Release Date: May 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Interest income increased by $2.9 million or 38% due to growth in loan portfolios, reflecting strong financial performance in this area.
- Legacy Housing Corp repurchased 91,187 shares for $1.9 million during the quarter, demonstrating confidence in the company's stock value.
- Book value per basic share outstanding increased by 13.1% from the same period in 2023, indicating an increase in the company's underlying value.
- Cost of product sales decreased by $8.5 million or 29.3%, showing improved cost efficiency.
- Net income, despite a decrease, remained robust at $15.1 million for the quarter.
Negative Points
- Product sales decreased by $12.5 million or 28.8% due to a drop in unit volume shipped, particularly affecting direct sales and mobile home park sales.
- Other revenue decreased by $0.1 million or 3.1%, driven by a decrease in dealer finance fees and commercial lease rents.
- Selling, general, and administrative expenses increased by $0.5 million or 8.8%, primarily due to increased warranty costs and legal expenses.
- Basic earnings per share decreased by $0.05 per share or 7.5%, reflecting lower profitability per share.
- The company's cash position slightly decreased from $0.7 million as of December 31, 2023, to $0.6 million as of March 31, 2024.
Q & A Highlights
Q: So it sounds like heading into the second quarter unit volumes are going to be picking up from the first quarter? Is that a fair conclusion to come to yet?
A: (Duncan Bates - President, Chief Executive Officer) That's fair. We're shipping a lot of houses right now.
Q: Excellent. And then as it relates to sort of inventory on the yard, where does that stand?
A: (Duncan Bates - President, Chief Executive Officer) We've struggled with that at our Georgia plant for a few quarters now and that was the key or one of the key reasons for having a Georgia show, which was the first show that we've had since 2020. And so we're starting to ship that product. Now the goal is to have most of it cleared out by the end of the second quarter.
Q: That is super helpful. And then a little bit of directional guidance on the consumer and MHP loan interest, you stepped up in the first in the fourth quarter, kind of step down in the first quarter. What's sort of the normal run rate there at the moment?
A: (Duncan Bates - President, Chief Executive Officer) Right now, I mean, we're over $10 million. I think we'll pretty consistently be over $10 million in interest revenue a quarter for all of 2024 and moving forward.
Q: Hey, Duncan. I wanted to start just on the loan portfolio. Can you just give any more detail on that? The default loans of litigation happening with the one borrower within MHP. I know some of those move to current assets. Any additional insights into that?
A: (Duncan Bates - President, Chief Executive Officer) Yes, this is obviously active litigation and it's with a long-term customer. We have a park customer that we've worked with for over 13 years and he's built a nice portfolio of communities into which we financed, you know, over 1,000 mobile homes. We accelerated a large portion of these notes just due to slow payment or nonpayment. We're pursuing the collateral right now.
Q: Looking at product sales, you just talked about unit volumes looking better here into Q2. I'm curious on kind of selling price and mix are you seeing the mix shift back to some higher-priced homes? Or is it still staying at some smaller, lower priced homes?
A: (Duncan Bates - President, Chief Executive Officer) We're still at lower priced homes we seem to be really competitive from a price standpoint on the smaller homes. It doesn't help our average selling price. But I think that will continue to be able to drive volume and you know, on both sides of the business we've had sales, whether it's at the Georgia show or the dealer sale that I just mentioned that, we'll drive volumes kind of throughout the year.
Q: Great. And really good performance on the gross margin this quarter. How sustainable do you think that is? And anything that we need to be mindful of either from a lumber price increase or anything of that nature?
A: (Duncan Bates - President, Chief Executive Officer) Gross margins were high this quarter and they were impacted by a sale of a large chunk of leased homes to that community owner in the first quarter. Our goal is to hold on. I mean, we watch it very closely, but this quarter was significantly higher than the last few. So I think will, you know, will revert toward the average of, say the last four quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
