Cavco(US:CVCO)2025-10-31 18:00Financial Data and Key Metrics Changes - Revenue increased by 9.7% year-over-year to $556.5 million, with a slight sequential decrease of $0.3 million [11] - Operating profit rose by approximately 27% compared to last year's Q2 and up 3% sequentially [4] - Net income was $52.4 million, compared to $43.8 million in the same quarter of the prior year, with diluted earnings per share increasing to $6.55 from $5.28 [15][14] Business Line Data and Key Metrics Changes - Factory-built housing segment net revenue was $535.1 million, up 10% year-over-year, driven by a 5.4% increase in homes sold and a 4.4% increase in average revenue per home sold [11] - Financial services segment net revenue increased by 1.4% to $21.4 million, with operating profit rising from a loss to an $8 million profit [12][8] Market Data and Key Metrics Changes - National shipments in the industry were up over 3% year-to-date through August, with notable double-digit growth in many northern U.S. regions [4] - The Southeast region experienced a decline in shipments, down about 4% year-to-date and 10% in July and August compared to last year [5] Company Strategy and Development Direction - The company is focused on capital allocation, including investments in existing plants, acquisitions, and share repurchases, with $36 million of common shares repurchased [10][15] - The integration of the American HomeStar acquisition is progressing well, with expectations of adding value over the coming quarters [9][44] Management's Comments on Operating Environment and Future Outlook - Management noted significant regional differences in market performance, with a balanced market overall despite challenges in the Southeast [8][26] - The company is monitoring production closely and adjusting as necessary, indicating a cautious but optimistic outlook for the upcoming quarters [8][26] Other Important Information - The effective income tax rate increased to 22.1% due to a reduction in expected tax credits [14] - The company reported a cash balance of $400 million, with cash provided by operating activities at $78.5 million [16] Q&A Session Summary Question: How are orders trending into fiscal Q3? - Management indicated that wholesale orders were slightly down in the quarter, but backlog has stabilized and grown a little [24][26] Question: What is the current state of the Texas market? - The Texas market is performing well, with strong retail results contributing positively to production [32] Question: What are the expectations for gross margins in the next quarters? - Management acknowledged input cost pressures but emphasized the strength of their business model in managing costs [33][35] Question: How is the American HomeStar acquisition performing? - The integration is going well, and the acquired company is expected to contribute positively to the overall business [44][46] Question: What is the impact of tariffs on costs? - Tariffs have added approximately $2 million in costs for Q2, with potential increases due to recent tariff changes on Canadian lumber [35][92] Question: How does the company maintain pricing in the Southeast? - Management stated that pricing has remained stable despite lower order rates, indicating a healthy market environment [95]