Cavco Industries NASDAQ: CVCO reported higher fourth-quarter revenue and profit compared with the prior year, while management said orders strengthened late in the period and backlogs improved heading into the new fiscal year.
On the company’s fiscal fourth-quarter earnings call, President and CEO Bill Boor said Cavco shipped an all-time high 20,842 homes in fiscal 2026, despite total industry HUD shipments being down slightly. He said operating income for the year rose 14% when excluding a $10 million non-cash write-off recorded in the prior year.
“In the broader picture, our peak-to-peak ability to deliver homes is up significantly due to the continuous improvement in our plants, the major plant modernization projects we've completed in recent years, and the acquisition of American Homestar,” Boor said.
Fourth-Quarter Revenue Rises From Prior Year
Net revenue for the fiscal fourth quarter was $550.1 million, up 8.2% from $508.4 million in the prior-year period. Sequentially, revenue declined by $30.9 million due to lower units sold and lower average revenue per home sold.
Within the factory-built housing segment, net revenue was $528 million, up 8.2% from $487.9 million a year earlier. The company said the increase was driven primarily by the addition of American Homestar and a 7.8% increase in legacy average revenue per home sold, partly offset by an 8.9% decline in legacy home units sold.
Financial services revenue was $22.1 million, up 7.7% from $20.5 million in the year-ago quarter. The company cited higher loan sales after securing a long-term investor agreement, along with the addition of American Homestar Financial Services.
Consolidated gross margin was 23.1% of revenue, compared with 22.8% a year earlier. Factory-built housing gross margin declined to 21.2% from 22.3%, reflecting higher costs per unit sold. Financial services gross margin rose to 69.4% from 36.8%, driven by rate increases, underwriting changes and higher loan sales.
Selling, general and administrative expenses were $75.6 million, or 13.7% of revenue, compared with $77.5 million, or 15.2% of revenue, a year earlier. The prior-year period included the $10 million trade name write-off related to the company’s rebranding project.
Pre-tax profit increased 27.1% to $54.6 million from $42.9 million. Net income was $42.5 million, compared with $36.3 million a year earlier, and diluted earnings per share were $5.42, up from $4.47.
Orders Pick Up in March After Weather-Impacted Start
Boor said the quarter began slowly due to unusual weather across southern states, which caused lost production days and reduced market activity in January and early February. Capacity utilization was approximately 70% for the quarter.
Orders improved sharply in March, expanding backlogs late in the quarter. Boor said Cavco ended the period with nearly 25% more floors in backlog than at the start of the quarter, with five to seven weeks of backlog.
In response to analyst questions, Boor said the March order improvement occurred across every region the company tracks, with some of the strongest relative results in the Northwest, Southwest and Texas. He said April order rates remained near March levels, and backlog weeks improved across all regions through April.
“It wasn't just a blip,” Boor said. “We did see it pick up.”
Boor said stronger backlogs give the company an opportunity to raise production at plants that had been constrained by lower order levels. He said Cavco does not aim to build unusually high backlogs, but wants to produce at the level of incoming orders.
American Homestar Integration and Financial Services Progress
Boor said Cavco has completed much of the operational integration of American Homestar, with remaining work focused largely on systems integration. He reiterated that the company’s internal estimate of tangible cost synergies remains above $10 million annually, and said Cavco was already “very close to that pace” in the fourth quarter.
Management said additional opportunities remain, primarily in SG&A and purchasing savings.
In financial services, Boor said lending and insurance both contributed to a strong quarter. Cavco reached a new agreement with a purchaser of home-only loans, allowing the company to increase originations and sell some loans off the balance sheet.
Chief Accounting Officer Paul Bigbee said the forward-flow agreement includes a minimum commitment of about $25 million of originated loans per quarter over a two-year period. He said the economics are consistent with existing gain-on-sale transactions and described the agreement as a way to increase lending capacity in a capital-efficient manner rather than materially expand margins.
New Arizona Plant Planned for 2027
Cavco also discussed its recently announced groundbreaking for a new plant in El Mirage, Arizona. Boor said the project is part of a broader Southwest operations strategy intended to create growth and optionality in the region.
The plant is expected to be operational in mid-calendar 2027. Boor described it as a high-capacity, state-of-the-art facility in the Phoenix area, with one production line initially and infrastructure for a second line in the future.
Asked why Cavco is adding capacity while national utilization is around 70%, Boor said the decision was based on a long-term view of the national housing shortage and the role of factory-built housing.
“We made this decision because there's a $4 million-$6 million housing unit deficit in the country, and we think factory-built housing is a solution,” Boor said.
The company did not disclose the specific investment amount for the new plant. Management said it does not expect a noticeable margin drag as the facility ramps, citing Cavco’s experience bringing on capacity in prior projects.
Capital Allocation and Market Outlook
Cavco generated $67.4 million in operating cash flow during the quarter. Cash and restricted cash increased by $15.1 million to $257.6 million. Investing activities used $22.6 million, primarily for plant capital expenditures, while financing activities used $30 million, driven by share repurchases.
For fiscal 2026, Boor said Cavco deployed more than $360 million, including:
- $160 million for share repurchases;
- $173 million to acquire American Homestar;
- $35 million to expand and modernize existing plants.
The board recently increased Cavco’s share repurchase authorization by $150 million, leaving about $218 million available for future buybacks.
Management also addressed potential cost pressures. Executive Vice President and CFO Allison Aden said tariffs are having an upward impact on cost of goods sold, though the amount is difficult to estimate. She said lumber had recently begun to move higher and that steel producers were announcing price increases and allocation limitations.
Boor also discussed federal housing legislation passed by the House, saying it reflected bipartisan recognition of manufactured housing’s role in addressing supply constraints. He cited potential benefits related to product innovation, regulatory clarity, financing availability and zoning, while cautioning that the effects would take time to develop.
In closing, Boor said uncertainty remains elevated and that Cavco will continue to focus on reacting quickly to changing conditions. Still, he said the company is encouraged by recent order and backlog trends and remains focused on setting additional shipment records in the future.
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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