Executive Summary
Cavco Industries Inc (CVCO) delivered robust results for Q2 2025, showing a revenue increase of 12.3% year-over-year to $507.5 million, largely driven by strong sales in the factory-built housing segment and financial services. Despite challenges posed by recent hurricanes affecting operations, the company reported a solid backlog growth of approximately 20% and a notable capacity utilization increase to 70%. Net income rose to $43.8 million, reflecting a 5.5% increase compared to the prior year, showcasing effective cost management and operational efficacy. Management expressed optimism about recovering market conditions, especially in the Southeast, and reinforced their robust shareholder return strategy, including $44 million in share buybacks this quarter.
Key Performance Indicators
Key Insights
**Revenue:** $507.5 million (YoY increase of 12.3%, QoQ increase of 6.25%)
**Gross Profit:** $116.1 million, with a gross margin of 22.9% (down 80 basis points YoY)
**Operating Income:** $49.1 million, reflecting an operating margin of 9.8% (YoY increase of 8.08%, QoQ increase of 27.43%)
**Net Income:** $43.8 million, or $5.28 per diluted share (YoY increase of 5.5%, EPS growth of 11.04%)
**Cash Flow from Operations:** $54.7 million, with free cash flow of $49.8 million.
**Capacity Utilizat...
Financial Highlights
Revenue: $507.5 million (YoY increase of 12.3%, QoQ increase of 6.25%)
Gross Profit: $116.1 million, with a gross margin of 22.9% (down 80 basis points YoY)
Operating Income: $49.1 million, reflecting an operating margin of 9.8% (YoY increase of 8.08%, QoQ increase of 27.43%)
Net Income: $43.8 million, or $5.28 per diluted share (YoY increase of 5.5%, EPS growth of 11.04%)
Cash Flow from Operations: $54.7 million, with free cash flow of $49.8 million.
Capacity Utilization: Increased from 65% to 70%, running pace at closer to 75% excluding downtime.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
507.46M |
12.26% |
6.25% |
| Gross Profit |
116.12M |
8.57% |
12.30% |
| Operating Income |
49.13M |
8.08% |
27.43% |
| Net Income |
43.82M |
5.48% |
27.26% |
| EPS |
5.33 |
11.04% |
28.43% |
Key Financial Ratios
operatingProfitMargin
9.68%
operatingCashFlowPerShare
$6.65
freeCashFlowPerShare
$6.05
Management Commentary
1. Market Resilience: CEO Bill Boor highlighted the impact of hurricanes, stating: "Hurricane Helene resulted in delayed net revenue of approximately $4 million from the second to third quarter because conditions prevented us from completing shipments of finished homes." The company experienced minor operational disruptions but managed to minimize downtime.
2. Capacity and Demand Trends: The management noted a strong increase in backlogs, indicating optimistic future demand: "Units shipped in the quarter were up 15.7% over last year's quarter... our backlogs growing approximately 20%."
3. Shareholder Returns: CFO Allison Aden mentioned, "During the quarter, we repurchased nearly $44 million under our Board authorized share repurchase program, showing commitment to enhancing shareholder value."
*"Hurricane Helene resulted in delayed net revenue of approximately $4 million from the second to third quarter because conditions prevented us from completing shipments of finished homes."*
â Bill Boor, CEO
*"There's certainly risk and uncertainty in the macro environment, but based on what we're seeing in the market and the undeniable need for our products, we're optimistic about demand and we're pressing forward to provide more homes."*
â Bill Boor, CEO
Forward Guidance
Management's guidance indicates cautious optimism going forward, especially in light of improved market conditions. CEO Boor stated, *"There's certainly risk and uncertainty in the macro environment, but based on what we're seeing in the market and the undeniable need for our products, we're optimistic about demand and we're pressing forward to provide more homes."* Investors are advised to monitor production capabilities in the Southeast and the recovery trajectory post-hurricane disruptions, as well as ongoing developments in housing regulations impacting manufactured home sales.