Cavco Industries Posts Strong Q1 2026 Results on Surging Demand and Strategic Execution
PHOENIX – Cavco Industries, Inc. (NASDAQ: CVCO), a leading producer of manufactured housing, reported impressive financial results for the first quarter of fiscal 2026, demonstrating resilience and strategic growth amid ongoing market uncertainties. The company announced a significant uptick in both revenue and profitability, driven by higher production volumes, improved average selling prices, and a remarkable turnaround in its insurance operations.
For the quarter ended June 28, 2025, net revenue reached $556.9 million, a 16.6% sequential increase. Perhaps more notably, operating profit surged roughly 50% compared to both the previous quarter and the year-ago period. Diluted earnings per share stood at $6.42, a substantial rise from $4.11 in the first quarter of fiscal 2025.
"We executed very well as a company this quarter," said Bill Boor, President and Chief Executive Officer, during the earnings conference call. "Our plan to deliberately increase production where we had the backlog to support it paid off." The strategy resulted in a record 5,416 homes shipped during the quarter.
A key highlight was the first appreciable increase in the average selling price (ASP) for core products in many quarters. Boor noted that after a prolonged period of "slow leakage," the company witnessed true price appreciation for both single-section and multi-section homes when adjusting for sales mix. This suggests strengthening underlying demand and pricing power in Cavco's markets.
The Financial Services segment, particularly the insurance division, staged a dramatic recovery. It turned a "significant loss a year ago into a nice profit this year," attributed to more favorable weather conditions compared to the storm-impacted prior year and meaningful improvements in underwriting and pricing. The segment's gross margin soared to 40.9% from negative 0.6% a year ago.
CFO Allison Aden provided detailed financial color, noting that capacity utilization improved to approximately 75% from 65% in the prior-year quarter. She also addressed the impact of recent tariffs, estimating a modest $700,000 hit to cost of goods sold in Q1, but warning that fully implemented proposed tariffs could result in a quarterly impact of $2 million to $5.5 million in the future.
Strategic Moves and Market Outlook
Cavco's pending acquisition of American Homestar for approximately $184 million in cash remains on track to close early in the third quarter. Boor expressed continued excitement about the deal, which is expected to yield significant cost synergies and retail optimization benefits, particularly in the crucial Texas market.
The company also continued its aggressive capital return program, repurchasing $50 million of its common stock during the quarter. Since the buyback program's inception, Cavco has retired 16.6% of its outstanding shares.
While the overall tone was positive, management pointed to regional nuances. The Southeast U.S., excluding the long-challenged Florida market, showed relative softness, with order rates lagging behind other regions. This has led to a slight reduction in backlog for plants serving that area, prompting a "watch closely" approach to production levels there.
Boor also commented on the regulatory landscape, expressing encouragement that manufactured housing is gaining attention in Washington as a critical component of the affordable housing solution. He specifically highlighted a recent Senate bill that includes a provision to remove the chassis from the federal definition of a manufactured home—a change long sought by the industry to spur innovation.
Looking ahead, management acknowledged the persistent "uncertainty" in the broader economy but expressed confidence in their operational model and the fundamental demand for affordable housing. The company's deliberate push to increase production, coupled with disciplined capital allocation, positions it to navigate potential volatility while pursuing growth.
Analyst & Investor Commentary
"The ASP increase is the real story here," said Michael Thorne, a housing sector analyst at Ridgecrest Capital. "After quarters of flat to slightly down pricing on a mix-adjusted basis, this bounce suggests underlying demand is firming. Combined with their operational execution, it paints a picture of a company hitting its stride."
"The share buybacks are aggressive, which I like, but I question the timing of the American Homestar acquisition," remarked Sarah Chen, portfolio manager at Apex Value Partners, striking a more critical tone. "They're paying a premium to double down in Texas right when that region is showing signs of being 'the slowest of our major regions.' This feels like empire-building rather than disciplined capital allocation. The core business is doing well—why not just let that ride and return more cash?"
"The turnaround in Financial Services is a quiet victory," noted David Reeves, an independent investor following the stock. "Last year's weather-related losses were a drag, but management said they fixed the underlying pricing model. This quarter proves that. It turns a volatile segment into a more reliable profit contributor, which de-risks the overall investment thesis."
"As a former plant manager, I appreciate their 'plant-by-plant' approach to managing production," commented Linda Garcia, who writes the 'Industrial Digest' newsletter. "It shows operational discipline. They're not just ramping up blindly; they're leaning in where they have visibility and are prepared to pull back if order trends shift. That's how you avoid the inventory nightmares that plagued the industry a couple of years back."