Legacy Housing(LEGH) - 2024 Q4 - Annual Report

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]