Skyline Champion Corporation (NYSE:SKY) Q2 2024 Earnings Call Transcript

Phil Ng: Hey, Mark. You sound pretty excited about this direct to builder channel. Certainly, you have some excess capacity right now with a softer demand backdrop. What’s your ability to kind of pivot to serve that a little more fuller.Is there anything you got to do on the labor front or the facilities?

Mark Yost: Thanks for the question Phil. No, that part of the reason we’re running this quarter, we ran at 53% capacity utilization.Part of the reason we’re choosing to run at kind of less than optimal capacity utilization is really to make sure we have that available capacity to enter that channel.Right now is that pressure point and I think a lot of builders have been buying down rates doing that in view that it would be a short term, they just need to do it for a few quarters, to get through to keep their sales up. I think now that it’s more of a marathon, less than a sprint of rate buy downs, I think they’re starting to reconsider.So I think we’ve got this infrastructure in place to move into that channel very quickly, which is why I think the pipeline is shaping up the way it is for us.

Phil Ng: Okay. That’s helpful. And then how do you see this ECN integration rolling out and progressing call in the next 6 to 12 months. Any big mile marks you want to achieve, ahead of spring selling season. And then you called out how having this partnership now gives you better access liquidity, especially in a environment where credit’s a little tougher.Does it help on the rate side of things as well? Do your consumers get a more competitive rate now versus when you didn’t have this partnership, previously?

Mark Yost: Yeah, Phil. We haven’t done anything to drive rates in a different way. There are some benefits, I think, to our partners in terms of rate that we can look at, especially with our turnkey solutions that we’re offering, Phil.I think, if they’re buying from us, if they’re using our construction services, they’re using our floor plan and other things, I think overall, we can look at it from a DVD or a volume discount basis that will definitely help them in some ways. I really think the benefit for them is going to be a few fold; 1. It’s access to liquidity. 2.It is the, the speed that we’re going to deliver.So we’re working hand in hand with ECM in the Champion Financing program really to deliver great customer experience, faster turnaround times, better offerings in terms of what we can deliver to them and then I think the third piece is really just like I said, a suite of services to where they have one partner they can deal with for multiple needs and obviously competitive rates to the end consumer is really what it’s all about.

Phil Ng: Super. And just one last one for me.How do you kind of see your sales cadence kind of wrapping up on fourth quarter, you talked about 3Q. It’s just kind of a noisy year, so it would be helpful to kind of get your perspective on how the shape of the air wraps up?and do you expect pricing and mix to stabilize here, or there could be some further degradation in the back half?

Mark Yost: Yeah I think there is going to be a little bit of noise. Right? I mean, we are going to have some choppiness as we integrate Regional they have a different price point and other things that we’ll have to bring in here, but I would see revenue up sequentially and then continue to grow into spring, as the market ramps and some of the community customers continue to come back. I really think it’s positioned very well.ASPs are going to be a little bit noisy, to be honest, just because with the mix of retail versus manufacturing, you’re going to see kind of volatility in in rates just in terms of all a bit of noise, which is not really price deterioration or increases.It will be more mix oriented as Laurie mentioned earlier.

Phil Ng: And then Regional mix is down or up?Or I just want to make sure, you made some integrated Regional. Just want to make sure I flush that out.