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Skyline Champion Corp (SKY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue rose 35.1% YoY to $0.628B with gross margin at 26.2%; GAAP EPS was $0.79 and Adjusted EPS was $0.91, reflecting strong demand, higher retail mix, and Regional Homes contribution despite YoY margin compression and higher SG&A .
  • Backlog increased 28.2% sequentially to $405M (11 weeks of lead time vs 9 weeks in Q4), driven by broad-based order strength across retail, builder-developer, and community channels; management is ramping production to address demand .
  • Management indicated Q2 top-line is expected to be flat to slightly down sequentially due to weather-related shipment timing, while margins should fluctuate with channel/product mix by ~100–200 bps from current levels .
  • Strategic updates: Regional Homes synergies tracking toward the high end of the $10–$15M range by FY25 year-end; Champion Financing JV gaining momentum; share repurchase authorization refreshed to $100M on Aug 1 and $20M repurchased in Q1 .
  • Corporate name changed to Champion Homes, Inc. to support a unified flagship brand and DTC strategy, with expanding retail footprint and digital marketing initiatives cited as demand catalysts .

What Went Well and What Went Wrong

  • What Went Well
    • Orders and demand exceeded expectations across all channels and most geographies (ex-Canada), with order growth 40%–60% YoY across channels; backlog rose to $405M and lead times to 11 weeks .
    • Regional Homes acquisition is overperforming; management targets the high end of $10–$15M synergies by FY25 year-end; captive retail momentum and product/marketing enhancements drove share gains in strong geographies .
    • Gross margin stabilized sequentially on higher captive retail units, wholesale price stabilization, lower input costs, and synergy capture; option content declines leveled off in Q1 .
  • What Went Wrong
    • YoY gross margin contracted 170 bps to 26.2% on lower wholesale ASPs, mix shifts, ramping of idled facilities, and Regional Homes purchase accounting impacts (~50 bps) .
    • SG&A rose to $108.8M (17.3% of sales) on acquisition impact and a $7.9M fair value change in contingent consideration; GAAP EPS fell to $0.79 (down 11% YoY) .
    • Canada remained soft (revenue ~$21M; units -24% YoY) on higher rates and macro uncertainty; Q2 top-line guide tempered (flat to slightly down q/q) due to weather-related delivery timing .

Financial Results

Quarterly trend (sequential; oldest → newest)

MetricQ3 FY2024Q4 FY2024Q1 FY2025
Net Sales ($USD Millions)$559.5 $536.4 $627.8
Gross Margin (%)25.3% 18.3% 26.2%
Operating Income ($M)$56.2 $7.8 $55.4
Net Income ($M)$47.0 $2.8 $45.8
Diluted EPS ($)$0.81 $0.05 $0.79
Adjusted EPS ($)$0.82 $0.62 $0.91
Adjusted EBITDA ($M)$66.3 $53.1 $75.0
Adjusted EBITDA Margin (%)11.8% 9.9% 11.9%

Year-over-year (Q1 FY2024 vs Q1 FY2025)

MetricQ1 FY2024Q1 FY2025
Net Sales ($USD Millions)$464.8 $627.8
Gross Margin (%)27.9% 26.2%
Net Income ($M)$51.3 $45.8
Diluted EPS ($)$0.89 $0.79
Adjusted EPS ($)$0.89 $0.91
Adjusted EBITDA ($M)$66.8 $75.0

KPIs and operating metrics (oldest → newest)

KPIQ3 FY2024Q4 FY2024Q1 FY2025
U.S. Homes Sold (Units)5,643 5,652 6,538
ASP per U.S. Home ($)$92,300 $89,800 $91,700
Canadian Homes Sold (Units)249 189 167
Backlog ($M)$290.4 $315.8 $405.0
Backlog Lead Time (weeks)N/A9 (implied prior quarter) 11
Capacity Utilization (%)N/A57% 58%
Cash from Operations ($M)N/AN/A$84.6

Notes: Q4 FY2024 gross margin was impacted by a $34.5M water intrusion accrual; adjusted gross margin was 24.8% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (top-line)Q2 FY2025Not previously quantifiedFlat to slightly down sequentially due to weather-related shipment timingNew qualitative view
Gross Margin (%)Near-termNot quantified in Q4 materials; management now views current level as “more normal”Expect variability of ~100–200 bps q/q around current levels based on mix/channelQualitative framework updated
Retail mixNear-termN/AQ1 captive retail higher than expected; likely to remain seasonally elevated near-term, then easeQualitative update
Regional Homes synergyFY2025$10–$15M targetTracking toward high end of range by FY25 year-endRaised confidence
Capital returnsN/A$100M buyback authorized (May 16, 2024) Authorization refreshed to $100M on Aug 1; $20M repurchased in Q1Maintained/extended

No quantitative revenue/EPS guidance ranges were provided.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2024 and Q4 FY2024)Current Period (Q1 FY2025)Trend
Demand/ordersQ3: destocking, capacity expansion; Regional Homes closed; financing JV launched . Q4: backlog +8.7% to $315.8M .Broader, stronger-than-expected orders across channels/geographies; backlog to $405M; 11-week lead times .Improving demand and order breadth.
Gross marginQ3: 25.3% (mix, ramp) . Q4: 18.3% GAAP; 24.8% adjusted (water intrusion) .26.2%; sequential stabilization on captive retail, price stability, lower inputs; variability tied to mix .Stabilized; mix-driven variability ahead.
Retail vs wholesale mixQ3: Building retail footprint .Captive retail outperformed; seasonally elevated in Q1; expected to ease later in year .Higher near-term retail mix, then normalize.
Builder-developer channelQ3: Added capacity (Bartow, FL) .Strongest sales channel; +40% YoY; accelerating builder sign-ups .Accelerating growth and partner additions.
CanadaQ3: Softer demand at higher rates . Q4: Canadian units 189 .Revenue ~$21M; units -24% YoY; macro/rate headwinds persist .Continued softness.
Financing JV (Champion Financing)Launched in Q3 .Gaining momentum; improving capture rates; JV to be consolidated (with minority interest) .Building traction; accounting consolidation.
Supply/input costsNoted pressures/mix impacts previously .Lower input costs aided sequential margin; wholesale price stability .Easing cost environment.
Weather/macro/tariffsN/A.Q2 sales could be flat/down q/q due to storms; election-year uncertainty noted .Near-term weather/macro timing risk.

Management Commentary

  • “Our first quarter results reflect good execution… enhancing our customer channels, advancing the integration of Regional Homes, and realizing the early benefits from our Champion financing joint venture.”
  • “Backlog… $405 million… lead times were, on average, 11 weeks versus 9 weeks… We are steadily increasing our production rates….”
  • “Regional Homes continues to overperform… targeting to hit the higher end of the $10 million to $15 million synergy range by the end of fiscal 2025….”
  • “Gross margins have returned to more normal levels… expect [them] to be impacted quarter-to-quarter by fluctuations in [captive retail vs independent] channel mix.”
  • “We have changed our corporate company name to Champion Homes Inc. This marks another milestone in our direct-to-consumer journey….” ; echoed in press release .

Q&A Highlights

  • Orders surprised to the upside across all channels and geographies (ex-Canada), with broad-based strength; retail performance benefited from Regional Homes integration and financing flywheel .
  • Q2 revenue outlook tempered: flat to slightly down sequentially driven by weather-related delivery timing; order pace remained strong through July .
  • Gross margin framework: variability of ~100–200 bps q/q depending on mix; Q1 margin benefited from stabilized wholesale pricing, higher captive retail, lower input costs, and synergy capture .
  • Retail mix was elevated in Q1 and expected to remain seasonally higher near-term before easing; ASP/margins will reflect wholesale vs retail mix and single- vs double-section mix and options content .
  • Financing rates in channel averaged ~9% during the quarter; JV consolidation will flow through revenue with minority interest for Triad’s 49% .

Estimates Context

  • S&P Global consensus data for Q1 FY2025 could not be retrieved at the time of analysis due to a provider request limit. As a result, we cannot present revenue/EPS versus-consensus comparisons for this quarter. Wall Street consensus from S&P Global was unavailable at the time of analysis.

Key Takeaways for Investors

  • Demand momentum is real: revenue +35% YoY to $0.628B, backlog +28% q/q to $405M, with 11-week lead times and production ramp underway—supporting sustained top-line through 2H barring externalities .
  • Margins have stabilized near 26% from a depressed Q4 base; however, expect 100–200 bps q/q volatility tied to channel/product mix and weather timing in Q2 .
  • Strategic flywheel gaining traction: Regional Homes synergies tracking to the high end of $10–$15M and Champion Financing is improving capture rates—both supporting mix/ASP and growth durability .
  • Canada remains a headwind (~$21M revenue; units -24% YoY), but U.S. retail and builder channels are offsetting weakness and driving share gains in strong geographies .
  • Capital allocation supportive: $20M buybacks in Q1 and authorization refreshed to $100M enhance downside support; balance sheet remains strong with $549M cash and minimal debt .
  • Near-term trading setup: watch Q2 weather impact and mix-driven margin variability; medium-term thesis hinges on retail/financing flywheel, builder-developer expansion, and synergy realization .

Appendix: Additional Data Points and Disclosures

  • Q1 FY2025 highlights: U.S. homes sold 6,538 (+35.7% YoY), ASP $91,700 (+3% YoY), Adjusted EBITDA $75.0M (11.9% margin), CFO effective tax rate ~22.5% .
  • SG&A elevated at $108.8M (17.3% of sales) including ~$7.9M earn-out fair value change and higher variable compensation .
  • Cash from operations was $84.6M in Q1; cash and equivalents of $548.9M at quarter end .
  • Q4 FY2024 water intrusion accrual of $34.5M weighed on GAAP gross margin (18.3%); adjusted gross margin 24.8% .
  • Corporate identity change: Skyline Champion Corporation is now Champion Homes, Inc. (NYSE: SKY) .