Champion Homes, Inc. Income Taxes Disclosure
Pretax income for the fiscal years ended March 28, 2026, March 29, 2025, and March 30, 2024 was attributable to the following tax jurisdictions:
|
|
Year Ended |
|
|||||||||
(Dollars in thousands) |
|
March 28, |
|
|
March 29, |
|
|
March 30, |
|
|||
|
|
|
|
|
|
|
||||||
Domestic |
|
$ |
249,533 |
|
|
$ |
237,329 |
|
|
$ |
175,465 |
|
Foreign |
|
|
21,038 |
|
|
|
20,039 |
|
|
|
25,390 |
|
Income before income taxes |
|
$ |
270,571 |
|
|
$ |
257,368 |
|
|
$ |
200,855 |
|
The income tax provision by jurisdiction for the fiscal years ended March 28, 2026, March 29, 2025, and March 30, 2024 was as follows:
|
|
Year Ended |
|
|||||||||
(Dollars in thousands) |
|
March 28, |
|
|
March 29, |
|
|
March 30, |
|
|||
|
|
|
|
|
|
|
||||||
Current: |
|
|
|
|
|
|
|
|
|
|||
U.S. federal |
|
$ |
28,225 |
|
|
$ |
48,065 |
|
|
$ |
37,105 |
|
Foreign |
|
|
4,512 |
|
|
|
3,905 |
|
|
|
5,058 |
|
State |
|
|
10,450 |
|
|
|
12,270 |
|
|
|
11,200 |
|
Total current |
|
$ |
43,187 |
|
|
$ |
64,240 |
|
|
$ |
53,363 |
|
Deferred |
|
|
|
|
|
|
|
|
|
|||
U.S. federal |
|
$ |
12,254 |
|
|
$ |
(10,530 |
) |
|
$ |
(6,873 |
) |
Foreign |
|
|
897 |
|
|
|
1,361 |
|
|
|
2,249 |
|
State |
|
|
419 |
|
|
|
(1,347 |
) |
|
|
(1,603 |
) |
Total deferred |
|
$ |
13,570 |
|
|
$ |
(10,516 |
) |
|
$ |
(6,227 |
) |
Total income tax expense |
|
$ |
56,757 |
|
|
$ |
53,724 |
|
|
$ |
47,136 |
|
In accordance with the adoption of ASU 2023-09, a reconciliation of income taxes at the U.S. statutory federal income tax rate to total income tax expense for the fiscal year ended March 28, 2026 was as follows:
|
|
Year Ended |
|
|||||
(Dollars in thousands) |
|
March 28, 2026 |
|
|
% |
|
||
|
|
|
|
|
|
|
||
Tax expense at U.S federal statutory rate of 21% |
|
$ |
56,820 |
|
|
|
21.0 |
% |
Increase (decrease) in rate resulting from: |
|
|
|
|
|
|
||
State taxes, net of U.S. federal benefit (1) |
|
$ |
8,674 |
|
|
|
3.2 |
% |
Foreign tax effects |
|
|
|
|
|
|
||
Canada |
|
|
991 |
|
|
|
0.4 |
% |
Effect of cross-border tax laws |
|
|
699 |
|
|
|
0.3 |
% |
Tax credits |
|
|
|
|
|
|
||
Energy efficient homes credit |
|
|
(10,270 |
) |
|
|
(3.8 |
%) |
Other |
|
|
(1,619 |
) |
|
|
(0.6 |
%) |
Changes in valuation allowances |
|
|
— |
|
|
|
(— |
%) |
Nontaxable or nondeductible items |
|
|
1,380 |
|
|
|
0.5 |
% |
Other |
|
|
82 |
|
|
|
0.0 |
% |
Total income tax expense |
|
$ |
56,757 |
|
|
|
21.0 |
% |
|
|
|
|
|
|
|
||
(1) State taxes in California, Florida, Michigan, Texas, Pennsylvania, and Mississippi made up the majority (greater than 50 percent) of the tax effect in this category. |
|
|||||||
For the fiscal years ended March 29, 2025 and March 30, 2024, prior to the adoption of ASU 2023-09, a reconciliation of income taxes at the U.S. statutory federal income tax rate to total income tax expense was as follows:
|
|
Year Ended |
|
|||||
(Dollars in thousands) |
|
March 29, |
|
|
March 30, |
|
||
|
|
|
|
|
|
|
||
Tax expense at U.S federal statutory rate of 21% |
|
$ |
54,047 |
|
|
$ |
42,180 |
|
Increase (decrease) in rate resulting from: |
|
|
|
|
|
|
||
State taxes, net of U.S. federal benefit |
|
$ |
8,420 |
|
|
$ |
7,575 |
|
Change in net operating loss carryforward |
|
|
6,343 |
|
|
|
- |
|
Non-deductible compensation due to Section 162(m) |
|
|
1,486 |
|
|
|
2,435 |
|
Recognition of foreign investment basis difference |
|
|
822 |
|
|
|
955 |
|
Foreign tax rate differences |
|
|
793 |
|
|
|
1,134 |
|
Change in deferred tax valuation allowance |
|
|
(6,659 |
) |
|
|
(333 |
) |
U.S. tax credits |
|
|
(11,820 |
) |
|
|
(6,129 |
) |
Other |
|
|
292 |
|
|
|
(681 |
) |
Total income tax expense |
|
$ |
53,724 |
|
|
$ |
47,136 |
|
Deferred tax assets and liabilities at March 28, 2026 and March 29, 2025, consisted of the following:
(Dollars in thousands) |
|
March 28, |
|
|
March 29, |
|
||
ASSETS |
|
|
|
|
|
|
||
Warranty reserves |
|
$ |
12,509 |
|
|
$ |
12,759 |
|
Accrued product liability - water intrusion |
|
|
8,910 |
|
|
|
8,291 |
|
Employee compensation |
|
|
8,851 |
|
|
|
8,427 |
|
Intangible assets |
|
|
7,716 |
|
|
|
7,733 |
|
Lease assets |
|
|
6,669 |
|
|
|
8,034 |
|
Self-insurance reserves |
|
|
6,265 |
|
|
|
5,899 |
|
Equity-based compensation |
|
|
3,880 |
|
|
|
3,800 |
|
Inventory reserves and impairments |
|
|
3,620 |
|
|
|
3,688 |
|
Dealer volume discounts |
|
|
1,818 |
|
|
|
2,354 |
|
Capitalized research expenditures |
|
|
— |
|
|
|
11,733 |
|
Other |
|
|
7,449 |
|
|
|
5,391 |
|
Gross deferred tax assets |
|
$ |
67,687 |
|
|
$ |
78,109 |
|
LIABILITIES |
|
|
|
|
|
|
||
Property, plant, and equipment |
|
$ |
22,463 |
|
|
$ |
21,559 |
|
Foreign tax basis difference in investments |
|
|
8,445 |
|
|
|
7,350 |
|
Intangible assets |
|
|
6,726 |
|
|
|
4,705 |
|
Lease liabilities |
|
|
6,669 |
|
|
|
7,908 |
|
Capitalized research expenditures |
|
|
2,376 |
|
|
|
— |
|
Other |
|
|
816 |
|
|
|
893 |
|
Gross deferred tax liabilities |
|
|
47,495 |
|
|
|
42,415 |
|
Valuation allowance |
|
|
(5,181 |
) |
|
|
(5,046 |
) |
Net deferred tax assets |
|
$ |
15,011 |
|
|
$ |
30,648 |
|
The One Big Beautiful Bill Act ("OBBBA") was signed into law on July 4, 2025, which is considered the enactment date under U.S. GAAP. OBBBA changed many aspects of U.S. corporate income taxation including accelerated bonus depreciation, research and experimentation expense deduction, and terminating the energy efficient home tax credit. OBBBA contains multiple effective dates and only certain aspects have a financial reporting implication for the fiscal year ended March 28, 2026. The Company has reflected the effects of OBBBA as a change to income taxes payable with an offset to deferred tax assets in the accompanying Consolidated Balance Sheets.
The Company anticipates periodically repatriating the earnings of its Canadian subsidiaries. A deferred tax liability is recognized for income tax withholding which may be incurred upon the reversal of basis differences in investments in its foreign subsidiaries.
The Company periodically evaluates the realizability of its deferred tax assets based on whether it is “more likely than not” that some portion of the deferred tax assets will not be realized. Our evaluation considers available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. The Company’s valuation allowance principally consists of valuation allowances for certain state NOL carryforwards and certain Canadian deferred tax assets.
As of March 28, 2026, the Company has state NOL carryforwards in various jurisdictions which expire primarily in 2028 through 2036.
Unrecognized tax benefits represent the differences between tax positions taken or expected to be taken on a tax return and the benefits recognized for financial statement purposes. There were no unrecognized tax benefits at March 28, 2026 and March 29, 2025.
The Company is no longer subject to foreign tax examinations by tax authorities for years prior to fiscal 2022. The Company’s U.S. subsidiaries are subject to U.S. federal tax examinations for fiscal 2023 through fiscal 2026, and U.S. state tax examinations by tax authorities for fiscal 2022 through fiscal 2026.
In accordance with the adoption of ASU 2023-09, below is a summary of income taxes paid, net of refunds received, by jurisdiction for the fiscal year ended March 28, 2026:
|
|
Year Ended |
|
|
(Dollars in thousands) |
|
March 28, |
|
|
|
|
|
|
|
U.S. federal |
|
$ |
24,500 |
|
U.S. state and local |
|
|
9,954 |
|
Total U.S. |
|
$ |
34,454 |
|
|
|
|
|
|
Foreign |
|
|
|
|
Canada |
|
$ |
4,005 |
|
Total Foreign |
|
|
4,005 |
|
Total |
|
$ |
38,459 |
|
For the fiscal years ended March 29, 2025, and March 30, 2024, prior to the adoption of ASU 2023-09, net cash payments for incomes taxes were $59.2 million and $59.1 million, respectively.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 26, 2026 | Showing above |
| 2025 | May 27, 2025 | |
| 2024 | May 29, 2024 | |
| 2023 | May 30, 2023 | |
| 2022 | May 24, 2022 | |
| 2021 | May 26, 2021 | |
| 2020 | May 21, 2020 | |
| 2019 | May 23, 2019 | |
| 2017 | Aug 11, 2017 | |
| 2016 | Aug 5, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.