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Cavco Industries Inc., a manufacturer of park model RVs and manufactured housing released its third-quarter results for fiscal 2021, according to a press release.

Cavco noted that operational efficiencies declined due to managing higher and largely unpredictable factory employee absenteeism, hiring challenges and building material supply shortages related to the COVID crisis. Accordingly, its total average plant capacity utilization rate was approximately 75% during the third fiscal quarter of 2021, which has improved from approximately 65% during the second fiscal quarter of 2021 but is lower than pre-pandemic levels of more than 80%.

Sales order activity remained exceptionally strong during the third fiscal quarter of 2021 to the point where home sales order rates were nearly 65% higher than the comparable prior-year quarter. Increased order volume is the result of a higher number of well-qualified home buyers making purchase decisions, supported by reduced home loan interest rates. Increased orders outpaced the challenging production environment during the quarter, rising order backlogs 310% to $472 million as of Dec. 26, 2020, compared to $115 million on Dec. 28, 2019 and $321 million on Sept. 26, 2020.

“We continue to see extraordinary demand for our products, with order backlogs rising to record levels,” noted Cavco’s CEO and President Bill Boor. “Pent-up demand, driven by favorable demographics and a housing supply shortage, has been accelerated by historically low home loan interest rates. Our plants are doing a good job increasing production under challenging conditions. As a result, our utilization rate rose to approximately 75% during the third fiscal quarter from 65% in the second fiscal quarter. Throughout the pandemic, the people across Cavco have done a great job of staying focused on making a difference  for our homebuyers through the homes, loans and insurance we provide and that intention continues to come  through in our progress and results.”

More results follow.

Three months ended Dec. 26, compared to the three months ended Dec. 28, 2019 

  • Net revenue increased 5.5% to $288.8 million for the third quarter of fiscal year 2021 compared to $273.7 million in the same quarter last year.
  • In the Factory-built housing segment, Net revenue increased 5.3%, or $13.7 million, to $270.8 million compared to $257.1 million for the prior-year period. The increase was primarily due to 13% higher home selling prices resulting from pricing increases implemented as a result of rising input costs. These gains were partially offset by a 6.8% lower home sales volume during the third fiscal quarter, as production inefficiencies from labor and supply challenges continue to limit factory delivery volume.
  • Financial services segment Net revenue increased 8.4%, or $1.4 million, to $18.0 million compared to $16.6 million for the prior-year period. The increase was primarily due to $1 million of unrealized gains on marketable equity investments during the third fiscal quarter compared to $0.3  million for the same period last year.
  • Income from operations increased 3.5% to $23.8 million compared to $23.0 million in the same quarter last year.

In the factory-built housing segment, Income from operations was $16.5 million, a 1.8% decrease from $16.8 million for the prior-year period. Gross profit decreased due to higher material prices and lower sales volumes. During the third quarter of fiscal year 2021, we incurred $0.7 million in expenses related to the Securities and Exchange Commission (SEC) inquiry, but also received a  $0.4 million insurance recovery of prior expenses, resulting in a net expense of $0.3 million for the period compared to $0.9 million of such expenses for the same period last year. In addition, the prior-year period included a $2.1 million charge for the amortization of additional director and officer insurance premium, which has now been fully amortized and is not in the current period.

Nine months ended Dec. 26 compared to the nine months ended Dec. 28, 2019 

  • Net revenue for the first nine months of fiscal 2021 was $801.5 million, a 0.6% decrease from $806.4 million in the comparable prior-year period.
  • Factory-built housing Net revenue was $749.9 million, a 1.1% decrease from $758.6 million. The decrease was primarily from 9.4% lower home sales volume, partially offset by 9.1% higher home selling prices compared to the same period last year. Note that Destiny Homes was purchased in August 2019 and Lexington Homes was closed in June 2020.
  • Financial services segment net revenue was $51.7 million, a 7.9% increase from $47.9 million.  This includes $2.7 million of unrealized gains on marketable equity investments in the insurance subsidiary’s portfolio, compared to $0.6 million in unrealized gains in the prior-year period. In addition, higher volume in home loan sales and more insurance policies in force in the current year compared to the prior year were positive contributors, partially offset by lower interest income earned on the acquired consumer loan portfolios that continue to amortize.
  • Income from operations was $61.9 million, a 12.1% decrease from $70.4 million in the prior-year period.

In the factory-built housing segment, Income from operations was $48.1 million, a 12.9% decrease from $55.2 million for the prior-year period as gross profit decreased due to higher material prices and lower sales volumes. This was partially offset by lower expenses related to the SEC inquiry and additional D&O insurance premium amortization. For the nine months ended Dec. 26, Cavco recorded a net expense of $0.1 million compared to $2.5 million in the prior-year period for the  SEC inquiry. Additional D&O insurance premium amortization was $4.2 million in the current period versus $6.3 million in the prior-year period.

Read the full report here: CVCO Earnings Release Q3 FY21