Exchange: NASDAQ | Sector: Consumer Cyclical | Industry: Residential Construction
Q3 2025
Published: Jan 31, 2025
Earnings Highlights
Revenue of $522.04M up 16.9% year-over-year
EPS of $6.90 increased by 61.7% from previous year
Gross margin of 24.9%
Net income of 56.46M
"William Boor: 'We've made significant changes to underwriting to manage claims cost, and we implemented needed premium increases.'" - William Boor, CEO
Cavco Industries Inc (CVCO) delivered substantial financial results in Q3 2025, with net revenues reaching $522 million, reflecting a 16.8% increase year-over-year. The company achieved a notable EPS of $6.90, a 30% sequential jump driven by improved performance in both its Financial Services and Factory-built Housing segments. The management highlighted a strategic decision to ramp up production in anticipation of ongoing market recovery despite the seasonal challenges typical for this quarter. With healthy backlogs and enhanced operational efficiencies, Cavco is well-positioned for continued growth as the market stabilizes heading into 2025.
Key Performance Indicators
Revenue
522.04M
QoQ: 2.87% | YoY:16.85%
Gross Profit
129.95M
24.89% margin
QoQ: 11.91% | YoY:26.10%
Operating Income
63.97M
QoQ: 30.22% | YoY:60.98%
Net Income
56.46M
QoQ: 28.86% | YoY:56.90%
EPS
6.97
QoQ: 30.77% | YoY:61.72%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $522 million (YoY: +16.8%, QoQ: +2.9%)
**Gross Profit:** $129.95 million (Gross Margin: 24.9%, YoY: +180 bps)
Cavco posted strong revenue growth backed by a 21.6% increase in homes sold, although average revenue per home dipped by 3.5%. Noteworthy improvement in gross margins was attributed to better fixed overhead leverage and reductions in input costs.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
522.04M
16.85%
2.87%
Gross Profit
129.95M
26.10%
11.91%
Operating Income
63.97M
60.98%
30.22%
Net Income
56.46M
56.90%
28.86%
EPS
6.97
61.72%
30.77%
Key Financial Ratios
currentRatio
3.08
grossProfitMargin
24.9%
operatingProfitMargin
12.3%
netProfitMargin
10.8%
returnOnAssets
4.07%
returnOnEquity
5.34%
debtEquityRatio
0.03
operatingCashFlowPerShare
$4.67
freeCashFlowPerShare
$3.99
priceToBookRatio
3.4
priceEarningsRatio
15.89
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Key Management Insights
- Market Trends: CEO Bill Boor noted, 'This quarter showed strong execution across our operations, supported by continued forward momentum in the market.'
- Production Strategy: 'Exiting the third quarter with a healthy aggregate backlog and a higher system production rate positions us very well for the coming quarters.'
- Operational Adjustments: CFO Allison Aden emphasized successful underwriting changes leading to increased profit margins in the Financial Services segment, stating, 'The Q3 2025 performance improved significantly due to higher premiums earned and lower claim volume.'
Management expressed confidence in upcoming demand trends, noting a 14% year-over-year shipment gain in hurricane-impacted states, reinforcing operational resilience.
William Boor: 'We've made significant changes to underwriting to manage claims cost, and we implemented needed premium increases.'
â William Boor, CEO
Allison Aden: 'Consolidated gross margins in the third fiscal quarter as a percentage of net revenue was 24.9%, up 180 basis points from 23.1% in the same period last year.'
â Allison Aden, CFO
Forward Guidance
### Future Outlook
Expectations remain positive heading into the spring selling season, with management anticipating ongoing stabilization in demand. The company has adjusted its operations to adapt to market conditions, supporting production increases ahead of demand shifts. Management cited the importance of keeping production line efficiency high, indicating, 'We made this decision to press forward to higher production rates knowing that would involve utilizing some of the backlog.' Key economic factors and consumer demand indicators will be crucial as the company navigates potential market uncertainties. Investors should monitor the cash flow impact of continued share repurchase activity, as Cavco has repurchased $42 million in shares this quarter, reflecting confidence in financial stability and shareholder returns.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CVCO Focus
24.89%
12.30%
5.34%
15.89%
MTH
24.50%
15.10%
3.90%
4.74%
IBP
33.80%
13.30%
9.58%
25.12%
TMHC
25.00%
15.60%
4.40%
7.28%
LEGH
51.70%
34.60%
3.30%
10.45%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Cavco Industries presents a compelling investment case, marked by its strong financial performance and proactive management strategies. With a positive outlook for demand recovery and strategic operational enhancements, the company is positioned to leverage its market strength for sustainable long-term growth. However, investors should remain vigilant regarding macroeconomic indicators and competitive pressures in the residential construction sector.
Key Investment Factors
Growth Potential
Cavco exhibits strong growth potential driven by increased home sales and improvements in operational efficiency. The engagement with digital marketing strategies is expected to enhance customer outreach and sales conversions.
Profitability Risk
Primary risks include potential economic downturns affecting housing demand and increasing competition in the manufactured housing market. Weather-related disruptions also pose an operational risk, particularly in the Financial Services segment.
Financial Position
Cavco's balance sheet remains robust with total assets of $1.39 billion and total liabilities of $329 million, positioning it for strategic growth and investments. Current ratio of 3.08 indicates strong liquidity.
SWOT Analysis
Strengths
Strong brand recognition in manufactured housing
Robust cash flow generation
Diverse product offerings including financial services
Weaknesses
Higher average costs and potential for margin compression
Dependence on housing market stability
Seasonality in production and sales
Opportunities
Growth in demand for affordable housing solutions
Investment in digital marketing strategies to enhance sales
Potential M&A opportunities to strengthen market position