BEDFORD, Texas, Oct. 10, 2025 (GLOBE NEWSWIRE) -- Legacy Housing Corporation (“Legacy” or the “Company,” NASDAQ: LEGH), a leading manufacturer of community-focused manufactured homes, announced the completion of a significant company realignment, including its new Legacy 250 initiative and a refresh of its management structure. In anticipation of the Nation’s 250th Anniversary, Legacy has redesigned and reimagined its category-leading mobile homes to focus on delivering the American Dream. “Legacy homes are ...

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)

Financial Performance - Net revenue for the second quarter of 2025 was $50.2 million, an increase of 18.0% from the second quarter of 2024 [7] - Income from operations for the second quarter of 2025 was $16.8 million, an increase of 4.9% from the second quarter of 2024 [7] - Net income for the second quarter of 2025 was $14.7 million, a decrease of 9.2% from the second quarter of 2024 [7] - Basic earnings per share for the second quarter of 2025 was $0.61, a decrease of 9.0% from the second quarter of 2024 [7] - Book value per share for the second quarter of 2025 was $21.32, an increase of 11.2% from the second quarter of 2024 [7] Company Strategy and Market Position - The company experienced revenue growth driven by higher average selling prices and increased unit volumes [3] - The company is making solid progress across its retail footprint and land development projects [3] - The decline in share price during the quarter provided an opportunity for the company to repurchase stock, reflecting confidence in long-term business value [3] - Legacy Housing Corporation is one of the largest producers of manufactured homes in the United States, focusing primarily on the southern United States [5] Share Repurchase Activity - The company repurchased 260,635 shares of common stock for $5.8 million in the open market during the three months ended June 30, 2025 [7]

Company Overview - Legacy Housing Corporation builds, sells, and finances manufactured homes and tiny houses, distributed through independent retailers and company-owned stores [3] - The company is one of the largest producers of manufactured homes in the United States, primarily operating in the southern United States [3] - Legacy offers a variety of homes ranging from approximately 395 to 2,667 square feet, with prices ranging from approximately $33,000 to $180,000 [3] Financial Results Announcement - Legacy Housing Corporation will release its financial results for the second quarter ended June 30, 2025, after markets close on August 7, 2025 [1] - A conference call will be held on August 8, 2025, at 10:00 a.m. Central Time to discuss the financial results [1] - A replay of the webcast will be available approximately two hours after the call and archived for one year [2]

Group 1 - The focus is on smaller firms in niche industries rather than high growth names [1] - Crude Value Insights provides an investing service centered on oil and natural gas, emphasizing cash flow and value growth prospects [1] - The service includes a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2] Group 2 - Subscribers have access to live chat discussions about the oil and gas sector [2] - A two-week free trial is offered to attract new subscribers [3]

Financial Data and Key Metrics Changes - Product sales decreased by $6,500,000 or 21.2% for Q1 2025 compared to Q1 2024, primarily due to a decrease in unit volumes shipped, especially in mobile home park sales and retail sales [4][6] - Net revenue per product sold increased by 23.1% compared to the same period in 2024, driven by a shift from wholesale sales to higher retail prices [4][5] - Net income decreased by 32.1% to $10,300,000 in Q1 2025 compared to Q1 2024, with basic earnings per share decreasing to $0.43, a drop of 30.6% [8] - Cash increased to approximately $3,400,000 as of 03/31/2025, up from $1,100,000 as of 12/31/2024 [8][9] - Book value per basic share outstanding increased by 13.1% to $20.87 from the same period in 2024 [9] Business Line Data and Key Metrics Changes - Other revenue decreased by $1,000,000 or 59.2% during Q1 2025 compared to Q1 2024, primarily due to a decrease in forfeited deposits [6] - Cost of product sales decreased by $3,300,000 or 16% during Q1 2025 compared to Q1 2024, attributed to the decrease in units sold [7] - Gross profit margin was 29.2% of product sales in Q1 2025, down from 33.6% in Q1 2024 [7] Market Data and Key Metrics Changes - Retail loan originations in April 2025 were the highest in one month since going public, with year-to-date originations up 51% over the previous year [16][17] - Community shipments were lower than expected in Q1 due to broader market uncertainty and timing delays [17] Company Strategy and Development Direction - The company plans to simplify its product line by reducing the number of choices and options to improve efficiency [11] - A modification to the mobile home park financing program was introduced to allow community owners more flexibility in selling homes [12] - Management is focusing on enhancing sales, marketing, and land development projects, with new hires in key positions [13] Management Comments on Operating Environment and Future Outlook - Despite market uncertainty and tariff risks, the outlook for the remainder of 2025 is positive, with independent dealers showing recovery [14] - Delinquencies across loan portfolios remain low, and recovery rates are strong [18] - The company anticipates selling lots in a new development phase this summer, with significant potential value [19] Other Important Information - Share repurchases were limited in Q1 due to trading restrictions, but the company remains focused on long-term fundamentals [20] Q&A Session Summary Question: Pricing and Average Selling Price - The increase in average selling price was primarily due to a favorable sales mix, with plans for further price increases in June [22][23] Question: MHP Sales and Order Backlog - The decrease in MHP sales was attributed to both reduced demand and timing of orders, with significant orders pushed into Q2 [24][25] Question: Capital Spending and Cash Use - No unusual capital spending is expected outside of ongoing developments, particularly in Bastrop [29] Question: Production Expectations for Q2 - Production rates in Texas are expected to increase in Q2 compared to Q1, with a focus on streamlining the product portfolio [33][37] Question: Impact of Tariffs and Trade Uncertainty - Tariffs are a consideration but not a major issue, with most raw materials sourced domestically; uncertainty remains a challenge for investment decisions [39][40] Question: Comparison with Competitors - Delayed shipments and product complexity have impacted performance compared to competitors, but confidence in the industry remains strong [43][44]

Financial Data and Key Metrics Changes - Product sales decreased by $6.5 million or 21.2% for Q1 2025 compared to Q1 2024, primarily due to a decrease in unit volumes shipped, especially in mobile home park sales and retail sales [4][5] - Net revenue per product sold increased by 23.1% compared to the same period in 2024, driven by a shift from wholesale sales to consumers at higher retail prices [4][5] - Net income decreased by 32.1% to $10.3 million in Q1 2025 compared to Q1 2024, with basic earnings per share down to $0.43, a decrease of 30.6% [8] - Cash increased to approximately $3.4 million as of March 31, 2025, compared to $1.1 million as of December 31, 2024 [8][9] - Book value per basic share outstanding increased by 13.1% to $20.87 from the same period in 2024 [9] Business Line Data and Key Metrics Changes - Other revenue decreased by $1 million or 59.2% during Q1 2025 compared to Q1 2024, primarily due to a decrease in forfeited deposits [5][6] - Selling, general, and administrative expenses increased by $400,000 or 6.9% during Q1 2025 compared to the same period in 2024 [6] Market Data and Key Metrics Changes - Retail loan originations in April 2025 were the highest in one month since going public, with year-to-date originations up 51% over the previous year [15][16] - Community shipments were lower than expected in Q1 due to broader market uncertainty and timing delays [16] Company Strategy and Development Direction - The company plans to simplify its product line by reducing the number of choices and options to focus on core products and improve efficiency [11] - A modification to the mobile home park financing program was introduced to allow community owners more flexibility in selling homes, which is expected to broaden the customer base [12] - Management is focusing on enhancing sales, marketing, and land development projects, with new hires in key positions to strengthen operations [13] Management Comments on Operating Environment and Future Outlook - Despite market uncertainty and tariff risks, the outlook for the remainder of 2025 is positive, with independent dealers showing health across most regions [14] - Delinquencies across loan portfolios remain low, and recovery rates are strong, indicating a stable financial environment [17] - The company anticipates selling lots in a significant development project in Bastrop County this summer, which is expected to be valuable [18] Other Important Information - Share repurchases were limited in Q1 due to trading restrictions, but the company remains focused on long-term fundamentals and has the balance sheet capacity to repurchase shares [19] Q&A Session Summary Question: Pricing and Average Selling Price - The increase in average selling price was primarily due to a favorable sales mix, with a price increase implemented in February and another planned for mid-June [21][22] Question: MHP Sales and Order Backlog - The decrease in MHP sales was attributed to both reduced demand and timing of orders, with significant orders pushed into Q2 [23][24] Question: Capital Spending and Cash Use - No unusual capital spending is expected outside of ongoing developments, with a focus on completing the Bastrop project and exploring opportunities for growth [29] Question: Production Rates and Order Cadence - Production rates in Texas are expected to increase in Q2 compared to Q1, with a focus on rebuilding the dealer base and streamlining product offerings [36] Question: Impact of Tariffs and Trade Uncertainty - Tariffs are a consideration but not a major issue, with most raw materials sourced domestically; the uncertainty in the business environment is a more significant concern [39][40] Question: Comparison with Competitors - Delayed shipments and product complexity have impacted performance, but the company remains confident in the industry and expects a positive year ahead [44][47]

PART I - FINANCIAL INFORMATION This part presents the unaudited condensed financial statements and management's discussion and analysis for the quarter ended March 31, 2025 [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed financial statements and detailed notes for the quarter ended March 31, 2025 [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------ | :------------------------------- | :-------------------- | :------- | | Total current assets | $130,544 | $124,306 | $6,238 | 5.0% | | Total assets | $544,606 | $534,194 | $10,412 | 1.9% | | Total current liabilities | $33,351 | $32,742 | $609 | 1.9% | | Total liabilities | $40,878 | $40,238 | $640 | 1.6% | | Total stockholders' equity | $503,728 | $493,956 | $9,772 | 2.0% | - Cash balance **significantly increased** from **$1,149k** at December 31, 2024, to **$3,414k** at March 31, 2025[8](index=8&type=chunk) - Inventories, net, increased from **$37,538k** to **$41,404k**, indicating **higher stock levels**[8](index=8&type=chunk) [Condensed Statements of Income](index=5&type=section&id=Condensed%20Statements%20of%20Income) This section details the company's revenues, expenses, and net income over a specific reporting period | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Product sales | $24,290 | $30,833 | $(6,543) | (21.2)% | | Consumer, MHP and dealer loans interest | $10,655 | $10,633 | $22 | 0.2% | | Other revenue | $725 | $1,777 | $(1,052) | (59.2)% | | Total net revenue | $35,670 | $43,243 | $(7,573) | (17.5)% | | Income from operations | $11,591 | $16,750 | $(5,159) | (30.8)% | | Net income | $10,276 | $15,140 | $(4,864) | (32.1)% | | Basic EPS | $0.43 | $0.62 | $(0.19) | (30.6)% | | Diluted EPS | $0.41 | $0.60 | $(0.19) | (31.7)% | [Condensed Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines the changes in the company's equity accounts, including net income and stock transactions | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | Change (in thousands) | | :----------------------- | :------------------------------- | :---------------------------- | :-------------------- | | Total Stockholders' Equity | $493,956 | $503,728 | $9,772 | | Retained Earnings | $321,400 | $331,676 | $10,276 | | Treasury Stock | $(9,875) | $(10,550) | $(675) | - Net income of **$10,276k** was the **primary driver** for the increase in retained earnings during Q1 2025[13](index=13&type=chunk) - The company purchased **$675k** of treasury stock in Q1 2025[13](index=13&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by operating, investing, and financing activities | Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash provided by operating activities | $4,908 | $10,806 | $(5,898) | | Net cash (used in) provided by investing activities | $(1,968) | $2,721 | $(4,689) | | Net cash used in financing activities | $(675) | $(13,654) | $12,979 | | Net increase (decrease) in cash | $2,265 | $(127) | $2,392 | | Cash at end of period | $3,414 | $621 | $2,793 | - Operating cash flow **decreased significantly by 54.6% year-over-year**, **primarily due to decreased net income and changes in working capital**[152](index=152&type=chunk) - Investing activities **shifted from providing $2.7 million in cash in Q1 2024 to using $2.0 million in Q1 2025**, **mainly due to increased property development and notes issuance**[153](index=153&type=chunk) [Notes to Condensed Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20(Unaudited)) This section provides detailed disclosures and explanations for the figures presented in the condensed financial statements [1. NATURE OF OPERATIONS](index=9&type=section&id=1.%20NATURE%20OF%20OPERATIONS) This note describes the company's core business activities, including manufacturing, financing, and community development - **Legacy Housing Corporation manufactures and transports mobile homes, provides wholesale and retail financing, and develops manufactured home communities**[19](index=19&type=chunk) - The company operates as **one reportable segment**, with performance **evaluated by the CEO based on net income, total revenue, and return on investment**[22](index=22&type=chunk) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Allowance for doubtful accounts | $763 | $578 | | Product warranty liability | $2,033 | $1,950 | | Share-based compensation expense (Q1) | $171 | $257 | [2. REVENUE](index=15&type=section&id=2.%20REVENUE) This note details the company's revenue recognition policies and disaggregated revenue streams - Revenue from product sales is **recognized upon delivery and transfer of title to customers**[53](index=53&type=chunk) - For Q1 2025, **no single MHP customer accounted for more than 5.0% of product sales**, a **change from Q1 2024 where two customers had significant concentrations**[60](index=60&type=chunk) Disaggregated Revenue (Three months ended March 31) | Category | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Product sales | $24,290 | $30,833 | $(6,543) | (21.2)% | | Loan portfolio interest | $10,655 | $10,633 | $22 | 0.2% | | Other revenue | $725 | $1,777 | $(1,052) | (59.2)% | | **Total net revenue** | **$35,670** | **$43,243** | **$(7,573)** | **(17.5)%** | [3. CONSUMER LOANS RECEIVABLE](index=17&type=section&id=3.%20CONSUMER%20LOANS%20RECEIVABLE) This note provides information on the company's consumer loan portfolio, including interest rates and loan loss allowances - The **average contractual interest rate** for consumer loans was **approximately 13.1%** as of March 31, 2025[64](index=64&type=chunk) Consumer Loans Receivable, Net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Consumer loans receivable | $182,789 | $177,289 | | Allowance for loan losses | $(812) | $(694) | | Consumer loans receivable, net | $179,474 | $174,105 | Allowance for Loan Losses Activity (Consumer Loans, in thousands) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Allowance for loan losses, beginning | $694 | $765 | | Provision for loan losses | $193 | $(268) | | (Charge offs) recoveries | $(75) | $67 | | Allowance for loan losses, end | $812 | $564 | [4. NOTES RECEIVABLE FROM MOBILE HOME PARKS](index=19&type=section&id=4.%20NOTES%20RECEIVABLE%20FROM%20MOBILE%20HOME%20PARKS) This note details the company's notes receivable from mobile home parks, including interest rates and a significant settlement - The **average interest rate** on MHP Notes was **approximately 7.8%** as of March 31, 2025[78](index=78&type=chunk) - A settlement agreement in July 2024 **refinanced approximately $37 million in defaulted notes into a new two-year, $48.6 million Promissory Note at 7.9% interest, secured by over 1,000 mobile homes and two mobile-home parks**[82](index=82&type=chunk)[86](index=86&type=chunk)[90](index=90&type=chunk) MHP Notes Receivable, Net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Outstanding principal balance | $204,400 | $208,175 | | Allowance for loan losses | $(776) | $(654) | | Total | $202,666 | $206,464 | [5. OTHER NOTES RECEIVABLE](index=24&type=section&id=5.%20OTHER%20NOTES%20RECEIVABLE) This note describes other notes receivable, their collateral, interest rates, and past due balances - Other notes receivable are **collateralized by mortgages on real estate, mobile homes used as offices, and vehicles**, with **interest rates ranging from 5.00% to 17.50%**[93](index=93&type=chunk) - **Past due balances on other notes increased to $1,698k** as of March 31, 2025, **from $1,357k** as of December 31, 2024[95](index=95&type=chunk) Other Notes Receivable, Net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Outstanding principal balance | $16,386 | $15,412 | | Allowance for loan losses | $(468) | $(364) | | Total | $15,816 | $14,916 | [6. DEALER FINANCED RECEIVABLES](index=27&type=section&id=6.%20DEALER%20FINANCED%20RECEIVABLES) This note explains the company's dealer financed receivables, including terms and outstanding balances - **Dealer financed receivables are loans to independent retailers for mobile home purchases, typically with a three-year term and monthly interest payments**[103](index=103&type=chunk) Dealer Financed Receivables, Net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Outstanding principal balance | $31,878 | $32,779 | | Allowance for loan losses | $(200) | $(194) | | Total | $31,678 | $32,585 | [7. INVENTORIES, NET](index=28&type=section&id=7.%20INVENTORIES,%20NET) This note provides a breakdown of the company's inventory, including raw materials, work in progress, and finished goods Inventories, Net (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Raw materials | $13,583 | $13,172 | | Work in progress | $325 | $478 | | Finished goods, net | $27,496 | $23,888 | | **Total** | **$41,404** | **$37,538** | [8. PROPERTY, PLANT AND EQUIPMENT](index=28&type=section&id=8.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) This note details the company's property, plant, and equipment, including land, buildings, and construction in progress Property, Plant and Equipment, Net (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Land | $17,020 | $17,025 | | Buildings and leasehold improvements | $13,360 | $13,353 | | Construction in Progress | $20,864 | $19,719 | | Total property, plant and equipment, net | $48,445 | $47,585 | - **Depreciation expense for Q1 2025 was $399k, slightly down from $403k in Q1 2024**[107](index=107&type=chunk) [9. OTHER ASSETS](index=28&type=section&id=9.%20OTHER%20ASSETS) This note describes other assets, including prepaid rent and repossessed homes Other Assets (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Prepaid rent | $356 | $356 | | Repossessed homes | $6,274 | $5,129 | | **Total** | **$6,630** | **$5,485** | - **Repossessed homes increased by $1,145k** from December 31, 2024, to March 31, 2025[108](index=108&type=chunk) [10. ACCRUED LIABILITIES](index=29&type=section&id=10.%20ACCURUED%20LIABILITIES) This note provides a breakdown of accrued liabilities, including warranty, litigation, and income tax reserves Accrued Liabilities (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Warranty reserve | $2,033 | $1,950 | | Litigation reserve | $490 | $328 | | Federal and state income taxes | $5,734 | $3,295 | | **Total accrued liabilities** | **$15,238** | **$13,672** | - **Federal and state income taxes accrued increased significantly by $2,439k** from December 31, 2024, to March 31, 2025[110](index=110&type=chunk) [11. LINES OF CREDIT](index=29&type=section&id=11.%20LINES%20OF%20CREDIT) This note details the company's revolving credit facility, including available credit and interest expense - The company has a **$50,000k senior secured revolving credit facility with Prosperity Bank, maturing July 28, 2027**[111](index=111&type=chunk) - The **outstanding balance on the Revolver was $0** as of March 31, 2025, and December 31, 2024, with **$50,000k available credit**[112](index=112&type=chunk) - **Interest expense under the Revolver was $0 for Q1 2025, down from $276k for Q1 2024**[112](index=112&type=chunk) [12. INCOME TAXES](index=29&type=section&id=12.%20INCOME%20TAXES) This note explains the company's income tax expense and effective tax rate, including factors causing differences from statutory rates Income Tax Expense and Effective Tax Rate (Three months ended March 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :---------------- | :------------------ | :------------------ | | Income tax expense | $2,452 | $3,373 | | Effective tax rate | 19.3% | 18.2% | - **The effective tax rate differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy-efficient homes (§45L)**[113](index=113&type=chunk) [13. COMMITMENTS AND CONTINGENCIES](index=30&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's commitments and contingent liabilities, such as self-insured health benefits and legal proceedings - The company has a **self-insured health benefits plan with a $809k liability for incurred but not reported claims** as of March 31, 2025[115](index=115&type=chunk) - **Maximum contingent liability under repurchase agreements for dealer inventory financing was $672k** as of March 31, 2025, **down from $805k** at December 31, 2024[116](index=116&type=chunk) - **Legal reserves for ordinary course legal proceedings increased to $490k** as of March 31, 2025, **from $328k** at December 31, 2024[118](index=118&type=chunk) [14. FAIR VALUE MEASUREMENTS](index=31&type=section&id=14.%20FAIR%20VALUE%20MEASUREMENTS) This note describes the fair value measurement methodologies for the company's loan portfolios Fair Value vs. Book Value of Loan Portfolios (March 31, 2025, in thousands) | Portfolio | Fair Value | Book Value | | :-------------------------- | :--------- | :--------- | | Consumer loan portfolio | $168,317 | $179,474 | | Fixed rate MHP Notes | $195,921 | $199,693 | | Fixed rate other notes | $15,109 | $15,250 | - **Variable rate loans (MHP, other, line of credit) are valued at Level II, approximating carrying value**. **Fixed rate loans (consumer, MHP, other) are valued at Level III using discounted cash flows**[121](index=121&type=chunk) [15. EARNINGS PER SHARE](index=31&type=section&id=15.%20EARNINGS%20PER%20SHARE) This note provides details on basic and diluted earnings per share and share repurchase activities Earnings Per Share (Three months ended March 31) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Basic | $0.43 | $0.62 | | Diluted | $0.41 | $0.60 | - The company **repurchased 29,385 shares of common stock for $675k** in Q1 2025, with **approximately $13,927k remaining authorization** as of March 31, 2025[125](index=125&type=chunk) [16. RELATED PARTY TRANSACTIONS](index=33&type=section&id=16.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses sales transactions with related parties, highlighting changes in sales volumes - **Home sales to Bell Mobile Homes (related party) decreased to $384k** in Q1 2025 **from $1,119k** in Q1 2024[126](index=126&type=chunk) - **Home sales to Shipley Bros., Ltd. and Crazy Red's Mobile Homes (related party) increased to $392k** in Q1 2025 **from $299k** in Q1 2024[127](index=127&type=chunk) [17. SUBSEQUENT EVENTS](index=33&type=section&id=17.%20SUBSEQUENT%20EVENTS) This note reports significant events occurring after the balance sheet date, such as additional share repurchases - **Between April 1, 2025, and May 12, 2025, the company repurchased an additional 11,466 shares of common stock for $261k**[125](index=125&type=chunk)[128](index=128&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, and liquidity for the three months ended March 31, 2025 [Overview](index=34&type=section&id=Overview) This section provides an overview of Legacy Housing Corporation's business model, operations, and market focus - **Legacy Housing Corporation is a vertically integrated manufacturer, seller, and financier of manufactured homes and 'tiny houses' primarily in the southern United States**[130](index=130&type=chunk)[132](index=132&type=chunk) - The company **sold 427 home sections in Q1 2025, a decrease from 645 in Q1 2024**[130](index=130&type=chunk) - **Approximately 62% of manufactured homes were sold in Texas** during Q1 2025[134](index=134&type=chunk) [Factors Affecting Our Performance](index=36&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses key internal and external factors influencing the company's financial performance and strategic initiatives - The company is **developing manufactured housing communities and subdivisions**, holding properties **totaling $34,244k** for this purpose as of March 31, 2025[137](index=137&type=chunk) - **High inflation and rising interest rates are identified as potential adverse impacts on gross margins and home buyer financing affordability**[137](index=137&type=chunk) - The **Georgia manufacturing facility has space to add capacity**, and the company is **exploring opportunities to increase production capacity**[137](index=137&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the period, focusing on revenue, expenses, and net income Key Financial Performance (Three months ended March 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Total net revenue | $35,670 | $43,243 | $(7,573) | (17.5)% | | Product sales | $24,290 | $30,833 | $(6,543) | (21.2)% | | Net revenue per unit sold | $69.4 | $56.4 | $13 | 23.1% | | Income from operations | $11,591 | $16,750 | $(5,159) | (30.8)% | | Net income | $10,276 | $15,140 | $(4,864) | (32.1)% | - The **increase in net revenue per unit sold is primarily due to a decrease in wholesale units sold to mobile home parks and an increase in higher-priced retail units sold to consumers**[140](index=140&type=chunk) - **Selling, general and administrative expenses increased by $0.4 million (6.9%) due to higher legal expenses and loan loss provisions, partially offset by lower warranty and payroll expenses**[145](index=145&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 and fund growth - **Management believes cash flow from operations, current cash, and available lines of credit will be sufficient to fund operations and growth for the next 12 to 18 months**[149](index=149&type=chunk) Cash Flow Activities (Three Months Ended March 31) | Activity | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $4,908 | $10,806 | | Net cash (used in) provided by investing activities | $(1,968) | $2,721 | | Net cash used in financing activities | $(675) | $(13,654) | | Net change in cash | $2,265 | $(127) | | Cash at end of period | $3,414 | $621 | - The company **repurchased 29,385 shares for $675k** in Q1 2025, with a **remaining authorization of approximately $13,927k**[156](index=156&type=chunk) Contractual Obligations (as of March 31, 2025, in thousands) | Contractual Obligations | Total | 2025 | 2026 - 2027 | 2028 - 2029 | After 2029 | | :---------------------- | :---- | :--- | :---------- | :---------- | :--------- | | Lines of credit | $0 | $0 | $0 | $0 | $0 | | Operating lease obligations | $1,291 | $370 | $776 | $145 | $0 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no quantitative and qualitative disclosures about market risk applicable for this quarterly report [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and procedures and identifies material weaknesses in internal control over financial reporting - The company's **disclosure controls and procedures were deemed ineffective** as of March 31, 2025, due to **material weaknesses in internal control over financial reporting**[168](index=168&type=chunk) - **Material weaknesses include insufficient design, implementation, monitoring, or testing of control activities, and inadequate documentation or reviews** - **Lack of sufficient qualified accounting personnel to support GAAP and SEC reporting requirements** - **Insufficient design, implementation, or maintenance of information technology general controls over in-scope business processes and financial reporting systems** - Despite the identified material weaknesses, **management believes the financial statements fairly present the company's financial condition, results of operations, and cash flows**[169](index=169&type=chunk) PART II - OTHER INFORMATION This part covers legal proceedings, equity security sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 for details regarding the company's legal proceedings [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's equity security repurchases during the reporting period Repurchases of Equity Securities (Three months ended March 31, 2025) | Period | Total number of shares purchased | Average price paid per share | | :------------------ | :----------------------------- | :--------------------------- | | January 1-31, 2025 | 29,385 | $22.88 | | February 1-28, 2025 | — | — | | March 1-31, 2025 | — | — | - **All shares purchased were in the open market and not pursuant to a publicly announced plan or program**[175](index=175&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms the absence of defaults on senior securities during the reporting period [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company's operations [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) This section discloses other relevant information, including a director's Rule 10b5-1 trading plan termination - **On January 13, 2025, Curtis D. Hodgson, a Director, terminated a Rule 10b5-1 trading plan to sell up to 899,600 shares of the company's common stock**[177](index=177&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL documents - **Exhibit 31.1 and 31.2: Rule 13a-14(a) / 15d-14(a) Certifications** from the Chief Executive Officer and Chief Financial Officer - **Exhibit 32.1 and 32.2: Section 1350 Certifications** - **Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE: Inline XBRL Taxonomy Extension Documents**[180](index=180&type=chunk) SIGNATURES This section contains the required signatures for the quarterly report