Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net revenue per product sold increased by 23.1% compared to the same period in 2024, driven by a shift towards higher retail prices.
- Consumer loan portfolio increased by $20.3 million, and MHP loan portfolio increased by $20.1 million, indicating growth in financing activities.
- Book value per basic share outstanding increased by 13.1% from the same period in 2024, reflecting improved shareholder equity.
- Production in Texas is up, and the company is working to extend its backlog, indicating potential future sales growth.
- Retail loan originations in April 2025 were the highest in one month since going public, showing strong demand in the retail sector.
Negative Points
- Product sales decreased by $6.5 million or 21.2% during the three months ended March 31, 2025, compared to the same period in 2024.
- Gross profit margin decreased to 29.2% from 33.6% in the same period in 2024, indicating reduced profitability.
- Net income decreased by 32.1% to $10.3 million in the first quarter of 2025 compared to the first quarter of 2024.
- Selling, general, and administrative expenses increased by $0.4 million or 6.9%, impacting overall profitability.
- Other income decreased by $0.6 million or 35.5%, primarily due to a decrease in non-operating interest income.
Q & A Highlights
Q: Can you discuss the reasons behind the increase in average price per home and any pricing changes during the quarter?
A: The primary driver for the increase in average selling price was the mix, with a strong quarter in retail sales and inventory finance sales. We implemented a price increase in February and plan another in mid-June. The recent announcement suggests the next increase won't be as severe as expected. - Robert Bates, President, CEO
Q: How much of the decline in MHP sales is due to demand versus timing of orders? Can you provide insights on orders and backlog?
A: It's a combination of both. We had significant orders delayed across all regions due to raw material shortages and other factors. We've modified our MHP program to accommodate community owners wanting to sell homes, which should broaden our customer base. - Robert Bates, President, CEO
Q: Are there any unusual capital spending needs or cash uses this year?
A: Nothing outside the norm. We're focusing on completing the Bastrop development and continuously evaluating opportunities to expand our dealer base, loan portfolio, and manufacturing capacity. - Robert Bates, President, CEO
Q: What are your expectations for production rates across your plants in Q2 compared to Q1?
A: Production in Texas for Q2 will be higher than Q1. We've simplified our product portfolio to improve efficiency. Georgia continues to sell well, and we're rebuilding the dealer base there to increase production. - Robert Bates, President, CEO
Q: How should we think about gross and operating margins for Q2 and the rest of the year?
A: This quarter's margins are likely at the lower end due to under-absorbed labor. With recent and upcoming price increases, we expect margins to stabilize around 30%. - Robert Bates, President, CEO
Q: How significant are tariffs and trade uncertainties for your customers, and could reduced tariffs boost demand?
A: Tariffs are a consideration but not a major factor since most raw materials are domestically sourced. The broader uncertainty affects investment decisions, but normalcy would benefit our industry. - Robert Bates, President, CEO
Q: Why did other companies report strong shipments while Legacy Housing did not?
A: Delayed shipments, pricing, and product complexity affected us this quarter. We've maintained pricing despite lower volumes, and as conditions improve, we expect our backlog to grow. - Robert Bates, President, CEO
Q: Is the current situation specific to Legacy Housing, or is it indicative of industry weakness?
A: It's specific to us due to the factors discussed. The industry remains strong, and we expect a positive year, especially if regulatory relief is achieved. - Robert Bates, President, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
