Good morning and welcome to the Champion Homes Third Quarter Fiscal 2026 Earnings Call. Here to review the results are Tim Larson, Champion Homes President and Chief Executive Officer, Dave McKinstray, Champion Homes Executive Vice President, Chief Financial Officer and Treasurer, and Lori Huff, Champion's former Executive Vice President, Chief Financial Officer and Treasurer, who announced her retirement in December. Yesterday after the market closed, Champion Homes issued its earnings release. As a reminder, the earnings release and statements made during today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations. Such risks and uncertainties include the factors set forth in the earnings release and in the company's filings with the Securities and Exchange Commission. Please note that today's remarks contain non-GAAP financial measures, which we believe can be useful in evaluating performance. Definitions and reconciliations of these measures can be found in the earnings release. I will now turn the call over to Champion Home CEO, Tim Larson.

Thank you, and good morning, everyone. I'd like to begin by welcoming Dave McKinstray. Dave officially joined Champion on January 12th as CFO. He has a record of delivering results in complex environments and driving growth and execution of operational initiatives across consumer products and manufacturing businesses. We look forward to the benefits of Dave's experience and leadership and are excited to have him on the Champion Homes team. On behalf of the board and management team, I'd like to recognize and thank Lori Huff for her two decades of dedicated service to Champion Homes. During her tenure, she has helped build us into the industry leader we are today. We hope that she will enjoy her well-earned retirement and wish her all the very best. Before we turn to our results, I'd like to acknowledge our Chair of the Board, Ton Kelly. Ton has been a valued Board member since 2023 and became Chair of our Nominating and Governance Committee in August of 2024. We are thrilled that Ton was elected as Chair of the Champion Board of Directors last November. Her leadership and expertise will be instrumental in guiding us on our next phase of growth. Now I'll cover our fiscal third quarter highlights and progress on our strategic priorities that are advancing across Champion Homes. As I've shared previously, increasing awareness and demand for our products and brands is one of our strategic priorities. Building trust with consumers is one of the most impactful ways to build awareness and referral. We are proud to share that our Skyline Home brand was named America's most trusted manufactured home builder by Life Story Research. This marks the sixth year in a row that our Skyline Home's brand has earned this recognition, and it's based on an independent survey of over 47,000 consumers. It is also exciting to see the top three brands from the industry study are from the Champion Homes family of brands. Skyline Homes and the Champion Homes brands are one too and completing the podium is Genesis Homes, our builder-developer brand. This recognition underscores the strength of the Champion portfolio and our relentless drive to deliver a great experience for the families that purchase and live in our homes we design and build. Product innovation is one of our strategic priorities, and our team continues to launch new home plans at varying price points, including homes targeted for a broader segment of new buyers and expanding the addressable market for off-site built homes. This strategy is reflected in the Emerald Sky home we launched at the recent Louisville show, a stunning 1,600-square-foot, three-bedroom, two-bath home at a consumer retail price of approximately $185,000. When combined with land costs in each market, that places the total price for our home well below the new home ASP in the United States that's hovering around $500,000. We are pleased with the feedback in response to a range of new products featured at the Louisville show. We will continue to bring homes to market that provide our channel partners with the ability to offer buyers a great monthly payment and with all the benefits of a new home on the legislative and regulatory front there has been considerable activity recently and I want to spend a few moments on the latest developments as each are at different stages of the legislative process we previously shared updates on the Road to Housing Act in December the Act was not included in the final National Defense Authorization Act as is originally anticipated by most in the industry however the House of representatives has been drafting their package called the Housing for the 21st Century Act and we are following it closely as it includes elements that support the expansion of off-site built homes. There remains a strong bipartisan focus on solving the housing crisis and we believe that is the foundation for the Senate and the House to work together to enact meaningful legislation. We were also encouraged to see the House pass the Affordable Homes Act which reaffirms HUD as the final authority on manufactured housing standards. This legislation eliminates duplicate of federal rules and ensures that energy efficiency improvements are made in a way that preserves affordability. We continue to monitor legislation and zoning reform at both the local and national level and remain encouraged to see policymakers working to address affordability issues in the broader housing market. In late January, I was able to spend time with HUD Secretary Scott Turner's team in We had the opportunity to tour a Burleson, Texas plant with his team and regional HUD leadership. These efforts demonstrate HUD's commitment to helping provide affordable housing to Americans, and we look forward to continuing to spend time with them in anticipation of the HUD code evolving from the legislation I just mentioned. Now I'll review our third quarter's performance, which was in line with our expectations as we navigate a challenging macro and consumer environment. Our strong performance relative to the broader housing market was a result of our team's execution of our strategic initiatives. Reflected in higher ASPs from a shift to more multi-section homes and increased prices on new homes sold through company-owned retail stores, as well as the contributions from the Eisman transaction. Our teams continue to thoughtfully pace production with demand in each market. Manufacturing backlogs at the end of December decreased sequentially by 15% to $266 million. The average backlog lead time ended the quarter at seven weeks compared to 8 weeks at the end of the prior quarter and 10 weeks at the end of December last year. Manufacturer orders were up in the quarter compared to the same period last year. Third quarter net sales increased 2% year-over-year to $657 million and total homes sold during the period decreased by 2% to a total of 6,485 homes. As a reminder and consistent with what we shared on our last earnings call, we anticipated the year-over-year volume contraction due to the prior year period benefiting from deliveries impacted by weather shifting into Q3 from Q2 in fiscal year 25. From a channel perspective, sales to our independent retail channel decreased year-over-year and were flat sequentially as a result of the prior year comp dynamic I just mentioned. We continue to receive positive feedback and adoption of our dealer portal that is a one-stop digital experience that brings together lead management, order information, inventory, and valuable sales resources for our dealers. It's a key capability that leverages our investments to generate leads for our independent retailers through our direct-to-consumer strategy. At Captive Retail, sales increased year-over-year, benefiting from the execution by our combined sales teams with the acquisition of Eisman Homes and from an increase to our average selling price. Captive Retail sales represented 38 percent of consolidated sales in 3Q versus 35 percent last year. The retail team continues to provide timely new products and home features at the right price value for today's buyers. Moving to the community channel, as anticipated, our community sales were down in the third quarter versus the same period last year, as we paced inventory levels with moderating order rates and softer consumer confidence in the period. We received encouraging responses to our new products from our community customers at the Louisville Home Show, which is a positive leading indicator for us as we move into the spring selling season. I particularly enjoyed connecting with our community customers in Louisville. We believe in the great price value that our community customers offer and the critical role they play in solving the affordable housing crisis. Sales through Builder Developer Channel grew in the third quarter versus the same period last year. We were pleased to be part of the launch with our customer, TCM Capital, at the Blythe Village project in Fresno, California this week. This Build-to-Rent community with 67 units was designed with our HUD product. It is a great proof point as to what's possible through our Build-to-Developer team, products, and partners. In addition, we are excited to showcase our Build-to-Developer capabilities and a new home at the International Builder Show in Orlando this month. Both initiatives reflect our continued commitment to the expansion of this channel in our portfolio. Champion Financing continues to produce strong results and allows us to provide diverse financing options for our retailers and consumers. Triad's Capital Partners had a chance to join us in Louisville where they shared positive responses to our homes and our strategic initiatives. Their interest in offsite home building is a testament to our opportunities ahead and the broader engagement in the sector. We are also pleased that the sale of Triad's parent company, ECN Capital, to Warbur Pincus is progressing well and receives shareholder approval in January. Their transaction is expected to close in the first half of the year. The transaction will extinguish our 19.7% ownership in ECN Capital, with ECN shares valued at $3.10 per share, delivering proceeds to Champion of approximately $189 million Canadian dollars. In connection with our support of this transaction, we agreed to extend our Champion financing joint venture for an additional three years. We look forward to the continued collaboration with the ECN and the Warburg team. I will now turn the call over to Dave and Lori to talk further

about our financial performance. Thanks, Tim, and good morning, everyone. I'd like to begin by expressing how excited I am to be joining Tim and the rest of the Champion Homes team. Champion has an impressive legacy of delivering innovation, affordable housing solutions, and I'm energized to contribute to our next chapter. In my first few weeks, I've been impressed by the team and by the opportunities ahead of us. I'm grateful to Tim for his vision and leadership, and we've had time to deep dive into the strategic initiatives that he has established for the company. I look forward to driving these initiatives with Tim and the rest of the team. I'm going to turn the call over to Lori to review the quarter, and then I will come back to share my view of Q4.

Thanks, Dave, and good morning, everyone. I'll begin by reviewing our financial results for the third quarter, followed by a discussion of our balance sheet and cash flows. During the third quarter, net sales increased 2% to $657 million compared to the prior year period, with U.S. factory-built housing revenue also increasing 2% year over year. The number of U.S. homes sold in the third quarter fiscal 2026 decreased 3% to 6,270 homes due to a decrease in sales to the community REIT channel as well as a function of the prior year period having an outsized benefit of homes sold as a result of weather that shifted sales from the fiscal second quarter to the fiscal third quarter of last year. These decreases were partially offset by the inclusion of the acquisition of Eisenman homes in the current year period. The average selling price per U.S. home sold increased 5% to $99,300 due to changes in product mix and increased prices on new homes sold through our company-owned retail sales centers. On a sequential basis, U.S. factory-built housing revenue decreased 4% in the third quarter compared to the second fiscal quarter due to normal seasonality and, as anticipated, a decrease in sales to the community rate channel. Manufacturing capacity utilization was 59% compared to 60% in the second quarter. On a sequential basis, the average selling price per U.S. home sold remained relatively flat. Canadian revenue during the quarter was $26 million, representing a 3% increase in the number of homes sold versus the prior year. The average home selling price in Canada decreased 2% to $120,000 compared to the prior year period, primarily due to a change in product mix. Consolidated gross profit decreased 5% to $172 million in the third quarter. Our gross margin of 26.2% came in slightly better than our expectations, but decreased 190 basis points compared to the prior year period. The year-over-year gross margin compression was primarily due to higher manufacturing material costs relative to price and less absorption of fixed costs due to lower sales volumes, partially offset by higher ASPs on new homes sold through our company-owned retail sales centers and a higher percentage of total sales through our company-owned retail sales centers. SG&A in the third quarter increased to $110 million from $108 million in the same period last year, primarily due to the inclusion of the Eisenman Homes acquisition. SG&A as a percent of sales was 16.7 percent, which is relatively flat compared to the prior year period. The company's effective tax rate for the quarter was 18.3 percent versus an effective tax rate of 21.1 percent for the year-ago period. The effective tax rate was positively impacted by an increase in recognition of tax credits related to the sale of energy-efficient homes in the current year period. Net income attributable to Champion Homes for the third quarter decreased by 12% year-over-year to $54 million, or earnings of $0.97 per diluted share. The decrease was primarily driven by lower gross margin. Adjusted EVA DAW for the quarter was $75 million, a decrease of 10% compared to the prior year. Adjusted EBITDA margin decreased by 150 basis points to 11.4% compared to the prior year period. As of December 27, 2025, we had $660 million of cash and cash equivalents, and we generated $100 million of operating cash flows during the third quarter. In the quarter, we once again leveraged our strong cash position and returned capital to our shareholders through $50 million in share repurchases. Additionally, our board recently refreshed our $150 million share repurchase authority, reflecting confidence in our continued strong cash generation. Before I conclude my earnings call remarks, I want to express my appreciation for my time with Champion Homes. I've been fortunate to meet and work with incredibly talented individuals across my tenure. And while I'm looking forward to my retirement, I will miss the team that made working for Champions so rewarding. It has also been a great pleasure to work with our sell-side analysts and investors over the years. Thank you for the interactions and the relationships that have been fostered as a result. I look forward to watching Champion Homes continue to execute on its strategy. And with that, I'll turn the call over to Dave for some remarks on the company's near-term expectations. Thank you, Lori. Looking ahead

to the fourth quarter, we expect revenue to be up low single digits versus a prior year, with gross margin anticipated to be in the 25 to 26 percent range. These expectations reflect cautious consumer sentiment, the seasonally lower winter selling period, and softer demand in certain markets and customer channels. Additionally, weather-related disruptions, including recent extreme weather events, have the potential to create additional variability in delivery timing and quarterly results. As a reminder, consolidated gross margin can vary quarter to quarter due to changes in product mix, channel mix between independent dealers, and company-owned retail locations. While continuing to manage SG&A prudently, we remain focused on advancing our strategic growth priorities. Additionally, it's important to remember in Q4 in advance of the spring selling season, participation in several fourth quarter trade shows is expected to drive a modest increase in fixed SG&A versus other quarters. Lastly, as we go forward, we expect to continue to drive strong operating cash flow, and I'm excited by the many opportunities we have to utilize our balance sheet. We will be assessing our capital allocation strategy to ensure we're investing in long-term sustainable growth and maximizing shareholder returns. With that, I'll turn the call back to Tim. Thank you, Dave. We appreciate the time to

share our third quarter results and how it reflects the champion team's unwavering focus on our customers and executing our strategic priorities. We look forward to finishing the fiscal year strong and continue to expand demand for our products and deliver attainable housing solutions to our customers. And now let's open the line for questions. Operator please proceed. We will now begin the question

and answer session. To ask a question you may press star then one on your touchtone phone. If you're using a speakerphone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause

momentarily to assemble our roster. The first question comes from

Greg Palm with Craig Hallam. Please go ahead.

Yeah, thanks. Good morning, everybody. Maybe just a little bit more color on kind of the environment, what you saw in the quarter geographically, and then just as it relates to the current quarter, how we should sort of think about some of these weather-related impacts and are you taking into account any of that in

the guidance specifically? Good morning, Greg. Thank you for questions. In terms of the geography, nothing unusual that happens between quarter to quarter movement. You're always going to see that in the HUD data. And a lot of those things happen based on mixed factors and local factors. We're encouraged in our buyer data that we're seeing new consumers to off-site build homes, and that really impacted our quarter additionally in terms of your question on the weather really there were some delays that impacted production days you know our goal is to be able to make that up within the remaining part of the quarter so it comes down to how many of those days can we make up and then the delivery side you know how is deliveries impacted if there were local areas where the ability to get the home ready for set so ultimately we're going to work through those in the quarter and I know the team is driving to do that in a thoughtful way. And then I think in terms of the overall trends that we saw, we're encouraged by the team's ability with new products and in the marketplace to attract more consumers. And that's really the strategy that we've been focusing on in this environment. So all in all, it was a solid quarter and also we're focused on executing the fourth quarter with those things in

mind. Okay, makes sense. And I think you mentioned higher ASPs, you know, at Captive. And I guess I just wanted to clarify something, you know, was that a byproduct of mix or are you saying specifically that pricing on a like-for-like basis was higher? I guess what I'm kind of getting at is you aren't seeing any change or deterioration in the pricing environment,

so I just wanted to confirm that. Yeah, it was both, and it's year over year. We saw both some price and then also mix, as we mentioned, some more of the multi-section homes. Okay, and then

And I guess just broadly in light of some of these more recent comments on housing, whether it's affordability or ramping up supply, maybe this is just a good opportunity for you to kind of remind us all of what sort of role that you think factory-built could sort of play in this.

I think it plays an important role and, frankly, a critical role when it comes to the price point. As I talked about in my remarks, we've got products now that really zero in on that expanding addressable market for off-site built. And when you combine that with the legislation that's being discussed, that's really focused on affordability, it's a great time to be in this business. And I think part of what we've spoken to is how we're preparing with our channels, with our products, our go-to-market, to be able to engage a broader set of consumers. And that's really the strategy that we're executing. So there's going to be ebbs and flow in the legislative process. You see that. But ultimately, it's clear there's bipartisan support. And so we're eager to see those items pass so that we continue to build and grow the industry.

Okay. Appreciate the thoughts. Thanks.

The next question comes from Matthew Bowley with Barclays. Please go ahead.

Morning, everyone. Thank you for taking the questions. I guess first, I want to just touch on the volumes relative to the industry. I think obviously we'd all seen the industry data that was down kind of what low double digits, low teens through the first two months of the quarter. And I don't know if December was really different, but given, you know, you guys and your peer were kind of, you know, only down a single-digit rate, I'm just curious and kind of comment on your own volumes versus the industry, and obviously what I'm trying to get at is, you know, what that implies about, you know, the go-forward in terms of what your own out-the-door sales might look like.

Yeah, in terms of the team, they did a really good job executing with our channel partners, and that included leveraging the digital investments I mentioned, and we've also been evolving our product and being very agile product in each market and that certainly helped us in the quarter over some of the dynamics you mentioned the other thing is that includes our captive retail stores and as a reminder when we report our units includes both our retail and manufactured and so each quarter channel mix is a driver of that and certainly there was positive from a retail in the quarter and as we think about going forward as Dave mentioned we signaled growth quarter over quarter in the fourth quarter for us and it builds on some of those drivers that we just talked about so I think it's encouraging, as I mentioned, that we're seeing consumers come in from the broader housing market, and that helps us in an environment within our own industry. So I would say those are the drivers that really we're focused on as we execute through this quarter as well. Okay, got it, got it. Thank

you for that. And then secondly, the community channel, I mean, you know, I think what you said was it was down year-over-year, which was in line, which you had said, of course, last quarter, but it sounded like maybe there was some encouraging commentary coming out of Louisville. So So, yeah, with your community channel partners. So just any color on kind of what, you know, maybe what they're waiting for, you know, and sort of what their own inventories are looking like. And if there is an outlook at some point in calendar 26 to maybe see a kind of recovery in the community channel.

Yeah, we certainly have worked closely with our community channel partners on their demand plans for the upcoming season. and they did give us positive feedback about our new products and as we work with them on their execution. What we're seeing is in each market, depending on where their consumer is at, what their demand levels are, their pacing, obviously, their product and inventory, and we work very close with them on that. So as we head into the spring selling season, we work with them in terms of those demand plans and volume in terms of the execution. What I would say is there's similar macro environment trends that they're seeing. So if we see a stronger consumer as the spring selling season grows, there's the benefit of that. At the same time, you know, it can be choppy. And so we're working very close with our community channel, and I'm proud of the team, how they've created products really focused on that community segment. And we're prepared as their businesses grow and they need to grow. But we're really balanced about the community channel given those factors.

All right. Well, thanks, Tim. Congratulations to Lori and Dave as well. So thanks, guys. And good luck.

The next question comes from Mike Dowell with RBC Capital Markets. Please go ahead.

Thanks for taking my questions. First one, I just wanted to dig in a little bit on the margin commentary for the following quarter. And if we look at it kind of sequentially, can you help us understand, you know, what are your assumptions and the puts and takes around kind of price cost? So if you could break that down in both pricing and costs, what your mix assumptions are and what role shifts in utilization rates and fixed cost absorption may play in just the sequential decline in gross margin that you're projecting. And, you know, if you could be specific, that would be great. But ballpark or directional would help as well.

Yeah, appreciate the question. I think if you start at the top, and we said in the prepared remarks, you know, we'll have variability in our gross margin. We've seen that over time, and there's shifts. You mentioned some of them, right, the product mix, channel mix, all those different drivers. As we mentioned, too, Q3 was in line with our expectations of gross margins. We look out to Q4. You know, one dynamic that we're watching, I think, is something that's important as we continue to shift more towards captive retail that will increase the amount of potential swings we see. And one of the things that we're seeing in Q4 is we're actually seeing an inventory build in captive retail, which is a timing thing really from a gross margin perspective, but is a headwind on the Q4 period sequentially versus Q3. So that's one nuance that will be specific to Q4. Again, over the long term, it'll work itself out. You know, the other factors that you mentioned, I would suggest that they're going to be roughly in line with what we saw in Q3. The dynamics underpinning the market will continue from Q3 to Q4. We don't expect any wild variables between ASPs, between input costs, or mix from what we saw in Q3.

Okay, that's very helpful. Thank you. And then in terms of, I guess, just to pick up on that last comment about the inventory build in captive retail, can you broaden that out and talk a little bit more about what those sell-in versus sell-through dynamics have been and whether you think there's some either – because I didn't know if there was actually some de-stocking. And in some ways, it sounds like you're actually putting more inventory into your channel. So just help us understand that a bit.

Yeah, good. Thanks for the follow-up. So I think first, my comment was forward-looking. If you look back, and I think the company spoke about this, we spoke about this on prior calls, was as we went forward over the last two, three quarters, we actually drove down or drew down on inventory within our captive retail. as we go forward there's the spring selling season so it's really in preparation of the spring selling season that we're going to see that uptick in inventory so it's more of a seasonal dynamic than an underlying dynamic

within the business yeah that's right the only thing I would add is it's planned to be able to ready for the spring selling season rather than a slowdown in sales in that channel it's really preparing for the product lines as we go to market. And it also relates to our strategy with margin. As we come out with new products, we're always thoughtful about how to make sure we have a strong margin with each of those products, depending on their various price points. And so it really comes together in terms of the strategy to make sure we're prepared at our captive retail for the spring selling season

and driving our goals that we talked about. Got it. Yeah. Thank you for that distinction. That was helpful. And congrats again, Lori, on an amazing career and Dave on the new appointment. And as Matt said, good luck and talk to you soon.

The next question comes from Phil Ng with Jefferies. Please go ahead.

Hey, guys. Congratulations, Laurie. It's been a pleasure working with you and looking forward to partnering with you, Dave, going forward. I guess to kind of kick things off, Tim, what's the early read on spring selling season? I mean, backlogs did dip sequentially, but that feels more seasonal in nature. So just give us a pulse in terms of what you're hearing, what you're seeing, whether it's traffic, orders from your customers, and how the different channels effectively are managing inventory particularly. I'm most curious on the inventory side for REITs.

Yeah, I appreciate that, Phil. In terms of the trends, what we've been seeing, and we carried in some order growth. We mentioned in Q3 we had orders growing, and that's going to benefit us in Q4. and we signal the year-over-year growth to the start of the calendar year in our fourth quarter. We certainly anticipate, hopefully, as consumers have some tax relief and other elements with rate trends that those can be in our favor, balanced with the macro and consumer drivers and choppiness that we've seen in the market of late. And I think as we think about our strategy, we put ourselves in positions with our key channels with the right product in this environment. And in terms of your question of the community channel inventory, if you remember years ago, there was quite a bit of buildup, and then it took a while to have that come back what I'm encouraged by is we've been very calibrated with their community channel partners so if they see an opportunity we're going to be able to move quickly versus having that kind of languished in terms of the timing of their inventory so our approach there is to stay in sync with them and make sure we're flexible as we go through the spring selling season in our community channel specifically but I think our outlook as we think of this year going forward is how we continue to earn more of those consumers from the broader housing market and the product

strategy we have laid out is to drive that. But Tim, everything I'm hearing, I'm not hearing anything noticeable shift in terms of how you kind of view the consumer and your REAP partners. Certainly, there was some inventory management last quarter, but it feels reasonably steady as we kind of go into spring selling season. Is that a correct interpretation?

Yeah, I think to be specific, what we've signaled is we're working with them closely in certain markets that may be a little bit more paced given the environment in that market. Where are other projects that are starting up they're looking to do more of new demands and builds and so at the community channel we're really watching closely in terms of moderating our inventory with them so we've seen it you know year over year quarter over quarter we saw some abatement there it's more of a balanced approach to their community customers as you go through the spring selling season and given seasonality we need to get more into that spring selling season and we'll be updating you in Q4 about the community channel trends within the

quarter. Okay, super. On the legislation front, Tim, can you expand on some of the nuances between the bills from the House versus the Senate as it relates to manufacturer homes? You know, certain elements like the steel chassis was something that was highlighted, perhaps in the zoning, but any more color to kind of nuances between the two bills? I'm sure you spent a little more time unpacking it. And then next steps from here in any color on a timing perspective.

So, yeah, specifically the Senate bill that we've been talking about that included the chassis was not included in the defense bill. However, the House bill does also include the HUD homes without a chassis that was in the Senate bill, and so that's just beginning the process with the House. So we're encouraged that that ability to have a HUD code home without a chassis is still part of the legislative process. Clearly it's got to move through the House and then into the Senate, and we believe it will based on bipartisan support but there's going to be ebb and flow a part of the legislative process obviously you're seeing out of Washington a lot of focus on housing affordability increasing the supply of affordable homes all that certainly are the right things what we're hearing in terms of that so we'll see how the legislative process plays out it appears that there's a lot of bipartisan support to drive that and we're preparing accordingly but at the same time we got to focus on what we can control as the legislative process takes its place and that's what we're doing every day in anticipation of it but also doing projects like I mentioned and build a developer with local municipalities that can prove out how affordable housing can be delivered in each city so I think it's the combination of the federal and the local and we're driving execution with whatever those bills are coming out we'll be ready for but at the same time it's going to take time within that process so you know our goal is hopefully it happens sometime this year but we'll see how the legislative process plays out on the upcoming months okay thank you so

much. Really appreciate the color. The next question comes from Daniel Moore with CJS

Securities. Please go ahead. Thank you. Good morning, Tim. Dave, welcome. And just quickly echo Lori. Thank you for all the help over the last several years and best of luck and enjoy it. Maybe jumping, just expanding on a couple of the questions. Appreciate the color and the look into fiscal q4 um both from revenue and a gross margin perspective in terms of the revenue guide what are your expectations for backlog on a sequential basis um assuming we're kind of in that in that revenue guidance as we get to the end of fiscal q4 um and from a gross margin perspective you know slight incremental pressure from here um would we expect that to start to level off what are your expectations you know kind of looking out over the next two to four quarters from a gross margin perspective based on the visibility we have today yeah thanks i think

first from the revenue standpoint tim just talked about some of the dynamics that we're seeing in in the order flow which is you think about what that means from a backlog perspective and it's it's going to be kind of a continuation of what we saw in q3 where the sequential improvement if you will quarter on quarter continues so feel good about the orders that we got in Q3 and the orders that we're seeing here early in Q4. Your question on margin, as I mentioned in the previous question, is most of the dynamics are going to be the same from Q3 to Q4. We're not seeing any significant variables within that. There is that one seasonal variable that I talked about on the, call it readiness inventory for spring selling season at captive retail, but those underlying dynamics are expected to continue. Over the long term, our goal is to continue to drive gross margin, and we're doing that through driving value to the consumer. So, we don't see any huge variables beyond Q4. We're managing it within this range, and we feel good about where we're setting up for Q4 from a margin perspective.

Dave. Very helpful. Appreciate it, Dave. Just as I think back, I know the trade show SG&A issue certainly cropped up in the past. I think, as I recall, a few million dollars, maybe three to five million, something like that. Is that overly aggressive? Just any quantification there on the

incremental SG&A for the quarter? Yeah. You hit the seasonality of SG&A for us. The show season, if you will, in Q4 hits us, I would say just as a roadmap, if you look at last year as a percent of sales, you know, Q3, we were basically in line from SG&A as a percent of sales. I think that's a good roadmap for how you can think of Q4. Very helpful. And then just capital allocation,

you know, bought back 50 million in stock each of the last three quarters. Obviously, the board re-upped the authorization. Is that a run rate you'd expect to continue given the incremental capital coming in from ECN, or might you be even more aggressive considering the kind of the recent pullback in share price, just how we're thinking about balancing that? And thanks

for the color. Yeah, in the near term, I don't foresee any changes. As we think about it over the long term, we're going to continue to assess our capital allocation. And as I mentioned, and the prepared remarks, our goal is to make sure that we're driving those investments towards the highest return items that are going to drive the highest return for our share owners in line with our strategic priorities. So near term, don't expect any changes. And then over the long term, that's a continued assessment that we're going to make to make sure we're driving the most

potential value. Very good. Appreciate the color. The next question comes from Jesse Letterman with

Zellman and Associates. Please go ahead. Hey, good morning. Thanks for taking the question and congrats again to Lori and look forward to working with you, Dave. I'd like to follow up on the policy front. It was recently announced a program called Trump Homes with several large public site-built home builders potentially building roughly a million homes over an undefined period of time with investment from private investors. I'm just curious if amidst the focus from the administration on housing affordability, is Champion Homes or even, to your knowledge, industry advocacy groups getting, you know, involved in that conversation to try and, you know, provide or fill the administration's yearn for and the nation's yearn for affordable homes as, you know, incremental to, you know, what you're already doing operating the business as it stands hey Jesse yeah

certainly read about that from yesterday's remarks and I would say from a strategic perspective it's definitely in line with the execution that we're driving with our products our channel strategy or build a developer capability as I mentioned a few weeks ago I was with the HUD team and they got to see firsthand the capabilities we have and if you think about the messages that are coming out a lot of the policymakers in Washington they've been talking about how off-site built homes manufactured housing industry is a core part of that solution because when you think about the price points that we need to get to in our country you know those 150 200 300 thousand dollar homes that's really made possible in an off-site model which is what we've been delivering so we're encouraged by obviously the policy but also the messaging and we're going to stay tuned into what those specifics are to make sure we're positioned well to realize the opportunity that comes from that

Okay, great. Last quarter on gross margin, Lori kind of pegged the tariff impacts at about half a percentage of material costs and noted that you expected it to rise kind of towards 1%. So I was curious, where did that shake out relative to your expectations in the third quarter? And maybe, Dave, going forward, what's the assumption incrementally for fiscal fourth quarter? Is that going to be an incremental headwind that's driving the margin a bit lower sequentially as well? Or, you know, where do you see that tariff impact shaking out?

Yeah, thanks for the question. I think, first, the team's done a great job managing our tariff impact and working with our various suppliers to do that. So really applaud and appreciate that effort. And what we saw in Q3 was it came in pretty significantly below the 1% that we've talked about in the past. And so as we look forward to Q4, again, similar to some of the other commentary I had on gross margin, we're assuming those same dynamics into Q4. Now, of course, on tariffs, it's an evolving situation, so that can change based on the next potential news on it, but it's something we're always watching and we'll continue to react as that news comes and we'll manage it accordingly.

great good to hear and if i may sneak in one more tim since quarter end um you know as far into the quarter as you're willing to share me maybe even december as well you know what are you seeing from a retail perspective in terms of maybe key leading indicators for the spring selling season whether that's dealer traffic or quote activity or anything along those lines you can share because i know you mentioned that you're a little bit cautious on the consumer so any intel from that perspective would be helpful. Thanks again. Yeah, to be specific, the consumer caution

was just more of the trends that we've seen over the last year, some of the ebbs and flows by market, particularly in the community side. But from a broader consumer, certainly the demand is there for affordable housing. And we see that in our leads, our engagement in terms of our digital platforms. And we saw it at retail. Obviously, some of the weather pockets affected some of that for a bit. But we're planning for a continued strong spring selling season. And that's how we're approaching the business. Obviously, our ability to share that we're going to be up quarter over quarter in Q4 is based on some of those indicators, but we know what our backlog is and we're managing through that, but also thinking through how we continue to drive demand through the quarter. So, it's going to come down to that execution, but also do we get the consumer support through the quarter. So, Jesse, I'd say we're balanced about it and focusing on the things that we control and driving the business and engaging our customers digitally and obviously with the new products that were coming out at our retail stores and with our community partners. Great to hear it. Thanks again.

This concludes our question and answer session. I would like to turn the conference back over to Tim Larson for any closing remarks.

Thank you, everybody, for joining today. And we'll just reiterate our congratulations to Lori in welcoming to Dave. And we appreciate today's call and everybody joining us in your continuing region champion homes. We look forward to updating you in our fourth year and full year end here in a few months. Thanks, everybody. Have a great day and rest for your week.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.