Clayton Homes Annual Review 2017

A message from Kevin Clayton

Looking back on 2017, our company experienced tremendous growth. We centralized our focus to enhance customer experience, encourage innovation of our products and amplifed the affordability of Clayton Built® homes. As we reflect on our successes and our learnings from the past year, we will use these results as a guide on our journey to always be innovating, improving and moving forward to help families across America find their own slice of the world to call home.

In a time when the average price of a new home is well out of reach for most American families, our building process offers a disruptive innovation that provides an affordable housing solution. Today’s home buyers have different expectations and shop for their homes in a much different way than they have in the past. As a diverse builder offering traditional site built homes, prefabricated homes, luxury tiny homes and special projects like military barracks and apartments, we believe that everyone should have the chance to pursue homeownership. At Clayton, our team members are always working toward answering the evolving needs of our customers while staying true to our commitment to provide all types of quality built, stylish homes at an incredible value.

This past year brought with it many challenges and opportunities, and I am proud to say that we met them head on. Clayton home building group manufactured and sold over 48,000 homes to retailers across the country. Clayton Retail sold over 18,000 homes to families. Vanderbilt Mortgage and Finance, Inc. reported a record breaking year with over 189,021 home loans serviced and HomeFirst Agency serviced over 30,000 claims.

As we move forward into 2018 and beyond, we have made a commitment to continue to pursue innovations in building, customer experience and team member experience. Though our company has grown since my dad, Jim Clayton, opened the first Clayton Homes location in Knoxville, TN in 1966, our timeless passion, vision and values have never been stronger. We are proud to be one of America’s largest home builders and a leader in the housing industry because what we do is important - we’re opening doors to a better life.

Kevin Clayton
Chief Executive Officer

Kevin Clayton
Kevin Clayton

Clayton Overview

Clayton Location

361

Clayton Retail Stores

40

Home Building Facilities

19

Supply Centers

6

Site Builders

16,748

Team Members

47.7%

Market share

2017 in Review

365 days. 8,760 hours. 525,600 minutes. No matter how you measure it, 2017 was a remarkable year for Clayton filled with spectacular moments, tremendous successes and lots of learning. We hope that you’ll enjoy this collection of highlights of the Clayton story and share in our excitement of how 2017 was a year to remember.

Family in front of house

Innovation

Quality & Innovation

Our Commitment to Affordable Housing in America

We believe there’s more to a home than solid engineering and a modern design with all the bells and whistles – a home is a place to make memories that last a lifetime. Since opening our first retail home center in 1966, it has been our mission to provide quality built, affordable housing options to families across the nation. 2017 Clayton initiatives held true to supporting that mission – just take a look at the numbers.

46,858

Prefabricated
Homes Built

40

Home Building
Facilities

1,801

Site Built
Homes Constructed

$64,826

Average Sale Price of a
New Manufactured Home

Clayton Built®:
Durable & Efficient

When you choose Clayton Built®, you can be sure that your home is built on a foundation of strength, integrity and accountability, because for us “good enough” just doesn’t cut it. Our builders believe in going above and beyond to construct affordable homes that are innovative, efficient, dependable and beautiful.

Clayton Built

47.7%

2017 Market Share

Clayton Built® shipments made up 47.74% of the total manufactured housing industry market share in 2017.

Clayton home building group® is constantly innovating home design, building processes and construction materials to provide the best possible home for our consumers and help move the housing industry forward. In 2017, we launched a variety of new home designs and materials to meet consumer demand for luxury aesthetics and durable products – all at prices that fit our consumer’s budgets.

Home Building Innovations

Robotics

Clayton Windows, a member of the Clayton Supply division, introduced the RoboClean® robot to improve production efficiency. The robot arm cleans the edges of the window frames that are welded together by trained craftsmen to create sleek seams on the perimeter of the window.

Panelization

Prefabricated home building processes are being recognized by site builders as ways to innovate, build more efficiently and add cost savings for both the builder and home buyer. The panelized home building system is one process being adopted by site builders. In panelized home building, elements of a home are pre-built off-site then transported to the final home location. Oakwood Homes™, a member of the Clayton Properties Group®, is one such site builder utilizing prefab processes to build more efficiently.

New Standards for Home Building Facilities

Clayton home building group® opened a world-class home building facility in Athens, TX designed to transform industry standards with focus on team member experience, efficiency and innovation. Clayton Athens set the new standard for all of our national building locations and elevates the manufactured housing industry.

The new facility allows its builders to elevate the off-site construction process with advanced technology features and automated equipment which aids in the movement of materials and puts less physical strain on team members. This helps maintain exceptional product quality by minimizing potential errors and maximizing efficiency.

160k

Size of Athens
Facility in Sq. Ft.

70 Min.

Time needed for a team of
8 to assemble a roof

Nine additional home building facilities are currently being updated to mirror the Clayton Athens standards of a world-class team member experience continuing to elevate the manufactured housing industry through innovation.

Innovations include:

DuraCraft®

DuraCraft® is a Clayton Built® cabinet and trim system developed by Clayton's design and engineer teams in conjunction with a leading international manufacturer of high-quality plastic films and associated products. DuraCraft® is wrapped MDF cabinetry that is water-repellant and scratch-resistant to provide a more quality cabinet option in addition to real wood cabinets.

Clayton Connect

Clayton home building group® launched Clayton Connect, a new division, that delivers homes from home building facilities to retail home centers. As an extension of the home building process, the new fleet of trucks allows us to deliver our homes using quality equipment and care for our homes during transport from facility to home center.

6,000

Miles covered per day

Tech Innovations to Improve Customer Experience

In 2017, we launched some pretty cool technology to enhance the home buying process and augment customer experience.

Home Previewer®

The Home Previewer®, a free iPhone compatible app available for download from the App Store®, uses augmented reality to help prospective home buyers visualize what a home model will look like on their land before they buy.

Digital Customizer Tool

The new Customizer feature allows users to select design elements of a future home using favorite décor colors and materials.

HomeTouch™

A new and innovative technology to enhance the in-store shopping experience, select Clayton Retail home centers launched HomeTouch™ to provide an interactive experience using touch screen technology. This new feature enables buyers to experience 3D virtual tours of available floor plans, browse photos and learn about the off-site home building process.

Autonomous Home Tours

Goodall Homes™, a member of Clayton Properties Group® located in Nashville, TN and Knoxville, TN, introduced the concept of robot-guided home tours to enhance customer experience with extended business hours and a low-pressure way to tour model homes when a salesperson is not present. Still in the testing phase, this innovation is projected to be fully implemented in 2018.

Forward Thinking Home Designs

Designer Series Tiny Homes

The Clayton Designer Series launched a new small modular floor plan, The Saltbox. Designed by renowned architect Jeffrey Dungan, the Saltbox is designed to be a perfect year-round permanent residence, vacation home, guest home or accessory dwelling unit. Less space doesn’t mean less amenities in this home as it’s adorned with boutique appliances, upgraded windows and more.

Farmhouse Trends

Our architects answered our consumers desire for farmhouse style aesthetics in many ways with shiplap designs, farmhouse sinks and a variety of home feature offerings.

A Smarter Way to Build

Off-site construction allow sus to make the home building process more efficient with many benefits like:

What does it take to build a home?

When you build over 46,000 homes in a year, you’re able to buy thousands of products at one time from suppliers which leads to greater cost savings which we are able to pass off to our customers. By purchasing materials in bulk, we are able to save tens of millions of dollars each year for the company. Take a look at some of the materials included in our bulk purchases for 2017*:

19,159

Miles of Electrical Wire

This is enough wire to span across the U.S. 7.5 times!

235,786,417

Square feet of OSB

235 Million Sq. Ft of OSB can cover Disney World 5 times over!

170,000

Can lights

That’s enough lights to light up the Eiffel Tower 9 times over!

35,000,000

Square feet of carpet

We installed 35 million square feet of carpet - enough to cover the country of Monaco twice.

142,155

Sinks

This is enough sinks to give one to every person in Savannah, GA.

95,000

Toilets

If stacked, it would be 47 miles high, at that point you are approaching space!

50,000

Tons of steel

That’s the same weight as 222 Statue of Liberties!

Clayton Supply, our internal supply chain management system, builds many of the materials we use in our homes to ensure quality materials are being used to construct each home and leads to cost savings. 2017 was a record year for Clayton Supply’s material production:

432k

Windows Built

3.9M

Wall Board Panels Produced

40M

Lumber Sticks Used

171k

Appliances Purchased

Including refrigerators, ranges, dishwashers and microwaves ~92,000 or 54% were ENERGY STAR® eligible

The Future of Housing

At Clayton, we’re constantly testing, concepting and optimizing to meet the needs and wants of consumers. In the past, we’ve shared several concept homes that were projects that allowed us to explore trends and innovations in design to influence future designs and processes. Our learnings from these concept projects allowed us to implement design features and building techniques for future home builds to produce top caliber home designs that meet consumer demand for stylish and functional floor plans with enhanced energy efficiency features.

2007:
i-House

Designed to be cutting edge and extremely environmentally friendly, the i-House included features and amenities to accommodate many of our needs as a rapidly advancing society.
Read More

2014:
Gen Now Home

This concept was inspired by our youngest generation of buyers and designed to transform and grow with you throughout each stage of your family’s lifecycle.
Read More

2015:
3D Printed Home

Coined A.M.I.E, this concept project included an energy efficient home and car built using ORNL’s 3D printer, BAAM!
Read More

2017:
A New Class of Homes

We’re currently working to create a new class of homes to help ease the affordable housing crisis – a home with the aesthetic that consumers desire, and all at an affordable price.
Read More

Clayton Built® Constructed and Assembled in America

The need for quality built, affordable housing in America has never been greater. Clayton Built® prefabricated housing is one solution. Building innovations using robotics and technology with a human focus, evolutionary home designs, energy conscious construction and smart sourcing of products and materials allow manufactured home builders to offer the housing option thousands of Americans are turning to in order to get their wants and needs in a home – all at a price they can afford.

Values

Opening doors to a better life

A home is more than just four walls, a floor, a roof, appliances, nails and all the materials used to build our homes. A home without a family, without laughing, singing and dancing is just a building. To ensure that we stay true to our mission of providing quality built, affordable homes to hardworking families across the nation, we build each day’s foundation on our Guiding Principles:

We believe that team member experience and customer experience go hand-in-hand. Team members who are engaged, happy and excited share their enthusiasm for a brand with their customers and strive to build impressionable customer experiences to forge relationships that last beyond the sale of a home.

Our Team

Our strength as an organization is rooted in quality – the quality of our homes and the quality of our people. Cumulatively we have over 16,000 talented team members working together to provide the best possible customer experience to home buyers across the nation.

At Clayton, our team members are more than just employees – we’re family. Meet some of our team members to see why Clayton is much more than just a housing company.

Henry Peguero

Production Manager

"I was always trained in believing in our teammates and our customers."

Bobby Heifner

Production Manager

"Being a home owner is a big deal. I remember the first home I bought. Knowing that we can give people that kinda feeling is special."

Andy Hutsell

Product Development Manager

"My mission is to design really quality homes."

Charles Brumitte

Production Manager

"The best part about working here: I like to care about some of these young kids that are trying to learn what life is all about."

Sonya Clay

Area Coordinator

"I like to grow people. That’s my thing."

Our Customers

Our customers are our biggest priority, and this year we launched our largest customer experience initiative: Building Happyness. We believe that homeownership makes lives better, and through this initiative, we have committed ourselves to providing an exemplary home buying experience to each and every customer. The Building Happyness mantra reminds Clayton team members that every touchpoint is an opportunity to make the home buying experience extraordinary.

48,000 Families

In 2017 we delivered more than 48,000 homes and welcomed over 48,000 families across America to the Clayton family.

The Wood Family

“We weren’t interested in looking at any other house because we had such a good experience,” Diane said. “We knew they’d made all kind of improvements since we bought our first [Norris] in 1991, so we definitely wanted to go with Clayton and Norris.”

The Bryson Family

“If you want a home, go to Clayton. They’ll treat you right. They’re there for you.”

Lois Bradley

"My mom will soon be living on a single-floor in a home that she can age in much more successfully and comfortably. It’s bright and affordable. Her heating bills will be more than halved and her tax bill cut by two-thirds. She’s happy, which makes me happy. I believe in manufactured housing for my mom. I believe in manufactured housing, period."

The Phillips Family

"Everyone that comes to visit the first time talks about how nice it is," Elizabeth said. "It's great for living the life we want without being in debt."

Net Promoter Score: Our Measurement of Success

At Clayton, we measure success by customer satisfaction. The Net Promoter Score, or NPS, is one of the most telling measurement tools we use. This internationally recognized system boils customer satisfaction down to the single most important question:

How likely would you be to recommend us to friends and family?

Clayton is proud to have one of the highest NPS scores of any business in any industry. We continuously listen to our customers, and the feedback we receive helps us build smarter homes.

72

2017 Company NPS

Have it made®

Currently, there is an affordable housing crisis in America. Prefabricated housing is one solution to this issue. According to the Manufactured Housing Institute, more than 22 million people nationwide are already taking advantage of this low cost housing option.¹

The cost to buy a single-family home in America has steadily rose over the past ten years; however, even when the cost of homeownership seems insurmountable, the cost of prefabricated housing has remained well within the range of possibility for most American families.

Making affordable housing a readily available, tangible reality not only helps those dreaming of homeownership, it also helps to create safer communities and social support for families. Health care, criminal justice and education systems are just some of the industries that would benefit from an increase affordable housing across America. According to the Center for Housing Policy’s insights from Housing Policy Research report, “…affordable housing influences the health of people of all ages...[and] providing affordable housing is a valuable strategy to support and improve well-being.”³

With this in mind, in the Fall of 2017 we launched our largest marketing campaign to date encouraging prospective home buyers to consider Clayton Built® homes as smart, affordable housing options.

¹ "Affordable Housing." MHI | Manufactured Housing Institute. Accessed June 06, 2018. https://www.manufacturedhousing.org/affordablehousing/.
² Cornish, Cheryl, Stephen Cooper, Salima Jenkins, and US Census Bureau. "New Residential Sales." U.S. Trade with Haiti. August 23, 2011. Accessed June 06, 2018. https://www.census.gov/construction/nrs/historical_data/index.html.
³ Maqbool, Nabihah, Janet Viveiros, and Mindy Ault. "The Impacts of Affordable Housing on Health: A Research Summary." RUPCO. Accessed June 6, 2018. https://www.rupco.org/wp-content/uploads/pdfs/The-Impacts-of-Affordable-Housing-on-Health-CenterforHousingPolicy-Maqbool.etal.pdf.

Community

Clayton Cares: Our Commitment to Our Communities

At Clayton, we care about the communities where we live and work, and strive to leave the world a better place than we found it. We are proud to support a variety of national and local organizations throughout the country that support education, health and the arts.

2017 Charitable Contributions

$5+ Million

Overall monetary gifts

Clayton’s Season of Giving – How Schult Rockwell Helped One of Its Own

The Kickoff of Clayton’s Season of Giving – How Clayton Savannah Gives Back

Clayton’s Season of Giving – New Chances for New Team Members

Clayton's Season of Giving

Clayton team members also volunteered their time, talents and energy to support a wide variety of efforts and emergency disaster relief work when needed across the nation. The “Season of Giving” campaign shared stories from the experiences of Clayton team members giving back to their communities and fellow team members in need.

Disaster Relief Efforts

When disaster strikes in our communities, our team members’ volunteer spirits shine. When Hurricane Harvey struck in September 2017, the Clayton Waco home building facility banded together to provide assistance in a variety of ways to those affected by the devastating storms Harvey brought to Texas. Working together, the team raised $50,000 to donate to relief efforts as well as countless hours of their time to help their neighbors.

Next Step Network

Clayton has a long-standing relationship with Next Step Network, a non-profit housing intermediary which brings together mission-driven housing organizations and industry leaders in factory-build housing to promote the use of prefabricated homes as an affordable housing solution. In 2017, we donated $250,000 to provide critical mission support for Next Step.

“With the average new site built home in America now priced at $388,200, we think it is more important than ever to provide an affordable housing solution to hardworking families across the country.” – Kevin Clayton

Hope for the Warriors

In September 2015, Clayton home building group joined national non-profit Hope for the Warriors. We launched The Patriot home model and an on-going promotion in support of the organization. The funds we donate benefit veterans, service members and military families in a variety of programming including clinical health, wellness, sports, recreation, community and military relations and transition services.

- 2017 total donation: $125,000
- Total donation since 2015: $312,700 life to date.

$312,700

Total donations to date

Environmental Sustainability & Responsibility

Reducing Our Carbon Footprint

One of our Guiding Principles states that we will leave Clayton and the world better than we found them. We are constantly testing and implementing new processes to make our products more energy efficient, work spaces safer and healthier for our team members and to reduce our carbon footprint in the communities where we work and live.

More Efficient Homes

Clayton Retail launched an on-going energy efficiency initiative in 2015 in the form of the Energy Smart Home package. Available for consumers to purchase exclusively through Clayton Family of Brands retailers, the Energy Smart Home package includes home upgrades that help consumers save more on their utility bills and reduce their carbon footprint by optimizing energy usage within the home.

In 2017, Clayton Retail sold 7,360 homes with the Energy Smart Home package upgrade.

7,360

Energy Smart Home
packages sold

Clayton home building group builds and sells ENERGY STAR® certified manufactured and modular homes to Clayton Retail’s 360+ home centers and our network of over 800 independent retailers located nationwide. New ENERGY STAR certified homes are designed, produced and installed to meet ENERGY STAR requirements for energy efficiency making them significantly more energy efficient than standard homes.

In 2017, Clayton home building group sold 4,515 ENERGY STAR certified homes.

4,515

ENERGY STAR
certified homes sold

Cleaner, Safer Work Environments

In January 2015, Clayton home building group made a commitment for all home building facilities to become ISO 14001 registered. This initiative has helped us build more efficiently and put the well-being of our team members and communities first through simple changes like added recycling efforts, better dust control and more efficient waste water management. In 2017, 39 of the 40 home building facilities were ISO Registered.

At our Home Office, we have taken the proper steps to ensure that our building is LEED, Leadership in Energy and Environmental Design, certified to provide a healthy building environment for our team members. LEED certification provides independent, third-party verification that a building is achieving high performance in key areas of human and environmental health:

  • Conserving energy & water
  • Reducing waste sent to landfills
  • Being healthier & safer for our team members
  • Reducing harmful greenhouse gas emissions
  • Lowering operating costs

Through this certification, our Home Office conserves enough energy annually to:

  • Power 101 homes for an entire year
  • Save almost 1,335,000 gallons of water
  • Recycle over 1,000,000 lbs of waste

Green Building Practices

Clayton Built® homes are designed to efficiently use materials to produce less waste. Many materials used during the construction process are pre-cut to specific measurements and purchased in bulk by our home building facilities. This method helps us to use materials more efficiently and reduce the amount of leftover, unusable materials that could wind up in landfills. On average, the waste from one Clayton Built® home construction project will fit into one small dumpster.

Many of our building facilities also recycle and refurbish leftover materials to reduce waste. Recycled or refurbished materials include, but are not limited to:

  • Metals like copper wiring, steel and aluminum
  • Cardboard and paper products
  • Scrap wood
  • Drywall
  • Carpet padding and leftover carpet
  • Plastics like vinyl siding, plastic strapping and packaging materials arrive in
  • Axles used in transport
  • Tires used in transport

In 2017, Clayton home building group diverted 17,442 tons of material from landfills.

17k

Tons of waste
diverted from landfills

40

Building facilities
certified for ISO 14001