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Good morning, and welcome to the Champion Homes First Quarter Fiscal 2026 Earnings Call. My name is Mina, and I will be coordinating your call today. I will now turn the call over to your host, Jason Blair, to begin. Jason, please go ahead.

Good morning. Thank you for taking the time to join us for today's conference call and review of our business results for the first quarter ended June 28, 2025. Here to review our results are Tim Larson, Champion Homes' President and Chief Executive Officer; and Laurie Hough, Executive Vice President, Chief Financial Officer and Treasurer. Yesterday, after the market closed, we issued our 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 results 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 Homes' CEO, Tim Larson.

Thank you, Jason, and good morning, everyone. Before we discuss our quarterly results, I want to share an update on the progress we are making on our strategic priorities. These priorities reflect how we are elevating the business for near- and long-term performance. On our first strategy, winning as a customer-centric, high-performance team, we've added 2 highly accomplished executives, one to our Board of Directors, Ms. Fedewa and Alan Robertson as Chief Human Resources Officer. Mary is an accomplished leader in the real estate industry with more than 30 years of experience in finance and capital markets. She co-founded STORE Capital, one of the largest and fastest-growing real estate investment trusts in the U.S. Mary served as its President and CEO and as a member of its Board of Directors. Alan Robertson joins our executive leadership team at CHRO. He has over 15 years of human capital leadership experience, including most recently at Pulte Homes, where he led HR across their manufacturing and field operations teams. Alan's homebuilder experience and business-first leadership style are a great fit to support and develop our 9,000 team members. We continue to invest in our new product strategy that's bringing in new buyers with home styles and floor plans at the right price point and value. Recently, we received national recognition for our newly launched HUD Code and modular homes. You can view the homes on our social platforms. Consistent with our strategy to drive broader awareness to our brands and bring in new buyers to MH, we recently were featured on Designing Spaces on Lifetime Television. The program highlights our homes and how they are each delivered with quality, speed and affordability without compromise. From a regulatory perspective, we are pleased with last week's unanimous bipartisan vote by the Senate Banking Committee to advance the ROAD to Housing Act. The bill includes a specific section titled Manufactured Housing for America that highlights Congress' support for off-site built homes. We are encouraged that it's advancing to the next step, however, recognize it's early in the legislative process. We will continue to closely monitor the legislation and work with MHI in support of its advancement. Now I'll give an overview of this quarter's performance as well as expectations on the near-term outlook. The team's nimble operational execution resulted in a strong first quarter of fiscal 2026, delivering profitable growth in an ever-changing environment. First quarter year-over-year net sales increased 12% to $701 million and homes sold during the period increased 8% to a total of 7,215 homes. The increased sales across our channels and effective cost management delivered strong gross margin and earnings growth in the quarter. We are pacing production to the consumer environment in each market. Plants with larger backlogs increased production rates, while some locations moderated with local market trends. Manufacturing backlog at the end of June totaled $302 million, down 12% sequentially. The average backlog lead time ended the quarter at 7 weeks, which is within our target range of 4 to 12 weeks. Now I'll provide some additional commentary from the quarter on each of our sales channels. Sales to our independent retail channel increased compared to the prior year period. In addition to expanding the adoption of our digital and marketing support for dealers, we are also adding independent distribution points. At captive retail, sales increased versus Q1 the prior year due to an increase in average selling price and a shift in product mix. We also closed on the Iseman acquisition in late May. The combined teams are already making good progress in executing retail and product synergies. Moving to the community channel. Our community sales were up in the first quarter versus the same period last year, driven by new products and strong engagement by our sales team to match the offering with the needs of today's community operators. Consistent with the consumer environment I mentioned earlier, we anticipate some moderation in the community channel, which may impact near-term order rates. Sales to the builder developer channel grew in the first quarter versus the same period last year. Our pipeline in this channel remains solid and is growing. We remain encouraged by the potential of off-site construction being more widely adopted by builders. Champion Financing, our joint venture with Triad Financial Services, continues to operate effectively. Our retail loan programs continue to be a key lever in today's consumer environment as it allows our stores to match consumers with the right home and their optimal monthly payment. We are confident that the combination of our joint venture and ongoing access to consumer financing across several lenders provides a diversified portfolio of options for our retailers and consumers. I'll now turn the call over to Laurie, who will discuss our quarterly financial performance in more detail.

Thanks, Tim, and good morning, everyone. I'll begin by reviewing our financial results for the first quarter, followed by a discussion of our balance sheet and cash flows. I will also briefly discuss our near-term expectations. During the first quarter, net sales increased 12% to $701 million compared to the same quarter last year with U.S. factory-built housing revenue increasing 10%. The number of homes sold increased 7% to 6,965 homes in the U.S. compared to 6,538 homes in the prior year period. U.S. home volume during the quarter was supported by healthy demand across our community channel and an increase in builder developer sales. The average selling price per U.S. home sold increased by 4% to $95,000 due to a shift in mix to more multi-section units and increased pricing at our company-owned retail sales centers. On a sequential basis, U.S. factory-built housing revenue increased 18% in the first quarter compared to the fourth quarter of fiscal 2025. We saw a sequential increase due to expected seasonality as well as a shift of sales from the fourth quarter of fiscal 2025 into the first quarter of fiscal 2026 from delayed home shipments caused by inclement weather across the South in the March quarter. Manufacturing capacity utilization was 61% compared to 60% in the fourth quarter of fiscal 2025. On a sequential basis, the average selling price per U.S. home sold increased approximately 1%. Canadian revenue during the quarter was $30 million, representing a 50% increase in the number of homes sold versus the prior year period. We saw product mix shift to more single-section homes in Canada as well as stronger demand in the Alberta province versus the same period last year. The average home selling price in Canada decreased 3% to $120,500, primarily due to a shift in product mix. Consolidated gross profit increased 16% to $190 million in the first quarter, and our gross margin expanded 90 basis points from 26.2% in the prior year period. The higher gross margin was driven by higher ASPs on new homes sold through company-owned retail sales centers and the unfavorable purchase accounting impact in the prior year related to the increase in the carrying value of inventory acquired in the Regional Homes acquisition that did not recur in fiscal 2026. Gross margin increased sequentially from our fiscal fourth quarter and was higher than expectations, primarily due to lower-than- expected material input costs, higher captive retail ASPs and favorable product mix. SG&A in the fourth quarter increased $2 million over the prior year period to $111 million. The increase is primarily attributable to higher variable compensation from higher sales as well as $3.9 million of costs associated with plant closures and the acquisition of Iseman Homes. Those factors were partially offset by an $8 million expense in the first quarter of fiscal 2025 related to the acquisition of Regional Homes, which did not recur in the current period. The company's effective tax rate for the quarter was 21% versus an effective tax rate of 22.5% for the year ago period. The decrease in the effective tax rate is primarily due to an increase in tax credits. Net income attributable to Champion Homes for the first quarter increased by $19 million to $65 million or earnings of $1.13 per diluted share compared to net income of $46 million or earnings of $0.79 per diluted share during the same period last year. The increase in EPS was driven mainly by improved operating income. Adjusted EBITDA for the quarter was $94 million, which is an increase of $19 million or 26% compared to the prior year. Adjusted EBITDA margin was 13.4% compared to 11.9% in the prior year period. This increase in EBITDA margin is mainly driven by higher gross margins. We expect near-term gross margin in the 25% to 26% range as we balance cautious consumer sentiment and softer demand in certain markets. As a reminder, our consolidated gross margin fluctuates from quarter-to-quarter due to changes in product mix as well as the quantity of sales through our independent channels versus sales through our captive retail stores. As we work through this dynamic market environment, we continue to balance SG&A spending while continuing to drive our strategic growth priorities, including investments in people and technology. As of June 28, 2025, we had $605 million of cash and cash equivalents and long-term borrowings of $24 million with no maturities until December 2026. We generated $75 million of operating cash flows for the quarter. In the quarter, we 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. Subsequent to quarter end, we amended our existing $200 million revolving credit facility and extended the term through July 28, 2030. The facility provides the company with available liquidity for its strategic initiatives. We remain focused on executing on our strategic initiatives and given our favorable liquidity position, plan to utilize our cash to reinvest in the business to support strategic growth and return cash to shareholders. I'll now turn the call back to Tim for some closing remarks.

Thank you, Laurie. Looking to our second fiscal quarter of 2026, as we navigate consumer uncertainty and the factors impacting the overall housing market, we anticipate our second quarter revenue to be flat to up low single digits compared to the prior year period. While we are encouraged by the customer engagement and quoting activity we're seeing, the pace of orders so far in Q2 has been a bit slower than our fiscal second quarter last year. Our teams are being proactive in this environment to ensure production is optimized and our purchasing team has been very effective at navigating the ever-changing tariff dynamics. Our backlogs remain within a normal range of 4 to 12 weeks, and we are taking measured actions to manage fixed costs. We continue to review internal survey data to understand who is buying our homes. It is encouraging to see that we are consistently attracting first-time homebuyers as well as first-time buyers of manufactured homes. This reinforces that our products are a core solution to address the need for affordable housing in the U.S. and Canada. It's one of the many reasons the future for Champion is promising, and we are confident in the strategies we are executing to deliver value to all stakeholders. Our strategic long-term priorities that I've shared on previous calls provide a clear vision to execute effectively in today's environment and the discipline to effectively deploy our capital. In summary, we believe Champion Homes is well positioned to navigate this uncertain market while maintaining a steadfast focus on our long-term strategic growth priorities and daily execution, all grounded in our commitment to our customers, team members and shareholders. Thank you, everyone, for tuning into today's call and for the Champion Homes team for their continued efforts with a strong start to the fiscal year. I look forward to updating you all on the second quarter later this year. And now let's open the line for questions. Operator, please proceed.

[Operator Instructions] The first question is from the line of Greg Palm with Craig-Hallum Capital Group.

Maybe we can just start with a little bit more commentary on kind of the backdrop, the environment relative to kind of what you talked about in late May. So what -- maybe just what's changed geographically, recent -- it sounds like recent order rates may be softening maybe a little bit more, but just give us a little bit more color on what you're seeing out there, please.

Yes. Appreciate it, Greg. So first off, we had stronger community business in Q1. And as we talk to our community customers, they're seeing some of the same consumer dynamics. So we don't anticipate that continuing in the near term, but still having steady business with our community customers. We had our plant backlogs in Q1 that the plants with larger backlogs were able to produce, and those are in the regions of the country that we've talked about previously with some strength, whether that be the West as an example. Some of the softness that we saw in the South that we've talked about hasn't really returned back to some of the robust demand. So overall, those impacts that we factored into Q2. The other driver is, as we look across our channels, we have leading indicators that we look at, and those are some of the drivers that we see from our Q2 view. What I would share is that over the last 6 months, we've been able to grow share in HUD and grow share against single-family, which is encouraging in the market environment that we're in. So it's more of the consumer indicators, Greg, that we're seeing that affect our view of Q2, but I'm pleased with how the team is out there every day driving the business in this environment.

And just kind of thinking back to what you talked about in late May when you reported Q4 results, I mean, what happened in June specifically because you vastly outperformed relative to what you talked about for revenue and gross margin. So can you just give us a little bit of sense on where June was relative to what you thought back in late May?

So a big change was certainly the impact of the community business, and that drove a lot of the impact in Q1. And then as I mentioned, we look at each backlog by plant and where they can increase production rates. And as Laurie mentioned in her remarks, we had some improved pricing relative in our captive retail business. The other driver is our material costs weren't as significant as they've been previously in the quarters that have benefited Q1, which then all of that combined to flow through earnings in a strong quarter. And so as we go into Q2, we don't have some of those same dynamics, and we can already see that. And so that's why we have the view that we have for Q1 in terms of the guide that I provided on the revenue earlier. So it's some of those different drivers that we see is impacting Q1 versus Q2.

And then if I could just sneak one more quick one. Laurie, you mentioned these delayed shipments from the March quarter to now previously quarter. How many homes was that? What was the revenue impact? I don't recall you quantifying that last quarter.

Yes. We didn't quantify it, Greg, and we're not going to quantify it. But we -- that was part of the -- certainly part of the difference between our expectations. I think originally, we were thinking that would flow in over the first and second quarter of this fiscal year and the majority of it hit all in the first quarter. So that is certainly one of the differences between late May and where the results ended up as well.

Yes. And I think, Greg, too, if you look at the industry, we were pretty in line with the industry, what we were signaling for Q1. What changed is we got more benefit from those items that were in Q4, those homes and then the other drivers I mentioned. So from an industry perspective, our Q1 kind of outlook was pretty consistent. But to your point, we did outperform given the drivers that I mentioned.

The next question is from the line of Daniel Moore with CJS Securities.

Maybe just pulling on the string in the community channel. You talked about anticipating some moderation. I think you mentioned, Tim, a little bit in terms of geographic dispersion, but -- and the consumer softening. But is it more a function of just not picking up or are things actually softening a little bit? If so, what geographies and what's sort of holding some of your community partners back?

Yes. Thanks, Dan. No, we certainly have seen a robust community orders through the first quarter. What we're sharing is that, rate, we don't anticipate continuing in Q2. And it's as each community operator is looking at where their projects are, where their demand is and balancing that with the consumer environment, and it's fairly across multiple geographies. As you know, we have a number of community operators around the country. And so those are on a case-by-case basis. It's pretty consistent with what we've talked about before about various geographies. So it's not saying that -- I mean the community business, there's some strength there and certainly versus where it was over a few years ago, but it's more at the growth rate going forward. And so we're working with each community customer to make sure that the pace of production and the homes that they're looking for based on that match that. And we're just signaling that what we saw in Q1, we don't anticipate continuing into Q2 at the same rate.

Got it. That's helpful. Net new orders, as you just described, up in the quarter, you saw some strength there. The guide flat to up low single digits year-over-year in Q2, based on where we're trending quarter-to-date in terms of order rates, would that leave backlogs relatively flat sequentially? Are you sort of operating one in one out? Or do you anticipate drawing backlogs down a bit more in this quarter?

Yes, we anticipate being in our normal range, and we'll update you exactly where that lands. And one of the specific things we're doing is plant by plant, looking at what makes most sense in their market for that backlog utilization. As I mentioned, for Q1, we had some opportunities in certain locations. We'll look to do that in Q2. And then also in other markets, we'll moderate it just based on what makes sense in their environment. But we plan to be in our normal background range for the quarter.

Got it. Nice kind of turnaround or pickup in Canada. Is it one specific industry driving that in that demand? And what's the outlook as we look forward? How sustainable is the recovery we saw in the quarter?

Yes, it was strength in Alberta. And certainly, from an overall total business, it's 4% of our revenue. So you're going to see some relative movement within that percent. As we've mentioned, that market is pretty dynamic. We saw some recovery, but we're very poised in terms of how we think about that business. They face some of the challenges at the consumer level as well. So I think we're balanced in terms of how we think about Canada, but we're pleased by the progress we saw in Q1 in the Alberta region.

Okay. And last for me, Laurie, some sense for what Iseman Homes contributed to revenue in the quarter as well as backlog at quarter end?

So we closed on Iseman on May 30. So it was 1 month of revenue that was included in the results for the first quarter. Backlog, Dan, is really our manufacturing backlog. So our captive retail has no impact on our backlog numbers.

The next question is from the line of Matthew Bouley with Barclays.

On the gross margin, so I think in Q1 there, you spoke to some of these, I guess, surprising positives that led to the beat, maybe better input costs and some pricing in captive retail. But I'm just trying to understand sequentially into Q2 going back to 25% to 26%, if I heard you correctly. I guess, what sequentially would be a little softer to drive that? And I just want to understand, are we still thinking 25% to 26% is kind of where you'll be for the -- beyond the quarter? Or how are you thinking about getting back to that longer-term range of 26% to 27%?

Matt, thanks for the question. In 2Q, we're really balancing the cautious consumer sentiment and softer demand in certain markets. And as a reminder, our gross margins can fluctuate pretty significantly actually from quarter-to-quarter due to product mix, including single wide versus multi-section mix, option content in products as well as the mix between manufacturing volume going through captive retail versus independents. So that can drive a significant shift from quarter-to-quarter. We do think the 25% to 26% gross margins are going to continue in the near term.

Okay. Got it. And then I guess just on SG&A as well. obviously, showed some leverage there in Q1, on the strong revenue growth, and -- but as you're talking about kind of flattening out, I guess, year-over-year in the second quarter, I mean, any thoughts on how SG&A leverage might shape up as we go through this year?

Yes. We're going to continue to balance SG&A based on what we're seeing from a demand perspective.

The next question comes from the line of Michael Dahl with RBC Capital Markets.

First question on some of the pricing dynamics. I think the mix side is pretty clear, but you mentioned price increases on new products and at your captive retail. So can you speak a little more to what those like-for-like pricing dynamics were, where you took price, the rationale for taking price and what the response has been?

Thanks, Mike, for the question. Our pricing strategy varies by market and geography. So we're really trying to more broadly across all geographies, balance volume and price given the local demand environment in each region.

Okay. Could you put an order of magnitude on what that like-for-like increase contributed?

We're not going to separately disclose that. It's all part of wrapped up in the U.S. segment housing. So we did see at manufacturing that wholesale prices remained relatively flat, but we did see an increase in retail pricing. It had been a while since our captive retail locations had taken some price. So they did -- we were able to take advantage of that in certain geographies this quarter.

Okay. And then in terms of -- I guess, going back to Greg's question around kind of visibility. So the guide you gave was kind of 2 months into the quarter at the time you gave it. And I understand that things can fluctuate quite a bit. But at any given point in time, you do have half a quarter's worth of backlog, give or take, to give you some visibility. So my question is more around internal processes and whether there's anything that you are working on or can work on that help give you a little better visibility into refining some of those near-term guideposts, whether it's communicating externally or I assume operating internally, having this type of variance probably isn't optimal. So can you just give us a sense of anything that you guys are doing to try to refine that internally?

Yes, Mike. So a lot of it has to do with the closing of end consumer transactions at the end of any given month or quarter, and that's dependent on a lot of different factors. So as we mentioned earlier, we were able to pull forward a lot of the pent-up inventory that we weren't able to close in the fourth quarter into the first quarter. And so it's dependent on weather, it's dependent on the consumers' financing and what of those transactions can happen to get an order counted as a sale at the end of any given month or quarter. So we do obviously have financial forecasting tools and methodologies, but there's a lot of moving pieces when it comes to the end consumer closing of transactions as of a specific date.

The next question is from the line of Phil Ng with Jefferies.

Congrats on another really strong quarter. So Tim, if I heard you correctly, it sounds like your REIT channel -- community channel business is still growing, but perhaps the pace is slowing down a touch. But when you kind of look at order trends by different channels, it would be helpful to kind of give us a little color whether it's independent, direct-to-builder, how that's kind of shaping up from an order trend perspective? And any color from a channel inventory level, any risk that there's too much inventory and you got to destock in any pockets?

Appreciate that, Phil. So on the builder developer side, we've had some new projects come online that are encouraging. As I've mentioned before, those go through quite a process from where they are at zoning all the way through execution. So we'll work through that process with those customers. And then in terms of our independent channel, the overall guide that I mentioned factors in what we're seeing there, which is we've had really good quoting activity with our independents. But part of the order trend we're looking at is how does that conversion really work through the Q2 results. And right now, we're not seeing a strong conversion we saw in Q2 of last year, but still decent quoting activity with our independents. In terms of our captive retail, as I mentioned, we did see growth in that channel on the revenue side. Part of what the team was working through there is we anticipated last fall, a pretty significant opportunity going into Q1 and Q2 of this year. And with not as strong a consumer environment, we've had to work through some inventory in that channel, and they're doing that. And so I think from our perspective, that's part of a prudent approach we're taking with our captive retailers to work through that inventory. As far as the other channels go, on inventory, I think we're pretty balanced on an overall basis, but we certainly work with our dealers on a case-by-case basis to make sure we're having the right inventory for their customers. And beyond just aggregate inventory, it's the right products in this environment given the consumer price points that we want to hit and the payments we want to hit. So from our perspective, I think each channel, it's really relative to the Q1 growth rate, but we're encouraged by the quoting activity across our channels and the progress. It's just relative to the growth rate we saw in Q1 is more where we're seeing the moderation.

And on the inventory that you're kind of working through on your captive retail, should we expect that to be largely flushed out this quarter? Or it's going to take a little more time?

At this point, we're working that week by week and location by location, and we have over 80 retail stores. So I'm pleased with the progress the team is making there, and they're doing it very thoughtfully. But we'll give you an update on that in Q2.

And a question for Laurie. Gross margins were great. You mentioned lower input costs help. I suspect part of that is lumber and OSB prices falling. Should we still expect input costs to be a good guy in this current quarter? And not to say you have clarity, but certainly a little more on tariffs. Can you give us some color on how you're thinking about just inflation broadly as it relates to tariffs? Do you need to go out and raise prices to kind of offset that? Certainly, lumber duties, I think, coming out of Canada will start to pick up over the course of the year?

Yes, Phil. So from -- I do think that lower material costs will continue to help margins. They seem to be staying relatively stable. Other than forest products, we are seeing some increases in some components. And then as far as tariffs are concerned, we have evaluated the tariff impact. It wasn't substantial, actually not very significant at all in the first quarter. And as you know, they're constantly evolving. Our current estimate is that our unmitigated impact on our material cost is approximately 1% of our material cost for tariffs. And we will use a combination of alternative sourcing as well as price where demand allows.

The next question is from the line of Jesse Lederman with

Nice job in the quarter. A follow-up question, Laurie, on the tariff impact. So 1%, is that already contemplated within the reiterated 25% to 26% near-term range? Or will that be an incremental impact on top?

It is considered in that 25% to 26% based on known tariffs today.

Okay. Got it. And then were there any -- are you able to quantify the impact from tariffs? You said it was like basically not significant at all, I guess, was it like a couple -- a dozen basis points or something in the first quarter? Or just to kind of understand like how that might change from fiscal 1Q to 2Q?

It was not material in fiscal 1Q, primarily because of the flow of our inventory. We do have inventory on hand in our factories, Jesse. So that's the primary impact.

Got it. So basically, no impact in 1Q and then can go up to 1% of COGS in 2Q, but already contemplated within the guide?

1% of material costs.

Material costs, right?

Yes.

Got it. Which is about half of the overall COGS. Is that right?

In that range.

Okay. And then last question. Through the new JV, the Financing JV, are you -- or even just through captive retail, are you able to track or measure the average household income of those that are purchasing homes or applying for loans and whether that's increased or decreased over time?

So Jesse, I mentioned that reviewing the internal survey data of our customers and there are elements in there. And part of that is where are the buyers coming from, what their previous homeownership, what type of dwell they're in. And we're seeing a lot of first- time homebuyers. We're seeing people new to manufactured homes from a demographic, from a socioeconomic income, that's some of the cross-checks what we're doing. And right now, we're not going to be sharing that publicly because some of that's where we're pricing our approach and some of our consumer approaches. So I would say we're encouraged by what we're seeing there. We're encouraged by the ability for that consumer to pay, and we're also encouraged by how we're attracting new customers to manufactured housing.

Okay. That's great. Yes, I was curious if maybe you were seeing higher household income could be reflective of consumers that are mixing lower from site-built housing, if that's something you're willing to disclose. But otherwise, I appreciate all the color.

Yes. What I can say is we are seeing people come from previously owning a site-built home to manufactured housing. And so that is encouraging. What I do think we have to recognize is, and this is the consumer environment is those consumers are impacted by the general impact of the economy and inflation. So it's an opportunity for us and certainly part of the tailwind we anticipate over time, which is why we're doing the marketing to bring in new consumers, the new products that we're doing, but that's certainly shifting that over time. But so far, we're encouraged by what we're seeing from those efforts and bringing in those new buyers.

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

As I mentioned earlier, it's encouraging that we've been able to grow share in the last 6 months, and it reflects the team's commitment to innovating with products and engaging our customers. And we appreciate your time today and your questions and your interest in Champion and our strategy going forward. So with that, we'll wrap it up and look forward to updating you next quarter. Thanks so much.