Champion Homes, Inc. · NYSE:SKY
Champion Homes — Skyline Champion — Investor Presentation (June 2018)
28 slides from Champion Homes's investor presentation, Jun 25, 2018
Slide 1: June 2018 Investor Presentation
June 2018 Investor Presentation CONFIDENTIAL § JUNE 2018 DRAFT vF 6/23/2018 Exhibit 99.1
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, synergies resulting from the combination of the operations o
Slide 3: Today's presenters
Today’s presenters Laurie Hough Executive Vice President & Chief Financial Officer Keith Anderson Chief Executive Officer Appointed CEO of Champion Homes in January 2015 Has served on Champion’s Board of Directors since 2013 Previously served as EVP and COO of Walter Investment and President and CEO
Slide 4: Company overview & key highlights
Company overview & key highlights
Slide 5: Skyline Champion snapshot
Segment mix (pro forma net sales) skyline champion snapshot Note: Financials exclude synergies. (1) Share of manufactured housing market segment based on units produced. (2)See reconciliation in Appendix. Excludes synergies. (3)Expected synergies are based on management estimates. There is no assura
Slide 6: A combination of two market leading platforms
A combination of two market leading platforms U.S. Market Share / position(1) 14% / #2 3% / #4 17% / #2 Historical Financials Products / Services Overview Segment Mix(5) (1)Share of manufactured housing market segment and position based on 2017 units produced. (2)See reconciliation in Appendix. (3)R
Slide 7: Complementary manufacturing footprint in the United States and Canada
#2 position in U.S.(1) Leading position in Western Canada(2) 7 Idle manufacturing plants to support future growth 21 Retail locations in 7 states 10 Logistics terminals 36 Operating manufacturing facilities Complementary manufacturing footprint in the United States and Canada Note: Facilities stats
Slide 8: Powerful combination of Champion Homes & Skyline: key investment highlights
Powerful combination of champion homes & Skyline Key investment highlights Manufactured Housing Industry Has Significant Upside #2 Manufactured Housing Position in the United States(1) United States and Canada Footprint Concentrated in Attractive, Large and Fast-Growing Markets Scalable Platform For
Slide 9: Manufactured Housing Industry Has Significant Upside
Manufactured Housing Industry Has Significant Upside 1 (1) Long-term average for MH shipments: 224 Sub-prime boom and easy access to financing increased demand for site-built homes while access to financing for manufactured housing declined Prolonged period of extraordinarily low interest rates 2018
Slide 10: Structural advantages of manufactured homes vs. site-built homes
STRUCTURAL ADVANTAGES and opportunities of manufactured homes VS SITE-BUILT HOMES Affordability of MH vs. site-built Price premium between the average new site-built home and manufactured home has increased ~$100k between 2011 and 2017 Avg. price spread of new site-built vs. manufactured home To ref
Slide 11: Favorable US population characteristics
Favorable US population characteristics Manufactured housing sector underpinned by supportive demographic trends Site-Built Home Manufactured Home Median Net Worth (000s) $112.5 $26.0 Median Annual Income (000s) $50.6 $26.4 Median Assets (000s) $213.2 $44.7 Median Debt (000s) $30.3 $5.0 Median Age o
Slide 12: Increasing investment by manufactured housing communities
increasing investment by manufactured Housing Communities Source:Manufactured Housing Institute, mobilehomeuniversity.com and management estimates. (1)Data from 2017 Manufactured Housing Facts Industry Overview except when noted. (2)Data from National Communities Council and as of May 2017. Manufact
Slide 13: Improving financing options and deregulation
Improving financing options and deregulation 2 Improving financing options There has been limited financing and liquidity for manufactured homes after financial institutions exited the market from 1999 through 2002 Some financial institutions have recently announced new financing programs for manufa
Slide 14: Major manufactured housing market players by number of homes produced
Major manufactured housing market players by number of homes produced #2 Manufactured housing position in the United States(1) 3 U.S. manufactured housing market share The largest publicly traded manufactured home builder(2) #2 position in the manufactured housing industry(1) Top three position in m
Slide 15: US and Canada footprint concentrated in attractive, fast-growing markets
United States and CanadA footprint concentrated in attractive, large and fastest-growing markets 12 manufacturing facilities in the top 10 states for number of manufactured home shipments 9 manufacturing facilities in the top 10 fastest growing states for manufactured home shipments 4 Fastest growin
Slide 16: Comprehensive product offering with leading brands and enhanced capabilities
Comprehensive product offering with leading brands and enhanced capabilities Comprehensive product offering… …with industry-leading brands Manufactured housing Modular housing Commercial / Other Park …and a portfolio of value-added services Offers a wide selection of manufactured & modular homes and
Slide 17: Comprehensive product offering with leading brands (cont'd)
Comprehensive product offering with leading brands and enhanced capabilities (cont’d) Offers a wide selection of manufactured & modular homes and park models at retail locations across the Southeast United States Provides an avenue to sell directly to prospective homeowners 21 retail sales centers i
Slide 18: Scalable platform for future growth
SCALABLE Platform for future growth M&A Opportunity to enter new geographies through bolt on acquisitions ~20% of industry fragmented into 40-50 players Significant value creation from synergies Track-record of executing accretive acquisitions – IBS, Mansfield, Benton 6 Expand retail presence to dri
Slide 19: Significant synergy and revenue growth opportunities
Significant synergy and revenue growth opportunities 7 Mansfield integration example In April 2017, Champion purchased a manufactured housing facility in Mansfield, Texas from Skyline Integrated Champion’s ERP systems within two months of acquisition Optimized product segmentation by shifting produc
Slide 20: Operational initiatives and future margin expansion
Operational initiatives and future margin expansion 8 SKU reduction and sourcing standardization Procure more materials centrally, leveraging standard materials across plants Reduce the number of SKUs purchased through standardization Value engineer products Improve value to the customer through mat
Slide 21: Financial overview
Financial overview
Slide 22: Historical financial performance
Historical financial performance Historical financials Commentary Manufacturing footprint expansion since 2016 including adding plants in Topeka, IN; Benton, KY; Liverpool, PA Additional throughput in existing facilities due to standardization and product rationalization Increase in average selling
Slide 23: Impressive growth and ROIC metrics vs broader building products market
Impressive growth and ROIC metrics vs broader building products market Source:Based on financial information included in the respective company’s periodic and annual reports. Note:Financials are pro forma for acquisitions where relevant, including the combination of the operations of Skyline and Cha
Slide 24: Strong cash flow and balance sheet to support future growth
Strong cash flow and balance sheet to support future growth Strong free cash flow generation(1) Flexible balance sheet Commentary Operating leverage to drive improved free cash flow Further manufacturing efficiencies Minimal capex as a % of sales $100 million revolving credit facility provides liqui
Slide 25: Appendix
Appendix
Slide 26: Adjusted EBITDA reconciliation – Pro Forma
Adjusted EBITDA reconciliation – Pro Forma Where is backup for this? Note:Presented on a pro forma basis for the year ended 3/31/2018. Excludes synergies.
Slide 27: Adjusted EBITDA reconciliation – Champion
Adjusted EBITDA reconciliation – Champion Where is backup for this? Note:For the fiscal years ended 3/31. (1)Defined as Adj. EBITDA less capex. (1)
Slide 28: Adjusted EBITDA reconciliation – Skyline
Adjusted EBITDA reconciliation – Skyline Where is backup for this? (1)For the fiscal years ended 5/31. (2)Defined as Adj. EBITDA less capex. (2)