Executive Summary

Net revenue $43.2M (-18.2% YoY), operating income $16.8M (-8.7% YoY), net income $15.1M (-7.0% YoY), and basic EPS $0.62 (-7.1% YoY) for Q1 2024, with management emphasizing strong profitability despite softer volumes .
Product gross margins were elevated due to a large sale of leased homes; volumes and backlog improving post Spring Show at the Georgia plant; management reiterated “business fundamentals have not changed” and is focused on unlocking balance-sheet value .
Interest revenue is expected to exceed $10M per quarter throughout 2024, supported by growth in MHP, consumer, and dealer loan portfolios (+$28.2M, +$17.9M, +$2.1M YoY, respectively) .
Active share repurchases: ~261,529 shares at ~$20.56 since last call; authorization remains and CEO flagged willingness to repurchase aggressively when shares trade near book/liquidation value .
A large MHP borrower default moved to litigation; management detailed robust collateral (1,000+ homes, first liens on parks), commenced foreclosure on one park, and expects resolution with protection of shareholder capital .

What Went Well and What Went Wrong

What Went Well

Profitability resilience with softer volumes: operating income $16.8M and net income $15.1M amid revenue decline; product gross margins were “higher than average” due to leased-home sale .
Financing engine accelerating: interest income +$2.9M (+38% YoY) on growth in MHP/consumer/dealer portfolios; management expects >$10M interest revenue per quarter in 2024 .
Sales momentum/backlog building: successful Georgia Spring Show cleared finished goods and added backlog; dealer and park customer engagement improving. “Legacy’s business fundamentals have not changed… profitability… strong and sales volumes are improving” (Duncan Bates) .

What Went Wrong

Product sales down $12.5M (-28.8% YoY) on lower unit shipments and mix shift to smaller units; ASP declined due to mix and a large lower-priced sale from leased portfolio .
Park sales slower amid high rates and municipal/utility delays; dealer reorder rates below desired levels given inventory carrying costs .
Legal/litigation over a large MHP borrower accelerated notes (accruing at 17.5%); management initiated foreclosure on one park and is expending significant time while emphasizing collateral strength .

Financial Results

Metric	Q1 2023	Q4 2023	Q1 2024
Revenue ($USD Millions)	$52.8 (derived from -18.2% YoY vs Q1’24)	Not disclosed (company does not report Q4 numbers)	$43.2
Operating Income ($USD Millions)	$18.4 (derived from -8.7% YoY vs Q1’24)	Not disclosed	$16.8
Net Income ($USD Millions)	$16.2 (derived from -7.0% YoY vs Q1’24)	Not disclosed	$15.1
Basic EPS ($USD)	$0.67 (derived from -7.1% YoY vs Q1’24)	Not disclosed	$0.62
Gross Profit Margin %	N/A (not disclosed)	N/A	Elevated vs average due to leased-home sale
EBITDA Margin %	N/A (not disclosed)	N/A	N/A (not disclosed)

Note: Q1 2023 figures are calculated from Q1 2024 values and stated YoY change percentages disclosed in the press release; Q4 2023 figures are not disclosed and management noted they do not report Q4 quarterly figures .

Segment/Revenue Component Changes (YoY, Q1 2024):

Component	YoY Change ($USD Millions)	Commentary
Product Sales	-$12.5 (-28.8%)	Lower unit volumes; mix shift to smaller units; large sale from leased-home portfolio at lower ASP
Consumer, MHP & Dealer Loan Interest Income	+$2.9 (+38%)	Driven by larger balances; MHP +$28.2M, consumer +$17.9M, dealer notes +$2.1M YoY
Other Revenue	-$0.1 (-3.1%)	Dealer finance fees -$1.0M; commercial lease rents -$0.2M; offset by forfeited deposits +$1.1M

KPIs and Balance Sheet Highlights:

KPI	Q1 2024	Prior Context
Book Value ($USD Millions)	$450.4	+13.2% YoY
Book Value per Share ($USD)	$18.46	+13.1% YoY
Cash ($USD Millions)	~$0.6	$0.7 at 12/31/2023
Revolver Balance ($USD Millions)	$11.8	$23.7 at 12/31/2023
Share Repurchases (Q1 through 5/9/24)	261,529 shares at ~$20.56 avg	Remaining authorization ~$4.6M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Interest Revenue	FY 2024	None provided	Management expects >$10M per quarter	New directional commentary
Sales Volume/Backlog	FY 2024	None provided	Volumes improving; backlog building; aim to ramp production when backlog extends 8–10 weeks	New directional commentary
Pricing/Margins	FY 2024	None provided	Product gross margins were elevated in Q1 due to leased-home sale; may revert toward average; potential use of price lever to drive volume, offset by manufacturing efficiencies	Clarified margin drivers
Formal Financial Guidance (Revenue, EPS, Margins)	FY 2024	None provided	None provided	Maintained (no formal numeric guidance)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2023)	Previous Mentions (Q2 2023)	Current Period (Q1 2024)	Trend
Pricing Strategy	Held price despite lower volumes; ASP stabilized at smaller, less-optioned homes	Holding base loan rates; consumer credit quality guiding loan rates; MHP base rates flip to variable over time	Still holding price; competitive pressure seen from independents; may use price lever modestly to boost volume	Price discipline with selective flexibility
Backlog & Production	TX backlogs extended well into Q1 2024; ramping production; Georgia quality improvements	Georgia running 3–4/day; plan to ramp as demand returns	Georgia Spring Show rebuilt backlog; targeting 8–10 weeks backlog before ramp; shipments looking strong in Q2	Improving; cautious ramp
Loan Portfolio Performance	Very high current rates: 99.3% MHP and 98.5% consumer <30 days; growth in balances	Strong performance; increased applications; floor plan opportunity	Interest income +38% YoY; expect >$10M per quarter; consumer delinquencies up slightly but below national averages; reserve methodology discussed	Ongoing strength; selective expansion
Park Sales & Macro	Park sales stable; delayed shipments from utilities/zoning; high rates headwind	Park operator demand slower than desired; expecting traction end-2023/early-2024	Park business slower; smaller units gaining traction due to affordability; municipal/utility delays continue	Mixed; affordability supports small-unit demand
Workforce Housing/Commercial	Exploring workforce housing; margin similar to core; leasing attractive; potential diversification	Inquiries highest since joining; quotes out for potentially large orders	Continued evaluation; emphasis remains on core volumes/backlog while pursuing opportunities	Optionality maintained
Land Development	Bastrop (Del Valle) Phase 1 roads/water plant progressing; maximize shareholder value; valuation framework	Assembling team; prioritize Bastrop; goalposts forthcoming	Progressing; proposals to sell/partner; expect movements in Q2	Advancing with portfolio optimization

Management Commentary

“Legacy’s business fundamentals have not changed… Our profitability during the first quarter was strong and sales volumes are improving… We are focused on unlocking trapped value on our balance sheet and accelerating earnings growth.” – Duncan Bates, CEO .
“Product gross margins were higher than average during the first quarter due to a large sale of leased homes… we see manufacturing efficiencies improve when we ramp production.” – Management .
“We repurchased over 260,000 shares… at an average price of $20.56… The Board will increase the authorization as needed.” – Management .
“We accelerated a large portion of these [MHP] notes due to slow/non-payment… collateral comprises over 1,000 mobile homes… first liens on parks… we foreclosed on one mobile home park… we will protect our shareholders and our investment.” – Management .
“We’ll pretty consistently be over $10 million in interest revenue a quarter for all of 2024 moving forward.” – Management .

Q&A Highlights

MHP borrower litigation: Management outlined extensive collateral coverage and actions (accelerations at 17.5%, foreclosure on one park), aiming for resolution while safeguarding equity .
Mix/pricing: Demand skewing toward smaller, lower-priced homes across dealer and park channels; willingness to use price lever modestly if needed, balanced by manufacturing efficiencies .
Backlog/production: Building backlog a priority before ramp; currently a few weeks out across plants; target 8–10 weeks to unlock efficiency gains .
Delinquencies: Consumer delinquencies up slightly but below national averages; strong down-payment discipline, limited extras financing, dealer holdbacks support performance; reserve decreased due to favorable repos recovery .
Balance sheet and buybacks: Cash/revolver positions disclosed; authorization remaining ~$4.6M; management ready to repurchase aggressively when valuation approaches book/liquidation value .

Estimates Context

S&P Global Wall Street consensus estimates for Q1 2024 were not retrievable at this time due to data access limits; as such, a formal beat/miss assessment versus consensus is unavailable. Management’s commentary highlights elevated product margins (one-time leased-home sale impact), improving volumes/backlog, and >$10M quarterly interest revenue outlook, which may lead to upward adjustments to financing-related revenue expectations and caution on product ASPs if price concessions are used .
When S&P Global estimates become available, compare actual revenue $43.2M and basic EPS $0.62 to consensus to assess any significant surprises .

Key Takeaways for Investors

Profitability held up despite softer product volumes; financing revenues and elevated Q1 product margins were key offsets, but margins likely normalize as mix and pricing adjust .
Near-term sales catalysts: Georgia Spring Show success, dealer promotions/concessions, and improving affordability dynamics in the tiny/single-wide categories support backlog and potential production ramp .
Financing engine provides recurring income and resilience; management expects >$10M quarterly interest revenue in 2024, supported by growing portfolios and prudent underwriting .
Legal overhang with a large MHP borrower appears collateralized and actively managed; could result in asset recovery and potential upside on foreclosed assets, but time-intensive and a watch item for risk .
Share repurchases are a tangible capital allocation lever; management signaled readiness to buy aggressively when valuation approaches book/liquidation value, providing downside support .
Expect Q2 narrative to focus on sustaining backlog build, measured production ramp, and monitoring competitive pricing dynamics; if price lever is used, watch for volume gains vs margin impact .
Without consensus estimates, trading setups hinge on narrative momentum (backlog, financing visibility, litigation resolution) and capital return signals; monitor upcoming disclosures and any guidance formalization.

Legacy Housing Corp (LEGH)·Q1 2024 Earnings Summary