Skyline Champion Corp. is halting production at its 18 facilities in response to the continued spread of COVID-19.
“Foremost, Skyline Champion is focused on the safety and well-being of our employees, distributors and customers we serve, and the communities in which we operate, while simultaneously ensuring business continuity across our operations,” said Mark Yost, president and CEO. “We are well-positioned to navigate the uncertainty of the current environment due to our strong liquidity position, highly flexible, low cash-cost operating model, as well as our diversified customer channels and geographic mix.”
The company has 38 manufacturing facilities in the U.S. and Canada. Thirteen of those facilities are located in the states of California, Pennsylvania, Louisiana, Kentucky and New York that have ordered a suspension of operations for many businesses as part of their efforts to mitigate the spread of COVID-19.
In compliance with orders from state officials, the company has temporarily suspended operations of those thirteen facilities. In addition, Skyline Champion is closing its five Canadian manufacturing facilities due to reductions in demand. It is currently anticipated that these plant closures will continue until such time as the company determines that it has qualified for an exemption to operate, or as COVID-19 and recent oil price impacts are mitigated to allow the company and its suppliers to restart partial or full operations.
As part of the company’s core principles to safeguard its communities, employees have been encouraged to work from home where possible, increase social distancing, and increase sanitation standards, the company said.
Additionally, the company has enacted a relief program for employees impacted by COVID-19 to provide enhanced compensation and benefits on a limited basis. The company will continue to assess the rapidly evolving situation to work through the potential production risks that may arise from lower employee attendance, material shortages, transportation challenges, lack of inspectors, emergency orders from governmental agencies, and other factors.
With the company’s footprint across North America, it is well-positioned to modify production levels across facilities as it continues to serve customers while at the same time protecting its employees in regions that require shutdowns, according to Skyline.
The company is taking proactive steps to safeguard its cash position while maintaining strategic flexibility.
The company also provided an update on its outlook. Skyline Champion noted it has no significant debt maturing until June 2023. Liquidity remains strong and, in order to maximize financial flexibility, the company last week drew the remaining $38 million of its $100 million revolver, increasing cash availability to about $200 million. The company said the incremental cash from these borrowings will be used to offset the temporary working capital impacts of production shutdowns and to preserve financial flexibility to continue to invest in strategic priorities. This will give the company the ability to serve the need for attainable housing that will arise from the economic impacts of this environment.
