PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and notes, highlighting the significant impact of the June 2018 business combination [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20December%2029%2C%202018%20(unaudited)%20and%20March%2031%2C%202018) Condensed Consolidated Balance Sheets (Dollars in thousands) | Metric | Dec 29, 2018 (unaudited) | Mar 31, 2018 | Change | | :--------------------------------- | :----------------------- | :----------- | :----- | | Total Assets | $678,264 | $395,398 | +$282,866 | | Total Current Assets | $298,724 | $263,104 | +$35,620 | | Property, Plant and Equipment, net | $111,360 | $67,960 | +$43,400 | | Goodwill | $172,057 | $3,179 | +$168,878 | | Amortizable Intangible Assets, net | $48,914 | $1,542 | +$47,372 | | Total Liabilities | $279,719 | $242,101 | +$37,618 | | Total Equity | $398,545 | $153,297 | +$245,248 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(unaudited)%20for%20the%20three%20and%20nine%20months%20ended%20December%2029%2C%202018%20and%20December%2030%2C%202017) Condensed Consolidated Statements of Comprehensive Income (Loss) (Dollars in thousands) | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change (YoY) | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change (YoY) | | :--------------------------------- | :-------------------------- | :-------------------------- | :------------ | :-------------------------- | :-------------------------- | :------------ | | Net sales | $354,671 | $294,378 | +20.5% | $1,032,368 | $798,443 | +29.3% | | Gross profit | $64,736 | $56,260 | +15.1% | $178,896 | $133,619 | +33.9% | | Selling, general, and administrative expenses | $48,848 | $32,877 | +48.6% | $222,005 | $87,439 | +153.9% | | Operating income (loss) | $15,888 | $23,383 | -32.1% | $(43,109) | $46,180 | -193.3% | | Net income (loss) | $10,513 | $5,393 | +94.9% | $(67,365) | $18,064 | -472.9% | | Basic EPS | $0.19 | $0.11 | +72.7% | $(1.28) | $0.38 | -436.8% | | Diluted EPS | $0.19 | $0.11 | +72.7% | $(1.28) | $0.38 | -436.8% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20nine%20months%20ended%20December%2029%2C%202018%20and%20December%2030%2C%202017) Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | Metric | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change (YoY) | | :----------------------------------------- | :-------------------------- | :-------------------------- | :------------ | | Net cash provided by (used in) operating activities | $51,918 | $(671) | +$52,589 | | Net cash provided by (used in) investing activities | $2,396 | $(7,610) | +$10,006 | | Net cash (used in) provided by financing activities | $(60,815) | $5,780 | -$66,595 | | Net decrease in cash, cash equivalents and restricted cash | $(7,631) | $(944) | -$6,687 | | Cash, cash equivalents and restricted cash at end of period | $128,985 | $101,748 | +$27,237 | [Condensed Consolidated Statement of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity%20(unaudited)%20for%20the%20nine%20months%20ended%20December%2029%2C%202018) Condensed Consolidated Statement of Stockholders' Equity (Dollars in thousands) | Metric | Balance at April 1, 2018 | Balance at Dec 29, 2018 | Change | | :----------------------------------------- | :----------------------- | :---------------------- | :------- | | Members' Contributed Capital | $140,076 | $0 | -$140,076 | | Common Stock (Shares) | 0 | 56,713 | +56,713 | | Common Stock (Amount) | $0 | $1,571 | +$1,571 | | Additional Paid in Capital | $0 | $475,838 | +$475,838 | | Retained Earnings (Accumulated Deficit) | $22,514 | $(67,365) | -$89,879 | | Accumulated Other Comprehensive Loss | $(9,293) | $(11,499) | -$2,206 | | Total Equity | $153,297 | $398,545 | +$245,248 | - The significant increase in total equity is primarily due to the Exchange of membership interest for shares of Skyline Champion Corporation (**$285.2 million**) and equity-based compensation (**$97.6 million**), partially offset by members' capital distributions (**$65.3 million**) and a net loss (**$67.4 million**)[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Basis of Presentation and Business](index=8&type=section&id=1.%20Basis%20of%20Presentation%20and%20Business) This note details the basis of financial statement preparation, describes the Company's operations as a leading factory-built housing producer, and mentions the evaluation of new lease accounting standards - The Company is a leading producer of factory-built housing in the U.S. and Canada, operating **31 U.S. and 5 Canadian manufacturing facilities**, **21 retail sales centers**, and transportation logistics services[29](index=29&type=chunk) - The Company is evaluating the impact of ASU 2016-02, Leases (Topic 842), effective for fiscal years beginning after December 31, 2018, expecting a significant impact to its consolidated balance sheet[30](index=30&type=chunk)[31](index=31&type=chunk) [2. Business Combination](index=10&type=section&id=2.%20Business%20Combination) This note details the June 2018 reverse acquisition of Skyline Corporation by Champion Holdings, including the preliminary purchase price allocation and resulting goodwill and intangible assets - The Exchange between Champion Holdings and Skyline Corporation was completed on June 1, 2018, and accounted for as a reverse acquisition, with Champion Holdings as the accounting acquirer[36](index=36&type=chunk) Preliminary Estimated Purchase Price Allocation (Dollars in thousands) | Item | Allocation at Dec 29, 2018 | | :----------------------------------------- | :----------------------- | | Cash | $9,722 | | Trade accounts receivable | $13,876 | | Inventory | $19,028 | | Property, plant and equipment | $44,642 | | Deferred tax assets, net | $7,954 | | Other assets | $6,349 | | Accounts payable and accrued liabilities | $(35,977) | | Intangibles | $50,693 | | Goodwill | $168,878 | | Total preliminary estimated purchase price allocation | $285,165 | - Goodwill of **$168.9 million** is primarily attributed to expected synergies from the combination, including cost synergies and operational improvements[38](index=38&type=chunk) [3. Cash, Cash Equivalents and Restricted Cash](index=11&type=section&id=3.%20Cash%2C%20Cash%20Equivalents%20and%20Restricted%20Cash) The Company adopted ASU 2016-18, Restricted Cash, on April 1, 2018, retrospectively. As of December 29, 2018, cash and cash equivalents were $129.0 million, with no restricted cash, reflecting a change from March 31, 2018, where restricted cash was $22.9 million - The Company adopted ASU 2016-18, Restricted Cash, on April 1, 2018, requiring changes in restricted cash to be reflected with cash and cash equivalents on the statement of cash flows[44](index=44&type=chunk) Cash, Cash Equivalents and Restricted Cash (Dollars in thousands) | Metric | Dec 29, 2018 (unaudited) | Mar 31, 2018 | | :----------------------------------------- | :----------------------- | :----------- | | Balance sheet - cash and cash equivalents | $128,985 | $113,731 | | Balance sheet - restricted cash | $0 | $22,885 | | Statement of cash flows - cash, cash equivalents and restricted cash | $128,985 | $136,616 | [4. Inventories](index=12&type=section&id=4.%20Inventories) Total inventories increased to $111.4 million at December 29, 2018, from $98.0 million at March 31, 2018, with increases across raw materials, work in process, and finished goods. Reserves for obsolete inventory remained constant at $3.5 million Components of Net Inventory (Dollars in thousands) | Component | Dec 29, 2018 (unaudited) | Mar 31, 2018 | Change | | :------------------ | :----------------------- | :----------- | :----- | | Raw materials | $45,133 | $37,852 | +$7,281 | | Work in process | $13,299 | $10,004 | +$3,295 | | Finished goods and other | $52,919 | $50,166 | +$2,753 | | Total inventories | $111,351 | $98,022 | +$13,329 | - Reserves for obsolete inventory remained consistent at **$3.5 million** for both periods[47](index=47&type=chunk) [5. Property, Plant, and Equipment](index=12&type=section&id=5.%20Property%2C%20Plant%2C%20and%20Equipment) Net property, plant, and equipment significantly increased to $111.4 million at December 29, 2018, from $68.0 million at March 31, 2018, largely due to the acquisition of Skyline Corporation. Depreciation expense also increased for both the three and nine-month periods Property, Plant, and Equipment, Net (Dollars in thousands) | Component | Dec 29, 2018 (unaudited) | Mar 31, 2018 | Change | | :--------------------------------- | :----------------------- | :----------- | :----- | | Land and improvements | $34,797 | $22,071 | +$12,726 | | Buildings and improvements | $85,863 | $58,179 | +$27,684 | | Machinery and equipment | $40,459 | $31,924 | +$8,535 | | Construction in progress | $3,122 | $919 | +$2,203 | | Property, plant and equipment, at cost | $164,241 | $113,093 | +$51,148 | | Less accumulated depreciation | $52,881 | $45,133 | +$7,748 | | Property, plant, and equipment, net | $111,360 | $67,960 | +$43,400 | - Depreciation expense for the three months ended December 29, 2018, was **$2.9 million** (vs. **$1.9 million** prior year), and for the nine months was **$8.2 million** (vs. **$5.8 million** prior year)[48](index=48&type=chunk) [6. Goodwill and Intangible Assets](index=12&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased dramatically to $172.1 million at December 29, 2018, from $3.2 million at March 31, 2018, primarily due to the Exchange. Amortizable intangible assets also saw a substantial increase to $48.9 million from $1.5 million, mainly from newly recognized customer relationships and trade names from the acquisition Goodwill and Amortizable Intangible Assets (Dollars in thousands) | Metric | Dec 29, 2018 (unaudited) | Mar 31, 2018 | Change | | :--------------------------------- | :----------------------- | :----------- | :----- | | Goodwill | $172,057 | $3,179 | +$168,878 | | Amortizable intangibles, net | $48,914 | $1,542 | +$47,372 | - The increase in goodwill and intangible assets is a direct result of the Exchange, with **$41.7 million** in customer relationships and **$9.0 million** in trade names recognized[50](index=50&type=chunk)[53](index=53&type=chunk) - Amortization of intangible assets for the three months ended December 29, 2018, was **$1.6 million** (vs. **$0.2 million** prior year), and for the nine months was **$3.3 million** (vs. **$0.4 million** prior year)[53](index=53&type=chunk) [7. Other Current Liabilities](index=13&type=section&id=7.%20Other%20Current%20Liabilities) Total other current liabilities increased to $122.8 million at December 29, 2018, from $100.1 million at March 31, 2018. This increase was primarily driven by higher customer deposits, accrued volume rebates, accrued warranty obligations, and accrued insurance Components of Other Current Liabilities (Dollars in thousands) | Component | Dec 29, 2018 (unaudited) | Mar 31, 2018 | Change | | :----------------------------------------- | :----------------------- | :----------- | :----- | | Customer deposits and receipts in excess of revenues | $27,540 | $24,557 | +$2,983 | | Accrued volume rebates | $22,259 | $17,037 | +$5,222 | | Accrued warranty obligations | $17,366 | $12,530 | +$4,836 | | Accrued compensation and payroll taxes | $25,051 | $24,100 | +$951 | | Accrued insurance | $16,934 | $11,112 | +$5,822 | | Other | $13,679 | $10,776 | +$2,903 | | Total other current liabilities | $122,829 | $100,112 | +$22,717 | [8. Accrued Warranty Obligations](index=13&type=section&id=8.%20Accrued%20Warranty%20Obligations) Accrued warranty obligations increased to $23.1 million at December 29, 2018, from $15.4 million at the beginning of the nine-month period, driven by warranty expense and assumed warranty from the Exchange Changes in Accrued Warranty Obligations (Dollars in thousands) | Metric | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change (YoY) | | :----------------------------------------- | :-------------------------- | :-------------------------- | :------------ | | Balance at the beginning of the period | $15,430 | $14,534 | +$896 | | Warranty assumed in the Exchange | $6,259 | $0 | +$6,259 | | Warranty expense | $25,834 | $17,441 | +$8,393 | | Cash warranty payments | $(24,457) | $(16,966) | -$7,491 | | Balance at end of period | $23,066 | $15,009 | +$8,057 | [9. Debt and Floor Plan Payable](index=13&type=section&id=9.%20Debt%20and%20Floor%20Plan%20Payable) Total debt remained stable at $59.3 million, with a new $100.0 million revolving credit facility replacing existing term loans, while floor plan payable increased to $39.0 million for retail inventory Long-term Debt (Dollars in thousands) | Component | Dec 29, 2018 (unaudited) | Mar 31, 2018 | Change | | :--------------------------------- | :----------------------- | :----------- | :----- | | Revolving credit facility | $46,900 | $0 | +$46,900 | | Obligations under industrial revenue bonds | $12,430 | $12,430 | $0 | | Capital lease obligations and other debt | $0 | $4 | -$4 | | Term Loans due March 2020 | $0 | $46,897 | -$46,897 | | Total debt | $59,330 | $59,331 | -$1 | - The Company entered into a new **$100.0 million** revolving credit facility on June 5, 2018, maturing in June 2023, with an interest rate based on LIBOR plus **1.75%** (or ABR plus **0.75%**) at December 29, 2018[58](index=58&type=chunk)[59](index=59&type=chunk) - Floor plan payable increased to **$39.0 million** at December 29, 2018, from **$29.8 million** at March 31, 2018, with total available borrowings of **$47.0 million**[64](index=64&type=chunk) [10. Revenue Recognition](index=14&type=section&id=10.%20Revenue%20Recognition) The Company adopted ASC 606 on April 1, 2018, with no material impact, recognizing revenue upon transfer of control for manufacturing sales and delivery/acceptance for retail sales, and over time for commercial revenue - The Company adopted ASC 606 on April 1, 2018, using the modified retrospective method, with no material impact on revenues for the three and nine months ended December 29, 2018[66](index=66&type=chunk) - Revenue for manufacturing sales is recognized when wholesale floor plan financing or retailer credit approval is received, the home is shipped, and title is transferred[71](index=71&type=chunk) Revenue by Sales Category (Dollars in thousands) - Three Months Ended Dec 29, 2018 | Category | U.S. Factory-Built Housing | Canadian Factory-built Housing | Corporate/Other | Total | | :----------------------- | :------------------------- | :--------------------------- | :-------------- | :------ | | Manufacturing and retail | $308,013 | $27,130 | $0 | $335,143 | | Commercial | $1,505 | $0 | $0 | $1,505 | | Transportation | $0 | $0 | $18,023 | $18,023 | | Total | $309,518 | $27,130 | $18,023 | $354,671 | Revenue by Sales Category (Dollars in thousands) - Nine Months Ended Dec 29, 2018 | Category | U.S. Factory-Built Housing | Canadian Factory-built Housing | Corporate/Other | Total | | :----------------------- | :------------------------- | :--------------------------- | :-------------- | :------ | | Manufacturing and retail | $870,816 | $79,885 | $0 | $950,701 | | Commercial | $11,441 | $0 | $0 | $11,441 | | Transportation | $0 | $0 | $70,226 | $70,226 | | Total | $882,257 | $79,885 | $70,226 | $1,032,368 | [11. Other Expense](index=18&type=section&id=11.%20Other%20Expense) Other expense for the three months was $0.1 million due to an insured loss deductible, while for nine months it was $7.8 million, mainly from Exchange-related legal and advisory services - Other expense for the three months ended December 29, 2018, was **$0.1 million** (vs. **$1.9 million** prior year), primarily for an insured loss deductible[78](index=78&type=chunk) - Other expense for the nine months ended December 29, 2018, was **$7.8 million** (vs. **$2.9 million** prior year), primarily due to **$6.9 million** in Exchange-related services and **$0.8 million** for public offerings[78](index=78&type=chunk) [12. Income Taxes](index=18&type=section&id=12.%20Income%20Taxes) Income tax expense decreased for both periods, with effective tax rates significantly impacted by non-deductible Exchange-related costs, equity-based compensation, and deferred tax asset remeasurement under the 2017 Tax Act Income Tax Expense and Effective Tax Rate | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | | :------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income tax expense | $4,437 | $15,051 | $13,699 | $22,089 | | Effective tax rate | 29.7% | 73.6% | (25.5%) | 55.0% | - The change in effective tax rate is primarily due to non-deductible equity-based compensation and the remeasurement of U.S. deferred tax assets and liabilities at the new **21%** corporate income tax rate under the 2017 Tax Cuts and Jobs Act[79](index=79&type=chunk)[80](index=80&type=chunk) - Uncertain tax positions decreased by **$0.3 million** and **$0.7 million** for the three and nine months ended December 29, 2018, respectively, due to the expiration of certain statutes of limitations[82](index=82&type=chunk) [13. Equity-Based Compensation](index=18&type=section&id=13.%20Equity-Based%20Compensation) Equity-based compensation expense significantly increased for both periods, primarily due to the exchange of unvested Champion Holdings units for restricted shares as part of the Exchange Equity-Based Compensation Expense (Dollars in thousands) | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Equity-based compensation expense | $3,662 | $150 | $97,589 | $450 | - The substantial increase in equity-based compensation is due to the exchange of unvested Champion Holdings units for restricted shares of the Company as part of the Exchange, with a significant portion vesting upon follow-on public offerings[83](index=83&type=chunk) - As of December 29, 2018, the Company had **464,000** unvested time-vesting restricted shares outstanding with a weighted average grant date fair value of **$32.03** per share[87](index=87&type=chunk) [14. Earnings Per Share](index=20&type=section&id=14.%20Earnings%20Per%20Share) Basic and diluted EPS increased for the three months but showed a significant loss for the nine months, reflecting the net loss incurred, with prior EPS calculations adjusted for the exchange ratio Basic and Diluted Earnings Per Common Share | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to common shareholders | $10,427 | $5,056 | $(67,365) | $16,922 | | Average common shares outstanding | 56,249 | 44,525 | 52,595 | 44,480 | | Basic net income (loss) per share | $0.19 | $0.11 | $(1.28) | $0.38 | | Diluted net income (loss) per share | $0.19 | $0.11 | $(1.28) | $0.38 | - The Company's time-vesting and performance-vesting restricted shares are considered participating securities for EPS calculation using the two-class method[88](index=88&type=chunk) [15. Transactions with Related Parties](index=20&type=section&id=15.%20Transactions%20with%20Related%20Parties) Prior to the Exchange, Champion Holdings paid management fees to Principal Shareholders under a Management Advisory Services Agreement, which was terminated upon completion of the Exchange - A Management Advisory Services Agreement with Principal Shareholders, which provided management, consulting, financial, and other advisory services, was terminated in connection with the Exchange[90](index=90&type=chunk) - Management fee expense recognized prior to the Exchange was **$0.3 million** for fiscal 2019, compared to **$0.4 million** and **$1.1 million** for the three and nine months ended December 30, 2017, respectively[90](index=90&type=chunk) [16. Segment Information](index=20&type=section&id=16.%20Segment%20Information) The Company operates in U.S. and Canadian Factory-built Housing segments, with Corporate/Other covering transportation and corporate costs, evaluating performance based on EBITDA, which was significantly impacted by non-cash equity-based compensation - The Company operates in two reportable segments: U.S. Factory-built Housing (wholesale and retail) and Canadian Factory-built Housing, with Corporate/Other encompassing transportation and corporate costs[91](index=91&type=chunk) Selected Financial Information by Reportable Segment (Dollars in thousands) | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | **Net Sales:** | | | | | | U.S. Factory-built Housing | $309,518 | $242,739 | $882,257 | $641,878 | | Canadian Factory-built Housing | $27,130 | $24,950 | $79,885 | $74,006 | | Corporate/Other | $18,023 | $26,689 | $70,226 | $82,559 | | **EBITDA:** | | | | | | U.S. Factory-built Housing EBITDA | $30,637 | $27,184 | $80,240 | $52,988 | | Canadian Factory-built Housing EBITDA | $2,568 | $1,836 | $9,123 | $8,475 | | Corporate/Other EBITDA | $(12,740) | $(3,609) | $(120,937) | $(9,157) | - Corporate/Other EBITDA for the nine months ended December 29, 2018, was significantly impacted by non-cash equity-based compensation[93](index=93&type=chunk)[160](index=160&type=chunk) [17. Commitments, Contingencies and Legal Proceedings](index=23&type=section&id=17.%20Commitments%2C%20Contingencies%20and%20Legal%20Proceedings) The Company has contingent repurchase obligations of $190.4 million, guarantees $0.8 million in floor plan obligations, and is involved in various legal proceedings, but expects no material adverse effect - Contingent repurchase obligation for homes sold to independent retailers was estimated at **$190.4 million** as of December 29, 2018, with a reserve for estimated losses of **$0.8 million**[96](index=96&type=chunk) - The Company guarantees **$0.8 million** of certain retailers' floor plan obligations and has contingent obligations of **$21.0 million** under letters of credit and **$29.8 million** under surety bonds[97](index=97&type=chunk)[98](index=98&type=chunk) - The Company is subject to various legal proceedings and claims in the ordinary course of business but believes the ultimate liability will not have a material adverse effect on its financial condition[100](index=100&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) This section provides management's analysis of financial condition and results, focusing on the Champion Holdings and Skyline Corporation combination, industry trends, liquidity, capital resources, and critical accounting policies [Overview](index=24&type=section&id=Overview) - Skyline Champion Corporation is a leading producer of factory-built housing in the U.S. and Canada, offering manufactured construction, company-owned retail locations, and transportation logistics services[103](index=103&type=chunk) - The Company operates **31 manufacturing facilities** in the U.S. and **5** in western Canada, along with **21 retail sales centers**, marketing homes under brands like Skyline Homes, Champion Homes, and Redman Homes[103](index=103&type=chunk) [Acquisitions and Expansions](index=24&type=section&id=Acquisitions%20and%20Expansions) - The Company is expanding its manufacturing footprint, including adding a second production line at Corona, California, and planning new plants in Leesville, Louisiana (June 2019) and Leola, Pennsylvania (Q1 fiscal 2020)[105](index=105&type=chunk) - Strategic acquisitions include a plant in Mansfield, Texas (April 2017) and assets of Innovative Building Systems (IBS) in September 2016, which added modular manufacturing facilities and retail sales centers[105](index=105&type=chunk) - Retail operations have expanded with **three new sales centers** in fiscal 2018, **five** in fiscal 2017, and **three** in fiscal 2016, aiming to increase market presence and manufacturing utilization[106](index=106&type=chunk) [Combination with Skyline](index=24&type=section&id=Combination%20with%20Skyline) - The Exchange between Champion Holdings and Skyline Corporation was completed on June 1, 2018, and accounted for as a reverse acquisition, with Champion Holdings as the accounting acquirer[108](index=108&type=chunk) - Financial results for Skyline Champion Corporation for the nine months ended December 29, 2018, comprise Champion Holdings' results through June 1, 2018, and the combined company's results thereafter[108](index=108&type=chunk) [Industry and Company Outlook](index=25&type=section&id=Industry%20and%20Company%20Outlook) - U.S. HUD-code home industry shipments increased by **4.5%** for the eight months ended November 30, 2018, compared to the prior year[109](index=109&type=chunk) - The Company's U.S. HUD market share grew to **16.2%** for the eight months ended November 30, 2018, up from **13.8%** in the comparable prior-year period, benefiting from Skyline operations[109](index=109&type=chunk) - Modular homes accounted for approximately **19%** of the Company's U.S. manufacturing sales during the nine months ended December 29, 2018, with industry sales generally stable since 2009[110](index=110&type=chunk) [Pro Forma Results of Operations](index=25&type=section&id=Pro%20Forma%20Results%20of%20Operations) - Unaudited pro forma results combine Champion Holdings and Skyline Corporation as if the Exchange and related financing occurred on April 2, 2017, for informational purposes[112](index=112&type=chunk) - Pro forma adjustments include changes to depreciation, amortization of intangibles, interest expense, and the elimination of transaction costs and one-time equity-based compensation related to the Exchange[114](index=114&type=chunk) - Pro forma data does not account for potential impacts of current financial conditions, anticipated synergies, operating efficiencies, or integration costs[42](index=42&type=chunk) [Results of Operations: Three Months Ended December 29, 2018 vs. Three Months Ended December 30, 2017](index=26&type=section&id=Results%20of%20Operations%3A%20Three%20Months%20Ended%20December%2029%2C%202018%20vs.%20Three%20Months%20Ended%20December%2030%2C%202017) Net sales increased by **20.5%** to **$354.7 million**, driven by U.S. Factory-built Housing, while gross profit rose **15.1%**; SG&A surged **48.6%** due to integration and equity compensation, resulting in a **32.1%** operating income decrease but a **94.9%** net income increase [Net Sales](index=26&type=section&id=Net%20Sales) Net sales increased by 20.5% to $354.7 million, primarily driven by a 27.5% increase in U.S. manufacturing and retail sales, which included $63.2 million from Skyline operations and a 9.0% increase in average home selling price. Canadian sales also grew by 8.7%, while Corporate/Other net sales decreased by 32.5% due to lower transportation business volume Net Sales by Segment (Dollars in thousands) | Segment | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total Net Sales | $354,671 | $294,378 | $60,293 | 20.5% | | U.S. manufacturing and retail net sales | $309,518 | $242,739 | $66,779 | 27.5% | | U.S. homes sold | 5,019 | 4,289 | 730 | 17.0% | | U.S. manufacturing and retail average home selling price | $61.7 | $56.6 | $5.1 | 9.0% | | Canadian manufacturing net sales | $27,130 | $24,950 | $2,180 | 8.7% | | Canadian homes sold | 329 | 323 | 6 | 1.9% | | Corporate/Other net sales | $18,023 | $26,689 | $(8,666) | (32.5%) | - U.S. Factory-built Housing segment growth was primarily due to the inclusion of **$63.2 million** in Skyline operations sales and a **9.0%** increase in average home selling price[117](index=117&type=chunk) - The Company's U.S. HUD market share grew to **18.1%** from **14.0%** in the same period of the prior year, due to Skyline operations, despite a **3.9%** decrease in U.S. HUD industry units shipped[118](index=118&type=chunk) [Gross Profit](index=27&type=section&id=Gross%20Profit) Gross profit increased by 15.1% to $64.7 million, but gross profit as a percent of net sales decreased to 18.3% from 19.1%. U.S. Factory-built Housing gross profit increased by 17.9% but its margin decreased due to the prior year's higher efficiencies from FEMA disaster relief homes. Canadian segment gross profit margin improved due to lower labor and warranty costs, while Corporate/Other margins improved despite lower volume Gross Profit by Segment (Dollars in thousands) | Segment | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total gross profit | $64,736 | $56,260 | $8,476 | 15.1% | | Gross profit as a percent of net sales | 18.3% | 19.1% | | | | U.S. Factory-built Housing gross profit | $57,118 | $48,426 | $8,692 | 17.9% | | Canadian Factory-built Housing gross profit | $5,046 | $4,466 | $580 | 13.0% | | Corporate/Other gross profit | $2,572 | $3,368 | $(796) | (23.6%) | - U.S. Factory-built Housing gross profit margin decreased to **18.5%** from **19.9%**, partly due to the prior year's higher production efficiencies from FEMA disaster relief homes[125](index=125&type=chunk) - Canadian Factory-built Housing gross profit margin increased to **18.6%** from **17.9%**, primarily due to lower average labor and benefits and improved warranty costs[126](index=126&type=chunk) [Selling, General and Administrative Expenses](index=29&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses increased by 48.6% to $48.8 million, driven by a $8.2 million increase in U.S. Factory-built Housing (including Skyline operations) and a $7.9 million increase in Corporate/Other (due to equity-based compensation and integration costs) Selling, General and Administrative Expenses (Dollars in thousands) | Segment | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total SG&A expenses | $48,848 | $32,877 | $15,971 | 48.6% | | U.S Factory-built Housing SG&A | $30,539 | $22,360 | $8,179 | 36.6% | | Corporate/Other SG&A | $15,522 | $7,593 | $7,929 | 104.4% | - U.S. Factory-built Housing SG&A increased due to **$5.8 million** from Skyline operations, **$1.4 million** in higher sales commissions, and **$1.0 million** in other administrative/marketing costs[130](index=130&type=chunk) - Corporate/Other SG&A increased due to **$3.7 million** non-cash equity-based compensation, **$2.0 million** Skyline integration costs, and **$1.1 million** legal/professional fees[133](index=133&type=chunk) [Interest Expense, Net](index=31&type=section&id=Interest%20Expense%2C%20Net) Net interest expense decreased by 18.6% to $0.8 million, primarily due to higher interest income from increased average cash balances invested in short-term facilities Interest Expense, Net (Dollars in thousands) | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change | % Change | | :------------------ | :-------------------------- | :-------------------------- | :----- | :------- | | Interest expense, net | $813 | $999 | $(186) | (18.6%) | - The decrease in net interest expense was primarily related to higher interest income from increased average cash balances invested in short-term facilities[135](index=135&type=chunk) [Other Expense](index=31&type=section&id=Other%20Expense) Other expense decreased significantly by 93.6% to $0.1 million, primarily consisting of an insured loss deductible, a substantial reduction from prior year's Exchange-related legal and accounting services Other Expense (Dollars in thousands) | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change | % Change | | :------------------ | :-------------------------- | :-------------------------- | :----- | :------- | | Other expense | $125 | $1,940 | $(1,815) | (93.6%) | - The decrease was primarily because the prior year included **$1.9 million** in legal and accounting services related to the Exchange, while the current period had only a **$0.1 million** insured loss deductible[136](index=136&type=chunk) [Income Tax Expense](index=31&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by 70.5% to $4.4 million, with the effective tax rate falling to 29.7%, influenced by non-deductible expenses and prior year's deferred tax asset remeasurement Income Tax Expense and Effective Tax Rate | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change | % Change | | :------------------ | :-------------------------- | :-------------------------- | :----- | :------- | | Income tax expense | $4,437 | $15,051 | $(10,614) | (70.5%) | | Effective tax rate | 29.7% | 73.6% | | | - The effective tax rate change was influenced by non-deductible expenses, state/local income taxes, foreign operations, and the prior year's remeasurement of deferred tax assets/liabilities due to the 2017 Tax Act[138](index=138&type=chunk) [Adjusted EBITDA](index=32&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA increased by $0.8 million to $26.4 million, driven by increased operating income after adjusting for depreciation, amortization, integration, restructuring costs, and non-cash equity-based compensation Adjusted EBITDA Reconciliation (Dollars in thousands) | Metric | 3 Months Ended Dec 29, 2018 | 3 Months Ended Dec 30, 2017 | Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | | Net income | $10,513 | $5,393 | $5,120 | | Adjusted EBITDA | $26,407 | $25,640 | $767 | - The increase in Adjusted EBITDA is primarily due to increased operating income, after adjusting for higher depreciation, amortization, integration, restructuring costs, and non-cash equity-based compensation related to the Exchange and Skyline integration[140](index=140&type=chunk) [Results of Operations: Nine Months Ended December 29, 2018 vs. Nine Months Ended December 30, 2017](index=33&type=section&id=Nine%20Months%20Ended%20December%2029%2C%202018%20vs.%20Nine%20Months%20Ended%20December%2030%2C%202017) Net sales increased by **29.3%** to **$1,032.4 million**, with gross profit up **33.9%**; however, SG&A surged **153.9%** due to equity compensation and Exchange-related costs, resulting in a **$43.1 million** operating loss and **$67.4 million** net loss, despite a **41.3%** Adjusted EBITDA increase [Net Sales](index=33&type=section&id=Net%20Sales) Net sales increased by 29.3% to $1,032.4 million, driven by 37.4% growth in U.S. manufacturing and retail sales, including $153.3 million from Skyline operations and a 13.3% increase in average home selling price Net Sales by Segment (Dollars in thousands) | Segment | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total Net Sales | $1,032,368 | $798,443 | $233,925 | 29.3% | | U.S. manufacturing and retail net sales | $882,257 | $641,878 | $240,379 | 37.4% | | U.S. homes sold | 14,606 | 12,038 | 2,568 | 21.3% | | U.S. manufacturing and retail average home selling price | $60.4 | $53.3 | $7.1 | 13.3% | | Canadian manufacturing net sales | $79,885 | $74,006 | $5,879 | 7.9% | | Canadian homes sold | 1,003 | 988 | 15 | 1.5% | | Corporate/Other net sales | $70,226 | $82,559 | $(12,333) | (14.9%) | - U.S. Factory-built Housing sales growth was driven by **$153.3 million** from Skyline operations, a **13.3%** increase in average home selling price, and increased output from existing facilities[145](index=145&type=chunk) - The Company's U.S. HUD market share grew to **16.2%** from **13.8%**, with industry shipments up **4.5%**[146](index=146&type=chunk) [Gross Profit](index=34&type=section&id=Gross%20Profit) Gross profit increased by 33.9% to $178.9 million, with margins improving to 17.3% due to price adjustments, operational improvements, and product rationalization, offsetting rising material and labor costs Gross Profit by Segment (Dollars in thousands) | Segment | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total gross profit | $178,896 | $133,619 | $45,277 | 33.9% | | Gross profit as a percent of net sales | 17.3% | 16.7% | | | | U.S. Factory-built Housing gross profit | $153,147 | $108,277 | $44,870 | 41.4% | | Canadian Factory-built Housing gross profit | $14,988 | $13,806 | $1,182 | 8.6% | | Corporate/Other gross profit | $10,761 | $11,536 | $(775) | (6.7%) | - U.S. Factory-built Housing gross profit margin improved to **17.4%** from **16.9%**, offsetting material and labor cost increases through price adjustments, operational improvements, and product rationalization[152](index=152&type=chunk) - Pro forma gross profit increased by **$31.0 million**, with margins improving to **17.3%** from **16.0%**, consistent with operational improvements and product rationalization[155](index=155&type=chunk) [Selling, General and Administrative Expenses](index=35&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses surged by 153.9% to $222.0 million, primarily due to $97.2 million in non-cash equity-based compensation and $5.5 million in integration costs within Corporate/Other Selling, General and Administrative Expenses (Dollars in thousands) | Segment | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total SG&A expenses | $222,005 | $87,439 | $134,566 | 153.9% | | U.S. Factory-built Housing SG&A | $82,987 | $60,178 | $22,809 | 37.9% | | Corporate/Other SG&A | $132,265 | $21,072 | $111,193 | 527.7% | - Corporate/Other SG&A increased primarily due to **$97.2 million** non-cash equity-based compensation, **$5.5 million** integration costs, and **$1.2 million** restructuring costs[160](index=160&type=chunk) - U.S. Factory-built Housing SG&A increased due to **$12.7 million** from Skyline operations and **$6.1 million** in higher sales commissions and incentive compensation[158](index=158&type=chunk) [Interest Expense, Net](index=36&type=section&id=Interest%20Expense%2C%20Net) Net interest expense decreased by 14.3% to $2.7 million, primarily due to a $0.7 million increase in interest income from higher average cash balances, offsetting increased floor plan financing borrowings Interest Expense, Net (Dollars in thousands) | Metric | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | % Change | | :------------------ | :-------------------------- | :-------------------------- | :----- | :------- | | Interest expense, net | $2,712 | $3,164 | $(452) | (14.3%) | - The decrease in net interest expense was primarily due to a **$0.7 million** increase in interest income from higher average cash balances, offsetting a **$0.2 million** increase in interest expense from higher floor plan financing borrowings[163](index=163&type=chunk) - Pro forma interest expense, net, decreased by **$0.3 million** to **$2.6 million**, mainly due to additional interest income[164](index=164&type=chunk) [Other Expense](index=36&type=section&id=Other%20Expense) Other expense increased by 174.0% to $7.8 million, mainly due to $6.9 million for legal, accounting, and advisory services related to the Exchange and $0.8 million for public offerings Other Expense (Dollars in thousands) | Metric | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | % Change | | :------------------ | :-------------------------- | :-------------------------- | :----- | :------- | | Other expense | $7,845 | $2,863 | $4,982 | 174.0% | - The increase was primarily due to **$6.9 million** in legal, accounting, and advisory services related to the Exchange and **$0.8 million** for public offerings[166](index=166&type=chunk) - Pro forma other expense for the nine months ended December 29, 2018, was **$1.4 million**, including Exchange-related services, equity offering costs, and an insured loss deductible[167](index=167&type=chunk) [Income Tax Expense](index=38&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by 38.0% to $13.7 million, with a negative effective tax rate of (25.5%) primarily due to one-time Exchange-related charges and non-deductible expenses Income Tax Expense and Effective Tax Rate | Metric | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | % Change | | :------------------ | :-------------------------- | :-------------------------- | :----- | :------- | | Income tax expense | $13,699 | $22,089 | $(8,390) | (38.0%) | | Effective tax rate | (25.5%) | 55.0% | | | - The negative effective tax rate is primarily due to one-time charges related to the Exchange and non-deductible expenses; without these, the effective tax rate would have been **32.0%**[169](index=169&type=chunk) - Pro forma income tax expense was **$16.0 million** with an effective tax rate of **(44.2%)**, primarily due to the non-deductibility of certain expenses for tax purposes[170](index=170&type=chunk) [Adjusted EBITDA](index=39&type=section&id=Adjusted%20EBITDA) Historical Adjusted EBITDA increased by $21.3 million to $72.9 million, driven by increased operating income after adjusting for non-cash and one-time items related to the Exchange and Skyline integration Adjusted EBITDA Reconciliation (Dollars in thousands) | Metric | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | | Net (loss) income | $(67,365) | $18,064 | $(85,429) | | Adjusted EBITDA | $72,941 | $51,617 | $21,324 | - The increase in historical Adjusted EBITDA is primarily a result of a **$20.0 million** increase in operating income after adjusting for non-cash and one-time items related to the Exchange and Skyline integration[173](index=173&type=chunk) - Pro forma Adjusted EBITDA increased by **$17.0 million** to **$77.1 million**, driven by a **$15.3 million** increase in operating income after similar adjustments[174](index=174&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) [Sources and Uses of Cash](index=39&type=section&id=Sources%20and%20Uses%20of%20Cash) Net cash provided by operating activities significantly improved to $51.9 million, while cash used in financing activities increased substantially to $60.8 million due to distributions to Champion Holdings' members Summary Cash Flow Information (Dollars in thousands) | Metric | 9 Months Ended Dec 29, 2018 | 9 Months Ended Dec 30, 2017 | Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----- | | Net cash provided by (used in) operating activities | $51,918 | $(671) | +$52,589 | | Net cash provided by (used in) investing activities | $2,396 | $(7,610) | +$10,006 | | Net cash (used in) provided by financing activities | $(60,815) | $5,780 | -$66,595 | | Net decrease in cash, cash equivalents and restricted cash | $(7,631) | $(944) | -$6,687 | | Cash, cash equivalents and restricted cash at end of period | $128,985 | $101,748 | +$27,237 | - Primary sources of liquidity are net cash from operating activities and available borrowings under the revolving credit facility (**$32.1 million** unused capacity)[178](index=178&type=chunk) - Cash used in financing activities was **$66.6 million** higher, primarily due to **$65.3 million** in distributions to Champion Holdings' members prior to the Exchange[182](index=182&type=chunk) [Adjusted EBITDA (Definition and Limitations)](index=41&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP measure used by management to assess operating performance by excluding certain non-representative items, but it has limitations as an analytical tool - Adjusted EBITDA is a non-GAAP measure defined as net income/loss plus taxes, interest, depreciation, amortization, foreign currency gains/losses, equity-based compensation, restructuring charges, and other non-operating costs[183](index=183&type=chunk) - Management uses Adjusted EBITDA for business planning and performance comparison, believing it enhances understanding of core business performance[141](index=141&type=chunk)[175](index=175&type=chunk) - Limitations of Adjusted EBITDA include not reflecting interest expense, cash expenditures for capital or replacements, and potential variations in calculation across companies[185](index=185&type=chunk)[186](index=186&type=chunk) [Critical Accounting Policies](index=42&type=section&id=Critical%20Accounting%20Policies) - Management makes estimates and assumptions for financial statements, affecting reported amounts of assets, liabilities, revenues, and expenses, particularly for goodwill, intangible assets, deferred tax assets, and various reserves[187](index=187&type=chunk) - No significant changes in critical accounting policies occurred during the nine months ended December 29, 2018, except for revenue recognition (Note 10)[188](index=188&type=chunk) [Recently Issued Accounting Pronouncements](index=42&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - The Company is evaluating ASU 2016-02, Leases (Topic 842), effective for fiscal years beginning after December 31, 2018, expecting a significant impact to its consolidated balance sheet[30](index=30&type=chunk)[31](index=31&type=chunk) - The Company plans to adopt ASU 2016-02 using the modified retrospective method and elect the package of practical expedients[31](index=31&type=chunk) - The Company is assessing ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies goodwill impairment testing, effective for public entities after December 15, 2019[32](index=32&type=chunk) [Forward-Looking Statements](index=43&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements about future liquidity, earnings, expenditures, and financial condition, subject to various risks and uncertainties[191](index=191&type=chunk) - Key risk factors include economic and financial market conditions, demand fluctuations in the housing industry, interest rate changes, material prices, labor costs, competitive pressures, and regulatory changes[191](index=191&type=chunk)[192](index=192&type=chunk) - The Company does not assume any obligation to update, amend, or clarify forward-looking statements after the report date[192](index=192&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 is exposed to interest rate risk on variable-rate debt (revolving credit facility, industrial revenue bonds, floor plan financing) and foreign exchange risk from Canadian operations, with specific impacts quantified for interest rate and currency fluctuations [Interest Rate Risk](index=44&type=section&id=Interest%20Rate%20Risk) - The Company's debt (New Credit Agreement, industrial revenue bonds, floor plan financing) is subject to variable interest rates[193](index=193&type=chunk) - A **100-basis point** increase in interest rates would result in an additional annual interest expense of approximately **$1.0 million**, based on **$98.3 million** of outstanding variable-rate debt at December 29, 2018[193](index=193&type=chunk) [Foreign Exchange Risk](index=44&type=section&id=Foreign%20Exchange%20Risk) - The Company is exposed to foreign exchange risk from its Canadian operations, which had net sales of **$104.0 million Canadian dollars** for the nine months ended December 29, 2018[194](index=194&type=chunk) - A **1.0%** change in the USD/CAD exchange rate would change quarterly consolidated net sales by **$1.0 million**[194](index=194&type=chunk) - The Company does not financially hedge its investment in Canadian operations or Canadian denominated bank deposits[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of December 29, 2018, due to a material weakness in internal controls over financial reporting related to raw material inventory accuracy and valuation [Changes in Internal Control Over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - Disclosure controls and procedures were not effective as of December 29, 2018, due to a material weakness in internal controls over financial reporting[195](index=195&type=chunk) - The material weakness relates to the accuracy and valuation of raw material inventories, specifically in compiling inventory listings and valuing raw materials at cost[199](index=199&type=chunk) - Remedial activities include establishing policies for inventory accuracy and valuation, implementing more robust inventory count procedures, count testing, analytical procedures, and price testing[200](index=200&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, including commercial disputes and product liability, but expects no material adverse effect on its financial condition - The Company is involved in various legal proceedings and claims, including commercial/contractual disputes and product liability claims, arising in the ordinary course of business[204](index=204&type=chunk) - Management believes the ultimate liability with respect to these contingent obligations will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows[100](index=100&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks including the cyclical nature of the factory-built housing industry, economic sensitivity, dependence on distributors, material/labor fluctuations, extensive regulation, product quality issues, and integration challenges from acquisitions - The factory-built housing industry is cyclical, seasonal, and highly sensitive to economic conditions, including employment rates, consumer confidence, and interest rate levels[205](index=205&type=chunk)[206](index=206&type=chunk) - Increases in interest rates, more stringent credit standards, or tightening of financing terms could limit customer purchasing power and adversely affect sales[208](index=208&type=chunk) - The Company faces risks related to the availability and pricing of materials (e.g., lumber, insulation), labor shortages and turnover, and dependence on a small group of key suppliers[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - Competition from other home builders and alternative housing forms, changes in consumer preferences, product quality problems, and unfavorable local zoning ordinances could negatively impact sales and profitability[221](index=221&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) - The integration of Skyline and Champion Holdings may not be successful, and anticipated synergies may not be fully realized, potentially impacting business, liquidity, and financial results[247](index=247&type=chunk)[248](index=248&type=chunk) - The Company is subject to extensive government regulation, product liability claims, and warranty claims, which can be costly and adversely affect profitability[229](index=229&type=chunk)[232](index=232&type=chunk) - Certain shareholders beneficially own a substantial amount of common stock, exerting significant influence, and their interests may conflict with other shareholders[239](index=239&type=chunk)[240](index=240&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and XBRL formatted financial information - The exhibits include certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32) and XBRL formatted financial information (Exhibit 101)[255](index=255&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, confirming its submission by authorized officers of Skyline Champion Corporation - The report is signed by Keith Anderson, Chief Executive Officer, and Laurie Hough, Executive Vice President, Chief Financial Officer, and Treasurer, on February 6, 2019[259](index=259&type=chunk)

Skyline Champion Corp (NYSE:SKY) Q3 2018 Earnings Conference Call February 6, 2019 8:30 AM ET Company Participants Keith Anderson - CEO Laurie Hough - EVP & CFO Conference Call Participants Greg Palm - Craig-Hallum Colin Devine - Jefferies Rohit Seth - SunTrust Operator Good morning, and welcome to Skyline Champion Corporation's Third Quarter Fiscal 2019 Earnings Call. The company issued an earnings press release yesterday. Before we begin, I would like to remind everyone that yesterday's press release and ...