Ladies and gentlemen, thank you for standing by. And Welcome to the Legacy Housing Corporation Q4 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to introduce your host for today's conference call, Mr.

Curt Hodgson, Chairman of the Board. You may begin..

Good morning. Before we begin, may I remind our listeners that management's prepared remarks today will contain forward-looking statements, which are subject to risks and uncertainties and may have been, may make additional forward-looking statements and response to your questions.

Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995.

Actual results may differ from management's current expectations and therefore, we refer you to a more detailed discussion of the risks and uncertainties of the company's annual report filed with the Securities and Exchange Commission.

In addition, any projections as to the company's future performance represents management’s estimates as of today's call, Legacy Housing assumes no obligation to update these projections in future, unless otherwise required by applicable law.

Now, before we turn to what is a lot of encouraging news about Legacy's performance in Q4 and in 2019, I think it's appropriate first to address the ongoing pandemic that has impacted the world and obviously caused a great deal of anxiety and turmoil across the globe.

Our thoughts go out to all those impacted by the current crisis, and we certainly encourage everyone to take the necessary precautions to minimize any risks to your health and the health of those around you. We also want to thank you for joining this call in this current environment.

I will address in more detail the potential impact of the pandemics on Legacy later in my remarks. Now then on a happy note let's turn to an overview of our 2019 results. 2019 was quite simply the best year in Legacy's 15 year history and obviously, the first year that Legacy was a publicly traded company.

We achieved record revenue of $169 million, a 4.4% increase over results for the 2018 fiscal year. We did this largely by improving our product sales to manufactured home communities, growing those sales from $31 million to $64 million over year-over-year, a massive 106% increase for 2019.

We spent a lot of time in last few years cultivating relationships and expertise with respect to manufactured home communities, and this was the year those efforts were reaped dramatic dividends.

We believe we're in the middle of an up cycle for restocking, refurbishing and expanding existing parks, and we believe this trend should generally continue for the next 24 to 36 months. We were also pleased that we improved our company-owned store sales by $3 million to $16.1 million in 2019.

As you know, our company-owned stores carry higher margins and higher finance capture rates, and this helps explain how we improved our revenue in 2019 even though the volume of homes sold remained relatively flat as compared to 2018. Legacy also had a tremendous year in growing our consumer and manufactured home community loan portfolios.

In 2019, our interest income grew by $3.4 million, an 18.3% increase over 2018. Even more impressive our manufactured home community portfolio expanded by $34.4 million to now $92.3 million, reflective of the tremendous year we have with respect to orders for communities in the financing of those orders.

We also expanded our consumer book by approximately $8 million to $105 million at a deferred financing fees and allowance for loan losses. We think our books provide a tremendous mote, a Warren Buffett type mote, even in challenging times due to the great work of our in house team and originating and servicing these loans.

Our first year as a public company certainly presented some challenges and required some adaptation and essential resources to meet public company obligations. This is most reflected in our SG&A increase to approximately $25.5 million in 2019, 21% increase from the prior year. But overall 2019 was a great year for Legacy.

Our product sales margins were 27% compared to 23% in 2018. Our income before tax rose to a very healthy $37 .6 million, an increase of approximately $7 million from the prior year. Likewise, our net income increased to approximately $28.8 million, and more than 34% increase over the preceding year.

For the year, our earnings per share was $1.18, an 11% improvement over 2018. I'm very proud of what we've accomplished in 2019. We ended the year on a strong note with healthy demand levels of production and very strong balance sheet.

While the current COVID-19 situation presents definite challenges, we think it also presents or will present opportunities. Legacy is always managed to perform well relative to its peers when times get tough, and we anticipate this to be the case during the COVID-19 era.

We think this is at least in part due to centralized and vertical nature of our operations that allows us flexibility to adapt quickly, as this is particularly beneficial when conditions stabilize and improve as it will enable us to take advantage of some growth or acquisition opportunities and much more feeling dollar figures or valuations than we have seen in the last few years.

Let me briefly provide some more detail on our view of where legacy is situated in light of the global health and economic crisis we face. Legacy is more fortunate, some in that the manufactured home industry is not brought to the immediate launch of this pandemic like some companies, say in the hotel or airline industry.

Legacy like all businesses is certainly going to be impacted. For example, for at least a period of 2020, we anticipate some negative impact on our operations earnings as there is a likelihood of increased loan losses or deferred payments.

As loan providers suffer cash flow issues resulting from reduced employment, reduced sales lines, as potential customers are unable to shop for new homes, or cannot qualify for a home purchase and delays as some of our real estate development projects has zoning, regulatory and permitting decisions, are likely to be postponed.

However, this situation will ultimately present opportunities, such as with the cost of some of our raw materials, which are already coming down, or like our recent negotiation of more favorable borrowing terms for our credit facilities, or perhaps more long term as we anticipate easing of our labor costs.

We are being proactive so that Legacy is positioned to come out of these difficult times with positive momentum. Ken and I have navigated some of the most difficult times ever over the last 30, 40 years, that experience taught us some valuable lessons.

We've seen oil prices decline like they have recently in two episodes previously in Texas, this isn't our first rodeo. We're applying these lessons to the current situation by using some of the tactics we know can help us endure and prosper during these trying times.

For example, we've already begun offering discounts for the sale of aged inventory sitting on dealer and company owned stores, offering discounts on orders for new units and reducing down payment requirements for certain manufactured home communities.

Additionally, the company has modified rates of pay for nonproduction workers, and adjusted our overtime policies, company wise preserved our strong financial position even when facing the current financial turmoil.

With our order book, our balance sheet and available liquidity, we anticipate being able to maintain profitable production for the next few months even in the current climate and we will continue to execute our business objectives and strategy. This is obviously an evolving situation and we will update you if anything changes.

I would like to turn the call over Cork in order to discuss the quarter-over-quarter comparison.

Cork?.

Thanks, Curt. Net revenue for the fourth quarter of 2019 was $43.3 million, an increase of $8.3 million over 2018's fourth quarter net revenue of $35 million. Product sales, the largest component of our revenue, grew 25.7% in the quarter to $36.5 million. Sales to manufactured home parks increased $8.3 million or 91% to $17.4 million.

While sales through our company owned retail stores increased 87% in the quarter to $4.9 million, and sales of consigned inventory through our network of independent retailers increased $1.1 million to $10.7 million. These increases were partially offset by reduced factory direct sales compared to fourth quarter of 2018.

Product sales gross margin percentage increased to 24.3%, driven by the increasing sales through our retail stores, which typically carry the highest gross margins. Interest income in the quarter was $5.9 million, a 14.7% increase or the $5.1 million recorded last year. Interest generated by our consumer loan portfolio increased 9.3% to $4 million.

And interest from our manufactured home park loan portfolio increased 28.8% to $1.8 million compared to the fourth quarter of 2018.

SG&A expenses of $6.6 million increased $300,000 from the fourth quarter of 2018, reflecting higher personnel expenses related to public company compliance and staffing of our company owned retail stores, partially offset by reduced delivery and insurance expenses and reduced losses on sales of repossessed homes.

Pre-tax earnings increased $5.2 million to $8.9 million in the quarter. Income tax of $2.1 million increased $1.2 million over the fourth quarter of 2018 on the higher earnings recorded. Net income was $6.9 million for the fourth quarter compared to $2.8 million in the similar period of 2018.

Income per share based on basic and diluted weighted average shares outstanding was $0.28 compared to $0.13 in the prior year quarter. And finally, equity has increased $33.1 million from year-end 2018 to $222.4 million. That completes our financial overview.

Curt?.

Thanks Cork. On our last earnings call, we discussed third quarter earnings. I expect optimism about the direction we were headed going in the fourth quarter. I'm grateful that that optimism was justified as we performed well in the fourth quarter.

As I sit here year today, I know we're facing an unprecedented global health and economic crisis that obviously makes it difficult to predict with any precision what the next few months will bring.

But I remain optimistic about the future of Legacy and continue to believe we will return significant value to our shareholders over the next 12 or 18 months. Let me paint a picture anticipating questions about what the next three or six months looks like.

We have decreased our Texas production and our production overall in the company from 15 to 13 floors per day, it's a pretty modest decrease. But we have supplemented that with increasing our distribution from private branding up in the State of Indiana where we buy houses from other manufacturers and sell them to our park customers.

So I'm kind of anticipating that the second quarter sales will be about the same as before. Going into the third quarter, I can't really tell, because I don't know where COVID-19 is going to take us, but our order backlog continues to be strong and we're selling even in this crisis. In Georgia, we sold production every week through this crisis.

In Texas, we should know over the next couple days whether or not that production will continue, because we have some promotions going on, which expire April 1st. I'm confident about the second quarter and I'm optimistic about the third quarter. We've decreased SG&A costs by approximately 10% with some of the moves we just made.

So our profitability and our revenue should be strong. All three plants are working. They're working at a standard 40-hour workweek. We’re producing like we always have before. Thank you for your interest and attention today. And I'll now take any questions that you’ll have..

[Operator Instructions] Our first question comes from David Burdick with Oak Ridge..

So you ended the year strong and it’s tough the virus came at a time where the business was seeing some great momentum.

But just wanted to get a little more color on that Q4 strength and where that was coming from?.

I think it came from a lot of different places. The Q4 normally is kind of a down quarter in production in our industry, but we were producing the same way as we were in Q3. So we were able to have a higher top-line than we would have expected normal Q4 to be.

It’s also a period where we tend to pay bonuses and incur a lot of SG&A expenses, but our Q4 actually, our SG&A expenses held fairly steady as a percentage of sales. So I think that was, those were two pleasant surprises.

Our volume was a little higher than we would have expected, and our SG&A held steady even in the fourth quarter where it's usually a little higher. We continue to build our book of business portfolio.

Our interest income was up ever so gradually every month, every week, every quarter as we put on -- as we take our winnings and redeploy them in our own industry. I hope that answers your question..

So you talk about your order book being strong. Can you just provide a little more color on that? Are you referring to sales in the last couple of weeks? Would you be able to maybe provide a little more details on March trends? And then you also mentioned you’re offering some discounts and down payment assistance.

Can you talk about that a little more in some detail? Thanks..

Sales in Texas have declined to about 50% or 60% of production during COVID-19. Surprisingly even strong I think they've even may be exceed production.

And we missed our big show of the year, Tunica, which is the big annual show for the industry happens at the end of March, Tunica Mississippi and they canceled that show, which we typically get 300, 400, 500 units of orders at that show.

In lieu of that, we unveiled the plan that was essentially the same types of promotions we do at Tunica, and that doesn't end until Wednesday so I don't have the numbers. The anticipated numbers for that are almost as good as Tunica would be with essentially the same type of promotions, like six months free interest to those that that participate.

This isn't the first time that we've offered a low down payment financing for communities we've done it regularly. We just combined that with the typical Tunica sales to try to lock in these communities to production. We're kind of anticipating softening of prices and costs throughout our entire industry.

We just want to be ahead of it and make sure that we do it before the competition does. I don't think any of our competition has followed suit yet.

The lumber is down maybe a third, steel is down a little bit, labor is down a little bit and we may have an opportunity in the next six months to offer more promotions and maybe even have some super-duper sales along the way, that's what we intend to do is to fight for market share as the pie likely we'll get a little bit smaller across the entire nation at shipments of manufactured housing.

We get 110,000 shipments I think in last 12 months nationwide manufactured housing, and I wouldn't be surprised if we have a 20% decrease in our shipments over the next 12 months as we worked through COVID-19 hopefully that Legacy won't feel as much of a decline if a decline at all..

Our next question comes from Mark Smith with Lake Street Capital..

Curt, could you talk a little bit about mix of sales during the quarter, what you saw as far as singles versus double-wise? And then you know as you've been through some down cycles before how you maybe see that mix shifting here over the next few months?.

I'm going to have somebody else address this question, because it's not really a statistic to that, I keep up with very much. But the down cycles, I'm 66 years old this year and I'm in number one business in Texas since 1980. I'm more concerned about the decrease in oil prices than I am with COVID-19.

So, we've had from $60 a barrel to today $20 a barrel in Texas, Oklahoma, Louisiana, our oil states and there’s jobs that are associated with the price of oil. In that case, we don't have much exposure to the direct oilfield. We don't have much West Texas or Permian Basin exposure it's probably no more than 3% or 4% of our consumer portfolio.

But the Texas as a whole and our EMEA states, Houston has a lot of oil related jobs that are having layoffs at those companies. So we don't know for sure what will happen to our retail but we anticipate a slight increase in repossessions and a slight increase in the difficulty of collections.

But people keep moving to Texas, we keep having positive demographics that are coming primarily everywhere from the Midwest, from California everywhere. So as long as we have positive demographics in the states we’re going do just fine and as said Southeast has been amazingly resilient through this.

In fact, we may have to increase production in Georgia, because their sales keep on outperforming our production. So on balance, I think that we're going to get through this from an experience point of view. I have a saying that I developed many years ago, you can't just fall fast enough when oil goes from $60 to $20.

So within five days, we implemented 12 different steps to work on SG&A pricings to do more promotions and I think we're already ahead of our competition. One major company, Skyline Champion, I think has already shut down 13 plants. And while all three of ours are running pretty much close to capacity, so that’s it.

So Ken, do you have a feel for product mix?.

I think you know before oil dropped and everything, I think we used to be about 50-50 doubles to singles but as the park sales have got stronger and most of what they buy is single lots, I would probably say that the singles are going to be about 65% of the market. We're still about 35% doubles to 65 %, I would think that's about what the mix is..

And then I know that mobile home parks that this is kind of a growing business for you guy, but maybe as you look backwards if we've seen recessions and downturns.

Have you seen people, primarily in that Texas market, downsize homes and move more into manufactured housing outside of kind of site built homes?.

Yes, I think that's going to happen more and more, especially with this topic I think people are going to want to try to get back out of the cities where they're all crammed together. And we've build affordable housing, I think you're going to see a lot of people start to downsize and probably learn their lessons, but we look for some growth there..

And then last question for me just as we look at the loan business, both consumer and the manufactured home parks.

Can you talk at all about kind of the spread that you're seeing as your borrowing costs have maybe come down? And do you see or foresee these rates that you'd land at coming down kind of in sync with that, or is there an opportunity to get, maybe get a little more spread?.

Over the last few years, we've had a gradual decline in rates just as we want to be less of a sticker shock. So our consumers were paying 14% interest. And now we have programs all the way down to 11% and 12%, and our parks are paying 8.9 and now we offer 7.9.

But that isn't really affect our profitability, because we've had corresponding increase in gross margin, which I think Cork talked about a little bit I guess. We think we'll have a, we don't have any price reductions in mind but we know that we have material and labor costs coming down.

So our gross margin during this crisis, the COVID-19 crisis, will actually go up. It's really just a matter of how we're going to maintain are difficult if they are any different already, because several portfolio hasn't, so one bit of hiccup yet are our most recent data shows that our over 60 wage has not increased at all.

During this crisis, yet, we've had a few parks that’s indicated concern of their ability to pay should their consumers don't pay their community rent, but we haven't had anybody go into a nonpayment situation since the COVID-19 crisis began.

In full disclosure, we've had two or three before the COVID-19 that were slow pay, which is a little bit deterioration in our park portfolio. It's a matter of whether or not the portfolios perform or not and what happens when they don't perform.

Do we repossess the inventory? Do we work with our borrowers? And those policies are a little bit proprietary when discussing on an earnings call. But we've been through this before. We know what we're doing. And I think our earnings and our sales will reflect far superior performance to our peer group.

I don't even think that those of you that that knew me, Jenny and Neil on the road show, we were lamenting how well we do in difficult times. And now it's time for us to prove that up during this health prices and we will prove it out. We’ll do just fine in 2020 and probably 2021 as well..

[Operator Instructions] Our next question comes from Chris Colvin with [BICM]..

I had a question, just a couple questions clarifying.

So, did you say that the second quarter revenue you're anticipating will be roughly in-line with the first quarter, which presumably wasn't too impacted, or can you repeat your commentary there?.

I guess revenue to production, although there's a lag, because we don't count as the sale until it shifts and everything else. So assuming that production or that sales or revenue is reflected in production.

And then while we had, I don't know about 10% decrease in production we're having in the second quarter, we're adding to top-line approximately the same amount because of the deal we made was one of our principal competitors to buy a bunch of houses from them in Indiana and sell them to our best customers there.

It’s something we've done for years lately with another affiliated company but we just made a big deal.

So I think that something we have those built and shipped, which their plant currently isn't running then I think the second quarter will be approximate the same as first quarter in sales, it could even be a little bit better just a little bit better like 1% or 2% better.

Obviously, any deterioration in the second quarter whatsoever and trying to form an opinion on third quarter, but every time I wake up, there’s a new thing on the news, so I don't really, just really where the oil prices in Texas. So I think the health thing will be over sometime in the summer.

But the oil prices in Texas could cause us to make even more cuts in production in Texas if things get real soft here. So it's more of a function of oil prices in the third quarter than it is the COVID-19 crisis..

And then as far as production in Texas, you’ve said a couple times George is doing great, but it was unclear in Texas. You said production has dropped to 50% to 60% and then you ran this promotion since you didn't have the Tunica show.

So what is production today, because you said something about plants operating at full capacity? So I guess it's unclear how much kind of production is down in Texas?.

And I think maybe I was getting in couple of different concepts confused. This time of the year, we typically sell less than production and then we do promotions like Tunica to stimulate production. It's kind of seasonal business but the winner in the early part of the year is not as good as the summer in the fall.

So we've been experiencing since COVID an order book of around 50% of production in Texas, which isn't that much less than we normally would without promotions but we just had it subject to for technical promotion.

Our sales staff seems to think that they're going to be delivering this week, 300 to 400 orders from that sales promotion, I'd be happy with 200 just to be quite honest. So the decreases in production we've had and then into top-line are all Texas plays. Each plant in Texas, we have to plants in Texas decrease production by one per day.

Georgia remain the same and I think actually went up a little bit, and the Indiana boost or Midwest boost local help topline. So when I say 50%, I mean that we're ordering in the order book through this crisis is approximately half of production in Texas.

And as far as the actual level of production, as I said earlier, we just decreased it nationwide from 15 to 13 per day, which is, I’d have to do the math on that but I guess it's around 14%. And I don't look for further cuts in production. For quite a while, we have enough order books now that we can close to the second quarter.

It's only the third quarter that would be affected. We probably wouldn't decrease production in Texas in the second quarter really no matter what happened to the order book, it’s the third quarter that we might have to work on if the order book doesn't come back in Texas, I would say within the next six weeks..

That's clarifying that the 50% to 60% production, there's a huge seasonal aspect, it's not the recent events, so that's helpful. And then on SG$A you said you cut roughly 10% with the actions already taken and I think you just mentioned if necessary there could be more cost cuts.

So assuming because there're some pretty pessimistic kind of forecasts out there just on the economy and COVID’s impact and of course oil as well. So let's assume it's kind of dragged on a little bit or oil is not recovering.

How much opportunity is there to cut SG&A further? And from a gross margin perspective, do you think you can remain profitable production-wise, because your gross profit remain positive?.

We make profit several different ways but a good part of it is the interest we made on our book that's not going to go away. We don't have much fear of that suffering. So really just talking about profits from wholesale production or mobile homes which is kind of the other half of equation. And right now we feel real comfortable.

Our parts are all ordering pretty heavy during the special that's going on as we speak. I feel pretty good that we'll be able to retain our park business through this crisis.

Deals volume is off, I mean, anybody that owns a retail store is suffering decreased ups even if there are there and sometimes decreased by 50% and people's willingness to post it by a mobile home during these times has been off significantly. So that's where we're at.

But we’re in an industry that has allowed to operate in all the states that have a shelter in place are orders, the housing business and commercial construction usually are edged out is still allowed to operate. So I guess we're blessed and that we're not being told we must stay home.

So we get some business, no matter what, I don't know if that answer your question. I got a little distracted. So if there's something I left out just let me know..

On the SG&A side, if profit, revenue levels are lower, is there opportunity to cut more SG&A or that 10% you cut is pretty bare bones at this point?.

The SG&A really kind of a couple of categories, you got about a half of it which is absolutely fixed and then you have the other half, which is variable.

To the extent that half is variable is there, I think we're in pretty good shape is somewhat linear, it would go up and down with volume on the fixed side, and that's what we took some really big cuts.

We took it across the board payroll cut and we eliminated over time, and we are working on revamping service policies so that we'll just save a bunch there. When I said about 10% that was overall decrease in SG&A, I would guess that if things got tough, we have possibly another 10% that we could do without a lot of disruption but that's about it.

SG&A is so fixed, it's rented, its salaries, its utilities, its things that we can't really eliminate and still stay in business. In the 1980s for instance, for those of you that are younger than 66 years old and the number of plants in Texas went from 31 to three during an oil crisis.

So one way you could decrease SG&A expense is to markedly get smarter. We don't think it's going to come to that, but we're prepared if it comes to that. And I lay awake at night at 2 o'clock in the morning, what's the best case and what's the worst case scenario. We don't have any factory workers that have tested positive for COVID-19.

And sometimes I think, well, what if Ford did in one plant? What would we do? What would our response to be? And I don't really want to go there. But if we had a breakout at one of our plants, it would significantly impact our production, even if it wasn't our choice, which it probably would be in that case.

So we're not going to sit there and expose workers to this serious virus that's going around..

And then last one for me is maybe reminding other listeners on your loan portfolio, your consumer loans that you lend through dealers, the JV structures. So there's almost like a first loss if I'm thinking about a rate of 10% or so.

Can you just explain the scenario if defaults really start to peak out, how you're insulated because of the JV structure with dealers?.

So almost all of our consumer book was generated by independent retailers who sign a JV agreement with us that says that they will cover any losses from repos out of their share of the winnings that exceed 10%.

So basically, we're on the hook or the portfolio is on the hook for the first 10% and the independent retailer is on the hook for anything greater than that.

And many of them have so much equity built in their portfolios if you read our financials carefully, you'll see that we maintain a liability on our balance sheet at what we owe the dealers out of the portfolio. So that amount is essentially a cushion on our retail portfolio.

As far as our -- and I want to speak a little bit about our wholesale portfolio the $92 million that we have out there, when we sell a mobile home to par and finance reform and get 5%, 10%, 20%, he takes possession of that at unit and he goes ahead and ties it down and installs it and connects it to utilities and builds a deck and put security on it.

Some of the products have $6,000, $8,000, $10,000 their old money in this rental unit that they're creating. So they do have equity in that and would be very fearful that we would be picking it up and repositioning it. So we have strong bargaining position with a mobile home park in the case of non-performance.

And thus far, I don't think we've ever suffered a loss in the entire history of the company on a mobile home park loan. So I don't look at that as significant exposure. Some of these relationships are dear to us. And if they really are having cash flow issues, we may be helping them out a little bit to these difficult times.

But that said, they do have substantial investments in this rental unit. So between those two sides, our retail book of business was created with real down payments, averaging around 15% or 20% and the margins were very tame relative to some other portfolios.

I strongly believe that we have the most conservative business in the entire industry on the retail side. We've been led by a guy named Stuart McDowell, he's just a guy that doesn't make loans unless he really believes in them and we don't overrule them, hardly other do we overrule them.

So our retailer $100 million book of business is solid and I feel the same way about our loan home park portfolio. So roughly $200 million we allow in finance products to consumers and parks is the mote, that’s the mote and that will be a significant difference.

And we can parlay that and enhance that during these difficult times to keep the factories running. Long answer but I'm hoping that I made it simple enough for you to appreciate why Legacy will outperform our peer group and that's basically what we will outperform this year, they won't even be close..

Next question comes from Alex Rygiel with B. Riley FBR..

Couple quick questions, first, you had planned to open two to four new retail stores I suspect that’s probably delayed at the moment, but please confirm that.

And then if you could go into a little bit more detail on your community development efforts, understanding they probably have been slow here a little bit, but just update us on that activity?.

Ken, what don’t you take the retail store and I can take the community development..

We did open up one right at the end of the year of not paying and we got it off around, and it’s in the Atlanta market, and this is kind of slowed things up a little bit.

We've got our own one or two stores that we're struggling with right now that we may look at either shutdown or downsize in one of the stores or something but grow in a couple more stores is another market, but that's still on the drawing board. We just, we've got to get through this COVID-19 deal first..

On the community development, we haven't really added much to that since the last call. We made a loan to a guy who’s in the community development business as well secured that he personally guarantee as well. And I haven't talked to him recently about his plans to proceed with those three developments that we loaned on.

In our own real estate it's on our books, we talked about these before. We had a setback in Austin in one of our developments and then they decided they need a public hearing on a water treatment plant, which they said for the first week of April, which they've now postponed indefinitely. So that's a delay.

And then in other areas, we’re just having trouble getting staff and engineering work approved in front of city councils and things like this has been very difficult in the last round, so we think that all those projections of when those spaces will be coming online, I guess that’d be pushed back several months.

I'm still hopeful that we'll have spaces coming online this year but I'm not positive that that's going to happen, depending on when we can get to cities to give us the building permits that they’re supposed to be giving us at this point.

But I still like all our projects and I’ve lost in confident and we're in two places an Austin, one place in San Antonio, couple places in Fort Worth that we've made advances and loans to people that are in the business and other places around the country.

And from a strength point of view, we have two loans in place neither of which is secured by our real estate. So roughly $50 million of dry powder as of today and not a single bit of our real estate is placed on any loan.

And with all these developments we have going on I don't know exactly what our real estate is but I wouldn't be surprised if it’s on our books for $25 million, $30 million or more.

So our balance sheet is extremely solid and we intend to use that if the opportunity presents itself kind of to stores I wanted to get better, but I'm really not sure I don't want it to get worse first, so you know what I’m saying..

And then last question, as it relates to inventory. Inventory has been volatile couple of different times over the last year and a half or so. Inventory levels look very reasonable and manageable here at year-end 2019.

Where do they stand as of today since it's almost the end of the first quarter going into sort of COVID-19?.

With our March inventory levels are….

Actually, I don't think that's something that we're prepared to release at this time, Curt..

I think that we’re still and we just think inventory to really we can and from a raw materials point of view, it was a bottom-line where it really is and just counting the number of mobile homes on our retail labs and that we consigned to other people. I don't sense any market change one way or the other in those numbers.

And then for all I know they could be up 10% or down 10%, but I’d be surprised that it moved 20% quarter-over-quarter either direction. It’s something that we have had concern about an aged inventory we're always concerned about aged inventory, we don't want a bunch of old products sitting on retail locations. So we do keep track of that.

We got some of the years that have eight old ones on their lot and then we have a bunch that they have no old ones up for lot. So I haven't seen a lot of change and that heritage, which is our company owned stores is having challenges with aged inventory that we're trying to come to terms with, I think can use a bunch of old ones just recently..

Yes, we've done a year end reduction in sales we're doing some of that stuff out..

We have some extremely exciting product changes going on that we’re going to be launch to Tunica and from a product point-of-view and we invite anybody come down to our September show, which is still on Fort Worth.

I mean, we absolutely lead the industry and product development and what we're doing now is so exciting that in different times, I'd be a lot more optimistic but we’re coming up for some new products but aren't really going to make big difference in the industry..

And I'm not showing any further questions at this time. I’d like to turn the call back over to our host..

Well, thank you all for being on the call. And I'm sure many of you are working from home as you should be. And as I am this morning, we appreciate you staying with us and I'm looking forward to having a more optimistic call at the next juncture. Hopefully, we'll be on the other side of this crisis and we'll be back to normal.

Thanks for calling in and feel free to get hold of anybody on the execute team if you have any further question. Bye..

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day..