What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-02 compared with 2025-10-31 · 50 added, 46 removed, 173 unchanged (36% of the section changed)

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Our insurance subsidiary, Standard Casualty Company, provides property and casualty insurance primarily to owners of manufactured homes.

As of September 27, 2025 we operate a total of 31 homebuilding production lines with domestic locations in Millersburg and Woodburn, Oregon;

We operate a total of 33 homebuilding production lines with domestic locations in Millersburg and Woodburn, Oregon;

Riverside, California;

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Duncan, Oklahoma;

Austin, Fort Worth, Seguin and Waco, Texas;

Austin, Fort Worth (two lines), Lancaster, Seguin and Waco, Texas;

Montevideo, Minnesota;

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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 August 2025 were 70,757, an increase of 3.2% compared to 68,550 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 November 2025 were 95,947, a decrease of 0.3% compared to 96,240 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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We continue to monitor and react to inflation in the cost of these materials by maintaining a focus on our product pricing in response to higher materials costs, but such product pricing increases may lag behind the escalation of such costs.

From time to time and to varying degrees, we may experience shortages in the availability of materials and/or labor in the markets served.

From time to time and to varying degrees, we may experience shortages in the availability of materials and/or labor in the markets in which we operate.

Availability of these inputs has not caused significant production halts in the current period, but we have experienced periodic shutdowns in other periods and shortages of primary building materials have caused production inefficiencies as we have needed to change processes in response to the delay in materials.

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 September 27, 2025 was $210 million compared to $197 million at March 29, 2025, an increase of $13 million, and down $66 million compared to $276 million at September 28, 2024.

Our backlog at December 27, 2025 was $160 million compared to $197 million at March 29, 2025, a decrease of $37 million, and a decrease of $64 million compared to $224 million at December 28, 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) September 27,

2025 September 28,

($ in thousands, except revenue per home sold) December 27,

2025 December 28,

Factory-built housing $ 558,497 $ 500,860 $ 57,637 11.5 %

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Net Factory-built housing revenue per home sold $ 106,971 $ 99,004 $ 7,967 8.0 %

Six Months Ended

($ in thousands, except revenue per home sold) September 27,

2025 September 28,

Nine Months Ended

($ in thousands, except revenue per home sold) December 27,

2025 December 28,

Factory-built housing $ 1,629,308 $ 1,445,251 $ 184,057 12.7 %

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Net Factory-built housing revenue per home sold $ 103,023 $ 98,363 $ 4,660 4.7 %

Factory-built housing Net revenue increased for the three and six months ended September 27, 2025 due to higher home sales volume and an increase in Net revenue per home sold.

Factory-built housing Net revenue increased for the three and nine months ended December 27, 2025 due to higher home sales volume and an increase in Net revenue per home sold.

The American Homestar acquisition contributed $42.0 million in the current year periods.

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 six months ended September 27, 2025, Financial services Net revenue increased primarily due to higher insurance premiums.

For the three and nine months ended December 27, 2025, Financial services Net revenue increased primarily due to higher insurance premiums.

Three Months Ended

($ in thousands) September 27,

2025 September 28,

($ in thousands) December 27,

2025 December 28,

Factory-built housing $ 121,255 $ 118,193 $ 3,062 2.6 %

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Financial services 65.2 % 55.5 % N/A 9.7 %

Six Months Ended

($ in thousands) September 27,

2025 September 28,

Nine Months Ended

($ in thousands) December 27,

2025 December 28,

Factory-built housing $ 364,593 $ 333,223 $ 31,370 9.4 %

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Financial services 54.2 % 26.3 % N/A 27.9 %

Factory-built housing Gross profit and Gross profit as a percentage of Net revenue for the three and six months ended September 27, 2025 increased due to higher sales volume and an increase in Net revenue per home sold.

Financial services Gross profit in dollars and as a percentage of Financial services Net revenue for the three and six months ended September 27, 2025 increased due to higher insurance premiums and lower claim losses.

In the Factory-built housing segment, Gross profit for the three and nine months ended December 27, 2025 in creased due to an increase in home sales volume and Net revenue per home sold, partially offset by higher costs per unit.

Financial services Gross profit in dollars and as a percentage of Financial services Net revenue increased for the three and nine months ended December 27, 2025 due to higher insurance premiums and lower claim losses.

The claim loss reduction resulted from policy underwriting improvements and severe weather events in the prior year periods.

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Three Months Ended

($ in thousands) September 27,

2025 September 28,

($ in thousands) December 27,

2025 December 28,

Factory-built housing $ 74,162 $ 60,409 $ 13,753 22.8 %

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Selling, general and administrative expenses as % of Net revenue 14.0 % 12.6 % N/A 1.4 %

Six Months Ended

($ in thousands) September 27,

2025 September 28,

Nine Months Ended

($ in thousands) December 27,

2025 December 28,

Factory-built housing $ 203,073 $ 181,569 $ 21,504 11.8 %

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Selling, general and administrative expenses as % of Net revenue 13.1 % 13.1 % N/A — %

Factory-built housing Selling, general and administrative expenses increased for the three and six months ended September 27, 2025 as a result of variable compensation driven by higher incentive compensation due to higher earnings compared to the prior year periods.

Financial services Selling, general and administrative expenses for the three and six months ended September 27, 2025 increased primarily due to increases in compensation year over year.

Factory-built housing Selling, general and administrative expenses increased for the three and nine months ended December 27, 2025 due primarily to the addition of American Homestar, which added $6.9 million of incremental expense, as well as acquisition related deal costs of $2.9 million.

For the nine months ended December 27, 2025, in addition to the above items, the increase is also due to higher incentive based compensation from higher earnings compared to the prior year period, as well as an additional $1.5 million in deal costs during that period.

Total deal costs in the nine months ended December 27, 2025 was $4.4 million.

Financial services Selling, general and administrative expenses for the three and nine months ended December 27, 2025 increased primarily due to increases in compensation year over year.

Other Components of Net Income

Three Months Ended

($ in thousands) September 27,

2025 September 28,

($ in thousands) December 27,

2025 December 28,

Interest income $ 2,956 $ 5,353 $ (2,397) (44.8) %

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Effective tax rate 23.5 % 18.6 % N/A 4.9 %

Six Months Ended

($ in thousands) September 27,

2025 September 28,

Nine Months Ended

($ in thousands) December 27,

2025 December 28,

Interest income $ 13,105 $ 16,556 $ (3,451) (20.8) %

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Interest income consists primarily of interest earned on cash balances held in money market accounts and interest earned on commercial floorplan lending.

Interest expense consists primarily of interest related to finance leases.

Interest income is down in the three and nine months ended December 27, 2025 primarily due to lower interest rates on deposited cash and a decrease in cash balances due to the American Homestar acquisition in the three months ended December 27, 2025.

I nterest expense consists primarily of interest related to finance leases.

Other income, 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.

Income tax expense increased compared to the prior year period due to higher income before income taxes and a change in the effective tax rate due primarily to fewer energy star credits in the current year as well as certain deal costs that are not deductible for federal income tax purposes.

Liquidity and Capital Resources

We believe that cash and cash equivalents at September 27, 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 believe that cash and cash equivalents at December 27, 2025, 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 maintain cash in U.S.

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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.

No amounts are currently outstanding under the Revolving Credit Facility.

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

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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 six months ended September 27, 2025 and September 28, 2024, respectively:

Six Months Ended

(in thousands) September 27,

2025 September 28,

The following is a summary of the Company's cash flows for the nine months ended December 27, 2025 and December 28, 2024, respectively:

Nine Months Ended

(in thousands) December 27,

2025 December 28,

2024 $ Change

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Cash, cash equivalents and restricted cash at end of the period $ 242,472 $ 378,626 $ (136,154)

Net cash provided by operating activities increased primarily from higher Net income, a decrease in Consumer loans originated compared to the prior year period and a decrease in Prepaid expenses and other current assets.

Net cash provided by operating activities increased primarily from higher Net income, an increase in Deferred income taxes, a decrease in Consumer loans originated compared to the prior year period and decreases in Accounts receivable, net and Inventory.

The increase was partially offset by an increase in Commercial loans originated.

Consumer loan originations decreased $10.1 million to $29.8 million for the six months ended September 27, 2025 from $39.9 million for the six months ended September 28, 2024, and proceeds from consumer loans decreased $0.1 million to $33.9 million for the six months ended September 27, 2025 from $34.0 million for the six months ended September 28, 2024.

Commercial loan originations increased $28.5 million to $83.2 million for the six months ended September 27, 2025 from $54.7 million for the six months ended September 28, 2024.

Proceeds from the collection on commercial loans provided $75.4 million this year, compared to $55.1 million in the prior year, a net increase of $20.3 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.

Consumer loan originations decreased $11.2 million to $43.0 million for the nine months ended December 27, 2025 from $54.2 million for the nine months ended December 28, 2024, and proceeds from consumer loans decreased $4.3 million to $42.8 million for the nine months ended December 27, 2025 from $47.0 million for the nine months ended December 28, 2024.

Commercial loan originations increased $29.8 million to $117.3 million for the nine months ended December 27, 2025 from $87.5 million for the nine months ended December 28, 2024.

Proceeds from the collection on commercial loans provided $110.8 million for the nine months ended December 27, 2025, compared to $85.0 million in the comparable prior year, a net increase of $25.8 million.

The change in Net cash used in investing activities is primarily due to the cash paid for the acquisition of American Homestar and 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 a higher number of shares of common stock, which were also at a higher average daily stock price.

Obligations and Commitments.

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Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates during the six months ended September 27, 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.

There have been no significant changes to our critical accounting estimates during the nine months ended December 27, 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

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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