Skyline Champion(US:SKY)2025-11-05 21:16Financial Performance - Net sales for the three months ended September 27, 2025, increased to $684,429,000, up 10.9% from $616,877,000 for the same period in 2024[10] - Gross profit for the six months ended September 27, 2025, rose to $377,762,000, compared to $330,548,000 for the same period in 2024, reflecting a 14.3% increase[10] - Operating income for the three months ended September 27, 2025, was $74,815,000, a 12.8% increase from $66,678,000 in the prior year[10] - Net income attributable to Champion Homes, Inc. for the six months ended September 27, 2025, was $122,886,000, up 22.2% from $100,528,000 in the same period of 2024[10] - For the three months ended September 27, 2025, net income was $58.2 million, compared to $54.7 million for the same period in 2024, representing an increase of 6.4%[18] - The company’s total revenue for the six months ended September 27, 2025, was $1.39 billion, compared to $1.24 billion for the same period in 2024, indicating a growth of 12.1%[61] - For the three months ended September 27, 2025, consolidated net sales were $684.4 million, with U.S. Factory-built Housing contributing $649.1 million and Canadian Factory-built Housing contributing $26.1 million[72] - The company’s net income attributable to Champion Homes, Inc. for the three months ended September 27, 2025, was $58.2 million, an increase from $54.7 million in the same period of 2024[100] Assets and Liabilities - Total current assets increased to $1,112,431,000 as of September 27, 2025, compared to $1,086,498,000 as of March 29, 2025, marking a growth of 2.4%[7] - Total stockholders' equity increased to $1,581,260,000 as of September 27, 2025, compared to $1,544,438,000 as of March 29, 2025, indicating a growth of 2.4%[7] - Other current liabilities totaled $266.4 million as of September 27, 2025, down from $280.1 million on March 29, 2025[52] - As of September 27, 2025, total long-term debt was $24.0 million, a decrease from $24.8 million as of March 29, 2025[55] Cash Flow - The company reported a net cash provided by operating activities of $151,178,000 for the six months ended September 27, 2025, compared to $144,442,000 for the same period in 2024[15] - The company incurred a net cash used in investing activities of $37,795,000 for the six months ended September 27, 2025, compared to $22,553,000 in the prior year[15] - Cash and cash equivalents at the end of the period were $618,740,000, up from $610,338,000 at the beginning of the period, reflecting a net increase of 1.3%[15] - Cash used in financing activities was $107.9 million for the six months ended September 27, 2025, compared to $47.3 million in the same period of 2024, largely due to stock repurchases totaling $100.0 million[152] Operational Metrics - The company operated 42 manufacturing facilities in the U.S. and 4 in Canada as of September 27, 2025, maintaining a strong operational footprint[22] - The company has 82 sales centers across the U.S. for retail operations, enhancing its market presence[22] - The company’s manufacturing backlog decreased to $313.2 million as of September 27, 2025, down from $427.5 million as of September 28, 2024[98] - The company’s U.S. wholesale market share of HUD code homes sold was 22.6% for the five months ended August 31, 2025, compared to 21.9% for the same period in 2024[99] Acquisitions and Investments - The company acquired Iseman Homes, Inc. for a total purchase consideration of $26.8 million, which includes $24.6 million in cash and contingent consideration valued at $0.2 million[36] - The company made a $137.8 million equity investment in ECN Capital Corporation, acquiring approximately 12% of its common shares[48] - The company completed the acquisition of Iseman Homes in the first quarter of fiscal 2026 and is currently integrating it into operations[164] Expenses and Profitability - Total gross profit for the three months ended September 27, 2025, was $187.9 million, an increase of $21.6 million or 13.0% compared to $166.3 million in the same period of the prior year[105] - Selling, general, and administrative expenses totaled $113.1 million for the three months ended September 27, 2025, an increase of $13.5 million or 13.5% compared to the prior year[111] - Interest income, net for the three months ended September 27, 2025, was $4.0 million, a decrease of $0.7 million or 14.8% from the prior year[116] - Income tax expense for the three months ended September 27, 2025, was $18.6 million, representing an effective tax rate of 23.6%, up from $15.4 million and 21.6% in the prior year[117] Internal Controls and Compliance - The Company identified a material weakness in internal controls related to the retail operations of Regional Homes, acquired in October 2023, due to insufficiently documented manual controls[160] - As of September 27, 2025, the Company's disclosure controls and procedures were deemed ineffective by the CEO and CFO[159] - Management is implementing remediation measures, including improving retail accounting systems and increasing corporate oversight[162] - The Company continues to assess the effectiveness of its internal control over financial reporting and may require additional measures for remediation[163] Legal and Risk Factors - The Company is involved in various legal proceedings, including commercial disputes and product liability claims[167] - The risks associated with mergers and acquisitions, including integration challenges, were highlighted as potential concerns[161]