Skyline Champion(US:SKY)2026-02-04 21:15Financial Performance - Net sales for the three months ended December 27, 2025, were $656.6 million, an increase from $644.9 million for the same period in 2024, representing a growth of 1.1%[10] - Gross profit for the nine months ended December 27, 2025, was $550.0 million, compared to $511.6 million for the same period in 2024, reflecting a year-over-year increase of 7.5%[10] - Operating income for the three months ended December 27, 2025, was $62.5 million, down from $72.8 million in the prior year, indicating a decrease of 14.5%[10] - Net income attributable to Champion Homes, Inc. for the nine months ended December 27, 2025, was $177.2 million, compared to $162.1 million for the same period in 2024, an increase of 9.3%[10] - For the three months ended December 27, 2025, the net income was $56.004 million, compared to $62.827 million for the same period in 2024, reflecting a decrease of approximately 10.8%[18] - Net income attributable to Champion Homes, Inc. for the three months ended December 27, 2025, was $54.3 million, a decrease of $7.2 million, or 11.7%[118] - Net income attributable to non-controlling interest increased by $0.4 million, or 29.3%, to $1.7 million for the three months ended December 27, 2025[117] - Net income before income taxes of $230,513 for the nine months ended December 27, 2025, compared to $211,214 for the same period in the previous year, reflecting an increase of approximately 9.1%[73] Cash Flow and Liquidity - Cash and cash equivalents at the end of the period were $659.8 million, up from $610.3 million at the beginning of the period, marking an increase of 8.1%[15] - The company reported a net cash provided by operating activities of $251.2 million for the nine months ended December 27, 2025, compared to $194.9 million for the same period in 2024, an increase of 28.8%[15] - Cash used in investing activities rose to $45.3 million for the nine months ended December 27, 2025, compared to $35.0 million in the same period of 2024, primarily due to the acquisition of Iseman Homes[150] - Cash used in financing activities was $162.1 million for the nine months ended December 27, 2025, significantly higher than $65.9 million in the prior year, mainly due to increased stock repurchases totaling $150.0 million[151] - The company has a $200.0 million revolving credit facility, with $172.5 million available for borrowing as of December 27, 2025[146] Assets and Liabilities - Total assets as of December 27, 2025, were $2.114 billion, slightly up from $2.110 billion as of March 29, 2025[7] - Total stockholders' equity increased to $1.592 billion as of December 27, 2025, compared to $1.544 billion as of March 29, 2025, reflecting a growth of 3.1%[7] - The company incurred total current liabilities of $411.6 million as of December 27, 2025, down from $451.3 million as of March 29, 2025, a decrease of 8.8%[7] - As of December 27, 2025, total inventories, net amounted to $341.308 million, down from $360.629 million on March 29, 2025, with reserves for obsolete inventory at $11.3 million[39] - Long-term debt decreased to $23.816 million as of December 27, 2025, from $24.773 million on March 29, 2025[54] Operational Highlights - The company operated 42 manufacturing facilities in the U.S. and 4 in Canada as of December 27, 2025, maintaining a strong operational footprint in North America[21] - The company’s retail operations included 83 sales centers across the U.S., contributing to its distribution network for manufactured homes[21] - The Company acquired Iseman Homes, Inc. for a total purchase consideration of $26.8 million, which included net cash paid of $24.6 million and contingent consideration of $0.2 million[35] - The Company acquired Regional Homes in October 2023, enhancing its manufacturing and retail distribution in the Southeast U.S.[90] - The company continues to focus on operational improvements and strategic expansions to meet the demand for affordable housing solutions[89] Revenue and Sales Performance - For the nine months ended December 27, 2025, total revenue was $2.04 billion, up from $1.89 billion in the same period in 2024, indicating a growth of about 8.0%[60] - U.S. manufacturing and retail net sales increased by $135.9 million, or 7.6%, driven by a 2.5% increase in homes sold and a 5.0% increase in average selling price[121] - Canadian manufacturing net sales increased by $13.3 million, or 19.4%, primarily due to a 19.1% increase in homes sold[122] - The Company's manufacturing backlog decreased to $266.0 million as of December 27, 2025, down from $312.6 million as of December 28, 2024, due to production rates exceeding order rates[96] Expenses and Profitability - Selling, general, and administrative expenses for the three months ended December 27, 2025, were $109.7 million, an increase of $1.5 million, or 1.4%, compared to the same period in the prior fiscal year[108] - Selling, general, and administrative expenses increased by $17.5 million, or 5.5%, totaling $334.2 million for the nine months ended December 27, 2025[129] - Gross profit for the three months ended December 27, 2025, was $172.2 million, a decrease of $8.8 million, or 4.9%, compared to $181.0 million in the same period of 2024[103] - Gross profit as a percentage of net sales was 26.2% for the three months ended December 27, 2025, down from 28.1% in the prior year[104] - Total gross profit for the nine months ended December 27, 2025, was $549.9 million, an increase of $38.4 million, or 7.5%, compared to the prior year[124] - Gross profit as a percentage of net sales was 26.9% for the nine months ended December 27, 2025, compared to 27.1% in the prior year[125] Tax and Compliance - The effective tax rate for the three months ended December 27, 2025, was 18.3%, down from 21.1% for the same period in 2024[62] - Income tax expense for the three months ended December 27, 2025, was $12.4 million, a decrease of $4.3 million, or 25.9%, with an effective tax rate of 18.3%[114] - Income tax expense for the nine months ended December 27, 2025, was $48.6 million, representing an effective tax rate of 21.1%[136] - The Company had no unrecognized tax benefits as of December 27, 2025[65] - The Company was in compliance with all covenants of the Amended Credit Agreement as of December 27, 2025[56] Investments and Acquisitions - The investment in ECN Capital Corporation totaled $70.2 million as of December 27, 2025, with the Company owning approximately 19.9% of the voting shares[48] - The Company made an equity investment in ECN to facilitate the creation of a captive finance company, which is expected to improve market share[92] - The company established a loss reserve of $1.7 million for repurchase agreements as of December 27, 2025, with a contingent repurchase obligation estimated at $229.3 million[81] Challenges and Risks - The company incurred plant closure costs of $6.5 million related to idling production at the Bartow, Florida facility and exiting the lease of the Kelowna, British Columbia facility during the nine months ended December 27, 2025[26] - Management identified a material weakness in internal controls related to the retail operations of Regional Homes, acquired in October 2023, which could lead to material misstatements in financial statements[159] - The company is implementing measures to remediate the identified material weakness, including improving accounting systems and increasing corporate oversight[161] - The company anticipates compliance with its debt covenants and projects sufficient cash availability to support operations for the next year and beyond[147]