Financial Data and Key Metrics Changes - Net revenue for Q3 FY2026 was $581 million, an increase of $59 million or 11.3% from $522 million in the prior year quarter [16] - Consolidated gross margin as a percentage of net revenue decreased to 23.4% from 24.9% in the same period last year [18] - Net income was $44.1 million, down from $56.5 million in the same quarter of the prior year, with diluted earnings per share at $5.58 compared to $6.90 [20] Business Line Data and Key Metrics Changes - Factory-built housing segment net revenue was $558.5 million, up 11.5% from $500.9 million in the prior year quarter, primarily due to the addition of American Homestar [16] - Financial services segment net revenue increased to $22.5 million, up 6.2% from $21.2 million in the prior year quarter [17] - Gross profit in the factory-built housing segment was 21.7%, down from 23.6% in the prior year quarter due to higher per unit costs [18] Market Data and Key Metrics Changes - Industry shipments slowed in October and November, down 13% from the calendar 2024 period, with Cavco's volume down about 4% compared to last year [6][9] - The Southeast region saw higher volume in Q3 versus Q2, while most other regions experienced declining shipments [8] - Average selling price grew sequentially despite the volume drop-off, indicating underlying demand [9] Company Strategy and Development Direction - The company is focused on integrating American Homestar and realizing synergies, with an estimated annual synergy of over $10 million, half of which has been achieved [12][14] - Continued share repurchases during the quarter, with $44 million used to buy back company stock, reflecting a commitment to return capital to shareholders [15] - The company is enhancing its digital marketing infrastructure and rebranding efforts to improve market presence and customer engagement [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the spring selling season, citing healthy leading indicators such as quotes and retail traffic [10] - The company is monitoring the impact of weather on operations but remains confident in maintaining production rates and backlogs [33][81] - Discussions around affordable housing policies are seen as supportive for factory-built housing, especially with upcoming elections [10] Other Important Information - SG&A expenses increased to $81.4 million, or 14% of net revenue, primarily due to the addition of American Homestar and higher compensation costs [18][19] - Interest income decreased to $3 million from $5.4 million in the prior year quarter due to lower cash balances after the acquisition [19] Q&A Session Summary Question: What caused the lower utilization and production adjustments? - Management noted a significant industry downturn in October and November, but the Southeast region performed well, and production rates were maintained to prepare for potential increases in the spring [28][30] Question: What is the outlook for gross margins and cost impacts? - Management indicated that gross margins were affected by higher input costs, but no significant impact from acquisition accounting was noted [37][64] Question: How are community sales performing compared to retail? - Community sales showed relative weakness, but management did not perceive this as a long-term trend, noting that communities remain optimistic about future sales [52][55] Question: What are the expectations for synergies from the American Homestar acquisition? - Management expects to realize $10 million in annual synergies, with approximately half already achieved, focusing on purchasing and labor savings [99] Question: How is the company positioned for the upcoming spring selling season? - Management expressed confidence in maintaining production rates and backlogs, with positive indicators from recent industry events and customer discussions [88][90]

Financial Data and Key Metrics Changes - Net revenue for Q3 2026 was $581 million, an increase of $59 million or 11.3% from $522 million in the prior year quarter [15] - Consolidated gross margin as a percentage of net revenue decreased to 23.4% from 24.9% in the same period last year [16] - Net income was $44.1 million, down from $56.5 million in the same quarter of the prior year, with diluted earnings per share at $5.58 compared to $6.90 [19] Business Line Data and Key Metrics Changes - Factory-built housing segment net revenue was $558.5 million, up 11.5% from $500.9 million in the prior year quarter, primarily due to the addition of American Homestar [15] - Financial services segment net revenue increased to $22.5 million, up 6.2% from $21.2 million in the prior year quarter, driven by higher insurance premium rates [16] - Gross profit in the factory-built housing segment decreased to 21.7% from 23.6% in the prior year quarter due to higher per unit costs [17] Market Data and Key Metrics Changes - Industry shipments slowed in October and November, down 13% from the calendar 2024 period, with Cavco's volume down about 4% compared to last year [5] - The Southeast region stabilized and saw higher volume in Q3 versus Q2, while most other regions experienced declining shipments [8] - Average selling price grew sequentially despite the volume drop-off, with single-section home prices roughly flat and multi-section pricing up [9] Company Strategy and Development Direction - The company is focused on integrating American Homestar, with estimated annual synergies above $10 million, half of which has been achieved [12] - Continued share repurchases during the quarter amounted to $44 million, with a healthy unrestricted cash balance of $225 million at the end of Q3 [14] - The company is optimistic about the spring selling season, with healthy leading indicators such as quotes and retail traffic [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the tone in operations and the market is optimistic, with discussions around affordable housing gaining traction [10] - The company is maintaining production rates and staffing levels to be well-positioned for potential increases in demand during the spring [28] - Management acknowledged challenges due to weather impacting operations but expressed confidence in the stability of backlogs [82] Other Important Information - SG&A expenses increased to $81.4 million, or 14% of net revenue, primarily due to the addition of American Homestar and higher compensation costs [17] - Interest income decreased to $3 million from $5.4 million in the prior year quarter due to lower cash balances after the acquisition [18] Q&A Session Summary Question: What caused the lower utilization and how should production be viewed for Q4? - Management indicated that the industry experienced a significant downtick in October and November, but production rates were maintained to prepare for potential increases in the spring [28][30] Question: Can you elaborate on gross margin impacts and acquisition accounting? - Management clarified that there was no impact on gross margins from the acquisition, with year-over-year declines attributed to increases in input costs [38][65] Question: What are the updated synergy targets from the American Homestar acquisition? - Management stated that annualized synergies are expected to reach $10 million, with approximately half already realized [99]

Core Insights - Champion Homes is a leading provider of factory-built housing solutions in North America, utilizing an integrated business model that includes manufacturing, retail, installation, and transportation [1][2] - The company has a diversified product portfolio and a strong presence in the U.S. and Canada, catering to various housing needs in the residential construction market [1] - Champion Homes' stock has seen an 18% decline over the past year, underperforming the S&P 500, which has increased by 13% during the same period [2] Financial Performance - In the latest quarter, Champion Homes reported net sales of $684.4 million, an increase of 11%, and earnings per share (EPS) rose nearly 10% to $1.03 [5] - The company expanded its gross margin to 27.5%, increased its backlog, and generated $75.9 million in operating cash while repurchasing $50 million of its stock [5] Institutional Investment - Tensile Capital Management established a new position in Champion Homes, acquiring 308,162 shares valued at approximately $23.5 million, representing 2.9% of Tensile's $800.4 million in U.S. equity holdings [3][4][6] - This investment reflects Tensile's strategy of accumulating category leaders with defensible unit economics, indicating confidence in Champion's long-term prospects [6]

Financial Data and Key Metrics Changes - Revenue increased by 9.7% year-over-year to $556.5 million, with a slight sequential decrease of $0.3 million [11] - Operating profit rose by approximately 27% compared to last year's Q2 and up 3% sequentially [4] - Net income was $52.4 million, compared to $43.8 million in the same quarter of the prior year, with diluted earnings per share increasing to $6.55 from $5.28 [15][14] Business Line Data and Key Metrics Changes - Factory-built housing segment net revenue was $535.1 million, up 10% year-over-year, driven by a 5.4% increase in homes sold and a 4.4% increase in average revenue per home sold [11] - Financial services segment net revenue increased by 1.4% to $21.4 million, with operating profit rising from a loss to an $8 million profit [12][8] Market Data and Key Metrics Changes - National shipments in the industry were up over 3% year-to-date through August, with notable double-digit growth in many northern U.S. regions [4] - The Southeast region experienced a decline in shipments, down about 4% year-to-date and 10% in July and August compared to last year [5] Company Strategy and Development Direction - The company is focused on capital allocation, including investments in existing plants, acquisitions, and share repurchases, with $36 million of common shares repurchased [10][15] - The integration of the American HomeStar acquisition is progressing well, with expectations of adding value over the coming quarters [9][44] Management's Comments on Operating Environment and Future Outlook - Management noted significant regional differences in market performance, with a balanced market overall despite challenges in the Southeast [8][26] - The company is monitoring production closely and adjusting as necessary, indicating a cautious but optimistic outlook for the upcoming quarters [8][26] Other Important Information - The effective income tax rate increased to 22.1% due to a reduction in expected tax credits [14] - The company reported a cash balance of $400 million, with cash provided by operating activities at $78.5 million [16] Q&A Session Summary Question: How are orders trending into fiscal Q3? - Management indicated that wholesale orders were slightly down in the quarter, but backlog has stabilized and grown a little [24][26] Question: What is the current state of the Texas market? - The Texas market is performing well, with strong retail results contributing positively to production [32] Question: What are the expectations for gross margins in the next quarters? - Management acknowledged input cost pressures but emphasized the strength of their business model in managing costs [33][35] Question: How is the American HomeStar acquisition performing? - The integration is going well, and the acquired company is expected to contribute positively to the overall business [44][46] Question: What is the impact of tariffs on costs? - Tariffs have added approximately $2 million in costs for Q2, with potential increases due to recent tariff changes on Canadian lumber [35][92] Question: How does the company maintain pricing in the Southeast? - Management stated that pricing has remained stable despite lower order rates, indicating a healthy market environment [95]