Skyline Champion(SKY) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net sales increased 33% to $617 million compared to the same quarter last year, with U.S. factory-built housing revenue increasing 37% [18] - Net income attributable to Champion Homes for the second quarter increased 20% to$ 55 million or earnings of $0.94 per diluted share compared to$ 46 million or earnings of $0.79 per diluted share during the same period last year [24] - Adjusted EBITDA for the quarter was$ 74 million compared to $59 million in the prior year period, with an adjusted EBITDA margin of 12.0% compared to 12.7% in the prior year period [25] Business Line Data and Key Metrics Changes - Home sales increased 29% year-over-year to 6,536 units, with a 14% increase in organic sales orders year-over-year [9] - The average selling price per U.S. homes sold increased by 4.5% to$ 92,400 due to a higher mix of units sold through company-owned retail sales centers [19] - Manufacturing capacity utilization was 60% compared to 58% in the sequential first quarter of fiscal 2025 [20] Market Data and Key Metrics Changes - Canadian revenue during the quarter was $22 million, representing a 23% decline in the number of homes sold and a 1.5% decline in the average selling price per home versus the prior year period [21] - The company observed a softening in order rates in the third fiscal quarter, which is typical for the slower winter selling season [13] Company Strategy and Development Direction - The company is enhancing its digital direct-to-consumer strategy and advancing the integration of the Regional Homes acquisition [8] - Champion Financing has gained significant momentum, with new financing options launched for independent dealers and consumer client financing programs [12] - The company is strategically expanding its reach into Builder-as-a-Service and consumer retail sales through digital platforms [28] Management's Comments on Operating Environment and Future Outlook - Management expressed concern for those affected by hurricanes and noted that 9 of their 48 plant locations were impacted, leading to expected timing delays in order fulfillment [14] - Despite immediate headwinds, management anticipates strong medium- and long-term demand in hurricane-affected regions, which is expected to increase demand for housing [16] - The outlook remains optimistic, with healthy demand and resilient margins expected to support sustained growth [27] Other Important Information - The company returned capital to shareholders through$ 20 million in share repurchases and replenished its $100 million share repurchase authority [26] - The effective tax rate for the quarter was 21.6%, positively impacted by an increase in recognition of tax credits related to energy-efficient homes [23] Q&A Session Summary Question: Impact of storms on volume and revenue - Management indicated that production was interrupted due to power outages and flooding, and catching up on demand will depend on infrastructure rebuild [31] Question: Gross margin performance - Management noted positive impacts on gross margins from lower forest product input costs and stronger captive retail sales, with purchase accounting impacts expected to be immaterial going forward [33] Question: Expectations for order rates and backlog - Management expects a softening in order rates due to the presidential election and anticipates backlog may moderate before picking up in the spring and summer selling season [37] Question: Builder developer channel performance - Management reported strong order growth from community REITs and builder developers, with optimism in the marketplace [39] Question: M&A appetite and capital allocation - Management confirmed M&A is a priority, with a robust pipeline and plans for further acquisitions alongside innovation and shareholder returns [40] Question: FEMA orders and charter rates - Management has not received FEMA orders yet but expects significant demand for housing in affected regions, with charter rates currently running at about 8% to 8.5% for good credit [45][46]