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Cavco Industries Reports Fiscal 2025 Second Quarter Results and Announces New $100 Million Stock Repurchase Program

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CVCO
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PHOENIX, Oct. 31, 2024 (GLOBE NEWSWIRE) -- Cavco Industries, Inc. (Nasdaq: CVCO) ("we," "our," the "...

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AI Summary

Cavco's net revenue for Q2 grew to $507 million, up 12.3%. Home sales volume increased by 15.7%, indicating strong demand. Net income per diluted share rose to $5.28 from $4.76 last year. Backlogs reached $276 million, 19% higher than the previous quarter. Cavco approved a $100 million stock repurchase program post-results.

Sentiment Rationale

Strong top-line growth and growing backlogs suggest positive market confidence.

Trading Thesis

Immediate financial results indicate likely short-term stock performance improvements.

Market-Moving

  • Cavco's net revenue for Q2 grew to $507 million, up 12.3%.
  • Home sales volume increased by 15.7%, indicating strong demand.
  • Net income per diluted share rose to $5.28 from $4.76 last year.

Key Facts

  • Cavco's net revenue for Q2 grew to $507 million, up 12.3%.
  • Home sales volume increased by 15.7%, indicating strong demand.
  • Net income per diluted share rose to $5.28 from $4.76 last year.
  • Backlogs reached $276 million, 19% higher than the previous quarter.
  • Cavco approved a $100 million stock repurchase program post-results.

Companies Mentioned

  • CVCO (CVCO)

Earnings

Earnings report shows strong performance metrics which directly affect investor sentiment.

PHOENIX, Oct. 31, 2024 (GLOBE NEWSWIRE) -- Cavco Industries, Inc. (Nasdaq: CVCO) ("we," "our," the "Company" or "Cavco") today announced financial results for the second fiscal quarter ended September 28, 2024. Quarterly Highlights Net revenue was $507 million, up $55 million or 12.3% compared to $452 million in the second quarter of the prior year, primarily on home sales volume growth.Home sales volume is up 15.7% and capacity utilization is up to approximately 70% from approximately 60% in the second quarter of the prior year.Factory-built housing Gross profit as a percentage of Net revenue was 22.9%, compared to 23.2% in the prior year period. Financial services Gross profit as a percentage of Net revenue was 21.8%, compared to Gross profit of 35.9% in the prior year period.Income before income taxes was $55.0 million, up $3.3 million or 6.4% compared to $51.7 million in the prior year period.Net income per diluted share attributable to Cavco common stockholders was $5.28 compared to $4.76 in the prior year quarter.Backlogs totaled $276 million at the end of the quarter, up $44 million, or 19%, from $232 million three months ago, with modules in the backlog growing 20%.Stock repurchases were approximately $44 million in the quarter.On October 29, 2024, the Company's Board of Directors approved an additional $100 million stock repurchase program. Commenting on the quarter, President and Chief Executive Officer Bill Boor said, "Our second quarter results were strong as our plants ramped production in line with order growth. Additionally, our Financial Services segment showed improvement following the previously communicated $4 million in claims resulting from Hurricane Beryl early in the period. He continued, "Our continuing prayers and support are with all those affected by Hurricanes Helene and Milton. Thankfully, our employees and their families remained safe; however, many suffered devastating property damage. While dealing with their personal challenges, our Cavco teammates resumed operations, minimizing any negative home shipment effects. Our thanks go out to all our dedicated co-workers in the region for their grit and commitment to providing homes for our customers. The critical importance of that work has never been more apparent than in the aftermath of these catastrophes." Financial Results  Three Months Ended    ($ in thousands, except revenue per home sold)September 28,2024 September 30,2023 ChangeNet revenue       Factory-built housing$486,343  $434,066  $52,277   12.0%Financial services 21,118   17,964   3,154   17.6% $507,461  $452,030  $55,431   12.3%        Factory-built modules sold 8,119   6,912   1,207   17.5%        Factory-built homes sold (consisting of one or more modules) 4,913   4,248   665   15.7%        Net factory-built housing revenue per home sold$98,991  $102,181  $(3,190)  (3.1)%         Six Months Ended    ($ in thousands, except revenue per home sold)September 28,2024 September 30,2023 ChangeNet revenue       Factory-built housing$944,391  $891,175  $53,216   6.0%Financial services 40,669   36,730   3,939   10.7% $985,060  $927,905  $57,155   6.2%        Factory-built modules sold 15,790   14,318   1,472   10.3%        Factory-built homes sold (consisting of one or more modules) 9,634   8,830   804   9.1%        Net factory-built housing revenue per home sold$98,027  $100,926  $(2,899)  (2.9)%               In the factory-built housing segment, the increase in Net revenue for the three and six months periods was due to higher home sales volume, partially offset by a decrease in revenue per home sold primarily due to a lower proportion of homes sold through our Company-owned stores and, to a lesser extent, product pricing decreases.Financial services segment Net revenue increased for the three and six month periods from higher insurance premiums.  Three Months Ended    ($ in thousands)September 28,2024 September 30,2023 ChangeGross profit         Factory-built housing$111,520  $100,507  $11,013   11.0%Financial services 4,602   6,450   (1,848)  (28.7)% $116,122  $106,957  $9,165   8.6%          Gross profit as % of Net revenue         Consolidated 22.9%  23.7% N/A  (0.8)%Factory-built housing 22.9%  23.2% N/A  (0.3)%Financial services 21.8%  35.9% N/A  (14.1)%          Selling, general and administrative expenses         Factory-built housing$61,440  $56,455  $4,985   8.8%Financial services 5,557   5,051   506   10.0% $66,997  $61,506  $5,491   8.9%          Income from operations         Factory-built housing$50,080  $44,052  $6,028   13.7%Financial services (955)  1,399   (2,354)  (168.3)% $49,125  $45,451  $3,674   8.1%           Six Months Ended    ($ in thousands)September 28,2024 September 30,2023 ChangeGross profit       Factory-built housing$215,030  $213,875  $1,155   0.5%Financial services 4,494   10,961   (6,467)  (59.0)% $219,524  $224,836  $(5,312)  (2.4)%          Gross profit as % of Net revenue         Consolidated 22.3%  24.2% N/A  (1.9)%Factory-built housing 22.8%  24.0% N/A  (1.2)%Financial services 11.1%  29.8% N/A  (18.7)%          Selling, general and administrative expenses         Factory-built housing$121,160  $112,476  $8,684   7.7%Financial services 10,688   10,710   (22)  (0.2)% $131,848  $123,186  $8,662   7.0%          Income from operations         Factory-built housing$93,870  $101,399  $(7,529)  (7.4)%Financial services (6,194)  251   (6,445)  (2,567.7)% $87,676  $101,650  $(13,974)  (13.7)%  In the factory-built housing segment, Gross profit as a percent of Net revenue for the three and six months ended September 28, 2024 decreased primarily due to lower average selling price, partially offset by lower input costs per unit.In the financial services segment, Gross profit and Income from operations for the three and six months ended September 28, 2024 was negatively impacted by high insurance claims from Hurricane Beryl in July and multiple weather events in Texas, as well as the wildfires in New Mexico in the first fiscal quarter of this year.Selling, general and administrative expenses increased for the three months ended September 28, 2024 as a result of increases in variable compensation driven by higher incentive compensation and as a result of increases in expense from acquired retail locations. Selling, general and administrative expenses increased for the six months ended September 29, 2024 as a result of increases in expense from acquired retail locations.  Three Months Ended    ($ in thousands, except per share amounts)September 28,2024 September 30,2023 ChangeInterest Income$5,692  $5,812  $(120)  (2.1)%Net income attributable to Cavco common stockholders$43,815  $41,539  $2,276   5.5%Diluted net income per share$5.28  $4.76  $0.52   10.9%         Six Months Ended    ($ in thousands, except per share amounts)September 28,2024 September 30,2023 ChangeInterest Income$11,203  $10,430  $773   7.4%Net income attributable to Cavco common stockholders$78,244  $87,896  $(9,652)  (11.0)%Diluted net income per share$9.38  $10.05  $(0.67)  (6.7)%                 Items ancillary to our core operations had the following impact on the results of operations:   Three Months Ended Six Months Ended($ in millions)September 28,2024 September 30,2023 September 28,2024 September 30,2023Net revenueUnrealized (loss) gains recognized during the period on securities held in the financial services segment$(0.4) $(0.3) $0.5  $— Selling, general and administrative expenses  Legal and other expense related to the SEC inquiry, including indemnified costs of a former officer —   (0.7)  —   (1.0)Other income, netUnrealized gains on corporate equity securities 0.2   —   0.1   0.1                  Conference Call Details Cavco's management will hold a conference call to review these results tomorrow, November 1, 2024, at 1:00 p.m. (Eastern Time). Interested parties can access a live webcast of the conference call on the Internet at https://investor.cavco.com or via telephone. To participate by phone, please register at here to receive the dial in number and your PIN. An archive of the webcast and presentation will be available for 60 days at https://investor.cavco.com. About Cavco Cavco Industries, Inc., headquartered in Phoenix, Arizona, designs and produces factory-built housing products primarily distributed through a network of independent and Company-owned retailers. We are one of the largest producers of manufactured and modular homes in the United States, based on reported wholesale shipments. Our products are marketed under a variety of brand names including Cavco, Fleetwood, Palm Harbor, Nationwide, Fairmont, Friendship, Chariot Eagle, Destiny, Commodore, Colony, Pennwest, R-Anell, Manorwood, MidCountry and Solitaire. We are also a leading producer of park model RVs, vacation cabins and factory-built commercial structures. Cavco's finance subsidiary, CountryPlace Mortgage, is an approved Fannie Mae and Freddie Mac seller/servicer and a Ginnie Mae mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Our insurance subsidiary, Standard Casualty, provides property and casualty insurance to owners of manufactured homes. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. These forward-looking statements reflect Cavco's current expectations and projections with respect to our expected future business and financial performance, including, among other things: (i) expected financial performance and operating results, such as revenue and gross margin percentage; (ii) our liquidity and financial resources; (iii) our outlook with respect to the Company and the manufactured housing business in general; (iv) the expected effect of certain risks and uncertainties on our business; and (iv) the strength of Cavco's business model. These statements may be preceded by, followed by, or include the words "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "goal," "intend," "likely," "outlook," "plan," "potential," "project," "seek," "target," "can," "could," "may," "should," "would," "will," the negatives thereof and other words and terms of similar meaning. A number of factors could cause actual results or outcomes to differ materially from those indicated by these forward-looking statements. These factors include, among other factors, Cavco's ability to manage: (i) customer demand and the availability of financing for our products; (ii) labor shortages and the pricing, availability, or transportation of raw materials; (iii) the impact of local or national emergencies; (iv) excessive health and safety incidents or warranty and construction claims; (v) increases in cancellations of home sales; (vi) information technology failures or cyber incidents; (vii) our ability to maintain the security of personally identifiable information of our customers, (viii) comply with the numerous laws and regulations applicable to our business, including state, federal, and foreign laws relating manufactured housing, privacy, the internet, and accounting matters; (ix) successfully defend against litigation, government inquiries, and investigations, and (x) other risks and uncertainties indicated from time to time in documents filed or to be filed with the Securities and Exchange Commission (the "SEC") by Cavco. The forward-looking statements herein represent the judgment of Cavco as of the date of this release and Cavco disclaims any intent or obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise. This press release should be read in conjunction with the information included in the Company's other press releases, reports, and other filings with the SEC. Readers are specifically referred to the Risk Factors described in Item 1A of the Company's Annual Report on Form 10-K for the year ended March 30, 2024 as may be updated from time to time in future filings on Form 10-Q and other reports filed by the Company pursuant to the Securities Exchange Act of 1934, which identify important risks that could cause actual results to differ from those contained in the forward-looking statements. Understanding the information contained in these filings is important in order to fully understand Cavco's reported financial results and our business outlook for future periods. CAVCO INDUSTRIES, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except per share amounts)  September 28,2024 March 30,2024ASSETS(Unaudited)  Current assets   Cash and cash equivalents$364,113  $352,687 Restricted cash, current 21,519   15,481 Accounts receivable, net 94,296   77,123 Short-term investments 24,574   18,270 Current portion of consumer loans receivable, net 30,899   20,713 Current portion of commercial loans receivable, net 36,887   40,787 Current portion of commercial loans receivable from affiliates, net 2,894   2,529 Inventories 244,025   241,339 Prepaid expenses and other current assets 82,758   82,870 Total current assets 901,965   851,799 Restricted cash 585   585 Investments 12,845   17,316 Consumer loans receivable, net 20,770   23,354 Commercial loans receivable, net 47,192   45,660 Commercial loans receivable from affiliates, net 3,933   2,065 Property, plant and equipment, net 225,121   224,199 Goodwill 121,969   121,934 Other intangibles, net 27,445   28,221 Operating lease right-of-use assets 36,378   39,027 Total assets$1,398,203  $1,354,160 LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities   Accounts payable$39,252  $33,531 Accrued expenses and other current liabilities 272,228   239,736 Total current liabilities 311,480   273,267 Operating lease liabilities 32,485   35,148 Other liabilities 7,529   7,759 Deferred income taxes 4,732   4,575 Stockholders' equity   Preferred stock, $0.01 par value; 1,000,000 shares authorized; No shares issued or outstanding —   — Common stock, $0.01 par value; 40,000,000 shares authorized; Issued 9,417,332 and 9,389,953 shares, respectively; Outstanding 8,267,797 and 8,320,718, respectively 94   94 Treasury stock, at cost; 1,149,535 and 1,069,235 shares, respectively (348,406)  (274,693)Additional paid-in capital 284,995   281,216 Retained earnings 1,105,371   1,027,127 Accumulated other comprehensive loss (77)  (333)Total stockholders' equity 1,041,977   1,033,411 Total liabilities and stockholders' equity$1,398,203  $1,354,160  CAVCO INDUSTRIES, INC.CONSOLIDATED STATEMENTS OF INCOME(Dollars in thousands, except per share amounts)(Unaudited)  Three Months Ended Six Months Ended September 28,2024 September 30,2023 September 28,2024 September 30,2023Net revenue$507,461  $452,030  $985,060  $927,905 Cost of sales 391,339   345,073   765,536   703,069 Gross profit 116,122   106,957   219,524   224,836 Selling, general and administrative expenses 66,997   61,506   131,848   123,186 Income from operations 49,125   45,451   87,676   101,650 Interest income 5,692   5,812   11,203   10,430 Interest expense (125)  (257)  (215)  (523)Other income, net 258   655   147   781 Income before income taxes 54,950   51,661   98,811   112,338 Income tax expense (11,135)  (10,088)  (20,567)  (24,354)Net income 43,815   41,573   78,244   87,984 Less: net income attributable to redeemable noncontrolling interest —   34   —   88 Net income attributable to Cavco common stockholders$43,815  $41,539  $78,244  $87,896         Net income per share attributable to Cavco common stockholders       Basic$5.33  $4.80  $9.48  $10.15 Diluted$5.28  $4.76  $9.38  $10.05 Weighted average shares outstanding       Basic 8,226,298   8,656,537   8,256,664   8,663,430 Diluted 8,305,326   8,731,419   8,337,671   8,742,734  CAVCO INDUSTRIES, INC.OTHER OPERATING DATA(Dollars in thousands)(Unaudited)  Three Months Ended Six Months Ended September 28,2024 September 30,2023 September 28,2024 September 30,2023Capital expenditures$4,905  $4,287  $9,819  $8,470 Depreciation$4,375  $4,275  $8,744  $8,449 Amortization of other intangibles$385  $393  $777  $785                  For additional information, contact: Mark FuslerCorporate Controller and Investor Relationsinvestor_relations@cavco.com Phone: 602-256-6263On the Internet: www.cavcoindustries.com

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