Champion Homes Profit Fell as Material Costs Squeezed Margins
Backlog climbed 33.5% sequentially as demand strengthened entering the new quarter.
Champion Homes (SKY), the manufactured-home builder, reported lower fiscal first-quarter profit as material-cost inflation and a higher tax rate outweighed modest sales growth.
The sales mix shifted toward volume after price increases had driven growth in recent quarters. U.S. home shipments rose 1.8% from a year earlier, reversing the preceding quarter’s 0.6% decline, while average selling-price growth slowed to 0.6% from 4.6%.
Net sales rose 1.3% to $710.2 million, decelerating from 4.6% growth in the preceding quarter, though sales increased 14.3% sequentially. Net income attributable to Champion fell 24.0% to $49.2 million, and diluted earnings declined to $0.89 a share from $1.13 a share.
Champion sold 7,089 U.S. homes, up 20.0% sequentially, while the average selling price fell 3.0% from the preceding quarter to $95,600. The combination left growth more dependent on shipments as pricing momentum continued to cool from earlier fiscal 2026 levels.
Gross profit fell 5.6% to $179.3 million even as revenue increased, with cost of sales rising to $531.0 million from $511.5 million. Adjusted gross margin narrowed sequentially to 25.2% from 25.7%, extending its decline from 27.5% three quarters earlier as higher material costs offset some benefit from retail pricing.
Adjusted EBITDA dropped 21.9% from a year earlier to $73.6 million but rose 31.6% sequentially. Its margin recovered to 10.4% from 9.0% in the preceding quarter while remaining below the levels recorded in the prior two quarters. Adjusted diluted earnings fell 26.1% to $0.88 a share.
Champion ended the quarter with 95 U.S. retail locations after completing its Homes Direct acquisition, while expenses reflected that expansion and the addition of Iseman Homes. Cash increased by $146.5 million to $784.7 million, aided by $137.0 million in proceeds from the sale of its ECN investment, giving the company additional liquidity as its larger backlog moved into the next quarter.