Champion Homes, Inc. Q4 FY2025 earnings call

• Fiscal 2025 saw 26,000 homes sold, a 19% increase year-over-year, and $2.5 billion in sales (23% revenue growth).
• Announced acquisition of Iseman Homes, with annualized revenues of ~$40 million, to expand retail footprint.
• Active in marketplace, showcased new products at International Builder Show; engaged with HUD leadership, encouraged by regulatory progress on manufactured housing.
• Idled a production location in Florida due to slow recovery from 2024 hurricanes; consolidated two Canadian factories for efficiency.
• Q1 fiscal 2026 revenue expected to be up low single digits; near-term gross margin guided at 25%-26%.
• Expanding retail capabilities, investing in digital technology and dealer portal for independent retailers.

In the fourth quarter, net sales increased 11% to $594 million. U.S. factory built housing revenue saw a 10% increase, with 5,941 homes sold (up 5% year-over-year) and an average selling price per U.S. home of $94,300 (up 5%). Sequentially, U.S. factory-built housing revenue decreased 8% due to seasonality and weather. Canadian revenue was $25 million, a 22% increase in homes sold, but average selling price decreased 9% to $110,600. Consolidated gross profit increased 55% to $152 million, with gross margin expanding 740 basis points to 25.7%. SG&A in the fourth quarter increased $20 million to $110 million.

• Anticipate Q1 fiscal 2026 revenue to be up low single digits compared to same period last year.
• Near-term gross margin expected in the 25%-26% range due to softening consumer confidence, decreased demand, and inflation.
• Board refreshed $100 million share repurchase authority, reflecting confidence in strong cash generation.

• Market uncertainty, including tariffs and inflation impacting consumer sentiment.
• Weather impacts in certain regions (e.g., Florida, South) affecting sales and operations.
• Consumer confidence and demand fluctuations, leading to mixed performance in different markets.
• Regulatory changes and their implementation affecting manufactured housing market access.

Q: Elaborate on discussions with customers in retail and community markets and order rates into April and May.

A: Tim Larson notes mixed in-store traffic by region, but digital leads up; more serious buyers in market, reflecting low single-digit growth for Q1.

Q: Gross margin guidance and what drives the near-term range.

A: Laurie Hough explains near-term margin guide 25%-26% due to short-term softening consumer confidence, decreased demand in certain markets, and inflation; long-term expects structural margins 26%-27%.

Q: Removal of permanent chassis requirement for manufactured homes and its impact.

A: Tim Larson says it allows for better curb appeal, zoning support, and potential cost savings; encourages product innovation leveraging this change.