NYSE:SKY Champion Homes Q2 2025 Earnings Report $66.06 -1.44 (-2.13%) Closing price 08/8/2025 03:59 PM EasternExtended Trading$65.23 -0.83 (-1.26%) As of 08/8/2025 07:02 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Champion Homes EPS ResultsActual EPS$0.93Consensus EPS $0.61Beat/MissBeat by +$0.32One Year Ago EPS$0.82Champion Homes Revenue ResultsActual Revenue$616.88 millionExpected Revenue$600.52 millionBeat/MissBeat by +$16.36 millionYoY Revenue Growth+32.90%Champion Homes Announcement DetailsQuarterQ2 2025Date10/28/2024TimeAfter Market ClosesConference Call DateTuesday, October 29, 2024Conference Call Time8:00AM ETUpcoming EarningsChampion Homes' Q2 2026 earnings is scheduled for Monday, October 27, 2025, with a conference call scheduled on Tuesday, October 28, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by Champion Homes Q2 2025 Earnings Call TranscriptProvided by QuartrOctober 29, 2024 ShareLink copied to clipboard.Key Takeaways Home sales increased 29% year-over-year to 6,536 units with organic sales orders up 14% across retail, builder/developer and REIT partners, demonstrating broad-based demand strength. The Regional Homes acquisition delivered synergy savings at the upper end of targets one year ahead of plan, accelerating integration benefits. Consolidated gross profit rose 43% to $166 million with gross margin expanding 190 basis points to 27.0%, driven by higher average selling prices and lower input costs. Revenue for Q3 is expected to decline by mid-single digits sequentially due to hurricane disruptions at nine plant locations and typical winter season softness. Champion closed the quarter with $570 million in cash, generated $60 million in operating cash flow, and returned $20 million to shareholders via share repurchases, while replenishing its $100 million buyback authorization. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallChampion Homes Q2 202500:00 / 00:00Speed:1x1.25x1.5x2xThere are 8 speakers on the call. Operator00:00:00Good morning, and welcome to the Champion Homes Second Quarter Fiscal 2025 Earnings Call. My name is Sachi, and I will be coordinating your call today. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:25I will now turn the call over to your host, Jason Blair, to begin. Jason, please go ahead. Speaker 100:00:31Good morning. Thank you for taking the time to join us for today's conference call and review our business results for the Q2 ended September 28, 2024. Here to review Champion's results are Mark Yost, Champion Home's President and Chief Executive Officer and Lori Huff, Executive Vice President and Chief Financial Officer. Yesterday, after the market closed, we issued our earnings release. As a reminder, the earnings release and statements made during today's call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Speaker 100:01:05These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations. Such risks and uncertainties include the factors set forth in the earnings release and in the company's filings with the Securities Exchange Commission. Please note that today's remarks contain non GAAP financial measures, which we believe can be useful in evaluating performance. Definitions and reconciliations of these measures can be found in the earnings release. Would now like to turn the call over to Champion Home's President and CEO, Mark Yost. Speaker 200:01:40Good morning, ladies and gentlemen. Thank you for joining today's earnings call. Before we discuss our financial results and outlook, I would like to take a moment to honor the memory of Keith Anderson, a dear colleague, mentor and transformative leader for Champion Homes. Keith served both as a Director and former CEO at Champion, where his visionary leadership and steadfast commitment to excellence left an indelible mark on our company. His influence extended beyond our corporate boundaries as he played a significant role in shaping the broader housing industry through his board and advisory roles. Speaker 200:02:23Keith's career was distinguished by his integrity, innovation and relentless dedication to corporate excellence. Keith was more than just a leader. He was a mentor and a friend to many of us. His wise counsel and warm personality enriched our professional lives and instilled our corporate culture with a sense of purpose and camaraderie. As we proceed with today's call, we hold Keith's memory dear and continue to be inspired by his enduring legacy. Speaker 200:02:57His contributions have not only shaped our past, but also laid the strong foundation for our future. Now let us move to the overview of this quarter's performance. Our performance this quarter demonstrates effective execution across the company, particularly enhancing our digital direct to consumer strategy, advancing the integration of Regional Homes acquisition and scaling the benefits from Champion Financing. These efforts have enabled Champion Homes to deliver more value to our customers. The 2nd quarter exhibited strong growth with home sales increasing 29% year over year to 6,536 units. Speaker 200:03:42Additionally, we saw a 14% increase in organic sales orders year over year with gains across retail, builder developer and our community REIT partners. However, at the end of the quarter, hurricane impacts disrupted both orders and sales affecting both manufacturing and retail locations due to prolonged power outages and the temporary suspension of policy writing by insurers. Despite these challenges, our team's extraordinary efforts Speaker 300:04:20ensured Speaker 200:04:20that our operations suffered no significant damage. The 2nd quarter saw a sequential decrease in revenue from the fiscal Q1 down $12,000,000 while our backlog grew $23,000,000 resulting in a total backlog of $427,000,000 at the end of the quarter. The average backlog lead time remained steady at 11 weeks, aligning with the end of the 1st fiscal quarter. I'm pleased to announce that the acquisition of Regional Homes has continued and surpassed our expectations. We have achieved the upper limit of our synergy targets this quarter, which marks a significant milestone for us. Speaker 200:05:06Impressively, this achievement comes just 1 year following the acquisition, a full year ahead of projected schedule. Building on the success, Champion Financing, our collaboration with Triad Financial has also gained significant momentum this quarter. Over recent quarters, we've launched new floor plan financing options for our independent dealers and consumer financing programs for our selected national products. The early outcomes from these initiatives have been very encouraging, bolstering our confidence that we can provide customers with a comprehensive and appealing home buying solution. This success underscores our commitment to enhancing financing accessibility, further propelling our growth the manufactured housing market. Speaker 200:05:59Altogether, these strategic actions support our commitment to strengthening our market position and delivering on our promise of providing accessible, comprehensive housing solutions and creating value for our shareholders. Looking to our 3rd fiscal quarter, we observe we are observing a softening in order rates, which is in line with our typically slower winter selling season. Additionally, we have noticed that consumers are taking a cautious approach, delaying their purchasing decisions as they await the outcome of the upcoming election. As we address the operational impacts from Hurricanes Helene and Milton, I want to express our heartfelt concern for all those affected by these devastating events. 9 of our 48 plant locations in Florida, Georgia and the Carolinas have been directly impacted, leading to expected timing delays in order fulfillment, home deliveries and retail sales. Speaker 200:07:04Our focus is on the extensive cleanup and rebuilding efforts required in these regions and we are committed to supporting our employees and the communities during this challenging time. Going forward, we do anticipate a modest decline in top line performance for the 3rd quarter projected to decrease by mid single digits sequentially. This anticipated dip is largely attributable to the timing disruptions from the hurricanes. Despite the immediate headwinds, we anticipate strong medium and long term demand within these regions spurred by widespread destruction of homes. This is expected to increase demand and it places us in a pivotal position to aid in the rebuilding efforts, affirming our commitment to support the recovery in these communities. Speaker 200:07:58I will now turn the call over to Lori, who will discuss our quarterly financial performance in more detail. Speaker 400:08:04Thanks, Mark, and good morning, everyone. I'll begin by reviewing our financial results for the Q2, followed by a discussion of our balance sheet and cash flows. I will also briefly discuss our near term expectations. During the Q2, net sales increased to 33% to $617,000,000 compared to the same quarter last year with U. S. Speaker 400:08:29Factory built housing revenue increasing 37%. The number of homes sold increased 31% to 6,357 homes in the U. S. Compared to 4,842 Homes in the prior year period. U. Speaker 400:08:47S. Home volume during the quarter was supported by additional retail and manufacturing capacity resulting from the Regional Homes acquisition that contributed approximately $148,000,000 to net sales during the quarter. The average selling price per U. S. Home sold increased by 4.5% to $92,400 due to a higher mix of units sold through our company owned retail sales centers. Speaker 400:09:15On a sequential basis, U. S. Factory built housing revenue decreased 2% in the Q2 compared to the Q1 of fiscal 2025. We saw a slight sequential decline mainly due to Hurricane Helene's landfall 2 days prior to the end of the second quarter. Several of our manufacturing plants in Florida, Georgia and the Carolinas lost a day or 2 of production and were unable to ship homes. Speaker 400:09:45In addition, our captive retail locations were delayed in closing several home sales. On a sequential basis, the average selling price per home increased 1% due to changes in product mix. Manufacturing capacity utilization was 60 compared to 58% in the sequential Q1 of fiscal 2025. Current utilization rates primarily reflect the increased capacity brought online through recently opened plants. Canadian revenue during the quarter was $22,000,000 representing a 23% decline in the number of homes sold and a 1.5% decline in the average selling price per home versus the prior year period. Speaker 400:10:34The average home selling price in Canada decreased to $124,200 due to a shift in product mix. The reduction in sales volume can be attributed to a combination of factors, including higher interest rates and economic uncertainty in key markets that have tempered buyer enthusiasm for new homes. These conditions are anticipated to continue to impact the housing market dynamics in Canada in the near term. Consolidated gross profit increased 43% to $166,000,000 in the second quarter, and our gross margin expanded by 190 basis points from 25.1 percent in the prior year period. The higher gross margin was primarily due to higher average selling prices on new homes sold as our company owned retail sales centers captured a greater share of overall sales versus the prior year. Speaker 400:11:36In addition, lower input costs primarily from forest product materials contributed to the higher gross margin profile. These favorable margin trends were partially offset by the effect of purchase accounting increases to the carrying value of the finished goods inventory that was acquired with the Regional Homes acquisition, which had a negative 40 basis point impact on consolidated gross margin during the quarter. On a sequential basis, gross margin came in better than anticipated due to lower input costs and higher captive retail sales. SG and A in the 2nd quarter increased $35,000,000 over the prior year period to $100,000,000 The increase is primarily attributable to the Regional Homes acquisition and higher variable costs related to higher revenue and profitability. The company's effective tax rate for the quarter was 21.6% versus an effective tax rate of 24.5% for the year ago period. Speaker 400:12:42The effective tax rate was positively impacted by an increase in recognition of tax credits related to the sale of energy efficient homes. Net income attributable to Champion Homes for the 2nd quarter increased 20% to 55,000,000 dollars or earnings of $0.94 per diluted share compared to net income of $46,000,000 or earnings of $0.79 per diluted share during the same period last year. The increase in EPS was driven mainly by higher operating income in the 2nd quarter. Adjusted EBITDA for the quarter was $74,000,000 compared to $59,000,000 in the prior year period. Adjusted EBITDA margin was 12.0 percent compared to 12.7% in the prior year period, which was impacted by higher SG and A. Speaker 400:13:38We expect the recent hurricanes in the Southeast will impact revenue in our fiscal Q3, although the extent of that impact is difficult to estimate. Gross margins have stabilized. However, we expect margins to fluctuate quarter to quarter as a result of product mix. As of September 28, 2024, we had $570,000,000 of cash and cash equivalents and long term borrowings of $25,000,000 with no maturities until 2026. We generated $60,000,000 of operating cash flows for the quarter compared to $54,000,000 for the prior year period. Speaker 400:14:21The increase in operating cash flows reflects higher net income, partially offset by an increase in our inventory balances when compared to the prior year period. In the quarter, we leveraged our strong cash position and returned capital to our shareholders through $20,000,000 in share repurchases. Additionally, our Board recently approved the replenishment of our $100,000,000 share repurchase authority, reflecting confidence in our strong cash generation. I'll now turn the call back to Mark for some closing remarks. Speaker 200:14:58Thank you, Lori. The outlook for our company remains optimistic, particularly against the backdrop of the broader housing market. Despite the general challenges facing new traditional construction, our operations are benefiting from the healthy demand and resilient margins. This includes revised orders from retailers and builder developers as well as our community partners, reflecting a persistent need for affordable housing solutions. These trends not only demonstrate the resilience of our market, but also positions us ideally for sustained growth. Speaker 200:15:37Moreover, we are strategically expanding our reach into builder as a service and consumer retail sales through digital platforms, complemented by our innovative financing solutions. These initiatives are designed to drive our growth and enhance value for all stakeholders. The recent hurricanes, while impacting the near term timing, are expected to ultimately create a surge in demand in the affected regions, affirming our pivotal role in recovery and rebuilding efforts. This positions us to further solidify our market presence and capitalize on long term growth opportunities. And now I'd like to open the floor for questions. Speaker 200:16:22Operator, please proceed. Operator00:16:25Thank you. We will now be conducting a question and answer The first question is from Greg Palm from Craig Hallum. Please go ahead. Speaker 300:16:57Yes. Good morning. Thanks for taking the questions. I'd also like to echo your comments about Keith. You had a really strong influence on a lot of people inside and outside the company. Speaker 300:17:09So it's going to be missed by a lot of people here. I want to just start with maybe if you're able to quantify just some of the impacts from the storms near term both in the recently completed quarter and current quarter. Any way to sort of quantify it either from a volume or revenue standpoint? And I guess the bigger question is at what point do you sort of catch up that pent up demand? Do you think it takes a couple of quarters? Speaker 300:17:42Is it in the next year? What's your best guess at this point? Speaker 200:17:46Yes. Thank you, Greg. I think production at several of our facilities in Florida, Georgia and the Carolinas were interrupted due to power outages and flooding in the surrounding areas. Retail placements the last week of September in North Carolina and Florida, those stores had to close and insurers stopped binding policies the final week of September. So there definitely was an impact on the quarter. Speaker 200:18:15Overall, I think as far as when we catch that up, it really depends a lot on the infrastructure rebuild. So right now, we're assuming it's going to take probably this quarter and maybe a little bit into the next quarter for them to rebuild. But if that cleanup goes a little quicker or the infrastructure moves ahead of schedule, then I think that demand is there. Speaker 300:18:40Okay. And just I think the obvious bright spot in the quarter on the gross margin side of things, really, really remarkable performance there. And I think you're still seeing some purchase accounting headwinds. So maybe a 2 part question. At what point do those end, I assume we're pretty close, but just even looking ahead, not just kind of near term, but is this a better sort of gross margin rate knowing that we're going to have maybe some upside from as capacity increases? Speaker 300:19:20And maybe just highlight a little bit more on terms of the quarter other than the sort of the mix of units going through captive, anything else that you want to call out in terms of the outperformance? Speaker 400:19:33Hi, Greg. Yes, I would say definitely saw some positive impact on gross margins for lower forest products input costs. So we don't expect that to be quite as significant in the 3rd fiscal quarter. So we'll negatively impact margins. From a purchase accounting perspective, we do feel that we're kind of through that at this point and it will be immaterial going forward. Speaker 400:20:04And then as you mentioned, the last key component was stronger captive retail sales than we expected running through this quarter, even with the impact of the hurricane. So the captive retail segment did really well. Speaker 300:20:21Yes. That's what I thought. Okay. I will leave it there. Congrats on the solid execution again. Speaker 200:20:28Thank you, Greg. Operator00:20:31The next question is from Daniel Moore from CJS Securities. Please go ahead. Speaker 500:20:36Yes. Thank you. Good morning, Mark. Good morning, Laurie. Good morning, Jim. Speaker 500:20:41Maybe just a little bit more color in terms of obviously the impact of the hurricanes is helpful and clearly we're going into a little bit of a seasonally softer period. Just your thoughts about overall expectations for order and backlog. Should we think about backlog potentially moderating for a quarter or 2 before perhaps starting to pick up as we get into the seasonally stronger kind of spring and summer selling season? Just thinking how you just in terms of how you're thinking about managing production versus order rates for the next say 1 to 2 quarters? Speaker 200:21:14Yes. Thank you, Dan. I think we were looking at this and expecting Speaker 300:21:18a little bit of an order Speaker 200:21:18softening going into the The first half of last quarter orders were very strong. The first half of last quarter orders were very strong, kind of in the organically in the 30% range. And then as soon as the presidential candidates mentioned things like a $25,000 incentive, I think orders right after that week started to soften a little bit as we kind of expected going into the presidential election. So I think the outcome of the election is going to influence that trajectory on orders a little bit. So we've actually purposely been building a little bit of backlog going into the winter season, waiting on the outcome of the elections. Speaker 200:22:13So I think order pace is still very good, up 14% organically year over year, so very good pace. I think backlogs will moderate a little bit going into December. And I expect once we get through the election cycle, maybe depending on which candidate wins could influence the order pace in the 3rd Q4, depending on the incentive structure and or regulatory environment each candidate is proposing. Speaker 500:22:46Really helpful. And maybe just following up on Greg's question on the gross margin front. If you had to sort of rank order the favorable impacts of the quarter in terms of kind of the delta between lower forest products or input costs and mix, how would we think about that either sequentially or year over year? Speaker 400:23:10Yes, Dan, we're not going to break out the bucket of the impact. Speaker 500:23:18Understood. Appreciate the commentary previously. Maybe just taking the seasonality and impacts of the hurricanes out of the equation, can you just talk about what you're hearing from both REIT customers as well as community developers and how that translates into your kind of confidence as we look out beyond the next 1 to 2 quarters? Speaker 200:23:39No, I think the tone in the marketplace is very good. Community REITs were a strong order growth channel this quarter. Builder developers were extremely strong. So I think if the order pace slowed at all, it was really in some of the retail channel in certain areas, which is really akin to the consumer confidence and waiting for the results of the election, I think. So very good optimism on all sides. Speaker 200:24:08Our leads are up. Our quote activity is very strong. So I think people are shopping. They're coming in. We've got good traffic, both at retail and with our community partners. Speaker 200:24:21So I think the traffic is there. I think people are just holding off on the execution of the buying decision until they see if there's some type of opportunity for some type of incentive post election. Speaker 500:24:35All right. Makes sense. And maybe lastly, you bought back a little bit of stock during in the quarter. You're kind of basically through the synergies or most of them with the acquisition a year ahead of schedule. Just talk about your appetite for M and A going forward and how we think about capital allocation priorities for the next 2 to 4 quarters? Speaker 500:25:01Thanks again. Speaker 200:25:03Yes. Thanks, Dan. I think M and A is definitely a priority for us. We're blessed that the acquisition and the people at Regional and the team at Regional have done amazing things. And I think that gives us some confidence in doing further acquisitions. Speaker 200:25:22Our pipeline is very robust. So I think we're very active in thinking about that and that would be our top capital priority as we go forward and then innovation in driving some of the growth of our platforms and our direct to consumer strategy would also be pivotal in that along with, of course, since we're generating high cash, we have the ability to return some to shareholders as well. Operator00:26:00The next question is from Matthew Bouley from Barclays. Please go ahead. Speaker 600:26:06Good morning. You have Elizabeth Langan on for Matt today. Thank you for taking our questions. You mentioned that the demand in your builder developer channel is extremely strong. Could you talk a little bit more about that and kind of relative to last quarter what you've seen with builder sign ups, whether it's continuing to accelerate or kind of staying stable? Speaker 200:26:30Yes. So the new builder capture this quarter accelerated slightly over last quarter. So we're seeing it accelerate. The capture rate as small to mid tier builders are under pressure. Even the large traditional builders, I think, are starting to see some margin pressure and compression in their ability to meet the demands of first time homebuyers. Speaker 200:26:54So, I think that bodes well for us as we go forward. So builder developer continues to escalate and we anticipate it will be a strong growth channel for the foreseeable future. Speaker 600:27:11And then kind of thinking about the impact of hurricanes and are you expecting any impacts at the inventory stocking position? Is there anything that we should think about in terms of whether or not people might be dealers might be stocking more if they're expecting the demand to pick up or anything around that? Speaker 200:27:32No, I think obviously dealers are going to start I think probably in the near term as they see infrastructure start to get rebuilt in certain areas, start to I would call order because they're going to need to back fill the demand. There was 1,000 upon 1,000 of homes unfortunately destroyed. And so the demand for housing in those regions is going to be substantial. So I would expect as they see the visibility in terms of infrastructure timing, then they'll start to place orders more readily to take care of the homeowners who've been displaced. Speaker 700:28:19Thank you. Speaker 200:28:20Thank you. Operator00:28:24The next question is from Fiona Chang from Jefferies. Please go ahead. Speaker 700:28:30Hi, this is Fiona on for Phil Ng. Congrats on a good quarter. I'm just curious given the damage from Hurricane Towing and Mountain, do you guys see any potential upside in units from FEMA going forward? And comparing to the contract awarded back in the fiscal year of 2023, are you guys expecting to see more unit growth this time? Speaker 200:28:53Yes. I think as far as FEMA, we haven't received any type of orders yet. Obviously, there's been mass destruction in those regions. So the federal government along with state governments are actively trying to figure out what type of response to do, but there's no activity from FEMA as of yet. Speaker 700:29:16Okay. Thank you. And then just another follow-up. Given the chatter rate, usually you lack the 30 year fixed mortgage rate. Have you seen any movement for the channel rate for this quarter? Speaker 200:29:29No. The channel rates generally lag changes in mortgages by about 6 months, generally speaking. They're currently running at about 150 basis point spread for good credit, somewhere north of 8%. So I would say 8 point 8%, 8.5%, something like that for fairly good credit. Speaker 700:29:55Okay. That's helpful. Thank you. Speaker 200:29:57Thank you, Vienna. Speaker 300:30:01There are Operator00:30:01no further questions at this time. I would like to turn the floor back over to Mark Yost for closing comments. Speaker 200:30:09I want to thank everyone for taking the time to listen to our call this morning and for your continued interest in Champion Homes. We look forward to updating you on our progress on our fiscal Q3 earnings call. Thank you and have a great day. Operator00:30:25This concludes today's teleconference. You may disconnect your lines at this time.Read morePowered by Earnings DocumentsPress Release(8-K) Champion Homes Earnings HeadlinesChampion Homes, Inc. 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It builds homes under the Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes brands in the United States; and Moduline and SRI Homes brand names in western Canada. The company also provides construction services to install and set-up factory-built homes; operates a factory-direct manufactured home retail business under the Titan Factory Direct and Champion Homes (NYSE:SKY) Center brand names with 31 sales centers in the United States; and engages in the transportation of manufactured homes and recreational vehicles. 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There are 8 speakers on the call. Operator00:00:00Good morning, and welcome to the Champion Homes Second Quarter Fiscal 2025 Earnings Call. My name is Sachi, and I will be coordinating your call today. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:25I will now turn the call over to your host, Jason Blair, to begin. Jason, please go ahead. Speaker 100:00:31Good morning. Thank you for taking the time to join us for today's conference call and review our business results for the Q2 ended September 28, 2024. Here to review Champion's results are Mark Yost, Champion Home's President and Chief Executive Officer and Lori Huff, Executive Vice President and Chief Financial Officer. Yesterday, after the market closed, we issued our earnings release. As a reminder, the earnings release and statements made during today's call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Speaker 100:01:05These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations. Such risks and uncertainties include the factors set forth in the earnings release and in the company's filings with the Securities Exchange Commission. Please note that today's remarks contain non GAAP financial measures, which we believe can be useful in evaluating performance. Definitions and reconciliations of these measures can be found in the earnings release. Would now like to turn the call over to Champion Home's President and CEO, Mark Yost. Speaker 200:01:40Good morning, ladies and gentlemen. Thank you for joining today's earnings call. Before we discuss our financial results and outlook, I would like to take a moment to honor the memory of Keith Anderson, a dear colleague, mentor and transformative leader for Champion Homes. Keith served both as a Director and former CEO at Champion, where his visionary leadership and steadfast commitment to excellence left an indelible mark on our company. His influence extended beyond our corporate boundaries as he played a significant role in shaping the broader housing industry through his board and advisory roles. Speaker 200:02:23Keith's career was distinguished by his integrity, innovation and relentless dedication to corporate excellence. Keith was more than just a leader. He was a mentor and a friend to many of us. His wise counsel and warm personality enriched our professional lives and instilled our corporate culture with a sense of purpose and camaraderie. As we proceed with today's call, we hold Keith's memory dear and continue to be inspired by his enduring legacy. Speaker 200:02:57His contributions have not only shaped our past, but also laid the strong foundation for our future. Now let us move to the overview of this quarter's performance. Our performance this quarter demonstrates effective execution across the company, particularly enhancing our digital direct to consumer strategy, advancing the integration of Regional Homes acquisition and scaling the benefits from Champion Financing. These efforts have enabled Champion Homes to deliver more value to our customers. The 2nd quarter exhibited strong growth with home sales increasing 29% year over year to 6,536 units. Speaker 200:03:42Additionally, we saw a 14% increase in organic sales orders year over year with gains across retail, builder developer and our community REIT partners. However, at the end of the quarter, hurricane impacts disrupted both orders and sales affecting both manufacturing and retail locations due to prolonged power outages and the temporary suspension of policy writing by insurers. Despite these challenges, our team's extraordinary efforts Speaker 300:04:20ensured Speaker 200:04:20that our operations suffered no significant damage. The 2nd quarter saw a sequential decrease in revenue from the fiscal Q1 down $12,000,000 while our backlog grew $23,000,000 resulting in a total backlog of $427,000,000 at the end of the quarter. The average backlog lead time remained steady at 11 weeks, aligning with the end of the 1st fiscal quarter. I'm pleased to announce that the acquisition of Regional Homes has continued and surpassed our expectations. We have achieved the upper limit of our synergy targets this quarter, which marks a significant milestone for us. Speaker 200:05:06Impressively, this achievement comes just 1 year following the acquisition, a full year ahead of projected schedule. Building on the success, Champion Financing, our collaboration with Triad Financial has also gained significant momentum this quarter. Over recent quarters, we've launched new floor plan financing options for our independent dealers and consumer financing programs for our selected national products. The early outcomes from these initiatives have been very encouraging, bolstering our confidence that we can provide customers with a comprehensive and appealing home buying solution. This success underscores our commitment to enhancing financing accessibility, further propelling our growth the manufactured housing market. Speaker 200:05:59Altogether, these strategic actions support our commitment to strengthening our market position and delivering on our promise of providing accessible, comprehensive housing solutions and creating value for our shareholders. Looking to our 3rd fiscal quarter, we observe we are observing a softening in order rates, which is in line with our typically slower winter selling season. Additionally, we have noticed that consumers are taking a cautious approach, delaying their purchasing decisions as they await the outcome of the upcoming election. As we address the operational impacts from Hurricanes Helene and Milton, I want to express our heartfelt concern for all those affected by these devastating events. 9 of our 48 plant locations in Florida, Georgia and the Carolinas have been directly impacted, leading to expected timing delays in order fulfillment, home deliveries and retail sales. Speaker 200:07:04Our focus is on the extensive cleanup and rebuilding efforts required in these regions and we are committed to supporting our employees and the communities during this challenging time. Going forward, we do anticipate a modest decline in top line performance for the 3rd quarter projected to decrease by mid single digits sequentially. This anticipated dip is largely attributable to the timing disruptions from the hurricanes. Despite the immediate headwinds, we anticipate strong medium and long term demand within these regions spurred by widespread destruction of homes. This is expected to increase demand and it places us in a pivotal position to aid in the rebuilding efforts, affirming our commitment to support the recovery in these communities. Speaker 200:07:58I will now turn the call over to Lori, who will discuss our quarterly financial performance in more detail. Speaker 400:08:04Thanks, Mark, and good morning, everyone. I'll begin by reviewing our financial results for the Q2, followed by a discussion of our balance sheet and cash flows. I will also briefly discuss our near term expectations. During the Q2, net sales increased to 33% to $617,000,000 compared to the same quarter last year with U. S. Speaker 400:08:29Factory built housing revenue increasing 37%. The number of homes sold increased 31% to 6,357 homes in the U. S. Compared to 4,842 Homes in the prior year period. U. Speaker 400:08:47S. Home volume during the quarter was supported by additional retail and manufacturing capacity resulting from the Regional Homes acquisition that contributed approximately $148,000,000 to net sales during the quarter. The average selling price per U. S. Home sold increased by 4.5% to $92,400 due to a higher mix of units sold through our company owned retail sales centers. Speaker 400:09:15On a sequential basis, U. S. Factory built housing revenue decreased 2% in the Q2 compared to the Q1 of fiscal 2025. We saw a slight sequential decline mainly due to Hurricane Helene's landfall 2 days prior to the end of the second quarter. Several of our manufacturing plants in Florida, Georgia and the Carolinas lost a day or 2 of production and were unable to ship homes. Speaker 400:09:45In addition, our captive retail locations were delayed in closing several home sales. On a sequential basis, the average selling price per home increased 1% due to changes in product mix. Manufacturing capacity utilization was 60 compared to 58% in the sequential Q1 of fiscal 2025. Current utilization rates primarily reflect the increased capacity brought online through recently opened plants. Canadian revenue during the quarter was $22,000,000 representing a 23% decline in the number of homes sold and a 1.5% decline in the average selling price per home versus the prior year period. Speaker 400:10:34The average home selling price in Canada decreased to $124,200 due to a shift in product mix. The reduction in sales volume can be attributed to a combination of factors, including higher interest rates and economic uncertainty in key markets that have tempered buyer enthusiasm for new homes. These conditions are anticipated to continue to impact the housing market dynamics in Canada in the near term. Consolidated gross profit increased 43% to $166,000,000 in the second quarter, and our gross margin expanded by 190 basis points from 25.1 percent in the prior year period. The higher gross margin was primarily due to higher average selling prices on new homes sold as our company owned retail sales centers captured a greater share of overall sales versus the prior year. Speaker 400:11:36In addition, lower input costs primarily from forest product materials contributed to the higher gross margin profile. These favorable margin trends were partially offset by the effect of purchase accounting increases to the carrying value of the finished goods inventory that was acquired with the Regional Homes acquisition, which had a negative 40 basis point impact on consolidated gross margin during the quarter. On a sequential basis, gross margin came in better than anticipated due to lower input costs and higher captive retail sales. SG and A in the 2nd quarter increased $35,000,000 over the prior year period to $100,000,000 The increase is primarily attributable to the Regional Homes acquisition and higher variable costs related to higher revenue and profitability. The company's effective tax rate for the quarter was 21.6% versus an effective tax rate of 24.5% for the year ago period. Speaker 400:12:42The effective tax rate was positively impacted by an increase in recognition of tax credits related to the sale of energy efficient homes. Net income attributable to Champion Homes for the 2nd quarter increased 20% to 55,000,000 dollars or earnings of $0.94 per diluted share compared to net income of $46,000,000 or earnings of $0.79 per diluted share during the same period last year. The increase in EPS was driven mainly by higher operating income in the 2nd quarter. Adjusted EBITDA for the quarter was $74,000,000 compared to $59,000,000 in the prior year period. Adjusted EBITDA margin was 12.0 percent compared to 12.7% in the prior year period, which was impacted by higher SG and A. Speaker 400:13:38We expect the recent hurricanes in the Southeast will impact revenue in our fiscal Q3, although the extent of that impact is difficult to estimate. Gross margins have stabilized. However, we expect margins to fluctuate quarter to quarter as a result of product mix. As of September 28, 2024, we had $570,000,000 of cash and cash equivalents and long term borrowings of $25,000,000 with no maturities until 2026. We generated $60,000,000 of operating cash flows for the quarter compared to $54,000,000 for the prior year period. Speaker 400:14:21The increase in operating cash flows reflects higher net income, partially offset by an increase in our inventory balances when compared to the prior year period. In the quarter, we leveraged our strong cash position and returned capital to our shareholders through $20,000,000 in share repurchases. Additionally, our Board recently approved the replenishment of our $100,000,000 share repurchase authority, reflecting confidence in our strong cash generation. I'll now turn the call back to Mark for some closing remarks. Speaker 200:14:58Thank you, Lori. The outlook for our company remains optimistic, particularly against the backdrop of the broader housing market. Despite the general challenges facing new traditional construction, our operations are benefiting from the healthy demand and resilient margins. This includes revised orders from retailers and builder developers as well as our community partners, reflecting a persistent need for affordable housing solutions. These trends not only demonstrate the resilience of our market, but also positions us ideally for sustained growth. Speaker 200:15:37Moreover, we are strategically expanding our reach into builder as a service and consumer retail sales through digital platforms, complemented by our innovative financing solutions. These initiatives are designed to drive our growth and enhance value for all stakeholders. The recent hurricanes, while impacting the near term timing, are expected to ultimately create a surge in demand in the affected regions, affirming our pivotal role in recovery and rebuilding efforts. This positions us to further solidify our market presence and capitalize on long term growth opportunities. And now I'd like to open the floor for questions. Speaker 200:16:22Operator, please proceed. Operator00:16:25Thank you. We will now be conducting a question and answer The first question is from Greg Palm from Craig Hallum. Please go ahead. Speaker 300:16:57Yes. Good morning. Thanks for taking the questions. I'd also like to echo your comments about Keith. You had a really strong influence on a lot of people inside and outside the company. Speaker 300:17:09So it's going to be missed by a lot of people here. I want to just start with maybe if you're able to quantify just some of the impacts from the storms near term both in the recently completed quarter and current quarter. Any way to sort of quantify it either from a volume or revenue standpoint? And I guess the bigger question is at what point do you sort of catch up that pent up demand? Do you think it takes a couple of quarters? Speaker 300:17:42Is it in the next year? What's your best guess at this point? Speaker 200:17:46Yes. Thank you, Greg. I think production at several of our facilities in Florida, Georgia and the Carolinas were interrupted due to power outages and flooding in the surrounding areas. Retail placements the last week of September in North Carolina and Florida, those stores had to close and insurers stopped binding policies the final week of September. So there definitely was an impact on the quarter. Speaker 200:18:15Overall, I think as far as when we catch that up, it really depends a lot on the infrastructure rebuild. So right now, we're assuming it's going to take probably this quarter and maybe a little bit into the next quarter for them to rebuild. But if that cleanup goes a little quicker or the infrastructure moves ahead of schedule, then I think that demand is there. Speaker 300:18:40Okay. And just I think the obvious bright spot in the quarter on the gross margin side of things, really, really remarkable performance there. And I think you're still seeing some purchase accounting headwinds. So maybe a 2 part question. At what point do those end, I assume we're pretty close, but just even looking ahead, not just kind of near term, but is this a better sort of gross margin rate knowing that we're going to have maybe some upside from as capacity increases? Speaker 300:19:20And maybe just highlight a little bit more on terms of the quarter other than the sort of the mix of units going through captive, anything else that you want to call out in terms of the outperformance? Speaker 400:19:33Hi, Greg. Yes, I would say definitely saw some positive impact on gross margins for lower forest products input costs. So we don't expect that to be quite as significant in the 3rd fiscal quarter. So we'll negatively impact margins. From a purchase accounting perspective, we do feel that we're kind of through that at this point and it will be immaterial going forward. Speaker 400:20:04And then as you mentioned, the last key component was stronger captive retail sales than we expected running through this quarter, even with the impact of the hurricane. So the captive retail segment did really well. Speaker 300:20:21Yes. That's what I thought. Okay. I will leave it there. Congrats on the solid execution again. Speaker 200:20:28Thank you, Greg. Operator00:20:31The next question is from Daniel Moore from CJS Securities. Please go ahead. Speaker 500:20:36Yes. Thank you. Good morning, Mark. Good morning, Laurie. Good morning, Jim. Speaker 500:20:41Maybe just a little bit more color in terms of obviously the impact of the hurricanes is helpful and clearly we're going into a little bit of a seasonally softer period. Just your thoughts about overall expectations for order and backlog. Should we think about backlog potentially moderating for a quarter or 2 before perhaps starting to pick up as we get into the seasonally stronger kind of spring and summer selling season? Just thinking how you just in terms of how you're thinking about managing production versus order rates for the next say 1 to 2 quarters? Speaker 200:21:14Yes. Thank you, Dan. I think we were looking at this and expecting Speaker 300:21:18a little bit of an order Speaker 200:21:18softening going into the The first half of last quarter orders were very strong. The first half of last quarter orders were very strong, kind of in the organically in the 30% range. And then as soon as the presidential candidates mentioned things like a $25,000 incentive, I think orders right after that week started to soften a little bit as we kind of expected going into the presidential election. So I think the outcome of the election is going to influence that trajectory on orders a little bit. So we've actually purposely been building a little bit of backlog going into the winter season, waiting on the outcome of the elections. Speaker 200:22:13So I think order pace is still very good, up 14% organically year over year, so very good pace. I think backlogs will moderate a little bit going into December. And I expect once we get through the election cycle, maybe depending on which candidate wins could influence the order pace in the 3rd Q4, depending on the incentive structure and or regulatory environment each candidate is proposing. Speaker 500:22:46Really helpful. And maybe just following up on Greg's question on the gross margin front. If you had to sort of rank order the favorable impacts of the quarter in terms of kind of the delta between lower forest products or input costs and mix, how would we think about that either sequentially or year over year? Speaker 400:23:10Yes, Dan, we're not going to break out the bucket of the impact. Speaker 500:23:18Understood. Appreciate the commentary previously. Maybe just taking the seasonality and impacts of the hurricanes out of the equation, can you just talk about what you're hearing from both REIT customers as well as community developers and how that translates into your kind of confidence as we look out beyond the next 1 to 2 quarters? Speaker 200:23:39No, I think the tone in the marketplace is very good. Community REITs were a strong order growth channel this quarter. Builder developers were extremely strong. So I think if the order pace slowed at all, it was really in some of the retail channel in certain areas, which is really akin to the consumer confidence and waiting for the results of the election, I think. So very good optimism on all sides. Speaker 200:24:08Our leads are up. Our quote activity is very strong. So I think people are shopping. They're coming in. We've got good traffic, both at retail and with our community partners. Speaker 200:24:21So I think the traffic is there. I think people are just holding off on the execution of the buying decision until they see if there's some type of opportunity for some type of incentive post election. Speaker 500:24:35All right. Makes sense. And maybe lastly, you bought back a little bit of stock during in the quarter. You're kind of basically through the synergies or most of them with the acquisition a year ahead of schedule. Just talk about your appetite for M and A going forward and how we think about capital allocation priorities for the next 2 to 4 quarters? Speaker 500:25:01Thanks again. Speaker 200:25:03Yes. Thanks, Dan. I think M and A is definitely a priority for us. We're blessed that the acquisition and the people at Regional and the team at Regional have done amazing things. And I think that gives us some confidence in doing further acquisitions. Speaker 200:25:22Our pipeline is very robust. So I think we're very active in thinking about that and that would be our top capital priority as we go forward and then innovation in driving some of the growth of our platforms and our direct to consumer strategy would also be pivotal in that along with, of course, since we're generating high cash, we have the ability to return some to shareholders as well. Operator00:26:00The next question is from Matthew Bouley from Barclays. Please go ahead. Speaker 600:26:06Good morning. You have Elizabeth Langan on for Matt today. Thank you for taking our questions. You mentioned that the demand in your builder developer channel is extremely strong. Could you talk a little bit more about that and kind of relative to last quarter what you've seen with builder sign ups, whether it's continuing to accelerate or kind of staying stable? Speaker 200:26:30Yes. So the new builder capture this quarter accelerated slightly over last quarter. So we're seeing it accelerate. The capture rate as small to mid tier builders are under pressure. Even the large traditional builders, I think, are starting to see some margin pressure and compression in their ability to meet the demands of first time homebuyers. Speaker 200:26:54So, I think that bodes well for us as we go forward. So builder developer continues to escalate and we anticipate it will be a strong growth channel for the foreseeable future. Speaker 600:27:11And then kind of thinking about the impact of hurricanes and are you expecting any impacts at the inventory stocking position? Is there anything that we should think about in terms of whether or not people might be dealers might be stocking more if they're expecting the demand to pick up or anything around that? Speaker 200:27:32No, I think obviously dealers are going to start I think probably in the near term as they see infrastructure start to get rebuilt in certain areas, start to I would call order because they're going to need to back fill the demand. There was 1,000 upon 1,000 of homes unfortunately destroyed. And so the demand for housing in those regions is going to be substantial. So I would expect as they see the visibility in terms of infrastructure timing, then they'll start to place orders more readily to take care of the homeowners who've been displaced. Speaker 700:28:19Thank you. Speaker 200:28:20Thank you. Operator00:28:24The next question is from Fiona Chang from Jefferies. Please go ahead. Speaker 700:28:30Hi, this is Fiona on for Phil Ng. Congrats on a good quarter. I'm just curious given the damage from Hurricane Towing and Mountain, do you guys see any potential upside in units from FEMA going forward? And comparing to the contract awarded back in the fiscal year of 2023, are you guys expecting to see more unit growth this time? Speaker 200:28:53Yes. I think as far as FEMA, we haven't received any type of orders yet. Obviously, there's been mass destruction in those regions. So the federal government along with state governments are actively trying to figure out what type of response to do, but there's no activity from FEMA as of yet. Speaker 700:29:16Okay. Thank you. And then just another follow-up. Given the chatter rate, usually you lack the 30 year fixed mortgage rate. Have you seen any movement for the channel rate for this quarter? Speaker 200:29:29No. The channel rates generally lag changes in mortgages by about 6 months, generally speaking. They're currently running at about 150 basis point spread for good credit, somewhere north of 8%. So I would say 8 point 8%, 8.5%, something like that for fairly good credit. Speaker 700:29:55Okay. That's helpful. Thank you. Speaker 200:29:57Thank you, Vienna. Speaker 300:30:01There are Operator00:30:01no further questions at this time. I would like to turn the floor back over to Mark Yost for closing comments. Speaker 200:30:09I want to thank everyone for taking the time to listen to our call this morning and for your continued interest in Champion Homes. We look forward to updating you on our progress on our fiscal Q3 earnings call. Thank you and have a great day. Operator00:30:25This concludes today's teleconference. You may disconnect your lines at this time.Read morePowered by