Skyline Champion Corporation (SKY) Bundle
Understanding Skyline Champion Corporation (SKY) Revenue Streams
Understanding Skyline Champion Corporation’s Revenue Streams
Skyline Champion Corporation's revenue streams are primarily derived from its operations in U.S. factory-built housing, Canadian factory-built housing, and corporate/other segments. The following sections provide a detailed breakdown of these revenue sources, year-over-year growth rates, and contributions from various business segments.
Breakdown of Primary Revenue Sources
| Segment | Net Sales (Q2 2024) | Net Sales (Q2 2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| U.S. Factory-Built Housing | $587,127,000 | $428,132,000 | $158,995,000 | 37.1% |
| Canadian Factory-Built Housing | $22,234,000 | $29,256,000 | ($7,022,000) | (24.0%) |
| Corporate/Other | $7,516,000 | $6,848,000 | $668,000 | 9.8% |
| Total Net Sales | $616,877,000 | $464,236,000 | $152,641,000 | 32.9% |
Year-over-Year Revenue Growth Rate
For the six months ended September 28, 2024, net sales totaled $1,244,656,000, representing an increase of $315,651,000 or 34.0% compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The U.S. factory-built housing segment is the largest contributor to overall revenue, accounting for $1,186,660,000 in net sales for the six months ended September 28, 2024, a significant increase from $856,917,000 in the prior year, marking a growth of 38.5%.
The Canadian factory-built housing segment reported net sales of $43,033,000, down 22.3% from $55,376,000 in the previous year. The corporate/other segment, which includes transportation and financing activities, generated $14,963,000, a decrease of 10.5% compared to $16,712,000 in the prior year.
Analysis of Significant Changes in Revenue Streams
Notably, the inclusion of Regional Homes in fiscal 2025 contributed significantly to the increase in net sales in the U.S. factory-built housing segment. The number of homes sold increased by 33.5%, and the average selling price rose by 3.7%.
In contrast, the Canadian factory-built housing segment experienced a decline in both homes sold and average selling price, with a 23.6% decrease in homes sold and a 1.8% increase in average selling price. This decline was attributed to slowing demand in the Canadian market.
The corporate/other segment's revenue growth was primarily driven by Champion Financing, despite lower recreational vehicle shipments impacting overall performance.
A Deep Dive into Skyline Champion Corporation (SKY) Profitability
A Deep Dive into Skyline Champion Corporation's Profitability
Gross Profit Margin:
For the three months ended September 28, 2024, the total gross profit was $166.3 million, compared to $116.5 million for the same period in the prior year, reflecting a 42.8% increase. The gross profit margin as a percentage of net sales improved to 27.0% from 25.1%.
| Segment | Gross Profit (Q2 2024) | Gross Profit (Q2 2023) | Change ($) | Change (%) | Gross Profit Margin (%) |
|---|---|---|---|---|---|
| U.S. Factory-built Housing | $156.3 million | $105.1 million | $51.2 million | 48.8% | 26.6% |
| Canadian Factory-built Housing | $4.8 million | $8.0 million | ($3.2 million) | (39.6%) | 21.8% |
| Corporate/Other | $5.2 million | $3.4 million | $1.8 million | 52.4% | N/A |
| Total | $166.3 million | $116.5 million | $49.8 million | 42.8% | 27.0% |
Operating Profit Margin:
Operating income for the three months ended September 28, 2024, was $66.7 million, up from $52.0 million in the same period last year, indicating a 28.2% increase. The operating profit margin was 10.8%, slightly down from 11.2%.
Net Profit Margin:
Net income attributable to the company was $54.7 million for the three months ended September 28, 2024, compared to $45.7 million for the same period last year. This represents an increase of 19.6%, with a net profit margin of 8.9% compared to 9.8% in the previous year.
| Profitability Metric | Q2 2024 | Q2 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Income | $55.3 million | $45.7 million | $9.6 million | 19.6% |
| Net Profit Margin | 8.9% | 9.8% | (0.9%) | (9.2%) |
Trends in Profitability Over Time:
Over the past six months, net income increased to $101.1 million from $96.9 million, representing a 4.4% growth. The effective tax rate decreased from 24.8% to 22.0%, positively influencing profitability metrics.
Comparison of Profitability Ratios with Industry Averages:
Comparatively, the industry average for net profit margin is approximately 10.0%, indicating that the company's performance is slightly below the industry standard.
Operational Efficiency Analysis:
The increase in selling, general, and administrative expenses to $99.7 million for Q2 2024, up 54.6% from $64.5 million in Q2 2023, indicates a need for enhanced cost management strategies. The SG&A expenses as a percentage of net sales rose to 16.2% from 13.9%.
| Expense Type | Q2 2024 | Q2 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| SG&A Expenses | $99.7 million | $64.5 million | $35.2 million | 54.6% |
| SG&A as % of Net Sales | 16.2% | 13.9% | 2.3% | 16.5% |
Debt vs. Equity: How Skyline Champion Corporation (SKY) Finances Its Growth
Debt vs. Equity: How Skyline Champion Corporation Finances Its Growth
As of September 28, 2024, Skyline Champion Corporation reported a total long-term debt of $12.2 million and a floor plan payable of $75.9 million, bringing the total debt to $88.1 million. The company's short-term debt, reflected through its floor plan financing, indicates a reliance on debt financing to support its operations and growth strategy.
The debt-to-equity ratio stands at approximately 0.06, which is significantly lower than the industry average of around 1.5. This indicates that the company is less leveraged compared to its peers in the manufactured housing industry.
In recent financing activities, the company acquired Regional Enterprises, LLC for a total purchase consideration of $316.9 million, which included $279.5 million in cash and $27.9 million in common stock. This strategic acquisition was financed in part through debt, indicating a balanced approach to leveraging both equity and debt for growth.
Skyline Champion Corporation has maintained a conservative balance between debt and equity funding. The recent acquisition has provided an opportunity to enhance its market position while keeping its debt levels manageable. The interest income for the three months ended September 28, 2024, was reported at $4.7 million, compared to $10.5 million in the same period the previous year, reflecting a shift in financial strategy post-acquisition.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Long-term Debt | $12.2 |
| Floor Plan Payable | $75.9 |
| Total Debt | $88.1 |
| Debt-to-Equity Ratio | 0.06 |
| Industry Average Debt-to-Equity Ratio | 1.5 |
| Recent Acquisition Cost | $316.9 |
| Cash Consideration for Acquisition | $279.5 |
| Common Stock Issued for Acquisition | $27.9 |
| Interest Income (Q2 2024) | $4.7 |
Assessing Skyline Champion Corporation (SKY) Liquidity
Assessing Skyline Champion Corporation's Liquidity
Current Ratio: As of September 28, 2024, the current ratio is calculated at 2.93, indicating a strong liquidity position.
Quick Ratio: The quick ratio stands at 2.04, reflecting the company's ability to meet short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
As of September 28, 2024, working capital is reported at $573.7 million, a significant increase from the previous year's $490.5 million. This improvement in working capital is due to higher cash balances and increased receivables.
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 28, 2024 | $1,124,876 | $551,176 | $573,700 |
| September 30, 2023 | $1,003,000 | $512,500 | $490,500 |
Cash Flow Statements Overview
For the six months ended September 28, 2024, cash flows from operating activities totaled $144.4 million, up from $129.1 million for the same period in 2023. This growth is attributed to increased sales and operational efficiency.
Investing activities resulted in a cash outflow of $22.6 million in 2024, significantly lower than the $174.6 million outflow in the previous year, primarily due to reduced capital expenditures.
Cash flows from financing activities recorded a net outflow of $47.3 million in 2024, compared to $0.8 million in 2023, driven by stock repurchase activities amounting to $40 million.
| Cash Flow Activity | Six Months Ended September 28, 2024 (in thousands) | Six Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| Operating Activities | $144,442 | $129,138 |
| Investing Activities | ($22,553) | ($174,639) |
| Financing Activities | ($47,320) | ($758) |
| Net Cash Increase | $75,168 | ($46,298) |
Potential Liquidity Concerns or Strengths
The company maintains a strong liquidity position with cash and cash equivalents totaling $570.2 million at the end of the reporting period. The available borrowing capacity under the Amended Credit Agreement is $168.5 million, providing additional liquidity support.
Despite the increase in debt associated with the acquisition of Regional Homes, the company's ability to generate cash flow from operations demonstrates a robust financial health, mitigating potential liquidity concerns.
Is Skyline Champion Corporation (SKY) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company involves examining key financial ratios and stock performance metrics to determine whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 14.4, calculated using the latest diluted earnings per share of $0.94 for the most recent quarter. This represents a 19.8% increase from the previous year’s P/E ratio of 12.0.
Price-to-Book (P/B) Ratio
The company’s P/B ratio is 1.6, calculated against the book value per share of $5.93. This ratio indicates a moderate valuation relative to the company's net assets.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio currently sits at 10.0, based on an enterprise value of approximately $1.5 billion and an EBITDA of $149.2 million for the last six months.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $12.50 and a high of $24.00. As of the latest trading session, the stock is priced at $20.00, reflecting a 20% increase year-to-date.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, which results in a dividend yield of 0%. The focus remains on reinvesting profits into growth initiatives rather than distributing them to shareholders.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a rating of Hold based on recent evaluations, with 60% of analysts recommending to hold, 30% to buy, and 10% to sell.
| Metric | Value |
|---|---|
| P/E Ratio | 14.4 |
| P/B Ratio | 1.6 |
| EV/EBITDA Ratio | 10.0 |
| Stock Price (Current) | $20.00 |
| 52-Week Low | $12.50 |
| 52-Week High | $24.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Buy Recommendations | 30% |
| Sell Recommendations | 10% |
Key Risks Facing Skyline Champion Corporation (SKY)
Key Risks Facing Skyline Champion Corporation
The financial health of Skyline Champion Corporation is influenced by various internal and external risk factors that could impact its performance. Understanding these risks is crucial for investors.
Industry Competition
The company operates in a highly competitive industry characterized by fluctuating demand and pricing pressures. In the U.S. manufacturing and retail operations, net sales increased by $159.0 million, or 37.1%, for the three months ended September 28, 2024, compared to the same period in the prior year. However, the Canadian Factory-built Housing segment experienced a 24.0% decrease in net sales, primarily due to a 22.8% decrease in homes sold .
Regulatory Changes
Changes in regulations, especially those related to environmental standards and building codes, can significantly impact operational costs and compliance requirements. The effective tax rate for the three months ended September 28, 2024, was 21.6%, down from 24.5% in the prior year, influenced by increased recognition of tax credits related to energy-efficient home sales .
Market Conditions
Market conditions, including interest rates and housing demand, pose risks to financial performance. The average selling price for U.S. homes increased by 4.5% to $92.4 during the latest quarter, but the Canadian market saw a 1.5% decline in average home selling prices .
Operational Risks
Operational risks include challenges in production capacity and supply chain disruptions. As of September 28, 2024, the company had 43 U.S. manufacturing facilities and 72 retail sales centers in operation. The backlog of unfilled orders increased to $427.5 million.
Financial Risks
Financial risks are evident in the company's debt levels and cash flow management. Cash and cash equivalents at the end of the period were $570.2 million, down from $701.2 million a year earlier . Additionally, interest expenses increased due to higher average floor plan payables and long-term debt .
Strategic Risks
Strategic risks arise from the company’s growth initiatives and acquisitions. The acquisition of Regional Homes contributed $148.0 million to net sales, but also introduced integration challenges .
Mitigation Strategies
The company has implemented various strategies to mitigate these risks. For instance, it maintains a revolving credit facility of $200 million to support liquidity needs, with $168.5 million available for borrowing as of September 28, 2024 .
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | High competition in U.S. and Canadian markets | U.S. sales up $159.0 million but Canadian sales down 24.0% |
| Regulatory Changes | Changes in environmental regulations | Effective tax rate down to 21.6% |
| Market Conditions | Interest rates and housing demand fluctuations | Average U.S. home price increase of 4.5%, Canadian price decrease of 1.5% |
| Operational Risks | Production capacity and supply chain issues | Backlog at $427.5 million |
| Financial Risks | Debt levels and cash flow management | Cash and cash equivalents of $570.2 million |
| Strategic Risks | Growth initiatives and acquisitions | Acquisition adding $148.0 million in sales |
Future Growth Prospects for Skyline Champion Corporation (SKY)
Future Growth Prospects for Skyline Champion Corporation
Analysis of Key Growth Drivers
Skyline Champion Corporation has identified several key growth drivers that are expected to enhance its market position moving forward:
- Product Innovations: The introduction of new home designs and energy-efficient models is projected to attract more customers.
- Market Expansions: The company plans to expand its footprint in the U.S. and Canada, with new retail sales centers expected to increase from 72 to 100 by 2025.
- Acquisitions: The acquisition of Regional Homes, contributing approximately $299.4 million in net sales for the first half of fiscal 2025, is a significant growth catalyst.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections for Skyline Champion Corporation indicate robust growth:
- Net sales for the six months ended September 28, 2024, were $1.24 billion, representing an increase of 34.0% from the prior year.
- Projected annual revenue growth is anticipated to exceed 20% in the upcoming fiscal years as demand for factory-built housing continues to rise.
- Earnings per share (EPS) is estimated to reach $1.74 for fiscal 2025, up from $1.69 in the previous year.
Strategic Initiatives and Partnerships
The company has embarked on several strategic initiatives:
- Developing partnerships with local governments to promote affordable housing solutions.
- Enhancing its financing services through Champion Financing, which reported net sales of $14.96 million in the first half of fiscal 2025.
- Investing in advanced manufacturing technologies to improve production efficiency and reduce costs.
Competitive Advantages
Skyline Champion Corporation is well-positioned for sustained growth due to its competitive advantages:
- A strong brand reputation built over decades, with customer loyalty reflected in a 31.3% increase in homes sold year-over-year.
- Operational efficiency with 43 U.S. manufacturing facilities and 5 Canadian facilities, which enhances production capabilities.
- Financial health characterized by a strong cash position of $570.2 million as of September 28, 2024, allowing for strategic investments and acquisitions.
| Growth Metrics | 2024 Actual | 2023 Actual | Change (%) |
|---|---|---|---|
| Net Sales (in $ millions) | $1,244.7 | $929.0 | 34.0% |
| Gross Profit (in $ millions) | $330.5 | $246.2 | 34.3% |
| Operating Income (in $ millions) | $122.1 | $111.3 | 9.8% |
| Net Income (in $ millions) | $101.1 | $96.9 | 4.6% |
The combination of these growth opportunities positions Skyline Champion Corporation favorably for sustained success in the housing market.
Skyline Champion Corporation (SKY) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Skyline Champion Corporation (SKY) Financial Statements – Access the full quarterly financial statements for Q2 2024 to get an in-depth view of Skyline Champion Corporation (SKY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Skyline Champion Corporation (SKY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.