Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38761 Legacy Housing Corporation (Exact name of registrant as specified in its charter) Texas 20-2897516 (State or ot ...

Legacy Housing Corporation (NASDAQ:LEGH) Q2 2023 Earnings Call Transcript August 10, 2023 11:00 AM ET Company Participants Duncan Bates - President & CEO Max Africk - General Counsel Conference Call Participants Alex Rygiel - B. Riley Mark Smith - Lake Street Capital Tim Moore - EF Hutton Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Legacy Housing Corporation Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After th ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38761 Legacy Housing Corporation (Exact name of registrant as specified in its charter) Texas 20-2897516 (State or other j ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-38761 Legacy Housing Corporation (Exact name of registrant as specified in its charter) Texas 20-2897516 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1600 Airport Freeway, #100 Bedford, Texas 76022 For the quarterly period ended March 31, 2 ...

Financial Data and Key Metrics Changes - Product revenue decreased to $43.3 million, a decline of 16.4% in Q1 2023 compared to Q1 2022, primarily due to reduced shipments across all three plants [10] - Net income increased by 1.1% to $16.3 million in Q1 2023 compared to Q1 2022, with basic earnings per share growing by $0.01, an increase of 1% [15] - Other revenue, consisting mainly of dealer financed fees and commercial lease rents, increased to $1.8 million, a rise of 33.3% year-over-year [14] - Consumer and MHP loan interest income rose to $7.7 million, an increase of 13.9% compared to the same period in 2022 [22] - Selling, general, and administrative expenses decreased by $2.3 million, or 29.3%, due to reduced salaries and legal expenses [24] - The company achieved an 18.7% return on equity over the last 12 months, with a book value per basic share of $16.32, up 20.3% from the previous year [25] Business Line Data and Key Metrics Changes - The manufactured housing industry has slowed, with March 2023 shipments up from February but still below 2022 levels; however, the company believes it has fared better than most competitors [21] - The company has a healthy backlog at all plants, indicating a strong sales push despite overall industry slowdowns [21] Market Data and Key Metrics Changes - The company noted that over 50% of households in the U.S. earn less than $75,000, which aligns with its target customer base, suggesting potential for increased demand as housing affordability worsens [18] - The company has observed a significant rise in mortgage rates and tightened underwriting standards, which may impact consumer purchasing behavior [18] Company Strategy and Development Direction - The company is focused on maintaining pricing while reducing raw material inventory and managing costs effectively [26] - Management is optimistic about growth opportunities in the industry, particularly as housing affordability issues persist [12][27] - The company is exploring land development opportunities and partnerships to enhance its business model and generate recurring revenue [100] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the slowing demand but expressed confidence in maintaining plant utilization and securing large orders [18] - The company plans to continue operating conservatively while being opportunistic in capital deployment, particularly in financing and land development [95][100] - Management emphasized the importance of improving sales, inventory management, and cost control to enhance margins [81] Other Important Information - The company ended Q1 2023 with $3.2 million in cash and $7.8 million drawn on its line of credit, alongside $8.5 million in treasuries yielding approximately 4.7% [26] - Management has no current plans for a larger transaction or sale of the company, focusing instead on long-term growth [92][95] Q&A Session Summary Question: Can you discuss the macro environment affecting the industry? - Management noted a significant rise in mortgage rates and slowing demand for new home construction, but expressed confidence in maintaining plant utilization and potential demand increases as affordability worsens [18] Question: What is the status of your land development activities? - The company is actively pursuing land development opportunities and is open to partnerships, with a focus on creating a replicable business model that generates recurring income [100] Question: How do you plan to manage pricing in the current competitive environment? - Management stated they have held pricing steady and are offering financing specials to maintain sales without sacrificing margins [55] Question: What is the outlook for interest income moving forward? - Interest income is expected to move directionally higher as the company deploys capital into loan portfolios [74] Question: Can you provide an update on inventory levels? - Management indicated that raw material inventory is around $17 million, with excess inventory across company-owned dealerships, and they are focused on improving inventory turnover [40] Question: What is the long-term strategy for the business? - The company aims to continue growing and generating predictable returns, with no plans for a sale, focusing on operational improvements and capital deployment opportunities [92][95]

Legacy Housing Corporation (NASDAQ:LEGH) Q4 2022 Earnings Conference Call March 16, 2023 11:00 AM ET Company Participants Duncan Bates - President and Chief Executive Officer Max Africk - General Counsel Conference Call Participants Min Cho - B. Riley Mark Smith - Lake Street Capital Tim Moore - E.F. Hutton Group Brian Glenn - Olcott Partners Operator Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Legacy Housing Corporation Fourth Quarter 2020 Earnings Conference Call. At this tim ...

Sales Performance - Legacy Housing Corporation sold 4,189 home sections in 2022, a 15.2% increase from 3,635 home sections sold in 2021[116]. - In 2022, approximately 53% of manufactured homes were sold in Texas, up from 50% in 2021, indicating a strong market presence[119]. - The total number of products sold in 2022 was 3,339, a 10.9% increase from 3,011 in 2021[153]. - Product sales increased by $56.1 million, or 33.8%, in 2022, driven by higher average sales prices and increased unit volumes[152]. - Direct sales increased to $45,549 in 2022 from $25,173 in 2021, representing an increase of 81%[271]. - Sales to two independent third-parties accounted for 5.9% and 5.4% of product sales in 2022[266]. Financial Performance - Net revenue for 2022 was $257.0 million, an increase of $59.5 million or 30.1% compared to 2021[150]. - Net income for 2022 reached $67,773, representing a 35.9% increase compared to $49,871 in 2021[198]. - Basic net income per share increased to $2.78 in 2022, up from $2.06 in 2021, reflecting a growth of 34.9%[198]. - Operating income for 2022 was $78,018, a 32.5% increase from $58,916 in 2021[198]. - Total net revenue for the year ended December 31, 2022, was $257,015, an increase of 30% compared to $197,507 in 2021[271]. Cash Flow and Liquidity - Net cash used in operating activities was $1.7 million in 2022, a significant decrease from $60.3 million provided in 2021[164]. - Cash and cash equivalents at the end of 2022 were $2.8 million, up from $1.0 million at the end of 2021[162]. - The available credit under the Revolver was $17.4 million as of December 31, 2022, down from a maximum limit of $70 million[172]. - The company reported a net cash used in operating activities of $(1,691) in 2022, a decrease from $60,296 in 2021[203]. Assets and Liabilities - Total current assets increased to $107,081,000 in 2022 from $92,541,000 in 2021, driven by an increase in cash and cash equivalents from $1,042,000 to $2,818,000[196]. - Total liabilities decreased from $57,273,000 in 2021 to $54,709,000 in 2022, indicating improved financial stability[196]. - The company’s inventories decreased from $42,000,000 in 2021 to $32,075,000 in 2022, indicating a potential shift in inventory management strategy[196]. - The maximum contingent obligations under repurchase agreements were approximately $8,925,000 as of December 31, 2022, compared to $4,908,000 in 2021[176]. Financing and Interest - The company offers three types of financing solutions, enhancing competitive advantages and facilitating sales[120]. - Consumer and MHP loans interest income grew by $1.4 million, or 5.0%, in 2022, primarily due to an increase in the average outstanding consumer loan portfolio balance[154]. - The average contractual interest rate for consumer loans was approximately 13.4% as of December 31, 2022, slightly down from 13.5% in 2021[220]. - Interest expense under the Revolver decreased from $887,000 in 2021 to $225,000 in 2022, with an outstanding balance of $2,545,000 as of December 31, 2022, down from $7,993,000 in 2021[173]. Inventory and Production - The company operates three manufacturing facilities, producing approximately 70 home sections or 60 fully-completed homes per week[118]. - Current manufacturing facilities are operating at or near peak capacity, with plans to increase production at the Georgia facility to meet demand from new markets[125]. - The company is actively reviewing opportunities to add production capacity in attractive regions to meet future demand[127]. - The company’s inventories decreased from $42,000,000 in 2021 to $32,075,000 in 2022, indicating a potential shift in inventory management strategy[196]. Compliance and Regulations - The company maintained compliance with financial covenants, including a tangible net worth of at least $120,000,000 and a debt to EBITDA ratio of 4-to-1 or less as of December 31, 2022[173]. - The company is classified as an "emerging growth company," allowing it to delay the adoption of certain accounting standards until it no longer qualifies[178]. - The Company plans to adopt ASU 2016-13 effective January 1, 2023, which is expected to increase allowance amounts due to changes in credit loss measurement[292]. Other Financial Metrics - Operating expenses increased by $41.4 million, or 31.6%, primarily due to higher costs of materials and labor[158]. - Other revenue increased by $2.1 million, or 48.2%, primarily due to a rise in consignment fees and commercial lease rents[157]. - The company approved a new repurchase program in November 2022, allowing for the purchase of up to $10,000 of its common stock[208]. - The accrued warranty liability at the end of 2022 was $3,049, up from $2,876 in 2021, showing a 6% increase[252].

Financial Data and Key Metrics Changes - Net revenue increased to $57.3 million in Q3 2022, a 1.5% improvement over Q3 2021, driven by price increases despite a decrease in shipments from the Georgia facility [6] - Interest revenue from retail and commercial loan portfolios was $7 million, slightly down from Q3 2021 due to large payoffs in the commercial loan portfolio [7] - Income from operations rose to $16.9 million, a 10% increase from Q3 2021, primarily due to price increases and lower cost of sales [7] - Net income for the quarter was $14.7 million, a 13.4% increase over Q3 2021, with basic earnings per share growing to $0.60, an 11.1% increase [9] - The company ended the quarter with a net cash position of $11.3 million and no drawings on its line of credit [10] Business Line Data and Key Metrics Changes - The Georgia facility experienced a significant slowdown in production due to quality challenges, with shipments in August and September at approximately 10% of normal levels [20] - Production in Georgia decreased by about 40%, while production in Texas increased slightly [21] - The backlog in Georgia is solid, with approximately 800 units, indicating a strong order flow despite recent production issues [22] Market Data and Key Metrics Changes - Labor costs have risen to approximately $9 per square foot, up from $4 pre-COVID, indicating inflationary pressures in the labor market [23] - The company has seen an increase in applicants for positions, suggesting a potential easing of labor shortages as the housing market slows [23] Company Strategy and Development Direction - The company plans to maintain pricing while reducing raw material inventory to capitalize on lower material costs in the coming quarters [8] - Management aims to focus on improving operational efficiencies, including inventory management and reducing SG&A expenses [12] - The company is exploring new product lines and geographic opportunities to drive growth, particularly in land development and temporary classroom products [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2023, citing a strong backlog and the potential for growth despite current economic challenges [12] - The company believes that the slowdown in the broader housing market may create opportunities to acquire assets at attractive prices [51] - Management noted that the integrated business model with multiple recurring earnings streams will provide resilience in a slowing economy [10] Other Important Information - The company implemented a $10 million stock repurchase program as part of its capital allocation strategy [9] - Management highlighted the importance of in-house financing in maintaining competitive pricing and customer loyalty [39] Q&A Session Summary Question: What happened in Georgia? - The slowdown was due to quality challenges and increased regulatory scrutiny, leading to a significant decrease in production and shipments [20] Question: How is the labor situation currently? - Labor costs have increased, but there has been a rise in applicants, indicating potential improvements in labor availability [23] Question: Can you discuss the loan portfolio and pricing strategy? - The company has not raised rates despite market pressures, maintaining competitive pricing for customers [25] Question: What are the capital allocation plans moving forward? - The company is focused on organic growth and exploring new opportunities while weighing stock repurchases against other capital uses [30] Question: How does the macro environment impact the company? - The company anticipates continued challenges in the site-built housing market but remains optimistic about the manufactured home sector [51]

Financial Performance - For the three months ended September 30, 2022, total net revenue increased by $855,000, or 1.5%, to $57.325 million compared to $56.470 million in the same period of 2021 [163]. - Total net revenue for the nine months ended September 30, 2022, was $181.5 million, an increase of $36.5 million, or 25.1%, from $145.0 million in the same period in 2021 [174]. - Net income for the three months ended September 30, 2022, was $14.735 million, an increase of $1.742 million, or 13.4%, compared to $12.993 million in the same period of 2021 [163]. - Net income for the nine months ended September 30, 2022, was $48.1 million, an increase of $11.7 million, or 32.3%, compared to $36.3 million in the same period in 2021 [174]. - Income from operations for the nine months ended September 30, 2022, was $55.6 million, an increase of $12.6 million, or 29.4%, compared to $43.0 million in the same period in 2021 [174]. Sales and Revenue Composition - Product sales increased by $378,000, or 0.8%, to $48.678 million, driven by higher average sales prices despite a decrease in unit volumes [165]. - Product sales increased by $33.9 million, or 27.8%, during the nine months ended September 30, 2022, driven by higher average sales prices and increased unit volumes [176]. - The net revenue per product sold increased by $5, or 9.2%, to $64.6 due to rising material and labor costs, resulting in higher home sales prices [165]. - The company sold 753 total products during the three months ended September 30, 2022, a decrease of 63 units, or 7.7%, compared to 816 units in the same period of 2021 [165]. - Other revenue increased by $734,000, or 80.6%, to $1.645 million, driven by increases in servicer fee revenue, commercial lease rents, and consignment fees [168]. Costs and Expenses - The cost of product sales decreased by $2.166 million, or 6.1%, primarily due to a decrease in units sold, despite increases in material and labor costs [169]. - The cost of product sales increased by $18.6 million, or 21.7%, during the nine months ended September 30, 2022, primarily due to an increase in units sold and rising material and labor costs [180]. - Selling, general and administrative expenses increased by $5.3 million, or 35.2%, during the nine months ended September 30, 2022, compared to the same period in 2021 [181]. Cash Flow and Financial Position - Cash and cash equivalents increased to approximately $11.3 million as of September 30, 2022, compared to $1.0 million as of December 31, 2021 [185]. - Net cash provided by operating activities decreased by $49.7 million during the nine months ended September 30, 2022, compared to the same period in 2021 [187]. Compliance and Financial Obligations - The Company is required to maintain a tangible net worth of at least $120,000 and a debt to EBITDA ratio of 4 to 1 or less, and was in compliance with these covenants as of September 30, 2022 [196]. - The maximum contingent obligations under the repurchase agreements were approximately $9,905 as of September 30, 2022, compared to $4,908 as of December 31, 2021 [200]. - Operating lease obligations total $3,112, with $176 due in 2022, $1,352 in 2023-2024, $1,154 in 2025-2026, and $430 after 2026 [199]. Internal Controls and Reporting - The Company has identified material weaknesses in internal control over financial reporting, particularly in revenue recognition and accounts payable processing, which are expected to be remediated by the end of fiscal 2022 [208]. - The Company’s disclosure controls and procedures were deemed not effective as of September 30, 2022, due to identified material weaknesses [206]. - There were no changes in internal control over financial reporting that materially affected the Company's controls during the third quarter of fiscal 2022 [209]. Other Financial Information - Interest expense under the New Revolver for the nine months ended September 30, 2022, was $326, down from $827 in the same period of 2021, with an outstanding balance of $0 as of September 30, 2022, compared to $7,993 as of December 31, 2021 [196]. - The effective tax rate for the nine months ended September 30, 2022, was 17.5%, compared to 17.0% for the same period in 2021 [183]. - The Company has not drawn any amounts on the $10,000 credit facility associated with the PILOT agreement, which provides incentives through property tax abatements [197]. - The Company is classified as an "emerging growth company" and has elected to delay the adoption of certain accounting standards until it is no longer classified as such [203]. - The Company has not recorded any reserve for repurchase commitments as of September 30, 2022, considering its obligations on current contracts to be immaterial [200].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38761 Legacy Housing Corporation (Exact name of registrant as specified in its charter) Texas 20-2897516 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR (State or other j ...