Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Skyline Champion Corporation's First Quarter Fiscal 2024 Earnings Call. The company issued an earnings press release this morning. I would like to remind everyone that today's press release and statements made during this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in the company's filings with the Securities and Exchange Commission.

the be discuss performance. useful call, it measures, today's can believes in during company non-GAAP will which Additionally, evaluating its reconciliation can release. measures of in A earnings the be found these

call I like Champion's and Executive would Chief Mark Please ahead. to the President go now Officer. Yost, over turn Skyline to

Mark Yost

call, joining Laurie everyone. Hough, and good CFO. I'm this pleased you for and on by Thank to call our earnings morning be joined EVP

activities then briefly thoughts will first about far provide quarter, an second talk on of on the our and I Today, year. quarter and update our so balance with our in highlights, conclude the

For retail existing the to continue we more intake, their seeing still order return sales in growth from demand as finish backlog than X,XXX of retail quarter, we inventory. saw community they are home healthy we as a pause REIT delivered channel, consumers, a to in good and the and Despite end set new our homes, channel.

through in our end year-over-year our production of both, quarter with We revenue. with in expect community sales, pause the current and combined last by we, the year of environment of quarter. rates In first this production were fiscal that The the aligning FEMA-related ordering channel. absence declines in short-term our continue are drove to order second plant

result a levels. normalize of XXXX As reduced fiscal volume to leverage, continued to margins

transforming investment our at and our a homes the way and even margin enhancing to focus built offerings has levels. profile, lower our in and customer that encouraged the healthy led I'm product are production streamlining bought, experience,

their homebuyers in channels our -- four range and financing backlog within environment both the of Additionally, Normal pricing customers. to the lead benefits normal lock average and help weeks. XX demand times needs meet sales the current levels to better direct of has driven benefit historically

orders the were of the The up which July was pause XX% in year-over-year XX%. leading orders, of first orders our were in driven up quotes, $XXX at California. future in of decrease by primarily was order million continued March. cancellations and in and sequential as Sales indicator the $XXX community compared our X million, quarter to end backlog are fiscal Backlog

saw also by in in captive increase XX% e-leads. driven retail a year-over-year locations, growth deposits our We at

were fourth XX% levels, good manufacturing and orders in XX% pause were Sequentially, given community up the up channel. quotes quarter from trends the

Decatur, During the facility in is quarter, homes. we our new key the our of efforts facility Indiana. streamline investment a production our to innovate manufacturing began at broader and in production This

and plan began consumer. in speed positions floor financing demonstrate construction, of traditional XXXX. Also partners orders at benefits this support solution select in we of production the channel key In processes believe portfolio and partners for This our to we ensure offering to with will an to delivery of retailers quality credit point, the timely production turnkey market. automating to intent R&D remainder fiscal today's quality addition and at ample those we us investment location, this this the a channel end growing effort providing developers efforts throughout of to ramping price to specifically modular are our a full the

going of second the to inventory. Moving plants needs. better ordering the the community-focused as at up on community catch September our community quarter the to outlook, channel we continue selling to pause REIT through expect Accordingly, in they are align production pull timing we existing back to

flat quarter first be revenue second slightly anticipate our relatively sequentially to to we result, versus a As quarter. down

pipeline. Ian additional Decatur, North retail our Indiana needs the impacts to capacity of help stable This consumer the and for Carolina. placements, housing, channel in Mid-term capacity and affordable the continuing and upcoming Hurricane in Bartow from us REIT strong Pembroke, the invest in outlook new confidence growing builder-developer support ramping end will demand serve positive of Florida,

not to continuing the automation on into including investments. initiatives digital are These long-term our and will enhancing experience investments strategic focus our production digital experience drive our online operations by engaged customers. be partner for us only our our customer better as channel tools, greater We consumer the a our preferred more end efficiency homebuyers but to will we make and drive in

I to turn more Laurie the will financials detail. to quarterly call discuss now over our in

Laurie Hough

near-term Mark flows. for of discussion and expectations. good everyone. quarter I morning, discuss Thanks by results will sheet first by reviewing financial also and balance cash a I'll our begin our briefly the followed our

net XX% During in to units million which sold homes quarter year We $XXX sales. million compared quarter, reflects X,XXX FEMA in selling The a last recognized period. the unit decreased year lower first sold quarter, in to in of lower prior net the a we sales average X,XXX sales decrease same the homes US in compared to the home. and number the price per during $XX

US due due and US sales production with selling per related home down volume the decrease material reduced was home order in X% $XX,XXX decreased year-over-year average mix and to sold surcharges. to of the FEMA to price to absence The rates. schedules product align

product basis our our units revenue order complexity relief factory-built disaster due activity REIT in ASP US a carry year FEMA customers. of housing sold align to with shifts decreased quarter-over-quarter rates X% build. moderate that the core with to On from higher expectations would consistent community last than production a sequential

to for the decreased by per by opting home number selling customers as homes. X% environment monthly of interest affordable sold smaller current and looked and less declined core the rate optioned payments price maintain The homes X% average in

our Carolina quarter. in our plants, decreased in in January started of XX% Indiana Decatur, opened Pembroke, utilization and newly the XX% this production adversely utilization which quarter to XXXX. Capacity facility sequential fourth fiscal which Capacity compared facility opened being is North by to notably impacted

production will such to channel. current these are training while as levels. additional to channels prioritizing builder-developer ability at plants teams employees tailoring our Our our capacity service key demand This enhance

in Florida facility look also up later production ramping to this Bartow, We forward our year.

XX% price prior year a Canada $XXX basis XX% to year to in quarter. decreased period, in prior-year decline number average versus sold. due to compared by $XXX,XXX response decreased $XX first price of in first driven and profit points $XXX,XXX home XXX Canadian the the the XX% in quarter margins gross million, to reductions revenue compared homes by primarily changes gross the decreased to million the demand. in to in contracted selling last to quarter Consolidated The

a sequential On margin basis, we gross XX basis points. saw decline

and sales, US higher core interest quarter primarily their hit sales margins mix point last a the net FEMA allowing basis as the volume, less payment XX.X% as price rates. XXX were higher the well given first segment to shift margined due Our lower year with homes, housing and gross down quarter of sales, points unit segment features options homeowner product prior year, to monthly from in to

period to SG&A income for first $XXX in XXXX. costs from $X.XX plant last XX% start-ups quarter to million the closed Net compared during $XX decreased per compensation fiscal per net sales $X.XX year, earnings in diluted income last first million due the million incentive and decreased share, of of million in lower or to acquisitions share, activity, partially or the quarter year. period additional to reduced the and diluted from same expense $XX offset SG&A $XX by same

on by million, year-ago XX.X% period. the lower for operating versus the effective EBITDA for the in XX.X% Adjusted the decline to rate in more year compared quarter The of reduced prior margin period. tax to an the decrease a driven sales XX.X% quarter million $XX EBITDA $XXX profitability levels. year for period, return prior Adjusted compared reflects to EPS in was in the leverage rate effective volume. was tax of was The company's and XX.X%, normal

returns In to the business have reiterate expectation near-term, the efficient customers, output. The looking we lines current conditions remain structural environment continue more that focused order a the cadence. capabilities of regular channel said, maintain as strengthened That operational investments of remainder improvements in and rate and periods on maintaining activity XXXX. our made in to production monthly by improve protecting mix payments fiscal our will interest for in we profitability lower affordable the shift our

Our from three of driven by North compression levels the in Carolina, margin facilities fiscal Indiana XXXX additional are expectations landing margins Florida. and ramp for our manufacturing near

compared XXXX. million cash long-term had of operating XXXX, cash capital period. The and primarily producing year. prior increase due to of we equivalents working year Xst until the of million in flows flows cash impact July, is cash to million, the the the operating generated quarter million of for prior $XX FEMA $XXX maturities We $XX for As borrowings with units no of in $XX in

executing the business our remain plan to operational focused for on liquidity initiatives, long-term We support opportunities to in growth. favorable reinvest on strategic our that given utilize position and our cash and

Mark, closing the some now for back I'll turn call to remarks.

Mark Yost

Laurie. Thanks,

demand is adapt builder/developer positioning with is partners initiatives. manage to well and Skyline by we well rebalancing channel through growth core the believe we of as changing helping our manufactured-to-rent points, affordable outlook and positioned demographics. our channels, community long-term retail for The our price as REIT, the As strategic Champion due consumer to our opportunities, supported the

In addition, continues cost homes. of believe affordable we housing, that the the and more for to elevated to our need site-built will grow traditional buyers drive housing

of make I our team, the the strong they Skyline people. result things a happen thank Q&A, open Champion performance The for we amazing a to Before lines take day. and to want every is each entire as moment, consistently our

you that Q&A. now for lines open operator, And may with the

Operator

Thank you.

CJS We be our Moore ahead. question go comes conduct [Operator from Securities. And session. Instructions] first with question-and-answer a will Dan now Please

Unidentified Analyst

questions. Chris Thanks for actually Hey. Good for of It's morning. couple taking a Dan.

we little bit get a just more maybe So specific.

So us shipments of could QX unit little for help in as well more versus ASPs out for QX, a you expectations directionally? terms as bit

Mark Yost

Chris good Sure morning. and

Unidentified Analyst

morning. Good

Mark Yost

down think flat down hit been slightly in due to I directionally I shipments as point. mentioning, price see ASPs of affordable slightly to think mix we changing relatively really unit just an to and XQ terms Laurie's

the return thinking, is, I at until September pullback ordering those flattish primarily to and timeframe. community to slightly where plants due REITs specifically So they think to production in in down the we're

Unidentified Analyst

directionally that margin sense, from you a Got quarters talk perspective, QX margins margin Looking, at gross kind for down. same -- makes just Very be Q And bit guide about going little gross can or of helpful. few next it. further? a talked from kind to perspective, you about of a the had maybe

Laurie Hough

XX% bring new Yeah. to the to come of expect I the and in range lower-end closer we kind quarter probably that of -- Chris. into down the get plants. margins XX% to as sequentially, of gross the -- on Hi range range XX% that second

Unidentified Analyst

there. I’ll it. helpful. leave it Very Got And it. appreciate

Mark Yost

you, Thank Chris.

Operator

comes ahead. from question next go Matthew with Barclays. Bouley Our Please

Elizabeth Langan

Good morning.

Langan, Elizabeth for have on today. Matt You

but that is or reengage issue? tell it metrics that at REITs have any chain you do seeing you when of talking through a kind bit level? about, of -- off starting you slower things just mind are order said be So September more that what will do would start or more look kind will community you supply to you might of at and the you visibility any communities little Obviously, a

Mark Yost

The the Yeah. you. morning, still current setting that they've inventory Elizabeth. got. Good and And thank finishing REITs community are

So it's a little issue. bit of chain supply a

trimmed with being of about obviously to level, community the set having timing. those the are of finished terms many community able and REITs out talking get In who we're at conversations units

earnings mentioned September where when they But going order. even inventory if of the their inventory to quickly is to those kind and going look you you some their how that through REITs, anticipation of the they're releases start timing targeting return they're at levels. to timeframe are is public And generally of know levels

So I think their phenomenal. sales is -- its pace,

is demand of the the excellent end-consumer REITs. at So many

demand issue affordable is housing their demand very is an traffic strong. for not the end end-consumer strong, it's So because

more in get they're have them. cash. on It don't take can units on already just just they and and finished they to until tying people down finished -- really doubling goods is Otherwise, inventory living inventory up a the set they that want

Elizabeth Langan

the there and you. of -- dealer That a talking at mind if you any about restocking? might makes or be destocking of seeing looks sense. it kind level, lot a how what Okay. their And inventories you're like little if Thank bit there's with would then,

Mark Yost

dealer the channel through Yes, destocking. is their

driven decline our year-over-year, -- pick we've by orders. think in a in that retail XX% is I our order because the up pace community seen XX% really channel,

activity of the of good. traffic keeping strong. so quite They're demand increase is carrying retail They're retail are cost year-over-year, We've building the deposit is end inventory at things the inventory. consumer lean seen right deposits So, not captive own up. But now. our higher level because actually the up retail quite

today. is So, I'd retail very the encouraging say, of terms what seeing it's channel in

Elizabeth Langan

I you Thank much. Okay. appreciate that. very

Mark Yost

Thank you.

Operator

Please next Our Jefferies. with go Ng comes ahead. from question Phil

Phil Ng

to in call particularly kind Hey, about that color some the of it on year, color help orders and back your REIT more revenue half the relates the from it of us how as actually ramp And customers, you what on timing through us shape volumes, to means guys. some appreciate capacity? well as for the potentially right? of that back as Mark, think up a coming But September. little your of margins give think

Mark Yost

Phil, and morning. Thanks Yes. good

channel back turn will really October, production that, to November. know in You After the say, I orders. mentioned come start with REIT think into as they September until, REITs I won't let's

think third the you'll into December. see I quarter, relatively So revenue because the holiday in get into you flattish levels season

able So into ramp to I we'll fully don't think be that.

And into the year, we strengthening as next quarter. our first go quarter then, volumes fourth revenues and fiscal calendar of

and in So I flat and orders as of to kind those fourth picking up fiscal then produce really think and the backlogs pick and start be quarter our it'll us allow this second the orders. -- in relatively third, those of to into year in fill community up

Phil Ng

how kind things, margin we the year? moves how side of think of -- that half back about the on And then should the through of

Laurie Hough

Phil. Yes,

think then the remain sequentially, that through are come of know year. I margins level and you end down to at the going

Phil Ng

said, XQ range. to XX% to Okay. closer level, gross to that are XX% margins And of be you going XX% that lower Laurie, end potentially the

in guys? it there a Is about of could think that back you good a XX% level. for half So, floor way breach the to through kind

Laurie Hough

think that substantially. not few I the a probably that's points, floor the It fluctuate, of -- might bottom at know, You as basis range.

Phil Ng

Okay. That's impressive you. of

review. strategic in disadvantage taking a how lender you your arm. from then I that being Two large to pretty lending with actually larger put You're offering earlier that managing put that up which competitors compete a at? you of home do is in pretty Mark, manufacturer And your a question your and that lending lines you on Is some consider Does would the fourth was intrigued well. a by look a about market? through that you're had. how any and have something I Is believe I comment void go plan business?

Mark Yost

Really customer I Phil, know, comes consumer it look to experience. their at we down You obviously think the things the many and strategically. and

a want So customers a services, offer tie preferred them deeper are a our services said, it's that relationship we wanted we manufacturer you and for tie offer floor us in. many them if know with closer and of and full of, whether of finishing us they they for instance in terms our a set we with plan suite

growing the relationship and community do many the turnkey in phone can from you one What provider call. dealers can is of builder turnkey we're to is with some channel. developer easier to more the of We make them hearing think the do to full I business what us our make experience frankly the because you be a with.

comes those I it the on what dedicated So down think real focus alternatives to on But think consumer need. the they table. are always really I and our

on I adds those providing creates if focus services benefit definitely to so, we'll and to them in better And a experience financial them that. then think

Phil Ng

Okay. Mark. That’s helpful color. Appreciate it

Mark Yost

Thank you, Phil.

Operator

go next ahead. Our Capital comes Mike with RBC from Please Dahl Markets. question

Chris Kalata

my Mike. on Kalata Chris for actually questions. Thanks It's Hi. for taking

outlook you flat. SG&A said this of For hoping I could year. expecting quarter some you were year-over-year on we But the -- on relatively imply last in XQ SG&A the think, be increases Laurie, numbers kind maybe for was the -- I portion. portion fixed fixed dial of I think you

in this So just could for SG&A dial kind hoping you for expectation year. of dollars maybe the

Laurie Hough

plants new a have just to experience also customer of Chris in systems support of And do investments back-end percent then sales. we ramping that. and relative Yes, the had the the to quarter really the with this as our

running through well. long-term that's -- of running that lot SG&A investment So a is as

relatively second in the March in the expect what would revenue expect going we third at a forward in quarter. the quarter up. on I it for the But fluctuate to first revenue that second levels then basis dollar up as to remain and saw would the we quarter going picks possibly obviously saw SG&A I So remain quarter, and similar to

Chris Kalata

have customer through the delay that it orders Got up there? chain orders then quarter. a large update seeing you it. on Is that supply started supposed were you're builder delayed you Any still or I And That's just placing wanted follow -- to there? last that were helpful.

Mark Yost

No, those orders actually we maybe the still we I August come expected think Chris early and we orders Labor those anticipate we September. Day coming in orders By -- to mentioned and call in. last expect or August on in we're September those

So on everything's track. on Everything's pace.

So any we orders expect those time now.

Chris Kalata

Awesome. taking Great my to Thanks for question, hear. guys.

Operator

Our comes from next Capital question Craig-Hallum Greg ahead. go with Group. Please Palm

Greg Palm

various the dig for more. little taking Yes. maybe Good bit into want a to Thanks morning. I channels questions.

we So maybe on and But of you're more more terms traffic bit little order certain on a can give or or in seeing retailer go are we geographically? there issues? destocking inventory what's on at with just going importantly bit about us Maybe little the of maybe there's dealer can a start completely the where sense rates. through what still are regions a you

Mark Yost

you. Yes. thank Good and morning, Greg

the places global I a the a we're through think handful it channel. destocking sense? where It's retail channel. there's retail at Are No. destocking Is in happening? impacting Sure. of there the

order pace orders community the as kind seen growth. channel and XX% and quarter-over-quarter is up. to the business our driven is XX% Order up Sequentially of flat. community We've XX% at channel continued is primarily -- that's of by are retail which really retailers

seen in good retailers. traction So really we've

where economically little across retail it's pretty generally slower board. pause a would is I others. it's pretty of But Canada that's more really say speaking There's But retail dispersed. driven, and terms retail. obviously would variations in US is is. the where entire consistent say I the stronger across slight the traffic in would say Communities but I than is

Greg Palm

of as do and if how mean cost you call look more I of I Yes sense and I'll crews? sort it that by capital all of ask there mean sort to I mean, on this? around supply maybe my is I'll that a want get the I question into guess, pause it follow-up. contribute you you that the setting to the REITs. segues chain does leave driven of

Mark Yost

very I they're the many changing are their who've of a don't of because think of to REITs price that the or a for of I'll return them, for cost capital consumer. the they're it Greg mean business significant REITs it portion end But -- heritage hurdle the they're legacy I the for point drives targeting especially able time. call most hit still been long in a -- good

I think to going capital maintain processes their at very those managing good that. they've stack job through and done a

the on follow some or some you having sales the of if Demand talk to record communities, of they're communities public the even periods. others,

end through demand mainly manage But really is new opening finished challenges, consumer working just set at state. transformers So new at see very certain with they -- everything greenfield operations. starting to Right we're certain are good their getting supply through electrical to chain trying now greenfields. of and through the

progress encouraging So the is need online out very stuff on their inventory own front. of community just coming to today They dig

Greg Palm

in just I resumption? and directly just your order October that what of And or lastly, best not you is you anything that believe November? that today terms or mean, is you know September terms that telling they're what makes of is visibility, it in sense given

Mark Yost

It's a combination, Greg.

team of We've So communication business through at which the got weekly them. their inventories kind we're they're pace development in many moving seeing situations. with is in our

and And from of are the all so, one also period. messaging. terms targeting many separate fairly that would consistent it's another distinct that of been time I REITs say in the

in the working consistent talking to through and with. it's we industry with work So that different it partners the sounds like

Greg Palm

Understood.

there. it leave I’ll Okay. Thanks.

Mark Yost

Greg. Thanks,

Operator

over ahead. like Mark floor comments. There Please to further this I closing go to would are turn for the Yost back time. questions at no

Mark Yost

forward care. the Thank second interest. and continued Take on appreciate updating our in call. our We you on time quarter participating progress look for you to your We call. today's

Operator

This concludes today's call. conference

line and your time. may participation You this Thank disconnect a good have you at for day.

Skyline Champion (SKY) 2 Aug 232024 Q1 Earnings call transcript