Cavco Industries Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 2, 2024

There are 8 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the First Quarter Fiscal Year 2025 Cavco Industries Inc. Earnings Call Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Fessler, Corporate Controller and Investor Relations. Please go ahead.

Speaker 1

Good day, and thank you for joining us for Cavco Industries' Q1 fiscal year 2025 earnings conference call. During this call, you'll be hearing from Bill Gore, President and Chief Executive Officer Alison Aden, Executive Vice President and Chief Financial Officer and Paul Bigby, Chief Accounting Officer. Before we begin, like to remind you that comments made during this conference call by management may contain forward looking statements, including statements of expectations or assumptions about Cavco's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies, current or future volatility in the credit markets or future market conditions. All forward looking statements involve risks and uncertainties, which could affect Cavco's actual results and could cause its actual results to differ materially from those expressed in any forward looking statements made by or on behalf of Cavco. I encourage you to review Cavco's filings with the Securities and Exchange Commission, including without limitation, the company's most recent Forms 10 ks and 10 Q, which identify specific factors that may cause actual results or events to differ materially from those described in any forward looking statements.

Speaker 1

This conference call also contains time sensitive information that is only accurate as of the date of this live broadcast, Friday, August 2, 2024. Cavco undertakes no obligation to revise or update any forward looking statement, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law. Now, I'd like to turn the call over to Bill Borer, President and Chief Executive Officer.

Speaker 2

Bill? Welcome and thank you for joining us today to review our Q1 results. The positive order trend we saw in Q4 continued this quarter enabling our plants to increase production with rising shipments and a growing backlog. Obviously, we want to spend time discussing this in more detail, but first I'd like to take a few minutes on the Financial Services segment, specifically insurance. Our insurance operations incurred very high losses in Q1.

Speaker 2

Nobody likes to use or hear the weather excuse, but the unusually high number of convective storms in Texas and the fires in Ruidoso, New Mexico combined to create a level of claims we haven't seen before. We incurred a number of individual events, none of which reached our reinsurance coverage. Insurance is by its nature a volatile business and it gets a lot of attention when results are down. We're managing for the long term and with that mindset, we can tolerate challenging periods as long as the fundamentals of the business are sound. The key to success over time is being on top of the risks you're willing to cover and making sure you're getting premiums appropriate to those covered risks.

Speaker 2

We're actively managing these fundamentals in we're confident that will continue to be the case despite the recent results. Insurance is an adjacent business. We understand it and it adds value both to our retail operations and to our homebuyers who need ready access to our policies in order to complete their transaction and protect their homes. Given the losses this quarter, financial services deserve some upfront discussion and of course we'll be happy to answer questions. But I don't want that to take focus away from the main event, our factory built housing results, which continue to improve.

Speaker 2

So let's turn our attention to that. Momentum was building through this quarter. For 7 quarters now, we've reported that same plan orders were increasing, not dramatically, but headed in the right direction. This quarter, the sequential increase was a bit more significant, up about 25%. As a result, we were able to increase shipments 20% and our units in backlog climbed 22%.

Speaker 2

Our working backlog remained at about 7 to 8 weeks, held in check by a significant increase in our weekly production rate. Sequentially, our average selling price dropped 4%. I think what's most relevant is what we're seeing on a same product basis in wholesale pricing. The takeaway there is that wholesale pricing has been pretty stable, dropping less than 1%. As we've talked in the past, there are a lot of dynamics in our reported ASP and most of the 4% drop is the result of a lower percent of our product going through company owned stores, the mix shift we saw towards single section units and pricing in our retail operations, which can vary period to period.

Speaker 2

Notably, our factory gross margin remained very steady, up 20 basis points sequentially. Without the help of any significant interest rate relief, buyers are placing orders because they need homes and rate stability enables them to have confidence in their monthly payment. The strongest part of the market is the lower cost single section home. In my view, affordability affects which home a family can afford across the spectrum of home prices, but at the lowest price homes it affects whether they can afford to own. There are startlingly high number of families right on that cusp of being able to afford a home at all.

Speaker 2

They've been priced out by inflation and rate increases, but they will come back into the market if they get monthly payment relief in any form. Community orders are not back to normal, but they are improving. For a number of quarters, it was correct to assume community orders were off significantly across the board. Now we're starting to see some feathering in of increase as specific communities get back to more normal order rates. This is consistent with what we've been expecting from the segment and we anticipate improvement through the remainder of the year.

Speaker 2

This is a story by story situation just as it was when retailers recovered from their inventory a year ago, it's regional and community specific. Regarding regional differences, Florida remains well off what we consider normal community order rates. To a lesser extent, we continue to see lagging community orders in the Southwest. Ultimately, community orders will recover and this will provide added shipments over current levels. With that, I'd like to turn it over to Allison to discuss the financial results in more detail.

Speaker 3

Thank you, Bill. Net revenue for the 1st fiscal quarter of 2025 was 477,600,000 up 1.7000000 or 0.4 percent compared to $475,900,000 during the prior year. Sequentially, net revenues increased $57,500,000 driven by an increase of units sold, partially offset by lower average selling prices and lower revenues in financial services. Within the factory built housing segment, 1st quarter net revenue was $458,000,000 up $900,000 or 0.2 percent from $457,100,000 in the prior year quarter. This increase was primarily due to a 3% increase in homes sold, partially offset by a 2.7% decrease in average revenue per home sold.

Speaker 3

Factor utilization for Q1 of 2025 was approximately 65% when considering all available production days, but was nearly 70% excluding scheduled downtime for market and a holiday. Utilization was approximately 60% in the prior year period. In the Financial Services segment, net revenue increased 4.2% to 19,600,000 from $18,800,000 This increase was primarily due to more insurance policies in force and higher insurance premium rates, partially offset by fewer loan sales and lower interest income earned on the acquired consumer loan portfolio. Consolidated gross margin in the 1st fiscal quarter as a percentage of net revenue was 21.7%, down 310 basis points from 24.8% in the same period last year. This decrease was due to lower average selling prices in the factory built housing segment and losses in financial services.

Speaker 3

In the factory built housing segment, the gross profit decreased 220 basis points to 22.6 percent in Q1 of 2025 versus 24.8 percent in Q1 of 2024, driven by lower average selling prices. Financial services gross margin as a percentage of revenue decreased to negative 0.6% in Q1 of 2025 from 24% in Q1 of 2024. The insurance division was significantly impacted by multiple weather events in Texas as well as the forest fires in New Mexico, resulting in a segment pretax net loss of $5,200,000 Selling, general and administrative expenses in the Q1 of 2025 were $64,900,000 or 13.6 percent of net revenue compared to $61,700,000 or 13% of net revenue during the same quarter last year. The increase in these expenses was primarily due to $1,500,000 related to the Kentucky Dream Home acquisition that occurred in the Q3 of fiscal 2024, increased employee compensation and increases in healthcare and professional services support. Interest income for the Q1 was $5,500,000 up 19.3% from the prior year quarter.

Speaker 3

The increase over the prior year is primarily due to higher interest rates on larger cash balances. Pre tax profit was down 27.7 percent this quarter to $43,900,000 from $60,700,000 for the prior year period. The current period includes a pre tax loss of $5,200,000 in the Financial Services segment. Effective income tax rate was 21.5 percent for the 1st fiscal quarter compared to 23.5% in the same period last year. Net income to Cavco stockholders was $34,400,000 compared to net income of 46 $400,000 in the same quarter of the prior year.

Speaker 3

Diluted earnings per share this quarter were $4.11 per share versus $5.29 per share in last year's Q1. The pre tax net loss of $5,200,000 in the Financial Services segment resulted in a reduction of diluted net income per share of approximately $0.49 on an after tax basis. Additionally, from a sequential perspective, Financial Services posted an after tax earnings of $3,300,000 in Q4 of 2024. The sequential swing relative to our positive Q4 2024 Financial Services performance is approximately $0.89 As insurance results have been a focus this quarter, we also wanted to alert you to an additional weather event that occurred after the end of the Q1 that will impact our 2nd quarter results. In early July, Hurricane Beryl made landfall near Houston, Texas.

Speaker 3

While we don't write insurance coverage in coastal counties, several of our inland policyholders were impacted by severe wind damage. Currently, we expect losses to be in the range of our reinsurance limit, which is $4,000,000 Anything over $4,000,000 will be covered by our reinsurance. Now I'll turn it over to Paul to discuss the balance sheet.

Speaker 4

Thanks, Allison. Comparing the June 29, 2024 balance sheet to March 30, 2024, the cash balance was $359,300,000 up $6,600,000 from $352,700,000 at the end of the prior fiscal year. The change in the balance consists of a series of pluses and minuses. I'll start with the increases in cash, which include net income, adjusted for non cash items such as depreciation and stock based compensation expense, prepaid and other current asset decreases of $5,600,000 and an increase in current liabilities of $22,700,000 Decreases to cash include accounts receivable increase of $8,000,000 purchases of property, plant and equipment of $5,000,000 inventory increases of $3,500,000 commercial and consumer loan originations greater than sales and payments of $10,900,000 and lastly, share repurchases of $29,200,000 Restricted cash and the related other current liability increased from cash collected on service loans in our Financial Services segment. Prepaid and other assets was down due to lower prepaid insurance and workers' compensation balances, partially offset by normal amortization of other prepaid.

Speaker 4

Property, plant and equipment increased from additional investment in equipment and plant locations. Accrued expenses and other current liabilities are up from increased insurance loss reserves, higher customer deposits and an increase in volume rebates. Finally, stockholders' equity was essentially flat at $1,000,000,000 Now I'll turn it back to Bill.

Speaker 2

Thank you, Paul. Didi, let's go ahead and move on to questions.

Operator

Thank And our first question comes from Daniel Moore of CJS Securities. Your line is open.

Speaker 5

Bill, Alex and Paul, good morning and thanks for taking the questions.

Speaker 2

Good morning. Good morning.

Speaker 5

Start with Financial Services and then get back to the main events as you described, Bill. Just to clarify, Allison, it sounds like the full impact in the quarter was maybe closer to $8,000,000 or $9,000,000 in terms of the claims or $0.89 Is that relative to what a sort of more normal profitable quarter would look like in that business? Is that the right way to think about it?

Speaker 3

That's the right way to think of it, Dan. Would have been an increase of instead of posting a loss of $0.49 typically we would have posted a gain of $0.40 as we did in Q4. So that would as long as $0.89

Speaker 5

Perfect. That makes sense. And then for fiscal Q2 Hurricane Barril, is it the impact is $4,000,000 or you expect an operating income loss of $4,000,000 dollars

Speaker 3

Right now, the impact is estimated to be right at $4,000,000

Speaker 5

Okay, okay. That's really helpful. And no other weather events that are significant at least as of this stage that we're aware of?

Speaker 3

Not that we have visibility to now.

Speaker 5

Not yet. Perfect. What can you tell us about potential premium rate increases or other measures that you might consider given the higher claims occurrences?

Speaker 2

Yes, it's been a bit of an ongoing process. We've been you have to basically file with each state when you are looking for an increase and that's been going on actually for some time as probably anyone on the call who owns a home knows insurance rates have been skyrocketing for all of us. So we've been getting those premium increases and we continue to be pretty active in that process. So there's more pretty sizable increases coming. The dynamics of insurance and maybe I'm telling you things you already understand about it.

Speaker 2

It basically is you've got to incur the losses in order to go ask for the premium increase. And then when you get the approval, it takes a renewal cycle, so about a year before the whole premium increase takes hold. That's just kind of the nature of the business. But to your question, Dan, we absolutely have pretty sizable increases coming in all the states we operate in.

Speaker 5

Perfect. To the more interesting stuff with backlog up 21% sequentially, how should we think about production or shipment growth in fiscal Q2 and beyond versus Q1?

Speaker 6

Yes. I guess what

Speaker 2

I can tell you, I mean, short of given guidance on quarter, we can kind of tell you being a bit into the quarter now that the trends continue. So I guess what I'd say is our backlog is up in the at this point in the quarter compared to where we finished as well as production and order rates. So everything is continuing on an upward trend at this point. We're in that mode. We really don't want to see backlogs get away from us.

Speaker 2

So we're in a mode of trying to figure out not trying to figure out, but putting the efforts in place to ramp production up pretty aggressively in order to try to match this stronger order rate that we're seeing.

Speaker 5

Very good. And it sounds like it's really still mostly retail, trickle an order here, an order there from community, but waiting for that to come back in a more meaningful way. Is that the right way to think about it?

Speaker 2

Yes, communities are definitely showing up now. I mean, I'm kind of somewhere in between, I guess, as I've described that. The retail remains pretty solid as it has been and growing. Communities are starting to come back. It's just kind of there's a ways to go, if that makes sense.

Speaker 2

So we're somewhere in the middle. I remember talking about that a couple of quarters ago that given the inventory levels, if demand supported it, which it really has, then we were kind of looking mid this calendar year to start seeing some relief and that it would take a little time to get 100% back. So we're kind of

Speaker 5

right on that schedule and we think there's still some improvement to go. Helpful. Last one, I'll jump back in queue. Factory built gross margin 22%, up a little bit. And despite ASPs being down, which you described partially due to maybe a few less houses sold through your retail.

Speaker 5

As capacity ramps and as capacity or as production ramps and utilization improves, is there some upside to that? Or should we think of that as the new sort of run rate at least for now? Thanks again.

Speaker 2

You want to try?

Speaker 3

Sure. I mean, I would think that on the positive side, as we continue to ramp, as we've seen in our historical financials, we'll have leverage in our factory overhead component. The second element is clearly the cost of materials, primarily lumber and that was B. As we've talked about before, we got about a 60 day lag from what we can see in the commodities market, which during the period that would most likely impact our Q2, it's been relatively low. If we take all those factors, the pricing, the cost of our materials and our leveraging of factory overheads, that would be where we land in Q2.

Speaker 5

Really helpful, Al. Okay. I'll jump back with any follow ups. Thank you.

Speaker 2

Thanks, Dan.

Operator

Thank you. Our next question comes from Greg Palm of Craig Hallum. Your line is open.

Speaker 6

Yes. Thanks for taking the questions. I just wanted to confirm, just based on what you're seeing in July, you said that backlog is up since quarter end. So order rates, production rates, you said all that is actually up relative to how it finished end of quarter?

Speaker 2

Yes, that's correct.

Speaker 6

And as it relates to community orders in general, are you seeing any notable difference between, call it, when they're ordering and when they want to actually receive the homes? For instance, is that backlog stretching out maybe a little bit longer than it is historically or the communities actually taking the orders for near term delivery?

Speaker 2

Yes, it's a good question. I think it's taking they're making orders that they know are going to come relatively quickly. We're in a pretty good spot on backlog being in that 7 or 8 week range. And so we focus our view of the backlog on units that we can make and ship, right? We're not really focused on orders that are way out in time.

Speaker 2

And so if someone places an order with us right now, they know that they're going to have that home in a couple of months. So they're not placing orders and saying, okay, here's an order that I wanted 9 months from now.

Speaker 6

Yes. Okay. And I'm curious, has anything notable happened with rates over the last couple of months? And I think where I'm sort of going with all these questions is what's anything changing that's essentially increasing or accelerating? It sounds like the orders at retail and finally starting to get some of those communities to come back.

Speaker 6

I'm not sure if there's an underlying reason at all, but curious if you can comment on what's happened with rates over the last few months as well.

Speaker 2

The rates have actually been very stable. They haven't been noticeably dropping. And so to your question, I think there's a couple of things going on in my mind. One is, our prospective buyers have been there throughout. They've been we've seen it in the traffic numbers.

Speaker 2

There's a need for housing. They're out there trying to figure out how to make it happen for their family. And so when they get the stability in rates, they at least can understand what their monthly cost is going to be and it stays in that zone all the way through to get their loan done. And so just the stability has really facilitated traffic turning into orders on the and I'd say that on the retail side basically. The community improvement is really what we've been talking about.

Speaker 2

They got slugged with a lot of inventory. It kind of hit them after it hit retailers when we turned the communities and said the retailers aren't ordering, so here come your homes. And that was kind of a year ago or a little more actually. And they're working through that. And as they get inventories under control, to the extent they're confident in having a resident for any home that they set up, they're starting to kind of order as fast as they can set them up.

Speaker 2

So really 2 different dynamics, Greg. I hope I explained that clearly.

Speaker 6

Yes. Yes, that's great. And then on ASPs, Allison, can you just go through or I don't know if it was you or Bill, just go through the various reasons. I think it was mostly mix related overall, just number of homes going through company owned stores, maybe a mix towards singles versus doubles. But I don't know if you can quantify or just go through that again, that'd be great.

Speaker 3

I would characterize it as primarily a shift more towards single units, which are the lower price. A like for like pricing, there was a slight decreases as we do see continued pricing pressure. But as volumes increase, we'll see that you will see that subside.

Speaker 6

Okay.

Speaker 2

And Greg, just on the point about our company owned retail stores, we've kind of brought that into the mix because as we've grown retail over the last year, it's shifted out a little bit for us. But if you think about it, we put more multi sections through retail, but we put even more single sections through retail. So both grew in our retail operations, but overall, the percent of our homes that went through retail was down as a percentage. And so if you think about our ASP and maybe I'm stating the obvious, if you think about our ASP, if period to period you see a lower percent going through retail, then we've got less retail pricing in our ASP and more wholesale pricing, which automatically is going to drive ASP down a little bit. But I think it's a little bit of a cloud because what we're all really interested in is how is pricing holding up.

Speaker 2

And that's why I wanted to give the perspective that wholesale pricing for our plants was down less than 1%. It's still leaking a little bit, but it has not been that significant.

Speaker 6

No, I appreciate that. I'm glad you gave that color. I'll leave it there. Best of luck. Thanks.

Speaker 7

Thank you.

Operator

Thank you. And our next question comes from Jay McCanless of Wedbush. Your line is

Speaker 7

open. Hey, everyone. Thanks for taking

Speaker 5

my question. So Bill, could we talk

Speaker 7

a little bit more about the price issue and what your retail stores are seeing right now in terms of price competition from other retailers? How is that shaping up?

Speaker 2

Yes, it's, man, it can vary from quarter to quarter. You can see their pricing on average, even if you look at it just single or just multi section, it can move only quarter to quarter because they're out there on kind of on the street corner competing for deals. And I'll also remind people that while we've grown in some other areas, we're still pretty concentrated in Texas. And so our retail is largely a reflection of Texas market, not the whole country. And the reason I say that is, I hope I'm not going too far here to lose people, but the reason I say that is our retail, if you think of us being in Texas, Texas came out of this downturn a little ahead of other regions.

Speaker 2

So they were already kind of on the stronger end and improving. So we're not seeing the sequential what we see in our retail sequentially isn't really reflective of the whole country. Other regions are kind of catching up in a positive way. So I'm not sure if I'm really touching on your question, but retail pricing for us mostly focused in Texas did drop a bit this quarter. It was a factor in that 4% overall ASP, not a huge one.

Speaker 2

And I wouldn't be too concerned about it because I think it's kind of normal variation on that street corner by street corner competition for deals.

Speaker 7

No, that's what I was trying to find out is and thank you for the detail around Texas, but that's where I was trying to get to is what happened with retail pricing. It sounds like it's a pretty competitive environment, especially when we're talking about lower cost single section homes. Is that the right way to think about it?

Speaker 2

That's right. And I guess you should draw your own judgment. I'm just kind of giving my perspective that when we see variation period to period net, I wouldn't get I don't get too worked up about it because I think there can be a lot of variability in the next quarter, it can bounce up. It's just kind of going to move on us. Got it.

Speaker 2

Okay.

Speaker 5

I don't see any structural

Speaker 2

issue there. Sorry.

Speaker 7

I'm sorry, Bill, I cut you off. Could you say that again?

Speaker 2

I don't see any structural or trending issue in that. I think that's just a variation. That's good to know. Thank you.

Speaker 7

Secondly, where are channel rates right now and where were they maybe a quarter ago and a year ago?

Speaker 1

Yes. So right now Jay, they're at 9% to 9.4%. And as Bill mentioned earlier, that is pretty consistent with where they were last quarter and even last year.

Speaker 7

I mean, if this move that we're seeing in the 10 year turns out to be more permanent than not and we see it keep going down, How fast do you guys think whether with Country Place or some of the Yale's competitors, how quickly do you think people are going to try and start bringing rates down?

Speaker 2

I think the reaction time on land home deals, whether they're conforming or non conforming would be kind of more correlated. I don't think that I would make any assumption personally about what that will do to chattel rates, which are much stickier over time. You really don't react upward or downward very in a highly correlated way with 10 year or any other mortgage index. So we get relief on land home deals and certainly GSE costs would or GSE rates would react, but not necessarily a channel. Okay.

Speaker 2

That's great to know.

Speaker 5

And then last one for me on the community business.

Speaker 7

It sounds like things are finally starting to get better there, but how much longer do you think it's going to take another couple of quarters till they're back to normal order rates? How are you thinking about that, Bill?

Speaker 2

Yes, I think that's fair. I mean, it's always dependent on overall health of the market for sure, but that's going in a positive way. I remember talking about this when we were having the inventory glut in retail. And we want to think about it as just being a problem one day and gone the next, but how it really happens is you get a critical mass of communities that get back to normal order patterns and you just kind of stop talking about it because the problems drifted away from you. So I think we've been saying for a long time, we thought we'd see improvement mid calendar year.

Speaker 2

That's where we're at. And I think it will continue to improve by the end of the year.

Speaker 7

Great. That's all I had. Thank you. Thanks.

Operator

Thank you. We have a follow-up question from Daniel Moore of CJS Securities. Your line is open.

Speaker 5

Yes, thanks again. Just a favorite capital allocation, dollars 370,000,000 cash and growing despite buying back stock. Any what's the M and A pipeline look like? And what are your thoughts in terms of just aggressiveness of putting the remaining authorization to work? Thank you.

Speaker 3

Thanks. So as we shared, we share stock repurchases was about $29,000,000 in the first quarter. That leaves us $97,500,000 remaining on the January 2024 Board authorization of 100,000,000 dollars We stay, as always, consistent in our capital allocation strategy and we continue to put dollars into planned improvement and expanding capacity and efficiencies in our plans. To your point, we continually vet an active pipeline of M and A and that's ongoing. And then we are looking, as we've talked about, opportunities in our lending operations.

Speaker 3

And we stay focused on consistency in our capital allocation.

Speaker 5

Understood. And then last one, on Anthem, just any update there? Or should I ask we ask maybe once a year instead of once a quarter in terms of how you see that kind of ramping up? Thank you.

Speaker 2

I love the question because it's a product line we're still really excited about. So you can ask every quarter or call us up in between and ask. We're really happy with the receptivity. We are seeing some orders. I don't want to report on the actual numbers.

Speaker 2

We're seeing a huge number of kind of quotes. So it's a process. It takes some time. But I think, I guess it was since the last call, we had Homes on the Hill. We showed new single section duplex still under the Anthem line at Homes on the Hill where we set that home up on the lawn in front of the Capitol building and people are coming through.

Speaker 2

That's an event we've done, I think, 4 years now. And I think that's a game changing product, maybe even more than a multi section duplex. So it's going to keep picking up. I think there are going to be particularly early adopters in the rental community space. So we have some things going on there.

Speaker 2

So I'm not giving you specific numbers, Dan. I really think it's going very well there and we are starting to sell actual units.

Speaker 5

All right. Very helpful. Appreciate it.

Speaker 2

Thank you.

Operator

Thank you. I'm showing no further questions at this time. I'd like to turn it back to Bill Bora for closing remarks.

Speaker 4

Great.

Speaker 2

As we discussed, our internal operating discussions have clearly shifted over the last couple of quarters and we're focused on ramping volume back up in line with orders that we're seeing. It definitely feels good to be having those discussions after a lengthy period of kind of throttling back production. It's important to reflect on how this reduced volume period was managed. Very complementary of our operators who were able to maintain healthy gross margins even while running at 60% hard to maintain a cost structure that's as variable as possible. I look back over the 5 quarters that we reported 60% capacity utilization And during that period, we continued to invest in operational improvement.

Speaker 2

We repurchased about $140,000,000 of our stock and our cash balance grew about $80,000,000 So as we sit here today, our teams across the company have really managed extremely well waiting for the market to return and we're very anxious to demonstrate our potential in a stronger environment. I want to thank you for joining us today and for your interest in Cavco and we look forward to keeping you updated on our progress. Thank you.

Operator

This concludes today's conference call. Thank you for participating and you may now disconnect.

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Key Takeaways

  • Our Insurance operations incurred a $5.2M pre-tax loss in Q1 due to unusually high storm and fire claims, shaving about $0.49 from EPS, with Hurricane Beryl expected to add another $4M in Q2.
  • Factory-built housing momentum continued with same-plant orders up ~25% sequentially, shipments rising ~20% and backlog growing ~22%, allowing plants to ramp production rates.
  • Reported ASP fell ~4% sequentially mainly from mix shifts toward single-section homes and fewer company-owned store sales, while wholesale pricing held steady with under a 1% drop and factory gross margin improved by 20 bps.
  • Community home orders, although still below historical norms—especially in Florida and the Southwest—are beginning to recover, with management anticipating further gains through year-end.
  • Cavco closed Q1 with $359M in cash, repurchased $29M of stock (leaving $97.5M authorization) and continues investing in plant capacity and potential M&A opportunities.
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Earnings Conference Call
Cavco Industries Q1 2025
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