PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Cavco Industries reported strong Q1 FY2026 results, with net revenue increasing 16.6% to $556.9 million and net income rising 50.0% to $51.6 million [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly increased to $1.42 billion as of June 28, 2025, driven by receivables, with liabilities growing and equity stable Consolidated Balance Sheet Highlights (in thousands) | Account | June 28, 2025 | March 29, 2025 | | :--- | :--- | :--- | | **Total Current Assets** | $915,272 | $910,186 | | **Total Assets** | **$1,419,617** | **$1,406,645** | | **Total Current Liabilities** | $317,280 | $303,166 | | **Total Liabilities** | **$354,784** | **$342,063** | | **Total Stockholders' Equity** | **$1,064,833** | **$1,064,582** | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Net revenue increased 16.6% to $556.9 million for Q1 FY2026, with net income rising 50.0% to $51.6 million and diluted EPS reaching $6.42 Quarterly Income Statement Summary (in thousands, except per share data) | Metric | Q1 FY2026 (ended June 28, 2025) | Q1 FY2025 (ended June 29, 2024) | YoY Change | | :--- | :--- | :--- | :--- | | **Net Revenue** | $556,857 | $477,599 | +16.6% | | **Gross Profit** | $129,506 | $103,402 | +25.2% | | **Income from Operations** | $60,358 | $38,551 | +56.6% | | **Net Income** | $51,642 | $34,429 | +50.0% | | **Diluted EPS** | $6.42 | $4.11 | +56.2% | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to $55.5 million, while investing activities used $7.7 million and financing activities used $54.7 million, primarily for stock repurchases Quarterly Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $55,523 | $47,393 | | **Net cash used in investing activities** | ($7,715) | ($5,349) | | **Net cash used in financing activities** | ($54,729) | ($31,863) | - The company repurchased **$50.0 million** of its common stock during the quarter, a significant increase from the $29.5 million repurchased in the same period last year[14](index=14&type=chunk) [Notes to Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes highlight revenue growth led by factory-built housing, financial services profitability, and the $190 million acquisition of American Homestar Corporation Net Revenue by Segment (in thousands) | Segment | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | Factory-built housing | $535,694 | $458,048 | +17.0% | | Financial services | $21,163 | $19,551 | +8.2% | | **Total Net Revenue** | **$556,857** | **$477,599** | **+16.6%** | Income Before Income Taxes by Segment (in thousands) | Segment | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Factory-built housing | $62,629 | $49,101 | | Financial services | $2,668 | ($5,240) | | **Total Income Before Taxes** | **$65,297** | **$43,861** | - On July 14, 2025, the company entered into a definitive agreement to acquire American Homestar Corporation for **$190 million** in cash, funded from cash on hand[54](index=54&type=chunk)[55](index=55&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 16.6% revenue growth to increased home sales and improved gross margin, especially in financial services, while maintaining strong liquidity for operations and the $190 million acquisition [Company and Industry Outlook](index=19&type=section&id=Company%20and%20Industry%20Outlook) Industry home shipments increased 5.3% year-to-date, with the company's backlog at $200 million, while management remains cautious about material costs and labor availability - Industry home shipments for the calendar year through May 2025 increased by **5.3%** compared to the same period last year[61](index=61&type=chunk) - The company's backlog was **$200 million** as of June 28, 2025, compared to $232 million a year prior and $197 million at the end of fiscal 2025[68](index=68&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Net revenue increased 16.6% driven by higher home sales, leading to a 25.2% rise in gross profit and a significant improvement in financial services gross margin Homes Sold by Channel | Channel | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | Company-owned retail | 1,023 | 1,013 | +1.0% | | Independent retailers, etc. | 4,393 | 3,708 | +18.5% | | **Total Homes Sold** | **5,416** | **4,721** | **+14.7%** | Gross Profit as % of Net Revenue | Segment | Q1 FY2026 | Q1 FY2025 | Change (bps) | | :--- | :--- | :--- | :--- | | Consolidated | 23.3% | 21.7% | +160 bps | | Factory-built housing | 22.6% | 22.6% | 0 bps | | Financial services | 40.9% | (0.6)% | +4150 bps | [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, with operating cash flow increasing to $55.5 million, sufficient to fund operations and the $190 million American Homestar acquisition, despite significant stock repurchases - The company expects its current cash position and operating cash flows to be sufficient to fund operations and the planned acquisition of American Homestar[79](index=79&type=chunk) - Net cash used in financing activities increased primarily due to repurchasing more shares of common stock at a higher average price[84](index=84&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes were reported regarding quantitative and qualitative disclosures about market risk from the prior Annual Report on Form 10-K - There have been no material changes to the market risk disclosures from those in the company's Form 10-K[86](index=86&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 28, 2025, disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - The President and Chief Executive Officer and the Chief Financial Officer concluded that as of June 28, 2025, the company's disclosure controls and procedures were effective[88](index=88&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the fiscal quarter[89](index=89&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, but management does not anticipate a material adverse effect on its financial position or operations - Management does not believe that pending legal matters are likely to have a material adverse effect on the company's consolidated financial position, liquidity, or results of operations[45](index=45&type=chunk)[92](index=92&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from those disclosed in the company's Annual Report on Form 10-K - The report refers to the risk factors discussed in Part I, Item 1A of the company's Form 10-K, indicating no material changes[93](index=93&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 108,293 shares for $50.4 million in Q1 FY2026, with $28 million remaining under the 2024 plan and $150 million under the May 2025 plan Issuer Purchases of Equity Securities (Q1 FY2026) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Mar 30 - May 3, 2025 | 55,744 | $479.62 | | May 4 - May 31, 2025 | 24,813 | $459.65 | | Jun 1 - Jun 28, 2025 | 27,736 | $427.55 | | **Total** | **108,293** | **N/A** | - As of June 28, 2025, **$28 million** remained available from the October 2024 repurchase authorization, and the full **$150 million** was available from the May 2025 authorization[95](index=95&type=chunk) [Other Information](index=25&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 28, 2025 - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading plan during the quarter[95](index=95&type=chunk) [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) The report lists filed exhibits, including the merger agreement for American Homestar acquisition, credit agreement amendments, and officer certifications - Key exhibits filed include the merger agreement for the acquisition of American Homestar, Inc. and certifications by the Principal Executive Officer and Principal Financial Officer[96](index=96&type=chunk)

Financial Data and Key Metrics Changes - Revenue increased by 9.5% year over year and 16.6% sequentially, reaching $556.9 million [5][15] - Operating profit rose approximately 50% compared to both the previous quarter and the same quarter last year [5] - Net income was $51.6 million, compared to $34.4 million in the previous year, with diluted earnings per share at $6.42 versus $4.11 [18] Business Line Data and Key Metrics Changes - Factory Built Housing segment net revenue was $535.7 million, up 17% from the prior quarter, driven by a 14.7% increase in homes sold and a 1.9% increase in average revenue per home sold [15][16] - Financial Services segment net revenue increased by 8.2% to $21.2 million, attributed to higher insurance premium rates [16][18] - Consolidated gross margin improved to 23.3%, up 160 basis points from the previous year [16] Market Data and Key Metrics Changes - The Southeast region experienced a slight lag in orders, with shipments slightly below the preceding quarter [8][9] - Average selling price (ASP) increased due to a shift towards multi-section homes and true price appreciation, marking a significant upward move after a period of modest declines [10][11] Company Strategy and Development Direction - The company is focused on increasing production rates to meet demand, with a record of 5,416 homes shipped this quarter [8] - An agreement to purchase American HomeStar for approximately $184 million is expected to close early in the third quarter, aimed at cost reduction and product optimization [12][13] - The ongoing share buyback program has repurchased $50 million of stock this quarter, totaling 16.6% of outstanding shares since the program's inception [14][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current quarter's performance but acknowledged ongoing uncertainty in future demand [7][26] - The company noted that while the Southeast region is lagging, overall order trends remain positive, and they are monitoring production levels closely [9][45] - Management highlighted the importance of legislative developments regarding manufactured housing, indicating a focus on affordable housing solutions [55][56] Other Important Information - The company reported a decrease in cash and restricted cash of $6.9 million, with cash from operating activities at $55.5 million [20] - The impact of tariffs on cost of goods sold was estimated at $700,000 for the quarter, with potential future increases if proposed tariffs are implemented [49][74] Q&A Session Summary Question: Is the level of ordering continuing thus far into fiscal Q2? - Management noted that while summer months may see a seasonal slowdown, there is a continuation of positive order trends [25][26] Question: Are there specific states in the Southeast experiencing softness? - Management clarified that Florida has been struggling, but other Southeastern states are steady, with a need to monitor production closely [27][29] Question: What is the impact of tariffs on costs? - The estimated impact of tariffs was $700,000 for Q1, with potential future costs reaching $2 million to $5.5 million per quarter if fully implemented [49][74] Question: What are the expectations for growth in Texas? - Management expressed confidence in Texas as a significant market for manufactured housing, anticipating continued growth and opportunities for value creation [105][106]

Financial Data and Key Metrics Changes - Revenue increased by 9.5% year over year and 16.6% sequentially, reaching $556.9 million [5][15] - Operating profit rose approximately 50% compared to both the previous quarter and the same quarter last year [5] - Net income was $51.6 million, compared to $34.4 million in the previous year, with diluted earnings per share at $6.42 versus $4.11 [20] Business Line Data and Key Metrics Changes - Factory Built Housing segment net revenue was $535.7 million, up 17% from $458 million in the prior quarter, driven by a 14.7% increase in homes sold [15] - Financial Services segment net revenue increased to $21.2 million, up 8.2% from $19.6 million in the prior year, primarily due to higher insurance premium rates [15][19] Market Data and Key Metrics Changes - The Southeast region experienced a slight lag in orders, with Q1 shipments slightly below the preceding quarter [7][30] - Average selling price (ASP) increased due to a shift towards multi-section homes and true price appreciation, marking a significant upward move after a period of modest declines [10][11] Company Strategy and Development Direction - The company is focused on increasing production rates to meet demand, with a record of 5,416 homes shipped this quarter [6][7] - An agreement to purchase American HomeStar for approximately $184 million in cash was announced, expected to close early in the third quarter, aimed at cost reduction and product optimization [12][13] - The company continues its share repurchase program, having repurchased $50 million of stock this quarter, totaling 16.6% of outstanding shares since the program's inception [14][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of their plan despite uncertainties in future demand, noting that the current order trends remain positive [6][28] - The company acknowledged challenges in the Southeast region, particularly in Florida, but emphasized a steady performance in other areas [30][32] - Management highlighted improvements in financial services, attributing the turnaround to better underwriting criteria and favorable weather conditions [11][19] Other Important Information - Consolidated gross margin increased to 23.3%, up 160 basis points from the previous year [16] - The effective income tax rate decreased to 20.9% from 21.5% in the prior year [20] - The company generated $55.5 million in cash from operating activities, reflecting solid performance [22] Q&A Session Summary Question: Is the level of ordering continuing into fiscal Q2? - Management noted that while summer months may see a seasonal slowdown, there is a continuation of positive trends without indications of a drop [27][28] Question: Are there specific states in the Southeast experiencing softness? - Management clarified that Florida has been struggling, but other Southeastern states are performing steadily, with a focus on monitoring production levels [30][32] Question: What is the impact of tariffs on costs? - The estimated impact of tariffs on costs was about $700,000 for Q1, with potential increases expected if proposed tariffs are implemented [51][75] Question: What are the expectations for growth in Texas? - Management expressed confidence in Texas as a key market for manufactured housing, anticipating continued growth and opportunities for value creation [105][106]

[Cavco Industries Fiscal 2026 First Quarter Results](index=1&type=section&id=Cavco%20Industries%20Fiscal%202026%20First%20Quarter%20Results) [Quarterly Highlights](index=1&type=section&id=Quarterly%20Highlights) Cavco reported strong Q1 FY2026 results with a 16.6% revenue increase to $557 million and 56% diluted EPS growth to $6.42 Quarterly Highlights Summary | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | **Net Revenue** | $557 million | $478 million | +16.6% | | **Home Sales Volume Growth** | +14.7% | N/A | N/A | | **Capacity Utilization** | ~75% | ~65% | +10 p.p. | | **Net Income per Diluted Share** | $6.42 | $4.11 | +56% | | **Backlog** | $200 million | N/A | N/A | | **Stock Repurchases** | $50 million | N/A | N/A | - Management noted that the decision to increase plant run rates in previous quarters was validated by higher shipments and a **stable backlog** in Q1[5](index=5&type=chunk) - The company entered into a definitive agreement to acquire American Homestar Corporation to expand its presence in the South Central US[5](index=5&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) Financial performance was robust, driven by strong growth in factory-built housing and a significant rebound in financial services gross profit [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total net revenue increased 16.6% to $556.9 million, driven by growth in both factory-built housing and financial services segments Revenue by Segment | Revenue by Segment ($ in thousands) | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | Factory-built housing | $535,694 | $458,048 | 17.0% | | Financial services | $21,163 | $19,551 | 8.2% | | **Total Net Revenue** | **$556,857** | **$477,599** | **16.6%** | Home Sales Metrics | Home Sales Metrics | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | Factory-built homes sold | 5,416 | 4,721 | 14.7% | | Net revenue per home sold | $98,910 | $97,024 | 1.9% | - The increase in Financial services revenue was primarily driven by **higher insurance premiums**[8](index=8&type=chunk) [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Consolidated gross profit increased 25.2% to $129.5 million, driven by significant margin improvement in financial services Gross Profit by Segment | Gross Profit by Segment ($ in thousands) | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | Factory-built housing | $120,845 | $103,510 | 16.7% | | Financial services | $8,661 | $(108) | NM | | **Total Gross Profit** | **$129,506** | **$103,402** | **25.2%** | Gross Margin by Segment | Gross Margin by Segment | Q1 FY2026 | Q1 FY2025 | Change (p.p.) | | :--- | :--- | :--- | :--- | | Factory-built housing | 22.6% | 22.6% | 0.0 p.p. | | Financial services | 40.9% | (0.6)% | +41.5 p.p. | | **Consolidated** | **23.3%** | **21.7%** | **+1.6 p.p.** | - The significant improvement in Financial Services profitability was due to **lower insurance claims losses** compared to the prior year, which was heavily impacted by weather events, as well as **increased premiums** and **improved underwriting**[10](index=10&type=chunk) [Net Income and EPS](index=3&type=section&id=Net%20Income%20and%20EPS) Net income grew 50.0% to $51.6 million, resulting in a 56.2% increase in diluted net income per share to $6.42 Net Income and EPS Metrics | Metric ($ in thousands, except per share) | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income | $51,642 | $34,429 | 50.0% | | Diluted Net Income per Share | $6.42 | $4.11 | 56.2% | [Financial Statements](index=5&type=section&id=Financial%20Statements) Consolidated financial statements show a stable financial position with total assets of $1.42 billion and strong quarterly performance [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet as of June 28, 2025, shows total assets of $1.42 billion and stable stockholders' equity of $1.06 billion Key Balance Sheet Items | Key Balance Sheet Items ($ in thousands) | June 28, 2025 | March 29, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $344,626 | $356,225 | | Total current assets | $915,272 | $910,186 | | **Total assets** | **$1,419,617** | **$1,406,645** | | Total current liabilities | $317,280 | $303,166 | | **Total liabilities** | **$354,784** | **$342,063** | | **Total stockholders' equity** | **$1,064,833** | **$1,064,582** | [Consolidated Statements of Income](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The income statement shows a 16.6% revenue increase to $556.9 million and a 50.0% net income growth to $51.6 million Income Statement | Income Statement ($ in thousands) | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | Net revenue | $556,857 | $477,599 | 16.6% | | Gross profit | $129,506 | $103,402 | 25.2% | | Income from operations | $60,358 | $38,551 | 56.6% | | **Net income** | **$51,642** | **$34,429** | **50.0%** | [Other Operating Data](index=6&type=section&id=OTHER%20OPERATING%20DATA) Capital expenditures significantly increased to $9.0 million in Q1 FY2026, with modest increases in depreciation and amortization Operating Data | Operating Data ($ in thousands) | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Capital expenditures | $9,009 | $4,914 | | Depreciation | $4,797 | $4,369 | | Amortization of other intangibles | $372 | $392 | [Corporate Information and Outlook](index=1&type=section&id=Corporate%20Information%20and%20Outlook) Management expressed confidence in performance, highlighted strategic acquisition plans, and demonstrated commitment to shareholder returns [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Bill Boor affirmed increased plant run rates led to higher shipments and stable backlogs, highlighting financial services contribution and business model flexibility - CEO Bill Boor stated that plants increased run rates in anticipation of order growth, which was rewarded with **higher shipments** and a **stable quarter-to-quarter consolidated backlog**[5](index=5&type=chunk) - The company's **flexible business model** is considered a key strength, making it well-positioned to adjust to market uncertainties[5](index=5&type=chunk) [Business Outlook and Strategy](index=1&type=section&id=Business%20Outlook%20and%20Strategy) Cavco is pursuing strategic growth through the acquisition of American Homestar Corporation to expand its South Central US presence - The company has entered into a **definitive agreement to acquire American Homestar Corporation**[5](index=5&type=chunk) - This acquisition is a strategic move to expand Cavco's reach in the South Central US and continue putting more families into **affordable homes**[5](index=5&type=chunk) [Shareholder Activities](index=1&type=section&id=Shareholder%20Activities) Cavco repurchased $50 million of its stock in Q1, with $178 million remaining for future repurchases - The company repurchased approximately **$50 million of its stock** during the quarter[6](index=6&type=chunk) - **$178 million** remains available for repurchases under previously announced Board authorizations[6](index=6&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) A conference call to discuss Q1 results is scheduled for August 1, 2025, with webcast availability on the investor relations website - A conference call to review the results is scheduled for **August 1, 2025, at 1:00 p.m. (Eastern Time)**[12](index=12&type=chunk) - A live webcast and a **60-day archive** will be available on the company's investor relations website[12](index=12&type=chunk)

Company Overview - Cavco Industries, Inc. is headquartered in Phoenix, Arizona and specializes in designing and producing factory-built housing products, primarily distributed through a network of independent and company-owned retailers [3] - The company is one of the largest producers of manufactured and modular homes in the United States, based on reported wholesale shipments [3] - Cavco is also a leading producer of park model RVs, vacation cabins, and factory-built commercial structures [3] - The finance subsidiary, CountryPlace Mortgage, is an approved seller/servicer for Fannie Mae and Freddie Mac, and a Ginnie Mae mortgage-backed securities issuer, offering various mortgage products [3] - The insurance subsidiary, Standard Casualty, provides property and casualty insurance to owners of manufactured homes [3] Upcoming Earnings Release - Cavco Industries will release earnings for the first quarter ended June 28, 2025, on July 31, 2025, after the market closes [1] - Senior management will discuss the results in a live webcast on August 1, 2025, at 1:00 p.m. Eastern Time [1] - The webcast will be accessible via the company's investor relations website [1]

Summary of Cavco Industries (CVCO) Conference Call on Acquisition of American HomeStar Company and Industry Overview - **Company**: Cavco Industries (CVCO) - **Acquisition Target**: American HomeStar - **Industry**: Manufactured Housing Key Points and Arguments 1. **Acquisition Announcement**: Cavco Industries announced the planned acquisition of American HomeStar, marking a significant step in its capital allocation and growth strategy [6][9]. 2. **Financial Details**: The total cash required for the acquisition is estimated at $184 million, which will be funded entirely from cash on hand. The deal is expected to close in the early third fiscal quarter [9][12]. 3. **Operational Overview of American HomeStar**: - Operates two manufacturing plants in the Dallas-Fort Worth area and has 19 company-owned retail centers. - Approximately 57% of production is sold through company stores, with 30% to builders and developers, and the remainder to independent retailers [8][9]. - Sold 1,676 homes in the last twelve months [8]. 4. **Market Presence**: The acquisition will deepen Cavco's presence in Texas, a key market for manufactured housing, where Cavco already has four plants and 46 retail centers [10][11]. 5. **Synergies and Cost Savings**: - Expected cost synergies from leveraging Cavco's shared services and purchasing power, particularly in reducing material costs for American HomeStar [11][19]. - Anticipated operational efficiencies and throughput improvements through the implementation of best practices from previous acquisitions [11][21]. 6. **Strategic Fit**: The integration of American HomeStar's retail and manufacturing operations is seen as a strong match, allowing for product optimization across the combined retail footprint [11][34]. 7. **Historical Performance**: American HomeStar's recent performance is viewed as reflective of broader industry trends, with shipments at about 70% of the levels seen two years ago during a peak period [72]. Additional Important Insights 1. **Forward-Looking Statements**: The call included forward-looking statements regarding the expected benefits of the acquisition, which are subject to various risks and uncertainties [4][5]. 2. **Integration Timeline**: Initial cost synergies are expected to materialize quickly, while more substantial integration benefits may take up to a year to fully realize [19][20]. 3. **Retail Strategy**: While Cavco is not specifically targeting an increase in captive retail share, the acquisition provides a strong integrated retail system that enhances market access [58][63]. 4. **Cultural Fit**: The leadership expressed respect for American HomeStar's management and emphasized the cultural alignment between the two companies, which is seen as beneficial for the integration process [76][77]. This summary encapsulates the key points discussed during the conference call regarding Cavco Industries' acquisition of American HomeStar, highlighting the strategic rationale, financial implications, and operational synergies anticipated from the deal.

Core Viewpoint - Cavco Industries, Inc. has announced a definitive agreement to acquire American Homestar Corporation for $190 million in cash, aiming to enhance its market position and operational synergies in the manufactured housing sector [1][2][8]. Company Overview - Cavco Industries, Inc. is a leading producer of factory-built housing products in the U.S., with a focus on manufactured and modular homes, park model RVs, and commercial structures [7]. - American Homestar, founded in 1971, operates two manufacturing facilities and nineteen retail locations, specializing in high-quality, affordable housing [10]. Financial Details - American Homestar reported revenues of $194 million and net income of $16.6 million for the twelve months ending May 31, 2025, with an Adjusted EBITDA of $17.8 million [1][15]. - The acquisition will be funded entirely from Cavco's cash reserves and is expected to close in the third quarter of fiscal year 2026, pending regulatory approvals [2][8]. Strategic Rationale - The acquisition is expected to be accretive to Cavco's earnings and cash flow from operations, providing opportunities for operational and cost synergies through shared best practices [8]. - This move strengthens Cavco's presence in the South-Central U.S., a key market for manufactured housing, particularly in Texas and surrounding states [8]. Leadership Perspectives - Cavco's President and CEO Bill Boor expressed respect for American Homestar's leadership and emphasized the cultural fit between the two companies [3]. - American Homestar's President and CEO Dwayne Teeter highlighted the alignment of values and the potential for growth within the combined entity [3].

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Financial Performance - Net revenue for fiscal year 2025 was $2,015,458 thousand, a 12.3% increase from $1,794,792 thousand in fiscal year 2024 [192]. - Total homes sold increased to 19,753 in fiscal year 2025, up 16.7% from 16,928 in fiscal year 2024 [192]. - Gross profit for factory-built housing increased to $441,796 thousand, a 10.7% rise from $398,919 thousand in the previous year [195]. - Income before income taxes for fiscal year 2025 was $211,070 thousand, reflecting a 6.0% increase from $199,180 thousand in fiscal year 2024 [200]. - The effective tax rate for fiscal year 2025 was 19.0%, down from 20.7% in fiscal year 2024, attributed to increased tax credits [201]. Order Backlog - The company's home order backlog as of March 29, 2025, was approximately $197 million, an increase of $6 million from $191 million a year earlier [185]. Expenses - Selling, general and administrative expenses rose to $275,315 thousand, an 11.0% increase from $247,920 thousand in fiscal year 2024 [196]. Cash Flow - Cash and cash equivalents at the beginning of fiscal year 2025 were $368.8 million, an increase from $283.5 million in fiscal year 2024, representing a change of $85.3 million [205]. - Net cash provided by operating activities decreased by $46.2 million to $178.5 million in fiscal year 2025, primarily due to increased working capital needs [205]. - Net cash used in financing activities increased by $40.2 million to $147.9 million in fiscal year 2025, primarily related to common stock repurchases [209]. Loan Originations - Consumer loan originations decreased by $24.7 million to $66.1 million in fiscal year 2025, down from $90.8 million in fiscal year 2024 [206]. - Commercial loan originations increased by $32.1 million to $143.4 million in fiscal year 2025, compared to $111.2 million in fiscal year 2024 [207]. Financial Services - The financial services segment's net revenue increased by 5.3% to $82,347 thousand, primarily due to higher insurance premiums [194]. Market Challenges - The company continues to face challenges in the secondary market for manufactured home-only loans, impacting industry growth [188]. Production and Workforce Management - The company is focused on balancing production levels and workforce size with demand to maximize efficiencies [185]. Debt and Credit Facilities - The company has a $75.0 million revolving credit facility, with no amounts outstanding as of March 29, 2025 [203]. - The company anticipates compliance with its debt covenants, projecting cash availability to exceed operational needs for the next year [203]. Interest Rate and Exchange Rate Sensitivity - A 1% unfavorable change in average interest rates would reduce the fair value of consumer loans receivable by approximately $1.2 million [221]. - A 10% change in exchange rates could have resulted in a revaluation loss of approximately $0.7 million as of March 29, 2025 [223].

Financial Data and Key Metrics Changes - Net revenue for Q4 FY2025 was $508.4 million, an increase of $88.2 million or 21% compared to $420.1 million in the prior year [11] - Consolidated gross margin decreased to 22.8%, down 80 basis points from 23.6% in the same period last year [13] - Net income was $36.3 million compared to $33.9 million in the same quarter of the prior year, with diluted earnings per share at $4.47 versus $4.03 [15] Business Line Data and Key Metrics Changes - In the factory-built housing segment, net revenue was $487.9 million, up 22.4% from $398.5 million in the prior year quarter, driven by a 28.5% increase in homes sold [11][12] - Financial Services segment net revenue decreased to $20.5 million, down 5.2% from $21.6 million in the prior year, due to fewer loan sales and insurance policies [12] Market Data and Key Metrics Changes - Unit shipments increased by almost 29% year over year, indicating a positive market activity across retail channels [7][18] - The backlog was down sequentially but showed a healthy increase in March, with plants holding 5 to 7 weeks of backlog [8] Company Strategy and Development Direction - The company is focusing on a rebranding strategy, renaming manufacturing plants to the Cavco name to improve customer recognition and streamline product lines [9][43] - Continued strategic investments in plant improvements and acquisitions have increased production capacity, supported by strong cash generation and a debt-free balance sheet [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted economic uncertainty in Q4 but highlighted a positive uptick in buyer activity in March, indicating a potential recovery in demand [5][7] - The company remains confident in its ability to manage production rates and backlogs, with expectations for increased production in the upcoming quarters [25] Other Important Information - The company repurchased approximately $33 million of stock in Q4, cumulatively buying back 15.5% of outstanding shares since the program's inception [10][16] - The effective income tax rate decreased to 15.4% for Q4, attributed to higher ENERGY STAR tax credits and stock option exercise benefits [15] Q&A Session Summary Question: Expectations for production rates in Q1 relative to Q4 - Management indicated that production rates are expected to remain consistent with Q4, with some plants looking to increase production based on backlog growth [22][25] Question: Impact of February weather on production and margins - Management acknowledged that February's unusual weather caused lost production days, which may have exerted downward pressure on gross margins, but the impact was not deemed significant [36][38] Question: Details on pricing competition and market dynamics - Management noted that pricing competition is more pronounced in lower-priced homes, particularly single wides, while overall pricing pressure has not been widespread across the country [60][64] Question: Impact of tariffs on cost of goods sold - Management confirmed that tariffs did not impact Q4 results, but they expect limited effects in Q1 and potentially more significant impacts in Q2 as tariffs take effect [79][80] Question: Insights from recent congressional hearings on housing supply - Management emphasized the importance of focusing on supply issues in the housing market and highlighted potential legislative changes that could benefit the industry [84][86]