Legacy Housing (LEGH) Q3 2024 earnings summary

Executive summary

• Net revenue for Q3 2024 was $44.3 million, down 11.4% year-over-year, driven by an 18.8% decline in product sales due to lower unit volume and a shift to smaller units, partially offset by higher retail store sales.

• Net income decreased 1.8% to $15.8 million, with basic EPS down 1.5% to $0.65 compared to Q3 2023.

• Book value per share rose 12.7% to $19.84 year-over-year.

• The fall show in late September generated record customer attendance and orders, extending backlog into Q1 2025.

• The company remains among the top U.S. manufactured home producers, with 1,772 home sections sold in the first nine months of 2024.

Financial highlights

• Gross profit margin dropped to 29.2% from 32.9% year-over-year, mainly due to underabsorbed labor from lower production.

• Interest income from consumer and MHP loans increased 17.3% year-over-year, driven by portfolio growth.

• Other income/expense increased $3.4 million, largely from a one-time settlement gain related to MHP notes.

• Operating income for Q3 2024 was $15.3 million, down 19.4% year-over-year.

• Cash flow from operations was $28.1 million for the nine months ended September 30, 2024, compared to a $5.3 million outflow in the prior year period.

Outlook and guidance

• Q4 product sales expected to increase over Q3, with gross margins anticipated to normalize back to the low 30% range as production ramps up.

• Orders from the 2024 Fall Show increased backlog into Q1 2025, and management expects market strength to continue into 2025 as housing affordability remains low.

• Management expects cash flow, cash on hand, and available credit to be sufficient for operations and growth for at least the next 12–18 months.

• The company is focused on expanding manufacturing capacity and developing new manufactured housing communities, especially in urban areas with site shortages.

• Plans to sell lots in Bastrop County development in first half of 2025.