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What Others Say – Legacy Housing Corp (LEGH) IPO Set for 12.14.2018

December 11th, 2018 Comments off

 

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The initial public offering – IPO – for Legacy Housing Corporation is set for 12.14.2018, per NASDAQ.

 

That makes this a good time to take a look at what they and others beyond the manufactured housing industry are saying about Legacy.

We like old-fashioned businesses. This one is in low-cost, manufactured housing. If you know what a “double-wide” is then you know what types of homes we are talking about here,” said Candyman of IPOCandy for TalkMarkets.

Any investor should respect the numbers Legacy (LEGH) is generating – $169M LTM revenues up 31%, 24% EBITDA margins and pre-tax ROE of 26%,” Candyman continues. “These levels of growth and profitability have been consistent over the last 10 years.”

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Candyman then goes on to elaborate a point known by thousands of manufactured housing pros, and often plugged here on MHProNews or on MHLivingNews.com. Namely, the savvy of offering affordable homes during an affordable housing crisis.

 

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Considering Low Cost Housing

Housing is expensive, especially stick-built single family homes. For many Americans, a manufactured home is an excellent, low-cost solution. Demand for lower-cost housing has been very durable and it’s not just from low earners. As rents increase in greater metropolitan areas young adults are realizing that they may be better off owning, if they can find a “starter” property that they can afford. Often that won’t be a detached stick-built structure,” per TalkMarkets.

Other demand drivers are from community builders (described below) and as vacation homes requiring less investment and maintenance that a typical one family home,” adding, “Unit volume has been recovering since the US economic collapse in 2008 but still has room to expand further before nearing prior levels.”

 

ManufacturedHousingVsTotalCompletedHomesLegacyHousingS1FilingIPODailyBusinessNewsMHProNews

Legacy clearly believes in the future of the business, because they are raising capital to expand their retail base.  The chart above is more useful than the ones shown by other media. 

NASDAQ said, “Legacy Housing Corporation, formerly Legacy Housing, Ltd., builds, sells and finances manufactured homes and “tiny houses” that are distributed through a network of independent retailers and company-owned stores and are sold directly to manufactured home communities. We are the fourth largest producer of manufactured homes in the United States as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute and Institute for Building Technology and Safety for the second quarter of 2018.”

 

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With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 390 to 2,667 square feet consisting of 1 to 5 bedrooms, with 1 to 3 1/2 bathrooms. Our homes range in price, at retail, from approximately $22,000 to $95,000. In 2017, we sold 3,274 home sections (which are entire modules or single floors). During the first nine months of 2018, we have sold 3,045 home sections. We commenced operations in 2005 and have experienced strong sales growth and increased our equity holders’ capital at a compound annual growth rate, or CAGR, of approximately 25% between 2009 and 2017. We currently have the largest backlog of orders in our company’s 13-year history.”

Donovan Jones writing for investors media outlet Seeking Alpha shared the following video from Legacy, and basically says they think this stock ought to be a buy.

 

Among the pull quotes Jones at Seeking Alpha cited was this:

Market & Competition

According to a 2016 release by the U.S. Census Bureau, the total manufactured homes market was valued at about $6.245 billion in 2007, marking a decline to about $5.8 billion in 2016.

The average sale price per manufactured house has risen from $65,400 in 2007 to $70,600 in 2016, while the total number of homes sold has declined from 95,752 in 2007 to 81,136 in 2016.”

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Graphic, including apparent errors, is by MHI. Their GDP, count is about 50 percent understated. There are also some 10 more manufacturing plants now than what’s shown. Some sources dispute the job count as too low for the total industry as well.

 

That GDP figure once more makes a point that MHProNews has made for over a year. Namely, that MHI is wrong, wrong, wrong in saying that the manufactured housing industry adds $3 billion to the economy.  As a short segue, does it seem that MHI wants to make manufactured housing seem smaller than it is?  MHI, per member Frank Rolfe, under-reports the number of land-lease communities by about 6,000.  Rolfe and his partner Dave Reynolds say that a “two year hand count” resulted in some 44,000 communities they identified, while MHI uses a number closer to 38,000 communities, which – no surprise – mirrors the figure that purportedly favored-member MHVillage provides.

 

Legacy Housing Files for IPO, Plus Manufactured Housing Industry Market Updates

Those details matter to companies that are emerging, such as Legacy, and others.

CurtisHodgsonKennyEShipleyLegacyHousingCorpCoFoundersLEGHIPOMHProNewsLegacy was co-founded by Curtis D. Hodgson and Kenny E. Shipley, and per NASDAQ, “Our homes address the significant need in the United States for affordable housing. This need for affordable housing is being driven by a nationwide trend of increasing rental rates for housing, higher prices for site-built homes and decreasing percentages of home ownership among portions of the U.S. population. Our customers typically have annual household incomes of less than $60,000 and include young and working class families, as well as persons age 55 and older. In 2016, there were approximately 63,799,000 households in the United States with annual household incomes of less than $60,000, representing a majority of all U.S. households, according to the Current Population Survey and 2017 Annual Social and Economic Supplement published by the U.S. Census Bureau.”

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We believe our company is one of the most vertically integrated in the manufactured housing industry, allowing us to offer a complete solution to our customers, from manufacturing custom-made homes using quality, cost effective materials and distributing those homes through our expansive network of independent retailers and company-owned distribution locations, to providing tailored financing solutions for our customers. Our homes are constructed in the United States at one of our three manufacturing facilities in accordance with the construction and safety standards of the U.S. Department of Housing and Urban Development (“HUD”). As of the date of this prospectus, our factories employ high-volume production techniques that allow us to produce, on average, approximately 75 home sections, or 62 fully-completed homes depending on product mix, in total per week. We use quality materials and operate our own component manufacturing facilities for many of the items used in the construction of our homes. Each home can be configured according to a variety of floor plans and equipped with such features as fireplaces, central air conditioning and state-of-the-art kitchens,” said NASDAQs review.

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From Legacy Housing (LEGH) S1. See full S1 as a download, linked here.

Nasdaq goes on, “Our homes are marketed under our premier “Legacy” brand name and, as of September 30, 2018, are sold primarily across 15 states through a network of 115 independent retail locations and 11 company-owned retail locations and through direct sales to owners of manufactured home communities. Our 11 company-owned retail locations, including our nine Heritage Housing stores and two Tiny House Outlet stores, exclusively sell our Legacy branded homes. During 2017, 62% of our manufactured homes were sold in Texas, followed by 8% in Georgia, 8% in Colorado, 5% in Oklahoma, and 4% in Louisiana. For the nine months ended September 30, 2018, our largest sales occurred in Texas (59%), Georgia (12%), Louisiana (9%), and Oklahoma (4%). We plan to deepen our distribution channel by using a portion of the net proceeds from this offering to expand our company-owned retail locations in new and existing markets.”

We offer three types of financing solutions to our customers. We provide floor plan financing for our independent retailers, which takes the form of a consignment arrangement between the retailer and us. We also provide consumer financing for our products which are sold to end-users through both independent and company-owned retail locations, and we provide financing to manufactured housing community owners that buy our products for use in their housing communities as rental units. Our ability to offer attractive financing options provides us with several competitive advantages and allows us to capture sales that may not have otherwise occurred without our ability to offer consumer financing.”

We were originally organized in May 2005 as Legacy Housing, Ltd., a Texas limited partnership. Effective January 1, 2018, we converted into a Delaware corporation and changed our name to Legacy Housing Corporation, which is referred to herein as the Corporate Conversion,” adding, “Our principal executive offices are located at 1600 Airport Freeway, #100, Bedford, Texas 76022, and our telephone number is (817) 799-4900. You may access our website at www.legacyhousingcorp.com.”

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Blokable – Making “Housing As Easy as Ordering A Car”

July 8th, 2017 Comments off

MeetBlockablePrefabsManufacturedModularHousingIndustryDailyBusinessNewsMHProNewsGeekWire introduced us today to Blockable, a Seattle, Washington based factory built housing operation led by a former Amazon manager.

GeekWire noted that, “According to an SEC filing, Blokable is looking to raise approximately $3 million and so far has brought in about $1.36 million. The document lists Jason Calacanis, an investor and entrepreneur known for the popular publishing site Weblogs that sold to AOL in 2005, as director.

Aaron Holm, Blokable’s CEO, declined to comment.”

DigitalTrends said, “When you work at Amazon, you learn about scaling your business in a hurry. Now, Aaron Holm, former Amazon product manager and burgeoning entrepreneur…”

Those kinds of statements merited a look at what this factory built housing startup was planning and doing.

Make Housing As Easy as Ordering A Car

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Holm was reportedly interested in container housing (see our most recent reports on that trend, linked  and here).  He visited Detroit in 2015, and was “convinced that the only way to free up the housing market was by making housing that you can order and configure as easily as buying a car.”

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As with many modular and prefab units, modules are craned into place, after they are assembled and moved to the job site.

Bockable’s website said, “To achieve this, we’d have to design a building system that could produce different lengths, achieve different square footage, and give customers the ability to create different designs, forms, and price points. The biggest need and where we could provide the most benefit to start was to enable developers to reduce the cost and complexity of building housing.”

Produced in Vancouver, Washington, the firm is looking for projects in a 1000 mile radius of their base.

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Image credit of Blockable, by Digital Trends. The firm says it can currently do about 25 units a month, but also stresses that they are rapidly scalable. Think…Amazon manager.

DigitalTrends said there first few projects were focused on emergency housing shelters for the homeless.

The prefab modular housing units themselves are described this way.

The units the company aims to produce are aptly named “Bloks,” and are available in lengths from 18 feet to 38 feet. Customers will also be able to add basic and premium bathrooms and kitchens, as well as other modular additions like stairs, railings, and window units. The price per square foot is expected to range from $150 to $300. Finished units are estimated to cost between $25,000 and $100,000, depending on size.”

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Compare this to the Blockable, above. To see this recent report on container housing, click here or the image above.

The price points are higher than some of the container housing stories we’ve done recently, such as the one linked here or here.  But these units seem to have more panache than many container designs boast.  

We’ll keep an eye on Blockable, and other industrialized housing trends too. ##

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Drew’s Q2 – Dividends and Insider Trading

August 10th, 2016 Comments off
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Credit, Drew Industries.

Elkhart, Indiana based Drew Industries (NYSE:DW), a leading supplier of RV and manufactured housing industries components, has announced their second quarter results. According to their August 9th, 2016 SEC filing by Chief Financial Office (CFO) David Smith, their Board of Directors approved a regular quarterly cash dividend of $0.30 per share of common stock, payable on September 2, 2016, to stockholders of record at the close of business on August 19, 2016.

MHProNews has also learned from CerbatGem that Drew Director David A. Reed sold 2,500 shares of the firm’s stock on Monday, August 8th. The stock was sold at an average price of $96.39, for a total value of $240,975.00.

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Leigh J. Abrams, Drew Industries.

FIDaily told the Daily Business News that Mr. Leigh J. Abrams, Director disclosed the sale of 10,000 shares of DW stock. The shares were purchased at an average price of $96.43. Abrams now owns $6,317,708 of the stock per the Form 4 SEC filing.

On August 9, Brian Michael Hall, Corporate Controller disclosed the sale of 687 shares of (DW). The shares were sold on June 8th for an average price of $80.68. The Corporate Controller now owns $161,360 of the stock, according to the SEC filing.

On August 8, Director John B. Jr Lowe disclosed the sale of 10,687 shares. The shares were purchased at an average price of $77.38. Lowe now owns $1,925,369 of the stock per the Form 4 SEC filing.

The company is worth $2.45 Billion, and is classified as low risk with multiple segments of profit generation. Zacks Investment Research stated,

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Credit, MarketWatch.

Drew Industries Incorporated has two reportable operating segments, the manufactured housing products segment and the recreational vehicle products segment. Several of the Company’s customers produce both manufactured homes and recreational vehicles, and the Company supplies products having similar characteristics for use in both these lines of business.”

Highlights from Drew include:

  • Revenues of USD 440.83 million, Net Earnings of USD 37.57 million.
  • Gross margins widened from 22.66% to 26.52% compared to the same period last year, operating (EBITDA) margins now 16.02% from 12.15%.

The Daily Business News market tracker shows DW at $97.14 up 0.95 on Aug 10, 2016 intraday trading.  Drew is one of the manufactured home industry connected stocks reported each business day on MHProNews, with yesterday’s closing numbers linked here.

Continued growth in both the RV and manufactured housing sectors makes the outlook for suppliers like Drew bright. The Manufactured Housing Association for Regulatory Reform (MHARR) reported that new HUD Code manufactured home shipments rose 20% in June, 2016, click here for more details.

Drew’s Q2 report can be download here. ##

(Image credit, Drew Industries (DW) logo.)

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Frank Griffin, Daily Business News, MHProNews.

Submitted by Frank Griffin to Daily Business News, MHProNews.com.

Alpha questions Drew, but Citigroup rates stock a Buy

November 22nd, 2014 Comments off

drew+new-york-stock-exchange-nyse-credit=andrew crump-flickrcreativecommons-posted-daily-business-news-mhpronews-com475x356-Seeking Alpha   claims millions of followers in the investment world, and they questioned the value of Drew Industries (NYSE:DW) in a report Thursday. By contrast, Citigroup issued an investors note, increased the target price from $51 to $57 a share and rates Drew a Buy.

Drew CFO Joseph S. Giordano III sold 2,000 shares of DW stock on Monday, November 10th, per SEC filings. The stock was sold at an average price of $47.50, for a total transaction of $95,000.00.

Mideast Times  said, “Drew Industries (NYSE:DW) traded up 1.63% during mid-day trading on Wednesday, hitting $47.90. 9,045 shares of the company’s stock traded hands. Drew Industries has a one year low of $40.38 and a one year high of $55.35. The stock has a 50-day moving average of $45.3 and a 200-day moving average of $46.33. The company has a market cap of $1.133 billion and a P/E ratio of 18.61.

Drew is one of the stocks tracked by the Daily Business News market report. On Friday, Drew Industries, Inc. (NYSE:DW) 47.00 -0.13 (-0.28%) – for the complete Friday’s report on factory-built home connected stocks, click here. ##

(Image credit: Andrew Crump/FlickrCreativeCommons & Drew Logo)