Champion Homes (NYSE:SKY) reported higher fourth-quarter sales and earnings as the manufactured housing company said it continued to outperform a softer industry backdrop, while also announcing a deal to expand its company-owned retail footprint in the western United States.
On the company’s fourth-quarter fiscal 2026 earnings call, President and CEO Tim Larson said Champion sold 26,622 homes during the fiscal year ended March 28, 2026, which he described as “the record number of homes sold since the company went public in 2018.” Larson said off-site built homes remain a compelling affordability solution as traditional U.S. home prices remain elevated.
“With the average price of a home in the U.S. hovering near $500,000, Champion Homes provides today's buyers with a high-quality, attractive brand-new home at a fraction of that cost,” Larson said.
Fourth-Quarter Sales Rise 4.6%
Champion reported fourth-quarter net sales of $621.3 million, up 4.6% from the prior-year period. Larson said the result came in above the company’s sales expectations, despite weather-related headwinds early in the quarter.
Executive Vice President, CFO and Treasurer Dave McKinstray said U.S. homes sold in the quarter declined 0.6% year over year to 5,908, while the full-year U.S. total reached 25,718 homes. The average selling price per U.S. home sold increased 4.6% to $98,600, driven by a shift toward more multi-section homes and higher prices through company-owned retail sales centers.
In Canada, homes sold increased to 243 from 230 a year earlier, with revenue benefiting from higher volume and favorable foreign exchange rates.
Adjusted gross profit increased 4.6% to $159.4 million, and adjusted gross margin was 25.7%, essentially flat from the prior year. Adjusted net income attributable to Champion rose 1% to $37.7 million, or $0.68 per diluted share, compared with $36.3 million, or $0.63 per diluted share, a year earlier. Adjusted EBITDA increased 6.3% to $55.9 million, with adjusted EBITDA margin edging up to 9% from 8.9%.
Backlog Improves Entering Spring Selling Season
Larson said manufacturing orders increased 7% year over year in the fourth quarter. Manufacturing backlog ended the period at $316 million, up $50 million, or about 19%, sequentially. Average backlog lead time was eight weeks, consistent with the prior quarter and the year-ago period.
Manufacturing capacity utilization, including idle facilities, was 59%, in line with the third quarter and slightly below 60% in the prior-year quarter. Larson said Champion continues to pace production with demand in each market.
Larson also noted that HUD industry shipments declined about 9% in the three months ended March 2026 compared with the prior year. He said Champion outperformed the broader market during that period, with shipments down only in the low single digits.
By channel, sales to independent retailers increased year over year, and Larson said ordering levels returned closer to normal in the fourth quarter after dealers worked through inventory earlier in the fiscal year. Captive retail sales also grew year over year and represented 37% of consolidated sales, compared with 35% a year earlier. Community channel sales declined in the fourth quarter, partly due to weather in northern markets, though Larson said full-year sales in the channel increased. Builder-developer sales also grew year over year.
Homes Direct Deal Expands Western Retail Footprint
Champion announced the acquisition of Homes Direct, a manufactured housing retailer with 11 locations in Arizona, California, Colorado, New Mexico and Oregon. Larson said the acquisition will bring Champion’s U.S. company-owned retail store count to 95 and expand its presence in the West.
Homes Direct has annualized revenue of approximately $70 million, and Champion expects the transaction to close in its fiscal second quarter. The company did not include the acquisition in its first-quarter outlook.
Larson said Homes Direct already works with Champion, including near the company’s plant in Chandler, Arizona, but still carries other brands. He said Champion expects to migrate more of those products to Champion’s own brands over time, similar to the company’s integration of Iseman Homes.
“The other great thing about Homes Direct is they have a really great customer experience and post-sale experience on the service side,” Larson said during the question-and-answer portion of the call.
Cash Flow, Buybacks and Triad Proceeds
Champion ended the fiscal year with $638.3 million in cash and cash equivalents. Full-year net cash provided by operating activities was $303.9 million, up 26.2% from $240.9 million in fiscal 2025.
During the fourth quarter, Champion repurchased and retired $50 million of its common stock, bringing full-year repurchases to $200 million. McKinstray said the board refreshed the company’s share repurchase authorization back to $150 million earlier in the month.
Larson also discussed the completed acquisition of ECN Capital, Triad’s parent company, by an investor group led by Warburg Pincus. Champion received CAD 189.1 million in proceeds from the sale of its 19% ownership interest in ECN during the current fiscal first quarter. Larson said Champion will continue its joint venture with Triad, which provides financing options for retailers and consumers.
Company Guides for Flat First-Quarter Revenue
Looking to the first quarter of fiscal 2027, McKinstray said Champion expects revenue to be approximately flat versus the prior year as the company manages through a challenging consumer environment. He cited affordability pressures, elevated CPI and pressure on consumer purchasing power.
Champion expects adjusted gross margin of 24.5% to 25.5% in the first quarter. McKinstray said inflationary pressures accelerated through the fourth quarter and into the first quarter, with cost increases in categories including lumber, oriented strand board, steel and petroleum-related products.
“While we're managing margins through efficiency and value, these initiatives lag input cost inflation,” McKinstray said. He also said channel and product mix are expected to create modest headwinds.
McKinstray said adjusted SG&A as a percentage of sales is expected to be in the 16% to 17% range, consistent with the company’s run rate after the Iseman acquisition. He also noted that ENERGY STAR tax credits expire July 1, which is expected to increase Champion’s fiscal 2027 effective tax rate by approximately 3 to 4 percentage points compared with fiscal 2026.
During the call, Larson said order activity so far in the spring selling season was encouraging, though he emphasized that the consumer and economic backdrop remains dynamic. He also pointed to legislative and regulatory developments, including the House passage of the 21st Century ROAD to Housing Act, as potential longer-term catalysts for manufactured housing.
About Champion Homes (NYSE:SKY)
Champion Homes, traded under the NYSE ticker SKY, operates as a leading provider of factory-built housing solutions in North America. The company specializes in the design, manufacture and sale of manufactured and modular homes, serving a broad spectrum of customers from first-time homebuyers to those seeking upscale residential properties. Champion Homes leverages vertically integrated operations to streamline production, ensuring consistent quality and cost efficiencies across its product lines.
The company's product portfolio encompasses single- and multi-section modular homes, manufactured home models, park models and select commercial modular buildings.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
The article "Champion Homes Q4 Earnings Call Highlights" first appeared on MarketBeat.
