Champion Homes, Inc. (SKY) - 10-K Summary
Business Context and Reporting Period
Company: Champion Homes, Inc. (formerly Skyline Champion Corporation)
Reporting Period: Fiscal Year ended March 28, 2026 (Fiscal 2026)
Industry: Factory-built housing (manufactured and modular homes, park model RVs, ADUs)
Operations: 46 manufacturing facilities (42 U.S., 4 Canada) and 84 retail sales centers. The company is the #1 modular builder and #2 manufactured home producer in the U.S. by unit volume.
Key Financial Metrics
| Metric (in millions) | Fiscal 2026 | Fiscal 2025 |
|---|---|---|
| Net Sales | $2,663.6 | $2,483.4 |
| Gross Profit | $704.3 | $664.0 |
| Gross Margin | 26.4% | 26.7% |
| Operating Income | $251.8 | $237.0 |
| Net Income (Attributable to CH) | $206.9 | $198.4 |
| Adjusted EBITDA | $308.2 | $285.1 |
| Cash from Operations | $303.9 | $240.9 |
| Cash & Equivalents (End of Period) | $638.3 | $610.3 |
| Long-Term Debt | $14.4 | $24.8 |
| Floor Plan Payable | $94.6 | $106.1 |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 7.3% to $2.66 billion, driven by a 1.8% increase in U.S. homes sold and a 4.8% increase in average selling price. Canadian sales grew 17.9%.
- Acquisitions: Acquired Iseman Homes (10 retail centers) in May 2025 for $26.8 million, contributing to U.S. retail growth.
- Margin Pressure: Gross margin decreased slightly to 26.4% from 26.7%, impacted by higher material/labor costs and an $8.4 million charge for water intrusion remediation, partially offset by $3.5 million in supplier reimbursements.
- Backlog: Manufacturing backlog decreased to $316.0 million from $343.4 million as production rates exceeded order rates.
- Capital Allocation: Repurchased $200.0 million of common stock during the fiscal year. Board authorized an additional $50.0 million in May 2026, bringing total remaining authorization to $150.0 million.
Outlook, Risks, and Unusual Items
- Water Intrusion Liability: A significant product liability issue involving water intrusion in homes built prior to fiscal 2022 resulted in an $8.5 million charge in Q4 2026. The total estimated liability is now $35.6 million. The company received $3.5 million in cash and $2.5 million in credits from the material distributor.
- Internal Controls: Remediated a material weakness in internal controls related to the Regional Homes retail operations acquired in 2023. Controls were deemed effective as of March 28, 2026.
- ECN Investment: The company's investment in ECN Capital Corporation was liquidated in April 2026 (Q1 Fiscal 2027) following ECN's acquisition by a private group. This will not impact the operations of the joint venture, Champion Financing.
- Key Risks: Exposure to raw material price volatility (lumber, steel), interest rate sensitivity affecting consumer financing, labor shortages, and potential goodwill impairment (17.1% of total assets).
Investor Verification Checklist
- Remediation Costs: Verify the accuracy of the $35.6 million water intrusion liability estimate and the timeline for future remediation expenses.
- Backlog Quality: Assess the risk of order cancellations given the backlog decline and current interest rate environment.
- Share Repurchase Impact: Monitor the execution of the $150 million remaining share repurchase authorization and its effect on liquidity.
- Margin Sustainability: Evaluate the company's ability to pass through inflationary costs (materials/labor) to maintain gross margins above 26%.
- Canadian Operations: Review the impact of foreign exchange rates on the Canadian segment, which represents ~4% of sales but has significant asset exposure.