Skyline Champion Q2 2024 Earnings Call Transcript

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November 1, 2023

There are 7 speakers on the call.

Operator

Good morning, and welcome to Skyline Champion Corporation's 2nd Quarter Fiscal 20 24 Earnings Call. The company issued an earnings press release yesterday after close. I would like to remind everyone that today's press release and statements made during this call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to the materially from the company's expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in the company's filings with the Securities and Exchange Commission.

Operator

Additionally, during today's call, the company will discuss non GAAP measures, which it believes can be useful in evaluating its performance. The reconciliation of these measures can be found in the earnings release. I would now like to turn the call over to Mark Yost, Skyline Champion's President and Chief Executive Officer. Please go ahead.

Speaker 1

Thank you for joining our earnings call, and good morning, everyone. I am pleased to be joined on this call by Lori Huff, Q3 and CFO. Today, I will briefly talk about our Q2 highlights and then provide an update on activities so far in our Q3, including Q2 of fiscal 2020, we saw healthy demand from end consumers through our captive and independent retail channels. The community REIT channel softness continued as expected through the September quarter as our REIT partners worked Q2 of fiscal 2019, through their backlog of existing new home inventory before placing new orders. This pause in the community ordering combined with the absence Q2 of FEMA related sales that were in the Q2 of last year drove our year over year declines in both production and revenue.

Speaker 1

The call. Backlog as of September 30 was $258,000,000 compared to $260,000,000 at the end of the June quarter as sequential quarterly unit increases were offset by decreases in price. Average lead times of 8 weeks quarter normalized within our historical range of 4 to 12 weeks and are consistent with lead times at the end of the Q1. The quarter. Order volume during the quarter increased again sequentially and we are seeing the expected decrease in home prices call as consumers shift to smaller homes or homes with fewer features and options given the current interest rate environment.

Speaker 1

The. Shifting to some of our strategic actions we have taken recently, on September 26, the closing of our investment in ECN Capital and the establishment of our new captive finance company, Champion Financing. The call. We believe that the formation of a captive finance company will unlock home volume growth and bring value for our key stakeholders call by providing broader and more attractive financing options and services to our customers. It will enable us call to provide a comprehensive home buying solution, while becoming more deeply connected with our channel partner customers the end consumers who purchase our homes.

Speaker 1

The investment aligns with our longer term strategic view the call is being recorded on offering digital configuration and selling to homebuyers. As we continue to ramp up Champion financing, we believe the benefits will Create a deeper connection with our dealers and consumers. As we drive more volume to ECN, which will help to increase the diversity of capital sources that will accelerate the growth of the industry overall. Additionally, in call. We closed on the acquisition of Regional Homes, the 4th largest HUD manufacturer in the United States, the largest independent retailer in the company we have long admired.

Speaker 1

We are confident that addition of regional homes to the Skyline Champion platform will allow us to accelerate profitable growth through the expansion of our retail and manufacturing contribution across the Southeastern United States. Regional Homes has a customer centric selling approach call and is dedicated to providing an exceptional home buying experience to its customers, which directly aligns with Skyline Champion's core value call and our strategic initiative to enhance customer buying experience. In coordination with the closing of the acquisition, call. I'm excited to welcome Heath Jenkins to the Skyline Champion leadership team as he will serve as President of our captive retail operations. The brings years of industry retail experience and strong leadership capabilities, but most importantly exhibits an unwavering commitment the customer first.

Speaker 1

Altogether, these investments represent an exciting opportunity as we strengthen our efforts to support the long term growth the solidified Skyline Champion's market positioning as the leading provider of attainable housing solutions, the quarter for which the market is in tremendous need of today. Moving to the Q3 outlook, we continue to see stronger order rates call from our retail and builder developer channels. And while some REIT customers have returned to the market as others are continuing to destock call as we move into our normally seasonally slower period. We expect the 3rd quarter revenue to be up mid the high single digits as a result. We have seen orders strengthen 5 quarters in a row by the growing need from consumer for affordable housing.

Speaker 1

The call. We anticipate this need for housing to be longer in duration than we initially anticipated due to recent indications from the Federal Reserve. The call. Additionally, this need is driving more regulatory tailwinds for our products that give us increasing confidence the closing of our housing solution. With our long term strategic investments into retail, call, financing, digital and automation.

Speaker 1

We are adding value and enhancing the buying experience for the end consumer and our channel partners. Call. I will now turn the call over to Lori to discuss our quarterly financials in more detail.

Speaker 2

Thanks, Mark, and good morning, everyone. Call. I'll begin by reviewing our financial results for the Q2 followed by a discussion of our balance sheet and cash flows. Call. I will also briefly discuss our near term expectations.

Speaker 2

During the Q2, net sales decreased 42% call to $464,000,000 compared to the same quarter last year in which we recognized $118,000,000 in FEMA unit sales. The call. The decrease in net sales reflects a 15% year over year decline in average selling price per U. S. Home Q1 due to FEMA unit sales last year, which carry a higher ASP than our core product due to the complexity of sales.

Speaker 2

The call. In addition, our core product ASP declined due to product mix and the decrease in material surcharges. The call. During the quarter, we sold 4,842 Homes in the U. S.

Speaker 2

Compared to 7,270 4 homes in the prior year period. U. S. Home volume was down year over year due to the absence of FEMA related sales quarter and reduced production schedules to align with order rates. On a sequential basis, U.

Speaker 2

S. Factory built housing revenue was in line with the first quarter consistent with expectations that demand would remain relatively flat. An increase in the number of homes sold was call, partially offset by a decrease in the average selling price per home as core customers opt for smaller and less optioned homes the the utilization decreased to 53% compared to 56% in the sequential Q1 of fiscal 2024. The capacity utilization is being adversely impacted by newly opened plants and a rightsizing of production rates call at certain plants that serve end markets in which current order trends remain softer. The quarter.

Speaker 2

Canadian revenue decreased 25 percent to $29,000,000 compared to the Q2 last year, call, primarily due to a 23% decline in the number of homes sold, driven by slowing demand. The call. The average home selling price in Canada decreased to $126,100 call compared to $129,400 in the prior year period, primarily due to the fluctuation the translation of the Canadian dollar to the U. S. Dollar for the year over year period.

Speaker 2

The quarter. Consolidated gross profit decreased 58% to $116,000,000 in the 2nd quarter quarter and gross margins contracted by 890 basis points versus the prior year quarter. On call. On a sequential basis, we saw gross margin decline 280 basis points. Our U.

Speaker 2

S. Housing segment gross margins were 24.5 percent of segment net sales, down 9.50 basis points from the same quarter last year, call, primarily due to higher margin senior unit sales in the prior year quarter as well as lower core product sales volume and a mix shift to homes with call, less features and options, allowing the homeowner to hit their monthly payment price point given higher interest rate. The quarter. Gross margins were also negatively impacted by lower production rates as we are choosing to operate plants at lower run rates call in order to be prepared to quickly ramp upon the return to normal order volume. SG and A in the Q2 decreased $19,000,000 to $64,000,000 primarily due to lower incentive compensation call.

Speaker 2

Net income for the 2nd quarter decreased 68% call to $46,000,000 or $0.79 per diluted share compared to net income of $144,000,000 call for earnings of $2.51 per diluted share during the same period last year. The call. The decrease in EPS was driven by the decline in sales and reduced operating leverage on lower volume. The call. Diluted EPS for this quarter includes approximately $0.03 of transaction related costs the Q1 of 2019 was $1,500,000,000 incurred for

Speaker 1

the acquisition of Regional Homes.

Speaker 2

The company's effective tax rate for the quarter was 24.5% versus an effective tax rate of 25.0 percent for the year ago period. Adjusted EBITDA for quarter was $59,000,000 compared to $197,000,000 in the prior year period. The quarter. Adjusted EBITDA margin of 12.7% compared to 24.4% in the prior year period call reflects the return to more normal profitability levels. In the near term, call.

Speaker 2

We remain focused on maintaining efficient production lines as channel conditions improve and order activity returns to a more regular cadence. The call. The structural improvements and investments made in our business have strengthened our operational capabilities, quarter, protecting profitability in periods of lower output. That said, we reiterate our expectation that the mix shift Q4 of fiscal 2020, we expect the impact of the Q4 of fiscal 20 24. The call.

Speaker 2

We expect margins to compress further in the sequential third and fourth quarters due to product mix shifts, the newly added production capacity continuing to ramp and the purchase accounting implications of the Regional Homes acquisition. The call. As of September 30, 2023, we had $701,000,000 of cash and cash equivalents the call and long term borrowings of $12,000,000 with no maturities until 2029. We generated $54,000,000 of quarter, compared to $231,000,000 for the prior year period. The decrease in operating cash flows is primarily due to lower net income and the working capital impact of producing semi units in the prior year.

Speaker 2

The call. During the quarter, we allocated $143,000,000 of our capital for the strategic purchase of call and the company's common and preferred shares of ECN Capital. Subsequent to quarter end, we used $318,000,000 of cash to purchase Regional Homes. The call. In addition, we assumed $93,000,000 of debt, primarily related to inventory floor plan liabilities.

Speaker 2

The call. We remain focused on executing on our operational initiatives and given our favorable liquidity position, plan to utilize our cash call to reinvest in the business and for opportunities that support strategic long term growth.

Speaker 1

The call.

Speaker 2

Since closing on the ECN investment, we've been working to develop the business plan for the strategic partnership with Triad Financial Services, call, including the rollout of Champion Financing Branded Floor Plan Programs for our retail and community channel partners call, as well as tailored retail loan programs for our retail network. We are targeting launching these programs in January 2024. The call. As a reminder, the partnership is an asset light structure, leveraging Triad's existing origination and servicing infrastructure the call and ECN's funding capabilities, which include relationships with community banks and leading institutional investors call with no loan risk on the Skyline Champion balance sheet. We will be reporting the impact of the ECN common stock investment and the results

Speaker 1

call of the captive financing

Speaker 2

partnership on a quarterly way. We began the integration of Regional Homes the closing of the transaction in mid October. The teams have been meeting to share best practices and to begin to capture synergies. The call. As a reminder, we anticipate synergy capture of $10,000,000 to $15,000,000 over the next 2 years, call, including manufacturing procurement synergies, leveraging our national footprint and operational improvements call from sharing of best practices across production and sales.

Speaker 2

The regional balance sheet, including retail finished goods inventory will be revalued to its fair value and will negatively impact the company's consolidated gross margin in the next several quarters the call as those homes are retail sold. In addition, SG and A will increase for the amortization of intangible assets call generated from the acquisition. I'll now turn the call back to Mark for some closing remarks.

Speaker 1

Thanks, Laurie. Call. As we manage through the rebalancing of our channels, we believe Skyline Champion is well positioned due to our affordable price points, strategic positioning and our core initiatives. The long term outlook for demand is supported by the channel opportunities with community REITs, manufacturer to rent and builder developer growth as well as helping our retail partners adapt changes the call in consumer demographics. In addition, the need for affordable housing continues to grow each and every day call, and we believe that the elevated cost of housing will drive more traditional slateful buyers to our homes.

Speaker 1

Call. Before we open the lines for Q and A, I want to take a moment to thank our people. The entire Skyline Champion team has our consistently strong performance as a result call of the amazing things they make happen each and every day. So with that operator, we may now open the lines for Q and A.

Operator

The the confirmation tone will indicate that your line is in the question

Speaker 1

the

Operator

call. Our first

Speaker 3

Here, I wanted to start with gross margin. It sounds like in the quarter, the maybe the weaker than expected result was more of a function of some of these plant operating costs versus maybe increased the competition or discounting. So I just wanted to make sure that was right. And then just sort of going forward, is the thought process that you're the Maybe keeping more employees on or keeping more shifts in preparation for that returner the Of demand, is that why one of the reasons why gross margin is going to maybe stay a little bit subdued here in the near term?

Speaker 2

The Yes, Greg, I think that you summed it up pretty well. We are definitely seeing in addition to the things the You mentioned a product that product mix shift that we were anticipating but to a greater degree as well. So, yes.

Speaker 3

The And just in terms of maybe quantifying a little bit more relative to this previous quarter, the What kind of compression should we expect over the next quarter or 2?

Speaker 2

Yes. For the next few quarters, We're definitely it's going to be there's a lot of moving parts. So we're going to continue to see the product mix shift the with the consumer trying to reach a more affordable monthly payment with interest rates the Where they are today and as well as the ramping plants and then the impact of the regional purchase accounting on gross margin. So we're expecting that probably around 200 basis points.

Speaker 3

And the purchase accounting was kind of 40 to 60 basis points, Correct.

Speaker 2

Yes, I did mention that last quarter. We're still working through all the numbers based on the closing balance sheet.

Speaker 3

Yes, okay. And then I don't know if you can maybe talk a little bit more about Champion Financing and what that the Looks like over the next 1 or 2 years, I know ECN, the partner here, they've publicly stated the expectation of that JV contributing the $40,000,000 of pretax income per partner in calendar 'twenty five. I think maybe they said at least 40 $1,000,000 if I remember right. Is that something you want to bless as well? And if that's the case, just kind of curious what that ramp might look like over the next couple of years?

Speaker 1

Yes, Greg. I think the ramp is out there. I think, ECN mentioned 12% to 24 For their 50%. So I think that's where you're looking at that piece for that. The JVs, obviously, We're very excited about that, especially given the banking conditions that we're seeing today.

Speaker 1

I think the fact that the ECN has capital flow partners from Blackstone and Carlisle is tremendous in today's market. We've already seen 2 or 3 banks the start to regional and community banks start to exit out of the lending space for our customers. The And as there's further pressure and we anticipate some further pressure on regional community banks, the Making sure our customers have access to liquidity is very important for our dealers the And obviously our community partners and builder developers as a matter of fact. So I think having that partnership with ECN is vital, especially the strong relationships they have with Blackstone and Carlisle, who committed an additional $1,300,000,000 worth of capital. So infusing liquidity into the market when community and regional banks.

Speaker 1

So that really is a strong leg forward to us. So As Laurie mentioned, we're getting things set up right now. We anticipate we'll have the systems and other things ready to go by January time period. And so we'll really start to ramp it in the calendar year of 2024. And so I think everything is on track for that and The teams are working very well together.

Speaker 1

Yes, makes sense. And just to

Speaker 3

be clear, I was talking calendar 'twenty five. I think they mentioned 12 to 24 in calendar 2024, is that right?

Speaker 1

Yes, that's correct.

Speaker 3

Yes, okay. Makes sense. Okay, I will leave it there. Thanks.

Speaker 1

The Thanks, Greg.

Operator

Thank you. Our next question is coming from Daniel Moore with CJS Securities. Please proceed with your question.

Speaker 4

The Yes, thanks. Good morning, Mark. Good morning, Laurie. First off, just want to clarify comments, Mark. I think you said fiscal Q3 revenue up mid to high single digits sequentially.

Speaker 4

Is that correct? And if so, is that organically or inclusive of regional?

Speaker 1

The That's inclusive of regional, Dan, in that number. Yes, we expect somewhere at least in that range, the mid to high single digits at least for the quarter sequentially.

Speaker 4

Got it. And it sounds like some communities returning, some still destocking. Are there any discernible differences, be the Regional or other that you can sort of identify or is it more community versus community by community?

Speaker 1

It's really more community by community. We've seen actually a handful of communities return. They've been starting to order and get back on a normal cadence. Others are still in that destocking process. So it's I don't want to say it's fifty-fifty, Dan, but it's definitely there's a split the between the communities that are starting to move and others are still kind of in that pause mode.

Speaker 4

Got it. And What can you say just in terms of kind of longer term progress that the Genesis solution is making? The We focus on those top 100 builders, but even beyond that, in terms of sort of converting to your solution, I recognize it takes the Years, not quarters, but what's the sort of momentum or cadence of those dialogues?

Speaker 1

The The momentum is phenomenal actually. I think now that interest rates the have stayed up a little bit and they're forecasted to stay up a little longer according to the Fed. It's really causing builders to take a look at what that outlook is. Right now, a majority of builders are buying the closing of the quarter, we had order growth of 20 sequentially and orders year over year grew by 2 50 percent and that's with no buy downs, no real incentives to drive volumes. So I think the affordable price points there and with their cost of capital for small to mid tier builders kind of ranging in that 14% range for development.

Speaker 1

That really can drive that's a huge incentive for them the to switch to our solutions to where we can save them 9 to 12 months of cost capital time. So it's tremendous. So I'd say the momentum is definitely picking up, especially now that people are looking at the fact that buydowns Can't last forever and the Fed's extending longer. I think that really is a motivation for builders to the look at an alternative because they can't do it otherwise.

Speaker 4

Got it. Helpful. And last for me, just circling back to the gross margin. The Appreciate the color and commentary. 200 bps, kind of back down to the 23% range, maybe a little conservative, we'll see.

Speaker 4

Just talk, Laurie, about when we get through the purchase accounting and get to maybe back to 60%, 65% utilization where you see margins leveling off even at this new, let's say, if it's a new norm for a longer period of time in terms of lower price points, mix, etcetera, where you sort of see us, leveling off over the next 4 to 8 quarters? Thanks. The

Speaker 2

Yes, Dan, thanks for the question. We still think that our long term structural margin targets are the in that mid-twenty percent range. So I do believe that we're going to get back to the targets that we talked about the Historically, it's just going to be bumpy for the next few quarters.

Speaker 4

All right. Very helpful. I'll jump back with any follow ups. Thanks. The

Operator

Thank you. Our next question is coming from the line of Phil Ng with Jefferies. Please proceed with your question.

Speaker 5

The Hey, Mark, you sound pretty excited about this direct to builder channel. Certainly, you have some excess capacity right now with a softer demand backdrop. What's your ability to kind of pivot to serve that channel a little more fuller? Is there anything you got to do on the labor front or the facilities?

Speaker 1

The No. Thanks for the question, Phil. No, part of the reason we're running this quarter, we ran at 53% capacity utilization. The Part of the reason we're choosing to run at kind of less than optimal capacity utilization is really to make sure we have the available capacity to enter that channel. Right now is that pressure point.

Speaker 1

And I think a lot of builders have been buying down rates the in view that it would be a short term. They just need to do it for a few quarters to get through to keep their sales up. I think now that it's more of a marathon less than a sprint of rate buy downs, I think they're starting to reconsider. So I think We've got this infrastructure in place to move into that channel very quickly, which is why I think the pipeline is shaping up the way it is For us.

Speaker 5

Okay. That's helpful. And then how do you see this you see an integration rolling out and progressing, call it, the next the 12 months, any big mile marks you want to achieve ahead of spring selling season? And you called out how having this partnership now gives you better access to liquidity, especially in a ship now gives you better access to liquidity, especially in an environment where credit is a little tougher. Does it help on the rate side of things as well?

Speaker 5

Do your consumers get a more competitive rate now versus when you didn't have this partnership previously?

Speaker 1

Yes, Phil. We haven't done anything to drive rates in a different way. There are some benefits I think to our partners in terms of rate that we can look at, the Especially with our turnkey solutions that we're offering, Phil. I think if they're using if they're buying from the call. They're using our construction services.

Speaker 1

They're using our floor plan and other things. I think the Overall, we can look at it from a DVD or a volume discount basis that will definitely help them in some ways. I really think the benefit the program really to deliver great customer experience, faster turnaround times, better offerings in terms of what we can deliver to them. And then I think the 3rd piece is really just like I said, the suite of services to where they have one partner they can deal with for multiple needs. And obviously competitive rates to the end consumer is really what it's all about.

Speaker 5

The Super. And just one last one for me. How do you kind of see your sales cadence kind of wrapping up in the 4th quarter? You talked about 3Q. It's just kind of a noisy year, so it'd be helpful to kind of get your perspective on how the shape of the year wraps up.

Speaker 5

And do you expect pricing and mix to kind of the Stabilize here or there could be some further degradation in the back half?

Speaker 1

Yes. I think there's going to be a little bit of noise, Right. I mean, we're going to have some choppiness as we integrate regional. They have a different price point and other things that we'll have to bring in here. The I would see revenue up sequentially and then continue to grow in the spring, as the market ramps and Some of the community customers continue to come back.

Speaker 1

I really think it's positioned Very well. ASPs are going to be a little bit noisy, to be honest, just because with the mix of retail versus manufacturing, you're going to see kind of the volatility in rates just in terms of all of it in noise, which is not really price the deterioration or increases. It will be more mix oriented as Laurie mentioned earlier.

Speaker 5

And then regional mix is down or up or I just want to make sure you made some comment about integrated regional. I just want to make sure I fleshed that out.

Speaker 2

The Yes. So regional is seeing the mix shift that we're seeing more broadly across all of the plants still. The So where last year they had higher prices, their prices are coming down as well just due to the mix the shift in the monthly payment price point that the customer is driving. So we do expect ASPs to come down the Just generally sequentially from the Q2 to the Q3 and probably stay in that range for the quarter for the next few quarters, as we work through, that leveling of mix.

Speaker 5

Okay. Makes sense. Thanks a lot.

Speaker 1

The Thank you.

Operator

Thank you. Our next question is coming from Mike Dahl with RBC Capital. Please proceed with your question.

Speaker 6

Hi. It's actually Chris Quad on for Mike. Just to follow-up on the regional the discussion now that the deal is closed, is there any more specifics you could provide on terms of expected unit contribution in next quarter and the 4Q, just given the additional color you have now?

Speaker 1

Yes. We don't Chris, thank you for the question. We don't break out regional separately in terms of the guidance. I think they're wrapped up in our overall statement of the How we see the Q3 shaping up.

Speaker 6

Got it. Understood. And then just maybe shifting on Shifting towards the many changes in the core in your core customer dynamics following the move up higher in rates. I mean, have you seen a change the quarter. In order trends in the last month or 2, how has the financing environment shifted in response to the move higher, like our spreads the Have spreads expanded?

Speaker 6

And any color you could provide on the health of the core MH consumer today relative to a few weeks back and the financing changes?

Speaker 1

Yes. Thank you, Chris. I think I'm actually I'm fairly confident in the consumer right now. We've seen like I said, one thing I look at very the Directly is the fact that we're our unit volumes and our order rates have picked up 20% sequentially. And like I said earlier, I think 250% year over year percent and that's without incentives.

Speaker 1

So I think We're seeing that drive to affordability. We're seeing customers look for a better alternative. And we don't really have to drive huge financial call incentives to capture that customer base. So I think that outlook is shaping up very well for us In terms of that, our customers right now are seeing probably we're seeing rates probably the best rates we're seeing right now for channel are about 8.5%. I would say the average is probably closer to 8%, 9%.

Speaker 1

If they're poor credit, they're in the 10%, 11%, 11.5%. So but it's a great spread right now. In some cases, the 50 basis points, 100 basis points we're seeing for channels, which is very competitive in the marketplace today. So it's a great value for our consumers. The call.

Operator

Thank you. We do have a follow-up question coming from the line of Greg Palm with Craig Hallum Capital Group. Please proceed with your question.

Speaker 3

The Yes. Thanks for taking the follow-up. Apart from the excluding this purchase accounting, will Regional's gross margins Should be accretive or are they kind of in line with kind of that mid-20s gross margin? I forget whether you We've talked about that before, but maybe you can remind us.

Speaker 2

Yes, Greg, they're a little bit lower, so we've got to work on I'm bringing in the synergy capture over the next couple of years to bring that up.

Speaker 3

Okay, got it. So maybe that's part of the mix shift as well. And then Just thinking longer term, I know, Laurie, you mentioned kind of getting back to mid-20s, but why wouldn't it be the higher whether it's in that kind of 26% to 27% range that you were talking about previously or even somewhere in the The higher 20s, just under more normal capacity utilization levels. You mentioned the synergy capture. It just the It feels like, but I just wanted to maybe flush that out a little bit more if I could.

Speaker 2

Yes, Greg. The 26%, 27% is still quarter, certainly doable at normal capacity levels. And obviously, as volumes increase, there's some upside potential there too. So the We see it in that range, 25 to 27 whatever.

Speaker 3

Okay. So it doesn't sound like anything sort of changed in terms of Getting back to that level or long term versus what we were thinking last quarter?

Speaker 2

Not from a long term perspective, no.

Speaker 3

Yes. Okay. All right. Understood. Thanks for taking the follow ups.

Operator

The Thank you. It appears we have no further questions at this time. So I'd like to pass the floor back over to Mr. Youssef for any additional closing remarks.

Speaker 1

I'd like to thank everyone for participating in today's call. We appreciate the time and your continued interest. Call. We look forward to updating you on our progress on our Q3 call. Thank you and have a great day.

Operator

Call. Thank you. Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation and you may disconnect your lines at this time.

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Key Takeaways

  • In Q2 the company reported a 42% year-over-year sales decline to $464 million, driven by the absence of last year’s FEMA sales and continued order softness from community REIT partners.
  • Backlog remained steady at $258 million with average lead times of eight weeks, and the shift toward smaller, less-optioned homes reflects consumer sensitivity to higher interest rates.
  • Skyline Champion closed its investment in ECN Capital and is launching Champion Financing in January 2024 to offer dealers and homebuyers broader, captive financing solutions without loan risk on the company’s balance sheet.
  • The acquisition of Regional Homes strengthens the company’s Southeast retail footprint, with $10–15 million of synergies expected over two years, though purchase-accounting and inventory revaluation will pressure near-term margins.
  • For Q3 the company expects revenue to rise mid-to-high single digits sequentially, while gross margins will remain compressed due to product mix shifts, new capacity ramp-up and acquisition impacts, with a long-term target in the mid-20% range.
A.I. generated. May contain errors.
Earnings Conference Call
Skyline Champion Q2 2024
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