The following should be read in conjunction with Skyline Champion Corporation's
condensed consolidated financial statements and the related notes that appear in
Item 1 of this Report.
Overview
Skyline Champion Corporation (the "Company") 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 manufactured offsite construction, company-owned retail locations, and
transportation logistics services. The Company markets its homes under several
nationally recognized brand names including Skyline Homes, Champion Home
Builders, Genesis Homes, Athens Park Models, Dutch Housing, Atlantic Homes,
Excel Homes, Homes of Merit, New Era, 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 37 manufacturing facilities throughout the U.S. and
five 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 19 sales centers
that sell manufactured homes to consumers primarily in the southern 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 and Expansions
Over the last several years, demand for the Company's products, primarily
affordable housing in the U.S., has continued to improve. As a result, the
Company has focused on operational improvements to increase capacity utilization
and profitability at its existing manufacturing facilities as well as executing
measured expansion of its manufacturing footprint through facility and equipment
investments and acquisitions. 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 wholistic solutions to homebuyers.
In May, 2022, the Company acquired Manis Custom Builders, Inc. ("Manis") in
order to expand its manufacturing footprint and further streamline its product
offering in the Southeast U.S. In June, 2021, the Company acquired two idle
facilities in Navasota, Texas in order to increase its production capabilities
in the Texas market. The Company began production and completed the
certification process at one of those facilities during the fourth quarter of
fiscal 2022. On February 28, 2021, the Company acquired ScotBilt, which operated
two manufacturing facilities in Georgia providing affordable housing throughout
Alabama, Florida, Georgia and the Carolinas. The ScotBilt acquisition
complemented the Company's prior manufacturing footprint in the attractive
mid-south region.
In January, 2021, the Company acquired two idle facilities in Pembroke, North
Carolina which provide an opportunity to further expand its manufacturing
footprint in the Southeast markets. The Company is currently renovating one of
those facilities for expected production in late fiscal 2023.
The Company's acquisitions and investments are part of a strategy to grow and
diversify revenue with a focus on increasing the Company's HUD and modular
homebuilding presence in the U.S. as well as improving the results of
operations. These acquisitions and investments are included in the Company's
consolidated results for periods subsequent to their respective acquisition
dates.
Industry and Company Outlook
Since July 2020, the U.S. and Canadian housing industry demand has been robust.
The limited availability of existing homes for sale and the broader need for
newly built affordable, single-family housing has continued to drive demand for
new homes in these 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 homebuyers, and the population of households earning less than
$60,000 per year. More recently, we have seen a number of market trends pointing
to increased sales of ADUs and urban-to-rural migration as customers accommodate
working-from-home patterns, as well as people seeking rent-to-own single-family
options.
The robust demand environment has resulted in backlog of $1.4 billion as of July
2, 2022 compared to $1.2 billion as of July 3, 2021. Generally higher backlog at
our manufacturing facilities creates an opportunity to increase production
efficiencies. Although the higher demand brings opportunities, it also has
resulted in significant increases in raw material and labor costs. Although we
have seen recent improvements, we continue to experience intermittent supply
disruption and higher freight costs. Finding and retaining qualified labor
continues to be a challenge for our plants which requires us to monitor our
compensation programs and adjust accordingly. We manage our business to
anticipate or quickly react to these supply challenges and cost increases and
generally are able to pass along increased costs to our customers. Generally,
order cancellation rates have been very low, but the longer lead-time caused by
larger backlogs, rising interest rates and changing prices could result in
higher cancellations. During the first quarter, as interest rates increased,
independent retailers cancelled a limited number of orders to decrease their
inventory carrying costs.
13
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For the three months ended July 2, 2022, approximately 86% of the Company's U.S.
manufacturing sales were generated from the manufacture of homes that comply
with the Federal 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
MHI, HUD-code industry home shipments were 31,894 and 27,857 units during the
three months ended May 31, 2022 and 2021, respectively. Based on industry data,
the Company's U.S. wholesale market share of HUD code homes sold was 18.0% and
18.9%, for the three months ended May 31, 2022 and 2021, respectively. Annual
HUD-code industry shipments have generally increased each year since calendar
year 2009 when only 50,000 HUD-coded manufactured homes were shipped, the lowest
level since the industry began recording statistics in 1959. While shipments of
HUD-coded manufactured homes have improved modestly in recent years,
manufactured housing's most recent annual shipment levels still operate at lower
levels than the long-term historical average of over 200,000 units annually.
UNAUDITED INCOME STATEMENTS FOR THE FIRST QUARTER OF FISCAL 2023 VS. 2022
Three months ended
July 2, July 3,
(Dollars in thousands) 2022 2021
Results of Operations Data:
Net sales $ 725,881 $ 510,197
Cost of sales 496,546 398,667
Gross profit 229,335 111,530
Selling, general, and administrative expenses 72,282 54,023
Operating income 157,053 57,507
Interest expense, net 90 649
Other income (634 ) (54 )
Income before income taxes 157,597 56,912
Income tax expense 40,446 14,011
Net income $ 117,151 $ 42,901
Reconciliation of Adjusted EBITDA:
Net income $ 117,151 $ 42,901
Income tax expense 40,446 14,011
Interest expense, net 90 649
Depreciation and amortization 5,616 5,145
Transaction costs 338 -
Other (973 ) -
Adjusted EBITDA $ 162,668 $ 62,706
As a percent of net sales:
Gross profit 31.6 % 21.9 %
Selling, general, and administrative expenses 10.0 % 10.6 %
Operating income 21.6 % 11.3 %
Net income 16.1 % 8.4 %
Adjusted EBITDA 22.4 % 12.3 %
14
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NET SALES
The following table summarizes net sales for the three months ended July 2, 2022
and July 3, 2021:
Three months ended
July 2, July 3, $ %
(Dollars in thousands) 2022 2021 Change Change
Net sales $ 725,881 $ 510,197 $ 215,684 42.3 %
U.S. manufacturing and retail net sales $ 661,081 $ 457,320 $ 203,761 44.6 %
U.S. homes sold 6,813 6,372 441 6.9 %
U.S. manufacturing and retail average
home selling price $ 97.0 $ 71.8 $ 25.2 35.1 %
Canadian manufacturing net sales $ 45,062 $ 37,831 $ 7,231 19.1 %
Canadian homes sold 352 385 (33 ) (8.6 %)
Canadian manufacturing average home
selling price $ 128.0 $ 98.3 $ 29.7 30.2 %
Corporate/Other net sales $ 19,738 $ 15,046 $ 4,692 31.2 %
U.S. manufacturing facilities in
operation at end of period 37 35
U.S. retail sales centers in operation
at end of period 19 18
Canadian manufacturing facilities in
operation at end of period 5 5
Net sales for the three months ended July 2, 2022 were $725.9 million, an
increase of $215.7 million, or 42.3%,over the three months ended July 2, 2022.
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 $203.8 million, or 44.6%, for the three months ended July 2, 2022 compared to
the three months ended July 3, 2021. The increase was primarily due to an
increase in the number of homes sold during the three months ended July 2, 2022
of 6.9%, as well as an increase in the average home selling price of 35.1%. The
increase in the number of homes sold was a result of additional capacity from
recent expansions, Federal Emergency Management Agency ("FEMA") Disaster Relief
housing sales of $82.5 million and increased production output from our existing
facilities. The average selling price increase was due, in part, to the impact
of sales to FEMA as well as due to pricing actions enacted on our core products
in response to rising material, freight, and labor costs. FEMA units generally
have more specifications than our typical products and therefore drive a higher
average selling price per home. Generally, we are able to pass the increase in
input costs to our customers.
Canadian Factory-built Housing:
The Canadian Factory-built Housing segment net sales increased by $7.2 million,
or 19.1% for the three months ended July 2, 2022 compared to the same period in
the prior fiscal year, primarily due to a 30.2% increase in average home selling
price, partially offset by an 8.6% decrease in homes sold. The increase in
average selling price was due to pricing actions enacted in response to rising
material and labor costs and change in product mix. The decrease in homes sold
is due to the timing of shipments. On a constant currency basis, net sales for
the Canadian segment were unfavorably impacted by approximately $1.4 million due
to fluctuations in the translation of the Canadian dollar to the U.S. dollar
during the first three months of fiscal 2023 as compared to the same period of
the prior fiscal year.
Corporate/Other:
Net sales for Corporate/Other includes the Company's transportation business and
the elimination of intersegment sales. For the three months ended July 2, 2022,
net sales increased $4.7 million, or 31.2%, primarily attributable to an
increase in shipments and an increase in average revenue per mile shipped.
15
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GROSS PROFIT
The following table summarizes gross profit for the three months ended July 2,
2022 and July 3, 2021:
Three months ended
July 2, July 3, $ %
(Dollars in thousands) 2022 2021 Change Change
Gross profit:
U.S. Factory-built Housing $ 209,637 $ 99,211 $ 110,426 111.3 %
Canadian Factory-built Housing 14,795 8,325 6,470 77.7 %
Corporate/Other 4,903 3,994 909 22.8 %
Total gross profit $ 229,335 $ 111,530 $ 117,805 105.6 %
Gross profit as a percent of net sales 31.6 % 21.9 %
Gross profit as a percent of sales during the three months ended July 2, 2022
was 31.6% compared to 21.9% during the three months ended July 3, 2021. 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 increased by $110.4
million, or 111.3%, during the three months ended July 2, 2022 compared to the
same period in the prior fiscal year. Gross profit was 31.7% as a percent of
segment net sales for the three months ended July 2, 2022 compared to 21.7%% in
the same period of the prior fiscal year. The increase in gross profit was due
to price increases implemented in response to rising input costs. Sales to FEMA
during the first quarter of fiscal 2023 also helped improve margins since these
sales are generally at higher prices than our core product which help offset the
disruption to our operations and our customers.
Canadian Factory-built Housing:
Gross profit for the Canadian Factory-built Housing segment increased by $6.5
million, or 77.7% during the three months ended July 2, 2022 compared to the
same period in the prior fiscal year primarily due to increased sales volume.
Gross profit as a percent of net sales was 32.8% for the three months ended July
2, 2022, compared to 22.0% in the same period of the prior fiscal year due to
price increases in response to rising material and labor costs.
Corporate/Other:
Gross profit for the Corporate/Other segment increased $0.9 million, or 22.8%,
during the three months ended July 2, 2022 compared to the same period of the
prior fiscal year, primarily due to increased net sales in the Company's
transportation operations. Gross profit decreased as a percent of segment net
sales to 24.8% from 26.5% as a result of changes in revenue mix.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses include 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 July 2, 2022 and July 3, 2021:
Three months ended
July 2, July 3, $ %
(Dollars in thousands) 2022 2021 Change Change
Selling, general, and administrative
expenses:
U.S. Factory-built Housing $ 53,054 $ 40,755 $ 12,299 30.2 %
Canadian Factory-built Housing 3,749 2,945 804 27.3 %
Corporate/Other 15,479 10,323 5,156 49.9 %
Total selling, general, and
administrative expenses $ 72,282 $ 54,023 $ 18,259 33.8 %
Selling, general, and administrative
expense as a percent of net sales 10.0 % 10.6 %
Selling, general, and administrative expenses were $72.3 million for the three
months ended July 2, 2022, an increase of $18.3 million, or 33.8%, compared to
the same period in the prior fiscal year. The following is a summary of the
change by operating segment.
16
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U.S. Factory-built Housing:
Selling, general, and administrative expenses for the U.S. Factory-built Housing
segment increased $12.3 million, or 30.2%, during the three months ended July 2,
2022 as compared to the same period in the prior fiscal year. Selling, general,
and administrative expenses, as a percent of segment net sales decreased to 8.0%
for the three months ended July 2, 2022 compared to 8.9% during the comparable
period of the prior fiscal year primarily due to higher revenue and increased
leverage of fixed costs. The increase in selling, general, and administrative
expenses resulted from higher sales commissions and incentive compensation which
is generally based on sales volume or a measure of profitability, and higher
wage expense from headcount increases due to the growth in housing demand and
our business expansion.
Canadian Factory-built Housing:
Selling, general, and administrative expenses for the Canadian Factory-built
Housing segment increased $0.8 million, or 27.3%, for the three months ended
July 2, 2022 when compared to the same period of the prior fiscal year. Selling,
general, and administrative expenses as a percent of segment net sales increased
to 8.3% for the three months ended July 2, 2022 compared to 7.8% during the
comparable period of the prior fiscal year. The increase in selling, general,
and administrative expenses is due to higher incentive compensation related to
the increase in sales and gross profit of the segment.
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 $5.2 million, or 49.9%, during the three months ended
July 2, 2022 as compared to the same period of the prior fiscal year due to
investments made to enhance our online customer experience and supporting
systems, as well as an increase in equity compensation.
INTEREST EXPENSE, NET
The following table summarizes the components of interest expense, net for the
three months ended July 2, 2022 and July 3, 2021:
Three months ended
July 2, July 3, $ %
(Dollars in thousands) 2022 2021 Change Change
Interest expense $ 903 $ 808 $ 95 11.8 %
Less: Interest income (813 ) (159 ) (654 ) 411.3 %
Interest expense, net $ 90 $ 649 $ (559 ) (86.1 %)
Average outstanding floor plan payable $ 38,696 $ 28,592
Average outstanding long-term debt $ 12,430 $ 39,330
Interest expense, net was $0.1 million for the three months ended July 2, 2022,
a decrease of $0.6 million, or 86.1%, compared to the same period of the prior
fiscal year. The net decrease in expense was primarily due to higher interest
income during the first quarter of fiscal 2023 compared to the first quarter of
fiscal 2022 due to a significant increase in interest rates on our invested
cash.
OTHER INCOME
The following table summarizes other income for the three months ended July 2,
2022 and July 3, 2021:
Three months ended
July 2, July 3, $ %
(Dollars in thousands) 2022 2021 Change Change
Other income $ (634 ) $ (54 ) $ (580 ) 1,074.1 %
Other income increased $0.6 million during the three months ended July 2, 2022
as compared to the same period of the prior fiscal year. The Company received
proceeds during the first quarter of fiscal 2023 from an insurance company that
related to Champion Home Builders' pre-bankruptcy workers compensation claims,
which was partially offset by transaction costs for the acquisition of Manis.
17
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INCOME TAX EXPENSE
The following table summarizes income tax expense for the three months ended
July 2, 2022 and July 3, 2021:
Three months ended
July 2, July 3, $ %
(Dollars in thousands) 2022 2021 Change Change
Income tax expense $ 40,446 $ 14,011 $ 26,435 188.7 %
Effective tax rate
25.7 % 24.6 %
Income tax expense for the three months ended July 2, 2022 was $40.4 million,
representing an effective tax rate of 25.7%, compared to income tax expense of
$14.0 million, representing an effective tax rate of 24.6% for the three months
ended July 3, 2021.
The Company's effective tax rate for the three months ended July 2, 2022 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 Company's effective tax rate for the three
months ended July 3, 2021 differed 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, results in foreign jurisdictions, and tax
benefits from equity compensation.
18
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ADJUSTED EBITDA
The following table reconciles net income, the most directly comparable U.S.
GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the three
months ended July 2, 2022 and July 3, 2021:
Three months ended
July 2, July 3, $ %
(Dollars in thousands) 2022 2021 Change Change
Net income $ 117,151 $ 42,901 $ 74,250 173.1 %
Income tax expense 40,446 14,011 26,435 188.7 %
Interest expense, net 90 649 (559 ) (86.1 %)
Depreciation and amortization 5,616 5,145 471 9.2 %
Transaction costs 338 - 338 *
Other (973 ) - (973 ) *
Adjusted EBITDA $ 162,668 $ 62,706 $ 99,962 159.4 %
* indicates that the calculated percentage is not meaningful
Adjusted EBITDA for the three months ended July 2, 2022 was $162.7 million, an
increase of $100.0 million from the same period of the prior fiscal year. The
increase is primarily a result of higher operating income due to increases in
sales volume, average selling prices and gross margins, partially offset by
higher SG&A expenses.
The Company defines Adjusted EBITDA as net income or loss plus, (a) the
provision for income taxes, (b) interest expense, net, (c) depreciation and
amortization, (d) gain or loss from discontinued operations, (e) restructuring
charges and impairment of assets, and (f) other non-operating income and costs,
including those for the acquisition and integration or disposition of
businesses. 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.
In evaluating Adjusted EBITDA, investors should be aware that, in the future,
the Company may incur expenses similar to those adjusted for in this
presentation. This presentation of Adjusted EBITDA should not be construed as an
implication that the Company's future results will be unaffected by unusual or
nonrecurring items.
Adjusted EBITDA has important limitations as an analytical tool and you should
not consider it in isolation or as a substitute for analysis of our results as
reported under U.S. GAAP. Some of these limitations are:
Adjusted EBITDA:
•
does not reflect the interest expense on our debt;
•
excludes impairments; and
•
does not reflect our cash expenditures, or future requirements, for capital
expenditures or contractual commitments;
•
although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future, and
Adjusted EBITDA does not reflect any cash requirements for such replacements;
and
•
other companies in our industry may calculate Adjusted EBITDA differently than
we do, limiting its usefulness as a comparative measure.
Given these limitations, Adjusted EBITDA should not be considered as a measure
of discretionary cash available to us to invest in the growth of our business.
We compensate for these limitations by relying primarily on our U.S. GAAP
results and using non-GAAP financial measures only on a supplemental basis.
BACKLOG
Although orders from customers can be cancelled 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 July 2, 2022
totaled $1.4 billion compared to $1.2 billion at July 3, 2021. The increase in
backlog was primarily driven by an increase in average selling price per home in
backlog. Increasing production rates to keep pace with orders is limited by
individual plant capacity, time to train new employees, employee attendance and
availability of materials, including most recently raw material allocations by
certain suppliers.
19
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Liquidity and Capital Resources
Sources and Uses of Cash
The following table presents summary cash flow information for the three months
ended July 2, 2022 and July 3, 2021:
Three months ended
July 2, July 3,
(Dollars in thousands) 2022 2021
Net cash provided by (used in):
Operating activities $ 47,422 $ 31,905
Investing activities (18,971 ) (9,219 )
Financing activities 2,056 1,798
Effect of exchange rate changes on cash, cash equivalents (2,142 ) 673
Net increase in cash and cash equivalents
28,365 25,157
Cash and cash equivalents at beginning of period 435,413 262,581
Cash and cash equivalents at end of period $ 463,778 $ 287,738
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. On July 7,
2021, the Company entered into an Amended and Restated Credit Agreement which
provides for a $200.0 million revolving credit facility, including a $45.0
million letter of credit sub-facility ("Amended Credit Agreement"). At July 2,
2022, $167.9 million was available for borrowing under the 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.
Cash provided by operating activities was $47.4 million for the three months
ended July 2, 2022 compared to $31.9 million for the three months ended July 3,
2021. Cash provided by operating activities increased due to higher net income,
partially offset by changes in working capital, primarily increases in inventory
and accounts receivable related to production activities for the FEMA contract.
Cash used in investing activities was $19.0 million for the three months ended
July 2, 2022 compared to $9.2 million for the three months ended July 3, 2021.
The increase in cash used for investing activities was related to cash paid for
the acquisition of Manis.
Cash provided by financing activities was $2.1 million for the three months
ended July 2, 2022 compared to $1.8 million for the three months ended July 3,
2021. Cash provided by financing in each period was primarily a result of
increased borrowings under floor plan financing agreements.
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 2022
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 2022 Annual Report.
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.
20
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Forward-Looking Statements
Some of the statements in this Report are not historical in nature and are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include statements
about our expectations regarding our future liquidity, earnings, expenditures,
and financial condition. These statements are often identified by the words
"will," "could", "should," "anticipate," "believe," "expect," "intend,"
"estimate," "hope," or similar expressions. These statements reflect
management's current views with respect to future events and are subject to
risks and uncertainties. There are risks and uncertainties, many of which are
beyond our control, that could cause our actual results to differ materially
from those in our forward-looking statements, including regional, national and
international economic, financial, public health and labor conditions, and the
following:
•
Supply-related issues, including prices and availability of materials;
•
labor-related issues;
•
inflationary pressures in the North American economy;
•
the cyclicality and seasonality of the housing industry and its sensitivity to
changes in general economic or other business conditions;
•
demand fluctuations in the housing industry, including as a result of actual or
anticipated increases in homeowner borrowing rates;
•
the possible unavailability of additional capital when needed;
•
competition and competitive pressures;
•
changes in consumer preferences for our products or our failure to gauge those
preferences;
•
quality problems, including the quality of parts sourced from suppliers and
related liability and reputational issues;
•
data security breaches, cybersecurity attacks, and other information technology
disruptions;
•
the potential disruption of operations caused by the conversion to new
information systems;
•
the extensive regulation affecting the production and sale of factory-built
housing and the effects of possible changes in laws with which we must comply;
•
the potential impact of natural disasters on sales and raw material costs;
•
the risks associated with mergers and acquisitions, including integration of
operations and information systems;
•
periodic inventory adjustments by, and changes to relationships with,
independent retailers;
•
changes in interest and foreign exchange rates;
•
insurance coverage and cost issues;
•
the possibility that all or part of our intangible assets, including goodwill,
might become impaired;
•
the possibility that our risk management practices may leave us exposed to
unidentified or unanticipated risks;
•
the COVID-19 pandemic, which has had, and could continue to have, significant
adverse effects on us; and
•
other risks described in Part I - Item 1A, "Risk Factors," included in the
Fiscal 2022 Annual Report, as well as the risks and information provided from
time to time in our other periodic reports filed with the Securities and
Exchange Commission (the "SEC").
If any of the risks or uncertainties referred to above materializes or if any of
the assumptions underlying our forward-looking statements proves to be
incorrect, then differences may arise between our forward-looking statements and
our actual results, and such differences may be material. Investors should not
place undue reliance on our forward-looking statements, which speak only as of
the date of this report. We assume no obligation to update, amend or clarify
them to reflect events, new information or circumstances occurring after the
date hereof, except as required by law.
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