Champion Homes, Inc. Q3 FY2026 earnings call

• Welcomed Dave McKinstray as CFO, recognized Laurie Hough's 20 years of dedicated service. - Skyline Homes named America's most trusted manufactured homebuilder for the 6th consecutive year, with Champion's brands dominating the top 3 in the industry study. - Product innovation with the launch of new home plans like the Emerald Sky at the Louisville show. - Legislative updates including the ROAD to Housing Act not being in the final National Defense Authorization Act, but the House's Housing for the 21st Century Act supporting offsite-built homes, and the Affordable HOMES Act passing. - Third quarter performance: net sales up 2% to $657 million, homes sold down 2% to 6,485, manufacturing backlog decreased to $266 million with a 7-week lead time. - Channel performance: Independent retail sales down year-over-year but flat sequentially, captive retail sales up year-over-year with 38% of consolidated sales, community sales down year-over-year but with positive feedback from the Louisville show, builder developer sales up year-over-year. - Champion financing strong, with the sale of Triad's parent company to Warburg Pincus progressing and proceeds to Champion.

U.S. factory-built housing net sales increased 2% year-over-year to $657 million. The number of U.S. homes sold decreased 3% to 6,270 homes due to factors like community REIT channel sales decline and prior year weather shift, partially offset by the acquisition of Iseman Homes. The average selling price per U.S. home sold rose 5% to $99,300. Canadian revenue for the quarter was $26 million, a 3% increase in homes sold, but the average selling price decreased 2% due to product mix changes. Captive retail sales represented 38% of consolidated sales in Q3, up from 35% last year.

• Fourth quarter revenue expected up low single digits year-over-year. - Gross margin anticipated to be in the 25%-26% range. - Cautious consumer sentiment, seasonally lower winter selling period, and softer demand in some markets/channels. - Weather-related disruptions may impact delivery timing and results. - Focus on advancing strategic growth priorities, with a modest increase in fixed SG&A in Q4 due to trade shows. - Expect to continue strong operating cash flow and assess capital allocation for long-term sustainable growth.

• Weather-related disruptions can cause variability in delivery timing and quarterly results. - Uncertainties in the legislative process affecting industry growth and affordability initiatives. - Macroeconomic factors impacting consumer demand and housing market conditions.

Q: Greg Palm asked about the geographic environment, weather impacts, and volumes compared to the industry.

A: Timothy Larson said geography had mixed local factors, weather caused production delays but the team was working to make up for them, and volumes were better than the industry due to channel partner execution, digital investments, and product agility.

Q: Matthew Bouley inquired about volumes compared to the industry and the community channel outlook.

A: Timothy Larson stated volumes were better due to channel partner execution and positive retail performance, the community channel was down year-over-year but had positive feedback from the Louisville show, and they were working closely with partners on demand plans.

Q: Michael Dahl asked about Q4 margin assumptions and the inventory build in captive retail.

A: David McKinstray said margin dynamics were similar to Q3, with a seasonal inventory build at captive retail for the spring selling season.

Q: Philip Ng asked about the spring selling season, legislative nuances, and REIT inventory.

A: Timothy Larson said the early read on the spring selling season was positive with order growth, legislative nuances included House and Senate bills on HUD homes, and REIT inventory was managed closely with partners.

Q: Dan Moore asked about Q4 revenue backlog, margin outlook, SG&A, and capital allocation.

A: David McKinstray said revenue backlog was expected to continue sequential improvement, margin dynamics were similar, SG&A was seasonal, and capital allocation would be assessed for long-term growth.

Q: Jesse Lederman asked about the Trump Homes program, tariff impact, and retail leading indicators.

A: Timothy Larson said Champion was aligned with the Trump Homes program's strategy, tariff impact was below expectations, and retail leading indicators were positive with demand for affordable housing.