Workflow
Skyline Champion(SKY) - 2023 Q3 - Earnings Call Transcript
SKYSkyline Champion(SKY)2023-02-07 23:10
Filings

Financial Data and Key Metrics Changes - Net sales increased by 9% to 582millioncomparedtothesamequarterlastyear[12]−Netincomeforthethirdquarterincreasedby22582 million compared to the same quarter last year [12] - Net income for the third quarter increased by 22% to 83 million or 1.44perdilutedsharecomparedto1.44 per diluted share compared to 68 million or 1.18perdilutedshareduringthesameperiodlastyear[16]−Consolidatedgrossprofitincreasedby111.18 per diluted share during the same period last year [16] - Consolidated gross profit increased by 11% to 174 million, with gross margins improving by 50 basis points [15] Business Line Data and Key Metrics Changes - U.S. factory-built housing segment revenue grew by 58million,primarilydrivenbyanincreaseinaveragesellingprice[36]−ThenumberofhomessoldintheU.S.factory−builtsegmentdecreasedbyapproximately158 million, primarily driven by an increase in average selling price [36] - The number of homes sold in the U.S. factory-built segment decreased by approximately 1% to 5,749 homes [36] - Canadian revenue decreased by 15% to 31 million, driven by a 19% decline in the number of homes sold [14] Market Data and Key Metrics Changes - The backlog at the end of the quarter was down 282millionto282 million to 532 million, a 35% decrease compared to the September quarter [8] - Average selling price per U.S. home sold increased by 14% to 94,200duetoproductmixandpriceincreases[13]−Demandvarieswidelybygeography,withlowerordersandbacklogsintheSouthCentralregionsoftheU.S.[32]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonenhancingcustomerexperience,streamliningproductofferings,andtransforminghomebuildingandbuyingprocesses[30]−Thereisagrowinginterestinaffordablehousingsolutions,withexpectationsofgainingmarketsharefromtraditionalsite−builtbuilders[79]−Thecompanyplanstoinvestinproductionautomationandexpanditsdigitalpresencetoengageconsumers[11]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinlong−termgrowthpotential,supportedbydemandforaffordablehousingandstrategicpositioning[20]−Thecompanyanticipatesasequentialseasonaldeclineinfourth−quarterrevenue,estimatingahighsingle−digitdecrease[32]−Managementnotedthatwhilethecurrenteconomicenvironmentposeschallenges,thecompanyiswell−positionedtooutperformthebroaderhousingmarket[43]OtherImportantInformation−Theeffectivetaxrateforthequarterwas23.194,200 due to product mix and price increases [13] - Demand varies widely by geography, with lower orders and backlogs in the South Central regions of the U.S. [32] Company Strategy and Development Direction - The company is focusing on enhancing customer experience, streamlining product offerings, and transforming home building and buying processes [30] - There is a growing interest in affordable housing solutions, with expectations of gaining market share from traditional site-built builders [79] - The company plans to invest in production automation and expand its digital presence to engage consumers [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth potential, supported by demand for affordable housing and strategic positioning [20] - The company anticipates a sequential seasonal decline in fourth-quarter revenue, estimating a high single-digit decrease [32] - Management noted that while the current economic environment poses challenges, the company is well-positioned to outperform the broader housing market [43] Other Important Information - The effective tax rate for the quarter was 23.1%, down from 25.6% in the prior year [16] - The company repaid 39 million in outstanding floor plan borrowings, focusing on reinvesting cash into the business [19] - The company has $712 million in cash and cash equivalents as of December 31, 2022 [42] Q&A Session Summary Question: Can you elaborate on the retail side and inventory destocking? - Management indicated that destocking is occurring on a market-by-market basis, with most dealers expected to finalize by March [21] Question: Is there a pickup in retail traffic with the recent pullback in rates? - Retail foot traffic has increased since the beginning of the calendar year, although it was down in the third quarter [22] Question: What is the expected margin perspective moving forward? - Margins are expected to normalize back to historical levels, around 26% to 27%, with some pressure from new facilities [50] Question: How is the demand outlook for fiscal 2024? - Management is optimistic about fiscal 2024, citing a low supply of homes for sale and strong interest from builders [58] Question: Are there any bottlenecks in production to meet demand? - The company is expanding capacity to meet bulk orders from builders, ensuring adequate supply [60] Question: What is the impact of the retail channel on ASP? - The retail channel typically has higher ASPs than wholesale, and the mix will influence future ASPs [104]