Champion Homes, Inc. · NYSE:SKY
Champion Homes — Q3 2024 Earnings Presentation
28 slides from Champion Homes's earnings presentation, Feb 6, 2024
Slide 1: Investor Presentation December 2023
INVESTOR PRESENTATION DECEMBER 2023
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER FORWARD-LOOKING STATEMENTS Statements in this presentation and discussions that follow, including those about the industry shipments, demographic trends, financing availability, the potential results of operational improvements, strategic initiatives, and future market demand are intended
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: Skyline Champion is rethinking and transforming construction
Skyline Champion Corporation is rethinking and transforming construction across the United States and Western Canada. We are making it possible for people to have a home that is built better, built faster and is more attainable today. We achieve this by providing offsite solutions that are more inno
Slide 5: The Factory Built Home Advantage
THE FACTORY BUILT HOME ADVANTAGE HOMEOWNERSHIP PRODUCTION EFFICIENCY PRODUCT IMPROVEMENT LABOR COSTS AND INNOVATION AFFORDABILITY AND QUALITY Manufactured housing is the Centralized, indoor facilities Factory construction can Designed flexibility largest source of unsubsidized for home building proc
Slide 6: Corporate Responsibility
CORPORATE RESPONSIBILITY COMMUNITY SUSTAINABILITY HEALTH AND SAFETY GOVERNANCE OUTREACH ENERGY STAR certified homes Ongoing behavior-based safety and Encourage civic involvement at local Code of conduct certification required training programs with a goal of zero community level at all levels within
Slide 7: By the Numbers
SKYLINE (i CHAMPION BY THE NUMBERS
Slide 8: Fiscal 2023 Highlights
FISCAL 2023 HIGHLIGHTS $2.6 25,910 $98 20.4% 21% BILLION HOMES SOLD IN THOUSAND HUD MARKET SHARE ADJUSTED REVENUE NORTH AMERICA US AVERAGE HOME BASED ON EBITDA MARGIN 1 SELLING PRICE SHIPMENT DATA $493 $402 $7.00 31.4% $545 MILLION MILLION EARNINGS GROSS MILLION ADJUSTED FREE CASH FLOW 2 NET INCOME
Slide 9: Footprint
FOOTPRINT Corporate Headquarters Manufacturing Facility Retail Operation Logistics Terminal 48 7 OPERATI NG I DLE PLANTS FOR MANUFACTURI NG FUTURE GROWTH FACI LI TI ES 19 MANUFACTURING FACILITIES ARE IN THE 10 STATES WI TH THE HI GHEST NUMBER OF 9 73 MANUFACTURED HOME SHI PMENTS LOGISTICS RETAI L No
Slide 10: Segment and Revenue Breakdown
SEGMENT AND REVENUE BREAKDOWN % OF FISCAL 2023 REVENUE % OF US MANUFACTURING US HOUSING 88% HUD-CODED HOMES 2% LOGISTICS 92% 6% CANADIAN PARK 5% MODULAR 7% HOMES 2% 6% 92% 88% 7% 5% LOGISTICS, CANADIAN US HUD-CODED MODULAR PARK CORPORATE+ HOUSING HOUSING HOMES HOMES MODEL 10
Slide 11: Brands and Price Point
BRANDS AND PRICE POINT INDUSTRY-LEADING BRANDS COMPREHENSIVE PRODUCT OFFERING TYPE / STYLES SIZE / PRICE RANGE Single-section Single-family 400 – 3,100 sq. ft. / Multi-section Single-story $40 – $90 per sq. foot MANUFACTURED HOUSING Single-family 1,000 – 3,100 sq. ft. / Multi-section Single-story $6
Slide 12: Product Innovation
PRODUCT INNOVATION The Genesis off-site component approach to homebuilding gives builders, developers and housing innovators a near turnkey solution to affordable housing. Genesis alleviates the challenges of managing multiple sub-contractors and reduces risk of project delays with the factory-built
Slide 13: Opportunity
SKYLINE (i CHAMPION a ae OPPORTUNITY
Slide 14: Numerous Growth Drivers to Further Expand Our Market Leadership
BUSINESS STRATEGIES PRODUCTION AUTOMATION INCREASE OPERATING AND ENTERPRISE-WIDE CAPACITY AND MARGIN DIGITAL TECHNOLOGIES NUMEROUS GROWTH Refine product floor plan designs and Investment in production automation options to offer “designed flexibility” to our DRIVERS TO FURTHER technology to reduce m
Slide 15: Investments in Growth Strategies
INVESTMENTS IN GROWTH STRATEGIES PRODUCTION AUTOMATION ONLINE DIGITAL EXPERIENCE • Leverage industrial solutions to automate component level manufacturing • Build custom-designed automation technology to develop competitively differentiating technologies • Eliminates ergo stressors in physically dem
Slide 16: Acquisition of Regional Homes
ACQUISITION OF REGIONAL HOMES HIGHLIGHTS KEY STATISTICS • Founded in 2006, now the 4th largest company in the industry, with the largest independent retail footprint • Strong relationship with federal and state disaster relief housing programs in AL, FL, LA, MS, and TX • Headquartered in Flowood, Mi
Slide 17: Acquisition of Regional Homes: Transaction Rationale
ACQUISITION OF REGIONAL HOMES TRANSACTION RATIONALE • Combines #2 SKY with #4 Regional Homes enhancing combined procurement and national digital marketing leverage • Expands SKY’s market share in complimentary geographies including Alabama and Mississippi which are the #3 and #10 largest states for
Slide 18: Investment in ECN Capital
INVESTMENT IN ECN CAPITAL EQUITY INVESTMENT CHAMPION FINANCING • SKY purchased shares of ECN for $138M • Captive finance partnership owned 51% by o 27.450M preferred shares SKY / 49% by Triad Financial o 33.550M common shares • Provides tailored retail finance programs • SKY owns 19.9% interest in E
Slide 19: Investment in ECN Capital: Transaction Rationale
INVESTMENT IN ECN CAPITAL TRANSACTION RATIONALE • Drives growth by providing broader and more attractive financing options and services for Skyline Champions’ customers through captive finance company • Magnifies the benefits of our digital and direct-to-consumer strategic investments • Ability to o
Slide 20: HUD Industry Overview
HUD INDUSTRY OVERVIEW THE MANUFACTURED HOUSING INDUSTRY (HUD PRODUCT) HAS SIGNIFICANT UPSIDE AS FINANCING RETURNS 600 60% Aging installed HUD code product is generally sold to customers HUD is approx. 11% of single family housing starts base expected with either private land or REITs that fill parks
Slide 21: Market Demographic Trends
MARKET DEMOGRAPHIC TRENDS 60% OF THE US POPULATION CANNOT 2022 US HOUSEHOLD INCOME DISTRIBUTION (1) AFFORD A TRADITIONAL HOME (1) $200,000 $150,000 $84,200 36% 36% $100,000 28% $50,000 $0 20% 40% 60% 80% 95% Household Income Percentile Household Income Below $50,000 $50,000 to $100,000 Over $100,000
Slide 22: Customer Channels: Retail, Communities, Builder/Developer
CUSTOMER CHANNELS: RETAIL, COMMUNITIES, BUILDER/DEVELOPER MANUFACTURED HOUSING COMMUNITIES ARE KEY CUSTOMERS OF MANUFACTURERS (1) BUILDER/DEVELOPER 6% AGING INSTALLED BASE DRIVING REPLACEMENT NEED FISCAL 2023 OTHER 13% US MANUFACTURING CUSTOMER CHANNELS COMMUNITIES 33% 22M 43K+ 555K RETAIL 48% LAND-
Slide 23: Financing and Regulatory Environment
FINANCING AND REGULATORY ENVIRONMENT IMPROVING FINANCING CHALLENGING HISTORICAL EASING REGULATION AN ENVIRONMENT AS LENDERS FINANCING ENVIRONMENT ADDITIONAL TAILWIND RETURN TO MARKET Many manufactured homes are financed Fannie Mae has introduced MH HUD is actively assisting the industry by as a pers
Slide 24: Financial Highlights
SKYLINE (i) CHAMPION FINANCIAL HIGHLIGHTS
Slide 25: Five-Year Financial Summary
FIVE-YEAR FINANCIAL SUMMARY HISTORICAL($FINANCIALS in millions) COMMENTARY REVENUE Manufacturing footprint Increased average selling expansion since 2019 price due to pricing actions includes organic expansions Additional throughput in taken in response to rising in Leesville, LA, Navasota, existing
Slide 26: Cash Flow, Balance Sheet, & Capital Allocation
CASH FLOW, BALANCE SHEET, & CAPITAL ALLOCATION STRONG FREE CASH FLOW GENERATION (1)(2) FLEXIBLE BALANCE SHEET ($ in millions) 94% ($ in millions) 4/1/2023 $600 95% 91% 90% Cash and equivalents $ 747 $500 90% Revolver ($200mm) - 85% $400 $493 Industrial revenue bonds (3) 12 80% $300 Total Debt $ 12 7
Slide 27: Appendix
(A) CHAMPION
Slide 28: Reconciliation of Net Income to Adjusted EBITDA and Free Cash Flow
APPENDIX RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND FREE CASH FLOW ($ in thousands) 2019 2020 2021 2022 2023 Net income from continuing operations $ (58,208) $ 58,160 $ 84,899 $ 248,044 $ 401,802 Interest expense (income), net 3,290 1,401 3,248 2,512 (14,977) Income tax expense (bene