UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State of Incorporation) |
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(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Name of each exchange on which registered |
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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.
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).
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:):
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
Emerging growth company |
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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 January 24, 2022:
SKYLINE CHAMPION CORPORATION
FORM 10-Q
TABLE OF CONTENTS
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)
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January 1, |
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April 3, |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Trade accounts receivable, net |
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Inventories, net |
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Other current assets |
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Total current assets |
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Long-term assets: |
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Property, plant, and equipment, net |
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Goodwill |
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Amortizable intangible assets, net |
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Deferred tax assets |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Floor plan payable |
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$ |
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$ |
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Accounts payable |
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Other current liabilities |
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Total current liabilities |
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Long-term liabilities: |
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Long-term debt |
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Deferred tax liabilities |
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Other liabilities |
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Total long-term liabilities |
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Stockholders' Equity: |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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) |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
1
Skyline Champion Corporation
Condensed Consolidated Income Statements
(Unaudited, dollars in thousands, except per share amounts)
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Three months ended |
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Nine months ended |
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January 1, |
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December 26, |
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January 1, |
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December 26, |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general, and administrative expenses |
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Operating income |
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Interest expense, net |
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Other expense (income) |
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( |
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( |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Net income per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
2
Skyline Champion Corporation
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, dollars in thousands)
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Three months ended |
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Nine months ended |
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January 1, |
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December 26, |
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January 1, |
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December 26, |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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) |
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Total comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
3
Skyline Champion Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited, dollars in thousands)
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Nine months ended |
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January 1, |
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December 26, |
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Cash flows from operating activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
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Amortization of intangible assets |
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Amortization of deferred financing fees |
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Equity-based compensation |
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Deferred taxes |
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Loss (gain) on disposal of property, plant, and equipment |
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Foreign currency transaction loss (gain) |
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Change in assets and liabilities: |
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Accounts receivable |
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Inventories |
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( |
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Prepaids and other assets |
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( |
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Accounts payable |
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Accrued expenses and other liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities |
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Additions to property, plant, and equipment |
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( |
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Cash paid for acquisition |
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— |
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Proceeds from maturity of Company owned life insurance policy |
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— |
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Proceeds from disposal of property, plant, and equipment |
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Net cash used in investing activities |
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( |
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Cash flows from financing activities |
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Changes in floor plan financing, net |
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( |
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Payments on deferred financing fees |
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( |
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— |
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Payments on revolving debt facility |
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( |
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( |
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Stock option exercises |
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Tax payments for equity-based compensation |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
4
Skyline Champion Corporation
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, dollars and shares in thousands)
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Three months ended January 1, 2022 |
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Common Stock |
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Shares |
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Amount |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balance at October 2, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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Net common stock issued under equity-based compensation plans |
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— |
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— |
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— |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance at January 1, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Nine months ended January 1, 2022 |
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Common Stock |
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Shares |
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Amount |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balance at April 3, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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Net common stock issued under equity-based compensation plans |
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( |
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— |
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( |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance at January 1, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Three months ended December 26, 2020 |
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Common Stock |
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Shares |
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Amount |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balance at September 26, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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Balance at December 26, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Nine months ended December 26, 2020 |
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Common Stock |
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Shares |
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Amount |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balance at March 28, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Net common stock issued under equity-based compensation plans |
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( |
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( |
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( |
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— |
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— |
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( |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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Balance at December 26, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Components of accumulated other comprehensive income (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 (the “Company”) is a leading producer of factory-built housing in the United States (“U.S.”) and Canada. The Company’s operations consist of manufacturing, retail, and transportation activities. The Company operates
COVID-19 Government Financial Assistance: The outbreak of a novel strain of coronavirus ("COVID-19") was declared a global pandemic by the World Health Organization in March 2020. Various government programs were announced to provide financial relief for affected businesses, including the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and state level programs in the United States and the Canada Emergency Wage Subsidy ("CEWS") under the COVID-19 Economic Response Plan in Canada. The Company recognized $
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 26, 2021 (the “Fiscal 2021 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 $
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 2022,” will end on April 2, 2022 and will include 52 weeks. References to “fiscal 2021” refer to the Company’s fiscal year ended April 3, 2021. The three and nine months ended January 1, 2022 and December 26, 2020 each included 13 and 39 weeks, respectively.
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.
6
Skyline Champion Corporation
Notes to Condensed Consolidated Financial Statements - Continued
2. Business Acquisition
ScotBilt Acquisition
On
The preliminary allocation of the purchase price was as follows:
(Dollars in thousands) |
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Cash |
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$ |
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Trade accounts receivable |
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Inventory |
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Property, plant, and equipment |
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Other assets |
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Accounts payable and accrued liabilities |
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( |
) |
Intangibles |
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Goodwill |
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Total purchase price allocation |
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$ |
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Goodwill is primarily attributable to expected synergies from the combination of the companies, including, but not limited to, expected cost synergies through procurement activities and operational improvements through sharing of best practices. Goodwill, which is deductible for income tax purposes, was allocated to the U.S. Factory-built Housing reporting unit.
Cash, trade accounts receivable, inventory, other assets, accounts payable, and accrued liabilities were generally stated at historical carrying values given the short-term nature of these assets and liabilities. Intangible assets include $
3. Inventories, net
The components of inventory, net of reserves for obsolete inventory, were as follows:
(Dollars in thousands) |
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January 1, |
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April 3, |
|
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Raw materials |
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$ |
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$ |
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Work in process |
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Finished goods and other |
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|
|
|
|
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Total inventories, net |
|
$ |
|
|
$ |
|
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