Earnings call transcript Q1 2023

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Duncan Bates

Good morning. This is Duncan Bates.

Operator

Yes.

You go ahead, sir.

Duncan Bates

We're get to go.

Operator

Yes. go. to get We're

Duncan Bates

Safe morning. for Duncan XXXX joining Legacy's read Max Good getting and Conference Legacy's CEO. Africk, the will Counsel Thanks our General disclosure This right. before Bates, started. is President Call. Harbor All First Quarter

Max Africk

Duncan. Thanks,

begin, uncertainties, listeners management's Before in make forward-looking and today management may prepared subject are response remind statements, questions. statements forward-looking may contain which I to to remarks our we that will risks your and additional

the Safe Litigation Therefore, for claims the company's the XXXX. risks the and protection of refer to in filed differ Securities Report company that Annual therefore, statements Private Actual or you the contained Commission. and expectations, a Reform Harbor uncertainties and is management's vary the Securities with Exchange forward-looking of current more in from we of results detailed the may Act discussion

to today's the applicable as In Housing assumes as management's addition, any law. projections obligation estimates these the company's represent required call. by Legacy unless performance otherwise update future projections of to no future, in

Duncan Bates

Thanks, Max.

year. XXXX. to during I'll first reduction remarks first open Q&A. for agreements quarter all call this in any we did to quarter, independent then primarily XXXX or revenue we run in decreased of compared prepared not shipments resulted financing three the as Product from most convert floor $XX.X of to dealer a across the plants. we'll last quarters plan Also, quarter million our The through consignment decrease XX.X% the did agreements

believe big year all on over below plants. made at March were slowed. than has industry data housing MHI's backlog a February, XXXX that and March push still a fared business up has nice We better manufactured but this The our most. well sales have XXXX numbers. We to shipments According

Several large have up stepped orders. longtime with customers

continue We all feed We near three having plants. have footprint small capacity. run manufacturing orders a to and anticipate to

as housing our affordability several are tailwinds nears that believe also lows. major We record industry for there

discussed Georgia we and on team XXXX significantly still we improved the in Georgia. quarter have during third-party workforce, have first below our hard monitor call, plant. Eatonton, been right-sized manufacturing a prior the of product working Production at the was quality. retrain and in As We to historical the on levels improvements our brought

However, gained we on side momentum several orders manufacturing have for recently secured plant. the large the and

to production push continues without team quality. Our sacrificing volume

was balances MHP the compared ended loan months and as loan $X.X in or income XXXX, March in during Consumer interest same MHP to the to increased the and increased million driven XX, by This increase consumer period XX.X% XXXX. three portfolios.

consists commercial Other XX.X% XXXX. XXXX, as revenue which rents, financed months, or during compared same and of three million period increased ended primarily March the dealer to the $X.X in XX, fees to lease

in We now outstanding and remain loan recurring revenue. lows. generates across business financing over near $XXX performing Our well The portfolios. our predictable principal defaults million have portfolios record are

decrease to XXXX. administrative Selling, months in warranty million in was general, partially salaries a due primarily March three decreased and offset decrease expenses same in XX, or incentive in the period a increase decrease XX.X% compared legal XXXX, as This during by and to and costs an cost. expense $X.X the ended

first $XX.X to to XXXX. of compared million the quarter first XXXX in X.X% increased income quarter the Net of

from $X.XX XXXX, the of Basic increase the first same earnings an grew quarter XXXX. in period per share in share per X% of

$XX.XX, outstanding over end XXXX. XX.X% XX.X% months. first on XX return per basic from At the an Legacy's period of equity share of last was XXXX, an the same of increase book value the in delivered quarter Legacy the

material raw pricing continue hold to inventory. We and our reduce

drawn million ways but healthy. we $X.X line balance $X.X in and We ended quarter of looking sheet also Our to million are SG&A at the top is Legacy's with credit. our focus reduce warranty on cash sales, remains and on costs.

also We of $X.X approximately million yielding treasuries X.X%. own

As were I with quarter, strategic during integrated seeing waiting Sales in business the the our for our model. the opportunities improved. see founders. of to industry have From recently our first discussed are should a investors but been the standpoint, start this. margins we down beauty slows, economy and earnings They years

Our foundation are we well-positioned is and for stable growth.

our begin Operator, prepared this concludes the remarks. Q&A. Please

Operator

Thank you. Instructions]. [Operator

Our with Rygiel first question comes Riley. from B. Alex

open. line Your is

Duncan Bates

Alex. Hey,

Operator

Alex?

Alex Rygiel

Hey Duncan, how are you?

Duncan Bates

are How I'm good. you?

Alex Rygiel

questions Very good. A couple here. of quick

rates. here? can sort for home slowing demand macro the we well. upon rise that's environment First, of space touch into you a of kind Obviously, now kind new as of construction mortgage yes, We significant got leaked your of had

of macro into about sort dynamic talk the kind little single-family seasonality. kind now, to of maybe of just a home kind of level going it here normal like maybe stabilized and So feels but a bit lower have builders

So feel in like case the mobile that's industry? do you well as the

Duncan Bates

Yes.

Alex. have think I certainly feel We comfortable that's very said, full. right, demand plants. slow. That three we've We seen them got keeping

some are business. I for important the this that think pointed real out you most is tailwinds there thing

doubled. that rates, You've got have right, mortgage

You've have got for standards tightened. underwriting that really mortgages

You've -- in year. in slowing of customers, we to than an uptick households country. our affordability think demand this problem got we over $XX,XXX And although I are end those this our all-time of in at that and end this market. there of tend this lower as should you've XX% the serve near And that home country worsens highs. And is got a day, prices the less the make see

Alex Rygiel

talk plants talk that comment full? making you Can about bit on a The That's pretty your keep properties in water had helpful. with of the treatment of about land about facilities sort activities? investments company's can your and been whatnot a that confident earlier And books, number then some development and its some years. conjunction your can you you through

Duncan Bates

largest this properties last that things? The communities I personally own -- have that faces do is, seven you believe been the into few outright that where we headwind sure. we And Yes, industry over these developing we've got put years. the

based the other with But our developers here. value same mobile of time, tell And we Our made primary homes. you selling, discussions at and in is is have progress. lot industry; significant building, business on that there financing I'll

to I think sense there full properties push to through forward development. that us are certain make for

are metropolitan much you make probably primarily raw progress bought, sense that recurring on land homes on that we're and where of made in in in flow there's type increased to as value. has haven't that imagine, contribute potentially we're land we that There's can major really allowed stream. And financing others could entitled -- Texas partner cash we've And around have others some right? areas to look,

there on in -- the a be make with that somebody So or the those partner of may near on. couple sell to either sense near-term

Alex Rygiel

you've think you Can three some about maybe to business geographic opportunities it past, sort of relates the mentioned to years? the that I over And next then lastly, one ahead. kind plan talk given as the of

Duncan Bates

Sure. Yes.

this think the recurring lining time And pretty financing a and business. We've earnings for We've a got I sheet. regional exciting our for we're balance business. from interesting a got up is business. great

ship don't some don't your shipped where to as typically a that and these are there to. where we'd COVID opportunities outside regions as continue I hit certainly plants we miles And but mean economically farther You of much do homes we created XXX are. XXX we that, to from homes like lot

But participating a to to of -- to no process geographic there definitely sheet really we're out be overpay conservative. But no going going looks We're we're getting for we're in bank exciting where some and which us. all things, not is something. if going on be are into backlog a I areas. think -- balance manufacturer the move for you're and really some And some look, single new will us there plant with opportunities for

Operator

One moment for our next question.

Our next Mark with from question Street. Lake comes Smith

line Your is open.

Mark Smith

Hi guys.

on just movement of Duncan First average did see really the of question I've What quarter? got kind selling here price. kind is in we price

Duncan Bates

June Mark, was So price our XXXX. last in increase of

prices haven't dropped we've also have but We since prices. raised then, not

say the past with quarters. it's been I So in few line

Mark Smith

Okay.

Duncan Bates

homes homes. primarily have those -- They're that. homes the of we've we're more lot park prices some dealers, also lower typically of one basic so park are model the bells our And a selling that we a homes. -- to -- whistles has single-wides comment very, typically without building mean, there more very just of big and sell I been model been lot recently than elaborate on

you'll see some the be our line. much And but pretty overall think -- filing, in could there when there, that when so issues you see I mixed you see

Mark Smith

a consumers more consumers? Is can pressuring lending that's so we pressure the being the squeezed as it really about lower Then arm use are with give consumer What rates on your is of lever hurting just can any in environment? more to you us, that sales? kind think detail if industry, it general Okay. today's as you really And them? rates it guys incent is -- rates,

Duncan Bates

decent lot a through that backed have is foot company-owned they're it there's sitting are overall, customers, where we're of still seeing take I'll industry business You've Mark. or a and the traffic on dealers, our their hearing amount should and I in dealers we're right? in whether two selling of channel below About think they got that lots. picked retail been And think Yes. half be. independent is these has what I talk but that being up, about conversions of they're dealers up, that, inventory to pieces,

lot haven't And there's of on an financing being are affordable side just raised it's consumers the though, rates and on This so our a and think squeezed. we going the really product in is I the economy things.

there so side conversion to we dealer right to of hesitation now and higher. discussed whether make already home most or think get prices, rent consumers. think the more I the could homes, business. But see increasing large there's so stick-built go we're it's on traditional And hoping that by other And a change a that purchase some the I pickup rate out of housing of options, as just issues

have and the sell chips institutional of are when that for These big downs homes of the developers owners say industry and categorize that -- regional took which at time On the have them of astronomical base been long other customer lot you serve as in that, the prices business, the entrepreneurs. ridden a community our that's paying park would and guys and a the had business. to off table ups We backed we a typically guys half prices. wholesale I side are directly

a lot is helped deploying so us which on And are capital of our a are of customers now, guys them lot and orders. out those

of their rents it changed. variable these mean, lot and debt as And some went raise institutional think the rate expansion on their a if you all-time guys side. out have may using player, you the the plans on to of can't consolidated park I if at -- much high you're I and -- as prices large you're a backed need

So that's helps. hopefully that

Mark Smith

the us on in sitting you you're versus inventory kind material, question today? me, on Last of of the inventory, just additional with and finished for comfort Okay. raw breakdown can any when just you're goods level what give kind

Duncan Bates

we're directly turning And think raw then company-owned Yes. been I more on, on as raw number material we've got I'll is our excess me. rest company-owned inventory other of area that's around some inventory boat as the inventory of lot but -- the to similar where at like, and in And lots, we've $XX we've or don't you'd is the especially dealerships progress you've and dealers the or tell some have not really I think the Board you, focused in we front in on so there. across there. a side. dealerships company-owned sitting are like got got ways is, as making dealerships the quick that would a the And material of and that inventory go the an I million.

Operator

our question. next for moment One

next Tim Hutton. from Our EF comes from Moore question

open. is line Your

Duncan Bates

Hi Tim.

Leanne Hayden

This appreciate everybody. now, who's Hi, It's but Tim right for in in sorry. Hayden. really Hayden your Leanne is immersed Leanne our time. I'm annual regardless conference filling

Duncan Bates

Hey, Tim, there? you

Operator

is It's one Tim. little you ma'am very for up, a bit? Can speak female She a low.

Duncan Bates

Sorry.

Leanne Hayden

guys Can me? you hear

Duncan Bates

yes, better. yes, Yes, much that's

Leanne Hayden

Okay.

that. Tim on I'm the thanks about just My right pricing. our Leanne Moore. He in for immersed a for now, EF is Hutton. is Hayden Sorry first but follow-up regardless, time. This annual in conference from is filling question

what preserve to despite their online that? cuts. you offer Your ASPs? and competitors, more you Or to pricing promotions for plan do specials below in still plan your your order Do is

Duncan Bates

Yes.

our to certainly our able pricing. We hold to start pricing. seen been competitors cut have We have

what I offer in is to think important been recently do of is to we've the And able pricing discuss integrated specials. model. financing context our

without no offering other for and months them payments finance And pricing price few with increases business are through we're years. the sacrificing but or pushed we've we so believe good what sell over at to we've held homes the incentives our past of couple returns a that

time, down the sales And decent have this we large quarter. were the secure so we be a amount our I like But that'll at orders. continue of strategy. same mean, hit to been to on call able

going our tools as as to we we're holding to keep we use do mean, will. long to need can we that, price if I and So financing

Leanne Hayden

is nimble would volumes, can Okay. retaining downturn can keep How a Yes, utilization up question that makes only second at hours there's reduce to workers? something that if with play more and your sense. plants, regarding what My manufacturing in like talented out? three you sudden footprint shift order your just you or plants do

Duncan Bates

mean think I I typical whether working or you down Yes. can are the as a cutting many not ways production, in it's production hours slow days. week

a production year. missed of this We yet day haven't

I and the where -- feel pretty forward. about backlog So moving good is

front a backlog. really time we'll we're continue to and the some production start but picking see I'm up. And not on and I demand -- at the trying this make sales to just to -- tools, cut And are hopefully, grow We're so them there days. planning push to use we're think

Leanne Hayden

Okay. raw half the from Would All price could think would this last year how right. the would gross plant -- year and ago that less margin? Georgia but in great. about versus down something to in of be second materials that That's a year. be How cost this we of lapping when help? a should boost, that factoring year deflation compared inefficiencies It

Duncan Bates

a feel -- to and we'd stepped really still road and It's I like really below team finally got the has We're little where job. like to in a get We're some momentum bit up been be. Yes. long a we've Georgia. here good done

and think coming though one really -- are -- by us also one end helps we push efficiency additional but I we're prices house from if could out through a think that's quarter, the the get could prices to realistic back down. standpoint. we Again, goal, that a day holding if of I cost material a

still in those be things as to up continue So keep strong. I long to should think to same production two and margins as able direction move the we're continue

Leanne Hayden

to that That's for the great. you that? so a the maybe is year's product benefit? $XX to your conversion much. floor program December last decline would December Thank as about Does quarter million. revenues financing mean a do dealers XXXX by some Okay. last My that expect ago quarter question that seemed for boost headwind sales Or face year you this what of you

Duncan Bates

Sure.

plan reminder give the everyone So I'll on quick conversion. just a floor consignment to financing

years had We necessarily that a consignment market. say, program place I wouldn't is for have in

recognized a we And so we've plan moved floor dealers over to these the we sales converted take market financing as essentially program. no since conversion on inventory. as over, the there's And back

-- ago converted a And to so push have that new program, trying not we started was have some project dealers a this over the year we were and to that and over. we well still everybody

But last conversion we of big had the first a during quarter year.

But of and don't a And have that -- smaller so last quarter. the it's we this that quarter we we -- year. not fourth conversions that not a -- happened on I just year. a the just last will we the had number It's something made first push we volume during would expect same have

Leanne Hayden

from you all so much those That's Thank for answers. Okay. me.

Duncan Bates

Good Yes. with Thanks so the much. luck conference.

Leanne Hayden

you. Thank

Operator

One our next for moment question.

next comes from question a who Our Investor. [indiscernible] Private is

line Your is open.

Unidentified Analyst

for I'll questions. a taking thanks little bounce bit. the Hey, around

financing the forward higher? quarter, moving you're specials income first environment, interest but You expect rising consistent should rate we then also and to the generally on of dollars kind or be opportunities some seeing relative basis, to a on the talked some directionally those be about speaking should

Duncan Bates

in for or to higher. us in They'll a not a spread. has The the seen deploy borrowing into lend financing to think We're in take we've which portfolios. loan opportunity creates this industry, and this directionally nice I capital pullback be financing Yes. moving industry a

without long So we've six as a those for. payments. as months been to include fixed set how The got are far our that months we've promotions some say where couple flexibility we've three rates rates and running say

And we've toward that, the new year, the make that of won't immediately loans, all to interest pick into so the revenue that deployed the end you while portfolios. start of cash benefits loan we should up as the see

Unidentified Analyst

Okay. a side, did Thank but there And process, anything brief is about and on hypothetical on you there. have comments land the something? little Is just you or you're just then helpful. development some you. negotiations talking bit the in actually more transacting in some portfolio sense, doing That's color the of land, the like that about had

Duncan Bates

background. we major the some these in a significant up We to past, through I year our in that of management's took amount continue we challenges business, Look, the think Yes. work you all if time. had developments that had with right? work look on over history of up And to the

so And forward. really on pushing these we're refocused back developments getting

I have hasn't Texas for parks in there entitled. by And think land if people yet. created there's realized that certainly pushing are value been building and that they're like, that's looking forward these are, we And significant

And stuff, so -- any yet. opportunities have always for approached hearing to offers to sale we're mean but -- don't ultimately have think our been do of haven't decision a a this I made on and I sign and like we plan we anything open but and

developments is to a back forward interested So we'll certain there, kind certainly pushing piece, if of someone in we're and creating on it's refocused but them. the value listen

Unidentified Analyst

where asked Okay. either color any on and answered, backlog that's amounts or moving? been size, And dollar we I units or apologize directionally was there if commentary this on but did give the or

Duncan Bates

a is can we've Yes. balance liability a to customer backlog deposits. One I you don't number. our for got publish of we area look -- sheet that

to That quarter. two said, years after taking see And over than will your something since we over that I order less -- $X down tell selling. the the and little been really a of really We've you million and -- focus that's continue quarter through orders team has team and we our difficult to last to people, sales it's have And that's that. involved transition management or You'll we've get relationships. going been get momentum for to you amazing management a nice it's you planning bit some really top team. secure customer when we're you little a longtime got able

of build. to So several months we've got homes

Unidentified Analyst

some on any then Is the regarding discussions in the relationships I've agreements customer just place? have this we asked building do past. And in those there ongoing already still and/or supply about long-term --

Duncan Bates

We've right I talked handle No, say sell now. can production or basis. under large get if homes, about a them none and some -- that can we'll get handle wants they them a order, we you on but just it. we'll out players mean, with agreement larger our they somebody amount space with deliveries of the standard monthly XXX

so are not but now. taking under three factories, do from of all of the customers any really And type that supply have we agreement they're long-term volume right significant

Unidentified Analyst

of question, shorter Okay. any there own the longer of Great. probably we've What's to a years is you And amount a the the on strategy a update came entire Can for been for but kind in They help shareholders, company, just us outlook issues then you have but stock. pretty shareholders maybe time, more desire with this is the this downs just can long-term remedied but return some founders, back, and some that really at accounting the for plants they've this the everybody? you a business? of of sell while which an a you got weren't time. was and would And few answer, those, industry. three talked had the happening side. long entail long-term of discuss what about business? You terms nice were of fair ups We've the to give what's you during for But quite good. able period financial results you public

Duncan Bates

any this to plans no of No, type larger at time. Yes. transaction for

reporting We through SEC some have worked issues side. the on

in we auditor. through I a and think was team accurate issues or But with numbers manner. large by team work we've caused that a place some that timely of a prior we internally. deliver But had with have that our issue new now a can also in

that the longer no so And that's was. it concern

people experience to see have this years. over I'm for think the point, mentors it our fortunate anyone country. And both as to in this continue been this probably I would and they've because business at XX in have coaches founders than business years. to in this grow in combined And more for them any industry very love in two

return growing And goal we're to continue and is business. book Legacy's line always our to high We're so at our to focused profits of invest bottom focused on the value. continuing grow rates

look year down is at they've XX started at the done making year-over-year money, $XX And that if a with grown XX% XX% business million this pretty was XX and last cap then almost remarkable. we've on years. And XX% months, you and what which to you're that over less than company. you $XXX million, And market a look we're for

so we're be going operate we've got continue this to a to And manner -- arise. now where afraid opportunistic we're as But investor in not things conservative we're cash. set foundation to the

popping And it execute. opportunities up team the got actually to we and are believe we've we're where at time that and we a are seeing

So to plan keep saying we're public of and stay long business going a to the company. growing way

Unidentified Analyst

a bit in talk Because units building that, Okay. producing put maybe be you Maybe opportunity? a that, that about we're just are or -- respectful. do when that there, it That's there would that some how we at is more assets frame very looking production Is and organic? is great. you to trying opportunities, clarity there actively facilities little unfinished, I'm

fantastic opportunity updates. so hard deployment. terms some what of any we're the but historically, in of exactly only you. a strategy And time side land job for on But on done that shareholders capital when this could have provide of is on partners, to that you guys changed you some that had maybe time color a you think what's set development in some just has extent. know period we're side. I quarterly permitting to going that's the Thank looking And terms for taken it's getting

Duncan Bates

are are talk have now track. sure. take say these on plan a update to are opportunities, an some management opportunities of a the in we presence but of strategy. on get are areas sales Yes, to can that job back first lot up start there margins a our when own -- have where improve of business. We great, I the issues lot mean, can those. We more do we on We a costs side. can aggressively our our through and now. on I taken do that -- better about inventory. better on and we time do do our are our all, to I'd of on managing of think can managing We and job market those SG&A first a job we're the have all IR things I But focused that there with better

those financing once opportunities other especially there's think, the have like all manufacture, there's deploy we'd these that other to realize value developments right -- markets are and on opportunities we'd from manufacture to there's side. that of like I we now, products capital to There's set in. there to and

And get also of may is these looking lens into we we're return there's that then manufacturing development. of through returns finance. times return may deploying at we there feel by better that businesses when there that think and can feel do attractive to all businesses. and are what And in be compare all the like make when a financing returns. there's that the land side like, deploying we when times the best by times gives country strictly us in a single there We this operating hey, on on I geographies our it so plant cash that be where we additional And focuses to units think on generated we currently will can

Unidentified Analyst

being I I because tell. think helpful to That's the story with company very good a investors active forward answer. And there's very Great. a look Okay. to more

thanks So I for my taking appreciate all questions. it.

Duncan Bates

questions. Thanks Yes, for absolutely. the

Operator

One our question. next moment for

a next also from Roman Investor. comes Our question Private [indiscernible]

open. is line Your

Unidentified Analyst

Thank idea like you these that Is to you Quick you Like does land longer-term for if of that the some think build the Are to kind JV going the guys that to the near on you. this -- on company's spinning do entitlement idea fit from own. stuff these sites raise how as this the question you you this is business be -- what have long-term do -- is strategy development going of you to presentation. Duncan, into plan them the on a great partners? proceed Like various holds? around it, then capital with what's about -- off? parcel? on completion how on be side,

Duncan Bates

Yes, sure.

I push we with for tell like I So yet. said, can't forward them. to had that continue answer the I you

I is we to them fit. see as think plan that the monetize

stable business makes I our what side special revenue ultimately it. think the is recurring of

generates so And business, a as that returns don't own forward and I look to They high predictable to own think wants I to anyone something company. want growing has the manufacturing cyclical margins.

business. at as And so look the lens I think and that to we'll use entire

it's how and create partner that or think business I do them. we replicate can on develop these from development recurring So and we generate and either income a think land about grow model we and

Unidentified Analyst

Yes.

right look way the to at that's the think I exactly it.

you you said, route, bring to from collect encourage you fund capital do like effectively fees with collect and or Where to I think I through would like right? this. management either a JV in JV somebody -- think it

it's not is So so on outlay not -- company the capital all the side.

a Just business. presentation. excited about suggestion. the Super great But

Duncan Bates

the Yes. for questions. Thanks

Operator

call And the questions like further at Duncan back remarks. to closing this turn any time. over I'm not to showing I'd any for

Duncan Bates

your placed orders. truly Two The release orders to full mentioned appreciate during business. have the customers press the you. our and I keep large and final Thank keep customers. longtime and comments. One, call certain facilities thank our we our Perfect. you workers paid

everyone reach call. Housing. concludes like our any interest information thank We in your the My I'd at to is this Legacy earnings questions. the appreciate out of And bottom Operator, follow-up joined free with release. to who today's secondly, us press call. to contact Feel

Operator

presentation. ladies Well, does and conclude this today's gentlemen,

now and disconnect wonderful have You day. may a

Legacy Housing (LEGH) 10 May 232023 Q1 Earnings call transcript