Legacy Housing (LEGH) 13 Nov 242024 Q3 Earnings call transcript

Thank you for standing by, and welcome to the Legacy Housing Corporation's Third Quarter 2024 Earnings Call [Operator Instructions].

As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Duncan Bates, Legacy Housing President and Chief Executive Officer. Please go ahead, sir.

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

Thanks, Duncan.

I is Act Reform to today claims of results in of for performance statements, in by the no Litigation response contained begin, update management's projections the expectations. of management may risks as protection we want Securities from obligation your forward-looking differ our projections and statements represent remind forward-looking as Before these required statements additional listeners current applicable assumes in and the XXXX. Actual law. prepared management's uncertainties, remarks harbor and estimates Private are questions. Therefore, will the may which forward-looking to future safe make Legacy contain the that subject today, to to otherwise management's to future that the Any best company's company unless

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

consist XX, of to same primarily XX.X% sales decrease period at sales and the finance inventory or increased commercial ended $X.X sales sales, inventory retail retail compared was in unit was sales, store sales park sales offset volume company-owned Product a sales. Product by The driven finance sales decreased months XXXX. decrease X stores. direct categories. The by home during shipped XXXX, primarily million mobile in our sales, as September and partially direct in the decrease

of September in a months of increase expense, compared $X.X The expense, marketing as finance an increase in that flat the interest due other decrease XXXX, due primarily September months a the fees, a the $X.X the months increase in an XX.X% and as in September other to compared gain million XX, was as XXXX. The increased primarily in period agreement, $X.X a same was deposits offset compared XX, and forfeited million sale expense, in compared of September a $X.X ended $X.X and of XXXX. This agreement in dealer in $X.X period increase inventory offset by million during in in to the months settlement increase in the compared a of partially miscellaneous XXXX fees. Other increase decrease related revenue. The finance to in XX.X% a expense, decrease in debt decrease increase cost of during product or in expenses. Net $X.X the million other payroll increase decrease X same had provision, sales land XX, decreased miscellaneous sales in expense expense X.X% XXXX. We million miscellaneous period $X.X is in a million months $XX.X in sales in $X.X a million costs product decreased million X $X.X primarily we miscellaneous net. Also XXXX, million in million during related cost of decrease compared of margin sales X $X.XX in $X.X third to third and September as profit XX.X% of to XX, per decrease to same to executed the X a portfolios. and a to professional million in care balances product XX.X% land. Selling, to XXXX. XXXX. Consumer the income XXXX ended loan increase of million. Other to significantly compared million net the decrease sold. during ended the income, XX, September general increased $X.X ended decrease months the increased revenue compared increased decreased $X.X third of ended the the million as the fees, million $X.X XXXX, growth loan million Basic commercial $X.X increase September million September by September $XX.X ended in and administrative increased of consumer million our or result to XX, loan bad was a by XX, same remained change in had or or service decrease net period XXXX dealer same portfolio $XX.X the million in forfeitures, X income XXXX, miscellaneous per our loan income third by quarter a to primarily This driven compared as interest XXXX, of lease XXXX. settlement as the the primarily due ended $X.X a X of XXXX. health million MHP consumer portfolio loans X.X% by $X.X the net period $X.X portfolios. Between and share and quarter, quarter increased expenses a X.X% result XX, X a not to did income loans, XX, XXXX. We the XXXX months in to September September per or of quarter MHP For the the in in an income on fees September to the as and million, in quarter million and and share the deposit sold our rents, months XXX% Gross ended decreased loss as of same is expense units due interest million XXXX. The $X.X months in MHP $X.X XXXX, our X period XX, income during conversion sales, to XX, other in million contract in the X nonoperating and ended miscellaneous months other during of revenue during land decrease X primarily in consignment compared $X.X during in consists the warranty third loan to XXXX, expense ended earnings XX, XXXX, XXXX, cost

the in $XX.X approximately XXXX. outstanding and respectively. At of we the XX, the of million, million $XX.XX, As million value in revolver $X.X as $X.X million Legacy's was book third to basic as XX, XXXX, same $X.X XXXX, and from compared December was September XX.X% of of outstanding balance of September XX, XX, end December period the XXXX, The cash of of XXXX, an XXXX. share increase per quarter had

September the Legacy's customers into huge success. that XXXX in extended quarter number fall wrote show the of We was of late orders a a hosted backlog record first XXXX. and

to production by changes Texas increased we were quarter, customers. very updates community to younger fall we fourth the interior finishes dealer the showcased and to both plants. At home show, at and appeal homebuyers. The exterior received both well significant During

shipping and building these orders are now. We

lower came have Third in would quarter shipments we liked. than

at Given the around marketing of to the changes see and elected many our the product person in show. customers updates, the order

the to hold we the for continue than including in manager of are the onboarding moving sales pricing, XX% third We plants October peers. direction. were in senior September our slower Product a the to build sales Despite which contributed sales has quarter, for XXXX.   We XXXX late continue in team, to right Texas recovery September. a over up slower

dealer is business good. of across Our the network most

team dealers footprint. new to pushing the independent manufacturing are the across We add

XXXX. couple a areas quarter South finance finance compared We points. Applications Texas, leading highest of XXXX A were of top retail XXXX. XX% XXXX focus. the dealer recent funding Florida are October side. the to since of recorded the the indicator of data third were up as third for retail and on the Carolinas December quarter view

is community business continue volumes. rates depress slowly. Our improving interest to transaction High

receiving XXXX. are community think business We and to improve more requests in inbound the will continue

community side. on quarter, the we orders several meaningful secured the During

seasonal We the to to tiny as continue to have investors, community selling strategy. a occupancy. I assets year-round view this explore of park the success of and growth this encourage RV opportunity these economics to HUD listening from highly homes customers transitioning any

continue to portfolios lending grow. Our

last MHP, retail financing from and XX is months, up the Over floor interest finance plan XX.X%. revenue

the are Our were low levels decline. gross given quarter XXXX. remain strong. Product labor, production Under-absorbed for rates the and lower the third of delinquencies drove margins recovery XX.X%

We watch improving. closely and continue margins to expect to with normalize labor production

also quarter in Bay sold keeping material on excess $X.X the million. an We fluctuations. eye We third for price land Horseshoe during are

the now last the as to will that investors land were the our hired sales and call, occupancy were in parks these XXX rates projects. already settlement manager We deed is spaces to continue shift parks two of Brand-new home XX%. a homes focus on mentioned have I site. us approximately under Legacy combined see operating oversee the to agreement. The As to core corporate properties. on we mobile office

to homes We are now increase occupancy renting before monetizing.

half there of the next for Jeff pad A the a on the utilities the Bastrop to development couple agreement resulted quarter. the we anticipate still gain and selling land first during As believe is of We our the roads upside meaningful In realize are during County, quarters. sell over near settlement few X,XXX lots complete properties in development. when Phase X. We third updates onetime nearly XXXX. Austin, mentioned,

are roads provide balance in own XXX sheet. on market updates Xx value lots next our study We lots. developed worth estimated the the A home starting Horseshoe additional we'll X the and that Phase quarter. In are Bay, now approximately mobile we

and half are build-out. selling the homes we first The is begin the of our dealerships post-IPO This near sales land will in quarter, opening the and we company-owned new first XXXX. lot Horseshoe since land, Bay

continue and footprint fundamentals a We this as our to business long-term owners independent as to are company-owned of making the view in progress some expand business our age. I our retirement retail on network business. path dealer believe approach

factory-built housing of the our and reform. Q&A. of industry. Operator, The in without crisis concludes begin Please this hear are regulatory our the is more media We coverage remarks. solved affordable not seeing talks housing prepared

the Certainly, comes and CJS our today from for Securities. of Moore first question Daniel line from

for It there plants the seen talk in production backlogs than to relative like you light rates the ramp quarter strength production detail fall but helpful? QX, expectations during about be just orders the three you've across rather let in that intend in to build, call December or would Maybe of show. your sounds any really your for

ramp Absolutely. backlog. for a trying our looking were up, we catalyst been we've and to production build to Dan,

the Third was September. than which excitement but the at created quarter show, of we we of lot end have around fall was lighter liked, a would

new I decided quarter the customers customers features fourth started of the and for ahead those delivery the in show think or year. sharing with order at of houses seeing as had even the team that quarter the our wait some the show, in and first sales in and next we colors to

us. shipments some delayed that for So,

all sales and daily, pricing had taken haven't my to team has for we've years, overseeing thing, is and of the plants team the senior down. other hires. over hired we an What pricing here, wasn't continue two we and department the the senior a mean he's spare several I impact. I made couple key managing build me the think last and sales time. We've Texas manager there, the working

our I larger some think of competitors have.

some getting but of now. building fourth new orders ultimately, expect So little materials a up over certainly bit standpoint We of in, the delay from quarter. the the be these quarter product we're a show sales had to a third I

talk detail you've experienced just this QX about of how in things trended kind good quarter? into and of And the October. over show, orders have can maybe momentum the around we are gave so just far QX, far But see carried thus trending orders how in kind how

a I the orders for sales think below huge see of business dealer see the a customers The houses, encouraging you're XX, is we'd still selling space starting deals show, better really some the at all inquiries to even continue steady QX. that to the the the it of than the be, like, community been selling where is through to it's writing out we've since come good. Production That's improving. bit. It's show struggling certainly back. and to out, network, take a which weeks and we're helps and had slower but we've that on COVID, where not the where last park and the than and we'd is more deals little sign founders but like hundreds been backlog starting couple good XX to park had still are two meaningful deals, but the side. We us built on thing side pretty we're

from FEMA Carolinas. if as see or there and both? potential If like Georgia the doesn't any opportunity in just either do you the see not, impact rebuild look it, sound was forward, but to hurricanes or replacement It we terms in checking of

out plant in some Absolutely. fortunate the Southeast we of where and inventory in far customers We as there, shipments the the we areas just as from our unscathed. to came were had going team the storm. But, certain and it luckily delayed

certainly that been forward, primarily been going we will yet. But hurricane and housing housing. temporary think started been I the with HUD in of be Texas, inquiries a Georgia conversations doesn't that flow on build we to over can temporary applications rebuild in other meaningful seem the money rebuild with work there workforce build getting products lot expect confusing. There's any or providers in like but has of our there's It work. housing Carolinas. workforce We're

pointed Last like as margins, gross QX. in It starting sounds out, one. But tick sequentially. absorption you you'll better lower get

So, year? like we any looks specificity for normalization more next in margins of the QX think and terms what of about first half into as

Dan. Absolutely,

think orders. production quarter. just the is pretty want on the through to market show started our was and but fourth XXs people. This I it low hang where in the down it's those got your through we'll back quarter get we as and XXs to was building until as obviously is in you still COVID, not tight tight, and really was Labor a

we up the the normalize heading as production ramp I from think team end standpoint. a production year of right-size the to we'll into

line And comes from Lake our question Mark next from Street. of Smith the

to kind through if there, kind ongoing there's just first on if agreement, at impact we've worked settlement of look any of in wanted the check QX? I as everything we now

operating it. gain the during the agreement settlement No, corporate at new borrower onto we're managers the we've X got the we've that the quarter. a And is This of level meaningful site. park then last around, the worked now did on moving current and We and the around quarter got team a we've realize ultimately, pieces pretty our hired arms and through getting parks books. was

are I work occupancy think And moving ultimately as in of to But to the fairly monetize the take there's higher. settlement And books, opportunities agreement on to look then far we pieces so, assets there's complete. we'll near future. these as cleanup some the getting do, the

want And in then ask up I big size about the a in bit. quite to portfolio just ramp financing came the did MHP

speak to happened can what you there? just of If all kind

Yes.

had notes part development as by were the loans that and of As borrower the settlement secured homes well. then also MHP were agreement, there

some shifted balances from we development the settlement, the loan to with So, over portfolio of the MHP.

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

A couple of questions. quick

you say the product above give get margin can quarter? First, back would us clarification, fourth you that gross did XX% earlier a in sales

lower slid to We from like I XX% in production fourth get we'd quarter. think the to to XX%. the XX% with

And in get so, to were second closer where we'd like to the we quarter.

and think keeping I helps an impacted on think wood the after I been products, the we're which eye production hurricane. lumber improving but have the

absorption really goal. the in because third that's the So, slipped labor the under But quarter. margin of

And to at how the it take long then that's might increase to to level a occupancy the X sell? parks attractive owned

there these get pads on have can a of rented, quarter, some not we up and brand-new and Both been a set think others Alex. homes that connected. shipped we had I had in parks utilities of of which were that weren't lot

the a Beaumont, where on is. And that's far so, so I manager focused think job upside we're really homes with we've the And done Texas, most up. those new good pretty leasing park

occupancy these. We'll see we XX% get before to somewhere ultimately like and it goes. just how XX% between I'd So, us monetize

the fall backlog to 'XX. coming show, into like And show, out sounds XQ visibility it of good it got you've for fall then relates as the

show You've that increased all your than production about had better Texas that in same? suggest was expected Does plants. or you the the

this XX year year the show the big probably this than to years year. big the a was think And difference every more the had that's I No, event made really updates in we houses success. our is, mean sales we last I combined.

was team finishes I new the nice did options, we colors, on say cabinet a job product. walk-in of I to ultimately, XX% lot but wrote we for a modernize a the were lot finishes. customers And flooring showers. think got updated the there, the I'd orders, exterior So, We and interior really that. the, orders think and countertops, wallboard, great of The weather of pushed really

couple took then And so, get started a us little colors a it all weeks in, them. time, and the bit of new of building we to

the a kind I The out quarter. it update to for getting may So, get did. long term, these And on I quickly. And where pain our starting up really were there nicely. think the the production feedback we the think was through been But we're term, show selling of and third us looking customers in lots really us for dealer the have little in that long great. they're sets them to homes product,

today's This like does now conclude Duncan the to to question-and-answer session I'd hand program. further of remarks. program the back for any Bates

concludes Sure. your Thank Operator, Housing. earnings today's this you Legacy our in for joining appreciate call. We interest call.

your you, today's does gentlemen, And and conference. This participation ladies for conclude in program. thank the you. Thank

You may day. Good now disconnect.