Cavco Industries Navigates Hurricane Disruptions as Housing Demand Rebounds, Posts Solid Q2 Growth

PHOENIX – Cavco Industries, Inc. (NASDAQ: CVCO), a leading producer of factory-built housing, demonstrated resilience in its second quarter of fiscal 2025, posting solid growth despite headwinds from catastrophic hurricanes in the Southeast. The company reported net revenue of $507.5 million, a 12.3% increase from the prior year period, underscoring a recovering housing market and robust operational execution.

In a conference call with analysts, President and CEO Bill Boor addressed the significant impact of Hurricanes Helene and Milton, which struck key operational regions in Florida and Georgia. While expressing relief that employees were safe, Boor detailed an estimated loss of 15 to 20 equivalent production days across affected plants and a $4 million revenue shift from Q2 to Q3 due to shipment delays. "The real question," Boor noted, "is how quickly and how fully the Southeast market recovers to its pre-storm health. Based on the last few weeks of activity, we're optimistic."

Beyond the weather disruptions, the quarter told a story of broader market momentum. Units shipped surged 15.7% year-over-year, with capacity utilization climbing to approximately 70%—or nearly 75% excluding scheduled holiday downtime. This operational ramp-up, aligned with improving demand, fueled a 20% growth in order backlogs, which now represent 8 to 10 weeks of production.

"We felt very good about our results this quarter," Boor stated, highlighting growth across all sales channels: dealer, community, and builder-developer. "For what seems like a very long time, we've been talking about slow community order rates due to inventory challenges... we feel the recovery is mostly behind us."

CFO Allison Aden provided the financial details: The Factory-Built Housing segment revenue reached $486.3 million, up 12%. However, consolidated gross margin dipped slightly to 22.9%, primarily due to lower average selling prices and a $4 million hit in the Financial Services segment from Hurricane Beryl claims, which reached the company's reinsurance limit. Net income for common stockholders was $43.8 million, or $5.28 per diluted share.

Capital allocation remained a focus. The company repurchased $44 million of its shares in the quarter and announced its Board had authorized an additional $100 million for buybacks. "We continue to have this important tool to responsibly manage the balance sheet," Boor emphasized. When asked about mergers and acquisitions, executives pointed to recent deals like Kentucky Dream Homes and Solitaire Homes, but indicated a preference for organic capacity expansion. "If we had a dollar to spend, we'd probably spend it in growing our existing plant capacities," Boor added.

Looking ahead, management expressed cautious optimism. The industry shipment rate has recovered from a low of 88,000 homes to approximately 103,000. While near-term uncertainty persists, particularly regarding the Southeast's recovery pace, the fundamental demand for affordable, factory-built homes provides a strong tailwind. The company is pressing forward to meet that demand, even as it supports employees and communities rebuilding after the storms.

Market Voices: Analyst & Investor Reactions

Michael Thorne, Portfolio Manager at Horizon Capital: "Cavco's ability to grow shipments and backlog despite major hurricanes is impressive. It speaks to underlying demand strength and operational discipline. The expanded buyback authorization signals strong confidence in the balance sheet and intrinsic value. The margin pressure is a watch item, but seems largely tied to product mix, not fundamental pricing erosion."

David Chen, Housing Sector Analyst at ClearView Research: "The key takeaway is the sequential market improvement. Capacity utilization is moving in the right direction, and the inventory overhang in communities appears to be dissipating. The hurricane impact is a temporary setback, but the 15-20 day production loss is quantifiable. The bigger, unquantifiable variable is the potential demand surge from rebuilding efforts, which could materialize over the next several quarters."

Sarah Jenkins, Independent Investor & Blog Contributor: "Another quarter of gross margin contraction? Seriously? They're shipping 15% more homes but making less on each one. Executives gloss over this with talk of 'product mix' and 'channel shift,' but it feels like they're competing on price in a recovering market. And pouring another $100 million into buybacks while margins are slipping seems like financial engineering to prop up EPS, not investing in the business's future."

Robert Gaines, Retired Manufacturing Executive: "The resilience here is in the operations. Minimizing physical damage and getting teams back to work quickly after those storms is a testament to their planning and culture. The housing affordability crisis isn't going away, and Cavco is positioned right in the sweet spot. Short-term noise from weather shouldn't distract from that long-term structural trend."