Legacy Housing Corporation (NASDAQ:LEGH) Q2 2023 Earnings Call Transcript August 10, 2023 11:00 AM ET

Company Participants

Duncan Bates - President & CEO

Max Africk - General Counsel

Conference Call Participants

Alex Rygiel - B. Riley

Mark Smith - Lake Street Capital

Tim Moore - EF Hutton

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Legacy Housing Corporation Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please note that today's conference is being recorded.

I will now hand the conference over to your speaker host, Mr. Duncan Bates, President, Chief Executive Officer. Please go ahead, sir.

Duncan Bates

Good morning. This is Duncan Bates, Legacy's President and CEO. Thanks for joining our second quarter 2023 conference call. Max Africk, Legacy's General Counsel will read the safe harbor disclosure before getting started. Max?

Max Africk

Thanks, Duncan. Before we begin, may I remind our listeners that management's prepared remarks today will contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the 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.

Duncan Bates

Thanks, Max. I will run through our prepared remarks, then open the call for Q&A. Product revenue decreased to $42.3 million or 23.2% in the second quarter of 2023, compared to the second quarter of 2022. The decrease primarily resulted from a 14.6% decrease in products sold and a 10.1% decrease in net revenue per product as customer demand shifted toward the lower end of our product line. Also, we did not convert any independent dealer consignment arrangements to floor plan financing agreements during this quarter as we did in the second quarter of 2022.

According to Manufactured Housing Institute data, industry home shipments through May 2023 were down 29% year-to-date. However, housing affordability in the US continues to deteriorate and retail traffic in our industry is accelerating. One of the leading indicators that we track on the retail or dealer side of our business is loan applications.