Champion Homes (SKY) Q2 2025 Earnings Transcript | The Motley Fool

Image source: The Motley Fool. DATE Tuesday, Oct. 29, 2024 at 8:00 a.m. ET CALL PARTICIPANTS President and Chief Executive Officer - Mark Yost Executive Vice President and Chief Financial Officer - Laurie Hough TAKEAWAYS Home Sales Volume -- 6,536 units sold, representing a 29% increase year over year and indicating broad-based demand across retail, builder/developer, and community REIT channels. Net Sales -- $617 million, up 33% from the prior year period, with U.S. factory-built housing revenue increasing 37% and Canadian revenue at $22 million. Organic Sales Orders -- 14% growth year over year, reflecting strong activity in every core channel. Backlog -- Increased $23 million sequentially, reaching $427 million, with lead time steady at 11 weeks from the previous quarter. Average Selling Price (U.S.) -- $92,400 per home, rising 4.5% year over year and further up 1% sequentially, driven by higher mix through company-owned retail. Gross Profit -- $166 million, a 43% increase year over year; gross margin expanded 190 basis points to 27.0%, due to higher retail mix and lower forest product input costs. SG&A Expense -- $100 million, rising $35 million from prior year primarily due to the Regional Homes acquisition and increased variable compensation. Net Income -- $55 million, up 20% year over year, or $0.94 per diluted share versus $0.79 prior year, primarily attributed to higher operating income. Adjusted EBITDA -- $74 million, up from $59 million in the prior year, though margin decreased to 12.0% from 12.7% due to elevated SG&A. Cash Position -- $570 million in cash and equivalents as of Sept. 28, 2024; $25 million in long-term borrowings with no maturities until 2026. Share Repurchases -- $20 million returned to shareholders during the quarter and Board approval replenished the $100 million repurchase authority. Regional Homes Synergies -- Management stated, “we have achieved the upper limit of our synergy targets this quarter,” a full year ahead of schedule following the acquisition. Impact of Hurricanes -- Manufacturing and retail operations in Florida, Georgia, and the Carolinas directly affected, leading to power outages, lost production days, and home delivery delays. Guidance for Q3 -- Management anticipates a “modest decline in top line performance,” projecting mid-single-digit sequential revenue decrease due to timing disruptions from hurricane impacts. Need a quote from a Motley Fool analyst? Email [email protected] RISKS Management expects hurricane-related plant closures in Florida, Georgia, and the Carolinas to cause “timing delays in order fulfillment, home deliveries and retail sales” in the third quarter. Laurie Hough stated, “We saw a slight sequential decline mainly due to Hurricane Helene's landfall 2 days prior to the end of the second quarter. Several of our manufacturing plants in Florida, Georgia and the Carolinas lost a day or 2 of production and were unable to ship homes.” Management observed that order rates are “in line with our typically slower winter selling season.” Consumers are “delaying their purchasing decisions as they await the outcome of the upcoming election.” Canadian revenue declined 23% in units sold and 1.5% in average selling...

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