Cavco Industries Q3 Earnings Call Highlights

Key Points

• American Homestar acquisition boosted net revenue to $581 million (up 11.3%) with Homestar contributing $42 million and 343 homes, but acquisition-related costs, higher SG&A and a higher effective tax rate cut diluted EPS to $5.58 from $6.90 and trimmed consolidated gross margin to 23.4%.
• Demand and volumes softened—HUD shipments were down about 13% in Oct–Nov and Cavco's core volumes (ex-acquisition) fell ~4% YoY and 6% sequentially—yet backlogs held at roughly 4–6 weeks and average selling price rose on mix shifts and more retail/company‑store sales.
• Integration and balance sheet: management now expects >$10 million of annualized tangible cost synergies (about half already in the run rate), repurchased $44 million of stock, and ended the quarter with roughly $225 million of unrestricted cash (total cash & restricted cash $242.5 million) despite acquisition cash outflows.

Cavco Industries NASDAQ: CVCO reported third-quarter fiscal 2026 results shaped by the closing of its American Homestar acquisition, while also navigating a seasonal slowdown in industry shipments and higher expenses tied to the deal.

Industry demand, volumes, and backlog trends

President and CEO Bill Boor said there were “a lot of moving parts” in the quarter’s results, but noted that the underlying business environment was marked by a slowdown in manufactured housing shipments in October and November. Based on HUD shipment data, industry shipments for those two months were down 13% versus the comparable period in calendar 2024, though December HUD shipment data was not yet available at the time of the call.

Excluding the benefit of the American Homestar acquisition, Cavco said its volume declined about 4% year-over-year and 6% sequentially. Management said it took selective downtime around the holidays where needed, but deliberately maintained daily production rates to stay positioned for spring selling season opportunities.

Boor said the company typically utilizes about a week of overall backlogs and finished the quarter with backlogs in the 4-to-6 week range, similar to the prior year’s third quarter. He said early indications suggested backlogs were stable and “could increase,” depending on order trends and production pace heading into spring. In the Q&A, Boor added that management was “pretty comfortable that our backlogs are holding,” despite weather disruptions early in the quarter.

Channel and pricing: communities softer, retail steady

By channel, Boor said communities represented most of the reduced volume in the quarter, while retailers were steady quarter-to-quarter. He cautioned that communities can be volatile quarter-to-quarter and said he was not hearing a bearish tone from community operators about demand from end consumers.

Average selling price was a positive indicator in the quarter, rising sequentially despite lower volumes. Boor said mix and retail integration helped lift ASP, with single-section home pricing roughly flat and multi-section pricing up. Management also reiterated that the industry has been trending toward multi-section homes for some time, and Boor suggested affordability pressures at the lowest price points may be straining demand among entry-level buyers.

In Q&A, management said multiple factors pushed ASP higher in the quarter, including American Homestar’s higher proportion of sales through company-owned stores, Cavco’s own shift toward more retail sales, and a continued mix shift toward multi-section homes. Mark Fusler, corporate controller and investor relations, said the sequential ASP increase included about $1,000 attributable to American Homestar. Cavco also disclosed that American Homestar contributed 343 homes in the quarter, and that company-owned store sales totaled 1,339 homes versus 1,075 in the prior-year quarter.

Margins and profitability: acquisition costs and higher taxes weighed on EPS

Cavco’s year-over-year decline in earnings per share was driven by several factors that management highlighted moving up the income statement. Boor cited a higher effective tax rate compared to last year, reflecting declining tax credits due in part to the phaseout of the ENERGY STAR program and nondeductible deal costs. He also pointed to higher SG&A due to bringing American Homestar overhead into the company and one-time transaction costs.

Executive Vice President and CFO Allison Aden reported net revenue of $581 million, up 11.3% from $522 million in the prior-year quarter. Sequentially, net revenue increased $24.5 million, driven by the American Homestar addition (a $42 million contribution) and higher average revenue per home sold, partially offset by lower base business unit sales.

• Factory-built housing segment revenue: $558.5 million, up 11.5% year-over-year.
• Financial services segment revenue: $22.5 million, up 6.2% year-over-year and up $1.1 million sequentially.

Consolidated gross margin was 23.4%, down from 24.9% a year earlier. In factory-built housing, gross profit margin was 21.7% versus 23.6% in the prior-year quarter, with Aden attributing the decline broadly to higher per-unit costs. Financial services gross margin rose to 65.2% from 55.5%, driven by lower weather-related claims, the growing impact of rate increases, and underwriting changes.

SG&A was $81.4 million, or 14% of net revenue, compared with $66 million, or 12.6% of net revenue, in the year-ago period. Aden said the increase was primarily due to the addition of American Homestar ($6.9 million in operating costs and $2.9 million in deal-related expenses) and higher compensation. Interest income fell to $3 million from $5.4 million due to lower cash balances following the acquisition.

Pre-tax profit declined 16.9% to $57.6 million from $69.3 million. The effective tax rate increased to 23.5% from 18.6%, driven by reduced tax credits and nondeductibility of certain deal costs. Net income was $44.1 million versus $56.5 million, and diluted EPS was $5.58 versus $6.90.

On the margin outlook, management said there was no gross margin impact from purchase accounting related to American Homestar. Aden also noted that tariffs were having an upward impact on costs and estimated a roughly $3 million cost impact in the quarter, while emphasizing that the ability for suppliers to pass through tariffs depends partly on demand conditions.

American Homestar integration and synergy outlook

Boor said integration was progressing on plan across functions including HR, payroll, finance, IT, and operations. After being together for over a quarter, management said its view of tangible, measurable cost synergies had “firmed up.” Boor stated Cavco now expects annualized tangible cost reduction synergies of above $10 million, and estimated that about half had been achieved in the run rate entering the fourth quarter. He said the benefits were not evident in Q3 because gains were achieved as the quarter progressed and were offset by integration costs that are expected to decline.

In response to an analyst question, Aden said the quantified synergy buckets include purchasing savings and optimization, direct labor savings, and SG&A shared-services efficiencies. She suggested that if the company exited Q3 with about $5 million of annualized synergies, the next quarter could reflect roughly a $1.25 million benefit to profitability, while the full synergy ramp continues.

Capital allocation, cash, and balance sheet items

Cavco repurchased $44 million of stock during the quarter. Aden said approximately $98 million remained under the board’s repurchase authorization. Boor said the company ended Q3 with unrestricted cash of $225 million.

Chief Accounting Officer Paul Bigbee reported that cash and restricted cash decreased $157.5 million in the quarter to $242.5 million. Operating cash flow was $66.1 million, investing cash use was $179.7 million (primarily the acquisition), and financing cash use was $43.9 million (primarily share repurchases). Bigbee also said several balance sheet line items increased from the addition of American Homestar, including inventories, notes receivable, property, plant and equipment, goodwill and intangibles, accrued liabilities, and deferred income taxes.

In closing remarks, Boor said the company remains focused on being positioned to execute as the market improves, while continuing longer-term efforts to strengthen Cavco’s brand and go-to-market strategy, including rebranding manufacturing brands under the Cavco name and introducing a product line framework across its system.

About Cavco Industries NASDAQ: CVCO

Cavco Industries, Inc is a leading designer, manufacturer and retailer of factory-built homes and modular structures. The company produces a range of HUD-code manufactured homes, modular buildings, park model RVs and cabins through its network of production facilities. Its offerings cater to both residential and commercial markets, including customizable single- and multi-section homes, workforce and affordable housing solutions, educational and healthcare modules, as well as specialty lodging products for the recreational vehicle and hospitality industries.

Since its founding in 1967, Cavco has grown through strategic investments and acquisitions, expanding its footprint across the United States and into parts of Canada and Mexico.

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