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 January ~~26, 2021: 56,638,836~~24, 2022: 56,827,132


	December 26, 2020			March 28, 2020			January 1, 2022			April 3, 2021
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	267,060		$	209,455		$	382,133		$	262,581
Trade accounts receivable, net		41,325			45,733			46,184			57,481
Inventories, net		131,123			126,386			185,052			166,113
Other current assets		15,517			17,239			21,340			13,592
Total current assets		455,025			398,813			634,709			499,767
Long-term assets:
Property, plant, and equipment, net		103,826			109,291			127,196			115,140
Goodwill		173,521			173,521			191,970			191,803
Amortizable intangible assets, net		39,272			43,357			53,171			58,835
Deferred tax assets		19,516			21,812			14,304			19,914
Other noncurrent assets		34,705			34,906			46,801			32,443
Total assets	$	825,865		$	781,700		$	1,068,151		$	917,902
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Floor plan payable	$	25,595		$	33,914		$	34,315		$	25,733
Accounts payable		38,603			38,703			44,200			57,214
Other current liabilities		143,453			114,030			205,094			180,695
Total current liabilities		207,651			186,647			283,609			263,642
Long-term liabilities:
Long-term debt		39,330			77,330			12,430			39,330
Deferred tax liabilities		4,008			3,264			4,615			4,280
Other		42,681			40,144
Other liabilities								34,119			42,039
Total long-term liabilities		86,019			120,738			51,164			85,649

Stockholders' Equity:
Common stock, $0.0277 par value, 115,000 shares authorized, 56,638 and 56,665 shares issued (including 0 and 145 shares subject to restriction) as of December 26, 2020 and March 28, 2020, respectively		1,569			1,570
Common stock, $0.0277 par value, 115,000 shares authorized, 56,827 and 56,640 shares issued as of January 1, 2022 and April 3, 2021, respectively								1,572			1,569
Additional paid-in capital		488,558			485,552			498,898			491,668
Retained earnings (accumulated deficit)		50,720			(48	)
Retained earnings								241,135			82,898
Accumulated other comprehensive loss		(8,652	)		(12,759	)		(8,227	)		(7,524	)
Total stockholders’ equity		532,195			474,315			733,378			568,611
Total liabilities and stockholders’ equity	$	825,865		$	781,700		$	1,068,151		$	917,902


	Three Months Ended					Nine Months Ended					Three months ended					Nine months ended
	December 26, 2020			December 28, 2019		December 26, 2020			December 28, 2019		January 1, 2022		December 26, 2020			January 1, 2022			December 26, 2020
Net sales	$	377,581		$	342,239	$	973,232		$	1,068,585	$	534,690	$	377,581		$	1,569,112		$	973,232
Cost of sales		305,797			273,338		784,652			849,594		377,451		305,797			1,171,016			784,652
Gross profit		71,784			68,901		188,580			218,991		157,239		71,784			398,096			188,580
Selling, general, and administrative expenses		44,286			45,237		126,466			145,354		65,825		44,286			181,188			126,466
Operating income		27,498			23,664		62,114			73,637		91,414		27,498			216,908			62,114
Interest expense, net		795			328		2,601			1,019		508		795			2,002			2,601
Other income		(180	)		—		(6,993	)		—
Other expense (income)												7		(180	)		(36	)		(6,993	)
Income before income taxes		26,883			23,336		66,506			72,618		90,899		26,883			214,942			66,506
Income tax expense		5,284			6,299		15,493			20,456		23,277		5,284			53,696			15,493
Net income	$	21,599		$	17,037	$	51,013		$	52,162	$	67,622	$	21,599		$	161,246		$	51,013
Net income per share:
Basic	$	0.38		$	0.30	$	0.90		$	0.92	$	1.19	$	0.38		$	2.84		$	0.90
Diluted	$	0.38		$	0.30	$	0.90		$	0.92	$	1.18	$	0.38		$	2.81		$	0.90


	Nine Months Ended						Nine months ended
	December 26, 2020			December 28, 2019			January 1, 2022			December 26, 2020
Cash flows from operating activities
Net income	$	51,013		$	52,162		$	161,246		$	51,013
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		8,994			9,826			9,869			8,994
Amortization of intangible assets		4,082			4,069			5,664			4,082
Amortization of deferred financing fees		380			384			599			380
Fair market value adjustment for asset classified as held for sale		—			986
Equity-based compensation		4,625			6,168			6,134			4,625
Deferred taxes		3,251			4,222			5,942			3,251
(Gain) loss on disposal of property, plant, and equipment		(75	)		126
Foreign currency transaction gain		(421	)		(93	)
Loss (gain) on disposal of property, plant, and equipment								696			(75	)
Foreign currency transaction loss (gain)								55			(421	)
Change in assets and liabilities:
Accounts receivable		4,577			15,441			11,419			4,577
Inventories		(3,388	)		14,980			(19,133	)		(3,388	)
Prepaids and other assets		(2,239	)		(6,199	)		(22,954	)		(2,239	)
Accounts payable		(284	)		(16,130	)		(13,076	)		(284	)
Accrued expenses and other liabilities		33,301			(12,865	)		17,945			33,301
Net cash provided by operating activities		103,816			73,077			164,406			103,816
Cash flows from investing activities
Additions to property, plant, and equipment		(4,235	)		(12,110	)		(22,784	)		(4,235	)
Proceeds from maturity of company owned life insurance policy		1,186			—
Cash paid for acquisition								(207	)		—
Proceeds from maturity of Company owned life insurance policy								—			1,186
Proceeds from disposal of property, plant, and equipment		1,836			44			70			1,836
Proceeds from sale of held for sale asset		—			1,100
Net cash used in investing activities		(1,213	)		(10,966	)		(22,921	)		(1,213	)
Cash flows from financing activities
Changes in floor plan financing, net		(8,318	)		(946	)		8,583			(8,318	)
Payments on deferred financing fees								(1,130	)		—
Payments on revolving debt facility		(38,000	)		(15,000	)		(26,900	)		(38,000	)
Stock option exercises		67			109			1,099			67
Tax payments for equity-based compensation		(1,687	)		(2,131	)		(3,007	)		(1,687	)
Net cash used in financing activities		(47,938	)		(17,968	)		(21,355	)		(47,938	)
Effect of exchange rate changes on cash and cash equivalents		2,940			510			(578	)		2,940
Net increase in cash and cash equivalents		57,605			44,653			119,552			57,605
Cash and cash equivalents at beginning of period		209,455			126,634			262,581			209,455
Cash and cash equivalents at end of period	$	267,060		$	171,287		$	382,133		$	267,060

	Three Months Ended December 26, 2020
	Common Stock																		Three months ended January 1, 2022
	Shares			Amount			Additional Paid in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total			Common Stock
Balance at September 26, 2020		56,638		$	1,569		$	487,557		$	29,121		$	(10,803	)	$	507,444
																			Shares		Amount		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at October 2, 2021																				56,796	$	1,572	$	496,059	$	173,513		$	(8,166	)	$	662,978
Net income		—			—			—			21,599			—			21,599			—		—		—		67,622			—			67,622
Equity-based compensation		—			—			1,001			—			—			1,001			—		—		1,921		—			—			1,921
Net common stock issued under equity-based compensation plans																				31		—		918		—			—			918
Foreign currency translation adjustments		—			—			—			—			2,151			2,151			—		—		—		—			(61	)		(61	)
Balance at December 26, 2020		56,638		$	1,569		$	488,558		$	50,720		$	(8,652	)	$	532,195
Balance at January 1, 2022																				56,827	$	1,572	$	498,898	$	241,135		$	(8,227	)	$	733,378


	Nine Months Ended December 26, 2020																		Nine months ended January 1, 2022
	Common Stock																		Common Stock
	Shares			Amount			Additional Paid in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total			Shares		Amount		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at March 28, 2020		56,665		$	1,570		$	485,552		$	(48	)	$	(12,759	)	$	474,315
Balance at April 3, 2021																				56,640	$	1,569	$	491,668	$	82,898		$	(7,524	)	$	568,611
Net income		—			—			—			51,013			—			51,013			—		—		—		161,246			—			161,246
Equity-based compensation		—			—			4,625			—			—			4,625			—		—		6,134		—			—			6,134
Cumulative adjustment for adoption of ASU 2016-13		—			—			—			(245	)		—			(245	)
Net common stock issued under equity-based compensation plans		(27	)		(1	)		(1,619	)		—			—			(1,620	)		187		3		1,096		(3,009	)		—			(1,910	)
Foreign currency translation adjustments		—			—			—			—			4,107			4,107			—		—		—		—			(703	)		(703	)
Balance at December 26, 2020		56,638		$	1,569		$	488,558		$	50,720		$	(8,652	)	$	532,195
Balance at January 1, 2022																				56,827	$	1,572	$	498,898	$	241,135		$	(8,227	)	$	733,378

	Three Months Ended December 28, 2019
	Common Stock
	Shares		Amount		Additional Paid in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total
Balance at September 28, 2019		56,665	$	1,570	$	481,909		$	(23,083	)	$	(10,246	)	$	450,150
Net income		—		—		—			17,037			—			17,037
Equity-based compensation		—		—		1,465			—			—			1,465
Net common stock issued under equity-based compensation plans		1		—		(3	)		—			—			(3	)
Foreign currency translation adjustments		—		—		—			—			548			548
Balance at December 28, 2019		56,666	$	1,570	$	483,371		$	(6,046	)	$	(9,698	)	$	469,197

	Nine Months Ended December 28, 2019																Three months ended December 26, 2020
	Common Stock																Common Stock
	Shares		Amount		Additional Paid in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total			Shares			Amount			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at March 30, 2019		56,657	$	1,569	$	479,226		$	(58,208	)	$	(10,615	)	$	411,972
Balance at September 26, 2020																		56,638		$	1,569		$	487,557		$	29,121		$	(10,803	)	$	507,444
Net income		—		—		—			52,162			—			52,162			—			—			—			21,599			—			21,599
Equity-based compensation		—		—		6,168			—			—			6,168			—			—			1,001			—			—			1,001
Foreign currency translation adjustments																		—			—			—			—			2,151			2,151
Balance at December 26, 2020																		56,638		$	1,569		$	488,558		$	50,720		$	(8,652	)	$	532,195

																	Nine months ended December 26, 2020
																	Common Stock
																	Shares			Amount			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at March 28, 2020																		56,665		$	1,570		$	485,552		$	(48	)	$	(12,759	)	$	474,315
Net income																		—			—			—			51,013			—			51,013
Equity-based compensation																		—			—			4,625			—			—			4,625
Cumulative adjustment for adoption of ASU 2016-13																		—			—			—			(245	)		—			(245	)
Net common stock issued under equity-based compensation plans		9		1		(2,023	)		—			—			(2,022	)		(27	)		(1	)		(1,619	)		—			—			(1,620	)
Foreign currency translation adjustments		—		—		—			—			917			917			—			—			—			—			4,107			4,107
Balance at December 28, 2019		56,666	$	1,570	$	483,371		$	(6,046	)	$	(9,698	)	$	469,197
Balance at December 26, 2020																		56,638		$	1,569		$	488,558		$	50,720		$	(8,652	)	$	532,195

Components of accumulated other comprehensive ~~loss~~income (loss) consisted solely of foreign currency translation adjustments.

1.Basis of Presentation and Business

~~Basis of Presentation and Business~~

Nature of Operations: Skyline Champion Corporation (the “Company”) is a leading producer of factory-built housing in the United States (“U.S.”) and Canada. The Company’s operations consist of manufacturing, retail, and transportation activities. The Company operates 3335 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 18 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") was declared a global pandemic by the World Health Organization in March 2020. Various government programs ~~have been~~were announced to provide financial relief for affected businesses, including the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and state level programs in the United States and the Canada Emergency Wage Subsidy ("CEWS") under the COVID-19 Economic Response Plan in Canada. The Company recognized ~~$6.2~~$0.2 million ~~for payroll~~and $7.0 million of subsidies under CEWS during the nine months ended December 26, 2020. NaN payroll subsidy was recognized under CEWS during the three months ended December 26, 2020. The Company also recognized $0.2 million and $0.8 millionthese programs during the three and nine months ended December 26, 2020, ~~for wage subsidies under the CARES Act and other state level programs in the United States.~~respectively. 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 December 26, 2020, the Company had collected all of the CEWS subsidies for which it has applied.~~ In addition, the CARES Act allows for deferring payment of certain payroll taxes. Through December ~~26,~~ 2020 the Company ~~has~~ deferred ~~$11.6~~$11.8 million of payroll taxes. The Company paid $5.9 million of the deferred payroll taxes ~~that will~~in the third quarter of fiscal 2022, with the remaining amount expected to be paid ~~beginning~~ in December ~~2021.~~2022.

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

The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries after elimination of intercompany balances and transactions. In the opinion of management, these statements include all normal recurring adjustments necessary to fairly state the Company’s consolidated results of operations, cash flows, and financial position. The Company has evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on May ~~21, 2020~~26, 2021 (the “Fiscal ~~2020~~2021 Annual Report”).

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

~~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 2021,” will end on April 3, 2021 and will include 53 weeks. References to “fiscal 2020” refer to the Company’s fiscal year ended March 28, 2020. The three and nine months ended ~~December 26, 2020~~ ~~and~~ ~~December 28, 2019~~ ~~each included 13 weeks and 39 weeks, respectively.~~

~~Recently Adopted Accounting Pronouncements:~~ ~~On March 29, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13,~~ ~~“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 of $0.2 million in the allowance for credit loss and a 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 expected credit losses during the period, are recognized in earnings. ~~As of December 26, 2020 and March 28, 2020, accounts~~Accounts receivable are reflected net of reserves of ~~$0.5~~$1.0 million and ~~$0.4~~$0.4 million at January 1, 2022 and April 3, 2021, respectively. ~~As of December 26, 2020~~At both January 1, 2022 and ~~March 28, 2020,~~April 3, 2021, other notes receivable are reflected net of reserves of ~~$0.4 million and $0.5 million, respectively. Changes in expected credit losses were not significant in the first nine months of fiscal 2021.~~ $0.4 million.

~~In January 2017,~~The Company’s fiscal year is a 52- or 53-week period that ends on the ~~FASB issued ASU 2017-04, “Intangibles - Goodwill~~Saturday nearest to March 31. The Company’s current fiscal year, “fiscal 2022,” will end on April 2, 2022 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~~

~~Skyline Champion Corporation~~

~~Notes~~will include 52 weeks. References to ~~Condensed Consolidated Financial Statements - Continued~~

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 fair value, not to exceed the total amount of goodwill allocated“fiscal 2021” refer to the ~~reporting unit.~~Company’s fiscal year ended April 3, 2021. The ~~Company adopted the provisions of ASU 2017-04 effective March 29,~~three and ninemonths ended January 1, 2022 and December 26, 2020 each included 13 and ~~the adoption did not have an impact on the Company's consolidated financial statements.~~39 weeks, respectively.

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.

2.Business Acquisition

ScotBilt Acquisition

On February 28, 2021, the Company acquired 100% of the membership interests of ScotBilt Homes, LLC and related companies (“ScotBilt”), a builder of manufactured homes with annual revenues of approximately $79.0 million, for a purchase price of $53.0 million. Under the terms of the purchase agreement, the preliminary purchase price was adjusted for cash held by ScotBilt at the closing date and working capital adjustments resulting in an initial total purchase consideration of $54.5 million. In the first quarter of fiscal 2022, the Company reduced the preliminary purchase price allocation by $0.2 million as a result of the final working capital settlement. The Company accounted for the acquisition as a business combination under the acquisition method of accounting provided by FASB ASC 805, Business Combinations (“ASC 805”). As such, the purchase price was allocated to the net assets acquired, inclusive of intangible assets, with the excess fair value recorded to goodwill. The purchase price allocation for this acquisition is preliminary and could change.

The preliminary allocation of the purchase price was as follows:


(Dollars in thousands)
Cash	$	1,521
Trade accounts receivable		2,256
Inventory		6,752
Property, plant, and equipment		10,466
Other assets		1,164
Accounts payable and accrued liabilities		(7,432	)
Intangibles		21,100
Goodwill		18,449
Total purchase price allocation	$	54,276

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 deductible for income tax purposes, was allocated to the U.S. Factory-built Housing reporting unit.

Cash, trade accounts receivable, inventory, other assets, accounts payable, and accrued liabilities were generally stated at historical carrying values given the short-term nature of these assets and liabilities. Intangible assets include $13.0 million in customer relationships and $8.1 million associated with the ScotBilt trade name and were based on an independent appraisal. The fair value of the customer relationships was determined using the multi-period excess earnings method and the fair value of the trade name was determined using the relief-from-royalty method. The Company estimates that each intangible asset has a weighted average useful life of ten years from the acquisition date. Fair value estimates of property, plant, and equipment were based on independent appraisals, giving consideration to the highest and best use of the assets. Key assumptions used in the appraisals were based on a combination of market, cost, and sales comparison approaches, as appropriate. Level 3 fair value estimates of $10.5 million related to property, plant, and equipment and $21.1 million related to intangible assets were recorded in the accompanying consolidated balance sheet as of April 3, 2021.

The acquisition of ScotBilt was a taxable business combination. Therefore, the Company’s tax basis in the assets acquired and the liabilities assumed approximate the respective fair values at the acquisition date.

3.Inventories, net

~~Inventories, net~~

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

At ~~December 26, 2020~~January 1, 2022 and ~~March 28, 2020,~~April 3, 2021, reserves for obsolete inventory were ~~$4.6~~$4.4 million and ~~$4.2~~$4.6 million, respectively.

4.Property, Plant, and Equipment

~~Property, Plant, and Equipment~~

Property, plant, and equipment are stated at cost. Depreciation is calculated primarily on a straight-line basis, generally over the following estimated useful lives: land improvements – 3 to 10 years; buildings and improvements – 8 to 25 ~~years;~~years; and vehicles and machinery and equipment – 3 to 8 ~~years.~~years. Depreciation expense for the three months ended January 1, 2022 and December 26, 2020 was $3.3~~and~~ ~~December 28, 2019~~ ~~was $3.0~~ million and ~~$3.2~~$3.0 million, respectively. Depreciation expense for the ninemonths ended January 1, 2022 and December 26, 2020 was $9.9~~and~~ ~~December 28, 2019~~ ~~was $9.0~~ million and ~~$9.8~~$9.0 million, respectively.

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


(Dollars in thousands)	January 1, 2022			April 3, 2021
Land and improvements	$	39,411		$	36,470
Buildings and improvements		97,206			97,005
Machinery and equipment		64,286			57,790
Construction in progress		13,913			1,889
Property, plant, and equipment, at cost		214,816			193,154
Less: accumulated depreciation		(87,620	)		(78,014	)
Property, plant, and equipment, net	$	127,196		$	115,140

(Dollars in thousands)

December 26,
2020

March 28,
2020

Land and improvements

$
35,525

$
35,332

Buildings and improvements

87,096

87,222

Machinery and equipment

54,423

51,239

Construction in progress

1,981

1,810

Property, plant, and equipment, at cost

179,025

175,603

Less: accumulated depreciation

(75,199
)

(66,312
)
Property, plant, and equipment, net

$
103,826

$
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 ~~December 26, 2020~~January 1, 2022 and ~~March 28, 2020,~~April 3, 2021, the Company had goodwill of ~~$173.5 million.~~$192.0 million and $191.8 million, respectively.

The components of amortizable intangible assets were as follows:


(Dollars in thousands)	December 26, 2020									March 28, 2020									January 1, 2022									April 3, 2021
	Customer Relationships			Trade Names			Total			Customer Relationships			Trade Names			Total			Customer Relationships			Trade Names			Total			Customer Relationships			Trade Names			Total
Gross carrying amount	$	48,845		$	13,261		$	62,106		$	48,370		$	13,068		$	61,438		$	61,913		$	21,389		$	83,302		$	61,963		$	21,409		$	83,372
Accumulated amortization		(16,847	)		(5,987	)		(22,834	)		(13,118	)		(4,963	)	$	(18,081	)		(22,336	)		(7,795	)		(30,131	)		(18,158	)		(6,379	)	$	(24,537	)
Amortizable intangibles, net	$	31,998		$	7,274		$	39,272		$	35,252		$	8,105		$	43,357		$	39,577		$	13,594		$	53,171		$	43,805		$	15,030		$	58,835

7During the three months ended January 1, 2022 and December 26, 2020, amortization of intangible assets was $1.9 million and $1.4 million, respectively. During the nine months ended January 1, 2022 and December 26, 2020, amortization of intangible assets was $5.7 million and $4.1 million, respectively.

The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed software. At January 1, 2022 and April 3, 2021, the Company had capitalized cloud computing costs of $15.7 million and $0.3 million, respectively. Cloud computing costs are included in other noncurrent assets in the accompanying Consolidated Balance Sheets. There was 0 amortization of capitalized cloud computing costs during the three and nine months ended January 1, 2022 and December 26, 2020 as the related systems have not yet been placed in service.

~~During both the three months ended~~ ~~December 26, 2020~~6. ~~and~~ ~~December 28, 2019~~Other Current Liabilities~~, amortization of intangible assets was $1.4 million. During both the nine months ended~~ ~~December 26, 2020and~~ ~~December 28, 2019, amortization of intangible assets was $4.1 million.~~

5.	~~Other Current Liabilities~~

The components of other current liabilities were as follows:


(Dollars in thousands)	January 1, 2022		April 3, 2021
Customer deposits	$	65,114	$	58,888
Accrued volume rebates		24,849		18,207
Accrued warranty obligations		24,508		24,033
Accrued compensation and payroll taxes		50,149		42,560
Accrued insurance		17,455		12,421
Other		23,019		24,586
Total other current liabilities	$	205,094	$	180,695

(Dollars in thousands)

December 26, 2020

March 28, 2020

Customer deposits

$
38,096

$
22,679

Accrued volume rebates

17,876

17,469

Accrued warranty obligations

19,725

19,179

Accrued compensation and payroll taxes

35,200

27,776

Accrued insurance

14,291

11,182

Other

18,265

15,745

Total other current liabilities

$
143,453

$
114,030

6.	~~Accrued Warranty Obligations~~

7.	~~Debt and Floor Plan Payable~~

~~The~~On July 7, 2021, the Company ~~has~~entered into an ~~agreement~~Amended and Restated Credit Agreement with a syndicate of banks that provides for a revolving credit facility of up to ~~$100.0~~$200.0 million, including a $45.0 million letter of credit sub-facility ~~of not less than $45.0 million~~ (“Amended Credit Agreement”). The Amended Credit Agreement replaced the Company’s previously existing $100.0 million revolving credit facility. Outstanding borrowings of $26.9 million on the Company’s previous revolving credit facility were repaid in July 2021. The Amended Credit Agreement allows the Company to draw down, repay and re-draw loans on the available funds during the term, ~~of the Credit Agreement.~~

~~The Credit Agreement~~subject to certain terms and conditions, matures ~~on June 5, 2023~~in July 2026 and has no scheduled amortization. The Company capitalized $1.1 million of deferred financing fees associated with the Amended Credit Agreement, which is included in other noncurrent assets on the accompanying consolidated balance sheets. The Company wrote off $0.3 million of deferred financing fees associated with the previously existing credit facility, which is included in interest expense, net for the nine months ended January 1, 2022.

The interest rate on borrowings under the Amended Credit Agreement adjusts based on the ~~first lien~~consolidated total net leverage of the Company from a high of LIBOR plus ~~2.25%~~1.875% and ABR plus ~~1.25%~~0.875%, at the election of the Company, when the ~~first lien~~consolidated total net leverage ratio is equal to or greater than ~~2.00:~~2.25:1.00, to a low of LIBOR plus ~~1.50%~~1.125% and ABR plus ~~0.50%~~0.125% when the ~~first lien~~consolidated total net leverage is below 0.50:1.00. In addition, the Company is obligated to pay an unused line fee ranging between ~~0.25%~~0.15% and ~~0.40%~~0.3% (depending on the ~~first lien~~consolidated total net ~~leverage)~~leverage ratio) in respect of unused commitments under the Amended Credit Agreement. At ~~December 26, 2020~~January 1, 2022 the interest rate ~~on borrowings~~ under the Amended Credit Agreement was ~~1.7%~~1.23%. At ~~December 26, 2020~~,January 1, 2022, letters of credit issued under the Amended Credit Agreement totaled ~~$33.9~~$30.4 million and total available borrowings were ~~$39.2~~$169.6 million.

Obligations under industrial revenue bonds are supported by letters of credit and bear interest based on a municipal bond index rate. The weighted-average interest rate at ~~December 26, 2020,~~January 1, 2022, including related costs and fees, was ~~2.19%~~1.78%. The industrial revenue bonds require lump-sum payments of principal upon maturity in ~~2029.~~2029.

The Amended Credit Agreement contains covenants that restrict the amount of additional debt, liens and certain payments, including equity buybacks, investments, dispositions, mergers and consolidations, among other restrictions as defined. The Company was in compliance with all covenants of the Amended Credit Agreement as of ~~December 26, 2020~~January 1, 2022..

The Company’s retail operations utilize floor plan financing to fund the purchase of manufactured homes for display or resale. At ~~December 26, 2020~~January 1, 2022 and ~~March 28, 2020,~~April 3, 2021, the Company had outstanding borrowings on floor plan financing agreements of ~~$25.6~~$34.3 million and ~~$33.9~~$25.7 million, respectively. Total credit line capacity provided under the agreements was ~~$49.0~~$57.0 million as of January 1, 2022. ~~December 26, 2020~~. Borrowings are secured by the financed homes and are required to be repaid when the Company sells ~~the~~a financed home to a customer.

9.Revenue Recognition

~~Revenue Recognition~~

The following tables disaggregate the Company’s revenue by sales category for the three and ninemonths ended January 1, 2022 and December 26, ~~2020~~2020:

Three Months Ended December 26, 2020

(Dollars in thousands)

U.S.
Factory-Built
Housing

Canadian
Factory-Built
Housing

Corporate/
Other

Total

Manufacturing and retail

$
332,200

$
26,351

$
—

$
358,551

Commercial

4,158

—

—

4,158

Transportation

—

—

14,872

14,872

Total

$
336,358

$
26,351

$
14,872

$
377,581

Nine Months Ended December 26, 2020

(Dollars in thousands)

U.S.
Factory-Built
Housing

Canadian
Factory-Built
Housing

Corporate/
Other

Total

Manufacturing and retail

$
857,028

$
66,104

$
—

$
923,132

Commercial

11,549

—

—

11,549

Transportation

—

—

38,551

38,551

Total

$
868,577

$
66,104

$
38,551

$
973,232

Three Months Ended December 28, 2019

(Dollars in thousands)

U.S.
Factory-Built
Housing

Canadian
Factory-Built
Housing

Corporate/
Other

Total

Manufacturing and retail

$
304,568

$
22,809

$
—

$
327,377

Commercial

250

—

—

250

Transportation

—

—

14,612

14,612

Total

$
304,818

$
22,809

$
14,612

$
342,239

Nine Months Ended December 28, 2019

(Dollars in thousands)

U.S.
Factory-Built
Housing

Canadian
Factory-Built
Housing

Corporate/
Other

Total

Manufacturing and retail

$
944,472

$
72,916

$
—

$
1,017,388

Commercial

4,781

—

—

4,781

Transportation

—

—

46,416

46,416

Total

$
949,253

$
72,916

$
46,416

$
1,068,585

10.Income Taxes

9.	~~Leases~~

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 income statements is shown below:

Three Months Ended

(Dollars in thousands)

December 26,
2020

December 28,
2019

Operating lease expense

$
1,362

$
1,359

Short-term lease expense

266

402

Total lease expense

$
1,628

$
1,761

Nine Months Ended

(Dollars in thousands)

December 26,
2020

December 28,
2019

Operating lease expense

$
4,102

$
4,234

Short-term lease expense

1,251

1,005

Total lease expense

$
5,353

$
5,239

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

(Dollars in thousands)

December 26,
2020

March 28,
2020

Right-of-use assets under operating leases:

Other long-term assets

$
12,515

$
14,808

Lease obligations under operating leases:

Other current liabilities

$
4,305

$
4,789

Other long-term liabilities

8,210

10,019

Total lease obligation

$
12,515

$
14,808

~~Maturities of lease obligations as of December 26, 2020, are shown below:~~

(Dollars in thousands)

December 26,
2020

Fiscal 2021 ⁽¹⁾

$
1,294

Fiscal 2022

4,694

Fiscal 2023

3,754

Fiscal 2024

1,803

Fiscal 2025

1,124

Thereafter

1,879

Total undiscounted cash flows

14,548

Less: imputed interest

(2,033
)
Lease obligations under operating leases

$
12,515

~~(1)~~

~~For remaining~~ ~~period~~ ~~in fiscal year.~~

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

~~December 26,~~

~~2020~~

~~Weighted-average remaining lease term (in years)~~

~~4.6~~

~~Weighted-average discount rate~~

~~5.5~~

~~Skyline Champion Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

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.

~~Cash flow information related to operating leases is shown below:~~

Nine Months Ended

(Dollars in thousands)

December 26,
2020

December 28,
2019

Non-cash activity:

Right-of-use assets obtained in exchange for operating lease obligations

$
1,430

$
1,711

Operating cash flows:

Cash paid related to operating lease obligations

$
4,255

$
4,262

~~10.~~

~~Income Taxes~~

For the three months ended January 1, 2022 and December 26, 2020, ~~and December 28, 2019,~~ the Company recorded ~~$5.3~~$23.3 million and ~~$6.3~~$5.3 million of income tax expense and had an effective tax rate of ~~19.7%~~25.6% and ~~27.0%~~19.7%, respectively. For the nine months ended January 1, 2022 and December 26, 2020, ~~and December 28, 2019,~~ the Company recorded ~~$15.5~~$53.7 million and ~~$20.5~~$15.5 million of income tax expense and had an effective tax rate of ~~23.3%~~25.0% and ~~28.2%~~23.3%, respectively. During the three months ended December 26, 2020, the Company completed a U.S. research and development ("R&D") tax credit study for the years 2018 and 2019 that resulted in the recognition of a tax benefit of ~~$1.7~~$1.7 million.

The Company’s effective tax rate for ~~both~~ the three and nine months ended ~~December 26, 2020~~ ~~and December 28, 2019~~January 1, 2022 differs from the federal statutory ~~income tax~~ rate of ~~21.0%~~21.0% due primarily to the effect of ~~non-deductible expenses,~~ state and local income taxes, non-deductible expenses, tax credits, results in foreign jurisdictions, and tax benefits related to equity compensation. The Company’s effective tax rate for the three and nine months ended December 26, 2020 differs from the federal statutory rate of 21.0% due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits (including the $1.7 million R&D credit), and results in foreign jurisdictions.

At ~~December 26, 2020,~~January 1, 2022, the Company had 0 unrecognized tax benefits. The Company does not anticipate any material changes to uncertain tax benefits in the next twelve months. The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense.

11.Earnings Per Share

~~11.~~

~~Earnings Per Share~~

Basic net income per share (“EPS”) attributable to the Company was computed by dividing net income attributable to the Company by the average number of common shares outstanding during the period. Certain of the Company’s time-based restricted share awards were considered participating securities prior to the completion of the vesting period. The vesting for these time-based shares ~~was completed~~occurred in the second quarter of fiscal 2021. Diluted earnings per common share is computed based on the more dilutive of: (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 nine months ended December 26, 2020, ~~and~~ ~~the three and nine months ended December 28, 2019,~~ the two-class method was more dilutive. The two-class method was not applicable to the computation for the three months ended December ~~26, 2020~~26,2020, or any subsequent periods, as the time-vested restricted share awards were fully vested and no longer considered participating ~~securities during the period. Securities that could potentially dilute basic EPS in the future that were considered antidilutive in the three and nine months ended~~ ~~December 26, 2020~~securities. ~~totaled 0.2 million. There were 0 antidilutive securities in the three and nine months ended December 28, 2019.~~

~~Skyline Champion Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

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


	Three months ended				Nine months ended
(Dollars and shares in thousands, except per share data)	January 1, 2022		December 26, 2020			January 1, 2022		December 26, 2020
Numerator:
Net income	$	67,622	$	21,599		$	161,246	$	51,013
Undistributed earnings allocated to participating securities		—		—			—		(62	)
Net income attributable to the Company's common shareholders	$	67,622	$	21,599		$	161,246	$	50,951
Denominator:
Basic weighted-average shares outstanding		56,847		56,702			56,787		56,630
Dilutive securities		491		288			498		253
Diluted weighted-average shares outstanding		57,338		56,990			57,285		56,883

Basic net income per share	$	1.19	$	0.38		$	2.84	$	0.90
Diluted net income per share	$	1.18	$	0.38		$	2.81	$	0.90

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

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

~~Skyline Champion Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

Selected financial information by reportable segment was as follows:


	Three months ended						Nine months ended
(Dollars in thousands)	January 1, 2022			December 26, 2020			January 1, 2022			December 26, 2020

Net sales:
U.S. Factory-built Housing	$	484,319		$	336,358		$	1,413,338		$	868,577
Canadian Factory-built Housing		36,910			26,351			113,242			66,104
Corporate/Other		13,461			14,872			42,532			38,551
Consolidated net sales	$	534,690		$	377,581		$	1,569,112		$	973,232
Operating income:
U.S. Factory-built Housing EBITDA	$	98,724		$	35,538		$	239,816		$	88,628
Canadian Factory-built Housing EBITDA		7,571			2,933			19,627			13,790
Corporate/Other EBITDA		(9,638	)		(6,407	)		(26,966	)		(20,235	)
Other income		7			(180	)		(36	)		(6,993	)
Depreciation		(3,348	)		(3,025	)		(9,869	)		(8,994	)
Amortization		(1,902	)		(1,361	)		(5,664	)		(4,082	)
Consolidated operating income	$	91,414		$	27,498		$	216,908		$	62,114
Depreciation:
U.S. Factory-built Housing	$	2,706		$	2,378		$	7,935		$	7,167
Canadian Factory-built Housing		279			246			837			609
Corporate/Other		363			401			1,097			1,218
Consolidated depreciation	$	3,348		$	3,025		$	9,869		$	8,994
Amortization of U.S. Factory-built Housing intangible assets:	$	1,902		$	1,361		$	5,664		$	4,082
Capital expenditures:
U.S. Factory-built Housing	$	6,799		$	1,234		$	19,070		$	3,173
Canadian Factory-built Housing		248			312			589			554
Corporate/Other		632			137			3,125			508
Consolidated capital expenditures	$	7,679		$	1,683		$	22,784		$	4,235

(Dollars in thousands)							January 1, 2022			April 3, 2021
Total Assets:
U.S. Factory-built Housing (1)							$	586,047		$	578,897
Canadian Factory-built Housing (1)								94,891			87,224
Corporate/Other (1)								387,213			251,781
Consolidated total assets							$	1,068,151		$	917,902

Skyline Champion Corporation

Notes to Condensed Consolidated Financial Statements - Continued

Three Months Ended

Nine Months Ended

(Dollars in thousands)

December 26,
2020

December 28,
2019

December 26,
2020

December 28,
2019

Net sales:

U.S. Factory-built Housing

$
336,358

$
304,818

$
868,577

$
949,253

Canadian Factory-built Housing

26,351

22,809

66,104

72,916

Corporate/Other

14,872

14,612

38,551

46,416

Consolidated net sales

$
377,581

$
342,239

$
973,232

$
1,068,585

Operating income:

U.S. Factory-built Housing EBITDA

$
35,538

$
33,165

$
88,628

$
104,624

Canadian Factory-built Housing EBITDA

2,933

1,786

13,790

9,085

Corporate/Other EBITDA

(6,407
)

(6,771
)

(20,235
)

(26,177
)
Other income

(180
)

—

(6,993
)

—

Depreciation

(3,025
)

(3,171
)

(8,994
)

(9,826
)
Amortization

(1,361
)

(1,345
)

(4,082
)

(4,069
)
Consolidated operating income

$
27,498

$
23,664

$
62,114

$
73,637

Depreciation:

U.S. Factory-built Housing

$
2,378

$
2,659

$
7,167

$
8,365

Canadian Factory-built Housing

246

255

609

744

Corporate/Other

401

257

1,218

717

Consolidated depreciation

$
3,025

$
3,171

$
8,994

$
9,826

Amortization of intangible assets:

U.S. Factory-built Housing

$
1,361

$
1,345

$
4,082

$
4,069

Canadian Factory-built Housing

—

—

—

—

Corporate/Other

—

—

—

—

Consolidated amortization of intangible assets

$
1,361

$
1,345

$
4,082

$
4,069

Capital expenditures:

U.S. Factory-built Housing

$
1,234

$
1,981

$
3,173

$
9,483

Canadian Factory-built Housing

312

414

554

842

Corporate/Other

137

306

508

1,785

Consolidated capital expenditures

$
1,683

$
2,701

$
4,235

$
12,110

(Dollars in thousands)

December 26,
2020

March 28,
2020

Total Assets:

��

U.S. Factory-built Housing (1)

$
482,043

$
491,110

Canadian Factory-built Housing (1)

77,113

56,760

Corporate/Other (1)

266,709

233,830

Consolidated total assets

$
825,865

$
781,700

(1)

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

13.Commitments, Contingencies and Legal Proceedings

~~(1)~~

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~~its 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 less contractually defined curtailment payments. Excluding the resale value of the homes, the contingent repurchase obligation as of ~~December 26, 2020~~January 1, 2022 was estimated to be ~~$148.8~~$281.7 million. 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. In addition, the Company has estimated the expected contingent net loss the Company will incur upon resale of any repurchases. 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 has a contingent repurchase obligation. Based on these repurchase agreements and historical loss experience, as well as current economic conditions and forecasts that affect the potential loss exposure, a loss reserve of $~~0.9~~1.8 million and ~~$1.0~~$1.4 million was recorded as of ~~December 26, 2020~~January 1, 2022 and ~~March 28, 2020,~~April 3, 2021, respectively. Losses incurred on homes repurchased were not significant during the three or nine ~~month periods~~months ended January 1, 2022 or December 26, ~~2020~~ ~~or December 28, 2019.~~2020.

At ~~December 26, 2020~~,January 1, 2022, the Company was contingently obligated for ~~$33.9~~$30.4 million under letters of credit, primarily consisting of ~~$12.6~~$12.6 million to support long-term debt, ~~$21.0~~$17.5 million to support the casualty insurance program, and ~~$0.3~~$0.3 million to support bonding agreements. The letters of credit are issued from a sub-facility of the Amended Credit Agreement. The Company was also contingently obligated for ~~$34.3~~$35.6 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 1 of this Report.

Skyline Champion Corporation (the “Company”) is a leading producer of factory-built housing in the U.S. and Canada. The Company serves as a complete solutions provider across complementary and vertically integrated businesses including 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 on 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, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes in the U.S., and Moduline and SRI Homes in western Canada. The Company operates 3335 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~~mainly to independent retailers, builders/developers, and manufactured home community operators. The Company’s retail operations consist of 18 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.

Since July 2020, U.S. and Canadian housing demand has been robust. The limited availability of existing homes for sale and the broader need for newly built affordable, single-family housing has continued to drive demand for new homes in these markets. In recent years, manufactured home construction experienced revenue growth due to a number of favorable demographic trends and demand drivers in the ~~United States,~~U.S., including underlying growth trends in key homebuyer groups, such as the population over 6555 years of age, the population of first-time home buyers, and the population of households earning less than ~~$50,000~~$60,000 per year. ~~More recently, we see~~We have also seen a number of market trends pointing to increased sales of ~~Alternative Dwelling Units (“ADUs”)~~accessory dwelling units and urban-to-rural migration as customers accommodate working-from-home patterns, as well as people seeking rent-to-own single-family options.

The robust demand environment has resulted in backlog of $1.5 billion as of January 1, 2022 compared to $488.5 million as of December 26, 2020. Generally higher backlog at our manufacturing facilities creates an opportunity to increase production efficiencies. Although the higher demand brings opportunities, it also has resulted in significant increases in raw material and labor costs. In addition, we are experiencing intermittent supply disruption and higher freight costs. Finding and retaining qualified labor continues to be a challenge for our plants which requires us to review our compensation programs and adjust accordingly. We ~~intend to capitalize on these trends and drivers to grow~~manage our business over the medium-to-long-term. We believe that there is an opportunity for continued manufactured and modular construction market expansion driven by the foregoing trends and demand drivers, as well as construction labor shortages in certain regions (which tend to ~~adversely and disproportionally impact~~anticipate or quickly react to these supply challenges and cost ~~of site-built homes when compared~~increases and generally are able to ~~manufactured housing)~~pass along increased costs to our customers. Historically, order cancellation rates have been very low, but the longer lead-time caused by larger backlogs and ~~increased affordability of factory-built homes relative to site-built homes.~~
changing prices could result in higher cancellations in future periods.

For the nine months ended ~~December 26, 2020~~,January 1, 2022, approximately ~~77%~~78% of the Company’s U.S. manufacturing sales were generated from the manufacture of homes that comply with the ~~Federal HUD-code~~U.S. Department of Housing and Urban Development ("HUD") code construction standard in the U.S. Industry shipments of HUD-code homes are reported on a one-month lag. According to data reported by the Manufactured Housing Institute ("MHI"), HUD-code industry home shipments were

~~86,769~~ 71,281 and 61,492 units during the ~~eleven~~eight months ended November 30, 2021 and 2020, ~~compared to 87,897 units shipped in same period of~~respectively. Based on industry data, the ~~prior year. The~~ Company’s ~~HUD~~U.S. wholesale market share ~~during~~of HUD code homes sold was 19.4% and 16.2%, for the ~~eleven-month period~~eight months ended November 30, 2021 and 2020, ~~was 15.7% versus 17.1% in the comparable period of the prior year.~~respectively. Annual ~~industry~~ shipments have generally increased each year since calendar year ~~since~~ 2009 when only 50,000 ~~HUD code~~HUD-coded manufactured homes were shipped, the lowest level since the industry began recording statistics in 1959. While shipments of ~~HUD code~~HUD-coded manufactured homes have improved modestly in recent years, current manufactured ~~housing’s most recent annual shipment levels~~housing shipments are still ~~operate~~ at lower levels than the long-term historical average of over 200,000 units ~~annually.~~a year.

Over the ~~nine months ended~~ ~~December 26, 2020~~last several years, demand for the Company’s products, primarily affordable housing in the U.S., ~~approximately 17%~~has continued to improve. As a result, the Company has focused on operational improvements to make existing manufacturing facilities more profitable as well as executing measured expansion of its manufacturing and retail footprints. The Company has increased capacity through strategic acquisitions and expansions of its manufacturing operations. The Company is focused on growing in strong housing markets across the U.S.

On June 21, 2021, the Company acquired two idle facilities in Navasota, Texas in order to strengthen its production capabilities in the Texas market. The Company began certification of the manufacturing operations at one of these facilities in the third quarter of fiscal 2022, and expects to begin delivering products from that facility in the fourth fiscal quarter. On February 28, 2021, the Company acquired ScotBilt, which operates two manufacturing facilities in Georgia that provide affordable housing throughout Alabama, Florida, Georgia and the Carolinas. The operations of ScotBilt are included in the financial results of the Company since the date of the acquisition. On January 14, 2021, the Company

acquired two idled facilities in Pembroke, North Carolina, which provides an opportunity to further expand its manufacturing footprint in the South and Southeast markets. The Company is currently assessing prospects for initiating production in one or both of these facilities.

The Company's acquisitions and investments are part of a strategy to grow and diversify revenue with a focus on increasing the Company’s ~~U.S. manufacturing sales were modular. The industry historically reported U.S.~~HUD and modular market shipments quarterly and three months in arrears. However, reporting of industry shipment data is unavailable, and is expected to remain unavailable for the foreseeable future. Industry shipments of modular homeshomebuilding presence in the U.S. ~~were 14,690~~as well as improving the results of operations. These acquisitions and investments are included in ~~calendar year 2019. The Company’s modular market share during this period was 13.9%.~~the Company's consolidated results for periods subsequent to their respective acquisition dates.

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. ~~As of December 26, 2020, only one manufacturing facility remained temporarily idled due to labor availability constraints.~~ During ~~the second and third quarters of~~ fiscal 2021, the Company experienced intermittent closures due to COVID-19 outbreaks at the facilities or surrounding communities causing higher than normal absenteeism. In the ~~third quarter~~second half of fiscal 2021, the Company was able to increase daily production rates over the levels achieved in the prior fiscal year period as direct labor staffing levels increased and production efficiencies improved. ~~As of December 26, 2020,~~Although the Company has generally been able to navigate the production challenges caused by the pandemic in fiscal 2022, availability of labor and certain materials ~~have improved compared to earlier in fiscal 2021, but~~ remain subject to disruption and uncertainty. Prices for key raw materials have experienced increased volatility and, overall, manufacturing costs have trended higher than prior periods.

~~Since the start~~As part of the fiscal year, the Company’s retail operations have adjusted their operating procedures to comply with local and state mandates; and have generally remained open but have shifted physical visits to a larger on-line presence. The Company consolidated its retail footprint by closing three retail sales centers during the second quarter of fiscal 2021 in an effort to optimize costs while taking advantage of an increase in distribution through digital marketing efforts. We have strong local independent retailers to serve customers in those areas.

Ininitial response to the pandemic, the Company offered extended benefits to employees, including increased sick pay and waived premium payments on healthcare benefits for furloughed employees. The Company’s U.S. operations incurred $2.2 million of expense related to ~~those~~the extended ~~benefits.~~benefits during the nine months ended December 26, 2020. Various government programs ~~have been announced~~were enacted to provide financial relief for affected businesses, including the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") ~~and state level programs~~ in the ~~United States~~U.S. and the Canada Emergency Wage Subsidy ("CEWS") under the COVID-19 Economic Response Plan in Canada. CEWS ~~provides~~provided a cash subsidy of up to 75% of eligible employees’ remuneration, subject to certain criteria. The Company recognized $6.2 million for payroll subsidies under CEWS and $0.6 million for payroll subsidies under the CARES Act during the nine months ended December 26, 2020. No payroll subsidy was recognized under CEWS or Cares Act during the three months ended December 26, 2020. The Company also recognized $0.2 million and $0.8 million during the three and nine months ended December 26, 2020 for wage subsidies under the CARES Act and other state level programs in the United States. In addition, the CARES Act ~~allows~~allowed for deferring payment of certain payroll taxes. Through December ~~26,~~ 2020 the Company ~~has~~ deferred ~~$11.6~~$11.8 million of payroll taxes ~~that will~~. The Company repaid $5.9 million in the current quarter, with the remaining amount expected to be paid ~~beginning~~ in December ~~2021.~~2022.

UNAUDITED INCOME STATEMENTS FOR THE THIRD QUARTER OF FISCAL ~~2021~~2022 VS. ~~2020~~2021


	Three Months Ended						Three months ended
(Dollars in thousands)	December 26, 2020			December 28, 2019			January 1, 2022			December 26, 2020

Results of Operations Data:
Net sales	$	377,581		$	342,239		$	534,690		$	377,581
Cost of sales		305,797			273,338			377,451			305,797
Gross profit		71,784			68,901			157,239			71,784
Selling, general, and administrative expenses		44,286			45,237			65,825			44,286
Operating income		27,498			23,664			91,414			27,498
Interest expense, net		795			328			508			795
Other income		(180	)		—
Other income (expense)								7			(180	)
Income before income taxes		26,883			23,336			90,899			26,883
Income tax expense		5,284			6,299			23,277			5,284
Net income	$	21,599		$	17,037		$	67,622		$	21,599

Reconciliation of Adjusted EBITDA:
Net income	$	21,599		$	17,037		$	67,622		$	21,599
Income tax expense		5,284			6,299			23,277			5,284
Interest expense, net		795			328			508			795
Depreciation and amortization		4,386			4,516			5,250			4,386
Equity-based compensation (for awards granted prior to December 31, 2018)		—			965
Acquisition integration costs		—			560
Other		—			40
Adjusted EBITDA	$	32,064		$	29,745		$	96,657		$	32,064
As a percent of net sales:
Gross profit		19.0	%		20.1	%		29.4	%		19.0	%
Selling, general, and administrative expenses		11.7	%		13.2	%		12.3	%		11.7	%
Operating income		7.3	%		6.9	%		17.1	%		7.3	%
Net income		5.7	%		5.0	%		12.6	%		5.7	%
Adjusted EBITDA		8.5	%		8.7	%		18.1	%		8.5	%

The following table summarizes net sales for the three months ended January 1, 2022 and December 26, ~~2020 and December 28, 2019:~~2020:

*One of the Company’s manufacturing facilities is temporarily idled as of December 26, 2020, but still considered operational.

Net sales for the three months ended ~~December 26, 2020~~January 1, 2022 were ~~$377.6~~$534.7 million, an increase of ~~$35.3~~$157.1 million, or ~~10.3%~~41.6%, over the three months ended December ~~28, 2019.~~26, 2020. The following is a summary of the change by operating segment.

Net sales for the Company’s U.S. manufacturing and retail operations increased by ~~$31.5~~$148.0 million, or ~~10.3%.~~44.0%, for the three months ended January 1, 2022 compared to the three months ended December 26, 2020. The ~~increase~~change was primarily due to an increase in the number of homes sold during the period of ~~6.2% and~~9.2%, an increase in the average home selling price of ~~4.0%. The~~31.7%, and the impact of the acquisition of ScotBilt. Demand for our products has increased significantly in recent periods and we have been able to increase production in ~~the number of homes sold is due~~response to ~~strong demand which has resulted in increased production levels at many of Company’s manufacturing locations.~~that demand. The average selling price increased during the period due to pricing actions enacted in response to rising material, freight, and labor costs ~~partially offset by~~as well as a shift in product ~~mix. Product~~ mix ~~fluctuations result from consumer preferences regarding~~to larger homes with more features and amenities. Generally, we are able to pass the ~~sizes and styles of homes selected for purchase, options and upgrade packages, as well as regional housing dynamics.~~increase in input costs along to our customers.

The Canadian Factory-built Housing segment net sales increased by ~~$3.5~~$10.6 million, or ~~15.5%~~40.1% for the three months ended ~~December 26, 2020~~January 1, 2022 compared to the same period in the prior fiscal year, primarily due to a ~~15.2%~~5.7% increase in the number of homes sold and ana 32.6% increase ~~of 0.4%~~ in ~~the~~ average home selling price. The increase in ~~the number of~~volume was due to an increase in homes sold isdriven by strong demand. The increase in average selling price was due to ~~stronger demand compared~~pricing actions enacted in response to ~~the same period last year which has resulted in increased production levels at the Company’s Canadian manufacturing locations.~~rising material and labor costs. On a constant currency basis, net sales for the Canadian segment were ~~unfavorably~~also favorably impacted by approximately ~~$0.1~~$1.8 million due to fluctuations in the translation of the Canadian dollar to the U.S. dollar during the ~~third quarter of fiscal 2021~~three months ended January 1, 2022 as compared to the same period of the prior fiscal year.

Net sales for Corporate/Other includes the Company’s transportation business and the elimination of intersegment sales. For the three months ended ~~December 26, 2020,~~January 1, 2022, net sales ~~increased $0.3~~decreased $1.4 million, or ~~1.8%. The increase was~~9.5%, primarily attributable to ~~higher net sales in~~lower revenue from the ~~Company’s transportation business from increased manufactured home and RV shipments.~~shipment of recreational vehicles.

The following table summarizes gross profit for the three months ended January 1, 2022 and December 26, ~~2020~~2020:
~~and December 28, 2019~~:

Gross profit as a percent of sales during the three months ended ~~December 26, 2020~~January 1, 2022 was ~~19.0%~~29.4% compared to ~~20.1%~~19.0% during the three months ended December ~~28, 2019.~~26, 2020. The following is a summary of the change by operating segment.

Gross profit for the U.S. Factory-built Housing segment increased by ~~$1.7~~$80.4 million, or ~~2.8%~~127.7%, during the three months ended ~~December 26, 2020~~January 1, 2022 compared to the same period in the prior fiscal year. Gross profit was 29.6% as a percent of segment net sales for the three months ended January 1, 2022, compared to 18.7% in the same period of the prior fiscal year. Margin improvement was driven primarily by price increases in response to rising input costs and the timing of certain price adjustments for raw materials under our buying programs. We have also focused on product simplification and material SKU rationalization to improve operational efficiencies to better leverage increased production and manufacturing fixed costs.

Gross profit for the Canadian Factory-built Housing segment increased by $4.9 million, or 90.8%, during the three months ended January 1, 2022, compared to the same period in the prior fiscal year, primarily due to increased sales volume. Gross profit as a percent of ~~segment~~ net sales was ~~18.7%~~27.8% for the three months ended ~~December 26, 2020~~January 1, 2022, compared to ~~20.1%~~20.4% in the same period of the prior ~~year primarily due~~fiscal year. Margin improvement was driven by price increases in response to ~~increased~~rising material and labor costs, ~~caused by market volatility in certain commodities including forest products, partially offset by~~as well as direct labor and manufacturing efficiencies, and increased leverage of manufacturing fixed ~~costs caused by higher sales volumes.~~costs.

Gross profit for the Canadian Factory-built Housing segment increased by $0.9 million, or 19.1% during the three months ended December 26, 2020 compared to the same period in the prior year. Gross profit as a percent of net sales was 20.4% for the three months ended December 26, 2020, compared to 19.8% in the same period of the prior year. The increase is primarily due to higher sales volume, as well as pricing actions taken to offset material cost inflation.18

Gross profit for the Corporate/Other segment increased ~~$0.3~~$0.2 million, or ~~8.8%~~5.4%, during the three months ended ~~December 26, 2020~~January 1, 2022, compared to the same period of the prior fiscal year, ~~primarily due to~~as a result of changes in revenue mix.

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 January 1, 2022 and December 26, ~~2020~~2020: ~~and December 28, 2019:~~

Selling, general, and administrative expenses were ~~$44.3~~$65.8 million for the three months ended ~~December 26, 2020, a decrease~~January 1, 2022, an increase of ~~$1.0~~$21.5 million, or 48.6%, compared to the same period in the prior fiscal 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 ~~decreased $0.7~~increased $17.9 million, or ~~2.2%~~57.1%, during the three months ended ~~December 26, 2020~~January 1, 2022, as compared to the same period in the prior fiscal year. AsSelling, general, and administrative expenses as a percent of segment net sales ~~selling, general, and administrative expenses decreased~~increased to ~~9.3%~~10.2% for the three months ended ~~December 26, 2020~~January 1, 2022, compared to ~~10.5%~~9.3% during the comparable period of the prior fiscal year. The ~~decrease~~increase in expenses resulted from ~~a reduction in costs for travel and marketing-related expenses partially offset by increased~~the following factors: (i) higher sales commissions and incentive compensation, which is generally based on sales volume or a measure of ~~profitability.~~profitability; (ii) higher wage expense from increased headcount as we staffed to respond to the growth in housing demand; and (iii) the impact of the acquisition of the ScotBilt operations.

Selling, general, and administrative expenses for the Canadian Factory-built Housing segment ~~decreased~~increased $0.3 million, or ~~10.0%~~10.3%, ~~million~~ for the three months ended ~~December 26, 2020~~January 1, 2022 when compared to the same period of the prior fiscal year. AsSelling, general, and administrative expenses as a percent of segment net sales ~~selling, general, and administrative expenses for the Canadian segment was 10.2% and 13.1%~~decreased to 8.0% for the three months ended ~~December 26, 2020 and December 28, 2019, respectively.~~January 1, 2022, compared to 10.2% during the comparable period of the prior fiscal year. The ~~decrease as a percentage of net sales was~~higher expenses are a result of ~~increased leverage~~an increase in incentive compensation which is generally based on a measure of ~~fixed costs due to increased sales volumes.~~profitability.

$3.4 million, or ~~0.6%~~32.9%, during the three months ended ~~December 26, 2020 as~~January 1, 2022, compared to the same period of the prior ~~year. Increases in professional fees and other administrative costs were mostly offset by a reduction~~fiscal year, due to an increase in equity compensation, ~~expense~~as well as $2.2 million of costs related to investments made to enhance our customer buying experience and ~~integration costs from the 2018 combination of Skyline Corporation and the operating assets of Champion Enterprises Holding, LLC (the “2018 Combination”).~~supporting systems.

The following table summarizes the components of interest expense, net for the three months ended January 1, 2022 and December 26, ~~2020 and December 28, 2019:~~2020:

Interest expense, net was ~~$0.8~~$0.5 million for the three months ended ~~December 26, 2020, an increase~~January 1, 2022, a decrease of ~~$0.5~~$0.3 million compared to the same period of the prior fiscal year. The net ~~increase~~decrease in expense was primarily due to ~~a reduction~~lower average outstanding borrowings on long-term debt, offset in ~~interest income earned~~part by higher average borrowings on floor plan payables. The Company repaid the ~~Company’s cash balances invested in short-term facilities and reduced interest expense~~outstanding balance on its revolving credit facility during the ~~Company’s borrowings, both due to a reduction in interest rates.~~second quarter of fiscal 2022.

~~The following table summarizes other income for the three months ended December 26, 2020 and December 28, 2019:~~

Other income for the three months ended December 26, 2020 related to payroll tax subsidies provided by certain U.S. government sponsored financial assistance programs enacted in response to the pandemic.

The following table summarizes income tax expense for the three months ended January 1, 2022 and December 26, ~~2020 and December 28, 2019:~~2020:

Income tax expense for the three months ended ~~December 26, 2020~~January 1, 2022 was $23.3 million, representing an effective tax rate of 25.6%, compared to income tax expense of $5.3 million, representing an effective tax rate of 19.7%~~, compared to income tax expense of $6.3 million, representing an effective tax rate of 27.0%,~~ for the three months ended December ~~28, 2019. During the third quarter of fiscal 2021, the Company completed a U.S. R&D tax credit study for the years 2018 and 2019 that resulted in recognition of a tax benefit of $1.7 million.~~ 26, 2020. The change in the effective tax rate for the three months ended ~~December 26, 2020~~January 1, 2022 compared with the same period of the prior year, was primarily due to ~~an increase in~~the recognition of a tax ~~credits, certain~~benefit of $1.7 million during the third quarter of fiscal 2021 related to a U.S. R&D tax ~~law changes and results in foreign jurisdictions.~~credit study.

The Company’s effective tax rate for ~~both~~ the three months ended ~~December 26, 2020 and December 28, 2019~~January 1, 2022 differs from the federal statutory income tax rate of 21.0%, due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, results in foreign jurisdictions, and tax benefits related to equity compensation. The Company’s effective tax rate for the three months ended December 26, 2020 differed from the federal statutory income tax rate of 21.0% due primarily to the effect of non-deductible expenses, state and local income taxes, tax credits (including the R&D study), and results in foreign jurisdictions.

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 January 1, 2022 and December 26, ~~2020 and December 28, 2019:~~

Adjusted EBITDA for the three months ended ~~December 26, 2020~~January 1, 2022 was ~~$32.1~~$96.7 million, an increase of ~~$2.3~~$64.6 million from the same period of the prior fiscal year. The increase is primarily a result of higher operating income ~~after adjusting for the effect of integration costs and equity-based compensation incurred in the prior year. The increase in operating income is primarily~~ due to ~~increased~~increases in net sales ~~volume.~~ ~~See the definition of Adjusted EBITDA below for additional information regarding the definition~~volume and ~~use of this metric.~~gross margins, partially offset by higher SG&A expenses.

UNAUDITED INCOME STATEMENTS FOR THE FIRST NINE MONTHS OF FISCAL ~~2021~~2022 VS. ~~2020~~2021


	Nine Months Ended						Nine months ended
(Dollars in thousands)	December 26, 2020			December 28, 2019			January 1, 2022			December 26, 2020

Results of Operations Data:
Net sales	$	973,232		$	1,068,585		$	1,569,112		$	973,232
Cost of sales		784,652			849,594			1,171,016			784,652
Gross profit		188,580			218,991			398,096			188,580
Selling, general, and administrative expenses		126,466			145,354			181,188			126,466
Operating income		62,114			73,637			216,908			62,114
Interest expense, net		2,601			1,019			2,002			2,601
Other income		(6,993	)		—			(36	)		(6,993	)
Income before income taxes		66,506			72,618			214,942			66,506
Income tax expense		15,493			20,456			53,696			15,493
Net income	$	51,013		$	52,162		$	161,246		$	51,013

Reconciliation of Adjusted EBITDA:
Net income	$	51,013		$	52,162		$	161,246		$	51,013
Income tax expense		15,493			20,456			53,696			15,493
Interest expense, net		2,601			1,019			2,002			2,601
Depreciation and amortization		13,076			13,895			15,533			13,076
Equity-based compensation (for awards granted prior to December 31, 2018)		1,358			3,606			—			1,358
Acquisition integration costs		—			1,938
Fair market value adjustment for asset classified as held for sale		—			986
Other		—			250
Adjusted EBITDA	$	83,541		$	94,312		$	232,477		$	83,541
As a percent of net sales:
Gross profit		19.4	%		20.5	%		25.4	%		19.4	%
Selling, general, and administrative expenses		13.0	%		13.6	%		11.5	%		13.0	%
Operating income		6.4	%		6.9	%		13.8	%		6.4	%
Net income		5.2	%		4.9	%		10.3	%		5.2	%
Adjusted EBITDA		8.6	%		8.8	%		14.8	%		8.6	%

The following table summarizes net sales for the nine months ended January 1, 2022 and December 26, ~~2020 and December 28, 2019:~~2020:


	Nine Months Ended										Nine months ended
(Dollars in thousands)	December 26, 2020		December 28, 2019		$ Change			% Change			January 1, 2022		December 26, 2020		$ Change		% Change

Net sales	$	973,232	$	1,068,585	$	(95,353	)		(8.9	%)	$	1,569,112	$	973,232	$	595,880		61.2	%
U.S. manufacturing and retail net sales	$	868,577	$	949,253	$	(80,676	)		(8.5	%)	$	1,413,338	$	868,577	$	544,761		62.7	%
U.S. homes sold		14,060		15,507		(1,447	)		(9.3	%)		18,106		14,060		4,046		28.8	%
U.S. manufacturing and retail average home selling price	$	61.8	$	61.2	$	0.6			1.0	%	$	78.1	$	61.8	$	16.3		26.4	%
Canadian manufacturing net sales	$	66,104	$	72,916	$	(6,812	)		(9.3	%)	$	113,242	$	66,104	$	47,138		71.3	%
Canadian homes sold		812		872		(60	)		(6.9	%)		1,079		812		267		32.9	%
Canadian manufacturing average home selling price	$	81.4	$	83.6	$	(2.2	)		(2.6	%)	$	105.0	$	81.4	$	23.6		29.0	%
Corporate/Other net sales	$	38,551	$	46,416	$	(7,865	)		(16.9	%)	$	42,532	$	38,551	$	3,981		10.3	%
U.S. manufacturing facilities in operation at end of period*		33		33
U.S. manufacturing facilities in operation at end of period												35		33
U.S. retail sales centers in operation at end of period		18		21								18		18
Canadian manufacturing facilities in operation at end of period		5		5								5		5

*One of the Company’s manufacturing facilities is temporarily idled as of December 26, 2020, but still considered operational.

Net sales for the nine months ended ~~December 26, 2020~~January 1, 2022 were ~~$973.2~~$1,569.1 million, ~~a decrease~~an increase of ~~$95.4~~$595.9 million, or ~~8.9%~~61.2%, over the nine months ended December ~~28, 2019.~~26, 2020. The following is a summary of the change by operating segment.

Net sales for the Company’s U.S. manufacturing and retail operations ~~decreased~~increased by ~~$80.7~~$544.8 million, or ~~8.5%.~~62.7%, for the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020. The ~~decrease~~increase was primarily due to ~~a decrease~~an increase in the number of homes sold during the ~~nine months ended December 26, 2020~~period of ~~9.3%, partially offset by~~4,046 and an increase in the average ~~home~~ selling price of ~~1.0%~~26.4%. ~~U.S. housing sales volumes were severely impacted by COVID-19-related factors~~The increase in the ~~first few months~~number of homes sold was a result of increased production levels at many of the ~~fiscal year. Production facilities operated at reduced levels~~Company’s manufacturing locations in response to strong demand for our products, as ~~compared to~~well as the addition of production volume through the acquisition of ScotBilt. The average selling price increased over the prior year due to ~~employee hiring constraints, social-distancing protocols~~pricing actions enacted in response to rising material and labor costs. Generally, we are able to pass increases in ~~some areas, reduced demand. Production~~input costs along to our customers. The improvement this year is also a result of a negative impact to sales in the prior fiscal year caused by COVID-19 related plant shutdowns and ~~demand levels began to return to more~~higher than normal pre-COVID-19 levels during the second quarter and production levels have continued to increase during the third quarter. The average home selling price increased due to a shift in product mix versus the same period last year.absenteeism.

The Canadian Factory-built Housing segment net sales ~~decreased~~increased by ~~$6.8~~$47.1 million, or ~~9.3%~~71.3%, for the nine months ended ~~December 26, 2020~~January 1, 2022 compared to the same period in the prior fiscal year, primarily due to ~~a 6.9% decrease~~an increase in ~~the number of~~ homes sold ~~coupled with~~of 267 and a ~~2.6% decrease~~29.0% increase in average home selling price. The ~~decrease~~increase in volume was due to ~~reduced demand and~~an increase in production ~~primarily from oil-related demand drivers and the impacts of COVID-19 for first few months of the fiscal year. Production and demand levels began~~rates in response to ~~return to more normal pre-COVID-19 levels during the second quarter and production levels have continued to~~strong housing demand. The increase ~~during the third quarter. The decrease~~ in average selling price iswas due to ~~a shift~~pricing actions enacted in ~~product mix. On~~response to rising material and labor costs. In addition, on a constant currency basis, net sales for the Canadian segment were ~~unfavorably~~favorably impacted by approximately ~~$0.9~~$8.4 million due to fluctuations in the translation of the Canadian dollar to the U.S. dollar during the first nine months of fiscal ~~2021~~2022 as compared to the same period of the prior fiscal year. Net sales during the nine months ended December 26, 2020 were negatively impacted by COVID-19 related plant shutdowns and higher than normal absenteeism.

Net sales for Corporate/Other includes the Company’s transportation business and the elimination of intersegment sales. For the nine months ended ~~December 26, 2020,~~January 1, 2022, net sales ~~decreased $7.9~~increased $4.0 million, or ~~16.9%. The decrease was~~10.3%, primarily attributable to ~~lower net sales as a result of lower shipments caused by COVID-19-related manufacturing shutdowns~~an increase in both the RV and manufactured housing industries experienced mainly in the U.S. Midwest and Northeast regions in the first few months of the fiscal year. As production in the RV and manufactured housing industries started to normalize to pre-COVID-19 levels, shipments of ~~these products also started to increase during the second~~manufactured homes and ~~third quarters of fiscal 2021.~~recreational vehicles.

The following table summarizes gross profit for the nine months ended January 1, 2022 and December 26, ~~2020 and December 28, 2019:~~2020:

Gross profit as a percent of sales during the nine months ended ~~December 26, 2020~~January 1, 2022 was ~~19.4%~~25.4% compared to ~~20.5%~~19.4% during the nine months ended December ~~28, 2019~~.26, 2020. The following is a summary of the change by operating segment.

Gross profit for the U.S. Factory-built Housing segment ~~decreased~~increased by ~~$29.0~~$193.2 million, or ~~14.9%~~116.5%, during the nine months ended ~~December 26, 2020~~January 1, 2022 compared to the same period in the prior fiscal year. Gross profit was ~~19.1%~~25.4% as a percent of segment net sales for the nine months ended ~~December 26, 2020~~January 1, 2022 compared to ~~20.5%~~19.1% in the same period of the prior fiscal year. The ~~decrease~~increase in gross profit is due to operational efficiencies and increased ~~material costs from market volatility in certain commodities, primarily forest products, reduced~~ leverage of manufacturing fixed costs ~~caused~~resulting from higher production volumes and higher average selling prices during fiscal 2022. Higher input costs for materials and labor have generally been offset to date by ~~reduced sales volumes, as well as~~increasing the ~~supplemental COVID-19-related sick pay~~prices of our products. The improvement is also a result of less COVID-19 related sick-pay and health benefits which were provided ~~to employees totaling approximately $2.2 million.~~in the prior fiscal year.

Gross profit for the Canadian Factory-built Housing segment ~~decreased~~increased by ~~$2.2~~$14.5 million, or ~~14.2%~~112.1% during the nine months ended ~~December 26, 2020~~January 1, 2022 compared to the same period in the prior fiscal year primarily due to ~~lower~~increased sales ~~volume.~~volumes and the price of our products. Gross profit as a percent of net sales

was ~~19.6%~~24.2% for the nine months ended ~~December 26, 2020~~,January 1, 2022, compared to ~~20.7%~~19.6% in the same period of the prior ~~year~~

fiscal year. The increase in gross profit as a percent of sales is primarily due to ~~increased~~operational leverage from the increase in homes sold, partially offset by higher material ~~costs from market volatility in certain commodities, primarily forest products, and reduced leverage of manufacturing fixed costs caused by reduced sales volumes.~~costs.

Gross profit for the Corporate/Other segment increased ~~$0.7~~$1.8 million, or ~~7.9%~~18.1%, during the nine months ended ~~December 26, 2020~~January 1, 2022 compared to the same period of the prior fiscal year, primarily due to increased net sales inand the product mix within the Company’s transportation operations. ~~Gross profit improved as a percent of segment net sales to 25.3% from 19.4% as a result of changes in revenue mix and expansion of storage offerings.~~

Selling, general, and administrative expenses include foreign currency transaction gains and losses, equity compensation, and intangible amortization expense. The following table summarizes selling, general, and administrative expenses for the nine months ended January 1, 2022 and December 26, ~~2020~~2020: ~~and December 28, 2019:~~

Selling, general, and administrative expenses were ~~$126.5~~$181.2 million for the nine months ended ~~December 26, 2020, a decrease~~January 1, 2022, an increase of ~~$18.9~~$54.7 million, or 43.3%, compared to the same period in the prior fiscal 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 ~~decreased $13.4~~increased $43.7 million, or ~~13.0%~~48.9%, during the nine months ended ~~December 26, 2020~~January 1, 2022 as compared to the same period in the prior fiscal year. Selling, general, and administrative expenses, as a percent of segment net sales decreased to ~~10.3%~~9.4% for the nine months ended ~~December 26, 2020~~January 1, 2022 compared to ~~10.8%~~10.3% during the comparable period of the prior fiscal year. The ~~decrease~~increase in ~~selling, general, and administrative~~ expenses resulted from ~~a combination of factors which include:~~the following factors: (i) ~~a reduction in travel and trade show expenses; (ii) lower~~higher sales commissions and incentive compensation, which is generally based on sales volume or a measure of profitability; ~~and (iii) lower~~(ii) higher wage expense from headcount ~~reductions~~increases to support increased sales; (iii) an increase in travel expenses compared to the same period in the prior fiscal year; and ~~furloughs in response to COVID-19.~~(iv) the impact of the acquisition of the ScotBilt operations.

Selling, general, and administrative expenses for the Canadian Factory-built Housing segment ~~decreased $0.8~~increased $2.7 million, or ~~11.5%~~44.9%, for the nine months ended ~~December 26, 2020~~January 1, 2022 when compared to the same period of the prior fiscal year. Selling, general, and administrative expenses as a percent of segment net sales decreased to ~~9.0%~~7.6% for the nine months ended ~~December 26, 2020~~January 1, 2022 compared to ~~9.3%~~9.0% during the comparable period of the prior fiscal year. The ~~decrease~~increase in selling, general, and administrative expenses resulted from ~~a reduction~~an increase in ~~travel~~commissions and ~~other administrative costs,~~incentive compensation as well as ~~lower~~ wage expense from additional headcount ~~reductions and furloughs~~to support the increase in ~~response to COVID-19.~~sales.

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 $4.7~~increased $8.4 million, or ~~13.2%~~26.8%, during the nine months ended ~~December 26, 2020~~January 1, 2022 as compared to the same period of the prior ~~year. The decrease is~~fiscal year due to ~~a reduction~~$4.2 million of costs related to investments made to enhance our customer buying experience and supporting systems and an increase in incentive, equity compensation costs, ~~incentive~~ and ~~travel expenses as well as no longer incurring costs related to integration activities~~wage expense from ~~the 2018 Combination, and a fair value adjustment of an asset classified as held for sale recorded in the prior year.~~additional headcount.

The following table summarizes the components of interest expense, net for the nine months ended January 1, 2022 and December 26, ~~2020~~2020: ~~and December 28, 2019:~~

Interest expense, net was ~~$2.6~~$2.0 million for the nine months ended ~~December 26, 2020, an increase~~January 1, 2022, a decrease of ~~$1.6~~$0.6 million, or 23.0%, compared to the same period of the prior fiscal year. The net ~~increase~~decrease in expense was primarily due to lower average outstanding borrowings on long-term debt, offset in part by higher average ~~revolver balances combined with a reduction~~borrowings on floor plan payables. The Company repaid the outstanding balance on its revolving credit facility during the second quarter of ~~interest income earned on the Company’s cash balances invested in short-term facilities and reduced interest expense on the Company’s borrowings, both due to a reduction in interest rates.~~fiscal 2022.

The following table summarizes other income for the nine months ended January 1, 2022 and December 26, ~~2020~~2020: ~~and December 28, 2019:~~

Other income ~~for~~decreased $7.0 million, or 99.5%, during the nine months ended ~~December 26, 2020~~ ~~was $7.0 million which was~~January 1, 2022, compared to the same period of the prior fiscal year. The decrease is due to a ~~result of~~reduction in the wage subsidies provided by government sponsored financial assistance programs that were enacted in ~~responses~~response to the COVID-19 ~~pandemic.~~pandemic during fiscal 2021. The programs included a Canadian wage subsidy benefit of $6.2 million and U.S. federal and state wage subsidy benefits of $0.8 ~~million.~~million recognized in the nine months ended December 26, 2020 which did not recur in the current year.

The following table summarizes income tax expense for the nine months ended January 1, 2022 and December 26, ~~2020~~2020: ~~and December 28, 2019:~~

Income tax expense for the nine months ended ~~December 26, 2020~~January 1, 2022 was $53.7 million, representing an effective tax rate of 25.0%, compared to income tax expense of $15.5 million, representing an effective tax rate of 23.3%~~, compared to income tax expense of $20.5 million, representing an effective tax rate of 28.2%~~ for the nine months ended December ~~28, 2019. During the third quarter of fiscal 2021, the Company completed a U.S. R&D tax credit study for the years 2018 and 2019 that resulted in recognition of a tax benefit of $1.7 million.~~ 26, 2020. The change in the effective tax rate for the nine months ended ~~December 26, 2020~~January 1, 2022 compared with the same ~~respective~~ period of the prior year, was primarily due to ~~an increase in~~the recognition of a tax ~~credits, certain~~benefit of $1.7 million during the third quarter of fiscal 2021 related to a U.S. R&D tax ~~law changes and results in foreign jurisdictions.~~credit study.

The Company’s effective tax rate for the nine months ended ~~December 26, 2020~~ ~~and December 28, 2019~~January 1, 2022 differs from the federal statutory income tax rate of 21.0%, due primarily to the effect of state and local income taxes, non-deductible expenses, tax credits, results in foreign jurisdictions, and tax benefits related to equity compensation. The Company’s effective tax rate for the nine months ended December 26, 2020 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, tax credits (including the R&D study), and results in foreign jurisdictions.

The following table reconciles net income, the most directly comparable U.S. GAAP measure, to Adjusted EBITDA, a non-GAAP financial measure, for the nine months ended January 1, 2022 and December 26, ~~2020~~2020: ~~and December 28, 2019:~~


	Nine Months Ended										Nine months ended
(Dollars in thousands)	December 26, 2020		December 28, 2019		$ Change			% Change			January 1, 2022		December 26, 2020		$ Change			% Change

Net income	$	51,013	$	52,162	$	(1,149	)		(2.2	%)	$	161,246	$	51,013	$	110,233			216.1	%
Income tax expense		15,493		20,456		(4,963	)		(24.3	%)		53,696		15,493		38,203			246.6	%
Interest expense, net		2,601		1,019		1,582		*				2,002		2,601		(599	)		(23.0	%)
Depreciation and amortization		13,076		13,895		(819	)		(5.9	%)		15,533		13,076		2,457			18.8	%
Equity-based compensation (for awards granted prior to December 31, 2018)		1,358		3,606		(2,248	)		(62.3	%)		—		1,358		(1,358	)		(100.0	%)
Acquisition integration costs		—		1,938		(1,938	)	*
Fair market value adjustment for asset classified as held for sale		—		986		(986	)	*
Other		—		250		(250	)	*
Adjusted EBITDA	$	83,541	$	94,312	$	(10,771	)		(11.4	%)	$	232,477	$	83,541	$	148,936			178.3	%

Adjusted EBITDA for the nine months ended ~~December 26, 2020~~January 1, 2022 was ~~$83.5~~$232.5 million, ~~a decrease~~an increase of ~~$10.8~~$148.9 million, from the same period of the prior fiscal year. The ~~decrease~~increase is primarily a result of ~~lower~~higher operating income ~~after adjusting for the effects of integration costs~~due to increases in net sales volume and gross margins, partially offset by higher SG&A expenses and the ~~fair market value adjustment for an asset classified as held for sale incurred~~reduction in wage subsidies received in the prior year. ~~The decrease in operating income is primarily due to a decrease in sales volume and a decrease in gross margin, partially offset by lower SG&A expenses.~~

The Company defines Adjusted EBITDA as net income or loss ~~plus:~~plus; (a) the provision for income taxes; (b) interest expense, net; (c) depreciation and amortization; (d) gain or loss from discontinued operations; (e) ~~equity-based~~equity based compensation for awards granted prior to December 31, 2018; (f) non-cash restructuring ~~charges; (g)~~charges and impairment of assets; and ~~(h)~~(g) 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 does not purport to represent cash flow provided by, or used in, operating activities as defined by U.S. GAAP, which is presented in the Statement of Cash Flows. In addition, Adjusted EBITDA is ~~commonly used~~not necessarily comparable to similarly titled measures reported 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.~~other companies.

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

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

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 at ~~December 26, 2020~~January 1, 2022 totaled ~~$488.5 million~~$1.5 billion compared to ~~$133.1~~$488.5 million at December ~~28, 2019.~~26, 2020. The increase in backlog iswas driven by increased demand for single-family homes, which ~~has~~ resulted in order levels that ~~have~~ significantly outpaced production in both the U.S. and Canada. ~~Production levels vary widely by plant, but have, on~~

~~average, surpassed last year’s average production rates throughout the third quarter of fiscal 2021. Increasing~~Our ability to increase production rates to keep pace with orders is limited by individual plant capacity, ~~time~~the availability of and time needed to train new employees, employee attendance and ~~accessibility~~availability of ~~materials. Production~~materials, including certain allocations of raw materials by our suppliers. We may ~~also be limited by additional instances~~experience greater order cancellations in the future as a result of ~~COVID-19 related impacts, including intermittent facility shutdowns.~~higher prices and the longer time required to manufacture and deliver our products.

The following table presents summary cash flow information for the nine months ended January 1, 2022 and December 26, ~~2020~~2020:

The Company’s primary sources of liquidity are cash flows from operations and existing cash balances. Cash balances and cash ~~flow~~flows from operations for the next year are expected to be adequate to cover working capital requirements and capital ~~expenditures, and debt payment obligations.~~expenditures. The Company does not have any scheduled long-term debt maturities in the next twelve months. On July 7, 2021, the Company entered into an Amended and Restated Credit Agreement which provides for a $200.0 million revolving credit facility, including a $45.0 million letter of credit sub-facility. At January 1, 2022, $169.6 million was available for borrowing under the Amended Credit Agreement. The Company’s revolving credit facility includes (i) a maximum consolidated total net leverage ratio ~~covenant that requires~~of 3.25 to 1.00, subject to an upward adjustment upon the ~~Company’s first lien debt levels~~consummation of a material acquisition, and (ii) a minimum interest coverage ratio of 3.00 to ~~remain less than 2.75 times of the consolidated trailing twelve-month EBITDA.~~1.00. The Company anticipates compliance with its debt covenants and projects its level of cash availability to be in excess of cash needed to operate the business for the next year. In the event operating cash flow and existing cash balances were deemed inadequate to support the Company’s liquidity needs, and one or more capital resources were to become unavailable, the Company would revise operating strategies accordingly.

Cash provided by operating activities was ~~$103.8~~$164.4 million ~~during~~for the nine months ended ~~December 26, 2020~~January 1, 2022 compared to ~~$73.1~~$103.8 million ~~during~~for the nine months ended December ~~28, 2019. The increase of $30.7 million in cash from~~26, 2020. Cash provided by operating activities ~~is primarily~~increased due to ~~increased deposits~~higher net income in the current year, partially offset by an increase in inventory from ~~customers, deferral~~higher material costs and higher stocking levels to mitigate supply chain challenges, an increase in prepaid and other assets primarily from the capitalization of ~~certain~~$15.4 million of cloud computing costs in fiscal 2022, and a $5.9 million payment of payroll ~~tax obligations resulting from~~taxes which were deferred in the prior fiscal year under the CARES Act ~~regulations, and the benefit of the CEWS subsidy received, partially offset by slightly lower net income compared to the same period of the prior year.~~regulations.

Cash used in investing activities was $22.9 million for the nine months ended January 1, 2022 compared to $1.2 million for the nine months ended December 26, ~~2020~~ ~~compared to $11.0 million during the nine months ended December 28, 2019.~~2020. The ~~decrease in cash used for investing activities is~~increase was primarily related to ~~a decrease~~an increase in capital expenditures in the current ~~period which is primarily~~period. The Company acquired two idle manufacturing facilities in Texas and made investments in plant improvements to facilitate increased production or operational efficiencies. The Company deferred all non-essential spending in the first half of fiscal 2021 due to ~~deferral of non-essential spending as well as~~ COVID-19 concerns.~~non~~-recurring spending incurred in the prior year related to: (i) expansion of production capacity at the Leesville, Louisiana manufacturing facility; and (ii) investment in equipment to facilitate improvement in safety and operating efficiencies. In addition, the Company received $1.2 million of proceeds from the maturity of a Company owned life insurance policy and $1.8 million of proceeds from the sale of fixed assets during fiscal 2021. The Company received proceeds of $1.1 million from the disposition of a held for sale property in fiscal 2020.

Cash used in financing activities was $21.4 million for the nine months ended January 1, 2022 compared to $47.9 million for the nine months ended December 26, ~~2020~~ ~~compared to $18.0 million during the nine months ended December 28, 2019. Cash~~2020. The decrease in cash used infor financing activities during the first nine months of fiscal 2021 was related to a $38.0 million repayment on the revolving credit facility, net repayments of the floor plan payable balance of $8.3 million and payments for remittance of employee taxes associated with share-based compensation programs of $1.7 million. Cash used in financing activities during the first nine months of fiscal 2020 was primarily related to ~~$15.0 million~~lower repayments during fiscal 2022 of ~~repayments on~~ the Company's previously existing revolving credit ~~facility, a $2.1 million payment for remittance of employee taxes associated with share-based compensation programs and a $0.9 million net repayment of the~~facility. The Company also saw an increase in floor plan ~~payable balance.~~financing during fiscal 2022, which had decreased in fiscal 2021 in response to lowering financed retail inventories in response to the pandemic.

For a discussion of our critical accounting policies that management believes affect its more significant judgments and estimates used in the preparation of our Consolidated Financial Statements, see Part II, Item 7 of the Fiscal ~~2020~~2021 Annual Report, under the heading “Critical

Accounting Policies.” There have been no significant changes in our significant accounting policies or critical accounting estimates discussed in the Fiscal ~~2020~~2021 Annual ~~Report, with the exception of adoption of new accounting pronouncements as discussed in Note 1, “Basis of Presentation – Recently Issued Accounting Pronouncements.”~~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 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. These risks and uncertainties include~~statements, including regional, national and international economic, financial, public health and labor conditions, and the following:

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

For a discussion of the Company’s interest rate and foreign exchange risks, see Part II, Item 7A of the Fiscal ~~2020~~2021 Annual Report, under the heading "Quantitative and Qualitative Disclosures about Market Risk." There have been no significant changes in such risks since ~~March 28, 2020.~~April 3, 2021.

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~~Company’s disclosure controls and procedures ~~(pursuant~~pursuant to Rules 13a-15(e) ~~or 15d-15(e)~~ of the Exchange ~~Act)~~Act at ~~December 26, 2020~~.January 1, 2022. Based upon this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of ~~December 26, 2020~~January 1, 2022..

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

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


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

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


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 ~~December 26, 2020~~January 1, 2022 (unaudited) and ~~March 28, 2020~~April 3, 2021	1
Condensed Consolidated Income Statements (unaudited) for the three ~~and~~and nine months ended January 1, 2022 and December 26, 2020 ~~and December 28, 2019~~	2
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three ~~and~~and nine months ended January 1, 2022 and December 26, 2020 ~~and December 28, 2019~~	3
Condensed Consolidated Statements of Cash Flows (unaudited) for ~~the~~the nine months ended January 1, 2022 and December 26, 2020 ~~and December 28, 2019~~	4
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three ~~and~~and nine months ended January 1, 2022 and December 26, 2020 ~~and December 28, 2019~~	5
Notes to Condensed Consolidated Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3. Quantitative and Qualitative Disclosures About Market Risk	2728

Item 4. Controls and Procedures	2728

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	29

Item 6. Exhibits	30

SIGNATURES	31


(Dollars in thousands)	December 26, 2020		March 28, 2020		January 1, 2022		April 3, 2021
Raw materials	$	69,664	$	55,408	$	108,370	$	91,916
Work in process		19,412		17,773		22,644		21,642
Finished goods and other		42,047		53,205		54,038		52,555
Total inventories, net	$	131,123	$	126,386	$	185,052	$	166,113


	Three months ended						Nine months ended
(Dollars in thousands)	January 1, 2022			December 26, 2020			January 1, 2022			December 26, 2020
Balance at beginning of period	$	31,855		$	24,460		$	30,469		$	24,969
Warranty expense		9,146			9,863			30,330			24,616
Cash warranty payments		(10,057	)		(8,808	)		(29,855	)		(24,070	)
Balance at end of period		30,944			25,515			30,944			25,515
Less: noncurrent portion in other long-term liabilities		(6,436	)		(5,790	)		(6,436	)		(5,790	)
Total current portion	$	24,508		$	19,725		$	24,508		$	19,725


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


	Three months ended January 1, 2022
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total

Manufacturing and retail	$	478,838	$	36,910	$	—	$	515,748
Commercial		5,481		—		—		5,481
Transportation		—		—		13,461		13,461
Total	$	484,319	$	36,910	$	13,461	$	534,690


	Nine months ended January 1, 2022
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total

Manufacturing and retail	$	1,403,856	$	113,242	$	—	$	1,517,098
Commercial		9,482		—		—		9,482
Transportation		—		—		42,532		42,532
Total	$	1,413,338	$	113,242	$	42,532	$	1,569,112

	Three months ended December 26, 2020
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total

Manufacturing and retail	$	332,200	$	26,351	$	—	$	358,551
Commercial		4,158		—		—		4,158
Transportation		—		—		14,872		14,872
Total	$	336,358	$	26,351	$	14,872	$	377,581



	Nine months ended December 26, 2020
(Dollars in thousands)	U.S. Factory-Built Housing		Canadian Factory-Built Housing		Corporate/ Other		Total

Manufacturing and retail	$	857,028	$	66,104	$	—	$	923,132
Commercial		11,549		—		—		11,549
Transportation		—		—		38,551		38,551
Total	$	868,577	$	66,104	$	38,551	$	973,232

(Dollars in thousands)	December 26, 2020
Fiscal 2021 ⁽¹⁾	$	1,294
Fiscal 2022		4,694
Fiscal 2023		3,754
Fiscal 2024		1,803
Fiscal 2025		1,124
Thereafter		1,879
Total undiscounted cash flows		14,548
Less: imputed interest		(2,033	)
Lease obligations under operating leases	$	12,515


	Three months ended				��
(Dollars in thousands)	January 1, 2022		December 26, 2020			$ Change			% Change
Net income	$	67,622	$	21,599		$	46,023			213.1	%
Income tax expense		23,277		5,284			17,993			340.5	%
Interest expense, net		508		795			(287	)		(36.1	%)
Depreciation and amortization		5,250		4,386			864			19.7	%
Adjusted EBITDA	$	96,657	$	32,064		$	64,593			201.5	%