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Champion Homes, Inc. (SKY)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 delivered strong YoY growth: net sales up 32.9% to $616.9M, gross margin up 190 bps to 27.0%, and diluted EPS up 19% to $0.94, aided by higher ASPs, increased captive retail mix, and lower forest product input costs .
  • Sequentially, revenue slipped 1.7% vs Q1 (from $627.8M to $616.9M) as late-quarter hurricanes disrupted production, shipments, and retail closings; backlog rose to $427M (+$23M q/q), with lead times steady at ~11 weeks .
  • Adjusted EBITDA was $74.2M and margin 12.0%; SG&A rose y/y with Regional Homes consolidation, but fell q/q to $99.7M (16.2% of sales) as earn-out effects abated; cash ended the quarter at $570.2M, and the Board refreshed the $100M repurchase authorization; $20M was repurchased in Q2 .
  • Near-term outlook: management expects a mid-single-digit sequential revenue decline in Q3 FY2025 due to hurricane timing effects; medium-term demand seen as strong in affected regions due to rebuild needs; gross margins “stabilized” but will fluctuate with mix .
  • Consensus estimates from S&P Global were unavailable at time of writing due to data quota limits; comparisons to Street consensus cannot be provided (S&P Global data unavailable).

What Went Well and What Went Wrong

  • What Went Well

    • Robust volume/price: U.S. homes sold +31% to 6,357 and ASP +4.5% to $92,400; gross margin expanded 190 bps to 27.0% on pricing, captive mix, lower inputs, and higher utilization .
    • Synergy capture ahead of plan: Regional Homes integration “achieved the upper limit” of synergy targets, a year ahead of schedule; builder/developer and financing initiatives showed accelerating traction .
    • Backlog/cash: Backlog increased to $427M with steady ~11 week lead time; operating cash flow of ~$60M in the quarter and cash rose to $570M; $20M buyback executed and authorization refreshed to $100M .

  • What Went Wrong

    • Weather and timing: Hurricane impacts late in the quarter reduced production, shipments, and retail closings; management expects a mid-single-digit sequential revenue decline in Q3 .
    • SG&A intensity: SG&A rose y/y to $99.7M (16.2% of sales) with Regional Homes and higher variable comp; adjusted EBITDA margin contracted 60 bps y/y to 12.0% due to higher SG&A .
    • Canada softness: Canadian homes sold fell to 179; revenue was $22M amid higher rates and macro uncertainty; prior quarter also saw a 24% decline in units .

Financial Results

MetricQ2 FY2024Q4 FY2024Q1 FY2025Q2 FY2025
Net Sales ($USD Millions)$464.236 $536.363 $627.779 $616.877
Diluted EPS ($)$0.79 $0.05 $0.79 $0.94
Gross Margin (%)25.1% 18.3% 26.2% 27.0%
Operating Income ($USD Millions)$52.035 $7.755 $55.388 $66.678
Adjusted EBITDA ($USD Millions)$58.821 $53.148 $74.967 $74.242
Adjusted EBITDA Margin (%)12.7% 9.9% 11.9% 12.0%

Notes:

  • Adjusted metrics are Non-GAAP; reconciliations provided in filings .

Segment/KPI Trends

KPIQ4 FY2024Q1 FY2025Q2 FY2025
U.S. Homes Sold (units)5,652 6,538 6,357
ASP per U.S. Home ($)$89,800 $91,700 $92,400
Canada Homes Sold (units)189 167 179
Canada Revenue ($USD Millions)$23 $21 $22
Capacity Utilization (%)57% 58% 60%
Backlog ($USD Millions)$315.8 $405.0 $427.0
SG&A ($USD Millions)$90.605 $108.827 $99.655
SG&A as % of Sales16.9% 17.3% 16.2%
Cash & Equivalents ($USD Millions)$495.063 $548.933 $570.231
Operating Cash Flow ($USD Millions)N/A$84.616 ~$59.8
Share Repurchases ($USD Millions)N/A$20.0 $20.0

Actual vs Street Consensus (Q2 FY2025)

MetricActualConsensus
Revenue ($USD Millions)$616.877 Unavailable (S&P Global data quota exceeded)
Diluted EPS ($)$0.94 Unavailable (S&P Global data quota exceeded)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Top-line Revenue (seq. trend)Q3 FY2025Flat to down sequentially due to weather timing Mid-single-digit sequential decline due to hurricanes Lowered
Gross Margin OutlookQ3 FY2025“Returned to more normal levels”; fluctuation 100–200 bps q/q “Stabilized”; will fluctuate with mix q/q Maintained (tone more confident)
Backlog Lead TimeQ3 FY2025~11 weeks ~11 weeks (steady) Maintained
Share Repurchase AuthorizationOngoingReplenished to $100M (Aug 1, 2024) Refreshed to $100M (Oct 28, 2024) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024, Q1 FY2025)Current Period (Q2 FY2025)Trend
Direct-to-consumer & digital lead managementStrengthened digital lead system; higher conversion/capture rates; robust social media footprint Continued emphasis on digital with rising traffic; captive retail share supporting ASP/margins Improving execution and impact
Champion Financing JV (Triad)New consumer and floor plan programs; early traction; JV consolidation planned “Gained significant momentum”; flywheel effect aiding demand and capture Accelerating
Builder/developer channelFastest-growing segment; new awards in subdivisions; accelerating sign-ups “Extremely strong”; capture accelerated vs prior quarter Strengthening
Community REIT channelStarting to return; sequential ramp expected Strong order growth channel; optimism; timing cautious pre-election Gradual recovery with macro sensitivity
CanadaSoft demand; higher rates and economic uncertainty Units down; revenue $22M; ASP down on mix Ongoing headwind
Input costs (forest products)Modest inflation (~2%); pass-through manageable Lower input costs aided margins in Q2; less benefit expected in Q3 Tailwind moderating
Hurricanes/weatherQ1 guide flagged potential storms affecting Q2 Disrupted Q2 production/shipments; expected Q3 mid-single-digit sequential decline Near-term headwind; medium-term rebuild tailwind
Water intrusion liability (legacy)$34.5M charge; remediation plan; recoveries pursued No new impact in Q2; purchase accounting headwinds from Regional fading Legacy issue contained; PA headwinds subsiding
M&ARobust pipeline; Regional integration success gives confidence M&A remains top capital priority; repurchases ongoing Active pipeline

Management Commentary

  • “Champion Homes delivered another strong quarter, generating healthy margins and cash flow… our digital direct-to-consumer strategy, combined with our retail footprint expansion… positioned us to achieve significant growth in home sales compared to last year.” — Mark Yost, CEO .
  • “Gross margin expanded by 190 basis points… primarily due to higher average selling prices on new homes sold as our company-owned retail sales centers captured a greater share… and lower input costs, primarily from forest product materials.” — Laurie Hough, CFO .
  • “We achieved the upper limit of our synergy targets… just 1 year following the acquisition, a full year ahead of projected schedule.” — Mark Yost, CEO .
  • “We anticipate a modest decline in top line performance for the third quarter, projected to decrease by mid-single digits sequentially… largely attributable to the timing disruptions from the hurricanes.” — Mark Yost, CEO .

Q&A Highlights

  • Hurricanes: Management detailed lost production days and insurance binding suspensions; expect catch-up over this and possibly the next quarter depending on infrastructure rebuild pace .
  • Gross margin drivers: Lower forest product inputs, stronger captive retail mix; purchase accounting headwinds now “immaterial” going forward .
  • Orders/backlog around election: Organic order rates up 14% y/y; backlog likely moderates into December; election outcome and potential incentives could influence trajectory .
  • Builder/developer strength: Accelerating capture with small/mid-tier and large builders; expected to remain a strong growth channel .
  • FEMA potential: No FEMA orders yet despite widespread destruction; monitoring federal/state response .
  • Charter rates: Running ~8–8.5% for good credit; typically lag mortgages by ~6 months .
  • Capital allocation & M&A: M&A remains top priority; robust pipeline; continued repurchases (Q2 $20M; authority refreshed to $100M) .

Estimates Context

  • S&P Global consensus estimates for Q2 FY2025 were unavailable at time of writing due to data quota limits; therefore, we cannot assess beats/misses vs Street for revenue, EPS, or EBITDA (S&P Global data unavailable).

Where estimates may adjust:

  • With Q2 revenue and margin strength, captive retail mix, and backlog up into winter seasonality, models may raise medium-term gross margin run-rate but temper Q3 top-line assumptions for hurricane timing impacts; Canada likely remains conservative on units .

Key Takeaways for Investors

  • Healthy core trends: YoY strength in units, ASP, margins, and backlog underpin medium-term confidence; sequential softness is timing/weather-related rather than demand-driven .
  • Mix and margins: Captive retail share and lower input costs lifted margins; expect fluctuations with product and channel mix; purchase accounting headwinds fading — supportive for margin durability .
  • Rebuild catalyst: Hurricanes likely depress Q3 sequential revenue but set up demand tailwinds in the Southeast; monitor FEMA activity and dealer stocking behavior .
  • Builder/developer momentum: Accelerating capture should continue to drive volumes; watch for incremental wins and community REIT normalization through CY2025 .
  • Capital allocation: $570M cash, minimal debt, ongoing buybacks (authorization refreshed to $100M), and active M&A pipeline provide multiple levers for value creation .
  • Canada caution: Higher rates and uncertainty continue to weigh on Canadian volumes and ASP; keep model assumptions conservative .
  • Near-term trading: Expect volatility around Q3 headline (sequential decline) and macro/election narratives; medium-term thesis supported by backlog, mix, and strategic initiatives in DTC and financing .