Skyline Champion Corp (NYSE:SKY) Q4 2019 Earnings Conference Call - Final Transcript

May 22, 2019 • 08:30 am ET

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Skyline Champion Corp (NYSE:SKY) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Keith Anderson

but momentum from an improved marketing and training programs is beginning to build. Retailers and builder developers are seeing the advantages these programs can offer to the end consumer.

We anticipate a more meaningful impact during the last six months of our fiscal year 2020. On the regulatory front, HUD appears ready to loosen on-site inspection requirements for garages and carports. This will assist the industry's adoption of the new GSE financing programs in both costs and efficiency.

I will now turn the call over to Mark to provide an update on some of our expansion efforts.

Executive
Mark Yost

Thank you, Keith. It's a pleasure to be joining you on today's call. Skyline Champion now operates 37 manufacturing facilities, strategically located in markets that are within close proximity to our customers. We are continuing to make progress, expanding capacity to meet demand while improving our efficiency in response to rising capacity utilization.

I am pleased to report that the plant expansion on our Leola, Pennsylvania, campus was completed at the end of the first quarter and began production in April, in line with our expectations. The local team has done a great job of bringing the new facility online. As a reminder, this new facility will primarily produce park model homes.

Our new Leesville, Louisiana plant is also progressing according to plan, with an expected opening by the end of June. Leesville will incorporate new production technology for floor and wall-built stations. This will help to mitigate directly the risks, and will also serve as a prototype for future expansion of automation at other facilities.

I will now turn the call over to Laurie to discuss our quarterly financials in more detail.

Executive
Laurie Hough

Thanks, Mark.

We are pleased with our performance during the quarter as net sales increased 23% to $328 million compared to $266 million in the prior year. The net sales increase was driven by the inclusion of the legacy Skyline operations and an increase in the average home selling price.

US sales grew by 35% to $295 million. The number of US factory-built homes sold increased 15%. Average selling price per US homes sold expanded 17% to $61,100, as a result of increased market demand, product mix and pricing.

Canadian sales during the quarter declined by 17% to $18.7 million, caused by a similar decline in the number of homes sold. Average home selling prices increased marginally to $81,600. Gross profit increased to $66 million, up 53% compared to $43 million in the prior year quarter.

Our US housing segment gross margins were 20.6% of segment net sales, up from 16.2% last year. Sequentially, when comparing the US factory-built housing segments gross margins in the fourth quarter versus our fiscal 2019 third quarter, we saw a 200 basis point increase due to synergy capture, disciplined pricing and operational improvements.

SG&A in the fourth quarter increased to $53 million versus $35 million in the same period last year. The increase primarily due to the inclusion of the Skyline operations for the