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We completed our initial public offering (the “IPO”) in December 2018 and our common stock trades on The NASDAQ Global Market under the symbol “LEGH.”
−Removed: 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 IBTS for the twelve month period ending September 30, 2020.
+Added: We are the sixth 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 IBTS for the twelve month period ending September 30, 2021.
With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 395 to 2,667 square feet consisting of 1 to 5 bedrooms, with 1 to 3 1 / 2 bathrooms.
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Our 13 company-owned retail locations, including 11 Heritage Housing stores and two Tiny House Outlet stores, exclusively sell our homes.
+Added: During 2021, approximately 50% of our manufactured homes were sold in Texas, followed by 16% in Georgia, 8% in Louisiana and 5% in Alabama.
During 2020, approximately 46% of our manufactured homes were sold in Texas, followed by 8% in Georgia, 8% in Michigan, 5% in Kansas, and 5% in North Carolina.
−Removed: During 2019, approximately 48% of our manufactured homes were sold in Texas, followed by 8% in Georgia, 6% in Kansas, 5% in Florida and 5% in Oklahoma.
We plan to deepen our distribution channel by using cash from operations and borrowings from our lines of credit to expand our company-owned retail locations in new and existing markets.
We offer three types of financing solutions to our customers.
−Removed: We provide floor plan financing for our independent retailers, which takes the form of a consignment arrangement between the retailer and us.
+Added: We provide floor plan financing for our independent retailers, which takes the form of a consignment arrangement or a financed sale 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 solutions to manufactured housing community owners that buy our products for use in their housing communities.
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We believe our target U.S.
−Removed: age groups consist of young families between the ages of 20-39 and persons age 50 and older.
−Removed: These age groups have grown significantly since 2007.
+Added: age group is wide ranging from young families who are often first time homebuyers to older homebuyers who may be downsizing or moving towards a more rural lifestyle.
The comparatively low all-in cost of fully-equipped manufactured housing is attractive to our target consumers.
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Census Bureau, the Institute for Building Technology and Safety, and the Manufactured Housing Institute.
−Removed: Population Growth from 2007 to 2017
−Removed: Census Bureau.
Manufactured homes are an attractive alternative for consumers as new single-family home prices continue to rise at a rapid rate.
−Removed: As shown in the chart below, the average sale price for new single-family homes (including the land on which they were built) increased approximately 42% since 2009 while the annual average sale price of manufactured homes increased 14% during that time period.
+Added: As shown in the chart below, there is a growing gap between the average sale price for new single-family homes (including the land on which they were built) and the price of the average manufactured home;
+Added: management sees this gap as an opportunity for the industry.
Average Sale Price Comparison
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Census Bureau.
−Removed: In 2017, the manufactured housing industry shipped 92,891 manufactured homes according to data published by the U.S.
−Removed: Census Bureau, the Institute for Building Technology and Safety (“IBTS”) and the Manufactured Housing Institute (“MHI”).
−Removed: Total annualized manufactured home shipments in 2018 increased to approximately 96,500.
−Removed: In 2019, according to MHI and the Census Bureau, manufactured housing shipments were approximately 94,600, which remains well below the average annual shipments totaling approximately 350,000 between 1994 and 1999.
+Added: The manufactured housing industry shipped 105,800 and 94,400 manufactured homes in 2021 and 2020, respectively, according to data published by the U.S.
+Added: Census Bureau.
+Added: Manufactured housing shipments have increased by 30% and 34%, respectively, over the past five years and represent approximately 7% of total completed privately owned housing units.
Manufactured Home Shipments vs.
Total Completed Housing
−Removed: Census Bureau, the Institute for Building Technology and Safety, and the Manufactured Housing Institute.
+Added: Census Bureau
Our Competitive Advantages
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Our three manufacturing facilities are strategically located to allow us to serve our 176 independent and 13 company-owned retail locations primarily across 15 states.
−Removed: Currently, we have a manufacturing plant in Fort Worth, Texas that measures 97,000 square feet in size and produced 1,043 homes in 2020 and 1,297
−Removed: homes in 2019, a manufacturing plant in Commerce, Texas that measures 130,000 square feet in size and produced 691 homes in 2020 and 713 homes in 2019, and a manufacturing plant in Eatonton, Georgia that measures 388,000 square feet in size and produced 1,097 homes in 2020 and 1,016 homes in 2019.
+Added: Currently, we have a manufacturing plant in Fort Worth, Texas that measures 97,000 square feet in size and produced 1,095 homes in 2021 and 1,043 homes in 2020, a manufacturing plant in Commerce, Texas that measures 130,000 square feet in size and produced 732 homes in 2021 and 691 homes in 2020, and a manufacturing plant in Eatonton, Georgia that measures 388,000 square feet in size and produced 1,046 homes in 2021 and 1,097 homes in 2020.
Once our homes are constructed and equipped at our facilities, we have the ability to transport the finished products directly to customers ensuring timely and efficient delivery of our manufactured homes.
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Our first company-owned retail location opened in June 2016.
−Removed: Increasing the mix of company-owned locations allows us to improve the customer experience through all the steps of the buying process, from manufacturing and design to sales, financing and customer service.
We believe our company-owned stores will, on average, carry higher gross margins.
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We believe that a strong alignment of interests with stockholders and investors exists through the ownership of a significant percentage of our outstanding shares by our co-founders, Curtis D.
−Removed: Hodgson (Executive Chairman of the Board) and Kenneth E.
+Added: Hodgson (Executive Chairman of the Board) and Kenneth
Shipley (President and Chief Executive Officer).
Hodgson and Shipley acquired their ownership in 2005 when they founded the company.
−Removed: Each individual has and continues to receive a minimal annual
−Removed: salary ($50,000).
+Added: Each individual has received a minimal annual salary ($50,000).
+Added: Shipley continues to receive a minimal annual salary ($50,000).
+Added: In January 2022, Messr.
+Added: Hodgson entered into an amended and restated employment agreement which provides him with an annual salary of $200,000 and a signing bonus of 150,000 shares of restricted stock, which vested upon grant.
+Added: Under this new agreement, he is also eligible for an annual incentive bonus and equity awards.
By providing structural and economic alignment with the performance of our company, Messrs.
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Our growth strategy includes the following key initiatives:
−Removed: ● Broaden and Deepen Our Retail Presence in Key Geographic Areas.
−Removed: As of December 31, 2020, we distribute our products primarily across 15 states through a combination of 13 company-owned retail locations and 100 independent retail locations.
−Removed: 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.
−Removed: We believe our company-owned stores will, on average, be more productive than our independent retail locations and carry higher gross margins due to our ability to select critical markets and develop highly-trained sales representatives who possess a deep understanding of our business and customer needs.
● Expand Financing Solutions for Our Customers.
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During the years ended December 31, 2021 and 2020, we financed approximately 46% and 62% of the homes we sold to consumers, respectively.
−Removed: We intend to expand financing solutions to manufactured housing community-owner customers, in a manner that includes developing new sites for products in or near urban locations where there is a shortage of sites to place our products.
+Added: We intend to expand financing and leasing solutions to manufactured housing community-owner customers, in a manner that 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.
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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 more homes and for financing bulk purchases of those homes by community owners.
−Removed: ● Pursue Selective Acquisitions.
−Removed: We seek to grow through selective acquisitions of existing manufactured home retailers in both existing markets and new markets that exhibit strong and reliable long-term fundamentals.
−Removed: We also regularly evaluate opportunities related to our affordable housing business in our geographic markets.
−Removed: In April 2018, we acquired approximately 420 acres of raw land located near Austin, Texas for $4.2 million.
+Added: ● Pursue Selective Development Opportunites.
+Added: We seek to grow through selective acquisition of developable land in proximity to our manufacturing footprint which will serve as a future revenue stream for the underlying land as well as ensuring high utilization of our expertise in manufacturing and distribution.
+Added: In April 2018, we acquired approximately 420 acres of raw land located in Bastrop County near Austin, Texas for $4.2 million.
In November 2018, we acquired approximately 69 acres of raw land located near Adkins, Texas for $0.8 million.
−Removed: In July and August 2019, we acquired approximately 140 acres of raw land
−Removed: in Johnson County, Texas for $0.9 million.
+Added: In July and August 2019, we acquired approximately 140 acres of raw land in Johnson County, Texas for $0.9 million.
In September 2020, we acquired approximately 80 acres of raw land in Wise County, Texas for $0.9 million.
+Added: In February 2021, we acquired approximately 233 acres of raw land in Bexar County, Texas for $1.6 million.
We have secured a permit for a wastewater plant for the land in Bastrop County and we intend to begin construction in 2022.
−Removed: Upon completion, the wastewater plant can serve 1,075 home sites.
+Added: completion, the wastewater plant can serve 1,075 home sites.
We will continue to evaluate opportunities to develop the remaining land, or to provide financing to third party developers of additional manufactured housing communities in order to provide locations for manufactured homes for our customers.
−Removed: 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 IBTS for the twelve month period ending September 30, 2020.
+Added: ● Focus on our Retail Process.
+Added: As of December 31, 2021, we distribute our products primarily across 15 states through a combination of 13 company-owned retail locations and 176 independent retail locations.
+Added: We believe that a focused 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.
+Added: We believe our company-owned stores will, on average, carry higher gross margins due to our ability to select critical markets and develop highly-trained sales representatives who possess a deep understanding of our business and customer needs.
+Added: We are the sixth 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 IBTS for the twelve month period ending September 30, 2021.
We produce a wide variety of homes that can be used by our customers in a number of ways.
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We frequently introduce new floor plans, decor, exterior design, features and accessories to appeal to changing consumer trends and we offer an assortment of customizations to match each customer’s individual tastes.
−Removed: Each home typically contains a living room, dining area, kitchen, 1 to 5 bedrooms and 1 to 3 1 / 2 bathrooms, and each home can be customized to include certain features including, among others, fireplaces, central air conditioning, overhead heat ducts, stipple-textured ceilings, decorative wood grain vinyl floors, wood cabinetry and energy conservation elements.
+Added: Each home typically contains a living room, dining area, kitchen, 1 to 5 bedrooms and 1 to 3 1 / 2 bathrooms, and each home can be customized to include certain features including, among others, fireplaces, central air conditioning, mini-split climate control, overhead heat ducts, stipple-textured ceilings, decorative wood grain vinyl floors, wood cabinetry and energy conservation elements.
The manufactured homes we build are constructed in accordance with the construction and safety standards of HUD.
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The production schedules for our manufacturing facilities are based on wholesale orders received from distributors, which fluctuate from week to week.
−Removed: In general, our facilities are structured to operate on one 8- to 9-hour shift per day, five days per week.
+Added: In general, our facilities are structured to operate on one 8- to 9-hour shift per day,
+Added: five days per week.
We currently manufacture a typical home in approximately three to six production days.
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Raw Materials and Suppliers.
−Removed: The principal materials used in the production of our manufactured homes include wood, wood products, steel, aluminum, gypsum wallboard, windows, doors, fiberglass insulation, carpet, vinyl,
−Removed: fasteners, plumbing materials, appliances and electrical items.
+Added: The principal materials used in the production of our manufactured homes include wood, wood products, steel, aluminum, gypsum wallboard, windows, doors, fiberglass insulation, carpet, vinyl, fasteners, plumbing materials, appliances and electrical items.
We currently buy these materials from various third-party manufacturers and distributors.
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The inability to obtain any materials used in the production of our homes, whether resulting from material shortages, limitation of supplier facilities or other events affecting production of component parts, may affect our ability to meet or maintain production requirements.
−Removed: We have not previously experienced any material difficulty in obtaining key materials in adequate quantity or quality.
+Added: Pricing and availability of certain raw materials were volatile during 2021 due to a number of factors in th e economic environment.
+Added: We continue to monitor and react to inflation in these materials by maintaining a focus on our product pricing in response to higher materials costs.
We provide the retail home buyer with a one-year limited warranty from the date of purchase covering defects in material or workmanship in home structure, plumbing and electrical systems.
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North Carolina
−Removed: In 2020 and 2019, we also sold homes in Alabama, Arkansas, Arizona, Colorado, Iowa, Illinois, Indiana, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, Ohio, Pennsylvania, South Carolina, Tennessee, Wisconsin and Virginia.
+Added: South Carolina
+Added: In 2021 and 2020, we also sold homes in Arkansas, Arizona, Colorado, Iowa, Illinois, Indiana, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, Ohio, Pennsylvania, Tennessee, Utah, Virginia and Wisconsin.
We continually seek to increase our wholesale shipments by growing sales at our existing independent retailers and by finding new independent retailers to sell our homes.
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We believe we have the most comprehensive printed catalog of manufactured housing products in the industry.
−Removed: Our independent retailers generally either pay cash to purchase inventory or finance their inventory needs through our consignment arrangements.
+Added: Our independent retailers generally either pay cash to purchase inventory or finance their inventory needs through our consignment arrangements or financed sales.
Certain of our independent retailers finance a portion of their inventory through wholesale floor plan financing arrangements with third parties.
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Approximately 39% of our 2020 product sales were attributable to our independent retail distributors, 12% to our company-owned retail locations and 49% to direct sales to owners of manufactured housing communities.
−Removed: In addition to our expansive independent retailer channel, we have attractive growth opportunities to expand our company-owned locations.
As of December 31, 2021, we operate 13 company-owned retail locations.
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All of our customers are located in the United States.
−Removed: During the year ended December 31, 2020, one customer accounted for 29% of our net sales and no other customer accounted for more than 10% of our net sales.
+Added: During the year ended December 31, 2021, no customer accounted for more than 10% of our net sales.
During the year ended December 31, 2020, one customer accounted for 29% of our net sales and no other customer accounted for more than 10% of our net sales.
2 unchanged sentences
● Floor Plan Financing.
−Removed: We provide floor plan or wholesale financing for our independent retailers, which takes the form of a consignment arrangement between the retailer and us.
+Added: We consign inventory or provide wholesale financing to our independent retailers.
● Consumer Financing.
1 unchanged sentence
● Manufactured Housing Community Financing.
−Removed: We provide financing to community owners that buy our products for use in their rental housing communities.
+Added: We provide financing to community owners that buy or lease our products for use in their rental housing communities.
Overview of Consumer and MHP Financing Options as of December 31, 2021
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At the present time, we currently offer only chattel loans.
−Removed: As our own network of company-owned retail
−Removed: centers becomes a larger share of our production, we will be able to couple our consumer-financing solutions with increased levels of anticipated sales from our own centers.
We provide retail consumer financing to consumers who purchase our full-size manufactured homes and tiny houses and dealer incentive arrangements to encourage independent retailers to use our financing product.
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These loans typically range in term from two to five years and carry interest at 5.00% to 12.0%.
−Removed: For the year ended December 31, 2020, we originated loans to owners of manufactured home communities for lot development purposes with a total amount outstanding of $14,686,000.
+Added: For the year ended December 31, 2021, we originated loans to owners of manufactured home communities for lot development purposes with a total amount of $34,069,000.
The manufactured housing industry is highly competitive at both the manufacturing and retail levels, with competition based upon several factors, including price, product features, reputation for service and quality, depth of distribution, promotion, merchandising and the terms of retail and wholesale consumer financing.
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For the past 17 years, the industry has experienced a trend towards consolidation and, as a result, the bulk of the market share is controlled by a small number of companies.
−Removed: We are the country’s fourth
−Removed: largest producer of manufactured homes.
+Added: We are the country’s sixth largest producer of manufactured homes.
Accordingly, we believe we have a significant opportunity to expand in this industry by effectively growing our market share.
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Our manufactured homes (including our tiny houses) are also subject to local zoning and housing regulations.
−Removed: In certain cities and counties in areas where our homes are sold, local governmental ordinances and regulations have been enacted which restrict the placement of manufactured
−Removed: homes on privately-owned land or which require the placement of manufactured homes in manufactured home communities.
+Added: In certain cities and counties in areas where our homes are sold, local governmental ordinances and regulations have been enacted which restrict the placement of manufactured homes on privately-owned land or which require the placement of manufactured homes in manufactured home communities.
Such ordinances and regulations may adversely affect our ability to sell homes for installation in communities where they are in effect.
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While many manufactured homes are financed with agency-conforming mortgages in which the ability to repay is verified, and interest rates and other costs are within the safe harbor limits, a significant amount of loans to finance the purchase of manufactured homes, particularly chattel loans and non-conforming land-home loans, fall outside such safe harbors.
−Removed: Additionally, the CFPB rules, among other things, amended the Truth-in-Lending Act and the Real Estate Settlement Procedures Act by expanding the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protections Act of 1994 (“HOEPA”) and imposing additional restrictions on mortgages that are covered by HOEPA.
+Added: Additionally, the CFPB rules, among other things, amended the Truth-in-Lending Act and the Real Estate
+Added: Settlement Procedures Act by expanding the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protections Act of 1994 (“HOEPA”) and imposing additional restrictions on mortgages that are covered by HOEPA.
As a result, certain manufactured home loans are now subject to HOEPA limits on interest rates and fees.
Loans with rates or fees in excess of the limits are deemed “High Cost Mortgages” and provide additional protections for borrowers, including with respect to determining the value of the home.
−Removed: Most loans for the purchase of
−Removed: manufactured homes have been written at rates and fees that would not appear to be considered High Cost Mortgages under these rules and while some lenders may offer loans that are deemed High Cost Mortgages, the rate and fee limits may deter some lenders from offering such loans to borrowers or be reluctant to enter into loans subject to the provisions of HOEPA.
+Added: Most loans for the purchase of manufactured homes have been written at rates and fees that would not appear to be considered High Cost Mortgages under these rules and while some lenders may offer loans that are deemed High Cost Mortgages, the rate and fee limits may deter some lenders from offering such loans to borrowers or be reluctant to enter into loans subject to the provisions of HOEPA.
Additionally, certain CFPB rules apply to appraisals on principal residences securing higher-priced mortgage loans.
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As of December 31, 2021, we had approximately 880 employees.
−Removed: Of our employees, approximately 760 individuals are hourly employees and approximately 110 individuals are salaried employees.
+Added: Of our employees, approximately 777 individuals are hourly employees and 103 individuals are salaried employees.
Our employees are currently not represented by any collective bargaining unit.
4 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.