SKY — Champion Homes, Inc.

Summary of Champion Homes Q1 2027 Earnings Call

1. Key Financial Results and Metrics

• Net Sales: Increased 1.3% year-over-year to $710.2 million.
• Units Sold: U.S. home sales rose 1.8% to 7,089 units; Canadian sales decreased from 250 to 185 units due to weather disruptions.
• Average Selling Price (ASP): Increased 0.6% to approximately $95,600.
• Adjusted Gross Profit: $179 million, with a gross margin of 25.2%.
• Adjusted Net Income: $48.3 million, or $0.88 per diluted share.
• Adjusted EBITDA: $73.6 million, with a margin of 10.4%.
• Cash Position: Ended the quarter with $784.7 million in cash and equivalents, up from $638.3 million at fiscal year-end.
• Share Repurchase: $50 million of common stock repurchased; total repurchased since fiscal 2025 is $330 million.

2. Strategic Updates and Business Highlights

• Acquisition of Homes Direct: Closed on August 1, 2026, enhancing the direct-to-consumer strategy.
• Manufacturing Capacity Utilization: Increased to 62%, up from 59% sequentially.
• Backlog: Increased to $421.8 million from $302 million year-over-year, with a lead time of approximately 9 weeks.
• Legislative Support: The 21st Century ROAD to Housing Act passed, promoting affordable housing and factory-built homes.
• Retail Channel Performance: Captive retail represented 35% of sales, with strong execution across 95 stores, including 11 Homes Direct locations.

3. Forward Guidance and Outlook

• Q2 Revenue Growth: Expected mid-single digits compared to the prior year, excluding Homes Direct.
• Adjusted Gross Margin: Anticipated to be in the range of 25% to 26%.
• SG&A Expenses: Expected to remain at 16% to 17% of sales, with ongoing investments in growth.
• Long-term Strategy: Focus on maintaining a strong balance sheet while investing in growth opportunities and shareholder returns.

4. Bad News, Challenges, or Points of Concern

• Canadian Sales Decline: Significant drop in units sold in Canada due to weather-related disruptions.
• ASP Pressure: Sequential decline in ASP attributed to a shift in sales mix towards lower-priced models and increased sales through independent retailers.
• Input Cost Inflation: Elevated material costs continue to impact margins, although inflation rates are slowing.
• Consumer Affordability Pressures: Ongoing economic challenges affecting consumer purchasing power and demand for housing.

5. Notable Q&A Insights

• Retail Traffic: Positive momentum in retail traffic and orders observed through May and June.
• Production Adjustments: Production is being ramped up in key markets based on backlog growth.
• ASP Dynamics: ASP fluctuations are largely driven by channel mix, with independent and community sales impacting overall pricing.
• Legislative Impact: The HUD rulemaking process post-legislation is expected to take time, with gradual impacts anticipated rather than immediate changes.
• SG&A Trends: Continued increase in SG&A expenses is expected, with a focus on long-term investments and operational efficiency.

This summary encapsulates the key points from the earnings call, highlighting both the positive developments and challenges faced by Champion Homes in Q1 2027.