SKY Skyline Champion Corporation

Skyline Champion Corporation (NYSE: SKY) (“Skyline Champion”) today announced financial results for its fourth quarter and full year ended April 1, 2023 (“fiscal 2023”).

Fourth Quarter Fiscal 2023 Highlights (compared to Fourth Quarter Fiscal 2022)

• Net sales decreased 23.0% to $491.5 million
• U.S. homes sold decreased 25.5% to 4,900
• Total backlog decreased 42.1% to $308 million from the sequential third quarter
• Average selling price (“ASP”) per U.S. home sold increased 5.6% to $92,700
• Gross profit margin contracted by 120 basis points to 28.7%
• Net income decreased by 33.5% to $57.7 million
• Earnings per share (“EPS”) decreased 33.8% to $1.00
• Adjusted EBITDA decreased 37.3% to $76.2 million
• Adjusted EBITDA margin contracted by 350 basis points to 15.5%
• Net cash generated by operating activities of $52.2 million during the quarter

Full Year Fiscal 2023 Highlights (compared to Full Year Fiscal 2022)

• Net sales increased 18.1% to $2.6 billion
• Gross profit margin improved by 470 basis points to 31.4%
• Earnings per share (“EPS”) increased 61.7% to $7.00
• Adjusted EBITDA increased 54.0% to $545.0 million
• Adjusted EBITDA margin improved by 490 basis points to 20.9%

“Skyline Champion delivered strong results in fiscal 2023 in the face of a tough macroeconomic environment, a testament to the hard work of our people, partners and the demand for our attainable home solutions,” said Mark Yost, Skyline Champion’s President, and Chief Executive Officer. “We were able to grow our topline and expand our gross profit margin through improved operational efficiency and customer-focused investments. While backlogs continue to normalize, the current housing environment creates an opportunity for Skyline Champion to continue to outperform.”

Fourth Quarter Fiscal 2023 Results

Net sales for the fourth quarter fiscal 2023 decreased 23.0% to $491.5 million compared to the prior-year period. The number of U.S. homes sold in the fourth quarter fiscal 2023 decreased 25.5% to 4,900. Volume levels during the quarter were adversely impacted by retailer inventory destocking which drove lower order rates and reduced production. The ASP per U.S. home sold increased 5.6% to $92,700 due to the mix of units sold and price increases to offset cost inflation. The number of Canadian factory-built homes sold in the quarter decreased to 246 homes compared to 400 homes in the prior-year period due to reduced demand. Total backlog for Skyline Champion was $308 million as of April 1, 2023, compared to $532 million at the end of the third quarter. Backlogs continued to decrease to more normal levels, following historical highs.

Gross profit decreased by 26.1% to $141.2 million in the fourth quarter fiscal 2023 compared to the prior-year period. Gross profit margin was 28.7% of net sales, a 120-basis point contraction compared to 29.9% in the fourth quarter fiscal 2022. Gross profit margin contraction is being driven by lower volumes on comparison and lower demand in certain markets.

Selling, general, and administrative expenses (“SG&A”) in the fourth quarter fiscal 2023 decreased to $72.4 million from $75.0 million in the same period last year. SG&A as a percentage of net sales was 14.7%, a 290-basis point increase from prior year levels. The lower SG&A expense during the quarter was due to lower sales volume, partially offset by higher expense due to acquisitions closed earlier this year and investments in new capacity.

Net income decreased by 33.5% to $57.7 million for the fourth quarter fiscal 2023 compared to the prior-year period. The decrease in net income was driven by lower sales in the quarter.

Adjusted EBITDA for the fourth quarter fiscal 2023 decreased by 37.3% to $76.2 million compared to the fourth quarter fiscal 2022. Adjusted EBITDA margin contracted by 350 basis points to 15.5%.

As of April 1, 2023, Skyline Champion had $747.5 million of cash and cash equivalents, an increase of $312.0 million as compared to prior fiscal year end.

Full Year Fiscal 2023 Financial Highlights

For fiscal 2023, net sales were $2.6 billion which represents an increase of 18.1%, or $399.3 million, compared to fiscal 2022. Net sales growth was primarily driven by higher average selling prices per home and $200 million of disaster relief housing revenue recorded in the first half of the fiscal year.

Gross profit increased $229.6 million or 39.0% to $818.7 million in fiscal 2023, compared to $589.1 million in the prior year period. Gross profit margin increased by 470 basis points to 31.4% of net sales for fiscal 2023, compared to fiscal 2022, primarily due to disaster-relief housing mix, increased price levels, operational efficiencies and improved leverage of fixed costs.

SG&A increased to $300.4 million for fiscal 2023, compared to $256.2 million in the prior year period primarily due to acquisitions and new plant startups, higher variable compensation from increased sales volumes and higher marketing expenses. As a percentage of sales, SG&A was flat year over year.

Net income for fiscal 2023 was $401.8 million compared to net income of $248.0 million for fiscal 2022, an increase of $153.8 million or 62.0% due to an increase in net sales and improved operating income.

Adjusted EBITDA for fiscal 2023 increased by 54.0% to $545.0 million, compared to $353.9 million for fiscal 2022. Adjusted EBITDA margin expanded 490 basis points to 20.9% in fiscal 2023.

Conference Call and Webcast Information:

Skyline Champion management will host a conference call this morning, May 30, 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 13737889. The replay will be available until 11:59 P.M. Eastern Time on June 13, 2023.

About Skyline Champion Corporation:

Skyline Champion Corporation (NYSE: SKY) is the largest independent, publicly traded, factory-built housing company in North America and employs approximately 7,700 people. With more than 70 years of homebuilding experience and 43 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 single-family, multi-family, and hospitality sectors.

In addition to its core homebuilding business, Skyline Champion operates a factory-direct retail business with 31 retail locations across the 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, 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, 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.

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 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 2, 2022 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 in thousands)

 

 

 

April 1, 2023

 

 

April 2, 2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

747,453

 

 

$

435,413

 

Trade accounts receivable, net

 

 

67,296

 

 

 

90,536

 

Inventories, net

 

 

202,238

 

 

 

241,334

 

Other current assets

 

 

26,479

 

 

 

14,977

 

Total current assets

 

 

1,043,466

 

 

 

782,260

 

Long-term assets:

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

177,125

 

 

 

132,985

 

Goodwill

 

 

196,574

 

 

 

191,970

 

Amortizable intangible assets, net

 

 

45,343

 

 

 

51,283

 

Deferred tax assets

 

 

17,422

 

 

 

17,750

 

Other noncurrent assets

 

 

82,794

 

 

 

58,371

 

Total assets

 

$

1,562,724

 

 

$

1,234,619

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Floor plan payable

 

$

—

 

 

$

35,460

 

Accounts payable

 

 

44,702

 

 

 

92,159

 

Other current liabilities

 

 

204,215

 

 

 

222,493

 

Total current liabilities

 

 

248,917

 

 

 

350,112

 

Long-term liabilities:

 

 

 

 

 

 

Long-term debt

 

 

12,430

 

 

 

12,430

 

Deferred tax liabilities

 

 

5,964

 

 

 

5,124

 

Other

 

 

62,412

 

 

 

41,840

 

Total long-term liabilities

 

 

80,806

 

 

 

59,394

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Common stock

 

 

1,585

 

 

 

1,573

 

Additional paid-in capital

 

 

519,479

 

 

 

502,846

 

Retained earnings

 

 

725,672

 

 

 

327,902

 

Accumulated other comprehensive loss

 

 

(13,735

)

 

 

(7,208

)

Total stockholders' equity

 

 

1,233,001

 

 

 

825,113

 

Total liabilities and stockholders' equity

 

$

1,562,724

 

 

$

1,234,619

 

SKYLINE CHAMPION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, dollars and shares in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

April 1, 2023

 

 

April 2, 2022

 

 

April 1, 2023

 

 

April 2, 2022

 

Net sales

 

$

491,532

 

 

$

638,117

 

 

$

2,606,560

 

 

$

2,207,229

 

Cost of sales

 

 

350,381

 

 

 

447,090

 

 

 

1,787,879

 

 

 

1,618,106

 

Gross profit

 

 

141,151

 

 

 

191,027

 

 

 

818,681

 

 

 

589,123

 

Selling, general, and administrative expenses

 

 

72,380

 

 

 

75,029

 

 

 

300,396

 

 

 

256,218

 

Operating income

 

 

68,771

 

 

 

115,998

 

 

 

518,285

 

 

 

332,905

 

Interest (income) expense, net

 

 

(7,684

)

 

 

511

 

 

 

(14,977

)

 

 

2,512

 

Other expense (income)

 

 

—

 

 

 

—

 

 

 

(634

)

 

 

(36

)

Income before income taxes

 

 

76,455

 

 

 

115,487

 

 

 

533,896

 

 

 

330,429

 

Income tax expense

 

 

18,709

 

 

 

28,689

 

 

 

132,094

 

 

 

82,385

 

Net income

 

$

57,746

 

 

$

86,798

 

 

$

401,802

 

 

$

248,044

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.01

 

 

$

1.53

 

 

$

7.05

 

 

$

4.37

 

Diluted

 

$

1.00

 

 

$

1.51

 

 

$

7.00

 

 

$

4.33

 

SKYLINE CHAMPION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollars in thousand)

 

 

 

Twelve Months Ended

 

 

 

April 1, 2023

 

 

April 2, 2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

401,802

 

 

$

248,044

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

26,726

 

 

 

20,936

 

Amortization of deferred financing fees

 

 

357

 

 

 

690

 

Equity-based compensation

 

 

14,160

 

 

 

9,777

 

Deferred taxes

 

 

1,127

 

 

 

3,019

 

(Gain) loss on disposal of property, plant, and equipment

 

 

(129

)

 

 

612

 

Foreign currency transaction loss (gain)

 

 

828

 

 

 

(83

)

Change in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

23,090

 

 

 

(32,854

)

Inventories

 

 

49,196

 

 

 

(75,019

)

Prepaids and other assets

 

 

(11,930

)

 

 

(28,217

)

Accounts payable

 

 

(49,082

)

 

 

34,824

 

Accrued expenses and other liabilities

 

 

(39,920

)

 

 

42,750

 

Net cash provided by operating activities

 

 

416,225

 

 

 

224,479

 

Cash flows from investing activities

 

 

 

 

 

 

Additions to property, plant, and equipment

 

 

(52,244

)

 

 

(31,979

)

Cash paid for acquisition

 

 

(6,810

)

 

 

(207

)

Cash paid for equity method investment

 

 

(2,500

)

 

 

—

 

Proceeds from disposal of property, plant, and equipment

 

 

375

 

 

 

219

 

Net cash used in investing activities

 

 

(61,179

)

 

 

(31,967

)

Cash flows from financing activities

 

 

 

 

 

 

Changes in floor plan financing, net

 

 

(35,460

)

 

 

9,728

 

Payments of deferred financing fees

 

 

—

 

 

 

(1,130

)

Payments on revolving debt facility

 

 

—

 

 

 

(26,900

)

Stock option exercises

 

 

2,473

 

 

 

1,405

 

Tax payment for equity-based compensation

 

 

(4,032

)

 

 

(3,039

)

Net cash used in financing activities

 

 

(37,019

)

 

 

(19,936

)

Effect of exchange rate changes on cash, and cash equivalents

 

 

(5,987

)

 

 

256

 

Net increase in cash and cash equivalents

 

 

312,040

 

 

 

172,832

 

Cash and cash equivalents at beginning of period

 

 

435,413

 

 

 

262,581

 

Cash and cash equivalents at end of period

 

$

747,453

 

 

$

435,413

 

SKYLINE CHAMPION CORPORATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Unaudited, dollars in thousand)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

April 1, 2023

 

 

April 2, 2022

 

 

Change

 

 

April 1, 2023

 

 

April 2, 2022

 

 

Change

 

Reconciliation of Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

57,746

 

 

$

86,798

 

 

$

(29,052

)

 

$

401,802

 

 

$

248,044

 

 

$

153,758

 

Income tax expense

 

 

18,709

 

 

 

28,689

 

 

 

(9,980

)

 

 

132,094

 

 

 

82,385

 

 

 

49,709

 

Interest (income) expense, net

 

 

(7,684

)

 

 

511

 

 

 

(8,195

)

 

 

(14,977

)

 

 

2,512

 

 

 

(17,489

)

Depreciation and amortization

 

 

7,386

 

 

 

5,403

 

 

 

1,983

 

 

 

26,726

 

 

 

20,936

 

 

 

5,790

 

EBITDA

 

 

76,157

 

 

 

121,401

 

 

 

(45,244

)

 

 

545,645

 

 

 

353,877

 

 

 

191,768

 

Transaction costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

338

 

 

 

—

 

 

 

338

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(973

)

 

 

—

 

 

 

(973

)

Adjusted EBITDA

 

$

76,157

 

 

$

121,401

 

 

$

(45,244

)

 

$

545,010

 

 

$

353,877

 

 

$

191,133

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230530005019/en/

Investor contact information: Name: Kevin Doherty Email: investorrelations@championhomes.com Phone: (248) 614-8211