Core Viewpoint - Cavco Industries, Inc. is set to release its earnings for the fourth quarter and fiscal year ending March 29, 2025, on May 22, 2025, with a subsequent live discussion scheduled for May 23, 2025 [1]. 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 recognized as one of the largest producers of manufactured and modular homes in the United States, based on reported wholesale shipments [3]. - Cavco also leads in the production 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].

Group 1 - Cavco Industries, Inc. celebrates 60 years in the affordable housing market and introduces a new tagline, "Where Exceptional Meets Affordable" [5] - The company is unifying its manufacturing brand lineup under the Cavco name to strengthen national brand identity and recognition [6] - Product segmentation will be streamlined to enhance digital marketing effectiveness and simplify the homebuying process, allowing easier identification of Cavco-built homes [7] Group 2 - The strategic brand realignment aims to improve customer experience and market approach, leveraging investments in digital marketing [8] - As a result of the brand realignment, Cavco will incur a non-cash charge of approximately $9.9 million in pre-tax earnings and a reduction of about $7.6 million in net income [8] - Cavco is one of the largest producers of manufactured and modular homes in the U.S., with a significant presence in park model RVs and factory-built commercial structures [9]

Core Viewpoint - Investors are seeking growth stocks that can deliver above-average growth and exceptional returns, but identifying such stocks can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - Cavco (CVCO) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 29.4%, with projected EPS growth of 19.4% this year, significantly outperforming the industry average of 5.4% [5] Group 2: Financial Metrics - Cavco's asset utilization ratio (sales-to-total-assets ratio) is 1.4, indicating that the company generates $1.4 in sales for every dollar in assets, surpassing the industry average of 1.23 [6] - The company's sales are expected to grow by 13.2% this year, while the industry average is projected at 0% [7] Group 3: Earnings Estimates - There has been a positive trend in earnings estimate revisions for Cavco, with the Zacks Consensus Estimate for the current year increasing by 21.8% over the past month [9] - Cavco has earned a Growth Score of B and carries a Zacks Rank 1 due to these positive earnings estimate revisions, positioning it well for potential outperformance [11]

Core Insights - Three stocks are highlighted with strong buy rankings and positive momentum characteristics for investors to consider on February 5th Group 1: Cavco Industries (CVCO) - Cavco Industries designs and produces factory-built housing products, primarily distributed through independent and company-owned retailers [1] - The company has a Zacks Rank of 1 (Strong Buy) and a 3.1% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [1] - Shares gained 12.7% over the last three months, outperforming the S&P 500's gain of 4.3%, and possesses a Momentum Score of A [2] Group 2: Shore Bancshares (SHBI) - Shore Bancshares is a bank holding company engaged in banking through two subsidiaries [2] - The company also has a Zacks Rank of 1 and a 6.3% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [2] - Shares gained 10.7% over the last three months, again outperforming the S&P 500's gain of 4.3%, and possesses a Momentum Score of A [2] Group 3: Flexsteel Industries (FLXS) - Flexsteel Industries is involved in the design, manufacture, and sale of a broad line of quality upholstered furniture for various uses [3] - The company holds a Zacks Rank of 1 and an 8.6% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [3] - Shares gained 5.4% over the last three months, slightly outperforming the S&P 500's gain of 4.3%, and possesses a Momentum Score of B [4]

Group 1 - Cavco Industries, Inc. is a major player in the factory-built homes sector in the United States, operating two main divisions: one for home construction and another for related services [1] - The company is recognized for its significant production capacity and market presence in the factory-built home industry [1] Group 2 - Grassroots Trading emphasizes objective and unbiased research, focusing on small- to mid-cap companies while also identifying opportunities in larger firms [1]

Financial Data and Key Metrics Changes - Earnings per share (EPS) increased by 30% to $6.90 compared to the previous quarter [8] - Net revenue for Q3 2025 was $522 million, up 16.8% from $446.8 million in the prior year [20] - Net income rose to $56.5 million, an increase of $20.5 million compared to $36 million in the same quarter of the prior year [25] Business Line Data and Key Metrics Changes - Factory-built Housing segment net revenue was $500.9 million, up 17.3% from $426.9 million in the prior year quarter, driven by a 21.6% increase in homes sold [21] - Financial Services segment net revenue increased to $21.2 million, up 6.8% from $19.8 million in the prior year quarter, primarily due to higher insurance premium rates [22] - Consolidated gross margins increased to 24.9%, up 180 basis points from 23.1% in the same period last year [22] Market Data and Key Metrics Changes - The seasonally adjusted annual rate of HUD shipments in October and November was 108,000 and 109,000 annual units, respectively, compared to about 93,000 a year ago [14] - Industry shipment data for October and November showed a 14% year-over-year shipment gain in the most impacted states following hurricanes [16] Company Strategy and Development Direction - The company is focusing on ramping up production in anticipation of continued market improvement in 2025, despite entering a seasonally slower quarter [12] - A digital marketing strategy transformation has been implemented to enhance customer engagement and support retailers [17][18] - The company plans to continue investing in expanding plant capacity and exploring M&A opportunities [114][115] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to adjust production rates based on market demand, indicating readiness for both potential demand increases and decreases [13][45] - The company noted that traffic and retail dealer activity have remained healthy, even amid rising interest rates [41] - There is optimism about steady improvement in the market, with channel inventory issues resolved [121] Other Important Information - The company repurchased $42 million of stock during the quarter, with cumulative repurchases totaling $389 million since the program began [26] - The effective income tax rate decreased to 18.6%, primarily due to tax credits associated with higher shipments of ENERGY STAR compliant homes [25] Q&A Session Summary Question: What can you tell us about customer discussions and order rates? - Management noted that industry shipments have trended upward and retail traffic remains healthy, indicating a potential for a stronger Spring selling season [39][40] Question: Are there any factors that could create a less favorable shipping comparison from Q3 to Q4? - Management indicated that there are more operating days in Q4 compared to Q3, suggesting potential for increased production [46][47] Question: Can you elaborate on the changes made in the Financial Services segment? - Management highlighted changes in underwriting practices and premium adjustments as key factors in the improved performance of the Financial Services segment [50][51] Question: What are the geographical strengths and weaknesses in demand? - Management identified the Southeast and Texas as strong markets, while Florida continues to lag behind [69][70] Question: Any updates on FEMA orders for temporary housing relief? - Management noted that there has been a lack of FEMA orders, but they remain optimistic that orders will materialize in the future [86][87] Question: What is the outlook on input prices and gross margins? - Management indicated that recent decreases in OSB prices could positively impact gross margins in the upcoming quarter [106][107] Question: How does the company plan to allocate capital moving forward? - Management stated that the focus will be on expanding plant capacity, exploring M&A opportunities, and managing share buybacks responsibly [114][115]

Financial Performance - Net revenue for the three months ended December 28, 2024, was $522,040,000, representing a 16.8% increase from $446,769,000 for the same period in 2023[12]. - Gross profit for the nine months ended December 28, 2024, was $349,474,000, up 6.5% from $327,887,000 in the prior year[12]. - Net income for the nine months ended December 28, 2024, was $134,706,000, a 8.1% increase compared to $123,971,000 for the same period in 2023[12]. - Total net revenue for the nine months ended December 28, 2024, reached $1,507,100,000, a 9.6% increase compared to $1,374,674,000 for the same period in 2023[77]. - Net income attributable to Cavco common stockholders for the three months ended December 28, 2024, was $56,462 thousand, compared to $35,987 thousand for the same period in 2023, representing a 57% increase[57]. - Basic earnings per share for the three months ended December 28, 2024, was $6.97, up from $4.31 in the same period last year, reflecting a 62% increase[57]. - Net income for the nine months ended December 28, 2024, was $134,706 thousand, compared to $123,883 thousand for the same period in 2023, indicating an 8% increase[57]. Assets and Liabilities - Total assets increased to $1,385,767,000 as of December 28, 2024, compared to $1,354,160,000 as of March 30, 2024[10]. - Total current liabilities increased to $285,222,000 as of December 28, 2024, from $273,267,000 as of March 30, 2024[10]. - Accrued expenses and other current liabilities amounted to $259,134,000 as of December 28, 2024, up from $239,736,000 on March 30, 2024[34]. - Cash and cash equivalents at the end of the period were $378,626,000, up from $366,608,000 at the end of the same period last year[14]. - Cash, cash equivalents, and restricted cash at the end of the period increased by $12,018 thousand to $378,626 thousand as of December 28, 2024, compared to $366,608 thousand at the end of the prior year[90]. Stock and Shareholder Activities - The company repurchased common stock totaling $114,446,000 during the nine months ended December 28, 2024[14]. - Common stock repurchases totaled $42,722 thousand for the three months ended December 28, 2024[54]. - In Q3 FY2025, the company repurchased a total of 98,084 shares of common stock at an average price of $424.63 per share, totaling approximately $41.5 million[103]. - The company has announced plans to repurchase an additional 117,954 shares under its publicly announced plans[103]. Loans and Financing - As of December 28, 2024, total consumer loans receivable amounted to $55,649,000, up from $45,656,000 as of March 30, 2024, indicating a growth of 21.5%[28]. - Commercial loans receivable net balance as of December 28, 2024, was $58,103,000, an increase from $47,725,000 as of March 30, 2024, representing a growth of 21.5%[30]. - The total outstanding principal balance of commercial loans receivable was $94,902,000, with no nonperforming loans reported[31]. - Consumer loan originations decreased by $20.1 million to $54.2 million for the nine months ended December 28, 2024, from $74.3 million in the prior year[91]. - Commercial loan originations increased by $4.0 million to $87.5 million for the nine months ended December 28, 2024, from $83.5 million in the prior year[92]. - The company entered into a $75 million revolving credit facility on November 12, 2024, maturing on November 12, 2029[38]. - The company had no borrowings outstanding under the revolving credit facility as of December 28, 2024, and was in compliance with all covenants[44]. Revenue by Segment - Home sales revenue for the nine months ended December 28, 2024, reached $1,378,103,000, compared to $1,250,417,000 for the same period in 2023, reflecting a year-over-year increase of 10.2%[22]. - Factory-built housing net revenue for the three months ended December 28, 2024, was $500,860,000, a 17.3% increase from $426,939,000 in the same period last year[77]. - Financial services net revenue for the three months ended December 28, 2024, was $21,180,000, reflecting a 6.8% increase from $19,830,000 in the prior year[77]. - The number of factory-built homes sold by company-owned retail sales centers increased to 1,075 for the three months ended December 28, 2024, up 4.8% from 1,026 in the previous year[77]. Profitability Metrics - Factory-built housing gross profit increased by $22,437 thousand, or 23.4%, for the three months ended December 28, 2024, compared to the same period in 2023[80]. - Financial services gross profit increased by $4,462 thousand, or 61.2%, for the three months ended December 28, 2024, compared to the same period in 2023[80]. - Consolidated gross profit as a percentage of net revenue increased to 24.9% for the three months ended December 28, 2024, up from 23.1% in the prior year[80]. - Selling, general and administrative expenses increased by $2,668 thousand, or 4.2%, for the three months ended December 28, 2024, compared to the same period in 2023[83]. Market and Industry Insights - The manufactured housing industry saw a 16.3% increase in home shipments for the calendar year through November 2024, totaling 96,240 shipments compared to 82,784 in the same period last year[67]. - The company is focused on building energy-efficient homes and has initiatives to utilize renewable materials, aiming to reduce utility costs for homeowners[69]. - The company continues to face challenges in the secondary market for manufactured home-only loans, which affects borrowing costs and industry growth[72]. - The company maintains a conservative cost structure to enhance the value of its homes and has a strong balance sheet to navigate market opportunities[70]. Accounting and Compliance - The company is currently evaluating the impacts of new accounting standards on its Consolidated Financial Statements, including ASU 2023-09 and ASU 2023-07, which will enhance income tax and segment reporting disclosures[20][21].

Group 1: Earnings Performance - Cavco reported quarterly earnings of $6.90 per share, exceeding the Zacks Consensus Estimate of $4.12 per share, and up from $4.27 per share a year ago, representing an earnings surprise of 67.48% [1] - The company posted revenues of $522.04 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 16.68%, compared to year-ago revenues of $446.77 million [2] Group 2: Stock Performance and Outlook - Cavco shares have increased approximately 4.8% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] - The current consensus EPS estimate for the coming quarter is $4.73 on revenues of $480.8 million, and for the current fiscal year, it is $18 on revenues of $1.91 billion [7] Group 3: Industry Context - The Building Products - Mobile Homes and RV Builders industry is currently ranked in the bottom 16% of over 250 Zacks industries, indicating potential challenges for stocks within this sector [8] - Another company in the same industry, Patrick Industries, is expected to report a significant year-over-year earnings decline of 49.5% for the quarter ended December 2024 [9]

Core Insights - Cavco Industries, Inc. reported significant financial improvements in the third fiscal quarter ended December 28, 2024, driven by increased home shipments and a recovery in financial services [3][5][6] Financial Performance - Net revenue reached $522 million, an increase of $75 million or 16.8% compared to $447 million in the same quarter last year, primarily due to growth in home sales volume [5][20] - Home sales volume increased by 21.6%, with capacity utilization rising to approximately 75% from about 60% in the prior year [5][20] - Gross profit for factory-built housing as a percentage of net revenue was 23.6%, up from 22.4% in the prior year [5][11] - Financial services gross profit as a percentage of net revenue surged to 55.5%, compared to 36.8% in the previous year [5][11] Income and Earnings - Income before income taxes was $69.3 million, reflecting a 57.9% increase from $43.9 million in the prior year [5][20] - Net income attributable to Cavco common stockholders was $56.5 million, up 56.9% from $36 million in the same quarter last year [5][20] - Diluted net income per share increased to $6.90, a 62% rise compared to $4.27 in the prior year quarter [5][20] Operational Highlights - Backlogs totaled $224 million at the end of the quarter, representing 6-8 weeks of production [5] - Stock repurchases amounted to approximately $42 million during the quarter [5] Segment Performance - The factory-built housing segment saw net revenue of $500.9 million, up 17.3% from $426.9 million in the prior year [4][5] - Financial services segment net revenue increased to $21.2 million, a 6.8% rise from $19.8 million in the previous year [4][5] - The increase in financial services revenue was attributed to higher insurance premiums [7][11] Cost and Expenses - Selling, general and administrative expenses rose to $66 million, a 4.2% increase compared to the previous year [8][20] - The effective tax rate was 18.6%, influenced by higher-than-expected production of Energy Star homes [5][20]

Core Viewpoint - Cavco Industries, Inc. is set to release its third-quarter earnings for the period ending December 28, 2024, on January 30, 2025, with a live discussion scheduled for January 31, 2025 [1]. 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 recognized as one of the largest producers of manufactured and modular homes in the United States, based on reported wholesale shipments [3]. - Cavco's product offerings include various brand names such as Cavco, Fleetwood, Palm Harbor, and others, along with 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, providing a range of mortgage products for factory-built home purchasers [3]. - The insurance subsidiary, Standard Casualty, offers property and casualty insurance specifically for owners of manufactured homes [3].