Skyline Champion Corp - Quarter Report: 2022 December (Form 10-Q)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-04714

Skyline Champion Corporation

(Exact name of registrant as specified in its charter)


Indiana		35-1038277
(State of Incorporation)		(I.R.S. Employer Identification No.)

755 West Big Beaver Road, Suite 1000
Troy, Michigan		48084
(Address of Principal Executive Offices)		(Zip Code)

(248) 614-8211

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	SKY	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:):


Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of January 26, 2023: 57,046,775

SKYLINE CHAMPION CORPORATION

FORM 10-Q

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 2022 (unaudited) and April 2, 2022	1
Condensed Consolidated Income Statements (unaudited) for the three and nine months ended December 31, 2022 and January 1, 2022	2
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended December 31, 2022 and January 1, 2022	3
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended December 31, 2022 and January 1, 2022	4
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three and nine months ended December 31, 2022 and January 1, 2022	5
Notes to Condensed Consolidated Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3. Quantitative and Qualitative Disclosures About Market Risk	26

Item 4. Controls and Procedures	26

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	27

Item 6. Exhibits	28

SIGNATURES	29

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Skyline Champion Corporation

Condensed Consolidated Balance Sheets

(Dollars and shares in thousands, except per share amounts)


	December 31, 2022			April 2, 2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	712,448		$	435,413
Trade accounts receivable, net		47,515			90,536
Inventories, net		220,941			241,334
Other current assets		24,302			14,977
Total current assets		1,005,206			782,260
Long-term assets:
Property, plant, and equipment, net		165,857			132,985
Goodwill		196,574			191,970
Amortizable intangible assets, net		48,303			51,283
Deferred tax assets		14,733			17,750
Other noncurrent assets		81,014			58,371
Total assets	$	1,511,687		$	1,234,619
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Floor plan payable	$	—		$	35,460
Accounts payable		39,352			92,159
Other current liabilities		220,931			222,493
Total current liabilities		260,283			350,112
Long-term liabilities:
Long-term debt		12,430			12,430
Deferred tax liabilities		5,725			5,124
Other liabilities		59,807			41,840
Total long-term liabilities		77,962			59,394

Stockholders' Equity:
Common stock, $0.0277 par value, 115,000 shares authorized, 56,925 and 56,838 shares issued as of December 31, 2022 and April 2, 2022, respectively		1,580			1,573
Additional paid-in capital		515,128			502,846
Retained earnings		670,533			327,902
Accumulated other comprehensive loss		(13,799	)		(7,208	)
Total stockholders’ equity		1,173,442			825,113
Total liabilities and stockholders’ equity	$	1,511,687		$	1,234,619

See accompanying Notes to Condensed Consolidated Financial Statements.

Skyline Champion Corporation

Condensed Consolidated Income Statements

(Unaudited, dollars in thousands, except per share amounts)


	Three months ended					Nine months ended
	December 31, 2022			January 1, 2022		December 31, 2022			January 1, 2022
Net sales	$	582,322		$	534,690	$	2,115,028		$	1,569,112
Cost of sales		408,233			377,451		1,437,498			1,171,016
Gross profit		174,089			157,239		677,530			398,096
Selling, general, and administrative expenses		71,820			65,825		228,017			181,188
Operating income		102,269			91,414		449,513			216,908
Interest (income) expense, net		(5,409	)		508		(7,293	)		2,002
Other expense (income)		—			7		(634	)		(36	)
Income before income taxes		107,678			90,899		457,440			214,942
Income tax expense		24,865			23,277		113,384			53,696
Net income	$	82,813		$	67,622	$	344,056		$	161,246
Net income per share:
Basic	$	1.45		$	1.19	$	6.04		$	2.84
Diluted	$	1.44		$	1.18	$	6.00		$	2.81

See accompanying Notes to Condensed Consolidated Financial Statements.

Skyline Champion Corporation

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, dollars in thousands)


	Three months ended					Nine months ended
	December 31, 2022		January 1, 2022			December 31, 2022			January 1, 2022
Net income	$	82,813	$	67,622		$	344,056		$	161,246
Other comprehensive income (loss):
Foreign currency translation adjustments		1,008		(61	)		(6,591	)		(703	)
Total comprehensive income	$	83,821	$	67,561		$	337,465		$	160,543

See accompanying Notes to Condensed Consolidated Financial Statements.

Skyline Champion Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited, dollars in thousands)


	Nine months ended
	December 31, 2022			January 1, 2022
Cash flows from operating activities
Net income	$	344,056		$	161,246
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		11,660			9,869
Amortization of intangible assets		7,681			5,664
Amortization of deferred financing fees		266			599
Equity-based compensation		11,631			6,134
Deferred taxes		3,581			5,942
(Gain) loss on disposal of property, plant, and equipment		(143	)		696
Foreign currency transaction loss		844			55
Change in assets and liabilities:
Accounts receivable		42,847			11,419
Inventories		30,470			(19,133	)
Prepaids and other assets		(9,895	)		(22,954	)
Accounts payable		(52,663	)		(13,076	)
Accrued expenses and other liabilities		(26,291	)		17,945
Net cash provided by operating activities		364,044			164,406
Cash flows from investing activities
Additions to property, plant, and equipment		(38,177	)		(22,784	)
Acquisitions, net of cash acquired		(6,810	)		(207	)
Proceeds from disposal of property, plant, and equipment		224			70
Net cash used in investing activities		(44,763	)		(22,921	)
Cash flows from financing activities
Changes in floor plan financing, net		(35,460	)		8,583
Payments of deferred financing fees		—			(1,130	)
Payments on revolving debt facility		—			(26,900	)
Stock option exercises		596			1,099
Tax payments for equity-based compensation		(1,363	)		(3,007	)
Net cash used in financing activities		(36,227	)		(21,355	)
Effect of exchange rate changes on cash and cash equivalents		(6,019	)		(578	)
Net increase in cash and cash equivalents		277,035			119,552
Cash and cash equivalents at beginning of period		435,413			262,581
Cash and cash equivalents at end of period	$	712,448		$	382,133

See accompanying Notes to Condensed Consolidated Financial Statements.

Skyline Champion Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, dollars and shares in thousands)


	Three months ended December 31, 2022
	Common Stock
	Shares		Amount		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at October 1, 2022		56,925	$	1,580	$	511,250	$	587,720		$	(14,807	)	$	1,085,743
Net income		—		—		—		82,813			—			82,813
Equity-based compensation		—		—		3,878		—			—			3,878
Foreign currency translation adjustments		—		—		—		—			1,008			1,008
Balance at December 31, 2022		56,925	$	1,580	$	515,128	$	670,533		$	(13,799	)	$	1,173,442


	Nine months ended December 31, 2022
	Common Stock
	Shares		Amount		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at April 2, 2022		56,838	$	1,573	$	502,846	$	327,902		$	(7,208	)	$	825,113
Net income		—		—		—		344,056			—			344,056
Equity-based compensation		—		—		11,631		—			—			11,631
Net common stock issued under equity-based compensation plans		87		7		651		(1,425	)		—			(767	)
Foreign currency translation adjustments		—		—		—		—			(6,591	)		(6,591	)
Balance at December 31, 2022		56,925	$	1,580	$	515,128	$	670,533		$	(13,799	)	$	1,173,442


	Three months ended January 1, 2022
	Common Stock
	Shares		Amount		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at October 2, 2021		56,796	$	1,572	$	496,059	$	173,513		$	(8,166	)	$	662,978
Net income		—		—		—		67,622			—			67,622
Equity-based compensation		—		—		1,921		—			—			1,921
Net common stock issued under equity-based compensation plans		31		—		918		—			—			918
Foreign currency translation adjustments		—		—		—		—			(61	)		(61	)
Balance at January 1, 2022		56,827	$	1,572	$	498,898	$	241,135		$	(8,227	)	$	733,378

	Nine months ended January 1, 2022
	Common Stock
	Shares		Amount		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at April 3, 2021		56,640	$	1,569	$	491,668	$	82,898		$	(7,524	)	$	568,611
Net income		—		—		—		161,246			—			161,246
Equity-based compensation		—		—		6,134		—			—			6,134
Net common stock issued under equity-based compensation plans		187		3		1,096		(3,009	)		—			(1,910	)
Foreign currency translation adjustments		—		—		—		—			(703	)		(703	)
Balance at January 1, 2022		56,827	$	1,572	$	498,898	$	241,135		$	(8,227	)	$	733,378

Components of accumulated other comprehensive loss consisted solely of foreign currency translation adjustments.

See accompanying Notes to Condensed Consolidated Financial Statements.

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation and Business

Nature of Operations: Skyline Champion Corporation's (the “Company”) operations consist of manufacturing, retail and transportation activities. At December 31, 2022, the Company operated 37 manufacturing facilities throughout the United States (“U.S.”) and five manufacturing facilities in western Canada that primarily construct factory-built, timber-framed manufactured and modular houses that are sold primarily to independent retailers, builders/developers, and manufactured home community operators. In addition to its core home building business, the Company provides construction services to install and set-up factory-built homes. The Company’s retail operations consist of 31 sales centers that sell manufactured houses to consumers across the U.S. The Company’s transportation business engages independent owners/drivers to transport recreational vehicles throughout the U.S. and Canada and manufactured houses in certain regions of the U.S. The Company also has a holding company located in the Netherlands.

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations.

The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries after elimination of intercompany balances and transactions. In the opinion of management, these statements include all normal recurring adjustments necessary to fairly state the Company’s consolidated results of operations, cash flows, and financial position. The Company has evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on May 24, 2022 (the “Fiscal 2022 Annual Report”).

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes thereto. Actual results could differ from those estimates. The condensed consolidated income statements, condensed consolidated statements of comprehensive income, and condensed consolidated statements of cash flows for the interim periods are not necessarily indicative of the results of operations or cash flows for the full year.

The Company’s fiscal year is a 52- or 53-week period that ends on the Saturday nearest to March 31. The Company’s current fiscal year, “fiscal 2023,” will end on April 1, 2023 and will include 52 weeks. References to “fiscal 2022” refer to the Company’s fiscal year ended April 2, 2022. The three and nine months ended December 31, 2022 and January 1, 2022 included 13 and 39 weeks, respectively.

The Company’s allowance for credit losses on financial assets measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current economic conditions and forecasts that affect the collectability of the reported amount. Expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, are recognized in earnings. Accounts receivable are reflected net of reserves of $2.1 million and $1.7 million at December 31, 2022 and April 2, 2022, respectively. At both December 31, 2022 and April 2, 2022, other notes receivable are reflected net of reserves of $0.4 million.

In May 2022, the Company acquired certain operating assets from Manis Custom Builders, Inc. ("Manis"). In July 2022, the Company acquired 12 Factory Expo retail sales centers from Alta Cima Corporation. The purchase price and net assets acquired for both transactions were not material to the accompanying condensed consolidated financial statements.

There were no accounting standards recently issued that are expected to have a material impact on the Company’s financial position or results of operations.

2. Inventories, net

The components of inventory, net of reserves for obsolete inventory, were as follows:


(Dollars in thousands)	December 31, 2022		April 2, 2022
Raw materials	$	113,518	$	141,238
Work in process		26,420		26,523
Finished goods and other		81,003		73,573
Total inventories, net	$	220,941	$	241,334

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

At December 31, 2022 and April 2, 2022, reserves for obsolete inventory were $7.0 million and $4.8 million, respectively.

3. Property, Plant, and Equipment

Property, plant, and equipment are stated at cost. Depreciation is calculated primarily on a straight-line basis, generally over the following estimated useful lives: land improvements – 3 to 10 years; buildings and improvements – 8 to 25 years; and vehicles and machinery and equipment – 3 to 8 years. Depreciation expense for the three months ended December 31, 2022 and January 1, 2022 was $3.8 million and $3.3 million, respectively. Depreciation expense for the nine months ended December 31, 2022 and January 1, 2022 was $11.7 million and $9.9 million, respectively.

The components of property, plant, and equipment were as follows:


(Dollars in thousands)	December 31, 2022			April 2, 2022
Land and improvements	$	41,526		$	39,815
Buildings and improvements		115,464			104,085
Machinery and equipment		81,147			69,518
Construction in progress		28,704			10,280
Property, plant, and equipment, at cost		266,841			223,698
Less: accumulated depreciation		(100,984	)		(90,713	)
Property, plant, and equipment, net	$	165,857		$	132,985

4. Goodwill, Intangible Assets, and Cloud Computing Arrangements

Goodwill

Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. At December 31, 2022 and April 2, 2022, the Company had goodwill of $196.6 million and $192.0 million, respectively.

Intangible Assets

The components of amortizable intangible assets were as follows:


(Dollars in thousands)	December 31, 2022									April 2, 2022
	Customer Relationships & Other			Trade Names			Total			Customer Relationships & Other			Trade Names			Total
Gross carrying amount	$	66,010		$	21,495		$	87,505		$	61,986		$	21,419		$	83,405
Accumulated amortization		(29,615	)		(9,587	)		(39,202	)		(23,819	)		(8,303	)		(32,122	)
Amortizable intangibles, net	$	36,395		$	11,908		$	48,303		$	38,167		$	13,116		$	51,283

During the three months ended December 31, 2022 and January 1, 2022, amortization of intangible assets was $3.0 million and $1.9 million, respectively. During the nine months ended December 31, 2022 and January 1, 2022, amortization of intangible assets was $7.7 million and $5.7 million, respectively.

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

Cloud Computing Arrangements

The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed technology. At December 31, 2022 and April 2, 2022, the Company had capitalized cloud computing costs of $24.9 million and $20.5 million, respectively. Cloud computing costs are included in other noncurrent assets in the accompanying condensed consolidated balance sheets. Amortization of capitalized cloud computing costs for the three and nine months ended December 31, 2022 was $0.2 million and $0.6 million, respectively. There was no amortization of capitalized cloud computing costs during the three and nine months ended January 1, 2022.

5. Other Current Liabilities

The components of other current liabilities were as follows:


(Dollars in thousands)	December 31, 2022		April 2, 2022
Customer deposits	$	67,100	$	67,396
Accrued volume rebates		29,368		23,505
Accrued warranty obligations		29,112		25,806
Accrued compensation and payroll taxes		38,041		64,888
Accrued insurance		19,204		13,569
Accrued income taxes		15,134		6,959
Other		22,972		20,370
Total other current liabilities	$	220,931	$	222,493

6. Accrued Warranty Obligations

Changes in the accrued warranty obligations were as follows:


	Three months ended						Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			December 31, 2022			January 1, 2022
Balance at beginning of period	$	35,755		$	31,855		$	32,832		$	30,469
Warranty expense		12,958			9,146			40,718			30,330
Cash warranty payments		(12,575	)		(10,057	)		(37,412	)		(29,855	)
Balance at end of period		36,138			30,944			36,138			30,944
Less: noncurrent portion in other long-term liabilities		(7,026	)		(6,436	)		(7,026	)		(6,436	)
Total current portion	$	29,112		$	24,508		$	29,112		$	24,508

7. Debt and Floor Plan Payable

Long-term debt consisted of the following:


(Dollars in thousands)	December 31, 2022		April 2, 2022
Obligations under industrial revenue bonds due 2029	$	12,430	$	12,430
Revolving credit facility maturing in 2026		—		—
Total long-term debt	$	12,430	$	12,430

On July 7, 2021, the Company entered into an Amended and Restated Credit Agreement with a syndicate of banks that provides for a revolving credit facility of up to $200.0 million, including a $45.0 million letter of credit sub-facility ("Amended Credit Agreement"). The Amended Credit Agreement replaced the Company's previously existing $100.0 million revolving credit facility. Outstanding borrowings of $26.9 million on the Company's previous revolving credit facility were repaid in July 2021. The Amended Credit Agreement allows the Company to draw down, repay and re-draw loans on the available facility during the term, subject to certain terms and conditions, matures in July 2026, and has no scheduled amortization. The Company capitalized $1.1 million of deferred financing fees associated with the Amended Credit Agreement, which are included in other noncurrent assets on the accompanying consolidated balance sheets. The Company wrote off $0.3 million of deferred financing fees associated with the previously existing credit facility during the second quarter of fiscal 2022.

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

The interest rate on borrowings under the Amended Credit Agreement adjusts based on the consolidated total net leverage of the Company from a high of the London Inter-Bank Offered Rate ("LIBOR") or the Secured Overnight Financing Rate plus the benchmark replacement adjustment ("Replacement Rate") plus 1.875% and Alternative Base Rate ("ABR") plus 0.875%, at the election of the Company, when the consolidated total net leverage ratio is equal to or greater than 2.25:1.00, to a low of LIBOR or the Replacement Rate plus 1.125% and ABR plus 0.125% when the consolidated total net leverage is below 0.50:1.00. In addition, the Company is obligated to pay an unused line fee ranging between 0.15% and 0.3% (depending on the consolidated total net leverage ratio) in respect of unused commitments under the Amended Credit Agreement. There were no outstanding borrowings under the revolving credit facility at December 31, 2022 and April, 2, 2022, respectively. At December 31, 2022 the interest rate under the Amended Credit Agreement was 5.60% and letters of credit issued under the Amended Credit Agreement totaled $32.1 million. Available borrowing capacity under the Amended Credit Agreement as of December 31, 2022 was $167.9 million.

Obligations under industrial revenue bonds are supported by letters of credit and bear interest based on a municipal bond index rate. The weighted-average interest rate at December 31, 2022, including related costs and fees, was 5.25%. The industrial revenue bonds require lump-sum payments of principal upon maturity in 2029.

The Amended Credit Agreement contains covenants that restrict the amount of additional debt, liens and certain payments, including equity buybacks, investments, dispositions, mergers and consolidations, among other restrictions as defined. The Company was in compliance with all covenants of the Amended Credit Agreement as of December 31, 2022.

Floor Plan Payable

The Company’s retail operations historically utilized floor plan financing to fund the purchase of manufactured homes for display or resale. During the third quarter of fiscal 2023, the Company repaid all of its outstanding floor plan borrowings. At April 2, 2022, the Company had outstanding borrowings on floor plan financing of $35.5 million. Total credit line capacity provided under the agreements was $70.0 million as of December 31, 2022. Under floor plan financing, borrowings are secured by the financed homes and are required to be repaid when the Company sells the home to a customer.

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

8. Revenue Recognition

The following tables disaggregate the Company’s revenue by sales category:


	Three months ended December 31, 2022
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total
Manufacturing and retail	$	541,838	$	31,342	$	—	$	573,180
Commercial		—		—		—		—
Transportation		—		—		9,142		9,142
Total	$	541,838	$	31,342	$	9,142	$	582,322


	Nine months ended December 31, 2022
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total
Manufacturing and retail	$	1,956,797	$	115,602	$	—	$	2,072,399
Commercial		359		—		—		359
Transportation		—		—		42,270		42,270
Total	$	1,957,156	$	115,602	$	42,270	$	2,115,028

	Three months ended January 1, 2022
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total
Manufacturing and retail	$	478,838	$	36,910	$	—	$	515,748
Commercial		5,481		—		—		5,481
Transportation		—		—		13,461		13,461
Total	$	484,319	$	36,910	$	13,461	$	534,690


	Nine months ended January 1, 2022
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total
Manufacturing and retail	$	1,403,856	$	113,242	$	—	$	1,517,098
Commercial		9,482		—		—		9,482
Transportation		—		—		42,532		42,532
Total	$	1,413,338	$	113,242	$	42,532	$	1,569,112

9. Income Taxes

For the three months ended December 31, 2022 and January 1, 2022, the Company recorded $24.9 million and $23.3 million of income tax expense and had an effective tax rate of 23.1% and 25.6%, respectively. For the nine months ended December 31, 2022 and January 1, 2022, the Company recorded $113.4 million and $53.7 million of income tax expense and had an effective tax rate of 24.8% and 25.0%, respectively.

The Company’s effective tax rate for the three and nine months ended December 31, 2022 differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, and results in foreign jurisdictions. The Company’s effective tax rate for the three and nine months ended January 1, 2022 differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, results in foreign jurisdictions, and tax benefits from vested equity compensation.

At December 31, 2022, the Company had no unrecognized tax benefits. The Company does not anticipate any material changes to uncertain tax benefits in the next 12 months. The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

10. Earnings Per Share

Basic net income per share attributable to the Company was computed by dividing net income attributable to the Company by the average number of common shares outstanding during the period. Diluted earnings per share is calculated using our weighted-average outstanding common shares, including the dilutive effect of stock awards as determined under the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per common share:


	Three months ended				Nine months ended
(Dollars and shares in thousands, except per share data)	December 31, 2022		January 1, 2022			December 31, 2022		January 1, 2022
Numerator:
Net income attributable to the Company's common shareholders	$	82,813	$	67,622		$	344,056	$	161,246
Denominator:
Basic weighted-average shares outstanding		56,971		56,847			56,946		56,787
Dilutive securities		406		491			444		498
Diluted weighted-average shares outstanding		57,377		57,338			57,390		57,285

Basic net income per share	$	1.45	$	1.19		$	6.04	$	2.84
Diluted net income per share	$	1.44	$	1.18		$	6.00	$	2.81

11. Segment Information

Financial results for the Company's reportable segments have been prepared using a management approach, which is consistent with the basis and manner in which financial information is evaluated by the Company's chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision maker, the Chief Executive Officer, evaluates the performance of the Company’s segments primarily based on net sales, earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and operating assets.

The Company operates in two reportable segments: (i) U.S. Factory-built Housing, which includes manufacturing and retail housing operations and (ii) Canadian Factory-built Housing. Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments and intersegment eliminations. Segments are generally determined by geography. Segment data includes intersegment revenues and corporate office costs that are directly and exclusively incurred for each segment. Total assets for Corporate/Other primarily includes cash and U.S. deferred tax items not specifically allocated to another segment.

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

Selected financial information by reportable segment was as follows:


	Three months ended						Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			December 31, 2022			January 1, 2022
Net sales:
U.S. Factory-built Housing	$	541,838		$	484,319		$	1,957,156		$	1,413,338
Canadian Factory-built Housing		31,342			36,910			115,602			113,242
Corporate/Other		9,142			13,461			42,270			42,532
Consolidated net sales	$	582,322		$	534,690		$	2,115,028		$	1,569,112
Operating income:
U.S. Factory-built Housing EBITDA	$	115,483		$	98,724		$	476,332		$	239,816
Canadian Factory-built Housing EBITDA		5,893			7,571			27,361			19,627
Corporate/Other EBITDA		(12,323	)		(9,638	)		(34,205	)		(26,966	)
Other expense (income)		—			7			(634	)		(36	)
Depreciation		(3,824	)		(3,348	)		(11,660	)		(9,869	)
Amortization		(2,960	)		(1,902	)		(7,681	)		(5,664	)
Consolidated operating income	$	102,269		$	91,414		$	449,513		$	216,908
Depreciation:
U.S. Factory-built Housing	$	3,245		$	2,706		$	9,787		$	7,935
Canadian Factory-built Housing		277			279			903			837
Corporate/Other		302			363			970			1,097
Consolidated depreciation	$	3,824		$	3,348		$	11,660		$	9,869
Amortization of U.S. Factory-built Housing intangible assets:	$	2,960		$	1,902		$	7,681		$	5,664
Capital expenditures:
U.S. Factory-built Housing	$	11,181		$	6,799		$	34,892		$	19,070
Canadian Factory-built Housing		1,163			248			2,592			589
Corporate/Other		220			632			693			3,125
Consolidated capital expenditures	$	12,564		$	7,679		$	38,177		$	22,784

(Dollars in thousands)							December 31, 2022			April 2, 2022
Total Assets:
U.S. Factory-built Housing (1)							$	702,432		$	695,500
Canadian Factory-built Housing (1)								121,366			107,459
Corporate/Other (1)								687,889			431,660
Consolidated total assets							$	1,511,687		$	1,234,619

(1)

Deferred tax assets for the Canadian operations are reflected in the Canadian Factory-built Housing segment. U.S. deferred tax assets are presented in Corporate/Other because an allocation between segments is not practicable.

12. Commitments, Contingencies and Legal Proceedings

Repurchase Contingencies and Guarantees

The Company is contingently liable under terms of repurchase agreements with lending institutions that provide wholesale floor plan financing to retailers. These arrangements, which are customary in the manufactured housing industry, provide for the repurchase of products sold to retailers in the event of default by the retailer on its agreement to pay the financial institution. The risk of loss from these agreements is significantly reduced by the potential resale value of any products that are subject to repurchase and is spread over numerous retailers. The repurchase price is generally determined by the original sales price of the product less contractually defined curtailment payments. Based on these repurchase agreements and our historical loss experience, we established an associated loss reserve which was $2.6 million and $2.3 million at December 31, 2022 and April 2, 2022, respectively. Excluding the resale value of the homes, the contingent repurchase obligation as of December 31, 2022 was estimated to be $399.4 million. Losses incurred on homes repurchased were not significant during the three and nine months ended December 31, 2022 or January 1, 2022.

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

At December 31, 2022, the Company was contingently obligated for $32.1 million under letters of credit, primarily consisting of $12.6 million to support long-term debt, $19.2 million to support the casualty insurance program, and $0.3 million to support bonding agreements. The letters of credit are issued from a sub-facility of the Amended Credit Agreement. The Company was also contingently obligated for $30.8 million under surety bonds, generally to support performance on long-term construction contracts and license and service bonding requirements.

The Company has received claims for damage related to water intrusion in homes built in one of its manufacturing facilities. The Company is investigating the cause of the damage and assessing its responsibility to remediate. While it is reasonably possible that the Company will receive future claims that could result in additional costs to repair that could be significant in the aggregate, the Company is unable to estimate the number of such claims or the amount or range of any potential losses associated with such claims at this time.

In the normal course of business, the Company’s former subsidiaries that operated in the United Kingdom historically provided certain guarantees to two customers. Those guarantees provide contractual liability for proven construction defects up to 12 years from the date of delivery of certain products. The guarantees remain a contingent liability of the Company which declines over time through October 2027. As of the date of this report, the Company expects few, if any, claims to be reported under the terms of the guarantees.

Legal Proceedings

The Company has agreed to indemnify counterparties in the ordinary course of its business in agreements to acquire and sell business assets and in financing arrangements. The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. As of the date of this filing, the Company believes the ultimate liability with respect to these contingent obligations will not have, either individually or in the aggregate, a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

Item 2. MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following should be read in conjunction with Skyline Champion Corporation’s condensed consolidated financial statements and the related notes that appear in Item 1 of this Report.

Overview

Skyline Champion Corporation (the “Company”) is a leading producer of factory-built housing in the U.S. and Canada. The Company serves as a complete solutions provider across complementary and vertically integrated businesses including company-owned retail locations, transportation logistics services, and construction services to install and set-up factory-built homes. The Company markets its homes under several nationally recognized brand names including Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S., and Moduline and SRI Homes in western Canada. The Company operates 37 manufacturing facilities throughout the U.S. and five manufacturing facilities in western Canada that primarily construct factory-built, timber-framed, manufactured and modular houses that are sold primarily to independent retailers, builders/developers, and manufactured home community operators. The Company’s retail operations consist of 31 sales centers that sell manufactured homes to consumers across the U.S. The Company’s transportation business engages independent owners/drivers to transport manufactured homes, recreational vehicles, and other products throughout the U.S. and Canada.

Acquisitions and Expansions

Over the last several years, demand for the Company’s products, primarily affordable housing in the U.S., has continued to improve. As a result, the Company has focused on operational improvements to increase capacity utilization and profitability at its existing manufacturing facilities as well as executing measured expansion of its manufacturing and retail footprint through facility and equipment investments and acquisitions. The Company continues to focus on growing in strong housing markets across the U.S. and Canada, as well as expanding products and services to provide more holistic solutions to homebuyers.

In July 2022, the Company acquired 12 Factory Expo retail sales centers from Alta Cima Corporation, which expanded the internal retail network across a broader portion of the U.S. In May 2022, the Company acquired Manis Custom Builders, Inc. ("Manis") in order to expand its manufacturing footprint and further streamline its product offering in the Southeast U.S. On February 28, 2021, the Company acquired ScotBilt Homes, LLC and related companies (collectively, "Scotbilt"), which operated two manufacturing facilities in Georgia providing affordable housing throughout Alabama, Florida, Georgia and the Carolinas. The ScotBilt acquisition complemented the Company’s prior manufacturing footprint in the attractive mid-south region.

The Company is also focused on streamlining its U.S. manufacturing production capacity through various plant start-ups. In June 2021, the Company acquired two idle facilities in Navasota, Texas in order to increase its production capabilities in the Texas market. The Company began production at one of those facilities during the fourth quarter of fiscal 2022. In January 2021, the Company acquired two idle facilities in Pembroke, North Carolina, and is currently certifying one of those facilities for production in the fourth quarter of fiscal 2023. The Company is also in the process of opening previously idled facilities in Bartow, Florida and Decatur, Indiana, both of which are expecting to begin production in fiscal 2024.

The Company's acquisitions and investments are part of a strategy to grow and diversify revenue with a focus on increasing the Company’s homebuilding presence in the U.S. as well as improving the results of operations through streamlining production of similar product categories. These acquisitions and investments are included in the Company's consolidated results for periods subsequent to their respective acquisition dates.

Industry and Company Outlook

Since July 2020, the U.S. and Canadian housing industry demand has generally been robust. The limited availability of existing homes for sale and the broader need for newly built affordable, single-family housing has driven demand for new homes in those markets. In recent years, manufactured home construction experienced revenue growth due to a number of favorable demographic trends and demand drivers in the U.S., including underlying growth trends in key homebuyer groups, such as the population over 55 years of age, the population of first-time homebuyers, and the population of households earning less than $60,000 per year. More recently, we have seen a number of market trends pointing to increased sales of accessory dwelling units ("ADUs") and urban-to-rural migration as customers accommodate working-from-home patterns, as well as people seeking rent-to-own single-family options.

Recent increases in interest rates in response to inflation have impacted the demand for the Company's products in both the U.S. and Canada. Incoming orders from our manufacturing customers decreased compared to the same quarter last year. In addition, our independent retail customers have cancelled stock-model orders in response to the increase in floor plan carrying costs and the desire to optimize their model home inventory based on rising interest rates. The Company's backlog was $532.0 million as of December 31, 2022 compared to $1.5 billion as of January 1, 2022. The decrease in backlog is due to the year-over-year decrease in net orders and higher production volumes during fiscal 2023 compared to last year. Cancellation of end-consumer orders, at the retail level, have been minimal.

The robust demand for housing in 2021 and the first half of 2022 resulted in significant increases in certain raw material and labor costs. Although we have seen recent improvements in raw material costs and availability, we continue to experience intermittent disruption and higher freight costs. Finding and retaining qualified labor continues to be a challenge for our plants which requires us to monitor our compensation programs and adjust accordingly. We manage our business to anticipate or quickly react to these supply challenges and cost increases and generally are able to pass along increased costs to our customers.

For the nine months ended December 31, 2022, approximately 88% of the Company’s U.S. manufacturing sales were generated from the manufacture of homes that comply with the U.S. Department of Housing and Urban Development ("HUD") code construction standard in the U.S. Industry shipments of HUD-code homes are reported on a one-month lag. According to data reported by the Manufactured Housing Institute, HUD-code industry home shipments were 76,802 and 71,281 units during the eight months ended November 30, 2022 and 2021, respectively. Based on industry data, the Company’s U.S. wholesale market share of HUD code homes sold was 20.9% and 19.4%, for the eight months ended November 30, 2022 and 2021, respectively. Annual HUD-code industry shipments have generally increased each year since calendar year 2009 when only 50,000 HUD-coded manufactured homes were shipped, the lowest level since the industry began recording statistics in 1959. While shipments of HUD-coded manufactured homes have improved modestly in recent years, manufactured housing’s most recent annual shipment levels still operate at lower levels than the long-term historical average of over 200,000 units annually.

UNAUDITED INCOME STATEMENTS FOR THE THIRD QUARTER OF FISCAL 2023 VS. 2022


	Three months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022
Results of Operations Data:
Net sales	$	582,322		$	534,690
Cost of sales		408,233			377,451
Gross profit		174,089			157,239
Selling, general, and administrative expenses		71,820			65,825
Operating income		102,269			91,414
Interest (income) expense, net		(5,409	)		508
Other expense		—			7
Income before income taxes		107,678			90,899
Income tax expense		24,865			23,277
Net income	$	82,813		$	67,622

Reconciliation of Adjusted EBITDA:
Net income	$	82,813		$	67,622
Income tax expense		24,865			23,277
Interest (income) expense, net		(5,409	)		508
Depreciation and amortization		6,784			5,250
Adjusted EBITDA	$	109,053		$	96,657
As a percent of net sales:
Gross profit		29.9	%		29.4	%
Selling, general, and administrative expenses		12.3	%		12.3	%
Operating income		17.6	%		17.1	%
Net income		14.2	%		12.6	%
Adjusted EBITDA		18.7	%		18.1	%

NET SALES

The following table summarizes net sales for the three months ended December 31, 2022 and January 1, 2022:


	Three months ended
(Dollars in thousands)	December 31, 2022		January 1, 2022		$ Change			% Change
Net sales	$	582,322	$	534,690	$	47,632			8.9	%
U.S. manufacturing and retail net sales	$	541,838	$	484,319	$	57,519			11.9	%
U.S. homes sold		5,749		5,832		(83	)		(1.4	%)
U.S. manufacturing and retail average home selling price	$	94.2	$	83.0	$	11.2			13.5	%
Canadian manufacturing net sales	$	31,342	$	36,910	$	(5,568	)		(15.1	%)
Canadian homes sold		273		336		(63	)		(18.8	%)
Canadian manufacturing average home selling price	$	114.8	$	109.9	$	4.9			4.5	%
Corporate/Other net sales	$	9,142	$	13,461	$	(4,319	)		(32.1	%)
U.S. manufacturing facilities in operation at end of period		37		35
U.S. retail sales centers in operation at end of period		31		18
Canadian manufacturing facilities in operation at end of period		5		5

Net sales for the three months ended December 31, 2022 were $582.3 million, an increase of $47.6 million, or 8.9%, compared to the three months ended January 1, 2022. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Net sales for the Company’s U.S. manufacturing and retail operations increased by $57.5 million, or 11.9%, for the three months ended December 31, 2022 compared to the three months ended January 1, 2022. The increase was primarily due to an increase in average home selling price of 13.5%, partially offset by a decrease in homes sold of 1.4%. The decrease in the number of homes sold was a result of lower customer orders and production volume, partially offset by additional capacity from recent acquisitions and expansions. The average selling price increase was due to pricing actions previously enacted on our products in response to rising material, freight, and labor costs. Generally, we have been able to pass the increase in input costs to our customers.

Canadian Factory-built Housing:

The Canadian Factory-built Housing segment net sales decreased by $5.6 million, or 15.1% for the three months ended December 31, 2022 compared to the same period in the prior fiscal year, primarily due to a 18.8% decrease in homes sold, partially offset by a 4.5% increase in average home selling price. The increase in average selling price was due to pricing actions previously enacted in response to rising material and labor costs. The decrease in homes sold is due to slowing housing demand in certain regions of Canada and a shift in mix. On a constant currency basis, net sales for the Canadian segment were unfavorably impacted by approximately $2.3 million due to fluctuations in the translation of the Canadian dollar to the U.S. dollar during the three months ended December 31, 2022, as compared to the same period of the prior fiscal year.

Corporate/Other:

Net sales for Corporate/Other includes the Company’s transportation business and the elimination of intersegment sales. For the three months ended December 31, 2022, net sales decreased $4.3 million, or 32.1%, primarily attributable to the decrease in home and recreational vehicle shipments.

GROSS PROFIT

The following table summarizes gross profit for the three months ended December 31, 2022 and January 1, 2022:


	Three months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change			% Change
Gross profit:
U.S. Factory-built Housing	$	162,092		$	143,333		$	18,759			13.1	%
Canadian Factory-built Housing		8,471			10,251			(1,780	)		(17.4	%)
Corporate/Other		3,526			3,655			(129	)		(3.5	%)
Total gross profit	$	174,089		$	157,239		$	16,850			10.7	%
Gross profit as a percent of net sales		29.9	%		29.4	%

Gross profit as a percent of sales during the three months ended December 31, 2022 was 29.9% compared to 29.4% during the three months ended January 1, 2022. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Gross profit for the U.S. Factory-built Housing segment increased by $18.8 million, or 13.1%, during the three months ended December 31, 2022 compared to the same period in the prior fiscal year. The increase in gross profit was due to higher average selling prices for our products, partially offset by higher material costs. Gross profit was 29.9% as a percent of segment net sales for the three months ended December 31, 2022 compared to 29.6% in the same period of the prior fiscal year. The increase in gross profit as a percent of segment sales was due to higher profitability on retail sales aided by our acquisition of Factory Expo home centers in the second quarter of fiscal 2023.

Canadian Factory-built Housing:

Gross profit for the Canadian Factory-built Housing segment decreased by $1.8 million, or 17.4% during the three months ended December 31, 2022 compared to the same period in the prior fiscal year. The decrease in gross profit is primarily due to lower sales volumes and increasing material costs. Gross profit as a percent of net sales was 27.0% for the three months ended December 31, 2022, compared to 27.8% in the same period of the prior year, primarily the result of decreased leverage of fixed manufacturing costs.

Corporate/Other:

Gross profit for the Corporate/Other segment decreased $0.1 million, or 3.5%, during the three months ended December 31, 2022 compared to the same period of the prior fiscal year. Gross profit increased as a percent of segment net sales to 38.6% from 27.2% as a result of changes in revenue mix.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative expenses include foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes selling, general, and administrative expenses for the three months ended December 31, 2022 and January 1, 2022:


	Three months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change			% Change
Selling, general, and administrative expenses:
U.S. Factory-built Housing	$	52,813		$	49,208		$	3,605			7.3	%
Canadian Factory-built Housing		2,857			2,958			(101	)		(3.4	%)
Corporate/Other		16,150			13,659			2,491			18.2	%
Total selling, general, and administrative expenses	$	71,820		$	65,825		$	5,995			9.1	%
Selling, general, and administrative expense as a percent of net sales		12.3	%		12.3	%

Selling, general, and administrative expenses were $71.8 million for the three months ended December 31, 2022, an increase of $6.0 million, or 9.1%, compared to the same period in the prior fiscal year. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Selling, general, and administrative expenses for the U.S. Factory-built Housing segment increased $3.6 million, or 7.3%, during the three months ended December 31, 2022 as compared to the same period in the prior fiscal year. Selling, general, and administrative expenses, as a percent of segment net sales decreased to 9.7% for the three months ended December 31, 2022 compared to 10.2% during the comparable period of the prior fiscal year primarily due to higher revenue and increased leverage of fixed costs. The increase in selling, general, and administrative expenses resulted from higher costs for our business expansions, partially offset by lower incentive compensation.

Canadian Factory-built Housing:

Selling, general, and administrative expenses for the Canadian Factory-built Housing segment decreased $0.1 million, or 3.4%, for the three months ended December 31, 2022 when compared to the same period of the prior fiscal year. Selling, general, and administrative expenses as a percent of segment net sales increased to 9.1% for the three months ended December 31, 2022 compared to 8.0% during the comparable period of the prior fiscal year. The increase in selling, general, and administrative expenses as a percentage of segment net sales is due to lower sales volumes.

Corporate/Other:

Selling, general, and administrative expenses for Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments, and intersegment eliminations. Selling, general, and administrative expenses for Corporate/Other increased $2.5 million, or 18.2%, during the three months ended December 31, 2022 as compared to the same period of the prior fiscal year due to increases in equity compensation and investments made to enhance our online customer experience and supporting systems.

INTEREST (INCOME) EXPENSE, NET

The following table summarizes the components of interest (income) expense, net for the three months ended December 31, 2022 and January 1, 2022:


	Three months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change			% Change
Interest expense	$	998		$	701		$	297			42.4	%
Less: interest income		(6,407	)		(193	)		(6,214	)		3,219.7	%
Interest (income) expense, net	$	(5,409	)	$	508		$	(5,917	)		(1,164.8	%)
Average outstanding floor plan payable	$	27,244		$	32,942
Average outstanding long-term debt	$	12,430		$	12,430

Interest, net was $5.4 million of income for the three months ended December 31, 2022, compared to $0.5 million of expense in the same period of the prior fiscal year. The change was primarily due to higher interest income during the third quarter of fiscal 2023 compared to the prior year. Higher interest rates and higher invested cash balances versus the comparable period were the primary drivers of the increase in interest income.

INCOME TAX EXPENSE

The following table summarizes income tax expense for the three months ended December 31, 2022 and January 1, 2022:


	Three months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change		% Change
Income tax expense	$	24,865		$	23,277		$	1,588		6.8	%
Effective tax rate		23.1	%		25.6	%

Income tax expense for the three months ended December 31, 2022 was $24.9 million, representing an effective tax rate of 23.1%, compared to income tax expense of $23.3 million, representing an effective tax rate of 25.6%, for the three months ended January 1, 2022.

The Company’s effective tax rate for the three months ended December 31, 2022 differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, and results in foreign jurisdictions. The Company’s effective tax rate for the three months ended January 1, 2022 differed from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, results in foreign jurisdictions, and tax benefits from vested equity compensation.

ADJUSTED EBITDA

The following table reconciles net income, the most directly comparable U.S. GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the three months ended December 31, 2022 and January 1, 2022:


	Three months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022		$ Change			% Change
Net income	$	82,813		$	67,622	$	15,191			22.5	%
Income tax expense		24,865			23,277		1,588			6.8	%
Interest (income) expense, net		(5,409	)		508		(5,917	)	*
Depreciation and amortization		6,784			5,250		1,534			29.2	%
Adjusted EBITDA	$	109,053		$	96,657	$	12,396			12.8	%

* indicates that the calculated percentage is not meaningful

Adjusted EBITDA for the three months ended December 31, 2022 was $109.1 million, an increase of $12.4 million from the same period of the prior fiscal year. The increase is primarily a result of higher operating income due to increases in sales volume, average selling prices and gross margins, partially offset by higher SG&A expenses.

UNAUDITED INCOME STATEMENTS FOR THE FIRST THREE QUARTERS OF FISCAL 2023 VS. 2022


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022
Results of Operations Data:
Net sales	$	2,115,028		$	1,569,112
Cost of sales		1,437,498			1,171,016
Gross profit		677,530			398,096
Selling, general, and administrative expenses		228,017			181,188
Operating income		449,513			216,908
Interest (income) expense, net		(7,293	)		2,002
Other income		(634	)		(36	)
Income before income taxes		457,440			214,942
Income tax expense		113,384			53,696
Net income	$	344,056		$	161,246

Reconciliation of Adjusted EBITDA:
Net income	$	344,056		$	161,246
Income tax expense		113,384			53,696
Interest (income) expense, net		(7,293	)		2,002
Depreciation and amortization		19,341			15,533
Transaction costs		338			-
Other		(973	)		-
Adjusted EBITDA	$	468,853		$	232,477
As a percent of net sales:
Gross profit		32.0	%		25.4	%
Selling, general, and administrative expenses		10.8	%		11.5	%
Operating income		21.3	%		13.8	%
Net income		16.3	%		10.3	%
Adjusted EBITDA		22.2	%		14.8	%

NET SALES

The following table summarizes net sales for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022		January 1, 2022		$ Change			% Change
Net sales	$	2,115,028	$	1,569,112	$	545,916			34.8	%
U.S. manufacturing and retail net sales	$	1,957,156	$	1,413,338	$	543,818			38.5	%
U.S. homes sold		19,836		18,106		1,730			9.6	%
U.S. manufacturing and retail average home selling price	$	98.7	$	78.1	$	20.6			26.4	%
Canadian manufacturing net sales	$	115,602	$	113,242	$	2,360			2.1	%
Canadian homes sold		928		1,079		(151	)		(14.0	%)
Canadian manufacturing average home selling price	$	124.6	$	105.0	$	19.6			18.7	%
Corporate/Other net sales	$	42,270	$	42,532	$	(262	)		(0.6	%)
U.S. manufacturing facilities in operation at end of period		37		35
U.S. retail sales centers in operation at end of period		31		18
Canadian manufacturing facilities in operation at end of period		5		5

Net sales for the nine months ended December 31, 2022 were $2,115.0 million, an increase of $545.9 million, or 34.8%, compared to the nine months ended January 1, 2022. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Net sales for the Company’s U.S. manufacturing and retail operations increased by $543.8 million, or 38.5%, for the nine months ended December 31, 2022 compared to the nine months ended January 1, 2022. The increase was primarily due to a 9.6% increase in the number of homes sold during the period, as well as a 26.4% increase in the average home selling price. The increase in the number of homes sold was a result of utilizing additional capacity from recent acquisitions and expansions, FEMA Disaster Relief housing sales and increased production output from our existing facilities. The average selling price increase was due, in part, to the impact of sales to FEMA of $200.3 million as well as to pricing actions on our core products taken in response to rising material, freight, and labor costs. FEMA units generally have more specifications than our typical products and therefore drive a higher average selling price per home.

Canadian Factory-built Housing:

The Canadian Factory-built Housing segment net sales increased by $2.4 million, or 2.1% for the nine months ended December 31, 2022 compared to the same period in the prior fiscal year, primarily due to a 18.7% increase in average home selling price, partially offset by a 14.0% decrease in homes sold. The increase in average selling price was due to pricing actions previously taken in response to rising material and labor costs and a change in product mix. The decrease in homes sold is due to slowing demand in certain regions of Canada and a shift in mix. On a constant currency basis, net sales for the Canadian segment were unfavorably impacted by approximately $5.1 million due to fluctuations in the translation of the Canadian dollar to the U.S. dollar during the nine months ended December 31, 2022 as compared to the same period of the prior fiscal year.

Corporate/Other:

Net sales for Corporate/Other includes the Company’s transportation business and the elimination of intersegment sales. For the nine months ended December 31, 2022, net sales decreased $0.3 million, or 0.6%.

GROSS PROFIT

The following table summarizes gross profit for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change		% Change
Gross profit:
U.S. Factory-built Housing	$	628,473		$	359,148		$	269,325		75.0	%
Canadian Factory-built Housing		36,436			27,444			8,992		32.8	%
Corporate/Other		12,621			11,504			1,117		9.7	%
Total gross profit	$	677,530		$	398,096		$	279,434		70.2	%
Gross profit as a percent of net sales		32.0	%		25.4	%

Gross profit as a percent of sales during the nine months ended December 31, 2022 was 32.0% compared to 25.4% during the nine months ended January 1, 2022. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Gross profit for the U.S. Factory-built Housing segment increased by $269.3 million, or 75.0%, during the nine months ended December 31, 2022 compared to the same period in the prior fiscal year. Gross profit was 32.1% as a percent of segment net sales for the nine months ended December 31, 2022 compared to 25.4% in the same period of the prior fiscal year. The increase in gross profit was due to a combination of higher volumes and sales prices for our products. In addition, sales to FEMA during the first half of fiscal 2023 increased margins since these sales are generally at higher prices than our core products, which helps offset the disruption to our operations and our customers.

Canadian Factory-built Housing:

Gross profit for the Canadian Factory-built Housing segment increased by $9.0 million, or 32.8% during the nine months ended December 31, 2022 compared to the same period in the prior fiscal year. Gross profit as a percent of net sales was 31.5% for the nine months ended December 31, 2022, compared to 24.2% in the same period of the prior year. The increase in gross profit was due to higher average selling prices of our homes and lower material input costs.

Corporate/Other:

Gross profit for the Corporate/Other segment increased $1.1 million, or 9.7%, during the nine months ended December 31, 2022 compared to the same period of the prior fiscal year. Gross profit increased as a percent of segment net sales to 29.9% from 27.0% due to revenue mix in the Company's transportation business.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative expenses include foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes selling, general, and administrative expenses for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change		% Change
Selling, general, and administrative expenses:
U.S. Factory-built Housing	$	169,608		$	132,977		$	36,631		27.5	%
Canadian Factory-built Housing		9,979			8,654			1,325		15.3	%
Corporate/Other		48,430			39,557			8,873		22.4	%
Total selling, general, and administrative expenses	$	228,017		$	181,188		$	46,829		25.8	%
Selling, general, and administrative expense as a percent of net sales		10.8	%		11.5	%

Selling, general, and administrative expenses were $228.0 million for the nine months ended December 31, 2022, an increase of $46.8 million, or 25.8%, compared to the same period in the prior fiscal year. The following is a summary of the change by operating segment.

U.S. Factory-built Housing:

Selling, general, and administrative expenses for the U.S. Factory-built Housing segment increased $36.6 million, or 27.5%, during the nine months ended December 31, 2022 as compared to the same period in the prior fiscal year. Selling, general, and administrative expenses, as a percent of segment net sales decreased to 8.7% for the nine months ended December 31, 2022 compared to 9.4% during the comparable period of the prior fiscal year primarily due to higher revenue and increased leverage of fixed costs. The increase in selling, general, and administrative expenses resulted from higher sales commissions and incentive compensation which is generally based on sales volume or a measure of profitability, and higher wage and related expenses from headcount increases in response to increased production levels, and from added selling and administrative costs for our business expansions.

Canadian Factory-built Housing:

Selling, general, and administrative expenses for the Canadian Factory-built Housing segment increased $1.3 million, or 15.3%, for the nine months ended December 31, 2022 when compared to the same period of the prior fiscal year. Selling, general, and administrative expenses as a percent of segment net sales increased to 8.6% for the nine months ended December 31, 2022 compared to 7.6% during the comparable period of the prior fiscal year. The increase in selling, general, and administrative expenses is due to higher incentive compensation related to the increase in segment profitability.

Corporate/Other:

Selling, general, and administrative expenses for Corporate/Other includes the Company’s transportation operations, corporate costs incurred for all segments, and intersegment eliminations. Selling, general, and administrative expenses for Corporate/Other increased $8.9 million, or 22.4%, during the nine months ended December 31, 2022 as compared to the same period of the prior fiscal year due to increases in equity compensation and investments made to enhance our online customer experience and supporting systems.

INTEREST (INCOME) EXPENSE, NET

The following table summarizes the components of interest (income) expense, net for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change			% Change
Interest expense	$	2,893		$	2,502		$	391			15.6	%
Less: interest income		(10,186	)		(500	)		(9,686	)		1,937.2	%
Interest (income) expense, net	$	(7,293	)	$	2,002		$	(9,295	)		(464.3	%)
Average outstanding floor plan payable	$	34,342		$	30,278
Average outstanding long-term debt	$	12,430		$	12,430

Interest, net was $7.3 million of income for the nine months ended December 31, 2022, compared to $2.0 million of expense in the same period of the prior fiscal year. The change was primarily due to higher interest income from higher average invested cash balances and higher interest rates during the nine months ended December 31, 2022 compared to the same period of the prior fiscal year.

OTHER INCOME

The following table summarizes other income for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change			% Change
Other income	$	(634	)	$	(36	)	$	(598	)		1,661.1	%

Other income increased $0.6 million during the nine months ended December 31, 2022 as compared to the same period of the prior fiscal year. During the first quarter of fiscal 2023, the Company received insurance proceeds for partial settlement of certain Champion Home Builders’ pre-bankruptcy workers compensation claims, which was partially offset by transaction costs incurred for the acquisition of Manis.

INCOME TAX EXPENSE

The following table summarizes income tax expense for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022			$ Change		% Change
Income tax expense	$	113,384		$	53,696		$	59,688		111.2	%
Effective tax rate		24.8	%		25.0	%

Income tax expense for the nine months ended December 31, 2022 was $113.4 million, representing an effective tax rate of 24.8%, compared to income tax expense of $53.7 million, representing an effective tax rate of 25.0% for the nine months ended January 1, 2022.

The Company’s effective tax rate for the nine months ended December 31, 2022 differs from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, and results in foreign jurisdictions. The Company’s effective tax rate for the nine months ended January 1, 2022 differed from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, results in foreign jurisdictions, and tax benefits from vested equity compensation.

ADJUSTED EBITDA

The following table reconciles net income, the most directly comparable U.S. GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022		$ Change			% Change
Net income	$	344,056		$	161,246	$	182,810			113.4	%
Income tax expense		113,384			53,696		59,688			111.2	%
Interest (income) expense, net		(7,293	)		2,002		(9,295	)	*
Depreciation and amortization		19,341			15,533		3,808			24.5	%
Transaction costs		338			—		338		*
Other		(973	)		—		(973	)	*
Adjusted EBITDA	$	468,853		$	232,477	$	236,376			101.7	%

* indicates that the calculated percentage is not meaningful

Adjusted EBITDA for the nine months ended December 31, 2022 was $468.9 million, an increase of $236.4 million from the same period of the prior fiscal year. The increase is primarily a result of higher operating income due to increases in sales volume, average selling prices and gross margins, partially offset by higher SG&A expenses.

The Company defines Adjusted EBITDA as net income or loss plus, (a) the provision for income taxes, (b) interest income or expense, net, (c) depreciation and amortization, (d) gain or loss from discontinued operations, (e) restructuring charges and impairment of assets, and (f) other non-operating income and costs, including those for the acquisition and integration or disposition of businesses. Adjusted EBITDA is not a measure of earnings calculated in accordance with U.S. GAAP, and should not be considered an alternative to, or more meaningful than, net income or loss, net sales, operating income or earnings per share prepared on a U.S. GAAP basis. Adjusted EBITDA does not purport to represent cash flow provided by, or used in, operating activities as defined by U.S. GAAP, which is presented in the Statement of Cash Flows. In addition, Adjusted EBITDA is not necessarily comparable to similarly titled measures reported by other companies.

In evaluating Adjusted EBITDA, investors should be aware that, in the future, the Company may incur expenses similar to those adjusted for in this presentation. This presentation of Adjusted EBITDA should not be construed as an implication that the Company’s future results will be unaffected by unusual or nonrecurring items.

Adjusted EBITDA has important limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

Adjusted EBITDA:

•

does not reflect the interest expense on our debt;

•

excludes impairments; and

•

does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

•

other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Given these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using non-GAAP financial measures only on a supplemental basis.

BACKLOG

Although orders from customers can be cancelled at any time without penalty, and unfilled orders are not necessarily an indication of future business, the Company’s unfilled U.S. and Canadian manufacturing orders at December 31, 2022 totaled $532.0 million compared to $1.5 billion at January 1, 2022. The decrease in backlog was primarily driven by higher production rates and lower net orders. Recent increases in interest rates in response to inflation has impacted the demand for the Company's products in both the U.S. and Canada. Incoming gross orders from our customers decreased compared to the same quarter last year. In addition, our independent retail customers have cancelled stock-model orders in response to the increase in floor plan carrying costs and the desire to optimize their model home inventory. Cancellation of end-consumer orders, at the retail level, has been minimal.

Liquidity and Capital Resources

Sources and Uses of Cash

The following table presents summary cash flow information for the nine months ended December 31, 2022 and January 1, 2022:


	Nine months ended
(Dollars in thousands)	December 31, 2022			January 1, 2022
Net cash provided by (used in):
Operating activities	$	364,044		$	164,406
Investing activities		(44,763	)		(22,921	)
Financing activities		(36,227	)		(21,355	)
Effect of exchange rate changes on cash, cash equivalents		(6,019	)		(578	)
Net increase in cash and cash equivalents		277,035			119,552
Cash and cash equivalents at beginning of period		435,413			262,581
Cash and cash equivalents at end of period	$	712,448		$	382,133

The Company’s primary sources of liquidity are cash flows from operations and existing cash balances. Cash balances and cash flows from operations for the next year are expected to be adequate to cover working capital requirements, capital expenditures, and strategic initiatives and investments. The Company has an Amended and Restated Credit Agreement which provides for a $200.0 million revolving credit facility, including a $45.0 million letter of credit sub-facility ("Amended Credit Agreement"). At December 31, 2022, $167.9 million was available for borrowing under the Amended Credit Agreement. The Company’s revolving credit facility includes (i) a maximum consolidated total net leverage ratio of 3.25 to 1.00, subject to an upward adjustment upon the consummation of a material acquisition, and (ii) a minimum interest coverage ratio of 3.00 to 1.00. The Company anticipates compliance with its debt covenants and projects its level of cash availability to be in excess of cash needed to operate the business for the next year and beyond. In the event operating cash flow and existing cash balances were deemed inadequate to support the Company’s liquidity needs, and one or more capital resources were to become unavailable, the Company would revise its operating strategies.

Cash provided by operating activities was $364.0 million for the nine months ended December 31, 2022 compared to $164.4 million for the nine months ended January 1, 2022. Cash provided by operating activities increased due to higher net income and higher cash generated from working capital items.

Cash used in investing activities was $44.8 million for the nine months ended December 31, 2022 compared to $22.9 million for the nine months ended January 1, 2022. The increase in cash used for investing activities was related to net cash paid for acquisitions and higher capital expenditures to support plant expansion and ongoing maintenance.

Cash used in financing activities was $36.2 million for the nine months ended December 31, 2022 compared to cash used in financing activities of $21.4 million for the nine months ended January 1, 2022. The increase in cash used in financing activities was primarily due to the Company's repayment of all oustanding floor plan borrowings in the third quarter of fiscal 2023.

Critical Accounting Policies

For a discussion of our critical accounting policies that management believes affect its more significant judgments and estimates used in the preparation of our Consolidated Financial Statements, see Part II, Item 7 of the Fiscal 2022 Annual Report, under the heading “Critical Accounting Policies.” There have been no significant changes in our significant accounting policies or critical accounting estimates discussed in the Fiscal 2022 Annual Report.

Recently Issued Accounting Pronouncements

For information on the impact of recently issued accounting pronouncements, see Note 1, “Basis of Presentation – Recently Issued Accounting Pronouncements,” to the condensed consolidated financial statements included in this Report.

Forward-Looking Statements

Some of the statements in this Report are not historical in nature and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our expectations regarding our future liquidity, earnings, expenditures, and financial condition. These statements are often identified by the words “will,” “could”, “should,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “hope,” or similar expressions. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties. There are risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in our forward-looking statements, including regional, national and international economic, financial, public health and labor conditions, and the following:

•

Supply-related issues, including prices and availability of materials;

•

labor-related issues;

•

inflationary pressures in the North American economy;

•

the cyclicality and seasonality of the housing industry and its sensitivity to changes in general economic or other business conditions;

•

demand fluctuations in the housing industry, including as a result of actual or anticipated increases in homeowner borrowing rates;

•

the possible unavailability of additional capital when needed;

•

competition and competitive pressures;

•

changes in consumer preferences for our products or our failure to gauge those preferences;

•

quality problems, including the quality of parts sourced from suppliers and related liability and reputational issues;

•

data security breaches, cybersecurity attacks, and other information technology disruptions;

•

the potential disruption of operations caused by the conversion to new information systems;

•

the extensive regulation affecting the production and sale of factory-built housing and the effects of possible changes in laws with which we must comply;

•

the potential impact of natural disasters on sales and raw material costs;

•

the risks associated with mergers and acquisitions, including integration of operations and information systems;

•

periodic inventory adjustments by, and changes to relationships with, independent retailers;

•

changes in interest and foreign exchange rates;

•

insurance coverage and cost issues;

•

the possibility that all or part of our intangible assets, including goodwill, might become impaired;

•

the possibility that our risk management practices may leave us exposed to unidentified or unanticipated risks;

•

the COVID-19 pandemic, which has had, and could continue to have, significant adverse effects on us; and

•

other risks described in Part I — Item 1A, "Risk Factors," included in the Fiscal 2022 Annual Report, as well as the risks and information provided from time to time in our other periodic reports filed with the Securities and Exchange Commission (the “SEC”).

If any of the risks or uncertainties referred to above materializes or if any of the assumptions underlying our forward-looking statements proves to be incorrect, then differences may arise between our forward-looking statements and our actual results, and such differences may be material. Investors should not place undue reliance on our forward-looking statements, which speak only as of the date of this report. We assume no obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof, except as required by law.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the Company’s interest rate and foreign exchange risks, see Part II, Item 7A of the Fiscal 2022 Annual Report, under the heading "Quantitative and Qualitative Disclosures about Market Risk." There have been no significant changes in such risks since April 2, 2022.

Item 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the specified time periods and accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) of the Exchange Act at December 31, 2022. Based upon this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2022.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial or contractual disputes, product liability claims and other matters. For additional information on legal proceedings, see Note 12 “Commitments, Contingencies and Legal Proceedings – Legal Proceedings,” to the condensed consolidated financial statements included in this Report.

Item 6. EXHIBITS


Exhibit Number		Description

31.1		Certification of Chief Executive Officer pursuant to Exchange Act rules 13a-4 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †

31.2		Certification of Chief Financial Officer pursuant to Exchange Act rules 13a-4 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

101 (INS)		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101(SCH)		Inline XBRL Taxonomy Extension Schema Document.
101(CAL)		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101(DEF)		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101(LAB)		Inline XBRL Taxonomy Extension Label Linkbase Document.
101(PRE)		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

† Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Skyline Champion Corporation

Registrant


Signature	Title	Date

/s/ Mark Yost	President and Chief Executive Officer	February 7, 2023
Mark Yost	(Principal Executive Officer)

/s/ Laurie Hough	Executive Vice President, Chief Financial Officer and Treasurer	February 7, 2023
Laurie Hough	(Principal Financial Officer)