Cavco Industries Inc (CVCO) Q2 2026 Earnings Call Highlights: Strong Revenue Growth and ...

This article first appeared on GuruFocus.

Revenue: $556.5 million, up 9.7% year-over-year. Operating Profit: Increased by 27% year-over-year. Factory-Built Housing Revenue: $535.1 million, up 10% year-over-year. Financial Services Revenue: $21.4 million, up 1.4% year-over-year. Gross Profit Margin: 24.2%, up 130 basis points from last year. Net Income: $52.4 million, up from $43.8 million in the prior year. Diluted EPS: $6.55, up from $5.28 in the prior year. Factory Utilization: Approximately 75%, up from 70% last year. Cash and Restricted Cash: Increased by $31.6 million to $400 million. Share Repurchases: $36 million repurchased during the quarter.

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Release Date: October 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Cavco Industries Inc (NASDAQ:CVCO) reported a 9.7% year-over-year increase in revenue, demonstrating strong financial performance. Operating profit increased by 27% compared to last year's Q2, indicating improved operational efficiency. The company successfully integrated the American Homestar acquisition, which is expected to enhance their market presence. Financial services segment showed significant improvement, with operating profit rising from a loss last year to an $8 million profit this year. Cavco Industries Inc (NASDAQ:CVCO) maintained a strong balance sheet, enabling strategic investments and share repurchases.

Negative Points

The Southeast region experienced a slowdown, with shipments down 4% year-to-date and 10% in July and August compared to last year. Wholesale orders were slightly down, indicating potential challenges in maintaining order volumes. The company faces potential cost pressures from increased tariffs on Canadian lumber, which could impact future profitability. Interest income decreased due to lower interest rates on invested cash balances. The effective income tax rate increased to 22.1% from 20.3% in the prior year, reducing net income growth.

Q & A Highlights

Q: Can you provide more details on how orders are trending into fiscal Q3 and your expectations for production levels during the seasonally slower periods? A: William Boor, CEO: Orders were slightly down in the quarter, which is not unusual for summer. October can be strong, but it tends to slow through the holidays. The market feels balanced, and while the Southeast required some production adjustments, backlogs have stabilized. We are comfortable with the current environment and will adjust as needed.

Story Continues

Q: How is the Texas market performing, especially with the American Homestar acquisition? A: William Boor, CEO: Texas is almost flat year-to-date, but our retail operations there had a strong quarter. The market is supportive, and our retail team is performing well, which positively impacts production.

Q: Can you discuss the impact of tariffs on your costs and margins? A: Allison Aden, CFO: The Q2 tariff impact was about $2 million. We previously estimated a $2 million to $5.5 million quarterly impact if tariffs were fully implemented. Recent increases in Canadian lumber tariffs could add to costs, but the China tariff delay might reduce the impact. We continue to focus on efficiencies to manage these costs.

Q: How is the integration of American Homestar progressing, and what impact do you expect on margins? A: William Boor, CEO: Integration is going well, and American Homestar is folding into our operations smoothly. We expect some synergies over time. Allison Aden, CFO: The acquisition's impact on consolidated gross margins should be minimal due to high marketability and rational inventory levels.

Q: What are your thoughts on the regulatory environment and its potential impact on the industry? A: William Boor, CEO: The HUD code update is positive, allowing for more multi-family units and reducing bureaucracy. Chassis removal is gaining bipartisan support, which could drive innovation. We are optimistic about regulatory changes that could benefit the industry, though the timing is uncertain.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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