Legacy Housing(US:LEGH)2019-04-09 19:01Financial Data and Key Metrics Changes - Legacy Housing Corporation reported gross revenue of $161 million for 2018, marking the highest annual revenue in the company's history, with a year-over-year increase of 26% [5][13] - The company sold 3,950 home sections in 2018, a 20% increase from 3,274 in 2017, and sold 3,392 complete homes, up 17% from 2,900 in 2017 [5][6] - The average selling price of products increased to approximately $41,000 in 2018 from about $38,000 in 2017 [6] - Net income for 2018 was $21.5 million, compared to $26.3 million in 2017; however, on a pro forma basis, net income increased by 27% when accounting for tax changes [18] Business Line Data and Key Metrics Changes - Company-owned retail store sales increased by 27% in 2018, rising from $10.4 million in 2017 to $13.2 million in 2018 [14] - The cost of product sales increased by 30% to $107 million, largely due to higher production volume and increased material and labor costs [14][16] - SG&A expenses rose by 22% to $21 million, driven by costs associated with expanding retail operations and opening new offices [15] Market Data and Key Metrics Changes - The manufactured housing industry is experiencing incremental recovery but remains below long-term averages, with opportunities for growth driven by demand for affordable housing [7] - Some key markets, particularly Texas and Louisiana, experienced softening in sales towards the end of 2018, attributed to weather-related events [8][9] Company Strategy and Development Direction - The company plans to focus on internal opportunities while evaluating acquisitions that align with shareholder interests [24] - There is a cautious approach to expanding retail operations, with an emphasis on analyzing past successes and failures to create an effective rollout strategy [10] - The company is involved in new park developments, including a 400-acre parcel near Austin and a project in San Antonio, with expectations for significant returns on investment in the coming years [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need to adapt to being a public corporation and emphasizes the importance of internal systems [23] - There is optimism regarding demand for products despite challenges in certain markets, with a strong order backlog and production capacity [35] - The company is monitoring interest rates, which could impact competitiveness against site-built housing [38] Other Important Information - The consumer loan portfolio increased by $10.5 million to $97 million, while the manufactured home park loan portfolio rose by $8.4 million to $58 million [19] - Equity grew to approximately $190 million as of December 31, 2018, up $66 million from the previous year [22] Q&A Session Summary Question: Reason for the delay in the 10-K filing - Management explained that the delay was due to transitioning from a partnership to a corporate structure and ensuring all resources were in place, with no disagreements with auditors [30][31] Question: Overview of the first quarter performance - Management noted that while the industry faced challenges, Legacy maintained a good order backlog and operated at or near capacity [35] Question: Details on the 400 unshipped units - Most of the unshipped units were tagged for independent retailers, with delays attributed to customers not being ready for delivery [41][44] Question: Update on retail store performance - Retail stores are currently selling about two units per month, which is not profitable, but management expects to improve this to four to five units per month [75] Question: Insights on FEMA business - Management indicated that there are currently no FEMA orders, and the business is not expected to see significant FEMA-related sales unless a catastrophe occurs [71]