Q3 2023 Legacy Housing Corp Earnings Call
Okay.
Okay.
Good day and thank you for standing by welcome to the legacy Housing Corporation third quarter 2023 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session with your press Star one on your telephone you will then hear an automated message of Boston. Your hand is raised to withdraw your question. Please press star one again.
Please be advised today's conference is being recorded I would now like to turn the comps over to your speaker today Duncan Bates. Please go ahead.
Good morning, This is Duncan Bates legacies, president and CEO.
Thanks for joining our third quarter 2023 conference call.
Max Afric legacy as general counsel to read the Safe Harbor disclosure before getting started backs.
Thanks, Duncan before we begin may I remind our listeners that management's paired 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 is contained in the private Securities Litigation Reform Act of 1990.
Actual results may differ from management's current expectations. We therefore 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 Companys future performance represent managements estimates as of today's call legacy housing assumes no obligation to update these projections in the future unless otherwise required by applicable law.
Thanks Max.
I'm joined today by Jeff Federman leg at legacy.
Legacy is chief financial Officer.
Jeff will discuss our third quarter performance I will provide additional corporate updates and open the call for Q&A Jeff.
Thanks Duncan.
Product sales decreased 11 7 billion for 24% during the three months ended September 32023, as compared to the same period in 2022.
This decrease was driven by an industry wide decrease unit volumes.
Kris and net revenue per unit.
A decrease in the conversion of certain independent dealer consignment arrangements.
Financing arrangements.
Other market factors.
For the three months ended September 32023, our net revenue per unit sold decreased one 6% to $63600.
Consumer and MH P loans interest income increased to $8 8 million or 25, 7%. During the three months ended September 32023, as compared to the same period in 2022.
This increase was driven by increased balances at the M H P and consumer loan portfolio.
Between September 32023, and September 30 of 2022.
H P note portfolio increased by $47 8 million.
In our consumer loan portfolio increased by $16 8 million.
This is net of principle payments and loan loss allowances.
This does not include floor plan financing or development loans.
Other revenue primarily consists of contract deposit forfeitures dealer finance fees and commercial lease rents and increased to $4 1 million or 158% and the.
Third quarter of 2023 compared to the third quarter of 2022.
This increase was primarily due to an increase in forfeited deposits and an increase in floorplan financing fees.
The cost of product sales decreased $8 7 million or 25, 9%. During the three months ended September 32023, as compared to the same period in 2020.
The decrease in cost.
Primarily related to the decrease in units sold.
Product gross margin was 32, 9% for the third quarter of 2023.
Up from 31, 9% for the third quarter of 2022.
Selling general and administrative expenses decreased nine 2% during the three months ended September 32023, as compared to the same period in 2022.
This decrease was primarily due to a decrease in warranty costs and a decrease in other miscellaneous costs, partially offset by increased legal expenses and an increase in loan loss provision.
Net income increased nine 2% to $16 1 million in the third quarter of 2023 compared to the third quarter of 2022.
Net income margin was 32, 2% for the third quarter of 2023.
From 25, 7% for the third quarter of 2022.
We ended the quarter with zero point $5 million in cash and 13.0 million drawn.
Drawn on our line of credit.
On July 28, 2023, we closed a new revolving credit facility with the prosperity bank.
The facilities for 50 million with a $25 million accordion feature it is secured by our consumer loan portfolio.
Legacy delivered an 18, 6% return on shareholder's equity over the last 12 months at the end of the third quarter 2023 legacy book value per basic share outstanding was $17 61.
An increase of 18, 7% from the same period in 2022.
Okay.
Yes.
Thanks, Jeff we're happy to have you on the team.
Let's start with the market.
Discuss legacy financial performance and provide an update on strategic initiatives.
According to manufactured housing Institute data industry home shipments through September of 2023 are down 25, 7% year to date.
However housing affordability in the U S continues to deteriorate.
Large numbers of potential homebuyers are priced out of the traditional housing market.
We held our 2023 fall show.
In Fort worth in early October.
As I mentioned in the press release.
The 2023 shale was one of the most successful sales events and the company's history.
Michelle orders extend backlogs at our Texas facilities, well into the first quarter of 2024.
A higher production rate than the third quarter of 2023.
Both dealer and part customers ordered homes at default shell.
The retail our dealer side of our business is showing signs of life.
Foot traffic is up and dealers are selling homes, although it varies by geography, we believe that that most of the destocking issues from early 2023 are largely behind.
<unk> three.
The reorder rate is lower than we would like but inventory carrying costs are also higher.
One important data point on the dealer side.
Legacy is consumer finance business close more loans in October 2023 than any other month in the company's history.
On the community our park side of the business.
<unk> to community owners and developers remained stable.
Their manufacturers with battle delayed shipments due to set up related issues.
Discriminatory zoning practices and high interest rates are headwinds for new developments.
We secured a few large port park orders with deliveries extending through mid 2024.
I'm proud of our team's performance to date in 2023 <unk>.
Despite a 25, 7% decline in industry wide shipments through September legacy as net income is only down one 5% year to date through the third quarter.
We are driving sales and managing expenses effectively.
In interest income from 12 months of reinvesting our profits back into the loan portfolios.
A meaningful portion of the year to date profits.
Product sales declined in 2023.
At September 30th 2023 over 99, 3% of NH, Peanuts, and 98, 5% of our consumer loans are current.
Less than 30 days without payment.
We monitor these numbers closely and are confident in the strength of our loan portfolios.
I received positive feedback from the last call about discussing projects that the team is working on.
Here's where I'm focused.
Hiring.
We made a big we're making a big push to hire young hungry individuals that are committed to a career at legacy our team is lean aging and possesses a tremendous amount of industry knowledge. Our goal is to create a path for motivated individuals to harness this information in advance within the company.
Number two working capital.
Our working capital is too high we have too much raw material and finished goods inventory, we are working to reduce inventory and free up capital that can be reinvested back into the business.
Third Georgia sales.
The Texas plants are in good shape from a sales standpoint, our team in Georgia has done a great job with product quality and we are now building the highest quality homes that have come out of the 10 plants now we need to accelerate sales most of the sales team is new and learning curve.
He and I have been heavily involved and we are starting to see results.
We need to keep the hammer down now.
Number four workforce housing we.
We have 40 plus floor plans and have have not historically made a push in the space. We continue to bid on large projects with well known disaster relief service providers.
Legacy is the balance sheet to hold and lease large amounts of inventory.
It's too early to discuss specific projects in numbers, but I continue to believe that.
Workforce housing is a huge opportunity for legacy.
Number five land development.
We hired a dedicated team to prioritize and accelerate land development.
Completing phase one of del Val or vast dropped county outside of Boston is our top priority water and electricity are in road construction and construction of the water treatment plant began in November.
Delaying construction at several properties may have helped us.
For example, some properties where in very rural areas when purchased.
Now five plus years later, there are plans to Ron city sewer and other services that will increase value and provide flexibility we continue to evaluate ways to maximize the value of these projects for our shareholders.
In addition to these internal projects, we are consistently evaluating inorganic growth opportunities. The new bank line gives us the flexibility to produce pursue these opportunities if they hit our returns thresholds.
One final thought on valuation.
We are growing book value or shareholders equity at about 19% a year.
Legacy was started with $700000 and we have grown that equity to $429 5 million in 18 years make it save it invest it again and again.
Our book value, primarily consist of finance notes at par with a reserve inventory at cost and land development at cost our facilities and equipment are mostly depreciated. We believe that our book value is conservatively stated and is near the company's liquidation value.
We publish our book value per share each quarter as of September 32023, our book value per share was $17 61.
That number is a month and a half scale and our stock is trading and the $19 range, it's not much of a premium.
At the stock trades at or below book value per share, we will use the full extent of our balance sheet to repurchase shares.
I believe that we can continue growing shareholders' equity at 18% to 19% a year and this high interest rate environment and that our share price will begin to reflect this if you do the math the numbers get large quickly any strategic moves are icing on the cake.
Operator. This concludes our prepared remarks, please begin the Q&A.
Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered you assume with yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Okay.
Our first question comes from Mark Smith with Lake Street. Your line is open.
Hi, guys.
Duncan.
Dig into gross profit margin, just a little bit more.
Really solid execution. There can you talk about any additional drivers there megawatts.
Inflationary pressures Scott down what you are looking at for labor.
The insights that would be great.
Yeah, sure Hey, Mark.
So a couple of thoughts for you, obviously volume was down pretty significantly in the third quarter. So managing expenses is.
Is extremely important.
We've been able to hold price.
Even at even at lower volumes and material prices have come down.
Labor and overhead on on the other side of things.
Have continued to go up and they are not accelerating at a at a quick rate, but it certainly.
Has had an impact on on gross margin.
I would expect as we as we ramp up production and continue to.
Manage our costs.
We can we're trying to hold these margins where they are but obviously managing.
Managing.
Inventory as well as labor.
Okay.
And then <unk>.
Solid performance on the consumer finance loan business.
Did you guys use.
Right.
It all kind of helped drive that it looks like maybe we saw rates down a little bit.
Any discussion around that.
Yes.
Sure I think our rates across the loan portfolios have been pretty attractive and certainly helped us drive sales, we are taking rates up a little bit on the consumer loan portfolio, but we have not.
Those won't be included in the third quarter numbers. So I think we've got an opportunity to take rates.
A little bit here to get back in line with the market.
Okay, and then any you guys have done a good job kind of managing charge offs and any issues within the portfolio.
Any changes in kind of your underwriting policies or is everything kind of stayed the same there.
Yes, they would stay the same I feel pretty good about our underwriting processes.
We have added additional.
Collections personnel to the team just in the event that you you did start to see some cracks in the in our loan portfolios.
But we're keeping an eye on it and we make a lot of calls we monitor it closely.
And we've.
Continue to perform.
Managing those portfolios.
Yes.
Okay, great. Thank you.
Thanks, Mark one moment for our next question.
Yes.
Okay.
Yeah.
Our next question comes from Alex <unk> with B Riley Securities. Your line is open.
Thank you, Alex Duncan and team.
Nice quarter there.
Couple of quick questions here.
First.
<unk> been holding your average selling price at a nice level here.
Any any.
Reason for that to change sort of over the intermediate term.
Now we plan to continue to hold it.
The one thing that has changed remember last quarter.
We saw a pretty significant drop in.
Average selling price quarter over quarter, I think thats stabilized.
And it's stabilized toward kind of smaller less option Toms, but I feel pretty good about where it is now I don't think we will see another another major drop but as far as pricing goes I mean, we're now ramping up production.
The Texas plants, we've got a nice backlog well into the first quarter and so.
I don't plan to see any price degradation.
Into 2024.
And then <unk>.
<unk> been talking about larger kind of commercial customer orders and that's super exciting.
Two questions I suspect its a little bit different of a product.
But can you talk about that as it relates to average selling price and margin kind of at the end of the day the margin on that product.
Is there any risk that it's a different margin.
It creates a headwind.
Yeah. So we're still in the early stages of this and then all of this came about by obviously orders were pretty slow through the year and Kenny and I hit the road and have been meeting with as many people as we can to sell all the products that we can.
We've actually we've got we build this product already Alex so, but we're typically selling it to.
Dealers in South, Texas, and West, Texas, who have relationships with.
Mainly oilfield services companies to house their workers and so for US it's always been.
Four homes here.
10 homes, there and and never a focus from a direct sales standpoint.
But as we dug in and I mean, theres a lot of these projects and.
We're primarily competing against.
Different product skid mounted metal product fits.
More expensive to manufacturers, so I think from a.
What price standpoint.
We're pretty competitive.
The margins on that product looks similar to our other our other products I mean, it's just it's essentially large single wides with.
Individual studio type apartments, with or without kitchenette, and all with bathrooms.
So it's something that we're we have experienced building, it's not built to a different code or anything like that that would significantly increased.
Increase the price, but really the interesting thing to US is a lot of this product is leased.
And.
From what we can tell.
The lease terms are pretty attractive.
On larger products and so it's still it's a little early I want to I want to get contract signed on a couple of things before we before we talk about it but I think there is a large opportunity and I think it does help diversify the business as well as potentially growing the recurring revenue side of <unk>.
Our business.
Yes.
And then lastly, as it relates to community development, obviously Bilbao.
As your most attractive kind of near term can you help us to understand when homes might get delivered to that site and then as it relates to other real estate that you own any opportunities to sell these land assets and redeploy that capital into a share buyback.
Yeah well.
I'm, putting them in three buckets I think that there is a bucket for.
That makes sense to sell.
Properties that are just raw land, where we haven't made.
A lot of progress and Theyre smaller maybe not suited for.
The development or Theres. Some reason why they are cost prohibitive.
I think on those we can we can sell them when we feel like the market's right and make a nice return.
There's a second bucket and I mentioned this on the call were.
Since these projects have taken a long time.
There have been developments and so we've got a situation.
We're we're we're seeing.
The area that this was in.
Grow pretty significantly.
And their city city sewer and water come in in the near term and so I think that.
That bucket or we'll have to look at hard on whats.
It's the best use of these of these projects could.
Could be MH could be single family, but we want to maximize the value.
That's bucket number two and then bucket number three is.
Is del Val.
And in <unk>.
Horseshoe Bay and some of the other projects that are further along and I think we've got a we've got to accelerate those.
To create value. We've now got a full time team working on these projects and I still there are new or theyre getting up to speed on what's been done historically and what needs to happen.
Hesitant to give you a tie.
Timeline for Dell's al because we've shattered it so many times in the past, but I think by.
By year end as we start to get the roads in and and the water treatment plant is being built I think next call.
Have a really good idea of Wynn homes actually start getting placed.
On those slots.
Yes.
Very helpful. Thank you very much.
Yes, Thanks, Alex.
One moment for our next question.
Our next question comes from Tim Moore with <unk>. Your line is open.
Thanks, and congratulations on the continued good operational execution.
Yes, I mean, yes.
Yes, it's vastly improved took over Duncan.
I just wanted to kind of follow up on a thread that probably all the investors' minds I mean, your gross margin has done impressive if not.
Well the past three quarters, despite the industry volumes downturn and even the minor ASP drop in the spring. So the industry. So just for the September quarter, you just reported.
Dunkin' or would you have to maybe parse out.
How much of that gross margin expansion in the quarter.
It came from maybe cost deflation versus any benefit you might have had from some conversion of floor financing.
Yes, Theres no no floor financing in this quarter.
And so really I would say the majority of it is just from.
Better execution on the purchasing side and I think we still have a ways to go I think that vendors are obviously reluctant.
To get price decreases unless you really push forum and so the majority of that margin expansion.
Came from purchasing.
Labor Labor has continued to go up and I think the market has softened a little bit and it's not it's not accelerating like it was through COVID-19, but that's something that we're certainly keeping a close eye on is our.
And our labor cost per square foot produced and we track it pretty closely but I would say over the last.
Five years, you see continued in.
Kris and and your labor costs.
And as we talk about ramping up production and hiring people.
We're certainly paying higher wages than we did four or five years ago.
The goal is to continue that.
Chicken continue to push on.
Purchasing.
And.
And add labor to ramp up production.
In an organized way and instead of just.
You pay a bunch of labors a lot of money to stand around.
No that makes sense.
It was very impressive what you've done with the gross margin. So Doug maybe you mentioned in your prepared remarks that legacy close more loans.
October than any other month in legacy history, no consumer loan front.
Can you maybe share with us just the cadence the monthly cadence during September quarter in other words was.
Was it incrementally better every month with the volume and the orders from July through September.
I'm just trying to get a sense, maybe if youre kind of seeing a bottom.
Yes, I mean I.
I feel like.
Internal sentiment from a sales standpoint was the lowest I've seen it in the third quarter.
And a much better place now and I think that.
The success of the fall show was a big step in the right direction and that was something that I.
Was pretty concerned about and.
We sold a lot of homes and Thats great.
Yeah.
How can I will answer your question better sorry.
No no I'm just trying to think.
Now that you have if you kind of parse out that amazing. So you just had in demand and orders I mean, you kind of feel like the floors and for the industry maybe on volumes in consumer sentiment.
Yes, I think I think volumes.
Yeah.
We're ramping up volume sales youre looking at in Texas and back to your back to your question I lost my train of thought.
The debt on the lending portfolios, we haven't we haven't changed anything I think.
The increase in applications and actually closing.
Loans speak too.
A little bit of a pick up on the dealer side of the business. These these loans don't close overnight there is a whole underwriting process associated with them. So it's not perfectly Lynn.
Linear, but we had we saw originations.
This fall our applications, reaching pretty good numbers and.
And Brandon and his team that run that business for US just did a good job of execution in October and we plan to keep it going.
That's great I remember meeting Brandon a year ago and my last question is just regarding the CFO role changed maybe maybe congest comment maybe what he brings to enhance.
<unk> housing I read about as accounting background and his finance experience, but maybe just give my shot to do a little commercial on with you Brian.
Yes, sure I'll turn it over to Jeff, but I'm happy to have him on.
Thanks, Ken Thanks for asking the question.
I've got a pretty diverse background.
Good good operational background, especially in manufacturing.
And.
Good experience.
Helping businesses.
ROE from.
One stage to the next in terms of process and operations and.
And scale.
And.
I've had the benefit of that.
Getting exposed to legacy a couple of years ago.
And learning the business a little in a in a consulting role and so come again.
It's Ben.
Have that luxury.
Knowing the business pretty well before you come into something new.
But it's a good team here.
I feel like I bring good good solid experience.
Across the board from an operations perspective from us.
Finance corporate finance perspective.
On the accounting side and getting through some of the issues that the company has had historically.
Great. That's very helpful insight, thanks for sharing Jeff and Duncan Thanks for answering my questions Im all separate to that.
Yes, Thanks, Tim.
One of them, but for our next question.
Our next question comes from Jay Mccanless with Wedbush. Your line is open.
Hey, good morning, guys welcome aboard Jeff.
Duncan could you maybe walk us through I mean, it sounds like the show went really well, but what was the feedback from the dealers just a couple three maybe high points you could give us an I mean, it sounds like with the order rate sounds like they are getting more bullish as we think about the spring, but anything that stood out from your talks with.
With the independent.
Yes, Jay.
2023 was a pretty hard year for.
The independent dealers.
You come off of.
Just the market absolutely going gangbusters in 2022 up until the end of the year.
And backlogs being stretched out so when they were selling a lot of homes, they're ordering a lot of house, but they werent able to get those <unk>.
Immediately.
And so you just you had a situation where.
The demand really dried up from the retail customer and then as backlogs came in I think that there was a lot of inventory that was forced on these dealers.
And they were having trouble selling it and then you've got you've got the carrying cost.
Going up as well so I mean, I think a lot of these guys.
We're in pretty pretty tough shape.
And the show was.
Surprisingly optimistic I mean, we were we were pretty worried.
About about turn out and about especially about orders I mean, we kind of thought that at a minimum people would come to.
To party and Fort worth with Us, but we are worried about the order front and so I think the good news is.
We're seeing a lot of dealers sell homes and a lot of those phones have been.
Sitting for a while and so it's good to see them start to move.
We have ran some specials and I think that.
The sales effort on the dealer side was great.
And.
Now they've just got to focus on on executing and moving any.
Aged inventory they have but what.
What we haven't seen yet is a reorder rate.
This is high as we like it and I think that that's mainly driven by the carrying cost of the inventory.
Being being higher but I think as these guys continue to sell homes.
Well they'll continue to order homes, and it's nice to have that piece of our business.
Moving in the right direction.
Because at the beginning of the year that certainly wasn't the case.
Sure.
Great.
And then I guess the.
You answered my question I think but just.
This mid <unk> mid to low Sixty's, you think thats, probably going to be a good number to use for the next couple of quarters for modeling.
These are average price.
Yes, I think so I think the.
I think all the customers are a little squeezed.
<unk> got on the on the retail side.
Inflation has been tough for this customer and they probably like a little bit larger, but the payments may not work and so we're selling a lot of we're selling a lot of single Wides.
With that I would say fully optioned.
And then we see the same thing on the park side, where that some of the community owners or go into a little bit smaller homes.
To keep the monthly payments down.
For the financing so I'd say, that's a pretty good number.
If we see a big big pickup in and double Wides going out or are we hit one of these.
These workforce housing deals that are a little bit higher units that could go up but for right now from a base case standpoint that feels like a good.
Asps to me.
Okay.
And then just one other question.
<unk> heard about some commercial banks in the U S pulling back and exiting doing floor plan lending for the MH space is there any opportunity for legacy to maybe go a little further afield and pick up some business at some of these banks have been exiting.
Yes, absolutely I mean, I think that's actually a pretty big opportunity for us we've made some changes.
To our floor plan program and the team that executes it but there's a lot. There's a lot of dealers that we don't that we don't floor and so there is an opportunity to.
To expand and add some more dealers, we've got other dealers that floor with someone else, but carry legacies and so I think theres an opportunity to.
To convert those over to us as well as add more.
The legacy homes on their lot and I still think there is an opportunity to grow the fee.
The consumer finance business, we've got we've got a lot of dealers that I wouldn't say, we're there. We're there number one financing choice at this point and so I think there is an opportunity to make a push there.
Youre, adding floor plan financing, but youre also pushing the.
The consumer.
Lending business as well.
That sounds great. Thanks for taking my questions.
Absolutely Thanks Jay.
One moment for our next question.
Yes.
Yeah.
Our next question comes from George Melas with <unk> management. Your line is open.
Great. Thank you good morning, gentlemen.
Question on production and inventory.
My understanding is that you were sort of increasing production in the quarter let's.
But sales of course were rather soft and finished good inventory.
Even though it may be <unk> was flat sequentially. So im trying to square that and try to understand if you actually did increase production in the September quarter.
Sure.
How did you handle that to manage the gap.
Finished goods inventory.
Yes, I mean production in the quarter was down pretty significantly I felt like third quarter was about the lowest that we are running at all the plants and we still we did miss a production day, but we are really building.
<unk> three homes on average at each plant, which was down pretty significantly from kind of mid mid 2022, our third quarter of 2002.
Now, we've got a little bit of an easy comp because in the third quarter of 2002, that's when we really started having the issues at Georgia.
And so production was down in the third quarter were taken it up in Texas now we've still got some work to do in Georgia.
We were we havent ramp production up there.
Got too much finished good inventory at Georgia that were working to move and I really feel like by.
By by Q1, we'll be back on track there will get a lot of that finished good inventory.
Shipped.
And we should have the orders to start taking up production at that time.
Okay.
New Georgia, that's mostly.
Or is it also to the retail channel.
Yes, it's both we've got a couple of large part customers. There. So we have built a lot of that product.
And they have been.
Just kind of large.
I would say good entrepreneurs that have large real estate portfolios and they bought a lot of homes from us and they have been pretty loyal and so were we appreciate them, but we've also we have a.
Legacy has a dealer presence in the southeast through heritage housing and we also have some independent dealers, there, but as I add to that sales team.
We've hired a lot of people I mean, we're I think we've hired.
Seven or so salespeople in the past few months and we need to get back on track with the with the dealer business. It's just it's a large territory and so you can't have two people covering the entire southeast for dealers effectively so I think theres a lot of opportunity there.
Now that we've gotten through the quality issues and the service issues and are starting to regain our customers Trust.
Okay, that's great news that his qualities.
Crude.
Question about <unk>.
Sort of.
Sort of cash Youre loans in your line of credit.
Your line of credit of course was unused at the beginning of the year and now you have $13 million. So show you seem to find good opportunities to increase your own portfolio.
I think that continues or is there a limit to that.
Yeah, I mean, you know cash is king right now and so if you've got the ability to to lend into this industry.
There's plenty of opportunities and so we're being we're being selective.
But we have had some good opportunities to put money to work at it.
At pretty attractive yields.
Even though the cost on anybody's bank line that's variable.
It's fairly high right now and so.
We will be selective we're not going to go we're not going to go crazy, but we're certainly not going to turn down good opportunities to either invest in the loan portfolios or on the development loan side, where we can put money to work.
With with a lien on a property and a personal guarantee.
High teens yield.
Okay makes sense and then just a final quick question. It seems like Youll, all retail operation seems to be doing a little bit better.
Have you worked out some of the Kinks there or.
Yes, we're working on it I think I think heritage has a lot of potential I mean, we haven't added additional locations in a couple of years and we're seeing some opportunities to do that but the key is getting the management team in place.
We've made we've made a few changes at the <unk>.
Our senior management team, we've got a few additions.
Additions that we need to to make but I feel I feel pretty good about how heritages being managed and we're we're selling more <unk>.
Production through Heritage then than we have in the past and I think but it's still it's still lower than that.
And then where we would like to be and so that's that's another area that I feel.
I feel like we have with.
With the right team, we've got a good opportunity.
To grow that side of our business and it's still.
Significantly below where our peers are in terms of production that we are selling through our company owned retail stores. So I just I think there's a big opportunity in heritage.
Great. Thank you very much.
Yes. Thanks.
One moment for our next question.
Right.
Our next question comes from remote themselves as a private investor Your line is open.
Thank you, Hey, Duncan and Jeff Congrats on a great quarter.
Wanted to ask a question.
To the land development, maybe if you can give us a little bit more specificity regarding who you hired.
As part of this new team and sort of like the overall vision is for that whole business.
Yes, I mean, we're still we're in the early stages of it.
And in each region.
And the goal right now is just too.
Prioritize and accelerate development on these properties and so like I was I.
I was speaking about earlier, we've got three buckets, we're looking at I think.
Some of them as we dig a little bit deeper may make sense to sell.
Theres some that may make sense to to hold in and there are certainly the ones that we've made good progress on that we're really trying to push forward quickly and so I'll continue to provide updates I understand it's kind of it's high level, but.
I'm still getting my arms around it.
And making sure that whatever decision we make on these properties.
Theyre all being executed from the lens of creating the most value for the shareholders and so it's not going to be it's not going to be overnight, but I think that the easy ones are are either hey, we need to accelerate this or hey, we should just look at selling it is selling this and what's it worth and if there is something.
That makes sense to sell and you can make 345 times your money, it's probably good.
Good opportunity to do that.
Okay.
Thanks, that's helpful. I guess my I guess my question is do you see this as like a vertical after business.
This is going to be.
A full ramp up of product thats going to be held on our balance sheet for a long time.
And you're just going to sort of accelerate.
Or is this or is this something that's more of I guess I'm trying to figure out here, but this is a trade or is this is a long term hold.
Yes.
I am trying to figure that out too.
Look the biggest headwind of this in this entire industry is where to put these homes and so I think if you can create a model that is that you can replicate over and over again that allows.
Our customers to sell homes into communities.
That's that's a pretty good model.
But it's going to take some time to get there and so thats I mean, you hit the nail on the head Thats, what im trying to understand now I'd like to think that we can come up with something pretty creative where this this is a model that we can replicate.
<unk>, the largest headwind for our industry, but.
I'm not.
Have a good starting point.
We just have to execute on that and use the knowledge to create something that we can replicate over and over again and so that as that is precisely what I'm trying to figure out.
And sorry, one more question on this.
What do you think is the biggest headwind for you to sort of figure this out.
Is it capital over time I mean, what is what is the limited capital.
I think we've got the capital I think we've just got to understand how it skewed and from a from a public market standpoint, and how the cash flows will be valued.
And that's going to that's going to determine if these are you know.
Long holes or are these can you get them to a point, where you can maximize the value for the shareholders because.
If I add if I, if I finished del Val and I've got.
1100 spaces and rents coming off of those.
Sure.
Our investors going to value added seven times earnings or they can evaluate like Sun communities at 30 times earnings.
And so I don't know the answer to that question yet.
Understood. Thank you so much.
Yes. Thank you.
And I'm not showing any further questions at this time I'll turn the call back over to Duncan for any closing remarks.
Sure. Thank you I'd like to thank everybody, who joined today's earnings call. We certainly appreciate your interest in legacy.
And operator this concludes our call.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
Okay.
<unk>.
Okay.
Okay.
Yes.
[music].
Okay.
Yes.
[music].