Cavco Industries, Inc. Q4 FY2025 Earnings Call

Good day and thank you for standing by. Welcome to the Cavco Industries Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mark Fusler, Corporate Controller and Investor Relations. Please go ahead.

Good day and thank you for joining us for Cavco Industries' fourth quarter and fiscal year 2025 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 Paul Bigbee, Chief Accounting Officer. Before we begin, we'd like to remind you that comments made during this conference call by management may contain forward-looking statements and non-GAAP financial measures. Forward-looking statements include statements about our expected 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 credit 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 material risks and the 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. The appendix to our press release also contains reconciliations of our non-GAAP financial metrics to the most comparable GAAP measure. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Friday, May 23rd, 2025. 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 would like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill?

Thanks, Mark. Welcome, and thank you for joining us today to review our fourth quarter results. Seasonally, the fourth quarter ushers in the spring selling season. In our last call, we talked about the steady increase in orders over several quarters through calendar 2024 and how that has enabled us to increase production rates where our plants had supporting backlogs. The quarter-to-quarter trend of increasing orders continued in Q4, boosted by a pickup in March. This was after unusually challenging weather in February slowed installations in the field and caused some unplanned downtime in several plants. Harsh February weather is obviously expected in northern states, but the weather across the south was unexpected. Specifically, we lost 24 operating days across our system. The good news is that weather backs up installations and shipments, but it doesn't negate them. Again, in March we saw the expected spring pickup to close out a solid quarter. More generally, a lot of economic uncertainty entered the mix in Q4. However, March's uptick indicates that our buyers are out there trying to purchase new homes. Overall, our unit shipments were up almost 29% year-over-year. The backlog was down sequentially. To dissect that a bit, backlogs were expected to be down in January. They continued to decline in February for the reasons outlined earlier. And then we saw a healthy increase in March. While there is a range in the individual plants, across the system we have five to seven weeks of backlog. Market activity across the retail channels is generally positive and our plants are either holding production levels or looking to increase depending on their specific market conditions. Earlier in Q4 we announced that we renamed our manufacturing plants to the Cavco name. This is part of a rebranding of our homes under product lines that tie directly to the characteristics of the homes rather than the legacy brands of the factories. Our new and cohesive branding approach will make it easier for home buyers to quickly narrow their home search to the product lines that match their needs. Clearly, this change will better leverage all of the work we've done in digital marketing over the past few years and will benefit our dealers with improved leads from cavcohomes.com. Our plant investments and marketing improvements have Cavco ready to continue ramping shipments through both industry growth and market share gains. Our steady strategic investment through the downturn in both acquisitions and plant improvements has meaningfully grown our peak-to-peak capacity. This consistent investment has been enabled by strong cash generation and our debt-free balance sheet. While we've continued investing strategically, we've also continued our share buyback program. This quarter, we repurchased about $33 million of stock. Similarly, since the initial repurchase authorization in fiscal 2021, we've bought back 15.5% of our outstanding shares. We continue to be confident that we can repurchase shares without hindering any strategic opportunities. With that, I'd like to hand it over to Allison to provide more details around the fourth quarter results.

Thank you, Bill. Net revenue for the fourth fiscal quarter of 2025 was $508.4 million, up $88.2 million, or 21%, compared to $420.1 million during the prior year. Sequentially, net revenue decreased $13.7 million, driven by a decline in average revenue per home sold. Within the factory-built housing segment, net revenue was $487.9 million, up $89.4 million or 22.4% from $398.5 million in the prior year quarter. The increase was primarily due to 28.5% increase in homes sold, partially offset by a 4.7% decline in average revenue per home sold. The decrease in average revenue per home was primarily due to a lower proportion of homes sold through our company-owned stores, product pricing decreases, and more single-wide in the mix. Factory utilization for Q4 of 2025 was approximately between 70% to 75% when considering all available production days. Utilization was approximately 60% in Q4 of the prior year. Financial services segment net revenue was $20.5 million, down $1.1 million or 5.2% from $21.6 million in the prior year. This decline was due to fewer loan sales and fewer insurance policies in force, partially offset by higher insurance premium rates. Consolidated gross margin in the fourth quarter as a percentage of net revenue was 22.8%, down 80 basis points from 23.6% in the same period last year. In the factory-built housing segment, the gross profit decreased 10 basis points to 22.3% in Q4 2025 versus 22.4% in Q4 of 2024, driven by lower average selling prices. Financial services gross margin as a percentage of revenue decreased to 36.8% in Q4 of 2025 from 45% in Q4 of 2024 primarily due to reduced revenue from loan sales. Selling, general, and administrative expenses in the fourth quarter of 2025 were $77.5 million, or 15.2% of net revenue, compared to $61.4 million, or 14.6% of net revenue during the same quarter last year. The increase in SG&A was primarily due to a $10 million write-off of intangible trade name values due to our brand realignment. Additionally, compensation increased as a result of higher bonuses and commission expenses on higher earnings compared to the prior year period. Pre-tax profit was flat at $42.9 million this quarter compared to the prior year quarter. Effective income tax rate was 15.4% for the fourth quarter compared to 21% in the same period last year. The decrease in the effective tax rate was due to higher Energy Star tax credits and greater tax benefit from stock option exercises. Net income was $36.3 million compared to net income of $33.9 million in the same quarter of the prior year, and diluted earnings per share this quarter was $4.47 versus $4.03 in last year's fourth quarter. Adjusting for expenses associated with our brand realignment, adjusted net income was $43.9 million compared to $33.9 million with adjusted diluted EPS of $5.40 per share versus $4.03 per share in last year's fourth quarter. During the quarter, we also repurchased $33.2 million of common shares, and during the full year, we repurchased $150 million of shares. Also, the Board of Directors recently extended the authorization by an additional $150 million, reflecting confidence in our strong cash generation, leaving approximately $228 million under authorization for future share repurchases. Now, I'll turn it over to Paul to discuss the balance sheet.

Thanks, Allison. In the quarter, we had a decrease in cash and restricted cash of $3.3 million, bringing our balance to $375.3 million. Cash provided by operating activities was $38.7 million, partially impacted by the increase of current liabilities and accounts receivable. Cash used in investing activities was $10.1 million, and cash used in financing activities was $31.9 million, primarily due to share repurchases. Comparing the March 29, 2025 balance sheet to March 30, 2024, the increase in accounts receivable is related to organic growth in the factory-built housing segment. Unit shipments were 28.5% in the fourth quarter of fiscal 2025 compared to a year ago. The increase in short-term consumer loans receivable is due to higher origination of loans held for sale in excess of actual sales. Inventories increased from higher finished goods inventory at company-owned retail lots due to increased demand, as well as higher raw material purchases to support increased production. Goodwill and intangibles decreased from the $10 million write-off of intangible trade name values. Current liabilities are up from increased compensation and bonus accruals on higher earnings, increased insurance loss reserves, and higher customer deposits. Finally, treasury stock increased $150 million due to buybacks executed in fiscal year 2025. With that, I'll turn it back to Bill.

Okay. Thank you, Paul. Liz, let's go ahead and open up the line for questions.

Our first question comes from Daniel Moore with CJS Securities.

Hi, good morning. This is Justin on for Dan. Can you talk about your expectations for production rates for fiscal first quarter relative to the fourth quarter? And then what can you tell us about your discussions with customers in both retail and community markets and the cadence of order rates in April and thus far in May?

Yeah, we don't usually get too far into the current quarter but I know this when we report on the fourth quarter, quite a bit of time has passed since the quarter ends, so I understand the question. The production rate question first, this quarter we were kind of consistent with the previous quarter, pretty flat in Q4 with Q3. Like I said, the quarter started off kind of expectedly with January. We knew that we were entering into the year at a higher production rate than the order rates. We talked about that last quarter. That was a decision we made to kind of ramp up in anticipation of the spring selling season. And March picked up and what I'd say about the current quarter that we're in now, first quarter of the fiscal year, is that April has pretty much been consistent with that March positive trend as far as orders and a little bit of backlog growth. So, I'll give you that much and say that from a production perspective, when we talk to all of our plants, we have a range of backlogs in the plants and there are some plants that don't have the backlog really to increase production rate at the moment. But you really could only put our plants in two categories, those that are holding at this level, anticipating and hoping that they'll get a little backlog and be able to start ramping up and a good number of our plants that are kind of talking about, hey, our next move will be up in production. So, we really don't have any that seem to be looking at decreasing production rates for any reason. So, overall, the bias across our plants is for increasing production rates. And that'll be dependent on what the market gives us, for sure. You also asked how I think about the different channels. Retail, the dealers have been pretty solid for quite a while now and that continues. And communities, I almost hate to bring it up because it was such a long discussion, but with communities for a long time we were kind of held back on order rates as an industry because of inventory challenges and a little bit of hesitance with the market, we've seen them continue to, I guess, build back up. They got past the inventory, and now I would say the general feeling is they've moved pretty much back toward their proportionate share of order rates. So, we feel good about that too. That's been evolving over quite a bit of time. But really, I think, and when we talk communities, I always point out we're talking about both kind of the land lease and rental communities as well as the builder channel. So, lumping all those together, they're kind of returning back to their proportionate share of orders, which is real positive.

All right, that's helpful. And then one more, if I could. How should we think about gross margin and operating margins in Q1 and over the next quarter relative to the Q4 results?

Yes, thank you. Although we experienced some negative effects from lower average selling prices of our homes, we also saw a decrease in input costs and service expenses, resulting in our factory-built gross margins declining by only 10 basis points year-over-year to 22.3%. This shows that several factors will influence our future margins in the factory-built housing sector, particularly pricing. We are noticing that pricing pressures are becoming more visible, with increased competition in certain areas. The second aspect to consider will be cost. Commodity prices can be unpredictable and often volatile. Typically, we see price increases around this time of year as builders and wholesalers prepare for the spring building season. Currently, prices are stable, but there is a possibility of a price surge soon, and we will need to monitor how tariffs will influence this. Lastly, our consolidated margins rely on the performance of our financial services segment, particularly our insurance division. Recent developments in that division, along with strategic changes aimed at minimizing losses, mean that significant storm activity could lead to higher claims and potentially affect our margins in the future. Does that help?

Yeah. Very helpful. Appreciate you taking the question. Thank you.

Thank you.

Our next question comes from the line of Greg Palm with Craig-Hallum.

Yeah. Good morning, thanks. I wanted to just start with a little bit on what you saw in February. You mentioned some lost production days. What states or what regions exactly did you see that? And just to be clear, it was the month of February. Was that right?

February was quite unusual. It feels like a long time ago, but the weather was particularly impactful across the Sunbelt, especially in Texas and the southeastern states. We experienced some setbacks, particularly in field setups, which halted during a period when the weather should have been favorable historically. Additionally, some of our plants in Texas and the Southeast experienced downtime due to the February weather, amounting to about 24 lost production days, which is unusual. We are always eager to see how spring unfolds, and February delayed our ability to gauge that.

Yeah. Just to clarify, did that impact the margin in some way, and can we quantify how those lost production days affected factory margins?

I think you're on the right track. I’ll give it a try, and then Allison can add or correct anything. Generally, you’re correct. We've mentioned before that we aim to keep our costs as variable as possible. Even above gross margin, there are fixed costs. So whenever we experience a decrease in volume, it tends to put pressure on gross margin. In my view, though I’m open to Allison’s perspective, it likely didn’t have a significant impact on the gross margin we reported, but it would have applied downward pressure. Would you agree with that, Allison?

Yeah. I think that's balanced, Bill.

And I guess maybe looking ahead, as it relates to the kind of the rebrand, maybe let's unpack or dig into that a little bit more in kind of the, number one, the rationale and maybe the feedback so far and what you really hope to get out of that.

I appreciate that question because it's difficult to fully explain, and we aim to be concise in our prepared remarks. To give you some background, we have 31 plants, most of which we've acquired over the years, starting with the Fleetwood acquisition in 2009. Previously, if we had a plant from Fleetwood, it retained the Fleetwood name in the market, leading to their products being branded as Fleetwood products, regardless of their price or characteristics. This worked for some time, but now, with our investments in online marketing and the potential for more national marketing programs, it became less effective. Therefore, we've decided that all our plants will be referred to as Cavco plants, and while we aren't changing the physical products they make, the names of those products will no longer be tied to the plant names. We now have product lines categorized by the types of homes we produce, named based on their characteristics. For instance, a high-end customizable product will be part of one product line, while a lower-priced product will be in another line. This change will help customers narrow their searches online more efficiently, allowing us to direct them to relevant dealers. This is significant as it will enhance both lead generation for dealers and the customer's home search process. We have also recently rolled out national products available in all markets, which strengthens our marketing capabilities on our website. We believe this will bring much-needed clarity to home shoppers. I may have been a bit wordy there, but I hope this clarifies things.

Yeah, makes sense. I will get back in queue. Thanks.

Thanks.

Our next question comes from the line of Jay McCanless with Wedbush.

Hey, good morning, everyone. Thanks for taking my questions. So digging down on the tariffs, I know during the supply chain days, tankless water heaters were an issue, some other things like that. I guess if you think about your cost of goods sold bucket, your input bucket, is there anything in there that we need to really be concerned about from a tariff perspective? I know Renai has a plant in Georgia now, so that should, I think, at least protect them partially. But are there any other things in the COGS bucket we need to be keeping an eye on?

Jay, if I could, let me just share key points and, Bill, please jump in where you want to enter your comment. I think there's really three key points as we think about tariffs and how they could impact our business. The first is that many products we use are exempt from any recent tariffs and that includes US lumber and steel. Second, we've been successful managing tariffs on Canadian lumber that have been in place for several years now. And although a few months ago, there was some discussion around potentially increasing this tariff rate associated with Canadian lumber, those discussions have now been set aside. So, we don't see any incremental impact there. Lastly, important to note that we do purchase many lighting, electrical and plumbing components, windows and doors that are sourced from China. And therefore, we do expect to see some impact that could reach between 5% to 8% of our material costs. And just as a reminder, the material costs are roughly about half of the cost of goods sold. Does that help?

Yeah. So, 5% to 8% on basically 50% of the COGS bucket, is that the way to think about it, Allison?

Yeah, that'd be the way to think about it at this point, Jay.

Okay. And I'm sorry, Bill, I cut you off.

No, no, it's good to clarify that. I was going to say your question, I'm not sure I'm adding a lot of value. But your question really kind of has two components, right? The cost increase, which Allison covered. And also, are we worried about just supply, just the access to the materials. So far, I don't believe we've gotten to the point where we feel like our ability to get the materials we need for a home has been really challenged. I guess the scenario where that might take place is if site building remodel, repair, remodel and our business kind of takes off. But right now, we'll keep our eye on it. But I don't think we have a high degree of concern about just being able to access the materials we need.

Okay, that's great. Thank you, Bill, and Allison also. So my second question, could you talk about where chattel rates are now and what you guys are seeing on credit availability for consumers?

Yeah, I can take the interest rate. We've seen a little bit of a spread start happening with lenders. So right now, the range is about 8% to 9%, but haven't really seen any impact to availability.

Good to hear. And then more of a broad question on the price competition you talked about, Allison, in the prepared remarks. Is it price competition across the board or is it more focused on lower-priced homes, single-wides? Any more detail you can give us on that price competition comment would be helpful.

Sure, I can address that, Allison. Generally, we aren't observing a significant increase in price competition. Certain regions, particularly Florida, have been struggling for some time. Interestingly, while the Southeast has remained relatively strong over the past one to two years, Florida continues to present challenges. Price competition is largely confined to specific areas. Overall, we haven't seen widespread price competition across the country. Your question brings up an interesting aspect. In this quarter, we've noticed that pricing for single-section homes has been under a bit more pressure compared to multi-section homes. It appears that the low-end market is becoming more competitive, with a shift towards single-section homes and some pricing pressures in that segment.

That's good to know. So more competitive on single-section homes?

Yeah, and we'll keep our eye on that, Jay, because sometimes, and I think we all do this, I know we do it internally. Sometimes we're looking with a magnifying glass at some of these small number changes. We've commented before, if you look back at the cycle that we've been coming out of, this industry pricing has held up pretty well. And for a number of quarters, we've kind of seen the true price, true wholesale same product with its price quarter-to-quarter, it's been a very slow small decline.

Great. Thank you, Bill. That’s it for now. I’ll jump back in queue. Thank you.

Thanks, Jay.

Our next question comes from Jesse Lederman with Zelman & Associates.

Thank you for taking my question. Bill, could you please clarify your comment about April being similar to March in terms of orders? Are you indicating that April's figures are consistent with March's in an absolute sense, or that the positive momentum from March has carried into April? I would have anticipated that as we progress into the spring selling season, there would be an increase in activity from March to April. I'm just trying to understand your earlier statement better.

Yeah. Without parsing it too much, I wasn't trying to imply that it was flat. I was saying that March was an uptick and April has kind of seasonally been consistent with that uptick. We didn't see a reverse course on the trend.

Got it. So, April, in other words, is following normal seasonality, you would say? Is that right?

I think generally, that's fair, yeah. I'm not trying to be vague, seasonality is kind of an interesting thing to track, too, because one year, the seasonality looks a little different than the next. But we feel good about April kind of continuing the positive momentum that we saw in March.

Okay, great. But even still, it sounds like pricing is flattish, maybe down incrementally on an apples-to-apples basis just because of pressure in some regions like Florida specifically. Would you normally see an increase in the spring months as you enter the spring selling season, which is typically stronger from a demand perspective? Or do you not normally have seasonality in pricing from that standpoint?

I don't think we've really observed seasonality in pricing because the industry is generally aware of what to expect. If orders are scarce, there might be some downward pressure on prices. Conversely, if orders are strong across the board, prices could increase. However, this is just my impression since I haven't looked into it closely, but we don't typically enter a seasonally stronger time expecting a price increase. Overall, pricing does not appear to be seasonal. I find our current pricing situation quite intriguing. We've experienced several quarters of consistent incremental growth in orders. Despite this, there's been a gradual decline in same-product pricing, which I refer to as leakage since prices aren't really falling. If the market continues to improve, we might expect this trend to stabilize and potentially increase, as is usual. However, there are always macroeconomic risks, such as interest rates, that could affect this. If the positive trend we observed in March and April reverses and volumes decrease, we may see continued price leakage or even an increase in that leakage. The industry is known for its volatility and cyclical nature, but the key question remains whether orders will keep increasing. If they do, I anticipate that pricing will at least remain steady and start to rise.

I just want to confirm that the margin for fiscal 4Q did not reflect any impact from tariffs. Is that accurate? If it is, when do you anticipate that effect will be seen? Essentially, if pricing remains stable but there is a 2% to 3% rise in overall home costs, it seems likely that margins could be pressured. Can you provide some insight into the timing of when tariffs might have influenced the 4Q numbers, and if they weren't included, when we can expect that to be reflected?

Tariffs did not impact Q4. The timing for materials affecting our cost of goods is about 60 to 90 days from when we see commodity pricing until it reflects in our costs. Tariffs are just starting to take effect, so we might see a limited impact at the end of Q1 and a more significant effect in Q2. However, we are focused on a small number of products and input costs that will be affected. We have successfully navigated supply chain shortages in the past and maintain strong vendor relationships. We believe we can proactively manage the impact of tariffs in the upcoming quarters.

Awesome. Thanks, Allison. And last one for me. Bill, you did a really great job at the House subcommittee hearing last week. It'd be great to just get your thoughts on what you think the key takeaway was from the hearing, and yeah, if you could give some color on that, that would be great. Thanks so much.

I appreciate your comments on this. Things happen slowly in that town, and every opportunity can lead to political involvement. We witnessed that even during discussions about affordable housing, which both sides certainly agree needs improvement in supply. It was positive that the conversation was centered on supply. We previously mentioned that if the government intervenes by providing more funds for home purchases, that approach tends to be inflationary for home prices and does not address the underlying supply issue. The focus on supply in the discussion was encouraging. There are two House bills currently in play that I believe are significant. I won’t elaborate too much on this, as I risk going off track. One bill aims to clarify that HUD is the sole regulator of our industry. Some of you may recall that we’ve navigated challenges with the Department of Energy, which proposed energy efficiency rules that weren’t well-suited to our processes, creating dysfunction in the regulatory landscape. Establishing HUD as the sole regulator is crucial, and I believe there’s a strong chance this will be legislatively confirmed. The second bill is also intriguing; it proposes removing the chassis from the definition of a manufactured house under HUD code. This change would still allow us to produce many homes with a permanent chassis but would facilitate innovation in our industry. It could enable easier creation of multistory homes and allow for more flexibility in ground-level installations without elevation issues tied to the chassis. Considering these possibilities reveals significant opportunities for product innovation in urban and suburban markets, thus opening a new market for the industry. That said, I must caution that removing the chassis definition won’t create opportunities immediately; much work is still needed at the state level after the federal definition is revised. However, all of these measures aim to increase the supply of factory-built housing, which is essential for addressing affordability challenges. Thank you for the question. I’ll try to keep it brief, but these actions are actively underway in Congress, and if we can push them through, it will create positive momentum for the industry.

Great to hear. Thanks so much again for all the color.

Thanks, Jesse.

We have a follow-up question from Greg Palm with Craig-Hallum.

Yeah, thanks. I guess just on the tariffs and whether that's on some of the inputs that you alluded to or even something like steel, I guess the question is, how are you and some of your peers acting like? Are there surcharges that are being put in place in case? Or how would you expect to sort of counter if things actually get bad from here?

We've noticed that in certain markets, various manufacturers are planning to raise prices or impose surcharges due to tariffs. Many manufacturers, including us, are informing our customers about these developments. While we won't act preemptively, we want to be clear that our pricing may become more unpredictable. It’s possible that we may need to implement price increases on a weekly basis as a response to tariffs. Our approach is to be transparent with our customers, making them aware that tariffs could significantly affect our costs and, consequently, our pricing. I realize this may complicate planning for them, but we want to be prepared to adapt to any changes in our cost structure. Additionally, I've mentioned before that the relationship between costs and prices in our industry has evolved to become more separate. Whether we can pass on a cost increase in a specific market largely depends on the supply-demand conditions in that area. I foresee that if tariffs have a substantial impact, there will be regions where we can raise prices and preserve our margins. However, in places like Florida, where demand may be lacking, tariffs may not influence pricing. I hope this clarifies my point. People seem to be preparing for a fluctuating situation, and there has been more openness about the potential realities of this issue among us and our competitors, leading to several proactive measures.

Yeah, I guess what I was asking is whether you expect to pass it along or take the hit yourself, and the way I understand it is, it depends on the market, but for the most part, it sounds like you're still focused on maintaining that margin to some extent.

Yeah. I'm kind of a bit of a Econ 101 thinker on a lot of this stuff. And if we have a market that demand is really exceeding supply, then the market price of our homes is going to go up really regardless of what's going on in the cost side. So, I really do think of the pricing of our products being somewhat independent from the cost.

Yeah, okay. And I guess just maybe a follow-up on just sort of the activity in March or April because I think what you're seeing is definitely quite a bit better than, call it, general housing. So, any thoughts on whether that's a byproduct of the customer base, a byproduct of maybe the financing market and it not being as important to manufacturing housing? I'm just curious if you've got any theories why demand is holding up at least better on a relative basis.

And, Greg, your question is really in comparison to the site builder dynamics?

Correct, yeah.

I'm going to try to keep my response brief, as I could discuss this for quite some time. It's an interesting situation, though I'm not an expert on it, I'll share my perspective. Site builders experienced a boost due to the mortgage lock-in effect. Homeowners with 3% mortgage rates hesitated to sell, leading to a low inventory of previously owned homes. Consequently, those needing a new home were likely to purchase new ones because that was the available option. However, as the average mortgage rate is starting to increase and more inventory of new homes is entering the market, it appears site builders have seen their market opportunity diminish. Although it hasn't completely halted their growth, they are facing a bit of compression in that regard. Our buyers, on the other hand, are largely influenced by monthly pricing. Historically, a significant portion of manufactured home purchases are for new manufactured homes. Therefore, we operate in a distinct customer base and market dynamics, which means we aren’t as impacted by the current inventory levels in the housing market. The dynamics are quite different overall. Site builders are growing more slowly than we are at present, as more previously owned homes are returning to the market and inventory is increasing.

Got it, okay. Yeah, that's good color. All right, thank you.

All right. Thanks, Greg.

We have a question from Jay McCanless with Wedbush. Jay, you may be on mute.

Sorry about that, everyone. Thanks for taking my follow-up. Two questions for me. The first one, since you talked so much about Florida, could you give us any sense of what Florida is for annual shipments for Cavco or percentage of annual revenue, just so we have a sense of what's going on there?

I'm not sure I have an exact figure. We have two plants in Florida, so you could consider a ratio of two out of 31 to get a rough idea of our production capacity there. The market isn't entirely lost; these plants have been operating with low backlogs for some time, and while their production levels are down, we haven't closed either line. Overall, in relation to the company as a whole, I don't think it's a significant amount, and this situation has persisted for quite a while.

That's good to know. And then specifically on OSB prices, we've seen those come down pretty dramatically and it seems like they keep going down every week. Do you guys expect that to be a tailwind on your first quarter, your second quarter gross margin, just given how much OSB you typically use in a home?

I think you're correct. In March, we noticed that prices reflected a consistent demand that is nearly back to the lows we experienced in 2020. From my historical perspective, this situation can shift rapidly. Additionally, as I mentioned earlier, we generally observe an uptick in orders from builders and wholesalers during the spring building season. This is a specific factor that we will need to monitor closely.

Okay, great. Thanks. Appreciate it.

That concludes today's question-and-answer session. I'd like to turn the call back to Bill Boor for closing remarks.

Bill, I think you’re on mute.

Thanks for the heads-up. Sorry, folks. Thanks, Liz. In a cyclical industry like ours, clearly, macroeconomic drivers can have a big impact on demand. I mean, we've talked about that a lot in the call. And so we're very focused on the key to success being making real-time adjustments across our system. I think our results continue to reflect both a positive view about the general direction of the industry's volume opportunity, but at the same time, an organization that stays very nimble, and we're able to react accordingly to whatever the market gives us. We feel very well positioned to react to market shifts and to continue to get solid results for our shareholders. I want to thank you for joining us today and for your interest in Cavco. And we look forward to keeping you updated on our progress. Thank you.

Thank you.

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