Skyline Champion Announces Third Quarter Fiscal 2024 Results
- Closed the acquisition of Regional Homes
- Launched captive joint venture, Champion Financing
- Expanded Southeast capacity with the opening of a new facility in Bartow, Florida
- Net cash generated by operating activities increased 4.7% to $89.5 million
- Net sales decreased 3.9% to $559.5 million
- U.S. homes sold decreased 1.8% to 5,643
- Gross profit margin contracted by 460 basis points to 25.3%
- Net income decreased by 43.3% to $47.0 million
- Adjusted EBITDA decreased 39.2% to $66.3 million
Insights
The reported decrease in net sales by 3.9% and a contraction of gross profit margin by 460 basis points indicate a challenging quarter for Skyline Champion. The decline in net income by 43.3% is a significant downturn, reflecting operational pressures. The decreased average selling price (ASP) per U.S. home suggests either a strategic pricing adjustment or a shift towards lower-margin products. Investors should consider the impact of these figures on the company's financial health and the sustainability of its dividend policy, if any.
While the overall sales have dipped, the increase in total backlog by 12.6% points to a healthy demand pipeline. However, the increase in SG&A expenses, partly due to the Regional Homes acquisition, could be a concern if not offset by future operational efficiencies. The expansion in Southeast capacity and the launch of Champion Financing suggest strategic moves to capture more market share in a competitive housing industry. Market trends, such as the impact of higher interest rates on housing demand, particularly in Canada, should be monitored closely.
The mention of softer demand in the Canadian market due to higher interest rates highlights macroeconomic influences on Skyline Champion's performance. The housing market is sensitive to interest rate fluctuations and the company's results may serve as an indicator of broader economic trends. The net cash decrease of $203.2 million due to the acquisition could affect the company's leverage and liquidity position, which is crucial for navigating uncertain economic conditions.
Third Quarter Fiscal 2024 Financial Highlights (compared to Third Quarter Fiscal 2023 unless otherwise noted)
-
Net sales decreased
3.9% to$559.5 million -
U.S. homes sold decreased1.8% to 5,643 -
Total backlog increased
12.6% to$290.4 million -
Average selling price (“ASP”) per
U.S. home sold decreased2.0% to$92,300 -
Gross profit margin contracted by 460 basis points to
25.3% -
Net income decreased by
43.3% to$47.0 million -
Earnings per share (“EPS”) decreased
43.8% to$0.81 -
Adjusted EBITDA decreased
39.2% to$66.3 million -
Adjusted EBITDA margin contracted by 690 basis points to
11.8% -
Net cash generated by operating activities increased
4.7% to$89.5 million
Third Quarter Fiscal 2024 Operational Highlights
- Closed the acquisition of Regional Homes
- Launched captive joint venture, Champion Financing
-
Expanded Southeast capacity with the opening of a new facility in
Bartow, Florida
“I am really impressed with how the team handled our business goals this quarter and their ability to execute on our operational and strategic priorities,” said Mark Yost, Skyline Champion’s President, and Chief Executive Officer. “Executing during a seasonally slower period while making great progress on the integration of Regional Homes and the rollout of Champion Financing is a testament to our people and our partners. In addition, we expanded our capacity during the quarter with the opening of a new plant in
Third Quarter Fiscal 2024 Results
Net sales for the third quarter fiscal 2024 decreased
Gross profit decreased by
Selling, general, and administrative expenses (“SG&A”) in the third quarter fiscal 2024 increased to
Net income decreased by
Adjusted EBITDA for the third quarter fiscal 2024 decreased by
As of December 30, 2023, Skyline Champion had
Conference Call and Webcast Information:
Skyline Champion management will host a conference call tomorrow, February 6, 2024, at 9:00 a.m. Eastern Time, to discuss Skyline Champion’s financial results and an update on current operations.
Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of Skyline Champion’s website at skylinechampion.com. The online replay will be available on the same website immediately following the call.
The conference call can also be accessed by dialing (877) 407-4018 (domestic) or (201) 689-8471 (international). A telephonic replay will be available approximately two hours after the call by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 13743591. The replay will be available until 11:59 P.M. Eastern Time on February 20, 2024.
About Skyline Champion Corporation:
Skyline Champion Corporation (NYSE: SKY) is a leading producer of factory-built housing in
In addition to its core home building business, Skyline Champion provides construction services to install and set-up factory-built homes, operates a factory-direct retail business with 73 retail locations across
Skyline Champion builds homes under some of the most well-known brand names in the factory-built housing industry including Skyline Homes, Champion Home Builders, Genesis Homes, Regional Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit,
Presentation of Non-GAAP Financial Measures
In addition to the results provided in accordance with
Skyline Champion defines Adjusted EBITDA as net income or loss plus expenses or minus income, (a) the provision for income taxes, (b) interest income or expense, net, (c) depreciation and amortization, (d) gain or loss from discontinued operations, (e) non-cash restructuring charges and impairment of assets, (f) other non-operating income and costs, including but not limited to those costs for the acquisition and integration or disposition of businesses and idle facilities. Adjusted EBITDA is not a measure of earnings calculated in accordance with
Forward-Looking Statements
Statements in this press release, including certain statements regarding Skyline Champion’s strategic initiatives, and future market demand are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of words such as "believe," "expect," "future," "anticipate," "intend," "plan," "foresee," "may," "could," "should," "will," "potential," "continue," or other similar words or phrases. Similarly, statements that describe objectives, plans, or goals also are forward-looking statements. Such forward-looking statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Skyline Champion. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied, or projected by such forward-looking statements. Risks and uncertainties include regional, national and international economic, financial, public health and labor conditions, and the following: supply-related issues, including prices and availability of materials; labor-related issues; inflationary pressures in the North American economy; the cyclicality and seasonality of the housing industry and its sensitivity to changes in general economic or other business conditions; demand fluctuations in the housing industry, including as a result of actual or anticipated increases in homeowner borrowing rates; the possible unavailability of additional capital when needed; competition and competitive pressures; changes in consumer preferences for our products or our failure to gauge those preferences; quality problems, including the quality of parts sourced from suppliers and related liability and reputational issues; data security breaches, cybersecurity attacks, and other information technology disruptions; the potential disruption of operations caused by the conversion to new information systems; the extensive regulation affecting the production and sale of factory-built housing and the effects of possible changes in laws with which we must comply; the potential impact of natural disasters on sales and raw material costs; the risks associated with mergers and acquisitions, including integration of operations and information systems; periodic inventory adjustments by, and changes to relationships with, independent retailers; changes in interest and foreign exchange rates; insurance coverage and cost issues; the possibility that all or part of our intangible assets, including goodwill, might become impaired; the possibility that our risk management practices may leave us exposed to unidentified or unanticipated risks; the potential disruption to our business caused by public health issues, such as an epidemic or pandemic, and resulting government actions; and other risks set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section, and other sections, as applicable, in our Annual Reports on Form 10-K, including our Annual Report on Form 10-K for the fiscal year ended April 1, 2023 previously filed with the Securities and Exchange Commission (“SEC”), as well as in our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed with or furnished to the SEC.
If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, then the developments and future events concerning Skyline Champion set forth in this press release may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this release. We anticipate that subsequent events and developments will cause our expectations and beliefs to change. Skyline Champion assumes no obligation to update such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, unless obligated to do so under the federal securities laws.
SKYLINE CHAMPION CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited, dollars and shares in thousands)
|
||||||||
|
|
December 30,
|
|
|
April 1,
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
497,907 |
|
|
$ |
747,453 |
|
Trade accounts receivable, net |
|
|
48,659 |
|
|
|
67,296 |
|
Inventories, net |
|
|
290,542 |
|
|
|
202,238 |
|
Other current assets |
|
|
33,057 |
|
|
|
26,479 |
|
Total current assets |
|
|
870,165 |
|
|
|
1,043,466 |
|
Long-term assets: |
|
|
|
|
|
|
||
Property, plant, and equipment, net |
|
|
287,708 |
|
|
|
177,125 |
|
Goodwill |
|
|
359,260 |
|
|
|
196,574 |
|
Amortizable intangible assets, net |
|
|
79,320 |
|
|
|
45,343 |
|
Deferred tax assets |
|
|
22,255 |
|
|
|
17,422 |
|
Other noncurrent assets |
|
|
250,711 |
|
|
|
82,794 |
|
Total assets |
|
$ |
1,869,419 |
|
|
$ |
1,562,724 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Floorplan payable |
|
$ |
80,389 |
|
|
$ |
- |
|
Accounts payable |
|
|
43,810 |
|
|
|
44,702 |
|
Other current liabilities |
|
|
215,098 |
|
|
|
204,215 |
|
Total current liabilities |
|
|
339,297 |
|
|
|
248,917 |
|
Long-term liabilities: |
|
|
|
|
|
|
||
Long-term debt |
|
|
24,663 |
|
|
|
12,430 |
|
Deferred tax liabilities |
|
|
6,867 |
|
|
|
5,964 |
|
Other liabilities |
|
|
76,634 |
|
|
|
62,412 |
|
Total long-term liabilities |
|
|
108,164 |
|
|
|
80,806 |
|
|
|
|
|
|
|
|
||
Stockholders' Equity: |
|
|
|
|
|
|
||
Common stock |
|
|
1,600 |
|
|
|
1,585 |
|
Additional paid-in capital |
|
|
563,019 |
|
|
|
519,479 |
|
Retained earnings |
|
|
868,598 |
|
|
|
725,672 |
|
Accumulated other comprehensive loss |
|
|
(11,259 |
) |
|
|
(13,735 |
) |
Total stockholders’ equity |
|
|
1,421,958 |
|
|
|
1,233,001 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,869,419 |
|
|
$ |
1,562,724 |
|
SKYLINE CHAMPION CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, dollars and shares in thousands, except per share amounts)
|
||||||||||||||||
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
December 30,
|
|
|
December 31,
|
|
|
December 30,
|
|
|
December 31,
|
|
||||
|
|
|
|
|
|
|
||||||||||
Net sales |
|
$ |
559,455 |
|
|
$ |
582,322 |
|
|
$ |
1,488,460 |
|
|
$ |
2,115,028 |
|
Cost of sales |
|
|
418,183 |
|
|
|
408,233 |
|
|
|
1,101,026 |
|
|
|
1,437,498 |
|
Gross profit |
|
|
141,272 |
|
|
|
174,089 |
|
|
|
387,434 |
|
|
|
677,530 |
|
Selling, general, and administrative expenses |
|
|
85,091 |
|
|
|
71,820 |
|
|
|
219,984 |
|
|
|
228,017 |
|
Operating income |
|
|
56,181 |
|
|
|
102,269 |
|
|
|
167,450 |
|
|
|
449,513 |
|
Interest (income), net |
|
|
(4,309 |
) |
|
|
(5,409 |
) |
|
|
(24,090 |
) |
|
|
(7,293 |
) |
Other expense (income) |
|
|
756 |
|
|
|
— |
|
|
|
2,821 |
|
|
|
(634 |
) |
Income before income taxes |
|
|
59,734 |
|
|
|
107,678 |
|
|
|
188,719 |
|
|
|
457,440 |
|
Income tax expense |
|
|
12,764 |
|
|
|
24,865 |
|
|
|
44,811 |
|
|
|
113,384 |
|
Net income |
|
$ |
46,970 |
|
|
$ |
82,813 |
|
|
$ |
143,908 |
|
|
$ |
344,056 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.81 |
|
|
$ |
1.45 |
|
|
$ |
2.51 |
|
|
$ |
6.04 |
|
Diluted |
|
$ |
0.81 |
|
|
$ |
1.44 |
|
|
$ |
2.49 |
|
|
$ |
6.00 |
|
SKYLINE CHAMPION CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, dollars in thousand)
|
||||||||
|
|
Nine months ended |
|
|||||
|
|
December 30,
|
|
|
December 31,
|
|
||
|
|
|
|
|||||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
143,908 |
|
|
$ |
344,056 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
24,017 |
|
|
|
19,341 |
|
Amortization of deferred financing fees |
|
|
255 |
|
|
|
266 |
|
Equity-based compensation |
|
|
15,231 |
|
|
|
11,631 |
|
Deferred taxes |
|
|
(3,115 |
) |
|
|
3,581 |
|
Loss (gain) on disposal of property, plant, and equipment |
|
|
145 |
|
|
|
(143 |
) |
Foreign currency transaction loss |
|
|
(184 |
) |
|
|
844 |
|
Loss on equity method investment |
|
|
217 |
|
|
|
— |
|
Change in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
39,340 |
|
|
|
42,847 |
|
Floor plan receivables |
|
|
(4,978 |
) |
|
|
— |
|
Inventories |
|
|
47,696 |
|
|
|
30,470 |
|
Other assets |
|
|
(10,756 |
) |
|
|
(9,895 |
) |
Accounts payable |
|
|
(15,309 |
) |
|
|
(52,663 |
) |
Accrued expenses and other liabilities |
|
|
(17,850 |
) |
|
|
(26,291 |
) |
Net cash provided by operating activities |
|
|
218,617 |
|
|
|
364,044 |
|
Cash flows from investing activities |
|
|
|
|
|
|
||
Additions to property, plant, and equipment |
|
|
(40,986 |
) |
|
|
(38,177 |
) |
Cash paid for equity method investment |
|
|
(2,250 |
) |
|
|
— |
|
Cash paid for investment in ECN common stock |
|
|
(78,858 |
) |
|
|
— |
|
Cash paid for investment in ECN preferred stock |
|
|
(64,520 |
) |
|
|
— |
|
Investment in floor plan loans |
|
|
(18,466 |
) |
|
|
— |
|
Proceeds from floor plan loans |
|
|
14,646 |
|
|
|
— |
|
Acquisitions, net of cash acquired |
|
|
(284,545 |
) |
|
|
(6,810 |
) |
Proceeds from disposal of property, plant, and equipment |
|
|
556 |
|
|
|
224 |
|
Net cash used in investing activities |
|
|
(474,423 |
) |
|
|
(44,763 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Changes in floor plan financing, net |
|
|
4,474 |
|
|
|
(35,460 |
) |
Payments on long term debt |
|
|
(67 |
) |
|
|
— |
|
Stock option exercises |
|
|
506 |
|
|
|
596 |
|
Tax payments for equity-based compensation |
|
|
(983 |
) |
|
|
(1,363 |
) |
Net cash provided by (used in) financing activities |
|
|
3,930 |
|
|
|
(36,227 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
2,330 |
|
|
|
(6,019 |
) |
Net (decrease) increase in cash and cash equivalents |
|
|
(249,546 |
) |
|
|
277,035 |
|
Cash and cash equivalents at beginning of period |
|
|
747,453 |
|
|
|
435,413 |
|
Cash and cash equivalents at end of period |
|
$ |
497,907 |
|
|
$ |
712,448 |
|
SKYLINE CHAMPION CORPORATION RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (Unaudited, dollars in thousand)
|
||||||||||||||||||||||||
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||||||||||
|
|
December 30,
|
|
|
December 31,
|
|
|
Change |
|
|
December 30,
|
|
|
December 31,
|
|
|
Change |
|
||||||
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
$ |
46,970 |
|
|
$ |
82,813 |
|
|
$ |
(35,843 |
) |
|
$ |
143,908 |
|
|
$ |
344,056 |
|
|
$ |
(200,148 |
) |
Income tax expense |
|
|
12,764 |
|
|
|
24,865 |
|
|
|
(12,101 |
) |
|
|
44,811 |
|
|
|
113,384 |
|
|
|
(68,573 |
) |
Interest (income), net |
|
|
(4,309 |
) |
|
|
(5,409 |
) |
|
|
1,100 |
|
|
|
(24,090 |
) |
|
|
(7,293 |
) |
|
|
(16,797 |
) |
Depreciation and amortization |
|
|
9,639 |
|
|
|
6,784 |
|
|
|
2,855 |
|
|
|
24,017 |
|
|
|
19,341 |
|
|
|
4,676 |
|
EBITDA |
|
|
65,064 |
|
|
|
109,053 |
|
|
|
(43,989 |
) |
|
|
188,646 |
|
|
|
469,488 |
|
|
|
(280,842 |
) |
Transaction costs |
|
|
1,188 |
|
|
|
— |
|
|
|
1,188 |
|
|
|
3,253 |
|
|
|
338 |
|
|
|
2,915 |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(973 |
) |
|
|
973 |
|
Adjusted EBITDA |
|
$ |
66,252 |
|
|
$ |
109,053 |
|
|
|
(42,801 |
) |
|
$ |
191,899 |
|
|
$ |
468,853 |
|
|
|
(276,954 |
) |
SKYLINE CHAMPION CORPORATION RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS PER SHARE (Unaudited, dollars and shares in thousands, except per share amounts) (Certain amounts shown net of tax, as applicable)
|
||||||||||||||||
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
December 30,
|
|
|
December 31,
|
|
|
December 30,
|
|
|
December 31,
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
46,970 |
|
|
$ |
82,813 |
|
|
$ |
143,908 |
|
|
$ |
344,056 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction costs |
|
|
934 |
|
|
|
— |
|
|
|
2,481 |
|
|
|
255 |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(733 |
) |
Adjusted net income attributable to the
|
|
$ |
47,904 |
|
|
$ |
82,813 |
|
|
$ |
146,389 |
|
|
$ |
343,578 |
|
Adjusted basic net income per share |
|
$ |
0.83 |
|
|
$ |
1.45 |
|
|
$ |
2.55 |
|
|
$ |
6.03 |
|
Adjusted diluted net income per share |
|
$ |
0.82 |
|
|
$ |
1.44 |
|
|
$ |
2.53 |
|
|
$ |
5.99 |
|
Average basic shares outstanding |
|
|
57,644 |
|
|
|
56,971 |
|
|
|
57,364 |
|
|
|
56,946 |
|
Average diluted shares outstanding |
|
|
58,136 |
|
|
|
57,377 |
|
|
|
57,842 |
|
|
|
57,390 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240205529816/en/
Investor information:
Name: Kevin Doherty
Email: investorrelations@championhomes.com
Phone: (248) 614-8211
Source: Skyline Champion Corporation
FAQ
What is the ticker symbol for Skyline Champion Corporation?
What are the financial highlights of Skyline Champion's third quarter fiscal 2024?
What were the operational highlights for Skyline Champion in the third quarter fiscal 2024?
What was the impact of the Regional Homes acquisition on Skyline Champion's net sales?
What was the change in Skyline Champion's net cash generated by operating activities in the third quarter fiscal 2024?
How did Skyline Champion's net income change in the third quarter fiscal 2024?
What is the conference call and webcast information for Skyline Champion's financial results?
