卡夫科工業 (CVCO) 2027 會計年度第二季財報電話會議：出貨量創新高，在手訂單增加 63%

Cavco Industries (NASDAQ: CVCO) 受益於 American Homestar 的併購挹注、原有住宅銷量增加及產品價格調漲，2027 財年第二季出貨量與營收雙雙創下歷史新高。在手訂單大幅增加，同時資料中心工作人員住宅也成為新的訂單成長動能。

重點摘要

• 淨營收年增 18% 至 6.564 億美元，其中工廠製造住宅營收為 6.337 億美元。
• Cavco 創下單季出貨 5,972 戶的歷史新高。接單量持續超過出貨量，推動全系統在手訂單年增 63%，平均交期達 8 至 10 週。
• 稅前盈餘成長 9.1% 至 7,340 萬美元。淨利增至 5,540 萬美元，稀釋後 EPS 從 6.55 美元升至 7.17 美元。
• 合併毛利率由 24.2% 降至 22.5%。投入成本上升對工廠製造住宅毛利率構成壓力，部分被產品提價所抵銷。
• 資料中心工作人員住宅的訂單與出貨量顯著增加。管理層表示，這些產品提高了平均售價，但對合併毛利率百分比並無顯著影響。
• Cavco 執行了 3,000 萬美元的股票回購，季末擁有的非受限現金為 2.72 億美元。

核心財務數據

銷管費用包含了一筆一次性 700 萬美元的保費退還，與 2019 年購買的額外董事及高階主管責任險有關。利息收入從 500 萬美元降至 360 萬美元，主因收購 American Homestar 後現金餘額減少。

業務與營運表現

工廠製造住宅

營收成長反映了納入 American Homestar、原有住宅銷量增加以及原有每戶住宅營收提高。同廠比基礎下的原有出貨量呈現低個位數百分比成長。

管理層表示，American Homestar 在併購滿一年後表現超越原先預期，並提及實體綜效高於預期且生產力快速提升。

產能利用率約為 75%。Cavco 表示這仍低於永續營運水準，尚有擴產空間。部分工廠營運率已超過 80%，而其他工廠在手訂單較薄弱，提高產量的步調較為審慎。

資料中心工作人員住宅

本季工作人員住宅對訂單、出貨量及在手訂單的貢獻日益顯著。早期最大型的項目集中在德州的偏遠地區，但 Cavco 觀察到需求已擴散至其他地區。

典型單元為單節結構，包含 6 至 7 間配備衛浴設施的自給式房間。批發價格通常介於 7 萬至 10 萬美元之間，反映出其建材用量大幅高於傳統單節住宅。

管理層表示，工作人員住宅拉高了平均售價，但對毛利率百分比並無實質改變，因為較高的營收被相應增加的建材成本所抵銷。這也沒有實質增加單季總出貨量，因為 Cavco 原本就有足夠的住宅在手訂單，可在沒有這些訂單的情況下支援相近的產量。

其主要好處是在進入季節性淡季的冬季前增加了額外的在手訂單。Cavco 正將較大的訂單分攤至各工廠，以避免對獨立經銷商與社區客戶造成干擾。

金融服務

金融服務營收隨著房貸銷售增加而成長。CountryPlace Mortgage 在鎖定新貸款買家後，繼續增加貸款承作量。

保險業務創下另一個低理賠額的季度。受益於市場條件改善以及過去兩年理賠表現提升，Cavco 亦享受到較低的再保險成本。

管理層展望

儘管面臨正常的冬季季節性因素，管理層仍打算消化 8 至 10 週的在手訂單，並在工廠層級需求支援的情況下提高產量。公司強調生產決策仍將因廠而異，並可在市場條件改變時進行調整。

毛利率可見度仍然有限。Cavco 預計建材通膨仍將是一項風險，並將在市場條件允許之處尋求局部調漲價格。管理層提醒，冬季需求可能會限制其透過定價完全抵銷成本上升的能力。

新的 El Mirage 設施整體進度符合預期，預計於 2027 日曆年中期左右開始營運。初期將營運一條具備相當產能的生產線，但 Cavco 未提供具體的支出或盈餘貢獻目標。

風險與關注事項

• 自年初以來，鋼材成本已上漲近 150%，帶來了成本與可取得性的雙重風險。
• 管理層無法確定資料中心工作人員住宅需求會發展到多大或持續多久，也無法確定訂單對延遲和取消的脆弱程度。
• 冬季天氣與假期預估會減緩業務活動，不過 Cavco 進入該時期時，其在手訂單規模創下 2022–2023 年升息以來的最高水準。
• 住宅價格上漲持續對客戶的負擔能力造成壓力。管理層指出，即使是微幅的利率變動，也會實質影響每月付款金額。
• 動產貸款利率對整體房貸利率變動的反應相對較慢，部分原因是該市場缺乏有效的次級市場管道。

分析師問答亮點

需求與現場建造住宅對比：管理層表示，組合住宅的需求近期與現場建造住宅出現分歧。Cavco 主要依據客戶訂單而非投機性庫存進行建造，從而降低了受到影響現場建造商的庫存與促銷優惠壓力的風險。

客戶結構：核心客戶仍是尋求替代租屋的低收入首購族，以及可能正在縮減居住坪數或購買第二套房產的 55 歲以上買家。管理層也看到在因價格過高而被首購級現場建造住宅排除在外的買家中的商機。

訂單趨勢：訂單自特別強勁的財年第一季以來呈季減，但仍略高於去年同期。若排除工作人員住宅，管理層描述訂單水準符合過去幾年的區間。

定價與產品組合：單節與多節住宅售價均調漲。單節住宅比重較高部分抵銷了產品提價對每戶平均營收的影響。

法規商機：Cavco 正與美國住房與城市發展部 (HUD) 合作，推動由《ROAD to Housing Act》賦能的無底盤、地面固定及雙層組合住宅。管理層亦強調州級劃分分區改革對將工廠製造住宅擴展至先前受限的市場至關重要。

完整法說會逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Fiscal Year 2027 Cavco Industries Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Mark Fusler, Corporate Controller and Investor Relations. Please go ahead.

Mark Fusler

Good day, and thank you for joining us for Cavco Industries Second Quarter Fiscal Year 2027 Earnings Conference Call. During this call, you'll be hearing from Bill Boor, President and Chief Executive Officer; Allison Aden, Executive Vice President and Chief Financial Officer; and myself.

Before we begin, we'd like to remind you that comments made during this conference call by management may contain forward-looking statements. Forward-looking statements include statements about our expected and future business and financial performance and are not promises or guarantees of future performance.

They are expectations or assumptions about Cavco's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies, current or future volatility in the credit markets or future market conditions. All forward-looking statements involve risks and uncertainties, which could affect Cavco's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of Cavco.

For a discussion of the material risks and important factors that could affect our actual results, please refer to those contained in our filings with the SEC, which are also available on our Investor Relations website and at sec.gov. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Friday, October 30, 2026.

Cavco undertakes no obligation to revise or update any forward-looking statement, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law.

Now I'd like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill?

William Boor

Thanks, Mark. Welcome, and thank you for joining us today to review our second quarter results for fiscal 2027. In the first quarter, we reported unit shipment and revenue records. And now in the second quarter, we were able to better those records. I'll stop short of implying that the market is strong. It isn't. However, the quarter orders -- this quarter, orders continued to exceed our pace of shipments, resulting in another to exceed our pace of shipments, resulting in another sequential increase in our backlog. We're entering the winter months and orders are slowing as they typically do.

At the same time, across the system, the end of quarter backlog averaged a healthy 8 to 10 weeks. Overall, we're shipping more than last year. Orders are slowing but are well above last year's levels, and our backlog is 63% higher. Heading into winter, we're in good position to lean in on production where backlogs allow, knowing we can respond to changing markets as needed.

And to provide some context about orders on a same plant basis, we were up high single digits compared to last year and down sequentially from a very strong Q1. In the second quarter, we shipped a record 5,972 homes. Last quarter, revenue exceeded $600 million for the first time, and this quarter, it was up another 7.6% to $656 million, and year-over-year revenue was up about 17.9%.

Our capacity utilization was about 75%, still well below levels we're able to sustain. So from a longer-term perspective, there remains significant room to reach higher volumes, which I think is important given the regulatory momentum and the continuing affordable housing supply deficit.

Factory-built gross margin increased 30 basis points from last quarter. This was a good outcome given ongoing materials inflation. While differential across operating areas, we saw product pricing increase enough to offset the negative margin impact of growing materials costs. And to be clear about consolidated average selling price, the overall increase was from both single-section and multi-section homes selling at higher prices rather than driven by changes in product or distribution mix.

It's important we discuss the increasing role being played by data center workforce housing in our orders, shipments and backlogs. Data center orders and shipments increased significantly during the quarter. Like any other channel, we don't intend to specifically break out the units and orders, but I want to talk through how this dynamic impacted the quarter.

First, because we had healthy backlogs going into the quarter, there was not a net meaningful impact on shipments. In other words, had we not seen these workforce housing orders, we had plenty of other business and would have shipped a similar overall volume.

Regarding price, these units are generally single sections and they have a higher price than typical single-section homes. So there was an upward effect on average selling price. But having said that, my earlier comments about sequential product price increases still hold true for the base residential units. Workforce housing shipments added to what would have already been an increase in product pricing.

Shifting to margin. The pricing is higher on workforce housing, mainly because the material cost of a unit is significantly higher. Generally, these units are built with 6 or 7 self-contained living spaces with in-room toilets and showers. Taking all of this into account, there was no meaningful impact on our percent gross margin resulting from the workforce housing shipments, higher price, higher cost, neutral impact on gross margin percent.

The big positive of these incremental workforce housing orders is that they're adding to the backlog, thereby enabling us to lean in on production despite heading into the winter months and with continued economic uncertainty.

Overall, this is a developing opportunity. And frankly, we don't have a clear view about how much this will grow, how susceptible the orders may be to delays or cancellations or how long we'll see a meaningful level of remote data center projects.

Switching gears, I want to acknowledge the contribution our financial services operations continue to make. There's not a lot to discuss here except the continuing strong performance. Overall, pretax profit was up a couple of percent over a very good quarter last year.

Insurance had another in a string of strong quarters with low claims. We're also benefiting from reduced reinsurance costs due to both the general reinsurance market improving and our dramatic improvement in claims performance the last couple of years.

CountryPlace Mortgage continued to ramp up originations after securing new investors for loan purchases, which we've mentioned in previous quarters. And shifting to capital allocation, we repurchased $30 million of company stock in the quarter. Since initiating our repurchases just over 5 years ago, we've returned $642 million to our shareholders through buybacks without hampering any strategic growth investment in our plants, greenfields, acquisitions or otherwise.

In Q2, we surpassed cumulative repurchases of 20% of our shares over that time, and we finished the quarter with a healthy $272 million of unrestricted cash.

Now I'll turn it over to Allison to give more details on the financial results.

Allison Aden

Thank you, Bill. Net revenue for the second fiscal quarter of 2027 was $656.4 million, up 18% compared to $556.5 million during the prior year period. Sequentially, net revenues increased $46.4 million, driven by a higher units sold and higher average revenue per home sold.

Within the factory-built housing segment, net revenue was $633.7 million, up $98.6 million or 18.4% from $535.1 million in the prior year quarter. This increase was primarily due to the addition of American Homestar, an increase in legacy homes sold and an increase in legacy average revenue per home sold.

The increase in legacy average revenue per home was primarily due to product pricing increases, partially offset by a lower proportion of homes sold through our company-owned stores and more single wides in the mix.

Financial Services segment net revenue was $22.6 million, up $1.2 million or 5.6% sic [ 5.8% ] from $21.4 million in the prior year quarter. This increase was due to higher loan sales in our mortgage division. Consolidated gross margin in the second fiscal quarter as a percentage of net revenue was 22.5%, down from 24.2% in the same period last year.

In the factory-built housing segment, the gross profit was 21.1% in Q2 of 2027, slightly down from 22.9% in Q2 of 2026. The reduction is due to higher input costs, partially offset by increased product pricing. Financial services gross margin as a percentage of revenue increased to 60.2% in Q2 of 2027 from 55.6% in Q2 of 2026, driven primarily by improved underwriting margins.

Selling, general and administrative expenses in the second quarter of 2027 were $77.7 million or 11.8% of net revenue compared to $72.2 million or 13% of net revenue during the same quarter last year. The increase in these costs was primarily due to the addition of American Homestar, along with increased compensation and employee benefit expense.

These expense increases were partially offset by a $7 million onetime return of premiums related to additional D&O insurance that was purchased back in 2019. Interest income for the second quarter was $3.6 million, down from $5 million in the prior year quarter, resulting from lower cash balances after the purchase of American Homestar.

Pre-tax profit was up 9.1% this quarter to $73.4 million from $67.3 million for the prior year period. The effective income tax rate was 24.4% for the second fiscal quarter compared to 22.1% in the same period of the prior year. The increase in the effective rate was primarily driven by lower tax credits compared to the prior year quarter.

Net income was $55.4 million versus $52.4 million in the same quarter of the prior year, and diluted earnings per share this quarter was $17.17 (sic) [ $7.17 ] compared to $6.55 in last year's second quarter.

During the quarter, we repurchased $30 million of common shares under our Board-authorized share repurchase program, leaving approximately $158 million under authorization for future repurchases.

Now I'll turn it over to Mark to discuss the balance sheet.

Mark Fusler

Thanks, Allison. In the quarter, we had an increase in cash and restricted cash of $31.7 million, bringing our balance to $297.9 million. Cash provided by operating activities was $96.4 million. Cash used in investing activities was $33.8 million, primarily related to plant improvements and related equipment and cash used in financing activities was $30.9 million, primarily due to share repurchases.

Comparing the September 26, 2026 balance sheet to March 28, 2026, accounts receivable increased from greater homes sold, inventories increased from raw material purchases in anticipation of increased costs. Prepaid expenses and other current assets decreased from expected tax refunds.

Property, plant and equipment increased from investment in the new El Mirage facility in addition to other plant improvement projects. Accrued expenses and other current liabilities increased from higher customer deposits, volume rebates and warranty accruals on higher sales and treasury stock increased due to stock buybacks executed in the period.

Now I'll turn it back to Bill.

William Boor

Thank you, Mark. With this report, we've hit a year since joining forces with American Homestar. And thus far, that acquisition has exceeded expectations with higher-than-assumed tangible synergies and rapid increases in productivity. A lot of hard work has gotten us to this point.

A couple of weeks ago, I was able to spend several days with the plants and stores that came to us in the acquisition and the teamwork and focus on making the right products for the market has been tremendous. As we move into comparable periods, we won't be specifically highlighting the operations going forward. So I want to take a quick opportunity to really thank everyone involved in such a successful acquisition and integration.

On another note, since our last earnings call, we showed the first off-chassis home at HUD's Innovative Housing Showcase in Washington, D.C. Earlier this week, HUD Secretary, Scott Turner and U.S. Congressman, Eli Crane visited our Phoenix plant to discuss Cavco's readiness to provide innovative products that are being enabled by the ROAD to Housing Act.

I can tell you my message was we're ready. So let's figure out how to get these things out there. But while we manage the near-term business, we're also working very hard on the huge opportunities that lie ahead.

Michelle, could you please open the line for questions?

Operator

[Operator Instructions] And our first question comes from Daniel Moore with CJS Securities.

分析師問答

Dan Moore

Just the components of growth, you shipped 15% more homes year-over-year in the quarter compared to HUD Code shipments in the low single digits. Can you just kind of break out organic versus the contribution from American Homestar.

Mark Fusler

Yes, we had -- yes, thanks, Dan. So we did have increase in our legacy brand as well. So kind of the low single digits.

William Boor

Yes. One thing that is going to be -- I know there's going to be a ton of interest as there should be in workforce housing. One thing I'll point out to folks is that again, we're early in this. We're trying to figure it out. We're going to try to share information as we can on the magnitude and all that.

One thing that's probably going to be a little bit of a complication as people interpret the industry is that the vast majority of those units will not be HUD code. So when you're looking at HUD Code and then comparing any participants shipments and sales, there's going to be a little disconnect due to that gap.

But I'd characterize the -- as I said, like from a shipments perspective in the quarter, and I think this is relevant to your question, Dan, we had a good backlog going into the quarter. And if we hadn't shipped workforce housing units this quarter, we would have worked on our backlog that we had in kind of the normal single-family residential units.

So from my perspective, looking back at the quarter, it was going to be about in that same range regardless. Does that make sense?

Dan Moore

Absolutely does. I think you're reading my sheet of questions as it relates to the workforce housing question here. So you're jumping ahead of me. That's helpful.

William Boor

I'll hold back.

Dan Moore

All good. Taking another 10,000 feet up, it seems like -- and maybe workforce housing is skewing it a little. But if you look at the growth relative to certainly, site-built seems to be diverging even more.

So are you seeing more -- whether it's opportunities community by community, maybe more early impact of ROAD to Housing, do you see that -- are we seeing evidence that we're sort of breaking away from the overall housing market, if you will?

William Boor

No, it certainly seems like in the near term, there's a divergence, and we've talked over time that while we're subject to a lot of the same macro effects and macro forces, the business models are clearly different and the customer base is clearly different. I'd hesitate to say we're seeing the early effects of ROAD to Housing because I think it's too early.

We're pushing to try to work with HUD and others to figure out how we can really put that law into action with things like the products we can make off chassis. But at this point, I wouldn't attribute much of any deviation there. I've tried to keep up on the site builders as they've announced and as folks like you have had comments on their performance.

It really is different. I mean my understanding is they've had some level of spec building that now they're trying to ease back on. We don't have that in our industry. Our industry is kind of a pool structure where a customer has to make an order and it flows back to us and we make it.

So we're not having those kinds of headwinds that I think they have. The other thing in my view, and I'm trying to think through this just like you guys are, in my view, our customers -- many of them are just trying to find the time when they can get approved for a loan and buy a house. And so they've been out there. We've told you for a long time that traffic has been healthy.

People are out there trying to find the opportunity to buy a home. So there's quite a bit of like, I don't know, pent-up or demand that's sitting on the benches that's waiting to come forward. And we've kind of -- I think we've kind of seen that come forward a little bit recently. And maybe that's different. I don't -- you can be the judge -- maybe that's different than a site builder where their buyers might -- especially if it's a move-up buyer, they might have a little bit more discretion and thought about when they pull the trigger.

So I don't know if I can simply explain it, but those are some thoughts about the differences between the 2 businesses. And I know they're struggling because they've offered incentives for quite a long time. And as much as they try to get off them, they're having difficulty doing that. A lot of those factors just aren't part of our business model. And I think we're showing a little bit more of a steady road right now because of that.

Dan Moore

Super helpful. One or 2 more, I'll jump out. Just given the increase in backlog, are you -- are we thinking about holding production relatively steady kind of going into the winter months? There's usually some seasonality, but at the same time, in the last few quarters, you've been saying we're going to lean into this increase in orders and reincrease production.

So how should we think -- how are you thinking about the next quarter or 2 here?

William Boor

Yes, I'd probably always drive you guys crazy because I say it's kind of plant dependent. But I will say that we have fewer and fewer plants that don't have the kind of backlog where they can consider increasing production. I mean we've -- we're pretty healthy across our system with just a couple of plants that have lean backlogs at the moment.

So yes, the tug of war is that going into these winter months, every year, you hear us say -- we don't know what the winter is going to hold, and it's a little ways before spring selling season. So that causes our teams and our leaders to be hesitant. But as I said, one good -- the big positive workforce housing is it's added to our backlog. And to your point, I'm of the mindset, and I think all of our leadership is of the mindset that, that gives us the ability to push a little bit. And we do that with confidence because we've seen our organization know how to adjust if they have to.

So yes, Mike, our tone in the company is let's work on this backlog. Let's not let it -- in one scenario, you don't want it to run away from you and get big. That would be wishful thinking and hopeful. But let's not let it get big, let's push production even though we're heading into the winter months.

Dan Moore

That is really helpful. Last one, maybe Allison, but just factory-built gross margin, slight improvement sequentially. Obviously, raw material general inflation is not going away. So just expectations regarding kind of trajectory from where we were this quarter over the next maybe quarter or 2 or 3.

Allison Aden

Yes, sure. I appreciate that. In our last quarter, I think we indicated that material costs were increasing. And we said that the bigger unknown was really the extent to which the industry orders and the capacity utilization would enable price increases to offset the pricing cost. And in Q2, we, in fact, were fortunate and price increases were available.

So that's how our margin was able to grow by 40 basis points. And just to kind of focus on the point on material escalation, steel, which is up almost 150%, if you will, since the beginning of the year, separate from the gross margin discussion, there's obviously availability risk that we're also managing. So as we think about Q3 and forward, we're in the same position as we were last quarter.

Material inflation is -- seems more of a probability and a risk. And just on the price side, there's also areas where price we can take increases. But it's a local-by-local event, as we've always said. And as winter months hit, we can't be sure if continued price increases will be available or if the ASP will fully offset what's likely to be continued material inflation.

So as we always talk about consistently, it's a little hard to project the gross margins. And really, what we stay focused on is the business model, and that's our ability to really leverage our variable costs. and continue to take pricing increases where we can.

Operator

And our next question will come from Greg Palm with Craig-Hallum.

Greg Palm

I am going to try to beat a dead horse here and ask a few on workforce housing, even though it doesn't sound like you want to quantify much. But I guess, first, I'm curious, like what types of structures are you building for the industry? And what exactly constitutes a unit?

William Boor

Yes. That's an interesting question, and I'm learning a lot real time, to be honest, but I can share what I believe to be the best understanding on that. There's really and others might correct me on this, but here's what I know, Greg, think about it in 3 buckets. One bucket is when a project is in construction, the need was really temporary construction worker, construction office type structures.

And we provide some of those.

That's probably over time, that's going to be a relatively small part of what gets built and those structures may move to the next project, right? They're just kind of temporary. Then there's another relatively small component that is -- and where we're getting opportunities really is remote data centers, right? We're not getting opportunities to build housing in cities where there are some data centers.

But where it's remote, the kind of leadership team, those kind of people need housing. And those, I would tell you to think of as kind of a single-family residential unit looks very much like we make typically. What we're finding out is that while you hear that data center employment might be relatively low, there actually isn't a large need for people to maintain, clean, keep the facility updated.

And that's where I think we're going to see the most sizable component of workforce housing. And the things that the units we're making come in different shapes and sizes for sure. But think of a single wide that if you look at it like head on the long side of the single wide, you see 6 or 7 rooms that have their own bathroom facility, their own shower, but there's like 6 or 7 lined up in a single wide.

And then on site, those might be positioned with a corridor down the middle. That's where we're seeing a lot of the -- probably the biggest component of the volume. And as I said earlier, those units are not going to show up in the HUD code numbers. So it makes it a little bit tough to track how companies are doing if this becomes a big component of overall demand. But does that give you a feel for it?

Greg Palm

Yes. And I guess specifically, I just want to make sure I'm understanding this right. So one single unit might have like 6 or 7 rooms. So I guess what would the ASP on something like that be? Because I'm guessing that's way, way more than a traditional single wide.

William Boor

Yes. And there's a range about what we're seeing. I mean we're seeing kind of generally under $100,000 wholesale, but kind of can be in the $70,000 to $100,000 wholesale. And that's what I tried to explain in the prepared comments because now as I've described that, 7 showers, 7 toilets, 7 sinks, the material costs go up.

That's why the pricing is up. And when you kind of net it all out, including labor and these things are running fairly well through our plants. Once you kind of get to -- once your team gets a feel for how to make them, it's not really slowing us down significantly.

So when you have that higher materials cost, your gross margin effect is really not when you consolidate it with the rest of the company, it's kind of right in line.

Greg Palm

Yes. Okay. And in terms of like geographic, is there a certain region where you're seeing the most activity? And just overall, can you at least -- I know there's maybe limited visibility somewhat and things are happening on the fly. But presumably, you have some sort of pipeline or contract you're working against, right?

William Boor

Yes. We've got a few different intermediaries really. It's almost like selling through a dealer. We've got a few intermediaries. And we've seen a lot of volume in Texas area, but I wouldn't tell you that it's isolated to that. And over time, we're starting to see it spread out into other regions.

So I don't think it's going to be an incredibly localized. But early on, some of the bigger projects we've been involved in has been kind of in remote areas of Texas.

Greg Palm

Okay. All right. Maybe just one non-workforce housing question, then I'll hop back. But last quarter, you mentioned going back to the HUD code business, price competition. I think that was tied mostly to Texas. I don't know. Now it sounds like maybe you didn't mention that, so maybe it's lessened, but now maybe the industry is focused on this other sort of category. So maybe that lessens the risk going forward. But what are you seeing?

William Boor

Shiny object syndrome. You're tying back to the comments we made about retail, I believe, last quarter.

Greg Palm

Yes, correct.

William Boor

Even as we talked about it, I was kind of getting shaky and nervous that people are going to really focus on it because we brought it up. We brought it up because it was a meaningful impact on our consolidated margins. We felt people needed to hear about it. But what I tried to say then is these markets are moving. And we were seeing increased wholesale pricing. And we focus on Texas in this discussion only because so much of our retail is focused there, right? That's not a statement necessarily about Texas.

But we're seeing wholesale prices continue to rise in Texas, and we were seeing on the retail side, a lot of competition for the buyers that were out there. So their pricing wasn't going up commensurate with that. And I tried to frame that as I think this -- we're explaining it. We think you need to know about it, but we also think this is a market in transition and a moment in time.

If we fast forward to what happened this quarter, I think we've got some positive indications that it was a moment in time. However, like what we've continued to see is the wholesale pricing is going up to our retailers. And for everybody's knowledge, when we sell an internal manufactured home from one of our plants to our retail, we do it on a market basis and arm's length basis.

So I think it really reflects what's going on in the market. So their invoice cost of that purchased home into retail has been rising, but we saw this quarter the retail price start to go up as well. And net-net, the margin was still kind of in the same ballpark in retail it was previously. But the fact that the prices are starting to move up, I think, is a good indication that this is something we keep our eye on, but we're not expecting it to be like an ongoing systemic issue.

Operator

And our next question is going to come from John Lovallo with UBS.

John Lovallo

The first one is just in our conversations with folks across the industry, it seems like there's some market participants that have been at least somewhat less enthusiastic about participating in workforce housing. And it seems to us like the ASP is pretty solid. I guess I'm curious how the profitability compares.

And also, is there any risk to just kind of damaging the brand by doing this type of product? I'm just trying to figure out why others would not be more inclined to participate.

William Boor

Yes. I'm not sure I could answer why someone might be less inclined as we talked about the gross margin is kind of right in our wheelhouse. So I'm not worried about profitability. The one thing that I think we need to be careful about and are being very careful about is we're not we're not just loading all these orders into one or a few plants to the point where they're not able to take care of their independent dealer customers or their community customers.

So that would be a potential risk if a company just like kind of made all the rest of their business wait while they just focused on workforce housing. It's not to the magnitude, and we're being very mindful about trying to basically put these orders, spread these orders in our system smartly so that we're not hurting our independent dealer customers.

From a brand perspective, I'm not sure I see it. I mean we're still going to make a quality unit. It's obviously a very different application. It's not one that a customer is really going to be confused by. It's not going to be something that they're seeing in their neighborhood, for example. So I think it's kind of an nicely opportunity.

And this industry and Cavco through time and through history, we've done workforce housing for oilfields as an example. And it's just -- in times like this, it's really welcome because it's added orders that give you that extra backlog.

John Lovallo

Yes. That makes sense to me. Next question is the 21st Century ROAD to Housing Act obviously received a lot of attention, but there was a recent executive order that was called decreasing housing costs for the American people that included provisions, many of which were aimed at increasing coordination across federal agencies, also support for innovation and standardizing some of the permitting for manufactured housing. Any thoughts on these initiatives and how meaningful they could be for the industry?

William Boor

Yes. John, I'm kind of in a little bit of a wait-and-see mode, and that's not any pessimism. But the executive order by its very nature is somewhat general. And like you said, it was directional for some of the government agencies in different areas. There were aspects of it that are on things like automatically eliminating mortgage interest when someone's equity gets to a certain level.

If there's an impact on us from something like that, it's not even secondary. And I think directionally, you can get on board with the idea of let's not have people paying out of their pockets for something that's not needed.

But probably the most interesting one, but there's very little definition around it is the task force that the President kind of assigned to HUD and I guess it was FHFA to co-chair to just look at opportunities in factory-built housing to make the regulatory and inspection and approval processes more efficient.

From my two cents, and I feel a little bit like I'm sticking my neck out on something I haven't learned enough about. But from my two cents, manufactured housing under the HUD code is kind of a model for that kind of efficiency. So if that task force starts to look at other areas like modular or hybrid systems, I think that could be something that leads to some good outcomes for affordable housing in general.

So we'd be all for it. But it's still general. And so I'm not sure I have really a well-informed opinion about it at this point, John.

John Lovallo

Got it. Got it. Last one from my end and just going back to an earlier question on sort of the divergence between on-site and manufactured housing in terms of demand. Wondering if you could sort of pinpoint what the core buyer has looked like more recently? I mean, are these folks former renters? Are they just more rate-sensitive folks? Is there an average wage bracket that you're seeing? I mean anything that might help explain the difference?

William Boor

Yes. We tend to think in broad strokes that we've got kind of 2 core customer groups. One is that first-time buyer, low income, relatively low income, and they need a good affordable house, and they're trying to just figure out if they can get out of rent, right? So that's definitely a big part of the market.

And the other tends to be actually kind of retirees, 55 and older people, maybe they're downsizing, maybe they're getting a second home for snowbirding, right? And that still holds true. And I don't think that we've identified or noticed any like structural trend about new customers.

I think if there is one, and we've struggled to quantify this for ourselves and for you guys, if there is one, it's the buyer who historically would have only looked at site-built homes and because site builders are unable to hit first-time buyer price points and they're actually moving up and away from those price points, some of those customers are finding their way to manufactured housing and they're liking what they see and they're buying from us.

So if there's any trend that I would point to and it's a little bit of an empty statement because I can't quantify it. I do think we're getting more opportunity at what we consider the high price points and a site builder considers the low price points.

One thing I've noticed in the earnings releases over the last couple of quarters with homebuilders is a number of them talking about we're going to skew a little bit away from first -- what they call first-time buyers and a little bit more into first-time move-up. When I hear that as a manufactured housing person, that sounds like opportunity. It sounds like they continue to move up in price. And if we can get access to the locations that those buyers want to live, that's pure opportunity for us. And I think that's a shift out of all the customer dynamics you're asking about.

Operator

And the next question is going to come from Jesse Lederman with Zelman.

Jesse Lederman

Nice job in the quarter. Really exciting on the workforce housing opportunity. I wanted to ask a couple of clarifying questions. One is for Mark on the low single-digit increase that he noted earlier on shipments. I wasn't sure if that was referring to the organic increase or if that was the American Homestar increase and then the remainder, which I guess would be like low double digits would be the organic during the quarter?

Mark Fusler

Yes, I was referring to the legacy. So yes. Same plant.

William Boor

Yes, if we go back to the consistent plant group.

Jesse Lederman

Okay. So the organic, I guess, in other words, or legacy was up low single digits and the rest is American Homestar?

Mark Fusler

That's right.

Jesse Lederman

All right. That's helpful. Another clarifying one on single wides. Allison, I think you mentioned on the ASP part of what partially offset the increase in like-for-like pricing was perhaps more single wides in the mix, whereas I think we previously had discussed over the last few quarters really more of a shift to the multi-section homes.

So I would love for any more commentary on kind of what the price point mix during the quarter and then also what you think is driving it and what your expectations for that is going forward?

Allison Aden

Yes. I think it's a little bit of that kind of Bill mentioned, too, is that some of the buyers that are coming in are looking at what they can afford. And so we are seeing some go to the more single wides. But still the pricing has held. And I think our ability to really focus on our pricing structure that's allowing us to pass through the increase on the materials is really kind of the key element to focus on.

William Boor

I mean that mix can bounce around. You're right. I mean, for a while, if I go back a little bit further for a while, it was leaning towards singles and it leaned toward multis. And now we've had a quarter or 2 where even when you take out the workforce housing, it was still leaning a little bit more towards singles.

I don't have a really great answer for that, except in hindsight, when we see some of those movements and we look back over time, you kind of have to chalk it up to normal variation, to be honest. But the interesting thing this quarter with price, and I'm hammering a point we've already made is we've had plenty of quarters where we've seen a little uptick in price that we've had to tell everybody, yes, but it was really product mix and it was really a degree of integration with our company stores.

It wasn't really product price. And this quarter, it's the opposite. And I think it's important for people to hear that like the single wides and the multi-sections are both selling at a higher price than they were previously.

Jesse Lederman

Absolutely. I think that's a helpful distinction. What's your sense on that? Obviously, we know like a lot of potential buyers are and current renters who may want to buy are constrained from an affordability perspective and from inflation and all these different things.

Your sense for the consumers' ability now at retail, like if retail is going to pass along those price increases, too, what's the ability for the potential buyer to absorb any further increases?

William Boor

Yes. I think that's the point. I mean, from a business perspective, when we're looking at it just in isolation, pricing sounds great. But to your point, it's making it harder for folks. So yes, we're very conscious of that. And your point is very well taken. And what's hard to understand is what would be the demand sensitivity to a small increase or a small reduction in price.

But as I always point out, it's a local market. And so I think sometimes people think that there's some kind of pricing power where we can just decide to go raise or lower the price. I think this price -- these product markets are much more efficient than that. And right now, the price is going up, and it's making it harder for folks for sure. If they get a little interest rate relief, that's huge, too, right?

I mean that can offset that effect pretty quickly. And I hesitate to say it because it's not a trend now, but in the last few weeks, we've seen a slight downward movement in interest rates that might offset their monthly cost effect of the price increase.

Jesse Lederman

Okay. That's helpful, Bill. One follow-up on the interest rate stuff. I know you've talked about the chattel rate being stickier, but presumably, it does still kind of get benchmarked to some degree like over the last months, even before we kind of had this pullback, I would assume chattel rates grew because of what we are seeing on the 30-year mortgage rate.

So what is kind of the time frame through which the -- I know it's stickier, but like how quickly is it actually almost repricing up or down when the 30-year mortgage rate is moving, especially when there's such volatility as we've seen lately?

William Boor

Yes. My feeling is it's pretty sticky. I don't think it responds very quickly, and it will move a little and it will stay there for a while. So it's not very responsive. I think you're right that it's somehow correlated, but it is not an immediate reaction. Now we've talked a lot about what you need really for that market to become efficient is for some kind of secondary market.

And the GSEs, we're still trying our hardest to get the GSEs to take note of that and start buying home-only loans. Who knows if and when we'll ever get a breakthrough there. But the other thing, just like we've told folks that we've got investors that are new investors, probably more appropriate investors than we've had in the past for those loans. That's helpful, too, right?

If people like us at the CountryPlace are out there finding flow-through investment money that's probably tied to insurance liabilities, so they can offset a similar term, then that helps the market become more efficient, too. So I'm kind of interested to see where this goes and maybe the coming years, it might be, but maybe we're moving toward a more efficient market.

Jesse Lederman

Got it. Yes. We're eagerly watching to see what the GSEs do as well as it pertains to the chattel rates. Last one for me. I really appreciate all the help as always. It almost sounded like when you were talking about the backlog and you were saying if we didn't take the workforce orders, we kind of would have ended up in a similar place anyway, which kind of sounds like you maybe had some orders that you didn't accept because -- like you almost took the workforce housing orders in lieu of other potential orders or demand.

So I just want to allow you to maybe clarify if that's right. And whether or not you're almost taking a step -- you need to for one reason or another, and it doesn't seem like you do, you're only, I guess, at 75% capacity utilization. Of course, a strong number, but still room to go. Just love your clarity on that.

William Boor

Yes, I'm glad you asked the question because I wouldn't have been sensitive to that possible confusion. Yes, by no means are we not taking other orders. So my point was that we're at a healthy backlog level. We're not at a high backlog level where it's become a problem for customers. If you're -- if you go back in time and you're like pushing a year, that's an issue.

We're at 8 to 10 weeks and heading into the winter months, we're still taking all the orders. The backlog just kind of helps us with that dynamic we talked earlier where a given plants kind of concerned that they're going into the winter season, and they don't know how strong orders are going to be.

If workforce housing adds a little to their backlog on top of taking all the other orders, it helps us lean in a little bit harder on production. So yes, by no means do I want people to feel like we're taking one order over the other. We're not in that mode at this point.

Operator

And our next question will come from Tyler Batory with Oppenheimer.

Tyler Batory

First one for me, I'll continue the trend here on the workforce housing topic. Is there a lot of competition for this business? And are you mostly competing with other manufactured housing producers or with different types of temporary housing?

And then from your perspective, what helps you win this business? And what differentiates you from some of the others that might be trying to get into this space?

William Boor

Yes. It's an interesting and good question. Yes, I'm sure we're not the only ones getting workforce housing business. So I don't want that to be perceived. It's competitive to some extent. There are at this point, kind of intermediaries that are finding the opportunities with the projects and then kind of talking to the manufactured housing type companies to produce them.

So it's kind of a very natural market in that sense. But -- and your other question, it's not my perception that for a given remote data center, they would be looking at some other form of housing.

I think factory build is the appropriate housing or the appropriate construction method for that stuff. So I think it's in our wheelhouse as an industry. And I'm sure it's competitive. What's making the difference, I think, is as it is with any sale, right?

It's an intermediary coming to us and it's a pricing discussion. It's when can you deliver discussion and all the things that we would face if we were dealing with a land lease community or any other customer.

Tyler Batory

Okay. Okay. And then in terms of the order and demand commentary, I mean, obviously, you have the workforce housing that's coming in. You talked about orders below last quarter's pace. Just how much of that deceleration is just normal seasonality? Just want to confirm that there isn't any sort of change in underlying demand outside of what's happening with workforce housing.

William Boor

Yes. It's a great question. Yes, we talked about a drop-off and it's really thinking sequentially, right, from Q1. And I'll remind people, sometimes when you have those comparisons, you think that the drop-off saying something negative about the current quarter when you're comparing to a quarter that was pretty darn strong. And Q1 was strong.

We had -- I don't remember what we disclosed as far as the sequential uptick, but we had a couple of quarters where we were significantly into double-digit increases quarter-to-quarter. So a little bit of this is the comparison to a very strong Q1 in orders. And then yes, absolutely, seasonality, we would typically see Q2 be a little bit slower than Q1 from a seasonality perspective.

I guess to put it in some perspective, I'd say that orders this quarter are very much in the range of what we've seen in the last couple of years. In the last couple of years, we've always prospectively been racking our brains trying to figure out where is this going because there's been a lot of uncertainty in the market.

But when you look back, we've kind of been in the zone. And our second quarter orders are not out of line with that zone. So it's not like they've fallen off a cliff. And I'm talking about excluding workforce housing. So it's not strong, but the level of orders is still manageable. And as I said repeatedly, I think it's in a range that we're very able to adjust up or down from here.

Tyler Batory

Okay. Okay. Very helpful. And then my last question, just the capacity addition that you have coming online mid-2027. Just remind us how much spending is left there? And then help us think about just what the ramp-up looks like in terms of initial earnings contribution and when you really kind of get to a more stabilized level of production there?

William Boor

Yes. We haven't been out with actual capital numbers on that. The start-up is still pretty much online for sometime like mid-calendar next year. Projects have risk there, but I think we've been able to manage this one where so far, we've stayed roughly on schedule.

It's going to be a big -- initially, it will be one production line, but it will be a sizable production line as far as capacity and throughput. So we haven't really put projections out to isolate that one production line to give specific numbers at this point.

Tyler Batory

Okay. Very good. That's all for me.

William Boor

Tyler, I'll make one more point on your previous question just because I'm looking at some of the data as I answered, and I think everything I said kind of put it contextually in the right place.

But maybe one way to think about Q2 orders is that they were slightly up year-over-year. So even while we saw a drop-off from that very strong Q1 year-over-year, this is definitely -- we're not trying to tell people we've seen a drop off a cliff here.

Operator

And our next question comes from Catherine Lapey with Gabelli.

Catherine Lapey

Congrats again as well on the great quarter. Could you talk a little bit about the 75% capacity utilization in light of the strong 8- to 10-week backlog. So I'm wondering what's holding up the capacity utilization and what would get that number to 80%, 85%, 90%.

William Boor

Yes, it's kind of that dynamic we've been talking about. I mean we've been -- if you look at the last year or so, we've been kind of increasing that number a little bit. We -- capacity utilization is not a perfect number. And so we do tend to round it off a little bit when we communicate it. And the other thing about it is that as we do projects, and we've been doing a lot of projects in our existing plant system, but we adjust up the denominator, right?

So it's a moving target when you really think about the pieces and parts of it. So we've been in that 75% range, but I think over time, on an increasing view of total capacity, and that's why we -- you have seen us increase the total amount we put out. What's holding it up is this whole dynamic -- well, 2 things, I would say.

One is I've definitely observed that it seems a lot easier to reduce product pace than it is to increase it. Usually, when we're in the opposite mode, you can allow attrition to bring your staffing levels down and you can kind of adjust down pretty rapidly. When you're going the other direction, it can be more challenging. Now you're hiring people, training them and trying to go up. We're good at managing that, but that is a dynamic that always is at play.

And then the other thing is that, yes, backlogs have been increasing. And but -- and they're at a good healthy level right now. But when you're heading into winter months, there's that question in a given plant of is now the time to increase? Or should we just kind of hang out at this level and see and wait for spring to decide when to increase.

So that's -- those are the kind of plant-by-plant discussions we have. And every one of our plants is in a different place on that. We've got some plants that are basically producing relatively full. They've been at 80-plus percent for a while. We've got other plants that have a thinner backlog that haven't -- we haven't together decided to push production very hard yet given their backlog and their market dynamics.

So it's all this tug of war between are we entering a slowing period? Is the backlog big enough to bridge it? All that goes into the decisions about how hard to push the production.

Catherine Lapey

Okay. Great. Just a quick follow-up on that. Would you say that the workforce housing orders are targeting a specific sector of plants? Like are they closer to the plants that are already at that 85% capacity utilization? Or is the location of the workforce housing going to help with some of the plants with leaner backlogs? Or is it just pretty variable and hard to tell?

William Boor

Yes, it's a little bit variable. I mean the projects are where they are. We probably have plants that can reach them no matter where they are because I think our system covers the landscape pretty well. But this kind of ties Catherine, into some comment I made subtly earlier, I think, that was we're able to -- and I think the guys are doing a great job at this.

We're able to take in sizable orders and then think about where we're going to produce them, even if we break that order up and make it in a couple of plants. So it does relate to this capacity utilization dynamic. And if we've got a plant that's full, we're going to look to try to move those orders. You're still going to be relatively in the same region, but move those orders to where we've got more upside in capacity utilization.

Catherine Lapey

Great. Yes, that makes a lot of sense. Just one last question for me. I'd love to hear a little more on the breakdown of CapEx this quarter, particularly how much is attributable to El Mirage and then how much is just kind of steady CapEx that we can expect in the future?

Allison Aden

Yes. I think if you look at this quarter and last quarter, you do see kind of a tick up from the last -- the previous 3 quarters, which represents kind of the maintenance level. So I think that just looking at historically, while it's not -- the increase would not be completely attributable to El Mirage because we always have several projects and some phase of capital improvement.

But I think that directionally kind of gives you an indicator of the investment that we're making. And I think the key is when we looked at El Mirage, we did what we do with all of our major product decisions, and that's go through a pretty labor-intensive return calculation. But at the end of the day, the capital spending per capacity for El Mirage is going to be right in line with with historically the way that we've laid capital out for capacity additions.

William Boor

Allison, if you had to throw a number out for like sustaining capital, it's probably 8, maybe as high as 10.

Allison Aden

Between 8 and 9, that's usually. And you can see that's slightly over the D&A. So that kind of proves out what the maintenance capital has to be.

William Boor

To Allison's point, we've got projects going on in our plants, too. We've -- individually, they're all relatively small from a total company level, but we've done so many of them that they're always sneaking into those numbers.

Allison Aden

Small but important.

Operator

And the next question is going to come from Greg Gibas with Northland Securities.

Gregory Gibas

Bill, Allison, Mark, congrats on the results. I wanted to -- you noted federal and state-level support, not only with the Road to Housing Act, but also other reforms that you expect to open exciting opportunities in the years ahead. I imagine that's in reference to zoning regulations, better financing access.

But maybe to provide a little more clarity, I was wondering what you're most excited about and if there's any potential developments along those lines that we should keep an eye out for?

William Boor

Yes. Good question. I'm excited about what's going on federally. Obviously, it's not over with the ROAD to Housing Act and people are always already talking about ROAD 2.0 and what might be involved in that. So we continue to have momentum there, and I think we've talked a lot about that.

But probably equally as excited about the trends we're seeing at the state level where more and more states are passing state-level laws to try to even the playing field for factory-built housing to get into -- it's a zoning issue to get into areas we've really been kept out of in the past. So I don't even know if I could put one ahead of the other. I think both of those are pretty much equally exciting and both are equally important.

ROAD to Housing at some level is allowing us to make the products that fit into urban and close end markets and the state level work is probably more where the rubber hits the road to give us access to those markets. So really, we need both. We're getting good support in both areas, and that's what I think is going to really change the game.

Gregory Gibas

Makes sense and good to hear. I was going to ask about workforce housing orders, but I think that's been addressed. So what are your plans maybe for other off-chassis HUD homes? How -- can you maybe speak to the demand or interest, how that's trended following the unveiling of the Grande Arbor and kind of how the pipeline looks for future home designs?

William Boor

Yes. It's noticeably from my perspective, in my conversations with traditional developers, people that maybe are small in a certain location that have spent their careers doing site-built projects, they're perking up at the idea of maybe I should switch to manufactured housing.

And if I can get low sets and 2 stories, it really seems to have captured the imagination and attention of those kinds of builders. And we've had -- I can tell you, since the law passed, we've had several projects that have come to us to learn and talk about whether that's the next opportunity, which is why it's so important to continue pushing on like let's get the rulemaking done if that's what it takes or let's get some efficient alternate construction letter process in place so that we can start selling these things.

But yes, that's -- I think that's what it's opening up. People are excited about 2-story officially made HUD code homes and certainly ground set.

Operator

And our last question is going to come from Daniel Moore with CJS Securities.

Dan Moore

I know you, after an hour and 2 minutes, wanted one more word. So I...

William Boor

Started us off, you're going to finish this off here.

Dan Moore

I'll make it quick. This is the first quarter we've heard about it in a more meaningful way. So just can you talk to like the number of intermediaries? Is that growing that you're interacting with or in discussions with over the last 1, 3, 6 months? Just kind of trying to get a second derivative momentum idea of how this is kind of playing out in real time.

William Boor

Yes. And we haven't been hiding the ball. I mean I'll tell you, it really kind of hit this quarter for us. I mean this is a quarter that it was even really a thing as far as really tangible shipments and tangible orders.

Yes, I think the intermediaries are going to grow. I mean we've worked with a couple in these early days, but I just think this is going to continue to unfold, and I don't think it's going to ultimately be just a few people that are intermediaries between the manufactured housing companies and the data center projects. So it's -- we're waiting into it.

We've got some key relationships at this point. I think we'll expand that as we go forward. But as I said in my comments, it's very hard to predict how long, how stable, how big. So we're just going to have to keep our eyes -- our ear to the ground and try to be as helpful as we can to you guys understanding it.

Operator

And I will now turn the call back to Bill Boor for closing remarks.

William Boor

Yes. For those who have hung in with us, thanks for hanging in with us. It's great that people are real interested, and I hope we're giving you good information to understand not only where we were this quarter, but where we're heading. And it's obviously great to be able to report such strong results amidst an environment that has high interest rates and continuing uncertainty in the economy.

Going into the winter months, we've talked this. It's always a challenging point in the year. We know activity will slow with the weather and the holidays. But what's different this year is we're entering that period with the largest backlog since 2022, '23 when interest rates ran up. So we really feel like we're well positioned to react as needed to the markets. Thanks, everyone, for joining us and for your interest in Cavco, and we look forward to keeping you updated.

Operator

This concludes today's conference call. Thank you for participating, and you may now disconnect.