10-Q 1 sky-20220702.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 2, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-04714

 

Skyline Champion Corporation

(Exact name of registrant as specified in its charter)

 

Indiana

 

35-1038277

(State of Incorporation)

 

(I.R.S. Employer Identification No.)

 

 

 

755 West Big Beaver Road, Suite 1000

 

 

Troy, Michigan

 

48084

(Address of Principal Executive Offices)

 

(Zip Code)

 

(248) 614-8211

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

SKY

 

New York Stock Exchange

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:):

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Number of shares of common stock outstanding as of July 22, 2022: 56,889,105

 

 


 

SKYLINE CHAMPION CORPORATION

FORM 10-Q

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

 

Condensed Consolidated Balance Sheets as of July 2, 2022 (unaudited) and April 2, 2022

1

Condensed Consolidated Income Statements (unaudited) for the three months ended July 2, 2022 and July 3, 2021

2

Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three months ended July 2, 2022 and July 3, 2021

3

Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended July 2, 2022 and July 3, 2021

4

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended July 2, 2022 and July 3, 2021

5

Notes to Condensed Consolidated Financial Statements

6

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

21

 

 

Item 4. Controls and Procedures

22

 

 

PART II – OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

23

 

 

Item 6. Exhibits

24

 

 

SIGNATURES

25

 

i


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Skyline Champion Corporation

Condensed Consolidated Balance Sheets

(Dollars and shares in thousands, except per share amounts)

 

 

 

July 2,
2022

 

 

April 2,
2022

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

463,778

 

 

$

435,413

 

Trade accounts receivable, net

 

 

128,573

 

 

 

90,536

 

Inventories, net

 

 

292,158

 

 

 

241,334

 

Other current assets

 

 

22,917

 

 

 

14,977

 

Total current assets

 

 

907,426

 

 

 

782,260

 

Long-term assets:

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

144,933

 

 

 

132,985

 

Goodwill

 

 

192,555

 

 

 

191,970

 

Amortizable intangible assets, net

 

 

50,026

 

 

 

51,283

 

Deferred tax assets

 

 

16,302

 

 

 

17,750

 

Other noncurrent assets

 

 

62,090

 

 

 

58,371

 

Total assets

 

$

1,373,332

 

 

$

1,234,619

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Floor plan payable

 

$

37,859

 

 

$

35,460

 

Accounts payable

 

 

76,133

 

 

 

92,159

 

Other current liabilities

 

 

256,243

 

 

 

222,493

 

Total current liabilities

 

 

370,235

 

 

 

350,112

 

Long-term liabilities:

 

 

 

 

 

 

Long-term debt

 

 

12,430

 

 

 

12,430

 

Deferred tax liabilities

 

 

5,384

 

 

 

5,124

 

Other liabilities

 

 

41,705

 

 

 

41,840

 

Total long-term liabilities

 

 

59,519

 

 

 

59,394

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Common stock, $0.0277 par value, 115,000 shares authorized, 56,848 and 56,838 shares issued as of July 2, 2022 and April 2, 2022, respectively

 

 

1,573

 

 

 

1,573

 

Additional paid-in capital

 

 

506,815

 

 

 

502,846

 

Retained earnings

 

 

444,702

 

 

 

327,902

 

Accumulated other comprehensive loss

 

 

(9,512

)

 

 

(7,208

)

Total stockholders’ equity

 

 

943,578

 

 

 

825,113

 

Total liabilities and stockholders’ equity

 

$

1,373,332

 

 

$

1,234,619

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

1


 

Skyline Champion Corporation

Condensed Consolidated Income Statements

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

 

 

 

Three months ended

 

 

 

July 2,
2022

 

 

July 3,
2021

 

Net sales

 

$

725,881

 

 

$

510,197

 

Cost of sales

 

 

496,546

 

 

 

398,667

 

Gross profit

 

 

229,335

 

 

 

111,530

 

Selling, general, and administrative expenses

 

 

72,282

 

 

 

54,023

 

Operating income

 

 

157,053

 

 

 

57,507

 

Interest expense, net

 

 

90

 

 

 

649

 

Other income

 

 

(634

)

 

 

(54

)

Income before income taxes

 

 

157,597

 

 

 

56,912

 

Income tax expense

 

 

40,446

 

 

 

14,011

 

Net income

 

$

117,151

 

 

$

42,901

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

2.06

 

 

$

0.76

 

Diluted

 

$

2.04

 

 

$

0.75

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

2


 

Skyline Champion Corporation

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, dollars in thousands)

 

 

 

Three months ended

 

 

 

July 2,
2022

 

 

July 3,
2021

 

Net income

 

$

117,151

 

 

$

42,901

 

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(2,304

)

 

 

878

 

Total comprehensive income

 

$

114,847

 

 

$

43,779

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

3


 

Skyline Champion Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited, dollars in thousands)

 

 

 

Three months ended

 

 

 

July 2,
2022

 

 

July 3,
2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

117,151

 

 

$

42,901

 

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

 

 

 

 

 

 

Depreciation

 

 

3,670

 

 

 

3,257

 

Amortization of intangible assets

 

 

1,946

 

 

 

1,888

 

Amortization of deferred financing fees

 

 

95

 

 

 

127

 

Equity-based compensation

 

 

3,960

 

 

 

1,441

 

Deferred taxes

 

 

1,685

 

 

 

4,079

 

Loss on disposal of property, plant, and equipment

 

 

6

 

 

 

6

 

Foreign currency transaction loss (gain)

 

 

351

 

 

 

(84

)

Change in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(38,141

)

 

 

(3,097

)

Inventories

 

 

(48,855

)

 

 

(25,129

)

Prepaids and other assets

 

 

(11,084

)

 

 

(14,992

)

Accounts payable

 

 

(15,931

)

 

 

8,741

 

Accrued expenses and other liabilities

 

 

32,569

 

 

 

12,767

 

Net cash provided by operating activities

 

 

47,422

 

 

 

31,905

 

Cash flows from investing activities

 

 

 

 

 

 

Additions to property, plant, and equipment

 

 

(9,435

)

 

 

(9,221

)

Cash paid for acquisition

 

 

(9,553

)

 

 

 

Proceeds from disposal of property, plant, and equipment

 

 

17

 

 

 

2

 

Net cash used in investing activities

 

 

(18,971

)

 

 

(9,219

)

Cash flows from financing activities

 

 

 

 

 

 

Changes in floor plan financing, net

 

 

2,398

 

 

 

3,045

 

Stock option exercises

 

 

9

 

 

 

79

 

Tax payments for equity-based compensation

 

 

(351

)

 

 

(1,326

)

Net cash provided by financing activities

 

 

2,056

 

 

 

1,798

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(2,142

)

 

 

673

 

Net increase in cash and cash equivalents

 

 

28,365

 

 

 

25,157

 

Cash and cash equivalents at beginning of period

 

 

435,413

 

 

 

262,581

 

Cash and cash equivalents at end of period

 

$

463,778

 

 

$

287,738

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

4


 

Skyline Champion Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, dollars and shares in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended July 2, 2022

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total

 

Balance at April 2, 2022

 

 

56,838

 

 

$

1,573

 

 

$

502,846

 

 

$

327,902

 

 

$

(7,208

)

 

$

825,113

 

Net income

 

 

 

 

 

 

 

 

 

 

 

117,151

 

 

 

 

 

 

117,151

 

Equity-based compensation

 

 

 

 

 

 

 

 

3,960

 

 

 

 

 

 

 

 

 

3,960

 

Net common stock issued under equity-based compensation plans

 

 

10

 

 

 

 

 

 

9

 

 

 

(351

)

 

 

 

 

 

(342

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,304

)

 

 

(2,304

)

Balance at July 2, 2022

 

 

56,848

 

 

$

1,573

 

 

$

506,815

 

 

$

444,702

 

 

$

(9,512

)

 

$

943,578

 

 

 

 

 

 

 

Three months ended July 3, 2021

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total

 

Balance at March 28, 2020

 

 

56,640

 

 

$

1,569

 

 

$

491,668

 

 

$

82,898

 

 

$

(7,524

)

 

$

568,611

 

Net income

 

 

 

 

 

 

 

 

 

 

 

42,901

 

 

 

 

 

 

42,901

 

Equity-based compensation

 

 

 

 

 

 

 

 

1,441

 

 

 

 

 

 

 

 

 

1,441

 

Net common stock issued under equity-based compensation plans

 

 

59

 

 

 

2

 

 

 

82

 

 

 

(1,332

)

 

 

 

 

 

(1,248

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

878

 

 

 

878

 

Balance at July 3, 2021

 

 

56,699

 

 

$

1,571

 

 

$

493,191

 

 

$

124,467

 

 

$

(6,646

)

 

$

612,583

 

 

Components of accumulated other comprehensive loss consisted solely of foreign currency translation adjustments.

See accompanying Notes to Condensed Consolidated Financial Statements.

5


 

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements

 

1. Basis of Presentation and Business

Nature of Operations: Skyline Champion Corporation's (the “Company”) operations consist of manufacturing, retail and transportation activities. At July 2, 2022, the Company operated 37 manufacturing facilities throughout the United States (“U.S.”) and five manufacturing facilities in western Canada that primarily construct factory-built, timber-framed manufactured and modular houses that are sold primarily to independent retailers, builders/developers, and manufactured home community operators. The Company’s retail operations consist of 19 sales centers that sell manufactured houses to consumers primarily in the Southern U.S. The Company’s transportation business engages independent owners/drivers to transport recreational vehicles throughout the U.S. and Canada and manufactured houses in certain regions of the U.S. The Company also has a holding company located in the Netherlands.

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations.

The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries after elimination of intercompany balances and transactions. In the opinion of management, these statements include all normal recurring adjustments necessary to fairly state the Company’s consolidated results of operations, cash flows, and financial position. The Company has evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on May 24, 2022 (the “Fiscal 2022 Annual Report”).

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes thereto. Actual results could differ from those estimates. The condensed consolidated income statements, condensed consolidated statements of comprehensive income, and condensed consolidated statements of cash flows for the interim periods are not necessarily indicative of the results of operations or cash flows for the full year.

The Company’s allowance for credit losses on financial assets measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current economic conditions and forecasts that affect the collectability of the reported amount. Expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, are recognized in earnings. Accounts receivable are reflected net of reserves of $1.7 million at both July 2, 2022 and April 2, 2022. At both July 2, 2022 and April 2, 2022, other notes receivable are reflected net of reserves of $0.4 million.

The Company’s fiscal year is a 52- or 53-week period that ends on the Saturday nearest to March 31. The Company’s current fiscal year, “fiscal 2023,” will end on April 1, 2023 and will include 52 weeks. References to “fiscal 2022” refer to the Company’s fiscal year ended April 2, 2022. The three months ended July 2, 2022 and July 3, 2021 each included 13 weeks.

In May, 2022, the Company acquired Manis Custom Builders, Inc. ("Manis") for $9.6 million. The net assets acquired were not material to the accompanying consolidated financial statements.

There were no accounting standards recently issued that are expected to have a material impact on the Company’s financial position or results of operations.

2. Inventories, net

The components of inventory, net of reserves for obsolete inventory, were as follows:

 

(Dollars in thousands)

 

July 2,
2022

 

 

April 2,
2022

 

Raw materials

 

$

133,640

 

 

$

141,238

 

Work in process

 

 

30,531

 

 

 

26,523

 

Finished goods and other

 

 

127,987

 

 

 

73,573

 

Total inventories, net

 

$

292,158

 

 

$

241,334

 

 

At July 2, 2022 and April 2, 2022, reserves for obsolete inventory were $5.7 million and $4.8 million, respectively.

 

 

6


Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

 

3. Property, Plant, and Equipment

Property, plant, and equipment are stated at cost. Depreciation is calculated primarily on a straight-line basis, generally over the following estimated useful lives: land improvements – 3 to 10 years; buildings and improvements – 8 to 25 years; and vehicles and machinery and equipment – 3 to 8 years. Depreciation expense for the three months ended July 2, 2022 and July 3, 2021 was $3.7 million and $3.3 million, respectively.

The components of property, plant, and equipment were as follows:

 

(Dollars in thousands)

 

July 2,
2022

 

 

April 2,
2022

 

Land and improvements

 

$

40,502

 

 

$

39,815

 

Buildings and improvements

 

 

110,338

 

 

 

104,085

 

Machinery and equipment

 

 

73,244

 

 

 

69,518

 

Construction in progress

 

 

14,789

 

 

 

10,280

 

Property, plant, and equipment, at cost

 

 

238,873

 

 

 

223,698

 

Less: accumulated depreciation

 

 

(93,940

)

 

 

(90,713

)

Property, plant, and equipment, net

 

$

144,933

 

 

$

132,985

 

 

4. Goodwill, Intangible Assets, and Cloud Computing Arrangements

Goodwill

Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. At July 2, 2022 and April 2, 2022, the Company had goodwill of $192.6 million and $192.0 million, respectively.

Intangible Assets

The components of amortizable intangible assets were as follows:

 

(Dollars in thousands)

 

July 2, 2022

 

 

April 2, 2022

 

 

 

Customer
Relationships

 

 

Trade
Names

 

 

Total

 

 

Customer
Relationships

 

 

Trade
Names

 

 

Total

 

Gross carrying amount

 

$

62,168

 

 

$

21,696

 

 

$

83,864

 

 

$

61,986

 

 

$

21,419

 

 

$

83,405

 

Accumulated amortization

 

 

(25,094

)

 

 

(8,744

)

 

 

(33,838

)

 

 

(23,819

)

 

 

(8,303

)

 

$

(32,122

)

Amortizable intangibles, net

 

$

37,074

 

 

$

12,952

 

 

$

50,026

 

 

$

38,167

 

 

$

13,116

 

 

$

51,283

 

 

During both the three months ended July 2, 2022 and July 3, 2021, amortization of intangible assets was $1.9 million.

Cloud Computing Arrangements

The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed technology. At July 2, 2022 and April 2, 2022, the Company had capitalized cloud computing costs of $23.9 million and $20.5 million, respectively. Cloud computing costs are included in other noncurrent assets in the accompanying condensed consolidated balance sheets. Amortization of capitalized cloud computing costs for the three months ended July 2, 2022 was $0.2 million. There was no amortization of capitalized cloud computing costs during the three months ended July 3, 2021.

 

 

 

7


Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

 

5. Other Current Liabilities

The components of other current liabilities were as follows:

 

(Dollars in thousands)

 

July 2,
2022

 

 

April 2,
2022

 

Customer deposits

 

$

68,315

 

 

$

67,396

 

Accrued volume rebates

 

 

26,133

 

 

 

23,505

 

Accrued warranty obligations

 

 

26,129

 

 

 

25,806

 

Accrued compensation and payroll taxes

 

 

50,618

 

 

 

64,888

 

Accrued insurance

 

 

16,008

 

 

 

13,569

 

Accrued taxes

 

 

42,413

 

 

 

6,959

 

Other

 

 

26,627

 

 

 

20,370

 

Total other current liabilities

 

$

256,243

 

 

$

222,493

 

 

6. Accrued Warranty Obligations

Changes in the accrued warranty obligations were as follows:

 

 

 

Three months ended

 

(Dollars in thousands)

 

July 2,
2022

 

 

July 3,
2021

 

Balance at beginning of period

 

$

32,832

 

 

$

30,469

 

Warranty expense

 

 

11,921

 

 

 

10,304

 

Cash warranty payments

 

 

(11,598

)

 

 

(9,694

)

Balance at end of period

 

 

33,155

 

 

 

31,079

 

Less: noncurrent portion in other long-term liabilities

 

 

(7,026

)

 

 

(6,436

)

Total current portion

 

$

26,129

 

 

$

24,643

 

 

7. Debt and Floor Plan Payable

Long-term debt consisted of the following:

 

(Dollars in thousands)

 

July 2,
2022

 

 

April 2,
2022

 

Revolving credit facility maturing in 2026

 

$

 

 

$

 

Obligations under industrial revenue bonds due 2029

 

 

12,430

 

 

 

12,430

 

Total debt

 

 

12,430

 

 

 

12,430

 

Less: current portion

 

 

 

 

 

 

Total long-term debt

 

$

12,430

 

 

$

12,430

 

 

On July 7, 2021, the Company entered into an Amended and Restated Credit Agreement with a syndicate of banks that provides for a revolving credit facility of up to $200.0 million, including a $45.0 million letter of credit sub-facility ("Amended Credit Agreement"). The Amended Credit Agreement replaced the Company's previously existing $100.0 million revolving credit facility. Outstanding borrowings of $26.9 million on the Company's previous revolving credit facility were repaid in July 2021. The Amended Credit Agreement allows the Company to draw down, repay and re-draw loans on the available facility during the term, subject to certain terms and conditions, matures in July 2026, and has no scheduled amortization. The Company capitalized $1.1 million of deferred financing fees associated with the Amended Credit Agreement, which are included in other noncurrent assets on the accompanying consolidated balance sheets. The Company wrote off $0.3 million of deferred financing fees associated with the previously existing credit facility during the second quarter of fiscal 2022.

 

8


Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

 

The interest rate on borrowings under the Amended Credit Agreement adjusts based on the consolidated total net leverage of the Company from a high of the London Inter-Bank Offered Rate ("LIBOR") or the Secured Overnight Financing Rate plus the benchmark replacement adjustment ("Replacement Rate") plus 1.875% and Alternative Base Rate ("ABR") plus 0.875%, at the election of the Company, when the consolidated total net leverage ratio is equal to or greater than 2.25:1.00, to a low of LIBOR or the Replacement Rate plus 1.125% and ABR plus 0.125% when the consolidated total net leverage is below 0.50:1.00. In addition, the Company is obligated to pay an unused line fee ranging between 0.15% and 0.3% (depending on the consolidated total net leverage ratio) in respect of unused commitments under the Amended Credit Agreement. There were no outstanding borrowings under the revolving credit facility at July 2, 2022 and April, 2, 2022, respectively. At July 2, 2022 the interest rate under the Amended Credit Agreement was 2.97% and letters of credit issued under the Amended Credit Agreement totaled $32.1 million. Available borrowing capacity under the Amended Credit Agreement as of July 2, 2022 was $167.9 million.

Obligations under industrial revenue bonds are supported by letters of credit and bear interest based on a municipal bond index rate. The weighted-average interest rate at July 2, 2022, including related costs and fees, was 2.61%. The industrial revenue bonds require lump-sum payments of principal upon maturity in 2029.

 

The Amended Credit Agreement contains covenants that restrict the amount of additional debt, liens and certain payments, including equity buybacks, investments, dispositions, mergers and consolidations, among other restrictions as defined. The Company was in compliance with all covenants of the Amended Credit Agreement as of July 2, 2022.

Floor Plan Payable

The Company’s retail operations utilize floor plan financing to fund the purchase of manufactured homes for display or resale. At July 2, 2022 and April 2, 2022, the Company had outstanding borrowings on floor plan financing agreements of $37.9 million and $35.5 million, respectively. Total credit line capacity provided under the agreements was $67.0 million as of July 2, 2022. Borrowings are secured by the homes and are required to be repaid when the Company sells the home to a customer.

8. Revenue Recognition

The following tables disaggregate the Company’s revenue by sales category for the three months ended July 2, 2022 and July 3, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended July 2, 2022

 

(Dollars in thousands)

 

U.S.
Factory-Built
Housing

 

 

Canadian
Factory-Built
Housing

 

 

Corporate/
Other

 

 

Total

 

Manufacturing and retail

 

$

660,811

 

 

$

45,062

 

 

$

 

 

$

705,873

 

Commercial

 

 

270