CVCO — FY2026 Annual Financial Report Analysis

Cavco Industries, one of the largest US builders of manufactured and modular homes, grew fiscal 2026 revenue 11.4% to $2.24 billion and diluted earnings per share 15.8% to $23.98 (fiscal year ended March 28, 2026). Three things drove it: the American Homestar acquisition (closed September 29, 2025) added $90.5 million of home revenue; higher prices added $102.9 million; and the company's small insurance arm had a much quieter storm year. The core home-building business barely grew its profit. Strip out a one-off charge from the year before and the factory-built housing segment's pre-tax income was close to flat.

At a glance

• $2.24 billion revenue, +11.4%. About $90 million came from American Homestar. Without it, home revenue grew roughly 6.9%, mostly from price ($102.9 million) and much less from volume ($30.8 million).
• Financial services pre-tax income: $23.3 million, up from $1.5 million. Fewer weather-related insurance claims and better underwriting explain about two-thirds of the $33.6 million rise in total pre-tax profit.
• Order backlog: $195 million, vs $197 million a year earlier. The pipeline of homes ordered but not yet built didn't grow, even with an acquired company added to it.

The numbers

Gross margin is the share of revenue left after the direct cost of building and selling the homes. Operating margin is the share left after overhead such as sales, administration and management pay as well, before interest income and tax.

Two businesses, two very different years

Cavco reports two segments. Factory-built housing (building and selling homes, wholesale and through 92 company-owned retail stores) is about 96% of revenue. Financial services is its mortgage lender, CountryPlace, plus Standard Casualty, a home insurer that writes most of its policies in Texas.

Factory-built housing: revenue rose 11.6% to $2.16 billion, but gross margin fell from 22.9% to 22.1%. Management says gross profit benefited from "higher average selling prices and higher home sales, partially offset by higher costs per unit". In other words, building costs rose faster than prices. Pre-tax income for the segment rose 5.6% to $221.4 million. That comparison is flattered: fiscal 2025's segment expenses included a $10.0 million non-cash write-down of old brand names (trade names on the books as assets). Add it back and fiscal 2025's housing pre-tax income was about $219.5 million, so this year was up less than 1%. Fiscal 2026 also carried $3.9 million of deal costs for American Homestar, and American Homestar contributed $5.2 million of net income in its six months.

Part of the "higher price" story is a change in sales mix, not just price increases. Retail homes sold through Cavco's own stores rose 15.5% to 4,771. Wholesale homes rose 2.9% to 16,071. A retail sale includes the store's markup and installation work, so it brings in more revenue per home than a wholesale sale to an independent dealer. More retail sales raise revenue per home on their own. American Homestar brought 19 retail locations, and that is a large part of why the mix shifted.

Financial services: revenue rose only 5.8% to $87.1 million, but gross profit more than doubled to $50.6 million (gross margin 58.0% vs 28.9%). The filing credits "higher premiums and improved underwriting results as well as favorable weather in the year resulting in lower weather related insurance claims". Pre-tax income jumped from $1.5 million to $23.3 million. Storms come and go, so this part of the gain is the least likely to repeat.

What the headline numbers hide

• EPS grew faster than profit because of buybacks. Net income rose 11.4%, but EPS rose 15.8%: Cavco spent $159.9 million buying back its own shares, which cut the diluted share count 3.8% to 7.95 million. Fewer shares means each one gets a bigger slice of profit. A higher tax rate partly offset this (22.1% vs 19.0%), mainly because of $3.7 million less in federal energy-efficient-home tax credits after eligibility rules changed.
• The year-ago charge flatters the comparison. Excluding the $10.0 million trade-name write-down (which the company says cut fiscal 2025 diluted EPS by $0.93), fiscal 2025 EPS would have been about $21.64. On that basis, fiscal 2026 EPS growth is about 10.8%, not 15.8%. Operating income growth falls from 20.1% to roughly 14%.
• Less interest income on cash. Paying $172.8 million in cash (net of cash acquired) for American Homestar, together with lower interest rates, cut interest income from $21.1 million to $16.3 million. Cash and equivalents fell from $356.2 million to $236.7 million. The company still has no borrowings on its $75 million credit line.
• Cash conversion was strong. Operating cash flow was $267.5 million, 1.4 times net income. Part of that came from Cavco's lending book: it sold $79.6 million of consumer loans while making $64.0 million of new ones. Receivables and inventory also released cash ($2.9 million and $4.9 million after stripping out the acquisition). Inventory on the balance sheet rose 17% to $295.7 million, but that includes the acquired business, not a build-up of unsold homes. After $35.4 million of capital spending, the business generated about $232 million of free cash, more than enough to cover the buybacks.
• No numeric guidance. Cavco doesn't give revenue or earnings forecasts, so there's no earlier forecast to compare against. Its outlook section opens: "It is difficult to predict the future of housing demand".

Takeaway: Cavco's 15.8% EPS growth came mostly from things outside the core factories: a favorable storm year at its insurer, an acquisition, buybacks, and a year-ago write-down that makes the comparison look better. The home-building segment's own pre-tax profit was roughly flat, because building costs rose faster than selling prices.

Looking ahead

Industry demand hasn't grown. The Manufactured Housing Institute counted about 103,000 HUD-code homes shipped in calendar 2025, the same as in 2024. Cavco's backlog was slightly smaller year on year at $195 million. Management didn't promise a recovery: CEO Bill Boor described "an environment that has not materially improved and remains uncertain". He did say fourth-quarter wholesale orders were "up significantly" from both the prior quarter and the prior-year quarter, mostly in March. The fourth quarter itself was mixed: revenue up 8% to $550 million and EPS of $5.42 vs $4.47, but factory-built housing gross margin was down 110 basis points (1.1 points) to 21.2%. The release attributes that to higher input costs and lower home sales.

Three things to watch. First, whether the March order pickup holds and turns into backlog growth rather than a one-month spike. Second, whether factory-built margins stop slipping as American Homestar is integrated and the new El Mirage, Arizona plant (groundbreaking announced in May 2026) adds capacity. Third, how much of the insurance gain survives a normal Texas storm season. Our read: unless housing margins stabilize, earnings growth will depend on volume recovering and on buybacks (the board added another $150 million authorization in May 2026), not on the factories' profitability improving.