Financial Data and Key Metrics Changes - Net revenue increased to 7 million, slightly down from Q3 2021 due to large payoffs in the commercial loan portfolio [7] - Income from operations rose to 14.7 million, a 13.4% increase over Q3 2021, with basic earnings per share growing to 11.3 million and no drawings on its line of credit [10] Business Line Data and Key Metrics Changes - The Georgia facility experienced a significant slowdown in production due to quality challenges, with shipments in August and September at approximately 10% of normal levels [20] - Production in Georgia decreased by about 40%, while production in Texas increased slightly [21] - The backlog in Georgia is solid, with approximately 800 units, indicating a strong order flow despite recent production issues [22] Market Data and Key Metrics Changes - Labor costs have risen to approximately 4 pre-COVID, indicating inflationary pressures in the labor market [23] - The company has seen an increase in applicants for positions, suggesting a potential easing of labor shortages as the housing market slows [23] Company Strategy and Development Direction - The company plans to maintain pricing while reducing raw material inventory to capitalize on lower material costs in the coming quarters [8] - Management aims to focus on improving operational efficiencies, including inventory management and reducing SG&A expenses [12] - The company is exploring new product lines and geographic opportunities to drive growth, particularly in land development and temporary classroom products [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2023, citing a strong backlog and the potential for growth despite current economic challenges [12] - The company believes that the slowdown in the broader housing market may create opportunities to acquire assets at attractive prices [51] - Management noted that the integrated business model with multiple recurring earnings streams will provide resilience in a slowing economy [10] Other Important Information - The company implemented a $10 million stock repurchase program as part of its capital allocation strategy [9] - Management highlighted the importance of in-house financing in maintaining competitive pricing and customer loyalty [39] Q&A Session Summary Question: What happened in Georgia? - The slowdown was due to quality challenges and increased regulatory scrutiny, leading to a significant decrease in production and shipments [20] Question: How is the labor situation currently? - Labor costs have increased, but there has been a rise in applicants, indicating potential improvements in labor availability [23] Question: Can you discuss the loan portfolio and pricing strategy? - The company has not raised rates despite market pressures, maintaining competitive pricing for customers [25] Question: What are the capital allocation plans moving forward? - The company is focused on organic growth and exploring new opportunities while weighing stock repurchases against other capital uses [30] Question: How does the macro environment impact the company? - The company anticipates continued challenges in the site-built housing market but remains optimistic about the manufactured home sector [51]
Legacy Housing(LEGH) - 2022 Q3 - Earnings Call Transcript