According to their “about us” investor relations (IR) page: “Champion Homes, Inc. is one of the largest homebuilders in North America and employs approximately 8,800 people. With more than 70 years of homebuilding experience and 48 manufacturing facilities throughout the United States and western Canada, Champion Homes, Inc. is well positioned to build a wide variety of manufactured and modular homes, ADUs, park-model RVs and modular buildings for the single-family, multi-family, and hospitality sectors.” Champion Homes, Inc. (NYSE: SKY) closed at $89.70 and was down -2.19 (-2.38%). Volume was 1,236,295 shares traded on December 26, 2024 by the close at 4:00 PM ET.  The image below has been arranged from a screen shot of their website on the date shown by Manufactured Home Pro News (a.k.a.:  MHProNews), which according to left-leaning Bing’s and AI powered Copilot is the apparently unchallenged largest and most read trade media in the manufactured home industry. Pageviews on the MHProNews website is reportedly over 100 times that of the Manufactured Housing Institute (MHI) website. More details useful for this analysis and that prior article vs. others serving manufactured housing with news, tips, views are found here.  The confirmation of those facts and related evidence are verified in #4, below. 

Mere opinions are a dime a dozen. As is our current custom on MHProNews, a systematic review of some published statements and facts follows, including several items per the Champion Homes (NYSE: SKY) website, that will illustrate and begin to unpack the headline concerns explored in this analysis. Former and future President Donald J. Trump’s transition proclaimed nominee for HUD Secretary, Eric Scott Turner will be woven into this discussion and critique of Champion after initial facts are developed further below.

Part I

In no particular order of importance are the following facts, insights, related analysis with manufactured housing industry expert commentary.

1) According to the SEC website and the document linked here: “Under our federal securities laws, public companies are required to disclose certain financial and other information to investors.” That SEC document says in part (emphasis added by MHProNews).

Since the concept of materiality is focused on the total mix of information from the perspective of a reasonable investor, those who assess the materiality of errors, including registrants, auditors, audit committees, and others, should do so through the lens of the reasonable investor. To be consistent with the concept of materiality, this assessment must be objective.”

2) The question and answer (Q&A or ‘chat’) with left-leaning Bing’s AI powered Copilot is useful to establish some basic concepts, evidence, and facts. Two typos are corrected below.

3)

6) There are several pages that might be unpacked in the latest Champion Homes (SKY) I.R. presentation. The information above, for example, is useful to not only investors, but also to media, the general public, and public officials such as former and future President Donald J. Trump planned nominee to be the Secretary of the U.S. Department of Housing and Urban Development (HUD), Eric Scott Turner.  Turner worked with prior HUD Secretary Ben Carson and others on Opportunity Zones in the first Trump term. The relevance given the affordable housing crisis in the U.S. and HUD’s role as the primary regulator of HUD Code manufactured housing is apparent.

7) As a practical matter, according to Champion Homes’ November 2024 IR presentation,

• the ratio of HUD Code manufactured homes to modular homes is about 7 to 1.
• Their graphic states that Champion’s production is about 93 percent in the U.S. vs only about 5 percent in Canada.
• 84 percent of Champion’s stated U.S. production is HUD Code manufactured homes vs. about 12 percent modular and only 4 percent “park” model style units (typically considered RVs).

Depending on the company and their production line/building center (i.e.: factory), manufactured homes and modular homes may be produced on the same production line and/or out of the same production center (i.e.: factory). A larger size of the image below is available via the link here.

8) While the specifics on the number of modular homes or park model homes produced by Champion are not stated in terms of exact unit numbers, a reasonably close estimate is available based on the data they have provided. But keep in mind the 7 to 1 ratio above as another section of their document is explored. But let’s note that on Page 6 among their statements that will be tested by MHProNews is the following. MHProNews plans to contact the firm and provide an opportunity to respond to the concerns raised herein. Their response, if any, will be part of a planned follow up report on Champion Homes.

Stakeholder Engagement

• Open and transparent communication with all our stakeholders – shareholders, employees, customers, suppliers, and communities we serve

• Social responsibility to homebuyers, customers, employees and the communities in which they live and work

The Q&A with Copilot illustrates that the above logically includes transparency via engagment with mainstream or specialized trade media.

9) The above helps to bring the following into focus. Champion Homes (SKY) is a member of the Manufactured Housing Institute (MHI). For about 6 years, MHI has been attempting to make their case for what they originally referred to as a new class of manufactured homes. They later rebranded that as “CrossMod Homes.” Note that sometimes that is shown with the ® or the TM symbols. CrossMod ^TM  or CrossMod^®. MHI holds that trademark.

10) While Champion asserts transparency for investors and other stakeholders, their IR presentation offers no specific clues as to how many CrossMods have been built by their firm. Nor has their been any known total specific numbers offered by the Manufactured Housing Institute (MHI) as to how many total CrossMod style HUD Code homes have been built and sold. The signficance of that will come into focus shortly, but first the evidence from Champion Homes (SKY).

According to Champion Homes’ IR presentation:
1) Manufactured homes retail from $40 to $90 per square foot.
2) Modular Homes retail from $60 to $110 per sq. foot.
3) CrossMod (TM) Housing is $70 to $140 per sq. foot.

Per a word search of the Champion Homes IR pitch there is no mention of the Manufactured Housing Improvement Act of 2000. Nor is there mention of preemption, federal preemption, or “enhanced preemption.”

As before, to open the image below in a larger size, depending on your device or browser, click the image and follow the prompts. Or click here and follow the prompts to open in a new window in a larger size.

11) With the above in mind, consider the following Q&As (chat) with Copilot. The signficiance of this topic with respect to Champion Homes (SKY), their present or potential investors, as well as for other Manufactured Housing Institute (MHI) members or affordable housing stakeholders and seekers, will be brought into focus through the following evidence-based items.

On paper, both the Manufactured Housing Institute and the Manufactured Housing Association for Regulatory Reform (MHARR) have said that under the Manufactured Housing Improvement Act of 2000 (a.k.a.: MHIA 2000, MHIA, 2000 Reform Act, 2000 Reform Law) includes a provision commonly referred to as “enhanced preemption” to clarify that the 2000 Reform Law strengthened the original preemption under the 1974 manufactured housing enabling legislation, correct? Explain the importance of the 2000 Reform Law and why enhanced preemption authority by HUD has been and could be used to overcome zoning barriers that preclude HUD Code manufactured homes.

12) Note what Copilot said in its linked narrative about the signficance and importance of “enhanced premption.” Note that cutting and pasting Copilot’s response below failed to provide all of the links shown above.  That said, MHARR, MHLivingNews and MHProNews were all hotlinked by Copilot in its narrative to explain the importance of federal preemption authority.

Enhanced Preemption Authority:

Enhanced preemption authority by HUD is crucial because it allows federal standards to override conflicting state and local regulations. This authority can be used to overcome zoning barriers that preclude HUD Code manufactured homes1. By ensuring that federal standards take precedence, it helps to facilitate the availability of affordable manufactured homes and increases homeownership opportunities for all Americans.

In essence, the 2000 Reform Law and its enhanced preemption authority aim to protect the quality, durability, safety, and affordability of manufactured homes while promoting innovative and cost-effective construction techniques.

13) The first adminstrator of HUD’s Office of Manufactured Housing Programs (OMHP) following the enactment of the 2000 Reform Law said the following in remarks to MHProNews. 

14) MHARR has on their website, as MHProNews and MHLivingNews do on our websites, a copy of a letter from Congressional lawmakers that instructed then HUD Secretary Mel Martinez (R) that he was not properly enforcing the 2000 Reform Law enhanced federal preemption provision. That letter is evidence of Congressional intent. It should be noted that MHARR is nonpartisan. The leadership of MHProNews/MHLivingNews ahave been political independents for over a decade. That said, a key statement in the letter by lawmakers involved in the enactement of the 2000 Reform Act is shown below.

15) Per that Congressional letter to then Secretary Martinez (R), the text of which is found in a longer article linked here, said on page 2 near the conclusion of their letter the following (see Congressional Represenatives signatures above).

Thus, the 2000 Act expressly provides, for the first time, for “Federal preemption,” and states that this should be “broadly and liberally construed” to ensure that local “requirements” do not affect “Federal superintendence of the manufactured housing industry.” Combined with the expansion of the findings and purposes of the Act to include for the first time the “availability of affordable manufactured homes,’ the 2000 Act changes have transformed the Act from solely being a consumer protection law to also being an affordable housing law.

More specifically, these combined changes have given HUD the legal authority to preempt local requirements or restrictions which discriminate against the siting of manufactured homes (compared to other single family housing) simply because they are HUD-code homes. We ask that HUD use this authority to develop a Policy Statement or regulation to address this issue, and we offer to work with you to ensure that it comports with Congressional intent.

Sincerely,

MHProNews notes that the 2000 Reform Law was passed by a widely bipartisan vote in Congress and was signed into law under then-President William Jefferson “Bill” Clinton (D). It was under the George W. Bush-Richard “Dick” Cheney (R) term of office that their HUD appointee, Secretary Mel Martinez received that letter dated 11.14.2003.

16) To illustrate why enhanced preemption under the 2000 Reform Law is so important, a series of remarks and linked comments follows.

a) Gary Adamek has been a member of the Texas Manufactured Housing Association (TMHA) for years, and TMHA is a Manufactured Housing Institute (MHI) state association member, as are the WHA and the PMHA (see Bliss and Gaiski remarks above). When Adamek told MHLivingNews that exclusionary zoning has hurt the industry more than financing barriers, that is a strong statement, because MHARR has said that zoning and finance discrimination are the two biggest “bottlenecks” for the industry.

b) Legacy Housing (LEGH) has not been shy to express their publicly stated concerns about the problems limiting manufactured housing. Legacy Housing co-founder and Executive Chairman Curt Hodgson put it like this.

“…I’ve indicated for some time, we have a place to put challenge in our industry, particularly in larger metropolitan areas like Dallas, Houston, San Antonio, Atlanta, Denver. And that difficulty is not being remedied, at least not currently.”

17) As recently as July 2023, fellow MHI member Cavco Industries (CVCO) CEO William “Bill” Boor made the following statement in remarks to Congress on behalf of MHI.

18) So, it is difficult for Champion, or any other MHI official or member for that matter, to overlook or deny that zoning barriers are a major hurdle, as MHARR and others have consistently asserted.  How does that fit with Champion’s claim of transparency in their IR presentation?  But to further illustrate the problem with that missing statement, consider what outside researchers have said about the zoning issue. Andrew Justus, J.D., housing policy analyst said in the spring of 2023 that zoning barriers are among the factors ‘holding manufactured housing back.’

19) Harvard, the Urban Institute, HUD, and the Lincoln Institute of Land Policy have all weighed in on zoning barriers in the past two years, or previously.

20) MHProNews contacted then Skyline Champion’s (recently rebranded as just Champion Homes) media relations professional Sarah Janowicz about the issues relative to zoning barriers for HUD Code manufactured homes.

a) Prior to providing detailed responses to MHProNews, Janowicz said the following.

Hi Tony – I figured I would reach out to provide a little more context and see if you wanted something on the record. If so, I’ll circulate the commentary I provided to our legal and management team to ensure they are okay with the statements being on the record. In terms of next steps, should I wait to see if you have any follow up questions that may require a response before sending this off to the larger group for review?

Sarah Janowicz

Director of Investor Relations and External Reporting

Skyline Champion Corporation …”

b) In response to a detailed set of follow up questions, that included Janowicz and Skyline’s prior statements, she said the following on June 11, 2020, at about 11:36 AM ET.

Hi Tony – We appreciate the opportunity to provide responses to clarify questions relating to our earnings call. While we also appreciate the interest on getting our feedback on the additional follow up questions,  we are declining to provide additional information at this time.

c) That noted, Janowicz/Skyline Champion (now just Champion Homes) had previously said the following with respect to zoning barriers.

d) That follow up inquiry from MHProNews to Janowicz/Skyline Champion had the following on June 10, 2020 3:46 PM.

Sarah,

First, thanks again for the replies. Got it on the regional impact and electronic support.

That said, let me pose the following follow up questions on the balance of your comments.

Quoting your reply:

• “Any change in the regulations or the enforcement of regulations that reduce restrictions on the placement of HUD Code homes would be positive for the entire manufactured home industry.”
• “Skyline Champion, like many other manufactured home builders, is working with and supports MHI’s efforts.”

As the links and references provided in the MHProNews questions reflect, on paper, MHI has said it wants the full implementation of “enhanced preemption” provision of the Manufactured Housing Improvement Act of 2000.  As the first bullet you above you provided says, that would benefit the entire industry. With that noted, the questions.

 

Follow up Question 1a) But doesn’t MHI’s failure to robustly and routinely push for enforcement call into question the wisdom of blind loyalty by Skyline Champion to “MHI’s efforts?” First, what efforts?  When MHI leaders have met with HUD officials, why isn’t the MHIA’s Enhanced Preemption enforcement at the top of the list on the push? Letters they have sent may never be seen by the person it addresses. By contrast, when a face-to-face meeting occurs between HUD and MHI, shouldn’t that be raised each time until enforcement of preemption is a reality?

 

Question 1b) Additionally, wouldn’t MHI robustly pressing HUD in every meeting be in the best interest of shareholders?

Quoting your reply:

• Expanding home buyer access to financing would benefit the entire industry.

Note that editorially, we would concur with that statement. However, that begs a follow up query.

Follow up question 2) Then why has MHI pushed for the “new class of manufactured homes” now called “CrossModTM” homes, when that program reportedly has virtually no traction? Rephrased, isn’t it prudent and in the interest of shareholders to off competitive lending on all manufactured homes instead of only a select few that are hardly selling?

As before, your reply below the question will help our mutual clarity and accuracy once we publish our report. Thanks, we look forward to your reply.

Tony

L. A. “Tony” Kovach
Managing Member
LifeStyle Factory Homes, LLC

DBAs:

MHLivingNews.com | MHProNews.com …”

e) As was noted above, that Q&A is apparently relevant to the planned follow up to Champion’s communication-leadership-IR team to provide them an opportunity to respond to this report with analysis. Stay tuned for that, tentatively planned for Monday of next week.

21) Law Professor Daniel R. Mandelker made a relevant observation to MHI, which could be applied to the concerns being raised in this report with analysis on Champion’s latest IR pitch. Professor Mandelker, considered a zoning expert, said that an ‘organization is needed for manufactured housing advocates for litigation and legislative support.’ See that in context and in exchanges with MHProNews/MHLivingNews linked below. Because intentionally or not, his remarks called into question the effectiveness of MHI in their advocacy.

22) CrossMods were supposed to help manufactured housing expand its market share, acceptance, and sales.  From the time MHI began to beat the drums for CrossMods, this publication and our MHLivingNews sister site raised several concerns about the logic and viability of the program. The headline below spoke volumes, because MHProNews was publicly editorially questioning the wisdom of the plan. MHARR also blasted the plan and its logic and continues to do so, see examples from MHARR linked below.

a) MHARR exposed in their own words and over a period of years the problems with the “new class” of manufactured homes which was later rebranded CrossMod. On this date, there are several pages of posted articles by MHARR on the CrossMod subject.

23) But it wasn’t only MHARR, MHProNews and MHLivingNews that have consistently and repeatedly exposed the problems with their program. The Modular Home Builders Association (MHBA) Executive Director Tom Hardiman publicly called for MHI to end the misleading and deceptive program, which he aptly pointed out tended to undermine what MHARR calls “mainstream” manufactured housing.

a) But what Hardiman’s remarks also obliquely underscored is that “regular” or “mainstream” manufactured homes would be harmed by the program.  As MHProNews reported, there was a number of professionals that ‘walked out’ of MHI’s pitch that announced the now multiple years of struggling for traction program.

Manufactured Housing Institute “Walk Out,” “Cover Up,” and Shock at their Vegas Event

b) As a manager for an MHI member firm told MHProNews, CrossMods were an insult to existing manufactured homes. ‘What are we [producing], chopped liver?’

c) MHI kept touting the program and providing their ‘logic’ for launching and continuing the plan. But as months turned into years, the supposed benefits of the program proved to be a fantasy, or perhaps, worse. In a letter to federal officials, MHI’s CEO Lesli Gooch admitted in the context of her complaints and requests that developers – who were supposed to be one of the groups that CrossMods would attract – where ‘moving away’ from the product.

d) Nevertheless, Clayton Homes CEO Kevin Clayton cut a video to specifically promote the struggling/failing product.

e) Comparing Skyline Champion (SKY) May 2023 IR pitch deck slide to the corresponding one from November 2024 the market share for HUD Code manufactured homes and U.S. vs. Canadian housing are up. The market share of modular homes and commercial projects are down, again, per SKY.

f) To see the graphics above and below in a larger size either click the image and follow the prompts or click here (top immediately above) (second above) or here (below) to open in a new window and follow the prompts to see the image in a larger size.

24) The headline stated there would be a comparison between Champion in 1998 and Champion in 2024. Here that is. Champion produced 21,968 HUD Code manufactured homes, per the now defunct Manufactured Home Merchandiser Magazine, once considered by many to be the flagship publication for MHVille. That trade publisher shut down in the summer of 2009, as did so many once longtime producers and sellers of manufactured homes.

a) Champion’s IR presentation says that they produced 24,974 homes in all of North America. Doing the math, 24,974 x .84% = 20,978.16. So, compared to the Champion of yesteryear (1998) and its 21,968 new HUD Code manufactured homes the roughly 20,978 means they produced about a 1000 fewer homes a quarter of a century later. Here is the math: 21,968 – 20,978 = about 990 fewer HUD Code manufactured homes. As was noted, CrossMods have failed to increase the production of the industry. The percentage of market share declined, as Champion’s current and previous IR pitch helps document.

25) There is an evidence-based argument to be made that Champion Homes (for a time, Skyline Champion Homes NYSE: SKY) has failed their investors and stakeholders in both their fiduciary duties and in their material disclosure duties.  See the Q&A with Copilot to illustrate that concern.

From Champion Homes (SKY) IR presentation and website: https://ir.championhomes.com/events-and-presentations/presentations/default.aspx it seems that Champion’s total production of manufactured homes has dropped since 1998, correct? It also seems that an evidence-based argument can be made that Champion’s leaders have failed to disclose some materially signficant items. They would include: no specific mention of zoning barriers. No reference to how zoning barriers could be overcome if HUD enforced the Manufactured Housing Improvement Act of 2000 “enhanced preemption” provision. Champion’s Nov. 2024 IR pitch says that they are transparent, which is essentially an SEC requirement because they are publicly traded. But if they fail to agressively support enforcement by HUD of enhanced preemption, aren’t they failing investors and stakeholders in their fiduciary and material disclosures realms alike?

Yes, it appears that Champion’s total production of manufactured homes has indeed dropped since 1998.

Regarding the disclosure of materially significant items, it seems that Champion’s leaders have not specifically mentioned zoning barriers or how these barriers could be overcome if HUD enforced the Manufactured Housing Improvement Act of 2000’s “enhanced preemption” provision3.

Champion’s November 2024 IR pitch emphasizes transparency, which is an SEC requirement for publicly traded companies. However, if they fail to aggressively support the enforcement of enhanced preemption by HUD, they could be seen as failing their investors and stakeholders in both fiduciary and material disclosure realms68.

Does this help clarify things for you? …”

 

The linked references by Copilot in the chat (Q&A) above were as follows.

a = 1) Champion Homes – Wikipedia

b = 2) MHInsider Zoning Post Analyzed by AI-‘Failure to Disclose ELS Ownership Potential Conflicts of Interest-Not Providing Comprehensive Info Misleading’ ‘Possible SEC-Legal’ Issues; plus MHMarkets

c = 3) Governments should lighten up on zoning for affordable manufactured homes | Lakeland Ledger

d = 4) Zoning Barriers to Manufactured Housing | Daniel R. Mandelker

e = 5) Champion Homes Annual Reports

f = 6) HUD: FAQs – Manufactured Housing Improvement Act of 2000

g = 7) MHARR – “Time to Enforce the Law on Federal Preemption”

h = 8) HUD Response to Federal “Enhanced Preemption” for Manufactured Homes, FHA Loan Exclusive, as Mainstream Housing Prices Surge Despite Pandemic, Unemployment Crisis

 

 

26) There is much more to know. For instance, why does MHI claim to be in favor of getting enhanced preemption enforced yet fail to use those words on their own website and/or in social media posts, interviews, or op-eds? The comparison between how MHARR and MHI’s association-staff leaders responded to substantially the same questions is explored in depth in the report with analysis below.

 

 

27) There is an evidence-based argument to be made that Champion Homes, along with other MHI members, are in some form colluding to limit the industry in a fashion that promotes industry consolidation. MHI leaders  and documents have indirectly said as much. The first illustration that follows is by MHProNews, but the next two are items from an MHI leader or an annotated MHI document.

 

28) Various Federal Reserve linked professionals: Elena Falcettoni, James A. “Jim” Schmitz Jr. and Mark L. J. Wright made their detailed case that manufactured housing is being limited by steps taken by HUD and builders.  Antitrust researcher Samuel “Sam” Strommen made a different but compatable 17-page 130 plus footnote argument that monopolization of the industry is occurring because of the “felony” behavior of key MHI members. Champion Homes was cited by Strommen, it is one of the “Big Three” (or Big 3) at MHI.

29) Champion (SKY) has held a board seat at MHI for some time. MHProNews plans to invite Champion’s leadership to respond to this. Multiple follow ups are planned, as soon as next week. One or more may include an article on the mainstream Patch. Stay tuned for that follow up.

30) Scott Turner could be walking into a challenging situation if he fails to enforce federal preemption. The first Trump White House reportedly knew about federal preemption, at least later into the adminstration.  For those who grasp what was done to Trump 1.0, a measure of understanding is warranted. But Trump 2.0 should be different.  With an “enforce the law” mantra Turner and his peers should be prepared to do what Republicans and Democrats before him didn’t.

31) Fiduciary duty and materiality (per SEC) are linked as shown.

Given that multiple MHI members have been sued for purported market manipulation that includes evidence-based claims of antitrust violations, these are issues that the Trump 2.0 team needs to be aware of and act upon.

Potentially related insights follow. Enough said for today.

—

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Again, our thanks to free email subscribers and all readers like you, as well as our tipsters/sources, sponsors and God for making and keeping us the runaway number one source for authentic “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)

By L.A. “Tony” Kovach – for MHProNews.com.

Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.

For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

This article reflects the LLC’s and/or the writer’s position and may or may not reflect the views of sponsors or supporters.

http://latonykovach.com

Connect on LinkedIn: http://www.linkedin.com/in/latonykovach

 

 

Related References:

The text/image boxes below are linked to other reports, which can be accessed by clicking on them.’