Q4 2019 Earnings Call

[music].

Ladies and gentlemen, thank you were standing Bard walk into the legacy House incorporation Q4, 2000 marching earnings call.

At this time, all participants are in listen only mode.

The speakers presentation they'll be a question and answer session to ask a question during recession here to press star one on your telephone if you're required to further assistance. Please press star one zero.

I'd now like to disrupt piece comes comes to her husband Chairman of the board you may begin.

Good morning.

Before we begin their remind our listeners that management's prepared remarks today.

Well contained forward looking statements, which are subject to risks and uncertainties and made it may make additional forward looking statements in response to your question.

For the company claims the protection 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.

For you to a more detailed description of the risks and uncertainties in the company's annual report.

With the Securities and Exchange Commission.

In addition, any projections as to the company's future performance represents.

Managements estimates as of today's call.

She housing assumes no obligation to update these projections of future unless otherwise required by applicable law.

Now before we turn to what's a lot what does a lot of encouraging news about legacies performance in Q4 and in 2019.

I think it's appropriate first to address the ongoing endemic.

It has impacted the world and obviously college Greenfielding intermodal across the globe.

Our thoughts go out all those impacted by the current crisis.

And we certainly encourage everyone to take necessary precautions to minimize any risk to your health and the health.

Although the around you.

We also want to thank you for joining the call in this current environment.

I will address in more detail the potential impact to depend on legacy later in my remarks.

Now that I'm happy now, let's turn to an overview of our 2019 results.

2019 was quite simply the best your legacy is 15 your history and obviously the first year to legacy was a publicly traded company.

We achieved record revenue of $169 million, a 4.4 person increase over a result.

For the 2018 fiscal year.

We did is largely by improving our product sales to manufactured home communities.

Growing though sales from 31 million.

To 64 million over your year over year, a massive 106% increase.

For 2019.

We spent a lot of time.

Last few years cultivating relationships and expertise with respect to manufactured home communities and this was the year those <unk> dramatic dividends.

We believe we're in a in the middle of an upside over restocking refurbishing and expanding existing parks.

We believe this trend should generally continue for next 20 or 36 months.

We're also pleased that we improved our company owned store sales.

$3 million to 16.1 million and 2019.

As you know our company owned stores carry higher margins and higher finance capture rates and this helps us this helps explain.

We improved our revenue in 2019, even though the buying.

Oh, so remain relatively flat as compared to 2000.

Legacy also had a tremendous year in growing or consumer manufactured home community loan portfolios.

In 2019, our interest income grew by $3.4 million, an 18.3 person increase.

Over 2018.

Even more impressive are manufactured home community portfolio expanded by $34.4 million to now night $92.3 million.

Thanks to the tremendous year, we had with respect to order from human studies and the financing of those doors.

We also expanded our consumer book by approximately $8 million to 105 million.

Net of deferred financing fees and allowance for loan losses.

We think our books provide a tremendous remote.

Warren Buffett type mode.

Even in challenging times.

Due to the great work of our in house team and originating in service in originating and servicing these loans.

Our first year as a public company.

Certainly presented some challenges in required some adaptation.

And expenditure resources to meet our public company obligations.

This is most reflected in our S. DNA increased to approximately $25.5 million in 2019, 21% increase from the prior year.

But overall 2019 was a great your for legacy our product sales margins were 27% compared to 23% in 2018.

Our income before tax.

Rose to a very healthy 37.6 million.

An increase of approximately 7 million from the prior year.

Likewise, our net income increased to approximately 28.8 million.

More than 34% increase over the preceding year.

For the or our earnings per share was $1.18 and 11% improvement over 2018.

I'm very proud of what we accomplished in 2019.

We ended the year on a strong, though with healthy demand levels or production and very strong balance sheet.

While the current covert 19 situation.

Presents definitely challenges.

We think it also represents or will present opportunities.

I guess he is always managed to perform well relative to its peers when times get tough.

We anticipate this to be the taste during the cold it and I see there.

We think this is at least in part due to centralize and vertical nature of our operations.

That allows us flexibility to adapt quickly.

It's this is particularly beneficial when conditions stabilize improve as it will enable us.

To take advantage of some growth we're acquisition opportunities.

As much more appealing dollar figures are valuations than we've seen the last few years.

Let me briefly provides more detail are you aware legacy is situated in light of the global health and economic crisis, we face.

Legacy as more portion this and that the manufactured home industry is not born in the direct to the media run this endemic like some companies.

Say in the hotel airline industry.

Oh legacy like all businesses is certainly going to be back.

For example at least.

In a period where it.

With me.

The legacy like all of his name is being paid for example for at least a period of 2020.

We anticipate some negative impact on our operations earnings is there's a likelihood of increased loan losses.

Deferred.

Payments as loan.

Pfizer, so free cash flow issues, resulting from reduced employment reduce sales volume as potential customers are unable to shop for new homes or cannot qualify for a home purchase and delays or some of our real estate development projects as zoning regulatory and permitting decisions.

Are likely to be postponed.

However, this situation will ultimately present opportunities such as with the cost of some of our raw materials, which are already come down.

Or like our recent negotiation a more favorable borrowing church for our credit facilities.

Or perhaps more long term as we anticipate easing a bar labor cost.

We are being proactive so the legacy is positioned to come out of these difficult times were positive momentum.

Any night navigated.

Some of the most difficult times ever over the last 30 40 years.

That experienced caused some valuable lessons weve seen oil prices decline like they have recently.

In two episodes previously in Texas. This isn't our first rodeo [noise].

We are applying these lessons to the current situation.

Using some of the tactics we know.

Can help us endure and prosper during these trying times.

For example, we've already begun an offering discounts for the sale aged inventory sitting on either at company owned store.

Offering discounts on orders for millions.

And reducing down payment requirements for certain manufactured home communities.

Additionally, the company has modified rates of paying for production workers.

Adjusted our overtime policies companywide reserve, a strong financial position, even when facing the current financial turmoil.

With our order book, our balance sheet and available liquidity.

We anticipate being able to maintain profitable production.

For the next few months, even in the current client and we will continue to execute our business objectives and strategy.

This is it obviously, an evolving situation and we will.

Update you if anything changes.

I would like to turn the call over the course.

In order to discuss at quarter over quarter comparison.

<unk>.

Thanks Kurt.

Net revenue for the fourth quarter of 2019 was 43.3 million an increase of 8.3 million over 20, eighteens fourth quarter net revenue of 35 million.

Product sales the largest component of our revenue grew 25.7% in the quarter to 36.5 million.

Sales to manufactured home parks increased 8.3 million or 91% to 17.4 million while sales through our company owned retail stores increased 87% in the quarter to 4.9 billion and sales of consigned inventory through our network of independent retailers increased.

1.1 billion to 10.7.

These increases were partially offset by reduced factory direct sales compared to the fourth quarter of 28 change.

Product sales gross margin percentage increase to 24.3% driven by the increasing sales through our retail stores, which typically carry the highest gross margins.

Interest income in the quarter was 5.9 million, a 14.7% increase or the 5.1 billion recorded last year.

Interest generated by our consumer loan portfolio increased 9.3% to 4 million.

And interest from our manufactured home park loan portfolio increased 28.8% to 1.8 million compared to the fourth quarter 2018.

SGN a expenses of 6.6 million increased 300000 for the fourth quarter of 2018.

Reflecting higher personnel expenses related to public company compliance and staffing of our company owned retail stores, partially offset by reduced delivery and the insurance expenses have reduced losses on sales of free possessed problems.

Pre tax earnings increased 5.2 million to 8.9 million in the quarter.

Income tax of 2.1 million increased 1.2 million over the fourth quarter on of 2018 on the higher earnings recorded.

Income was 6.9 million for the fourth quarter compared to 2.8 million a similar period of 2018.

Income per share based on basic and diluted weighted average shares outstanding was 28 cents compared to 13 cents and the prior year quarter.

And finally equity has increased 33.1 million from year end 2018 to 222.4 million.

[noise] that completes our financial overview chart.

Thanks Corp, I know in our last earnings call, we discussed a third quarter earnings.

I expect optimism about the direction, we were headed going into fourth quarter and I'm grateful that that option optimism was justified.

As we performed well in the fourth quarter.

As I sit here today I know, we're facing an unprecedented global health economic crisis.

Obviously makes it difficult to predict with any precision with the next few months would bring.

But I remain optimistic about the future of legacy.

And continue to believe we will return significant value driver shareholders over next 12 or 18 months.

Let me paint a picture anticipate any questions about what the next three years six months looks like.

We have decreased our Texas production in our production overall and the company from 15 to 34 per day, a pretty modest decrease.

But we have supplemented that with increasing our distribution from private branding in the state of Indiana, where we buy houses from other manufacturers and Sylvan Tour Park customers.

So I'm kind of anticipating that that or the second quarter sales.

Sales will be about the same as before.

Going into the third quarter I can't really Joe because I don't know were cobot nineteens good take us.

Our order backlog continues to be strong we're selling even in this crisis in Georgia, We sold production every week through this crisis in Texas, We should know within next couple of days, whether or not that.

Production will continue because we have some promotions going on which expire April one.

I'm confident about the second quarter I'm optimistic about the third quarter.

We then we decreased as she in a cost by approximately 10% with some of the moves we just made.

So profitable our profitability and our revenue should be strong all three plants are working.

Working at a standard 40 hour work week.

We're producing like we always have you have before.

Thank you for your introduced an attention today and I am I will take any questions that you all huh.

Ladies and gentlemen, you have a question or comment at this time. Please press Star then the one key on your Touchtone telephone. If your question has been answered you missed him or herself from the Q. Please press the pound key.

Our first question comes from David vertical Oak Ridge.

Hey, guys. Thanks for taking my question. So you ended the year strong and it's a tough the virus came at a time or the business being some great momentum, but just wanted to get a little more color on that Q4 strength and where that was coming from.

Well this is curve.

I think he came from a lot of different places a the Q4.

Normally is kind of a down quarter in production in our industry, but we are producing.

At the same rate as we were in Q3. So we were able to have a higher top line then.

We would have expected normal Q4, b, it's obviously period, where we tend to pay bonuses and incur a lot of best Phoenix SGN expenses.

But our Q4 actually a rescue next but this unique expenses held fairly steady as a percentage of sales.

So I think that was the those were two pleasant surprises our volume was little higher.

And we would have expected interest genie held steady even in the fourth quarter, whereas usually little higher.

We continue to build our books of business our portfolio our interest income moves up ever. So gradually every month every week every quarter as we put on as we take on warnings and redeploy them in our own industry.

I hope that answers your question.

Yeah that was helpful. Thanks, So you talk about your order book being strong.

Can you just provide a little more color on that are you referring to sales in the last couple of weeks would you be able to maybe provide a little more details on March trends and then you also mentioned your offerings and discounts in down payments just assistance or can you talk about that a little more in some detail. Thanks.

Now I'll answer that one to.

Sales in Texas have declined to about 50 or 60% of production during coded 90.

Sales in Georgia have surprisingly been strong I think baby many exceeded.

Production.

The.

And we missed our big show the year Genekit, which is the big annual show for the industry Ams at the end of March didn't give Mississippi and they canceled that show, which we typically get three four or 500.

Units of orders at the show.

<unk> of that we.

We unveiled a plan that was essentially the same types of promotions, we do it didn't again.

In.

That doesn't and into Wednesday, So I don't have the numbers.

The anticipated numbers for that.

Our almost as good as tuning to would be with essentially the same type or promotions like six months free interest.

To that either is it that participate.

With this isn't the first time that we've offered a low down payment financing for communities Weve done. It regularly we just we just combine that with the typical tune it because sales to try to lock in these communities to production, but kind of anticipating softening of prices in cost throughout her entire industry, we just want to.

As you head of it and make sure that we knew that we do it before the competition does I haven't I don't think any anywhere competition.

As filed suit yet lumber is down maybe a third steel is down a little bit.

Labors down a little bit and.

We may have an opportunity to next six months to to offer more promotions and maybe even have some super duper sales along the lines.

That's what we intend to do is too as fight.

For market share as the as the pie likely we'll get a little smaller across the entire nascent and shipments of manufactured housing. Yeah 110000 shipments last 12 months nationwide manufactured housing and I wouldn't be surprised if we have a 20%.

Decreasing their shipments over the next 12 months as weak as we work through Coven 19, hopefully legacy will.

I don't feel as much of a decline if it if they decline at all.

That's helpful a jump back into queue. Thanks.

Our next question comes from Mark Smith with Lake Street capital.

Hi, guys. Kurt can you talk a little bit about a mix of sales during the quarter. What you saw us far singles versus double wide and then you know as you've been through some some down cycles before you know how you maybe see that mix.

Shifting here over the next few months.

I'm going to have somebody else.

I dress and mix question, because it's not really statistics statistics that I keep up with very much but the down cycles I'm.

66 years old this year and I've been them alone business in Texas.

I'm more concerned about the decrease in oil prices than I you know.

And I am Cobot 19.

So we've had all go from $60 per barrel to today $20 per barrel.

Texas, Oklahoma, Louisiana, or oil states and there's jobs that are that are associated with the price oil.

In that case, we don't have much exposure to the direct oil field, we don't have much west, Texas Permian Basin exposure.

I'd say, it's probably no more than three or 4% of our consumer portfolio.

But.

The.

Texas is a whole and our immediate states Houston has a lot of oil related jobs are having layoffs at those companies. So we don't know for sure what will happen to our retail book, we anticipate a slight increase in repossessions and a slight increase in the difficulty of collections.

But people keep moving to Texas, we keep haven't positive demographics examine from everywhere from Midwestern from California everywhere. So long as we have positive demographics in states, where there do just fine.

And then it's in the southeast had been.

Amazingly recently through this.

In fact, we may have to increase production in Georgia, because because our sales keep on outperforming our production.

No, but on balance I think that.

Oh, we're going to get through this from an experienced point of view.

I have a saying that I developed many years ago, you can't get small fast enough.

And when the oil goes from 16 20, so within five days, we we implemented 12 different steps to work on SP in any pricing to do more promotion.

And I think we're already ahead of our competition.

One major comedy Skyline champion I think is already shut down 13 plans.

And while all three larger running pretty much close to capacity. So that said so can you do you ever feel for product mix mix what about.

I think you know before all of oil dropped and everything I think.

And.

You know, we we we used to be about a 50 50 doubles to singles, but is the park sales have gotten stronger than most of what they buy is single watts.

I would probably say that the singles or.

Couldn't be about 65% the market, even though we're still about 35%.

65, [laughter] I would think that's about what the mixes.

Okay, Perfect and then I know that you know mobile home parks.

This is kind of a growing business for you guys, but maybe as you look backwards. If you if we've seen recessions and downturn and so have you seen people.

Primarily that Texas market downsize homes and move more into manufactured housing now so outside of kind of site built homes.

I I think that's going to yeah, I think that's going to happen more and more with especially with this cope with the pain I think people are going to want to try to get back out of the cities where their old cream together.

Well, we build affordable housing I think you can see a lot of people start to downsize.

It's probably learned our lessons.

We look we look for some growth there.

Okay.

Perfect and then last question for me just as we look at the loan business, both consumer and to manufactured home parks can you talk at all about kind of the spread that you're seeing is your borrowing costs of maybe come down and you know do you see or foresee. These these rates that you land.

At coming down in kind of in sync with that or is there an opportunity to get maybe get a little more spread.

Kurt you want that.

Yeah.

Over the last years, we've had a gradual decline in rates, just because we want to be less.

Sticker shock so our consumers were paying 14% interest and now we have programs all the way down to 11 or 12% and her park for paying 8.9 and now we offer 7.9.

But that isn't really get affected our profitability because we we've had a corresponding increase in.

And gross margin, which I think port talked about little bit.

We we think we'll have a we don't have any price reductions in mind.

We know that we have material and labor.

Costs coming down so our gross margin during this crisis with the Cobot 19 Christ will actually go up.

We're really just a matter of how we're going to maintain.

Our difficult loans, if they're already.

Consumer portfolio hasn't fell one benefit cup yet are our most recent data shows that are over 60 range has not increased at all during this crisis yet.

We've had a few parks have indicated concern of their ability to pay should their consumers don't pay their or their community rent, but we haven't had anybody.

Go into a nonpayment situation since the co since the co in 19.

Hi crisis it began.

Full disclosure, we've had two or three before the cold and Nike.

That were.

Slow pay which is a little but.

Little bit deterioration in our portfolio.

A matter of whether or not to portfolios perform or not and what happens when they don't perform.

Do we do we repossessed the inventory do we work with Ti.

Our borrowers and those policies are little bit proprietary drilling one discussions.

On a on earnings calls but.

We've been through this before we know what we're doing.

And I.

I think our earnings and our sales will reflect far superior performance to our peer group I know names that I don't even think those of you did.

The new me getting Neil on the on the Uh Huh.

On the road show.

Oh, Yeah, we were lamenting how well we do in difficult times and now it's time for us to prove that out right now during this health crisis, and we will probably will do just fine in 2020, and probably 2021 as well.

Okay, great. Thank you.

Again, ladies and gentlemen, if you have a question or comment at this time. Please press the star than the one key on your Touchtone telephone.

Our next question comes from Chris Coldren with Brcm.

Hey, Curt.

I had a question just a couple of questions clarifying. So did you say this second quarter revenue.

You're anticipating will be roughly in line with first quarter, which presumably.

Wasn't too in fact, it or can you.

Your commentary there.

Well I just tie revenue production, although there's a lag because we don't we don't Connors of sale until it ships and everything else place.

So assuming that production.

That sales revenue is reflected in production.

And then we at while we had a I don't know about a 10% decrease in production or we're having the same quarter.

We're adding to top line.

Approximately the same amount.

Because of the deal we made with one of our principal.

Competitors to buy a bunch of houses from them in Indiana and sell them to our best customers that there is something we've done for years lately with another.

Another affiliated company, but we just made a big deals so I think that.

Suddenly, we get those openshift, which their plan currently isn't running.

Then I think that second quarter will be approximately the same as first quarter in sales could even be a little bit better just a little bit better like weren't you better.

Let's see any deterioration in second quarter whatsoever.

Trying to form an opinion on third quarter, but every time I wake up is it new thing on the news so I don't really.

It's really more of the oil prices in Texas. So I think the house thing will be over.

Sometime this summer, but the oil prices in Texas could.

Caused us to make even more cuts and production in Texas, if things get real soft here. So.

It's more a function of oil prices in the third quarter than it is I think over 19 crisis.

Right. That's helpful and then as far as production and Texas, you you've said a couple of times, Georgia is doing great, but it was unclear in Texas. He said production and dropped to 50% to 60% and then you ran this promotion since you didn't have the Tunica show. So what is a production today could you said something about plants.

Operating at full capacity, so I guess, it's unclear how much kinda production is down in Texas, I think maybe I was getting a couple of different concepts infused. This time of year, we typically so less than production and then we do promotions like tuning to stimulate production.

It's kind of a seasonal business that the winter in the early.

Part of the year is not as good as this summer and that in a in the fall.

So we've we've been experiencing since coded.

And order book of around 50% or production, Texas, which isn't that much less than we normally would without promotions.

Well, we just had you know substitute for Ginnie Cooper promotion.

While our sales staff, it seems and things that they're going to be delivering this week.

Three to 400 orders from that.

Sales promotion I'd be happy with 200, just to be quite honest.

So we decreased the decreases in production, we've had and then and the bidding to top line are all Texas based each plant in Texas. We have two plans. It takes a decreased production by one per day.

Georgia remain the same and I think actually went up a little bit ER and the Indiana booster Midwest boost will help topline.

So the when I said 50, Bruce and I mean that were ordering or the order book through this crisis is approximately half of production in Texas and.

As far as are the at a level of production.

As I said earlier, we just decrease to a nationwide from 15 to 13 per day.

Which is that do the math on that but I guess, it's around 14%.

And I don't look for further cuts in production.

For quite a while we have enough order book now.

We could close to the second quarter.

It's only the third quarter that would be affected we probably wouldn't decreased production in Texas.

In the second quarter really no matter what happened to the order book.

It's the third quarter that we might have to work.

If the order books doesn't come back.

In Texas, I would say with those next six weeks.

Okay. That's helpful. Yeah that that's clarifying that 50% to 60% production that theres a huge seasonal aspect that's not the recent events. That's helpful. And then on that's you know you said you cut roughly 10% with the actions already taken I think you just mentioned if necessary. They there could be more cost cuts so assuming that there's some pretty passenger.

Mystic or kind of forecast out there just on the economy and Covidien pack and of course oil as well so let's assume it's kinda drags on a little bit oil, it's not recovering how much opportunity there there to cut SGN, a further and from a gross margin perspective do you think you can remain profitable.

You know production wise so your gross profit remains positive.

Okay, we make profit several different ways, but a good part of it because the interest would make.

On our book, that's not going to go away, we don't have much fear of.

That suffering so really just talking about profits from wholesale production mobile homes, which is a kind of the other half equation and.

Right now we feel real comfortable our parks are all ordering pretty heavy to review special that's going on as we speak I.

I feel pretty good that we'll be able to retain.

Our our park.

Our part business through this crisis.

Here's the deal volume as is off I mean anybody that owns a retail store is suffering decreased ups, even if they're there sometimes decreased ups by 50% and people's willingness to posted by that.

I am along during these times has been off significantly so so that's a.

That's what we're at but we're in an industry that is allowed to operate.

And all the states that have a shelter in place orders the housing business and commercial construction usually are hedged out is still allowed to operate so where I guess, we're blessed and that we're not being told we must stay home.

So we get some business no matter what huh.

With that right get that answer your question I got a little distracted. So if there's something I left out his let me know.

Yeah, that's DNA side, if you know.

Profits a revenue levels are lowers your opportunity to cut more s. DNA or that 10% you cut it is pretty bare fare burns at this point, so and ASCII. They really kind of couple a categories you got about half of it which is absolutely sticks.

And then you had the other half which is variable so the extent that half is variable is there.

I think were.

Yeah in pretty good shape, and say somewhat linear it will go up and down nine.

On the fixed side, that's what we took some really big.

Big cuts, we Oh, we took an across the board payroll could.

And we eliminated overtime.

And we are working on a revamping service policies. So that will give save a bunch there when I said about 10% I was overall.

A decrease in as she now I would guess that if things got tough.

Yep, possibly another 10% that we could do without.

A lot of disruption.

That's about it as DNA is so fixed you know its rent is it salaries it's a.

Most utilities, it's it's things like.

We that we can't really.

Eliminate and still stay in business.

Adding data in the 19 eighties for instance to for those of you that are younger than 66 years old.

In the number of plants in Texas went from 31 to three during an oil crisis. So.

One way you can decrease as gene expenses to is to market. They get smaller we don't think is going to come to that but we're prepared if they if it does that.

I I lay awake at night it to collect Martin.

It's the best case was the worst case scenario, we don't have any any factory workers that have tested positive for coated 19.

Sometimes I think well what afford it in one plant.

What would what would we do well with our response b.

And I don't really want to go there, but if we had breakout at Warner plants. It was significantly impact our production even if we even if it wasn't our choice, which are probably would be in that case texture.

So what I mean, we're not going to sit there and expose workers to this.

Serious virus this go around.

That's helpful. And then a lot last one for me is maybe a remind me another listeners on your loan portfolio.

Your consumer loans that you you job.

Lend through dealers.

The JV structure. So they see there's almost like a first loss if I'm thinking about a write up 10% or so can you just explain and this scenario of defaults really start to pick up how your insulated because the JV structure with dealers.

Yeah, I'll take that went to it's great. It's very sounds like so I just try to simplify it.

So [laughter] almost all of our consumer book was generated by independent retailers, who signed a JV agreement with this.

It says that they will cover any losses from repos.

Out of their share of the winnings that exceed 10%. So basically word on how to our portfolio. So the first 10%.

And the independent retailer is.

For anything greater than that.

And many of them have so much equity built in their portfolios you if you read our financials carefully.

We'll see that we've maintained a liability on our balance sheet of what we owe the dealers on the portfolios. So that that amount is essentially cushion.

On our retail portfolio.

As far as our and I want to speak a little bit about our wholesale before I cheated the $92 million, we got there.

When we sell a mobile home to apart and financing for him and get 5%, 10%, 20% down.

He takes possession and then.

A unit and he goes ahead and.

Ties it down and installs that they can exit utilities and builds a deck and put security.

Some of that either some of the parks have.

Six 810000 hours of they're a little money in this rental units that are creating so they do have equity in that and would be very fearful that we would it be picking it up repossessing yet so we have strong bargaining position.

With a mobile home parks in the case nonperformance and thus far I don't think we've ever suffered a loss in the entire his should the company on a mobile home parks well. So I don't live it I don't look at that is significant exposure somebody's relationships are dare to us and if they really are having cash.

As we may be helping them out a little bit through these difficult times.

But that said they do have substantial investments in this and this rental units so between the two sides.

Our retail book of business was created with real down payments, averaging around 15 or 20%.

In the margins were very team relative to some other portfolios.

I strongly believe that we had the.

Most conservative book of business and the entire industry on the retail side.

We've been led by Guy named Stuart Mcdonald He's a.

He is a show.

Mr.

The guy that doesn't make loans unless you really believes.

We don't and we don't overrule hardly ever I do we do we over room, so our retail or 100 million. Our book of business is solid so solid and I feel the same way butter motorhome bond portfolio. So roughly 200 million hours, we have out.

In finance products to consumers and parks is is the boat that's the moat and that will be a significant difference and we can we can parlay that enhance that during these difficult times to keep the factories running long answer but.

I'm I'm, hoping that made it simple enough for you to appreciate why legacy will outperform.

Our peer group and that's basically what we will outperform this year and won't even be close.

That's very helpful. But that's all my questions I appreciate it.

Our next question comes from Alex Rughal will be Raleigh FBR.

Thanks, Good morning car.

Hey, Apple quick question.

First you would plan to open two to four new retail stores I I suspect that's probably the laid at the moment. Please confirm that and then if you could go into little bit more detail on.

Your community development efforts understanding the problems and slow here a little bit.

But just update us on that activity.

Any watch take the retail store like it takes you need to build.

Yeah, We've got we did open up one rather to ended the year.

19, and we've got it off the ground and go what it's been the Atlanta market.

And.

This is kind of slowed things up a little bit we've got a we've got our own one or two stores that we.

We're struggling with right now that.

We may.

We might look at either.

Shutting down or downsize and one of the stores or something but grown a couple of more stores or some other markets, but that's still on on the.

Drawing board, we just a we've got to get through this covert not paying deal first.

On the community development, we haven't really added much too that since the last call. We made a loan to a guy who's in the community development business.

As well she cheered that he personally guaranteed as well.

And I haven't talked to him recently about his plans.

To proceed with those three developments that we loaned on.

In our own real estates is on our books.

Talked about these before we had a setback.

In Austin and one of our developments.

And then they decided they need a public hearing on the water treatment plant.

Which they said for the first week of April, which they've now postponed indefinitely. So.

That's a delay.

And then or other areas, we were just having trouble getting.

Staff and an engineering work that approved and in front of city councils and things like this has been very difficult.

In the last month, so we think that all those projections of.

When those space will be coming on line [noise].

Hi, good at the place back.

Several months.

I'm still hopeful that we'll have space is coming on line.

This year, but I.

I'm not positive that that's going to happen depending on when we get these cities to give us the building permits that that they're supposed to giving us at this point.

But I'm still I still like our projects and none of 'em have lost in Calvin everywhere in two places in Austin, one place in San Antonio couple of placement for work that we've made.

Advances in loans to people that are in the business and.

In other places around the country.

And from a from a screen point of view, we have two loans in place.

No neither of which has secured.

By our real estate, so roughly $50 million or dry powder as of today.

No not a single that of our real estate was placed on any loan.

With all these developments we have going on I don't know exactly what our real estate is but.

I wouldn't be surprised it was not on our books for 25 $30 million or more so.

Our balance sheets are extremely solid and.

We intend to use that if the opportunity presents itself kind of a two way source I wanted to get better, but I'm really nice right I wanted to get worse first.

Oh.

You don't have science.

That's very helpful. And then last question as it relates to inventory inventory had been volatile couple of different times over the last year and a half or so.

Inventory levels look very reasonable manageable here at year end 2019.

Where did they stand at.

As of today since it's almost the ended the first quarter going into ops.

19.

[noise]. That's that's something that are you know what our margin inventory levels are up again.

Actually I don't think that's something that we're prepared to release at this time Kurt.

Right I think there were still and we just take inventory over the weekend then from a.

From a tourist point of view it was a bottom line, where it really is and just counting the number of mobile homes, our retail lives.

Weve consigned to other people.

I don't sense any market change one way or the other.

And those numbers.

And then for all I know they could be up.

10% or down, 10%, but I'd be surprised to they've moved 20%.

Oh quarter over quarter either direction.

That's something that we.

Have had concerned about and aged inventory, we're always concerned about aged inventory, we don't want a bunch of old products sitting on retail locations. So we.

We do keep track of that we've got some deals that have.

Eight oh the ones on their lives and then we have a bunch of others have no one's a class so.

I haven't seen a lot of change.

And that heritage, which is our company owned stores.

As is having challenges with aged inventory that we're trying to come to grips with.

I think yeah can you sold a bunch of old ones, just recently right Yep, Yeah, we've done.

Here in production sale and were blown some of that stuff out.

We have some I'm extremely exciting product changes going on that we're going to be launched it 10, new care and.

[noise] from a.

Product point of view.

And we invite anybody come down to our September show, which is still on a full work.

I mean, we absolutely lead the industry and product development and what we're doing now is.

So exciting that Uh huh.

And in different at different times I would be.

I'd be a lot more optimistic.

Are coming up with some brought new products that.

I really going to make a big difference in the industry.

Very helpful. Thank you for us.

And I'm not showing any further questions at this time I turn the call back over to our hosts.

Well, thanks to all for being on a call and I'm sure. Many of you ever were consolidation should be.

And as I am this morning.

Oh, we appreciate you staying with us and.

I'm.

Looking forward to having a more optimistic call. It next.

The next year I'm sure hopefully we'll be on the other side of this crisis.

Back to normal.

Thanks for calling in and feel free to get hold of anybody on executive team. If you have any further questions.

Right.

Ladies and gentlemen, does conclude todays presentation. You may now disconnect have a wonderful day.

[noise].