Skyline Champion Corporation (NYSE:SKY) (“Skyline Champion”),
today announced financial results for its fourth quarter and full
year ended March 28, 2020 (“fiscal 2020”) and provided an update on
business conditions as it responds to the impact of COVID-19.
“Our people and our partners have proven their agility and
resiliency as they embraced unique and difficult challenges over
the last two months,” said Mark Yost, Skyline Champion’s President
and Chief Executive Officer. “I am very pleased with how we have
navigated and performed through this period of near-term
uncertainty. Importantly, our people have operated effectively and
safely.”
“We entered the pandemic from a position of strength as we grew
fourth quarter sales orders by 14% through the first eleven weeks
of the quarter, even as the geographies we serve were softer. In
response to COVID-19, we have been carefully managing our expenses
by reducing non-essential spending, and furloughing certain
employees, with many now taking advantage of benefits provided by
the CARES Act. We previously announced temporary facility closures
and have seen a decline in demand as a result of stay-at-home
restrictions and the temporary closure of a myriad of our
independent retailers. We are encouraged that we were able to
reopen many of those closed locations in late April, at reduced
production levels due to social distancing protocols and decreased
demand. We will continue to manage our footprint and be prepared to
reopen additional facilities as restrictions are eased and when
demand warrants.”
“While the economic impact of COVID-19 on Skyline Champion’s
fiscal 2021 results is uncertain at this time, we are confident
about the long-term demand for attainable and sustainable housing.
During this period, we are continuing to invest in strategic
initiatives such as simplifying and digitizing our product
offerings that we believe will add value to our customers and
further enhance our performance. With our solid liquidity position
and decisive actions taken across the organization, we believe we
are well positioned to manage through the current environment and
prepared to grow when conditions improve.”
Fourth Quarter Fiscal 2020 Highlights (compared to Fourth
Quarter Fiscal 2019)
- Net sales decreased 8.1% to $301.1 million
- U.S. factory-built homes sold decreased 4.8% to 4,603
- Gross profit as a percent of sales declined by 40 basis points
to 19.9%
- Net income decreased by 34.5% to $6.0 million
- Earnings per share (“EPS”) decreased to $0.11 from $0.16
- Excluding non-recurring expenses, Adjusted EPS decreased to
$0.14 from $0.26
- Adjusted EBITDA decreased 17.0% to $20.1 million
- Adjusted EBITDA margin decreased by 70 basis points to
6.7%
- Borrowed $38.0 million on revolving credit facility to maximize
financial flexibility
Full Year Fiscal 2020 Highlights (compared to Full Year
Fiscal 2019)
- Net sales increased 0.7% to $1,369.7 million
- U.S. factory-built homes sold increased 3.4% to 20,110
- Gross profit as a percent of sales expanded by 240 basis points
to 20.4%
- Net income was $58.2 million, compared to net loss of $58.2
million (fiscal 2019 includes $101.0 million in non-cash,
equity-based compensation expense)
- EPS was $1.02 compared to net loss per share of $1.09
- Excluding non-recurring expenses, Adjusted EPS increased to
$1.15 from $1.04
- Adjusted EBITDA increased 17.8% to $114.4 million
- Adjusted EBITDA margin expanded by 120 basis points to
8.3%
- Net operating cash flows increased to $76.7 million from $65.2
million
“Skyline Champion delivered solid results for Fiscal 2020,
achieving double digit growth in Adjusted EBITDA and cash from
operations. Our profitability initiatives gained traction, driving
margin expansion for both gross profit and Adjusted EBITDA. We
achieved these results despite modest growth in net sales for the
full year and some softening during the fourth quarter,” Yost
concluded.
Fourth Quarter Fiscal 2020 Results
Net sales for the fourth quarter fiscal 2020 decreased 8.1% to
$301.1 million compared to the prior-year period. The number of
U.S. factory-built homes sold by Skyline Champion in the fourth
quarter fiscal 2020 decreased 4.8% to 4,603 compared to the prior
year fourth quarter primarily due to the temporary idling of up to
20 U.S. production facilities in the last weeks of March. The
average selling price (“ASP”) per U.S. home sold decreased 1.4% to
$60,200. ASP decreased primarily due to a shift in product mix to
more single section home sales. The number of Canadian
factory-built homes sold in the quarter declined to 130 homes
compared to 229 homes in the prior-year period primarily from a
reduction in oil-related demand drivers. Total backlog for Skyline
Champion was $127.5 million as of March 28, 2020 compared to $142.7
million as of March 30, 2019. Backlogs decreased $5.6 million
during the quarter compared to $38.6 million in the fiscal fourth
quarter of 2019 driven by the improvement in sales orders in the
fourth quarter of fiscal 2020.
Gross profit decreased by 9.7% to $60.0 million in the fourth
quarter fiscal 2020 compared to the prior-year period. Gross profit
was 19.9% of net sales, a 40-basis point reduction compared to
20.3% in the fourth quarter fiscal 2019. Gross profit compression
was primarily due to the reduction in net sales and increase in
labor inflation partially offset by material pricing.
Selling, general and administrative expenses (“SG&A”) in the
fourth quarter fiscal 2020 decreased to $47.2 million from $53.1
million in the same period last year due to a reduction in
equity-based compensation, variable incentive compensation, and
acquisition integration costs.
Net income for the fourth quarter fiscal 2020 was $6.0 million,
compared to net income of $9.2 million during the same period from
the prior year. The decrease in net income was mainly driven by the
decline in gross profit and increased income tax expense, and was
partially offset by reductions in SG&A. EPS decreased to $0.11
for the fourth quarter fiscal 2020 compared to $0.16 in the same
period of the prior year. Excluding non-recurring expenses,
Adjusted EPS decreased to $0.14 for the fourth quarter of fiscal
2020 compared to $0.26 during the same period of the prior
year.
Adjusted EBITDA for the fourth quarter fiscal 2020 decreased by
17.0% to $20.1 million compared to the fourth quarter fiscal 2019.
The decrease was primarily driven by lower sales volumes and
reduced gross profit. Adjusted EBITDA margin declined by 70 basis
points to 6.7%.
As of March 28, 2020, Skyline Champion had $209.5 million of
cash and cash equivalents.
Full Year Fiscal 2020 Financial Highlights
For fiscal 2020, net sales were $1,369.7 million which
represents an increase of 0.7%, or $9.7 million, compared to fiscal
2019.
Gross profit increased $33.6 million or 13.7% to $279.0 million
for fiscal 2020, compared to $245.4 million for the prior year
period. Gross profit increased 240 basis points to 20.4% of net
sales for fiscal 2020, compared to fiscal 2019.
SG&A decreased to $192.5 million for fiscal 2020, compared
to $275.1 million in the prior year period, mostly driven by a
decrease in equity-based compensation expense, as well as reduced
transaction and integration related expenses resulting from the
Skyline acquisition that were incurred in the prior year.
Net income for fiscal 2020 was $58.2 million, compared to net
loss of $58.2 million for fiscal 2019.
Adjusted EBITDA for fiscal 2020 increased by 17.8% to $114.4
million, compared to $97.1 million for fiscal 2019.
Conference Call and Webcast Information:
Skyline Champion management will host a conference call
tomorrow, May 21, 2020, at 8:00 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 http://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
13703501. The replay will be available until 11:59 P.M. Eastern
Time on June 4, 2020.
About Skyline Champion Corporation:
Skyline Champion Corporation (NYSE: SKY) was formed on June 1,
2018 as the result of the combination of Skyline Corporation
(“Skyline”) and the operating assets of Champion Enterprises
Holdings, LLC (“Champion”). The combined company employs
approximately 6,600 people and is the largest independent, publicly
traded, factory-built housing company in North America. With more
than 65 years of homebuilding experience and 38 manufacturing
facilities throughout the United States and western Canada, Skyline
Champion is well positioned with a leading portfolio of
manufactured and modular homes, ADUs, park-models and modular
buildings for the multi-family, hospitality, senior and workforce
housing sectors.
In addition to its core home building business, Skyline Champion
operates a factory-direct retail business, Titan Factory Direct,
with 21 retail locations spanning the southern United States, and
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, Athens Park Models,
Dutch Housing, Excel Homes, Homes of Merit, New Era, Redman 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, Adjusted EBITDA Margin, and
Adjusted Earnings Per Share (including dilutive securities, if
any)—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 (a) the provision for income taxes, (b) interest expense, net,
(c) depreciation and amortization, (d) gain or loss from
discontinued operations, (e) foreign currency gains and losses, (f)
equity-based compensation awards granted before December 31, 2018,
(g) restructuring charges, (h) impairment of assets, and (i) other
non-operating costs including those for the acquisition and
integration of businesses. 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. 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 our 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 EPS 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. Skyline Champion
cautions 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: the COVID-19 pandemic, which has had, and could continue
to have, significant adverse effects on us; 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; supply-related issues;
labor-related issues; 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, exacerbated by the COVID-19
pandemic; 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 possible mergers and acquisitions; the prices and availability
of materials; 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 goodwill might become impaired;
the possibility that our risk management practices may leave us
exposed to unidentified or unanticipated risks; 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 March 30, 2019
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, except per share amounts)
March 28,
2020
March 30,
2019
ASSETS
Current assets:
Cash and cash equivalents
$
209,455
$
126,634
Trade accounts receivable, net
45,733
57,649
Inventories
126,386
122,638
Other current assets
17,239
11,369
Total current assets
398,813
318,290
Long-term assets:
Property, plant and equipment, net
109,291
108,587
Goodwill
173,521
173,406
Amortizable intangible assets, net
43,357
48,936
Deferred tax assets
21,812
34,058
Other noncurrent assets
34,906
16,677
Total assets
$
781,700
$
699,954
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Floor plan payable
$
33,914
$
33,321
Accounts payable
38,703
43,421
Other current liabilities
114,030
129,561
Total current liabilities
186,647
206,303
Long-term liabilities:
Long-term debt
77,330
54,330
Deferred tax liabilities
3,264
3,422
Other
40,144
23,927
Total long-term liabilities
120,738
81,679
Stockholders' Equity:
Common stock
1,570
1,569
Additional paid-in capital
485,552
479,226
Accumulated deficit
(48
)
(58,208
)
Accumulated other comprehensive loss
(12,759
)
(10,615
)
Total stockholders' equity
474,315
411,972
Total liabilities and stockholders'
equity
$
781,700
$
699,954
SKYLINE CHAMPION
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited, dollars and shares in
thousands, except per share amounts)
Three Months Ended
Twelve Months Ended
March 28,
2020
March 30,
2019
March 28,
2020
March 30,
2019 (a)
Net sales
$
301,145
$
327,675
$
1,369,730
$
1,360,043
Cost of sales
241,161
261,212
1,090,755
1,114,684
Gross profit
59,984
66,463
278,975
245,359
Selling, general, and administrative
expenses
47,166
53,096
192,520
275,101
Operating income (loss)
12,818
13,367
86,455
(29,742
)
Interest expense, net
382
578
1,401
3,290
Other expense
—
426
—
8,271
Income (loss) before income taxes
12,436
12,363
85,054
(41,303
)
Income tax expense
6,438
3,206
26,894
16,905
Net income (loss)
$
5,998
$
9,157
$
58,160
$
(58,208
)
Net income (loss) per share:
Basic
$
0.11
$
0.16
$
1.03
$
(1.09
)
Diluted
$
0.11
$
0.16
$
1.02
$
(1.09
)
(a) Includes only ten months of results from the Skyline
operations.
SKYLINE CHAMPION
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited, dollars in
thousands)
Twelve Months Ended
March 28,
2020
March 30,
2019 (a)
Cash flows from operating
activities
Net income (loss)
$
58,160
$
(58,208
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
18,546
16,079
Amortization of deferred financing
fees
510
542
Fair market value adjustment to held for
sale asset
986
—
Property, plant, and equipment impairment
charge
550
—
Equity-based compensation
8,349
101,999
Deferred taxes
11,796
3,047
Loss (gain) on disposal of property,
plant, and equipment
239
(37
)
Foreign currency transaction loss
235
123
Change in assets and liabilities net of
business acquired:
Accounts receivable
11,901
(2,223
)
Inventories
(4,491
)
(6,044
)
Other assets
(10,616
)
(2,092
)
Accounts payable
(4,606
)
(3,105
)
Accrued expenses and other liabilities
(14,816
)
15,147
Net cash provided by operating
activities
76,743
65,228
Cash flows from investing
activities
Additions to property, plant, and
equipment
(15,389
)
(12,092
)
Cash acquired in business acquisition
—
9,722
Proceeds from disposal of property, plant,
and equipment
196
56
Proceeds from sale of held for sale
asset
1,100
—
Decrease in note receivable
—
284
Net cash used in investing activities
(14,093
)
(2,030
)
Cash flows from financing
activities
Changes in floor plan financing, net
592
3,496
Borrowings on revolving debt facility
38,000
46,900
Payments on revolving debt facility
(15,000
)
(5,000
)
Payments on term-loans and other debt
—
(46,900
)
Payments for deferred financing fees
—
(2,169
)
Stock option exercises
112
1,615
Tax payments for equity-based
compensation
(2,135
)
(5,183
)
Members' capital distribution
—
(65,277
)
Net cash provided by (used in) financing
activities
21,569
(72,518
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(1,398
)
(662
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
82,821
(9,982
)
Cash, cash equivalents, and restricted
cash at beginning of period
126,634
136,616
Cash, cash equivalents, and restricted
cash at end of period
$
209,455
$
126,634
(a) Includes only ten months of results
from the Skyline operations.
SKYLINE CHAMPION
CORPORATION
RECONCILIATION OF NET INCOME
(LOSS) TO ADJUSTED EBITDA
(Unaudited, dollars in
thousands)
Three Months Ended
Twelve Months Ended
March 28,
2020
March 30,
2019
Change
March 28,
2020
March 30,
2019 (a)
Change
Reconciliation of Adjusted
EBITDA:
Net income (loss)
$
5,998
$
9,157
$
(3,159
)
$
58,160
$
(58,208
)
$
116,368
Income tax expense
6,438
3,206
3,232
26,894
16,905
9,989
Interest expense, net
382
578
(196
)
1,401
3,290
(1,889
)
Depreciation and amortization
4,652
4,545
107
18,546
16,079
2,467
EBITDA
17,470
17,486
(16
)
105,001
(21,934
)
126,935
Equity-based compensation (for awards
granted prior to December 31, 2018)
970
3,436
(2,466
)
4,576
101,025
(96,449
)
Foreign currency transaction loss
(gain)
327
(65
)
392
235
123
112
Transaction costs
—
480
(480
)
—
8,201
(8,201
)
Acquisition integration costs
737
2,465
(1,728
)
2,674
7,966
(5,292
)
Restructuring charges
—
404
(404
)
366
1,640
(1,274
)
Impairment charges and other
550
(56
)
606
1,512
70
1,442
Adjusted EBITDA
$
20,054
$
24,150
$
(4,096
)
$
114,364
$
97,091
$
17,273
(a) Includes only ten months of results
from the Skyline operations.
SKYLINE CHAMPION
CORPORATION
RECONCILIATION OF NET INCOME
(LOSS) 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
Twelve Months Ended
March 28,
2020
March 30,
2019
March 28,
2020
March 30,
2019 (a)
Net income (loss)
$
5,998
$
9,157
$
58,160
$
(58,208
)
Adjustments:
Equity-based compensation (for awards
granted prior to December 31, 2018)
1,003
2,993
4,003
99,868
Transaction costs
—
480
—
8,531
Acquisition integration costs
555
1,857
2,014
6,000
Restructuring charges
—
304
276
1,277
Impairment charges
414
—
1,139
—
Adjusted net income
7,970
14,791
65,592
57,468
Less: Undistributed earnings allocated to
participating securities
20
121
193
1,650
Adjusted net income attributable to the
Company's common shareholders
$
7,950
$
14,670
$
65,399
$
55,818
Adjusted basic net income per share
$
0.14
$
0.26
$
1.16
$
1.04
Adjusted diluted net income per share
$
0.14
$
0.26
$
1.15
$
1.04
Average basic shares outstanding
56,532
56,251
56,516
53,491
Average diluted shares outstanding
56,785
56,434
56,762
53,491
(a) Includes only ten months of results
from the Skyline operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200520005804/en/
Investor contact information: Sarah Janowicz Email:
investorrelations@championhomes.com
Phone: (248) 614-8211
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