Good day, and thank you for standing by. Welcome to Legacy Housing Corporation Quarter 1 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Duncan Bates, CEO. Please go ahead. Good morning. This is Duncan Bates, Legacy's president and CEO. Thank you for joining our first quarter 2024 conference call. Max Africk, Legacy's general counsel, will read the Safe Harbor disclosure before getting started. Max? Thanks, Duncan. Before we begin, I will remind our listeners that management's prepared remarks today will contain forward-looking statements, which are subject to risk 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 contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations, and any projections as to the company's future performance represent management's best estimates as of today's call. Thanks, Max. I'm joined today by Jeff Fiedelman, Legacy's Chief Financial Officer. Jeff will discuss our first quarter performance, then I will provide additional corporate updates and open the call for Q&A. Jeff? Thanks, Duncan. Product sales primarily consist of direct sales, commercial sales, inventory finance sales, and retail store sales. Product sales decreased $12.5 million or 28.8% during the three months ended March 31, 2024, as compared to the same period in 2023. This decrease was driven by a decrease in unit volume shift, primarily in direct sales, mobile home park sales, and inventory finance sales categories. The decrease was offset by increased sales at our company-owned retail stores. For the three months ended March 31, 2024, our net revenue per product sold decreased primarily due to a shift in product mix to smaller units into a large sale of homes from our leased home portfolio to a mobile home park customer at a lower average price than our typical new home. Consumer MHP and dealer loans interest income increased $2.9 million or 38% during the three months ended March 31, 2024, as compared to the same period in 2023 due to growth in our loan portfolios. This increase was driven by increased balances in the MHP consumer and dealer loan portfolios. Between March 31, 2024, and March 31, 2023, our MHP loan portfolio increased by $28.2 million, our consumer loan portfolio increased by $17.9 million, and our dealer finance notes increased by $2.1 million. Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, service fees, and other miscellaneous income and decreased $0.1 million or 3.1% during the three months ended March 31, 2024, as compared to the same period in 2023. This decrease was primarily due to a $1.0 million decrease in dealer finance fees, a $0.2 million decrease in commercial lease rents, partially offset by a $1.1 million increase in forfeited deposits. The cost of product sales decreased $8.5 million or 29.3% during the three months ended March 31, 2024, as compared to the same period in 2023. The decrease in costs is primarily related to the decrease in units sold. Selling general and administrative expenses increased $0.5 million or 8.8% during the three months ended March 31, 2024, as compared to the same period in 2023. This increase was primarily due to a $0.3 million increase in warranty costs, a $0.1 million increase in legal expense, a $0.2 million increase in professional fees, and a net $0.2 million increase in other miscellaneous costs, partially offset by a $0.3 million decrease in loan loss provision. Other income expense increased $0.4 million or 29.9% during the three months ended March 31, 2024, as compared to the same period in 2023. There was an increase of $0.6 million in non-operating interest income offset by an increase of $0.2 million in interest expense. Net income decreased 7.0% to $15.1 million in the first quarter of 2024 compared to the first quarter of 2023. Basic earnings per share decreased $0.05 per share or 7.5% in the first quarter of 2024 compared to the first quarter of 2023. As of March 31, 2024, we had approximately $0.6 million in cash compared to $0.7 million as of December 31, 2023. The outstanding balance of the revolver as of March 31, 2024, and December 31, 2023, was $11.8 million and $23.7 million, respectively. At the end of the first quarter of 2024, Legacy's book value per basic share outstanding was $18.46, an increase of 13.1% from the same period in 2023. In November 2022, our board of directors approved a share repurchase program to authorize the repurchase of up to $10 million of the company's common stock. We repurchased 91,187 shares for $1.9 million in the open market during the three months ended March 31, 2024. Between April 1 and May 9, 2024, we repurchased 170,342 shares for $3.5 million in the open market. As of today, we have a remaining authorization of approximately $4.6 million. Thanks, Jeff. I want to add some color on the markets and provide other corporate updates. As discussed, sales were down during the first quarter, but they also are improving as housing affordability remains at a multi-decade low with no signs of changing. First, on the dealer side, our current business is heavily dependent on dealers. Seasonality impacted dealer sales during the first quarter but started to accelerate late February. Reorder rates are still lower than we would like due to higher inventory carrying costs. Sales at our company-owned retail stores are also improving. To drive dealer sales, we launched a new special this week that includes concessions on popular home models. Initial feedback has been positive. On the community or park side of our business, our park business is slower and has been impacted by high interest rates similar to other real estate asset classes. Rates have driven M&A transaction volume down and cooled new development. We are gaining momentum in the park sales with smaller units, 400-600 sq ft tiny homes and small HUD Code single-wides. Low monthly payments through our financing program allow park customers to make money renting these homes in nearly all markets. We held a spring show in Eatonton, Georgia, in late April for dealer and park customers. It was our first show in Georgia since 2020. We are still rounding out orders, but the show was very successful. Over the past 18 months, we've spent a tremendous amount of time improving product quality at our Eatonton plant. The houses looked great, and the changes were well received by customers. The show allowed us to clear finished goods inventory at the plant and build a nice backlog. Despite lower volumes during the quarter, we carefully managed factory overhead and expenses. Product gross margins were higher than average during the first quarter due to a large sale of leased homes to a community owner. We continue to monitor product gross margins closely and see manufacturing efficiencies improve when we ramp production. For corporate updates, since our last earnings call, we repurchased over 260,000 shares of common stock at an average price of $20.56. Repurchases were limited by trading restrictions and a narrow open window between year-end and first quarter. We utilized 54% of our $10 million repurchase authorization. The board will increase the authorization as needed. Legacy's business fundamentals have not changed. The market is slower but improving over 2023. There was confusion with our fourth quarter numbers, and the stock traded down to liquidation value. We will continue to repurchase shares aggressively when this happens. We've continued to add team members in key areas of our business. The land developments are progressing, and we are evaluating proposals to sell or partner on some of the properties. There is significant value to unlock on our balance sheet. Driving earnings growth and realizing this value is management's top priority. Operator, this concludes our prepared remarks. Please begin the Q&A. Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Alex Rygiel from B. Riley Securities. Thank you. Good morning, Duncan. Hey. Good morning. It sounds like heading into the second quarter, unit volumes going to be picking up from the first quarter. Is that a fair conclusion to come to? Yeah. That's fair. We're shipping a lot of houses right now. Excellent. And then as it relates to sort of inventory on the yard, where does that stand? Yeah. We've struggled with that at our Georgia plant for a few quarters now, and that was the key or one of the key reasons for having a Georgia show, which was the first show that we've had since 2020. And so we're starting to ship that product now, and the goal is to have most of it cleared out by the end of the second quarter. That is super helpful. Then a little bit of directional guidance on the consumer and MHP loan interest. It stepped up in the fourth quarter, kind of stepped down in the first quarter. What's sort of the normal run rate there at the moment? Yeah. There are some key. I mentioned the confusion in the fourth quarter. Obviously, we don't report fourth quarter numbers, but I think when investors backed into the fourth quarter numbers, they were surprised by some moving around of revenue from the loan portfolios. And so it makes it a little different or difficult to compare. But right now, I mean, we're over $10 million. I think we'll pretty consistently be over $10 million in interest revenue a quarter for all of 2024 moving forward. Excellent. Thank you very much. Thanks, Alex. Thank you. One moment for our next question. Our next question comes from the line of Mark Smith from Lake Street. Hey, Duncan. Guys, I wanted to start just on the loan portfolio. Can you just give any more detail on the default loans and litigation happening with the One Borrower within MHP? I know some of those moved to current assets. Any additional insights into that? Yeah. Look, this is obviously active litigation, and it's with a long-term customer. So we've got a disclosure in the file, but I'll summarize that for you right now. We have a park customer that we've worked with for over 13 years, and he's built a nice portfolio of communities into which we financed over 1,000 mobile homes. We accelerated a large portion of these notes just due to slow payment or nonpayment. As you can imagine, it's taken a lot of my time and the team's time to work through this situation. I think this is a situation that can be resolved outside of the courtroom, but our duty as officers of this company is to protect our collateral. So we're pursuing the collateral right now. The collateral is comprised of over 1,000 mobile homes where the principal outstanding is 50% or less of a replacement cost, and that's excluding equity for the setup and building the pads. We've also got first liens on several mobile home parks in this portfolio, and there's limited outstanding debt. The notes are cross-collateralized and personally guaranteed by multiple individuals, some of which have pretty significant net worth and can be held joint in several liability for these debts. So we've spent a ton of time on this with our auditors. We've valued all the collateral, and we think that there's a significant amount of equity into this portfolio. So we haven't although these notes are in default, and when we accelerated them, they're accruing interest at 17.5%, most of which has been offset by an accrual. But our goal is to resolve this relatively quickly. But ultimately, if we've got to go take all the collateral, we're currently taking action to do that. And you'll see another disclosure where we actually, during the first quarter, foreclosed on one mobile home park that I think at the price that we're into it, there's significant upside value. And so we'd like to resolve it, but if we need to take everything, we'll do that and protect our shareholders and our investment. Okay. The MHP portfolio has always been really solid and safe, I think, viewed from the outside. Has anything changed fundamentally within that portfolio, or is this just kind of a one-off situation with this One Borrower? Yeah. I think it's a unique situation, and obviously, the size is unique, but nothing's changed in that portfolio. We've had situations over the last few years that we've worked through, and we've been able to recover all of our principal outstanding and, in most cases, the accrued interest as well. And so I don't see this as any different than those other situations except for it's a larger chunk. Okay. Looking at product sales, you just talked about unit volumes looking better here in the Q2. I'm curious on kind of selling price and mix. Are you seeing the mix shift back to some higher-priced homes, or is it still staying at some smaller, lower-priced homes? Yeah. I'd say it's still at lower-priced homes. We seem to be really competitive from a price standpoint on the smaller homes. And I think just housing affordability, whether it's stick-built or it's factory-built, it's a problem. And we're selling. It's not only on the park side where we're selling smaller units. We're also selling a lot of smaller units on the dealer side of our business. And it's an area where we're really competitive. It doesn't help our average selling price, but I think that we'll continue to be able to drive volume. And on both sides of the business, we've had sales, whether it's at the Georgia show or the dealer sale that I just mentioned, that will drive volumes kind of throughout the year. I mean, we're expecting a better year this year than last year, but it's a tricky market. And so we're managing it closely, and we're adjusting as we need to and watching our expenses. And we're just going to take it one quarter at a time. Perfect. Last question for me. You brought up the backlog in your commentary. Just curious any additional insights on kind of where the backlog is today and kind of your comfort level with that? Yeah. I mean, our goal really is building our backlog. We've held production at pretty consistent rates for the last two quarters, but they're well below where we'd like to be. And the goal has been to build a backlog, and you can start ramping production because we don't want to ramp too early, and we've made that mistake before. So we're a few weeks out across all plants. In an ideal world, I'd like to be 8-10 weeks out, but we're not there yet. But I think first quarter, and just given that the dealer side of the business is stronger, we saw the impacts in the first quarter of the seasonality. And as we get into the spring selling season, that should improve. And that, combined with some sales and concessions, we're hoping to build the backlog and ultimately ramp up production where we can get some efficiencies on the manufacturing side. Excellent. Thank you. Thanks, Mark. Thank you. One moment for our next question. Our next question comes from the line of Jay McCanless from Wedbush. Hey. Hey, Jay. Thanks for taking my questions. Hey, Duncan. So kind of following on the last question, with the downward price mix you're seeing at this point, is it possible, you think, this year that you guys could sell more products but still be down in revenue just because of that sales mix, or are you thinking that dollar revenue is going to be up year-over-year for 2024 versus 2023? I think I'll have better insight into that next quarter. We're trying to sell as much as we can. I mean, sales are the top focus right now, and we're pushing the team pretty hard. We have seen a move toward our smaller products. So it certainly could be the case where you sell more units, but your revenue is down. That said, I really feel like, from an internal sales sentiment standpoint, that sometime, kind of like last summer, end of last summer, really felt like the trough for me. And it's been, we've hit some air pockets. I mean, we felt like we really had sales moving after the show last October. And then you start to see the park customers back up where they're having challenges with utilities or with municipalities, and it delays shipments. But it feels like things are smooth. Sales are below where we want them to be, but we've made some adjustments that we should start to see the benefits of in the second quarter. Okay. Great. And really good performance on the gross margin this quarter. How sustainable do you think that is and anything that we need to be mindful of either from a lumber price increase or anything of that nature? Yeah. Gross margins were our product gross margins were high this quarter, and they were impacted by we've got a lease portfolio where we actually lease homes in mobile home parks. We don't offer that program anymore, but we had a sale of a large chunk of leased homes to that community owner in the first quarter. And so that skewed gross margins to the upside. I think our goal is to hold them. I mean, we watch it very closely, but this quarter was significantly higher than the last few. So I think we'll revert toward the average of, say, the last four quarters. But if we can get production up, we'll pick up some efficiencies. And we still haven't used the price lever. We've held prices at the detriment of volume and used financing concessions. But if we do need to use the price lever to drive volume, that'll have an impact on gross margins, but it won't be drastic. I think it'll be offset by some manufacturing efficiencies where we're currently not absorbing all the overhead and pushing that through cost of goods sold. Actually, it was going to be our next question, Duncan. I was going to ask you about, have you been able to hold price? Sounds like you have. I guess, if you're holding price, what are you seeing from some of your competitors that can build maybe not all the way down to some of the prices you guys can do, but in that lower call it lower-price single-section home arena? What are you seeing out of them? Yeah. I think the guys without a balance sheet and without much of a backlog, I mean, mainly independent players, we've certainly seen price decreases there. I think just given the consolidation in the industry, we've got rational competitors. But we've seen some lower pricing here within the past two weeks that surprised us. I think or I know we're really competitive on the tiny homes and the smaller single-wides. As you get into the larger product, especially at the dealers, you see the impacts of us holding prices, I think, compared to other competitors that have dropped them. But we're monitoring that very closely. I mean, we'd like to get we'd like to get our volume up. And that's the key goal right now, is build a backlog or continue to build the backlog and get volume up. Shipments during the second quarter, we're looking pretty strong so far. Good to hear. So could you talk about in the consumer book, we did see an increase both sequentially and year-over-year for delinquencies there. That's not uncommon. We're seeing that in the stick-built world too. But maybe could you talk about what type of stresses you're seeing on that portfolio? And if we do stay in this higher-for-longer environment, kind of what are some of the worst levels we've seen in that portfolio, like beginning of COVID or something like that, as a frame of reference? Yeah. And look, we think internally a little bit different about delinquencies compared to the accounting for delinquencies. And so when we think about our retail loan portfolio, we look at what percentage of the portfolio have we not received a payment in 30 days? And we brought this servicing in-house around 2012. And at that time, over 30 was running close to 6%. And then you've seen us work that down to 2021. It was close to 1.3%. So just we've got a great program, and we've got a great team that services this. I know that delinquencies or defaults or problematic accounts have increased slightly, but they're still well below the national average. And there's certain elements of our retail financing program that contribute to this outperformance. One of them, I mean, we take real down payments. I mean, across the board, we have a minimum down payment, and we've seen some of our competitors bend on that. It seems like a race to the bottom. We don't finance a lot of extras. We don't finance decks or septic tanks or storage sheds. A lot of those items, right, you get they're added on to the loan, but you don't collect much from them. Finally, with our retail finance program, we have a holdback with our dealers. That gives us some additional cushion. I think all of these all of those items contribute to the outperformance, and we're monitoring it closely. You'll see that the reserve actually came down in the first quarter on the retail finance side of the business. The reason for that is we do a lookback when we calculate the reserve. In many cases, we're collecting more on the repos than the outstanding principal balances for homes that were sold pre-COVID and paid on for a few years. So I feel good about the team and the performance of the portfolio. Even if it continued to creep up, it wouldn't worry us. I think if it started to get closer to 5% or 6%, that's where we'd really think there's a concern, but we're still well below that. Okay. That's great. And maybe if we could an update on Bastrop and some of the other parcels, land parcels. Yeah. We hired an internal team. We've been working through the properties. Bastrop continues to progress. We're putting in the roads now in phase one. We've got phase two working as well. We've got a lot of utilities in there. We're building a water treatment plant. So there is a lot of focus on Bastrop. You'll see us continuing to invest capital there. Some of the other properties I talked about on either the last call or the call before, just working through where we are on those properties and ultimately determining the highest and best use for them from a shareholder's standpoint. And so we've received some interesting proposals to sell certain properties or to partner on certain properties, and we're working through that now. And I think you'll start to see some movement during the second quarter on those. Okay. That sounds great. Thanks for taking my questions. Yeah. Thanks, Jay. Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. At this time, I would now like to turn the conference back over to Duncan Bates, CEO, for closing remarks. I want to thank everybody for joining today's earnings call. We appreciate your interest in Legacy Housing. If you have any questions on the quarter, feel free to give Jeff or I a call or shoot us an email. Thanks a lot. Bye. This concludes today's conference call. Thank you for participating. You may now disconnect.