Legacy Housing Corporation

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Ladies and gentlemen, thank you for standing by and welcome to the Legacy Housing Corporation third quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone keypad. Please be advised that today's conference may be recorded. I would now like to turn the conference over to your speaker, Mr. Duncan Bates, Resident Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, everybody. This is Duncan Bates, Legacy's President and CEO. Thank you for joining our call today. Before we begin, may I remind our listeners that management's prepared remarks today will contain forward-looking statements which are subject to risk and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of a safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's annual report filed with the Securities and Exchange Commission. In addition, any projections as to the company's future performance represent management's estimates as of today's call. Legacy Housing assumes no obligation to update these projections in the future unless otherwise required by applicable law. We're excited to share our third quarter 2022 results and discuss our business today. We look forward to hosting earnings calls on a consistent quarterly basis in the future. I am joined today by Curt Hodson, Legacy's executive chairman, and Kenny Shipley, Legacy's co-founder and executive vice president. I will discuss our third quarter performance and provide additional corporate updates, I will then turn the call over to Curt for final comments and questions. Net revenue increased to $57.3 million in the third quarter, representing a 1.5% improvement over the third quarter of 2021. The increase resulted from price increases implemented over the past year offset by a decrease in shipments from our Eatonton, Georgia facility. During the third quarter, we delayed shipments and slowed production to improve the quality and consistency of homes manufactured in Eatonton. We are now shipping the delayed homes in addition to our current production and plan to meet or exceed historical production levels by early 2023. Although this process impacted third quarter revenue, the changes will significantly benefit our customers and our business moving forward. Interest revenue from the company's retail and commercial loan portfolios was $7 million for the third quarter, slightly down from the third quarter of 2021. The reduction was due to large payoffs on the commercial loan portfolio. Both the commercial and retail loan portfolios continue to perform extremely well. Income from operations for the third quarter of 2022 was $16.9 million, an increase of 10% from the third quarter of 2021. This increase was primarily driven by seven price increases since the third quarter of 2021 lower cost of sales, and an increase in other revenue, offset by lower volume from Georgia and higher SG&A. We plan to continue holding firm on price while reducing our raw material inventory to take advantage of lower material costs over the next few quarters. We will also focus on ways to reduce SG&A up this quarter due to increased warranty costs, salaries and incentive compensation, and professional fees. Net income of $14.7 million for the quarter was a 13.4% increase over the third quarter of 2021. Basic earnings per share grew to 60 cents per share in the third quarter, an increase of 11.1% from the third quarter of 2021. Legacy delivered a 22.5% return on equity over the last 12 months. At the end of the third quarter, Legacy's tangible book value per share was $14.84. We took an important step in our capital allocation strategy this quarter by implementing a $10 million stock repurchase program. We will consistently weigh stock repurchases against other capital uses to drive long-term value for our shareholders. Lastly, we ended the quarter in a net cash position with $11.3 million in cash and no drawings on our line of credit. Driven by our in-house financing, our backlog is strong across all manufacturing facilities and provides visibility well into 2023. As the economy slows, we believe investors will begin to see the value of our integrated business model with multiple recurring earning streams. We are long-term focused and plan to be opportunistic from a growth standpoint as asset prices in our broader industry moderate. Now, I'll turn the call back to Kurt for final comments and questions. Kurt?