Legacy Housing Corp Q1 FY2025 earnings call

• Simplified the product line by reducing floor plans, color choices, and simplifying pricing to focus on core products and improve plant efficiency.
• Modified the MHP program to accommodate community owners wanting to sell homes, broadening the customer base in core markets.
• Hired industry veterans in key positions to allocate senior management time to sales, marketing, and land development.
• Production in Texas is up, and efforts are underway to ship houses and extend the backlog.
• Positive outlook for the remainder of 2025 despite market uncertainty; company-owned stores had the highest unit sales in April 2025 in three years, and retail loan originations are strong.
• Community shipments were lower due to market uncertainty and project delays, but demand for rentals is solid and M&A activity is improving.
• Monetizing non-core landholdings, with progress on the Bastrop development where Phase 1 roads and utilities are complete, and Phase 2 is in progress.
• Share repurchases are limited by market conditions, but the company is long-term focused with the balance sheet to repurchase shares at current levels.

Product sales decreased $6.5 million or 21.2% during Q1 2025 compared to the same period in 2024 due to lower unit volume shipped. Net revenue per product sold increased by 23.1% as more units were sold to consumers at higher retail prices. Other revenue decreased $1.0 million or 59.2%. Cost of product sales decreased $3.3 million or 16.0%. Gross profit margin was 29.2% of product sales in Q1 2025 vs. 33.6% in Q1 2024. Selling, general and administrative expenses increased $0.4 million or 6.9%. Other income decreased $0.6 million or 35.5%. Net income decreased 32.1% to $10.3 million. Basic earnings per share decreased to $0.43 per share. Cash was approximately $3.4 million as of March 31, 2025, and book value per basic share outstanding was $20.87, an increase of 13.1% from Q1 2024.

• Outlook for the remainder of 2025 is positive despite market uncertainty and tariff risks.
• Company-owned stores had the highest unit sales in April 2025 in three years, and May 2025 is tracking strong.
• Retail loan originations in April 2025 were the highest in one month since going public, with year-to-date originations up 51% over the prior year.
• Production in Texas is up, and efforts are being made to extend the backlog.
• Anticipates a long-term positive impact on the industry from regulatory reform if executed.

• Market uncertainty affecting business operations.
• Tariff risks impacting costs and pricing.
• Regulatory uncertainties that could affect the industry's environment.

Q: Asked about pricing, specifically the mix and price increases.

A: The primary driver of the average price increase was the mix. A price increase was pushed through in February, and another is planned for mid-June, with the impact of tariffs not as severe as initially expected.

Q: Inquired about MHP sales, orders, and backlog.

A: It's a combination of less demand and timing of orders; some large orders slipped to the second quarter, and a modified MHP program is broadening the customer base.

Q: Asked about capital spending needs.

A: Nothing outside the norm, with additional capital going into the Bastrop development and looking at opportunities to expand the dealer base, loan portfolio, or manufacturing capacity.

Q: Questioned production rates in Q2, gross margin, and tariffs.

A: Production in Texas is expected to be higher in Q2; a gross margin around 30% is realistic. Tariffs are a consideration but not a major driver, with uncertainty being a tougher factor.

Q: Asked why shipments differ from other companies.

A: Due to delayed shipments, product complexity, and pricing; the company is confident in finishing the year strong with competitive pricing and a building backlog.