Cavco Industries Reports Mixed Quarterly Results Amid Acquisition Integration

Cavco Industries has released its financial performance figures for the third quarter of 2026, presenting a complex picture for investors. The company's top line showed robust growth, yet a sharp decline in profitability captured market attention and triggered a negative response on the trading floor.

• Revenue: $581.0 million (an increase of 11.3% year-over-year)
• Earnings Per Share (EPS): $5.58 (a decline of 19.1% compared to the prior year)
• American Homestar Revenue Contribution: $42 million
• Home Unit Sales Volume: Up 3.2%
• Manufactured Homes Gross Margin: 21.7%
• Order Backlog: $160 million (representing approximately 4–6 weeks of production)

Revenue Growth Masks Profitability Challenges

A primary driver behind the revenue climb to $581 million was a combination of increased unit sales and higher average selling prices. However, the quarter's results were significantly shaped by the integration of American Homestar Corporation, a transaction finalized in late September 2025. While this new subsidiary added $42 million to the quarterly revenue, it also brought substantial costs.

Significant one-time transaction expenses of $2.9 million, coupled with an additional $6.9 million in selling, general, and administrative costs related to the integration, weighed heavily on the bottom line. Consequently, pre-tax income fell by 16.9% to $58 million. A key question for management is whether ongoing revenue growth can soon offset these rising integration expenses.

Should investors sell immediately? Or is it worth buying Cavco Industries?

Core Segment Margins Face Pressure

Operational metrics within the core manufactured homes segment showed deterioration. The gross margin contracted to 21.7%, down from 23.6% in the same period last year. Furthermore, plant capacity utilization dipped to approximately 70%, compared to a utilization rate of 75% achieved the previous year.

A bright spot emerged from the company's financial services division, where the gross margin expanded considerably from 55.5% to 65.2%. In a separate capital allocation move, Cavco continued its share repurchase initiative, buying back approximately $44 million worth of its own stock during the quarter.

Outlook Hinges on Realizing Acquisition Synergies

With a current order backlog valued at $160 million, Cavco has visibility into production for the next month to month and a half. The critical factor for the company's near-term trajectory will be the pace at which it can capture synergies from the American Homestar acquisition to restore profitability to prior-year levels. The company retains authorization for further buybacks, with approximately $98 million remaining available under the current program.