What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-04 compared with 2025-01-31 · 33 added, 72 removed, 149 unchanged (41% of the section changed)

33 unchanged sentences

We are one of the largest producers of manufactured 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.

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Company and Industry Outlook

According to data reported by the Manufactured Housing Institute, industry home shipments for the calendar year through November 2024 were 96,240, an increase of 16.3% compared to 82,784 shipments in the same calendar period last year.

According to data reported by the Manufactured Housing Institute, industry home shipments for the calendar year through May 2025 were 44,927, an increase of 5.3% compared to 42,650 shipments in the same calendar period last year.

The manufactured h ousing industry offers solutions to the housing crisis with lower average price per square foot than a site-built home and the comparatively lower cost associated with manufactured home ownership, which remains competitive with rental housing.

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These shortages may also result in extended order backlogs, delays in the delivery of homes and reduced gross margins from home sales.

Our backlog at December 28, 2024 was $224 million compared to $276 million at September 28, 2024, a decrease of $52 million, and up $64 million compared to $160 million at December 30, 2023.

Our backlog at June 28, 2025 was $200 million compared to $197 million at March 29, 2025, an increase of $3 million, and down $32 million compared to $232 million at June 29, 2024.

While it is difficult to predict the future of housing demand, employee availability, supply chain and Company performance and operations, maintaining an appropriately sized and well-trained workforce is key to meeting demand.

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Three Months Ended

($ in thousands, except revenue per home sold) December 28,

2024 December 30,

Factory-built housing $ 500,860 $ 426,939 $ 73,921 17.3 %

Financial services 21,180 19,830 1,350 6.8 %

$ 522,040 $ 446,769 $ 75,271 16.8 %

Factory-built homes sold

by Company-owned retail sales centers 1,075 1,026 49 4.8 %

to independent retailers, builders, communities and developers 3,984 3,134 850 27.1 %

5,059 4,160 899 21.6 %

Net factory-built housing revenue per home sold $ 99,004 $ 102,630 $ (3,626) (3.5) %

Nine Months Ended

($ in thousands, except revenue per home sold) December 28,

2024 December 30,

($ in thousands, except revenue per home sold) June 28,

2025 June 29,

Factory-built housing $ 535,694 $ 458,048 $ 77,646 17.0 %

6 unchanged sentences

Net factory-built housing revenue per home sold $ 98,910 $ 97,024 $ 1,886 1.9 %

Factory-built housing Net revenue increased for the three and nine months ended December 28, 2024 due to higher home sales volume, partially offset by a decrease in Net revenue per home sold primarily caused by a lower proportion of homes sold through our Company-owned stores.

Factory-built housing Net revenue increased for the three months ended June 28, 2025 due to higher home sales volume and an increase in Net revenue per home sold.

Net factory-built housing revenue per home sold is a volatile metric dependent upon several factors.

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Changes in the number of modules per home, the selection of different home types/models and optional home upgrades create changes in product mix, also causing fluctuations in this metric.

For the three and nine months ended December 28, 2024, Financial services Net revenue increased primarily due to higher insurance premiums.

For the three months ended June 28, 2025, Financial services Net revenue increased primarily due to higher insurance premiums.

Three Months Ended

($ in thousands) December 28,

2024 December 30,

Factory-built housing $ 118,193 $ 95,756 $ 22,437 23.4 %

Financial services 11,757 7,295 4,462 61.2 %

$ 129,950 $ 103,051 $ 26,899 26.1 %

Gross profit as % of Net revenue

Consolidated 24.9 % 23.1 % N/A 1.8 %

Factory-built housing 23.6 % 22.4 % N/A 1.2 %

Financial services 55.5 % 36.8 % N/A 18.7 %

Nine Months Ended

($ in thousands) December 28,

2024 December 30,

($ in thousands) June 28,

2025 June 29,

Factory-built housing $ 120,845 $ 103,510 $ 17,335 16.7 %

Financial services 16,251 18,256 (2,005) (11.0) %

Financial services 8,661 (108) 8,769 NM

$ 129,506 $ 103,402 $ 26,104 25.2 %

3 unchanged sentences

Financial services 40.9 % (0.6) % N/A 41.5 %

Factory-built housing Gross profit as a percentage of Net revenue for the three months increased due to lower input costs per unit and efficiencies gained on increased production, partially offset by lower average selling price.

Gross profit housing in dollars for the nine months decreased due to lower average selling price, partially offset by lower input costs per unit.

Financial services Gross profit in dollars and as a percentage of Financial services Net revenue for the three months increased due to higher insurance premiums and lower claim losses.

For the nine months, Gross profit in dollars and as a percentage of Net revenue decreased due to higher expenses from higher storm and fire activity, partially offset by higher insurance premiums.

Factory-built housing Gross profit for the three months ended June 28, 2025 increased due to higher sales volume.

Gross profit as a percentage of Net revenue for the three months was flat as increased Net revenue per home sold was offset by increased input costs driven largely by increased material costs.

Financial services Gross profit in dollars and as a percentage of Financial services Net revenue for the three months increased due to higher insurance premiums, lower claim losses and reduced costs from improved underwriting guidelines.

Selling, General and Administrative Expenses

Three Months Ended

($ in thousands) December 28,

2024 December 30,

Factory-built housing $ 60,409 $ 57,854 $ 2,555 4.4 %

Financial services 5,571 5,458 113 2.1 %

$ 65,980 $ 63,312 $ 2,668 4.2 %

Selling, general and administrative expenses as % of Net revenue 12.6 % 14.2 % N/A (1.6) %

Nine Months Ended

($ in thousands) December 28,

2024 December 30,

($ in thousands) June 28,

2025 June 29,

Factory-built housing $ 63,154 $ 59,720 $ 3,434 5.8 %

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Selling, general and administrative expenses as % of Net revenue 12.4 % 13.6 % N/A (1.2) %

Factory-built housing Selling, general and administrative expenses increased for the three and nine months ended December 28, 2024 as a result of increases in variable compensation driven by higher incentive compensation in the third quarter and as a result of increases in compensation related to acquired retail locations for both periods.

Factory-built housing Selling, general and administrative expenses increased for the three months ended June 28, 2025 as a result of variable compensation driven by higher incentive compensation due to higher earnings compared to the prior year period.

Financial services Selling, general and administrative expenses for the three months increased primarily due to increases in compensation year over year.

For the nine months ended it was essentially flat.

Other Components of Net Income

Three Months Ended

($ in thousands) December 28,

2024 December 30,

Interest income $ 5,353 $ 5,234 $ 119 2.3 %

Interest expense (155) (842) (687) (81.6) %

Other income (expense), net 168 (224) 392 175.0 %

Income tax expense (12,874) (7,920) 4,954 62.6 %

Effective tax rate 18.6 % 18.0 % N/A 0.6 %

Nine Months Ended

($ in thousands) December 28,

2024 December 30,

($ in thousands) June 28,

2025 June 29,

Interest income $ 5,103 $ 5,511 $ (408) (7.4) %

Interest expense (164) (90) 74 82.2 %

Other income, net 315 557 (242) 43.4 %

Other expense, net — (111) 111 100.0 %

Income tax expense (13,655) (9,432) 4,223 44.8 %

2 unchanged sentences

Interest expense consists primarily of interest related to finance leases.

Other income (expense), net primarily consists of realized and unrealized gains and losses on corporate investments and gains and losses from the sale of property, plant and equipment.

Income tax expense increased for both periods ended compared to the prior year periods primarily due to higher profit before income taxes.

Other (expense), net primarily consists of realized and unrealized gains and losses on corporate investments and gains and losses from the sale of property, plant and equipment.

Income tax expense increased compared to the prior year period due to higher profit before income taxes.

Liquidity and Capital Resources

We believe that cash and cash equivalents at December 28, 2024, together with cash flow from operations, will be sufficient to fund our operations, cover our obligations and provide for growth for the next 12 months and into the foreseeable future.

We believe that cash and cash equivalents at June 28, 2025, together with cash flow from operations, will be sufficient to fund our operations, cover our obligations, provide for our planned acquisition of American Homestar and provide for growth for the next 12 months and into the foreseeable future.

We maintain cash in U.S.

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Such transactions may require the use of cash and have other impacts on our liquidity and capital resources.

We believe we have sufficient liquid resources including our $75 million Revolving Credit Facility, which may be increased from time to time through additional term facilities up to an aggregate amount of $75 million, and no amounts are outstanding.

We believe we have sufficient liquid resources including our $75 million Revolving Credit Facility, which may be increased from time to time through additional term facilities by up to an aggregate amount of $75 million up to $150 million.

No amounts are currently outstanding.

Depending on our operating results and strategic opportunities, we may choose to seek additional or alternative sources of financing in the future.

5 unchanged sentences

We believe that stockholders' equity at the insurance subsidiary remains sufficient and do not believe that the ability to pay ordinary dividends to Cavco at anticipated levels will be restricted per state regulations.

The following is a summary of the Company's cash flows for the nine months ended December 28, 2024 and December 30, 2023, respectively:

Nine Months Ended

(in thousands) December 28,

2024 December 30,

The following is a summary of the Company's cash flows for the three months ended June 28, 2025 and June 29, 2024, respectively:

Three Months Ended

(in thousands) June 28,

2025 June 29,

2024 $ Change

4 unchanged sentences

Cash, cash equivalents and restricted cash at end of the period $ 368,424 $ 378,937 $ (10,513)

Net cash provided by operating activities decreased primarily from increases in working capital, primarily from increases in Inventory and Accounts receivable.

This was partially offset by higher Net income and changes in Accounts payable, accrued expenses due primarily to increased customer deposits and volume rebates due to customers.

Consumer loan originations decreased $20.1 million to $54.2 million for the nine months ended December 28, 2024 from $74.3 million for the nine months ended December 30, 2023, and proceeds from sales of consumer loans decreased $77.3 million to $4.4 million for the nine months ended December 28, 2024 from $81.8 million for the nine months ended December 30, 2023.

Commercial loan originations increased $4.0 million to $87.5 million for the nine months ended December 28, 2024 from $83.5 million for the nine months ended December 30, 2023.

Proceeds from the collection on commercial loans provided $85.0 million this year, compared to $87.6 million in the prior year, a net decrease of $2.6 million.

The change in Net cash used in investing activities is primarily due to the prior year period including payments for acquisitions that did not repeat in the current year.

Net cash provided by operating activities increased primarily from higher Net income, partially offset by changes in Accounts receivable and Inventory due to increased working capital needs on higher revenue and reduced cash provided by Accounts payable, accrued expenses and other liabilities compared to the prior year due largely to lower insurance loss reserves in the current period.

Consumer loan originations decreased $5.6 million to $15.2 million for the three months ended June 28, 2025 from $20.8 million for the three months ended June 29, 2024, and proceeds from consumer loans decreased 0.7 million to $13.8 million for the three months ended June 28, 2025 from $14.5 million for the three months ended June 29, 2024.

Commercial loan originations increased $15.6 million to $42.4 million for the three months ended June 28, 2025 from $26.8 million for the three months ended June 29, 2024.

Proceeds from the collection on commercial loans provided $34.5 million this year, compared to $22.4 million in the prior year, a net increase of $12.1 million.

The change in Net cash used in investing activities is primarily due to an increase in cash paid for property plant and equipment in the current year.

The change in Net cash used in financing activities was primarily due to the repurchase of more shares of common stock and at a higher average daily stock price.

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Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates during the nine months ended December 28, 2024, as compared to those disclosed in Part II, Item 7 of the Form 10-K, under the heading "Critical Accounting Estimates," which provides a discussion of the critical accounting estimates that management believes are critical to the Company's operating results or may affect significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements.

There have been no significant changes to our critical accounting estimates during the three months ended June 28, 2025, as compared to those disclosed in Part II, Item 7 of the Form 10-K, under the heading "Critical Accounting Estimates," which provides a discussion of the critical accounting estimates that management believes are critical to the Company's operating results or may affect significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis