Skyline Champion (SKY)

Sarah Janowicz Director of Investor Relations and External Reporting
Mark Yost President, Chief Executive Officer
Laurie Hough Executive Vice President, Chief Financial Officer
Daniel Moore CJS securities
Rohit Seth SunTrust
Greg Palm Craig-Hallum
Matthew Bouley Barclays
Mike Dahl RBC Capital Markets
Phil Ng Jefferies
Call transcript
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Good morning. Welcome to Skyline Champion Corporation's Third Quarter Fiscal Year 2020 Earnings Call. The company issued an earnings press release yesterday after close.

I would now like to introduce your host for today's call, Sarah Janowicz, the company's Director of Investor Relations and External Reporting. Sarah, you may begin.

Sarah Janowicz

you third in quarter thank to earnings and our discuss results. morning for our participating call Good

Joining me on and CEO; today's call is Laurie EVP Mark Hough, and CFO. and Yost, President

and press to statements to everyone this like are include within Securities with and uncertainties actual subject the results to statements risks meaning materially forward-looking projections. statements of Litigation uncertainties forth would I Reform Such call expectations our that in risks and yesterday's the that Act release cause could made release Commission. remind during of in Private include the from differ and set the and factors and our XXXX. Exchange earnings our Securities These filings

we reconciliation be performance. earnings during evaluating our these in of release. believe can found we today's measures, Additionally, call, in A useful can will measures be discuss the which non-GAAP

now I turn Mark. over call would like to to the

Mark Yost

am this morning, Sarah, to strong improvement income year a I thank gross Good operating ago. pleased you. quarter same to period and report everyone. the compared margin

look at industry over year. HUD favorably calendar rebound months throughout we last continue we've trends few will shipments anticipate the industry and seen the that demand trend As

X.X% X.X%, to start quarter that deliver XX% with to top-line were standardization for the we compared growth the of our quarter. to quarter. merger across particularly the profit this strong With basis revenue segments, year-over-year reporting without $XX.X benefit year Adjusted XX% operating reaching in driven saw to operating and these we were gross a fact quarter. a during Adjusted improvements, XXX synergies, margin the of saw I’m was able operational We the to of rise million in EBITDA proud as the million down able results improvement material inflation income. points ago. by all we deliver year-over-year quarter, in increase $XXX EBITDA nearly leverage strong a of improvement grew by

remain softer in Canadian anticipate and and down U.S. Western market RV our prices due U.S. unit in saw we shift quarter, selling product with Star will lower volume in the to revenues average economic a markets We in resulting the quarter. soft to conditions along housing short-term. those experienced during we the single-section During In Fleet that Canada increases marginal the with the

opportunities on are Focusing the economic growth, by market, and there favorable continued ample demographic driven for factors.

volumes the by country the months industry in the ended approximately increased year-over-year of South-Central California three for the Midwest. November declines by offset X.X% strong with region of parts in HUD and growth

affordable with fiscal fourth continue the the after the industry’s We the rebounding finalize. and seeing mid-single-digit quarter Midwest strong of spring calendar to growth the and volume HUD return California for housing late year-over-year expect expected to end consolidations of towards for demand are at year customer this remainder rate our

market The in starts of lag will has levels especially price signs higher later middle year a broader also industry shown of and point. This between strong translate shipments. for the housing growth, demand to HUD missing single-family for due the affordable into

increasingly significant an in more for housing we at single-family Additionally, new role compared options. homes other points play modular price homes the and that filling manufactured to will believe gap affordable

events this evidence financing, recent and seeing of role on the both from the are regulatory We fronts. increasing

result, duty-to-serve, are which placements occurred chattel loan we for while translate in to private outlined that as the encouraged a for front, this later demand rollout as GSEs are terms to financing become the we're their market more XXXX. year. On should late into Financing their secondary still waiting competitive by starting the in

housing throughout shortage. Zoning changes to are help happen the additionally starting country the to solve

our solution areas. states accessory a product very affordable need dwelling urban the week to simple customers The has for affordable spaces International ADUs The last address or seeing Las Show Vegas like for was units provides which in in living in are markets. the restrictions for in Builders’ from We California, listed positive. housing ADUs feedback for demand from increased zoning those

in point Genesis series, feedback solution developers. these the surprised exceeded due provide. our were quality housing had those we from affordable our support the at and labor market products builders the on costs from home expectations. was Additionally, benefit International these for They speed homes to that builder that the price showcased an financing features One of products Builders’ Las GSEs. to Show, solutions supplementary the lower at and of The Vegas that

started class to subdivisions. past of for In We're of we traction handful this excited new homes. potential to the a this received of with addition the in interest models about IBS very have quarter experience we ordered to show, the at long-term delivery

to I more our to will in turn discuss call the quarterly over now detail. Laurie financials

Laurie Hough

to segment last was Canadian homes Thanks, our U.S. We sales in quarter. quarter as versus shift U.S. ago revenue segment increased the and price single quarter price of decreased section $X.X percentage sold factory-built driven $XX,XXX. average revenue million in decline Mark. in in while a million a by this slightly larger year, $XXX mix in the The we number saw average transportation of year. U.S. quarter of from as quarter sold of declines as in due decline the last selling home Net housing factory-built well $XXX was business to to selling The U.S. the a of sold per the December year in revenue homes $X.X reduction million the current the in in same the housing factory-built product million. X% declines versus third

XX% to stable The revenue homes decreased at compared XXX quarter. Canadian selling of by to XXX homes, number prior the the prices home period. Canadian to number in the year sold units $XX,XXX. were $XX of in homes sold decreases in Average corresponding million with decreased

Western housing shortfalls We expect remainder the the for Canada. in fiscal volume with fiscal the compared market to in similar same of the consistent XXXX, Canadian year-over-year period XXXX, broader

the million, increased profit to prior versus gross quarter. Consolidated up X% $XX year

up points from XX.X% sales, XX.X% year. from seasonal net were were last factory-built our September the as Sequentially, segment holiday basis XX housing Our margins from normal segment or gross ceased quarter, many of driven the XXXX shutdowns by segment down the impact production during reduced gross of season. facilities of U.S. XX.X% U.S. housing margins

$XX or expense third versus per due the the compared decreased income a third same in compensation reduction reduction The share $XX and in other million was primarily in in increase period quarter equity a million driven earnings income operating to $XX $XX.X compensation to per was Net the SG&A or during in by prior from expense. higher last costs. non-cash and of in expenses year. net income, million $X.XX interest equity-based for and the quarter an integration $X.XX million, year net share period the same lower of to profitability decrease

three adjusted tax third The XXXX change of net the rate year. in XX% basis, primarily rate effective the tax generated the for higher was due versus share-based diluted company's an effective an the was non-deductibles compensation to rate quarter. ended we for income December prior share ago the XXXX The incurred of per in quarter. $X.XX XX, XX.X% effective fiscal On compared $X.XX to year months in expense

same was their synergies run related fiscal period million, capture combination execution this a improvements. to over largely points to $XX.X last levels an reaching XX% Adjusted due X.X%, year EBITDA identified increase quarter to year's XXX expanded for from the rate margin The a basis adjusted continued operational earlier the year and ago. of margin on

compared end consolidated was the last $XXX million backlog million. our At December December of $XXX to of backlog

to four to experienced at of average the with range the stood Although us our production of the weeks have elevated backlog at normal remains five Backlog optimal levels schedule supply quarter. backlog varies over plant allows last weeks, which significantly the We within six and to U.S. year. compared production backlogs by of effectively the manage plant, end believe our levels more to returned chain vendors. our

feel our knowledgeable will these team prioritizing improvements initiatives efficiencies volume that on allow adjusted execute value as refine pricing efforts on our our elevate EBITDA bringing more focused are at by current products customers while initiatives XX% rationalization self-help continuing us achieve costing well operational as We on our our target continuing strengthen and leveraging capable opportunities members. on a strategies and to product and improvements our We levels. to to operational and margin and to to

track target months. in XX this to next achieve are to XX the We on

generated XX, As generated capital of $XXX operations decreased XXXX XXXX, utilization during Cash profitability December fiscal third year increased by in by cash of cash we purposes. $XX compared working from flow same the as had quarter $XX equivalents. was to the and million, cash period last million for million to offset cash of slightly

revolving we of to credit quarter, down the pay cash used facility. million During $X our excess

XXXX. our As December credit of a unused million facility as $XXX borrowing result, under the revolving of XX, had company capacity million $XX

core added ample with position to that cash strategic and business flexibility credit initiatives. our in strong invest from a have facility We our liquidity provides our

our be cash free opportunistic acquisitions organic to focused capacity areas continue expansions. We potential further on on to growth or strong include which could utilize identifying flow

for it Mark I'll now back turn some closing remarks. to

Mark Yost

Laurie, thank you.

financial As you achieve operational from solid results, and continue we to see performance. can our

we with goals. medium pleased record to our are our of We improvements to our achieve along long-term continued track and continue as progress incremental path reaching

feedback model on well builder evolving as opportunities channel the to like the community offerings are and as our an off-site the We services our with partners retail and construction them by we're expand from providing encouraged future customer products developers.

across to markets the driven by for forward, affordable look housing. increased we we remain country As the demand our healthy, expect

Our to future to for that the a position attention solution environment and our improvements long-term customer. and their that optimism regulators supported customers we’ve fundamentals, benefit sustainable invest we families. seen ultimately evaluate favorable our and continue to the suggest financing the Champion opportunities changes demand to by With is the of a Skyline by as in are end

open now And with the you Q&A. operator, for that, lines may


Thank you. [Operator Instructions].

Our Daniel proceed. Moore CJS Please securities. from with first question is

Daniel Moore

obviously, certainly about into two, about increase. out five backlog described shipments with next should at of level where that all we guess stay for Starting flat likely to how weeks, level, to to next that dealer over to for start backlogs, the you days? start build down just XXX XX to underlying or expectations you look of say talk Do fiscal you scenario more demand again, maybe QX? as expect think the a now Can we kind as back I normalized traffic you trends, laid quarter

Mark Yost

Thanks, Dan.

the board and across very very level. think see the is good, the traffic healthy. I we industry good dealership at activity Overall,

is everything think I very positive. So,

We months XX% the recently, of has industry have and we strong Alabama in increase of type kind that through in mentioned Carolinas, the South-Central Mississippi Atlantic been the past region region. seen growth as was few the

quarter, fourth first, which which is fourth board, was that very come then of markets into first other the weather. last period. and So, end back build seeing kind by June to continue Backlog across hardest hit good. start seen -- into the obviously into or we're of the we've the But here, now the rebound quarter year time the right should

Northeastern normally, confident we So, seasonal our backlog a very have especially dip footprint. that normal with

So very normal. this is

this Our were in backlogs of very for actually point year. good time

Daniel Moore

Very QX is concerned further. get But for decline product that as what can't helpful. terms of and predict are materials out fiscal in mix And modest then trends obviously impact just far to of ASPs, continue thoughts going the into expect U.S. as ‘XX? you as we necessarily in in and you raw your

Mark Yost

levels the this talked ready I inventory ones into last they earning last calls, what as as we through they two Most we earnings pick dealers dealers, focused the particularly the would of on their season wides. think probably period. the on June and single expect time sites had up kind multi -- quarter for of is have to low I about go

for a because So work in of community -- wide customers and up setting set easier they some take there's quickly in site were less it's the involved some the up. product of field retails able single the product that those because to to of

products as probably throughout those -- So up year. winter happens But the the think as a first. fall I lean, picks larger keeping will a and to things during see multi season you period, the inventory you tend wides more the warm-up, trend towards

in July, on a into August a ASPs you gradual see time uptick year period. So will the the general as goes June, uptick,

Daniel Moore


you orders you about, be provide helpful? talking have and elaborate mind Lastly specific evidence that builder subject progress know that you and of Genesis I more just developer for channel, specific detail tangible would on mentioned any Thanks. don't the you a seen, us for of to me, can maybe couple

Mark Yost

Dan. Thanks, Yes.

seen We've I of well International was Genesis received a week. Show from the activity at Builders’ think that. past inquiry amount tremendous this and

to we earlier, have things a As handful we subdivision, orders subdivision. with for to mentioned seen go of on be start get produced

being now, produced. in production actually are they So

of levels activity are So that happened. very -- have that's those encouraging those

We have developer already produced and but foray subdivision field builder actually it’s is this channel going a in the MH starting. Advantage into of kind main

by we're that. encouraged So


Rohit Seth question Please next with proceed is SunTrust. Our question. from your with

Rohit Seth

you're ask, to the in what seeing wanted Just of trends January? are kind

Mark Yost

market in Trends you…? or Rohit just the overall are HUD what

Rohit Seth

The HUD market volumes. on

Mark Yost

January Yes, orders are good. think and I trends

So increased. order activity has I think year-over-year

the general So is mentioned we what seeing call. trends growth. probably We're on good consistent year-over-year with

Rohit Seth

curious good just if compare builders order progression. maybe the entry-level seeing very are contrast then And like could and you stick

Just housing between the are such manufactured big curious really a delta builders right why you think housing is serge really, stick seeing there now? entry-level demand and

Mark Yost

we think a for market. HUD of in the natural pickup all of in but see is will and I that that type lag manufactured activity there demand housing

been an by So of interest example, fueled rate generally as speaking, lot demand builds, site has drops. a the

to that the Once let's during will like piece that. then to there was home place let out a determines happen four to you to drop, or of buy think upon, customer say drop. our base months retailer know customer interest lead a find they time have a rate that property six period a partners If of where of customer want back generally to rates their they and time interest which of something home, reach takes them what will base, a

acted the a of traditional tied because interest think number you retail land-home is one. home can a typical be as readily, rate not the it the when -- really upon distribution it's MH drop not immediate market, be of So, to site-built with a product deal, whereas land will immediately, an because

there's typically the for of if for save customer due benefit HUD average a to for lower some customers. manufactured price code interest a less housing is, an An of save whereas about dropped drop loan so, traditional two have chattel rate rates year, or customer -- point $X,XXX its Number the -- a or site-built a will our $XXX over past or a about save site interest a maybe about will X.XX% and year. a will year X,XXX that product

So there's that. more impetus to fuel

just So, lag. timing it’s a

We that, piece. it will channel, land through time because takes but the a see work to of itself

Rohit Seth

maybe then, about could And pipeline. talk Understood. you the M&A

on said You you net your to at sheet. And debt-to-EBITDA cash Xx. you be got about substantial balance willing believe take the would I

there about you any do what to that seeing the in talk just of fixed maybe story? So, or Are opportunities longer-term near-term some are is out there? more deals a

Mark Yost

the M&A we always actively think are looking I No, at pipeline.

activity. near-term of there potential a think potential is always I So, pipeline -- and M&A long-term


your Our next with question. Greg Please question Palm Craig-Hallum. is proceed with from

Greg Palm

about of some want I March sort near-term. you're guess maybe of quarter but just thought I a of thinking more last just of it mixed you if there. commentary you bit guidance, It I'm qualitative bag us shake how call color kind give don't how and you're And December out update just on wondering out. kind little of and like you on kind could the an of the sounds near-term? would what a gave seeing Mark, qualitative in kind to you -- kind gave some

Mark Yost

Yes. outlook revenue, just And Greg? you are talking on in terms of

Greg Palm

That’s Exactly. Yes. it.

Mark Yost


you softness in to in single-family Canada were for revenues. single-family XX% our which in and continue the down starts the Saskatchewan we -- was single-family were RV guys lot of British down Canada, drives during see starts in as quarter trucking we Canada. down a XX% quarter. year-over-year the year-over-year starts Columbia think to mentioned will business continue in we -- see I as market

and In that good permitting California. think most take timing up think develop of overall so that be the to we in the in dropped volumes. a will share single-family housing with revenues In due quarter to growth U.S. But that XX%, Canadian we're the next California going to parts U.S., only starts in in gaining -- anticipate seeing be in in there. that’s we see of single-family market but So and the the is issue country, the picking our economy in I land California are soft just a zoning, it’s and tying lags so our I Canada, weakness glad time or and timing I in lag in there'll Canada that to I’m to we’re timing and the with that,

So there's expect and and until multiple is there consolidation, integration that be been to parts been the parks on of activity result where a Midwest. those the merger sites primarily close parts happening that. but multiple at pause I buying the think that till of take to in going in first to and front will transactions customer community the of in probably do Midwest there's And then it rebound, quarter the is

close would transactions So you'll Midwest period of probably the time see when April, anticipation. I of May parts a those is downturn in the until some guess

continue than XX% months in will about region. pick the other the we to back that I that to see is down growth So South-Central was starting going last strong Texas Texas see think three but rebound. you're to up. in

I for including overall net-net neutral Canada. of think So kind the quarter

Greg Palm

And HUD what's year, yourselves U.S. the as is talking you calendar specifically outperforming things calendar as ‘XX industry you industry guess of see for -- underperforming, -- expectation we I as in mean are if do And code, we're I today? what how sit growth? year your seeing neutral, this

Mark Yost

Yes. And Greg? market you're talking HUD right,

Greg Palm

Yes. Correct.

Mark Yost

Okay. Yes.

think seen similar mentioned growth few be I where months going kind as of is in rebound. that the I So we’ve to last to HUD

upper growth areas HUD the for for this like kind single-digit year industry. of So mid-single,

the think our HUD industry. I growth to be will similar

will We summer. the normal our have for winter seasonality and

under-pace during So that we summer will But it the the probably in to will neutral time net-net growth. and wintertime. outpace then that be

[non-growth] market. will activity we see think in I HUD more probably

see we of the market and markets, some those So ADU park that. model should

that, produce. it’s on mix might product have But to choose that that growth really little HUD our to with just change we we than might channels trajectory we what trade-off -- different a will So other tend bit. a

Greg Palm

very, you hoping Vegas looking very typical to customer from a certain of little which show. number kind to us sales importantly, and sort I cycle the a of that in bit homes obviously does might typical in how probably more your seems some and can end out that just feedback got maybe this a more But you opportunity. for, are on who a the big developer, mind? folks is am there color here general, take gears play give long like like of your build Shifting use be

Mark Yost

a that's question, And Yes. great Greg.

XXX to think the did we XX Builders’ houses International typically -- anywhere builders I to Show, at from -- a between we XXX year. saw maybe that houses

So, that of builders’ show the through in range. the customers were went kind that

interested seen So, also with of channel. amount We've in discussions not activity of we but their into tremendous -- in but work don't land a a who group that to expanding to homebuilding with land get or builders they into customers have add they partnering are necessarily want that that who company. developers mind value working are developers land wouldn't seen with to in company and

we've those So, the I right seen. key that are think now demographics two

is really channel site The dependent.

are zoning. well to handful have six houses that look place, some a infrastructure, and others can in that have the if delivered We the pipeline put we've in produce builders of There’s of permitting the homes put done, would there's in longer builders stages as the the land have and in then permitting they that the that three take that to place. in that will putting and so little place done, don't developers infrastructure are months those have into that could time, zoning the handful really who you a which at be started and permitted, take to of are as the the and infrastructure to the zoned

a kind to filling on and the going later pipeline start of sales anticipate and really building really the timeframe. So, taking of it's by opportunities different about entire sales long-term June this that this funnel these and September all with of in handful But to some of strike we opportunity. all year and subdivisions filling having of it's will them advantage pipeline

Greg Palm

margins. Laurie maybe given question thought I one Great. from her Last it commentary Okay. I around me, guess was for interesting. a

revenue XX% to know us with from what key mean how the even you achieve expansion, level I not this in call margin margins EBITDA just kind mid flat call will now. XX%, levers But was, that to it guess, be months if the I about think is I'm the or you what that ability revenue. I you said XX going that? margin thinking is assuming of are was EBITDA you're it from through to Xs you're do something leverage it operating of cost thinking Can gross it structure. a on walk

Laurie Hough

Yes, operational excellence, base and options question. and our improvements margin gross those Sure. in offerings, related well as that back all standardization metals talking things material goes we've Thanks focusing things it the the Greg that about we're value, it's to as been product of to like and the for definitely of product, product rationalization engineering that. operational line usage,


from Our Bouley Barclays. next proceed. Please question is Matthew with

Matthew Bouley

for passing were I perhaps past ask as on like -- divergence any with kind U.S. on the up between think wanted just additional that insights footprint Mark that. the margin versus you in you and of talked sounded to guys of the you part Northeast some the shipments as about I geographic that think well HUD industry. some the of to lower you referring I business Is

outperform you. months as be what market that mentioned? Thank summer would So just in the that you I the confidence you guess able gives SKY to

Mark Yost

Thanks, Matt.

kind a to think seasonality. we two very typical it’s I things. for normally see One -- is, us of

other more affected have sector most the Northern of plants weather is part country We the participants. by in country, than of the the more North which

a have Northern our we of plants. So demographic

We typical the will footprint. and calendar just for flow year. market share very us our see given a typically ebb throughout It’s geographic

hardest area was and last that that really at declines. look say and I when Mississippi, timeframe the region, look if of saw kind that that those in Alabama, started year that the in that December all Carolina, of not of at where hardest crews last impacted affected in units year, saw, that though, last in markets South Tennessee, most South-Central decline were happened spring through year-over-year time you decline, would area rain impacted the year, declines we the you year into that and October kind of Overall, fastest the set most could of that last we went states

think it's orders I this and expected, with else. what strong year So rebounded interest has weather area is, seen we we've good have everything thus that seen as far our we -- fastest conditions in but

the what have really the we go that as fuels that's -- season. of view So we through

So see we see the the just very our our building. orders We picking show pipelines very, We Orders see were Louisville up. activity. very was retailers, the We activity good. in is good. had with very good, activity

So for pick everyone spring I think will just we getting normal to that so the and ready order see up. seasonal

Matthew Bouley

prices, the just up. secondly Thank kind offset forward you was in any seen ramps price in And that? that a Two offset secondly know to thinking going there Leesville? pressure then guys I modest you had the just bit guys there given on how are little you. about that Number then lumber temporary could of some And have you side. be gross from as uptick just margin signaled ability to parter. push one, there

Laurie Hough

Hi, definitely there bit continue plant. the as of and Matt. in I Leesville ramp to from numbers will the probably for the we was quarters a of next continue Yes, couple offset think

of We XX that of about ramp months have more plant.

will from couple quarters the next some that. we sure see So of for pressure

even of last did year. see same the in this As time versus lumber, lumber we ASPs quarter far kind as out

and trends pricing the we're in lumber general what go expect on market. bit We just seeing to a housing up based

match I able So in we will be to price. believe that that do


Instructions]. [Operator

Dahl from with proceed. Capital question next RBC Mike Markets. is Our Please

Mike Dahl

success and with there, But I I'm of number First you and about. a expectations more for things the wanted so margins terms that to couple question, the going start wanted details I then Laurie you your forward. mentioned to and few in ask for into things a going margins a the quarter of curious

standardization. then us you of the And where for synergy can synergies bigger or you're versus and SKY On on opportunities give incremental secondly, I you running on the an one the was rationalization update side, buckets think this identified have target?

XX where color are more expect next So, much you maybe processing, just on incremental that a in over six, progress how little the and you months?

Laurie Hough


that say really initiatives So, the talked synergies. have I would more about is we from operational that deal coming our improvement than margin

have a reached reminder, synergy rate we deal Just the quarter. targets in the as June run

simplifying So, had quarters and us. operational synergies, are year-over-year, improvement movement say product saw But a production to the offerings, quickly some steady the some next in the helping would certainly But of get quarters. we over see the definitely plant more rationalization We're couple kind the efficiencies. helping I margin. to the going synergies standardization of of increase sequential those in product from the

the which March a quarter I that similar to some be able going pressure more before, increasing generally just to overall quarter perspective. Canada. think this We're lumber I is from costs as to going going will offset margin hopefully in We're mentioned to see be see, to with price.

We some inflation. labor have seen

on plants. depending inflation locations those or improvements the the geographic price that with of operational of all offset is So getting

Mike Dahl

as the just to on second My Genesis. two question, shifting back Genesis, questions

of from type the you've on or in working been The kind of first one terms of hearing builder -- was that asked question with.

are I seen, land rent whether actually to to dynamics been homes the just So, taken builder, post build have on terms part, planning these community? any or are on as put if already color second builders was And Aside there? from size any there. if of since you've notable things and a the of place sale ADUs California trend the these to laws in going more whether for other and then, little curious there's

Mark Yost

Mike. Yes. Thanks

from seeing Genesis, builder and look and developers land we both activity developers the for-rent as we're think, actually I frankly for market in at the market. for-sale

we if have in interest. seen in both you the will, sales types So, customer funnel, pipeline the and show

would that what that thumb rent. on and site say on just XX sale a geography. really changes for rule But based and is. that of dependent probably So, it's customer’s XX for interested I XX:XX, it's really as

XX seen far permits we market, tremendous as were increase times to California like saw -- As we the a ADU the a issued. were of a obviously, the Los passed, for amount California City in we've and that Angeles of instance of laws that the number activity after ADU saw Recently in expect continue.

strong Oregon saw in Washington. ADUs on passed they the ADU state-wise has So permits. with now legislation growth along

zoning in change seen that. Maryland, developments the Atlanta ADU have passing seen cities zoning and market review right to We all Minneapolis, legislation for have now Philadelphia Massachusetts, changes Colorado recent as of Virginia, and the which could proposed under impact we Austin, well. And have then

of there really it. and growth builders amount just in into think think City Los getting at with pockets been through back is XX% activity, increase the in look the others you But in the the of ADU XX% to pipeline permits all XX% of -- it’s of field right permits urban getting getting So studies all I comfortable Angeles number has the in Los are I the -- those California, of a mainly Angeles -- permits permits. the now the if about good XX% of think I and

it's of now housing major So portion within permits the city. all


Phil is with with question Our next Ng proceed from Jefferies. Please your question.

Phil Ng

commentary your has lag. is for been upbeat outlook, quarters the a Mark, generally few there appreciating on pretty

this spring. there in be of a It headwinds kind when your business? U.S. So inflection demand could expect still more see noticeable to you in some sounds mild like

standpoint? are pretty single-digit So outlook and a thinking Are kind of of properly kind and and about growth XXXX, meet labor we when summer from it’s just at set capacity that right fall. deliver for that demand sharp mid acceleration you to

Mark Yost

Yes, thanks, Phil.

statement that is think correct. I

customer will U.S., the of growth that regions going exception U.S. parts I the maybe are two to that just in and/or of due lag just see one of states’ period either with trajectory this to growth the think just timing of or good in time. we

late summer going as we That’s the the fall activity we're to periods. during So I go correct. see pickup periodically throughout and think year

Phil Ng

feeling kind Is XXXX. hit calendar think your about you’re mid of the that good way U.S. trajectory about But single-digit to ability your still pretty to that right business?

Mark Yost

Yes. That’s correct.

Phil Ng

guess number kind capacity. medium like are better I And just time? if have labor positioned lagged drive could you Genesis growth And to is of a has are competitors, you you we And you type more manufactured versus I set think when market remind longer up a there and how and relative to need term standpoint? up of how little it’s for capacity that you whether financing, of scale home your catalysts what and may from to over remember about modular us correctly, a can investments

So, you of up of that for us? frame for kind help could kind

Mark Yost

Phil. Thanks, Yes.

utilization. operated this past capacity we XX% I at think quarter

So, some upward throughput. we some recently lines, production line expanded to park California. and Leesville. in at model increase ADU definitely potential expanded We’ve We’ve utilization our have a our of obviously,

We we have in that recently. operation Pennsylvania have got our opened one

to as think well continue funnels through. that poised I we're So, to it see growth

we've now, have are ADU plants plants got that well. we models. Right are think Genesis I as got XX that producing XX series producing

we've learning pipeline. So, country various that the people currently think peers investing And learning building today, so, their we to open we as best in I fill have -- of then, who side-by-side I and example peers -- as vacancies to traveling and that practices, an throughout a capacity. should additional with now, that go in programs up management got to the business have right it's people like company the We've really operations, and in investing we working expand. positions been funnel got training future bunch as say have pipeline And to develops, of ready we need other look will been of people. to those or the people actively are GM

Phil Ng

maybe have from is you kind turn. of the cash more forward mean proactive I taking me. cash From nicely. building obviously going have last flow one at just can’t you but standpoint, flow approach a that Laurie, next program encouraging. That's M&A guys since a hinted And on we

kind consider that more us deployment, months, would next capital thinking cash returning are back there and shareholders? the Thanks. anything in to you XX you about of XX is to to if of understand So how help

Laurie Hough

It’s something would definitely that would we focused growth really definitely be of consider, top our the more the priority. That M&A. company through but on

Phil Ng

but potential think And it. how can would a some any help you size terms of Got really magnitude? be color Skyline helpful? not should in on probably that about assume it’s we as these of opportunities big I

Mark Yost

Specifically M&A front are about? Phil on the talking you

Phil Ng

you bolt-on more terms these little how guys Are they general? big are or more in Yes. in looking deals be just us going a they mean in are to at, could targets sizable I help nature any of potentially size be? of

Mark Yost

think a focus. got I wide there's active M&A pipeline. We've

projects. of like to revenue a as begin pipeline type. far $XX things the something in be that got and blockbuster So, upwards million Frankly from we've as range that more would scales meaningful


Palm now We up proceed. have question Craig-Hallum. Greg Please a with follow

Greg Palm

Thanks. Yes.

maybe on will Just a presumably in financing utilizing new these the subdivisions first programs programs, there, the Genesis, guess of guess couple GSE to of trends. any I there land-home. on chattel pilot? I be GSE they some minutes on as it And the the update relates

on too? can front talk is of sort that there the So you what potential about

Mark Yost

Yes, sure, Greg.

on think GSEs, not yet GSEs the the in moved secondary really the market. I chattel the duty-to-serve program far as have

that. on still So we are waiting

anticipating We not anytime movement least been is just no I’m -- are anything not there at soon. because

rates I why the for seeing would to activity to really that dropped, this maybe that, I'm that’s And guess best scores, period have things available. start for in secondary encouraged and would market haven't say like by lenders the traditionally placement. which buying the caused private be some move. fall deeper in several is Interest are year to So time been FICO they midyear GSEs, there

go three get process. that's or were customers if year doesn't change turned will months, is FICO were can the FICO calls score, all When what example they through the later this now reach has score do I say out down. and selling past happen to as find you the and buying there's that the retailers industry land trickle will encouraging phone down and in said. a So customer they it start will came-in qualified their an change because all out then their those they to immediately like return that turned Then and they because of as to

change So be lag overnight, of is going like if there. bit to even a that not a there is little

Advantage, seeing, of it and Advantage As take more really the kind subdivisions. Choice the a of dependent start MH either within MH we far that’s to infill inventory one-off the What immediately on into as of retail actionable, a subdivisions put lot retailers perhaps -- are as the partners. MH products and then

So But I also builder seeing say obviously that the will very very Advantage, MH Genesis retailers the is an are well. and it’s besides that and has take product developer get that, probably say of Freddie understatement. increasing through series. process, Fannie we're proceeded behind of They're and is for active and amount financing XXX% I actually lag kind encouraging. still XXX% the there would but training very probably in appraisers the and

Greg Palm

from probably question of one around main how And couple was an FICO first answered to announce scores. you the had elevated of because excitement entities new a takeaways to you my relates amount accessibilities, my follow-up alluded Louisville financing, that around some of which you programs

So how any I’m of recently that many how you because commentary in could folks qualitative just were of a importance that standpoint, we’ve benefit what could relative from new out these down of announced if the months of and sure of FICO turned years, in figure last the some six, a there not the how five, products environment to it? magnitude seen could scores just couple And around be? level seven terms important in last trying here how financing to out four, characterize

Mark Yost

expected I in the I score their add believe order of nature the would that HUD industry that is in which in would though, of probably they into probably something I It's would a think probably our terms shipments. -- that percent to of anticipate mentioned. to shipments, magnitude hard talking It’s you're of you overall say what you industry in what what XXX, overall drop lowering is Greg. talking say a you're the if shipments in to XXX of just is lenders the few of or terms few of will I to shipments, quantify magnitude FICO know lending alluded that from percent


question-and-answer over to like session. This the for Mark call back I turn remarks. to concludes closing our would

Mark Yost

you very Thank much.

As builder very Thank see day. and better and improving forward the Genesis you industry, strengthening good have launched our was We much a we it the and of getting as great quarter. activity very to strength a look brand the mentioned, future. developer we


concludes conference. today's This

thank your You for lines may participation. disconnect you this time. your And at