NASDAQ reported that: “Legacy Housing (LEGH) came out with quarterly earnings of $0.28 per share, missing the Zacks Consensus Estimate of $0.77 per share.” Be that as it may, odds are that the analysts cited by Zack’s lacked some key insights or they wouldn’t have missed their estimates. With that notion in mind, consider what the late Sam Zell said: “You’ve got to have confidence. Once we understood the business we had absolute confidence in its future.” Zell was the Equity Lifestyle Properties (ELS) Chairman at the time and said that to a packed room of manufactured home industry professionals at the W Center in Chicago, IL. Are thinking analysts, industry professionals, or objective researchers/reporters any less confident that Legacy’s veteran leaders ‘understand the business’ of manufactured housing less then Zell did?
Inside information and insight from Legacy, coupled with a deeper understanding of manufactured housing than perhaps any in mainstream or financial news possess, inform and aid our expert analysis in Part II of Legacy’s reported results (Part I) in this report.
Per GlobeNewswire which cited Legacy as the source for its information is the following.
Part I
Legacy Housing Corporation Reports Full Year 2023 Financial Results
March 15, 2024 17:25 ET
BEDFORD, Texas, March 15, 2024 (GLOBE NEWSWIRE) — Legacy Housing Corporation (the “Company” or “Legacy”, NASDAQ: LEGH) today announced its financial results for the full year end December 31, 2023.
Financial Highlights
- Net revenue for the year ended 2023 was $189.1 million, a decrease of 26.4% from the year ended 2022.
- Income from operations for the year ended 2023 was $64.6 million, a decrease of 17.2% from the year ended 2022.
- Net income for the year ended 2023 was $54.5 million, a decrease of 19.6% from the year ended 2022.
- Basic earnings per share for the year ended 2023 was $2.23, a decrease of 19.7% from the year ended 2022.
- Book value for year ended 2023 was $436.7 million, an increase of 14.3% from the year ended 2022.
- Book value per share1 for year ended 2023 was $17.91, an increase of 14.2% from the year ended 2022.
Duncan Bates, President and Chief Executive Officer, stated: “I am proud of our team’s effort managing expenses and driving profitability in a lower demand environment. We spent an incredible amount of time this year recruiting and on-boarding talented professionals and upgrading our processes and systems. Market conditions are improving, and Legacy is well positioned for 2024. Please join our call Monday for additional details on our financial results for the reporting period.”
This shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Company’s securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Conference Call Information
Management will host a conference call to discuss the results at 10:00 AM Central Time on Monday, March 18, 2024. To access the conference call, please pre-register using this link. Registrants will receive confirmation with dial-in details. A live webcast of the call can be accessed using this link.
About Legacy Housing Corporation
Legacy builds, sells, and finances manufactured homes and “tiny houses” that are distributed through a network of independent retailers and company-owned stores. The Company also sells directly to manufactured housing communities. Legacy is the sixth largest producer of manufactured homes in the United States as ranked by the number of homes manufactured based on the information available from the Manufactured Housing Institute and the Institute for Building Technology and Safety. With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 395 to 2,667 square feet consisting of 1 to 5 bedrooms, with 1 to 3 1/2 bathrooms. Our homes range in price, at retail, from approximately $33,000 to $180,000.
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1 Book value per share is a non-GAAP financial measure, and we define book value per share as total stockholders’ equity divided by basic weighted-average common shares outstanding.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. As a result, our actual results or performance may differ materially from anticipated results or performance. Legacy undertakes no obligation to update any such forward-looking statements after the date hereof, except as required by law. Investors should not place any reliance on any such forward-looking statements. …”
Note that Legacy is not a client of MHProNews, and their contact information is omitted from their press release. This article is a report and analysis, not a paid pitch. It is fair to give them their say, just as it is fair to see if Zack’s was fair in their report.
Part II – Additional Information with More MHProNews Analysis and Commentary in Brief
1) Per Nasdaq, which cited Zacks on 3.15.2024 are the following.
- “The reported revenue represents a surprise of -44.42% over the Zacks Consensus Estimate of $60.66 million. With the consensus EPS estimate being $0.77, the EPS surprise was -63.64%.”
- “The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.”
An apparent problem with many outsiders looking into manufactured housing is that they may not ‘understand’ “the business,” to continue to borrow and apply the phrase from the late Zell cited in the preface above.
2) For example. As our Sunday report reflected in greater depth, Zell said during a Q&A in Chicago with Nathan Smith, that later who today is a partner in Flagship Communities, the following in response to Smith’s question.
“What the best thing for us as an industry to do to grow?” Sam Zell’s immediate reply was “Create a credit base for the industry.”
Legacy Housing established their own credit base years ago, as Curt Hodgson and Kenny Shipley have often pointed out. That is one of the points that Zack’s, or any other objective analysts, researchers, and news platforms, should consider.
3) Hogson and Shipley apparently understood the significance of what occurred in manufactured housing circa 2008, 2009, and 2010.
Part of their response to what occurred in manufactured housing in the 21st century apparently was their move to establish their own retail and wholesale financing for Legacy Housing products.
Over time, Legacy’s leaders also established their own production, captive and independent retail, as well as their own captive and independent wholesale and retail financing. The path that some use to get to vertical integration differs. Each has its own unique story, one that seemingly too few grasps, much less seek or share.
4) A deeper understanding of the financing side of the issue is found in the report linked below, which is derived by making comparisons to few in mainstream or financial media make to gauge the manufactured housing industry. That would be the RV industry performance vs. that of manufactured housing industry performance. The report looks at the entire time frame in the below. But then the report breaks that performance comparison down into two periods. One is from 1995 to 1999, and then the other is from 2000 to 2023. The results, to borrow from the headline below, truly are “revealing!” Grab your favorite beverage for such professionally related insights and see for yourself.
5) The article above explores the importance of that “credit base” for a company, or for the broader industry.
There are numerous linked implications from that report above. That noted, let’s apply some of its lessons to Legacy and Zack’s review of that firm by an unnamed author (was the Zack’s article mostly AI generated? And perhaps not properly monitored AI? As MHProNews has often noted, Bing’s AI powered Copilot advises that results should be double checked. When AI is used properly, it can be a powerful tool, but if used incorrectly, it can be a problematic one, as a planned look at another report (perhaps later this week) on MHProNews will reveal.
If Zack’s used AI, perhaps an inferior one to Copilot, and didn’t give proper attributions or supervision, all of those are potential problems with respect to the quality of their formulaic report on Legacy. But however it was written, the Zack’s report apparently has significant flaws. As the famous words of Samuel Clemens, better known as Mark Twain observed, there are lies, damn lies, and statistics. Statistics can be used to mask ignorance. It requires someone who understands the subject matter on a deeper level to see what those statistics mean and what may be the contributing factors that paint a picture that includes stats but isn’t hamstrung by them.
6) Legacy ought to be compared as an investment to Cavco Industries (CVCO), to Skyline Champion (SKY), or even to Clayton Homes (subsidiary of giant Berkshire Hathway). Skyline is only recently making its move to ‘secure its credit base.’ Comparing Skyline Champion to Legacy will certainly result in pluses and minuses for Legacy and the larger SKY. That noted, there are arguably ways that Legacy’s planning for the future in terms of ‘securing its credit base’ was superior to that of its larger rival Skyline Champion. Legacy’s leaders certainly did so years before Skyline’s leaders did.
7) To be objective, while Legacy had its hiccup with the Covid-relief program, that was an issue that they quickly corrected and have since moved on from. Unlike some of their larger rivals at the Manufactured Housing Institute (MHI), Legacy’s leadership responded to inquiries and did so promptly. Legacy’s leadership continues to respond to inquiries from MHProNews. They also provide periodic feedback on items, which gives us a sense of their thinking.
But beyond such insights, which those insider takes are mentioned but won’t be the focus of today’s report, are the publicly available information about the firm.
During a time when others in manufactured housing that have far deeper pockets have done rather poorly, Legacy has in several respects shined. Where is that mentioned by Zacks?
8) But let’s look again at Zell’s words as reported in yesterday’s report in greater depth and as mentioned herein.
“Create a credit base for the industry” was ELS Chairman Zell’s immediate response to which he elaborated: “No competitive financing is a serious impediment to growing.”
“There is no bigger issue than having an established credit base.”
“We as an industry should have created that [credit base] a long time ago.”
Many in the industry would agree with that, but that also begs questions.
9) For example. How is it a possible that a dozen years since Zell said those still relevant insights that the Manufactured Housing Institute (MHI), an institution on which ELS has an executive committee board seat, failed in pressing for full and proper implementation of the Duty to Serve (DTS) manufactured housing lending by the Government Sponsored Enterprises (GSE) of Fannie Mae and Freddie Mac? MHI leaders can’t have it both ways. If they are so well educated, and/or supposedly experienced in manufactured housing (or housing in general), then how is it that with all of their contacts, sizable staff, and other resources that they have clearly failed to implement the solutions that have been described as the three main bottlenecks to better manufactured housing industry performance?
Financing is obviously just one of them.
10) Perhaps as, or for some more important, is the point raised by Legacy’s President and CEO Duncan Bates in a prior earnings call. “Look, the biggest headwind of this – in this entire industry is where to put these [HUD Code manufactured] homes.”
MHProNews/MHLivingNews has been making that point since early on in our publishing history. Why? Because it is an obvious roadblock, not one that we discovered by reading some research paper or news article, however interesting those may be. To be clear, this critique isn’t just about one article on Zacks. It is about broader institutional failures, which includes media but isn’t limited to media. With a proper use of clearly disclosed Bing’s AI powered Copilot, a picture emerges about industry specific firms as well as manufactured housing more broadly. To be fair to Zacks, they may never have questioned the waters they are swimming in. They may never have questioned how media or government operate in the 21st century. Media is supposed to approach a topic objectively with seeking the truth of a situation in mind.
So, ignorance or innocence doesn’t give Zacks an excuse, at least not according to the standards set up by the Society of Professional Journalists. Ignorance or naivete merely help the reader understand how to approach information given by a less than dependable news item.
11) Zacks, other financial news sites, and stock analysts simply can’t, or shouldn’t, be so incredibly unaware of the internal machinations that have kept manufactured housing underperforming for some 25 years. There are, from time to time, mainstream or other media/researchers who do decent or even good work. That said, it shouldn’t be ‘news’ when a stock analyst asks an obvious question in an earnings call and then the bulk of media ignores it. There are reasons why MHProNews and MHLivingNews provides fact-packed reports with detailed analysis. In this current environment where information – short or long – often obscures the truth instead of revealing it, truth seeking and truth telling are in short supply.
12) The lack of understanding, cronyism, corruption and/or incompetence found in many financial news sites when it comes to manufactured housing is breathtaking.
It shouldn’t be necessary for a manufactured housing industry trade publisher to submit op-eds to mainstream media in order to get critical information about over two decades of manufactured housing industry performance into mainstream news (see first two links below). But that is where we are at as an industry. That is apparently also where we are at when it comes to MHI. That is where we are at when it comes to life in modern America.
Merely griping about circumstance without taking action steps to correct it is an immature response. Because for each of these problems being described, there are huge opportunities.
For whatever errors or glitches have occurred at an operation like Legacy or Nobility, theirs is the story of individuals who survey the landscape and then their respective leaders pulled up their boots and then did what they felt they must to survive and thrive.
So, it isn’t just Zacks that arguably needs a spanking. MHI apparently needs one, even more than Zacks does. By their own standards or that of prominent and longtime MHI member Zell, MHI has obviously failed the manufactured housing industry’s independents.
It is by looking at the broader picture, as well as the various puzzle pieces within that picture, that a clearer story can emerge. That story is often one of incompetence, cronyism, stated vs. hidden agendas, and/or corruption. And in the face of incompetence or corruption, some in the industry have adapted as best they could to face their future with courage and opportunities in mind.
This publication has long believed, and continues to hold to the notion, that one of the best opportunities for business or investing is in affordable housing done correctly. By peeling back the layers of nonsense, data that may be used to obscure rather than reveal, a compelling story emerges. There are some firms and trade groups who may seem to be riding high, but which may find themselves awash in legal woes, because of how they have operated.
Then there are some that may grasp that U.S. housing is a multi-trillion-dollar opportunity. Billions are being invested to find ‘solutions’ to affordable housing by investors, even though those solutions to the affordable housing are hiding in plain sight in the form of proven HUD Code manufactured homes. The fact that it is being inadequately served only means that the opportunities will be brighter for some, dimmer for others. To learn more, see the linked and related reports.
![DuncanBatesPhotoLegacyHousingLogoQuoteZoningBarriersLookBiggestHeadwindIinThisEntireIndustryIsWhereToPut[HUDCodeManufactured]HomesMHProNews](http://www.manufacturedhomepronews.com/wp-content/uploads/2023/11/DuncanBatesPhotoLegacyHousingLogoQuoteZoningBarriersLookBiggestHeadwindIinThisEntireIndustryIsWhereToPutHUDCodeManufacturedHomesMHProNews.jpg)
PS – MHProNews notes that there are firms that are not publicly traded at this time which in some ways fly under the radar of reporting. Not being reported doesn’t mean that they are necessarily failing to do their job, the reality may be that they are doing quite well. Some companies pop into greater prominence only when they become the subject of acquisition by a publicly traded firm. Be a company publicly or privately held, they each have a story to tell. And that story is likely obscured by the ‘gatekeepers’ in manufactured housing. Thankfully, those gatekeepers have proven and reliable counterweights. There is a battle over affordable housing and its future in America. Some of that battle is information. Some of it will be legal. Some of it will be regulatory or governmental. For all of it, stay tuned to what AI powered Copilot said is a reliable source for factual information. In a land with liars and plasterers, it is refreshing and useful to see, read, and absorb the truth. ###
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By L.A. “Tony” Kovach – for MHProNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.
For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
This article reflects the LLC’s and/or the writer’s position and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
Related References:
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