Harsh Q3 at homebuilder Cavco
The Phoenix-based company’s income declined to $2.23 million, a 41 percent plunge compared to the previous year’s quarter. The company also reported a 16 percent revenue decline, with $38.1 million in sales.
“Cavco’s incoming order rates were soft during the quarter and order backlogs were depleted,” Chief Executive Officer Joseph Stegmayer said in a statement. “Accordingly, we lowered our rates of production, which had an adverse effect on efficiency and profitability.”
Cavco touts itself as a leading producer of vacation cabins and park model homes. Under 11 brand names, the company manufactures modular homes, cabins, and commercial buildings and trailers. The company operates in the southwestern portion of the United States.
Despite analysts’ and economists’ opinions, Stegmayer remains confident that Cavco
will rebound from its financial predicaments.
“(W)e feel that we are well positioned in the marketplace with a broad product line … (and) the geographic markets in which we participate offer positive population growth and demographic factors that are generally favorable for the manufactured housing market,” he said.
Cavco’s fortunes were equally dismal in its second quarter.
The company reported a revenue decline of 8.6 percent – with $43 million in sales. Profit dropped 8.5 percent to $3.2 million, compared to $3.5 million in the same period of 2005.
Orders declined “significantly” according to a company statement, and the company was forced to cut production rates and its workforce.
According to The List database, Cavco has no announced agency relationships.
According to Nielsen Monitor-Plus, the company’s minuscule marketing budget was all spent on spot radio advertising.
With sales steadily dropping and an already tiny budget, Cavco may not be ready to hear from firms just yet. However, we think regional firms should keep the company on the radar for work in coming months. Firms that can assist with trade show or B-to-B marketing endeavors should approach Cavco for project work. Although its budget is small, the company could improve its profile with strategic below-the-line campaigns such as a public relations blitz or through product placement in local media outlets.