10q10k10q10k.net

What changed in Champion Homes, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Champion Homes, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+276 added−261 removedSource: 10-K (2024-05-29) vs 10-K (2022-05-24)

Top changes in Champion Homes, Inc.'s 2024 10-K

276 paragraphs added · 261 removed · 183 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

69 edited+24 added−12 removed42 unchanged
Biggest changeIncreasing the Operating Capacity and Profitability of our Existing Facilities We are currently focused on a number of ongoing operational initiatives to further enhance our operating margins and increase production capacity including: • refining our product floor plan designs and options to offer “designed flexibility” to our customers; • executing on continuous improvement initiatives related to procurement, operational and labor cost saving opportunities; enhancing the efficiency and sustainability of our products through value-adding material substitution; and • standardizing our manufacturing processes and employing metrics-driven accountability measures across all of our facilities.
Biggest changeIn connection with executing this business strategy, we are focused on the following four initiatives: • Increasing the operating capacity and profitability of our existing facilities; • implementing production automation and enterprise-wide digital technology; • continuing a balanced organic and acquisition-based growth strategy; and • broadening our offerings to include certain financing products to customers. 3 Increasing the Operating Capacity and Profitability of our Existing Facilities We are currently focused on a number of ongoing operational initiatives to further enhance our operating margins and increase production capacity including: • Refining our product floor plan designs and options to offer “designed flexibility” to our customers; • executing continuous improvement initiatives related to production, procurement and labor cost saving opportunities; • enhancing the efficiency and sustainability of our products through value-adding material substitution; and • standardizing our manufacturing processes and employing metrics-driven accountability measures across all of our facilities.
Star Fleet has strong relationships with its customer base, which includes some of the largest manufactured housing companies (including our own factory-built housing operations), and recreational vehicle manufacturers in the U.S. Market Overview General. Since July 2020, U.S. and Canadian housing demand has been robust.
Star Fleet has strong relationships with its customer base, which includes some of the largest manufactured housing companies (including our own factory-built housing operations) and recreational vehicle manufacturers in the U.S. Market Overview General. Since July 2020, U.S. and Canadian housing demand has generally been robust.
Available Information Our website address is www.skylinechampion.com and we make available, free of charge, on or through our website all of our periodic reports, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and current reports on Form 8-K, as soon as reasonably practicable after we file such reports with the SEC. 11
Available Information Our website address is www.skylinechampion.com and we make available, free of charge, on or through our website all of our periodic reports, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and current reports on Form 8-K, as soon as reasonably practicable after we file such reports with the SEC. 10
Under a typical floor plan financing arrangement, an independent financial institution specializing in 9 this line of business provides the retailer with a loan for the purchase price of the home and maintains a security interest in the home as collateral.
Under a typical floor plan financing arrangement, an independent financial institution specializing in this line of business provides the retailer with a loan for the purchase price of the home and maintains a security interest in the home as collateral.
Each of our locations performs regular safety audits to ensure that proper safety policies are in place and appropriate safety training is provided. In addition to training and development, we measure and report out on monthly safety metrics and regularly review our safety performance with our Board of Directors.
Each of our locations performs regular safety audits to ensure that proper safety policies are in place and appropriate safety training is provided. In addition to training and development, we measure and report monthly safety metrics and regularly review our safety performance with our Board of Directors.
The Fannie Mae DTS plan also includes an objective to explore opportunities to facilitate financing of loans secured by manufactured homes tiled as real property in certain manufactured housing communities. Expansion of the secondary market for home-only lending through the GSEs could provide further demand for housing, as lending options would likely become more available to homebuyers.
The Fannie Mae DTS plan also includes an objective to explore opportunities to facilitate financing of loans secured by manufactured 9 homes titled as real property in certain manufactured housing communities. Expansion of the secondary market for home-only lending through the GSEs could provide further demand for housing, as lending options would likely become more available to homebuyers.
Our captive retail distribution enhances the reach of our factory-built housing products directly to the homebuyer. 8 Each of our full-service retail sales centers has a sales office and a variety of model homes of various sizes, floor plans, features, and prices that are displayed in a residential setting with sidewalks and landscaping.
Our captive retail distribution enhances the reach of our factory-built housing products directly to homebuyers. Each of our full-service retail sales centers has a sales office and a variety of model homes of various sizes, floor plans, features, and prices that are displayed in a residential setting with sidewalks and landscaping.
We provide a variety of Company sponsored healthcare programs, including health, dental, and vision, that allow employees to manage their and their family's health and wellbeing. We expect each employee to follow our safety standards and protocols. Our corporate Environmental Health and Safety (“EHS”) team works to benchmark and implement EHS best practices at our plants.
We provide a variety of Company sponsored healthcare programs, including health, dental, and vision, that allow employees to manage their and their family's health and wellbeing. We expect each employee to follow our safety standards and protocols. Our Environmental Health and Safety (“EHS”) team works to benchmark and implement EHS best practices across our plants.
The efficiency of the assembly-line process, protection from the weather, and favorable pricing of materials resulting from our substantial purchasing power enables us to produce homes more quickly and often at a lower cost than a conventional site-built home of similar quality. The production schedules of our homebuilding facilities are based upon customer orders.
The efficiency of the assembly-line process, protection from the weather, and favorable pricing of materials resulting from our substantial purchasing power enables us to produce homes more quickly, with less material waste and often at a lower cost than a conventional site-built home of similar quality. The production schedules of our homebuilding facilities are based upon customer orders.
Additional information on our Corporate Governance policies can be found in our Proxy Statement filed with the SEC. 6 Human Capital and Diversity The Skyline Champion team manages the business in accordance with the Company’s Core Operating Principles: • Build and develop exceptional teams • Create a safe work environment • Build strong relationships • Take pride in our craftsmanship • Act with integrity and respect • Be open and honest • Run the business like it is your own We appreciate each member of the Skyline Champion team and the unique skills and diversity of thought each provides to the overall success of the Company.
Additional information on our Corporate Governance policies can be found in our Proxy Statement filed with the SEC. 5 Human Capital and Diversity The Skyline Champion team manages our business in accordance with the Company’s Core Operating Principles: • Build and develop exceptional teams • Create a safe work environment • Build strong relationships • Take pride in our craftsmanship • Act with integrity and respect • Be open and honest • Run the business like it is your own We appreciate each member of the Skyline Champion team and the unique skills and diversity of thought that each employee contributes to the overall success of the Company.
Many of our manufacturing facilities participate locally to support programs such as Habitat for Humanity and other local charities as well as work-study programs with local community colleges and high schools. Skyline Champion is committed to good corporate governance.
Many of our manufacturing facilities participate locally to support programs such as Habitat for Humanity and other local charities as well as work-study programs with local community colleges and high schools. Skyline Champion is committed to ensuring sound corporate governance.
We believe that we maintained the following leading positions in the factory-built housing industry in the United States and western Canada (based on units) in calendar year 2021: • Number two position in the manufactured housing market segment in the United States • Number one modular builder in the United States • A leading position in western Canada • A leading position in park model RV sales We believe our market leading positions are driven by our comprehensive product offering, strong brand reputation, broad manufacturing footprint, and our complementary retail and logistics businesses.
We believe that we maintained the following leading positions in the factory-built housing industry in the United States and western Canada (based on units) in calendar year 2023: • Number two position in the manufactured housing segment in the United States • Number one modular builder in the United States • A leading position in western Canada • A leading position in park model RV sales We believe our leading positions are driven by our comprehensive product offering, strong brand reputation, broad manufacturing footprint, and our complementary retail, construction services, and logistics businesses.
Customers may purchase a home from an inventory of homes maintained at the location, including a model home, or may order a home that will be built at a manufacturing facility. Our retail organization provides industry leadership with the expertise to be responsive to local economic conditions and ultimately provide affordable homes to value-conscious homebuyers.
Customers may purchase a home from an inventory of homes maintained at the location, including a model home, or may order a home that will be built to their specifications. Our retail organization provides industry leadership with the expertise to be responsive to local economic conditions and ultimately provide affordable homes to value-conscious homebuyers.
According to statistics published by the Institute for Building Technology and Safety ("IBTS") and the United States Department of Commerce, Bureau of the Census, for the 2021 calendar year, manufactured housing wholesale shipments of homes constructed in accordance with the HUD code accounted for an estimated 10% of all new single-family homes starts.
According to statistics published by the Institute for Building Technology and Safety ("IBTS") and the United States Department of Commerce, Bureau of the Census, for the 2023 calendar year, manufactured housing wholesale shipments of homes constructed in accordance with the HUD code accounted for an estimated 9% of all new single-family homes starts.
There are five collective bargaining agreements (one for each Canadian manufacturing facility) and each has separate expiration dates. The agreements are set to expire at various dates between June 2022 and June 2024. We are committed to conducting our business with integrity and in compliance with all applicable laws of the cities, states and countries in which we operate.
There are five collective bargaining agreements (one for each Canadian manufacturing facility) and each has separate expiration dates. The agreements are set to expire at various dates between May 2024 and November 2026. We are committed to conducting our business with integrity and in compliance with all applicable laws of the cities, states and countries in which we operate.
The single-family homes that we manufacture generally range in size from 400 to 4,000 square feet and typically include two to four bedrooms, a living room or family room, a dining room, a kitchen and typically two full bathrooms. We also build park model RVs for resorts and campgrounds, ADUs for backyard or recreational living, and commercial modular structures.
The 6 single-family homes that we manufacture generally range in size from 400 to 4,000 square feet and typically include two to four bedrooms, a living room or family room, a dining room, a kitchen and typically two full bathrooms. We also build park model RVs and cabins for resorts and campgrounds, and ADUs for backyard or recreational living.
During fiscal 2022, approximately 39% of our sales to independent retailers were financed under floor plan agreements with national lenders, while the remaining 61% were financed under various arrangements with local or regional banks or paid in cash. We generally receive payment from the lending institution 5 to 10 days after a home is sold and invoiced. Consumer Financing.
During fiscal 2024, approximately 35% of our sales to independent retailers were financed under floor plan agreements with national lenders, while the remaining 65% were financed under various arrangements with local or regional banks or paid in cash. We generally receive payment from the lending institution 5 to 10 days after a home is sold and invoiced. Consumer Financing.
We offer a leading portfolio of manufactured and modular homes, park model RVs, accessory dwelling units (“ADUs”) and modular buildings for the multi-family and hospitality sectors. Our facilities are strategically located to serve strong markets in the United States and western Canada.
We offer a leading portfolio of manufactured and modular homes, park model RVs, accessory dwelling units (“ADUs”) and modular buildings for the multi-family market. Our facilities are strategically located to serve strong regions in the United States and western Canada.
We build homes under some of the most well-known brand names in the factory-built housing industry including Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S., and Moduline and SRI Homes in western Canada.
We build homes under some of the most well-known brand names in the factory-built housing industry including Skyline Homes, Champion Homes, Genesis Homes, Regional Homes, Athens Park, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, All American Homes, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S., and Moduline and SRI Homes in western Canada.
We have adopted a written Code of Conduct and Ethics and in fiscal 2022 implemented a new company wide training program to assist employees in this regard. We encourage employees to report concerns through a variety of channels, including a compliance and ethics line which allows for anonymous reporting. All reports are investigated and resolved.
We have adopted a written Code of Business Conduct and have a company wide training program to train and assist employees in this regard. We encourage employees to report concerns through a variety of channels, including a compliance and ethics line which allows for anonymous reporting. All reports are investigated and resolved.
Implementing Production Automation and Enterprise-wide Digital Technology • We are investing in production automation technology to mitigate reliance on direct labor, reduce material waste, and improve the precision of our construction processes. • In conjunction with our enhanced digital offering for the customer experience, we are moving to an enterprise-wide, cloud based integrated platform.
In addition to the online experience, we are also using technology for: • Investing in production automation technology to mitigate reliance on direct labor, reduce material waste, and improve the precision of our manufacturing processes; • in conjunction with our enhanced digital offering for the customer experience, we are moving to an enterprise-wide, cloud based integrated platform.
The financial institution customarily requires us, as the manufacturer of the home, to enter into a separate repurchase agreement with the financial institution that, upon default by the retailer and under certain other circumstances, obligates us to repurchase the financed home at declining prices over the term of the repurchase agreement (which, in most cases, is 18 to 36 months).
The financial institution customarily requires us, as the manufacturer of the home, to enter into a separate repurchase agreement with the financial institution that, upon default by the retailer and under certain other circumstances, obligates us to repurchase the financed home at declining prices over the term of the repurchase agreement (which, in most cases, is 24 months but under certain circumstances can be until the home is sold by the retailer).
Our modular homes and commercial structures are built to comply with applicable state and local building codes. Our park model RVs are built in conformity with the applicable standards approved by the American National Standards Institute, a private, non-profit organization that administers and coordinates voluntary standards and conformity programs.
Our modular homes are built to comply with applicable state and local building codes. Our park model RVs are built in conformity with the applicable standards approved by the American National Standards Institute, a private, non-profit organization that administers and coordinates voluntary standards and conformity programs. A variety of laws affect the financing of the homes we manufacture.
We endeavor to mitigate the impact of supply chain challenges through sourcing alternative materials, where appropriate, and exploring alternative supply options. We generally have been able to pass higher material costs on to customers in the form of surcharges and price increases.
We endeavor to mitigate the impact of supply chain challenges through sourcing alternative materials, where appropriate, and exploring alternative supply options. We generally have been able to pass higher material costs on to customers in the form of surcharges and price increases, although that ability fluctuates over time and by market depending on demand trends.
We are a leading producer of factory-built housing in North America with net sales for the year ended April 2, 2022 (“fiscal 2022”) of approximately $2.2 billion. We have more than 70 years of homebuilding experience, approximately 8,400 employees and 41 manufacturing facilities located in 19 states across the United States and three provinces in western Canada.
We are a leading producer of factory-built housing in North America with net sales for the year ended March 30, 2024 (“fiscal 2024”) of approximately $2.0 billion. We have more than 70 years of homebuilding experience, approximately 8,600 employees and 48 manufacturing facilities located in 20 states across the United States and three provinces in western Canada.
Because we produce homes to fulfill wholesale orders, our factories generally do not carry finished goods inventories, except for homes awaiting delivery. We manage our production levels, capacity and workforce size based upon current market demands.
Because we produce homes to fulfill wholesale orders, our factories generally do not carry finished goods inventories, except for homes awaiting delivery. We manage our production levels, capacity and workforce size based upon current market demands. In typical demand and economic environments, orders are generally filled within 90 days of receipt.
A variety of laws affect the financing of the homes we manufacture. The Federal Consumer Credit Protection Act and Regulation Z promulgated thereunder require written disclosure of information relating to such financing, including the amount of the annual percentage interest rate and the finance charge.
The Federal Consumer Credit Protection Act and Regulation Z promulgated thereunder require written disclosure of information relating to such financing, including the amount of the annual percentage interest rate and the finance charge. A variety of state laws also regulate the form of financing documents and the allowable deposits, finance charge and fees charged.
The maximum amount of our contingent obligations under such repurchase agreements was approximately $339.5 million a s of April 2, 2022. The risk of loss under these agreements is spread over many retailers and is further reduced by the resale value of the homes.
The maximum amount of our contingent obligations under such repurchase agreements was approximately $296.3 million as of March 30, 2024. The risk of loss under these agreements is spread over many retailers and is further reduced by the resale value of the homes.
Our SEC filings are also available to the public on the SEC’s website at www.sec.gov . Business Strategy We will continue to pursue opportunities to grow our revenue and earnings by constructing quality-built, sustainable, and innovatively designed homes and other modular structures in an environmentally friendly factory setting.
Business Strategy We will continue to pursue opportunities to grow revenue and earnings by constructing quality-built, sustainable, and innovatively designed homes and other modular structures in an environmentally friendly factory setting.
Investing in our Customers’ Online Digital Experience The Company continues to invest in the design and testing of enhanced digital offerings. We are currently piloting an end-to-end platform where consumers can design, configure, and price their homes online, which we believe will ultimately drive revenue growth for Skyline Champion and our channel partners.
Implementing Production Automation and Enterprise-wide Digital Technology The Company continues to invest in the design and implementation of an enhanced digital customer experience. We are expanding an end-to-end platform where consumers can shop, design, configure, and price their homes online, which we believe will further drive revenue growth for Skyline Champion and our channel partners.
We believe higher-priced, multi-section manufactured and modular homes are attractive to households with higher incomes as an alternative to rental housing and condominiums and are well suited to meet the needs of the retiree buyer in many markets.
We believe higher-priced, multi-section manufactured and modular homes are attractive to households with higher incomes as an alternative to rental housing and condominiums and are well suited to meet the needs of the retiree buyer in many markets. 8 The two largest manufactured housing consumer demographics are Millennials (generally defined as those born between 1981 – 1996) and Baby Boomers (generally defined as those born between 1946 – 1964).
We construct homes in indoor facilities using an assembly-line process employing approximately 100 to 200 production employees at each facility. Factory-built HUD code homes are constructed in one or more sections affixed to a steel support frame that allows the sections to be moved through the assembly line and transported upon sale.
Factory-built HUD code homes are constructed in one or more sections affixed to a steel support frame that allows the sections to be moved through the assembly line and transported upon sale.
Environmental, Social and Governance (“ESG”) We demonstrate our commitment to ESG through company-wide and plant-specific programs and through our everyday business practices when providing high-quality, yet affordable homes to U.S. and Canadian homebuyers.
We believe those product offerings will facilitate further growth and help us capture a greater share of the market. Environmental, Social and Governance (“ESG”) We demonstrate our commitment to ESG through company-wide and plant-specific programs and through our everyday business practices when providing high-quality, yet affordable homes to U.S. and Canadian homebuyers.
We strive for an inclusive environment and reward individual contributions that foster innovative ideas for improving our products and workplace. We do not tolerate discrimination or harassment of any kind including but not limited discrimination or harassment to on the basis of gender identity, race, religion, age or disabilities. We are committed to the development of our employees.
We do not tolerate discrimination or harassment of any kind including but not limited to discrimination or harassment on the basis of gender identity, race, religion, age or disabilities. We are committed to the development of our employees.
We anticipate beginning production at one of these facilities in late fiscal 2023. 5 We have demonstrated our ability to broaden our manufacturing and retail presence through the successful execution of a balanced organic growth and acquisition-based strategy. As demand for affordable housing grows and the raw material supply chain normalizes, we will continue to execute on this growth strategy.
We have demonstrated our ability to broaden our manufacturing and retail presence through the successful execution of a balance of organic growth and acquisition-based strategy. As demand for affordable housing grows, we will continue to execute on this growth strategy.
Charges to transport homes increase with the distance from the factory to the retailer or home site. As a result, most of the retailers and builders/developers we sell to are located within a 500-mile radius of our manufacturing plants.
As a result, most of the retailers and builders/developers we sell to are 7 located within a 500-mile radius of our manufacturing plants.
In addition to our core home building business, we provide construction services to install and set-up factory-built homes, we operate a factory-direct manufactured home retail business, Titan Factory Direct, with 18 sales centers spanning the southern United States, and we operate Star Fleet Trucking, which provides transportation services to the manufactured housing and other industries from several dispatch locations across the United States. 4 Our principal executive offices are located at 755 West Big Beaver Road, Suite 1000, Troy, Michigan 48084.
In addition to our core home-building business, we provide construction services to install and set-up factory-built homes; we operate a factory-direct manufactured home retail business, marketed under the Regional Homes, Titan Factory Direct and Champion Homes Center brands, with 74 sales centers spanning the United States at the end of fiscal 2024; and we operate Star Fleet Trucking, which provides transportation services to the manufactured housing and other industries from several dispatch locations across the United States.
According to MHI, in March 2022, there were 33 producers of manufactured homes in the U.S. operating an estimated 141 production facilities. For calendar 2021, the top three companies had a combined market share for HUD code homes of approximately 75%.
According to MHI, in March 2024, there were 36 producers of manufactured homes in the U.S. operating an estimated 148 production facilities. For calendar 2023, the top three companies had a combined market share for HUD code homes of approximately 80%. We estimate that there were approximately 3,000 industry retail locations operating throughout the U.S. during calendar 2023.
During fiscal 2022, the average selling price was $80,656 for our U.S. factory-built homes and $107,589 for homes sold through our Canadian housing segment. Manufactured home sales prices ranged from $20,000 to over $350,000. Retail sales prices of the homes, without land, generally ranged from $35,000 to over $300,000, depending upon size, floor plan, features, and options.
During fiscal 2024, the average selling price of our factory-built homes in the U.S. was $90,000 and in Canada was $122,400. Manufactured home wholesale prices generally ranged from $30,000 to over $350,000. Retail sales prices of the homes, without land, generally ranged from $40,000 to over $400,000, depending upon size, floor plan, features, and options.
We operated 14 manufacturing facilities in the top ten states with the highest number of manufactured homes shipped in fiscal 2022, as well as 16 manufacturing facilities in the ten states with the greatest growth in the number of manufactured homes shipped in the last ten years.
We operated 19 manufacturing facilities in the top ten states with the highest number of manufactured homes shipped in fiscal 2024.
After production of a particular home has commenced, the order becomes noncancelable and the customer is obligated to take delivery of the home. Although factory-built homes can be produced throughout the year in indoor facilities, demand for homes is usually affected by inclement weather and by the cold winter months in northern areas of the U.S. and in Canada.
Although factory-built homes can be produced throughout the year in indoor facilities, demand for homes is usually affected by inclement weather and by the cold winter months in northern areas of the U.S. and in Canada. Charges to transport homes increase with the distance from the factory to the retailer or home site.
Most completed factory-built homes have components consistent with conventional site-builders, such as cabinets, wall and floor coverings, appliances, and electrical, heating and plumbing systems. Optional factory installed features include fireplaces, dormers, entertainment centers and skylights. Upon completion of the home at the factory, homes sold to retailers are transported to a retail sales center or directly to the home site.
Typically, a one to three-week supply of raw materials is maintained at our manufacturing facilities. Most completed factory-built homes have components consistent with conventional site-builders, such as cabinets, wall and floor coverings, appliances, and electrical, heating and plumbing systems. Optional factory installed features include fireplaces, dormers, entertainment centers and skylights.
This reduces the need for new building materials and extensive deployment of construction equipment, and thus reduces carbon emissions. On our journey, we have launched a program to participate in reforestation.
This reduces the need for new building materials and extensive deployment of construction equipment, and thus reduces carbon emissions. We participate in a reforestation program with Arbor Day Foundation. With forestry products central to the construction of homes, we participate in a program to plant one tree for every tree used in construction of our homes.
Homes sold to builders and developers are generally transported directly to the home site. At the home site, the home is placed on a foundation or otherwise affixed to the property and readied for occupancy, either by our employee set crews or third party contractors.
At the home site, the home is placed on a foundation or otherwise affixed to the property and readied for occupancy, either by our employee set crews or third-party contractors. The sections (also referred to as floors) of a multi-section home are joined and the interior and exterior seams are finished at the home site.
There are a number of other national manufacturers competing for a significant share of the manufactured housing market in the U.S., including Clayton Homes and Cavco Industries. Certain of these competitors may possess greater financial, manufacturing, distribution, and marketing resources. Government Regulation Our manufactured homes are subject to numerous federal, state and local laws, codes and regulations.
Certain of these competitors may possess greater financial, manufacturing, distribution, and marketing resources. Government Regulation Our manufactured homes are subject to numerous federal, state and local laws, codes and regulations.
We have built a diverse team with a wide range of experiences. At April 2, 2022, we employed approximately 8,400 full and part time employees. Our human capital resource objectives include identifying, recruiting, training, retaining and incentivizing our employees.
A copy of our Anti-Human Trafficking Policy is available within the Governance section of our website at www.skylinechampion.com. We have built a diverse team with a wide range of experiences. As of March 30, 2024, we employed approximately 8,600 full and part time employees. Our human capital resource objectives include identifying, recruiting, training, retaining and incentivizing our employees.
Governmental authorities enforcing these numerous laws and regulations can impose fines and/or seek injunctive relief for violations. We believe that our operations are in compliance with the requirements of the applicable laws and regulations. Seasonality The housing industry is subject to seasonal fluctuations based on home buyer purchasing patterns.
We believe that our operations are in compliance with the requirements of the applicable laws and regulations. Seasonality The housing industry is subject to seasonal fluctuations based on home buyer purchasing patterns. We typically experience decreased home buyer traffic during holidays and popular vacation periods.
The two largest manufactured housing consumer demographics are Millennials (generally defined as those born between 1981 – 1996) and Baby Boomers (generally defined as those born between 1946 – 1964). Millennials are generally first-time home buyers who may be attracted by the affordability and diversity of style choices of factory-built homes.
Millennials are generally first-time home buyers who may be attracted by the affordability and diversity of style choices of factory-built homes.
We compete with the other producers of manufactured homes, as well as companies selling homes repossessed from wholesalers or consumers. In addition, manufactured homes compete with new and existing site-built homes, as well as apartments, townhouses, and condominiums. Collectively, manufactured housing represents approximately only nine percent of annual U.S. single family home starts.
In addition, manufactured homes compete with new and existing site-built homes, as well as apartments, townhouses, and condominiums. Collectively, manufactured housing represents approximately 9% of annual U.S. single family home starts. There are a number of other national and regional manufacturers competing for a significant share of the manufactured housing market in the U.S.
We typically experience decreased home buyer traffic during holidays and popular vacation periods. Demand for our core single-family new home products typically peaks each spring and summer before declining in the winter, consistent with the overall housing industry. Typical seasonal patterns were not as prevalent in fiscal 2022 and 2021 as demand for affordable housing has increased significantly.
Demand for our core single-family new home products typically peaks each spring and summer before declining in the winter, consistent with the overall housing industry.
We offer our employees a competitive compensation package, including an array of benefits, and we deem our relationship with our employees to be generally good. At April 2, 2022, our manufacturing facilities in Canada employed approximately 950 workers of which the majority belong to trade associations that operate under collective bargaining agreements.
We are proud of the strong relationship we maintain with our employees and seek to support them through competitive compensation packages and a comprehensive suite of benefits. As of March 30, 2024, our manufacturing facilities in Canada employed approximately 700 workers of which the majority belong to trade associations that operate under collective bargaining agreements.
Our website is located at www.skylinechampion.com. Our website and the information contained on our website is not incorporated by reference and is not a part of this Annual Report. We make available on our website, as soon as reasonably practicable, all of the reports required to be filed with the SEC.
We make available on our website, as soon as reasonably practicable, all of the reports required to be filed with the SEC. Our SEC filings are also available to the public on the SEC’s website at www.sec.gov.
The limited availability of existing homes for sale and the broader need for newly built affordable, single-family housing has continued to drive demand for new homes in these markets. Factory-built housing provides an affordable alternative to other types of housing such as site-built housing and condominiums, and to existing housing such as pre-owned homes and apartments.
In inflationary and higher interest rate environments, factory-built housing provides an affordable alternative to other types of housing such as site-built housing and condominiums, and to existing housing such as pre-owned homes and apartments.
Independent retailers of factory-built homes generally finance their inventory purchases from manufacturers with floor plan financing provided by third-party lending institutions and secured by a lien on the homes. The availability and cost of floor plan financing can affect the amount of retailer new home inventory, the number of retail sales centers and related wholesale demand.
The availability and cost of floor plan financing can affect the amount of retailer new home inventory, the number of retail sales centers and related wholesale demand.
The primary components include lumber, plywood, OSB, drywall, steel, floor coverings, insulation, exterior siding (vinyl, composites, wood and metal), doors, windows, shingles, kitchen appliances, furnaces, plumbing and electrical fixtures and hardware. These components are presently available from a variety of sources and we are not dependent upon any single supplier.
The components and products used in factory-built housing are generally of the same quality as those used by other homebuilders, including conventional site-builders. The primary components include lumber, plywood, OSB, drywall, steel, floor coverings, insulation, exterior siding (vinyl, composites, wood and metal), doors, windows, shingles, kitchen appliances, furnaces, plumbing and electrical fixtures and hardware.
We regularly introduce homes with new floor plans, exterior designs and elevations, decors and features. Our corporate marketing and engineering departments work with our manufacturing facilities to design homes that appeal to consumers’ changing 7 tastes at appropriate price points for their respective markets.
Our corporate architecture, marketing, and engineering departments work with our manufacturing facilities to design homes that appeal to consumers’ changing tastes at appropriate price points for their respective markets. We design and build homes with a traditional residential or site-built appearance through the use of, among other features, dormers and higher pitched roofs.
A variety of state laws also regulate the form of financing documents and the allowable deposits, finance charge and fees charged. Federal laws permit manufactured housing retailers to assist home buyers with securing financing for the purchase of homes; however, they are prohibited from negotiating the financing terms.
Federal laws permit manufactured housing retailers to assist home buyers with securing financing for the purchase of homes; however, they are prohibited from negotiating the financing terms. Governmental authorities enforcing these numerous laws and regulations can impose fines and/or seek injunctive relief for violations.
We believe our idle manufacturing plants provide us with the ability to grow with demand over the longer term. We also continue to explore opportunities to acquire value-enhancing retail locations, manufacturing facilities, and factory-built housing competitors to supplement our organic growth initiatives. We have a proven track-record of executing and integrating acquisitions.
We continue to explore opportunities to acquire value-enhancing retail locations, manufacturing facilities, and factory-built housing competitors to supplement our organic growth initiatives.
We design and build a range of manufactured and modular homes, park model RVs, ADUs, and commercial structures. We believe that the high quality and broad scope of our product and service offerings provide us a competitive advantage relative to other factory-built and certain site-built homes.
We believe that the high quality and broad scope of our product and service offerings provide us a competitive advantage relative to other factory-built and certain site-built homes. With our award-winning product designs, we seek to meet the needs of our localized customers, while also providing them with an array of pre-designed options.
The sections (also referred to as floors) of a multi-section home are joined and the interior and exterior seams are finished at the home site. The consumer purchase of the home may also include retailer or contractor supplied items such as additional appliances, air conditioning, furniture, porches, decks, and garages.
The consumer purchase of the home may also include retailer or contractor supplied items such as additional appliances, air conditioning, furniture, porches, decks, and garages. We construct homes in indoor facilities using an assembly-line process employing approximately 100 to 200 production employees at each facility.
We estimate that there were approximately 3,200 industry retail locations throughout the U.S. during calendar 2021. 10 Based on industry data reported by IBTS, in fiscal 2022 our U.S. wholesale market share of HUD code homes sold was 19.3%, compared to 16.9% in fiscal 2021.
Based on industry data reported by IBTS, in fiscal 2024 our U.S. wholesale market share of HUD code homes sold was 19.9%, compared to 20.4% in fiscal 2023. We compete with the other producers of manufactured homes, as well as companies selling homes repossessed from wholesalers or consumers.
More recently, we have seen a number of market trends pointing to increased sales of ADUs and urban-to-rural migration as customers accommodate working from home patterns as well as people seeking rent-to-own single-family options. Financing Commercial Financing.
Recently, we have seen market trends pointing to increased sales of ADUs as well as people seeking rent-to-own single-family options. Financing Commercial Financing. Independent retailers of factory-built homes generally finance their inventory purchases from manufacturers with floor plan financing provided by third-party lending institutions and secured by a lien on the homes.
On February 7, 2022, we received a Delivery Disaster Relief Order from FEMA for approximately $200 million in revenue to be completed by September 2022. We offer a wide selection of manufactured and modular homes as well as park model RVs at company-owned retail locations marketed under the Titan Factory Direct brand.
We offer a wide selection of manufactured and modular homes as well as park model RVs at company-owned retail locations marketed under the Regional Homes, Titan Factory Direct and Champion Homes Center brands. We maintain our company-owned retail presence through 74 retail sales centers across the U.S.
Prices of certain materials such as lumber, insulation, steel, and drywall can fluctuate significantly due to changes in demand and supply. Lumber and related products experienced significant cost increases in fiscal 2022, primarily as a result of supply chain disruptions. Those disruptions have also impacted the availability of certain raw materials and components.
These components are presently available from a variety of sources and we are not dependent upon any single supplier. Prices of certain materials such as lumber, insulation, steel, and drywall can fluctuate significantly due to changes in demand and supply.
This enhanced technology will offer real-time analytics for improved decision making and will facilitate additional improvements in our manufacturing operations. Continuing a Balanced Organic and Acquisition-Based Growth Strategy In June 2021, the Company acquired two idle facilities in Navasota, Texas in order to increase our production capabilities in the Texas market.
This enhanced technology will offer real-time analytics for improved decision making and will facilitate additional improvements in our manufacturing operations. During the year, we launched our first automated cabinet construction center.
With our award-winning product designs, we seek to meet the needs of our localized customers, while also providing them with an array of pre-designed options. Our leading brands are marketed and distributed through a network of independent and company-owned retailers, community operators, government agencies, and builder/developers.
Our products are marketed and distributed through a network of independent and company-owned retail sales centers, community operators, government agencies, and builder/developers.
According to data reported by the Manufactured Housing Institute (“MHI”), industry manufactured home shipments were 108,964, 95,588, and 97,553 units during fiscal 2022, 2021, and 2020, respectively. Annual shipments have generally increased each year since calendar year 2009 when only 50,000 HUD-coded manufactured homes were shipped, the lowest level since the industry began recording statistics in 1959.
According to data reported by the Manufactured Housing Institute (“MHI”), industry manufactured home shipments were 92,288, 104,374, and 108,964 units during fiscal 2024, 2023, and 2022, respectively.
We design and build homes with a traditional residential or site-built appearance through the use of, among other features, dormers and higher pitched roofs. We offer our Genesis brand of homes which have features similar to site-built home amenities such as porches and garages. These homes are designed to be eligible for financing programs with terms similar to traditional mortgages.
We are also very active in the design and construction of energy-efficient homes and built over 1,600 homes last year that met the Energy Star® certification standards. We offer our Genesis brand of homes which have features similar to site-built home amenities such as porches and garages.
With forestry products central to the construction of homes, we began participation in a program to plant one tree for every tree used in construction of our homes in fiscal 2022. Reforestation contributes to the environment by replenishing forests, reducing greenhouses gases ("GHG"), and protecting local watersheds.
Through this partnership, we have planted more than one million trees since 2021. Reforestation contributes to the environment by replenishing forests, reducing greenhouses gases ("GHG") emissions, and protecting local watersheds.
Removed
Our market share in the United States total housing market is approximately 2.6%. Our market share in the United States manufactured housing market segment has increased from approximately 8% in the beginning of fiscal 2011 to approximately 19% in fiscal 2022 based on total number of units produced.
Added
Our market share in the United States total housing market is approximately 2.1% in fiscal 2024. We design and build a range of manufactured and modular homes, park model RVs and cabins, ADUs, and commercial structures.
Removed
In connection with executing this business strategy, we are focused on the following four initiatives: • Increasing the operating capacity and profitability of our existing facilities; • Investing in our customers’ online digital experience; • Implementing production automation and enterprise-wide digital technology; and • Continuing a balanced organic and acquisition-based growth strategy.
Added
Our principal executive offices are located at 755 West Big Beaver Road, Suite 1000, Troy, Michigan 48084. Our website is located at www.skylinechampion.com. Our website and the information contained on our website is not incorporated by reference and is not a part of this Annual Report.
Removed
During the COVID-19 pandemic, we have seen tremendous online interest from consumers and believe use of a digital platform to customize and purchase homes will continue to grow.
Added
Over that last several years, we have experienced tremendous online interest from consumers and believe a digital platform to enhance the buying experience will continue to grow as home buying trends evolve. The platform is complemented by our digital marketing and social engagement initiatives that are attracting new consumers to our brands.
Removed
The Company began production and completed the certification process at one of these facilities in the fourth quarter of fiscal 2022. On February 28, 2021, we acquired ScotBilt Homes, LLC and related companies from SHI Group Holdings, Inc. (collectively, “ScotBilt”). ScotBilt operated two manufacturing facilities in Georgia providing affordable housing throughout Alabama, Florida, Georgia and the Carolinas.
Added
We also believe these tools will extend the relationship with our customers after the home buying process is complete, resulting in increased customer satisfaction and expanding revenue opportunities.
Removed
The acquisition helped to balance our national distribution and complement our existing manufacturing footprint in the attractive mid-south region. The operations of ScotBilt are included in our financial results since the date of the acquisition. During fiscal 2022, we completed the successful cultural, processes, systems and internal controls integration of the acquired facilities into our operations.
Added
We believe this is a step toward our goal of enhancing our manufacturing process and leveraging opportunities to standardize certain components of our homes, lower certain input costs and improve the quality of what we build for consumers.
Removed
In January 2021, we closed on the purchase of two idled manufacturing facilities in North Carolina, one of the strongest growth states in the U.S.

… 25 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+24 added−16 removed88 unchanged
Biggest changeInflation could adversely affect our business and financial results. 17 Inflation can adversely affect us by increasing costs of raw materials, labor and transportation. Efforts made by the U.S. government to stimulate the economy and combat the impact of the COVID-19 pandemic has increased and may continue to increase the risk of significant, persistent inflation.
Biggest changeAny limitations or restrictions on the availability of financing by these agencies could adversely affect interest rates, financing, and our sales of new homes. Inflation has and could continue to adversely affect our business and financial results. Inflation adversely affects us by increasing costs of raw materials, labor and transportation.
The risks of a business combination or startup of a greenfield or idled facility could result in the failure of the anticipated benefits of that particular combination to be realized, which in turn could have adverse effects on our business, financial condition, results of operations and prospects. Our risk management practices may leave us exposed to unidentified or unanticipated risk.
The risks of a business combination or startup of a greenfield or idled facility could result in the failure of the anticipated benefits of that particular transaction to be realized, which in turn could have adverse effects on our business, financial condition, results of operations and prospects. Our risk management practices may leave us exposed to unidentified or unanticipated risk.
These factors can also increase the cost of labor. We have historically experienced high turnover rates among our direct labor employees, which can lead to increased spending on training and 14 retention and, as a result, increased costs of production.
These factors can also increase the cost of labor. We have historically experienced high turnover rates among our direct labor employees, which can lead to increased spending on training and retention and, as a result, increased costs of production.
For example, we may experience unexpected engineering or design flaws that may cause increased warranty costs. The costs resulting from these types of problems could be substantial and could have a significant adverse effect on our earnings.
For example, we may experience unexpected engineering or design flaws that may cause increased warranty costs. The costs resulting from these types of problems could be substantial and could have a significant adverse 14 effect on our earnings.
We rely on qualified truck drivers to deliver homes from our manufacturing facilities to retail centers and customer home sites. A lack of qualified drivers to deliver manufactured homes could result in an increase in our cost of goods sold and operating expenses.
We rely on qualified drivers to deliver homes from our manufacturing facilities to retail centers and customer home sites. A lack of qualified drivers to deliver manufactured homes could result in an increase in our cost of goods sold and operating expenses.
Any future determination to pay dividends to shareholders will be at the sole discretion of our board of directors and will depend upon many factors, including general economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory 18 restrictions, the implications of the payment of dividends by us to our shareholders or by our subsidiaries to us, and any other factors that the board of directors may deem relevant.
Any future determination to pay dividends to shareholders will be at the sole discretion of our Board of Directors and will depend upon many factors, including general economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, the implications of the payment of dividends by us to our shareholders or by our subsidiaries to us, and any other factors that the Board of Directors may deem relevant. 18 ITEM 1B.
In addition, there are independent factory-built housing retail locations that sell competitors’ products in most areas where our homes are sold and in most areas where we have Company-owned 12 retail operations.
In addition, there are independent factory-built housing retail locations that sell competitors’ products in most areas where our homes are sold and in most areas where we have Company-owned retail operations.
In the opinion of management, our properties have been well maintained, are in sound operating condition, and contain all equipment and facilities necessary to operate at present levels. We also own or lease eight idle manufacturing facilities which could be utilized for additional production capacity.
In the opinion of management, our properties have been well maintained, are in sound operating condition, and contain all equipment and facilities necessary to operate at present levels. We also own or lease six idle manufacturing facilities which could be utilized for additional production capacity.
Any such access, disclosure, or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, any of which could adversely affect our business. 16 Engaging in mergers, acquisitions, and start-up operations involves risks that could adversely affect our business.
Any such access, disclosure, or other 15 loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, any of which could adversely affect our business. Engaging in mergers, acquisitions, and start-up operations involves risks that could adversely affect our business.
We compete with large national and regional home building companies and with smaller local home builders for financing, raw materials, and skilled management and labor resources. Some of our manufacturing competitors have captive retail distribution systems and consumer finance and insurance operations.
We compete with large national and regional home building companies and with smaller local homebuilders for financing, raw materials, and skilled management and labor resources. Some of our manufacturing competitors have captive retail distribution systems and consumer finance and insurance operations.
Stock Performance The following graph shows the cumulative total stockholder return on our common stock over the period spanning March 31, 2017 to March 31, 2022, as compared with that of the Russell 3000 Index and a selected peer group of comparable, publicly traded companies in the housing segment, based on an initial investment of $100 on March 31, 2017. 22 Total stockholder return is measured by dividing share price change plus dividends, if any, for each period by the share price at the beginning of the respective period and assumes reinvestment of dividends.
Stock Performance The following graph shows the cumulative total stockholder return on our common stock over the period spanning March 31, 2019 to March 31, 2024, as compared with that of the Russell 3000 Index and a selected peer group of comparable, publicly traded companies in the housing segment, based on an initial investment of $100 on March 31, 2019. 22 Total stockholder return is measured by dividing share price change plus dividends, if any, for each period by the share price at the beginning of the respective period and assumes reinvestment of dividends.
Factory-built housing operates in the highly competitive housing industry, and, if other home builders are more successful or offer better value to our customers, then our business could decline. We operate in a very competitive environment and face competition from a number of other home builders in each market in which we operate.
Factory-built housing operates in the highly competitive housing industry, and, if other homebuilders are more successful or offer better value to our customers, then our business could decline. We operate in a very competitive environment and face competition from a number of other homebuilders in each market in which we operate.
An increase in competitive conditions could have any of the following impacts on us: sale of fewer homes or higher cancellations by our home buyers; an increase in selling incentives or reduction of prices; and realization of lower gross margins due to lower selling prices or an inability to increase selling prices to offset increased costs of the homes delivered.
An increase in competitive conditions could have any of the following impacts on us: sale of fewer homes or higher cancellations by our homebuyers; an increase in selling incentives or reduction of prices; and realization of lower gross margins due to lower selling prices or an inability to increase selling prices to offset increased costs of the homes delivered.
As a result, we may continue to see raw material cost pressures in future periods as strong housing demand continues. We may attempt to pass the higher material costs on to customers, but it is not certain that we will be able to achieve this without adversely affecting demand.
As a result, we may continue to see raw material cost pressures in future periods. We may attempt to pass the higher material costs on to customers, but it is not certain that we will be able to achieve this without adversely affecting demand.
The system selection and implementation process has required, and will continue to require, a significant investment of personnel and financial resources. We may not be able to successfully implement the new system without experiencing delays, increased costs and other difficulties.
The system selection and implementation process has required, and will continue to require, a significant investment of personnel and financial resources. We may not be able to successfully implement the new system without experiencing delays, increased costs, interruption to operations, or other difficulties.
Increased attention continues to be directed to publicly traded companies and their activities related to environmental, social and governance (“ESG”) matters, including new proposed rules by the SEC regarding climate-related disclosures. Advocacy groups have campaigned for action to promote change at public companies related to ESG matters.
Increased attention continues to be directed to publicly traded companies and their activities related to environmental, social and governance (“ESG”) matters, including recently issued rules by the SEC regarding climate-related disclosures. Advocacy groups have campaigned for action to promote change at public companies related to ESG matters.
Financial Risks Future increases in interest rates, more stringent credit standards, tightening of financing terms, or other increases in the effective costs of owning a factory-built home (including those related to regulation or other government actions) could limit the purchasing power of our potential customers and could adversely affect our business and financial results.
Financial Risks Further increases in interest rates, more stringent credit standards, tightening of financing terms, or other increases in the effective costs of owning a factory-built home (including those related to regulation or other government actions) have limited and could continue to limit the purchasing power of our potential customers and could continue to adversely affect our business and financial results.
Over 90% of our shipments of homes in fiscal 2022 were made to independent distributors throughout the U.S. and western Canada. We may not be able to establish relationships with new independent distributors or maintain good relationships with independent distributors that sell our homes.
Over 80% of our shipments of homes in fiscal 2024 were made to independent distributors throughout the U.S. and western Canada. We may not be able to establish relationships with new independent distributors or maintain good relationships with independent distributors that sell our homes.
If goodwill has become impaired, we charge the impairment as an expense in the period in which the impairment occurs. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and estimates" and Note 1 to the Consolidated Financial Statements.
If goodwill has become impaired, we charge the impairment as an expense in the period in which the impairment occurs. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 1 to the Consolidated Financial Statements.
PR OPERTIES The following table sets forth certain information with respect to our operating facilities as of April 2, 2022: Location Owned/Leased United States Chandler, Arizona Leased * Corona, California Leased Lindsay, California Owned San Jacinto, California Owned Woodland, California Owned Lake City, Florida (two facilities) Leased * Ocala, Florida Owned Millen, Georgia Leased** Waycross, Georgia Owned Weiser, Idaho Owned Topeka, Indiana (three facilities) Owned Arkansas City, Kansas Owned Benton, Kentucky Leased Leesville, Louisiana Leased Worthington, Minnesota Owned York, Nebraska Owned Sangerfield, New York Owned Lillington, North Carolina Owned Sugar Creek, Ohio Owned McMinnville, Oregon Owned Claysburg, Pennsylvania Owned Ephrata, Pennsylvania Owned Leola, Pennsylvania (two facilities) Owned Liverpool, Pennsylvania Owned Strattanville, Pennsylvania Owned Dresden, Tennessee Leased Athens, Texas Owned Burleson, Texas (two facilities) Owned Mansfield, Texas Owned Navasota, Texas Owned Lancaster, Wisconsin Owned Canada Lethbridge, Alberta Leased * Medicine Hat, Alberta Owned Penticton, British Columbia Owned Kelowna, British Columbia Leased Estevan, Saskatchewan Owned * -- land only leased; facility owned ** -- the land and operating facility in Millen, Georgia are maintained under a lease, however, we retain an option to purchase throughout the lease period 20 Our corporate headquarters is in Troy, Michigan and we have an administrative office in Elkhart, Indiana.
PR OPERTIES The following table sets forth certain information with respect to our operating facilities as of March 30, 2024: Location Owned/Leased United States Double Springs, Alabama Owned Hamilton, Alabama Owned Lynn, Alabama Owned Chandler, Arizona Leased * Corona, California Leased Lindsay, California Owned San Jacinto, California Owned Woodland, California Owned Bartow, Florida Leased * Lake City, Florida (two facilities) Leased * Ocala, Florida Owned Millen, Georgia Leased** Waycross, Georgia Owned Weiser, Idaho Owned Decatur, Indiana Owned Topeka, Indiana (three facilities) Owned Arkansas City, Kansas Owned Benton, Kentucky Leased Leesville, Louisiana Leased Worthington, Minnesota Owned York, Nebraska Owned Sangerfield, New York Owned Laurinburg, North Carolina Owned Lillington, North Carolina Owned Pembroke, North Carolina Owned Sugar Creek, Ohio Owned McMinnville, Oregon Owned Claysburg, Pennsylvania Owned Ephrata, Pennsylvania Owned Leola, Pennsylvania (two facilities) Owned Liverpool, Pennsylvania Owned Strattanville, Pennsylvania Owned Dresden, Tennessee Leased Athens, Texas Owned Burleson, Texas (two facilities) Owned Mansfield, Texas Owned Navasota, Texas Owned Lancaster, Wisconsin Owned Canada Lethbridge, Alberta Leased * Medicine Hat, Alberta Owned Kelowna, British Columbia Leased Penticton, British Columbia Owned Estevan, Saskatchewan Owned * -- land only leased; facility owned ** -- the land and operating facility in Millen, Georgia are maintained under a lease, however, we retain an option to purchase throughout the lease period 20 Our corporate headquarters is in Troy, Michigan and we have an administrative office in Elkhart, Indiana.
The homebuilding industry has from time-to-time experienced labor shortages and other labor-related issues. These labor shortages can be more severe during periods of strong demand for housing, during periods following natural disasters or as a result of broader economic disruptions such as the COVID-19 pandemic.
The homebuilding industry has from time-to-time experienced labor shortages and other labor-related issues. These labor shortages can be more severe during periods of strong demand for housing, during periods following natural disasters or as a result of 13 broader economic disruptions.
Significant increases in prices may prevent customers from being able to qualify for financing at the time the home is ready to be produced causing the customer to cancel their order in our backlog. Complications with the implementation of our new enterprise-wide system could adversely impact our business and operations.
Significant increases in prices may prevent customers from being able to qualify for financing at the time the home is ready to be produced causing the customer to cancel their order in our backlog which would negatively impact our revenue and margins. Complications with the implementation of our new enterprise-wide information system could adversely impact our business and operations.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock is traded on the New York Stock Exchange ("NYSE") under the symbol SKY. Holders As of May 13, 2022, the Company had approximately 390 holders of record of our common stock.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock is traded on the New York Stock Exchange ("NYSE") under the symbol SKY. Holders As of May 16, 2024, the Company had approximately 266 holders of record of our common stock.
These claims are common in the home building industry and can be costly. In addition, the costs of insuring against construction defect and product liability claims are high. There can be no assurance that this coverage will not be restricted and become more costly.
In addition, the costs of insuring against construction defect and product liability claims are high. There can be no assurance that this coverage will not be restricted and become more costly.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
Our management is responsible for maintaining effective internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
Raw material shortages from these and other suppliers can be more severe during periods following natural disasters or broader economic disruptions such as the COVID-19 pandemic. Pricing for raw materials can also be affected by the factors mentioned above as well as national, regional, local, economic and political factors, including tariffs.
Raw material shortages from these and other suppliers can be more severe during periods following natural disasters or broader economic disruptions. Pricing for raw materials can also be affected by the factors mentioned above as well as national, regional, local, economic and political factors, including tariffs and periods of high inflation.
Product liability claims and litigation and warranty claims that arise in the ordinary course of business may be costly, which could adversely affect our results of operations. As a home builder, we are subject to construction defect and home warranty claims arising in the ordinary course of business.
Product liability claims and litigation and warranty claims that arise in the ordinary course of business may be costly, which could adversely affect our results of operations. As a homebuilder, we are subject to construction defect and home warranty claims arising in the ordinary course of business. These claims are common in the homebuilding industry and can be costly.
The availability of wholesale financing for retailers is limited due to a limited number of floor plan lenders and reduced lending limits. Factory-built housing retailers generally finance their inventory purchases with wholesale floor plan financing provided by lending institutions. The availability of wholesale financing is significantly affected by the number of floor plan lenders and their lending limits.
Factory-built housing retailers generally finance their inventory purchases with wholesale floor plan financing provided by lending institutions. The availability of wholesale financing is significantly affected by the number of floor plan lenders and their lending limits.
Despite our security measures, our information technology and infrastructure may be vulnerable to cybersecurity attacks by hackers or breached due to employee error, malfeasance, or other disruptions, particularly with employees and others on data networks working increasingly from home because of the COVID-19 pandemic and other such factors.
Despite our security measures, our information technology and infrastructure may be vulnerable to cybersecurity attacks by hackers or breached due to employee error, malfeasance, or other disruptions, particularly with employees and others on data networks working increasingly from home.
A large portion of the people who buy our homes finance their home purchases through third-party lenders. Increases in interest rates or decreases in the availability of consumer financing could adversely affect the market for homes. Interest rates have been near historical lows for several years, which has made purchasing new factory-built homes more affordable. However, in 2022, the U.S.
A large portion of the people who buy our homes finance their home purchases through third-party lenders. Increases in interest rates or decreases in the availability of consumer financing have affected and could continue to adversely affect the market for homes. Interest rates were near historical lows for several years, which made purchasing new factory-built homes more affordable.
The contractual lease for our Troy, Michigan office expires in December 2022 and the contractual lease for our Elkhart, Indiana office expires in September 2023. Two of the manufacturing facilities are encumbered by industrial revenue bonds.
The contractual lease for our Troy, Michigan office expires in December 2027 and the contractual lease for our Elkhart, Indiana office expires in September 2028. Two of the manufacturing facilities are encumbered by industrial revenue bonds and two are encumbered by notes payable.
Compliance with these new standards may also cause an increase in our costs and use of human capital resources. As climate change and energy efficiency remains a global focus, energy-related initiatives will impact many companies including our suppliers of many of our raw materials such as lumber and steel.
Compliance with these new standards may also cause an increase in our costs, including investments in testing equipment and the use of human capital resources. As climate change and energy efficiency remains a global focus, energy-related initiatives will impact many companies including our raw material suppliers.
We also have 18 retail sales centers located across six states in the U.S. and nine terminals for our logistics operations across four states in the U.S. The corporate offices, retail sales centers, and logistics terminals are leased properties.
We also have 74 retail sales centers located across the U.S. and eight terminals for our logistics operations across four states in the U.S. The corporate offices, some of our retail sales centers, and logistics terminals are leased properties.
An impairment of all or part of our goodwill could adversely affect our operating results and net worth. As of April 2, 2022, 15.5% of our total assets consisted of goodwill, all of which is allocated to reporting units included in the U.S. Factory-built Housing segment.
An impairment of all or part of our goodwill could adversely affect our operating results and net worth. As of March 30, 2024, 18.6% of our total assets consisted of goodwill, all of which is allocated to reporting units included in the U.S. Factory-built Housing segment.
In addition, although we endeavor to compel suppliers to maintain appropriate levels of insurance coverage, there is no assurance that if a defect in a vendor-supplied part were to occur that the vendor would have the financial ability to rectify the defect.
There is no assurance that all such defects will be detected prior to the distribution of our products. In addition, although we endeavor to compel suppliers to maintain appropriate levels of insurance coverage, there is no assurance that if a defect in a vendor-supplied part were to occur that the vendor would have the financial ability to rectify the defect.
This legislation could result in changes to the HUD-code and other building standards requiring more robust energy efficiency standards or require the use of energy-saving construction material in our products. New building code requirements that impose stricter energy efficiency standards could significantly increase our costs.
If adopted, these proposed regulations would result in changes to the HUD-code requiring more robust energy efficiency specifications and require the use of energy-saving construction material in our products. New building code requirements that impose stricter energy efficiency standards could significantly increase our costs.
In addition, organizations that provide information to investors on corporate governance and other matters have developed ratings systems for evaluating companies on their approach to ESG.
In addition, organizations that provide information to investors on corporate governance and other matters have developed ratings systems for evaluating companies on their approach to ESG. Unfavorable ESG ratings may lead to negative investor sentiment which could have a negative impact on our stock price.
Industry conditions and future operating results could limit our sources of capital. If we are unable to locate suitable sources of capital when needed, we may be unable to maintain or expand our business.
We may be required to honor contingent repurchase obligations in the future and may incur additional expense and reduced cash flows because of these repurchase agreements. Industry conditions and future operating results could limit our sources of capital. If we are unable to locate suitable sources of capital when needed, we may be unable to maintain or expand our business.
We also compete with resale homes, also referred to as “previously owned” or “existing” homes, as well as rental housing. An oversupply of homes available for sale or the heavy discounting of home prices by our competitors could adversely affect demand for our homes and the results of our operations.
An oversupply of homes available for sale or the heavy discounting of home prices by our competitors could adversely affect demand for our homes and the results of our operations.
Estimated warranty costs are accrued at the time of product sale to reflect our best estimate of the amounts necessary to settle existing and future claims on products.
Estimated warranty costs are accrued at the time of product sale to reflect our best estimate of the amounts necessary to settle existing and future claims on products. An increase in actual warranty claims costs as compared to our estimates could result in increased warranty reserves and expense, which could have adverse impacts on our earnings.
A write-off of all or part of our goodwill could adversely affect our results of operations and financial condition. Our failure to maintain effective internal control over financial reporting could harm our business and financial results. Our management is responsible for maintaining effective internal control over financial reporting.
See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 1 to the Consolidated Financial Statements. A write-off of all or part of our investment in ECN could adversely affect our results of operations and financial condition. Our failure to maintain effective internal control over financial reporting could harm our business and financial results.
This stock performance graph shall not be deemed “filed” with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any of our filings under the Securities Act of 1933, as amended. 3/31/2017 3/31/2018 3/31/2019 3/31/2020 3/31/2021 3/31/2022 Skyline Champion Corporation $ 100.00 $ 233.55 $ 209.59 $ 172.96 $ 499.26 $ 605.37 Russell 3000 100.00 113.81 123.79 112.49 182.84 204.64 Peer Group* 100.00 129.01 111.92 87.69 236.06 190.77 *The peer group consisted of Beazer Homes USA, Cavco Industries, Century Communities, LGI Homes, MDC Holdings, M/I Homes, Meritage Homes, Quanex Building Products Corp, and Tri Pointe Group.
This stock performance graph shall not be deemed “filed” with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any of our filings under the Securities Act of 1933, as amended. 3/31/2019 3/31/2020 3/31/2021 3/31/2022 3/31/2023 3/31/2024 Skyline Champion Corporation $ 100.00 $ 82.53 $ 238.21 $ 288.84 $ 395.95 $ 447.42 Russell 3000 100.00 90.87 147.70 165.31 151.13 195.39 Peer Group* 100.00 78.35 210.92 170.45 214.24 326.11 *The peer group consists of Beazer Homes USA, Cavco Industries, Century Communities, LGI Homes, MDC Holdings, M/I Homes, Meritage Homes, Quanex Building Products Corp, and Tri Pointe Group.
These developments have historically had, and may once again have, an adverse effect on the overall demand for factory-built housing and its competitiveness with other forms of housing and could adversely affect our results of operations and financial condition.
These developments have historically had, and may once again have, an adverse effect on the overall demand for factory-built housing and its competitiveness with other forms of housing and could continue to adversely affect our results of operations and financial condition. 16 The liquidity provided by the GSEs and the FHA is also critical in insuring or purchasing home mortgages and creating or insuring investment securities that are either sold to investors or held in their portfolios.
In addition, recent increases in the prices of homes may limit consumers’ ability to obtain financing. Lenders may increase the qualifications needed for financing or adjust their terms to address any increased credit risk. These factors could adversely affect the sales or pricing of our factory-built homes.
In addition, recent increases in the prices of homes resulting from inflation, combined with higher loan rates, have limited and may continue to limit consumers’ ability to obtain financing to purchase a home. In addition, lenders may increase the qualifications needed for financing or adjust their terms to address any increased credit risk.
These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported.
For instance, during fiscal 2024, we identified an issue with certain construction materials that resulted in water intrusion-related issues. These estimated costs are based on an analysis of our historical claims and industry data and include an estimate of claims incurred but not yet reported.
Because barriers to entry to the industry at both the manufacturing and retail levels are low, we believe that it is relatively easy for new competitors to enter our markets. In addition, our products compete within the housing industry more broadly with other forms of low to moderate-cost housing, including site-built homes, panelized homes, apartments, townhouses, condominiums, and repossessed homes.
Because barriers to entry to the industry at both the manufacturing and retail levels are low, we believe that it is 11 relatively easy for new competitors to enter our markets.
Unfavorable ESG ratings may lead to negative investor sentiment which could have a negative impact on our stock price. 13 Regulatory Risks Environmental laws and regulations relating to climate change and energy can have an adverse impact on our business, our results of operations and on the availability and price of certain raw materials.
Regulatory Risks Environmental laws and regulations relating to climate change and energy efficiency can have an adverse impact on our business and results of operations.
Our products contain thousands of parts, many of which are supplied by a network of approved vendors. Product defects may occur, including components purchased from material vendors. There is no assurance that all such defects will be detected prior to the distribution of our products.
Our products and services may experience quality problems from time to time that can result in decreased sales and gross margin and can harm our reputation. Our products contain thousands of parts, many of which are supplied by a network of approved vendors. Product defects may occur, including components purchased from material vendors.
Any future epidemic, pandemic, or similar serious public health issue, and the measures taken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.
An epidemic, pandemic or other public health issue, or fear of such an event, and the actions taken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business and, along with any associated economic factors, have a material adverse effect on our business.
The initiatives undertaken by our suppliers could adversely impact our results of operations to the extent our suppliers raise their prices to cover energy and climate related initiatives. New environmental laws and regulations could have an adverse impact on our business and results of operations.
The initiatives undertaken by our suppliers could adversely impact our results of operations to the extent our suppliers raise their prices to cover energy and climate related initiatives. Increases in costs may make our products less affordable and as a result, negatively impact demand for those products.
Federal Open Market Committee raised the target rate for the fed funds rate for the first time in three years and indicated that it foresees additional future increases in that rate in order to combat rising inflation in the U.S. economy. Potential customers may be less willing or able to pay the increased monthly costs or to obtain financing.
However, since early 2022, the U.S. Federal Open Market Committee has continuously raised the target rate for the federal funds rate and could effectuate additional increases in that rate in response to inflation. Potential manufactured housing customers have been and may continue to be less willing or able to pay the increased monthly costs that result from higher loan rates.
Inflation can also lead to higher interest rates, which can have a negative impact on the housing industry, as well as increases in our borrowing rates. While we have historically been able to pass along price increases to our customers, in a persistent inflationary environment we may not be able to raise prices sufficiently in order to maintain our margins.
While we have historically been able to pass along price increases to our customers, in a persistently inflationary environment, we may not be able to raise prices sufficiently in order to maintain our margins. The availability of wholesale financing for retailers is limited due to a limited number of floor plan lenders and reduced lending limits.
Government regulations proposed or enacted in response to climate change could result in increased costs of raw materials and other manufacturing production costs of our homes. We believe that a variety of new legislation may be considered at the federal, state and local levels relating to climate change and energy efficiency.
Federal, state, and local government regulations proposed or enacted in response to climate change could result in raw material and other cost increases as well as impact the availability of raw materials necessary to manufacture our products. In 2021, the U.S. Department of Energy proposed regulations to enact new energy efficiency building specifications for manufactured homes.
Removed
Orders in the backlog may be cancelled by customers at any time without penalty. Our backlog has increased significantly in fiscal 2022 driven by higher demand for single-family housing, which has resulted in order levels that have outpaced production.
Added
In addition, our products compete within the housing industry more broadly with other forms of low to moderate-cost housing, including site-built homes, panelized homes, apartments, townhouses, condominiums, and repossessed homes. We also compete with resale homes, also referred to as “previously owned” or “existing” homes, as well as rental housing alternatives.
Removed
While cancellations have historically been low, longer lead times caused by the higher backlog could result in an increase in customer cancellations which could have an adverse impact on future financial performance. Orders in backlog may also be impacted by inflation. Customers obtain financing approval prior to ordering a home.
Added
Our results of operations may be adversely affected by public health issues, such as an epidemic or pandemic, and resulting governmental actions.
Removed
An increase in actual warranty claims costs as compared to our estimates could result in increased warranty reserves and expense, which could have adverse impacts on our earnings. 15 Our products and services may experience quality problems from time to time that can result in decreased sales and gross margin and can harm our reputation.
Added
The United States and Canada have experienced, and may experience in the future, outbreaks of contagious diseases that affect public health and have necessitated government intervention. The COVID-19 pandemic and the measures undertaken by governmental authorities to address it, initially disrupted or prevented us from operating parts of our 12 business in the ordinary course.
Removed
The liquidity provided by the GSEs and the FHA is also critical in insuring or purchasing home mortgages and creating or insuring investment securities that are either sold to investors or held in their portfolios. Any limitations or restrictions on the availability of financing by these agencies could adversely affect interest rates, financing, and our sales of new homes.
Added
The extent to which public health issues impact our results will depend on future developments, which cannot be predicted. If an epidemic, pandemic or similar public health issue has a significant adverse effect on the U.S. or Canadian economies, our business, results of operations, and cash flows could be materially adversely affected.
Removed
Our contingent repurchase obligation as of April 2, 2022, was estimated to be approximately $339.5 million, without reduction for the resale value of the homes. We may be required to honor contingent repurchase obligations in the future and may incur additional expense and reduced cash flows because of these repurchase agreements.
Added
Orders in the backlog may be cancelled by customers at any time without penalty. Orders in the backlog may be impacted by rising interest rates as retailers utilize floor plan financing arrangements to purchase stock inventory. Orders in backlog may also be impacted by inflation since customers obtain financing approval prior to ordering a home.
Removed
COVID-19 Pandemic Risks The COVID-19 pandemic has and may continue to materially and adversely impact our business. The global outbreak of COVID-19 was declared a global pandemic by the World Health Organization in March 2020.
Added
These factors could continue to adversely affect the sales or pricing of our factory-built homes.
Removed
This outbreak caused a material adverse effect on the level of economic activity around the world, including in all of the markets that we serve, and prompted federal and local governments to institute preventative measures, including quarantines and shelter-in-place orders, to mitigate the public health effects.
Added
Inflation also adversely affects our customers by decreasing purchasing power and ability to afford a new home. The U.S. economy has been experiencing periods of higher inflation, stemming from efforts by the U.S. government to stimulate the economy and other factors.
Removed
These measures caused, and may continue to cause, significant business and financial market disruption in affected areas, and had a detrimental impact to our business in the first half of fiscal 2021.
Added
The increased rate of inflation has also lead to higher interest rates, which has had and continue to have a negative impact on the housing industry, as well as increases in our borrowing rates.
Removed
In response to the outbreak, we implemented numerous measures attempting to manage and mitigate the effects of the virus on our financial condition, results of operations, cash flows, and business. In fiscal 2022, the global economy began reopening and distribution of vaccines has encouraged greater economic activity.
Added
A write-off of all or part of our goodwill could adversely affect our results of operations and financial condition. An impairment of all or part of our investment in ECN Capital Corporation could adversely affect our operating results and net worth. As of March 30, 2024, our investment in ECN Capital Corporation ("ECN") was $136.4 million.
Removed
This, combined with high demand for new homes, resulted in our sales increasing in fiscal 2022. However, vaccination rates, hesitancy, and emergence of variants could trigger reinstatement of restrictions and shutdowns and impact our business and dampen economic activity.
Added
We assess our investment in ECN for impairment when events or circumstance indicate that a decline in value below the carrying amount of the investment is other than temporary. If our investment in ECN has become impaired, we would charge the impairment as an expense in the period in which 17 the impairment occurs.
Removed
The COVID-19 pandemic continues to pose many risks including the following, among others: • Our employees, suppliers, customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, and other actions and restrictions that may be requested or mandated by governmental authorities. • Social distancing protocols and higher than normal employee absenteeism can lead to a decrease in capacity output of our manufacturing facilities. • We have experienced, and may continue to experience, disruptions and delays in our supply chain as a result of the effects of the COVID-19 pandemic.
Added
UNRESOLVE D STAFF COMMENTS None. ITEM 1C. CYBERSECURITY Our Board of Directors views the identification and effective management of cybersecurity threats as a critical component of overall risk management and oversight responsibility and has delegated responsibility for oversight of this risk to the Audit Committee of the Board of Directors (the "Audit Committee").
Removed
This has resulted in and is likely to continue to result in higher supply chain costs to us, in order to maintain the supply of component parts needed to produce our products. • Our management of the impacts of the COVID-19 pandemic has required, and will continue to require, significant investment of time by our management and employees.
Added
The Audit Committee oversees the management of risks arising from cybersecurity threats and regularly reports to the Board of Directors regarding cybersecurity. The Audit Committee oversees our enterprise risk assessment process, and cybersecurity represents an important component of our overall approach to risk assessment.
Removed
The focus on managing and mitigating the impacts of the COVID-19 pandemic on our business may cause us to divert or delay the application of our resources toward other initiatives or investments, which in turn may have a material adverse impact on our results of operations.
Added
Our cybersecurity policies, standards, processes and practices are based on recognized frameworks established by the National Institute of Standards and Technology and other applicable industry standards. In general, we seek to address cybersecurity risks through a comprehensive, cross-functional approach that is focused on identifying, assessing, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Removed
The extent to which the COVID-19 pandemic continues to impact us will depend on future developments that cannot be predicted, including new government actions or restrictions, new information that may emerge concerning the severity of COVID-19, the longevity of COVID-19, the availability and efficacy of vaccines and the impact of the COVID-19 pandemic on economic activity.

… 13 more changes not shown on this page.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+44 added−47 removed33 unchanged
Biggest changeNET SALES The following table summarizes net sales for fiscal 2022 and 2021: Year Ended (Dollars in thousands) April 2, 2022 April 3, 2021 $ Change % Change Net sales $ 2,207,229 $ 1,420,881 $ 786,348 55.3 % U.S. manufacturing and retail net sales $ 1,991,066 $ 1,266,308 $ 724,758 57.2 % U.S. homes sold 24,686 19,983 4,703 23.5 % U.S. manufacturing and retail average home selling price $ 80.7 $ 63.4 $ 17.3 27.3 % Canadian manufacturing net sales $ 159,124 $ 101,328 $ 57,796 57.0 % Canadian homes sold 1,479 1,231 248 20.1 % Canadian manufacturing average home selling price $ 107.6 $ 82.3 $ 25.3 30.7 % Corporate/Other net sales $ 57,039 $ 53,245 $ 3,794 7.1 % U.S. manufacturing facilities in operation at year end 36 35 1 3 % U.S. retail sales centers in operation at year end 18 18 — — % Canadian manufacturing facilities in operation at year end 5 5 — — % 26 Net sales for fiscal 2022 were $2.2 billion an increase of $786.3 million, or 55.3%, over fiscal 2021.
Biggest changeNET SALES The following table summarizes net sales for fiscal 2024 and 2023: Year Ended (Dollars in thousands) March 30, 2024 April 1, 2023 $ Change % Change Net sales $ 2,024,823 $ 2,606,560 $ (581,737 ) (22.3 %) U.S. manufacturing and retail net sales $ 1,885,507 $ 2,411,342 $ (525,835 ) (21.8 %) U.S. homes sold 20,954 24,736 (3,782 ) (15.3 %) U.S. manufacturing and retail average home selling price $ 90.0 $ 97.5 $ (7.5 ) (7.7 %) Canadian manufacturing net sales $ 109,089 $ 144,289 $ (35,200 ) (24.4 %) Canadian homes sold 891 1,174 (283 ) (24.1 %) Canadian manufacturing average home selling price $ 122.4 $ 122.9 $ (0.5 ) (0.4 %) Corporate/Other net sales $ 30,227 $ 50,929 $ (20,702 ) (40.6 %) U.S. manufacturing facilities in operation at year end 43 38 5 13 % U.S. retail sales centers in operation at year end 74 31 43 139 % Canadian manufacturing facilities in operation at year end 5 5 — — % Net sales for fiscal 2024 were $2.0 billion, a decrease of $581.7 million, or 22.3%, over fiscal 2023.
If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. As the analysis depends upon judgments, estimates and assumptions, such testing is subject to inherent uncertainties, which could cause the fair value to fluctuate from period to period. In fiscal 2022, the Company performed qualitative assessments of its reporting units.
If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. As the analysis depends upon judgments, estimates and assumptions, such testing is subject to inherent uncertainties, which could cause the fair value to fluctuate from period to period. In fiscal 2024, the Company performed qualitative assessments of its reporting units.
The Company establishes reserves for reported and unreported losses, and insurance company reimbursements, under these programs using an actuarial determined value which takes into consideration prior claim experience, estimates of losses for known occurrences and the respective volume of business activity for a given period. The health plan is currently subject to a stop-loss limit of $600,000 per occurrence.
The Company establishes reserves for reported and unreported losses and insurance company reimbursements under these programs using an actuarial determined value which takes into consideration prior claim 33 experience, estimates of losses for known occurrences and the respective volume of business activity for a given period. The health plan is currently subject to a stop-loss limit of $700,000 per occurrence.
Management uses Adjusted EBITDA for planning purposes, including the preparation of internal annual operating budget and periodic forecasts: (i) in communications with the board of directors and investors concerning financial performance; (ii) as a factor in determining bonuses under management’s annual incentive compensation program; and (iii) as a measure of operating performance used to determine the ability to provide cash flows to support investments in capital assets, acquisitions and working capital requirements for operating expansion.
Management uses Adjusted EBITDA for planning purposes, including the preparation of internal annual operating budget and periodic forecasts: (i) in communications with the Board of Directors and investors concerning financial performance; (ii) as a factor in determining bonuses under certain incentive compensation programs; and (iii) as a measure of operating performance used to determine the ability to provide cash flows to support investments in capital assets, acquisitions and working capital requirements for operating expansion.
As a result, quarterly results of a particular period are not necessarily representative of the results expected for the year. 33 Recently Issued Accounting Standards Refer to Note 1, “Summary of Significant Accounting Policies,” in our accompanying Consolidated Financial Statements for information regarding new accounting pronouncements. 34
As a result, quarterly results of a particular period are not necessarily representative of the results expected for the year. Recently Issued Accounting Standards Refer to Note 1, “Summary of Significant Accounting Policies,” in our accompanying Consolidated Financial Statements for information regarding new accounting pronouncements. 35
The Company is the largest independent publicly traded factory-built solutions provider in North America based on revenue, and markets its homes under several nationally recognized brand names including Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S. and Moduline and SRI Homes in western Canada.
The Company is the largest independent publicly traded factory-built solutions provider in North America based on revenue, and markets its homes under several nationally recognized brand names including Skyline Homes, Champion Homes, Genesis Homes, Regional Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, All American Homes, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S. and Moduline and SRI Homes in western Canada.
See also Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the year ended April 3, 2021, which provides additional information on comparisons of fiscal years 2021 and 2020. Overview The Company is a leading producer of factory-built housing in the U.S. and Canada.
See also Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the year ended April 1, 2023, which provides additional information on comparisons of fiscal years 2023 and 2022. Overview The Company is a leading producer of factory-built housing in the U.S. and Canada.
Based on industry data, the Company’s U.S. wholesale market share of HUD code homes sold was 19.3%, 16.9%, and 16.5% in fiscal 2022, 2021, and 2020, respectively. Annual industry shipments have generally increased each year since calendar year 2009 when only 50,000 HUD-coded manufactured homes were shipped, the lowest level since the industry began recording statistics in 1959.
Based on industry data, the Company’s U.S. wholesale market share of HUD code homes sold was 19.9%, 20.4%, and 19.3% in fiscal 2024, 2023, and 2022, respectively. Annual industry shipments have generally increased each year since calendar year 2009 when only 50,000 HUD-coded manufactured homes were shipped, the lowest level since the industry began recording statistics in 1959.
Losses under repurchase obligations represent the difference between the repurchase price and net proceeds from the resale of the homes, less accrued rebates, which will not be paid. Losses incurred on homes repurchased have been insignificant in recent periods. The reserve for estimated losses under repurchase agreements was $2.3 million at April 2, 2022.
Losses under repurchase obligations represent the difference between the repurchase price and net proceeds from the resale of the homes, less accrued rebates, which will not be paid. Losses incurred on homes repurchased have been insignificant in recent periods. The reserve for estimated losses under repurchase agreements was $1.8 million at March 30, 2024.
At April 2, 2022, letters of credit issued under the sub-facility totaled $30.4 million. Industrial Revenue Bonds Obligations under industrial revenue bonds are supported by letters of credit and bear interest based on a municipal bond index rate. The industrial revenue bonds require lump-sum payments of principal upon maturity in 2029.
At March 30, 2024, letters of credit issued under the sub-facility totaled $34.0 million. 31 Industrial Revenue Bonds Obligations under industrial revenue bonds are supported by letters of credit and bear interest based on a municipal bond index rate. The industrial revenue bonds require lump-sum payments of principal upon maturity in 2029.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES Selling, general, and administrative (“SG&A”) expenses include foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes SG&A expenses for fiscal 2022 and 2021: Year Ended (Dollars in thousands) April 2, 2022 April 3, 2021 $ Change % Change Selling, general, and administrative expenses: U.S.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES Selling, general, and administrative (“SG&A”) expenses include foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes SG&A expenses for fiscal 2024 and 2023: Year Ended (Dollars in thousands) March 30, 2024 April 1, 2023 $ Change % Change Selling, general, and administrative expenses: U.S.
Pursuant to these agreements, during the repurchase period, generally upon default by the retailer and repossession by the financial institution, the Company is obligated to repurchase the homes from the floor plan lenders. The contingent repurchase obligation as of April 2, 2022 is estimated to be approximately $339.5 million, without reduction for the resale value of the homes.
Pursuant to these agreements, during the repurchase period, generally upon default by the retailer and repossession by the financial institution, the Company is obligated to repurchase the homes from the floor plan lenders. The contingent repurchase obligation as of March 30, 2024 was estimated to be approximately $296.3 million, without reduction for the resale value of the homes.
In the event operating cash flow and existing cash balances were deemed inadequate to support the Company’s liquidity needs, and one or more capital resources were to become unavailable, the Company would revise its operating strategies. Cash provided by operating activities was $224.5 million in fiscal 2022 compared to $153.9 million in fiscal 2021.
In the event operating cash flow and existing cash balances were deemed inadequate to support the Company’s liquidity needs, and one or more capital resources were to become unavailable, the Company would revise its operating strategies. Cash provided by operating activities was $222.7 million in fiscal 2024 compared to $416.2 million in fiscal 2023.
In the normal course of business, the Company’s subsidiaries historically provided certain parent company guarantees to two U.K. customers. These guarantees provided contractual liability for proven construction defects up to 12 years from the date of delivery of the units.
The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. In the normal course of business, the Company’s subsidiaries historically provided certain parent company guarantees to two U.K. customers. These guarantees provided contractual liability for proven construction defects up to 12 years from the date of delivery of the units.
The Company’s effective tax rate for fiscal 2021 differed from the federal statutory income tax rate of 21.0%, due primarily to the effect of non-deductible expenses, tax credits, state and local income taxes, and results in foreign jurisdictions. ADJUSTED EBITDA The following table reconciles net income, the most directly comparable U.S.
The Company’s effective tax rate for both fiscal 2024 and 2023 differs from the federal statutory income tax rate of 21.0%, due primarily to the effect of non-deductible expenses, state and local income taxes, and foreign rate differential, partially offset by tax credits. ADJUSTED EBITDA The following table reconciles net income, the most directly comparable U.S.
The Company’s revolving credit facility includes (i) a maximum consolidated total net leverage ratio of 3.25 to 1.00, subject to an upward adjustment upon the consummation of a material acquisition, and (ii) a minimum interest coverage ratio of 3.00 to 1.00.
Total available borrowings under the Credit Agreement as of March 30, 2024 were $166.0 million. The Company’s revolving credit facility includes (i) a maximum consolidated total net leverage ratio of 3.25 to 1.00, subject to an upward adjustment upon the consummation of a material acquisition, and (ii) a minimum interest coverage ratio of 3.00 to 1.00.
While shipments of HUD-coded manufactured homes have improved modestly in recent years, current manufactured housing shipments are still at lower levels than the long-term historical average of over 200,000 units per year. Manufactured home sales represent approximately nine percent of all U.S. single family home starts.
While shipments of HUD-coded manufactured homes have improved modestly in recent years, current manufactured housing shipments are still at lower levels than the long-term historical average of over 200,000 units per year.
The following is a summary of the change by operating segment. U.S. Factory-built Housing: SG&A expenses for the U.S. Factory-built Housing segment increased by $61.6 million, or 48.8%, during fiscal 2022 as compared to the prior year. SG&A expenses, as a percent of segment net sales, were 9.4% in fiscal 2022 compared to 10.0% during fiscal 2021.
The following is a summary of the change by operating segment. 28 U.S. Factory-built Housing: SG&A expenses for the U.S. Factory-built Housing segment increased by $10.9 million, or 4.9%, during fiscal 2024 as compared to the prior year. SG&A expenses, as a percent of segment net sales, increased to 12.3% in fiscal 2024 compared to 9.2% during fiscal 2023.
OTHER MATTERS Inflation Inflation of raw materials, especially commodities such as forest products, was significant during fiscal 2022. The raw material price increases have generally been passed on to customers or mitigated through working with supply chain partners, sourcing alternative materials or other operational improvements to minimize the effect on profitability.
OTHER MATTERS Inflation Raw material price increases have generally been passed on to customers or mitigated through working with supply chain partners, sourcing alternative materials or other operational improvements to minimize the effect on our profitability.
NON-GAAP FINANCIAL MEASURES - ADJUSTED EBITDA The Company defines Adjusted Earnings Before Interest Taxes and Depreciation and Amortization (“Adjusted EBITDA”) as net income or loss plus; (a) the provision for income taxes; (b) interest expense, net; (c) depreciation and amortization; (d) gain or loss from discontinued operations; (e) equity based compensation for awards granted prior to December 31, 2018; (f) non-cash 31 restructuring charges and impairment of assets; and (g) other non-operating costs including those for the acquisition and integration or disposition of businesses and idle facilities.
GAAP. 32 NON-GAAP FINANCIAL MEASURES - ADJUSTED EBITDA The Company defines Adjusted Earnings Before Interest Taxes and Depreciation and Amortization (“Adjusted EBITDA”) as net income or loss plus expenses or minus income for: (a) the provision for income taxes; (b) interest income or expense, net; (c) depreciation and amortization; (d) gain or loss from discontinued operations; (e) non-cash restructuring charges and impairment of assets; (f) equity in net earnings or losses of affiliates; (g) charges related to the remediation of the water intrusion product liability claims; and (h) other non-operating income or expense including but not limited to those costs for the acquisition and integration or disposition of businesses and idle facilities.
The following is a summary of the change by operating segment. U.S. Factory-built Housing: Fiscal 2022 net sales for the Company’s U.S. manufacturing and retail operations increased by $724.8 million, or 57.2%, over fiscal 2021.
The following is a summary of the change by operating segment. U.S. Factory-built Housing: Fiscal 2024 net sales for the Company’s U.S. manufacturing and retail operations decreased by $525.8 million, or 21.8%, from fiscal 2023.
The Company operates 36 manufacturing facilities throughout the U.S. and five manufacturing facilities in western Canada that primarily construct factory-built, timber-framed manufactured and modular houses that are sold primarily to independent retailers, builders/developers, and manufactured home community operators. The Company’s retail operations consist of 18 sales centers that sell manufactured homes to consumers primarily in the southern U.S.
The Company operates 43 manufacturing facilities throughout the U.S. and 5 manufacturing facilities in western Canada that primarily construct factory-built, timber-framed manufactured and modular houses that are sold primarily to independent retailers, builders/developers, and manufactured home community operators.
The interest rate on borrowings under the Amended Credit Agreement adjusts based on the consolidated total net leverage of the Company from a high of the London Inter-Bank Offered Rate ("LIBOR") plus 1.875% and Alternative Base Rate ("ABR") plus 0.875%, at the election of the Company, when the consolidated total net leverage ratio is equal to or greater than 2.25:1.00, to a low of LIBOR plus 1.125% and ABR plus 0.125% when the consolidated total net leverage is below 0.50:1.00.
The interest rate spread adjusts based on the consolidated total net leverage of the Company from a high of 1.875% when the consolidated total net leverage ratio is equal to or greater than 2.25:1.00, to a low of 1.125% when the consolidated total net leverage is below 0.50:1.00.
Industry and Company Outlook 24 Since July 2020, U.S. and Canadian housing industry demand has been robust. The limited availability of existing homes for sale and the broader need for newly built affordable, single-family housing has continued to drive demand for new homes in these markets.
These acquisitions and investments are included in the Company's consolidated results for periods subsequent to their respective acquisition dates. Industry and Company Outlook Limited availability of existing homes for sale and the broader need for newly built affordable, single-family housing has continued to drive demand for new homes in the U.S. and Canadian markets.
However, continued, frequent and sudden increases in specific costs, as well as price competition, can affect the ability to pass on costs and adversely impact results of operations. Therefore, there is no assurance that inflation or the impact of rising material costs will not have a significant impact on revenue or results of operations in the future.
However, continued, frequent and sudden increases in specific costs, as well as price competition, can affect the ability to pass on costs and adversely impact results of operations.
The increase was primarily due to an increase in the number of homes sold during the period of 23.5% and an increase in the average home selling price of 27.3%.
The decrease was primarily due to a 15.3% decrease in the number of homes sold during the period, as well as a 7.7% decrease in the average home selling price.
The following is a summary of the change by operating segment. U.S. Factory-built Housing: Gross profit for the U.S. Factory-built Housing segment increased by $277.4 million, or 109.7%, during fiscal 2022 compared to the prior year. The increase in gross profit is due to the increase in revenue in fiscal 2022.
The following is a summary of the change by operating segment. U.S. Factory-built Housing: Gross profit for the U.S. Factory-built Housing segment decreased by $317.4 million, or 41.9%, during fiscal 2024 compared to the prior year. As a percent of net sales, gross profit was 23.3% for fiscal 2024 compared to 31.4% in the prior fiscal year.
Corporate/Other: 27 Gross profit for the Corporate/Other segment increased by $2.1 million, or 15.9%, during fiscal 2022 compared to the same period in the prior year. Corporate/Other gross profit improved as a percent of segment net sales to 27.0% from 24.9%. Gross margin for the Company’s transportation business improved due to a change in revenue mix.
Gross profit decreased to 27.9% as a percent of segment net sales from 30.9% in the prior year due to decreased leverage of fixed manufacturing costs. Corporate/Other: Gross profit for the Corporate/Other segment decreased by $1.4 million, or 8.3%, during fiscal 2024 compared to the same period in the prior year.
Seasonality The housing industry, which includes factory-built homes, is affected by seasonality. Sales during the period from March to November are traditionally higher than other months.
Therefore, there is no assurance that inflation or the impact of rising material costs will not have a significant impact on revenue or results of operations in the future. 34 Seasonality The housing industry, which includes factory-built homes, is affected by seasonality. Sales during the period from March to November are traditionally higher than other months.
The increase in cost is generally a function of the increase in net sales and profits for the segment which translates to higher incentive compensation. Corporate/Other: SG&A expenses for Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments, and intersegment eliminations.
SG&A expenses, as a percent of segment net sales, were 9.7% during fiscal 2024 compared to 9.0% in fiscal 2023. The increase in SG&A as a percent of net sales is a the result of less absorption of certain fixed costs. Corporate/Other: SG&A expenses for Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments, and intersegment eliminations.
OTHER INCOME, NET The following table summarizes other income, net for fiscal 2022 and 2021: Year Ended (Dollars in thousands) April 2, 2022 April 3, 2021 $ Change % Change Other income, net $ (36 ) $ (5,889 ) $ 5,853 (99.4 %) Other income, net decreased $5.9 million, or 99.4%, during fiscal 2022 as compared to the prior year.
OTHER (EXPENSE) INCOME, NET The following table summarizes other income, net for fiscal 2024 and 2023: Year Ended (Dollars in thousands) March 30, 2024 April 1, 2023 $ Change % Change Other expense (income), net $ 2,604 $ (634 ) $ 3,238 (510.7 %) Other expense (income), net increased $3.2 million during fiscal 2024 compared to the prior year.
See the definition of Adjusted EBITDA under “Non-GAAP Financial Measures” below for additional information regarding the definition and use of this metric in evaluating the Company’s results. 29 BACKLOG Although orders from customers can be cancelled at any time without penalty, and unfilled orders are not necessarily an indication of future business, the Company’s unfilled U.S. and Canadian manufacturing orders at April 2, 2022 totaled $1.6 billion compared to $858.6 million at April 3, 2021.
BACKLOG Although orders from customers can be cancelled at any time without penalty, and unfilled orders are not necessarily an indication of future business, the Company’s unfilled U.S. and Canadian manufacturing orders at March 30, 2024 totaled $315.8 million compared to $308.1 million at April 1, 2023.
Floor Plan Payable At April 2, 2022, the Company had outstanding borrowings on floor plan financing arrangements of $35.5 million. The Company’s retail operations utilize floor plan financing to fund the acquisition of manufactured homes for display or resale. The arrangements provide for borrowings up to $67.0 million.
The Company’s retail operations utilize floor plan financing to fund the acquisition of manufactured homes for display or resale. The arrangements provide for borrowings up to $248.0 million. Floor plan payables are secured by the homes acquired and are required to be repaid when the Company sells the financed home to a customer.
On July 7, 2021, the Company entered into an Amended and Restated Credit Agreement which provides for a $200.0 million revolving credit facility, including a $45.0 million letter of credit sub-facility ("Amended Credit Agreement"). At April 2, 2022, $169.6 million was available for borrowing under the Amended Credit Agreement.
The Company has an Amended and Restated Credit Agreement which provides for a $200.0 million revolving credit facility, including a $45.0 million letter of credit sub-facility ("Amended Credit Agreement"). At March 30, 2024, there were no borrowings under the Amended Credit Agreement and letters of credit issued under the Credit Agreement totaled $34.0 million.
The Company's acquisitions and investments are part of a strategy to grow and diversify revenue with a focus on increasing the Company’s HUD and modular homebuilding presence in the U.S. as well as improving the results of operations. These acquisitions and investments are included in the consolidated results for periods subsequent to their respective acquisition dates.
The Company believes this offering will provide customers needed financing solutions and improve the Company's market share. 24 The Company's acquisitions and investments are part of a strategy to grow and diversify revenue with a focus on increasing the Company’s homebuilding presence in the U.S. as well as improving the results of operations through streamlining production of similar product categories.
The increase in average selling price was due to pricing actions enacted in response to rising material and labor costs. Net sales for the Canadian segment were also favorably impacted by approximately $8.2 million as the Canadian dollar strengthened relative to the U.S. dollar during fiscal 2022 as compared to the prior year.
Net sales for the Canadian segment were also unfavorably impacted by approximately $2.8 million as the Canadian dollar weakened relative to the U.S. dollar during fiscal 2024 as compared to the prior year. Corporate/Other: Net sales for Corporate/Other includes the Company’s transportation business and the elimination of intersegment sales.
As a result, the Company has focused on operational improvements to increase the capacity utilization and profitability at its existing manufacturing facilities as well as executing measured expansion of its manufacturing footprint. The Company is focused on growing in strong housing markets across the U.S. and Canada.
Acquisitions and Expansions The Company is focused on operational improvements to increase capacity utilization and profitability at its existing manufacturing facilities as well as measured expansion of its manufacturing and retail footprint through facility and equipment investments and acquisitions. Those investments will help improve the Company's ability to satisfy demand for affordable housing.
Cash used in financing activities in fiscal 2021 is primarily a result of payments made on the revolving credit facility and floor plan financing facilities totaling $38.0 million and $8.2 million, respectively. CONTRACTUAL OBLIGATIONS AND COMMITMENTS Credit Facility The Amended Credit Agreement matures in July 2026 and has no scheduled amortization.
The change is a result of the Company's strategic utilization of floor plan borrowings and cash available to finance working capital. CONTRACTUAL OBLIGATIONS AND COMMITMENTS Credit Facility The Amended Credit Agreement matures in July 2026 and has no scheduled amortization.
The increase is primarily a result of increased operating income due to increases in net sales and gross margins, partially offset by higher SG&A expenses and the reduction in wage subsidies received in the prior year.
The decrease is primarily a result of lower operating income due to decreases in sales volume, average selling prices, gross margins and higher SG&A expenses, partially offset by the incremental operating income generated by Regional Homes for the period after the acquisition.
The Company has provided various representations, warranties, and other standard indemnifications in the ordinary course of its business in agreements to acquire and sell business assets and in financing arrangements. The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business.
The reserve for estimated losses under repurchase agreements was $1.8 million at March 30, 2024. See “ Critical Accounting Polices and Estimates – Reserve for Repurchase Commitments ” below. The Company has provided various representations, warranties, and other standard indemnifications in the ordinary course of its business in agreements to acquire and sell business assets and in financing arrangements.
Factory-built Housing $ 187,697 $ 126,141 $ 61,556 48.8 % Canadian Factory-built Housing 12,912 9,059 3,853 42.5 % Corporate/Other 55,609 43,736 11,873 27.1 % Total selling, general, and administrative expenses $ 256,218 $ 178,936 $ 77,282 43.2 % Selling, general, and administrative expenses as a percent of net sales 11.6 % 12.6 % SG&A expenses were $256.2 million during fiscal 2022, an increase of $77.3 million compared to the prior year.
Factory-built Housing $ 232,356 $ 221,498 $ 10,858 4.9 % Canadian Factory-built Housing 10,592 12,932 (2,340 ) (18.1 %) Corporate/Other 67,641 65,966 1,675 2.5 % Total selling, general, and administrative expenses $ 310,589 $ 300,396 $ 10,193 3.4 % Selling, general, and administrative expenses as a percent of net sales 15.3 % 11.5 % SG&A expenses were $310.6 million during fiscal 2024, an increase of $10.2 million compared to the prior year.
The Company has the ability to resell the repurchased collateral to other retailers, and losses incurred on repurchased homes have been insignificant in recent periods. The reserve for estimated losses under repurchase agreements was $2.3 million at April 2, 2022. See “ Critical Accounting Polices and Estimates – Reserve for Repurchase Commitments ” below.
The contingent repurchase obligation as of March 30, 2024 is approximately $296.3 million, without reduction for the resale value of the homes collateralizing the potential repurchases. The Company has the ability to resell the repurchased collateral to other retailers, and losses incurred on repurchased homes have been insignificant in recent periods.
Additionally, the Company is contingently obligated under repurchase agreements with certain lending institutions that provide floor plan financing to independent retailers. The contingent repurchase obligation as of April 2, 2022 is approximately $339.5 million, without reduction for the resale value of the homes.
Contingent Obligations The Company has contingent liabilities and obligations at March 30, 2024, including surety bonds and letters of credit totaling $15.1 million and $34.0 million, respectively. Additionally, the Company is contingently obligated under repurchase agreements with certain lending institutions that provide floor plan financing to independent retailers.
LIQUIDITY AND CAPITAL RESOURCES The following table presents summary cash flow information for fiscal 2022, 2021, and 2020: Year Ended (Dollars in thousands) April 2, 2022 April 3, 2021 March 28, 2020 Net cash provided by (used in): Operating activities $ 224,479 $ 153,897 $ 76,743 Investing activities (31,967 ) (56,808 ) (14,093 ) Financing activities (19,936 ) (47,813 ) 21,569 Effect of exchange rate changes 256 3,850 (1,398 ) Net increase in cash, cash equivalents, and restricted cash 172,832 53,126 82,821 Cash, cash equivalents, and restricted cash at beginning of period 262,581 209,455 126,634 Cash, cash equivalents, and restricted cash at end of period $ 435,413 $ 262,581 $ 209,455 The Company’s primary sources of liquidity are cash flows from operations and existing cash balances.
The increase in backlog was primarily driven by higher net orders and the acquisition of Regional Homes. 30 LIQUIDITY AND CAPITAL RESOURCES The following table presents summary cash flow information for fiscal 2024 and 2023: Year Ended (Dollars in thousands) March 30, 2024 April 1, 2023 Net cash provided by (used in): Operating activities $ 222,704 $ 416,225 Investing activities (485,678 ) (61,179 ) Financing activities 10,864 (37,019 ) Effect of exchange rate changes (280 ) (5,987 ) Net (decrease) increase in cash, cash equivalents, and restricted cash (252,390 ) 312,040 Cash, cash equivalents, and restricted cash at beginning of period 747,453 435,413 Cash, cash equivalents, and restricted cash at end of period $ 495,063 $ 747,453 The Company’s primary sources of liquidity are cash flows from operations and existing cash balances.
Canadian Factory-built Housing: The Canadian Factory-built Housing segment net sales increased by $57.8 million, or 57.0% for fiscal 2022 compared to the prior year, primarily due to a 20.1% increase in homes sold and a 30.7% increase in average selling price per new home. The increase in homes sold was driven by increased production in response to strong demand.
Canadian Factory-built Housing: The Canadian Factory-built Housing segment net sales decreased by $35.2 million, or 24.4% in fiscal 2024 compared to the prior year, primarily due to a 24.1% decrease in homes sold. The decrease in homes sold is due to lower customer demand caused by inflation and rising interest rates.
INTEREST EXPENSE The following table summarizes the components of interest expense, net for fiscal 2022 and 2021: Year Ended (Dollars in thousands) April 2, 2022 April 3, 2021 $ Change % Change Interest expense $ 3,245 $ 3,813 $ (568 ) (14.9 %) Interest income (733 ) (565 ) (168 ) 29.7 % Interest expense, net $ 2,512 $ 3,248 $ (736 ) (22.7 %) Average outstanding floor plan payable $ 31,485 $ 26,992 Average outstanding long-term debt $ 19,155 $ 64,663 28 Interest expense, net was $2.5 million for fiscal 2022, a decrease of $0.7 million compared to the prior year.
INTEREST (INCOME) EXPENSE, NET The following table summarizes the components of interest (income), net for fiscal 2024 and 2023: Year Ended (Dollars in thousands) March 30, 2024 April 1, 2023 $ Change % Change Interest expense $ 4,613 $ 3,276 $ 1,337 40.8 % Interest (income) (32,867 ) (18,253 ) (14,614 ) 80.1 % Interest (income) expense, net $ (28,254 ) $ (14,977 ) $ (13,277 ) 88.6 % Average outstanding floor plan payable $ 42,751 $ 25,756 Average outstanding long-term debt $ 18,162 $ 12,430 Interest income, net was $28.3 million during fiscal 2024, compared to $15.0 million in the prior year.
The Company’s transportation business engages independent owners/drivers to transport manufactured homes, recreational vehicles, and other products throughout the U.S. and Canada. Acquisitions and Expansions Over last several years, demand for the Company’s products, primarily affordable housing in the U.S., has continued to improve.
The Company’s retail operations consist of 74 sales centers that sell manufactured homes to consumers across the U.S. while the construction services business installs and sets up factory-built homes. The Company’s transportation business engages independent owners/drivers to transport manufactured homes, recreational vehicles, and other products throughout the U.S. and Canada.
Historically, order cancellation rates have been very low, but the longer lead-time caused by larger backlogs and changing prices could result in higher cancellations in future periods. For fiscal 2022, approximately 82% of the Company’s U.S. manufacturing sales were generated from the manufacture of homes that comply with the Federal HUD code construction standard in the U.S.
For fiscal 2024, approximately 88% of the Company’s U.S. manufacturing sales were generated from the manufacture of homes that comply with the Federal HUD code construction standard in the U.S. According to data reported by MHI, HUD-code industry home shipments were 92,288, 104,374, and 108,964 units during fiscal 2024, 2023, and 2022, respectively.
Estimated self-insurance costs are accrued for all expected future expenditures for reported and unreported claims based on historical experience. Warranty Reserves The Company’s factory-built housing operations generally provide each retail homebuyer or builder/developer with a 12-month assurance warranty from the date of retail purchase. Estimated warranty costs are accrued as cost of sales at the time of sale.
Estimated self-insurance costs are accrued for all expected future expenditures for reported and unreported claims based on historical experience.
The increase is primarily related to the cash paid for the acquisition of ScotBilt, net of cash acquired, of $52.5 million, partially offset by a decrease in capital expenditures compared to the prior year. 30 In fiscal 2022, cash used in financing activities was $19.9 million, versus $47.8 million in the prior fiscal year.
In fiscal 2024, cash provided by financing activities was $10.9 million, versus $37.0 million used for financing activities in the prior fiscal year. The year over year increase was primarily related to net borrowings under floor plan financing arrangements. Fiscal 2024 included a $15.4 million increase in floor plan borrowings while fiscal 2023 included a $35.5 million net repayment.
Canadian Factory-built Housing: SG&A expenses for the Canadian Factory-built Housing segment increased by $3.9 million, or 42.5%, during fiscal 2022 as compared to the prior year. SG&A expenses, as a percent of segment net sales, were 8.1% during fiscal 2022 compared to 8.9% in fiscal 2021.
Canadian Factory-built Housing: Gross profit for the Canadian Factory-built Housing segment decreased by $14.2 million, or 31.7%, during fiscal 2024 compared to the prior year. The decrease in gross profit was due to lower sales volumes.
INCOME TAX EXPENSE The following table summarizes income tax expense for fiscal 2022 and 2021: Year Ended (Dollars in thousands) April 2, 2022 April 3, 2021 $ Change % Change Income tax expense $ 82,385 $ 26,501 $ 55,884 210.9 % Effective tax rate 24.9 % 23.8 % Income tax expense during fiscal 2022 was $82.4 million, representing an effective tax rate of 24.9%, compared to income tax expense of $26.5 million, representing an effective tax rate of 23.8%, in fiscal 2021.
During the first quarter of fiscal 2023, the Company received insurance proceeds for partial settlement of certain Champion Homes Builders' pre-bankruptcy workers' compensation claims, which was partially offset by transaction costs incurred for the acquisition of Manis. 29 INCOME TAX EXPENSE The following table summarizes income tax expense for fiscal 2024 and 2023: Year Ended (Dollars in thousands) March 30, 2024 April 1, 2023 $ Change % Change Income tax expense $ 47,136 $ 132,094 $ (84,958 ) (64.3 %) Effective tax rate 23.5 % 24.7 % Income tax expense during fiscal 2024 was $47.1 million, representing an effective tax rate of 23.5%, compared to income tax expense of $132.1 million, representing an effective tax rate of 24.7%, in fiscal 2023.
More recently, we have seen a number of market trends pointing to increased sales of ADUs and urban-to-rural migration as customers accommodate working-from-home patterns, as well as people seeking rent-to-own single-family options. The robust demand environment has resulted in backlog at the end of fiscal 2022 of $1.6 billion compared to $858.6 million at the end of fiscal 2021.
More recently, we have seen a number of market trends pointing to increased sales of ADUs and rent-to-own single-family options. Inflation and higher interest rates have continued to impact demand for the Company's products in both the U.S. and Canada.
SG&A expenses for Corporate/Other increased by $11.9 million, or 27.1%, during fiscal 2022 as compared to the prior year. SG&A expenses, as a percent of segment net sales, were 97.5% during fiscal 2022 compared to 82.1% in fiscal 2021.
SG&A expenses for Corporate/Other increased by $1.7 million, or 2.5%, during fiscal 2024 as compared to the prior year. The increase is mainly due to increased equity compensation and investments made to enhance our online customer experience and support systems, offset in part by lower corporate incentive compensation which is measured against sales and profitability targets.
Removed
In June, 2021, the Company acquired two idle facilities in Navasota, Texas in order to increase its production capabilities in the Texas market. The Company began production and completed the certification process at one of those facilities during the fourth quarter of fiscal 2022.
Added
During fiscal 2023, robust demand for housing began to slow as inflation and higher interest rates made housing less affordable. Because the Company offers a more affordable price point than other housing options, the economic environment drives an even greater need for attainable housing solutions.
Removed
On February 28, 2021, the Company acquired ScotBilt, which operates two manufacturing facilities in Georgia providing affordable housing throughout Alabama, Florida, Georgia and the Carolinas. ScotBilt helped to balance the Company’s national distribution and complements the Company’s existing manufacturing footprint in the attractive mid-south region.
Added
As a result, the Company continues to focus on growing in strong housing markets across the U.S. and Canada, as well as expanding products and services to provide more holistic affordable solutions to homebuyers. In October 2023, the Company acquired Regional Homes, which operates three manufacturing facilities in Alabama and 44 retail sales centers across the Southeast U.S.
Removed
The operations of ScotBilt are included in the financial results of Skyline Champion since the date of the acquisition. During fiscal 2022, the Company completed the successful cultural, processes, systems and internal controls integration at the acquired facilities.
Added
Regional's strong presence in large HUD markets in the Southeast U.S. greatly expanded our captive retail and manufacturing distribution in the region. In July 2022, the Company acquired 12 Factory Expo retail sales centers from Alta Cima Corporation, which expanded the internal retail network across a broader portion of the U.S.
Removed
In January, 2021, the Company acquired two idle facilities in Pembroke, North Carolina which provide an opportunity to further expand its manufacturing footprint in the Southeast markets. The Company is currently renovating one of those facilities for expected production in late fiscal 2023.
Added
In May 2022, the Company acquired Manis Custom Builders, Inc. ("Manis") in order to expand its manufacturing footprint and further streamline its product offering in the Carolinas. In addition to those acquisitions, the Company is also focused on enhancing its U.S. manufacturing production capacity through various plant start-ups in strategic locations.
Removed
Generally, higher backlog at our manufacturing facilities creates an opportunity to increase production efficiencies. Although the higher demand brings opportunities, it also has resulted in significant increases in raw material and labor costs. In addition, we are experiencing intermittent supply disruption and higher freight costs.
Added
As a result, the Company began production in previously idled or acquired facilities in Decatur, Indiana and Bartow, Florida in fiscal 2024, a facility in Pembroke, North Carolina in the fourth quarter of fiscal 2023 and a facility in Navasota, Texas in the fourth quarter of fiscal 2022.
Removed
Finding and retaining qualified labor continues to be a challenge for our plants which requires us to review our compensation programs and adjust accordingly. We manage our business to anticipate or quickly react to these supply challenges and cost increases and generally are able to pass along increased costs to our customers.
Added
The Company owns six idle manufacturing facilities that could be used for further manufacturing capacity expansion in future periods. During fiscal 2024, the Company made an equity investment in ECN. The investment, in part, facilitated the creation of a captive finance company in partnership with Triad.
Removed
Industry shipments of HUD-code homes are reported on a one-month lag. According to data reported by MHI, HUD-code industry home shipments were 108,964, 95,588, and 97,553 units during fiscal 2022, 2021, and 2020, respectively.
Added
The captive finance company, Champion Financing, provides factory-built home floor plan and consumer loans to retailers and homebuyers.
Removed
COVID-19 Pandemic The outbreak of a novel strain of coronavirus ("COVID-19") was declared a global pandemic by the World Health Organization in March 2020. There remains continued uncertainty regarding the extent and duration of the impact that the COVID-19 pandemic will have on the economy, the housing market, and the Company, as well as the Company’s employees, customers, and suppliers.
Added
However, as interest rates stabilized in fiscal 2024, the Company saw an increase in orders from customers over the prior year. Although orders were higher, sales during fiscal 2023 outpaced those in fiscal 2024 as a result of higher production to fill elevated backlog carried over from prior years.
Removed
The Company has prioritized the safety and well-being of its employees and customers and implemented standards to operate in accordance with social-distancing protocols and public health authority guidelines. Beginning in March 2020, the Company took actions to temporarily idle certain facilities in response to government shutdown orders or reduced demand.
Added
The Company's backlog at the end of fiscal 2024 was $315.8 million compared to $308.1 million at the end of fiscal 2023 and $1.6 billion at the end of fiscal 2022.
Removed
By late April 2020, most of the temporarily idled manufacturing facilities had reopened, but at reduced production levels due to employee absenteeism, difficulty hiring new team members, and social distancing protocols. During fiscal 2021, the Company experienced intermittent closures due to COVID-19 outbreaks at the facilities or surrounding communities causing higher than normal absenteeism.
Added
Manufactured home sales represent approximately 9% of all U.S. single family home starts. 25 RESULTS OF OPERATIONS FOR FISCAL 2024 VS. 2023 Year Ended (Dollars in thousands) March 30, 2024 April 1, 2023 Results of Operations Data: Net sales $ 2,024,823 $ 2,606,560 Cost of sales 1,539,029 1,787,879 Gross profit 485,794 818,681 Selling, general, and administrative expenses 310,589 300,396 Operating income 175,205 518,285 Interest (income), net (28,254 ) (14,977 ) Other expense (income), net 2,604 (634 ) Income from operations before income taxes 200,855 533,896 Income tax expense 47,136 132,094 Net income before equity in net loss of affiliate 153,719 401,802 Equity in net loss of affiliate 7,023 — Net income $ 146,696 $ 401,802 Reconciliation of Adjusted EBITDA: Net income $ 146,696 $ 401,802 Income tax expense 47,136 132,094 Interest (income), net (28,254 ) (14,977 ) Depreciation and amortization 34,910 26,726 Transaction costs 3,253 338 Equity in net loss of affiliate 7,023 — Product liability - water intrusion 34,500 — Other — (972 ) Adjusted EBITDA $ 245,264 $ 545,011 As a percent of net sales: Gross profit 24.0 % 31.4 % Selling, general and administrative expenses 15.3 % 11.5 % Operating income 8.7 % 19.9 % Net income 7.2 % 15.4 % Adjusted EBITDA 12.1 % 20.9 % 26 FISCAL PERIODS The Company’s fiscal year is a 52- or 53-week period that ends on the Saturday nearest March 31.
Removed
In the second half of fiscal 2021, the Company was able to increase daily production rates over the levels achieved in the prior fiscal year period as direct labor staffing levels increased and production efficiencies improved.
Added
Fiscal 2024 and 2023 were each 52-week periods.
Removed
Although the Company has generally been able to navigate the production challenges caused by the pandemic in fiscal 2022, availability of labor and certain raw materials remains uncertain due to continued labor shortages and supply chain disruptions.
Added
The decrease in the number of homes sold was due to lower customer demand, lower production volume and the lack of disaster relief housing sales to FEMA compared to the prior year.
Removed
Prices for most raw materials and components have experienced increased volatility and, overall, labor, transportation and other manufacturing costs have trended higher than prior periods. As part of the initial response to the pandemic, the Company offered extended benefits to employees, including increased sick pay and waived premium payments on healthcare benefits for furloughed employees.
Added
The average selling price decrease was due, in part, to customers choosing smaller homes with fewer or lower cost options, generally as a result of pressure on consumers caused by higher borrowing costs, and the lack of disaster relief housing sales to FEMA which were $200.3 million in fiscal 2023.

… 65 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−3 removed0 unchanged
Biggest changeA 100 basis point increase in the underlying interest rates would result in additional annual interest expense of approximately $0.1 million, assuming related debt of $12.4 million, which is the amount of outstanding borrowings on industrial revenue bonds at April 2, 2022.
Biggest changeAt March 30, 2024, there was $91.3 million outstanding on the floor plan agreements and $12.4 million outstanding on borrowings under industrial revenue bonds at March 30, 2024. A 100 basis point increase in the underlying interest rates would result in additional annual interest expense of approximately $0.9 million on outstanding floor plan balances and industrial revenue bonds.
The Company does not financially hedge its investment in the Canadian operations or in Canadian denominated bank deposits. ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA Financial statements and supplementary data are filed herewith under Item 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
The Company does not financially hedge its investment in the Canadian operations or in Canadian denominated bank deposits. ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA Financial statements, exhibits and schedules are filed herewith under Item 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Assuming future annual Canadian net sales equivalent to fiscal 2022, a change of 1.0% in exchange rates between the U.S. and Canadian dollars would change consolidated sales by $2.0 million. The Company also has foreign exchange risk for cash balances maintained in Canadian dollars that are subject to fluctuating values when exchanged into U.S. dollars.
Assuming future annual Canadian net sales equivalent to fiscal 2024, a change of 1.0% in exchange rates between the U.S. and Canadian dollars would change consolidated sales by $1.5 million. The Company also has foreign exchange risk for cash balances maintained in Canadian dollars that are subject to fluctuating values when exchanged into U.S. dollars.
Foreign Exchange Risk The Company is exposed to foreign exchange risk with its factory-built housing operations in Canada. The Canadian operations had fiscal 2022 net sales of $199.5 million Canadian dollars.
Foreign Exchange Risk The Company is exposed to foreign exchange risk with its factory-built housing operations in Canada. The Canadian operations had fiscal 2024 net sales of $146.7 million Canadian dollars.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Debt obligations under the Amended Credit Agreement are subject to variable rates of interest based on LIBOR and ABR, at the election of the Company.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Debt obligations under the Amended Credit Agreement are subject to variable rates of interest based on SOFR or an ABR, at the election of the Company. Changes in interest rates will affect interest payments on outstanding debt balances.
Obligations under floor plan financing arrangements are subject to variable rates of interest based on terms negotiated with the floor plan lenders.
Obligations under industrial revenue bonds and certain floor plan financing arrangements are subject to variable rates of interest based on a municipal bond index rate and on terms negotiated with the floor plan lenders respectively.
The Company’s approach to interest rate risk is to balance borrowings between fixed rate and variable rate debt as management deems appropriate. At April 2, 2022, the Company’s borrowings under the Amended Credit Agreement, industrial revenue bonds and floor plan financing arrangements were all at variable rates.
At March 30, 2024 there were no outstanding borrowings on the Amended Credit Agreement. The Company’s approach to interest rate risk is to balance borrowings between fixed rate and variable rate debt as management deems appropriate.
Removed
A 100 basis point increase in the underlying interest rate would result in an additional annual interest expense of approximately $0.2 million, assuming related debt of $19.2 million, which is the amount of average outstanding borrowings under the Amended Credit Agreement during the year ended April 2, 2022.
Added
At March 30, 2024, the Company’s borrowings under the industrial revenue bonds were at variable rates, borrowings under notes payable assumed from the acquisition of Regional Homes are at fixed rates and borrowings under floor plan financing arrangements were at a combination of fixed and variable rates.
Removed
Obligations under industrial revenue bonds are subject to variable rates of interest based on a municipal bond index rate.
Removed
A 100 basis point increase in the underlying interest rates would result in additional annual interest expense of approximately $0.4 million, assuming related floor plan borrowings of $35.5 million, which is the amount of outstanding borrowings on floor plan financing at April 2, 2022.

Other SKY 10-K year-over-year comparisons