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:):

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 ~~October 25, 2019: 56,665,408~~July 20, 2020: 56,666,202

	September 28, 2019			March 30, 2019			June 27, 2020			March 28, 2020
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	154,739		$	126,634		$	236,507		$	209,455
Trade accounts receivable, net		56,194			57,649			43,412			45,733
Inventories		113,063			122,638
Inventories, net								115,815			126,386
Other current assets		16,071			11,369			16,101			17,239
Total current assets		340,067			318,290			411,835			398,813
Long-term assets:
Property, plant and equipment, net		111,428			108,587
Property, plant, and equipment, net								107,975			109,291
Goodwill		173,521			173,406			173,521			173,521
Amortizable intangible assets, net		46,059			48,936			41,993			43,357
Deferred tax assets		31,218			34,058			20,592			21,812
Other noncurrent assets		29,257			16,677			34,406			34,906
Total assets	$	731,550		$	699,954		$	790,322		$	781,700
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Floor plan payable	$	30,511		$	33,321		$	29,386		$	33,914
Accounts payable		43,343			43,421			32,340			38,703
Other current liabilities		126,746			129,561			115,885			114,030
Total current liabilities		200,600			206,303			177,611			186,647
Long-term liabilities:
Long-term debt		44,330			54,330			77,330			77,330
Deferred tax liabilities		3,660			3,422			3,498			3,264
Other		32,810			23,927			42,586			40,144
Total long-term liabilities		80,800			81,679			123,414			120,738

Stockholders' Equity:
Common stock, $0.0277 par value, 115,000 shares authorized, 56,665 and 56,657 shares issued (including 145 and 290 shares subject to restriction) as of September 28, 2019 and March 30, 2019, respectively		1,570			1,569
Common stock, $0.0277 par value, 115,000 shares authorized, 56,665 shares issued (including 145 shares subject to restriction) as of June 27, 2020 and March 28, 2020								1,570			1,570
Additional paid-in capital		481,909			479,226			487,781			485,552
Accumulated deficit		(23,083	)		(58,208	)
Retained earnings (accumulated deficit)								11,610			(48	)
Accumulated other comprehensive loss		(10,246	)		(10,615	)		(11,664	)		(12,759	)
Total stockholders’ equity		450,150			411,972			489,297			474,315
Total liabilities and stockholders’ equity	$	731,550		$	699,954		$	790,322		$	781,700

	Three Months Ended					Six Months Ended					Three Months Ended
	September 28, 2019		September 29, 2018			September 28, 2019		September 29, 2018			June 27, 2020			June 29, 2019
Net sales	$	354,458	$	355,436		$	726,346	$	677,697		$	273,285		$	371,888
Cost of sales		280,403		296,436			576,256		563,537			219,282			295,853
Gross profit		74,055		59,000			150,090		114,160			54,003			76,035
Selling, general, and administrative expenses		48,402		128,069			100,117		173,157			40,807			51,715
Operating income (loss)		25,653		(69,069	)		49,973		(58,997	)
Operating income												13,196			24,320
Interest expense, net		382		827			691		1,899			942			309
Other expense		—		1,307			—		7,720
Income (loss) before income taxes		25,271		(71,203	)		49,282		(68,616	)
Other income												(4,214	)		—
Income before income taxes												16,468			24,011
Income tax expense		7,526		5,822			14,157		9,262			4,565			6,631
Net income (loss)	$	17,745	$	(77,025	)	$	35,125	$	(77,878	)
Net income (loss) per share:
Net income											$	11,903		$	17,380
Net income per share:
Basic	$	0.31	$	(1.42	)	$	0.62	$	(1.53	)	$	0.21		$	0.31
Diluted	$	0.31	$	(1.42	)	$	0.62	$	(1.53	)	$	0.21		$	0.31

Three Months Ended

Six Months Ended

September 28,
2019

September 29,
2018

September 28,
2019

September 29,
2018

Net income (loss)

$
17,745

$
(77,025
)

$
35,125

$
(77,878
)
Other comprehensive (loss) income:

Foreign currency translation adjustments

(530
)

588

369

(107
)
Total comprehensive income (loss)

$
17,215

$
(76,437
)

$
35,494

$
(77,985
)

	Three Months Ended
	June 27, 2020		June 29, 2019
Net income	$	11,903	$	17,380
Other comprehensive income:
Foreign currency translation adjustments		1,095		899
Total comprehensive income	$	12,998	$	18,279

	Six Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			June 27, 2020			June 29, 2019
Cash flows from operating activities
Net income (loss)	$	35,125		$	(77,878	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income							$	11,903		$	17,380
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		6,655			5,275			2,921			3,110
Amortization of intangible assets		2,724			1,683			1,361			1,362
Amortization of deferred financing fees		257			285			127			131
Fair market value adjustment for asset classified as held for sale		986			—			—			986
Equity-based compensation		4,703			93,927			2,226			1,917
Deferred taxes		3,214			3,025			1,532			1,545
(Gain) loss on disposal of property, plant and equipment		(11	)		3
Foreign currency transaction (gain) loss		(25	)		33
Change in assets and liabilities net of business acquired:
Loss (gain) on disposal of property, plant, and equipment								5			(12	)
Foreign currency transaction gain								(122	)		(72	)
Change in assets and liabilities:
Accounts receivable		1,480			398			2,483			55
Inventories		9,701			3,852			10,956			9,786
Prepaids and other assets		(5,805	)		(524	)		(232	)		(3,706	)
Accounts payable		(98	)		(586	)		(6,396	)		1,568
Accrued expenses and other liabilities		(6,748	)		(475	)		5,441			(7,270	)
Net cash provided by operating activities		52,158			29,018			32,205			26,780
Cash flows from investing activities
Additions to property, plant, and equipment		(9,409	)		(4,684	)		(1,311	)		(4,526	)
Cash acquired in business acquisition		—			9,722
Proceeds from disposal of property, plant and equipment		17			11
Decrease in note receivable		—			132
Net cash (used in) provided by investing activities		(9,392	)		5,181
Proceeds from disposal of property, plant, and equipment								12			12
Net cash used in investing activities								(1,299	)		(4,514	)
Cash flows from financing activities
Changes in floor plan financing, net		(2,810	)		68			(4,527	)		(653	)
Borrowings on revolving debt facility		—			46,900
Payments on revolving debt facility		(10,000	)		—			—			(5,000	)
Payments on term-loans and other debt		—			(46,900	)
Payments for deferred financing fees		—			(1,974	)
Stock option exercises		112			1,615			3			—
Tax payments for equity-based compensation		(2,131	)		(2,336	)
Members' capital distribution		—			(65,277	)
Net cash used in financing activities		(14,829	)		(67,904	)		(4,524	)		(5,653	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		168			(38	)
Net increase (decrease) in cash, cash equivalents and restricted cash		28,105			(33,743	)
Cash, cash equivalents and restricted cash at beginning of period		126,634			136,616
Cash, cash equivalents and restricted cash at end of period	$	154,739		$	102,873
Effect of exchange rate changes on cash, cash equivalents, and restricted cash								670			400
Net increase in cash, cash equivalents, and restricted cash								27,052			17,013
Cash, cash equivalents, and restricted cash at beginning of period								209,455			126,634
Cash, cash equivalents, and restricted cash at end of period							$	236,507		$	143,647

	Three Months Ended September 28, 2019																		Three Months Ended June 27, 2020
	Common Stock																		Common Stock
	Shares		Amount		Members' Contributed Capital		Additional Paid in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total			Shares		Amount		Additional Paid in Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total
Balance at June 29, 2019		56,657	$	1,569	$	—	$	481,143		$	(40,828	)	$	(9,716	)	$	432,168
Balance at March 28, 2020																				56,665	$	1,570	$	485,552	$	(48	)	$	(12,759	)	$	474,315
Net income		—		—		—		—			17,745			—			17,745			—		—		—		11,903			—			11,903
Equity-based compensation		—		—		—		2,786			—			—			2,786			—		—		2,226		—			—			2,226
Net common stock issued under equity-based compensation plans		8		1		—		(2,020	)		—			—			(2,019	)
Cumulative adjustment for adoption of ASU 2016-13																				—		—		—		(245	)		—			(245	)
Stock option exercises																				—		—		3		—			—			3
Foreign currency translation adjustments		—		—		—		—			—			(530	)		(530	)		—		—		—		—			1,095			1,095
Balance at September 28, 2019		56,665	$	1,570	$	—	$	481,909		$	(23,083	)	$	(10,246	)	$	450,150


	Six Months Ended September 28, 2019
	Common Stock
	Shares		Amount		Members' Contributed Capital		Additional Paid in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total
Balance at March 30, 2019		56,657	$	1,569	$	—	$	479,226		$	(58,208	)	$	(10,615	)	$	411,972
Net income		—		—		—		—			35,125			—			35,125
Equity-based compensation		—		—		—		4,703			—			—			4,703
Net common stock issued under equity-based compensation plans		8		1		—		(2,020	)		—			—			(2,019	)
Foreign currency translation adjustments		—		—		—		—			—			369			369
Balance at September 28, 2019		56,665	$	1,570	$	—	$	481,909		$	(23,083	)	$	(10,246	)	$	450,150
Balance at June 27, 2020																				56,665	$	1,570	$	487,781	$	11,610		$	(11,664	)	$	489,297

Three Months Ended September 29, 2018

Common Stock

Shares

Amount

Members'
Contributed
Capital

Additional
Paid in
Capital

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Loss

Total

Balance at June 30, 2018

56,188

$
1,556

$
—

$
388,854

$
(853
)

$
(9,988
)

$
379,569

Net loss

—

—

—

(77,025
)

—

(77,025
)
Equity-based compensation

—

—

—

85,996

—

—

85,996

Net common stock issued under equity-based compensation plans

525

15

—

(2,674
)

—

—

(2,659
)
Foreign currency translation adjustments

—

—

—

—

—

588

588

Balance at September 29, 2018

56,713

$
1,571

$
—

$
472,176

$
(77,878
)

$
(9,400
)

$
386,469

Six Months Ended September 29, 2018

Common Stock

Shares

Amount

Members'
Contributed
Capital

Additional
Paid in
Capital

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Loss

Total

Balance at March 31, 2018

—

$
—

$
140,076

$
—

$
22,514

$
(9,293
)

$
153,297

Net loss

—

—

—

(77,878
)

—

(77,878
)
Members' capital distributions

—

—

(42,763
)

(22,514
)

—

(65,277
)
Exchange of membership interest for shares of Skyline Champion Corporation

56,143

1,555

(97,313
)

380,923

—

—

285,165

Equity-based compensation

—

—

—

93,927

—

—

93,927

Net common stock issued under equity-based compensation plans

570

16

—

(2,674
)

(2,658
)
Foreign currency translation adjustments

—

—

—

—

—

(107
)

(107
)
Balance at September 29, 2018

56,713

$
1,571

$
—

$
472,176

$
(77,878
)

$
(9,400
)

$
386,469

	Three Months Ended June 29, 2019
	Common Stock
	Shares		Amount		Additional Paid in Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total
Balance at March 30, 2019		56,657	$	1,569	$	479,226	$	(58,208	)	$	(10,615	)	$	411,972
Net income		—		—		—		17,380			—			17,380
Equity-based compensation		—		—		1,917		—			—			1,917
Foreign currency translation adjustments		—		—		—		—			899			899
Balance at June 29, 2019		56,657	$	1,569	$	481,143	$	(40,828	)	$	(9,716	)	$	432,168

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

~~On June 1, 2018,~~ Nature of Operations: Skyline Champion Corporation ~~(formerly known as Skyline Corporation), an Indiana corporation~~ (the “Company”) is a leading producer of factory-built housing in the United States (“U.S.”) and ~~Champion Enterprises Holdings, LLC (“Champion Holdings”~~Canada. The Company’s operations consist of manufacturing, retail, and transportation activities. The Company operates 33 manufacturing facilities throughout the U.S. and 5 manufacturing facilities in western Canada. These facilities 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 21 sales centers that sell manufactured houses to consumers primarily in the Southern 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.

COVID-19 Government Financial Assistance: The outbreak of a novel strain of coronavirus ("COVID-19") ~~completed the transactions contemplated~~was declared a global pandemic by the ~~Share Contribution & Exchange Agreement (the “Exchange Agreement”~~World Health Organization in March 2020. Various government programs have been announced which provide financial relief for affected businesses including the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act")~~, dated as~~ in the United States, and the Canada Emergency Wage Subsidy ("CEWS") under the COVID-19 Economic Response Plan in Canada. During the first quarter of ~~January 5, 2018, by and between~~fiscal 2021, the Company ~~and Champion Holdings. Under~~recognized CARES Act subsidies of $0.6 million. In addition, the ~~Exchange Agreement, (i) Champion Holdings contributed to~~CARES Act allows for deferring payment of certain payroll taxes. Through June 27, 2020, the Company ~~all~~has deferred $3.6 million of payroll taxes that will be paid beginning in December 2021. In Canada, the Company recognized $3.6 million of payroll subsidies under CEWS during the first quarter of fiscal 2021. The Company’s policy is to account for these subsidies as Other Income in the period in which the related costs are incurred and the Company is reasonably assured to receive payment. As of June 27, 2020, the Company had received $1.7 million of the ~~issued and outstanding equity interests~~CEWS subsidies.

Basis of each of Champion Holdings’ wholly-owned operating subsidiaries (the “Contributed Shares”), and (ii) in exchange for the Contributed Shares, the Company issued to the members of Champion Holdings, in the aggregate, 47,752,008 shares of the Company common stock (“Skyline Common Stock”) (such issuance, the “Shares Issuance”). Immediately following the Shares Issuance, the members of Champion Holdings collectively held 84.5%, and the Company’s pre-closing shareholders collectively held 15.5%, of the issued and outstanding Skyline Common Stock on a fully-diluted basis. The contribution of the Contributed Shares by Champion Holdings to Skyline, and the Shares Issuance by the Company to the members of Champion Holdings are collectively referred to herein as the “Exchange.”

The Exchange was treated as a purchase of the Company by Champion Holdings for accounting and financial reporting purposes. As a result, the financial results for the six months ending September 29, 2018 are comprised of 1) the results of Champion Holdings for the period between April 1, 2018 and May 31, 2018 and 2) the Company, after giving effect to the Exchange, from June 1, 2018 through September 29, 2018.

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 ~~23, 2019.~~21, 2020 (the “Fiscal 2020 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, ~~(loss)~~ 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.

Certain prior year amounts have been reclassified to conform with the current year presentation.

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 ~~2020”,~~2021,” will end on ~~March 28, 2020.~~April 3, 2021. References to “fiscal ~~2019”~~2020” refer to the Company’s fiscal year ended March ~~30, 2019.~~28, 2020. The three ~~and six~~ months ended ~~September 28,~~June 27, 2020 and June 29, 2019 ~~and September 29, 2018~~ each included 13 ~~weeks and 26 weeks, respectively.~~

The Company’s operations consist of manufacturing, retail and transportation activities. The Company operates 33 manufacturing facilities throughout the United States (“U.S.”) and 5 manufacturing facilities in western Canada that primarily construct factory-built, timber-framed manufactured and modular houses that are sold primarily to independent retailers and builders/developers. The Company’s retail operations consist of 21 sales centers that sell manufactured houses to consumers primarily in the Southern 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.weeks.

Recently Adopted Accounting Pronouncements: ~~In February 2016,~~On March 29, 2020, the ~~Financial Accounting Standards Board (“FASB”) issued~~Company adopted Accounting Standards Update ~~(“ASU”~~("ASU") ~~2016-02,~~2016-13, ~~Leases(Topic 842)~~ (“~~ASC 842”)~~Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” using a modified retrospective approach. The standard amends several aspects of the measurement of credit losses related to certain financial instruments, including the replacement of the existing incurred credit loss model and other models with the current expected credit losses ("CECL") model. The cumulative effect of adoption resulted in an increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognizeof $0.2 million in the ~~consolidated balance sheet~~allowance for credit loss and a ~~liability~~corresponding decrease in retained earnings as of March 29, 2020. 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 ~~make lease payments (the lease liability)~~expected credit losses during the period, are recognized in earnings. As of June 27, 2020 and ~~an asset representing~~March 28, 2020, accounts receivable are reflected net of reserves of $0.3 million and $0.4 million, respectively. As of June 27, 2020 and March 28, 2020, other notes receivable are reflected net of reserves of $0.9 million and $0.5 million, respectively. Changes in expected credit losses were 0t significant in the first three months of fiscal 2021.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment,” which addresses concerns over the cost and complexity of the two-step impairment testing model, and removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its ~~right~~fair value, not to ~~use~~exceed the ~~underlying asset for~~total amount of goodwill allocated to the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous requirements. This ASC 842 is effective for fiscal years beginning after December 31, 2018 and modified retrospective application is permitted.

reporting unit. The Company adopted ~~ASC 842 as~~the provisions of ASU 2017-04 effective March ~~31, 2019, the first day of fiscal~~29, 2020, using the modified retrospective approach and without restating comparative periods. The Company has elected to apply the transition package of three practical expedients which allow companies not to reassess whether agreements contain leases, the classification of leases, and the ~~capitalization of initial direct costs. The Company~~adoption did not ~~elect~~have an impact on the practical expedient which permits the use of hindsight when determining the lease term and assessing right-of-use assets for impairment. As permitted by the standard, the Company elected to: 1) recognize lease expense for leases with a term of 12 months or less on a straight-line basis over the lease term and will not recognize any right of use assets or lease liabilities for those leases, and 2) not separate lease and non-lease components.

The primary financial statement impact upon adoption was the recognition, on a discounted basis, of the Company's minimum commitments under non-cancelable operating leases as right of use assets and obligations on the consolidated balance sheets. The adoption of ASC 842 resulted in the recognition of lease-related assets and liabilities of $13.7 million. The standard did not have a material impact on the Company's results of operations or cash flows.

~~Recently Issued Accounting Pronouncements Pending Adoption:~~ ~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. The standard simplifies the accounting for goodwill impairments and allows a goodwill impairment charge to be based on the amount of a reporting unit’s carrying value in excess of its fair value. This eliminates the requirement to calculate the implied fair value of goodwill or what is known as “Step 2” under the current guidance. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted. The Company ~~is currently assessing the potential impact this ASU will have on its consolidated financial statements.~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments—Credit Losses~~ (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This guidance also requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. The new guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

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

The Exchange was completed on June 1, 2018 and was accounted for as a reverse acquisition under the acquisition method of accounting as provided by the FASB Accounting Standards Codification 805, Business Combinations. Champion Holdings was deemed to be the acquirer for accounting and financial reporting purposes. The assets acquired and liabilities assumed as a result of the Exchange were recorded at their respective fair values and added to the carrying value of Champion Holdings’ existing assets and liabilities. The Company incurred acquisition-related costs of approximately $0.5 million and $6.9 million for the three and six months ended September 29, 2018, respectively, which were classified as other expense in the condensed consolidated statements of operations. Additionally, the Company incurred approximately $6.0 million in stock compensation expense related to former Skyline employees during the first quarter of fiscal 2019, which is recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations. These types of costs were 0t incurred during fiscal 2020.

The purchase price of the acquisition was determined with reference to the value of equity (common stock) of the Company based on the closing price on June 1, 2018 of $33.39 per share. The purchase price has been allocated to the assets acquired and liabilities assumed using their estimated fair values at June 1, 2018, the closing of the Exchange. The purchase price and the allocation have been used to prepare the accompanying condensed consolidated financial statements.

Goodwill is primarily attributable to expected synergies from the combination of the companies, including, but not limited to, expected cost synergies through procurement activities and operational improvements through sharing of best practices. Goodwill, which is not deductible for income tax purposes, was allocated to the U.S. Factory-built Housing reporting unit.

Cash, trade receivables, other assets, accounts payable, accrued and other liabilities were generally stated at historical carrying values given the short-term nature of these assets and liabilities. Intangible assets consist primarily of amounts recognized for the fair value of customer relationships and trade names and were based on an independent appraisal. Customer-based assets include the Company’s established relationships with its customers and the ability of those customers to generate future economic profits for the Company. The Company estimates that these intangible assets have a weighted average useful life of ten years.Fair value estimates of property, plant, and equipment were based on independent appraisals and broker opinions of value, giving consideration to the highest and best use of the assets. Key assumptions used in the

~~appraisals were based on a combination of market and cost approaches, as appropriate. Level 3 fair value estimates of $40.2 million related to property, plant, and equipment and $52.1~~ million related to intangible assets were recognized in the accompanying condensed consolidated balance sheet as a result of the allocation of the purchase price from the Exchange. The Company determined $2.1 million of property acquired in the Exchange met the definition of held for sale at the acquisition date and was classified in other current assets. The fair value less cost to sell of this held for sale property is evaluated each reporting period to determine if it has changed. A loss of $1.0 million was recorded during the first quarter of fiscal 2020 related to this held for sale property based on updated market information. Assets held for sale were $1.1 million and $2.1 million as of September 28, 2019 and March 30, 2019, respectively. For further information on acquired assets measured at fair value, see Note 5, Goodwill and Intangible Assets.

~~The Company allocated a portion of the purchase price to certain realizable deferred tax assets totaling $27.3 million. Deferred tax assets are primarily federal and state~~Inventories, net operating loss carryforwards and credits offset by a valuation allowance for certain state net operating loss carryforwards that are not expected to be realized. The deferred tax assets are offset by deferred tax liabilities of $20.3 million resulting from the purchase price allocation step-up in fair value that exceed the historical tax basis.

~~The statement of operations for the three and six months ended September 29, 2018 includes $68.0 and $90.1 million, respectively, of net sales attributable to the acquired Skyline operations.~~

~~A summary of the results of operations for the Company, on an as reported and on a pro forma basis, are as follows:~~

The pro forma results are based on adding the historical results of operations of Champion Holdings and Skyline and adjusting those historical amounts for the amortization of intangibles created in the Exchange; the increase in depreciation as a result of the step-up in fair value of property, plant, and equipment; removing transaction costs directly associated with the Exchange; removing equity-based compensation expense directly resulting from the Exchange; reflecting the financing arrangements entered into in connection with the Exchange, and adjusting those items for income taxes. The pro forma disclosures do not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the Exchange or any integration costs. The pro forma data is intended for informational purposes and is not indicative of the future results of operations.

The Exchange Agreement provided that Champion Holdings was permitted to pay a capital distribution prior to completion of the Exchange to the extent it had cash in excess of debt and other debt-like items and unpaid Exchange fees and expenses. Prior to the completion of the Exchange, Champion Holdings made a capital distribution to its members equal to an aggregate of $65.3 million (of which $22.5 million was reflected as a reduction to retained earnings and $42.8 million was reflected as a reduction to members’ contributed capital).

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

(Dollars in thousands)	September 28, 2019		March 30, 2019		June 27, 2020		March 28, 2020
Raw materials	$	50,259	$	48,531	$	52,682	$	55,408
Work in process		13,682		13,973		15,914		17,773
Finished goods and other		49,122		60,134		47,219		53,205
Total inventories	$	113,063	$	122,638
Total inventories, net					$	115,815	$	126,386

At ~~September 28, 2019~~June 27, 2020 and March ~~30, 2019,~~28, 2020, reserves for obsolete inventory were ~~$4.0~~$4.3 million and ~~$4.1~~$4.2 million, respectively.

Property, plant, and equipment are stated at cost. Depreciation is calculated primarily on ~~the~~a straight-line ~~method,~~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 ~~September 28,~~June 27, 2020 and June 29, 2019 ~~and September 29, 2018~~ was ~~$3.6~~$2.9 million and ~~$2.8~~$3.1 million, respectively. ~~Depreciation expense for the six months ended September 28, 2019 and September 29, 2018 was $6.7 million and $5.3 million, respectively.~~

(Dollars in thousands)	September 28, 2019			March 30, 2019			June 27, 2020			March 28, 2020
Land and improvements	$	35,380		$	34,264		$	35,525		$	35,332
Buildings and improvements		86,738			83,973			88,079			87,222
Machinery and equipment		48,054			42,476			52,567			51,239
Construction in progress		3,821			3,619			1,181			1,810
Property, plant and equipment, at cost		173,993			164,332
Property, plant, and equipment, at cost								177,352			175,603
Less: accumulated depreciation		(62,565	)		(55,745	)		(69,377	)		(66,312	)
Property, plant, and equipment, net	$	111,428		$	108,587		$	107,975		$	109,291

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 ~~September 28, 2019~~June 27, 2020 and March ~~30, 2019,~~28, 2020, the Company had goodwill of $173.5 ~~million and $173.4 million, respectively. The change from March 30, 2019 was a result of the finalization of the allocation of net assets recognized in connection with the Exchange.~~million.

(Dollars in thousands)	September 28, 2019									March 30, 2019									June 27, 2020									March 28, 2020
	Customer Relationships			Trade Names			Total			Customer Relationships			Trade Names			Total			Customer Relationships			Trade Names			Total			Customer Relationships			Trade Names			Total
Gross carrying amount	$	48,674		$	13,192		$	61,866		$	48,782		$	13,173		$	61,955		$	48,509		$	13,125		$	61,634		$	48,370		$	13,068		$	61,438
Accumulated amortization		(11,274	)		(4,533	)		(15,807	)		(9,052	)		(3,967	)		(13,019	)		(14,342	)		(5,299	)		(19,641	)		(13,118	)		(4,963	)	$	(18,081	)
Amortizable intangibles, net	$	37,400		$	8,659		$	46,059		$	39,730		$	9,206		$	48,936		$	34,167		$	7,826		$	41,993		$	35,252		$	8,105		$	43,357

The Company recognized finite-lived intangibles for customer relationships of $43.1 million and trade names of $9.0 million as a result of the allocation of the purchase price from the Exchange. The fair value of the customer relationship intangible asset was estimated using the multi-period excess earnings method of the income approach. The fair value of the customer relationship intangible asset was determined based on estimates and assumptions of projected cash flows attributable to the acquired customer relationships, the annual attrition rate of existing customer relationships, the contributory asset charges attributable to the assets that support the customer relationships, such as net working capital, property, plant, and equipment, trade name, and workforce, the economic life and the discount rate as determined at the time of the final valuation. The fair value of the trade name intangible asset was estimated using the relief-from-royalty method of the income approach. The fair value of the trade names intangible asset was determined based on estimates and assumptions used for the expected life of the intangible asset, the royalty rate and the discount rate that reflects the level of risk associated with the future cash flows as determined at the time of the final valuation. During both the three months ended ~~September 28,~~June 27, 2020 and June 29, 2019, ~~and September 29, 2018,~~ amortization of intangible assets was $1.3 million and $1.2 million, respectively. During the six months ended September 28, 2019 and September 29, 2018, amortization of intangible assets was $2.7 million and $1.7 million, respectively.$1.4 million.

(Dollars in thousands)	September 28, 2019		March 30, 2019		June 27, 2020		March 28, 2020
Customer deposits and receipts in excess of revenues	$	24,953	$	28,392
Customer deposits					$	26,564	$	22,679
Accrued volume rebates		19,797		21,020		14,376		17,469
Accrued warranty obligations		19,477		17,886		18,905		19,179
Accrued compensation and payroll taxes		28,708		32,075		21,091		27,776
Accrued insurance		16,985		16,245		13,434		11,182
Other		16,826		13,943		21,515		15,745
Total other current liabilities	$	126,746	$	129,561	$	115,885	$	114,030

	Three Months Ended						Six Months Ended						Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			June 27, 2020			June 29, 2019
Balance at the beginning of the period	$	23,990		$	21,898		$	23,346		$	15,430		$	24,969		$	23,346
Warranty assumed in the Exchange		—			—			—			6,259
Warranty expense		7,803			9,448			18,333			16,667			6,359			9,596
Cash warranty payments		(7,356	)		(8,475	)		(17,242	)		(15,485	)		(6,633	)		(8,952	)
Balance at end of period		24,437			22,871			24,437			22,871			24,695			23,990
Less: noncurrent portion in other long-term liabilities		(4,960	)		(5,700	)		(4,960	)		(5,700	)		(5,790	)		(4,960	)
Total current portion	$	19,477		$	17,171		$	19,477		$	17,171		$	18,905		$	19,030

(Dollars in thousands)	September 28, 2019		March 30, 2019		June 27, 2020		March 28, 2020
Revolving credit facility maturing in 2023	$	31,900	$	41,900	$	64,900	$	64,900
Obligations under industrial revenue bonds due 2029		12,430		12,430		12,430		12,430
Total debt		44,330		54,330		77,330		77,330
Less: current portion		—		—		—		—
Total long-term debt	$	44,330	$	54,330	$	77,330	$	77,330

~~On June 5, 2018, the~~The Company ~~entered into a credit~~has an agreement ~~(the “Credit Agreement”)~~ with a syndicate of ~~banks. The Credit Agreement~~banks that provides for a revolving credit facility of up to $100.0 million, including a letter of credit sub-facility of not less than $45.0 ~~million. Initial borrowings under the~~ million (“Credit ~~Agreement were used to repay the Company’s existing $46.9 million term loans (“Term Loans”~~Agreement”) ~~and replace the Company’s existing cash collateralized stand-alone letter of credit facility.~~. The revolving credit facility allows the Company to draw down, repay and re-draw loans on the available funds during the term of the Credit Agreement. ~~During the three and six months ended September 28, 2019, the Company repaid $5.0 million and $10.0 million, respectively, of amounts previously drawn on the revolving credit facility.~~

The Credit Agreement matures on June 5, 2023 and has no scheduled amortization. The interest rate on borrowings under the Credit Agreement adjusts based on the first lien net leverage of the Company from a high of LIBOR plus 2.25% and ABR plus 1.25% when the first lien net leverage is equal to or greater than 2.00:1.00, to a low of LIBOR plus 1.50% and ABR plus 0.50% when the first lien net leverage is below 0.50:1.00. In addition, the Company is obligated to pay an unused line fee ranging between ~~0.40%~~0.25% and ~~0.25%~~0.40% (depending on the first lien net leverage) in respect of unused commitments under the Credit Agreement. At ~~September 28, 2019~~June 27, 2020 the interest rate on borrowings under the Credit Agreement was ~~3.57%~~1.75%. At ~~September 28, 2019,~~June 27, 2020, letters of credit issued under the Credit Agreement totaled $28.7 million. Total available borrowings under the Credit Agreement as of ~~September 28, 2019~~June 27, 2020 were ~~$39.4~~$6.4 million. On July 15, 2020, additional letters of credit were issued for $5.3 million. Total available borrowings under the Credit Agreement as of the date the financial statements were issued was $1.1 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 ~~September 28, 2019,~~June 27, 2020, including related costs and fees, was ~~3.69%. At March 30, 2019, the weighted average interest rate was 3.62%~~2.24%. The industrial revenue bonds require lump-sum payments of principal upon maturity in 2029.

The 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 Credit Agreement as of ~~September 28, 2019.~~June 27, 2020.

The Company’s retail operations utilize floor plan financing to fund the ~~acquisition~~purchase of manufactured homes for display or resale. At ~~September 28, 2019~~June 27, 2020 and March ~~30, 2019,~~28, 2020, the Company had outstanding borrowings on floor plan financing agreements of ~~$30.5~~$29.4 million and ~~$33.3~~$33.9 million, respectively. Total credit line capacity provided under the agreements was ~~$47.0~~$48.0 million as of ~~September 28, 2019.~~June 27, 2020. Borrowings are secured by the homes and are required to be repaid when the Company sells the home to a customer.

The following tables disaggregate the Company’s revenue by sales category for the three ~~and six~~ months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Three Months Ended September 28, 2019
(Dollars in thousands)	U.S. Factory-built Housing		Canadian Factory-built Housing		Corporate/ Other		Total

Manufacturing and retail	$	308,299	$	26,407	$	—	$	334,706
Commercial		4,531		—		—		4,531
Transportation		—		—		15,221		15,221
Total	$	312,830	$	26,407	$	15,221	$	354,458


	Six Months Ended September 28, 2019
(Dollars in thousands)	U.S. Factory-built Housing		Canadian Factory-built Housing		Corporate/ Other		Total

Manufacturing and retail	$	639,904	$	50,107	$	—	$	690,011
Commercial		4,531		—		—		4,531
Transportation		—		—		31,804		31,804
Total	$	644,435	$	50,107	$	31,804	$	726,346

	Three Months Ended September 29, 2018								Three Months Ended June 27, 2020
(Dollars in thousands)	U.S. Factory-built Housing		Canadian Factory-built Housing		Corporate/ Other		Total		U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total

Manufacturing and retail	$	302,017	$	25,401	$	—	$	327,418	$	248,859	$	15,195	$	—	$	264,054
Commercial		4,598		—		—		4,598		—		—		—		—
Transportation		—		—		23,420		23,420		—		—		9,231		9,231
Total	$	306,615	$	25,401	$	23,420	$	355,436	$	248,859	$	15,195	$	9,231	$	273,285


	Six Months Ended September 29, 2018								Three Months Ended June 29, 2019
(Dollars in thousands)	U.S. Factory-built Housing		Canadian Factory-built Housing		Corporate/ Other		Total		U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total

Manufacturing and retail	$	562,803	$	52,755	$	—	$	615,558	$	331,605	$	23,700	$	—	$	355,305
Commercial		9,936		—		—		9,936		—		—		—		—
Transportation		—		—		52,203		52,203		—		—		16,583		16,583
Total	$	572,739	$	52,755	$	52,203	$	677,697	$	331,605	$	23,700	$	16,583	$	371,888

The Company has operating leases for land, manufacturing and office facilities, and equipment. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. The Company's leases do not contain material residual value guarantees or material restrictive covenants. Operating lease expense is recognized on a straight-line basis over the lease terms. Lease expense included in the accompanying condensed consolidated ~~statement of operations~~income statements is shown below:

(Dollars in thousands)	Three Months Ended September 28, 2019		Six Months Ended September 28, 2019		Three Months Ended June 27, 2020		Three Months Ended June 29, 2019
Operating lease expense	$	1,470	$	2,875	$	1,383	$	1,405
Short-term lease expense		230		603		456		373
Total lease expense	$	1,700	$	3,478	$	1,839	$	1,778

Operating lease assets and obligations included in the accompanying condensed consolidated balance ~~sheet~~sheets are ~~shown~~ below:

(Dollars in thousands)	September 28, 2019		June 27, 2020		March 28, 2020
Right-of-use assets under operating leases:
Other long-term assets	$	12,712	$	13,440	$	14,808
Lease obligations under operating leases:
Other current liabilities		4,073	$	4,502	$	4,789
Other long-term liabilities		8,639		8,938		10,019
Total lease obligation	$	12,712	$	13,440	$	14,808

Maturities of lease obligations as of ~~September 28, 2019,~~June 27, 2020, are shown below:

(Dollars in thousands)	September 28, 2019			June 27, 2020
Fiscal 2020 ⁽¹⁾	$	2,500
Fiscal 2021		4,151
Fiscal 2021 ⁽¹⁾				$	4,081
Fiscal 2022		3,086			4,714
Fiscal 2023		2,232			3,655
Fiscal 2024		909			1,547
Fiscal 2025					777
Thereafter		2,213			1,712
Total undiscounted cash flows		15,091			16,486
Less: imputed interest		(2,379	)		(3,046	)
Lease obligations under operating leases	$	12,712		$	13,440

The ~~weighted average~~weighted-average lease term and discount rate for operating leases are shown below:

The discount rate used to measure a lease obligation should be the rate implicit in the lease; however, the Company’s operating leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate, which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments.

			Three Months Ended
(Dollars in thousands)	Six Months Ended September 28, 2019		June 27, 2020		June 29, 2019
Non-cash activity:
Right-of-use assets obtained in exchange for operating lease obligations	$	1,606	$	—	$	854
Operating cash flows:
Cash paid related to operating lease obligations	$	2,958	$	1,410	$	1,534

For the three months ended ~~September 28,~~June 27, 2020 and June 29, 2019, ~~and September 29, 2018,~~ the Company recorded ~~$7.5~~$4.6 million and ~~$5.8~~$6.6 million of income tax expense and had an effective tax rate of ~~29.8%~~27.7% and ~~(8.2%)~~27.6%, respectively. For the six months ended September 28, 2019 and September 29, 2018, the Company recorded $14.2 million and $9.3 million of income tax expense and had an effective tax rate of 28.7% and (13.5%), respectively. The change in the effective tax rate for the three and six months ended September 28, 2019, compared with the same respective periods of the prior year, was primarily due to costs related to the Exchange for which no tax benefit could be recognized.

The Company’s effective tax rate for both of the three ~~and six~~ months ended ~~September 28,~~June 27, 2020 and June 29, 2019 differs from the federal statutory income tax rate of 21.0% due primarily to the effect of non-deductible expenses, state and local income taxes, and results in foreign jurisdictions. ~~The Company’s effective~~

At June 27, 2020, the Company had 0 unrecognized tax rate for the three and six months ended September 29, 2018 differed from the federal statutory rate primarily due to the effect of non-deductible expenses, state and local income taxes, one-time charges related to the Exchange and results in foreign jurisdictions and non-taxable entities.

During the six months ended September 28, 2019, the Company’s uncertain tax position did not change. During the six months ended September 29, 2018, the Company’s uncertain tax position decreased by $0.4 million due to expiration of certain statutes of limitations.benefits. The Company ~~estimates no~~does not anticipate any material changes to uncertain tax benefits in the next twelve months. The Company records interest and penalties related to ~~uncertain~~unrecognized tax ~~positions~~benefits as a component of income tax expense. ~~Net interest and penalties for the periods presented herein were not significant.~~

Basic net income ~~(loss)~~ per share (“EPS”) attributable to the Company was computed by dividing net income ~~(loss)~~ attributable to the Company by the average number of common shares outstanding during the period. Certain of the Company’s time-vesting restricted share awards are considered participating securities. Diluted earnings per common share is computed based on the more dilutive ofof: (i) the two-class method, assuming the participating securities are not exercised or converted; or (ii) the summation of average common shares outstanding and additional common shares that would have been outstanding if the dilutive potential common shares had been issued.

During the three ~~and six~~ months ended ~~September 28,~~June 27, 2020 and the three months ended June 29, 2019, the two-class method was more ~~dilutive and was not applicable to~~dilutive. Securities that could potentially dilute basic EPS in the ~~September 29, 2018 computation given the net loss recorded for~~future that were considered antidilutive in the three ~~and six~~ months ended ~~September 29, 2018. The number of shares used to calculate earnings per share prior to the Exchange was determined based on the exchange ratio, as defined~~June 27, 2020 totaled 0.4 million. There were 0 antidilutive securities in the ~~Exchange Agreement.~~three months ended June 29, 2019.

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

Three Months Ended

Six Months Ended

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

September 28,
2019

September 29,
2018

September 28,
2019

September 29,
2018

Numerator:

Net income (loss)

$
17,745

$
(77,025
)

$
35,125

$
(77,878
)
Undistributed earnings allocated to participating securities

(65
)

—

(154
)

—

Net income (loss) attributable to the Company's common shareholders

$
17,680

$
(77,025
)

$
34,971

$
(77,878
)
Denominator:

Basic weighted average shares outstanding

56,481

54,105

56,424

50,747

Dilutive securities

243

—

233

—

Diluted weighted average shares outstanding

56,724

54,105

56,657

50,747

Basic net income (loss) per share

$
0.31

$
(1.42
)

$
0.62

$
(1.53
)
Diluted net income (loss) per share

$
0.31

$
(1.42
)

$
0.62

$
(1.53
)

	Three Months Ended
(Dollars and shares in thousands, except per share data)		June 27, 2020			June 29, 2019
Numerator:
Net income		$	11,903		$	17,380
Undistributed earnings allocated to participating securities			(30	)		(89	)
Net income attributable to the Company's common shareholders		$	11,873		$	17,291
Denominator:
Basic weighted-average shares outstanding			56,532			56,368
Dilutive securities			229			267
Diluted weighted-average shares outstanding			56,761			56,635

Basic net income per share		$	0.21		$	0.31
Diluted net income per share		$	0.21		$	0.31

Prior to the Exchange, the Company was party to a Management Advisory Services Agreement (“Services Agreement”) with Centerbridge Advisors, LLC; MAK Management L.P.; and Sankaty Advisors, LLC (collectively, the “Managers”), affiliates of which collectively owned a majority of the units of Champion Holdings and the Company’s common stock (the “Principal Shareholders”), whereby the Principal Shareholders provided management, consulting, financial and other advisory services to Champion Holdings. Management fee expense during fiscal 2019, recognized prior to the Exchange, was $0.3 million. The Services Agreement was terminated in connection with the Exchange. The Management fee expense is included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operation.

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 ~~segment~~segments primarily based on net sales, earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and operating assets.

The Company operates in 2 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 directly 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 ~~include~~includes cash and certain deferred tax items not specifically allocated to another segment.

Three Months Ended

Six Months Ended

(Dollars in thousands)

September 28,
2019

September 29,
2018

September 28,
2019

September 29,
2018

Net sales:

U.S. Factory-built Housing

$
312,830

$
306,615

$
644,435

$
572,739

Canadian Factory-built Housing

26,407

25,401

50,107

52,755

Corporate/Other

15,221

23,420

31,804

52,203

Consolidated net sales

$
354,458

$
355,436

$
726,346

$
677,697

Operating income:

U.S. Factory-built Housing EBITDA

$
35,314

$
26,687

$
71,459

$
49,603

Canadian Factory-built Housing EBITDA

4,244

3,035

7,299

6,555

Corporate/Other EBITDA

(8,998
)

(94,744
)

(19,406
)

(108,197
)
Depreciation

(3,545
)

(2,845
)

(6,655
)

(5,275
)
Amortization

(1,362
)

(1,202
)

(2,724
)

(1,683
)
Consolidated operating income

$
25,653

$
(69,069
)

$
49,973

$
(58,997
)
Depreciation:

U.S. Factory-built Housing

$
3,068

$
2,415

$
5,706

$
4,460

Canadian Factory-built Housing

247

227

489

458

Corporate/Other

230

203

460

357

Consolidated depreciation

$
3,545

$
2,845

$
6,655

$
5,275

Amortization of intangible assets:

U.S. Factory-built Housing

$
1,362

$
1,142

$
2,724

$
1,562

Canadian Factory-built Housing

—

60

—

121

Corporate/Other

—

—

—

—

Consolidated amortization of intangible assets

$
1,362

$
1,202

$
2,724

$
1,683

Capital expenditures:

U.S. Factory-built Housing

$
4,144

$
2,176

$
7,502

$
3,456

Canadian Factory-built Housing

317

204

428

414

Corporate/Other

422

285

1,479

814

Consolidated capital expenditures

$
4,883

$
2,665

$
9,409

$
4,684

(Dollars in thousands)

September 28,
2019

March 30,
2019

Total Assets:

U.S. Factory-built Housing (1)

$
491,699

$
488,878

Canadian Factory-built Housing (1)

62,879

59,260

Corporate/Other (1)

176,972

151,816

Consolidated total assets

$
731,550

$
699,954

	Three Months Ended
(Dollars in thousands)	June 27, 2020			June 29, 2019

Net sales:
U.S. Factory-built Housing	$	248,859		$	331,605
Canadian Factory-built Housing		15,195			23,700
Corporate/Other		9,231			16,583
Consolidated net sales	$	273,285		$	371,888
Operating income:
U.S. Factory-built Housing EBITDA	$	23,793		$	36,145
Canadian Factory-built Housing EBITDA		1,292			3,055
Corporate/Other EBITDA		(7,607	)		(10,408	)
Depreciation		(2,921	)		(3,110	)
Amortization		(1,361	)		(1,362	)
Consolidated operating income	$	13,196		$	24,320
Depreciation:
U.S. Factory-built Housing	$	2,398		$	2,638
Canadian Factory-built Housing		115			242
Corporate/Other		408			230
Consolidated depreciation	$	2,921		$	3,110
Amortization of intangible assets:
U.S. Factory-built Housing	$	1,361		$	1,362
Canadian Factory-built Housing		—			—
Corporate/Other		—			—
Consolidated amortization of intangible assets	$	1,361		$	1,362
Capital expenditures:
U.S. Factory-built Housing	$	885		$	3,358
Canadian Factory-built Housing		157			111
Corporate/Other		269			1,057
Consolidated capital expenditures	$	1,311		$	4,526

(Dollars in thousands)	June 27, 2020			March 28, 2020
Total Assets:
U.S. Factory-built Housing (1)	$	476,497		$	491,110
Canadian Factory-built Housing (1)		61,228			56,760
Corporate/Other (1)		252,597			233,830
Consolidated total assets	$	790,322		$	781,700

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 their agreement to pay the financial institution. The risk of loss from these agreements is spread over numerous retailers. The repurchase price is generally determined by the original sales price of the product ~~and pre-defined~~less contractually defined curtailment ~~arrangements.~~payments. The Company accounts for the guarantees under its repurchase agreements with the retailers’ financing institutions by estimating and deferring a portion of the related product sale that represents the estimated fair value of the repurchase obligation. ~~The~~In addition, the Company has estimated ~~fair value takes into account~~ the ~~estimate of the~~expected contingent net loss the Company will incur upon resale of any repurchases. ~~This estimate is~~These estimates are based on recent historical experience supplemented by management’s assessment of current economic and other conditions affecting retailers for which the ~~Company’s retailers. The reserve for estimated losses under~~Company has a contingent repurchase obligation. Based on these repurchase agreements, historical loss experience, as well as current economic

conditions and forecasts that affect the potential loss exposure, a loss reserve of $1.0 million was ~~$0.9 million at September~~recorded as of June 27, 2020 and March 28, ~~2019 and $1.0 million at March 30, 2019.~~2020. Excluding the resale value of the homes, the contingent repurchase obligation as of ~~September 28, 2019~~June 27, 2020 was estimated to be ~~approximately $157.4~~$145.2 million. Losses incurred on homes repurchased were ~~immaterial~~not significant during each of the three ~~and six~~ months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018.~~

In addition to the repurchase agreements, the Company has agreed to guarantee from 3% to 50% of certain retailers’ outstanding loans to a floor plan lender. At September 28, 2019, those guarantees totaled $0.7 million of which $0.5 million was outstanding.2019.

At ~~September 28, 2019,~~June 27, 2020, the Company was contingently obligated for ~~approximately~~ $28.7 million under letters of credit, primarily consisting of $12.7 million to support long-term debt, $15.7 million to support the casualty insurance program, and $0.3 million to support bonding agreements. The letters of credit are ~~backed by~~issued from a sub-facility ~~under~~of the ~~New~~ Credit Agreement. The Company was also contingently obligated for ~~$24.1~~$23.5 million under surety bonds, generally to support performance on long-term construction contracts and license and service bonding requirements.

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.

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.

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

~~On June 1, 2018,~~ Skyline Champion Corporation (the “Company”) was formed by Skyline Corporation (“Skyline”) and Champion Enterprises Holdings, LLC (“Champion”) combining their operations pursuant to the Share Contribution & Exchange Agreement (the “Exchange Agreement”), dated as of January 5, 2018, by and between Skyline and Champion Holdings, as described in further detail below. Champion Holdings was formed as a Delaware limited liability company in 2010. Skyline was originally incorporated in Indiana in 1959.

~~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 manufactured offsite construction, company-owned retail locations, and transportation logistics services. The Company is the largest independent publicly traded factory-built solutions provider in North America ~~based~~(based on ~~revenue~~revenue) and markets its homes under several nationally recognized brand names including Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Excel Homes, Homes of Merit, New Era, Redman Homes, Shore Park, Silvercrest, Titan Homes in the U.S., and Moduline and SRI Homes in western Canada. The Company operates 33 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 21 sales centers that sell manufactured homes to consumers primarily in the southern U.S. The Company’s transportation business engages independent owners/drivers to transport manufactured homes and recreational vehicles and other products throughout the U.S. and Canada.

In recent years, ~~market~~manufactured home construction experienced revenue growth due to a number of favorable demographic trends and demand ~~for the Company’s products, primarily affordable housing~~drivers in the ~~U.S., has continued~~United States, including underlying growth trends in key homebuyer groups, such as the population over 65 years of age, the population of first-time home buyers, and the population of households earning less than $50,000 per year. More recently, we see a number of market trends pointing to ~~improve. As a result, the Company has focused on operational improvements to make existing manufacturing facilities more profitable~~increased sales of Alternative Dwelling Units (“ADUs”) and urban-to-rural migration as customers accommodate working-from-home patterns, as well as ~~executing measured~~people seeking rent-to-own single-family options. We intend to capitalize on these trends and drivers to grow our business over the medium-to-long-term. We believe that there is an opportunity for continued manufactured and modular construction market expansion ~~of its manufacturing~~driven by the foregoing trends and ~~retail footprint.~~

~~In response to the increasing~~ demand for factory-built housing in the U.S., the Company has increased capacity through strategic acquisitions and expansions of its manufacturing footprint. The Company is focused on growing in strong HUD-markets across the U.S.drivers, as well as ~~further expanding into the Northeast~~construction labor shortages in certain regions (which tend to adversely and ~~Midwest U.S. modular housing markets. During June 2019, the Company began production at its newest~~disproportionally impact supply and cost of site-built homes when compared to manufactured housing facility in Leesville, Louisiana. During fiscal 2019, the Company completed its expansion of its Corona, California facility by adding a second production line and expanded its Leola, Pennsylvania campus by adding an additional plant. Production at the Leola facility began in April 2019. The Exchange added eight plants to the Company’s manufacturing footprint in fiscal 2019 (described in more detail below). In April 2017, the Company completed the purchase of a factory-built housing plant in Mansfield, Texas. In January 2017, the Company restarted operations at the Liverpool, Pennsylvania location, which was one of five modular manufacturing facilities acquired through a series of transactions with Innovative Building Systems, LLC and its subsidiaries. (“IBS” or the “IBS Acquisition”). The other facilities acquired from IBS are idle and provide the Company with opportunity to add capacity.

The Company has also focused on expansion of its company-owned retail operations, opening three additional retail sales centers during fiscal 2018 and five during fiscal 2017. Management believes retail expansion provides an opportunity to increase the Company’s presence in market segments that are not currently served through its independent retail network, while also providing for expansionhousing) and increased ~~utilization~~affordability of ~~existing manufacturing operations.~~

~~These acquisitions and investments are part of a strategy~~factory-built homes relative to grow and diversify revenue with a focus on increasing the Company’s HUD and modular homebuilding presence in the U.S. as well as improving the results of operations. These acquisitions and investments are included in the consolidated results for periods subsequent to their respective acquisition dates.

On January 5, 2018, Champion Holdings and Skyline entered into an Exchange Agreement pursuant to which the two companies agreed to combine their operations. The Exchange was completed on June 1, 2018 and was accounted for as a reverse acquisition under the acquisition method of accounting as provided by FASB Accounting Standards Codification 805, ~~Business Combinations~~ (“ASC 805”). Champion Holdings was determined to be the acquirer for accounting and financial reporting purposes. The assets acquired and liabilities assumed by Champion Holdings as a result of the Exchange were recorded at their respective fair values and added to the carrying value of Champion Holdings existing assets and liabilities. As Champion Holdings is the accounting acquirer, the Company’s financial results for the six months ending September 29, 2018 are comprised of 1) the results of Champion Holdings for the period between April 1, 2018 and May 31, 2018 and 2) the Company, after giving effect to the Exchange, from June 1, 2018 through September 29, 2018.

For the ~~six~~three months ended ~~September 28, 2019,~~June 27, 2020, approximately ~~77%~~76% of the Company’s U.S. manufacturing sales were generated from the manufacture of homes that comply with the Federal HUD-code construction standard in the U.S. ~~Industry~~Annual industry shipments have generally increased each year since calendar year 2009 when only 50,000 HUD code manufactured homes were shipped, the lowest level since the industry began recording statistics in 1959. While shipments of ~~HUD-code~~HUD code manufactured homes were 62,471 during the eight months ended August 31, 2019 compared to 66,721 units shipped in same period of the prior year. The Company’s HUD market share during those periods was 17.1% versus 14.4% in the comparable period of the prior year. Industry sales of HUD-code homes have increased since 2009, when 50,000 HUD-code homes were sold. Fewer factory-built homes were sold in 2009 than in any year since 1959. While HUD-code factory-built home shipments have improved modestly ~~over the past few~~in recent years, ~~the industry continues to~~manufactured housing’s most recent annual shipment levels still operate at ~~relatively low~~lower levels ~~compared to historical shipment statistics. For instance,~~than the long-term historical average ~~for manufactured home shipments since 1960 is approximately 222,000~~of over 200,000 units ~~per year.~~annually.

For the ~~six~~three months ended ~~September 28, 2019,~~June 27, 2020, approximately ~~16%~~18% of the Company’s U.S. manufacturing sales were modular. The industry normally reports U.S. modular market shipments quarterly and three months in arrears. However, reporting of industry shipment data has been delayed and unavailable for the calendar year 2020 due to the COVID-19 pandemic. Industry shipments of modular homes were 3,080 units in the U.S. ~~were 6,916~~ during the first ~~half~~three months of calendar year 2019 ~~which was 9.9% lower than~~and the ~~7,673 units shipped in the comparable period of the prior year. The~~ Company’s modular market share during these periods was ~~14.1% and 11.5%, respectively.~~14.6%. Modular home sales across the industry have generally been stable since 2009.

The outbreak of a novel strain of coronavirus ("COVID-19") was declared a global pandemic by the World Health Organization in March 2020. There remains continued uncertainty regarding the extent and duration of the impact that the COVID-19 pandemic will have on the economy, the housing market, and the Company, as well as the Company’s employees, customers, and suppliers.

The Company has prioritized the safety and well-being of its employees and customers and has implemented standards to operate in accordance with social-distancing protocols and public health authority guidelines. Beginning in March 2020, the Company took actions to temporarily idle certain facilities in response to government shutdown orders or reduced demand. By late April 2020, most of the temporarily idled manufacturing facilities had reopened, but at reduced production levels due to employee absenteeism, difficulty hiring new team members and social distancing protocols. At June 27, 2020, two U.S. manufacturing facilities were temporarily idled. Also, during the first quarter, the Company’s retail operations were impacted by various mandates for operating; however, those facilities generally remained open and shifted physical visits to a larger on-line presence.

In response to the pandemic, the Company offered extended benefits to employees, including increased sick pay and premium payments on healthcare benefits for furloughed employees. During the first quarter of fiscal 2021, the Company’s U.S. operations incurred $1.9 million of expense related to the extended benefits. Various government programs have been announced to provide financial relief for affected businesses, including the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") in the United States and the Canada Emergency Wage Subsidy ("CEWS") under the COVID-19 Economic Response Plan in Canada. CEWS provides a cash subsidy of up to 75% of eligible employees’ remuneration, subject to certain criteria. The Company recognized $3.6 million for payroll subsidies under CEWS and $0.6 million for payroll subsidies under the CARES Act during the first quarter of fiscal 2021. In addition, the CARES Act allows for deferring payment of certain payroll taxes. Through June 27, 2020, the Company has deferred $3.6 million of payroll taxes that will be paid beginning in December 2021.

UNAUDITED ~~RESULTS OF OPERATIONS~~INCOME STATEMENTS FOR Q2Q1 FISCAL ~~2020~~2021 VS. ~~2019~~

	Three Months Ended						Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			June 27, 2020			June 29, 2019

Results of Operations Data:
Net sales	$	354,458		$	355,436		$	273,285		$	371,888
Cost of sales		280,403			296,436			219,282			295,853
Gross profit		74,055			59,000			54,003			76,035
Selling, general, and administrative expenses		48,402			128,069			40,807			51,715
Operating income (loss)		25,653			(69,069	)
Operating income								13,196			24,320
Interest expense, net		382			827			942			309
Other expense		—			1,307
Income (loss) before income taxes		25,271			(71,203	)
Other income								(4,214	)		—
Income before income taxes								16,468			24,011
Income tax expense		7,526			5,822			4,565			6,631
Net income (loss)	$	17,745		$	(77,025	)
Net income							$	11,903		$	17,380

Reconciliation of Adjusted EBITDA:
Net income (loss)	$	17,745		$	(77,025	)
Net income							$	11,903		$	17,380
Income tax expense		7,526			5,822			4,565			6,631
Interest expense, net		382			827			942			309
Depreciation and amortization		4,907			4,047			4,282			4,472
Equity-based compensation (for awards granted prior to December 31, 2018)		1,534			85,839			970			1,107
Foreign currency transaction loss (gain)		47			(34	)
Transaction costs		—			492
Foreign currency transaction gain								(122	)		(72	)
Acquisition integration costs		340			2,313			—			1,038
Equity-offering costs		—			816
Restructuring costs and other		1			702
Fair market value adjustment for asset classified as held for sale								—			986
Restructuring costs								—			234
Adjusted EBITDA	$	32,482		$	23,799		$	22,540		$	32,085
As a percent of net sales:
Gross profit		20.9	%		16.6	%		19.8	%		20.4	%
Selling, general, and administrative expenses		13.7	%		36.0	%		14.9	%		13.9	%
Operating income (loss)		7.2	%		(19.4	%)
Net income (loss)		5.0	%		(21.7	%)
Operating income								4.8	%		6.5	%
Net income								4.4	%		4.7	%
Adjusted EBITDA		9.2	%		6.7	%		8.2	%		8.6	%

The following table summarizes net sales for the three months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Three Months Ended										Three Months Ended
(Dollars in thousands)	September 28, 2019		September 29, 2018		Change			% Change			June 27, 2020		June 29, 2019		$ Change			% Change

Net sales	$	354,458	$	355,436	$	(978	)		(0.3	%)	$	273,285	$	371,888	$	(98,603	)		(26.5	%)
U.S. manufacturing and retail net sales	$	312,830	$	306,615	$	6,215			2.0	%	$	248,859	$	331,605	$	(82,746	)		(25.0	%)
U.S. homes sold		5,026		5,038		(12	)		(0.2	%)		4,028		5,448		(1,420	)		(26.1	%)
U.S. manufacturing and retail average home selling price	$	62.2	$	60.9	$	1.4			2.3	%	$	61.8	$	60.9	$	0.9			1.5	%
Canadian manufacturing net sales	$	26,407	$	25,401	$	1,006			4.0	%	$	15,195	$	23,700	$	(8,505	)		(35.9	%)
Canadian homes sold		311		312		(1	)		(0.3	%)		192		285		(93	)		(32.6	%)
Canadian manufacturing average home selling price	$	84.9	$	81.4	$	3			4.3	%	$	79.1	$	83.2	$	(4.1	)		(4.9	%)
Corporate/Other net sales	$	15,221	$	23,420	$	(8,199	)		(35.0	%)	$	9,231	$	16,583	$	(7,352	)		(44.3	%)
U.S. manufacturing facilities in operation at end of period		33		31		2			6.5	%
U.S. manufacturing facilities in operation at end of period*												33		33
U.S. retail sales centers in operation at end of period		21		21		—			—	%		21		21
Canadian manufacturing facilities in operation at end of period		5		5		—			—	%		5		5

*Two of the Company’s manufacturing facilities are temporarily idled as of June 27, 2020, but still considered operational.

Net sales for the three months ended ~~September 28, 2019~~June 27, 2020 were ~~$354.5~~$273.3 million, a decrease of ~~$1.0~~$98.6 million, or ~~0.3% compared to~~26.5% over the three months ended ~~September~~June 29, ~~2018.~~2019. The following is a summary of the change by operating segment.

~~Sales of homes~~Net sales for the Company’s U.S. manufacturing and retail operations ~~increased~~decreased by ~~$6.2~~$82.7 million, or ~~2.0%~~25.0%. The ~~improvement~~decrease was primarily due to a ~~2.3%~~decrease in the number of homes sold during the three months ended June 27, 2020 of 1,420 units, or 26.1%. U.S. housing sales volumes were severely impacted by COVID-19-related factors, including government mandated stay-at-home orders. During the first weeks of the quarter, several of the Company’s U.S. manufacturing operations were temporarily idled. Since reopening most of these facilities, production has operated at reduced levels as compared to the prior year due to employee hiring constraints, social-distancing protocols and in some areas, reduced demand. The volume decrease was partially offset by an increase in average ~~home~~ selling ~~prices resulting from~~price. Average selling price increased due to a ~~shift~~change in product mix. Product mix fluctuations result from consumer preferences regarding the ~~size~~sizes and styles of homes selected for purchase, ~~as well as~~ opting for home upgrade packages, as well as regional housing dynamics.

The Canadian Factory-built Housing segment net sales ~~increased~~decreased by ~~$1.0~~$8.5 million, or ~~4.0%~~35.9% for the three months ended ~~September 28, 2019~~June 27, 2020 compared to the same period in the prior ~~year. The increase was~~year, primarily due to a ~~4.3% increase~~32.6% decrease in the number of homes sold, coupled with a 4.9% decrease in average home selling price. The decrease in volume was due to reduced demand and production primarily from oil-related demand drivers and the impacts of COVID-19. Our five Canadian plants were temporarily idled or running at reduced production levels for most of the quarter. The decrease in average selling price ~~resulting from~~is due to a shift in product ~~mix. Net~~mix to more single-section homes in fiscal 2021 first quarter versus the same period last year. On a constant currency basis, net sales for the Canadian segment were unfavorably impacted by approximately $0.6 million as the Canadian dollar weakened compared to the U.S. dollar during the ~~second quarter~~first three months of fiscal ~~2020~~2021 as compared to the same period of the prior year.

Net sales for Corporate/Other includes the Company’s transportation business and the elimination of intersegment sales. For the three months ended ~~September 28, 2019,~~June 27, 2020, net sales decreased ~~$8.2~~$7.4 million, or ~~35.0%~~44.3%. The decrease was primarily attributable to lower net sales in the Company’s transportation business ~~primarily~~largely as a result of lower shipments ~~associated with reduced~~due to COVID-19-related manufacturing shutdowns in both the RV ~~demand~~and manufactured housing industries experienced mainly in the U.S. Midwest and Northeast regions.

The following table summarizes gross profit for the three months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018~~:

	Three Months Ended												Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			Change			% Change			June 27, 2020			June 29, 2019			$ Change			% Change

Gross profit:
U.S. Factory-built Housing	$	65,361		$	50,706		$	14,655			28.9	%	$	48,410		$	68,315		$	(19,905	)		(29.1	%)
Canadian Factory-built Housing		5,953			4,588			1,365			29.8	%		2,782			4,626			(1,844	)		(39.9	%)
Corporate/Other		2,741			3,706			(965	)		(26.0	%)		2,811			3,094			(283	)		(9.1	%)
Total gross profit	$	74,055		$	59,000		$	15,055			25.5	%	$	54,003		$	76,035		$	(22,032	)		(29.0	%)
Gross profit as a percent of net sales		20.9	%		16.6	%								19.8	%		20.4	%

Gross profit as a percent of sales during the three months ended ~~September 28, 2019~~June 27, 2020 was ~~20.9%~~19.8% compared to ~~16.6%~~20.4% during the three months ended ~~September~~June 29, ~~2018.~~2019. The following is a summary of the change by operating segment.

Gross profit for the U.S. Factory-built Housing segment ~~increased~~decreased by ~~$14.7~~$19.9 million, or ~~28.9%~~29.1%, during the three months ended ~~September 28, 2019~~June 27, 2020 compared to the same period in the prior year. Gross profit was ~~20.9%~~19.5% as a percent of segment net sales for the three months ended ~~September 28, 2019~~June 27, 2020 compared to ~~16.5%~~20.6% in the same period of the prior year. ~~Gross profit expansion was driven~~The decrease is due to the supplemental COVID-19-related sick pay and health benefits provided to furloughed employees of $1.9 million, as well as reduced leverage of manufacturing fixed costs caused by material cost inputs, Exchange synergy capture, rationalization of product offerings and plant operating improvements. These improvements were partially offset by the production ramp costs for capacity expansion at a recently opened manufacturing facility.reduced sales volumes.

Gross profit for the Canadian Factory-built Housing segment ~~increased $1.4~~decreased by $1.8 million, or ~~29.8%,~~39.9% during the three months ended ~~September 28, 2019~~June 27, 2020 compared to the same period in the prior year. Gross profit as a percent of net ~~segment~~ sales was ~~22.5%~~18.3% for the three months ended ~~September 28, 2019,~~June 27, 2020, compared to ~~18.1%~~19.5% in the same period of the prior year. ~~Gross margin increased~~The decrease is due to ~~product mix, lower material commodity pricing,~~higher labor costs and ~~efforts to reduce~~reduced leverage of manufacturing fixed expenses ~~during slower economic market cycles.~~due to lower volume, partially offset by improved warranty costs.

Gross profit for the Corporate/Other segment decreased ~~$1.0~~$0.3 million, or ~~26.0%~~9.1%, during the three months ended ~~September 28, 2019~~June 27, 2020 compared to the same period in the prior ~~year. However, Corporate/Other~~year, primarily due to lower sales in the Company’s transportation operations. Although transportation sales were lower, gross profit improved as a percent of segment net sales to ~~18.0%~~30.5% from ~~15.8%. Gross margins for the Company’s transportation business improved~~18.7% as a ~~percent~~result of changes in revenue mix and expansion of storage offerings. Additionally, increases in intercompany sales ~~due in part to less brokered business to other providers at lower margins in response~~elimination activity contributed to the ~~decline~~increase in ~~revenue caused by~~gross margin as the ~~softening of market demand for RVs.~~eliminations decreased sales reported in this segment.

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 ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Three Months Ended												Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			Change			% Change			June 27, 2020			June 29, 2019			$ Change			% Change

Selling, general, and administrative expenses:
U.S. Factory-built Housing	$	34,476		$	26,494		$	7,982			30.1	%	$	28,376		$	36,171		$	(7,795	)		(21.6	%)
Canadian Factory-built Housing		1,956			1,840			116			6.3	%		1,606			1,813			(207	)		(11.4	%)
Corporate/Other		11,970			99,735			(87,765	)		(88.0	%)		10,825			13,731			(2,906	)		(21.2	%)
Total selling, general, and administrative expenses	$	48,402		$	128,069		$	(79,667	)		(62.2	%)	$	40,807		$	51,715		$	(10,908	)		(21.1	%)
Selling, general, and administrative expense as a percent of net sales		13.7	%		36.0	%								14.9	%		13.9	%

Selling, general, and administrative expenses were ~~$48.4~~$40.8 million for the three months ended ~~September 28, 2019,~~June 27, 2020, a decrease of ~~$79.7~~$10.9 million compared to the same period in the prior ~~year, primarily due to stock compensation expense recognized in the prior year, as explained further below.~~year. The following is a summary of the change by operating segment.

Selling, general, and administrative expenses for the U.S. Factory-built Housing segment ~~increased $8.0~~decreased $7.8 million, or ~~30.1%~~21.6%, during the three months ended ~~September 28, 2019~~June 27, 2020 as compared to the same period in the prior year. Selling, general, and administrative expenses, as a percent of segment net sales, was 11.0% for the three months ended September 28, 2019 compared to 8.6% during the comparable period in the prior year. The ~~increase~~decrease in selling, general, and administrative expenses ~~was~~resulted from a combination of factors which ~~include~~include: (i) ~~higher~~lower sales commissions and incentive compensation, which is generally based on sales volume or a measure of profitability; (ii) ~~an increase~~reduction in ~~salaries~~non-essential costs such as travel and ~~benefits to maintain competitive compensation packages to retain and recruit team members;~~trade shows; and (iii) ~~investment~~reduction in ~~capacity expansion at~~wages from headcount reductions and furloughs in response to COVID-19. Selling, general, and administrative expenses, as a ~~newly opened manufacturing facility.~~percent of segment net sales was 11.4% for the three months ended June 27, 2020 compared to 10.9% during the comparable period in the prior year. Selling, general, and administrative expense as a percentage of net sales increased in the current period due to less leverage of fixed costs due to reduced sales volumes.

Selling, general, and administrative expenses for the Canadian Factory-built Housing segment ~~increased $0.1~~decreased $0.2 million ~~or 6.3%, during the~~for three months ended ~~September 28, 2019 as~~June 27, 2020 when compared to the same period of the prior year. As a percent of segment net sales, selling, general, and administrative expenses for the Canadian segment was ~~7.4%~~11.0% and 7.6% for the three months ended ~~September 28,~~June 27, 2020 and June 29, 2019, compared to 7.2% for the same period in the prior year. The increase is primarily due to higher sales commissions and incentive compensation, which is generally based on sales volume or a measure of profitability.

respectively. 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 decreased $87.8 million, or 88.0%, during the three months ended September 28, 2019 as compared to the same period of the prior year. The decrease is mainly related to stock compensation expense ~~recognized in the prior year triggered by the secondary offerings which closed during the second quarter of fiscal 2019 of $85.8 million, as well~~ as a ~~reduction in acquisition integration costs and restructuring costs of $2.7 million.~~

~~The following table summarizes the components of interest expense, net for the three months ended September 28, 2019 and September 29, 2018:~~

Interest expense, net was $0.4 million for the three months ended September 28, 2019, a decrease of $0.4 million compared to the same period in the prior year. The decrease was related to: (i) higher interest income recognized during the period as a result of higher average cash balances invested in short term facilities and (ii) a lower average outstanding balance on its credit facility as compared to the same period in the prior year. The decrease was offset by increased interest expense on the floor plan payable balances due to a higher average outstanding balance as compared to the same period in the prior year, as well as an increase in the effective interest rate on the borrowings.

~~The following table summarizes other expense for the three months ended September 28, 2019 and September 29, 2018:~~

Other expense for the three months ended September 29, 2018 related to legal, accounting, and advisory services associated with the secondary offerings of $0.8 million and the Exchange of $0.5 million.

~~The following table summarizes income tax expense for the three months ended September 28, 2019 and September 29, 2018:~~

Income tax expense for the three months ended September 28, 2019 was $7.5 million, representing an effective tax rate of 29.8%, compared to income tax expense of $5.8 million, representing an effective tax rate of (8.2%), for the three months ended September 29, 2018.

The Company’s effective tax rate for the three months ended September 28, 2019 differs from the federal statutory income tax rate of 21.0%, due primarily to the effect of non-deductible expenses, state and local income taxes, and results in foreign jurisdictions. The Company’s effective tax rate for the three months ended September 29, 2018 differed from the federal statutory rate of 21.0% primarily due to the effect of non-deductible expenses, state and local income taxes, one-time charges related to the Exchange and results of operations in foreign jurisdictions and non-taxable entities.

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 September 28, 2019 and September 29, 2018:

Three Months Ended

(Dollars in thousands)

September 28,
2019

September 29,
2018

Change

% Change

Net income (loss)

$
17,745

$
(77,025
)

$
94,770

*

Income tax expense

7,526

5,822

1,704

29.3
%
Interest expense, net

382

827

(445
)

(53.8
%)
Depreciation and amortization

4,907

4,047

860

21.3
%
Equity-based compensation (for awards granted prior to December 31, 2018)

1,534

85,839

(84,305
)

(98.2
%)
Foreign currency transaction (gain) loss

47

(34
)

81

*

Transaction costs

—

492

(492
)

*

Acquisition integration costs

340

2,313

(1,973
)

(85.3
%)
Equity-offering costs

—

816

(816
)

*

Restructuring costs and other

1

702

(701
)

*

Adjusted EBITDA

$
32,482

$
23,799

$
8,683

36.5
%

Adjusted EBITDA for the three months ended September 28, 2019 was $32.5 million, an increase of $8.7 million from the same period of the prior year. The increase is primarily due improved gross profit levels generated by lower material cost inputs, procurement and operational synergies related to the Exchange, and execution on identified operational improvements. ~~See Adjusted EBITDA definition below for additional information regarding the definition and use of this metric in evaluating the Company’s results.~~

Six Months Ended

(Dollars in thousands)

September 28,
2019

September 29,
2018

Results of Operations Data:

Net sales

$
726,346

$
677,697

Cost of sales

576,256

563,537

Gross profit

150,090

114,160

Selling, general and administrative expenses

100,117

173,157

Operating income (loss)

49,973

(58,997
)
Interest expense, net

691

1,899

Other expense

—

7,720

Income (loss) before income taxes

49,282

(68,616
)
Income tax expense

14,157

9,262

Net income (loss)

$
35,125

$
(77,878
)

Reconciliation of Adjusted EBITDA:

Net income (loss)

$
35,125

$
(77,878
)
Income tax expense

14,157

9,262

Interest expense, net

691

1,899

Depreciation and amortization

9,379

6,958

Equity-based compensation (for awards granted prior to December 31, 2018)

2,641

93,927

Foreign currency transaction (gain) loss

(25
)

33

Transaction costs

—

6,905

Acquisition integration costs

1,378

3,502

Equity-offering costs

—

816

Fair market value adjustment for asset classified as held for sale

986

—

Restructuring costs and other

235

1,110

Adjusted EBITDA

$
64,567

$
46,534

As a percent of net sales:

Gross profit

20.7
%

16.8
%
Selling, general and administrative expenses

13.8
%

25.6
%
Operating income (loss)

6.9
%

(8.7
%)
Net income (loss)

4.8
%

(11.5
%)
Adjusted EBITDA

8.9
%

6.9
%

~~The following table summarizes net sales for the six months ended September 28, 2019 and September 29, 2018:~~

Six Months Ended

(Dollars in thousands)

September 28,
2019

September 29,
2018

Change

%
Change

Net sales

$
726,346

$
677,697

$
48,649

7.2
%
U.S. manufacturing and retail net sales

$
644,435

$
572,739

$
71,696

12.5
%
U.S. homes sold

10,474

9,587

887

9.3
%
U.S. manufacturing and retail average home selling price

$
61.5

$
59.7

$
1.8

3.0
%
Canadian manufacturing net sales

$
50,107

$
52,755

$
(2,648
)

(5.0
%)
Canadian homes sold

596

674

(78
)

(11.6
%)
Canadian manufacturing average home selling price

$
84.1

$
78.3

$
6

7.4
%
Corporate/Other net sales

$
31,804

$
52,203

$
(20,399
)

(39.1
%)
U.S. manufacturing facilities in operation at end of period

33

31

2

6.5
%
U.S. retail sales centers in operation at end of period

21

21

—

—
%
Canadian manufacturing facilities in operation at end of period

5

5

—

—
%

Net sales for the six months ended September 28, 2019 were $726.3 million, an increase of $48.6 million, or 7.2% over the six months ended September 29, 2018. The following is a summary of the change by operating segment.

The U.S. Factory-built Housing segment accounted for the Company’s net sales growth for the six months ended September 28, 2019 compared to the same period in the prior year. Sales of homes for the Company’s U.S. manufacturing and retail operations increased by $71.7 million, or 12.5%. The number of homes sold during the six months ended September 28, 2019 increased by 887 units, or 9.3%. Net sales increased by $50.3 million due to the inclusion of the Skyline operations for all six months in the first half of fiscal 2020 compared to the same period of the prior year which only included four months of Skyline operations. The remainder of the increase was due to a combination of factors which included additional manufacturing capacity, plant operating improvements, and an increase in the average home selling price which was driven primarily by product mix. Product mix fluctuations result from consumer preferences regarding the sizes and styles of homes selected for purchase, and opting for home upgrade packages as well as regional housing dynamics.

The Canadian Factory-built Housing segment net sales decreased by $2.6 million, or 5.0% for the six months ended September 28, 2019 compared to the same period in the prior year, primarily due to a 11.6% decrease in number of homes sold, partially offset by a 7.4% increase in average home selling price which was a result of pricing actions taken by the Company as well as shifts in product mix. The number of homes sold decreased due to the decline in manufactured housing demand in the British Columbia and Alberta provinces versus the same period in the prior year. On a constant currency basis, net sales for the Canadian segment were unfavorably impacted by approximately $1.3 million as the Canadian dollar weakened compared to the U.S. dollar during the first half of fiscal 2020 as compared to the same period of the prior year.

Net sales for Corporate/Other includes the Company’s transportation business and the elimination of intersegment sales. For the six months ended September 28, 2019, net sales decreased $20.4 million, or 39.1%. The decrease was primarily attributable to lower net sales in the Company’s transportation business primarily as a result of lower shipments associated with reduced RV demand in the U.S.

~~The following table summarizes gross profit for the six months ended September 28, 2019 and September 29, 2018:~~

Six Months Ended

(Dollars in thousands)

September 28,
2019

September 29,
2018

Change

%
Change

Gross profit:

U.S. Factory-built Housing

$
133,676

$
96,029

$
37,647

39.2
%
Canadian Factory-built Housing

10,579

9,942

637

6.4
%
Corporate/Other

5,835

8,189

(2,354
)

(28.7
%)
Total gross profit

$
150,090

$
114,160

$
35,930

31.5
%
Gross profit as a percent of net sales

20.7
%

16.8
%

Gross profit as a percent of sales during the six months ended September 28, 2019 was 20.7% compared to 16.8% during six months ended September 29, 2018. The following is a summary of the change by operating segment.

Gross profit for the U.S. Factory-built Housing segment increased by $37.6 million, or 39.2%, during the six months ended September 28, 2019 compared to the same period in the prior year. The increase in gross profit is due to the increase in sales volumes and improved margins. Gross profit was 20.7% as a percent of segment net sales for the six months ended September 28, 2019 compared to 16.8% in the same period of the prior year. Gross profit expansion was driven by favorable material pricing, refinement of product offerings, plant operating improvements, and procurement and operational synergies related to the Exchange, all of which were partially offset by labor inflation.

Gross profit for the Canadian Factory-built Housing segment increased $0.6 million, or 6.4%, during the six months ended September 28, 2019 compared to the same period in the prior year. Gross profit as a percent of net sales ~~was 21.1% for the six months ended September 28, 2019, compared to 18.8%~~increased in the ~~same~~current period ~~of the prior year. Gross margin increased~~ due to ~~product mix, lower material commodity pricing, and efforts to reduce~~less leverage of fixed ~~expenses during slower economic market cycles.~~

~~Gross profit for the Corporate/Other segment decreased $2.4 million, or 28.7%, during the six months ended September 28, 2019 compared to the same period in the prior year~~costs due to ~~lower~~reduced sales volume. Corporate/Other gross profit improved as a percent of segment net sales to 18.3% from 15.7%. Gross margins for the Company’s transportation business improved as a percent of sales due in part to less brokered business to other providers at lower margins in response to the decline in revenue caused by the softening of market demand for RVs.

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 six months ended September 28, 2019 and September 29, 2018:

Six Months Ended

(Dollars in thousands)

September 28,
2019

September 29,
2018

Change

%
Change

Selling, general, and administrative expenses:

U.S. Factory-built Housing

$
70,647

$
51,005

$
19,642

38.5
%
Canadian Factory-built Housing

3,769

3,966

(197
)

(5.0
%)
Corporate/Other

25,701

118,186

(92,485
)

(78.3
%)
Total selling, general, and administrative expenses

$
100,117

$
173,157

$
(73,040
)

(42.2
%)
Selling, general, and administrative expense as a percent of net sales

13.8
%

25.6
%

Selling, general, and administrative expenses were $100.1 million for the six months ended September 28, 2019, a decrease of $73.0 million compared to the same period in the prior year, primarily due to stock compensation expense recognized in the prior year, as explained further below. The following is a summary of the change by operating segment.

Selling, general, and administrative expenses for the U.S. Factory-built Housing segment increased $19.6 million, or 38.5%, during the six months ended September 28, 2019 as compared to the same period in the prior year. Selling, general, and administrative expenses, as a percent of segment net sales, was 11.0% for the six months ended September 28, 2019 compared to 8.9% during the comparable period in the prior year. The inclusion of six months of Skyline operations for the first half of fiscal 2020 versus four months for the same period of the prior year as well as intangible amortization related to the Exchange increased selling, general, and administrative expenses by $6.7 million. The Company recorded ramp up costs for capacity expansion of $2.1 million during the six months ended September 28, 2019. The remainder of the increase in selling, general, and administrative expenses was a combination of factors which include (i) higher sales commissions and incentive compensation, which is generally based on sales volume or a measure of profitability, and (ii) an increase in salaries and benefits to maintain competitive compensation packages to retain and recruit team members.

Selling, general, and administrative expenses for the Canadian Factory-built Housing segment decreased $0.2 million, or 5.0%, during the six months ended September 28, 2019 as compared to the same period of the prior year. The decrease is due to an effort to reduce fixed expenses during slower economic market cycles, partially offset by higher sales commissions and incentive compensation, which is generally based on sales volume or a measure of profitability. As a percent of segment net sales, selling, general, and administrative expenses for the Canadian segment was 7.5% for both the six months ended September 28, 2019 and the same period in the prior year.volumes.

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 decreased ~~$92.5~~$2.9 million, or ~~78.3%~~21.2%, during the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 as compared to the same period of the prior year. The decrease is ~~mainly~~due to a reduction in incentive compensation costs, and travel expense, as well as the benefit from not incurring costs related to ~~stock compensation expense of $93.9 million recognized~~acquisition integration expenses and the fair value adjustment on an asset classified as held for sale that were recorded in the prior year triggered by the Exchange and secondary offerings, as well as a reduction in acquisition integration and restructuring costs of $3.0 million. This decrease was partially offset by a fair market value adjustment charge of $1.0 million related to property acquired in the Exchange and stock-based compensation expense for long term incentive plans of $2.1 million recorded during the six months ended September 28, 2019.year.

The following table summarizes the components of interest expense, net for the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Six Months Ended												Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			Change			% Change			June 27, 2020			June 29, 2019			$ Change			% Change

Interest expense	$	2,466		$	2,699		$	(233	)		(8.6	%)	$	1,087		$	1,271		$	(184	)		(14.5	%)
Interest income		(1,775	)		(800	)		(975	)		121.9	%		(145	)		(962	)		817			(84.9	%)
Interest expense, net	$	691		$	1,899		$	(1,208	)		(63.6	%)	$	942		$	309		$	633			204.9	%
Average outstanding floor plan payable	$	31,959		$	29,407								$	31,067		$	32,811
Average outstanding long-term debt	$	50,759		$	59,377								$	77,330		$	53,080

Interest expense, net was ~~$0.7~~$0.9 million for the ~~six~~three months ended ~~September 28, 2019, a decrease~~June 27, 2020, an increase of ~~$1.2~~$0.6 million compared to the same period in the prior year. The ~~decrease~~net increase was primarily related to ~~higher~~a reduction of interest income ~~recognized during~~received on the ~~period as a result of higher~~Company’s average cash balances invested in ~~short term facilities. In addition, the Company incurred~~short-term facilities due to a reduction in interest rates. The net increase was partially offset by reduced interest expense on the Company’s borrowings, also due to ~~(i)~~ a ~~lower weighted average~~reduction in interest ~~rate on its revolving credit facility of 3.9% as compared to 7.4% on the term loans under a previously outstanding credit agreement,~~rates and ~~(ii)~~despite an ~~average lower outstanding balance on its credit facility as compared to the same period~~increase in the ~~prior year.~~average outstanding long-term debt balance.

The following table summarizes other ~~expense~~income for the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Six Months Ended										Three Months Ended
(Dollars in thousands)	September 28, 2019		September 29, 2018		Change			% Change			June 27, 2020			June 29, 2019		$ Change			% Change

Other expense	$	—	$	7,720	$	(7,720	)		(100.0	%)
Other income											$	(4,214	)	$	—	$	(4,214	)		100.0	%

Other ~~expense~~income for the ~~six~~three months ended ~~September 29, 2018 primarily consists of $6.9~~June 27, 2020 was $4.2 million ~~of expenses~~ related to ~~legal, accounting, and advisory services associated with the Exchange. The Company also incurred $0.8 million of expenses for legal, accounting, and advisory services related~~wage subsidies provided by government sponsored financial assistance programs enacted in responses to the ~~secondary offerings.~~pandemic. The Canadian wage subsidy benefit was $3.6 million and the US wage subsidy benefit was $0.6 million.

The following table summarizes income tax expense for the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Six Months Ended											Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			Change		% Change			June 27, 2020			June 29, 2019			$ Change			% Change

Income tax expense	$	14,157		$	9,262		$	4,895		52.9	%	$	4,565		$	6,631		$	(2,066	)		(31.2	%)
Effective tax rate		28.7	%		(13.5	%)							27.7	%		27.6	%

Income tax expense for the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 was ~~$14.2~~$4.6 million, representing an effective tax rate of ~~28.7%~~27.7%, compared to income tax expense of ~~$9.3~~$6.6 million, representing an effective tax rate of ~~(13.5%),~~27.6% for the ~~six~~three months ended ~~September~~June 29, ~~2018.~~2019.

The Company’s effective tax rate for both the ~~six~~three months ended ~~September 28,~~June 27, 2020 and June 29, 2019 differs from the federal statutory income tax rate of 21.0%, due primarily to the effect of non-deductible expenses, state and local income taxes, and results in foreign jurisdictions. The Company’s effective tax rate for the six months ended September 29, 2018 differed from the federal statutory rate of 21.0% primarily due the effect of non-deductible expenses, state and local income taxes, one-time charges related to the Exchange and results of operations in foreign jurisdictions and non-taxable entities. The effective tax rate for the six months ended September 28, 2019 is more representative of the Company’s ongoing expected effective tax rate.

The following table reconciles net income, the most directly comparable U.S. GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Six Months Ended												Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			Change			% Change			June 27, 2020			June 29, 2019			$ Change			% Change

Net income (loss)	$	35,125		$	(77,878	)	$	113,003		*
Net income													$	11,903		$	17,380		$	(5,477	)		(31.5	%)
Income tax expense		14,157			9,262			4,895			52.9	%		4,565			6,631			(2,066	)		(31.2	%)
Interest expense, net		691			1,899			(1,208	)		(63.6	%)		942			309			633		*
Depreciation and amortization		9,379			6,958			2,421			34.8	%		4,282			4,472			(190	)		(4.2	%)
Equity-based compensation (for awards granted prior to December 31, 2018)		2,641			93,927			(91,286	)		(97.2	%)		970			1,107			(137	)		(12.4	%)
Foreign currency transaction (gain) loss		(25	)		33			(58	)	*
Transaction costs		—			6,905			(6,905	)	*
Foreign currency transaction gain														(122	)		(72	)		(50	)		69.4	%
Acquisition integration costs		1,378			3,502			(2,124	)		(60.7	%)		—			1,038			(1,038	)	*
Equity-offering costs		—			816			(816	)	*
Fair market value adjustment for asset classified as held for sale		986			—			986		*				—			986			(986	)	*
Restructuring costs and other		235			1,110			(875	)		(78.8	%)
Restructuring costs														—			234			(234	)	*
Adjusted EBITDA	$	64,567		$	46,534		$	18,033			38.8	%	$	22,540		$	32,085		$	(9,545	)		(29.7	%)

Adjusted EBITDA for the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 was ~~$64.6~~$22.5 million, ~~an increase~~a decrease of ~~$18.0~~$9.5 million from the same period of the prior year. The ~~increase~~decrease is primarily a result of ~~increased~~lower operating income after adjusting for the effect of ~~increased depreciation and amortization, transaction-related expenses,~~ integration costs, fair market value adjustment for asset classified as held for sale, and restructuring costs ~~and non-cash equity-based compensation~~ incurred in ~~connection with~~ the ~~Exchange.~~prior year. The ~~increase~~decrease in operating income is primarily due to ~~an increase~~a decrease in sales ~~volume from~~volume. See the ~~inclusion~~definition of ~~the Skyline operations and an improvement in gross profit margins partially offset by higher selling, general, and administrative costs. See~~ Adjusted EBITDA ~~definition~~ below for additional information regarding the definition and use of this ~~metric in evaluating the Company’s results.~~metric.

The Company defines Adjusted EBITDA as net income or loss ~~plus~~plus: (a) the provision for income ~~taxes,~~taxes; (b) interest expense, ~~net,~~net; (c) depreciation and ~~amortization,~~amortization; (d) gain or loss from discontinued ~~operations,~~operations; (e) foreign currency gains and ~~losses,~~losses; (f) equity-based compensation awards granted prior to December 31, ~~2018,~~2018; (g) restructuring ~~charges,~~charges; (h) impairment of ~~assets,~~assets; and (i) other non-operating costs including those for the acquisition and integration or disposition of businesses and idle facilities. 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. The Company believes that Adjusted EBITDA is commonly used by investors to evaluate its performance and that of its competitors. However, the Company’s use of Adjusted EBITDA may vary from that of others in its industry.

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 ~~inference~~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:

~~Because of~~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.

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 ~~for homes~~ at ~~September 28, 2019~~June 27, 2020 totaled ~~$172.0~~$192.1 million compared to ~~$252.4~~$153.0 million at ~~September~~

June 29, ~~2018.~~2019. The ~~reduction~~increase in backlog is driven by ~~a decrease~~strong order levels in ~~order~~both the U.S. and Canada that have outpaced production levels. Production levels vary widely by plant, but have, on average, returned to approximately 90% of last year’s average production rates ~~from retailers. The order~~as of the end of June. Production rates ~~are based on manufacturers’ backlogs~~as of the end of June were being impacted by difficulty hiring new employees, higher absenteeism at certain plants and delivery times which are shorter, generally, than the same time last year. In addition, backlog for Canadian operations was lower in the current period due to continued softness in the western Canada housing markets.social distancing protocols.

The following table presents summary cash flow information for the three months ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018:~~2019:

	Six Months Ended						Three Months Ended
(Dollars in thousands)	September 28, 2019			September 29, 2018			June 27, 2020			June 29, 2019
Net cash provided by (used in):
Operating activities	$	52,158		$	29,018		$	32,205		$	26,780
Investing activities		(9,392	)		5,181			(1,299	)		(4,514	)
Financing activities		(14,829	)		(67,904	)		(4,524	)		(5,653	)
Effect of exchange rate changes on cash, cash equivalents		168			(38	)		670			400
Net increase (decrease) in cash, cash equivalents and restricted cash		28,105			(33,743	)
Cash, cash equivalents and restricted cash at beginning of period		126,634			136,616
Cash, cash equivalents and restricted cash at end of period	$	154,739		$	102,873
Net increase in cash, cash equivalents, and restricted cash								27,052			17,013
Cash, cash equivalents, and restricted cash at beginning of period								209,455			126,634
Cash, cash equivalents, and restricted cash at end of period							$	236,507		$	143,647

The Company’s primary sources of liquidity are cash flows from operations and existing cash ~~balances and borrowings under available credit facilities. The Company has $39.4 million of unused borrowing capacity under its revolving credit facility.~~balances. Cash balances and cash flow from operations for the next year are expected to be adequate to ~~fund~~cover working capital ~~expenditures.~~requirements, capital expenditures, and floor plan payment obligations. The Company does not have any scheduled long-term debt maturities in the next twelve months. The Company’s revolving credit facility includes a leverage ratio covenant that requires the Company’s first lien debt levels to remain less than 2.75x consolidated trailing twelve-month EBITDA. The Company anticipates compliance with its leverage ratio debt covenant and projects its level of cash availability ~~is projected~~ to be in excess of cash needed to operate the business for the next year. In the event operating cash flow isand 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 operating strategies accordingly.

Cash provided by operating activities was ~~$52.2~~$32.2 million during the ~~six~~three months ended ~~September 28, 2019~~June 27, 2020 compared to ~~$29.0~~$26.8 million during the ~~six~~three months ended ~~September~~June 29, ~~2018. Cash was generated~~2019. The increase of $5.4 million in cash from operating activities is primarily due to increases in deposits from customers and commercial projects, deferral of certain payroll tax obligations resulting from the CARES Act regulations, and the benefit of the CEWS subsidy received, partially offset by a reduction of operating income ~~(before non-cash charges) from higher sales and operating margins~~ compared to ~~the prior year. Additionally, there were no transaction expenses incurred for the Skyline acquisition or equity offering costs in the first half of fiscal 2020 compared to $7.5 million in~~ the same period of the prior ~~year, which contributed to the positive increase in cash provided by operating activities compared to the prior period. ��~~year.

Cash used in investing activities, primarily for capital expenditures, was ~~$9.4~~$1.3 million for the ~~six~~three months ended ~~September 28, 2019 which was related~~June 27, 2020 compared to $4.5 million during the three months ended June 29, 2019. The decrease in capital ~~expenditures. The~~ expenditures ~~for capital items are part~~in the current period is primarily due to deferral of ~~the Company’s focus on efficiency and safety initiatives~~non-essential spending as well as non-recurring spending incurred in the prior year related to: (i) expansion of production capacity ~~with~~at the ~~investment in the new~~ Leesville, Louisiana manufacturing ~~facility. Cash provided by investing activities was $5.2 million during the six months ended September 29, 2018~~facility; as ~~a result of cash acquired~~well as (ii) investment in ~~the Exchange of $9.7 million, offset by capital expenditures of $4.7 million.~~equipment to facilitate improvement in safety protocols and operating efficiencies.

Cash used in financing activities was ~~$14.8~~$4.5 million for the ~~six~~three months ended ~~September 28, 2019, primarily~~June 27, 2020 compared to $5.7 million during the three months ended June 29, 2019. Cash used in financing activities during the first quarter fiscal 2021 was related to ~~the $10.0 million repayment on the revolving credit facility and $2.8 million,~~ net ~~repayment~~repayments on the floor plan payable balance. Cash used in financing activities ~~for~~during the ~~six months ended September 29, 2018~~first quarter of fiscal 2020 was ~~$67.9~~primarily related to the $5.0 million primarily as a result of distributions to Champion Holdings’ members of $65.3 million prior to completion of the Exchange and $2.0 million of additional payments made for deferred financing fees. The Company also borrowed $46.9 million underrepayment on the revolving credit ~~agreement during~~facility and a $0.6 million net repayment on the ~~six months ended September 29, 2018 and utilized the proceeds to repay term loans.~~floor plan payable balance.

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 ~~Company’s~~Fiscal 2020 Annual Report, ~~on Form 10-K for fiscal 2019 (the “Fiscal 2019 Annual Report”),~~ under the heading ~~"Critical~~“Critical Accounting Policies."” There have been no significant changes in our significant accounting policies or critical accounting estimates discussed in the ~~2019~~Fiscal 2020 Annual Report, ~~on Form 10-K,~~ with the exception of adoption of ~~the~~ new ~~lease standard described~~accounting pronouncements as discussed in Note ~~10, “Leases,~~1, “Basis of Presentation – Recently Issued Accounting Pronouncements.” ~~to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (this “Report”).~~

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.

Some of the statements in this Report are not historical in nature and are considered 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 ~~important factors,~~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~~statements. These risks and uncertainties include regional, national, and international economic, financial, public health and labor conditions, and the following:

~~The~~If any of the risks or uncertainties referred to above materializes or if any of the assumptions underlying our forward-looking statements ~~in this Report are made~~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 ~~hereof, and we do not~~of this report. We assume ~~any~~no obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date ~~hereof.~~hereof, except as required by law.

For a discussion of the Company’s interest rate and foreign exchange risks, see Part II, Item 7A of the Fiscal ~~2019~~2020 Annual Report, under the heading "Quantitative and Qualitative Disclosures about Market Risk." There ~~were~~have been no significant changes in ~~the Company’s market risk to the market risk information included in the 2019 Annual Report on Form 10-K.~~such risks since March 28, 2020.

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 Rules 13a-15(e) or 15d-15(e) of the Exchange Act) at ~~September 28, 2019.~~June 27, 2020. Based upon this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of ~~September 28, 2019.~~June 27, 2020.

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’~~Company’s internal control over financial reporting.

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 ~~15,~~13 “Commitments, Contingencies and Legal Proceedings – Legal Proceedings,” to the condensed consolidated financial statements included in this Report.

In addition to the other information set forth in this Report, you should carefully consider the factors described in Part 1, Item 1A., “Risk Factors,” in our Fiscal 2019 Annual Report, which could materially affect our business, financial condition or future results. There have been no material changes to the disclosure on these matters set forth in the Fiscal 2019 Annual Report.

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.

Indiana		35-1038277
(State of Incorporation)		(I.R.S. Employer Identification No.)
~~P.O. Box 743~~
~~2520 By-Pass~~755 West Big Beaver Road, Suite 1000
~~Elkhart, Indiana~~Troy, Michigan		~~46515~~48084
(Address of Principal Executive Offices)		(Zip Code)


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

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of ~~September 28, 2019~~June 27, 2020 (unaudited) and March ~~30, 2019~~28, 2020	1
Condensed Consolidated Income Statements ~~of Operations~~ (unaudited) for the three ~~and six~~ months ended ~~September 28,~~June 27, 2020 and June 29, 2019 ~~and September 29, 2018~~	2
Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ (unaudited) for the three ~~and six~~ months ended ~~September 28,~~June 27, 2020 and June 29, 2019 ~~and September~~ ~~29, 2018~~	3
Condensed Consolidated Statements of Cash Flows (unaudited) for the ~~six~~three months ended ~~September 28,~~June 27, 2020 and June 29, 2019 ~~and September 29, 2018~~	4
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three ~~and six~~ months ended ~~September 28,~~June 27, 2020 and June 29, 2019 ~~and September 29, 2018~~	5
Notes to Condensed Consolidated Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1614

Item 3. Quantitative and Qualitative Disclosures About Market Risk	2822

Item 4. Controls and Procedures	2822

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	30

~~Item 1A. Risk Factors~~	3024

Item 6. Exhibits	3125

SIGNATURES	3226

(Dollars in thousands)
Cash	$	9,722
Trade accounts receivable		13,876
Inventory		19,028
Assets held for sale		2,086
Property, plant and equipment		40,220
Deferred tax assets, net		7,034
Other assets		6,706
Accounts payable and accrued liabilities		(36,027	)
Intangibles		52,065
Goodwill		170,342
Total purchase price allocation	$	285,052

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~~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~~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~~2002.. †

101 ~~(SCH)~~(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.~~File (formatted as Inline XBRL and contained in Exhibit 101).


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

	Six Months Ended
	September 29, 2018
(Dollars in thousands)	Reported			Pro forma
Net sales	$	677,697		$	723,501
Net loss		(77,878	)		(62,769	)

Signature	Title	Date

/s/ Mark Yost	Chief Executive Officer	~~October 31, 2019~~July 30, 2020
Mark Yost	(Principal Executive Officer)

/s/ Laurie Hough	Executive Vice President, Chief Financial Officer, and Treasurer	~~October 31, 2019~~July 30, 2020
Laurie Hough	(Principal Financial Officer)