By L. A. ‘Tony’ and Soheyla Kovach.
Legacy Housing recently announced that it has filed a form S-1 with the U.S. Securities and Exchange Commission (SEC) regarding its Initial Public Offering (IPO), as was reported on the Daily Business Newson MHProNews.
Legacy intends to raise $69.0 million in gross proceeds from an IPO of its common stock. Market watcher Seeking Alpha noted that it doesn’t include customary underwriter options. As a side note about SA, as with so many third-party media sources looking at manufactured housing, they get some insights right, others, not so much.
According to the Legacy IPO filing documents, as of September 30, 2018, the company had (unaudited) some $449,000 in cash and $90.7 million in total liabilities.
Free cash flow during the nine months ended September 30, 2018, was a negative ($4.2 million).
Listed underwriters of the Legacy Housing (LEGH) IPO are B. Riley FBR and Oak Ridge Financial.
The Personal/Professional Side – A MH Industry Veterans’ Insight
Several things have come into MHProNewssince our initial report, which is linked below.
Among the more colorful? This from a widely known industry veteran. “If you ever do profiles of hard working stiffs making it big, this is the epitome of them…”
Another snippet: “They used the car wash money to buy a garage, used that to start a repo depot, used that to expanded smartly over the last 25 years to be issuing an IPO as a manufacturer. From a portable car-wash…”
“…a prince among men, a real role model.”
Additional IPO Details
Management says it will use the net proceeds from the IPO as follows:
“Consistent with our long-term strategy of conservatively deploying our capital to achieve above average rates of return, we intend to use the net proceeds of this offering to expand our retail presence in the geographic markets we now serve, particularly in the southern United States. Each retail center requires between $1,000,000 and $2,000,000 to acquire the location, situate an office, provide inventory, and allocate the initial working capital. We expect to open 10 to 15 additional retail centers by the end of 2020. We also expect, based on our current financial position, that we will opportunistically increase our credit lines on terms that will allow us to rapidly expand the pace of our financing solutions for our retail consumers, giving our new retail centers the support they need to generate sales.”
Seeking Alphastated that Legacy’s company roadshow presentation is not yet available. MHProNewswill reach out for that document, once it is ready.
Not yet on the calendar.
Some of the information above and below are drawn from that document, which was obtained by the Daily Business News on MHProNews.
It’s available at this link below.
Legacy was co-founded by Curt Hodgson and Kenny Shipley, shown in the featured image above. They have become one of the top independent producers of HUD Code manufactured housing in the nation, by units and sales volume.
Legacy recently used MHProNewsto promote to successful September and October events. Their S1 says they have the greatest order backlog in their history. As a flashback, one of those promotions is linked further below.
24-7 Wall Street said, “With current operations focused primarily in the southern United States, it offers customers an array of quality homes ranging in size from about 390 to 2,667 square feet consisting of one to five bedrooms, with one to three and a half bathrooms. These homes range in price, at retail, from roughly $22,000 to $95,000. In 2017, the firm sold 3,274 home sections (which are entire modules or single floors).
During the first nine months of 2018, Legacy has sold 3,045 home sections. Legacy commenced operations in 2005 and has experienced strong sales growth and increased equity holders’ capital at a compound annual growth rate of approximately 25% between 2009 and 2017. The firm currently has the largest backlog of orders in the company’s 13-year history.”
Some pull quotes and graphics from the Legacy S1.
Our Growth Strategy
We have a strong operating history of investing in successful growth initiatives over the past 13 years. We believe that the solution we are able to provide for our customers, as a result of the vertical integration of our company, enhances our brand recognition as a leading producer, results in higher and more efficient utilization of our manufacturing factories and expands our direct-to-consumer outreach for our wide variety of customizable homes. This operational focus has provided us with sustained net sales and net income growth over the years. Our growth strategy includes the following key initiatives:
Broaden and Deepen Our Retail Presence in Key Geographic Areas. We currently distribute our products primarily across 15 states through a combination of 11 company-owned retail locations and 117 independent retail locations. We believe that a more robust network of company-owned retail locations will allow us to be more responsive and improve the customer experience at all stages, from manufacturing and design to sales, financing and customer service. We believe our company-owned stores will, on average, be more productive than our independent retail locations and generate higher gross margins due to our ability to select attractive markets and develop highly-trained sales representatives who possess a deep understanding of our business and customer needs.
Expand Financing Solutions for Our Customers. We recognize that offering financing solutions to our customers is an important component of being a vertically integrated company that provides affordable manufactured housing. Providing financing improves our responsiveness to the needs of prospective purchasers while also providing us with opportunities for loan origination and servicing revenues, which act as additional drivers of net revenue for us. With a portion of the net proceeds of this offering, we intend to expand our financing solutions to manufactured housing community-owner customers, in a manner than includes developing new sites for products in or near urban locations where there is a shortage of sites to place our products.
Continue to Focus on Innovation and Customization for Core Customer Groups. Our production strategy is focused on continually developing the resources necessary to efficiently build homes that incorporate unique, varied and innovative customer preferences. We are constantly seeking ways to directly source materials to be used in the manufacturing process, which allows us to ensure we utilize and employ quality materials that can be customized to meet our customers’ needs. Our principal focus is on designing and building highly functional and durable products that appeal to families of all sizes.
Seek Additional Agreements with Owners of Manufactured Home Communities. Community housing developments provide us with large, concentrated sales opportunities. These projects vary in size and density but generally include 30 to 300 homes. We believe there are significant growth opportunities to work with our development partners on such projects and view these opportunities as an important driver for both the sale of additional manufactured homes and for financing bulk purchases of those homes by community owners.
Pursue Selective Acquisitions. We seek to grow through selective acquisitions in both existing markets and new markets that exhibit strong and reliable long-term fundamentals. We also regularly evaluate opportunities tangentially related to our affordable housing business in our geographic markets. We have no current agreements or understandings regarding an acquisition
Again, the full Legacy (LEGH) S-1, which includes more graphics and financial details are found at this link here.
MHProNews congratulates the Legacy team on this announcement. As a disclosure, with other stocks we track and report upon,MHProNews holds no positions in the company. That said, the details over their years of sold growth reveal they have been a strong contender. That has reportedly moved to the firm into the number 4 position in the industry, behind Clayton, Cavco and Skyline-Champion. “We Provide, You Decide.” ## (News, analysis and commentary.)
(All their party images and content are provided under fair use news media guidelines.)
By L. A. ‘Tony’ and Soheyla Kovach.