Cavco Industries Inc.

10/31/2025 | Press release | Distributed by Public on 10/31/2025 14:41

Quarterly Report for Quarter Ending September 27, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q (the "Report") include "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often characterized by the use of words such as "believes," "estimates," "expects," "projects," "may," "will," "intends," "plans," or "anticipates," or by discussions of strategy, plans or intentions. Forward-looking statements include, for example, discussions regarding the manufactured housing and site-built housing industries; discussions regarding our efforts and the efforts of other industry participants to develop the home-only loan secondary market; our financial performance and operating results; our strategy; our liquidity and financial resources; our outlook with respect to Cavco Industries, Inc. and its subsidiaries (collectively, "we," "us," "our," the "Company" or "Cavco") and the manufactured housing business in general; the expected effect of certain risks and uncertainties on our business, financial condition and results of operations; economic conditions, including concerns of a possible recession, and consumer confidence; trends in interest rates and inflation; potential acquisitions, strategic investments and other expansions; the sufficiency of our liquidity; that we may seek alternative sources of financing in the future; operational and legal risks; how we may be affected by any pandemic or outbreak; geopolitical conditions; the cost and availability of labor and raw materials; governmental regulations and legal proceedings; the availability of favorable consumer and wholesale manufactured home financing; and the ultimate outcome of our commitments and contingencies. Forward-looking statements contained in this Report speak only as of the date of this Report or, in the case of any document incorporated by reference, the date of that document. We do not intend to publicly update or revise any forward-looking statement contained in this Report or in any document incorporated herein by reference to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.
Forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, many of which are beyond our control. To the extent that our assumptions and expectations differ from actual results, our ability to meet such forward-looking statements may be significantly hindered. Factors that could affect our results and cause them to materially differ from those contained in the forward-looking statements include, without limitation, those discussed under Risk Factors in Part I, Item 1A of our 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "Form 10-K").
Introduction
The following should be read in conjunction with the Company's unaudited Consolidated Financial Statements and the related Notes that appear in Part I, Item 1 of this Report. References to "Note" or "Notes" pertain to the Notes to our unaudited Consolidated Financial Statements.
Company Overview
Headquartered in Phoenix, Arizona, we design and produce factory-built homes primarily distributed through a network of independent and Company-owned retailers, planned community operators and residential developers. We are one of the largest producers of manufactured homes in the United States, based on reported wholesale shipments. We are also a leading producer of park model RVs, vacation cabins and factory-built commercial structures. Our finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation seller/servicer, and a Government National Mortgage Association ("GNMA") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Our insurance subsidiary, Standard Casualty Company, provides property and casualty insurance primarily to owners of manufactured homes.
As of September 27, 2025 we operate a total of 31 homebuilding production lines with domestic locations in Millersburg and Woodburn, Oregon; Riverside, California; Nampa, Idaho; Phoenix, Glendale and Goodyear, Arizona; Deming, New Mexico; Duncan, Oklahoma; Austin, Fort Worth, Seguin and Waco, Texas; Montevideo, Minnesota; Dorchester, Wisconsin; Nappanee and Goshen, Indiana; Lafayette, Tennessee; Douglas and Moultrie, Georgia; Shippenville (two lines) and Emlenton, Pennsylvania; Martinsville and Rocky Mount, Virginia; Crouse and Hamlet, North Carolina; Ocala and Plant City, Florida; and two international lines in Ojinaga, Mexico. We distribute our homes through a large network of independent distribution points and 79 Company-owned U.S. retail stores, of which 46 are located in Texas.
Company and Industry Outlook
According to data reported by the Manufactured Housing Institute, industry home shipments for the calendar year through August 2025 were 70,757, an increase of 3.2% compared to 68,550 shipments in the same calendar period last year. The manufactured housing industry offers solutions to the housing crisis with lower average price per square foot than a site-built home and the comparatively lower cost associated with manufactured home ownership, which remainscompetitive with rental housing.
The two largest manufactured housing consumer demographics, young adults and those who are age 55 and older, are both growing. "First-time" and "move-up" buyers of affordable homes are historically among the largest segments of new manufactured home purchasers. Included in this group are lower-income households that are particularly affected by periods of low employment rates and underemployment. Consumer confidence is especially important among manufactured home buyers interested in our products for seasonal or retirement living.
We employ a concerted effort to identify niche market opportunities where our diverse product lines and custom building capabilities provide us with a competitive advantage. We are focused on building quality, energy efficient homes for the modern home buyer. Our green building initiatives involve the creation of an energy efficient envelope, including higher utilization of renewable materials and provide lower utility costs. We also build homes designed to use alternative energy sources, such as solar.
We maintain a conservative cost structure in an effort to build added value into our homes and we work diligently to maintain a solid financial position. Our balance sheet strength, including the position in cash and cash equivalents, helps avoid liquidity problems and enables us to act effectively as market opportunities or challenges present themselves.
We continue to make certain commercial loan programs available to members of our wholesale distribution chain. Under direct commercial loan arrangements, we provide funds for financed home purchases by distributors, community operators and residential developers (see Note 8, Commercial Loans Receivable, to the unaudited Consolidated Financial Statements). Our involvement in commercial lending helps to increase the availability of manufactured home financing to distributors, community operators and residential developers and provides additional opportunities for product exposure to potential home buyers. While these initiatives support our ongoing efforts to expand product distribution, they also expose us to risks associated with the creditworthiness of this customer base and our inventory financing partners.
The lack of an efficient secondary market for manufactured home-only loans and the limited number of institutions providing such loans results in higher borrowing costs for home-only loans and continues to constrain industry growth. We work independently and with other industry participants to develop secondary market opportunities for manufactured home-only loan and non-conforming mortgage portfolios and expand lending availability in the industry. We also develop and invest in home-only lending programs to grow sales of homes through traditional distribution points. We believe that growing our investment and participation in home-only lending may provide additional sales growth opportunities for our factory-built housing operations and reduce our customers' dependence on independent lenders for this source of financing.
Key housing building materials include wood, wood products, steel, gypsum wallboard, windows, doors fiberglass insulation, carpet, vinyl, fasteners, plumbing materials, aluminum, appliances and electrical items. Fluctuations in the cost of materials and labor may affect gross margins from home sales to the extent that an increase in costs cannot be efficiently matched to the home sales price. Pricing and availability of certain raw materials have been volatile due to a number of factors in the current environment. We continue to monitor and react to inflation in the cost of these materials by maintaining a focus on our product pricing in response to higher materials costs, but such product pricing increases may lag behind the escalation of such costs. From time to time and to varying degrees, we may experience shortages in the availability of materials and/or labor in the markets served. Availability of these inputs has not caused significant production halts in the current period, but we have experienced periodic shutdowns in other periods and shortages of primary building materials have caused production inefficiencies as we have needed to change processes in response to the delay in materials. These shortages may also result in extended order backlogs, delays in the delivery of homes and reduced gross margins from home sales.
Our backlog at September 27, 2025 was $210 million compared to $197 million at March 29, 2025, an increase of $13 million, and down $66 million compared to $276 million at September 28, 2024.
While it is difficult to predict the future of housing demand, employee availability, supply chain and Company performance and operations, maintaining an appropriately sized and well-trained workforce is key to meeting demand. We continually review the wage rates of our production employees and have established other monetary incentive and benefit programs, with a goal of providing competitive compensation. We are also working to more extensively use web-based recruiting tools, update our recruitment brochures and improve the appearance and appeal of our manufacturing facilities to improve the recruitment and retention of qualified production employees and reduce annualized turnover rates.
Results of Operations
Net Revenue
Three Months Ended
($ in thousands, except revenue per home sold) September 27,
2025 		September 28,
2024 		Change
Factory-built housing $ 535,117 $ 486,343 $ 48,774 10.0 %
Financial services 21,410 21,118 292 1.4 %
$ 556,527 $ 507,461 $ 49,066 9.7 %
Factory-built homes sold
by Company-owned retail sales centers 1,187 1,032 155 15.0 %
to independent retailers, builders, communities and developers 3,991 3,881 110 2.8 %
5,178 4,913 265 5.4 %
Net factory-built housing revenue per home sold $ 103,344 $ 98,991 $ 4,353 4.4 %
Six Months Ended
($ in thousands, except revenue per home sold) September 27,
2025 		September 28,
2024 		Change
Factory-built housing $ 1,070,811 $ 944,391 $ 126,420 13.4 %
Financial services 42,573 40,669 1,904 4.7 %
$ 1,113,384 $ 985,060 $ 128,324 13.0 %
Factory-built homes sold
by Company-owned retail sales centers 2,210 2,045 165 8.1 %
to independent retailers, builders, communities and developers 8,384 7,589 795 10.5 %
10,594 9,634 960 10.0 %
Net factory-built housing revenue per home sold $ 101,077 $ 98,027 $ 3,050 3.1 %
Factory-built housing Net revenue increased for the three and six months ended September 27, 2025 due to higher home sales volume and an increase in Net revenue per home sold.
Net factory-built housing revenue per home sold is a volatile metric dependent upon several factors. A primary factor is the price disparity between sales of homes to independent distributors, builders, communities and developers and sales of homes to consumers by Company-owned retail stores. Wholesale sales prices are primarily comprised of the home and the cost to ship the home from a homebuilding facility to the home-site. Retail home prices include these items and retail markup, as well as items that are largely subject to home buyer discretion, including, but not limited to, installation, utility connections, site improvements, landscaping and additional services. Our homes are constructed in one or more floor sections ("modules") which are then installed on the customer's site. Changes in the number of modules per home, the selection of different home types/models and optional home upgrades create changes in product mix, also causing fluctuations in this metric.
For the three and six months ended September 27, 2025, Financial services Net revenue increased primarily due to higher insurance premiums.
Gross Profit
Three Months Ended
($ in thousands) September 27,
2025 		September 28,
2024 		Change
Factory-built housing $ 122,493 $ 111,520 $ 10,973 9.8 %
Financial services 11,914 4,602 7,312 158.9 %
$ 134,407 $ 116,122 $ 18,285 15.7 %
Gross profit as % of Net revenue
Consolidated 24.2 % 22.9 % N/A 1.3 %
Factory-built housing 22.9 % 22.9 % N/A - %
Financial services 55.6 % 21.8 % N/A 33.8 %
Six Months Ended
($ in thousands) September 27,
2025 		September 28,
2024 		Change
Factory-built housing $ 243,338 $ 215,030 $ 28,308 13.2 %
Financial services 20,575 4,494 16,081 357.8 %
$ 263,913 $ 219,524 $ 44,389 20.2 %
Gross profit as % of Net revenue
Consolidated 23.7 % 22.3 % N/A 1.4 %
Factory-built housing 22.7 % 22.8 % N/A (0.1) %
Financial services 48.3 % 11.1 % N/A 37.2 %
Factory-built housing Gross profit and Gross profit as a percentage of Net revenue for the three and six months ended September 27, 2025 increased due to higher sales volume and an increase in Net revenue per home sold.
Financial services Gross profit in dollars and as a percentage of Financial services Net revenue for the three and six months ended September 27, 2025 increased due to higher insurance premiums and lower claim losses. The claim loss reduction resulted from policy underwriting improvements and severe weather events in the prior year periods.
Selling, General and Administrative Expenses
Three Months Ended
($ in thousands) September 27,
2025 		September 28,
2024 		Change
Factory-built housing $ 65,757 $ 61,440 $ 4,317 7.0 %
Financial services 6,472 5,557 915 16.5 %
$ 72,229 $ 66,997 $ 5,232 7.8 %
Selling, general and administrative expenses as % of Net revenue 13.0 % 13.2 % N/A (0.2) %
Six Months Ended
($ in thousands) September 27,
2025 		September 28,
2024 		Change
Factory-built housing $ 128,911 $ 121,160 $ 7,751 6.4 %
Financial services 12,466 10,688 1,778 16.6 %
$ 141,377 $ 131,848 $ 9,529 7.2 %
Selling, general and administrative expenses as % of Net revenue 12.7 % 13.4 % N/A (0.7) %
Factory-built housing Selling, general and administrative expenses increased for the three and six months ended September 27, 2025 as a result of variable compensation driven by higher incentive compensation due to higher earnings compared to the prior year periods.
Financial services Selling, general and administrative expenses for the three and six months ended September 27, 2025 increased primarily due to increases in compensation year over year.
Other Components of Net Income
Three Months Ended
($ in thousands) September 27,
2025 		September 28,
2024 		Change
Interest income $ 5,046 $ 5,692 $ (646) (11.3) %
Interest expense (112) (125) (13) (10.4) %
Other income, net 142 258 (116) 45.0 %
Income tax expense (14,873) (11,135) 3,738 33.6 %
Effective tax rate 22.1 % 20.3 % N/A 1.8 %
Six Months Ended
($ in thousands) September 27,
2025 		September 28,
2024 		Change
Interest income $ 10,149 $ 11,203 $ (1,054) (9.4) %
Interest expense (276) (215) 61 28.4 %
Other income, net 142 147 (5) 3.4 %
Income tax expense (28,528) (20,567) 7,961 38.7 %
Effective tax rate 21.5 % 20.8 % N/A 0.7 %
Interest income consists primarily of interest earned on cash balances held in money market accounts, and interest earned on commercial floorplan lending. Interest expense consists primarily of interest related to finance leases.
Other income, net primarily consists of realized and unrealized gains and losses on corporate investments and gains and losses from the sale of property, plant and equipment.
Income tax expense increased compared to the prior year period due to higher profit before income taxes.
Liquidity and Capital Resources
We believe that cash and cash equivalents at September 27, 2025, together with cash flow from operations, will be sufficient to fund our operations, cover our obligations, provide for our planned acquisition of American Homestar and provide for growth for the next 12 months and into the foreseeable future. We maintain cash in U.S. Treasury and other money market funds, some of which is in excess of federally insured limits, but we have not experienced any losses with regards to such excesses. We expect to continue to evaluate potential acquisitions of, or strategic investments in, businesses that are complementary to the Company, as well as other expansion opportunities. Such transactions may require the use of cash and have other impacts on our liquidity and capital resources. We believe we have sufficient liquid resources including our $75 million Revolving Credit Facility, which may be increased from time to time through additional term facilities by up to an aggregate amount of $75 million up to $150 million. No amounts are currently outstanding. Depending on our operating results and strategic opportunities, we may choose to seek additional or alternative sources of financing in the future. There can be no assurance that such financing would be available on satisfactory terms, if at all. If this financing were not available, it could be necessary for us to reevaluate our long-term operating plans to make more efficient use of our existing capital resources at such time. The exact nature of any changes to our plans that would be considered depends on various factors, such as conditions in the factory-built housing industry and general economic conditions outside of our control.
State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, the assets owned by our insurance subsidiary are generally not available to satisfy the claims of Cavco or its other subsidiaries. We believe that stockholders' equity at the insurance subsidiary remains sufficient and do not believe that the ability to pay ordinary dividends to Cavco at anticipated levels will be restricted per state regulations.
The following is a summary of the Company's cash flows for the six months ended September 27, 2025 and September 28, 2024, respectively:
Six Months Ended
(in thousands) September 27,
2025 		September 28,
2024 		$ Change
Cash, cash equivalents and restricted cash at beginning of the fiscal year $ 375,345 $ 368,753 $ 6,592
Net cash provided by operating activities 133,994 102,074 31,920
Net cash used in investing activities (20,149) (11,029) (9,120)
Net cash used in financing activities (89,236) (73,581) (15,655)
Cash, cash equivalents and restricted cash at end of the period $ 399,954 $ 386,217 $ 13,737
Net cash provided by operating activities increased primarily from higher Net income, a decrease in Consumer loans originated compared to the prior year period and a decrease in Prepaid expenses and other current assets. The increase was partially offset by an increase in Commercial loans originated.
Consumer loan originations decreased $10.1 million to $29.8 million for the six months ended September 27, 2025 from $39.9 million for the six months ended September 28, 2024, and proceeds from consumer loans decreased $0.1 million to $33.9 million for the six months ended September 27, 2025 from $34.0 million for the six months ended September 28, 2024.
Commercial loan originations increased $28.5 million to $83.2 million for the six months ended September 27, 2025 from $54.7 million for the six months ended September 28, 2024. Proceeds from the collection on commercial loans provided $75.4 million this year, compared to $55.1 million in the prior year, a net increase of $20.3 million.
The change in Net cash used in investing activities is primarily due to an increase in cash paid for property plant and equipment in the current year.
The change in Net cash used in financing activities was primarily due to the repurchase of more shares of common stock and at a higher average daily stock price.
Obligations and Commitments.There were no material changes to the obligations and commitments as set forth in the Form 10-K.
Critical Accounting Estimates
There have been no significant changes to our critical accounting estimates during the six months ended September 27, 2025, as compared to those disclosed in Part II, Item 7 of the Form 10-K, under the heading "Critical Accounting Estimates," which provides a discussion of the critical accounting estimates that management believes are critical to the Company's operating results or may affect significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements.
Cavco Industries Inc. published this content on October 31, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 31, 2025 at 20:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]