Good day, and thank you for standing by. Welcome to the Third Quarter Fiscal Year 2022 Cavco Industries earnings call webcast. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during this session, you need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Fusler, Director of Financial Reporting and Investor Relations. Please go ahead. Good day, and thank you for joining us for Cavco Industries third quarter fiscal year 2022 Earnings Conference Call. During this call, you'll be hearing f rom Bill Boor, President and Chief Executive Officer, Allison Aden, Executive Vice President and Chief Financial Officer, and Paul Bigbee, Chief Accounting Officer. Before we begin, we'd like to remind you that the comments made during this conference call by management may contain forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations or assumptions about Cavco's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies, current or future volatility in the credit markets or future market conditions. All forward-looking statements involve risks and uncertainties, which could affect Cavco's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of Cavco. I encourage you to review Cavco's filings with the Securities and Exchange Commission, including, without limitation, the company's most recent Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. This conference call also contains time-sensitive information that is only accurate as of the date of this live broadcast, Friday, February 4th, 2022. Cavco undertakes no obligation to revise or update any forward-looking statements, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law. Now I'd like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill? Thank you, Mark. Welcome, and thank you everyone for joining us today to review our results for the third quarter of fiscal year 2022. We're very happy to report another record quarter for revenue and earnings. Revenues increased nearly 50% year-over-year, and diluted EPS was $8.57 compared to $2.12 in the year ago quarter. EPS included a large positive impact from non-recurring tax credits, which Allison and Paul will explain in more detail. It's really important to recognize that even excluding that impact, EPS was up about 150% due to outstanding results from our operations. This was a quarter that showed operational gains resulting from improvements set in motion over a long period of time, and we expect to continue that momentum. Our plants achieved a higher production level, and we reached capacity utilization of approximately 80% this quarter. This is in line with our pre-pandemic utilization, and it was accomplished despite persistent labor challenges and supply inefficiencies. The improved throughput is a result of a focused effort across all of our plants to simplify their product offerings, and it's also the result of work underway for some time to improve staffing and retention. The combination of a more stable and higher skilled team and a rationalized product offering is paying off. Our backlog remained consistent with last quarter at $1.1 billion. This represents 36-38 weeks of production. You might recall that this is down a few weeks from last quarter, which is purely a function of our higher production rate. The takeaway is that the backlog remains large with continuing strong orders and improving production to meet those orders. On a related point, strong backlogs exist across the industry, so we're not seeing any pressure on wholesale pricing. While our consolidated average selling price is down slightly compared to Q2, this is the result of a number of factors, including the mix of retail and wholesale sales and the addition of Commodore. On a same plant basis, both volume and pricing continued to improve upward during the quarter. I'd like to come back to labor. It would be difficult to say one way or another whether the general availability of labor has really improved at this point. If it has, it's been a modest improvement. However, we have made significant progress, which has directly enabled the operating improvements I've already commented on. While still below target levels, we've been able to increase plant staffing. The improvement we're now seeing is a result of long-term efforts in recruiting, onboarding, learning and development, investment in the workplace, and improved pay and benefits. It's been a very holistic approach that started before the labor disruption of the last 18-24 months. Continued progress in staffing and retention will enable even higher levels of productivity. We expect to continue to reach some momentum we've seen in our people strategies. Demand for our products remains strong. As we've discussed for some time, demographic housing drivers and the large housing deficit built up over the past 10-15 years provide a very positive demand outlook. These drivers apply particularly to manufactured housing due to the intensifying need for affordable homes. Of course, short-term economic factors impact the industry. However, when you consider the extraordinarily strong demand we've been experiencing for a number of quarters, despite significant home price increases and lengthy backlogs, it really reinforces the growing housing shortfall that exists and the need for what we do. With regard to some of our larger growth investments, we remain on the same schedule previously communicated for starting up the new Glendale, Arizona facility, which will be in the second quarter of this calendar year. To remind folks, Glendale will double our Park Model capacity while freeing up a line at our Goodyear facility for additional HUD production. We're now one full quarter into the Commodore acquisition. We're very happy with how everything's going. The hardest work comes after a deal closes, when transition activities require a lot from everyone involved, and this has certainly been the case over the last quarter. I wanna express sincere appreciation to all the folks at Commodore and within Cavco who have worked so hard on various aspects of integration. They accomplished a lot in the transition, while at the same time staying very focused on the work of getting homes to customers. Commodore's contribution to our volume has been right in line with our expectations this quarter, and their margins are improving as they work off lower-priced homes in their backlog. With that, I'll turn it over to Allison to discuss the quarterly results in more detail. Thank you, Bill. We're pleased to report that Cavco achieved record-breaking net revenue and net income results for the third quarter of fiscal 2022. Net revenues for the period were $431.7 million, up 49.5% compared to $288.8 million during the prior year's third fiscal quarter. The Commodore Corporation acquisition contributed $73.1 million of this increase. Sequentially, from the second quarter of 2022, net revenues increased by 20.1%, with Commodore Corporation's first full quarter of results being the main driver for the increase. Within the factory-built housing segment, net revenues increased 52.7% to $413.6 million, from $270.8 million in the prior year quarter. The increase was primarily due to the full quarter of Commodore's operation and a 24.4% increase in average revenue per home sold. The increase in average revenue per home sold was driven by product pricing increases and a mix shift to more multi-section homes. The total units sold increased by 22.8% to 4,424, up from 3,603 units in Q3 of 2021. Our factory utilization increased from 75% last quarter to 80% in Q3 of 2022, the highest level since the pandemic. This improvement in utilization is a result of an increase in factory labor headcount, coupled with a reduction in production hours per module. Our field operations continue to be successful in overcoming hiring challenges, unpredictable employee absenteeism, and building material supply disruptions. Financial Services segment net revenue increased 0.6% to $18.1 million, from $18 million, due both to a higher number of insurance policies and higher home loan sales compared to the prior period. In addition to year-over-year increases in revenue for the quarter, we also expanded our gross margin percentage. Consolidated gross profit in the third fiscal quarter as a percentage of net revenue was 26.7%, up from 20.5% in the same period last year, driven largely by the Factory-Built Housing segment. The gross margin for the Factory-Built Housing segment increased to 25.2% in Q3 of 2022 versus 17.4% in Q3 of 2021. This was driven by pricing, operational improvements, and declines in lumber prices experienced last summer that continue to flow through cost of sales in the quarter. As Bill explained, though our average selling price on a consolidated basis was down slightly compared to quarter two of 2022, we still generated a 110 basis point improvement. The acquisition of Commodore negatively impacted gross margin percentages from purchase accounting-related items, as no gross profit was recognized on the sale of homes from inventories that were acquired in the transaction. As required by GAAP, these assets were written up to fair value on the acquisition date. All acquired inventory has now been realized in net sales and future periods will not be impacted. Additionally, we continue to work through sales of homes that were in Commodore's backlog that were price protected and therefore had lower gross margins. We are working our way through these homes, and gross margins improved as we progressed through the quarter. Gross margins as a percentage of revenue in financial services decreased to 61.2% in Q3 of 2022 from 68% in Q3 of 2021 due to higher weather-related events and lower realized and unrealized gains on marketable equity securities in current periods. Selling, general, and administrative expenses in the third quarter of fiscal 2022 were $60.3 million or 14% of net revenue, compared to $35.4 million or 12.3% of net revenue during the same quarter last year. The increase is due to $8.7 million from the addition of Commodore Homes, costs associated with third-party consultants to review the non-recurring energy tax credits, and greater incentive and commission wages on improved earnings. Net other income this quarter was $4.3 million compared to $2.2 million in the prior year quarter. This increase is primarily driven by a $1.5 million higher unrealized gain on marketable equity securities and higher interest income earned on our commercial loan balances. Pre-tax profit was up 147.4% this quarter to $58.9 million from $24.9 million from the prior year period. The effective income tax rate was a benefit of 35.1% for the third fiscal quarter, compared to an expense of 23.9% in the same period last year. Our Q3 2022 income tax included a non-recurring benefit of $34.4 million for tax credits related to the sale of energy-efficient homes. Excluding this one-time item, our tax expense as a percentage of pre-tax income would have been 23.3%, consistent with prior period levels. Let me take a minute to expand on the non-recurring $34.4 million tax benefit recorded this period. Under the Internal Revenue Code Section 45L, the company qualified for credits related to the sale of certain energy-efficient homes between fiscal year 2018 and the third quarter of fiscal 2022. These credits are available for manufactured homes that meet specific energy-efficient levels as established under the Energy Policy Act of 2005, which was extended in the Consolidated Appropriations Act through the end of calendar year 2021. The company enlisted a third-party qualified expert to examine the information on our manufactured homes sold and determine which units qualified for energy-efficient tax credits under the program. This federal program ended on December 31, 2021, and as such, the company will not benefit from these tax credits in fiscal 2023 unless the program is extended or modified by future legislation. In total, after considering the net tax credits and associated expenses, diluted net income per share for the three months ended January 1, 2022 was favorably impacted by $3.23 per share. Cash related to these credits will be received in the form of lower estimated tax payments of approximately $14.2 million for this year's tax return. Cash refunds related to previous periods are expected to be received through fiscal year 2024 as we amend the associated tax returns. Net income attributable to Cavco shareholders was up 303.1% to $79.4 million, compared to net income of $19.7 million in the same quarter of the prior year. Net income per diluted share this quarter was $8.57 per share versus $2.12 per share in Q3 of 2021. Now I'll turn it over to Paul to discuss the balance sheet. Thanks, Allison. I'm gonna highlight some of the changes in the balance sheet from January 1, 2022 compared to April 3, 2021. The cash balance was $267.3 million, down $55 million from $322.3 million nine months earlier. The decrease is primarily due to cash use for the acquisition of Commodore, repurchases of common stock, and higher inventory purchases. These decreases were partially offset by net income reduced for non-cash items, changes in working capital, and sales and collections on consumer loans. A number of accounts increases as a result of Commodore, including accounts receivable, commercial loans receivable, inventories, property, plant and equipment, goodwill and intangibles, accounts payable, and accrued expenses. Consumer loans receivable decreased from principal collections on loans held for investment and is now up in cash. Prepaid and other assets increased from the income tax receivable related to the 45L energy efficient tax credits Allison just discussed. Accrued expenses and other current liability balances increased from deferred payroll tax payments under the CARES Act and higher volume rebates and customer deposits received due to greater order rates. Last, stockholders' equity was $806.2 million as compared to January 1, 2022 um I'm sorry, it was $122.6 million from $683.6 million nine months previously. Thank you, Paul. Katherine, let's turn it over for questions. Thank you. As a reminder, if you would like to ask a question, press star one on your telephone. Our first question comes from Daniel Moore with CJS Securities. Your line is open. Thank you, Bill, Allison, Paul. Good morning out there. Thanks for taking the questions. Start with Commodore. I think you said it contributed $73 million, if I heard that right, in the quarter. How many units did they ship? Just trying to get a sense of what the organic shipment growth looked like. Yeah, we're not gonna go down the path of separating out Commodore's shipments, but like I said in my comments, they were pretty well in line with, you know, what we expected when we talked in the acquisition that they add about 25% to our overall, capacity and shipment expectations. Okay. Maybe obviously demand and backlogs remain, you know, exceptionally strong. Just elaborate on, I think you described moderate decline in order rates. Is that, you know, just normal seasonality from your perspective? Or are we slowing beyond that? Any comments or color there would be great. I don't know where we said a moderate decline, to be honest, Dan. It's the order rates continue to be, you know, very strong. You know, I guess I feel like after a period of about 12 months from mid 2020 to mid 2021, which the order rates were just unbelievably high, we've kind of gotten back to where we're seeing a seasonal shape to the order rates, but they're still above 2019 levels, which were strong. We're still, you know, demand is does not seem to be a problem. In fact, we're still in a mode where, you know, we talk about backlogs, and we talk about industry shipments and things, but we're still in a mode where we're turning away business at this point, so demand's holding up really well. That's helpful. No, thank you. Talk about gross margin a little bit. There's some moving parts in there. How much of a benefit would you say you experienced during the quarter from timing of raw material lumber purchases? How much did selling, you know, conversely, Commodore's price-protected homes impact backlog and margin in the quarter? Just trying to get a sense for, you know, what a really normalized gross margin would look like. Yeah. Thank you, Dan. The lower lumber prices from late last summer, they continued to flow through our third quarter cost of goods sold. The backlog is still supporting of strong prices for our homes. You know, costs essentially of every input, including labor, are increasing. The commodities remain volatile and kind of unpredictable in the near term. I think if we you know if we take a step back at just a high level and try to quantify what the impact in the quarter was from Commodore, the write-up, it's fair to say it was about 50 basis points. Okay. No, that's very helpful. On the accounting issue. Go ahead. Yeah. Specifically related to the accounting issue. Right. Does that run off in fiscal Q4, or we have another quarter or so to go? No, we were able to, as we shared with you last quarter, this quarter, we did in fact run through that. Perfect. Just, you know, one more for me. You know, we are at 80% capacity utilization, obviously doing a, you know, great job despite some lingering headwinds of getting more through the plant. How do we think about, you know, unit growth sequentially into fiscal Q4 and, you know, maybe the first couple of quarters? Do we expect to see some modest pickup sequentially? Can we get a few more homes through? Just, you know, in terms of pro-production capacity and utilization, any comments would be helpful. Thanks. Yeah, I feel really good about where we're heading. I remember the last several quarters, we've pointed out to folks on these calls. You know, I still am comparing a lot of things back to pre-pandemic because they're good, solid comparisons to be made there. The comments the last several quarters when we've talked were around how we were getting our volumes up, even though we had dramatically less production employee hours. The fact that we've now gotten back to 80% and we're still challenged with labor and we're still challenged with supply inefficiencies, that gives me confidence that we ought to be able to keep pushing production. I think the momentum's there right now. You know, I'm getting a little bit ahead of myself here, but I'm gonna say I think we should be able to keep climbing up. Very helpful. I'll jump back in queue with any follow-ups. Thanks. Thank you, Dan. Thank you. Thank you. Our next question comes from Greg Palm with Craig-Hallum. Your line is open. Yeah, thanks. Congrats on the good results, everyone, and thanks for taking the questions here. Thanks, Greg. I'm curious maybe if I can start with Commodore. Any initial thoughts on synergy capture there? Yeah, I mean, we didn't overblow or put too much out there about synergies to begin with. We do believe there are some. We think that the, you know, in my opinion, they come in two big forms that are more operational than cost-oriented. One is the opportunity to kind of optimize our customer, I guess. We've talked about this with other transactions in the past. I remember Destiny, this was something we talked at length. You know, being able to work with dealers and customers that they brought to the company with and get more of our products into those chains and vice versa is always an opportunity. The other thing we've talked quite a bit about is operational improvements. You know, Commodore has done some things with manufacturing technologies that I've talked about quite a bit before. You know, after being kind of together here for a couple of months, I feel really excited about the opportunity to, you know, we'll bring some best practices and thoughts to their operations, but certainly it's gonna go both directions. Commodore can really bring a lot to our broader system around, technologies that improve quality, improve safety, and reduce kind of the labor content going into the production process. Those are the things that we're most focused on. I think from a, you know, cost perspective and overhead, you know, we could talk about those kinds of things. For right now, similar to the transactions we've done in the past, we're just looking to stabilize things and figure out where we go long term. We're not wishing for any synergies of that nature. Got it. The factory utilization number, was that driven at all by inclusion of Commodore? If I recall, they had a pretty big utilization number, I think you had mentioned when you acquired it. Yeah. Interestingly, they're kind of right at the rest of the system. I would say it's no effect up or down. They're right in that 80% range as well. Got it. Okay. I mean, given that, you know, what are your sort of thoughts on, you know, and really the appetite for, you know, new plant openings? You got the Park Model plant coming online here soon, you know, a new HUD line. What about sort of greenfielding? Can you remind us, I don't know if you still have an idle facility outside of that, but what are your sort of thoughts on increasing capacity outside the existing footprint? Yeah. I think the industry frankly needs more capacity. We're constantly looking at, you know, how we can participate in that. Glendale is a big move in that direction. We've got a couple things that we're working through to try to figure those things out. We have one production line at our Plant City, Florida plant that many years ago was idled. To call it a production line probably is a little bit of an overstatement. It's a building that used to produce manufactured housing, but it would be a project to bring it back up. We're evaluating that currently. Not to belabor this or sound like this means that we won't be doing those kinds of projects, the near-term concerns about adding capacity from a physical perspective, you could get up pretty rapidly. The concerns are staffing and supplies, you know. That's the only thing that really gives you any pause when you dig into those kinds of opportunities. We're working on things. I think, you know, as I said in my comments, you know, there will be ebbs and flows due to, you know, near-term economic factors. I don't think we're of the mind that this is no longer a cyclical industry to a point, but the underlying demand is fantastic and the drivers of the underlying demand. We're pretty confident from a demand perspective when we're thinking about those kind of project decisions. I guess that maybe dovetails into my last question about demand. I mean, do you have a sense? I feel like I've asked this question before, but you know, where the demand is the strongest, either by channel, by demographic? You know, what are you seeing out there in terms of buyers? Yeah. Well, there are a couple different dimensions to it that are interesting. I mean, from a channel perspective, you guys know the history. There was a period of time before the pandemic, most of the growth in this industry was coming from community business. They're about 1/3 or 30% or so of the total endpoint for manufactured housing. Before the pandemic, that's where the growth was coming as we steadily were building back up as an industry. As you guys know, I mean, pandemic hit, and for a period of time, that business, all that channel almost stopped. They held orders and kind of took a wait and see attitude, and dealers really picked up. It's been quite a few quarters now where I don't think you could really separate the demand from either of those channels. They're both looking for more homes than we're being able to produce. Both channels are really strong. From a demographic or from a market perspective, I think it is pretty interesting to think about what's gone on when prices have shot up so much, but manufactured housing's advantage relative to site-built grows in a cost inflationary market, as we've talked. Most of what I think we're seeing right now in the industry is that interface between the upper end of what manufactured housing does and the price points that site builders just can't hit anymore. I really think we're taking a meaningful increased share in that kind of zone. Conversely, affordability at the lower end is worse, right? Folks that a couple years ago could have afforded a single modular home kind of at the lower price points, they're priced out. That demand still exists, and hopefully we'll be able to find ways to get those people in homes too. It's been a shift more to the upper end of what manufactured housing does, and I think you've seen that in continuing shift to more multi-section homes relative to single-section. That's really the movement that I've seen in the industry over the last several quarters. Yeah, that's helpful. Last one for me, I mean, everybody in the industry is, you know, facing the same capacity issues that you're kind of talking about and the need to increase production rates. When you talk about turning down orders, where are those orders coming from? And more importantly, where are they going? If everybody in the industry is sort of in the same spot, my guess or assumption is that, you know, there's even more pent-up demand out there that we don't even really know that's not really even showing up in the numbers and the orders in the backlog. Is that right or not necessarily? I think you're absolutely right. I mean. Yeah, I think industry shipments, and we've been talking about this for quite a while too, industry shipments don't reflect demand by any means. Our orders probably, well, we believe orders really understate true underlying demands. When we talk about turning away orders, it's really a couple things mainly. You know, dealers that we haven't worked with are looking for homes, and they're coming to us saying, "Can I place some orders?" We're just basically saying, "We're not taking on new points of distribution." That's a form of turning down orders. The other is really, you know, there's a lot of demand in the community, you know, the REITs and the community operators for projects, you know, many homes in an order, and we're just telling them we can't take that on given our backlogs. Yeah, I think the conclusion. I'm very comfortable with the conclusion that backlogs and shipment data are not reflective of total demand right now. Interesting. All right, I'll leave it there. Thanks, and good luck. Thanks, Greg. Thank you. Thank you. As a reminder, to ask a question, press star one on your telephone. Our next question comes from Jay McCanless with Wedbush Securities. Your line is open. Hey, good morning, everyone. My first question on Commodore, if that was a 50 basis point drag this quarter, should we expect that to turn around and be a tailwind going forward and maybe even a little bit more? I can't remember if you guys had broken out what Commodore's gross margins looked like versus legacy Cavco. Yeah, we haven't broken it out specifically, but you know, to focus on the write-up of the inventory that we assumed at the time of the acquisition of 50 basis points, we would see that having been gone through this quarter, it would not be there as a drag in the coming quarter. Also, as we've taken a step back, we've also mentioned the fact that their backlog that we inherited during the acquisition also was price protected. So as we work through that lower margin, we would expect to see over time and that backlog being worked down to zero, they're lifting up their margins to be comparable to our overarching network margins. I wanna make sure it's really clear that the 50 basis points is specific to that purchase accounting need to write up their inventory at acquisition. That was just isolating that piece. Their overall impact on our margins was a bit larger than that because of the backlog pricing issue. Not sure if that's clear or not, but wanted to make sure it was. Yeah. It is. Thank you, Bill. I'd echo Allison's comments too that, you know, we got backlog to work through, but our expectation is that Commodore plants will be on par as far as profitability with the rest of our system. That's the goal. Okay. I guess the next question on that, and just, you know, 'cause looking at the gross margin you did in 2Q was 24% without Commodore, and then you have a little bit of a drag, and I'd love it if you guys could break out the benefit of lumber if you had that for the third quarter. But it just looks like moving up to this mid-20s gross margin is the natural path over the next few quarters. What do you guys think about that? You know, we won't be breaking out the specific impact of lumber. I think that, you know, as we've seen from the last several quarters, it's hard to speculate. From a margin perspective, I mean, the good news is that backlogs will still provide the ability to price and cost increases when our and our clients have shown that we've done a good job of that. We don't really expect to see any relief on the variety of materials and supplies that go into our homes. We've seen, you know, as we all have, a recent uptick in the lumber commodities. The main wildcard does remain lumber and OSB cost. Right. Any chance you guys could give us the average backlog price or what you think the average price for this quarter that you're about to deliver? Just trying to figure out what the balance on price is between Commodore and Cavco's product, [s ure of it]. Say again what you're looking for, Jay. Just, you know, if you have just the average price for what's in backlog now or if you have an idea of what the average price that you think you're gonna be able to deliver this quarter would be? Just still trying to figure out the difference between Commodore's price and Cavco's price. I mean, we've done a rough number on it in our model, but if you guys would be willing to share some of that would be helpful as well. I don't think there's anything specific that we would wanna share at this point between the differentiation in the pricing between the overarching network and Cavco carved out since the two are beginning to integrate very much. Our backlog, you know, excluding Commodore, I think you can think of it as all priced at current market. It's a matter of, them continuing to work through their lower priced backlog, which is happening. I mean, as I think Alice has said in her comments, their margin, they left the quarter with higher margins than they went into it with because they are working down that lower priced stuff. We're not gonna be able to just specifically separate their pricing from the rest of the system at this point. Got it. Your competitor a couple days ago had some very favorable comments about chattel rates staying low as well as some new money potentially coming into the manufactured housing space, I'm assuming for both chattel and land home deals. Would love to get an update what you guys are seeing on that front, and also just maybe an idea of where chattel rates are now and what you guys are seeing? Yeah. Well, I generally agree with what Mark said. Chattel rates have stayed very stable since they kind of took a big drop. I'm trying to think of the timing. It's probably been a year and a half ago already. Time flies. They're kind of, you know, they're kind of in the high 4%-low 5%, low- to mid-5% rate, and that really hasn't moved up over the last month or two. It's been very stable. Well, it's essentially a different market, right? We always say chattel rates are really not correlated to mortgage rates. They're much more stable. If you compare that to land home rates at this point, I can't imagine it's ever been close to this tight. There's another discussion kind of about the premium of manufactured housing land-home loans compared to site-built or what the GSEs call single family non-MH loans. I think that's been pretty stable, too. That's kind of in about a 50 basis point range, that premium for MH, for an MH product. Chattel is very stable. The MH land-home is kind of just moving right up as mortgage rates are at this point. Was there more to your question? I might have missed something there. Yeah. No, no. I mean, that was it. I mean, then I'll ask you the same follow-up that I asked Mark. You know, I thought it was very interesting that the FHFA rejected the Duty to Serve submissions from the GSEs. You know, I would love to hear what you guys are hearing, if anything, from the GSEs right now, and could an expanded Duty to Serve be something that might help the manufactured housing industry? Yeah, we'd love to see it. You know, frankly, we, and I'm not saying this with any bitterness, we just haven't seen a lot come out of the Duty to Serve over time. Again, I don't mean that in a, you know, in an overly negative or accusatory way. It's just kind of the fact. Yet, capital is very interested in the MH lending space. We're seeing really good interest from the investors we sell loans to, and it really hasn't been an issue. If people are qualified, they're able to get good loans at this point in time. The GSEs really aren't driving much there. Got it. Okay, great. Well, thanks for taking my questions. Yeah, thanks, Jay. Thank you. Thank you. Our next question comes from DeForest Hinman with Walthausen & Co. Your line is open. Hi. Thanks for taking the questions from shareholders. On the gross margin commentary, the 50 basis points, just so we're clear, is that the consolidated gross margin or is that the segment gross margin for MH? You're right. That's on the consolidated gross margin. Okay. Thank you. Furthering the discussion on the credit side, the mortgage side, do you have any insights in terms of credit quality on the inbound from FICO score? Any color you can provide there? You know, is the demand coming from, you know, quality customers that you know that are going to be able to pay longer term? Yeah, I mean, we've generally, in our lending business, I think this is even disclosed in our filings, we generally are working in what I would consider higher FICO scores. We've continued to see, you know, strength in applications there. I really don't think we've seen any real shift that would cause you to think that the industry's lending to, you know, is skewing more to lower credit applications at this point. Okay. No, it's a good call. The fact the lending industry has been, I think, very disciplined. You know, I guess that makes sense, too, when you're in an industry that's really supply constrained. There's really no need, and we haven't seen chasing credit down. No, it's very helpful. I mean, I'm glad you provided lots of color on this call because I think over the last couple of weeks, there's been this overhang on the whole space around, you know, rising rates and, you know, demand is going to fall off the table. I think it's becoming more clear to everyone that that's not the case. There seems to be a, I don't know if you want to use the word fundamental change in demand. I'm glad you're spending time discussing this. To further that discussion, you talked about units being turned away. You've mentioned the communities and the REIT space. I mean, is there anything you can share with us in terms of, you know, just how big that opportunity might be? I'm not even thinking about, you know, the next year. I'm thinking, you know, further than that, because I'm sure you've done some analysis and you've looked at some of these park customers that have done business with you, and they've made some disclosures publicly and maybe sometimes not publicly, but, you know, the parks have a certain amount of acreage. You can kind of do some math in terms of units per acre, and you look at some of the returns that some of these parks, the public REITs are making from a return perspective and their availability of capital. It's very attractive to build out these communities. Any color you could provide? I F you have anything there that says, you know, look, these guys need 50,000 units, 100,000 units over the next five years. Just so people can really understand how you guys are framing the demand, because you are obviously making positive comments, but any facts or figures you could give the shareholder community would be very appreciated to just understand just how you're looking at things. Yeah, I don't know if we have a big number projection over a certain number of years. I guess what we most immediately see is just the interaction with our customers. As I said earlier, they, you know, it's not a comfortable position to be as a manufacturer to not be able to come close to filling the orders that they're asking us for. We certainly, you know, haven't seen any letup over a number of years in the community's interest in buying a large number of homes. You know, I know that it does get talked about about the availability of land and certainly zoning as it impacts us, but it doesn't feel like we're close to that being a constraint. I know that's a very general answer to your question. Of course, I wish I could give you something more specific, but we see it being strong, and we see it staying strong for a while, from what we can tell now. I also wanna come back because you did touch on it, and you know, with rising interest rates, you kind of commented that. I think your comments were that that causes people to be really concerned about demand. You know, it impacts us. If interest rates go up, monthly payments go up, and that's the basis our customers buy on. The thing is, you gotta weigh that off against. Let's just talk about loans first, the increased length of loans that we've talked about last quarter. That helps lower monthly payments, so that's been a positive move for people's affordability. You just look at the demographics, as I alluded to. It has to be that rising interest rates are a downward near-term pressure when they go up. It affects manufactured housing, in my opinion, significantly less than it affects site builders because the affordability, the flow toward affordability comes right to us. I think history shows that. I think you've seen in rising interest rate environments, a muted impact on manufactured housing. Not that there's no impact. We're gonna keep our eyes on all these things. There's a lot of pressures upward and down, but man, if you look at the demographic drivers over time, I'm very confident about the ability to invest into that. No, that's very helpful. That's a good, very good color for everybody. I think I know the answer, but I'll ask the question anyways. On the raw material front, can you just give us an update in terms of, you know, where are the pain points in terms of products that you're dealing with? Are you seeing any improvement, staying the same or things getting worse with any of these given raw materials that you're struggling with? Yeah. Yeah. It's a continuing very challenging situation. I've said before, I do feel like a broken record because it's across the board. We were actually on the phone with our operating guys this morning, and just to rattle off from my notes: insulation, fasteners, electrical parts. We've had plants that have been told that they're months out from getting refrigerators, for example. One of the interesting things that's really a hot button right now is overhead flex duct. So my point isn't so much these specific items, it's the fact that it's across the board, and I would say it's affecting us from a efficiency perspective every bit today as it has been. The interesting dynamic now is that trucking, and this isn't news really, but trucking issues are a major part of this story, where sometimes we're ordering a given supply and the supply is available, but the truck's late, you know, significantly late. Logistics are a big part of the supply thing. I mean, I feel like our guys have really managed it well. It's been a drag on efficiency, and yet we've been able to push our throughput back up. I'm really confident in how we're approaching it, but every day we feel like we're kind of a little bit on the edge about whether a given plant's gonna be able to continue running. You never know which supply it is that's gonna cause them to stop if they stop. Overall, we've had some but minimal true shutdowns, but a lot of efficiency impact from this. Really hard to quantify. Okay. Thank you. Just the last question on the energy tax credit. Can you just give us color there? I mean, is this something we just were missing over the last, I don't know, five or 10 years? Something that came up with an audit review? I mean, how were we not accruing for that previously? Yeah. Thanks for the question. It's a good one. We always evaluate and continue to evaluate opportunities for tax incentives. This opportunity was identified as part of our overarching continuous process to identify those. You know, as you can appreciate, the complexity and the IRS Code are complex. We've been researching this credit for some time now. After a great deal of review and specifically consultation with a third-party expert and actually some of our home building peers, we did determine that we were able to utilize this credit and move forward with what was a fairly lengthy process, as you can tell, to balance with the size of the credit to estimate the impact in the current period. Under GAAP, you kind of have to take all of the periods in into one fell swoop, which is what you see encapsulated in this quarter's earnings. Okay, perfect. Last question on share repurchases. I know you had this kind of odd situation with this energy credit. Did that preclude us from buying stock at any point during the fourth quarter? If it did, should we be anticipating a higher level or accelerated pacing of share repurchases going forward? This particular item did not preclude us from purchasing shares. Buyback still is a very important lever for us to be able to return excess cash to our shareholders. We were able to accomplish about $9 million in the quarter. If you'll recall, we have about $100 million in the purchase authorization, and we've burned through about a third of that. We still view this as a very proactive way for us to deploy and return excess cash to the shareholders. Is $10 million probably the right number or is it more or less? You know, we won't be guiding to a particular outcome. I think that if you look over the last couple of quarters, it probably gives an indication. It will, you know, it varies from quarter to quarter, the pace, depending on the information that the company has vis-à-vis the marketplace. Okay. Thank you for taking all my questions. Thanks, DeForest. Thank you. Our next question comes from Ethan Steinberg with SG Capital. Your line is open. Hey, guys. Thanks for taking the call. Great job on the execution. I was curious if the 50 basis points was just on the accounting for the acquisition. Can you give us a sense of how much drag there was from just working through the low-priced backlog? I would say that working through their lowest priced backlog was probably 2-3 percentage points in the quarter. 200 or 300 basis points? Yes, that's correct. the total gross margin? Yes, that's correct. Okay. Can you give a sense of how much of that is left? It sounds like that's been worked down quite a bit. Not a specific price point, but it's as we progress through the quarter, of course, it becomes less and less. If you think about their average length of the backlog, that gives some indication of how we might think about the uplift in the coming quarters. Their backlog is on a ratio basis to ours, so it's not just to give you a feel for the backlog. Yeah. When we're thinking about the 25% run rate in the building or 26% and change blended, there's a lot of upward momentum to that sequentially from here based on those two factors, it seems like. Is that the right interpretation? With regards to those two factors, in isolation, that'd be fair. Yeah, that's a lot of tailwind. Then, Bill, I also wanted to check, you implied that units, you still feel pretty good about growing units nicely from here, absent big surprises on operations? I do. I mean, like I said, I mean, I'd always am a little nervous getting ahead of myself, but we've got momentum, and we're driving it with kind of what I would consider fundamentals. We've. You know, I think it's a huge accomplishment for our operations to get to 80% while we still do have these labor and supply challenges. I mean, if we can get to 80% with these challenges by continuing to make progress on labor, which we're doing, and with the hope that someday suppliers will settle out, then you would, it would be natural to think you ought to be able to go higher, right? Yeah. When do you think you're mostly done on the working down that low-priced product? Maybe not 100% of it, but when do you think it's something that we don't need to see or measure that much anymore? Do you think that's done by the end of this quarter? I think it's hard to pinpoint. I would say the end of the quarter would be a very aggressive projection. Probably something more akin to the timing of the backlog that we have with them, which is similar to ours. It'll dwindle down. Okay. The degree of pressure diminishes. Yeah. Yeah. Yes. That's correct. If you think about it, we've got a backlog that's got a stratification of prices. It's not perfectly this way, but the homes we're making today are the oldest ones in the backlog, the lowest price. The impact kind of will dwindle down over the next several quarters, would be a way to think about it. Yeah, that makes sense. Last thing is just that it was helpful getting that color on the moving pieces on the average price. Based on what's in the backlog, should the price still be going up sequentially, generally from here or not? There's still, I mean, I kind of always say this, that we're in an industry that has long backlogs, right? We do talk about it quite a bit, appropriately as being in relation to cost, but there's not much pulling price down for sure. We manage price at a local plant basis or local, like our local plants talking with us. It's pretty much unique to their cost inputs and their market dynamics. You know, I made the comment in my remarks during the third quarter, we're still on a same plant basis, we're still seeing increasing prices, so there's still some room there potentially. That's great. I thought one more thing. Was there any acquisition one-time-ish cost in SG&A or OpEx anywhere? No, not this quarter. Okay. All right. Great job. Thank you. I'll see you then. Thank you. We have a follow-up from Daniel Moore with CJS Securities. Your line is open. Thank you again. Allison, if you gave this, forgive me, but what was the SG&A impact from the consultant fees during the quarter related to the tax benefit? Yeah. It was a high-level expert that we used in a pretty protracted process that we went through. The fees in total estimated to be right around $5.8 million. Very helpful. Thank you. Thank you. There are no other questions in the queue. I'd like to turn the call back to Bill Boor for closing remarks. Yeah, thanks, Katherine. You know, we do feel like it was a really strong quarter from all the operational improvements that we talked about. You know, beyond what are clearly favorable market forces, we made great strides in many areas that ultimately led to operating improvement. We really appreciate everyone's interest, and we look forward to keeping you updated as we go forward. Thanks. This concludes today's conference call. Thank you for participating. You may now disconnect.