Legacy Housing Corp ((LEGH)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Legacy Housing Corporation painted a picture of mixed performance for the company. While there were significant achievements such as increased net revenue per product sold and growth in loan portfolios, the company faced challenges with a notable decrease in product sales, net income, and gross profit margin. Increased SG&A expenses and decreased other revenue further contributed to a challenging quarter. Despite these setbacks, the company remains optimistic about future growth, particularly in retail finance and loan originations.
Increase in Net Revenue Per Product Sold
Legacy Housing Corporation reported a 23.1% increase in net revenue per product sold compared to the same period in 2024. This growth was largely attributed to a strategic shift from wholesale to higher retail prices, showcasing the company’s ability to adapt its pricing strategy effectively.
Increase in Consumer and MHP Loan Portfolios
The company saw a notable increase in its consumer and mobile home park (MHP) loan portfolios, with the consumer loan portfolio growing by $20.3 million and the MHP loan portfolio increasing by $20.1 million compared to the previous year. This growth highlights the company’s strong performance in its lending operations.
Strong Retail Loan Originations
April 2025 marked a significant milestone for Legacy Housing Corporation, with retail loan originations reaching their highest levels since the company went public. Year-to-date originations were up 51% over the previous year, indicating robust demand and effective loan origination strategies.
Increase in Cash Reserves
The company’s cash reserves increased to $3.4 million as of March 31, 2025, up from $1.1 million at the end of 2024. This increase in cash reserves provides the company with greater financial flexibility and stability.
Growth in Book Value Per Share
Legacy Housing Corporation reported a 13.1% increase in book value per basic share outstanding from the same period in 2024. This growth reflects the company’s ability to enhance shareholder value despite challenging market conditions.
Decrease in Product Sales
Product sales decreased by $6.5 million or 21.2% compared to the same period in 2024, driven by a decrease in unit volume shipped. This decline poses a challenge for the company as it navigates a competitive market environment.
Significant Decrease in Net Income
The company experienced a 32.1% decrease in net income, totaling $10.3 million in the first quarter of 2025 compared to the first quarter of 2024. This significant drop in net income underscores the financial challenges faced during the quarter.
Decline in Gross Profit Margin
Legacy Housing Corporation’s gross profit margin decreased to 29.2% from 33.6% during the same period in 2024. This decline highlights the pressure on profitability amidst rising costs and competitive pricing.
Increase in SG&A Expenses
Selling, general, and administrative expenses increased by $0.4 million or 6.9% during the three months ended March 31, 2025, compared to the same period in 2024. This increase in expenses reflects the company’s ongoing investment in its operations and strategic initiatives.
Decrease in Other Revenue
Other revenue decreased by $1.0 million or 59.2%, mainly due to a $1.1 million decrease in forfeited deposits. This decline in other revenue adds to the financial challenges faced by the company.
Forward-Looking Guidance
Looking ahead, Legacy Housing Corporation plans to simplify its product line to improve efficiency and has made strategic hires to bolster its sales and marketing efforts. Despite market uncertainties, the company remains optimistic about the rest of 2025, with retail loan originations in April reaching record levels since going public and May tracking equally strong. The company is focused on leveraging its strengths in retail finance and loan originations to drive future growth.
In summary, the earnings call for Legacy Housing Corporation highlighted a mixed performance with both achievements and challenges. While the company faced declines in product sales, net income, and gross profit margin, it achieved growth in net revenue per product sold and loan portfolios. The company remains optimistic about its future prospects, particularly in retail finance and loan originations, as it continues to navigate a dynamic market environment.