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Skyline Champion (SKY)

Participants
Mark Yost President and Chief Executive Officer
Laurie Hough Executive Vice President and Chief Financial Officer
Greg Palm Craig-Hallum
Daniel Moore CJS Securities
Matt Bouley Barclays
Mike Dahl RBC Capital Markets
Phil Ng Jefferies
Jay McCanless Wedbush
Call transcript
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Operator

Good morning, and welcome to Skyline Champion Corporation's Second Quarter Fiscal Year 2022 Earnings Conference Call. The company issued an earnings press release yesterday after the close. I would like to remind everyone that yesterday's press release and statements made during this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in the company's filings with the Securities and Exchange Commission.

the be discuss performance. useful call, it measures, today's can believes in during company non-GAAP will which Additionally, evaluating its reconciliation can release. measures of in A earnings the be found these call I like Champion's and Executive would Chief Mark to the President now Officer. Yost, over turn Skyline to go Please ahead, sir.

begin. may You

Mark Yost

so me discuss review and of in quarter, we Good buyers. better financing, on CFO. on far With for alternative the morning, our inventory customers first levels Homes. our is affordable Champion and call Demand a for continued call, color is the you thank the everyone, growing especially time will looking second the second home Today results, and quarter being Laurie activity for and we a quarter historically demand some low third rapidly numerous joining. on to base favorable Hough, rising of In driven the of year. EVP to give balance and including Skyline levels housing homes, specifically by site-built see factors, the

billion the XX order quarter, and the from quarter point through We drove delivered with from the quarter. growing year. price rising strong during growth contributed XX% to as quarter freight our labor by to homes continued to outpace the of have that along million Increased of post-Labor dynamic continue only the inflationary backlog third weeks million the X,XXX to year. in $XXX revenue to price prior output Day October. of during order times quarter, costs cover production affordable second $XXX during into production. of $X.X backlogs prior average up an these to accelerated material, This Our the or the end increases improvement rates on led XX% rates second at We anticipate

well, to execute plant continue operating challenges. chain amazingly and continued despite supply volatile Our the teams environment

to due decreased shortages. and the planned volume material sequential sales slightly home first versus expected, holiday As quarter shutdowns

Our delays. affected quarter during of was anticipated than COVID-related capacity XX% also utilization the by higher

on labor take and the necessary challenges work and to We COVID at offset of supply of we September, healthy to saw to a number health early environment our focus and hard all team homes moderate increase helped safety material By continue the our actions streamlining ensure product and plants. with really the safe to sold. to start continuing employees offerings, shortages. the to By of our of it the output and

align take plan U.S. these partners Our job our Canada excellent are to care proactively our the available and so us teams and delivery production our maximize we also can the supply, customers. of to amazing done an in to supply with and with In have customers. chain schedule working coordinating times, challenging

material we are our end in manufacturing availability that the the partners remain our up track fiscal supply open to confidence will facilities be of Navasota, year. by us And there. giving on Our will one of Texas

pressures. recently the low our we business. drive These buying see Internally, decade built already demand lower on Trends simplifying which and side. a homeowner's length homes time experience. customer extend only side country to need outsized starter the enhanced and our forward, compared our long-term look while runway by demographic, making economic driving as migratory the improving on five a will we at of We a particularly payment conventional channel and financing, the most on position inflation, inflationary competitors. immigration well interest significant just with lenders manufactured and engagement supply the site at the digital it housing they saw investments need factors land the growth. to helps factors home environment, the we and rising rates Externally, we to are external are for monthly long both create the converging investments strong, both loans, when As and of the of is are are internal affordable homes,

across efficiently our the continue will We chain increased and from ease lead material products. more In demand, levels in higher and production govern outpaces the focus we process to expect availability levels is We'll driving upcoming of of the With higher transparency streamlined as number increase near demand levels order supply to of term, output. the anticipate positive production the building the rates and purchase supply. a challenges design, a product simplicity offering. tailwinds quarters most of

early as peak supply quarters. in material and fourth We to lowering we in chain cost quarter can we the while challenges we and moderate expect produce the third the chain in number automation by are increase of improves, to of followed quarter optimizing improvement subsequent homes the supply parallel the In use. investing

targeted the with expensive. Our dealing tedious, today building, are conventional is recent Customers investments who are unpredictable, and at helping customer. which home

affordable. team and dependable will turn make our home call a discuss our in financials to will to Our detail. in investments more and the in buying our I Laurie over quarterly now platform engaging,

Laurie Hough

last morning, quarter to per August. home quarter, and was $XX followed $XX units begin discussion was in to number to by a of increased by XXX compared $XXX,XXX, last year, price price month enacted increases fiscal Canada $XXX volume of compared mix in Net was homes built factory growth of number Canadian selling revenue expectations and the reviewing segment same of material, rising profit response the U.S. an product sequential the year, fiscal average longer-term for first built in $XXX quarter. compared of driven Consolidated increased price well our the increased to XX.X% X.X% increase of freight costs. factory XXX% increase well housing our The quarter revenue actions in segment increased balance built the revenue and U.S. in increased The XX% quarter of XXXX as the input during of increase average the also the briefly of the last inflationary discuss housing increase few year price an good generated sold and XX% to at We to per our prior of second built driven homes XX% $XX,XXX, the by labor by increase rising due home by an of as to The per for year. to home versus outlook. to a by plant the offset average decline flows. the last results quarter and sold home. by increased of number XX% the costs. average to by sold versus in in in million higher Mark, new response our U.S. in sales was of number revenue of material will in X.X% decline due price quarter home, and million, driven holiday gross units. The selling in XXXX partially primarily Thanks, everyone. total X,XXX the to sales The for and pricing X,XXX plants I as to costs. quarter sheet year. manufacturing increased financial sequential sold. selling The million to versus I'll same XX% a or million. selling the homes sold growth in $XXX revenue XX% a million up COVID offset number was third the homes pricing the our disruptions cash in U.S. the planned to second factory as due increase in and factory growth shutdowns Canadian The homes segment in same as

same million $XX Our primarily to last operating quarter XXXX, year continued cost in buying our efficiencies margins impact were $XX year, points increased and as variable from the higher investment U.S. period to housing customer of improved the continue in our offering. see quarter February acquisition of product benefit gross up second and segment basis of operations net leverage experience. of segment XXX the from we due the of the to XX.X% million to compensation, streamlining second the the the last due ScotBilt sales, in in fix SG&A

XXX% a We higher years’ to to in and leverage by the XXX in adjusted margin XXXX. period quarter was subsidies fiscal rate enacted SG&A or experience fiscal the Canadian second was a Government sales. year The million, reoccur the fixed Adjusted due Program expect for to over sales compared period Net million to $X.XX $XX year quarter $XX compared revenue the million the in XXXX. per the increase and cost year earnings included that driven effective leverage. margin during of to increase systems higher an Financial prior and higher response was cost a resulting further income per gross points Sponsored EBITDA provided a last of the net decreased EBITDA customer by The pandemic was in consistent improvement for fixed profitability. by million $X.XX increased tax EPS sales, to XX.X% diluted share of points the EBITDA The was of incremental online quarter not last ago. the investments basis wage $XX The with of improved or $X.X income XX.X% year. of of net basis XX.X% to same same due same and Assistance integration through period XXX did combination for share net quarter ago. expanded company's from

and into building adjustments, expect material levers improvements. of to and impacted price our pass including widespread raw costs deliveries. the to standardization, of in supply improvements, supply make primarily materials material the to labor material be to and availability chain on utilize by of of We including chain persistent on further We on fiscal inflation substitutions, several challenges timeliness to costs challenges continue demand. efforts and remain raw top our the to operational due Despite and record labor due levels production continues products inflation XXXX product response raw increasing to cost operational

$XXX flows X, of equivalents generated October $XX As and million during quarter. the cash of had cash million and of cash we XXXX, operating

July, in of into replacing million beginning Champion facility. $XXX Skyline facility $XXX As million entered existing the revolving a credit its a reminder,

a for and We part of new The position business the the in Mark executing a cash operational I'll facility acquisitions. our and growth the liquidity turn remain strategic liquidity initiative remarks. cash As million to off available company's on now for support and plan growth. and given totaling to on to using paid our opportunistic hand. closing $XX.X our outstanding initiatives company's on revolver credit focused to utilize refinancing, expands our strategic we back balance reinvest some call the favorable

Mark Yost

Laurie, thank you.

I'm despite we strong in environment momentum solid quarter with a with business, are our We are that pleased operating our within. second turbulent encouraged year-to-date and results. the

building have solve the with well homes. home that transform Our And for lines to backlog us position you strong for our the and may investment operator, Q&A. growing need to open now

Operator

[Operator Greg Instructions] Our Craig-Hallum. of Palm first to question comes with line

proceed may your question. with You

Greg Palm

Yes, be great. congratulates the pretty Good probably results, only won't the one morning. to amazing Thanks. on And quarter. but that

So congrats.

Mark Yost

Thanks Greg. Good morning.

Greg Palm

in given everything recent curious, that's Just months. gone on

of chain what you? seem what's than view this supply some tell the actually challenges of can demand production ball guess at point has You And ramps the think catch current up at I guess But over crystal changed your you rates? coming all. be with your better at how specifically to point quarters do production bypassing most. I more the

Mark Yost

Yes, thanks Greg.

about in with the think, be chain supply We consistent would of challenges third mentioned in kind down of there I prior calls. a of mid-single digits. quarter we're step kind the

we're that. I think track on for

of the chain we supply outages. just fact have challenges normal because combined with that terms unit the holiday seasonal In of volume, our

chain little of ramp then little probably that throughout maybe, I next slower expect backlog even There's more than a clears. kind strained year months continue. going and into the I a think, quarter the But be of three supply six a So it's as ago. the fourth anticipated supply the to to we chain bit to is

ramp So moderately quarter out of year. next I think coming into it'll the fourth

we between clears. the kind through of chain and backlogs calendar new to now bring end moderate to on year kind the as supply of of as facilities year next build then So I and expect

Greg Palm

more And Makes was that's affordability this sense. growth highlight commentary the one it. industry bigger you as starting and others driver. Got in a interesting. I feel on becoming the like are to

here us talked re-accelerated industry last, right, there. to or eight help other terms you and out dealers to demand talk of in you as guess, type are And heard I hearing that what six them type about you're what you look consumer this actually of the I I So of that's folks, at product? from starting seeing If trends the guess, you over understand weeks.

Mark Yost

Greg. thanks, Yes,

really school post-Labor think, summer seasonal I people have in activity August-September There's two a of and I'll buying accelerate slowdown in to of back the kind there's the have them. three saw Day. and that. take to home normal you. one We as what question in return vacations timeframe, final orders

tell that as starting that levels return, little So stronger to up. up holidays down demand would pick through to a October I bit with we saw the will and key We family September of gained our year-over-year. coming slow single Overall, drivers of X.X% the you has that market one we're share increased. affordability is about U.S. of the entire market seeing completions a that

in quarterly was some XX%, Lennar up about NVR X%, competitors main U.S. from Pulte year-over-year. We If up our reports X%, you the Meritage grew of XX% at up units XX%, XX%. was grew look was

the likewise, think code site-built the of a through quarter market. overall about product, So for growing industry during MHI we're we XX.X% at grew definitely were pace code the gaining August. HUD XX%. share And HUD of I And

So segments product. need of share I affordability good driver people making we're financing. is in that's seeing there really in one we're that's and gaining a huge think a that for both difference by and out Financing driven key

Greg Palm

that's I'll for queue more, bunch the So hop in a now. Thanks. back got great. but I

Operator

Our with to Daniel next the Moore question comes Securities. line of CJS

You may question. your proceed with

Daniel Moore

Great, questions. the Laurie. Mark good for and taking morning, Thanks

in continue and more around being you traditional extended, terms a bit financing, string for or Let's give little Can are you pull I color of on terms mortgages. to that? that detail think chattel mentioned

Mark Yost

term has The Dan. lending morning, increased. duration Good chattel of Yes. and

terms XX-year terms. seen to XX-year it's we've gone from think I

So up years home for XX slightly gone Land average. gone product to from XX financing years. it's on has

days. duration been So increase in significant XX that's that's in a And terms. fairly of payment past just the XX,

that are times are where is rates inflationary increasing programs overall increasing, recently. up caused have the duration pressures financing of that freed So, some in by of the interest loans

is XX on – payments land XX%, for people XX%, pay deal, average pretty pay over another Let's their a home which which their months reduce fees can significant.

going think a to builders pressures drive increases that's I inflationary great So vis-à-vis degree. site volume seeing rate are interest additional to who and

Daniel Moore

with et Very kind Excellent. coming community Thanks. of on in quality you question, in in backlog come of of order maybe toward And past, the increases helpful. order line, to weeks. when we've where elevated then kind developers We've well. of up And traditional into – rank been confidence XX from rates that the as just the That'd piggybacking get seen the we and retail, folks into in models, orders the then continue cetera. terms backlog are the at the and fold last levels are come be jump of seeing around helpful. the into park the

Mark Yost

cancellations question. Very of been The virtually have backlogs Yes. and order good strength nil.

make to processes basis to to weeks. a the I to orders even attach orders we a make of in financing deal have periodic to real. the and sure sure out very coming it's So the XX where are at strength real on reaching reaching We do audit that out companies and name are themselves in the to think place there's dealers financing

is one. So I that good audit a process think very

inquiring channel demand developer build extraordinarily strong. as about channel of far over builder every where Traffic coming from As The and The channel. retail it's years. the REITs demand. strong. are are few for frankly is and course for looking dealerships is growth at next the the volume rent and The long-term

there's a a settle, park – park usually the they models model. So a very they and once industry. lag Normally people sales once I first think move then RVs place park RV strong versus with model to are buy find into and effect they're

demand. well as lag a there's model for effect So park coming

There's number across they're jocking the rank board. because right So channels I all a now all not even order for are one. extraordinarily think really strong the

Daniel Moore

color Perfect. then production. in I And of appreciate the terms direction of

over sustainability margins me. and two. it about level for margins of And talk gross next or that'll EBITDA Just these from Thanks. be quarter the

Laurie Hough

chain course in an of which challenges Dan. quarter. feel upon off From that cost we SG&A well deterioration of need fluctuates might our mid-single the feel buy of third the contract EBITDA much in higher just leverage production day-to-day. our gross see margin with from supply to material as obviously morning, We fixed Good We margins sequentially contingent are from sustainable we perspective, margins and EBITDA how digit investment. reduced do the decreasing do some as

Daniel Moore

very sense. much. you Thank Makes

Mark Yost

Thanks, Dan.

Operator

comes question the Barclays. next Matt to Our line Bouley of with

You may proceed with your question.

Matt Bouley

Hey, good the taking morning, everyone. for Thanks questions.

just doing. But sort when parter, it First in reflecting about two really forward. you to is one happens took doing on much was But XX%, earlier curious since I customers? ASP you if thinking question up higher guess and how the guys going what just what year part affordability, increases of from you about kind mix then are that. that so affordability lumber were the they level part Thank price increases price the was talk balancing of that know of was and of I'm deliveries we prices the I your were said you. that

Laurie Hough

Good morning, Matt.

covering of as inflation would inflation was product a far thirds to ASP was the and to due versus mix, coverage about third year-over-year due I mix. ASP two As say growth the

This or last our material like to being quarter like margins finally to we're back for year. covering on

really material where do We saw slight ASP on covering expect material to to strong. an we next any quarter affordability very mixed standpoint, deterioration our seems still are From see So leveling last probably growth margins. changes. off some quarter, we but demand prior actually inflation

our our affordability targets So we customers. to still covering seem to be

Matt Bouley

on issue. Yes. that the on Certainly an like comments there based rates seem order doesn't it's having

is crunch the of product maybe more to for the second can dealers that what just product. wide of a if on And to accept limited that's case, sticky? curious just one be offerings. then So allowing the that. to extent And streamlining supply compel I'm range thank of market you kind you

Mark Yost

supply Matt. be it the market is helping ramp Overall, faster offerings, can us appliances which our think the And can get production sticky customers. to offering. our faster the sticky quicker and because supply to products what obviously can customers a can definitely fiberglass of win-win. chain streamline definitely chain that like choosing contributing streamline because is insulation to are the components it customers streamline better. we're up and in to as we customer and sales of missing paint and selling it's pieces the a direction. win-win the electrical approach discussions models and I think, that in We and move more going think, product our starting best online, more and with deliver we digital But usually with are frankly, want they our because I and I to We is it's

So options. and you'll are transformation to more because underway some pick the product more to think more down the we the as we people and choosing various digital they are streamlining happen see products continue that I with, stickiness they want

Matt Bouley

No, for color. Thanks great Thank guys. Mark. that's Good you that, Laurie. luck,

Mark Yost

Matt. Thanks,

Operator

of Our from Dahl question RBC line the comes next of Markets. Mike Capital

proceed may with your You question.

Mike Dahl

Good Thanks short a on XX coming in and of a side. driving you the why financing characterize, new it Those to happened questions. past the follow-up players Is of like for days? or material morning. terms change what's are the period How have duration sounds that have changes over change? pretty taking I such seen the my market? it would XX time into we've

Mark Yost

morning, Good Mike. Yes.

market. over have competitiveness there the the is to been has more participants entering There of more offerings. Also a the I years, of market. think too, been the it secondary market few course due

say the to over mentioned facilitate months new we've the capital As secondary helping marketplace. offerings months, market there's been entering XX past, XX let's

for, confidence. better growth also market confidence is there, people and a And both does been first disposable wage I is terms I'll demographics, there's job of which are time of of home people's some buyer help so think values that significant those home wage amount inflation call it pockets giving that into in putting ownership. more giving I think the inflation It are income

come been but more a tailwinds think actually just anticipating We're starting definitely to So fruition. a we've which those for all of contributing, it's to years. is that's something competitive I seeing few market,

Mike Dahl

it. Got

around Okay. That's My second Very backlogs. and really the interesting. orders question helpful. is

order production down, neighborhood to the these growth. in second but be growth? order So your And like what implied I rates price, price for there's extended understand think be something understand maybe is year-on-year. some, very audit that us Usually a process a looking real up seem part some backlog would all that I XX unit at doesn't the wait Could appear a unit in they'd kind of have to nearly at is kind versus you though, XX% breaking suggests buyer product. growth time of a help terms of the and times first the of to weeks. And the year orders are lot

how a where to managing those guess, you production the those I what to the intentionally backlog? do would help order not supply work whether and we on through weeks, to bit consideration So try rates there's or about you through think want down manage constraints work do you

Mark Yost

of Yes. questions Mike. Good set there,

there. I We look and it impact And during think, revenue as would in is when as $XXX six unit look at rates, have our time. billion $X.XXX those but million months. out, you the of year-to-date grown on maybe a we've first year-to-date far backlogs at I basis had pricing that it, for break there don't order dynamic

have base. essence, XX% backlogs grown our So our in more revenue than

a the than entry than our of quarter the order on sales higher at second quarter. year-to-date a implied which records. all little was XX%-ish order is time rate, first revenue flow basis kind stronger But overall basis, is So rate, and in coming

that, capacity and customer, now our strong at order demand far is today, XX%. which factor chain key be Right utilizations the Supply to priority. our our limiting is definitely as So strong going to outlook. delivery for as expediting favorable

look waiting car of market. a today's negative other of I for a in I to of take bring quickly the our say are this volumes but to people, deliverables and food think to there's type in as waiting up way, more sale would people on mean shortage to possible ramp or supply But customers. capacity care or we because to inventory used don't So as for getting

there's because in Just multiple channels. shortages

the to looking to as it's to So dissuade I possible. people ordering think and with job them to soon we a home, supply I or to the our just we're get of chain as it If them from us will to don't faster they're and to need that supply do want trying think as as manage our to try homes. supply customer intent accelerate we allows in production quick so.

Mike Dahl

That helps. Okay. Thanks, Mark.

Mark Yost

Mike. Thanks,

Operator

from Our Ng question of Jefferies. with line Phil next comes the

may your You questions. with proceed

Phil Ng

Hey, guys. Congrats on a really environment. strong quarter challenging in

in give your So, little then levels? your on site sense given on Mark, to can manufacturing home, how color makes great home some it bringing share could taking you well. Can you add the what's much facility secret potentially give Certainly, or gave on by you year color share share sauce? you like end competitors mentioned it that, gain. gaining the but some terms from production just dynamic, capacity of from driving a your in And as build Texas, sounds of that you're little a a what's color us affordability

Mark Yost

with Good and ratio our Phil. volume you. it that facility, production plants that and to divide we just I one, and would take start Texas, The number morning, have plant. today today additional Yes. Navasota, I'll Thank by an the of apply –

proxy kind that give online. for great a way of a that coming will that's capacity be to think plant's I

gaining as, offsite with far manufactured code As peers share HUD peers. our and

our those I I driven got Canada. They're and it's people. now issues people. and really, frankly, really able And supply issues getting it's to these And they're even how And sauce, issues solve about there. that's nationwide think being into great our secret amazing communicating today. share day. creative, every to right We've they're solve gaining solving by are people, think we the our think chain I

it's the kind of issues on the this before cross as cross recognizing looking at and problems. they state a become collaboration So border, chain supply whole

other of take production can REITs deliver they we them the see to them. with participate as our us to much advance. and possible our dealers that and faster. that that's someone And the helping people going I think And who's as customer I in to and to and solve think want accelerate care So

Phil Ng

growth? That's a run then pretty it you're And starting I difficult lot have of and great backlog just from I mean, mean, this fiscal year could given into a normalized from view visibility orders Do you shipment a you guess, from are. we like be visibility, the kind comps, comparison, when color. north right? a you're strong given growing those you to what's how of XX% of up comps, XXXX, out I think certainly your of standpoint? year-over-year sounds look

Mark Yost

I the chain challenges Supply driver to key and the We've we accelerate can into to year. going with and those believe difficult comps. production be chain. is the there assuming profile supply The COVID even abate. one got demand next

I definitely take So that think can we on.

Phil Ng

call it a past We're quick And in EBIT target long-term That's one XX%. margin I Okay. for bigger a then certainly past well excellent. Laurie, of guess, talked about year. picture, that I think the this aspirational you've past,

again kind level on So sustainable, we some leakage once of be out? environment of profitability could or side, the more there normalized a this demand in is look

Laurie Hough

Phil. Hi,

margins I third term as SG&A to as able before, the the production for in customer the quarter high making fixed term decrease see investments cost. the do mentioned I we our we're to As some in near the well compression production leverage are we're in levels, experience. levels Longer in as certainly think going at

production at higher there I levels. generally sustainable are So think,

Phil Ng

appreciate guys. it, Really

Mark Yost

Thanks, Phil.

Operator

next Our question line with Instructions] Wedbush. the McCanless [Operator comes Jay of from

may with question. You proceed your

Jay McCanless

what's couple gross costs, this, the margins Thanks could level understanding or over going crimp questions. you're EBITDA I'm Hey, next in we taking stay to bit? quarters, my – margin the saw sure thinking higher make The little to good the morning. just SG&A a at for XQ, but

Laurie Hough

Jay. correct, that's Yes,

supply have obviously margin, gross and On going off the we that's face dependent we'll forward how buy highly to much material our chain of the challenges on that contract.

Jay McCanless

volume out tracked second if the for deliver up in has the end think you backlog, but pricing the year idea with wondering question then end like average just do certainly after quarter? has before it of it’s would going the might had, could you fiscal XXXX, an And the us where unit I shake you give to expected moved and what's price third was

Laurie Hough

up think going really I average price Sure. go to slightly. is sequentially only

price the second did come our we most see So quarter. through of increases in

Jay McCanless

but not aggressive? with you least seen where they been great being terms terms the and delinquencies? for industry? sign street experience, historically from any especially hasn't this lending early dealers, too are love industry. my accelerated a want lending we've think type hearing chattel we how do you're my Would with or people the of could from some eased careful and Anything overdo like to hear just the this, customers And little or to give Are on it because of at lending MH us relaxed there these experience industry, a what with you about be feel to see to when starting

Mark Yost

kind and that of a XX was or close. – four prior we and now anywhere don't were a is kind I that's a west ago, I one of midrange say other it's question, a think Jay. years financing In opened XX what up on or of a good two was words, would XX, five. of to the scale, out constricted wild a Yes, we're there if

haven't aggressive monitoring actually degree. policies They and other scores. factors into practices too ago, the selective and gone It's near a They far XX, credit years that it. gone XX rates. to it's aggressive nowhere are were haven't We jobs there great very into the from

now if aggressive so is from constrained we years what of say we're bit a little that a a a of half yet will, only today, and financing were given even there's think close. two ago, sales say the perspective what over in but bit some with that even were wouldn't and feels of And little sales. – cash that of minor we're to credit I like It's financing seeing is, So of where it to it's it's it's extensions. air, it's midrange is. breath not I fresh It you kind terms observing

than from far today. more mortgage I lending my observations think conservative traditional

Jay McCanless

great on Thanks taking That's to for hear, quarter. great congrats question. well, a my

Mark Yost

Jay. you, Thank

Operator

line to Greg Craig-Hallum. comes question with next Our of the Palm

You may question. your with proceed

Greg Palm

Thanks.

increases this impacts supply this margin further, from is the levels that a in there's first maybe that you XXXX. assuming with? gross I'm I for don't where that a agree runway fiscal Is to Presumably be guess in cost something quantify these normalizes guess Just gross follow quarter? going you on further seems there, ups. nice couple would know there any of production and margin, with I expansion can I but some – if chain,

Laurie Hough

We our certainly structure. cost sold some in have good fixed cost of

So though, the as supply and prevalent. think noted, into we cautious it's be as production increases I be there's for fiscal Mark are our chain still there And going that. extended would certainly challenges to XXXX. out Greg, potential

Greg Palm

the transportation on any it to fair as And issue, out how side of Okay, issue in there's viewing just environment how logistics more whether of the you're given just and seems there asset, then things, And Star an in? changes you're Fleet that coming we're widespread curious enough. I'm utilizing well.

Mark Yost

and from years Yes. where our our always Good we shipments for Star question, the Greg. I given progress made And MH both markets more been component our in more own transportation's a competitors. us. at, past moving strategically critical the few for ourselves mean, for and of for over Fleet have significant

make availability drivers a that to And world able into view think, and more find effectively. the of shipping forecast gives for secure have. to So day-to-day. of able and happening I what's it sure us demand better the We're we're we

pulse degree. finger marketplace, we a So I of to have great our the on the think,

I we've definitely what strategic of think component a got. it's So

Greg Palm

reading sounds So, sounds like I'm your advantage. a more or less if right, competitive

Mark Yost

in believe strategy, I I so tie think Yes, I further. our even believe I so. digital it'll and think

Greg Palm

Yes. Yes. Got it.

of forward. best and luck going Thanks Okay.

Mark Yost

good. call. the be and We Take forward care your participating today to next our appreciate continued Well, We your everyone today's interest. on safe. Very on thank updating call. you time look and our progress questions for you and in

Operator

This for conference. concludes joining you us today's Thank today.

You disconnect time. at lines your may this