Champion Homes Q2 FY2027 profit falls to $52.7M
U.S. home sales and manufacturing backlog increased; gross margin and earnings declined, with higher material costs cited in the U.S. housing segment.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Champion Homes, Inc. (SKY) reported fiscal 2027 second-quarter net sales of $727.0 million, up 6.2% year over year, while net income attributable to Champion Homes fell to $52.7 million from $58.2 million. Operating income was $65.8 million versus $74.8 million, and Adjusted EBITDA was $76.6 million versus $83.4 million; Adjusted EBITDA margin was 10.5% versus 12.2%. Gross margin declined to 25.5% from 27.5%, with higher manufacturing material input costs cited for the U.S. Factory-built Housing segment.
U.S. manufacturing and retail sales rose 6.4%, reflecting 2.3% more homes sold and a 4.1% increase in average selling price. Canadian manufacturing sales fell 3.3%, primarily as average selling price declined 4.3%. Manufacturing backlog was $500.2 million as of September 26, 2026, versus $313.2 million as of September 27, 2025; orders exceeded production in the quarter.
The company completed its acquisition of Homes Direct assets on August 1, 2026, for $55.9 million in total consideration, net of preliminary working capital adjustments. It also received $137.0 million in net cash proceeds from liquidation of its ECN investment, recognizing a $2.5 million net gain. Net cash provided by operating activities for the six months was $115.4 million, compared with $151.2 million a year earlier.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointQuarterly net sales rose 6.2% to $727.0 million.
Negative
- Moderate pointQuarterly attributable net income fell from $58.2 million to $52.7 million.
- Moderate pointQuarterly Adjusted EBITDA fell from $83.4 million to $76.6 million.
- Moderate pointSix-month operating cash flow fell from $151.2 million to $115.4 million.
Filing Explained
At September twenty-six, the retailer-default repurchase exposure remained contingent and excluded homes’ resale value.
This unaudited second-quarter report records
The company estimates a contingent repurchase obligation, excluding the resale value of the homes, if retailers default on wholesale floor-plan loans; its associated loss reserve was
The water-intrusion remediation liability was
The company says it will continue monitoring inspections, repairs, actual costs and affected-home counts, and may revise the estimate.
Key Figures
Key Terms
Adjusted EBITDA financial
floor plan financing financial
relief-from-royalty method financial
measurement alternative financial
Second Amended Credit Agreement financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were SKY's second-quarter sales?
How much net income did SKY report in the second quarter of fiscal 2027?
What was SKY's manufacturing backlog?
How much did Champion Homes pay to acquire Homes Direct?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
|
||
(State of Incorporation) |
|
(I.R.S. Employer Identification No.) |
|
|
|
|
|
|
|
||
(Address of Principal Executive Offices) |
|
(Zip Code) |
( |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:):
☒ |
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
|
Smaller reporting company |
Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Number of shares of common stock outstanding as of October 30, 2026:
CHAMPION HOMES, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION |
|
|
|
Item 1. Financial Statements |
|
|
|
Condensed Consolidated Balance Sheets as of September 26, 2026 (unaudited) and March 28, 2026 |
1 |
Condensed Consolidated Income Statements (unaudited) for the three and six months ended September 26, 2026 and September 27, 2025 |
2 |
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended September 26, 2026 and September 27, 2025 |
3 |
Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended September 26, 2026 and September 27, 2025 |
4 |
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three and six months ended September 26, 2026 and September 27, 2025 |
5 |
Notes to Condensed Consolidated Financial Statements |
6 |
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
34 |
|
|
Item 4. Controls and Procedures |
34 |
|
|
PART II – OTHER INFORMATION |
|
|
|
Item 1. Legal Proceedings |
35 |
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
35 |
|
|
Item 5. Other Information |
35 |
|
|
Item 6. Exhibits |
36 |
|
|
SIGNATURES |
37 |
i
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Champion Homes, Inc.
Condensed Consolidated Balance Sheets
(Dollars and shares in thousands, except per share amounts)
|
|
September 26, 2026 |
|
|
March 28, 2026 |
|
||
|
|
(unaudited) |
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Trade accounts receivable, net |
|
|
|
|
|
|
||
Inventories, net |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Long-term assets: |
|
|
|
|
|
|
||
Property, plant, and equipment, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Amortizable intangible assets, net |
|
|
|
|
|
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Other noncurrent assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Floor plan payable |
|
$ |
|
|
$ |
|
||
Accounts payable |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term liabilities: |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Total long-term liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Stockholders' Equity: |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
See accompanying Notes to Condensed Consolidated Financial Statements.
1
Champion Homes, Inc.
Condensed Consolidated Income Statements
(Unaudited, dollars in thousands, except per share amounts)
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest (income), net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other (income) expense |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income before equity in net loss of affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in net loss of affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Champion Homes, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net income attributable to Champion Homes, Inc. per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See accompanying Notes to Condensed Consolidated Financial Statements.
2
Champion Homes, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, dollars in thousands)
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Total other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Total comprehensive income before non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income attributable to Champion Homes, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Champion Homes, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, dollars in thousands)
|
|
Six months ended |
|
|||||
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
|
|
|
|
|||||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of deferred financing fees |
|
|
|
|
|
|
||
Equity-based compensation |
|
|
|
|
|
|
||
(Gain) on extinguishments of debt |
|
|
( |
) |
|
|
|
|
Deferred taxes |
|
|
|
|
|
|
||
Loss (gain) on disposal of property, plant, and equipment |
|
|
|
|
|
( |
) |
|
Foreign currency transaction loss (gain) |
|
|
|
|
|
( |
) |
|
Equity in net loss of affiliates |
|
|
|
|
|
|
||
Dividends from equity method investment |
|
|
|
|
|
|
||
(Gain) on sale of investment in ECN |
|
|
( |
) |
|
|
|
|
Change in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Floor plan receivables |
|
|
|
|
|
( |
) |
|
Inventories |
|
|
( |
) |
|
|
|
|
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
|
||
Additions to property, plant, and equipment |
|
|
( |
) |
|
|
( |
) |
Cash paid for equity method investment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of investment in ECN |
|
|
|
|
|
|
||
Acquisitions, net of cash acquired |
|
|
( |
) |
|
|
( |
) |
Proceeds from disposal of property, plant, and equipment |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
|
|
|
|
( |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
||
Changes in floor plan financing, net |
|
|
|
|
|
( |
) |
|
Payments on long term debt |
|
|
( |
) |
|
|
( |
) |
Distributions to noncontrolling interest |
|
|
( |
) |
|
|
|
|
Payments of deferred financing fees |
|
|
|
|
|
( |
) |
|
Payments for repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
Stock option exercises |
|
|
|
|
|
|
||
Tax payments for equity-based compensation |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Champion Homes, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, dollars and shares in thousands)
|
|
Three months ended September 26, 2026 |
|
|||||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Non-Controlling Interest |
|
|
Total |
|
|||||||
Balance at June 27, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net common stock issued under equity-based compensation plans |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Common stock repurchases |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at September 26, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|||||
|
|
Six months ended September 26, 2026 |
|
|||||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Non-Controlling Interest |
|
|
Total |
|
|||||||
Balance at March 28, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net common stock issued under equity-based compensation plans |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|||
Common stock repurchases |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at September 26, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|||||
|
|
Three months ended September 27, 2025 |
|
|||||||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Shares |
|
|
Amount |
|
|
Additional |
|
|
|
Retained |
|
|
Accumulated |
|
|
Non-Controlling Interest |
|
|
Total |
|
||||||||
Balance at June 28, 2025 |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Net common stock issued under equity-based compensation plans |
|
|
|
|
|
— |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|||
Common stock repurchases |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Balance at September 27, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
$ |
|
||||||
|
|
Six months ended September 27, 2025 |
|
|||||||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Shares |
|
|
Amount |
|
|
Additional |
|
|
|
Retained |
|
|
Accumulated |
|
|
Non-Controlling Interest |
|
|
Total |
|
||||||||
Balance at March 29, 2025 |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Net common stock issued under equity-based compensation plans |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|||||
Common stock repurchases |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at September 27, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||||
Components of accumulated other comprehensive loss consisted solely of foreign currency translation adjustments.
See accompanying Notes to Condensed Consolidated Financial Statements.
5
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation and Business
Nature of Operations: The operations of Champion Homes, Inc. (the “Company”), consist of manufacturing, retail, construction services, and transportation activities. At September 26, 2026, the Company operated
Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations.
The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and those of its subsidiaries for which it is the primary beneficiary after elimination of intercompany balances and transactions. In the opinion of management, these statements include all normal recurring adjustments necessary to fairly state the Company’s consolidated results of operations, cash flows, and financial position. The Company has evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on May 26, 2026 (the “Fiscal 2026 Annual Report”).
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes thereto. Actual results could differ from those estimates. The condensed consolidated income statements, condensed consolidated statements of comprehensive income, and condensed consolidated statements of cash flows for the interim periods are not necessarily indicative of the results of operations or cash flows for the full year.
The Company’s fiscal year is a 52- or 53-week period that ends on the Saturday nearest to March 31. The Company’s current fiscal year, “fiscal 2027,” will end on April 3, 2027 and will include 53 weeks. References to “fiscal 2026” refer to the Company’s fiscal year ended March 28, 2026. The three and six months ended September 26, 2026 and September 27, 2025 each included 13 and 26 weeks, respectively.
The Company’s allowance for credit losses on financial assets measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current economic conditions and forecasts that affect the collectability of the reported amount. Expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, are recognized in earnings. Accounts receivable are reflected net of reserves of $
Floor plan receivables consist primarily of amounts loaned by the Company through Triad Financial Services, Inc. ("Triad") to certain independent retailers for purchases of homes manufactured by the Company, of which $
6
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
The floor plan receivables are collateralized by the related homes, mitigating loss exposure. The Company and Triad evaluate the credit worthiness of each independent retailer prior to credit approval, including reviewing the independent retailer’s payment history, financial condition, and the overall economic environment. The Company evaluates the risk of credit loss in aggregate on existing loans with similar terms, based on historic experience and current economic conditions, as well as individual retailers with past due balances or other indications of heightened credit risk. The allowance for credit losses related to floor plan receivables was not material as of September 26, 2026 or March 28, 2026. Loans are considered past due if any required interest or curtailment payment remains unpaid 30 days after the due date. Receivables are placed on non-performing status if any interest or installment payments are past due over 90 days. Loans are placed on nonaccrual status when interest payments are past due over 90 days. At September 26, 2026, there were
Recently Issued accounting pronouncements: In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which expands disclosures about a public entity's specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The update will be effective for annual periods beginning after December 15, 2026 (fiscal 2028). We are assessing the effect of this update on our consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, "Targeted Improvements to the Accounting for Internal-Use Software", which amends certain aspects of the accounting for the recognition and disclosure of capitalized software costs under ASC 350-40. The update will be effective for annual periods beginning after December 15, 2027 (fiscal 2029). We are assessing the effect of this update on our consolidated financial statements.
2. Business Combinations
Homes Direct Acquisition
On
7
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
The following table presents the consideration transferred and the preliminary purchase price allocation:
Description |
|
Amount |
|
|
Fair value of consideration transferred |
|
|
|
|
Cash consideration, net of cash acquired |
|
$ |
|
|
Consideration payable |
|
|
|
|
Total consideration |
|
$ |
|
|
Preliminary purchase price allocations: |
|
|
|
|
Inventories |
|
$ |
|
|
Other current assets |
|
|
|
|
Property, plant, and equipment, net |
|
|
|
|
Amortizable intangible assets, net |
|
|
|
|
Deferred tax assets |
|
|
|
|
Accounts payable |
|
|
( |
) |
Other current liabilities |
|
|
( |
) |
Identifiable net assets acquired |
|
|
|
|
Goodwill |
|
|
|
|
Total preliminary purchase price |
|
$ |
|
|
Other current assets, accounts payable and other current liabilities are generally stated at historical carrying values as they approximate fair value. Retail inventories are reflected at manufacturer wholesale prices. Intangible assets include $
Management has determined that the pro forma impact of the acquisition of Homes Direct on revenue and net income is not material to the consolidated financial statements and, accordingly, such information is not presented.
Iseman Homes, Inc. Acquisition
On
8
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
The following table presents the consideration transferred and the purchase price allocation:
Description |
|
Amount |
|
|
Fair value of consideration transferred |
|
|
|
|
Cash consideration, net of cash acquired |
|
$ |
|
|
Estimated earn out consideration |
|
|
|
|
Total consideration |
|
$ |
|
|
Purchase price allocations: |
|
|
|
|
Trade accounts receivable |
|
$ |
|
|
Inventories |
|
|
|
|
Other current assets |
|
|
|
|
Property, plant, and equipment, net |
|
|
|
|
Amortizable intangible assets, net |
|
|
|
|
Accounts payable |
|
|
( |
) |
Other current liabilities |
|
|
( |
) |
Identifiable net assets acquired |
|
|
|
|
Goodwill |
|
|
|
|
Total purchase price |
|
$ |
||
Trade accounts receivable, other assets, accounts payable and other liabilities are generally stated at historical carrying values as they approximate fair value. Retail inventories are reflected at manufacturer wholesale prices. Intangible assets include $
3. Inventories, net
The components of inventory, net of reserves for obsolete inventory, were as follows:
(Dollars in thousands) |
|
September 26, 2026 |
|
|
March 28, 2026 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods and other |
|
|
|
|
|
|
||
Total inventories, net |
|
$ |
|
|
$ |
|
||
4. Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Depreciation is calculated primarily on a straight-line basis, generally over the following estimated useful lives: land improvements –
9
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
The components of property, plant, and equipment were as follows:
(Dollars in thousands) |
|
September 26, 2026 |
|
|
March 28, 2026 |
|
||
Land and improvements |
|
$ |
|
|
$ |
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Property, plant, and equipment, at cost |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant, and equipment, net |
|
$ |
|
|
$ |
|
||
5. Goodwill, Intangible Assets, and Cloud Computing Arrangements
Goodwill
Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. At September 26, 2026 and March 28, 2026 the company had goodwill of $
Intangible Assets
The components of amortizable intangible assets were as follows:
(Dollars in thousands) |
|
September 26, 2026 |
|
|
March 28, 2026 |
|
||||||||||||||||||
|
|
Customer |
|
|
Trade |
|
|
Total |
|
|
Customer |
|
|
Trade |
|
|
Total |
|
||||||
Gross carrying amount |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortizable intangibles, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
During each of the three months ended September 26, 2026 and September 27, 2025, amortization of intangible assets was $
Cloud Computing Arrangements
The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed software. At September 26, 2026 and March 28, 2026, the Company had capitalized cloud computing costs, net of amortization of $
6. Investment in ECN Capital Corporation
In September 2023, the Company entered into a share subscription agreement with ECN Capital Corp. ("ECN") and made a $
10
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
In connection with the share subscription agreement, the Company and Triad, a subsidiary of ECN, formed Champion Financing, a captive finance company that is
The Company's interest in the common stock investment in ECN was accounted for under the equity method and the Company’s share of the income or losses of ECN are recorded on a three-month lag. For the three and six months ended September 26, 2026, the Company's share of ECN's net losses was $
The Company's investment in the Preferred Shares was included in other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets as of March 28, 2026. The investment was measured using the measurement alternative for equity investments without a readily determinable fair value. At March 28, 2026, the investment in the Preferred Shares was $
Triad, which was previously considered a related party through the date of liquidation of our investment in ECN, provides loan servicing for the Company's floor plan receivables. The Company pays Triad a fee for servicing loans which was not material for the three and six months ended September 26, 2026 or September 27, 2025, respectively. Triad also provides floor plan financing of the Company's products to Company-owned and independent retailers. At March 28, 2026 and September 27, 2025, the Company had floor plan payables due to Triad of $
7. Other Current Liabilities
The components of other current liabilities were as follows:
(Dollars in thousands) |
|
September 26, 2026 |
|
|
March 28, 2026 |
|
||
Customer deposits |
|
$ |
|
|
$ |
|
||
Accrued volume rebates |
|
|
|
|
|
|
||
Accrued warranty obligations |
|
|
|
|
|
|
||
Accrued compensation and payroll taxes |
|
|
|
|
|
|
||
Accrued insurance |
|
|
|
|
|
|
||
Accrued product liability - water intrusion |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
11
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
8. Accrued Warranty Obligations
Changes in the accrued warranty obligations were as follows:
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Warranty expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash warranty payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: noncurrent portion in other long-term liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total current portion |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9. Debt and Floor Plan Payable
Long-term debt consisted of the following:
(Dollars in thousands) |
|
September 26, 2026 |
|
|
March 28, 2026 |
|
||
|
|
|
|
|
|
|
||
Obligations under industrial revenue bonds due 2029 |
|
$ |
|
|
$ |
|
||
Notes payable to Romeo Juliet, LLC, due 2026 |
|
|
|
|
|
|
||
Notes payable to Romeo Juliet, LLC, due 2039 |
|
|
|
|
|
|
||
Note payable to United Bank, due 2026 |
|
|
|
|
|
|
||
Revolving credit facility maturing in 2030 |
|
|
|
|
|
|
||
Total debt |
|
|
|
|
|
|
||
Less: current portion of long-term debt |
|
|
|
|
|
( |
) |
|
Total long-term debt |
|
$ |
|
|
$ |
|
||
On July 28, 2025, the Company entered into a Second Amended and Restated Credit Agreement with a syndicate of banks that provides for a revolving credit facility of up to $
The interest rate on borrowings under the Second Amended Credit Agreement is based on the Secured Overnight Financing Rate ("SOFR") or an Alternative Base Rate ("ABR") plus an interest rate spread. The interest rate spread adjusts based on the consolidated total net leverage of the Company. The interest rate ranges from a high of SOFR plus
The Second Amended Credit Agreement contains covenants that restrict the amount of additional debt, liens and certain payments, including equity buy-backs, investments, dispositions, mergers and consolidations, among other restrictions as defined. The Company was in compliance with all covenants of the Second Amended Credit Agreement as of September 26, 2026.
Obligations under industrial revenue bonds are supported by letters of credit and bear interest based on a municipal bond index rate. The weighted-average interest rate at September 26, 2026, including related costs and fees, was
12
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
The Company settled notes payable to Romeo Juliet, LLC, a subsidiary of Wells Fargo Community Investment Holdings, Inc. and United Bank in the second quarter of fiscal 2027, resulting in a gain on debt extinguishments of $
Floor Plan Payables
The Company’s retail operations utilize floor plan financing to fund the purchase of manufactured homes for display or resale. At September 26, 2026 and March 28, 2026, the Company had outstanding borrowings on floor plan financing agreements of $
10. Revenue Recognition
The following tables disaggregate the Company’s revenue by sales category:
|
|
Three months ended September 26, 2026 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. |
|
|
Canadian |
|
|
Corporate/ |
|
|
Total |
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Retail |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Transportation/Other |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Six months ended September 26, 2026 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. |
|
|
Canadian |
|
|
Corporate/ |
|
|
Total |
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Retail |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Transportation/Other |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended September 27, 2025 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. |
|
|
Canadian |
|
|
Corporate/ |
|
|
Total |
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Retail |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Transportation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Six months ended September 27, 2025 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. |
|
|
Canadian |
|
|
Corporate/ |
|
|
Total |
|
||||
Manufacturing |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Retail |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Transportation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
13
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
11. Income Taxes
For the three months ended September 26, 2026 and September 27, 2025, the Company recorded $
The Company’s effective tax rate for the three and six months ended September 26, 2026 and September 27, 2025, differs from the federal statutory income tax rate of
The One Big Beautiful Bill Act ("OBBBA") was signed into law on July 4, 2025, which is considered the enactment date under U.S. GAAP. OBBBA changed many aspects of U.S. corporate income taxation including accelerated bonus depreciation, research and experimentation expense deduction, and terminating the energy efficient home tax credit.
At September 26, 2026, the Company had
12. Earnings Per Share
Basic net income per share attributable to the Company was computed by dividing net income attributable to the Company by the average number of common shares outstanding during the period. Diluted earnings per share is calculated using our weighted-average outstanding common shares, including the dilutive effect of stock awards as determined under the treasury stock method.
The following table sets forth the computation of basic and diluted earnings per common share:
|
|
Three months ended |
|
Six months ended |
|
|||||||||||
(Dollars and shares in thousands, except per share data) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Champion Homes, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted-average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted-average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted net income per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
13. Segment Information
Financial results for the Company's reportable segments have been prepared using a management approach, which is consistent with the basis and manner in which financial information is evaluated by the Company's chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision maker, the Chief Executive Officer, evaluates the performance of the Company’s segments primarily based on net sales, before elimination of inter-company shipments, earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and operating assets.
The Company operates in
14
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
Selected financial information by reportable segment was as follows:
|
|
Three months ended September 26, 2026 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. Factory-built Housing |
|
|
Canadian Factory-built Housing |
|
|
Corporate/Other |
|
|
Consolidated |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Selling, general, and administrative expenses(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Other items(3) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Segment EBITDA |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Canadian Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate/Other EBITDA |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in net income of affiliate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Depreciation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expenditure for segment assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Segment assets(4) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Six months ended September 26, 2026 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. Factory-built Housing |
|
|
Canadian Factory-built Housing |
|
|
Corporate/Other |
|
|
Consolidated |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Selling, general, and administrative expenses(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Other items(3) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Segment EBITDA |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Canadian Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate/Other EBITDA |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in net income of affiliate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Depreciation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expenditure for segment assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Segment assets(4) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
|
|
Three months ended September 27, 2025 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. Factory-built Housing |
|
|
Canadian Factory-built Housing |
|
|
Corporate/Other |
|
|
Consolidated |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Selling, general, and administrative expenses(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Other items(3) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Segment EBITDA |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Canadian Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate/Other EBITDA |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in net income of affiliate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Depreciation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expenditure for segment assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Segment assets(4) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
16
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
|
|
Six months ended September 27, 2025 |
|
|||||||||||||
(Dollars in thousands) |
|
U.S. Factory-built Housing |
|
|
Canadian Factory-built Housing |
|
|
Corporate/Other |
|
|
Consolidated |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Selling, general, and administrative expenses(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Other items(3) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Segment EBITDA |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Canadian Factory-built Housing EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate/Other EBITDA |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in net income of affiliate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Depreciation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expenditure for segment assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Segment assets(4) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
14. Commitments, Contingencies, and Legal Proceedings
Repurchase Contingencies and Guarantees
The Company is contingently liable under terms of repurchase agreements with lending institutions that provide wholesale floor plan financing to retailers. These arrangements, which are customary in the manufactured housing industry, provide for the repurchase of homes sold to retailers in the event of default by the retailer on its agreement to pay the financial institution. The risk of loss from these agreements is significantly reduced by the potential resale value of any homes that are subject to repurchase and is spread over numerous retailers. The repurchase price is generally determined by the original sales price of the home less contractually defined curtailment payments. Based on these repurchase agreements and our historical loss experience, we established an associated loss reserve which was $
At September 26, 2026, the Company was contingently obligated for $
In the normal course of business, the Company’s former subsidiaries that operated in the United Kingdom historically provided certain guarantees to two customers. Those guarantees provide contractual liability for proven construction defects up to
17
Champion Homes, Inc.
Notes to Condensed Consolidated Financial Statements - Continued
Product Liability - Water Intrusion
The Company has received consumer complaints for damages related to water intrusion in homes built in one of its manufacturing facilities prior to fiscal 2022. In fiscal 2024, the Company investigated and determined the cause of the damage was the result of materials that did not perform in accordance with the manufacturer's contractual obligations. The Company has identified that certain homes constructed over that period may be affected. Based on the results of ongoing investigation and repair efforts, the Company developed a remediation plan under Subpart I of the HUD code, which was approved in fiscal 2025. The plan called for inspection and repair of affected homes if there is evidence of damage, or procedures to mitigate the opportunity for future damage. As a result of the proposal, the Company recorded a charge of $
In January 2026, the Company entered into an agreement with the distributor of the roofing material to share certain costs of the remediation. As a result, the Company received $
Legal Proceedings
The Company has agreed to indemnify counterparties in the ordinary course of its business in agreements to acquire and sell business assets and in financing arrangements. The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. As of the date of this filing, the Company believes the ultimate liability with respect to these contingent obligations will not have, either individually or in the aggregate, a material adverse effect on the Company’s financial condition, results of operations, or cash flows.
18
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in conjunction with Champion Homes, Inc.’s condensed consolidated financial statements and the related notes that appear in Item 1 of this Report.
Overview
Champion Homes, Inc. is a leading producer of factory-built housing in the U.S. and Canada. The Company serves as a complete solutions provider across complementary and vertically integrated businesses including factory-built home manufacturing, company-owned retail locations, construction services, and transportation logistics services. The Company markets its homes under several nationally recognized brand names including Champion Homes, Genesis Homes, Skyline Homes, Regional Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, All American Homes, New Era, J. Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S., and Moduline and SRI Homes in western Canada. The Company operates 42 manufacturing facilities throughout the U.S. and four manufacturing facilities in western Canada that primarily construct factory-built, timber-framed, manufactured and modular houses that are sold primarily to independent retailers, builders/developers, and manufactured home community operators. The Company’s retail operations consist of 95 sales centers that sell manufactured homes to consumers across the U.S. The Company’s transportation business engages independent owners/drivers to transport manufactured homes, recreational vehicles, and other products throughout the U.S. and Canada.
Acquisitions, Expansions and Consolidations
The Company is focused on operational improvements to increase capacity utilization and profitability at its existing manufacturing facilities as well as measured expansion of its manufacturing and retail footprint through facility and equipment investments and acquisitions. Those investments will help improve the Company's ability to satisfy demand for affordable housing. The current economic environment drives an even greater need for attainable housing solutions. As a result, the Company continues to focus on growing in strong housing markets across the U.S. and Canada, as well as expanding products and services to provide more holistic and affordable solutions to homebuyers.
In August 2026, the Company completed its previously announced acquisition of the assets of Homes Direct, representing 11 retail sales centers across the western region of the U.S. The acquisition expands Champion's Western U.S. footprint and accelerates the Company's direct to consumer strategy. In May 2025, the Company acquired Iseman Homes, which operated 10 retail sales centers across the North Central U.S. This acquisition enhances the Company's ability to strengthen distribution from its nearby manufacturing facilities, furthering the Company’s commitment to integrated growth.
In addition to acquisitions, the Company is also focused on enhancing its U.S. manufacturing production capacity, as well as redeployment of capital and resources through strategic actions at specific plants. During the first half of fiscal 2026, the Company idled production at the Bartow, Florida manufacturing plant and ceased operations at the Kelowna, British Columbia manufacturing plant. The Company believes those actions will ultimately lead to greater operating efficiency and profitability. In addition, the Company sold a previously idled manufacturing facility during the second quarter of fiscal 2026. The Company continues to own six idle manufacturing facilities that could be used for further manufacturing capacity expansion in future periods.
During fiscal 2024, the Company made an equity investment in ECN. The investment, in part, facilitated the creation of a captive finance company in partnership with Triad, a subsidiary of ECN. The captive finance company, Champion Financing, through Triad, provides factory-built home floor plan and consumer loans to manufactured home retailers and homebuyers. The Company believes this offering will provide customers needed financing solutions and improve the Company's market share. On November 13, 2025, ECN entered into a definitive arrangement to be acquired by a private investor group for CAD $3.10 per share, plus any accrued but unpaid dividends. The transaction closed on April 24, 2026, which resulted in the liquidation of the Company's investment in ECN common and preferred shares in the first quarter of fiscal 2027 and resulted in net cash proceeds of $137.0 million and net gain on investment of $2.5 million. The liquidation of the Company's investment in ECN common and preferred shares will not impact the future operations of Champion Financing.
The Company's acquisitions, investments and plant consolidation are part of a strategy to grow and diversify revenue with a focus on increasing the Company’s homebuilding presence in the U.S. as well as improving the results of operations through streamlining production of similar product categories. These acquisitions and investments are included in the Company's consolidated results for periods subsequent to their respective acquisition dates.
Industry and Company Outlook
The need for newly built affordable, single-family housing has continued to drive demand for new homes in the U.S. and Canadian markets. In recent years, manufactured home construction experienced revenue growth due to a number of favorable demographic trends and demand drivers in the United States, including underlying growth trends in key homebuyer groups, such as the population over 55 years of age, the population of first-time home buyers, and the population of households earning less than $60,000 per year. However, in recent quarters,
19
inflationary pressures and rising interest rates have compressed the purchasing power of homebuyers while simultaneously increasing material input costs, thereby impacting the Company’s operating margins. These macroeconomic headwinds further underscore the fundamental long-term need for affordable housing. Where possible, the Company tries to mitigate the impact of rising material input costs by taking pricing actions, working with supply chain partners, sourcing alternative materials, or making other operational improvements to minimize the effect on operating margins.
The Company's manufacturing backlog increased to $500.2 million as of September 26, 2026 compared to $313.2 million as of September 27, 2025. The increase in backlog is a function of order rates exceeding production rates during the three months ended September 26, 2026, compared to the same period in the prior fiscal year.
For the six months ended September 26, 2026, approximately 86.6% of the Company’s U.S. manufacturing sales were generated from the manufacture of homes that comply with the U.S. Department of Housing and Urban Development ("HUD") code construction standard in the U.S. Industry shipments of HUD-code homes are reported on a one-month lag. According to data reported by the Manufactured Housing Institute, HUD-code industry home shipments were 52,702 and 44,567 units during the five months ended August 31, 2026 and 2025, respectively. Based on industry data, the Company’s U.S. wholesale market share of HUD code homes sold was 23.0% and 22.6%, for the five months ended August 31, 2026 and 2025, respectively. HUD-code industry shipments have improved modestly in recent years, but are still at lower levels than the long-term historical average of over 200,000 units per year. Manufactured home sales represent approximately 11% of all U.S. single family home starts. Our estimated market share in the U.S. total housing market, based on data through August 2026, was approximately 3.0% and 2.6% for the six months ended September 26, 2026 and September 27, 2025, respectively.
20
UNAUDITED RESULTS OF OPERATIONS FOR THE SECOND QUARTER OF FISCAL 2027 VS. 2026
|
|
Three months ended |
|
|||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Income Statements Data: |
|
|
|
|
|
|
||
Net sales |
|
$ |
727,032 |
|
|
$ |
684,429 |
|
Cost of sales |
|
|
541,430 |
|
|
|
496,497 |
|
Gross profit |
|
|
185,602 |
|
|
|
187,932 |
|
Selling, general, and administrative expenses |
|
|
119,819 |
|
|
|
113,117 |
|
Operating income |
|
|
65,783 |
|
|
|
74,815 |
|
Interest (income), net |
|
|
(5,332 |
) |
|
|
(4,034 |
) |
Other (income) expense |
|
|
(2,010 |
) |
|
|
79 |
|
Income before income taxes |
|
|
73,125 |
|
|
|
78,770 |
|
Income tax expense |
|
|
17,731 |
|
|
|
18,551 |
|
Net income before equity in net loss of affiliates |
|
|
55,394 |
|
|
|
60,219 |
|
Equity in net loss of affiliates |
|
|
290 |
|
|
|
125 |
|
Net income |
|
$ |
55,104 |
|
|
$ |
60,094 |
|
Net income attributable to non-controlling interest |
|
|
2,443 |
|
|
|
1,895 |
|
Net income attributable to Champion Homes, Inc. |
|
$ |
52,661 |
|
|
$ |
58,199 |
|
|
|
|
|
|
|
|
||
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
||
Net income attributable to Champion Homes, Inc. |
|
$ |
52,661 |
|
|
$ |
58,199 |
|
Income tax expense |
|
|
17,731 |
|
|
|
18,551 |
|
Interest (income), net |
|
|
(5,332 |
) |
|
|
(4,034 |
) |
Depreciation and amortization |
|
|
12,523 |
|
|
|
11,658 |
|
Product liability - water intrusion, net |
|
|
(313 |
) |
|
|
— |
|
Transaction costs |
|
|
618 |
|
|
|
— |
|
Other |
|
|
713 |
|
|
|
— |
|
Gain on extinguishments of debt |
|
|
(2,010 |
) |
|
|
— |
|
Equity in net loss of ECN |
|
|
— |
|
|
|
48 |
|
Plant closure costs |
|
|
— |
|
|
|
2,580 |
|
Gain on sale of idle facility |
|
|
— |
|
|
|
(3,650 |
) |
Adjusted EBITDA |
|
$ |
76,591 |
|
|
$ |
83,352 |
|
As a percent of net sales: |
|
|
|
|
|
|
||
Gross profit |
|
|
25.5 |
% |
|
|
27.5 |
% |
Selling, general, and administrative expenses |
|
|
16.5 |
% |
|
|
16.5 |
% |
Operating income |
|
|
9.0 |
% |
|
|
10.9 |
% |
Net income attributable to Champion Homes, Inc. |
|
|
7.2 |
% |
|
|
8.5 |
% |
Adjusted EBITDA |
|
|
10.5 |
% |
|
|
12.2 |
% |
21
NET SALES
The following table summarizes net sales for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
Change |
|
|
% |
|
||||
Net sales |
|
$ |
727,032 |
|
|
$ |
684,429 |
|
|
$ |
42,603 |
|
|
|
6.2 |
% |
U.S. manufacturing and retail net sales |
|
$ |
690,799 |
|
|
$ |
649,056 |
|
|
$ |
41,743 |
|
|
|
6.4 |
% |
U.S. homes sold |
|
|
6,724 |
|
|
|
6,575 |
|
|
|
149 |
|
|
|
2.3 |
% |
U.S. manufacturing and retail average home selling price |
|
$ |
102.7 |
|
|
$ |
98.7 |
|
|
$ |
4.0 |
|
|
|
4.1 |
% |
Canadian manufacturing net sales |
|
$ |
25,252 |
|
|
$ |
26,118 |
|
|
$ |
(866 |
) |
|
|
(3.3 |
%) |
Canadian homes sold |
|
|
198 |
|
|
|
196 |
|
|
|
2 |
|
|
|
1.0 |
% |
Canadian manufacturing average home selling price |
|
$ |
127.5 |
|
|
$ |
133.3 |
|
|
$ |
(5.8 |
) |
|
|
(4.3 |
%) |
Corporate/Other net sales |
|
$ |
10,981 |
|
|
$ |
9,255 |
|
|
$ |
1,726 |
|
|
|
18.6 |
% |
U.S. manufacturing facilities in operation at end of period |
|
|
42 |
|
|
|
42 |
|
|
|
|
|
|
|
||
U.S. retail sales centers in operation at end of period |
|
|
95 |
|
|
|
82 |
|
|
|
|
|
|
|
||
Canadian manufacturing facilities in operation at end of period |
|
|
4 |
|
|
|
4 |
|
|
|
|
|
|
|
||
Net sales for the three months ended September 26, 2026 were $727.0 million, an increase of $42.6 million, or 6.2%, compared to the three months ended September 27, 2025. The following is a summary of the change by operating segment.
U.S. Factory-built Housing:
Net sales for the Company’s U.S. manufacturing and retail operations increased by $41.7 million, or 6.4%, for the three months ended September 26, 2026 compared to the three months ended September 27, 2025. The increase was due to a 2.3% increase in new homes sold and 4.1% increase in the average selling price per new home. The increase in new homes sold was due to higher new home orders and production rates. The increase in average selling price was primarily due to a shift in mix to more multi-wide units and improved price realization.
Canadian Factory-built Housing:
The Canadian Factory-built Housing segment net sales decreased by $0.9 million, or 3.3% for the three months ended September 26, 2026 compared to the same period in the prior fiscal year, primarily due to a 4.3% decrease in average home selling price. On a constant currency basis, net sales for the Canadian segment were unfavorably impacted by approximately $0.6 million due to fluctuations in the translation of the Canadian dollar to the U.S. dollar during the three months ended September 26, 2026 as compared to the same period of the prior fiscal year.
Corporate/Other:
Net sales for Corporate/Other includes the Company’s transportation business, financing activities, and the elimination of intersegment sales. Net sales increased by $1.7 million or 18.6% for the three months ended September 26, 2026 compared to the same period in the prior fiscal year due to higher volumes from Champion Financing.
GROSS PROFIT
The following table summarizes gross profit for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing |
|
$ |
168,843 |
|
|
$ |
172,754 |
|
|
$ |
(3,911 |
) |
|
|
(2.3 |
%) |
Canadian Factory-built Housing |
|
|
7,637 |
|
|
|
7,461 |
|
|
|
176 |
|
|
|
2.4 |
% |
Corporate/Other |
|
|
9,122 |
|
|
|
7,717 |
|
|
|
1,405 |
|
|
|
18.2 |
% |
Total gross profit |
|
$ |
185,602 |
|
|
$ |
187,932 |
|
|
$ |
(2,330 |
) |
|
|
(1.2 |
%) |
Gross profit as a percent of net sales |
|
|
25.5 |
% |
|
|
27.5 |
% |
|
|
|
|
|
|
||
22
Gross profit as a percent of sales during the three months ended September 26, 2026 was 25.5% compared to 27.5% during the three months ended September 27, 2025. The following is a summary of the change by operating segment.
U.S. Factory-built Housing:
Gross profit for the U.S. Factory-built Housing segment decreased by $3.9 million, or 2.3%, during the three months ended September 26, 2026 compared to the same period in the prior fiscal year. Gross profit was 24.4% as a percent of segment net sales for the three months ended September 26, 2026, compared to 26.6% for the three months ended September 27, 2025. The decrease in gross profit as a percent of segment net sales was driven by higher manufacturing material input costs.
Canadian Factory-built Housing:
Gross profit for the Canadian Factory-built Housing segment increased by $0.2 million, or 2.4%, during the three months ended September 26, 2026 compared to the same period in the prior fiscal year. Gross profit as a percent of net sales was 30.2% for the three months ended September 26, 2026, compared to 28.6% in the same period of the prior year.
Corporate/Other:
Gross profit for the Corporate/Other segment increased $1.4 million, or 18.2%, during the three months ended September 26, 2026 compared to the same period of the prior fiscal year. The increase in gross profit was due to higher volumes from Champion Financing.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses include in part costs that are not directly attributable to the manufacture or resale of our products, including foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes selling, general, and administrative expenses for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Selling, general, and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing |
|
$ |
93,232 |
|
|
$ |
83,865 |
|
|
$ |
9,367 |
|
|
|
11.2 |
% |
Canadian Factory-built Housing |
|
|
2,783 |
|
|
|
5,189 |
|
|
|
(2,406 |
) |
|
|
(46.4 |
%) |
Corporate/Other |
|
|
23,804 |
|
|
|
24,063 |
|
|
|
(259 |
) |
|
|
(1.1 |
%) |
Total selling, general, and administrative expenses |
|
$ |
119,819 |
|
|
$ |
113,117 |
|
|
$ |
6,702 |
|
|
|
5.9 |
% |
Selling, general, and administrative expense as a percent of net sales |
|
|
16.5 |
% |
|
|
16.5 |
% |
|
|
|
|
|
|
||
Selling, general, and administrative expenses were $119.8 million for the three months ended September 26, 2026, an increase of $6.7 million, or 5.9%, compared to the same period in the prior fiscal year. The following is a summary of the change by operating segment.
U.S. Factory-built Housing:
Selling, general, and administrative expenses for the U.S. Factory-built Housing segment increased $9.4 million, or 11.2%, during the three months ended September 26, 2026 as compared to the same period in the prior fiscal year. SG&A as a percent of segment net sales increased to 13.5% for the three months ended September 26, 2026 compared to 12.9% during the comparable period of the prior fiscal year. The increase in SG&A was due to the inclusion of Homes Direct, higher incentive compensation and marketing costs and the $3.7 million gain on sale of idle facility from the prior fiscal year which did not recur.
Canadian Factory-built Housing:
Selling, general, and administrative expenses for the Canadian Factory-built Housing segment decreased $2.4 million, or 46.4%, for the three months ended September 26, 2026 when compared to the same period of the prior fiscal year. Selling, general, and administrative expenses as a percent of segment net sales decreased to 11.0% for the three months ended September 26, 2026 compared to 19.9% during the comparable period of the prior fiscal year, primarily due to costs associated with the Kelowna, BC plant closure of $2.4 million being incurred in the prior fiscal year.
23
Corporate/Other:
Selling, general, and administrative expenses for Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments, and intersegment eliminations. Selling, general, and administrative expenses for Corporate/Other decreased $0.3 million, or 1.1%, during the three months ended September 26, 2026 as compared to the same period of the prior fiscal year due to a reduction in foreign currency transaction losses and IT costs, partially offset by higher incentive compensation and professional fees.
INTEREST INCOME, NET
The following table summarizes the components of interest income, net for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Interest income |
|
$ |
6,778 |
|
|
$ |
5,974 |
|
|
$ |
804 |
|
|
|
13.5 |
% |
Less: interest expense |
|
|
(1,446 |
) |
|
|
(1,940 |
) |
|
|
494 |
|
|
|
(25.5 |
%) |
Interest income, net |
|
$ |
5,332 |
|
|
$ |
4,034 |
|
|
$ |
1,298 |
|
|
|
32.2 |
% |
Average outstanding floor plan payable |
|
$ |
95,477 |
|
|
$ |
101,306 |
|
|
|
|
|
|
|
||
Average outstanding debt |
|
$ |
18,105 |
|
|
$ |
24,075 |
|
|
|
|
|
|
|
||
Average cash balance |
|
$ |
670,521 |
|
|
$ |
612,034 |
|
|
|
|
|
|
|
||
Interest income, net was $5.3 million for the three months ended September 26, 2026, compared to $4.0 million for the three months ended September 27, 2025. The increase was due to lower outstanding debt balances and higher invested cash balances.
OTHER INCOME (EXPENSE)
The following table summarizes other income for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Other income (expense) |
|
$ |
2,010 |
|
|
$ |
(79 |
) |
|
$ |
2,089 |
|
|
|
(2,644.3 |
%) |
Other income for the three months ended September 26, 2026 represents the gain on debt extinguishments associated with the settlement of the notes payable to Romeo Juliet, LLC.
INCOME TAX EXPENSE
The following table summarizes income tax expense for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Income tax expense |
|
$ |
17,731 |
|
|
$ |
18,551 |
|
|
$ |
(820 |
) |
|
|
(4.4 |
%) |
Effective tax rate |
|
|
24.2 |
% |
|
|
23.6 |
% |
|
|
|
|
|
|
||
Income tax expense for the three months ended September 26, 2026 was $17.7 million, representing an effective tax rate of 24.2%, compared to income tax expense of $18.6 million, representing an effective tax rate of 23.6% for the three months ended September 27, 2025. The effective tax rate for the three months ended September 26, 2026 was negatively impacted primarily by a decrease in recognition of tax credits related to the sale of energy efficient homes.
24
The Company’s effective tax rate for each of the three months ended September 26, 2026 and September 27, 2025, differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, and results in foreign jurisdictions.
EQUITY IN NET LOSS OF AFFILIATES
The following table summarizes equity in net loss of affiliates for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Equity in net loss of affiliates |
|
$ |
290 |
|
|
$ |
125 |
|
|
$ |
165 |
|
|
|
132.0 |
% |
Equity in net loss of affiliates of $0.3 million for the three months ended September 26, 2026 represents net losses from an unconsolidated equity method investment. Equity in net loss of affiliates of $0.1 million for the three months ended September 27, 2025 represents losses on the equity method investment in ECN and other unconsolidated equity method investments. The investment in ECN was sold in the first quarter of fiscal 2027.
NON-CONTROLLING INTEREST
The following table summarizes net income attributable to non-controlling interest for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Net income attributable to non-controlling interest |
|
$ |
2,443 |
|
|
$ |
1,895 |
|
|
$ |
548 |
|
|
|
28.9 |
% |
Net income attributable to non-controlling interest represents the minority partner's 49% share of the results of operations of Champion Financing.
ADJUSTED EBITDA
The following table reconciles net income attributable to Champion Homes, Inc., the most directly comparable U.S. GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the three months ended September 26, 2026 and September 27, 2025:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Net income attributable to Champion Homes, Inc. |
|
$ |
52,661 |
|
|
$ |
58,199 |
|
|
$ |
(5,538 |
) |
|
|
(9.5 |
%) |
Income tax expense |
|
|
17,731 |
|
|
|
18,551 |
|
|
|
(820 |
) |
|
|
(4.4 |
%) |
Interest (income), net |
|
|
(5,332 |
) |
|
|
(4,034 |
) |
|
|
(1,298 |
) |
|
|
32.2 |
% |
Depreciation and amortization |
|
|
12,523 |
|
|
|
11,658 |
|
|
|
865 |
|
|
|
7.4 |
% |
Product liability - water intrusion, net |
|
|
(313 |
) |
|
|
— |
|
|
|
(313 |
) |
|
* |
|
|
Transaction costs |
|
|
618 |
|
|
|
— |
|
|
|
618 |
|
|
* |
|
|
Other |
|
|
713 |
|
|
|
— |
|
|
|
713 |
|
|
* |
|
|
Gain on extinguishments of debt |
|
|
(2,010 |
) |
|
|
— |
|
|
|
(2,010 |
) |
|
* |
|
|
Equity in net loss of ECN |
|
|
— |
|
|
|
48 |
|
|
|
(48 |
) |
|
* |
|
|
Plant closure costs |
|
|
— |
|
|
|
2,580 |
|
|
|
(2,580 |
) |
|
* |
|
|
Gain on sale of idle facility |
|
|
— |
|
|
|
(3,650 |
) |
|
|
3,650 |
|
|
* |
|
|
Adjusted EBITDA |
|
$ |
76,591 |
|
|
$ |
83,352 |
|
|
$ |
(6,761 |
) |
|
|
(8.1 |
%) |
* indicates that the calculated percentage is not meaningful
Adjusted EBITDA for the three months ended September 26, 2026 was $76.6 million, a decrease of $6.8 million from the same period of the prior fiscal year. The decrease is primarily a result of lower operating income as a result of lower gross margins.
The Company defines Adjusted EBITDA as net income or loss attributable to Champion Homes, Inc. plus expense or minus income: (a) the provision for income taxes; (b) interest, net; (c) depreciation and amortization; (d) gain or loss from discontinued operations; (e) non-cash
25
restructuring charges and impairment of assets; (f) equity in net earnings or losses of ECN; (g) charges related to the remediation of the water intrusion product liability claims; and (h) other non-operating income and costs, including but not limited to those costs for the acquisition and integration or disposition of businesses or investments, including the change in fair value of contingent consideration, 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, which is presented in the Statement of Cash Flows. In addition, Adjusted EBITDA is not necessarily comparable to similarly titled measures reported by other companies.
Adjusted EBITDA is presented as a supplemental measure of the Company’s financial performance that management believes is useful to investors, because the excluded items may vary significantly in timing or amounts and/or may obscure trends useful in evaluating and comparing the Company’s operating activities across reporting periods. Management believes Adjusted EBITDA is useful to an investor in evaluating operating performance for the following reasons: (i) Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest income and expense, taxes, depreciation and amortization and other non-operating income or loss, which can vary substantially from company to company depending upon accounting methods and the book value of assets, capital structure and the method by which assets were acquired; and (ii) analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry.
Management uses Adjusted EBITDA for planning purposes, including the preparation of the internal annual operating budget and periodic forecasts: (i) in communications with the Board of Directors and investors concerning financial performance; (ii) as a factor in determining bonuses under certain incentive compensation programs; and (iii) as a measure of operating performance used to determine the ability to provide cash flows to support investments in capital assets, acquisitions and working capital requirements for operating expansion.
26
UNAUDITED RESULTS OF OPERATIONS FOR THE FIRST HALF OF FISCAL 2027 VS. 2026
|
|
Six months ended |
|
|||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Income Statements Data: |
|
|
|
|
|
|
||
Net sales |
|
$ |
1,437,266 |
|
|
$ |
1,385,747 |
|
Cost of sales |
|
|
1,072,400 |
|
|
|
1,007,985 |
|
Gross profit |
|
|
364,866 |
|
|
|
377,762 |
|
Selling, general, and administrative expenses |
|
|
238,810 |
|
|
|
224,426 |
|
Operating income |
|
|
126,056 |
|
|
|
153,336 |
|
Interest (income), net |
|
|
(9,871 |
) |
|
|
(8,570 |
) |
Other (income) |
|
|
(5,290 |
) |
|
|
(1,141 |
) |
Income before income taxes |
|
|
141,217 |
|
|
|
163,047 |
|
Income tax expense |
|
|
34,740 |
|
|
|
36,250 |
|
Net income before equity in net loss of affiliates |
|
|
106,477 |
|
|
|
126,797 |
|
Equity in net loss of affiliates |
|
|
859 |
|
|
|
710 |
|
Net income |
|
$ |
105,618 |
|
|
$ |
126,087 |
|
Net income attributable to non-controlling interest |
|
|
3,800 |
|
|
|
3,201 |
|
Net income attributable to Champion Homes, Inc. |
|
$ |
101,818 |
|
|
$ |
122,886 |
|
|
|
|
|
|
|
|
||
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
||
Net income attributable to Champion Homes, Inc. |
|
$ |
101,818 |
|
|
$ |
122,886 |
|
Income tax expense |
|
|
34,740 |
|
|
|
36,250 |
|
Interest (income), net |
|
|
(9,871 |
) |
|
|
(8,570 |
) |
Depreciation and amortization |
|
|
24,857 |
|
|
|
23,560 |
|
Product liability - water intrusion, net |
|
|
(626 |
) |
|
|
— |
|
Transaction costs |
|
|
1,207 |
|
|
|
714 |
|
Other |
|
|
2,311 |
|
|
|
— |
|
Gain on extinguishments of debt |
|
|
(2,010 |
) |
|
|
— |
|
Equity in net loss of ECN |
|
|
263 |
|
|
|
507 |
|
Net gain on sale of ECN |
|
|
(2,514 |
) |
|
|
— |
|
Plant closure costs |
|
|
— |
|
|
|
5,832 |
|
Gain on sale of idle facility |
|
|
— |
|
|
|
(3,650 |
) |
Adjusted EBITDA |
|
$ |
150,175 |
|
|
$ |
177,529 |
|
As a percent of net sales: |
|
|
|
|
|
|
||
Gross profit |
|
|
25.4 |
% |
|
|
27.3 |
% |
Selling, general, and administrative expenses |
|
|
16.6 |
% |
|
|
16.2 |
% |
Operating income |
|
|
8.8 |
% |
|
|
11.1 |
% |
Net income attributable to Champion Homes, Inc. |
|
|
7.1 |
% |
|
|
8.9 |
% |
Adjusted EBITDA |
|
|
10.4 |
% |
|
|
12.8 |
% |
27
NET SALES
The following table summarizes net sales for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
Change |
|
|
% |
|
||||
Net sales |
|
$ |
1,437,266 |
|
|
$ |
1,385,747 |
|
|
$ |
51,519 |
|
|
|
3.7 |
% |
U.S. manufacturing and retail net sales |
|
$ |
1,368,161 |
|
|
$ |
1,310,987 |
|
|
$ |
57,174 |
|
|
|
4.4 |
% |
U.S. homes sold |
|
|
13,813 |
|
|
|
13,540 |
|
|
|
273 |
|
|
|
2.1 |
% |
U.S. manufacturing and retail average home selling price |
|
$ |
99.0 |
|
|
$ |
96.8 |
|
|
$ |
2.2 |
|
|
|
2.3 |
% |
Canadian manufacturing net sales |
|
$ |
48,576 |
|
|
$ |
56,238 |
|
|
$ |
(7,662 |
) |
|
|
(13.6 |
%) |
Canadian homes sold |
|
|
383 |
|
|
|
446 |
|
|
|
(63 |
) |
|
|
(14.1 |
%) |
Canadian manufacturing average home selling price |
|
$ |
126.8 |
|
|
$ |
126.1 |
|
|
$ |
0.7 |
|
|
|
0.5 |
% |
Corporate/Other net sales |
|
$ |
20,529 |
|
|
$ |
18,522 |
|
|
$ |
2,007 |
|
|
|
10.8 |
% |
U.S. manufacturing facilities in operation at end of period |
|
|
42 |
|
|
|
42 |
|
|
|
|
|
|
|
||
U.S. retail sales centers in operation at end of period |
|
|
95 |
|
|
|
82 |
|
|
|
|
|
|
|
||
Canadian manufacturing facilities in operation at end of period |
|
|
4 |
|
|
|
4 |
|
|
|
|
|
|
|
||
Net sales for the six months ended September 26, 2026 were $1.4 billion, an increase of $51.5 million, or 3.7% compared to the six months ended September 27, 2025. The following is a summary of the change by operating segment.
U.S. Factory-built Housing:
Net sales for the Company’s U.S. manufacturing and retail operations increased by $57.2 million, or 4.4% for the six months ended September 26, 2026 compared to the six months ended September 27, 2025. The increase was due to a 2.1% increase in new homes sold and 2.3% increase in the average selling price per new home. The increase in new homes sold was due to higher new home orders and production rates. The increase in average selling price was primarily due to a shift in mix to more multi-wide units and improved price realization.
Canadian Factory-built Housing:
The Canadian Factory-built Housing segment net sales decreased by $7.7 million, or 13.6% for the six months ended September 26, 2026 compared to the same period in the prior fiscal year, primarily due to a 14.1% decrease in homes sold. The decrease in homes sold was due to lower demand in certain markets and the closure of the Kelowna, BC plant in the second quarter of fiscal 2026. On a constant currency basis, net sales for the Canadian segment were unfavorably impacted by approximately $0.2 million due to fluctuations in the translation of the Canadian dollar to the U.S. dollar during the six months ended September 26, 2026 as compared to the same period of the prior fiscal year.
Corporate/Other:
Net sales for Corporate/Other includes the Company’s transportation business, financing activities, and the elimination of intersegment sales. Net sales increased by $2.0 million, or 10.8% for the six months ended September 26, 2026 compared to the same period in the prior fiscal year due to higher volumes from Champion Financing.
GROSS PROFIT
The following table summarizes gross profit for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing |
|
$ |
333,841 |
|
|
$ |
347,157 |
|
|
$ |
(13,316 |
) |
|
|
(3.8 |
%) |
Canadian Factory-built Housing |
|
|
14,396 |
|
|
|
15,735 |
|
|
|
(1,339 |
) |
|
|
(8.5 |
%) |
Corporate/Other |
|
|
16,629 |
|
|
|
14,870 |
|
|
|
1,759 |
|
|
|
11.8 |
% |
Total gross profit |
|
$ |
364,866 |
|
|
$ |
377,762 |
|
|
$ |
(12,896 |
) |
|
|
(3.4 |
%) |
Gross profit as a percent of net sales |
|
|
25.4 |
% |
|
|
27.3 |
% |
|
|
|
|
|
|
||
28
Gross profit as a percent of sales during the six months ended September 26, 2026 was 25.4% compared to 27.3% during the six months ended September 27, 2025. The following is a summary of the change by operating segment.
U.S. Factory-built Housing:
Gross profit for the U.S. Factory-built Housing segment decreased by $13.3 million, or 3.8% during the six months ended September 26, 2026 compared to the same period in the prior fiscal year. Gross profit was 24.4% as a percent of segment net sales for the six months ended September 26, 2026, compared to 26.5% for the six months ended September 27, 2025. The decrease in gross profit as a percent of segment net sales was driven by higher manufacturing material input costs.
Canadian Factory-built Housing:
Gross profit for the Canadian Factory-built Housing segment decreased by $1.3 million, or 8.5%, during the six months ended September 26, 2026 compared to the same period in the prior fiscal year. The decrease in gross profit was due to fewer homes sold in the period compared to the prior year. Gross profit as a percent of net sales was 29.6% for the six months ended September 26, 2026, compared to 28.0% in the same period of the prior year. The increase in gross profit as a percent of segment net sales was due to the impact of the closure of the Kelowna, BC plant, which reduced segment margin percentage and did not recur in the current fiscal year.
Corporate/Other:
Gross profit for the Corporate/Other segment increased $1.8 million, or 11.8%, during the six months ended September 26, 2026 compared to the same period of the prior fiscal year due to Champion Financing.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses include in part costs that are not directly attributable to the manufacture or resale of our products, including foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes selling, general, and administrative expenses for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Selling, general, and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Factory-built Housing |
|
$ |
181,516 |
|
|
$ |
170,448 |
|
|
$ |
11,068 |
|
|
|
6.5 |
% |
Canadian Factory-built Housing |
|
|
6,051 |
|
|
|
10,915 |
|
|
|
(4,864 |
) |
|
|
(44.6 |
%) |
Corporate/Other |
|
|
51,243 |
|
|
|
43,063 |
|
|
|
8,180 |
|
|
|
19.0 |
% |
Total selling, general, and administrative expenses |
|
$ |
238,810 |
|
|
$ |
224,426 |
|
|
$ |
14,384 |
|
|
|
6.4 |
% |
Selling, general, and administrative expense as a percent of net sales |
|
|
16.6 |
% |
|
|
16.2 |
% |
|
|
|
|
|
|
||
Selling, general, and administrative expenses were $238.8 million for the six months ended September 26, 2026, an increase of $14.4 million, or 6.4%, compared to the same period in the prior fiscal year. The following is a summary of the change by operating segment.
U.S. Factory-built Housing:
Selling, general, and administrative expenses for the U.S. Factory-built Housing segment increased $11.1 million, or 6.5% during the six months ended September 26, 2026 as compared to the same period in the prior fiscal year. SG&A as a percent of segment net sales increased to 13.3% for the six months ended September 26, 2026 compared to 13.0% during the comparable period of the prior fiscal year. The increase in SG&A was due to higher employee compensation and marketing costs, the inclusion of Homes Direct, and the $3.7 million gain on the sale of an idle facility in the second quarter of fiscal 2026 that did not recur in the current year.
Canadian Factory-built Housing:
Selling, general, and administrative expenses for the Canadian Factory-built Housing segment decreased $4.9 million, or 44.6%, for the six months ended September 26, 2026 when compared to the same period of the prior fiscal year. Selling, general, and administrative expenses as a percent of segment net sales decreased to 12.5% for the six months ended September 26, 2026 compared to 19.4% during the comparable period of the prior fiscal year, primarily due to costs associated with the Kelowna, BC plant closure of $5.2 million being included in the prior fiscal year.
29
Corporate/Other:
Selling, general, and administrative expenses for Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments, and intersegment eliminations. Selling, general, and administrative expenses for Corporate/Other increased $8.2 million, or 19.0%, during the six months ended September 26, 2026 as compared to the same period of the prior fiscal year. The increase was primarily due to higher employee compensation and incentive expense, higher professional fees and foreign currency transaction losses.
INTEREST INCOME, NET
The following table summarizes the components of interest income, net for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Interest income |
|
$ |
13,156 |
|
|
$ |
12,007 |
|
|
$ |
1,149 |
|
|
|
9.6 |
% |
Less: interest expense |
|
|
(3,285 |
) |
|
|
(3,437 |
) |
|
|
152 |
|
|
|
(4.4 |
%) |
Interest income, net |
|
$ |
9,871 |
|
|
$ |
8,570 |
|
|
$ |
1,301 |
|
|
|
15.2 |
% |
Average outstanding floor plan payable |
|
$ |
95,477 |
|
|
$ |
102,509 |
|
|
|
|
|
|
|
||
Average outstanding debt |
|
$ |
13,435 |
|
|
$ |
24,409 |
|
|
|
|
|
|
|
||
Average cash balance |
|
$ |
670,521 |
|
|
$ |
614,539 |
|
|
|
|
|
|
|
||
Interest income, net was $9.9 million for the six months ended September 26, 2026, compared to $8.6 million for the six months ended September 27, 2025. The increase was due to lower outstanding debt balances and higher average invested cash balances.
OTHER INCOME
The following table summarizes other income for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Other income |
|
$ |
5,290 |
|
|
$ |
1,141 |
|
|
$ |
4,149 |
|
|
|
363.6 |
% |
Other income for the six months ended September 26, 2026 represents gain on debt extinguishments of $2.0 million, the net gain on sale of the Company's investment in ECN common and preferred shares of $2.5 million and dividend income of $0.8 million from the investment in ECN Preferred Shares. Other income for the six months ended September 27, 2025 represents dividend income of $1.1 million from the investment in ECN Preferred Shares.
INCOME TAX EXPENSE
The following table summarizes income tax expense for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Income tax expense |
|
$ |
34,740 |
|
|
$ |
36,250 |
|
|
$ |
(1,510 |
) |
|
|
(4.2 |
%) |
Effective tax rate |
|
|
24.6 |
% |
|
|
22.2 |
% |
|
|
|
|
|
|
||
Income tax expense for the six months ended September 26, 2026 was $34.7 million, representing an effective tax rate of 24.6% compared to income tax expense of $36.3 million representing an effective tax rate of 22.2% for the six months ended September 27, 2025. The effective tax rate for the six months ended September 26, 2026 was negatively impacted primarily by a decrease in recognition of tax credits related to the sale of energy efficient homes.
30
The Company’s effective tax rate for each of the six months ended September 26, 2026 and September 27, 2025, differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, and results in foreign jurisdictions.
EQUITY IN NET LOSS OF AFFILIATES
The following table summarizes equity in net loss of affiliates for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Equity in net loss of affiliates |
|
$ |
859 |
|
|
$ |
710 |
|
|
$ |
149 |
|
|
|
21.0 |
% |
The Company's investment in ECN was accounted for under the equity method and the Company’s share of the earnings or losses of ECN were recorded on a three-month lag. Equity in net loss of affiliates of $0.9 million for the six months ended September 26, 2026 represents a loss on the equity method investment in ECN of $0.3 million and net losses from other unconsolidated equity method investments of $0.6 million. Equity in net loss of affiliates of $0.7 million for the six months ended September 27, 2025 represents a loss on the equity method investment in ECN of $0.5 million and net losses from other equity method investments of $0.2 million.
NON-CONTROLLING INTEREST
The following table summarizes net income attributable to non-controlling interest for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Net income attributable to non-controlling interest |
|
$ |
3,800 |
|
|
$ |
3,201 |
|
|
$ |
599 |
|
|
|
18.7 |
% |
Net income attributable to non-controlling interest represents the minority partner's 49% share of the results of operations of Champion Financing.
ADJUSTED EBITDA
The following table reconciles net income attributable to Champion Homes, Inc., the most directly comparable U.S. GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
$ |
|
|
% |
|
||||
Net income attributable to Champion Homes, Inc. |
|
$ |
101,818 |
|
|
$ |
122,886 |
|
|
$ |
(21,068 |
) |
|
|
(17.1 |
%) |
Income tax expense |
|
|
34,740 |
|
|
|
36,250 |
|
|
|
(1,510 |
) |
|
|
(4.2 |
%) |
Interest (income), net |
|
|
(9,871 |
) |
|
|
(8,570 |
) |
|
|
(1,301 |
) |
|
|
15.2 |
% |
Depreciation and amortization |
|
|
24,857 |
|
|
|
23,560 |
|
|
|
1,297 |
|
|
|
5.5 |
% |
Product liability - water intrusion, net |
|
|
(626 |
) |
|
|
— |
|
|
|
(626 |
) |
|
* |
|
|
Transaction costs |
|
|
1,207 |
|
|
|
714 |
|
|
|
493 |
|
|
|
69 |
% |
Other |
|
|
2,311 |
|
|
|
— |
|
|
|
2,311 |
|
|
* |
|
|
Gain on extinguishments of debt |
|
|
(2,010 |
) |
|
|
— |
|
|
|
(2,010 |
) |
|
* |
|
|
Equity in net loss of ECN |
|
|
263 |
|
|
|
507 |
|
|
|
(244 |
) |
|
|
(48.1 |
%) |
Net gain on sale of ECN |
|
|
(2,514 |
) |
|
|
— |
|
|
|
(2,514 |
) |
|
* |
|
|
Plant closure costs |
|
|
— |
|
|
|
5,832 |
|
|
|
(5,832 |
) |
|
* |
|
|
Gain on sale of idle facility |
|
|
— |
|
|
|
(3,650 |
) |
|
|
3,650 |
|
|
* |
|
|
Adjusted EBITDA |
|
$ |
150,175 |
|
|
$ |
177,529 |
|
|
$ |
(27,354 |
) |
|
|
(15.4 |
%) |
* indicates that the calculated percentage is not meaningful
31
Adjusted EBITDA for the six months ended September 26, 2026 was $150.2 million, a decrease of $27.4 million from the same period of the prior fiscal year. The decrease is primarily a result of lower operating income as a result of lower gross margins.
BACKLOG
Although orders from customers can be canceled at any time without penalty, and unfilled orders are not necessarily an indication of future business, the Company’s unfilled U.S. and Canadian manufacturing orders at September 26, 2026 totaled $500.2 million compared to $313.2 million at September 27, 2025. The increase in backlog is a function of order rates exceeding production rates during the six months ended September 26, 2026, compared to the same period in the prior year.
Liquidity and Capital Resources
Sources and Uses of Cash
The following table presents summary cash flow information for the six months ended September 26, 2026 and September 27, 2025:
|
|
Six months ended |
|
|||||
(Dollars in thousands) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Net cash provided by (used in): |
|
|
|
|
|
|
||
Operating activities |
|
$ |
115,438 |
|
|
$ |
151,178 |
|
Investing activities |
|
|
61,622 |
|
|
|
(37,795 |
) |
Financing activities |
|
|
(109,243 |
) |
|
|
(107,887 |
) |
Effect of exchange rate changes on cash, cash equivalents |
|
|
(3,294 |
) |
|
|
2,906 |
|
Net increase in cash and cash equivalents |
|
|
64,523 |
|
|
|
8,402 |
|
Cash and cash equivalents at beginning of period |
|
|
638,259 |
|
|
|
610,338 |
|
Cash and cash equivalents at end of period |
|
$ |
702,782 |
|
|
$ |
618,740 |
|
The Company’s primary sources of liquidity are cash flows from operations and existing cash balances. Cash balances and cash flows from operations for the next year are expected to be adequate to cover working capital requirements, capital expenditures, and strategic initiatives and investments. The Company's Second Amended Credit Agreement provides for a $200.0 million revolving credit facility, including a $45.0 million letter of credit sub-facility. At September 26, 2026, $170.6 million was available for borrowing under the Second Amended Credit Agreement. The Company’s revolving credit facility includes (i) a maximum consolidated total net leverage ratio of 3.25 to 1.00, subject to an upward adjustment upon the consummation of a material acquisition, and (ii) a minimum interest coverage ratio of 3.00 to 1.00. The Company anticipates compliance with its debt covenants and projects its level of cash availability to be in excess of cash needed to operate the business for the next year and beyond. In the event operating cash flow and existing cash balances were deemed inadequate to support the Company’s liquidity needs, and one or more capital resources were to become unavailable, the Company would revise its operating strategies.
Cash provided by operating activities was $115.4 million for the six months ended September 26, 2026 compared to $151.2 million for the six months ended September 27, 2025. The decrease was primarily driven by lower operating income before non-cash charges.
Cash provided by investing activities was $61.6 million for the six months ended September 26, 2026 compared to cash used in investing activities of $37.8 million for the six months ended September 27, 2025. The increase in cash provided by investing activities was primarily related to the sale of the investment in ECN common and preferred shares during the first quarter of fiscal 2027 partially offset by higher cash spent on acquisitions compared to the prior fiscal year.
Cash used in financing activities was $109.2 million for the six months ended September 26, 2026 compared to $107.9 million for the six months ended September 27, 2025. The change between periods was primarily a result of changes in floor plan financing. Cash used for repurchases of common stock was $100.0 million for each of the six months ended September 26, 2026 and September 27, 2025.
Critical Accounting Policies
For a discussion of our critical accounting policies that management believes affect its more significant judgments and estimates used in the preparation of our Consolidated Financial Statements, see Part II, Item 7 of the Fiscal 2026 Annual Report, under the heading “Critical Accounting Policies.” There have been no significant changes in our significant accounting policies or critical accounting estimates discussed in the Fiscal 2026 Annual Report, other than those included in Note 1, "Basis of Presentation".
32
Recently Issued Accounting Pronouncements
For information on the impact of recently issued accounting pronouncements, see Note 1, “Basis of Presentation – Recently Issued Accounting Pronouncements,” to the condensed consolidated financial statements included in this Report.
Forward-Looking Statements
Some of the statements in this Report are not historical in nature and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our expectations regarding our future liquidity, earnings, expenditures, and financial condition. These statements are often identified by the words “will,” “could”, “should,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “hope,” or similar expressions. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties. There are risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in our forward-looking statements, including regional, national and international economic, financial, public health and labor conditions, and the following:
33
If any of the risks or uncertainties referred to above materializes or if any of the assumptions underlying our forward-looking statements proves to be incorrect, then differences may arise between our forward-looking statements and our actual results, and such differences may be material. Investors should not place undue reliance on our forward-looking statements, which speak only as of the date of this report. We assume no obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof, except as required by law.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of the Company’s interest rate and foreign exchange risks, see Part II, Item 7A of the Fiscal 2026 Annual Report, under the heading "Quantitative and Qualitative Disclosures about Market Risk." There have been no material changes in such risks since March 28, 2026.
Item 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the specified time periods and accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
The Company’s management, with the participation of the CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act at September 26, 2026. Based upon this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of September 26, 2026.
Changes in internal control over financial reporting
There have been no changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. In the second quarter of fiscal 2027 we completed the acquisition of Homes Direct and are currently integrating Homes Direct into our operations, compliance programs and internal control processes. United States Securities and Exchange Commission guidance allows companies to exclude acquisitions from their assessment of the internal control over financial reporting during the first year following an acquisition while integrating the acquired company. We have excluded the acquired operations of Homes Direct from our assessment of the Company's internal control over financial reporting.
34
PART II – OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial or contractual disputes, product liability claims and other matters. For additional information on legal proceedings, see Note 14 “Commitments, Contingencies and Legal Proceedings – Legal Proceedings,” to the condensed consolidated financial statements included in this Report.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
On May 16, 2024, the Company's Board of Directors initiated a share repurchase program. The Company has been repurchasing shares since the program's initiation and the Board of Directors has continued to refresh the amount of authorized share repurchases. At September 26, 2026, there was $100.0 million remaining under the current share repurchase authorization. In October 2026, the Board of Directors approved an increase to the share repurchase program of $50.0 million to refresh the available amount to $150.0 million. Under this program, the number of shares ultimately purchased, and the timing of purchases are at the discretion of management and subject to compliance with applicable laws and regulations. The share repurchase program does not expire. The Company intends to fund the program from existing cash. Share repurchases are made in the open market or in privately negotiated transactions in compliance with applicable state and federal securities laws and other legal requirements. The level of repurchase activity is subject to market conditions and other investment opportunities. The repurchase program does not obligate the Company to acquire any particular amount of common stock and may be suspended or discontinued at any time. Share repurchase activity during the three months ended September 26, 2026 was as follows:
Fiscal Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid |
|
|
Total Number of |
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs |
|
||||
08/02/26 - 08/29/26 |
|
|
466,053 |
|
|
$ |
92.09 |
|
|
|
466,053 |
|
|
|
|
|
08/30/26 - 09/26/26 |
|
|
78,794 |
|
|
$ |
89.71 |
|
|
|
78,794 |
|
|
|
|
|
|
|
|
544,847 |
|
|
|
|
|
|
544,847 |
|
|
$ |
100,000 |
|
|
Item 5. OTHER INFORMATION
During the three months ended September 26, 2026, none of the Company’s directors or Section 16 officers
35
Item 6. EXHIBITS
Exhibit Number |
|
Description |
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. † |
|
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Exchange Act rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
|
|
|
|
32 |
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
|
|
|
|
101 (INS) |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101(SCH) |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document. |
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
|
|
|
|
|
|
† Filed herewith.
36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Champion Homes, Inc.
Registrant
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Tim Larson |
|
President and Chief Executive Officer |
|
November 4, 2026 |
Tim Larson |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ David McKinstray |
|
Executive Vice President, Chief Financial Officer and Treasurer |
|
November 4, 2026 |
David McKinstray |
|
(Principal Financial Officer) |
|
|
37