Champion Homes Navigates Affordability Push Amid Mixed Q3 Results

Manufactured Housing Giant Meets Forecasts Amid Market Headwinds

Champion Homes (NYSE: SKY) presented a quarter of resilience and strategic positioning, reporting third-quarter fiscal 2026 results that aligned with management's expectations. In an earnings call this week, executives outlined how the company is steering through a challenging economic landscape by doubling down on product innovation and advocating for policies that could expand the market for factory-built homes.

The call introduced Dave McKinstry as the new Chief Financial Officer, following the retirement of veteran CFO Laurie Hough. CEO Tim Larson also highlighted the recent election of Tawn Kelley as Board Chair, signaling a period of leadership transition.

Building Trust and Broadening Appeal

A central theme was the effort to build consumer trust and attract a wider buyer base. Larson pointed to Skyline Homes being named America's Most Trusted Manufactured Home Builder for the sixth straight year—an accolade based on a survey of over 47,000 consumers. He also showcased product innovation aimed at affordability, citing the new 'Emerald Sky' model—a 1,600-square-foot home retailing around $185,000. "This stands in stark contrast to the near $500,000 average price of a new site-built home," Larson noted, positioning the offering as a critical solution in the housing affordability crisis.

Policy Watch: A Legislative 'Ebb and Flow'

Management spent significant time discussing the legislative environment. While the anticipated ROAD to Housing Act was not included in the recent defense bill, attention has shifted to the draft 'Housing for the 21st Century Act' in the House. Larson expressed cautious optimism, characterizing legislative progress as having a natural "ebb and flow." He also highlighted the passage of the Affordable Homes Act, which streamlines federal oversight under HUD and addresses energy standards without sacrificing affordability. A late-January tour of Champion's Texas plant with HUD officials was cited as evidence of the department's engagement with the industry.

Financial Snapshot: Revenue Up, Profits Down

Financially, the quarter presented a mixed picture. Net sales rose 2% year-over-year to $657 million, even as the total number of homes sold dipped 2% to 6,485. The average selling price in the U.S. climbed 5% to $99,300, driven by product mix and pricing at company-owned retail centers.

However, profitability metrics softened. Consolidated gross profit fell 5% to $172 million, with gross margin contracting 190 basis points to 26.2%. The company cited higher material costs and lower absorption of fixed costs due to reduced volume as primary pressures. Net income attributable to Champion declined 12% to $54 million, or $0.97 per diluted share.

The company's backlog at quarter-end was $266 million, down 15% sequentially, with lead times shortening—a sign of improving supply chain fluidity. Champion ended the quarter with a strong cash position of $660 million.

Looking Ahead: Cautious Guidance for Q4

For the fourth quarter, new CFO Dave McKinstry projected revenue growth in the low single digits year-over-year, with gross margin expected to remain in the 25-26% range. He cautioned that consumer sentiment, seasonal winter softness, and potential weather disruptions could create variability. Management also noted that planned inventory builds ahead of the spring selling season might temporarily pressure margins.

Analyst & Investor Perspectives

Michael Thorne, Housing Market Analyst at Ridgeview Capital: "Champion is executing a necessary pivot. The focus on higher ASPs through multi-section homes and owned retail is protecting revenue, but the margin story reveals the intense cost pressures in manufacturing. Their real bet is on legislative change unlocking zoning and financing—that's the long-term growth lever."

Sarah Chen, Portfolio Manager at Greenhaven Funds: "The 5% ASP increase is the standout. It shows they have pricing power in an affordable segment where it's desperately needed. The Iseman acquisition integration seems smooth, and the strong cash flow supports continued shareholder returns via buybacks. This is a steady operator in a volatile market."

David R. Miller, Editor of 'The Contrarian Investor' Newsletter: "'In line with expectations' is a euphemism for 'not growing.' A 12% drop in net income and declining backlog are red flags, not signs of resilience. They're touting a $185K home as 'affordable' while margins collapse. This is a company being squeezed, and their hope in Washington is a prayer, not a strategy."

Linda Gibson, Retiree and Champion Homeowner: "As someone who bought a Champion home five years ago, I appreciate their focus on trust. But for my kids looking now, even $185,000 is a stretch with today's loan rates. I'm glad they're working on policy for zoning—that's the biggest hurdle in my area."

Champion Homes, a leading North American provider of factory-built housing, continues to leverage its vertically integrated model. The company's performance remains a key barometer for the affordable housing sector and the potential of off-site construction to alleviate the ongoing housing shortage.