Skyline Champion Corp (NYSE:SKY) Q1 2021 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 08:00 am ET


Skyline Champion Corp (NYSE:SKY) Q1 2021 Earnings Conference Call - Final Transcript


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Mark Yost

the increase in backlog, notably strong demand and lower production levels due to labor constraints. First, on the demand side, our sales team is doing a phenomenal job, responding to product inquiries and quoting requests from our customer channels. Under normal conditions, we would fully ramp-up production activities to meet increased demand. However, we have moderated labor activity level.

We like many factoring operations have experienced the expected side effects from the supplemental federal unemployment assistance provided by the CARES Act. As natural employee attrition occurs, and as we seek to replace and add headcount to our facilities, recruitment has been more challenging. Once the CARES Act supplemental unemployment benefits expire, we expect to see an uptick in qualified candidates and expect to increase our labor force to accommodate the increased demand for housing. However, we are prepared to manage any of the various forms that the next round of government support may take. On the operation side, we continue to monitor, manage and execute our enhanced safety and sanitation protocols at our facilities in our adhering to CDC guidelines for social distancing and other measures to reduce the spread of COVID-19. We have continued to refine and adapt our manufacturing processes to maintain a safe environment for our employees.

Encouragingly, we have found that these adjustments are not significantly impacting our productivity or efficiency levels as the production teams have acclimated to incorporating these protocols in their day-to-day activities. Our Western Canadian plants have followed a pattern similar to our U.S. plants. Sales volumes were down about 36% in the first quarter of fiscal 2021 as compared to the same period last. We temporarily idled these plants at the end of March 2020 and reopened the plants at reduced production levels during June -- the June quarter. We saw a steady increase in orders in the back half of the first quarter and backlog is growing as orders outpaced production levels. U.S. retailers continue to see increased closing ratios on their sales leads, which are coming more from online channels has been walk-in-traffic. While walk-in-traffic is still below pre-COVID levels due to various levels of operating restrictions throughout the U.S. Those coming to look for homes are ready and able to buy, and talking with dealers, financing is strong and inventory levels are lean. Even through the challenges presented by COVID, team was able to continue to make progress on our long-term objectives. The traction of our Genesis brand launched earlier this at the IBS Show in January, continues to build.

We have seen success with smaller subdivision developments and we are now working towards finalizing a few deals with a mid-sized subdivision developments. With the continued social distancing and safety challenges, we continue to invest in our standardization, automation, and digital solutions to make us a better partner to our customers. While we're very encouraged by the strong order rates and growth in backlog, we remain cautiously optimistic about the broader macro environment. The housing industry is experiencing