Skyline Champion Corporation (NYSE: SKY) (“Skyline Champion”)
today announced financial results for its second quarter ended
September 30, 2023 (“fiscal 2024”).
Second Quarter Fiscal 2024 Highlights (compared to Second
Quarter Fiscal 2023 unless otherwise noted)
- Net sales decreased 42.5% to $464.2 million
- U.S. homes sold decreased 33.4% to 4,842
- Total backlog decreased 0.7% to $257.8 million compared to the
sequential first quarter
- Average selling price (“ASP”) per U.S. home sold decreased
14.8% to $88,400
- Gross profit margin contracted by 890 basis points to
25.1%
- Net income decreased by 68.3% to $45.7 million
- Adjusted earnings per share (“EPS”) decreased 67.3% to
$0.82
- Adjusted EBITDA decreased 70.2% to $58.8 million
- Adjusted EBITDA margin contracted by 1,170 basis points to
12.7%
- Net cash generated by operating activities was $54.3 million
during the quarter
- Announced closing of strategic investment in ECN Capital and
formation of Champion Financing
- Closed on the acquisition of Regional Homes post quarter
end
“Skyline Champion continued to demonstrate our commitment to the
customer and our ability to execute our strategy in an evolving
economic environment,” said Mark Yost, Skyline Champion’s
President, and Chief Executive Officer. “We continued to see a
healthy increase in order volumes sequentially. In addition, we
have recently closed two transformational strategic opportunities –
our investment in ECN Capital including the formation of Champion
Financing, and the acquisition of Regional Homes. We are excited by
these new developments and remain confident that execution of our
strategic initiatives will continue to position us to better serve
our customers for years to come.”
Second Quarter Fiscal 2024 Results
Net sales for the second quarter fiscal 2024 decreased 42.5% to
$464.2 million compared to the prior-year period. The number of
U.S. homes sold in the second quarter fiscal 2024 decreased 33.4%
to 4,842. The lower volume output compared to the prior year period
primarily reflects the decrease in order volumes from the larger
community REITs as well as the absence of FEMA-related sales which
totaled $117.8 million last year. The ASP per U.S. home sold
decreased 14.8% to $88,400. The decline in ASPs is a result of
higher-priced FEMA unit sales in the prior-year period, changes to
core product mix, and a decrease in material surcharges. The number
of Canadian factory-built homes sold in the quarter decreased to
232 homes compared to 303 homes in the prior-year period due to the
higher interest rate environment and softening demand.
Gross profit decreased by 57.5% to $116.5 million in the second
quarter fiscal 2024 compared to the prior-year period. Gross profit
margin was 25.1% of net sales, a contraction of 890 basis points
compared to 34.0% in the second quarter fiscal 2023. The change in
gross profit margin was driven by lower ASPs due to the
higher-priced FEMA unit sales in the prior-year period and a shift
in product mix to homes with fewer options. Gross margins were also
impacted by softer demand and recently opened plants.
Selling, general, and administrative expenses (“SG&A”) in
the second quarter fiscal 2024 decreased to $64.5 million from
$83.9 million in the same period last year. SG&A during the
quarter decreased due to less variable compensation expense from
lower sales volumes. SG&A as a percentage of net sales was
13.9%, compared to 10.4% in the prior year period.
Net income decreased by 68.3% to $45.7 million for the second
quarter fiscal 2024 compared to the prior-year period. The decrease
in net income was driven by lower sales and gross profit in the
quarter.
Adjusted EBITDA for the second quarter fiscal 2024 decreased by
70.2% to $58.8 million compared to the second quarter fiscal 2023.
Adjusted EBITDA margin for the quarter was 12.7%, compared to 24.4%
in the prior-year period.
As of September 30, 2023, Skyline Champion had $701.2 million of
cash and cash equivalents, a decrease of $96.6 million in the
current quarter, due to the strategic investment in ECN Capital
partially offset by cash flows from operations.
Conference Call and Webcast Information:
Skyline Champion management will host a conference call
tomorrow, November 1, 2023, at 9:00 a.m. Eastern Time, to discuss
Skyline Champion’s financial results and an update on current
operations.
Investors and other interested parties can listen to a webcast
of the live conference call by logging onto the Investor Relations
section of Skyline Champion’s website at skylinechampion.com. The
online replay will be available on the same website immediately
following the call.
The conference call can also be accessed by dialing (877)
407-4018 (domestic) or (201) 689-8471 (international). A telephonic
replay will be available approximately two hours after the call by
dialing (844) 512-2921, or for international callers, (412)
317-6671. The passcode for the live call and the replay is
13741722. The replay will be available until 11:59 P.M. Eastern
Time on November 15, 2023.
About Skyline Champion Corporation:
Skyline Champion Corporation (NYSE: SKY) is a leading producer
of factory-built housing in North America and employs approximately
8,600 people subsequent to the closing of the acquisition of
Regional Homes in October 2023. With more than 70 years of
homebuilding experience and 47 manufacturing facilities throughout
the United States and western Canada, Skyline Champion is well
positioned with an innovative portfolio of manufactured and modular
homes, ADUs, park-models and modular buildings for the
single-family, multi-family, and hospitality sectors.
In addition to its core home building business, Skyline Champion
provides construction services to install and set-up factory-built
homes, operates a factory-direct retail business with 74 retail
locations across the United States, and operates Star Fleet
Trucking, providing transportation services to the manufactured
housing and other industries from several dispatch locations across
the United States.
Skyline Champion builds homes under some of the most well-known
brand names in the factory-built housing industry including Skyline
Homes, Champion Home Builders, Genesis Homes, Regional Homes,
Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes,
Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park,
Silvercrest, Titan Homes in the U.S. and Moduline and SRI Homes in
western Canada.
Presentation of Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S.
generally accepted accounting principles (“U.S. GAAP”) throughout
this press release, Skyline Champion has provided non-GAAP
financial measures, Adjusted EBITDA and Adjusted EBITDA Margin, and
Adjusted Earnings Per Share, which present operating results on a
basis adjusted for certain items. Skyline Champion uses these
non-GAAP financial measures for business planning purposes and in
measuring its performance relative to that of its competitors.
Skyline Champion believes that these non-GAAP financial measures
are useful financial metrics to assess its operating performance
from period-to-period by excluding certain items that Skyline
Champion believes are not representative of its core business.
These non-GAAP financial measures are not intended to replace, and
should not be considered superior to, the presentation of Skyline
Champion’s financial results in accordance with U.S. GAAP.
Skyline Champion defines Adjusted EBITDA as net income or loss
plus expenses or minus income, (a) the provision for income taxes,
(b) interest income or expense, net, (c) depreciation and
amortization, (d) gain or loss from discontinued operations, (e)
non-cash restructuring charges and impairment of assets, (f) other
non-operating income and costs, including but not limited to those
costs for the acquisition and integration or disposition of
businesses and idle facilities. Adjusted EBITDA is not a measure of
earnings calculated in accordance with U.S. GAAP, and should not be
considered an alternative to, or more meaningful than, net income
or loss, net sales, operating income or earnings per share prepared
on a U.S. GAAP basis. Adjusted EBITDA does not purport to represent
cash flow provided by, or used in, operating activities as defined
by U.S. GAAP. Skyline Champion believes that Adjusted EBITDA is
commonly used by investors to evaluate its performance and that of
its competitors. However, Skyline Champion’s use of Adjusted EBITDA
may vary from that of others in its industry. Adjusted EBITDA is
reconciled from the respective measure under U.S. GAAP in the
tables below. Adjusted EBITDA Margin is calculated as Adjusted
EBITDA divided by net sales reported in the statement of
operations. Adjusted Earnings Per Share is calculated as net income
or loss plus (a) equity-based compensation awards granted before
December 31, 2018, (b) restructuring charges, (c) impairment of
assets, and (d) other non-operating costs including those for the
acquisition and integration of businesses, including the related
tax effect, if any, on these items.
Forward-Looking Statements
Statements in this press release, including certain statements
regarding Skyline Champion’s strategic initiatives, and future
market demand are intended to be covered by the safe harbor for
"forward-looking statements" provided by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
generally can be identified by use of words such as "believe,"
"expect," "future," "anticipate," "intend," "plan," "foresee,"
"may," "could," "should," "will," "potential," "continue," or other
similar words or phrases. Similarly, statements that describe
objectives, plans, or goals also are forward-looking statements.
Such forward-looking statements involve inherent risks and
uncertainties, many of which are difficult to predict and are
generally beyond the control of Skyline Champion. We caution
readers that a number of important factors could cause actual
results to differ materially from those expressed in, implied, or
projected by such forward-looking statements. Risks and
uncertainties include regional, national and international
economic, financial, public health and labor conditions, and the
following: supply-related issues, including prices and availability
of materials; labor-related issues; inflationary pressures in the
North American economy; the cyclicality and seasonality of the
housing industry and its sensitivity to changes in general economic
or other business conditions; demand fluctuations in the housing
industry, including as a result of actual or anticipated increases
in homeowner borrowing rates; the possible unavailability of
additional capital when needed; competition and competitive
pressures; changes in consumer preferences for our products or our
failure to gauge those preferences; quality problems, including the
quality of parts sourced from suppliers and related liability and
reputational issues; data security breaches, cybersecurity attacks,
and other information technology disruptions; the potential
disruption of operations caused by the conversion to new
information systems; the extensive regulation affecting the
production and sale of factory-built housing and the effects of
possible changes in laws with which we must comply; the potential
impact of natural disasters on sales and raw material costs; the
risks associated with mergers and acquisitions, including
integration of operations and information systems; periodic
inventory adjustments by, and changes to relationships with,
independent retailers; changes in interest and foreign exchange
rates; insurance coverage and cost issues; the possibility that all
or part of our intangible assets, including goodwill, might become
impaired; the possibility that all or part of our investment in ECN
might become impaired; the possibility that our risk management
practices may leave us exposed to unidentified or unanticipated
risks; the potential disruption to our business caused by public
health issues, such as an epidemic or pandemic, and resulting
government actions; and other risks set forth in the “Risk Factors”
section, the “Legal Proceedings” section, the “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” section, and other sections, as applicable, in our
Annual Reports on Form 10-K, including our Annual Report on Form
10-K for the fiscal year ended April 1, 2023 previously filed with
the Securities and Exchange Commission (“SEC”), as well as in our
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
filed with or furnished to the SEC.
If any of these risks or uncertainties materializes or if any of
the assumptions underlying such forward-looking statements proves
to be incorrect, then the developments and future events concerning
Skyline Champion set forth in this press release may differ
materially from those expressed or implied by these forward-looking
statements. You are cautioned not to place undue reliance on these
statements, which speak only as of the date of this release. We
anticipate that subsequent events and developments will cause our
expectations and beliefs to change. Skyline Champion assumes no
obligation to update such forward-looking statements to reflect
events or circumstances after the date of this document or to
reflect the occurrence of unanticipated events, unless obligated to
do so under the federal securities laws.
SKYLINE CHAMPION
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited, dollars and shares in
thousands)
September 30, 2023
April 1, 2023
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
701,155
$
747,453
Trade accounts receivable, net
55,097
67,296
Inventories, net
182,239
202,238
Other current assets
39,447
26,479
Total current assets
977,938
1,043,466
Long-term assets:
Property, plant, and equipment, net
191,766
177,125
Goodwill
196,574
196,574
Amortizable intangible assets, net
40,299
45,343
Deferred tax assets
19,798
17,422
Other noncurrent assets
242,800
82,794
Total assets
$
1,669,175
$
1,562,724
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
50,829
$
44,702
Other current liabilities
192,322
204,215
Total current liabilities
243,151
248,917
Long-term liabilities:
Long-term debt
12,430
12,430
Deferred tax liabilities
6,417
5,964
Other liabilities
66,984
62,412
Total long-term liabilities
85,831
80,806
Stockholders' Equity:
Common stock
1,587
1,585
Additional paid-in capital
530,645
519,479
Retained earnings
821,628
725,672
Accumulated other comprehensive loss
(13,667
)
(13,735
)
Total stockholders' equity
1,340,193
1,233,001
Total liabilities and stockholders'
equity
$
1,669,175
$
1,562,724
SKYLINE CHAMPION
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited, dollars and shares in
thousands, except per share amounts)
Three months ended
Six months ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Net sales
$
464,236
$
806,825
$
929,005
$
1,532,706
Cost of sales
347,747
532,719
682,843
1,029,265
Gross profit
116,489
274,106
246,162
503,441
Selling, general, and administrative
expenses
64,454
83,915
134,893
156,197
Operating income
52,035
190,191
111,269
347,244
Interest (income), net
(10,480
)
(1,974
)
(19,781
)
(1,884
)
Other expense (income)
2,065
—
2,065
(634
)
Income before income taxes
60,450
192,165
128,985
349,762
Income tax expense
14,781
48,073
32,047
88,519
Net income
$
45,669
$
144,092
$
96,938
$
261,243
Net income per share:
Basic
$
0.80
$
2.53
$
1.69
$
4.59
Diluted
$
0.79
$
2.51
$
1.68
$
4.55
SKYLINE CHAMPION CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited, dollars in
thousand)
Six months ended
September 30, 2023
October 1,
2022
Cash flows from operating
activities
Net income
$
96,938
$
261,243
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
14,378
12,557
Amortization of deferred financing
fees
162
175
Equity-based compensation
10,943
7,753
Deferred taxes
(1,919
)
3,318
Loss (gain) on disposal of property,
plant, and equipment
96
(85
)
Foreign currency transaction loss
76
974
Change in assets and liabilities:
Accounts receivable
12,101
7,633
Floor plan receivables
(2,521
)
—
Inventories
20,059
11,540
Other assets
(13,434
)
(14,489
)
Accounts payable
4,387
(21,000
)
Accrued expenses and other liabilities
(12,128
)
8,947
Net cash provided by operating
activities
129,138
278,566
Cash flows from investing
activities
Additions to property, plant, and
equipment
(22,847
)
(25,613
)
Cash paid for equity method investment
(1,000
)
—
Cash paid for investment in ECN common
stock
(78,858
)
—
Cash paid for investment in ECN preferred
stock
(64,520
)
—
Investment in floor plan loans
(18,466
)
—
Proceeds from floor plan loans
10,528
—
Acquisitions, net of cash acquired
—
(6,810
)
Proceeds from disposal of property, plant,
and equipment
524
132
Net cash used in investing activities
(174,639
)
(32,291
)
Cash flows from financing
activities
Changes in floor plan financing, net
—
3,027
Stock option exercises
224
596
Tax payments for equity-based
compensation
(982
)
(1,363
)
Net cash (used in) provided by financing
activities
(758
)
2,260
Effect of exchange rate changes on cash
and cash equivalents
(39
)
(6,944
)
Net (decrease) increase in cash and cash
equivalents
(46,298
)
241,591
Cash and cash equivalents at beginning of
period
747,453
435,413
Cash and cash equivalents at end of
period
$
701,155
$
677,004
SKYLINE CHAMPION
CORPORATION
RECONCILIATION OF NET INCOME
TO ADJUSTED EBITDA
(Unaudited, dollars in
thousand)
Three months ended
Six months ended
September 30, 2023
October 1,
2022
September 30, 2023
October 1,
2022
Reconciliation of Adjusted
EBITDA:
Net income
$
45,669
$
144,092
$
96,938
$
261,243
Income tax expense
14,781
48,073
32,047
88,519
Interest (income), net
(10,480
)
(1,974
)
(19,781
)
(1,884
)
Depreciation and amortization
6,786
6,941
14,378
12,557
EBITDA
56,756
197,132
123,582
360,435
Transaction costs
2,065
—
2,065
338
Other
—
—
—
(973
)
Adjusted EBITDA
$
58,821
$
197,132
$
125,647
$
359,800
SKYLINE CHAMPION
CORPORATION
RECONCILIATION OF NET INCOME
TO ADJUSTED EARNINGS PER SHARE
(Unaudited, dollars and shares in
thousands, except per share amounts)
(Certain amounts shown net of
tax, as applicable)
Three months ended
Six months ended
September 30, 2023
October 1,
2022
September 30, 2023
October 1,
2022
Net income
$
45,669
$
144,092
$
96,938
$
261,243
Adjustments:
Transaction costs
1,555
—
1,555
252
Other
—
—
—
(727)
Adjusted net income attributable to the
Company's common shareholders
$
47,224
$
144,092
$
98,493
$
260,768
Adjusted basic net income per share
$
0.83
$
2,53
$
1.72
$
4.58
Adjusted diluted net income per share
$
0.82
$
2,51
$
1.71
$
4.55
Average basic shares outstanding
57,232
56,956
57,224
56,933
Average diluted shares outstanding
57,724
57,406
57,695
57,364
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031785371/en/
Investors: Name: Kevin Doherty Email:
investorrelations@championhomes.com Phone: (248) 614-8211
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