Skyline Champion Corporation (NYSE:SKY) Q4 2020 Earnings Conference Call May 21, 2020 8:00 AM ET Company Participants Sarah Janowicz - Investor Relations Mark Yost - President and Chief Executive Officer Laurie Hough - Executive Vice President and Chief Financial Officer Conference Call Participants Mike Dahl - RBC Capital Markets Greg Palm - Craig-Hallum Daniel Moore - CJS Securities Matthew Bouley - Barclays Collin Verron - Jefferies Rohit Seth - SunTrust Operator Good morning and welcome to Skyline Champ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 28, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-04714 Skyline Champion Corporation (Exact name of registrant as specified in its charter) Indiana 35-1038277 (State of Incor ...

Financial Data and Key Metrics Changes - Revenue decreased by 3.5% to $342 million compared to the same quarter last year [8][18] - Operating income increased nearly 50% year-over-year, with adjusted EBITDA growing by 13% to $29.7 million [8][24] - Adjusted EBITDA margin improved by 130 basis points to 8.7% [8][24] - Net income for the quarter was $17 million, or $0.30 per share, compared to $10.5 million, or $0.19 per share in the prior year [22] Business Line Data and Key Metrics Changes - U.S. factory-built housing segment revenue declined by $4.7 million, while Canadian revenue decreased by 16% to $23 million [18][19] - Average selling price per U.S. home sold decreased by 2% to $60,600 due to a shift in product mix towards single-section homes [18] - Canadian units sold decreased to 276 homes from 329 homes in the prior year [19] Market Data and Key Metrics Changes - HUD industry volumes increased by approximately 6.7% year-over-year, with strong growth in the South-Central region [11] - The broader housing market showed signs of strong growth, particularly for affordable housing [12] Company Strategy and Development Direction - The company is focused on operational improvements and product rationalization initiatives to achieve a 10% adjusted EBITDA margin target within 18 to 24 months [26] - The company anticipates continued growth driven by favorable demographic and economic factors, particularly in affordable housing [10][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market's health, driven by increased demand for affordable housing and improvements in the financing environment [31] - The company expects HUD industry volume growth to continue at a mid-single-digit rate for the remainder of the calendar year [11][31] Other Important Information - Consolidated backlog decreased to $133 million from $181 million year-over-year, with an average U.S. plant backlog of five weeks of production [25] - The company had $171 million in cash and cash equivalents, with $44 million of unused borrowing capacity under its revolving credit facility [27][28] Q&A Session Summary Question: Can you discuss underlying demand trends and expectations for backlog? - Management noted good traffic at the dealership level and expects backlog to build into the fourth quarter [34] Question: What are your thoughts on average selling prices and product mix? - Management anticipates a gradual uptick in average selling prices as the year progresses, particularly towards multi-section homes [35] Question: Can you elaborate on the Genesis and builder developer channel? - Management reported strong interest and activity from builders and developers, with some orders already in production [37] Question: What trends are you seeing in January? - Management indicated good year-over-year order activity in January [41] Question: Can you discuss the M&A pipeline? - Management is actively looking at M&A opportunities, with a pipeline of potential near-term and long-term activity [44] Question: What is your outlook for the near-term revenue? - Management expects softness in the RV market and Canadian revenues but anticipates good growth in the U.S. [50] Question: What is your expectation for HUD market growth in 2020? - Management expects mid-single-digit growth for the HUD industry, with the company likely to perform similarly [55] Question: Can you provide insights on financing trends? - Management noted that GSEs have not yet moved on the duty-to-serve chattel program but expressed optimism about private placements and interest rate drops [90]

Financial Data and Key Metrics Changes - Consolidated quarterly revenue was flat at $355 million compared to the prior year period, despite soft HUD industry shipments [7][19] - Gross profit increased by 25% year-over-year to $74 million, driven by improved material costs and synergies from the merger [7][22] - Adjusted EBITDA grew by 36% year-over-year to $32.5 million, with an adjusted EBITDA margin of 9.2%, a 250 basis point improvement [7][26] - Net income for the quarter was $17.7 million or $0.31 per share, compared to a net loss of $77 million or a loss of $1.42 per share in the prior year [24] Business Line Data and Key Metrics Changes - U.S. factory-built segment revenue grew by 2%, driven by a 2% increase in average selling price to $62,200 [20] - Canadian revenue increased by 4% to $26 million, with stable home sales volume at 311 homes [21] - The factory-built housing segment comprised 96% of total revenue, up from 93% in the prior year [19] Market Data and Key Metrics Changes - HUD industry shipments declined by approximately 2.6% year-over-year, with Texas being a primary driver of the decrease [8][9] - Backlog decreased by 32% year-over-year to $172 million, but grew 12% sequentially from the June quarter [12][13] - Retailers have normalized their ordering patterns, keeping inventory levels lower than last year [12] Company Strategy and Development Direction - The company remains positive on the outlook for the manufactured housing industry, driven by strong demand for affordable housing [8][10] - The launch of the Genesis Home brand aims to serve builder developers and retailers, with a focus on off-site construction options [16][40] - The company is investing in technology and automation to improve production efficiency and reduce reliance on subcontractors [18][99] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand environment is strong, with placements up 7% through August [36] - The company expects continued growth in the HUD industry volumes for the remainder of the fiscal year [10] - Management anticipates that EBITDA margins can reach around 10% over the next 18 to 24 months, driven by operational improvements [80] Other Important Information - The company completed a securitization of a $0.5 billion portfolio of manufactured housing home loans, marking a significant milestone in the market [14][86] - The effective tax rate for the quarter was 29.8%, compared to a negative 8.2% in the prior year [25] Q&A Session Summary Question: Can you provide insights on geographic areas outperforming in demand? - Management indicated that while Texas has been a drag, overall demand remains strong, with placements up 7% [36] Question: What are the biggest levers for continued improvement in margins? - Management highlighted operational improvements and margin enhancements as key drivers, with significant upside potential remaining [38] Question: Can you elaborate on the Genesis brand and its impact? - The Genesis brand is aimed at builder developers, focusing on off-site solutions that improve returns and reduce construction time [40][98] Question: What are the expectations for volume growth and ASPs for the remainder of the year? - Management expects mid-single-digit volume growth, with stronger performance anticipated in the fourth quarter [62] Question: How is the automation initiative progressing at the Leesville plant? - Management reported positive progress with automation, indicating it could be rolled out to other facilities in the future [68]

PART I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements present Skyline Champion Corporation's financial position as of September 28, 2019, and its performance for the three and six months then ended [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 28, 2019, the company's total assets were $731.6 million, an increase from $700.0 million as of March 30, 2019, primarily driven by an increase in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 28, 2019 (unaudited) | Mar 30, 2019 | | :--- | :--- | :--- | | **Total current assets** | $340,067 | $318,290 | | **Total assets** | $731,550 | $699,954 | | **Total current liabilities** | $200,600 | $206,303 | | **Total liabilities** | $281,400 | $287,982 | | **Total stockholders' equity** | $450,150 | $411,972 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended September 28, 2019, net sales were flat at $354.5 million, but net income swung to $17.7 million from a net loss of $77.0 million in the prior-year quarter, largely due to the absence of significant one-time expenses Statement of Operations Summary (in thousands, except per share amounts) | Metric | Three Months Ended Sep 28, 2019 | Three Months Ended Sep 29, 2018 | Six Months Ended Sep 28, 2019 | Six Months Ended Sep 29, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $354,458 | $355,436 | $726,346 | $677,697 | | **Gross profit** | $74,055 | $59,000 | $150,090 | $114,160 | | **Operating income (loss)** | $25,653 | $(69,069) | $49,973 | $(58,997) | | **Net income (loss)** | $17,745 | $(77,025) | $35,125 | $(77,878) | | **Diluted EPS** | $0.31 | $(1.42) | $0.62 | $(1.53) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended September 28, 2019, net cash provided by operating activities was $52.2 million, a significant increase from $29.0 million in the prior-year period, resulting in a net increase in cash of $28.1 million Cash Flow Summary for Six Months Ended (in thousands) | Cash Flow Activity | Sep 28, 2019 | Sep 29, 2018 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $52,158 | $29,018 | | **Net cash (used in) provided by investing activities** | $(9,392) | $5,181 | | **Net cash used in financing activities** | $(14,829) | $(67,904) | | **Net increase (decrease) in cash** | $28,105 | $(33,743) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the basis of presentation, including reverse acquisition accounting, adoption of the new lease standard, debt facilities, revenue disaggregation, segment performance, and contingent liabilities - The June 1, 2018 combination with Champion Holdings was treated as a reverse acquisition, with Champion Holdings as the accounting acquirer, and prior year results include significant one-time costs related to this transaction[19](index=19&type=chunk)[33](index=33&type=chunk) - The company adopted the new lease accounting standard ASC 842 on March 31, 2019, resulting in the recognition of lease-related assets and liabilities of **$13.7 million** on the balance sheet[26](index=26&type=chunk)[29](index=29&type=chunk) - The company operates in two reportable segments: U.S. Factory-built Housing and Canadian Factory-built Housing, with the U.S. segment being the primary driver of revenue and operating income[77](index=77&type=chunk) - The company is contingently liable under repurchase agreements with lenders for retailer floor plan financing, with an estimated obligation of **$157.4 million** as of September 28, 2019, though actual losses have been immaterial[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant improvement in profitability for the second quarter and first half of fiscal 2020 to improved gross margins and the absence of prior-year one-time costs related to the business combination [Results of Operations - Q2 Fiscal 2020 vs. 2019](index=26&type=section&id=Results%20of%20Operations%20-%20Q2%20Fiscal%202020%20vs.%202019) In the second quarter of fiscal 2020, net sales were nearly flat at $354.5 million, but gross profit increased 25.5% to $74.1 million, and the company reported operating income of $25.7 million compared to a loss of $69.1 million in the prior-year quarter Q2 Fiscal 2020 vs. 2019 Performance (in thousands) | Metric | Q2 FY2020 | Q2 FY2019 | % Change | | :--- | :--- | :--- | :--- | | **Net sales** | $354,458 | $355,436 | (0.3%) | | **Gross profit** | $74,055 | $59,000 | 25.5% | | **Operating income (loss)** | $25,653 | $(69,069) | N/A | | **Net income (loss)** | $17,745 | $(77,025) | N/A | | **Adjusted EBITDA** | $32,482 | $23,799 | 36.5% | - U.S. Factory-built Housing sales increased **2.0%** to **$312.8 million**, driven by a **2.3%** increase in average selling price, with gross margin expanding significantly to **20.9%** from **16.5%** due to lower material costs, synergy capture, and operational improvements[99](index=99&type=chunk)[100](index=100&type=chunk)[104](index=104&type=chunk) - SG&A expenses decreased by **$79.7 million**, primarily because the prior-year quarter included **$85.8 million** in stock compensation expense triggered by secondary offerings[107](index=107&type=chunk)[110](index=110&type=chunk) [Results of Operations - First Half Fiscal 2020 vs. 2019](index=33&type=section&id=Results%20of%20Operations%20-%20First%20Half%20Fiscal%202020%20vs.%202019) For the first six months of fiscal 2020, net sales increased 7.2% to $726.3 million, driven by a 12.5% increase in the U.S. Factory-built Housing segment, and the company posted net income of $35.1 million, a reversal from a $77.9 million net loss in the prior year H1 Fiscal 2020 vs. 2019 Performance (in thousands) | Metric | H1 FY2020 | H1 FY2019 | % Change | | :--- | :--- | :--- | :--- | | **Net sales** | $726,346 | $677,697 | 7.2% | | **Gross profit** | $150,090 | $114,160 | 31.5% | | **Operating income (loss)** | $49,973 | $(58,997) | N/A | | **Net income (loss)** | $35,125 | $(77,878) | N/A | | **Adjusted EBITDA** | $64,567 | $46,534 | 38.8% | - U.S. Factory-built Housing sales grew by **$71.7 million (12.5%)**, with **$50.3 million** of the increase attributable to the inclusion of Skyline operations for the full six-month period, compared to only four months in the prior-year period[120](index=120&type=chunk) - Canadian Factory-built Housing sales decreased **5.0%** due to an **11.6%** decline in the number of homes sold, reflecting weaker demand in British Columbia and Alberta[121](index=121&type=chunk) - SG&A expenses decreased by **$73.0 million**, mainly due to **$93.9 million** in stock compensation expense recognized in the prior year related to the Exchange and secondary offerings[127](index=127&type=chunk)[130](index=130&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity remains strong, with cash and cash equivalents increasing by $28.1 million during the first six months of fiscal 2020 to a total of $154.7 million, and $39.4 million of unused borrowing capacity under its revolving credit facility Liquidity Position (in thousands) | Metric | Sep 28, 2019 | Mar 30, 2019 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $154,739 | $126,634 | | **Working Capital (Current Assets - Current Liabilities)** | $139,467 | $111,987 | - Cash from operations increased to **$52.2 million** for the six months ended Sep 28, 2019, up from **$29.0 million** in the prior year, driven by higher operating income and the absence of prior-year transaction expenses[145](index=145&type=chunk) [BACKLOG](index=42&type=section&id=BACKLOG) The company's unfilled manufacturing orders for homes decreased to $172.0 million at September 28, 2019, compared to $252.4 million at the same time last year, attributed to a decrease in order rates and continued softness in western Canada housing markets - Unfilled U.S. and Canadian manufacturing orders totaled **$172.0 million** at September 28, 2019, a decrease from **$252.4 million** at September 29, 2018[143](index=143&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there were no significant changes in its market risk, including interest rate and foreign exchange risks, from the information disclosed in its Annual Report on Form 10-K for fiscal year 2019 - There were no significant changes to the company's market risk disclosures regarding interest rates and foreign exchange compared to the Fiscal 2019 Annual Report[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 28, 2019, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of September 28, 2019, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[155](index=155&type=chunk) - No changes occurred in the company's internal control over financial reporting during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[156](index=156&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and claims in the ordinary course of business, but management does not believe the ultimate liability will have a material adverse effect on the company's financial condition or results of operations - The company is subject to various legal proceedings and claims arising in the ordinary course of business but does not expect them to have a material adverse effect[85](index=85&type=chunk)[159](index=159&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year 2019 - No material changes have been made to the risk factors disclosed in the Fiscal 2019 Annual Report[160](index=160&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and Inline XBRL data files - The report includes required CEO and CFO certifications and interactive data files (XBRL) as exhibits[162](index=162&type=chunk)

SKYLINE感 CHAMPION Investor Presentation August 2019 DISCLAIMER FORWARD-LOOKING STATEMENTS Statements in this presentation and discussions that follow, including those about the industry shipments, demographic trends, financing availability, the potential results of operational improvements, synergies resulting from the combination of the operations of Skyline Champion Corporation (f/k/a Skyline Corporation) ("Skyline") and Champion Enterprises Holdings, LLC ("Champion") (the "Transaction") and future growth ...

Skyline Champion Corporation (NYSE:SKY) Q2 2019 Earnings Conference Call August 1, 2019 8:00 AM ET Company Participants Mark Yost - CEO Laurie Hough - EVP and CFO Conference Call Participants Daniel Moore - CJS Securities Greg Palm - Craig-Hallum Capital Group Phil Ng - Jefferies Matthew Bouley - Barclays Mike Dahl - RBC Capital Markets Operator Good morning, and welcome to Skyline Champion Corporation's First Quarter Fiscal Year 2020 Earnings Call. The company issued an earnings press release yesterday aft ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-04714 Skyline Champion Corporation (Exact name of registrant as specified in its charter) Indiana 35-1038277 (State of Incorpora ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 30, 2019 Commission File Number 001-04714 Skyline Champion Corporation (Exact name of registrant as specified in its charter) Indiana 35-1038277 (State of Incorporation) (I.R.S. Employer Identification No.) P.O. Box 743 2520 By-Pass Road Elkhart, Indiana 46515 (Address of Principal Executive Of ...

Financial Data and Key Metrics Changes - For fiscal year 2019, the company reported a total revenue of $1.4 billion, reflecting a strong revenue growth of 28% compared to the previous year [7] - Adjusted EBITDA for the year increased by 50% to $97 million, indicating strong operational performance [7] - In Q4, revenue grew by 23% year-over-year, with adjusted EBITDA reaching $24.2 million, an 86% increase from the prior year [8][9] Business Line Data and Key Metrics Changes - U.S. sales increased by 35% to $295 million, with a 15% increase in the number of homes sold and an average selling price of $61,100, up 17% [25][26] - Canadian sales declined by 17% to $18.7 million, attributed to a decrease in the number of homes sold, although average selling prices increased slightly to $81,600 [26] Market Data and Key Metrics Changes - The manufactured housing industry is expected to continue growing, with industry volumes remaining below long-term averages [10] - In Canada, orders were down 25% during the March quarter, particularly in British Columbia, Alberta, and Saskatchewan, with expectations for continued softness in the short term [15] Company Strategy and Development Direction - The company is focused on organic growth initiatives and evaluating potential acquisition opportunities to enhance its market position [40] - The integration of Skyline and Champion is progressing well, with a target to achieve synergies of $12 million to $16 million by December 2019 [36][37] Management's Comments on Operating Environment and Future Outlook - Management remains positive about the outlook for the manufactured housing industry, citing increasing demand for affordable housing and improving financing options [10][39] - The company is closely monitoring economic conditions and trends in the housing market while expecting continued growth in U.S. orders [13][39] Other Important Information - The company ended Q4 with a consolidated backlog of $143 million, down from $155 million a year ago, indicating a more normalized production level [17] - The effective tax rate for Q4 was 25.9%, a significant decrease from 176.4% in the prior year, primarily due to changes in equity-based compensation [31] Q&A Session Summary Question: Impact of weather on shipments - Management noted that weather conditions primarily affected regions between Texas and North Carolina, causing delays in shipments [47] Question: Order rates and regional performance - Management indicated that while some regions experienced softness, overall customer demand remains strong, with double-digit order growth in April [49] Question: Fannie and Freddie's programs - Management expects traction from Fannie and Freddie's programs in the latter half of the year, which could attract more lenders to the manufactured housing space [51] Question: Canadian market outlook - The Canadian operations are expected to remain soft for the next quarter or two, with approximately 8% of overall sales coming from Canada [53] Question: Sustainability of gross margins - Management confirmed that the strong gross margins in the U.S. are sustainable, with no one-time adjustments affecting the quarter [54] Question: Long-term EBITDA margin targets - Management expects long-term EBITDA margins to reach around 10%, with some deceleration in growth due to ongoing investments [76] Question: Impact of tariffs on costs - Management indicated that tariffs could impact costs by 1% to 3%, primarily affecting plumbing and cabinetry products [80] Question: Future M&A opportunities - Management is exploring M&A opportunities in both manufacturing capacity expansion and distribution channels [91]