Skyline Champion Corp. ((SKY)) has held its Q3 earnings call. Read on for the main highlights of the call.
During the recent earnings call, Skyline Champion Corp. exhibited a generally positive sentiment. The company reported significant growth across various financial metrics, including net sales and homes sold. Nevertheless, the earnings call also highlighted certain challenges, such as declining order rates and increased SG&A expenses, alongside weaker performance in the Canadian market.
Record Net Sales Growth
Skyline Champion Corp. celebrated a remarkable 15.3% increase in year-over-year net sales during the third quarter, reaching $645 million. This growth underscores the company’s robust market presence and ability to capitalize on favorable conditions.
Increase in Homes Sold
The company reported a 13% increase in the number of homes sold, totaling 6,646 homes in the period. This achievement reflects Skyline Champion’s strong demand and effective sales strategies in the housing market.
Strong Backlog Position
Ending the quarter with a backlog of $313 million, an 8% increase from the previous year, Skyline Champion demonstrated its strong pipeline of future projects, despite experiencing a 27% sequential decline due to seasonal factors.
Successful Regional Homes Acquisition
The acquisition of Regional Homes played a critical role in contributing to Skyline Champion’s organic growth. The company highlighted this as a testament to the customer-centric approach of the combined organizations.
Improved Gross Margin
Skyline Champion Corp. reported a 28% increase in consolidated gross profit, amounting to $181 million, with a gross margin expansion of 280 basis points from the previous year. This improvement signifies efficient cost management and operational performance.
Strong Cash Position
The company’s financial health is evident with $582 million in cash and cash equivalents, coupled with a relatively low long-term borrowing of $25 million, showcasing its solid liquidity position.
Shareholder Returns
Skyline Champion returned $20 million through share repurchases and approved the replenishment of a $100 million share repurchase authority, reflecting its commitment to delivering shareholder value.
Order Rate Decline
A notable 27% sequential decline in backlog due to a seasonal slowdown in order rates was observed. This decline points to the challenges of managing cyclical demand fluctuations.
Decline in Canadian Revenue
The Canadian market posed challenges with revenue declining to $26 million, and homes sold dropping by 16% amidst higher interest rates and economic uncertainty, impacting overall performance.
SG&A Cost Increase
Skyline Champion’s SG&A costs rose by $23 million, attributed to higher variable costs and investments in technology and personnel, reflecting strategic investments for future growth.
Forward-Looking Guidance
Looking ahead, Skyline Champion Corp. anticipates fourth-quarter revenue growth in the low double digits year-over-year, aligning with the pre-earnings consensus. The company remains focused on expanding its retail and direct-to-consumer capabilities, while continuing its commitment to affordable housing in both the U.S. and Canadian markets.
In conclusion, Skyline Champion Corp.’s latest earnings call painted an overall positive picture of the company’s financial health and strategic direction. Despite facing some challenges in specific areas, the company’s strong performance in sales growth and strategic acquisitions points to a promising future.