• Net Sales: Increased 15.3% year-over-year to $645 million.
• Homes Sold: Increased 13% to 6,646 homes.
• Backlog: $313 million, up 8% from the same period last year.
• US Factory Built Housing Revenue: Increased 17%.
• Average Selling Price per US Home: Increased 2.8% to $94,900.
• Canadian Revenue: $26 million, with a 16% decline in homes sold.
• Gross Profit: Increased 28% to $181 million.
• Gross Margin: Expanded 280 basis points to 28.1%.
• Net Income: Increased 31% to $62 million.
• Earnings per Share (EPS): $0.96 per diluted share, up from $0.81.
• Adjusted EBITDA: $83 million, with a margin of 12.9%.
• Cash and Cash Equivalents: $582 million.
• Share Repurchase: $20 million in share repurchases during the quarter.

• Warning! GuruFocus has detected 1 Warning Sign with SKY.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Champion Homes Inc (NYSE:SKY) reported a 15.3% year-over-year increase in net sales to $645 million for the third quarter.
• The company saw a 13% increase in homes sold, totaling 6,646 homes during the period.
• Champion Homes Inc (NYSE:SKY) has been recognized nationally, with its Skyline brand named the most trusted manufacturing housing brand by Lifestory Research for the fifth consecutive year.
• The company is expanding its retail and direct-to-consumer capabilities, which is expected to drive further growth.
• Champion Homes Inc (NYSE:SKY) has a strong cash position with $582 million in cash and cash equivalents and a share repurchase program reflecting confidence in continued strong cash generation.

Negative Points

• The company experienced a 27% sequential decline in backlog, attributed to a normal seasonal slowdown in order rates.
• Canadian revenue declined by 16% due to higher interest rates and economic uncertainty impacting buyer enthusiasm.
• SG&A expenses increased by $23 million over the prior year period, driven by higher variable costs and investments in people and technology.
• The company anticipates gross margins to return to the 26% to 27% range as the benefit of lower input costs dissipates.
• Champion Homes Inc (NYSE:SKY) is closely monitoring the impact of potential tariffs, which could affect operational costs and pricing strategies.

Q & A Highlights

Q: Can you provide more color on how orders trended throughout the quarter and what you're seeing in January regarding the outlook for 2025? A: Tim Larson, CEO: Our plant shipments and retail recovered quicker than expected from hurricane impacts, allowing us to increase capacity to 63%. While we saw a seasonal slowdown towards the end of Q3, we anticipate low double-digit growth in Q4. We're seeing healthy traffic and quoting activity, with a strong response at the Louisville show, indicating optimism for the spring selling season.

Q: What changes or strategic focuses do you foresee now that you're in the CEO role? A: Tim Larson, CEO: Having been part of building the strategy over the past 3.5 years, I don't foresee major strategic changes. We will focus on fundamentals, expanding successful retail operations, innovating products, enhancing customer experience, and strategically deploying capital.

Q: How confident are you in the trajectory of order rates as we look to Q4 and early fiscal '26? A: Tim Larson, CEO: We feel good about our orders and are optimistic about our products and price points. We plan for continued profitable growth and will update further on our next call. Early signs indicate a positive trajectory for order rates.

Q: How is the penetration of top 100 community developers trending, and what are the opportunities for Champion and MH to take share from site-built homes? A: Tim Larson, CEO: We've seen year-over-year growth in this channel, though it's smaller today. We're executing projects in various markets, learning to accelerate processes, and are optimistic about long-term opportunities. Our strategy is to continue growing the builder-developer channel.

Q: How do you view the impact of potential tariffs on your operations and growth margins? A: Tim Larson, CEO: We're monitoring the situation closely and have a playbook from past experiences. We'll balance cost, price, and volume if tariffs impact inflation. Operationally, we're prepared and balanced in our supply sources, focusing on managing costs relative to price and volume.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.