Cavco Industries Q1 2026: Unraveling Contradictions in Order Rates, Margins, and Regional Demand

Order rates and market conditions, gross margin expectations, order rates in the Southeast region, impact of tariffs on gross margins, regional demand and order rates are the key contradictions discussed in Cavco Industries' latest 2026Q1 earnings call.



Revenue and Production Growth:
- Cavco Industries reported net revenue of $556.9 million for the first fiscal quarter of 2026, up 16.6% sequentially and 17% year-over-year.
- This growth was driven by a 14.7% increase in homes sold and a 1.9% increase in average revenue per home sold. The company pressed forward with increased production to support positive order trends, resulting in a record of 5,416 homes shipped in the quarter.

Gross Margin Improvement:
- Gross margin rose to 23.3% as a percentage of net revenue, up 160 basis points from 21.7% in the same period last year.
- This improvement was mainly due to the Factory-Built Housing segment's gross profit percentage remaining consistent at 22.6% and the Financial Services segment's gross margin increasing to 40.9% from a negative 0.6% the prior year.

Regional and Product Mix Impact:
- The Southeast region showed slightly lagging orders with Q1 shipments below the preceding quarter.
- This was due to backlogs in the plants serving the Southeast dropping, requiring close monitoring to maintain production levels. The increase in average selling price was positively affected by a shift towards multi-section homes and some upward price trends in both single and multi-section homes.

Financial Services Profitability:
- Financial Services segment net revenue increased to $21.2 million, up 8.2% year-over-year.
- A significant improvement was attributed to higher insurance premium rates and fewer insurance policies in force, along with better underwriting criteria and policy pricing.