Business Overview and History Headquartered in Phoenix, Arizona, Cavco was founded in 1965 and has since grown to become one of the largest manufacturers of manufactured homes in the United States. The company operates a total of 31 production facilities across the country and Mexico, strategically located to serve its extensive network of independent and company-owned retail stores, as well as communities and developers.
Cavco's diverse product portfolio includes a wide range of factory-built housing solutions, from traditional single-family homes to park model RVs, vacation cabins, and even commercial structures. The company's brands, such as Cavco, Fleetwood, Palm Harbor, and Nationwide, are well-recognized in the industry for their quality, energy efficiency, and innovative design.
In its early years, Cavco focused primarily on manufacturing and distributing mobile homes. However, the company has demonstrated a keen ability to adapt to changing market conditions and consumer preferences over time. A significant milestone in Cavco's history was the acquisition of Fleetwood Enterprises' manufactured housing division in 2009, which substantially increased the company's manufacturing capacity and geographic footprint, solidifying its position as an industry leader.
During the early 2010s, Cavco faced challenges as the manufactured housing industry underwent consolidation and experienced decreased demand following the Great Recession. In response, the company concentrated on improving efficiencies, controlling costs, and investing in product innovations to enhance the energy efficiency and appeal of its homes to modern consumers. These strategic initiatives were crucial in helping Cavco navigate the industry downturn and position itself for future growth.
Financial Performance and Ratios Cavco's financial performance has been consistently strong, with the company reporting solid revenue and earnings growth over the past several years. In the most recent fiscal year (2024), the company reported revenue of $1.79 billion and net income of $157.82 million, translating to a net profit margin of 8.8%. The company's operating cash flow for fiscal year 2024 was $224.68 million, with free cash flow of $207.26 million.
For the most recent quarter (Q3 2025), Cavco reported revenue of $522.04 million, an increase of 16.8% compared to the prior year period. Net income for the quarter was $56.46 million. The increase in revenue was primarily due to a 21.6% increase in homes sold, partially offset by a 3.5% decrease in average revenue per home sold. The decrease in average revenue per home was due to a lower proportion of homes sold through company-owned stores and lower multi-wide units in the mix, partially offset by pricing increases.
The company's balance sheet remains healthy, with a current ratio of 3.08 and a debt-to-equity ratio of just 0.03, indicating a strong liquidity position and low financial leverage. Cavco's return on equity (ROE) and return on assets (ROA) stood at 16.2% and 12.2%, respectively, demonstrating the company's ability to efficiently utilize its capital and assets to generate returns for shareholders.
Liquidity Cavco Industries, Inc. maintains a strong liquidity position, as evidenced by its healthy current ratio of 3.08 and quick ratio of 2.23. This indicates that the company has ample current assets to cover its short-term liabilities, providing a buffer against potential financial challenges and the ability to capitalize on growth opportunities. As of the most recent quarter, Cavco reported cash and cash equivalents of $362.86 million. The company also has access to a $75 million revolving credit facility, with no amounts outstanding, further enhancing its financial flexibility.
Operational Efficiency and Sustainability Cavco's operational efficiency is a key competitive advantage, as the company has implemented lean manufacturing principles and continually optimizes its production processes. This has allowed the company to maintain a high level of product quality while also achieving cost efficiencies, which are then passed on to customers in the form of more affordable housing options.
Sustainability is another area of focus for Cavco, as the company has made significant investments in green building initiatives. Cavco's homes are designed to be energy-efficient, with features like higher insulation, alternative energy sources, and the use of renewable materials. These efforts not only benefit the environment but also provide long-term cost savings for homeowners.
Market Opportunity and Growth Strategies The manufactured housing industry has experienced a resurgence in recent years, driven by the growing demand for affordable and attainable housing solutions. Cavco is well-positioned to capitalize on this trend, leveraging its strong brand, operational expertise, and innovative product offerings.
One of Cavco's key growth strategies is to expand its presence in the site-built home market, where the company sees significant opportunities for growth. The company has been actively pursuing strategic acquisitions and partnerships to enhance its capabilities in this segment, further diversifying its revenue streams and strengthening its overall market position.
Additionally, Cavco continues to invest in its digital infrastructure and customer-centric initiatives, such as the expansion of its retail network and the development of new financing solutions. These efforts are designed to improve the homebuying experience for customers, increase lead generation, and drive long-term customer loyalty.
Business Segments Cavco operates in two main business segments: factory-built housing and financial services.
Factory-Built Housing Segment: This segment is the core of Cavco's business, where the company designs and produces factory-built homes that are primarily distributed through a network of independent and company-owned retailers, planned community operators, and residential developers. Cavco's factory-built housing products are marketed under various brand names including Cavco, Fleetwood, Palm Harbor, Nationwide, Fairmont, Friendship, Chariot Eagle, Destiny, Commodore, Colony, Pennwest, R-Anell, Manorwood, MidCountry and Solitaire.
For Q3 2025, factory-built housing net revenue was $500.86 million, up 17.3% from the prior year period. This increase was driven by higher home sales volume, partially offset by a decrease in net revenue per home sold. Gross profit for the segment was $118.19 million, up 23.4% from the prior year, with the gross profit margin increasing from 22.4% to 23.6% due to lower input costs per unit and production efficiencies from increased volume.
Financial Services Segment: This segment includes Cavco's finance subsidiary, CountryPlace Acceptance Corp., and its insurance subsidiary, Standard Casualty Company. CountryPlace offers conforming mortgages, non-conforming mortgages, and home-only loans to purchasers of factory-built homes. Standard Casualty Company provides property and casualty insurance, primarily to owners of manufactured homes.
For Q3 2025, financial services net revenue was $21.18 million, up 6.8% from the prior year period, driven by higher insurance premiums. Gross profit for the segment was $11.76 million, up 61.2% year-over-year, with the gross profit margin increasing from 36.8% to 55.5% due to higher premiums and lower claims losses.
Industry Trends According to data reported by the Manufactured Housing Institute, industry home shipments for the calendar year through November 2024 were 96,240, an increase of 16.3% compared to 82,780 shipments in the same calendar period last year. The manufactured housing industry continues to offer solutions to the housing crisis with lower average price per square foot than a site-built home and the comparatively lower cost associated with manufactured home ownership, which remains competitive with rental housing.
Future Outlook Based on recent performance and market conditions, Cavco is feeling confident about continued steady improvement in the market. The company reports that channel inventory issues are behind them, and they have a healthy aggregate backlog of 6-8 weeks. Cavco's plants have been able to steadily ramp up production rates where the market has supported it, positioning the company well for the coming quarters.
However, Cavco acknowledges that economic uncertainty remains, and they are prepared to adjust production accordingly if demand weakens in the coming quarters. The company's strong financial position and operational flexibility should allow it to navigate potential market fluctuations effectively.
Risks and Challenges While Cavco has demonstrated resilience in the face of market fluctuations, the company is not immune to various risks and challenges that could impact its future performance. These include:
1. Volatility in raw material prices and availability: Fluctuations in the cost and supply of key building materials, such as lumber and steel, can affect Cavco's production costs and profit margins.
2. Regulatory changes: The manufactured housing industry is subject to extensive government regulations, and any changes in these regulations could have a significant impact on Cavco's operations and compliance costs.
3. Competition: Cavco faces competition from other manufacturers of factory-built homes, as well as traditional site-built home builders, which could put pressure on the company's market share and pricing.
4. Macroeconomic conditions: Factors such as interest rates, employment levels, and consumer confidence can significantly impact the demand for Cavco's products, particularly in the affordable housing segment.
Despite these challenges, Cavco has proven its ability to navigate turbulent market conditions and capitalize on emerging opportunities. The company's strong brand, operational excellence, and focus on sustainability position it well for continued success in the years to come.
Conclusion Cavco Industries, Inc. (CVCO) has established itself as a leader in the manufactured housing industry, delivering high-quality and affordable homes to customers across the United States. The company's robust financial performance, operational efficiency, and commitment to sustainability have positioned it as a compelling investment opportunity for those seeking exposure to the affordable housing market. With a clear growth strategy, strong liquidity position, and a proven track record of navigating industry challenges, Cavco is well-poised to capitalize on the growing demand for attainable housing solutions in the years ahead.