Legacy Housing Corp ((LEGH)) has held its Q2 earnings call. Read on for the main highlights of the call.
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During Legacy Housing Corp’s recent earnings call, the sentiment was mixed. While the company reported significant improvements in product sales and gross margins, challenges such as a decrease in net income, increased expenses, and slower community sales contributed to a more balanced overall outlook.
Strong Product Sales Growth
Legacy Housing Corp experienced a notable increase in product sales, which rose by $6.7 million or 21.3% during Q2 2025 compared to Q2 2024. This growth was driven by higher unit volumes in inventory finance, retail, and mobile home park sales, showcasing the company’s robust sales strategy.
Improved Gross Profit Margin
The company reported an improvement in its gross profit margin, which increased to 32.4% in Q2 2025 from 31.9% in Q2 2024. This indicates better cost management and a successful pricing strategy, contributing positively to the company’s financial health.
Increase in Cash Reserves
Legacy Housing Corp’s cash reserves saw a significant boost, increasing to $2.6 million as of June 30, 2025, from $1.1 million on December 31, 2024. This improvement in liquidity reflects the company’s strong financial position.
Significant Share Repurchase
The company repurchased 260,635 shares of common stock for $5.8 million during Q2 2025. This move reflects confidence in the long-term value of the business and a commitment to returning value to shareholders.
Decrease in Net Income and EPS
Despite the positive sales growth, Legacy Housing Corp faced a 9.2% decrease in net income to $14.7 million and a 9.0% decrease in basic earnings per share to $0.61 in Q2 2025 compared to Q2 2024. This decline highlights some of the financial challenges the company is navigating.
Decline in Other Income
Other income decreased by $2.8 million or 74.5% during Q2 2025, primarily due to lower nonoperating interest income and a decrease in miscellaneous income from land sales. This decline in other income streams presents an area of concern for the company.
Increased Selling, General and Administrative Expenses
Selling, general, and administrative expenses rose by $1.1 million or 19.1% during Q2 2025 compared to Q2 2024. This increase was driven by various factors, including higher warranty and repossessed home expenses, impacting the company’s overall profitability.
Challenges in Community Sales
Community sales faced headwinds due to elevated interest rates, higher operating costs, and budget constraints among renters. These challenges have slowed down sales in this segment, posing a significant hurdle for the company.
Forward-Looking Guidance
Looking ahead, Legacy Housing Corp remains optimistic about its growth prospects. The company emphasized its focus on expanding its backlog, particularly in Texas, and expressed optimism about legislative changes that could support growth in home sales and community development. Despite the decrease in net income, the company is buoyed by the increase in product sales and improvements in its loan portfolios.
In conclusion, Legacy Housing Corp’s earnings call presented a mixed sentiment, with strong product sales and improved gross margins countered by challenges in net income and community sales. The company’s focus on strategic growth and legislative opportunities provides a hopeful outlook for the future.