Cavco Industries (CVCO) investor relations material

Executive summary

• Q3 net revenue rose 11.3% year-over-year to $581 million, driven by the American Homestar acquisition and higher home sales volume and prices.

• The American Homestar acquisition contributed $42 million in revenue and 343 homes sold, with integration progressing well and synergy estimates now above $10 million annually, about half realized by Q4.

• Net income was $44.1 million, down 22% year-over-year, with diluted EPS at $5.58, mainly due to higher tax rates, deal costs, and increased SG&A from acquisition-related expenses.

• Backlogs at quarter-end totaled $160 million, representing 4-6 weeks of production, positioning for a potential spring uptick.

Financial highlights

• Factory-built housing segment revenue increased 11.5% to $558.5 million; financial services revenue rose 6.2% to $22.5 million.

• Factory-built housing gross margin was 21.7%, down from 23.6% a year ago; consolidated gross margin fell to 23.4% from 24.9% year-over-year.

• Net income was $44.1 million, down from $56.5 million; diluted EPS was $5.58 versus $6.90 last year.

• Pre-tax profit declined 16.9% to $57.6 million.

• SG&A expenses increased due to American Homestar integration and $2.9 million in deal costs.

Outlook and guidance

• Backlogs are stable, and production rates have been maintained, with flexibility to increase if spring demand materializes.

• Management is optimistic for the spring selling season, citing healthy leading indicators and monitoring for potential production increases.

• Integration costs from the Homestar deal are expected to decline, with positive synergy impacts increasing in Q4.

• Tariffs and rising input costs, especially for lumber and steel, are expected to pressure margins in coming quarters.