Cavco Navigates Seasonal Slump and Acquisition Costs in Q3, Sees Spring Promise

Cavco Navigates Seasonal Slump and Acquisition Costs in Q3, Sees Spring Promise

Phoenix, AZ – Cavco Industries (NASDAQ: CVCO), a leading producer of factory-built housing, reported its fiscal third-quarter 2026 earnings, revealing a period of strategic integration and market recalibration. The quarter was decisively shaped by the recent closure of the American Homestar acquisition, which boosted revenue but also brought higher expenses and operational complexity, coinciding with a predictable seasonal slowdown in industry-wide shipments.

President and CEO Bill Boor described the quarter as having "a lot of moving parts." He pointed to a broader industry cooldown, citing preliminary HUD data indicating a 13% year-over-year drop in manufactured housing shipments for October and November. "We managed through the seasonal pressures," Boor stated, "by maintaining disciplined production rates to ensure we are ready for the spring selling season."

Excluding the contribution from American Homestar, Cavco's own volume declined approximately 4% compared to the same period last year. However, a key bright spot was the average selling price (ASP), which rose sequentially. Management attributed this to a favorable sales mix shift toward multi-section homes and a greater proportion of retail sales through company-owned stores—a trend accelerated by the acquisition.

Financially, the quarter presented a mixed picture. Executive Vice President and CFO Allison Aden reported net revenue of $581 million, an 11.3% increase year-over-year, largely fueled by American Homestar. However, consolidated gross margin contracted to 23.4% from 24.9%, pressured by higher per-unit costs and acquisition-related expenses. Selling, general and administrative (SG&A) expenses also rose, contributing to a 16.9% decline in pre-tax profit to $57.6 million. Diluted earnings per share settled at $5.58, down from $6.90 a year ago.

On integration, Boor expressed confidence, noting that tangible cost synergies from the American Homestar deal are now expected to exceed $10 million annually, with about half already realized. "Our view has firmed up," he said, adding that the benefits were masked in Q3 by one-time integration costs which are expected to taper off.

The company ended the quarter with a backlog of 4-6 weeks, consistent with historical levels for this period. "We're pretty comfortable that our backlogs are holding," Boor remarked, suggesting early indicators point to potential growth as orders trend into spring. He also noted that affordability pressures at the entry-level market segment persist, reinforcing the industry's longer-term shift toward multi-section homes.

Looking ahead, Cavco remains focused on leveraging its expanded retail footprint and brand consolidation under the Cavco name. With $225 million in unrestricted cash and an ongoing share repurchase program, the company is positioning itself to capitalize on an anticipated market improvement.

Market Voices: Analyst & Investor Reactions

Eleanor Vance, Portfolio Manager at Stonebridge Capital: "This was a transitional quarter as expected. The margin pressure is a near-term cost of strategic expansion. The raised synergy target and stable backlog are the critical takeaways—they're building capacity for the next upcycle."

Marcus Thorne, Independent Housing Sector Analyst: "The ASP increase is a solid sign of pricing power and mix management. It partially offsets the volume softness and suggests Cavco's retail strategy is gaining traction, which should benefit long-term margin stability."

David R. Chen, Editor at 'The Value Ledger': "Another 'wait for spring' story? Revenue up but profits down sharply—that's the reality here. The acquisition is dilutive in the short term, and the promised synergies are just that: promises. Share buybacks with declining EPS look more like financial engineering than confidence in organic growth."

Rebecca Shaw, Small Business Owner & Cavco Customer: "As a community operator, the demand from end-buyers is still there, but it's cautious. Seeing a major player like Cavco invest in retail and product integration gives us confidence in their supply chain and product evolution, which matters more than a single quarter's earnings."

About Cavco Industries: Cavco Industries is a leading designer, manufacturer, and retailer of factory-built homes and modular structures, serving residential and commercial markets across North America. Founded in 1967, the company's portfolio includes HUD-code manufactured homes, modular buildings, and park model RVs.