Champion Enterprises

Phyllis Knight, the CFO for Champion Enterprises, gave a speech today about the company at the Morgan Stanley Small Cap Executives Conference in New York. Here is the link to her presentation and slides. If you have any interest in the direction that Champion and the industry are taking, it is worth listening to her presentation.

Here are some of the highlights:

• 2007 HUD code Deliveries - 115,000 est. (All-time High in 1999 - 379K units)
• By 2011, Their sales will be split evenly between HUD code homes, modular and international modular
• There will be no growth in HUD code homes. 115,000/yr for a long time.
• Production capacity is in the 40-50% range today (1 week backlog) - Hopes to see it in the 80s soon
• They have strong cash flow and low CAPEX - They have the free cash flow and can do more "bolt on" acquisitions of modular home builders
  

Champion really has its model figured out. The future to factory-built housing is not in the HUD business - It's in the modular business. "The man with the gold makes the rules" is so true today. The financing is biggest hinderance to the HUD business and with modular you know longer have a financing problem.