Champion Homes (NYSE:SKY) executives told investors the company delivered third-quarter fiscal 2026 results that were “in line with our expectations” as it navigated what management described as a challenging macro and consumer environment, while continuing to emphasize product innovation, channel execution, and legislative developments that could expand the market for off-site built housing.
Leadership updates and strategic priorities
CEO Tim Larson opened the call by welcoming Dave McKinstry, who joined the company as CFO on January 12, and by recognizing the retirement of former CFO Laurie Hough after two decades with the company. Larson also noted that Tawn Kelley was elected chair of the board last November.
Larson also stressed product innovation aimed at broadening the buyer base. He cited the Emerald Sky home introduced at the Louisville show: a 1,600-square-foot, three-bedroom, two-bath home with a consumer retail price of approximately $185,000. Larson contrasted that price point with the average selling price for new homes in the U.S., which he said is “hovering around $500,000.”
Legislation and regulation: focus on affordability and HUD standards
Management discussed multiple policy efforts tied to manufactured housing and broader affordability goals. Larson said the ROAD to Housing Act was not included in the final National Defense Authorization Act in December as many in the industry had anticipated, and that the House has been drafting a package called the Housing for the 21st Century Act that includes elements supporting expansion of off-site built homes.
Larson also said the House passed the Affordable Homes Act, which “reaffirms HUD as the final authority on manufactured housing standards,” eliminates duplication of federal rules, and addresses energy efficiency in a way intended to preserve affordability. He added the company continues to monitor zoning reform at the local and national level.
During Q&A, Larson said the House bill includes language related to HUD code homes without a chassis, similar to provisions that had been discussed in the Senate bill, and he characterized legislative progress as likely to involve “ebb and flow.” He said the company is preparing for potential changes but remains focused on what it can control operationally.
Larson also mentioned touring the company’s Burleson, Texas plant with HUD Secretary Scott Turner’s team and regional HUD leadership in late January, describing it as evidence of HUD’s commitment to affordable housing.
Q3 results: sales up slightly as margins compressed
Hough reviewed the quarter’s financial performance. Net sales rose 2% year-over-year to $657 million. Total homes sold decreased 2% to 6,485, while U.S. homes sold declined 3% to 6,270. Management attributed part of the year-over-year volume comparison to the prior-year period benefiting from deliveries that shifted into Q3 from Q2 due to weather in fiscal 2025.
Average selling price per U.S. home sold increased 5% to $99,300, which Hough attributed to product mix and increased prices on new homes sold through company-owned retail sales centers. Sequentially, U.S. factory-built housing revenue declined 4% versus the second quarter, which management said reflected normal seasonality and lower community REIT sales. Manufacturing capacity utilization was 59%, compared with 60% in Q2.
In Canada, revenue was $26 million, with a 3% increase in the number of homes sold. The average selling price in Canada decreased 2% to $120,000, which management said was primarily due to product mix.
Profitability declined year-over-year. Consolidated gross profit fell 5% to $172 million, and gross margin was 26.2%, down 190 basis points from the prior-year period. Hough said the margin decline was primarily driven by higher manufacturing material costs relative to price and lower absorption of fixed costs from reduced volumes, partially offset by higher ASPs and a higher mix of sales through company-owned retail centers.
SG&A increased to $110 million from $108 million, primarily due to the inclusion of the Iseman Homes acquisition; as a percentage of sales, SG&A was 16.7%, described as relatively flat. Net income attributable to Champion Homes declined 12% to $54 million, or $0.97 per diluted share. Adjusted EBITDA was $75 million, down 10%, and adjusted EBITDA margin was 11.4%, down 150 basis points.
Channel and demand commentary: retail strength, community softness
Larson said performance relative to the broader housing market reflected higher ASPs from a shift to more multi-section homes, increased prices at company-owned retail stores, and contributions from the Iseman transaction. Backlog at the end of December declined sequentially by 15% to $266 million, and average backlog lead time ended the quarter at seven weeks, down from eight weeks in the prior quarter and 10 weeks a year earlier. Larson also said manufacturer orders were up compared with the same period last year.
Management described differing channel trends:
- Independent retail: Sales decreased year-over-year and were flat sequentially, which management tied to the prior-year weather-related comparison. Larson said the company continues to see positive feedback and adoption for its Dealer Portal, which integrates lead management, order information, and inventory tools.
- Captive retail: Sales increased year-over-year, benefiting from the Iseman Homes acquisition and higher ASP. Captive retail represented 38% of consolidated sales in Q3 versus 35% last year.
- Community channel: Sales declined year-over-year, which management said reflected pacing inventory levels amid moderating order rates and softer consumer confidence. Larson said the company received encouraging responses to new products from community customers at the Louisville show.
- Builder/developer: Sales grew year-over-year. Larson cited the launch of a 67-unit build-to-rent community (Blythe Village) in Fresno, California, with customer TCM Capital, designed with Champion’s HUD product, and said the company planned to showcase build-to-developer capabilities at the International Builders’ Show in Orlando.
In Q&A, Larson said the company is seeing new consumers come to off-site built homes, and that while geographic trends did not show anything unusual, local factors continue to drive variability market-to-market. He also confirmed that year-over-year ASP improvements reflected both pricing and mix.
Financing, capital allocation, and Q4 outlook
Larson said Champion Financing produced strong results and noted that the sale of Triad’s parent company, ECN Capital, to Warburg Pincus is progressing and received shareholder approval in January. The transaction is expected to close in the first half of the year. Larson said the deal will extinguish Champion’s 19.7% ownership in ECN Capital, with ECN shares valued at CAD 3.10 per share, delivering proceeds to Champion of approximately CAD 189 million. He also said Champion agreed to extend its financing joint venture for an additional three years.
As of December 27, 2025, Champion had $660 million in cash and cash equivalents and generated $100 million of operating cash flow during the quarter. The company repurchased $50 million of shares in Q3, and Hough said the board “refreshed” a $150 million repurchase authority.
Looking to Q4, McKinstry said the company expects revenue to be up low single digits year-over-year, with gross margin anticipated in the 25% to 26% range, citing cautious consumer sentiment, seasonally lower winter selling, and softer demand in certain markets and channels. He also warned that weather-related disruptions could create variability in deliveries and timing.
McKinstry added that trade show participation in Q4 ahead of the spring selling season is expected to drive a modest increase in fixed SG&A versus other quarters. On margins, management said underlying price, cost, and mix dynamics are expected to be similar to Q3, while noting a planned seasonal inventory build in captive retail ahead of spring that could be a near-term headwind to gross margin timing. Executives also said tariff impacts in Q3 came in “pretty significantly below” the previously discussed 1% level, and they expect similar dynamics in Q4, while acknowledging tariff conditions can evolve.
About Champion Homes (NYSE:SKY)
Champion Homes, traded under the NYSE ticker SKY, operates as a leading provider of factory-built housing solutions in North America. The company specializes in the design, manufacture and sale of manufactured and modular homes, serving a broad spectrum of customers from first-time homebuyers to those seeking upscale residential properties. Champion Homes leverages vertically integrated operations to streamline production, ensuring consistent quality and cost efficiencies across its product lines.
The company’s product portfolio encompasses single- and multi-section modular homes, manufactured home models, park models and select commercial modular buildings.
