Skyline Champion (SKY) 2 Nov 222023 Q2 Earnings call transcript

Good morning, and welcome to Skyline Champion Corporation's Second Quarter Fiscal 2023 Earnings 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 in discuss evaluating call, can measures, today's useful be its during company non-GAAP will which Additionally, performance. A be reconciliation found can in the of earnings release. these measures

Yost, the I Please Officer. over would to ahead. President turn now to Chief like go Mark Skyline Executive Champion's and call

provide pleased Laurie briefly for you then Hough, the our so quarter CFO. I will I'm year. EVP about activities earnings joined our on highlights, good morning, of call, balance wrap and update Thank be and this talk far second quarter our the third about everyone. up joining on to an call by Today, thoughts with in and

as pleased achieved profitability margin closings, am again safely gross share Ian. Hurricane quarter came despite these as once supply earnings for Thankfully, team delivered metrics through we share. per and results those home I chain and and the strong all are We members that our challenges including impacts the of to impacted. our this new plants short-term from storm highs well team thinking

and second XX% net points. quarter, grew XXX% more by X,XXX sales we margins by basis the than expanding During by EBITDA

also improving performance to our and customers' by enhancing driven Our buying in contributed overperformance. to completing to efficiency margins. operational Relief efficiencies initiatives on order experience this Disaster focused continues strong The Housing be team's work and operating protect the hard FEMA the quarter's

sequentially. on as prior total, focus the improvement basis Production up XX% we an year-over-year homes, product led and volumes X,XXX of to year were on up output. X% delivered our rationalization increased In a from

increase North retail and Homes home our the sales retail Navasota, of footprint acquisition XX also our the ramp expansion volumes. Our capacity in plant, Texas at year-over-year our to expansions, the contributed including through locations Altisima in acquisition of production Manis Carolina Laurinburg, the

to $XXX result was and to the million, at supply million a the down quarter. challenges, end quarter of levels, inventory dealer of the customer June stronger rightsizing the $XXX of production As chain backlog compared

the times helps June. levels Lead production weeks, financing, to reduce XX sales at in to the end of quarter direct meet weeks XX needs weeks to our better of pre-pandemic the lock benefits their customers. homebuyer the during and Normalizing pricing XX to improved and to channels of X compared to backlogs

As existing of destocked orders. levels expected, orders rightsizing inventory, we saw inventory homes the as during selling inventory as retailers placing backlog of well our the ahead in new of quarter as their cancellations in out they resulting existing

expect selling rates over-inventoried rise currently interest of X,XXX do out With destocking inventory the that confidence to units. through approximately continue by we to We of and continuing existing fiscal is waning, retailer stock industry remainder and consumer estimate XXXX. the

third top-line down to the to quarter we fourth With destocking, year-over-year. expect to and be be quarter year prior our flat

orders during and new the related saw their also availability their We put builder to hold quarter, developments, primarily due customers chain on of to supply and community transformers. in concrete the issues

we inventory in the and supply the rightsizing dynamics developments, medium-term. healthy dealer of new impacting demand Despite near-term chain see the

good driving down, with walk-in conditions quality credit and higher are retailer digital traffic is rates. economic leads closing While the consumers

increases in healthy. deposits we activity quote result, the a and As remains of year-over-year retailers many see at number

our to Las remains engagement and attended seeing where Vegas and well awareness we tiny builders the was our from To good, we demand and Genesis REIT Build-to-Rent are in homes, manufacturer received. increase in home September, Additionally, home increased channels. of rent Conference

as of our at a city products officials' of be an We to the Conference solution. will also Cities displaying housing affordable awareness National League increase home

ramping benefits facility working In year recently, these manufacturing and North later in streamline of from term, This states. staff to our and we the focus have and to we seen been tool Carolinas Most idle we the begin have as the will production surrounding Carolina. on near continue one production facilities our in this to significant efforts. further is streamlining scheduled

invest opening starting Bartow, housing we impact additional of in plant needs Florida the and to and of from are Hurricane builder to our the short- Ian. long-term Additionally, developer support demand growing

look rising interest forward, rates facing we are and As homebuyers inflation.

we traditional more into As are site-built a seeing result, moving solutions. home our factory-built homebuyers value-oriented our

our growth Our and and penetration the REIT further confidence mid-sized builders channel, interest potential growing in build-to-rent the channel developers. strengthened long-term by expanded growing the is upside from from community into traditional

by While these our far growth on mature, longer-term accessibility. take encouraged and by overall so the progress drivers made excited to we housing we've impacts results will time are the the and

connect on and we double environment, that this growing given housing, innovation the need continued number who need uncertainty. offerings introduce the affordable more In with down to economic consumers of

automation the are have and help production experience, our consumers accelerating home. investments can we to so a call customer great into place We

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

of everyone. will our morning, for by good also discussion and financial begin by the will expectations. our I I flow. and sheet briefly Mark, balance followed Thanks, cash a reviewing second quarter, discuss near-term our results

homes During quarter, increased the an factory-built average net XX% saw selling in U.S. segment the during driven housing quarter year. and of compared which in million, last same increase in $XXX increase revenue to was by price. the quarter, the We number second growth sold by sales the to $XXX an of million

efforts to our expansions to U.S. manufacturing driven the across our for Manis Texas offerings in number by a X,XXX existing our retail Year-over-year units of and of capacity were Expo product homes, of sold ramp Homes of Navasota, footprint. is our acquisition in quarter the increased Factory core homes the capacity. plant continued same streamlining growth The continued and by locations, volume driven addition increase compared XX% being X,XXX last the or the in total was year.

producing on labor transportation. price year-to-date. $XXX core bringing to million per increased sold input shipping finished including year-over-year mix, sales to product and offset U.S. to XX% remaining products units increases FEMA we to homes our quarter, the by price during teaming homes, priced $XXX and higher relief higher average During unit and disaster the selling million due The and quarter $XXX,XXX the FEMA including costs,

higher. As segment a fiscal our in price XXXX, second average reminder, was of a the units driving in increased basis, specifications first compared of XX% thus home factory-built On increase ASPs increase sequential and the X% per product, more U.S. revenue CME selling quarter the have than fiscal the XXXX. in of This sold. both by driven quarter to the core a number homes

increases. driven decrease remained at XX%. quarter capacity change The flat increase by during in and utilization in product price inventory the in a sequential price was growth as single-digit primarily was a sequentially low driven goods mix Volume finished by

quarter by a the in XX% partially year, compared driven to a increase of second decline homes average XX% of last home selling Canadian revenue in increased number X% to price, $XX million by sold. the the offset

in pressures costs. of $XXX,XXX continued in mix markets. in was on softening price by mix selling input demand home average in to shift volume higher a combat was of a our by larger to ongoing increases in a Canadian certain and price Canada driven The and inflationary product multi-section The caused home shift decline the

Consolidated volumes second due gross the to to the profit year selling increased average versus $XXX million higher prior prices. XXX% quarter, and in quarter up

second margins sales, quarter up gross segment net were the basis segment of from points XXX Housing XX% last U.S. year. Our

costs gross this helped on to to all The and in product product increased sales costs. improved increase leverage addition operating led quarter which and efficiencies FEMA continued margin higher force fixed of core pricing, to prices standardization, product lower

investment quarter additional the million SG&A year, increased variable in in in primarily driven revenue SG&A to increase from our and $XX same due the The higher second reflects by also period capacity million to footprint. profitability. higher $XX to last compensation and expand

period $X.XX diluted sales million year. $XXX was increase income Net quarter in same share, of by or per diluted improved of for during or The EPS net share driven the second income $X.XX the to profitability. improved compared resulting million gross in was per margin, higher and earnings last $XX

a XX% the versus to of by the points effective X,XXX XX.X% the XXX% and company's fixed rate Adjusted effective quarter million, adjusted expanded ago more an $XXX The of margin XX.X% tax year an margin rate improvement for leverage year increase The for EBITDA tax for EBITDA of was quarter. period was same the costs. gross due than ago. basis to over quarter

our business output last navigate increased profile. has to our while of improvements structural to margin service enhance also uncertainty, over protect improvements ability to strengthened periods leading capabilities, economic These in our profitability. continuing The the our our and operational and years few customers

fully move to into the moving to expect more to fiscal second product we half XXXX fiscal as the to affordable been our mix and anticipate XXXX, payments. impact As consumers we back that with realized we maintain continue unit options less margins monthly homes have with to of normalizing sales now of of FEMA headwinds levels a

for no with the of cash of and million XXXX, to cash generated $XX of had quarter, prior equivalents compared X, million period. We maturities million of we million October long-term an of the until increase As operating flows year and $XXX borrowings cash XXXX. $XXX $XXX

The increase cash primarily converting quarter, due receivables flows cash in to the higher net balances coupled second the quarter. in at the income, with first inventory increase end operating into and the of the is during

on our some call back the utilize given long-term and reinvest We support for on favorable remarks. business our the growth. now remain strategic executing in turn to to to I'll to cash focused initiatives, our liquidity operational closing plan position, Mark

Thanks, Laurie.

to uncertainty, positioning inflation, While consumers raised caution of sustained the strategic points, a the and level can and rates initiatives. continue housing price economic we with to outperform due core the Skyline market broader our global has Champion environment believe to current due interest rising affordable

channel build-to-rent to developers demand adapt as supported is outlook The for by well consumer REITs, demographics. as community and retail with builder helping partners our different opportunities the

housing drive our site-built that In we grow, cost the will more affordable homes. addition, of and the to elevated buyers need traditional for to believe continues housing

to with the cannot our for blessed take a we team Skyline we of to performance And I moment lines that, great that open the the of ability care strong for take and hard team as now to people thank Q&A, open are you have. work entire result our we customers. Champion consistently of lines have express may the I our want focus, is Q&A. operator, how to Before a

for gentlemen, technical delay. the and Ladies we apologize

begin now Our the will will your Craig-Hallum Q&A Greg with Please [Operator proceed with from question Palm Instructions] of first Capital question. be We line coming session. Group.

you Yeah. okay? Thanks. me morning. hear assume can I Good

Good Yes, morning. Greg.

give us start wanted are. we to out retail if to there. some how sense the Mark, you far out inventory can I So process just destocking I'm trying of the along figure positioning with

start you said there's comes we couple position? fiscal year, backlog where of were in get if think left, just down that assume X,XXX more that before I the does throughout maybe we So units times to lasting in? a normalized another

Yes, Greg.

the is is it about set than think more end about floorplan healthy. the to demand. crews actually important backlog consumer and change is that on consumer note demand I backlog, what's End credit

stock unit canceled and And is predominance units, channel and what retail a week solds the going that's takes we've reason seen retail model sold to a unit takes finish So retail a set is stock a to dealers. a seen we've about day. as the of about important because

So models, it stock stock with they've dealers more to and and homes. limits deliver the capacity retail sold going models to been those less because and crews down less leaning more set

seen of about XX% the they've they're in mix say, shift reduction setting because to a So of, that I'd XX% and products finishing. the

their that's overages the driving happened, levels, terms past limits. lenders inflation their have pending is At played more levels year lines have inflation. plan of and that's plan in floor time what same the retailers actually their floor of only an their is compounded which And inventory because to by in allowed over floor increase in plan

were overage XX% in lending of order of additional, floor lines to allow let's inflationary XX% on plan they advance giving changes. their to retailers So say, an to

revert overages. those in to pullback not just giving the gone them lumber, With back they've to

inventory So is and what inventory-wise that up the mix backlog-wise really, driving slowing seen by down ability we've product finish to their retailers XX%. shift is their at and their set

time, same XX% pulled plan limits been back At by their floor to have lending XX%. roughly the

where in kind So about credit a line. have I plan they back this that's is do units really think floor today. to short-term lines of thing X,XXX their get

going down to catch So them let we're that to slow up.

strength the is end seeing we're what consumer But demand. in

still very is activity quote good. Our

year-over-year X%. about Our are deposits captive actually at up by our retail

strengthening ones. retail, Not we're but activity. hearing seen we've especially own So digital retail only in the deposit same our from captive retailers, other

pulled retail So our and have plan still is but the help think to floor through been we've got consumer the of short-term manage that. kind where good I end issue lines channel demand back, we've got

double So, that X,XXX. I neighborhood think about off it's start of to started that with. probably We in somewhere XX,XXX

we're about through. So halfway probably

But the length flooring taking. pullback line exasperating probably is time the in credit overages the that's of

Got it.

of metrics at traffic can point, I us evolving quoting still that’s other the any important demand community What healthy consumer by coming there builder deposits backlogs retail. mean, in that on So out are also you Now things? developer, the helpful down? if you color. are just conversations And seeing and then kind are give build-to-rent on seeing are now these side of more you in channel? channels,

Yes, mean, REIT strong activity. I very definitely. the community channel,

they're and down mentioned, a timing of other things. on Greenfield developments I slowed concrete issues with just because supply along and transformer of As their few chain,

So coming see in these or X that until that's pushed so; we'll of months, X delayed probably a developments quarter out been many new good roughly. to Greenfield have through

there is start model extraordinarily is There's picking up. and Builder will demand that conversations. but actually Park So coming tiny is healthy. the developer demand through, more accelerating. home

Florida the We are plant for tool developer. builder up because Bartlett of demand working to our

in and XXXX. mid facility early up that, we So should opened working up on are idle be of to that calendar that opening

the all to lines is to this dealer the think channels in through just good. line. going for credit their have floor So inventory issue still I to is work demand plan Retail get

is of this was half the and to I for type then, at for environment the that of your that is And which hold in that I'm as that they mentioned next Okay. couple year would average bit looking quarters. in this back on well of that's XXXX to of up I outlook level the confirm, little the asking. just XX%, you this I'm guess you're fiscal in sort what surprised margins that a revenue of fiscal Laurie, XX% wanted expectation margins. for

we're of Greg, what couple product. margins and yes, the expecting. of the changes exactly for in we've product to range the quarters, XX% given Gross the the next streamlining made XX% structural to that's offering

color. queue. hop the the appreciate Thanks. I’ll in luck. I Good back Great.

Thanks, Greg.

Thank you.

is with next your Daniel of proceed Our question CJS from Securities. question. coming the Please Moore with line

for as for can. and apologize was can I first Mark, Laurie. I just production expectations Thanks, QX but Mark. fast repeat QX? one, the typing you I Thanks, the as outlook

top-line expect be expect with down to inventory well be we quarter even last even Yeah, levels these maybe year, so, third with we in quarter third and just slightly line. levels from last quarter as and to down for get QX last year, back from to fourth year's

in normalization but, kind in the I what's that you're the know another think of specificity Greg's gave you some this terms I that, you more of but cancellations of order that in magnitude inventories expecting cancellations the you of color last and/or about experienced of the question, any unit X,XXX so just on level of experienced of in quarter. maybe dealer question, sort seeing far this quarter? magnitude

been Yes, talked Dan, model the units, cancellations that about. have we mainly the stock

start seen think very been cancellations Actually, I good; customer on side to held seen from really stock our have the cancellations slow. of the that. that's or year. we've The XX% We've cancellations terms probably they've done rates So have But clean-up. been in with order those running up well. actually so model total of prior about few

model pace. up So just done is cancellation about wrapping I that up think clean and the in stock

the availability thing be going cannot they with place real Dealers just is their credit model have stock The on order line. floor units. unless us an plan to

on we in line. order just So availability cannot cannot see have new these because won't floor until until happens they actually plan because or orders an that destocking they technically the place coming they physically

even is orders, So and kind that of good that. all I of though new impact will think quote activity

done, as up the forward. get they destocking fill this So once go that we pipeline will

Really helpful.

as one or How inventory side? floor consumer spread but going about jump the financing there but remained widen Obviously, What MH the you on to up, the recent about rates narrow in weeks/months? for lending on well the we on overall it Thanks. for the I’ll started more consumers? Let home participation has between just documented land comparable plan seeing me again and of or side, and built the financing. for back, and are talked stick level activity the side

narrow cash is country. say the versus remained which and but have priced still regions more had credit, seen positive. good. will certain in now site-built to the end especially of a out very and buying who in more buyers have mortgage, home scores, for I customers, enough a more that very we The of probably the financing consumer It's us. big for traditional come coming market they're seeing site-built more healthy and year, maybe cash, credit actually We're good and last

activity. healthy So

Al right. I’ll jump again. back with any follow-ups. Thank you

you. Thank

you. Thank

Our next line with your with question question. coming Barclays. is of from the proceed Matthew Please Bouley

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

couple it does they did and inventory, of do on of that to? X,XXX that. go On units What previously represents? How points excess you where a have many clarification per units think the dealer

sort X,XXX could carried they recessions? that? of of What I'm at is expectation get further an they've inventory that based you. estimate risk past your trying Thank than of in the to Is on what cut what's

is you question. credit their for back with Thank to in Matt. lines. The Yes, get really the XXXX line floor plan

fact about in less words, historically overage they inventory. back That's have reverting – it's kind limits. credit that not So allowed to terms other what the just that actually and in of floor are of that plan allowing pulling pre-pandemic lenders the the are back

So their they have in to get line. back inventories

U.S. they even would the say X,XXX less to roughly destocking it's field driver is it So more is waiting in their of physical probably there physical actually in be – delivered set of physical to X,XXX -- in retailers of inventory. about and but have number the dealer is that the than But units the part I

they you back there. pullback plan So that driven three line. two it's get floor But really models figure availability get dealer in the to per in and to you have by more

it. Got

Okay.

that’s color. great Now

mentioned change to normalize I you know just [Audio drive or kind Gap] Gap] that to am margins but second know mix enough gross to to quickly? on the the curious, has is kind needs just else Secondly, touched anything this of the that normalize still I year. on that of sort of [Audio is sequential there up following prior the margins. I half decline for earlier,

Sorry, it's Laurie.

was really choppy. question Your

cut You many out Sorry. Can times. repeat? you

Basically, starting would thought it is high, point be about the to the Sorry – gross QX. is margin relative right, that. from

And to that terms Is Gap] so, enough change is in to of alluded [Audio mix the drive. that you pressure,

out cutting again. you're Sorry,

about think mix margins. you're talking I to relative

well this last benefit as product FEMA we pricing, on as in the about we forest favorable of call the quarter, So, obviously, had as talked quarter.

as correction for those optioned change price adjust the last which homes. going to input well also, surcharges is alluding some material were costs. to less the in change smaller, both of our variable, order So mix pulling on obviously, to And in have, we're of you to back in I as think product then the

So kind at answered questions. all dynamics of your of Hopefully, happening of I those are once. all

Thanks, Thanks, Yes. Laurie. Mark.

you. Thank

is coming with question next question. Ng Phil line your Please Our Jefferies. of with proceed from the

Certainly, Lot work at Mark. I color. Hey, a question, what's guess, great this is retailer how of orders call once that double-digit site-built look early view your level of inventory it, through anticipating talking you volumes This some decline. could in of least next declines and of about, homebuilders sides buy the level, fiscal not year? probably at on these kind but fair destock are the

side, you at is and different the Your REIT guys side. got little direct-to-builder situation a good some

think how whether grow able you're you're So of next thinking us to standpoint? help year a you going volume be to from kind fiscal unpack about

Fed - today going weeks months. question. the is what - we're Yes, watching upcoming over a the do and that's to actually Obviously, great and

see But activity look at. to that's deposit that hard and and stable. a good our activity So is quote I visibility

I in from next hearing expect of to significant that they're able them we builders see declines the we're decline be know of share. talking do. should double-digit where take that significant same year I many will don't the magnitude So we that

share year, be guidance yet that, We on we next will haven't of any type sure. but for from disclosed site-built taking

out just looking Got you. unpacking And similarly, Laurie, kind Matt's to year. then, next of question more

a base mix for just to You kind be a positive guys Should next the XXXX, is we to be able still? should of cross well, expect year. and price a use have to basis we decrementals? been manage pretty year's cost price applied headwind Is last as normal going

and guys have some your on to manage been like of some seeing well we're able certainly that You lumber. pullback inputs quite

we as going are so, XX% margins think we range. Yeah, around the the come mentioned, gross XX% to in

continue that our barring to not expecting going on we've demand, that's catastrophic that, we're changes that. based any in structural think change but I made,

Okay.

business guy Mark, And in. been sorry, more an year is alluded units year? there I pick to sneak opportunity one for to think positive I there FEMI kind Hurricane next some for this just good and you of have Ian, a up

FEMA yet. any obviously, Yes, orders disclosed hasn't

I devastation say that in be for units think few for But of extensive. -- state they in units. deploy that a there order so the Florida could still can demand I is need the a they've inventory got the Florida, thousand that will replenishment those pretty in

and So I a be need. think long-term there will short-term a

something out We type issue imagine we've if either is when type future. that can't good I those it are of into housing, there how order figure there that suffering know extent of a down be order, people don't and to or the in got replenishment quality highly of some disaster some damage will that likely but to an there's will get home. importantly, FEMA relief not with way But most else a the is the

color. Thank Great you. Okay.

Thank you.

Please Mike from proceed with with RBC Capital your line Our next the coming Markets. question of question. Dahl is

questions. for Thanks my morning. taking Good

you Mark, some have I XX%-ish units' environment if guess around units the and guys I at to press units the a of So, as the a just the on comments market starting inventory order look even share. point, or of X,XXX XX,XXX cancellations. kind

So units in X,XXX,XXX that applicable Skyline. to to you're be really talking like would X,XXX theory

like it's seeing delta seem come you're to math, bridging that. it in than more what between activity, doesn't much at meaningful the on to in the decline That even really our order seems least close

give Thanks. bit just more. know, a my more square a color, could little So you don't us question. first maybe That’s help us I that

the looking Mike, absolute I terms just at in are think of you inventory number. it Yes,

XX% pullback I to credit think what the availability. you roughly floor have is XX% plan consider to in also

of sales channel, inventory in and or over the units give XX,XXX there's to let's XX,XXX overinventoried roughly XX,XXX inventory say, channel. there's by, the in they units the entire – something normally if neighborhood take, were XX in So

back plan just And limits in that And just you model then if the the pull inventories the in to not that's would inventory to the kind you decline. stock fairly the have backlog to floor numbers, significant of physically stock getting a number in pull levels. by that matching addition normalized units be model back XX%, down were the

you because we're think of ground in physically go a I you're on The down canceled that going plan that physically, to So had number you needs units. pullback not inventory were credit units to backlog at the the not in replace and dealers those have then stock availability model lines. the the in floor

those to think look really you I magnitude fairly large. the three lenses I So in think, is at it, then and have

seen of you seen plan floorplan you floor Okay. on follow-up In have also sounds would past lines? what lenders to like drop do plan what out get to inventory of behavior? of from what side, at plan Matt's That up dealers what this And before, follows lines out or credit least dealer back it their limits. and limit to helps. full as talking on utilization below the typically i.e., a floor take cycles, And about question have it curtail for you're here's availability,

consumer and housing this of but maybe account Because really is like looking environment. in seem the seems it assume to out not that all your may shortly, that maybe for resolved potential further some commentary, weakening

were this The terms done overages materials The am inflationary the Mike. the due at really limits, for was homebuilding honest, I looking floor to plan be as unique timing. changes. destocking, actually to market really of inflationary in very No, once-in-a-lifetime

that you an of just, just single try every the backlogs. give to know So let we overmanage because be price overage, to given the not I we're plan think the don't going essence, to said wanting going seeing floor length invoice and ride to is in you what lenders,

I a reverting on change they So to delta normal back that that, in just we're were. is think from where but

demand traffic I and traffic said, walk-in at consumer the lower. Like dealership good very still level. is And remains

a much are traffic, really in dealers we'll that and walk-in more on and just are traffic see who with the dealers think much traffic. but more presence seeing a So focused convertible their I things, e-leads digital have the other activity, slowdown better

So demand I'm not concerned currently. about the end

I So do a environment to recessionary macroeconomic tend sense credit I cycles just that of to before bit have enough. through you Mark, what little if guess tight asking a I'm more. the in in a we've more press on gone environment, could, is broader

that variety of of We environment today. are parts the seeing across a credit

but if environment. on we're to know, I operator, may right, this in may So you credit maybe when if we an into the one of the – lending seen to one credit, as change or you've environment not you've of choose even depending available got a past isn't floor to of today, choose does dealer, as kind cycles, recessionary then that's availability how And the credit use all side. on don't not credit available if plan use go a their were environment

in I How recession think credit cycles at. what more do a that's past work So or when in getting a about use credit availability you these was recession? of the in of

strong, the -- we for especially are No, today which product, I affordable plan value robust. is housing have. floor think There's the lenders

So really is it wasn't lending don't in risk, the in environment various risk. at think I floorplan prior of And companies cycles, except even business. went when out

So if got go business, of that. then maybe you've out the banks

XXXX, banks in than I in XXXX they much position were and a healthier prior. think are the

I am about So worried not that. as

an And frankly, of credit type asset-backed facility. is this

patterns, level. Dealers typically to we see. comes have strength traffic availability plan when how that supply And really this are down especially So housing. manage lines it on it the will in even to of and market, short and recessionary market, is a it floor has in manage what their much to they to that

also finish crews. it and depends set And on the

them. takes and product, get lending speed reasons the more a higher them actually retailer their lending a it finish line. longer and and for and of floor rates, the because plan a them One set takes for plan it gone monetize And is hold cost to set with longer off is finish and the advantage to we've into that floor

there's don't they're the dealers their they're rate comes the are think And down I long deal needing banking floor shy to going a case. how of which plan is prior just the pipeline in under need product, as know, for that So saw affordable as that cycles. really housing. the much don't lending it majority support banks, environment today, turning is about with gun experiencing as federal to we fact the And you a I foresee and support banks

Got it.

you. Okay. Thank

Thank you.

McCanless your the question is next Wedbush. proceed question. Jay with of coming Our Please from of line

Hey, good morning, everyone.

equation lack to Just finished to that be the put fashion? get of a this? totally all of those the in upshot is now bottleneck set homes crews right timely Is clear here, the and in the

I pieces, finished stock the and retail it a lack the than would takes week and a finished model longer crews, set set change a impacting Jay. maybe set do If One to the you say two of it set. or mix is right? crews does

you key. of shift crew crews. have set That's is being capacity those one. mix, availability a finish But seven absolutely If a and dramatic your it then said, will impact in finished that

they in are as Those prices the is to the one the lines inflationary plan other drivers. back are they're fact allowing normal and were levels, come before down that they other lumber because things. two reverted floor The seeing overages have not

deeper on balance in plan to lending of at bit cash amount that I help of that an on doing seeing to to potential the Is addition sizable maybe opportunity on sitting increase getting the and a finish? sheet? You are look is pretty mean, floor time in cash. it little return a guys set

an financing on time, I think we all discussions solutions that's Jay, opportunity. have so the definitely

relative are chattel an home then, mortgage financing? rates, to rates are idea And running conventional just current of rates where could Okay. us you give also and where land

for fixed XXX to a XXX to spread between credit rate customers, and points, chattel good talked relatively what be quality would flat the we last the Jay, XX-year basis quarter. so about

yes, So in seeing we're what Not environment. financing a change the that's lot today. of

in months? additional what's standards? given underwriting of seeing that in know are those you didn't tightening tightened into I entities, terms know business. last what any the Are up of there's seen I lending happened all, six or at coming nine standards, the people, you've

no. Not significantly different,

questions. my Appreciated. cool. right, Well, All taking Okay. for thanks

James. you, Thank

you. Thank

Our your the of is from Group. question. next Craig-Hallum coming proceed Palm Greg line Please Capital with question with

thanks. Yeah,

in everything strategy? of Just one light thinking about how in quick any allocation capital going you're on, follow-up changes

XX% basis, I real-time mean, the a what, of in here you're kind sitting with, market of cap cash. now on

as main maybe buyback of looking M&A curious and is still more or just if you M&A sort of complement the a are if So a area? at focus

Hey Greg.

the capacity, are opening increasing idle seeing We course the experience, reinvesting in looking business, facilities strategic M&A. customer enhancing at and with the

in CapEx for you year? about what mind? have a And Do expectations number the

the do to as be than start past increase haven't but initiative. put we automation just been we it where have We production to out, expect our in anything we higher

Okay. Fair Thanks. enough.

we appears time. have It additional you. no Thank questions this at

So I'd to to like pass Mark any over Yost remarks. floor additional closing for the

appreciate in the for interest forward look and everyone our thank you to We progress participating We call. company. in today's to want updating I the our continued on your time next on call.

care. well. Thank Take you. Stay amazing. Stay

time. Ladies lines your and and teleconference. conclude does at your Once participation this you disconnect gentlemen, again, you thank may today's this we for