Skyline Champion SKY Form 10-Q filing Q1 FY2027

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

See accompanying Notes to Condensed Consolidated Financial Statements.

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Champion Homes, Inc.

Condensed Consolidated Income Statements

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

See accompanying Notes to Condensed Consolidated Financial Statements.

2

See accompanying Notes to Condensed Consolidated Financial Statements.

3

See accompanying Notes to Condensed Consolidated Financial Statements.

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Champion Homes, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, dollars and shares in thousands)

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

See accompanying Notes to Condensed Consolidated Financial Statements.

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation and Business

Nature of Operations: The operations of Champion Homes, Inc. (the “Company”), consist of manufacturing, retail, construction services, and transportation activities. At June 27, 2026, the Company operated 42 manufacturing facilities throughout the United States (“U.S.”) and 4 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 84 sales centers that sell manufactured houses to consumers across the U.S. The Company's construction services business provides installation and set-up services of factory-built homes. 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.

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, its wholly-owned subsidiaries and those of its subsidiaries for which it is the primary beneficiary 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, 2026 (the “Fiscal 2026 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 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 2027,” will end on April 3, 2027 and will include 53 weeks. References to “fiscal 2026” refer to the Company’s fiscal year ended March 28, 2026. The three months ended June 27, 2026 and June 28, 2025 each included 13 weeks, respectively.

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 $3.7 million and $3.3 million at June 27, 2026 and March 28, 2026, respectively.

Floor plan receivables consist primarily of amounts loaned by the Company through Triad Financial Services, Inc. ("Triad") to certain independent retailers for purchases of homes manufactured by the Company, of which $41.1 million and $47.1 million was outstanding at June 27, 2026 and March 28, 2026, respectively. Floor plan receivables are carried net of payments received and recorded at amortized cost. The Company intends to hold the floor plan receivables until maturity or payoff. These loans are serviced by Triad, to which we pay a servicing fee. Upon execution of the financing arrangement, the floor plan loans are generally payable at the earlier of the sale of the underlying home or two years from the origination date. Floor plan receivables are included in other current assets and other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets.

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

The floor plan receivables are collateralized by the related homes, mitigating loss exposure. The Company and Triad evaluate the credit worthiness of each independent retailer prior to credit approval, including reviewing the independent retailer’s payment history, financial condition, and the overall economic environment. The Company evaluates the risk of credit loss in aggregate on existing loans with similar terms, based on historic experience and current economic conditions, as well as individual retailers with past due balances or other indications of heightened credit risk. The allowance for credit losses related to floor plan receivables was not material as of June 27, 2026 or March 28, 2026. Loans are considered past due if any required interest or curtailment payment remains unpaid 30 days after the due date. Receivables are placed on non-performing status if any interest or installment payments are past due over 90 days. Loans are placed on nonaccrual status when interest payments are past due over 90 days. At June 27, 2026, there were no floor plan receivables on nonaccrual status and the weighted-average age of the floor plan receivables was twelve months.

Interest income from floor plan receivables is recognized on an accrual basis and is included in interest income in the accompanying Condensed Consolidated Income Statements. Interest income from floor plan receivables for the three months ended June 27, 2026 and June 28, 2025 was $0.8 million and $0.7 million, respectively.

Recently Issued accounting pronouncements: In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which expands disclosures about a public entity's specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The update will be effective for annual periods beginning after December 15, 2026 (fiscal 2028). We are assessing the effect of this update on our consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, "Targeted Improvements to the Accounting for Internal-Use Software", which amends certain aspects of the accounting for the recognition and disclosure of capitalized software costs under ASC 350-40. The update will be effective for annual periods beginning after December 15, 2027 (fiscal 2029). We are assessing the effect of this update on our consolidated financial statements.

2. Business Combinations

Iseman Homes, Inc. Acquisition

On May 30, 2025, the Company acquired all of the outstanding equity interests in Iseman Homes, Inc. ("Iseman Homes") for total purchase consideration of $26.8 million, net of working capital adjustments. The purchase consideration consisted of net cash paid of $24.6 million, contingent consideration with an estimated fair value of $0.2 million, and remaining consideration payable of $2.0 million, which was previously recorded in other current liabilities in the accompanying Condensed Consolidated Balance Sheets at March 28, 2026 and subsequently paid in the first quarter of fiscal 2027. The contingent consideration is related to an earnout provision in the event future performance metrics are achieved, with a maximum earnout amount of $1.5 million. The liability for the earnout is recorded in other current liabilities in the accompanying Condensed Consolidated Balance Sheets. The Company accounted for the acquisition as a business combination under the acquisition method of accounting provided by FASB ASC 805, Business Combinations ("ASC 805"). As such, the purchase price was allocated to the net assets acquired, inclusive of intangible assets, with the excess fair value recorded to goodwill.

The following table presents the consideration transferred and the purchase price allocation:

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

Trade accounts receivable, other assets, accounts payable and other liabilities are generally stated at historical carrying values as they approximate fair value. Retail inventories are reflected at manufacturer wholesale prices. Intangible assets include $2.9 million for a trade name based on an independent appraisal. The fair value of the trade name was determined using the relief-from-royalty method and was estimated to have a weighted average useful life of ten years from the acquisition date. Fair value estimates of property, plant, and equipment were based on independent appraisals, giving consideration to the highest and best use of the assets. Key assumptions used in the appraisals were drawn from a combination of market, cost, and sales comparison approaches, as appropriate. Level 3 fair value estimates of $9.6 million related to property, plant, and equipment and $2.9 million related to intangible assets were recorded in the accompanying Condensed Consolidated Balance Sheet as of the acquisition date. The goodwill is not deductible for income tax purposes. For further information on acquired assets measured at fair value, see Note 5, Goodwill, Intangible Assets and Cloud Computing Arrangements.

Management has determined that the pro forma impact of the acquisition of Iseman Homes on revenue and net income is not material to the consolidated financial statements and, accordingly, such information is not presented.

3. Inventories, net

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

At both June 27, 2026 and March 28, 2026, reserves for obsolete inventory were $11.5 million.

4. 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 June 27, 2026 and June 28, 2025 was $9.3 million and $9.0 million, respectively.

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

5. 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 both June 27, 2026 and March 28, 2026, the Company had goodwill of $365.2 million. Goodwill is allocated to reporting units included in the U.S. Factory-built Housing segment, which include the Company’s U.S. manufacturing and retail operations. At June 27, 2026, there were no accumulated impairment losses related to goodwill.

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

Intangible Assets

The components of amortizable intangible assets were as follows:

During the three months ended June 27, 2026 and June 28, 2025, amortization of intangible assets was $3.0 million and $2.9 million, respectively.

Cloud Computing Arrangements

The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed software. At June 27, 2026 and March 28, 2026, the Company had capitalized cloud computing costs, net of amortization of $18.3 million and $19.4 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 each of the three months ended June 27, 2026 and June 28, 2025 was $1.0 million, respectively.

6. Investment in ECN Capital Corporation

In September 2023, the Company entered into a share subscription agreement with ECN Capital Corp. ("ECN") and made a $137.8 million equity investment in ECN on a private placement basis. The Company purchased 33.6 million common shares, representing approximately 12% of the total outstanding common shares of ECN, and 27.5 million mandatory convertible preferred shares (the “Preferred Shares”). The Preferred Shares received cumulative cash dividends at an annual rate of 4.0%. Following the private placement, the Company owned approximately 19.9% of the voting shares of ECN. On November 13, 2025, ECN entered into a definitive arrangement to be acquired by a private investor group for CAD $3.10 per share, plus all accrued but unpaid dividends. The transaction, which closed on April 24, 2026, resulted in the liquidation of the Company's investment in ECN common and preferred shares in the first quarter of fiscal 2027, resulting in a net gain of $2.5 million which is presented in Other (income) in the Condensed Consolidated Income Statements.

In connection with the share subscription agreement, the Company and Triad, a subsidiary of ECN, formed Champion Financing, a captive finance company that is 51% owned by the Company and 49% owned by Triad. The results of Champion Financing are included in the consolidated results of the Company on a three-month lag. Triad's 49% ownership interest is reflected as non-controlling interest in the Consolidated Income Statements.

The Company's interest in the common stock investment in ECN was accounted for under the equity method and the Company’s share of the income or losses of ECN are recorded on a three-month lag. For the three months ended June 27, 2026 and June 28, 2025, the Company's share of ECN's net losses was $0.3 million and $0.5 million, respectively. Dividends received on the investment in common stock of ECN are reflected as a reduction to the investment balance and are presented on the Condensed Consolidated Statements of Cash Flows using the nature of the distribution approach. At March 28, 2026, the investment in the common stock of ECN totaled $70.5 million and was included in other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets.

The Company's investment in the Preferred Shares was included in other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets as of March 28, 2026. The investment was measured using the measurement alternative for equity investments without a readily determinable fair value. At March 28, 2026, the investment in the Preferred Shares was $64.5 million. For the three months ended June 27, 2026 and June 28, 2025, the Company reflected dividend income from the investment in the Preferred Shares of $0.8 million and $1.2 million, respectively, in other income on the accompanying Condensed Consolidated Income Statements.

Triad, which was previously considered a related party through the date of liquidation of our investment in ECN, provides loan servicing for the Company's floor plan receivables. The Company pays Triad a fee for servicing loans which was not material for the three months ended June 27, 2026 or June 28, 2025. Triad also provides floor plan financing of the Company's products to Company-owned and independent retailers. At March 28, 2026 and June 28, 2025, the Company had floor plan payables due to Triad of $10.9 million and $31.1 million, respectively. See Note 9, Debt and Floor Plan Payable for further detail regarding the Company's floor plan financing. At June 28, 2025, the

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

Company had repurchase commitments of $116.2 million on independent retailer floor plan loans outstanding with Triad. See Note 14, Commitments, Contingencies, and Legal Proceedings, for further detail regarding the Company's contingent repurchase obligations.

7. Other Current Liabilities

The components of other current liabilities were as follows:

8. Accrued Warranty Obligations

Changes in the accrued warranty obligations were as follows:

9. Debt and Floor Plan Payable

Long-term debt consisted of the following:

On July 28, 2025, the Company entered into a Second 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 ("Second Amended Credit Agreement"). The Second Amended Credit Agreement replaced the Company's previously existing Amended and Restated Credit Agreement dated July 7, 2021 (as amended by Amendment No.1 to Amended and Restated Credit Agreement, dated as of May 18, 2023). The Second Amended Credit Agreement allows the Company to draw down, repay and re-draw loans on the available funds during the term, subject to certain terms and conditions, matures in July 2030, and has no scheduled amortization.

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

The interest rate on borrowings under the Second Amended Credit Agreement is based on the Secured Overnight Financing Rate ("SOFR") or an Alternative Base Rate ("ABR") plus an interest rate spread. The interest rate spread adjusts based on the consolidated total net leverage of the Company. The interest rate ranges from a high of SOFR plus 1.875% or the ABR plus 0.875% (when the consolidated total net leverage ratio is equal to or greater than 2.25 to 1.00), to a low of SOFR plus 1.125% or the ABR plus 0.125% (when the consolidated total net leverage ratio is less than 0.50 to 1.00). At June 27, 2026, the interest rate under the Second Amended Credit Agreement was 4.77% and letters of credit issued under the Second Amended Credit Agreement totaled $29.4 million. Available borrowing capacity under the Second Amended Credit Agreement as of June 27, 2026 was $170.6 million.

The Second Amended Credit Agreement contains covenants that restrict the amount of additional debt, liens and certain payments, including equity buy-backs, 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 June 27, 2026.

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 June 27, 2026, including related costs and fees, was 4.45%. The industrial revenue bonds require lump-sum payments of principal upon maturity in 2029 and are secured by the assets of certain manufacturing facilities.

The Company has notes payable to Romeo Juliet, LLC, a subsidiary of Wells Fargo Community Investment Holdings, Inc. ("WFC"). The weighted-average interest rate on those notes at June 27, 2026 was 5.42%. The notes are secured by certain assets of the Company. In addition, the Company has a note payable to United Bank with an interest rate of 3.85% that is secured by a note receivable from HHB Investment Fund, LLC, a subsidiary of WFC.

Floor Plan Payables

The Company’s retail operations utilize floor plan financing to fund the purchase of manufactured homes for display or resale. At June 27, 2026 and March 28, 2026, the Company had outstanding borrowings on floor plan financing agreements of $99.4 million and $94.6 million, respectively. Total credit line capacity provided under the agreements was $308.0 million as of June 27, 2026. The weighted average interest rate on floor plan payables was 5.10% at June 27, 2026. Borrowings are secured by the homes and are required to be repaid when the Company sells the related home to a customer.

10. Revenue Recognition

The following tables disaggregate the Company’s revenue by sales category:

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

11. Income Taxes

For the three months ended June 27, 2026 and June 28, 2025, the Company recorded $17.0 million and $17.7 million of income tax expense and had an effective tax rate of 25.0% and 21.0%, respectively.

The Company’s effective tax rate for the three months ended June 27, 2026 and June 28, 2025, differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, and results in foreign jurisdictions.

The One Big Beautiful Bill Act ("OBBBA") was signed into law on July 4, 2025, which is considered the enactment date under U.S. GAAP. OBBBA changed many aspects of U.S. corporate income taxation including accelerated bonus depreciation, research and experimentation expense deduction, and terminating the energy efficient home tax credit.

At June 27, 2026, the Company had no unrecognized tax benefits.

12. Earnings Per Share

Basic net income per share attributable to the Company was computed by dividing net income attributable to the Company by the average number of common shares outstanding during the period. Diluted earnings per share is calculated using our weighted-average outstanding common shares, including the dilutive effect of stock awards as determined under the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per common share:

13. Segment Information

Financial results for the Company's reportable segments have been prepared using a management approach, which is consistent with the basis and manner in which financial information is evaluated by the Company's chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision maker, the Chief Executive Officer, evaluates the performance of the Company’s segments primarily based on net sales, before elimination of inter-company shipments, earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and operating assets.

The Company operates in two reportable segments: (i) U.S. Factory-built Housing, which includes manufacturing and retail housing operations and (ii) Canadian Factory-built Housing. Corporate/Other includes the Company’s transportation operations, the Company's financing activities, corporate costs directly incurred for all segments and intersegment eliminations. Segments are generally determined by geography. Segment data includes intersegment revenues and corporate office costs that are directly and exclusively incurred for each segment. Total assets for Corporate/Other primarily include cash and certain U.S. deferred tax items not specifically allocated to another segment.

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

Selected financial information by reportable segment was as follows:

(1)

Cost of sales is presented net of depreciation expense.

(2)

Selling, general, and administrative expenses are presented net of depreciation and amortization expense.

(3)

Other items for Corporate/Other include dividend income, equity in net loss of affiliates and non-controlling interest.

(4)

Deferred tax assets for the Canadian operations are reflected in the Canadian Factory-built Housing segment. U.S. deferred tax assets are presented in Corporate/Other because an allocation between segments is not practicable.

(1)

Cost of sales is presented net of depreciation expense.

(2)

Selling, general, and administrative expenses are presented net of depreciation and amortization expense.

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Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

(3)

Other items for Corporate/Other include dividend income, equity in net loss of affiliate and non-controlling interest.

(4)

Deferred tax assets for the Canadian operations are reflected in the Canadian Factory-built Housing segment. U.S. deferred tax assets are presented in Corporate/Other because an allocation between segments is not practicable.

14. Commitments, Contingencies, and Legal Proceedings

Repurchase Contingencies and Guarantees

The Company is contingently liable under terms of repurchase agreements with lending institutions that provide wholesale floor plan financing to retailers. These arrangements, which are customary in the manufactured housing industry, provide for the repurchase of homes sold to retailers in the event of default by the retailer on its agreement to pay the financial institution. The risk of loss from these agreements is significantly reduced by the potential resale value of any homes that are subject to repurchase and is spread over numerous retailers. The repurchase price is generally determined by the original sales price of the home less contractually defined curtailment payments. Based on these repurchase agreements and our historical loss experience, we established an associated loss reserve which was $1.7 million at both June 27, 2026 and March 28, 2026. Excluding the resale value of the homes, the contingent repurchase obligation as of June 27, 2026 was estimated to be $231.6 million. Losses incurred on homes repurchased were immaterial during the three months ended June 27, 2026 and June 28, 2025.

At June 27, 2026, the Company was contingently obligated for $29.4 million under letters of credit, consisting of $12.7 million to support long-term debt, $16.4 million to support the casualty insurance program, and $0.3 million to support bonding agreements. The letters of credit are issued from a sub-facility of the Second Amended Credit Agreement. The Company was also contingently obligated for $16.5 million under surety bonds, generally to support performance on long-term construction contracts and license and service bonding requirements.

In the normal course of business, the Company’s former subsidiaries that operated in the United Kingdom historically provided certain guarantees to two customers. Those guarantees provide contractual liability for proven construction defects up to 12 years from the date of delivery of certain products. The guarantees remain a contingent liability of the Company which declines over time through October 2027. As of the date of this report, the Company expects few, if any, claims to be reported under the terms of the guarantees.

Product Liability - Water Intrusion

The Company has received consumer complaints for damages related to water intrusion in homes built in one of its manufacturing facilities prior to fiscal 2022. In fiscal 2024, the Company investigated and determined the cause of the damage was the result of materials that did not perform in accordance with the manufacturer's contractual obligations. The Company has identified that certain homes constructed over that period may be affected. Based on the results of ongoing investigation and repair efforts, the Company developed a remediation plan under Subpart I of the HUD code, which was approved in fiscal 2025. The plan called for inspection and repair of affected homes if there is evidence of damage, or procedures to mitigate the opportunity for future damage. As a result of the proposal, the Company recorded a charge of $34.5 million during the fourth quarter of fiscal 2024 related to the estimated costs of the planned remediation efforts. The Company estimated the charges by establishing a range of total expected costs determined by an actuary using a Monte Carlo simulation. The analysis, which was completed at the end of the fourth quarter of fiscal 2024, resulted in a range of losses between $34.5 million and $85.0 million. At the time, the Company was not able to determine a value in the range that was more likely than any other value, and as prescribed by U.S. GAAP, recorded the charge for remediation based on the low end of the range of potential losses. During fiscal 2026, the Company reassessed the total expected remaining estimated costs of the planned remediation efforts and determined, through completed inspection, repair and settlement efforts, that there was sufficient experience such that recording to the low end of a range of losses was no longer appropriate. The actuarial analysis completed in the fourth quarter of fiscal 2026 resulted in a charge of $8.5 million to increase the remaining estimated liability to $35.6 million at March 28, 2026. The Company will continue to monitor the population of affected homes and the results of the inspection and repair activities, including actual repair costs on the affected homes and the number of affected homes to be repaired, and may revise the amount of the estimated liability, which could result in an increase or decrease in the estimated liability in future periods. At June 27, 2026 and March 28, 2026, the liability, net of remediation costs incurred to date, was $29.3 million and $35.6 million, respectively, and is included in other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

In January 2026, the Company entered into an agreement with the distributor of the roofing material to share certain costs of the remediation. As a result, the Company received $3.5 million cash payment in the fourth quarter of fiscal 2026 and will receive $2.5 million of future purchase credits. Reimbursements are reflected as a reduction to cost of goods sold as cash is received or purchase credits are applied. Additionally, the distributor will reimburse the Company for a portion of future remediation costs which will be both in the form of cash and purchase credits. Such amounts will be reflected as a reduction to cost of goods sold when those purchase credits are applied.

14

Champion Homes, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

Legal Proceedings

The Company has agreed to indemnify counterparties in the ordinary course of its business in agreements to acquire and sell business assets and in financing arrangements. The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. As of the date of this filing, the Company believes the ultimate liability with respect to these contingent obligations will not have, either individually or in the aggregate, a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

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Item 2. MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following should be read in conjunction with Champion Homes, Inc.’s condensed consolidated financial statements and the related notes that appear in Item 1 of this Report.

Overview

Champion Homes, Inc. is a leading producer of factory-built housing in the U.S. and Canada. The Company serves as a complete solutions provider across complementary and vertically integrated businesses including factory-built home manufacturing, company-owned retail locations, construction services, and transportation logistics services. The Company markets its homes under several nationally recognized brand names including Champion Homes, Genesis Homes, Skyline Homes, Regional Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, New Era, J. Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S., and Moduline and SRI Homes in western Canada. The Company operates 42 manufacturing facilities throughout the U.S. and four 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 84 sales centers that sell manufactured homes to consumers across the U.S. The Company’s transportation business engages independent owners/drivers to transport manufactured homes, recreational vehicles, and other products throughout the U.S. and Canada.

Acquisitions, Expansions and Consolidations

The Company is focused on operational improvements to increase capacity utilization and profitability at its existing manufacturing facilities as well as measured expansion of its manufacturing and retail footprint through facility and equipment investments and acquisitions. Those investments will help improve the Company's ability to satisfy demand for affordable housing. The current economic environment drives an even greater need for attainable housing solutions. As a result, the Company continues to focus on growing in strong housing markets across the U.S. and Canada, as well as expanding products and services to provide more holistic and affordable solutions to homebuyers.

In August 2026, the Company completed its previously announced acquisition of the assets of Homes Direct, representing 11 retail sales centers across the western region of the U.S. The acquisition expands Champion's Western U.S. footprint accelerates the Company's direct to consumer strategy. In May 2025, the Company acquired Iseman Homes which operated 10 retail sales centers across the North Central U.S. This acquisition enhances the Company's ability to strengthen distribution from its nearby manufacturing facilities, furthering the Company’s commitment to integrated growth.

In addition to acquisitions, the Company is also focused on enhancing its U.S. manufacturing production capacity, as well as redeployment of capital and resources through strategic actions at specific plants. During the first half of fiscal 2026, the Company idled production at the Bartow, Florida manufacturing plant and ceased operations at the Kelowna, British Columbia manufacturing plant. The Company believes those actions will ultimately lead to greater operating efficiency and profitability. In addition, the Company sold a previously idled manufacturing facility during the second quarter of fiscal 2026. The Company continues to own six idle manufacturing facilities that could be used for further manufacturing capacity expansion in future periods.

During fiscal 2024, the Company made an equity investment in ECN. The investment, in part, facilitated the creation of a captive finance company in partnership with Triad, a subsidiary of ECN. The captive finance company, Champion Financing, through Triad, provides factory-built home floor plan and consumer loans to manufactured home retailers and homebuyers. The Company believes this offering will provide customers needed financing solutions and improve the Company's market share. On November 13, 2025, ECN entered into a definitive arrangement to be acquired by a private investor group for CAD $3.10 per share, plus any accrued but unpaid dividends. The transaction closed on April 24, 2026, which resulted in the liquidation of the Company's investment in ECN common and preferred shares in the first quarter of fiscal 2027 and resulted in net cash proceeds of $137.0 million and net gain on investment of $2.5 million. The liquidation of the Company's investment in ECN common and preferred shares will not impact the future operations of Champion Financing.

The Company's acquisitions, investments and plant consolidation are part of a strategy to grow and diversify revenue with a focus on increasing the Company’s homebuilding presence in the U.S. as well as improving the results of operations through streamlining production of similar product categories. These acquisitions and investments are included in the Company's consolidated results for periods subsequent to their respective acquisition dates.

Industry and Company Outlook

The need for newly built affordable, single-family housing has continued to drive demand for new homes in the U.S. and Canadian markets. In recent years, manufactured home construction experienced revenue growth due to a number of favorable demographic trends and demand drivers in the United States, including underlying growth trends in key homebuyer groups, such as the population over 55 years of age, the population of first-time home buyers, and the population of households earning less than $60,000 per year.

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The Company's manufacturing backlog increased to $421.8 million as of June 27, 2026 compared to $302.5 million as of June 28, 2025. The increase in backlog is a function of order rates exceeding production rates during the three months ended June 27, 2026, compared to the same period in the prior fiscal year.

For the three months ended June 27, 2026, approximately 87.3% of the Company’s U.S. manufacturing sales were generated from the manufacture of homes that comply with the U.S. Department of Housing and Urban Development ("HUD") code construction standard in the U.S. Industry shipments of HUD-code homes are reported on a one-month lag. According to data reported by the Manufactured Housing Institute, HUD-code industry home shipments were 26,363 and 27,676 units during the three months ended May 31, 2026 and 2025, respectively. Based on industry data, the Company’s U.S. wholesale market share of HUD code homes sold was 23.1% and 22.5%, for the three months ended May 31, 2026 and 2025, respectively. HUD-code industry shipments have improved modestly in recent years, but are still at lower levels than the long-term historical average of over 200,000 units per year. Manufactured home sales represent approximately 11% of all U.S. single family home starts. Our estimated market share in the U.S. total housing market, based on data through May 2026, was approximately 3.0% and 2.7% for the three months ended June 27, 2026 and June 28, 2025, respectively.

UNAUDITED RESULTS OF OPERATIONS FOR THE FIRST QUARTER OF FISCAL 2027 VS. 2026

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NET SALES

The following table summarizes net sales for the three months ended June 27, 2026 and June 28, 2025:

Net sales for the three months ended June 27, 2026 were $710.2 million, an increase of $8.9 million, or 1.3%, compared to the three months ended June 28, 2025. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Net sales for the Company’s U.S. manufacturing and retail operations increased by $15.4 million, or 2.3%, for the three months ended June 27, 2026 compared to the three months ended June 28, 2025. The increase was due to a 1.8% increase in new homes sold and 0.6% increase in the average selling price per new home. The increase in new homes sold was due to higher new home orders and production rates.

Canadian Factory-built Housing:

The Canadian Factory-built Housing segment net sales decreased by $6.8 million, or 22.6% for the three months ended June 27, 2026 compared to the same period in the prior fiscal year, primarily due to a 26.0% decrease in homes sold partially offset by a 4.6% increase in average home selling price. The decrease in homes sold was due to lower demand in certain markets and the closure of the Kelowna, BC plant in the second quarter of fiscal 2026. The increase in average selling price was due to product mix. On a constant currency basis, net sales for the Canadian segment were favorably impacted by approximately $0.4 million due to fluctuations in the translation of the Canadian dollar to the U.S. dollar during the three months ended June 27, 2026 as compared to the same period of the prior fiscal year.

Corporate/Other:

Net sales for Corporate/Other includes the Company’s transportation business, financing activities, and the elimination of intersegment sales. Net sales were consistent for the three months ended June 27, 2026 and June 28, 2025.

GROSS PROFIT

The following table summarizes gross profit for the three months ended June 27, 2026 and June 28, 2025:

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Gross profit as a percent of sales during the three months ended June 27, 2026 was 25.2% compared to 27.1% during the three months ended June 28, 2025. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Gross profit for the U.S. Factory-built Housing segment decreased by $9.4 million, or 5.4%, during the three months ended June 27, 2026 compared to the same period in the prior fiscal year. Gross profit was 24.4% as a percent of segment net sales for the three months ended June 27, 2026, compared to 26.3% for the three months ended June 28, 2025. The decrease in gross profit as a percent of segment net sales was driven by higher manufacturing material input costs.

Canadian Factory-built Housing:

Gross profit for the Canadian Factory-built Housing segment decreased by $1.5 million, or 18.3%, during the three months ended June 27, 2026 compared to the same period in the prior fiscal year. The decrease in gross profit was due to fewer homes sold in the period compared to the prior year. Gross profit as a percent of net sales was 29.0% for the three months ended June 27, 2026, compared to 27.5% in the same period of the prior year. The increase in gross profit as a percent of segment net sales was due to higher average selling prices of new homes and the impact of the closure of the Kelowna, BC plant, which reduced segment margin percentage in the prior fiscal year.

Corporate/Other:

Gross profit for the Corporate/Other segment increased $0.4 million, or 4.9%, during the three months ended June 27, 2026 compared to the same period of the prior fiscal year.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative expenses include in part costs that are not directly attributable to the manufacture or resale of our products, including foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes selling, general, and administrative expenses for the three months ended June 27, 2026 and June 28, 2025:

Selling, general, and administrative expenses were $119.0 million for the three months ended June 27, 2026, an increase of $7.7 million, or 6.9%, compared to the same period in the prior fiscal year. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Selling, general, and administrative expenses for the U.S. Factory-built Housing segment increased $1.7 million, or 2.0%, during the three months ended June 27, 2026 as compared to the same period in the prior fiscal year. SG&A as a percent of segment net sales decreased to 13.0% for the three months ended June 27, 2026 compared to 13.1% during the comparable period of the prior fiscal year. The increase in SG&A was due to the inclusion of Iseman Homes for the entire period in fiscal 2027 versus a partial period in the prior year subsequent to the acquisition.

Canadian Factory-built Housing:

Selling, general, and administrative expenses for the Canadian Factory-built Housing segment decreased $2.5 million, or 42.9%, for the three months ended June 27, 2026 when compared to the same period of the prior fiscal year. Selling, general, and administrative expenses as a percent of segment net sales decreased to 14.0% for the three months ended June 27, 2026 compared to 19.0% during the comparable period of the prior fiscal year, primarily due to costs associated with the Kelowna, BC plant closure of $2.9 million being included in the prior fiscal year.

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Corporate/Other:

Selling, general, and administrative expenses for Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments, and intersegment eliminations. Selling, general, and administrative expenses for Corporate/Other increased $8.4 million, or 44.4%, during the three months ended June 27, 2026 as compared to the same period of the prior fiscal year. The increase was primarily due to foreign currency transaction losses, employee severance costs, and higher stock compensation and incentive expense.

INTEREST INCOME, NET

The following table summarizes the components of interest income, net for the three months ended June 27, 2026 and June 28, 2025:

Interest income, net was $4.5 million for each of the three months ended June 27, 2026 and June 28, 2025.

OTHER INCOME

The following table summarizes other income for the three months ended June 27, 2026 and June 28, 2025:

Other income for the three months ended June 27, 2026 represents the net gain on sale of the Company's investment in ECN common and preferred shares of $2.5 million and dividend income of $0.8 million from the investment in ECN Preferred Shares. Other income for the three months ended June 28, 2025 represents dividend income of $1.2 million from the investment in ECN Preferred Shares.

INCOME TAX EXPENSE

The following table summarizes income tax expense for the three months ended June 27, 2026 and June 28, 2025:

Income tax expense for the three months ended June 27, 2026 was $17.0 million, representing an effective tax rate of 25.0%, compared to income tax expense of $17.7 million, representing an effective tax rate of 21.0% for the three months ended June 28, 2025. The effective tax rate for the three months ended June 27, 2026 was negatively impacted primarily by a decrease in recognition of tax credits related to the sale of energy efficient homes.

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The Company’s effective tax rate for each of the three months ended June 27, 2026 and June 28, 2025, differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, and results in foreign jurisdictions.

EQUITY IN NET LOSS OF AFFILIATES

The following table summarizes equity in net loss of affiliates for the three months ended June 27, 2026 and June 28, 2025:

The Company's investment in ECN is accounted for under the equity method and the Company’s share of the earnings or losses of ECN are recorded on a three-month lag. Equity in net loss of affiliates of $0.6 million for the three months ended June 27, 2026 represents a loss on the equity method investment in ECN of $0.3 million and net losses from other unconsolidated equity method investments of $0.3 million. Equity in net loss of affiliates of $0.6 million for the three months ended June 28, 2025 represents a loss on the equity method investment in ECN of $0.5 million and net losses from other equity method investments of $0.1 million.

NON-CONTROLLING INTEREST

The following table summarizes net income attributable to non-controlling interest for the three months ended June 27, 2026 and June 28, 2025:

Net income attributable to non-controlling interest represents the minority partner's 49% share of the results of operations of Champion Financing.

ADJUSTED EBITDA

The following table reconciles net income attributable to Champion Homes, Inc., the most directly comparable U.S. GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the three months ended June 27, 2026 and June 28, 2025:

• indicates that the calculated percentage is not meaningful

Adjusted EBITDA for the three months ended June 27, 2026 was $73.6 million, a decrease of $20.6 million from the same period of the prior fiscal year. The decrease is primarily a result of lower operating income as a result of lower gross margins.

The Company defines Adjusted EBITDA as net income or loss attributable to Champion Homes, Inc. plus expense or minus income: (a) the provision for income taxes; (b) interest, net; (c) depreciation and amortization; (d) gain or loss from discontinued operations; (e) non-cash

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restructuring charges and impairment of assets; (f) equity in net earnings or losses of ECN; (g) charges related to the remediation of the water intrusion product liability claims; and (h) other non-operating income and costs, including but not limited to those costs for the acquisition and integration or disposition of businesses or investments, including the change in fair value of contingent consideration, and idle facilities. Adjusted EBITDA is not a measure of earnings calculated in accordance with U.S. GAAP, and should not be considered an alternative to, or more meaningful than, net income or loss, net sales, operating income or earnings per share prepared on a U.S. GAAP basis. Adjusted EBITDA does not purport to represent cash flow provided by, or used in, operating activities as defined by U.S. GAAP, which is presented in the Statement of Cash Flows. In addition, Adjusted EBITDA is not necessarily comparable to similarly titled measures reported by other companies.

Adjusted EBITDA is presented as a supplemental measure of the Company’s financial performance that management believes is useful to investors, because the excluded items may vary significantly in timing or amounts and/or may obscure trends useful in evaluating and comparing the Company’s operating activities across reporting periods. Management believes Adjusted EBITDA is useful to an investor in evaluating operating performance for the following reasons: (i) Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest income and expense, taxes, depreciation and amortization and other non-operating income or loss, which can vary substantially from company to company depending upon accounting methods and the book value of assets, capital structure and the method by which assets were acquired; and (ii) analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry.

Management uses Adjusted EBITDA for planning purposes, including the preparation of the internal annual operating budget and periodic forecasts: (i) in communications with the Board of Directors and investors concerning financial performance; (ii) as a factor in determining bonuses under certain incentive compensation programs; and (iii) as a measure of operating performance used to determine the ability to provide cash flows to support investments in capital assets, acquisitions and working capital requirements for operating expansion.

BACKLOG

Although orders from customers can be canceled at any time without penalty, and unfilled orders are not necessarily an indication of future business, the Company’s unfilled U.S. and Canadian manufacturing orders at June 27, 2026 totaled $421.8 million compared to $302.5 million at June 28, 2025. The increase in backlog is a function of order rates exceeding production rates during the three months ended June 27, 2026, compared to the same period in the prior year.

Liquidity and Capital Resources

Sources and Uses of Cash

The following table presents summary cash flow information for the three months ended June 27, 2026 and June 28, 2025:

The Company’s primary sources of liquidity are cash flows from operations and existing cash balances. Cash balances and cash flows from operations for the next year are expected to be adequate to cover working capital requirements, capital expenditures, and strategic initiatives and investments. The Company's Second Amended Credit Agreement provides for a $200.0 million revolving credit facility, including a $45.0 million letter of credit sub-facility. At June 27, 2026, $170.6 million was available for borrowing under the Second Amended Credit Agreement. The Company’s revolving credit facility includes (i) a maximum consolidated total net leverage ratio of 3.25 to 1.00, subject to an upward adjustment upon the consummation of a material acquisition, and (ii) a minimum interest coverage ratio of 3.00 to 1.00. The Company anticipates compliance with its debt covenants and projects its level of cash availability to be in excess of cash needed to operate the business for the next year and beyond. In the event operating cash flow and existing cash balances were deemed inadequate to support the Company’s liquidity needs, and one or more capital resources were to become unavailable, the Company would revise its operating strategies.

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Cash provided by operating activities was $72.5 million for the three months ended June 27, 2026 compared to $75.3 million for the three months ended June 28, 2025. The decrease was primarily driven by lower operating income before non-cash charges partially offset by more favorable changes in working capital items during the first three months of fiscal 2027 as compared to the same period of the prior year.

Cash provided by investing activities was $126.0 million for the three months ended June 27, 2026 compared to cash used in investing activities of $33.9 million for the three months ended June 28, 2025. The increase in cash provided by investing activities was primarily related to the sale of the investment in ECN common and preferred shares during the first quarter of fiscal 2027 and the acquisition of Iseman Homes in the prior fiscal year.

Cash used in financing activities was $48.8 million for the three months ended June 27, 2026 compared to $51.9 million for the three months ended June 28, 2025. The change between periods was primarily a result of changes in floor plan financing. Cash used for repurchases of common stock was $50.0 million for each of the three months ended June 27, 2026 and June 28, 2025.

Critical Accounting Policies

For a discussion of our critical accounting policies that management believes affect its more significant judgments and estimates used in the preparation of our Consolidated Financial Statements, see Part II, Item 7 of the Fiscal 2026 Annual Report, under the heading “Critical Accounting Policies.” There have been no significant changes in our significant accounting policies or critical accounting estimates discussed in the Fiscal 2026 Annual Report, other than those included in Note 1, "Basis of Presentation".

Recently Issued Accounting Pronouncements

For information on the impact of recently issued accounting pronouncements, see Note 1, “Basis of Presentation – Recently Issued Accounting Pronouncements,” to the condensed consolidated financial statements included in this Report.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the Company’s interest rate and foreign exchange risks, see Part II, Item 7A of the Fiscal 2026 Annual Report, under the heading "Quantitative and Qualitative Disclosures about Market Risk." There have been no significant changes in such risks since March 28, 2026.

Item 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the specified time periods and accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) of the Exchange Act at June 27, 2026. Based upon this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of June 27, 2026.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial or contractual disputes, product liability claims and other matters. For additional information on legal proceedings, see Note 14 “Commitments, Contingencies and Legal Proceedings – Legal Proceedings,” to the condensed consolidated financial statements included in this Report.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

On May 16, 2024, the Company's Board of Directors initiated a share repurchase program. The Company has been repurchasing shares since the program's initiation and the Board of Directors has continued to refresh the amount of authorized share repurchases. At June 27, 2026, there was $100.0 million remaining under the current share repurchase authorization. In July 2026, the Board of Directors approved an increase to the share repurchase program of $50.0 million to refresh the available amount to $150.0 million. Under this program, the number of shares ultimately purchased, and the timing of purchases are at the discretion of management and subject to compliance with applicable laws and regulations. The share repurchase program does not expire. The Company intends to fund the program from existing cash. Share repurchases are made in the open market or in privately negotiated transactions in compliance with applicable state and federal securities laws and other legal requirements. The level of repurchase activity is subject to market conditions and other investment opportunities. The repurchase program does not obligate the Company to acquire any particular amount of common stock and may be suspended or discontinued at any time. Share repurchase activity during the three months ended June 27, 2026 was as follows:

Item 5. OTHER INFORMATION

During the three months ended June 27, 2026, none of the Company’s directors or Section 16 officers adopted or terminated a Rule 10b5-1 Trading Plan or “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K.

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Item 6. EXHIBITS

† Filed herewith.

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