Business Wire | May 25, 2021 04:55PM EDT

Skyline Champion Announces Fourth Quarter and Full Year Fiscal 2021 Results

May 25, 2021

TROY, Mich.--(BUSINESS WIRE)--May 25, 2021--Skyline Champion Corporation (NYSE: SKY) ("Skyline Champion") today announced financial results for its fourth quarter and full year ended April 3, 2021 ("fiscal 2021"). Results included an extra week during the fourth quarter of fiscal 2021 compared to the year ago period.

Fourth Quarter Fiscal 2021 Highlights (compared to Fourth Quarter Fiscal 2020)

* Net sales increased 48.6% to $447.6 million * U.S. factory-built homes sold increased 28.7% to 5,923 * Total backlog increased 573.7% to $858.6 million * Average selling price ("ASP") per U.S. home sold increased 11.6% to $67,200 * Gross profit margin expanded by 220 basis points to 22.1% * Net income increased by 465.0% to $33.9 million * Earnings per share ("EPS") increased to $0.60 from $0.11 * Adjusted EBITDA increased 155.4% to $51.2 million * Adjusted EBITDA margin expanded by 470 basis points to 11.4% * Net cash provided by operating activities increased to $50.1 million * Completed the acquisition of ScotBilt Homes

"I am very proud of Skyline Champion's accomplishments in the challenging environment experienced during fiscal 2021, as we finished the year with very strong quarterly results," said Mark Yost, Skyline Champion's President and Chief Executive Officer. "During the year the team's exceptional efforts allowed the Company to increase production in response to surging demand despite a challenging operating environment, while remaining focused on the health and safety of all our employees and partners. In addition, we were able to leverage our strong balance sheet and complete the acquisition of ScotBilt Homes, helping to broaden our footprint and add efficient manufacturing facilities to our operations. Demand for affordable housing solutions accelerated over the past year, and with our investments to simplify the customer buying experience, automate and increase capacity, Skyline Champion is in an amazing position to capitalize on this demand."

Fourth Quarter Fiscal 2021 Results

Net sales for the fourth quarter fiscal 2021 increased 48.6% to $447.6 million compared to the prior-year period. The number of U.S. factory-built homes sold in the fourth quarter fiscal 2021 increased 28.7% to 5,923 compared to the prior year fourth quarter, as a result of strong demand and increased production levels. The ASP per U.S. home sold increased 11.6% to $67,200 due to price increases in response to rising material costs. The number of Canadian factory-built homes sold in the quarter increased to 419 homes compared to 130 homes in the prior-year period due to stronger demand and improved production levels. Total backlog for Skyline Champion was $858.6 million as of April 3, 2021 compared to $127.5 million as of March 28, 2020. Backlog increased $370.1 million during the quarter compared to a decrease of $5.6 million in the fourth quarter fiscal 2020 driven by strong order levels that have outpaced production and the acquisition of ScotBilt Homes, LLC and related companies.

Gross profit increased by 65.2% to $99.1 million in the fourth quarter fiscal 2021 compared to the prior-year period. Gross profit margin was 22.1% of net sales, a 220 basis point expansion compared to 19.9% in the fourth quarter fiscal 2020. The increase in the gross profit margin was driven by higher sales growth due to higher volume and pricing as well as operational efficiencies.

Selling, general, and administrative expenses ("SG&A") in the fourth quarter fiscal 2021 increased to $52.5 million from $47.2 million in the same period last year. Lower expenses due to decreased travel and marketing were more than offset by higher variable compensation and investment in the company's online customer experience platform.

Net income for the fourth quarter fiscal 2021 was $33.9 million, a significant improvement compared to net income of $6.0 million during the same period of the prior year. The increase in net income was mainly driven by the increase in sales and gross profit.

Adjusted EBITDA for the fourth quarter fiscal 2021 increased by 155.4% to $51.2 million compared to the fourth quarter fiscal 2020 primarily driven by an increase in net sales. Adjusted EBITDA margin expanded by 470 basis points to 11.4% due to higher sales growth and operational improvements.

As of April 3, 2021, Skyline Champion had $262.6 million of cash and cash equivalents.

Full Year Fiscal 2021 Financial Highlights

For fiscal 2021, net sales were $1,420.9 million which represents an increase of 3.7%, or $51.2 million, compared to fiscal 2020. Full year fiscal 2021 results included an extra week compared to fiscal year 2020 as well as revenue related to the ScotBilt acquisition and U.S. housing ASP growth of 3.9%.

Gross profit increased $8.7 million or 3.1% to $287.7 million for fiscal 2021, compared to $279.0 million for the prior year period. Gross profit margin decreased by 20 basis points to 20.2% of net sales for fiscal 2021, compared to fiscal 2020 primarily due to raw material inflation and extended employee benefits in the early months of the COVID-19 pandemic.

SG&A decreased to $178.9 million for fiscal 2021, compared to $192.5 million in the prior year period primarily due to lower travel and marketing-related expenses.

Net income for fiscal 2021 was $84.9 million compared to net income of $58.2 million for fiscal 2020, an increase of $26.7 million or 46.0% due to an increase in operating income and a decrease in income tax expense.

Adjusted EBITDA for fiscal 2021 increased by 17.8% to $134.8 million, compared to $114.4 million for fiscal 2020.

Conference Call and Webcast Information:

Skyline Champion management will host a conference call tomorrow, May 26, 2021, at 8:00 a.m. Eastern Time, to discuss Skyline Champion's financial results and an update on current operations.

Investors and other interested parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of Skyline Champion's website at http://skylinechampion.com. The online replay will be available on the same website immediately following the call.

The conference call can also be accessed by dialing (877) 407-4018 (domestic) or (201) 689-8471 (international). A telephonic replay will be available approximately two hours after the call by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 13719421. The replay will be available until 11:59 P.M. Eastern Time on June 9, 2021.

About Skyline Champion Corporation:

Skyline Champion Corporation (NYSE: SKY) is the largest independent, publicly traded, factory-built housing company in North America and employs approximately 7,700 people. With almost 70 years of homebuilding experience and 40 manufacturing facilities throughout the United States and western Canada, Skyline Champion is well positioned with a leading portfolio of manufactured and modular homes, ADUs, park-models and modular buildings for the single-family, multi-family, hospitality, senior and workforce housing sectors.

In addition to its core home building business, Skyline Champion operates a factory-direct retail business, Titan Factory Direct, with 18 retail locations spanning the southern United States, and Star Fleet Trucking, providing transportation services to the manufactured housing and other industries from several dispatch locations across the United States.

Skyline Champion builds homes under some of the most well know brand names in the factory-built housing industry including Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Excel Homes, Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, Titan Homes in the U.S. and Moduline and SRI Homes in western Canada.

Presentation of Non-GAAP Financial Measures

In addition to the results provided in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") throughout this press release, Skyline Champion has provided non-GAAP financial measures-Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share (including dilutive securities, if any)-which present operating results on a basis adjusted for certain items. Skyline Champion uses these non-GAAP financial measures for business planning purposes and in measuring its performance relative to that of its competitors. Skyline Champion believes that these non-GAAP financial measures are useful financial metrics to assess its operating performance from period-to-period by excluding certain items that Skyline Champion believes are not representative of its core business. These non-GAAP financial measures are not intended to replace, and should not be considered superior to, the presentation of Skyline Champion's financial results in accordance with U.S. GAAP.

Skyline Champion defines 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 awards granted before December 31, 2018, (f) restructuring charges, (g) impairment of assets, and (h) other non-operating costs including those for the acquisition and integration of businesses. Adjusted EBITDA is not a measure of earnings calculated in accordance with U.S. GAAP, and should not be considered an alternative to, or more meaningful than, net income or loss, net sales, operating income or earnings per share prepared on a U.S. GAAP basis. Skyline Champion believes that Adjusted EBITDA is commonly used by investors to evaluate its performance and that of its competitors. However, Skyline Champion's use of Adjusted EBITDA may vary from that of others in its industry. Adjusted EBITDA is reconciled from the respective measure under U.S. GAAP in the tables below. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by net sales reported in the statement of operations. Adjusted EPS is calculated as net income or loss plus (a) equity-based compensation awards granted before December 31, 2018, (b) restructuring charges, (c) impairment of assets, and (d) other non-operating costs including those for the acquisition and integration of businesses, including the related tax effect, if any, on these items.

Forward-Looking Statements

Statements in this press release, including certain statements regarding Skyline Champion's strategic initiatives, and future market demand are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of words such as "believe," "expect," "future," "anticipate," "intend," "plan," "foresee," "may," "could," "should," "will," "potential," "continue," or other similar words or phrases. Similarly, statements that describe objectives, plans, or goals also are forward-looking statements. Such forward-looking statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Skyline Champion. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied, or projected by such forward-looking statements. Risks and uncertainties include regional, national and international economic, financial, public health and labor conditions, and the following: the COVID-19 pandemic, which has had, and could continue to have, significant adverse effects on us; the impact of recent political instability and social unrest on economic conditions generally; the cyclicality and seasonality of the housing industry and its sensitivity to changes in general economic or other business conditions; demand fluctuations in the housing industry; supply-related issues; labor-related issues; the possible unavailability of additional capital when needed; competition and competitive pressures; changes in consumer preferences for our products or our failure to gauge those preferences; quality problems, including the quality of parts sourced from suppliers and related liability and reputational issues; data security breaches, cybersecurity attacks, and other information technology disruptions; the extensive regulation affecting the production and sale of factory-built housing and the effects of possible changes in laws with which we must comply; the potential impact of natural disasters on sales and raw material costs; the risks associated with mergers and acquisitions; the prices and availability of materials; periodic inventory adjustments by, and changes to relationships with, independent retailers; changes in interest and foreign exchange rates; insurance coverage and cost issues; the possibility that all or part of our goodwill might become impaired; the possibility that our risk management practices may leave us exposed to unidentified or unanticipated risks; and other risks set forth in the "Risk Factors" section, the "Legal Proceedings" section, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section, and other sections, as applicable, in our Annual Reports on Form 10-K, including our Annual Report on Form 10-K for the fiscal year ended March 28, 2020 previously filed with the Securities and Exchange Commission ("SEC"), as well as in our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed with or furnished to the SEC.

If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, then the developments and future events concerning Skyline Champion set forth in this press release may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this release. We anticipate that subsequent events and developments will cause our expectations and beliefs to change. Skyline Champion assumes no obligation to update such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, unless obligated to do so under the federal securities laws.

SKYLINE CHAMPION CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited, dollars and shares in thousands)

April 3,2021 March 28,2020

ASSETS

Current assets:

Cash and cash equivalents $ 262,581 $ 209,455

Trade accounts receivable, net 57,481 45,733

Inventories, net 166,113 126,386

Other current assets 13,592 17,239

Total current assets 499,767 398,813

Long-term assets:

Property, plant, and equipment, net 115,140 109,291

Goodwill 191,803 173,521

Amortizable intangible assets, net 58,835 43,357

Deferred tax assets 19,914 21,812

Other noncurrent assets 32,443 34,906

Total assets $ 917,902 $ 781,700

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Floor plan payable $ 25,733 $ 33,914

Accounts payable 57,214 38,703

Other current liabilities 180,695 114,030

Total current liabilities 263,642 186,647

Long-term liabilities:

Long-term debt 39,330 77,330

Deferred tax liabilities 4,280 3,264

Other 42,039 40,144

Total long-term liabilities 85,649 120,738

Stockholders' Equity:

Common stock 1,569 1,570

Additional paid-in capital 491,668 485,552

Retained earnings (accumulated deficit) 82,898 (48)

Accumulated other comprehensive loss (7,524) (12,759)

Total stockholders' equity 568,611 474,315

Total liabilities and stockholders' equity $ 917,902 $ 781,700

SKYLINE CHAMPION CORPORATION

CONSOLIDATED INCOME STATEMENTS

(Unaudited, dollars and shares in thousands, except per share amounts)

Three Months Ended

Twelve Months Ended

April 3, 2021

March 28, 2020

April 3, 2021

March 28, 2020

Net sales

$

447,649

$

301,145

$

1,420,881

$

1,369,730

Cost of sales

348,534

241,161

1,133,186

1,090,755

Gross profit

99,115

59,984

287,695

278,975

Selling, general, and administrative expenses

52,470

47,166

178,936

192,520

Operating income

46,645

12,818

108,759

86,455

Interest expense, net

647

382

3,248

1,401

Other expense (income)

1,104

-

(5,889)

-

Income before income taxes

44,894

12,436

111,400

85,054

Income tax expense

11,008

6,438

26,501

26,894

Net income

$

33,886

$

5,998

$

84,899

$

58,160

Net income per share:

Basic

$

0.60

$

0.11

$

1.50

$

1.03

Diluted

$

0.59

$

0.11

$

1.49

$

1.02

SKYLINE CHAMPION CORPORATION

CONSOLIDATED INCOME STATEMENTS

(Unaudited, dollars and shares in thousands, except per share amounts)

Three Months Ended Twelve Months Ended

April 3, March 28, April 3, March 28, 2021 2020 2021 2020

Net sales $ 447,649 $ 301,145 $ 1,420,881 $ 1,369,730

Cost of sales 348,534 241,161 1,133,186 1,090,755

Gross profit 99,115 59,984 287,695 278,975

Selling, general, and 52,470 47,166 178,936 192,520administrative expenses

Operating income 46,645 12,818 108,759 86,455

Interest expense, net 647 382 3,248 1,401

Other expense (income) 1,104 - (5,889) -

Income before income taxes 44,894 12,436 111,400 85,054

Income tax expense 11,008 6,438 26,501 26,894

Net income $ 33,886 $ 5,998 $ 84,899 $ 58,160

Net income per share:

Basic $ 0.60 $ 0.11 $ 1.50 $ 1.03

Diluted $ 0.59 $ 0.11 $ 1.49 $ 1.02

SKYLINE CHAMPION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollars in thousands)

Twelve Months Ended

April 3, 2021

March 28, 2020

Cash flows from operating activities

Net income

$

84,899

$

58,160

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

17,704

18,546

Amortization of deferred financing fees

506

510

Fair market value adjustment for asset classified as held for sale

-

986

Property, plant, and equipment impairment charge

-

550

Equity-based compensation

6,037

8,349

Deferred taxes

3,588

11,796

(Gain) loss on disposal of property, plant, and equipment

(61)

239

Foreign currency transaction (gain) loss

(519)

235

Change in assets and liabilities:

Accounts receivable

(9,305)

11,901

Inventories

(31,030)

(4,491)

Prepaids and other assets

967

(10,616)

Accounts payable

16,371

(4,606)

Accrued expenses and other liabilities

64,740

(14,816)

Net cash provided by operating activities

153,897

76,743

Cash flows from investing activities

Additions to property, plant, and equipment

(8,016)

(15,389)

Acquisition of a business, net of cash acquired

(52,548)

-

Proceeds from disposal of property, plant, and equipment

1,927

196

Proceeds from sale of held for sale asset

-

1,100

Proceeds from life insurance policy

1,829

-

Net cash used in investing activities

(56,808)

(14,093)

Cash flows from financing activities

Changes in floor plan financing, net

(8,181)

592

Borrowings on revolving debt facility

-

38,000

Payments on revolving debt facility

(38,000)

(15,000)

Stock option exercises

55

112

Tax payment for equity-based compensation

(1,687)

(2,135)

Net cash used in financing activities

(47,813)

21,569

Effect of exchange rate changes on cash, and cash equivalents

3,850

(1,398)

Net increase in cash and cash equivalents

53,126

82,821

Cash and cash equivalents at beginning of period

209,455

126,634

Cash and cash equivalents at end of period

$

262,581

$

209,455

SKYLINE CHAMPION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollars in thousands)

Twelve Months Ended

April 3, March 28, 2021 2020

Cash flows from operating activities

Net income $ 84,899 $ 58,160

Adjustments to reconcile net income to net cashprovided by operating activities:

Depreciation and amortization 17,704 18,546

Amortization of deferred financing fees 506 510

Fair market value adjustment for asset classified as - 986held for sale

Property, plant, and equipment impairment charge - 550

Equity-based compensation 6,037 8,349

Deferred taxes 3,588 11,796

(Gain) loss on disposal of property, plant, and (61) 239equipment

Foreign currency transaction (gain) loss (519) 235

Change in assets and liabilities:

Accounts receivable (9,305) 11,901

Inventories (31,030) (4,491)

Prepaids and other assets 967 (10,616)

Accounts payable 16,371 (4,606)

Accrued expenses and other liabilities 64,740 (14,816)

Net cash provided by operating activities 153,897 76,743

Cash flows from investing activities

Additions to property, plant, and equipment (8,016) (15,389)

Acquisition of a business, net of cash acquired (52,548) -

Proceeds from disposal of property, plant, and 1,927 196equipment

Proceeds from sale of held for sale asset - 1,100

Proceeds from life insurance policy 1,829 -

Net cash used in investing activities (56,808) (14,093)

Cash flows from financing activities

Changes in floor plan financing, net (8,181) 592

Borrowings on revolving debt facility - 38,000

Payments on revolving debt facility (38,000) (15,000)

Stock option exercises 55 112

Tax payment for equity-based compensation (1,687) (2,135)

Net cash used in financing activities (47,813) 21,569

Effect of exchange rate changes on cash, and cash 3,850 (1,398)equivalents

Net increase in cash and cash equivalents 53,126 82,821

Cash and cash equivalents at beginning of period 209,455 126,634

Cash and cash equivalents at end of period $ 262,581 $ 209,455

SKYLINE CHAMPION CORPORATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Unaudited, dollars in thousands)

Three Months Ended

Twelve Months Ended

April 3, 2021

March 28, 2020

Change

April 3,

2021

March 28, 2020

Change

Reconciliation of Adjusted EBITDA:

Net income

$

33,886

$

5,998

$

27,888

$

84,899

$

58,160

$

26,739

Income tax expense

11,008

6,438

4,570

26,501

26,894

(393)

Interest expense, net

647

382

265

3,248

1,401

1,847

Depreciation and amortization

4,629

4,652

(23)

17,704

18,546

(842)

EBITDA

50,170

17,470

32,700

132,352

105,001

27,351

Equity-based compensation (for awards granted prior to December 31, 2018)

-

970

(970)

1,359

4,576

(3,217)

Transaction costs

1,044

-

1,044

1,044

-

1,044

Acquisition integration costs

-

737

(737)

-

2,674

(2,674)

Restructuring charges

-

-

-

-

366

(366)

Impairment charges and other

-

877

(877)

-

1,747

(1,747)

Adjusted EBITDA

$

51,214

$

20,054

$

31,160

$

134,755

$

114,364

$

20,391

SKYLINE CHAMPION CORPORATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Unaudited, dollars in thousands)

Three Months Ended Twelve Months Ended

April 3, March April 3, March 28, 2021 28, Change 2020 Change 2020 2021

Reconciliationof AdjustedEBITDA:

Net income $ 33,886 $ 5,998 $ 27,888 $ 84,899 $ 58,160 $ 26,739

Income tax 11,008 6,438 4,570 26,501 26,894 (393)expense

Interest 647 382 265 3,248 1,401 1,847expense, net

Depreciationand 4,629 4,652 (23) 17,704 18,546 (842)amortization

EBITDA 50,170 17,470 32,700 132,352 105,001 27,351

Equity-basedcompensation(for awards - 970 (970) 1,359 4,576 (3,217)granted priorto December31, 2018)

Transaction 1,044 - 1,044 1,044 - 1,044costs

Acquisitionintegration - 737 (737) - 2,674 (2,674)costs

Restructuring - - - - 366 (366)charges

Impairmentcharges and - 877 (877) - 1,747 (1,747)other

Adjusted $ 51,214 $ 20,054 $ 31,160 $ 134,755 $ 114,364 $ 20,391EBITDA

SKYLINE CHAMPION CORPORATION

RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS PER SHARE

(Unaudited, dollars and shares in thousands, except per share amounts)

(Certain amounts shown net of tax, as applicable)

Three Months Ended

Twelve Months Ended

April 3, 2021

March 28, 2020

April 3, 2021

March 28, 2020

Net income

$

33,886

$

5,998

$

84,899

$

58,160

Adjustments:

Equity-based compensation (for awards granted prior to December 31, 2018)

-

1,003

1,128

4,003

Transaction costs

1,044

-

1,044

-

Acquisition integration costs

-

555

-

2,014

Restructuring charges

-

-

276

Impairment charges

-

414

-

1,139

Adjusted net income

34,930

7,970

87,071

65,592

Less: Undistributed earnings allocated to participating securities

-

20

77

193

Adjusted net income attributable to the Company's common shareholders

$

34,930

$

7,950

$

86,994

$

65,399

Adjusted basic net income per share

$

0.62

$

0.14

$

1.54

$

1.16

Adjusted diluted net income per share

$

0.61

$

0.14

$

1.53

$

1.15

Average basic shares outstanding

56,703

56,532

56,648

56,516

Average diluted shares outstanding

56,967

56,785

56,967

56,762

View source version on businesswire.com: https://www.businesswire.com/news/home/20210525005983/en/

CONTACT: Investor contact information: Name: Kevin Doherty Email: investorrelations@championhomes.com Phone: (248) 614-8211