Champion Homes (SKY) risk factors, FY2025 10-K

Market, Industry and Supply Chain Risks

1. 01Raw material shortages and price increases could delay or increase the cost of construction of our products which could materially and adversely impact our results of operations and our cash flows
2. 02Changes in U.S. trade policies, including tariffs or other trade protection measures, could negatively impact our business operations, results of operations, and cash flows by increasing our costs of goods, causing supply chain disruptions, or reduce demand for our products
3. 03The factory-built housing industry is cyclical, is affected by seasonality and is sensitive to changes in general economic or other business conditions
4. 04We are subject to demand fluctuations in the housing industry. Changes in demand could adversely affect our business, results of operations, and financial condition
5. 05Factory-built housing operates in the highly competitive housing industry, and, if other homebuilders are more successful or offer better value to our customers, then our business could decline
6. 06Changes in consumer preferences for our products or our failure to gauge those preferences could lead to reduced sales
7. 07Increases in tax rates or fees on developers by local government authorities could deter potential customers from buying our products and adversely affect our business or results of operations
8. 08Natural disasters and severe weather conditions could delay deliveries, increase costs, and decrease demand for new factory-built homes in affected areas
9. 09Increased attention and evolving expectations relating to environmental, social and governance matters may impact our business, financial results or stock price
10. 10Our results of operations may be adversely affected by public health issues, such as an epidemic or pandemic, and resulting governmental actions

Regulatory Risks

1. 11Environmental laws and regulations relating to climate change and energy efficiency can have an adverse impact on our business and results of operations
2. 12If the factory-built housing industry is not able to secure favorable local zoning ordinances, our sales could decline and our results of operations and cash flows could suffer
3. 13We are subject to extensive regulation affecting the production and sale of factory-built housing, which could adversely affect our business, financial condition, and results of operations
4. 14The transportation industry is subject to government regulation, and regulatory changes could have a material adverse effect on our results of operations or financial condition

Operational Risks

1. 15Our results of operations can be adversely affected by labor shortages, turnover and labor cost inflation
2. 16Increased costs of transportation may adversely affect our operating results and cash flows
3. 17Customer cancellations could have a negative impact on our revenue and margins
4. 18Complications with the implementation of our new enterprise-wide information system could adversely impact our business and operations
5. 19If we are unable to establish or maintain relationships with independent distributors that sell our homes, our sales could decline and our results of operations and cash flows could suffer
6. 20When we introduce new products into the marketplace, we may incur expenses that we did not anticipate, which, in turn, can result in reduced earnings
7. 21Product liability claims and litigation and warranty claims that arise in the ordinary course of business may be costly, which could adversely affect our results of operations
8. 22Our products and services may experience quality problems from time to time that can result in decreased sales and gross margin and can harm our reputation
9. 23We may not be able to manage our business effectively if we cannot retain current management team members or if we are unable to attract and motivate key personnel
10. 24Data security breaches, cybersecurity attacks, and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer
11. 25Engaging in mergers, acquisitions, and start-up operations involves risks that could adversely affect our business
12. 26not adequately anticipating customer demands in new markets
13. 27Our risk management practices may leave us exposed to unidentified or unanticipated risk

Financial Risks

1. 28Inflation has and could continue to adversely affect our business and financial results
2. 29The availability of wholesale financing for retailers is limited due to a limited number of floor plan lenders and reduced lending limits
3. 30We have contingent repurchase obligations related to wholesale financing provided to industry retailers
4. 31Industry conditions and future operating results could limit our sources of capital. If we are unable to locate suitable sources of capital when needed, we may be unable to maintain or expand our business
5. 32An impairment of all or part of our goodwill could adversely affect our operating results and net worth
6. 33An impairment of all or part of our investment in ECN Capital Corporation could adversely affect our operating results and net worth
7. 34We identified a material weakness in our internal control over financial reporting which, if not remediated appropriately or timely, could affect our ability to report financial information timely and accurately, negatively affect investor confidence, and cause reputational harm
8. 35Our failure to maintain effective internal control over financial reporting could harm our business and financial results
9. 36We anticipate paying no cash dividends for the foreseeable future