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Legacy Housing Corporation (LEGH) Q1 2025 Earnings Call May 13, 2025 11:00 AM ET Company Participants Duncan Bates - President and Chief Executive OfficerMax Africk - General CounselJeff Fiedelman - CFOWill Gildea - Equity Research AssociateStefano Latapy - Head Trader Conference Call Participants Mark Smith - Senior Research Analyst Operator Good day, and thank you for standing by. Welcome to the Legacy Housing Corporation Q1 twenty twenty five Earnings Conference Call. At this time, all participants are i ...

Legacy Housing Corporation (LEGH) Q1 2025 Earnings Call May 13, 2025 11:00 AM ET Speaker0 Good day, and thank you for standing by. Welcome to the Legacy Housing Corporation Q1 twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Max Africk, General Couns ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38761 Legacy Housing Corporation (Exact name of registrant as specified in its charter) Texas 20-2897516 (State or other ...

Core Viewpoint - Legacy Housing Corporation reported a decline in financial performance for the first quarter of 2025, with net revenue decreasing by 17.5% compared to the same period in 2024, despite achieving a record book value of over $500 million [3][7]. Financial Performance - Net revenue for Q1 2025 was $35.7 million, down 17.5% from Q1 2024 [7]. - Income from operations for Q1 2025 was $11.6 million, a decrease of 30.8% from Q1 2024 [7]. - Net income for Q1 2025 was $10.3 million, reflecting a 32.1% decline from Q1 2024 [7]. - Basic earnings per share for Q1 2025 were $0.43, down 30.6% from Q1 2024 [7]. - Book value per share reached $20.87, an increase of 13.1% from Q1 2024 [7][8]. Company Developments - The company simplified its product offerings and introduced a new financing solution for community owners [3]. - Legacy added industry veterans to key manufacturing and retail positions to enhance operations [3]. - The company is optimistic about future performance despite the current challenges [3]. Company Overview - Legacy Housing Corporation builds, sells, and finances manufactured homes and tiny houses, primarily in the southern United States [5]. - The company is one of the largest producers of manufactured homes in the U.S., offering homes ranging from approximately 395 to 2,667 square feet, with prices between $33,000 and $180,000 [5].

BEDFORD, Texas, April 29, 2025 (GLOBE NEWSWIRE) -- Legacy Housing Corporation (“Legacy” or the “Company”, NASDAQ: LEGH) will release its financial results for the first quarter ended March 31, 2025, after markets close on Monday, May 12, 2025. The Company will then host a conference call at 10:00 a.m. Central Time on Tuesday, May 13, 2025. To access the conference call, please pre-register using this link. Registrants will receive confirmation with dial-in details. A replay of the webcast will be available ...

Core Viewpoint - Legacy Housing Corp. (NASDAQ: LEGH) has been upgraded from Hold to Buy based on the potential value of 'hidden' assets that the company aims to unlock [1]. Company Analysis - The analyst has a long-term investment approach and has shifted focus from being a Tech analyst to also covering Commodities and Energy sectors, reflecting the ongoing energy transition [1].

Financial Data and Key Metrics Changes - Product sales decreased by $15.8 million or 10.9% in 2024 compared to 2023, primarily due to a decrease in unit volume shipped in direct sales and inventory finance sales categories [7] - Net revenue per product sold increased by 1.9% in 2024 compared to 2023, driven by a moderate increase in unit prices [8] - Net income increased by 13.2% to $61.6 million in 2024 compared to 2023, with basic earnings per share increasing by $0.32 or 14.3% [14] - Cash increased to approximately $1.1 million as of December 31, 2024, compared to $0.7 million as of December 31, 2023 [14] - Book value per basic share outstanding increased by 13.9% to $20.40 as of December 31, 2024 [15] Business Line Data and Key Metrics Changes - Consumer MHP and dealer loans interest income increased by $3.8 million or 10.1% from 2023 to 2024 due to growth in loan portfolios [8] - Other revenue increased by $7.0 million or 106.3% from 2023 to 2024, primarily due to $8.9 million in land sales [10] - Gross profit margin for product sales was 30.4% in 2024, down from 31.3% in 2023 [12] - Selling, general and administrative expenses decreased by $1.1 million or 4.4% in 2024 compared to 2023 [13] Market Data and Key Metrics Changes - The average price for a new single-family home in 2023 was $511,000, compared to a manufactured home price of $123,000 [18] - Legacy's average selling price in 2024 was approximately $61,000 per unit, up from $60,000 in 2023 [20] - Retail finance fundings in Q1 2025 are tracking well ahead of the 8% growth seen in 2024 [22] Company Strategy and Development Direction - The company continues to focus on the long-term fundamentals of manufactured housing, emphasizing high-quality, affordable homes and financing solutions [17] - Plans for 2025 include focusing on sales, particularly park sales in Texas and dealer sales in the Southeast, while streamlining product offerings and processes [28] - The company is in a strong net cash position and plans to repurchase shares aggressively if stock prices decline [29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges significant market uncertainties, including politics, tariffs, and recession risks, but remains committed to closely managing the business [16] - The affordable housing crisis is highlighted as a critical issue, with the manufactured housing industry seen as a necessary part of the solution [21] - Management expects production rates to improve as they ramp up production at Texas facilities, with a focus on building backlog [52] Other Important Information - The company sold a mobile home park as part of a settlement agreement, resulting in a meaningful gain [26] - The company is actively developing properties in Austin, with plans to sell lots in Phase 1 of a development project [27] Q&A Session Summary Question: Can you provide more details on land sales during the quarter? - The significant sale was a mobile home park from a settlement agreement in Beaumont, Texas, with other land monetized throughout the year [32] Question: Did you purchase any land in Q4 in Texas? - The company did not purchase land but is focused on foreclosing on development loans secured by land [35] Question: What are the concerns regarding delinquencies and the ability to recover loans? - Past due balances have increased slightly, but recovery remains strong due to home price increases and down payment requirements [38] Question: How might changing immigration policies impact customers and labor? - The company has not seen a material change in business from immigration policies, as they have stable borrowers [45] Question: Are there any expectations for increasing SG&A expenses in 2025? - Management does not foresee any material changes in SG&A expenses [47]

Sales Performance - In 2024, the company sold 2,471 home sections, a decrease of 14.1% from 2,877 home sections sold in 2023[89] - Approximately 38% of 2024 product sales were attributed to independent retail distributors, down from 51% in 2023[92] - Texas accounted for 54% of product sales in 2024, slightly up from 53% in 2023[94] - Product sales declined by $15.76 million, or 10.9%, primarily due to a decrease in unit volumes shipped, with total units sold dropping from 2,434 in 2023 to 2,129 in 2024, a decrease of 305 units or 12.5%[116] - Total product sales for 2024 amounted to $129.345 million, down from $145.100 million in 2023, indicating a decrease of about 10.8%[259] Financial Performance - Total net revenue decreased by $4.95 million, or 2.6%, from $189.14 million in 2023 to $184.19 million in 2024[115] - Total net revenue for 2024 was $184,191,000, a decrease of 2.0% from $189,144,000 in 2023[170] - Net income rose by $7.18 million, or 13.2%, from $54.46 million in 2023 to $61.64 million in 2024[115] - Net income increased to $61,642,000 in 2024, up 13.9% from $54,460,000 in 2023[170] - Basic net income per share rose to $2.55 in 2024, compared to $2.23 in 2023, reflecting a 14.3% increase[170] Operating Expenses - Total operating expenses decreased by $3.98 million, or 3.2%, from $124.56 million in 2023 to $120.58 million in 2024[115] - Operating expenses decreased to $120,581,000 in 2024, down 3.9% from $124,557,000 in 2023[170] Cash Flow and Liquidity - Net cash provided by operating activities was $35.99 million in 2024, a significant increase compared to a net cash used of $13.54 million in 2023[129] - The outstanding balance of the Revolver decreased from $23.68 million in 2023 to $0 in 2024, with available credit under the Revolver increasing from $26.32 million to $50 million[136] - Cash at the end of the period increased to $1,149,000 in 2024, compared to $748,000 in 2023[175] Loan and Credit Management - The company has not experienced material losses on its loan portfolios historically, indicating strong credit management[100] - Consumer, MHP, and dealer loans interest income increased by $3.76 million, or 10.1%, due to growth in loan portfolios, with the consumer loan portfolio increasing by $17.6 million and the MHP loan portfolio increasing by $24.5 million[118] - The allowance for loan losses decreased to $694,000 at the end of 2024 from $765,000 in 2023, indicating a reduction of approximately 9.3%[262] - The allowance for loan losses for mobile home parks decreased to $654,000 in 2024 from $735,000 in 2023, indicating improved credit quality[273] - 99.8% of mobile home park loans were less than 30 days past due as of December 31, 2024, indicating strong payment performance[273] Warranty and Liability - The warranty liability at the beginning of 2024 was $2,910,000, which decreased to $1,950,000 by the end of the year, reflecting a reduction of 33%[217] - The product warranty reserve accrued in 2024 was $840,000, a significant decrease of 67% compared to $2,552,000 in 2023[217] - Warranty costs incurred in 2024 totaled $1,800,000, down 33% from $2,691,000 in 2023[217] Tax and Regulatory Changes - The effective tax rate for 2024 was 18.9%, compared to 20.8% in 2023, primarily due to federal tax credits for energy-efficient construction[124] - The Company has identified material weaknesses in internal control over financial reporting, including insufficiently designed control activities and lack of qualified accounting personnel[161] - The new accounting standards issued by FASB are expected to have no material impact on the Company's financial statements upon adoption[146] Shareholder Actions - The company repurchased 262,530 shares of common stock for $5.4 million during 2024, with a remaining authorization of approximately $14.6 million as of December 31, 2024[132] - The Company does not expect to pay dividends on its common stock, indicating a focus on reinvestment[232] Asset Management - Total assets increased to $534,194,000 in 2024, up 5.4% from $506,742,000 in 2023[169] - Total stockholders' equity increased to $493,956,000 in 2024, up 13.1% from $436,735,000 in 2023[169] - As of December 31, 2024, accounts receivable, net totaled $3,985,000, down from $4,656,000 in 2023, with an allowance for doubtful accounts of $578,000[187] Future Outlook - The company is exploring opportunities to increase production capacity to meet future demand[102] - The Company is currently evaluating the impact of new disclosure requirements related to income taxes and expense disaggregation standards[144][145]

Financial Performance - Net revenue for the year ended 2024 was $184.2 million, a decrease of 2.6% from 2023 [7] - Income from operations for the year ended 2024 was $63.6 million, a decrease of 1.5% from 2023 [7] - Net income for the year ended 2024 was $61.6 million, an increase of 13.2% from 2023 [7] - Basic earnings per share for the year ended 2024 was $2.55, an increase of 14.3% from 2023 [7] - Book value for the year ended 2024 was $494.0 million, an increase of 13.1% from 2023 [7] - Book value per share for the year ended 2024 was $20.40, an increase of 13.9% from 2023 [7][8] Business Model and Market Position - The company builds, sells, and finances manufactured homes and "tiny houses" through a network of independent retailers and company-owned stores [5] - Legacy is one of the largest producers of manufactured homes in the United States, focusing primarily on the southern U.S. [5] - The homes range in size from approximately 395 to 2,667 square feet and are priced from approximately $33,000 to $180,000 [5] Strategic Outlook - The company is well positioned for 2025, with a strong demand for affordable housing in the United States [3] - The integrated business model provides opportunities to deploy capital at high rates of return and compound shareholder value [3] - Over the last three years, the company has increased book value by nearly 60% [3]