On May 23, 2024, Cavco Industries Inc (CVCO, Financial) released its 8-K filing detailing the financial results for the fourth quarter and fiscal year ended March 30, 2024. Cavco Industries Inc designs and produces factory-built homes under the Cavco Homes, Fleetwood Homes, and Palm Harbor Homes brands. It also produces modular homes, park model homes, and vacation cabins, as well as commercial structures, among others. The company operates principally in two segments: Factory-built housing and Financial services.
Quarterly Performance
For the fourth quarter, Cavco Industries Inc reported net revenue of $420 million, a decrease of 11.8% compared to $476.4 million in the same period last year. Net income for the quarter was $34 million, down from $47.3 million in the prior year, resulting in a net income per diluted share of $4.03, missing the analyst estimate of $4.51.
The company's gross profit as a percentage of net revenue was 23.6%, down from 25.3% in the previous year's fourth quarter. The factory-built housing segment saw a gross profit margin of 22.4%, a decline of 200 basis points year-over-year.
Full Fiscal Year Performance
For the full fiscal year, Cavco Industries Inc reported net revenue of $1,795 million, a 16.2% decrease from $2,143 million in the previous year. Net income per diluted share for the year was $18.37, falling short of the annual estimate of $18.84. The factory-built housing segment's gross profit margin was 23.2%, down from 25.3% in the prior year.
Key Financial Metrics
| Metric | Q4 2024 | Q4 2023 | Change |
|---|---|---|---|
| Net Revenue | $420 million | $476.4 million | -11.8% |
| Net Income | $34 million | $47.3 million | -28.3% |
| Net Income per Diluted Share | $4.03 | $5.39 | -25.2% |
| Gross Profit Margin | 23.6% | 25.3% | -1.7% |
Challenges and Achievements
The decline in revenue and net income was primarily attributed to lower sales volume in the factory-built housing segment. The company faced challenges such as higher interest rates and economic uncertainties, which impacted order rates and operating days. However, Cavco Industries Inc managed to increase its backlogs to $191 million, up 19.4% from three months ago, indicating a potential recovery in demand.
Bill Boor, President and Chief Executive Officer, commented, "The quarter started with several plants missing operating days due to thin backlogs coming out of the holidays. However, as the quarter progressed, order rates improved and almost all plants were back to 5-day operations."
Against the backdrop of higher interest rates and economic challenges, our team continued to deliver solid margins and cash flow. During the year, we significantly increased capacity through the successful integration of the Solitaire acquisition and the Hamlet and Glendale plant startups; we expanded our retail distribution footprint; we rolled out our new Anthem series, the first nationally available HUD-approved manufactured duplex; and we responsibly managed our balance sheet with approximately $110 million of share repurchases. Affordable housing remains a pressing need and our ability to provide affordable homes for families has never been stronger." - Bill Boor, CEO
Financial Segment Performance
The financial services segment reported a net revenue increase of 6.4% for the quarter, driven by more insurance policies in force. However, the factory-built housing segment saw a 12.6% decline in net revenue due to lower sales volume. Gross profit for the financial services segment increased by 4.7%, while the factory-built housing segment experienced a 19.8% decline in gross profit.
Conclusion
Despite the challenges faced in fiscal 2024, Cavco Industries Inc demonstrated resilience through strategic initiatives and capacity expansions. The company's focus on affordable housing and operational improvements positions it well for future growth, although economic uncertainties and interest rate fluctuations remain key factors to monitor.
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Explore the complete 8-K earnings release (here) from Cavco Industries Inc for further details.
