Legacy Housing(LEGH) - 2024 Q4 - Earnings Call Transcript

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]