Financial Data and Key Metrics Changes - Home sales decreased by $1.4 million, or 4.8%, during Q3 2025 compared to the same period last year, primarily due to declines in sales to mobile home park customers and independent dealers [5] - Net revenue per unit increased approximately 8% to $68,500 from $63,500 year over year [5] - Net income decreased by $7.2 million, or 45.3%, to $8.6 million compared to $15.8 million in Q3 2024, with a net income margin of 21.4%, down from 35.7% [12] - For the nine months ended September 2025, net income declined $13 million, or 28.7%, to $33.6 million from $47.1 million [12] Business Line Data and Key Metrics Changes - Product sales remained relatively flat year-to-date, declining slightly by $1.2 million, or 1.3% [6] - Consumer MHP and dealer loan interest income increased to $10.9 million, up 5.4% during Q3 compared to the prior year [6] - Other revenue decreased by $3 million, or 79%, for Q3 2025 compared to Q3 2024, primarily due to a significant land sale in the prior year [8] Market Data and Key Metrics Changes - The Texas Manufactured Housing Association reported a seasonally adjusted drop of 3.8% in August and a raw total decline of 6.1% from September 2024 [15] - Despite macroeconomic headwinds, the company held a successful annual show in September, leading to higher production rates expected for Q4 2025 [15] Company Strategy and Development Direction - The company is focusing on reducing working capital, particularly raw material and finished goods inventory, to free up $10-$20 million for reinvestment [17] - The acquisition of Americassim is aimed at enhancing retail distribution and integrating remote management technology to improve sales growth [19][20] - The company plans to increase its retail sales significantly, targeting a 50-100% increase in 2026 compared to 2025 [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the slowing industry and the impact of tariffs and labor costs on profitability [15][29] - The company remains optimistic about the Texas market, anticipating strong demand due to upcoming housing needs related to data centers [18] - Management noted that the consumer loan portfolio remains strong, with 99% of mobile home notes performing as agreed [16] Other Important Information - The company ended Q3 2025 with $13.6 million in cash and a new revolving credit facility of $50 million [13] - The book value per share increased to $21.85, reflecting a strong balance sheet despite lower sales [13] Q&A Session Summary Question: Can you discuss the Americassim asset purchase and its revenue model? - The acquisition focuses on the HomeX product, which allows for remote management of retail locations, potentially increasing sales [30][31] Question: What are the expectations for production out of Texas manufacturing facilities? - The company expects to average six to seven homes per day in Texas and two to three in Georgia, indicating a profitable outlook for Q4 [34] Question: Will there be additional price increases to offset raw material costs? - The company has implemented price increases of approximately 3-4% and is monitoring the market for further adjustments [36] Question: How is the consumer loan portfolio performing? - The portfolio remains strong, with low percentages of loans in trouble, although there are concerns about potential impacts from immigration enforcement [40][42] Question: What is the expected impact of the Americassim acquisition on retail sales? - The acquisition is expected to increase retail sales by 50-60% in 2026 compared to 2025, with significant improvements anticipated from integrating new systems [58][60]

Core Viewpoint - Legacy Housing (LEGH) reported quarterly earnings of $0.35 per share, missing the Zacks Consensus Estimate of $0.57 per share, representing a -38.60% earnings surprise [1][2] Financial Performance - The company posted revenues of $40.48 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 14.31%, compared to $44.27 million in the same quarter last year [2] - Over the last four quarters, Legacy Housing has surpassed consensus EPS estimates only once [2] Stock Performance - Legacy Housing shares have declined approximately 8.4% since the beginning of the year, while the S&P 500 has gained 14.3% [3] Future Outlook - The company's earnings outlook will be crucial for investors, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.66 on revenues of $51.3 million, and for the current fiscal year, it is $2.25 on revenues of $184.37 million [7] Industry Context - The Real Estate - Operations industry, to which Legacy Housing belongs, is currently in the top 35% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Company Information - The company is listed on The Nasdaq Stock Market under the trading symbol LEGH [2]. - The address of the company's principal executive offices is 1600 Airport Freeway, 100 Bedford, Texas 76022 [1]. - The common stock has a par value of $0.001 per share [2]. Financial Reporting - Legacy Housing Corporation reported preliminary unaudited third quarter 2025 product sales and deliveries of floor sections [5]. - The report was filed on November 7, 2025, indicating the date of the earnings release [4]. - The press release detailing the financial results is attached as Exhibit 99.1 [7]. - The report does not include specific financial metrics or performance guidance for the upcoming quarters [5]. - The report is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 [5]. Company Status - The company has not indicated whether it is an emerging growth company [3]. - There is no mention of new products, technologies, market expansion, or acquisitions in the current report [5].

Revenue Performance - For the three months ended September 30, 2025, total net revenue decreased by $3.8 million, or 8.6%, to $40.5 million compared to $44.3 million in the same period of 2024[150]. - Total net revenue for the nine months ended September 30, 2025, was $126.3 million, a decrease of $3.7 million or 2.8% compared to $130.0 million in 2024[159]. Product Sales - Product sales decreased by $1.4 million, or 4.6%, primarily due to a decrease in unit volumes shipped, with total units sold dropping from 475 to 420, a decline of 11.6%[150][151]. - Product sales decreased by $1.2 million, or 1.3%, during the nine months ended September 30, 2025, primarily due to a $7.5 million decrease in mobile home park sales[161]. Revenue per Unit - The net revenue per unit sold increased by 7.9% to $68.5, attributed to higher retail prices for consumer sales[151]. - Net revenue per unit sold increased by 13.7% to $68.6 during the nine months ended September 30, 2025, compared to $60.3 in 2024[162]. Other Revenue - Other revenue decreased significantly by $3.0 million, or 78.8%, primarily due to a $2.7 million drop in land sales[154]. - Other revenue decreased by $4.1 million, or 63.1%, during the nine months ended September 30, 2025, primarily due to a decrease in land sale revenue[164]. Operating Expenses - The cost of product sales increased by $1.6 million, or 7.5%, with raw material and tariff costs rising from 39.4% to 47.7% of sales[155]. - Selling, general, and administrative expenses increased by $1.3 million, or 20.6%, due to higher legal and consulting expenses[156]. - Operating expenses increased by $6.3 million, or 7.7%, during the nine months ended September 30, 2025, totaling $88.2 million[159]. Net Income - Net income for the nine months ended September 30, 2025, was $33.6 million, a decrease of $13.5 million or 28.7% compared to $47.1 million in 2024[159]. Cash Flow - Cash at the end of the period increased to approximately $13.6 million as of September 30, 2025, compared to $1.1 million as of December 31, 2024[171]. - Net cash provided by operating activities was $18.1 million during the nine months ended September 30, 2025, down from $28.1 million in 2024[173]. Tax Rate - The effective tax rate for the nine months ended September 30, 2025, was 17.5%, down from 18.2% in 2024, primarily due to federal tax credits[168]. Financing and Debt - The Company entered into a new four-year senior secured revolving credit facility with an initial commitment of $50,000 and an additional $25,000 under an accordion feature[177]. - Interest expense under the Revolver for the three months ended September 30, 2025 was $2, a significant decrease from $175 in the same period of 2024[178]. - The outstanding balance of the Revolver as of September 30, 2025 was $0, indicating no current borrowings[178]. - The interest rate for the Revolver as of September 30, 2025 was 7.25%, down from 7.61% as of December 31, 2024[178]. Compliance and Obligations - The Company was in compliance with all financial covenants as of September 30, 2025, including a maximum leverage ratio of 1.00 to 1.00 and a minimum fixed charge coverage ratio of 1.75 to 1.00[178]. - The Company has contractual obligations for operating lease obligations totaling $1,041, with $120 due in 2025 and $776 due in 2026-2027[179]. - The maximum contingent obligations under repurchase agreements were approximately $713 as of September 30, 2025, down from $805 as of December 31, 2024[180]. Accounting Estimates - Critical accounting estimates are based on historical experiences and various factors, with actual results potentially differing from these estimates[181]. - Recent accounting pronouncements are detailed in the Company's September 30, 2025 Condensed Financial Statements[182].

Financial Performance - Legacy Housing Corporation reported product sales of $28.8 million for Q3 2025, a decrease of 4.6% compared to the same period last year [1] - The company delivered 420 floor sections in the quarter, down from 475 in the prior-year period, indicating a trend of lower unit volumes despite increased net revenue per unit [1] - The book value per share increased by 10.2% year-over-year, reflecting ongoing financial resilience [1] Executive Changes and Strategic Focus - Following the end of the quarter, Legacy Housing experienced significant executive transitions, including the departures of its CEO, CFO, and General Counsel [2] - The return of founders Kenneth Shipley and Curtis Hodgson has led to a renewed focus on cost discipline and expanding sales opportunities [2] Sales and Operational Outlook - Curt Hodgson, Executive Chairman, emphasized the company's commitment to providing value, controlling costs, and delivering profits for investors [3] - A major industry show held in late September generated enough orders to ensure Texas manufacturing facilities operate at a pace of 3 to 4 floors per day through year-end, exceeding the third quarter's rate [3] - The company maintains a robust balance sheet and prioritizes operational efficiency, supported by recent order activity [4] Company Overview - Legacy Housing Corporation is a leading provider of affordable manufactured homes in the U.S., focusing on quality, value, and customer service [5] - The company builds, sells, and finances manufactured homes and "tiny houses," distributed through independent retailers and company-owned stores [5] - Homes range in size from approximately 395 to 2,667 square feet, with prices ranging from approximately $33,000 to $180,000 [5]

Core Insights - Legacy Housing Corporation has announced the acquisition of AmeriCasa Solutions, LLC and its FutureHomeX® sales management platform in an all-cash transaction aimed at enhancing revenue growth and improving the homebuying experience [1][2][4] Company Overview - Legacy Housing is one of the largest manufacturers of manufactured homes in the U.S., operating through over 100 independent retailers and 12 company-owned stores, as well as direct sales to manufactured housing communities [2][9] - The company offers homes ranging from approximately 395 to 2,667 square feet, with retail prices between $33,000 and $180,000 [9] Acquisition Details - The acquisition includes a high-performing retail dealership in Houston, a chattel mortgage loan portfolio, an insurance agency, and a services center in Bogotá, Colombia, with the transaction expected to close on or before November 28, 2025 [2] - The FutureHomeX® Platform is designed to streamline the homebuying process through automation and AI, enhancing sales growth across retail dealerships and communities [2][6] Leadership Changes - Norman Newton, the CEO of AmeriCasa Solutions, will join Legacy Housing as Chief Revenue Officer under a five-year employment agreement, bringing over 30 years of executive experience [3][5] Strategic Goals - Legacy Housing's strategy includes expanding company-owned retail locations, increasing sales volume through advanced technology, and adding a Chief Revenue Officer to its leadership team [7]

Core Insights - Legacy Housing Corporation has completed a significant realignment, including the launch of the Legacy 250 initiative and a refresh of its management structure [1][4] Group 1: Legacy 250 Initiative - The Legacy 250 initiative aims to celebrate the Nation's 250th Anniversary by redesigning mobile homes to enhance the concept of the American Dream, featuring taller, wider homes with improved designs [2] - The introduction of the Legacy Ultimate Series includes innovative features such as an optional 8x12 shed storage module, enhancing storage space and quality of life for homeowners [2] Group 2: Product Features and Innovations - Modern floorplans have been developed to cater to family needs, incorporating integrated dining bars, media-focused family rooms, and high-quality bathrooms, providing a custom home feel at accessible price points [3] - The company has introduced industry-first 21 SEER concealed-duct "mini-split" heat pumps, which are located under the home to maximize usable living space [3] Group 3: Management and Strategic Review - A comprehensive year-long strategic review led to the resignation of the CEO, CFO, and General Counsel, with interim leadership provided by co-founder Kenny Shipley and veteran Ron Arrington [4] - The strategic review emphasized the company's strengths in producing high-quality mobile homes and improving administrative systems, aiming to enhance operational excellence and innovation in manufacturing [5] Group 4: Company Overview - Legacy Housing Corporation is one of the largest producers of manufactured homes in the U.S., offering homes ranging from approximately 395 to 2,667 square feet, with prices from about $33,000 to $180,000 [6]

Group 1 - Legacy Housing Corporation (NASDAQ: LEGH) has seen positive performance for shareholders in recent months [1] - The company specializes in the production and sale of affordable housing [1] Group 2 - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and growth potential [1] - Subscribers benefit from a stock model account, cash flow analyses of exploration and production firms, and live sector discussions [2]

Financial Data and Key Metrics Changes - Product sales increased by $6.7 million or 21.3% for Q2 2025 compared to Q2 2024, driven by higher unit volume shipped [5] - Net income decreased by 9.2% to $14.7 million in Q2 2025 compared to Q2 2024, with basic earnings per share down 9% to $0.61 [10] - Gross profit margin improved to 32.4% in Q2 2025 from 31.9% in Q2 2024 [7][15] - Cash increased to approximately $2.6 million as of June 30, 2025, compared to $1.1 million at the end of 2024 [10] - Book value per basic share outstanding rose by 11.2% to $21.32 from the same period in 2024 [11] Business Line Data and Key Metrics Changes - Inventory finance sales increased by $4.9 million or 53.3% compared to Q2 2024 [13] - Retail sales rose by $2.9 million or 64.2% over the same period [14] - Commercial sales to community owners increased by 5.3% during Q2 2025 compared to Q2 2024 [14] - Consumer loan portfolio increased by $24.6 million, while MHP loan portfolio grew by $20.3 million [16] Market Data and Key Metrics Changes - The Southeast market is experiencing slower growth compared to Texas, with challenges in community customer demand due to elevated interest rates and operating costs [40] - The company is seeing a shift towards smaller houses as a response to affordability issues faced by renters [24][66] Company Strategy and Development Direction - The company aims to build its backlog to support increased production volume in the coming quarters, focusing on Texas where demand is stronger [15] - Ongoing discussions with community owners regarding large orders are expected to support volume growth despite current headwinds [14][35] - The company is actively managing its loan portfolios and evaluating opportunities to monetize noncore land [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the second half of the year, noting that while dealer business performed well, community sales remain choppy [45][66] - The company is monitoring legislative developments, such as the Road to Housing Act, which could support growth in home sales and community development [18][66] - Management highlighted the importance of maintaining healthy margins amid rising material and labor costs [15][60] Other Important Information - The company repurchased 260,635 shares of common stock for $5.8 million during Q2 2025, with a remaining authorization of approximately $8.1 million on its share repurchase program [11][17] - The company is focused on completing phase one of the Falcon Ranch development, with plans to sell lots as soon as possible [17][27] Q&A Session Summary Question: What is the momentum seen in July and August? - Management noted that dealer activity continues to drive revenue growth, with signs of life on the community side, but challenges remain due to increased costs and prices [22][24] Question: Progress on the Bastrop project and timeline for selling plots? - The goal is to sell lots as soon as possible, with infrastructure nearing completion, but the final bridge construction is necessary for full connectivity [25][27] Question: SG&A expenses running higher than expected? - Management indicated that SG&A expenses will likely return to historical levels, attributing current increases to specific accruals and expenses [29] Question: What is driving interest from community owners for large orders? - Long-term relationships with large customers and improved financing conditions are sparking interest, although some orders have been delayed [34][35] Question: Average selling price trends and sustainability? - The average selling price increased from $61,000 to $68,000, driven by retail sales, and management expects prices to remain elevated but acknowledges potential volume impacts [37][38] Question: Outlook on tariffs and inflationary pressures? - Management is monitoring commodity prices and labor costs, indicating that while some materials are stable, labor costs are expected to rise [60][61] Question: Differences in consumer behavior between renters and homeowners? - Renters are becoming more price-sensitive, impacting the MHP market, while the affordable housing crisis remains a significant issue [66]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Legacy Housing Corporation's unaudited condensed financial statements, including balance sheets, income statements, statements of changes in stockholders' equity, and cash flow statements, along with detailed notes explaining accounting policies, revenue recognition, loan portfolios, and other financial disclosures for the periods ended June 30, 2025, and December 31, 2024 [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) This section provides a summary of the company's financial position, detailing total assets, liabilities, and stockholders' equity at specific reporting dates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $551,985 | $534,194 | | Total Liabilities | $39,205 | $40,238 | | Total Stockholders' Equity | $512,780 | $493,956 | - Total assets increased by **$17.79 million (3.33%)** from December 31, 2024, to June 30, 2025, primarily driven by increases in consumer loans receivable, net, and property, plant and equipment, net[8](index=8&type=chunk) - Total liabilities decreased by **$1.03 million (2.57%)** over the same period, mainly due to a reduction in accounts payable and accrued liabilities[8](index=8&type=chunk) [Condensed Statements of Income](index=5&type=section&id=Condensed%20Statements%20of%20Income) This section outlines the company's financial performance over specific periods, detailing total net revenue, income from operations, net income, and earnings per share | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Net Revenue | $50,161 | $42,495 | $85,831 | $85,738 | | Income from Operations| $16,817 | $16,030 | $28,408 | $32,780 | | Net Income | $14,695 | $16,189 | $24,971 | $31,329 | | Basic EPS | $0.61 | $0.67 | $1.04 | $1.29 | | Diluted EPS | $0.60 | $0.65 | $1.01 | $1.26 | - For the three months ended June 30, 2025, total net revenue increased by **18.0%** year-over-year, while net income decreased by **9.2%**[10](index=10&type=chunk) - For the six months ended June 30, 2025, total net revenue remained relatively flat (**0.1% increase**) year-over-year, but net income decreased by **20.3%**[10](index=10&type=chunk) [Condensed Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section details the changes in the company's equity over time, reflecting impacts from net income, treasury stock transactions, and other capital adjustments | Metric (in thousands) | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :-------------------- | :---------------- | :------------- | :------------ | | Total Stockholders' Equity | $493,956 | $503,728 | $512,780 | | Retained Earnings | $321,400 | $331,676 | $346,371 | | Treasury Stock | $(9,875) | $(10,550) | $(16,367) | - Stockholders' equity increased from **$493.96 million** at December 31, 2024, to **$512.78 million** at June 30, 2025, primarily driven by net income and additional paid-in capital, partially offset by treasury stock purchases[12](index=12&type=chunk)[14](index=14&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities, showing the net change in cash over specific periods | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $10,970 | $14,265 | | Net cash (used in) provided by investing activities | $(3,138) | $2,142 | | Net cash used in financing activities | $(6,350) | $(17,095) | | Net increase (decrease) in cash | $1,482 | $(688) | | Cash at end of period | $2,631 | $60 | - Net cash provided by operating activities decreased by **$3.295 million (23.1%)** for the six months ended June 30, 2025, compared to the same period in 2024[16](index=16&type=chunk) - Investing activities shifted from providing **$2.142 million** in cash in 2024 to using **$3.138 million** in 2025, mainly due to increased purchases of property, plant, and equipment and issuance of notes receivable[16](index=16&type=chunk) [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed financial statements, covering accounting policies, revenue, and loan portfolios [1. Nature of Operations](index=8&type=section&id=1.%20Nature%20of%20Operations) This note describes the company's primary business activities, including manufacturing, sales, and financing of manufactured homes, and its single reportable segment structure - Legacy Housing Corporation manufactures and transports mobile homes, provides wholesale financing to dealers and mobile home parks, offers retail financing to consumers, and is involved in financing and developing new manufactured home communities[19](index=19&type=chunk) - The Company operates as a single reportable segment, with its Chief Executive Officer evaluating performance based on consolidated net income, total revenue, and return on investment[22](index=22&type=chunk) [Revenue Recognition](index=10&type=section&id=Revenue%20Recognition) This note details the company's policies for recognizing revenue from various sources, including product sales and interest income from financing portfolios - Product sales include Direct Sales, Commercial Sales, Inventory Finance Sales, and Retail Store Sales, with revenue recognized upon delivery and transfer of title[24](index=24&type=chunk) - Consumer, MHP, and dealer loans interest income is recognized from financing portfolios, while other revenue includes contract deposit forfeitures, consignment fees, commercial lease rents, and land sales[25](index=25&type=chunk) [Accounts Receivable](index=10&type=section&id=Accounts%20Receivable) This note provides information on the company's accounts receivable, including net balances and the allowance for doubtful accounts, reflecting collectibility estimates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | December 31, 2023 | | :-------------------- | :------------ | :---------------- | :---------------- | | Accounts receivable, net | $4,197 | $3,985 | $4,656 | | Allowance for doubtful accounts | $866 | $578 | $651 | - Accounts receivable, net, increased by **$212 thousand (5.32%)** from December 31, 2024, to June 30, 2025[27](index=27&type=chunk) - The allowance for doubtful accounts increased by **$288 thousand (49.83%)** over the same period, reflecting management's estimate of uncollectible amounts[27](index=27&type=chunk) [Leased Property](index=10&type=section&id=Leased%20Property) This note describes the company's operating lease arrangements for mobile homes and presents the future minimum lease income expected from these agreements - The Company leases mobile homes to park operators under operating leases, typically for 96 or 120 months, with options for termination, extension, or purchase[28](index=28&type=chunk)[29](index=29&type=chunk) | Year | Future Minimum Lease Income (in thousands) | | :--- | :--------------------------------------- | | 2025 | $549 | | 2026 | $1,098 | | 2027 | $926 | | 2028 | $770 | | 2029 | $495 | | Thereafter | $232 | | Total | $4,070 | [Product Warranties](index=11&type=section&id=Product%20Warranties) This note details the company's product warranty policy, including the accrual of warranty costs based on historical data and estimated future expenses - The Company provides a one-year warranty on manufactured homes, accruing costs when homes are sold based on historical data and estimated costs[33](index=33&type=chunk) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Warranty liability, beginning of period | $2,033 | $3,314 | $1,950 | $2,910 | | Product warranty reserve accrued (released) | $577 | $(579) | $1,153 | $257 | | Warranty costs incurred | $(490) | $(381) | $(983) | $(813) | | Warranty liability, end of period | $2,120 | $2,354 | $2,120 | $2,354 | [Share-Based Compensation](index=11&type=section&id=Share-Based%20Compensation) This note explains the company's accounting for share-based compensation, including the valuation methods used and the recognition of related expenses over vesting periods - Share-based compensation expense is recognized over the vesting period, with fair value estimated using the Black-Scholes model for options and closing stock price for restricted stock[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total share based compensation expense | $174 | $174 | $344 | $431 | - As of June 30, 2025, approximately **1,013,000 options** were outstanding, with **$3.89 million** in unrecognized compensation expense expected to be recognized over 6.7 years[40](index=40&type=chunk) [Fair Value Measurements](index=12&type=section&id=Fair%20Value%20Measurements) This note describes the methodologies used to determine the fair value of the company's financial instruments, categorizing them into Level I, II, and III based on input observability - The Company's financial instruments like cash, accounts receivable, and accounts payable are valued at fair value approximating carrying value (Level I)[44](index=44&type=chunk) - Variable interest rate instruments (MHP Notes, other notes, lines of credit) are considered Level II, while fixed-rate consumer loans and MHP/other notes are valued using discounted cash flows (Level III)[119](index=119&type=chunk) [Recent Accounting Pronouncements](index=13&type=section&id=Recent%20Accounting%20Pronouncements) This note outlines the impact of recently adopted and upcoming accounting standards on the company's financial reporting and disclosures - The Company adopted ASU 2023-07 (Segment Reporting) retrospectively for annual periods starting December 31, 2024, enhancing segment disclosures[48](index=48&type=chunk) - ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures) are not yet adopted, with the Company currently evaluating their potential impact[49](index=49&type=chunk)[50](index=50&type=chunk) [2. Revenue](index=13&type=section&id=2.%20Revenue) This note provides a detailed breakdown of the company's revenue streams, including various product sales categories and interest income from loan portfolios | Revenue Source (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Direct sales | $2,804 | $3,372 | $4,293 | $5,167 | | Commercial sales | $11,844 | $11,248 | $18,640 | $24,850 | | Inventory finance sales | $14,030 | $9,154 | $25,161 | $17,618 | | Retail store sales | $7,292 | $4,441 | $10,633 | $9,236 | | Other product sales | $2,417 | $3,437 | $3,950 | $5,613 | | Total product sales | $38,387 | $31,652 | $62,677 | $62,484 | | Total loan portfolio interest | $10,883 | $9,844 | $21,538 | $20,477 | | Other revenue | $891 | $999 | $1,616 | $2,777 | | Total net revenue | $50,161 | $42,495 | $85,831 | $85,738 | - For the three months ended June 30, 2025, inventory finance sales increased by **53.3%** and retail store sales increased by **64.2%** year-over-year[61](index=61&type=chunk) - For the six months ended June 30, 2025, commercial sales decreased by **25.0%** year-over-year, while inventory finance sales increased by **42.8%** and retail sales increased by **15.1%**[61](index=61&type=chunk) [3. Consumer Loans Receivable](index=16&type=section&id=3.%20Consumer%20Loans%20Receivable) This note details the company's consumer loan portfolio, including balances, average interest rates, allowance for loan losses, and past due amounts - Consumer loans receivable, with an average contractual interest rate of **13.1%**, increased to **$190.08 million** as of June 30, 2025, from **$177.29 million** at December 31, 2024[62](index=62&type=chunk)[71](index=71&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Allowance for loan losses | $1,203 | $694 | | Provision for loan losses (Six Months Ended June 30) | $922 | $(421) | | Total past due (>30 days) | $5,834 | $5,893 | - The allowance for loan losses for consumer loans increased by **$509 thousand (73.3%)** from December 31, 2024, to June 30, 2025, with a provision for loan losses of **$922 thousand** for the six months ended June 30, 2025[73](index=73&type=chunk) [4. Notes Receivable from Mobile Home Parks (MHP)](index=19&type=section&id=4.%20Notes%20Receivable%20from%20Mobile%20Home%20Parks%20%28MHP%29) This note provides information on notes receivable from mobile home parks, including balances, interest rates, loan loss allowances, and details of a significant settlement agreement - MHP Notes, with an average interest rate of **7.9%**, decreased slightly to **$204.91 million** as of June 30, 2025, from **$208.18 million** at December 31, 2024[75](index=75&type=chunk)[86](index=86&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Allowance for loan losses | $900 | $654 | | Provision for loan losses (Six Months Ended June 30) | $246 | $(24) | | Past due balances | $103 | $17 | - A settlement agreement in July 2024 resulted in the conveyance of two mobile home communities to Legacy and the refinancing of remaining debt into a new two-year, **$48.6 million** Promissory Note[79](index=79&type=chunk)[87](index=87&type=chunk) [5. Other Notes Receivable](index=22&type=section&id=5.%20Other%20Notes%20Receivable) This note details other notes receivable not directly tied to mobile home sales, including balances, loan loss allowances, and concentrations with third parties - Other notes receivable, not directly tied to mobile home sales, decreased to **$12.99 million** as of June 30, 2025, from **$15.41 million** at December 31, 2024[90](index=90&type=chunk)[96](index=96&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Allowance for loan losses | $432 | $364 | | Provision for loan losses (Six Months Ended June 30) | $68 | $(25) | | Past due balances | $1,704 | $1,357 | - Concentrations of other notes receivable with three independent third-parties accounted for **40.0%**, **27.0%**, and **7.9%** of the principal balance outstanding as of June 30, 2025[92](index=92&type=chunk) [6. Dealer Financed Receivables](index=24&type=section&id=6.%20Dealer%20Financed%20Receivables) This note provides information on dealer financed receivables, which are part of the company's inventory finance program, including balances and loan loss allowances - Dealer financed receivables, part of the inventory finance program, remained stable at **$32.76 million** as of June 30, 2025, compared to **$32.78 million** at December 31, 2024[99](index=99&type=chunk)[100](index=100&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Allowance for loan losses | $295 | $194 | | Provision for loan losses (Six Months Ended June 30) | $101 | $(267) | [7. Inventories, Net](index=25&type=section&id=7.%20Inventories%2C%20Net) This note details the composition of the company's inventories, including raw materials, work in progress, and finished goods, and changes over time | Inventory Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Raw materials | $13,914 | $13,172 | | Work in progress | $410 | $478 | | Finished goods, net | $26,198 | $23,888 | | Total | $40,522 | $37,538 | - Total inventories, net, increased by **$2.98 million (7.95%)** from December 31, 2024, to June 30, 2025, primarily due to an increase in finished goods[104](index=104&type=chunk) [8. Property, Plant and Equipment](index=25&type=section&id=8.%20Property%2C%20Plant%20and%20Equipment) This note provides a breakdown of the company's property, plant, and equipment, including land and construction in progress, and changes in their net values | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Land | $19,537 | $17,025 | | Construction in Progress| $23,103 | $19,719 | | Total Property, Plant and Equipment, net | $53,012 | $47,585 | - Net property, plant and equipment increased by **$5.43 million (11.4%)** from December 31, 2024, to June 30, 2025, driven by increases in land and construction in progress[105](index=105&type=chunk) [9. Other Assets](index=26&type=section&id=9.%20Other%20Assets) This note details the composition of other assets, primarily focusing on repossessed homes, and explains the changes in their balances over time | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Repossessed homes | $7,582 | $5,129 | | Total Other Assets | $7,938 | $5,485 | - Other assets increased by **$2.45 million (44.7%)** from December 31, 2024, to June 30, 2025, primarily due to a significant increase in repossessed homes from both consumer and MHP loan portfolios[107](index=107&type=chunk) [10. Accrued Liabilities](index=26&type=section&id=10.%20Accrued%20Liabilities) This note provides a breakdown of the company's accrued liabilities, including warranty reserves, litigation reserves, and federal and state income taxes | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Warranty reserve | $2,120 | $1,950 | | Litigation reserve | $468 | $328 | | Federal and state income taxes | $641 | $3,295 | | Total Accrued Liabilities | $11,974 | $13,672 | - Total accrued liabilities decreased by **$1.70 million (12.42%)** from December 31, 2024, to June 30, 2025, mainly due to a significant reduction in federal and state income taxes[108](index=108&type=chunk) [11. Lines of Credit](index=26&type=section&id=11.%20Lines%20of%20Credit) This note describes the company's revolving credit facility, including its commitment, maturity, outstanding balance, available credit, and compliance with financial covenants - The Company has a four-year senior secured revolving credit facility (the 'Revolver') with an initial commitment of **$50.0 million**, maturing July 28, 2027[109](index=109&type=chunk)[167](index=167&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Outstanding balance | $142 | $0 | | Available credit | $49,858 | $50,000 | | Interest rate | 6.76% | 7.61% | - The Company was in compliance with all financial covenants as of June 30, 2025, including a maximum leverage ratio of **1.00 to 1.00** and a minimum fixed charge coverage ratio of **1.75 to 1.00**[111](index=111&type=chunk)[168](index=168&type=chunk) [12. Income Taxes](index=27&type=section&id=12.%20Income%20Taxes) This note provides details on the company's income tax expense and effective tax rates, explaining factors contributing to deviations from the federal statutory rate | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $(3,081) | $(3,607) | $(5,533) | $(6,980) | | Effective tax rate | 17.3% | 18.2% | 18.1% | 18.2% | - The effective tax rate for the three and six months ended June 30, 2025, was lower than the federal statutory rate of **21%** due to federal tax credits for energy-efficient homes and a purchased federal tax credit[112](index=112&type=chunk) [13. Commitments and Contingencies](index=27&type=section&id=13.%20Commitments%20and%20Contingencies) This note outlines the company's various commitments and contingent liabilities, including self-insured health benefits, repurchase agreements, and legal proceedings - The Company has a self-insured health benefits plan with a stop-loss policy, accruing **$878 thousand** for incurred but not reported medical claims as of June 30, 2025[113](index=113&type=chunk) - Contingent liabilities under repurchase agreements for independent retailers' inventory financing approximated **$512 thousand** at June 30, 2025, a decrease from **$805 thousand** at December 31, 2024[114](index=114&type=chunk)[170](index=170&type=chunk) - Legal reserves for ordinary course legal proceedings totaled **$468 thousand** as of June 30, 2025, with management believing current litigation will not have a material adverse effect[118](index=118&type=chunk) [14. Fair Value Measurements](index=29&type=section&id=14.%20Fair%20Value%20Measurements) This note provides a comparison of the fair value and book value for various loan portfolios, illustrating potential discounts or premiums | Portfolio (in thousands) | June 30, 2025 Fair Value | June 30, 2025 Book Value | December 31, 2024 Fair Value | December 31, 2024 Book Value | | :----------------------- | :----------------------- | :----------------------- | :--------------------------- | :--------------------------- | | Consumer loan portfolio | $174,427 | $186,360 | $164,755 | $174,105 | | Fixed rate MHP Notes | $192,819 | $197,154 | $199,651 | $203,388 | | Fixed rate other notes | $12,386 | $12,517 | $14,730 | $14,916 | - The fair value of the consumer loan portfolio was lower than its book value at both periods, indicating a discount[119](index=119&type=chunk) [15. Earnings Per Share](index=30&type=section&id=15.%20Earnings%20Per%20Share) This note presents the basic and diluted earnings per share calculations, along with information on share repurchases affecting the weighted-average shares outstanding | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.61 | $0.67 | $1.04 | $1.29 | | Diluted EPS | $0.60 | $0.65 | $1.01 | $1.26 | - Both basic and diluted EPS decreased for the three and six months ended June 30, 2025, compared to the prior year, despite an increase in total net revenue for the three-month period[123](index=123&type=chunk) - The Company repurchased **260,635 shares** of common stock for **$5.82 million** during the three months ended June 30, 2025, with approximately **$8.11 million** remaining authorization[123](index=123&type=chunk) [16. Related Party Transactions](index=31&type=section&id=16.%20Related%20Party%20Transactions) This note discloses significant transactions with related parties, specifically home sales to affiliated entities, and their impact on revenue | Related Party | Home Sales (3 months ended June 30, 2025) | Home Sales (3 months ended June 30, 2024) | Home Sales (6 months ended June 30, 2025) | Home Sales (6 months ended June 30, 2024) | | :------------ | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Bell Mobile Homes | $1,162 | $1,312 | $1,547 | $2,431 | | Shipley Bros., Ltd. and Crazy Red's Mobile Homes | $805 | $1,361 | $1,197 | $1,660 | - Home sales to related party Bell Mobile Homes decreased by **11.5%** for the three months and **36.4%** for the six months ended June 30, 2025, compared to the prior year[126](index=126&type=chunk) - Home sales to related party Shipley decreased by **40.9%** for the three months and **27.9%** for the six months ended June 30, 2025, compared to the prior year[127](index=127&type=chunk) [17. Subsequent Events](index=31&type=section&id=17.%20Subsequent%20Events) This note confirms that no significant events occurred after the reporting period that would require adjustment or disclosure in the financial statements - No events requiring adjustments or disclosures in the interim financial statements occurred after June 30, 2025, through the filing date[128](index=128&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Legacy Housing Corporation's financial condition and results of operations, highlighting key business activities, factors affecting performance, and a detailed comparison of financial results for the three and six months ended June 30, 2025, versus 2024 [Overview](index=32&type=section&id=Overview) This section introduces Legacy Housing Corporation as a vertically integrated manufacturer, seller, and financier of manufactured homes, outlining its primary market and recent sales performance - Legacy Housing Corporation is a vertically integrated manufacturer, seller, and financier of manufactured homes and 'tiny houses,' primarily operating in the southern United States[131](index=131&type=chunk)[133](index=133&type=chunk) - The Company sold **697 home sections** for the three months ended June 30, 2025, an increase from **578** in the same period of 2024, but total units sold for the six months ended June 30, 2025, decreased to **1,124** from **1,223** in 2024[131](index=131&type=chunk) - Approximately **58%** of manufactured homes were sold in Texas for the six months ended June 30, 2025[135](index=135&type=chunk) [Factors Affecting Our Performance](index=34&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses key internal and external factors influencing the company's financial performance, including development activities, economic conditions, and production capacity - The Company is developing manufactured housing communities and subdivisions, with significant land and improvements in Bastrop County, Texas, totaling **$24.12 million**[137](index=137&type=chunk) - Inflation and rising interest rates pose risks to gross margins and home buyer financing affordability, which the Company is actively working to mitigate[137](index=137&type=chunk) - Future growth depends on the ability to fulfill orders and potentially expand production capacity, with the Georgia manufacturing facility having space for additional investment[137](index=137&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section analyzes the company's financial results, comparing performance across different periods and explaining the drivers behind revenue, expenses, and net income [Comparison of Three Months ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20Three%20Months%20ended%20June%2030%2C%202025%20and%202024) This subsection compares the company's financial performance for the three months ended June 30, 2025, against the same period in 2024, highlighting key revenue and income changes | Metric (in thousands) | June 30, 2025 | June 30, 2024 | $ Change | % Change | | :-------------------- | :------------ | :------------ | :------- | :------- | | Product sales | $38,387 | $31,652 | $6,735 | 21.3% | | Consumer, MHP and dealer loans interest | $10,883 | $9,844 | $1,039 | 10.6% | | Total net revenue | $50,161 | $42,495 | $7,666 | 18.0% | | Income from operations| $16,817 | $16,030 | $787 | 4.9% | | Net income | $14,695 | $16,189 | $(1,494) | (9.2)% | - Product sales increased by **21.3%** due to higher unit volumes, particularly in inventory finance sales (up **53.3%**) and retail sales (up **64.2%**)[139](index=139&type=chunk)[140](index=140&type=chunk) - Net income decreased by **9.2%** despite revenue growth, primarily due to a **$2.8 million** decrease in other income, driven by lower non-operating interest income and miscellaneous income[139](index=139&type=chunk)[146](index=146&type=chunk) [Comparison of Six Months ended June 30, 2025 and 2024](index=38&type=section&id=Comparison%20of%20Six%20Months%20ended%20June%2030%2C%202025%20and%202024) This subsection compares the company's financial performance for the six months ended June 30, 2025, against the same period in 2024, detailing changes in revenue, income, and sales volumes | Metric (in thousands) | June 30, 2025 | June 30, 2024 | $ Change | % Change | | :-------------------- | :------------ | :------------ | :------- | :------- | | Product sales | $62,677 | $62,484 | $193 | 0.3% | | Consumer, MHP and dealer loans interest | $21,538 | $20,477 | $1,061 | 5.2% | | Total net revenue | $85,831 | $85,738 | $93 | 0.1% | | Income from operations| $28,408 | $32,780 | $(4,372) | (13.3)% | | Net income | $24,971 | $31,329 | $(6,358) | (20.3)% | - Product sales remained flat (**0.3% increase**) for the six-month period, with a **13.9%** decrease in total units sold but a **16.4%** increase in net revenue per unit sold due to a shift towards higher-priced consumer sales[151](index=151&type=chunk)[152](index=152&type=chunk) - Net income decreased by **20.3%** for the six months, primarily due to a **$3.4 million** decrease in other income, reflecting lower non-operating interest income and miscellaneous income[149](index=149&type=chunk)[157](index=157&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, discussing cash flow, available credit, and funding strategies - The Company believes cash flow from operations, current cash balances, and available lines of credit are sufficient to fund operations and growth for the next 12 to 18 months[160](index=160&type=chunk) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $10,970 | $14,265 | | Net cash (used in) provided by investing activities | $(3,138) | $2,142 | | Net cash used in financing activities | $(6,350) | $(17,095) | | Net change in cash | $1,482 | $(688) | | Cash at end of period | $2,631 | $60 | - Net cash used in financing activities decreased significantly from **$17.1 million** in 2024 to **$6.35 million** in 2025, mainly due to lower net payments on lines of credit[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the Company - The Company has no applicable quantitative and qualitative disclosures about market risk[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the Company's disclosure controls and procedures, acknowledging material weaknesses in internal control over financial reporting as of June 30, 2025 - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[175](index=175&type=chunk) - Material weaknesses include insufficient design, implementation, monitoring, or testing of control activities; inadequate documentation and review; insufficient qualified accounting personnel; and lack of sufficiently designed, implemented, or maintained IT general controls[177](index=177&type=chunk)[180](index=180&type=chunk) - Despite the identified weaknesses, management believes the financial statements in this report fairly present the Company's financial condition, results of operations, and cash flows[176](index=176&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the financial statements for details on legal proceedings, which are considered to arise in the ordinary course of business and are not expected to have a material adverse effect on the Company's financial position - Legal proceedings are discussed in Note 13 - Commitments and Contingencies[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the Company's share repurchase program, including the number of shares repurchased and the remaining authorization for the three months ended June 30, 2025 | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased (in thousands) | | :-------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------ | | April 1-30, 2025 | 11,466 | $22.71 | $13,667 | | May 1-31, 2025 | 83,446 | $22.39 | $11,794 | | June 1-30, 2025 | 165,723 | $22.19 | $8,110 | - The Company repurchased **260,635 shares** of common stock for **$5.82 million** during the three months ended June 30, 2025, under a publicly announced program[183](index=183&type=chunk) - As of June 30, 2025, approximately **$8.11 million** remained authorized for repurchase under the program, which is in effect until October 31, 2025[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[184](index=184&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures applicable to the Company - There are no mine safety disclosures[184](index=184&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This section confirms that no officers or directors adopted, modified, or terminated Rule 10b5-1 trading plans during the three months ended June 30, 2025 - No officers or directors adopted, modified, or terminated Rule 10b5-1 trading plans during the three months ended June 30, 2025[184](index=184&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and other required filings - The exhibits include Rule 13a-14(a) / 15d-14(a) Certifications from the CEO and CFO, Section 1350 Certifications, and various XBRL documents[187](index=187&type=chunk) SIGNATURES [Signatures](index=38&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, confirming its submission by authorized officers of Legacy Housing Corporation - The report was signed by R. Duncan Bates, President and Chief Executive Officer, and Jeffrey Fiedelman, Chief Financial Officer, on August 7, 2025[191](index=191&type=chunk)