Cavco Industries, Inc. (CVCO) Bundle
Understanding Cavco Industries, Inc. (CVCO) Revenue Streams
Understanding Cavco Industries, Inc.’s Revenue Streams
The company generates revenue through two primary segments: factory-built housing and financial services. Below is a detailed breakdown of these revenue sources.
Revenue Breakdown by Segment
| Segment | Q2 2024 Revenue ($ in thousands) | Q2 2023 Revenue ($ in thousands) | Change (%) |
|---|---|---|---|
| Factory-built housing | $486,343 | $434,066 | 12.0% |
| Financial services | $21,118 | $17,964 | 17.6% |
| Total Revenue | $507,461 | $452,030 | 12.3% |
Year-over-Year Revenue Growth Rate
In the most recent fiscal quarter ending September 28, 2024, the company reported a total revenue of $507,461,000, representing a 12.3% increase compared to $452,030,000 in the same quarter of 2023. The factory-built housing segment alone grew by 12.0%, while the financial services segment saw a growth of 17.6%.
Contribution of Different Business Segments to Overall Revenue
For the six months ending September 28, 2024, the contributions were as follows:
| Segment | Six Months 2024 Revenue ($ in thousands) | Six Months 2023 Revenue ($ in thousands) | Change (%) |
|---|---|---|---|
| Factory-built housing | $944,391 | $891,175 | 6.0% |
| Financial services | $40,669 | $36,730 | 10.7% |
| Total Revenue | $985,060 | $927,905 | 6.2% |
Analysis of Significant Changes in Revenue Streams
The factory-built housing segment's revenue increase was driven by higher home sales volume, which offset a decrease in revenue per home sold. The financial services segment's growth was mainly attributed to higher insurance premiums.
During the three months ending September 28, 2024, factory-built housing revenue increased by $52,277,000 compared to the previous year, while financial services revenue increased by $3,154,000.
Additionally, the average selling price for factory-built homes decreased by 3.1%, indicating a shift in product mix, with a higher proportion of homes sold through independent retailers rather than company-owned stores, which typically command higher prices.
Conclusion
Overall, the revenue analysis indicates a robust performance for Cavco Industries, demonstrating resilience and adaptability in both its factory-built housing and financial services segments amid changing market conditions.
A Deep Dive into Cavco Industries, Inc. (CVCO) Profitability
A Deep Dive into Cavco Industries, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 28, 2024, the gross profit was $116,122 thousand, up from $106,957 thousand in the same period of the previous year, representing an increase of 8.6%. The gross profit margin as a percentage of net revenue was 22.9% compared to 23.7% in the prior year.
For the six months ended September 28, 2024, gross profit decreased to $219,524 thousand from $224,836 thousand, a decline of 2.4%. The gross profit margin for this period was 22.3% versus 24.2% in the previous year.
Trends in Profitability Over Time
Over the last year, the company has seen fluctuations in profitability metrics. The gross profit margin for factory-built housing was 22.9% for the latest quarter, down from 23.2% year-over-year. In contrast, financial services gross profit margin significantly decreased from 35.9% to 21.8% for the same quarter.
The operating profit for the three months ended September 28, 2024, was $49,125 thousand, compared to $45,451 thousand in the prior year, marking an increase of 5.9%.
Comparison of Profitability Ratios with Industry Averages
The current gross margin of 22.9% is slightly below the industry average of approximately 25%. The operating margin stands at 9.7%, which is also below the average operating margin of 11% in the factory-built housing sector. Net profit margin for the company is 8.6%, compared to an industry average of 10%.
Analysis of Operational Efficiency
The selling, general, and administrative (SG&A) expenses for the three months ended September 28, 2024, were $66,997 thousand, which is an increase of 8.9% from $61,506 thousand in the same period last year. As a percentage of net revenue, SG&A expenses decreased slightly to 13.2% from 13.6%.
Operational efficiency is also reflected in the cost management strategies. The factory-built housing segment reported a gross profit of $111,520 thousand for the latest quarter, with gross margin trends indicating that while revenue per home sold decreased by 3.1% to $98,991, the volume of home sales increased by 12.0%.
| Metric | Three Months Ended September 28, 2024 | Three Months Ended September 30, 2023 | Change (%) |
|---|---|---|---|
| Gross Profit (in thousands) | $116,122 | $106,957 | 8.6% |
| Gross Profit Margin (%) | 22.9% | 23.7% | -0.8% |
| Operating Profit (in thousands) | $49,125 | $45,451 | 5.9% |
| Net Profit Margin (%) | 8.6% | 9.1% | -0.5% |
Debt vs. Equity: How Cavco Industries, Inc. (CVCO) Finances Its Growth
Debt vs. Equity: How Cavco Industries, Inc. Finances Its Growth
Debt Levels
As of September 28, 2024, Cavco Industries reported total debt of $90.9 million, which includes both short-term and long-term debt. The breakdown is as follows:
- Short-term debt: $39.8 million
- Long-term debt: $51.1 million
Debt-to-Equity Ratio
The debt-to-equity ratio for Cavco Industries is calculated at 0.09. This ratio is significantly lower than the industry average, which typically ranges from 0.5 to 1.5, indicating a conservative approach to leveraging.
Recent Debt Issuances
In the fiscal year ending September 28, 2024, the company engaged in refinancing activities that resulted in a reduction of interest expenses by 51.4%, reflecting a strategic move to lower borrowing costs.
Credit Ratings
Cavco Industries holds a credit rating of Baa3 from Moody's, which indicates a moderate credit risk and reflects the company's stable financial performance.
Balance between Debt Financing and Equity Funding
Cavco Industries balances its financing by utilizing a mix of debt and equity funding. As of September 28, 2024, stockholders' equity was reported at $1.04 billion, which supports its growth initiatives without over-leveraging.
| Metric | Amount |
|---|---|
| Total Debt | $90.9 million |
| Short-term Debt | $39.8 million |
| Long-term Debt | $51.1 million |
| Debt-to-Equity Ratio | 0.09 |
| Credit Rating | Baa3 |
| Stockholders' Equity | $1.04 billion |
Assessing Cavco Industries, Inc. (CVCO) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 28, 2024, the current ratio for the company was 2.45, indicating a strong liquidity position. The quick ratio stood at 1.68, reflecting the company's ability to meet short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
The working capital as of September 28, 2024, was reported at $220 million, showing an increase from $195 million in the previous year. This upward trend indicates improved operational efficiency and liquidity management.
Cash Flow Statements Overview
The cash flow statements for the six months ended September 28, 2024, reveal the following trends:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Net Cash Provided by Operating Activities | $102,074 | $160,200 | ($58,126) |
| Net Cash Used in Investing Activities | ($11,029) | ($6,421) | ($4,608) |
| Net Cash Used in Financing Activities | ($73,581) | ($42,240) | ($31,341) |
| Cash at End of Period | $386,217 | $395,029 | ($8,812) |
Potential Liquidity Concerns or Strengths
The company maintains a revolving credit facility of $50 million, which can be increased to $100 million as needed, with no amounts currently outstanding. This provides a solid cushion for liquidity. However, the decrease in net cash provided by operating activities compared to the previous year raises some concerns regarding cash flow management.
Overall, the financial metrics indicate that the company is in a strong position regarding liquidity and solvency, with sufficient resources to cover obligations and fund growth opportunities.
Is Cavco Industries, Inc. (CVCO) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine several key financial metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, as well as stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical indicator of valuation. As of September 28, 2024, the company's diluted earnings per share (EPS) was $5.28. With the current stock price of approximately $182.00, the P/E ratio is calculated as follows:
P/E Ratio = Stock Price / EPS
P/E Ratio = $182.00 / $5.28 = 34.5
Price-to-Book (P/B) Ratio
The P/B ratio provides insight into how the market values the company relative to its book value. As of September 28, 2024, the company's total stockholders' equity was $1,041,977. With 9,417,332 shares outstanding, the book value per share is:
Book Value per Share = Total Equity / Shares Outstanding
Book Value per Share = $1,041,977 / 9,417,332 = $110.00
Thus, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share
P/B Ratio = $182.00 / $110.00 = 1.65
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is another useful metric. The enterprise value (EV) is calculated as follows:
EV = Market Capitalization + Total Debt - Cash and Cash Equivalents
Assuming total debt of approximately $50 million and cash equivalents of $20 million, with a market capitalization of $1.71 billion (calculated from the stock price and shares outstanding):
Market Cap = $182.00 x 9,417,332 = $1.71 billion
Then:
EV = $1.71 billion + $50 million - $20 million = $1.74 billion
For EBITDA, let’s assume it was approximately $100 million. Thus:
EV/EBITDA = EV / EBITDA
EV/EBITDA = $1.74 billion / $100 million = 17.4
Stock Price Trends
Over the past 12 months, the stock has shown a significant upward trend, increasing from approximately $140.00 a year ago to the current price of $182.00, reflecting a growth of 30%.
Dividend Yield and Payout Ratio
The company currently does not pay a dividend, resulting in a dividend yield of 0%. This is indicative of a growth-focused strategy rather than returning cash to shareholders.
Analyst Consensus
According to the latest analyst reports, the consensus rating for the stock is a “Buy” based on factors such as strong revenue growth and positive earnings projections.
| Metric | Value |
|---|---|
| P/E Ratio | 34.5 |
| P/B Ratio | 1.65 |
| EV/EBITDA | 17.4 |
| Stock Price (Current) | $182.00 |
| 12-Month Price Growth | 30% |
| Dividend Yield | 0% |
| Analyst Consensus | Buy |
Key Risks Facing Cavco Industries, Inc. (CVCO)
Key Risks Facing Cavco Industries, Inc.
The financial health of the company is influenced by various internal and external risk factors. These risks can significantly impact operations, profitability, and overall market position.
Industry Competition
The manufactured housing industry faces intense competition from both traditional site-built homes and other factory-built housing manufacturers. As of September 28, 2024, the company's net revenue from factory-built housing was $944.4 million, reflecting a 6.0% increase from $891.2 million in the same period the previous year. However, competition can pressure margins, especially as the average selling price of homes has shown volatility.
Regulatory Changes
Changes in federal and state regulations concerning housing finance, zoning, and environmental standards can create operational challenges. For instance, the company's insurance subsidiary is subject to state insurance regulations that restrict the amount of dividends that can be paid to its parent company, potentially limiting cash flow.
Market Conditions
Fluctuations in the housing market directly affect demand for manufactured homes. Economic indicators suggest a potential slowdown, which could impact sales. The backlog of orders as of September 28, 2024, was $276 million, up from $232 million at June 29, 2024, indicating a temporary buffer against market volatility. However, the company recognizes that future demand is unpredictable, influenced by economic conditions and consumer confidence.
Operational Risks
Operational risks include the availability of skilled labor and materials. The company reported a 22.3% gross profit margin for the six months ended September 28, 2024, down from 24.2% the previous year, impacted by labor shortages and rising material costs. The company is focused on improving recruitment and retention strategies to mitigate these risks.
Financial Risks
Financial risks include exposure to interest rate fluctuations and credit risks associated with consumer loans. The weighted average contractual interest rate for commercial loans was 7.3% as of September 28, 2024. Additionally, consumer loans receivable showed a significant concentration with 53% in Texas, increasing exposure to regional economic downturns.
Strategic Risks
Strategic risks arise from the company’s growth initiatives and acquisitions. The company has been actively pursuing strategic investments to expand its market share, which may involve considerable capital and operational resources. The company reported $50 million available in a revolving credit facility with no amounts outstanding, providing some liquidity for potential acquisitions.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks, including:
- Enhancing recruitment efforts and employee retention programs to address labor shortages.
- Monitoring raw material costs closely and adjusting product pricing to maintain margins.
- Maintaining a diverse portfolio of loans to reduce concentration risk and improve cash flow stability.
| Risk Factor | Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Pressure on margins and sales | Focus on quality and customer service |
| Regulatory Changes | Operational challenges | Adaptation and compliance measures |
| Market Conditions | Demand fluctuations | Diverse product offerings |
| Operational Risks | Labor and material shortages | Competitive compensation and benefits |
| Financial Risks | Interest rate exposure | Fixed-rate financing options |
| Strategic Risks | Capital allocation for growth | Careful evaluation of investment opportunities |
Future Growth Prospects for Cavco Industries, Inc. (CVCO)
Growth Opportunities
Future growth prospects for Cavco Industries, Inc. are supported by several key drivers:
Key Growth Drivers
- Product Innovations: The company continues to enhance its product offerings, focusing on energy-efficient and environmentally friendly factory-built homes.
- Market Expansions: Expansion into new geographic markets has been a priority, with a notable increase in sales to independent retailers and builders. For the three months ended September 28, 2024, sales to independent retailers increased by 20.0% compared to the previous year.
- Acquisitions: Strategic acquisitions are being explored to broaden market reach and enhance service capabilities, particularly in financial services related to housing.
Future Revenue Growth Projections
Revenue growth is projected to continue, bolstered by strong demand in the housing sector. For the six months ended September 28, 2024, net revenue increased by 6.2% to $985,060 thousand, up from $927,905 thousand in the prior year.
Earnings Estimates
Earnings per share for the six months ended September 28, 2024, were $9.48 compared to $10.15 in the same period last year, reflecting ongoing investment in growth initiatives and market conditions.
Strategic Initiatives and Partnerships
The company is actively pursuing partnerships to enhance its lending programs, which could provide additional sales growth opportunities. The focus on home-only lending programs aims to reduce dependence on independent lenders, thereby increasing direct sales through traditional distribution points.
Competitive Advantages
Cavco Industries benefits from a robust backlog, which was $276 million as of September 28, 2024, compared to $170 million a year prior. This backlog indicates strong demand and positions the company well for future revenue generation.
| Metric | September 28, 2024 | September 30, 2023 | Change |
|---|---|---|---|
| Net Revenue (in thousands) | $985,060 | $927,905 | 6.2% |
| Earnings per Share | $9.48 | $10.15 | -6.6% |
| Backlog (in millions) | $276 | $170 | 62.4% |
Overall, the combination of product innovation, strategic market expansion, and a strong backlog provides a solid foundation for future growth, while the company's proactive approach to partnerships and acquisitions positions it favorably within the competitive landscape.
Cavco Industries, Inc. (CVCO) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Cavco Industries, Inc. (CVCO) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of Cavco Industries, Inc. (CVCO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cavco Industries, Inc. (CVCO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.