Legacy Housing (LEGH) 9 Aug 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Legacy Housing Corp.

Second Quarter 2020 Earnings Call. [Operator Instructions].

today's being that advised be conference recorded. is Please hand over to would now speaker conference to like Bates. I your the today, Duncan ahead. go Please

Good getting quarter Bates, for Duncan will read Africk, morning. and harbor Counsel, This Thanks disclosure safe CEO. before Legacy's Legacy's General joining Max? conference XXXX President second the call. started. Max our is

to in management statements, claims in Act Duncan. statements may that for Therefore, and remarks the Reform today prepared At that protection listeners your management's risks forward-looking contained the Thanks, additional to contain make outset, which response forward-looking questions. our uncertainties, forward-looking the of the is harbor Litigation subject XXXX. company I and Private Securities the will remind safe are of statements will

current with differ in and Exchange Securities to the may refer you discussion management's filed more uncertainties Commission. risks and results report we the from a annual therefore, detailed of and company's expectations the Actual

to the company's performance to otherwise assumes In addition, call, these of the Housing by applicable future required best unless any in represents projections estimates no update Legacy obligation today's as future, as law. projections management's

joined I'm Officer. will performance Jeff Jeff? Q&A. our Fiedelman, today Legacy's Jeff updates financial provide Chief then the second Financial quarter additional will for call by discuss I corporate Max. open Thanks, and

ended retail months sales. sales X decreased XXXX. Product Thanks, Duncan. or the XX, Product finance during same sales primarily compared consist to the of store in inventory sales $XX.X direct sales, XXXX, commercial and period sales, XX.X% as million June

The stores. mobile inventory company-owned sales, in sales driven offset shipped was in volumes finance decrease home direct retail by partially sales decrease our a increased park decrease in at was unit This by sales categories. primarily

in compared ended units. the shift the revenue XXXX, due to mix to June same as $XX,XXX per to unit For to net in a period sold product primarily smaller decreased X.X% XXXX, months our X XX,

loan the growth our X XX.X% consumer $XX.X portfolios. portfolios. XXXX, months increased June to June by loans period loan to was by increased XXXX, Consumer as balances increased loan and XX, compared dealer $X.X XX, same ended the interest the XXXX MHP increase in portfolio dealer million XX, Between income due million. driven MHP June our This during in MHP or and XXXX in and

loan consumer dealer million by portfolio notes by increased Our $X.X $XX.X finance and increased million. our

This $X.X consists contract commercial of in revenue. primarily increase a months the XXXX. a due period by lease other forfeitures, and X during a to the XX.X% XXXX, revenue lease million fees, compared June fees rents, ended commercial offset Other decreased rents, $X.X was as decrease in consignment $X.X million deposit fees, miscellaneous partially decrease in same other income service $X.X million to or decrease primarily dealer million and finance in XX, miscellaneous

$X.X XX.X% during during June sales X related XXXX, compared product XX.X% XXXX. to X or ended XXXX. the same primarily XXXX, the the decrease to ended is XX.X% million the in The of X Gross as in profit product in Cost cost was units the during as margin XX, months months of months decrease decreased June June ended to XX, sales compared sold. XX, period

and in in increase a million debt $X.X net increase in offset tax $X.X expense. million XXXX, warranty expense related had a and the costs, We million months legal XXXX. a million flat in same other by loan in and $X.X $X.X provision, expense, marketing in bad a expenses payroll X and ended to in million $X.X a a decrease increase increase XX, expense, increase administrative Selling, property million were in a general $X.X the in $X.X million during loss expense June compared expense, period $X.X decrease miscellaneous as decrease million

$X.X of liabilities. million We accrued or Other on million same months receivables, $X.X income, had for June miscellaneous of a of of gain real a period $X.X the in increase Georgia notes, interest $X.X increased reversal during in and XXXX. million in result XX, to we of other property of of as had compared of income sale in and We X the an $X.X increase million had $X.X of an other an XXX.X% XXXX, net expense million million as ended increase in income miscellaneous allowances. income the a

X.X% the share or XXXX income per increased second compared share the million of quarter to $XX.X X.X% of in XXXX increased per in the the to second of second XXXX. $X.XX XXXX. quarter to earnings quarter Net second Basic quarter of compared

As of $XX.X million and to $X.X $XX.X approximately XX, million cash XXXX, the The $X.X had revolver June of XXXX, compared XX, June XX, outstanding December of balance and respectively. XX, was million in as as of December XXXX, XXXX. we million,

X, basic per an At was XXXX. of of XXX,XXX the the period of Legacy's common $XX.XX, XXXX. stock company's June $XX.X share XXXX, second On X from of XX.X% the of ended months for share the in We end repurchased Directors XXXX, an authorized repurchase the increase million Board during shares book program. additional the same our August million outstanding XX, repurchase value $X.X under of the quarter

shares liquidation opportunistically repurchase value. to stock when near continue the trades will We

Thanks, Jeff.

worked into product team in focus customers and through Our quarter. sales. We third certain continues the Georgia in with push delays on to Texas to shipments

platform strong. Our across the is of dealer most business

from quarter to second XXXX. quarter are inventory. ahead special our the applications this of launched Some finance We independent financing to XXXX aged slow retail fall second the up show. of to Retail dealers a of assist compared with move were XX%

Transaction down higher the to drives work rates is business volume, which new community as is slow. development interest owners for by demand past impacted rent been new few increase rolls has Our quarters. and

improving. However, the is market

past affordable a large to smaller quarter proud margins customers I'm occupancy is activity back and or units of owners, customers meaningfully margins are rent and tiny of months selling for quote Legacy for at since gross our These lower to so. and team's paused and success XXXX. keep the We're quarter. XX who has volumes. first MH to production having park deliveries. Our community of both manage up RV homes effort taking high. the ordering the Product HUD were XX.X% orders aiming handful second

price on labor and disciplined expenses are and overhead We watching closely.

Our to top priority the which for remainder XXXX build production result backlog, is higher our of in continuing will volume.

increased orders. July. Our and building in new sales We relationships plant members at Georgia customer our team are signing production

As a Georgia The Jeff we the second our positively sold impacted property during in sale results. quarter. mentioned,

estate continue our have core to balance our for markets, quarters. assets these We meaningful on received excluding developments few the Although over X them. see in sales onetime There sheet, value. monetize investors in that and will next to similar continue several nature, public real we'll are credit the assets

MHP, volumes XXXX, first plan our lending from in interest sales revenue to half are of financing finance up Although portfolios and grow. to continue the first floor of down is From XXXX, the XXXX retail half XX.X%.

rates delinquencies are low strong. remain Our recovery and

to and the a XXXX, a a MHP resolve new homes will X agreement X-year the the XX, litigation collateral guarantors with customer. need remaining home to signed July Under settlement long-term with binding mobile debt parks Legacy On we and agreement, the refinance Legacy. same. borrower remain note the will

parties. details as our last a we challenging plan growing behind significant solving can most multiple on for note We're these hands-on and are through Investors the view core more next the focus we positive situations distractions. new that over more We of are very With have outcome story transfers complex challenges operators discuss take to and following both this know years. There and no the on X earnings finalizing our worked We us, the problems energy. in time call. yesterday's business.

about a push prospects than this starting company and feel the potential full any is volume Everyone built XXXX. investors in excited and plants team. have today, to other time great our business earnings we through this as I of time the We more June year. contributing show I'm the better since

concludes this Q&A. the remarks. begin prepared Operator, our Please

[Operator Securities. of Daniel CJS the from come from Moore line question Instructions] Our first will

that of Texas in possible that the the in pushed terms, start referenced with, it and impact Georgia Maybe is are the delays, in QX? quantify delayed to the into shipments ballpark being quarter

homes are out Georgia. ship where over than park The weeks I'd and we -- it backlog some struggling, that XX QX. the pushed you don't there obviously looks and a pads a hey, takes side the rest. the customers specific get decent, will I for but especially on think with and longer ready bulk into permits shipments instead, up say in held experienced -- just XX, we those to get them We expected we'd take is thought, And and have few first were that number. just had the there. we getting -- of we I delays

this in ramp-up a we see certainly was you'll quarter slower like but third the certainly would than think I So shipments, it quarter.

in retail the of order a adds quarter finance great either XX% can sign. That's the and/or up Anything say year-over-year? is terms Obviously, during changes backlog or helpful. in sequentially rates you

Dan, publish backlog, Yes. follow closely it obviously we but don't internally. we

the -- that this we've one sales had of year. think best we I all week, probably weeks had we

push to we've lot us, I -- we're we're some of up us are unique that homes that up. this last the as problems. better than a to and the get that think and door, fought time both of did I some out we've business really distractions lot customers for close think looks changer game year really we starting projects to back And of like We've projects. cleaned be on this got ordering, it XXX% But -- sales. would on but take allow challenges excited so we're yesterday's had outlook some sides lot production a a and focused big a us that are on the at There are to summer, we're pretty

new sales where we process, But we before we financing them really can going. the details system we're it salespeople got now way hold all and we're We've with we've that some really quotes months tracking orders lot the around just and this that them and new through happy that time over the they sales day. direction people so I'm understand all the and X -- early can people the that's trained last up And implemented understand day on year the launched speed it shipments system, also a side. order the to accountable the in of contribute. to by and takes get have solutions get We've XX we're product -- hired and a taking

stay of the to just sales lot direction. a push We've things right So in got focused and really moving forward.

RSVP. tracking pretty I big the in of year. think being We're that are event year, every Fort We ahead up a dramatically. our Worth to for to addition in where obviously sales do applications the way typically and retail show. from another finance we RSVPs fall -- show It's we're

the to a pretty get to late in hard show show, and September. pushing we're we're So expecting good

the Excellent. seen, inflation meaningfully back X it I'll X or But of any we or the and Really of assets above that Maybe in how given is gains helpful. be think possible do there? litigation loans we've if more Just value losses terms or them? jump in the the against settlement, those potential above about could queue.

to we've our Yes. spoken roll auditors with do the We've and up work, and the got sleeves that. about

on balance putting spend that talking And lot I we're with think the we're quarter. is right those the houses. a so this spaces over going XXX on to we're about of something in But sheet assets time quantifying

figure team there in upside, the planning to our them We're got we've and -- to the but not there everything wrapped up think to then get I be could we some best own way and long-term. monetize assets. get just out And

Makes divesting. assets real of estate you're the market any of in that process lastly, sense value combined like then sense. And noncore for the

What give group Eatonton we pay quarter much sold example. our facility. mean for facility you we add -- some with. start essentially a lease that at we warehouses in to I'll of Well, to an that was tenants And I we didn't this

in no homes there's several, So gain have value. when a you leased one or that least are meaningfully real to think X own And -- at like is realizes that estate million important. of portfolio I sell assets something you sized a even $X.X addition for there can pretty that X that real

as list real the So we're the have asset his us -- monetize. dug and team And just we've first opportunities off -- into balance this and a the for through really we're them. as to We've working got estate to and balance of was come sheet Jeff sheet.

Mark of question will Street. the next Lake Our come line from Smith from

especially just in loans. loan First X we on talk just of portfolio like that it and about interest me, MHP the MHP maybe from look kind Maybe for coming that maybe actual what rates came down a a portfolio of stayed here rate sequentially portfolio flat, looking looks bit. the environment, pretty maybe at declining little but rate for should

Yes, sure.

sales financing homes we're I if you've been think less communities, opportunities. so And have model to down, park selling park right? got less

And full effect 'XX, 'XX, in real portfolio growth over was pretty the -- down rates the so 'XX 'XX, as estate the carried transactions. business started into park that of robust, 'XX slowing interest

been has growing X had years. so the been has prior slower and And the park the business to than it portfolio slower, X

rates As flips far go, to product X-year is rate and then as interest way there's that the that, a variable. it works fixed

of drive times volume to start the payments. that And be to mean, this increase. flip interest I loans no there financing during variable, to We've are And period will certain will -- book so as used a rate in tends notes we've used to year. slower flip concessions that

and So on But to these the rented or they start get and rates them rates them get get in the park line. houses. the tend set be homes paying in owners before starting interest can

higher we payment. And that offer period down buyers X-year what seen fixed rate a put down if though so better is little have for bit we a will

to have seen asset. in tapped out I've need got rent is real in my people estate make customer support So at And to month." month $XXXX we the communities a these lot a x "Hey, hundred say, I

so I affordable. that houses And keep I in need the can payment overall here

higher a so also shift shift payment. homes And putting people toward seen smaller we've a seen we've but to a down

keep payment monthly their the affordable. us lower homes So to is to

that GAAP to impact this that was it Any there. but about refinancing today, able on you're change in of there MHP them note has? settlement has the about that kind talk of if talk know don't we the you any see can I this reported then I and that notes was that And accounting? out as know some

an is and portfolio, lot we XX there. how here. of and Well, We've his it a But complex. him ended up look, done longtime he's feelings, a There this unfortunate were for customer. partners it a And is business over years. with was nice lot a got think, I history situation, was of

for taken deal win And think time it's lot And a put so both of I together. it's to this parties. a

and that in And are note that Louisiana on will in we'll so development the MHP parts in essentially, -- the while all us -- refinance of is coming those the drafted balance reduce and where wrap with to new portfolio a are X note, that's the notes X the up portfolio accordance collateral and into located.

to way notes So saying say, I of individual XX development that guess X XX you're a long to and from, down MHP going note.

Okay.

So the smaller a you refinance time, parks, the couple on like it before. of loan piece the books a consolidation, -- but sounds it that but these kind was same of than is at loan what get

back. refinance, think I it paid and right, And them sell time their right. That's us get from side, to gives assets

was ramped about But in you've really the that in It little quarter. that? cost labor, are product a up profit the input X you And talk about at profit Okay. we we at just as Duncan, sustainability solid going bit. last be like are costs, production looking any pretty sounds there just of you gross sales Can What me, seeing think on pressures? should Georgia gross the anything looking for margin forward? margin is on here

good in the production those couple hit some so it -- Texas. of it. in it proud we take the been volume. up mean We're pockets. orders really of up But at I team pretty closed, weeks, production sign. maintain really Yes. some past think just We were levels, that's can air pushing Georgia. given We've strong Sure. we've in took to the I'm a hard for looking hit I keeping And

think to I the hardest labor. thing manage is

coming companies I down inflation. labor think are soon. struggle don't I all with anytime think wages

but ways and to we've some some so X raw able labor advantage really the we've materials of got had inventory. holding is been We've price. been coming pricing. but to our disciplined a our And go, with big -- We've reduced material take we've

higher, do which gross able similar that think margins, be And can be year, at able gross so should to to margins volume product will levels. we production push if maintain I we this we are

come of the will McCanless question Next from Wedbush. Jay from line

through that Pretty gone had. I everything much

sequentially to guys XQ Maybe you quarterly the are how nice On up thinking step repurchase, see forward? that that XQ. from a on going rate to about run

"Hey, not allocate think Yes. We've stock." we opportunistically. repurchase quarter, to certain come amount the out. come We're to of got We're say, to going support not out are going best don't from going and continue the repurchase capital. that, We way Board to to buying going we're that's stock. every necessarily to But a

we're -- calculate what each calculation quarter going we our internally as liquidation to So that run a identifies value. our

as and But this the And the second we'll aggressive. I we when levels, back just received. to to the trades in were volumes we're keep eye can. if great were down authorization, it well repurchase the And have about been that stock think as -- one. that Board we it. we'll ask I we'll we an on certain the prices -- feel first buy those and be and levels, And quarter, hit stock when through the able another buybacks for much go we'll

one-off Okay. thing? the going That great. Or liability forward? expect some in of then And quarter, the that sounds should reversed was a that more we

team the really and on digging they're I these we've team side. Jeff his now with accounting that And kind sales. great in. of asset a some in that throw of the camp got and reporting SEC

find they sense that going our they're anymore, don't make up. So clean things balance as those order sheet to on

sides don't use. credit of and up, for we're we're both lopsided. the going balance balance But the assets that and don't to not on getting all get cleaned sell items we so And It's sheet there's sheet.

come George the is question from next line Management. MKH from Our Melas-Kyriazi of

plans, the at increasing from of a Just sense quality could plant there? think you working in quick, I be you and better the provide bit months are about in about a sort how X guys you going do you think sort us the production just little basis, a production on Can talked how you level color give of production about little out of things more are bit happy a things Georgia. where

for in living been I've some significant we X have breathing and Georgia Georgia. years. George, made And progress

you you've is was out house the -- as we're step first Georgia have as we fix and now good the as coming anything those. far your issues, got And are fix a clean As Texas. quality of building to in just

really it fix so And and proud efforts that of past got the get regulators to resolve the team you their have where -- needs And homes to then out to the working then issues. you've I'm and to of be. the go sins to and first, second and quality, the have with with quality the

tremendous of win you had some less opportunity money really here year, a But get And a year. to sales who to the with side. on that, with back going And And and than the team some in We in young relationships had are win cases it's time problems see new customers starting they've customers. full we back a sales that. had that We of I'd to they houses. and amount an something start for, professionals to Georgia. so have And new entirely spent we've as been say, do win you customers. doing some

they're about I sales had is dealer we've where Georgia firing keep today. And to all team excited. momentum. good stands the just feel base really -- to Georgia there. we And We've The and over got rebuild a

We day keep keep And there a -- just to heavy we little production didn't people. a got up We labor already had -- to we're we to in maybe July. I house good on think so we pushing. X have took

moving And so right It's Georgia. we're in direction. rightsizing the

projects be through may The And we with to Southeast there. as I is -- the pretty some think season, have over market storm get activity seems big strong. lucky you hurricane

get that with thing has Wales I set some houses have team rented cases, like these turning look been able we've us into they're Georgia them and in customer the and and able ], [ that calling And think build houses. park our more in interesting where we're targeted owners they're they've to relationships ordering home even many done one is products. to tiny up before there RV back

keep things out good our right So Georgia, a lot down the to got in of moving direction. of but we've coming head and keep

That's Okay. [indiscernible].

Georgia, historically the mix in is the park sales sort plant. also us, primarily what's remind on And of maybe Just very a of sales just update it there? brief Texas

park a we've over have do dealers. Yes, we Georgia, to work and some some customers had with got there. dealer rebuild to base, We've big

are sales guys are new encouraging. sales the the hitting right coming and and of of say that's the with Some Georgia now in most I'd back road sales. But applications, park

far in park we've then sales base their new are and Texas, on the in faces Texas approach of goes, dealers Texas. got We've some out little just sales haven't starting using team, moved As And a as that behind. ball the of a others hit modern got more say, knocking are to people a X technology to stride. I'd the plants also the that that Internet lot

trying we're picking park them. but And weeks, has so business of up have And to pushing. slower past in really we're help couple the been and been Texas, over orders the

show next -- direction, a reflected of but with the to moving right following the a numbers. in up those things quarter we got So with in lot that the and

And think these able that distractions, now we'll we've gotten a lot be of that. larger through I do to

your own I can't think dealerships, then maybe the XX, on have Okay. quick remember update just you number. Great. I a And exactly

XX right Yes, more that dealerships, those than changes now the probably we in years. have those we last we're to making have X operate I'd we the way say

dealer an And on the business success. our large I too. see larger got elsewhere. to and And if that really big retail for see team keep and a they're had that focus stores underperforming. back this that work. mean, things our -- some are I we're of is to it years it down of to now, embraced just some and We've stores with. underperformed competitors certainly fixable stores some right, we've I'm and the And Internet and hammer some there, We Legacy, making now. I has we're see coming opportunity. outperforming are marketing, footprints, technology real So got really think starting looking and business. investor And we've excited with is the I'm with our that piece company-owned the We a as was at

next Our Alex of B. the Securities. from comes question Rygiel line Riley from

of It sector? see kind is sounds in on point like you calling basis shipments this company you're more improving the Do more inflection sort entire demand. a think an positively and here, macro you specific? across Or it do of

I'd report this big had big our say everybody week, is week, sales after seeing competitors larger numbers. Skyline pretty I think upbeat. a

think as be It's so And right would it, but the it we I moving improving. to is direction. in market certainly like as seems the great not

the of that's we've I time that show customers. a been managing team and with about of lot I'm of the half the closely with spending dealing And our think sales us sales a that from numbers for what challenges lot second have distracted year. really excited

So saying, specific a the of point. we've way is think been that I inflection addressing. think market improving, there but I Legacy issues are an is long this And

and success production And with some great to discounting the are using homebuilders and they're volume, aggressive drive of larger seeing incentives that.

here, weakened. margin has but held You've volume obviously,

volume unit up any back to you'll be incremental comes or growth? picks drive giving think you margin do your the some of up, as As that market

great. look do margins The now. discussing we're something It's Yes.

price We the haven't used lever.

but lot what is I our labor we'll price mindful coming have a used larger think don't the lever, that think competitors see we're down, do. of materials I and

now here something So about we in as talking get we're the ready late show, for right September.

from Instructions] line And Securities. we the [Operator of have Moore follow-up Daniel a from CJS

flattened after, sequentially. question, the of actually declines Probably increased and several related ASPs last to obviously, but quarters out

talk of going about think whether a just your forward? maybe you little bit maybe in put bottom So and we've a expectations

Thanks, Yes. Dan.

that's right. think I

is think the we've was homes. park affordable more several of first-time homebuyers the business smaller, of throughout bottom. a We both to the problem on the Affordability and entire buying the went where built just housing through quarters stick side market, shift dealer side hit homes. a business a I not there

that have for flattened should though, think, the stable of be and year. I so declines And ASP rest the the pretty out

rates little that sort but as few throughout And bit in advantage in and cost the do just Excellent. in as the over widen see kind of one Is MH that of obviously, built, quarters. next well here lower-end price forecast to as only -- if a is the maybe net of positive benefit rise a kind net continue declining of the you between the not you currents? or a cross points the focused interest interest do -- negative on stick last pull those or rates,

some the Yes. We really base increased players. see think haven't And rates as I broad have. of rates of availability park interest traditional impacting rates larger chattel the our financing I with for mean the side business. as of much mortgage this customer is pretty

is or come there's interest down -- that rates in interest September think either down. or will so And indications come there I they is

we months. get and XX the the to okay, entire the for quality assets guys that volume around a that to I built move like product our will think it side can our estate offering -- well, park these key business. But our evaluating affordable. park a right, -- keeping say, we like And in XX of and drive or they'll keeps is in financing real is is thing and start refinance quicker affordable. business this customer And product next the this who are solution -- I that

this will there think buyer product. for be that a And I so

environment. be expensive services interest the will this to -- continue of and rate goods income their there's discretionary more And of for product demand more other there's going go be think will forward I areas. and there'll to regardless other

the remarks. to Duncan turn not I'm it And for showing would closing I further any like over any in queue. now back questions to

hosting call. houses up, a and have see fall about We're company Thank products products encourage probably updates earnings on or concludes September industry. hundreds your customers come We've you today's fully the out. Operator, our our more show furnished products event. for Worth set in XX some be of great appreciate XX our Housing. the I'd Fort our come on -- in financing and a to got to interested XX. who's you to out, and anyone or this learning Legacy our in going of we'll joining to the the on We interest there, speeches link encourage website It's call. seeing

Thank today's in This participation the conference. you does conclude for program. your

disconnect. great now Everyone, day. You may have a