0001558370-23-003920 | 10-K | XBRL Viewer

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2022	Dec. 31, 2021	Mar. 10, 2023	Jun. 30, 2022
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity Registrant Name	Legacy Housing Corporation
Entity File Number	001-38761
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	20-2897516
Entity Address, Address Line One	1600 Airport Freeway
Entity Address, Address Line Two	#100
Entity Address, City or Town	Bedford
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	76022
City Area Code	817
Local Phone Number	799-4900
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock ($0.001 par value)
Trading Symbol	LEGH
Security Exchange Name	NASDAQ
Entity Public Float				$ 108,311,007
Entity Common Stock, Shares Outstanding			24,380,224
Entity Central Index Key	0001436208
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Name	Daszkal Bolton, LLP	Weaver, LLP
Auditor Firm ID	229	410
Auditor Location	Sunrise, Florida	Dallas, Texas

BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 2,818	$ 1,042
Held to Maturity Securities	8,412	0
Accounts receivable, net	4,873	5,118
Current portion of contracts - dealer financed	29,441	3,496
Current portion of consumer loans receivable	6,801	6,080
Current portion of notes receivable from mobile home parks ("MHP")	9,670	10,049
Current portion of other notes receivable	8,927	20,300
Inventories	32,075	42,000
Prepaid expenses and other current assets	4,064	4,456
Total current assets	107,081	92,541
Contracts - dealer financed	595
Consumer loans receivable, net	132,208	119,543
Notes receivable from mobile home parks ("MHP"), net	133,072	92,943
Other notes receivable, net	13,795	20,930
Inventories, net	6,987	2,678
Other assets - leased mobile homes	8,824	9,419
ROU assets - operating leases	2,663
Other assets	1,482	1,097
Property, plant and equipment, net	30,106	27,516
Total assets	436,813	366,667
Current liabilities:
Accounts payable	4,549	4,155
Accrued liabilities	16,895	20,686
Customer deposits	9,715	7,749
Escrow liability	9,653	9,350
Operating lease obligation	650
Total current liabilities	41,462	41,940
Long-term liabilities:
Operating lease obligation, less current portion	2,121
Lines of credit	2,545	7,993
Deferred income taxes, net	3,065	3,004
Dealer incentive liability	5,516	4,336
Total liabilities	54,709	57,273
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $.001 par value, 10,000,000 shares authorized: no shares issued or outstanding
Common stock, $.001 par value, 90,000,000 shares authorized; 24,814,695 and 24,654,621 issued and 24,369,630 and 24,209,556 outstanding at December 31, 2022 and December 31, 2021, respectively	30	25
Treasury stock at cost, 445,065 shares at December 31, 2022 and December 31, 2021	(4,477)	(4,477)
Additional paid-in-capital	180,555	175,623
Retained earnings	205,996	138,223
Total stockholders' equity	382,104	309,394
Total liabilities and stockholders' equity	$ 436,813	$ 366,667

BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	24,814,695	24,654,621
Common stock, shares outstanding	24,369,630	24,209,556
Treasury stock, shares	445,065	445,065

STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
STATEMENTS OF INCOME - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Net revenue:
Product sales	$ 222,052	$ 165,995
Consumer and MHP loans interest	28,564	27,195
Other	6,399	4,317
Total net revenue	257,015	197,507
Operating expenses:
Cost of product sales	150,114	114,050
Selling, general and administrative expenses	27,568	23,306
Dealer incentive	1,315	1,235
Income from operations	78,018	58,916
Other income (expense):
Non-operating interest income	2,942	2,095
Miscellaneous, net	1,563	503
Interest expense	(375)	(887)
Total other	4,130	1,711
Income before income tax expense	82,148	60,627
Income tax expense	(14,375)	(10,756)
Net income	$ 67,773	$ 49,871
Weighted average shares outstanding:
Basic	24,357,785	24,204,437
Diluted	24,742,419	24,275,989
Net income per share:
Basic	$ 2.78	$ 2.06
Diluted	$ 2.74	$ 2.05

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Treasury stock	Additional paid-in-capital	Retained earnings	Total
Beginning Balance at Dec. 31, 2020	$ 25	$ (4,477)	$ 175,293	$ 88,352	$ 259,193
Beginning Balance (in shares) at Dec. 31, 2020	24,639,125
Share based compensation expense and stock units vested			230		230
Share based compensation expense and stock units vested (in shares)	8,571
Share based compensation expense - stock options exercised			100		100
Share based compensation expense - stock options exercised (Shares)	6,925
Net income				49,871	49,871
Ending Balance at Dec. 31, 2021	$ 25	(4,477)	175,623	138,223	$ 309,394
Ending Balance (in shares) at Dec. 31, 2021	24,654,621				24,654,621
Share based compensation expense and stock units vested	$ 5		4,932		$ 4,937
Share based compensation expense and stock units vested (in shares)	160,074
Net income				67,773	67,773
Ending Balance at Dec. 31, 2022	$ 30	$ (4,477)	$ 180,555	$ 205,996	$ 382,104
Ending Balance (in shares) at Dec. 31, 2022	24,814,695				24,814,695

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Operating activities:
Net income	$ 67,773	$ 49,871
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	1,936	1,587
Amortization of deferred revenue	(1,383)	814
Amortization of Treasury Note Discount	(25)
Amortization of lines of credit cost	74
Provision for accounts and notes receivable	(109)	971
Provision for long term inventory	(83)	(188)
Gain from sale of leased property	(753)	(98)
Amortization of operating lease right of use asset	62
Deferred income taxes	61	1,033
Share based payment expense	4,936	230
Changes in operating assets and liabilities:
Accounts receivable	309	(5,325)
Consumer loans activity, net	(13,346)	(15,525)
Notes receivable MHP activity, net	(39,423)	32,727
Dealer inventory loan activity, net	(26,553)
Inventories	5,699	(7,840)
Prepaid expenses and other current assets	485	(1,221)
Other assets	(1,449)	(1,739)
Accounts payable and accrued liabilities	(3,397)	(1,453)
Right of use activity, net	46
Customer deposits	1,966	4,737
Escrow liability	303	1,621
Dealer incentive liability	1,180	94
Net cash (used in) provided by operating activities	(1,691)	60,296
Investing activities:
Purchases of property, plant and equipment	(3,800)	(5,952)
Purchase of investments - treasury notes	(8,386)
Proceeds from sale of leased property	1,684
Issuance of notes receivable	(4,394)	(36,806)
Notes receivable collections	23,495	9,026
Collections from purchased loans	482	1,790
Net cash provided by (used in) investing activities	9,081	(31,942)
Financing activities:
Proceeds from exercise of stock options		100
Proceeds from lines of credit	100,589	96,088
Payments on lines of credit	(106,203)	(124,268)
Net cash used in financing activities	(5,614)	(28,080)
Net increase in cash and cash equivalents	1,776	274
Cash and cash equivalents at beginning of year	1,042	768
Cash and cash equivalents at end of year	2,818	1,042
Supplemental disclosure of cash flow information:
Cash paid for interest	251	873
Cash paid for taxes	$ 10,314	$ 8,195

NATURE OF OPERATIONS

12 Months Ended

Dec. 31, 2022

NATURE OF OPERATIONS

NATURE OF OPERATIONS

1. NATURE OF OPERATIONS

Legacy Housing Corporation (referred herein as ”Legacy”, “we”, “our”, “us”, or the “Company”) was formed on January 1, 2018 as a Delaware corporation through a corporate conversion of Legacy Housing, Ltd., (the “Partnership”) a Texas limited partnership formed in May 2005. Effective December 31, 2019, the Company reincorporated from a Delaware corporation to a Texas corporation. The Company is headquartered in Bedford, Texas.

The Company (1) manufactures and provides for the transport of mobile homes, (2) provides wholesale financing to dealers and mobile home parks and (3) provides retail financing to consumers and (4) is involved in financing and developing new manufactured home communities. The Company manufactures its mobile homes at plants located in Fort Worth, Texas, Commerce, Texas and Eatonton, Georgia. The Company relies on a network of dealers to market and sell its mobile homes. The Company also sells homes directly to dealers and mobile home parks.

In December 2018, the Company sold 4,000,000 shares of its common stock through an initial public offering (“IPO”) at $12.00 per share. Proceeds from the IPO, net of $4,504 of underwriting discounts and offering expenses paid by the Company, were $43,492. In January 2019, the Company sold an additional 600,000 shares of its common stock as part of the IPO at $12.00 per share. Proceeds from the January 2019 issuance, net of $505 of underwriting discounts and offering expenses paid by the Company, were $6,695.

On April 17, 2019, the Company purchased 300,000 shares of its common stock at the price of $10.20 per share, pursuant to the Company’s repurchase program. During the year ended December 31, 2020, the Company purchased 145,065 shares of its common stock at an average price of $9.77 per share, pursuant to the Company’s repurchase program. In November 2022, the Company’s Board of Directors approved a new repurchase program (the “2022 Repurchase Program”). Under the 2022 Repurchase Program, the Company may purchase up to $10,000 of its common stock. Share purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice. The 2022 Repurchase Program expires October 31, 2025.

Corporate Conversion

Effective January 1, 2018, the Partnership converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Legacy Housing Corporation. In order to consummate the corporate conversion completed on January 1, 2018, a certificate of conversion was filed with the Secretary of State of the State of Delaware and with the Secretary of State of the State of Texas. Holders of partnership interests in Legacy Housing, Ltd. received an initial allocation, on a proportional basis, of 20,000,000 shares of common stock of Legacy Housing Corporation.

Following the corporate conversion, Legacy Housing Corporation continues to hold all property and assets of Legacy Housing, Ltd. and all of the debts and obligations of Legacy Housing, Ltd. On the effective date of the corporate conversion, the officers of Legacy Housing, Ltd. became the officers of Legacy Housing Corporation. As a result of the corporate conversion, the Company is a federal corporate taxpayer.

Basis of Presentation

The financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net income.

Use of Estimates

The preparation of our financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting period. Material estimates that are susceptible to significant change in the near term primarily relate to the determination of accounts receivable, loans to mobile home parks, consumer loans and notes receivable, inventory obsolescence, income taxes, fair value of financial instruments and contingent liabilities. Actual results could differ from these estimates.

Segment Reporting

The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, the sale of manufactured homes includes providing transportation and consignment arrangements with dealers. We also provide financing options to the customers to facilitate such sale of homes. In addition, the sale of homes is directly related to financing provided by us. Accordingly, all significant operating and strategic decisions by the chief operating decision-maker, the Executive Chairman of the Board, are based upon analyses of our company as one segment or unit.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances in bank accounts that may, at times, exceed federally insured limits. The Company has not incurred any losses from such accounts and management considers the risk of loss to be minimal. As of December 31, 2022, the Company had two bank accounts that exceeded the FDIC limit. One account exceeded the FDIC limit by $1,504 and the second account exceeded the FDIC limit by $133.

Held to Maturity Securities

Management determines the appropriate classification of its investment securities at the time of purchase. The Company’s investments consist of US Treasury Notes with a maturity date of November 2023.

Accounts Receivable

Included in accounts receivable “net” are receivables from direct sales of mobile homes, sales of parts and supplies to customers, consignment fees and interest. Accounts receivable “dealer financed” are receivables for interest, fees and curtailments owed from dealers under their inventory finance agreements.

Accounts receivables “net” are generally due within 30 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts receivables “dealer financed” are due upon receipt and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines the allowance by considering several factors, including the aging of the past due balance, the customer’s payment history, and the Company’s previous loss history. The Company establishes an allowance for doubtful accounts for amounts that are deemed to be uncollectible. At December 31, 2022 and 2021, the allowance for doubtful accounts totaled $279 and $343, respectively.

Consumer Loans Receivable

Consumer loans receivable result from financing transactions entered into with retail consumers of mobile homes sold through independent retailers and company-owned retail locations. Consumer loans receivable generally consist of the sales price and any additional financing fees, less the buyer’s down payment. Interest income is recognized monthly per the terms of the financing agreements. The average contractual interest rate per loan was approximately 13.4% as of December 31, 2022 and 13.5% as of December 31, 2021. Consumer loans receivable have maturities that range from 2 to 30 years.

Loan applications go through an underwriting process which considers credit history to evaluate credit risk of the consumer. Interest rates on approved loans are determined based on consumer credit score, payment ability and down payment amount.

The Company uses payment history to monitor the credit quality of the consumer loans on an ongoing basis.

The Company may also receive escrow payments for property taxes and insurance included in its consumer loan collections. The liabilities associated with these escrow collections totaled $9,653 and $9,350 as of December 31, 2022 and 2021, respectively, and are included in escrow liability in the balance sheets.

Allowance for Loan Losses—Consumer Loans Receivable

The allowance for loan losses reflects management’s estimate of losses inherent in the consumer loans that may be uncollectible based upon review and evaluation of the consumer loan portfolio as of the date of the balance sheet. An allowance for loan losses is determined after giving consideration to, among other things, the loan characteristics, including the financial condition of borrowers, the value and liquidity of collateral, delinquency and historical loss experience.

The allowance for loan losses is comprised of two components: the general reserve and specific reserves. The Company’s calculation of the general reserve considers the historical loss rate for the last three years, adjusted for the estimated loss discovery period and any qualitative factors both internal and external to the Company. Specific reserves are determined based on probable losses on specific classified impaired loans.

The Company’s policy is to place a loan on nonaccrual status when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is normally when either principal or interest is past due and remains unpaid for more than 90 days. Management implemented this policy based on an analysis of historical data, current performance of loans and the likelihood of recovery once principal or interest payments became delinquent and were aged more than 90 days. Payments received on nonaccrual loans are accounted for on a cash basis, first to interest and then to principal, as long as the remaining book balance of the asset is deemed to be collectible. The accrual of interest resumes when the past due principal or interest payments are brought within 90 days of being current. As of December 31, 2022 and 2021, total principal outstanding for consumer loans on nonaccrual status was $1,610 and $1,239, respectively.

Impaired loans are those loans where it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impaired loans, or portions thereof, are charged off when deemed uncollectible. A loan is generally deemed impaired if it is more than 90 days past due on principal or interest, is in bankruptcy proceedings, or is in the process of repossession. A specific reserve is created for impaired loans based on fair value of underlying collateral value, less estimated selling costs. The Company used various factors to determine the value of the underlying collateral for impaired loans. These factors were: (1) the length of time the unit was unsold after construction; (2) the amount of time the house was occupied; (3) the cooperation level of the borrowers, i.e., loans requiring legal action or extensive field

collection efforts; (4) units located on private property as opposed to a manufactured home park; (5) the length of time the borrower has lived in the house without making payments; (6) location, size, and market conditions; and (7) the experience and expertise of the particular dealer assisting in collection efforts.

Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell. At repossession, the collateral is recorded at the same amount as the principal balance as the loan. The fair value of the collateral is then computed based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is charged to the allowance for loan losses. At each reporting period, the fair value of the collateral is adjusted to the lower of the amount recorded at repossession or the estimated sales price less estimated costs to sell, based on current information. Repossessed homes totaled $795 and $517 as of December 31, 2022 and 2021, respectively, and are included in other assets in the balance sheets.

Notes Receivable from Mobile Home Parks

The notes receivable from mobile home parks (“MHP Notes” or “Notes”) relate to mobile homes sold to mobile home parks and financed through notes receivable. The Notes have varying maturity dates and call for monthly principal and interest payments. The interest rate on the MHP Notes can be fixed or variable. Approximately $130,000 of the Notes have a fixed interest rate ranging from 6.9% to 11.5%. The remaining Notes have a variable rate typically set at 4.0% above prime with a minimum of 8.0%. The average interest rate per loan was approximately 8.1% and 7.6% as of December 31, 2022 and 2021, respectively with maturities that range from 1 to 10 years. The collateral underlying the Notes are individual mobile homes which can be repossessed and resold. The MHP Notes are generally personally guaranteed by the borrowers with substantial financial resources.

As of December 31, 2022, the Company had concentrations of MHP Notes with three independent third-parties and their respective affiliates that equaled 12.3%, 16.6% and 34.0% of the principal balance outstanding, all of which was secured by the mobile homes. As of December 31, 2021, the Company had concentrations of MHP Notes with two independent third-parties and their respective affiliates that equaled 10.4% and 30.1% of the principal balance outstanding, all of which was secured by the mobile homes.

Allowance for Loan Losses—MHP Notes

MHP Notes are stated at amounts due from customers, net of allowance for loan losses. The Company determines the allowance by considering several factors including the aging of the past due balance, the customer’s payment history, and the Company’s previous loss history. The Company establishes an allowance reserve composed of specific and general reserve amounts. There were minimal past due balances on the MHP Notes as December 31, 2022 and 2021 and no charge offs were recorded for MHP Notes for the years ended December 31, 2022 and 2021, respectively. Allowance for loan loss is considered immaterial and accordingly no provision is recorded against the MHP Notes as of December 31, 2022 and 2021.

There were no impaired MHP Notes for the years ended December 31, 2022 and 2021, respectively, and there were no repossessed homes balances as of December 31, 2022 and 2021, respectively. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell.

Other Notes Receivable

Other notes receivable relate to various notes issued to mobile home park owners and dealers, which are not directly tied to sale of mobile homes. The other notes have varying maturity dates and call for monthly principal and interest payments. The other notes are collateralized by mortgages on real estate, units being financed and used as offices, as well as vehicles, and are typically personally guaranteed by the borrowers. The interest rate on the other notes

are fixed and range from 5.00% to 17.90%. The Company reserves for estimated losses on the other notes based on current economic conditions that may affect the borrower’s ability to pay, the borrower’s financial strength, and historical loss experience. As of December 31, 2022 and 2021, the allowance for loan losses on other notes was $0 and $5, respectively. There were no past due balances for other notes as of December 31, 2022 and 2021, respectively, and there were no impaired balances for other notes as of December 31, 2022 and 2021, respectively.

Inventories

Inventories consist of raw materials, work-in-process, and finished goods and are stated at the lower of cost or net realizable value. The cost of raw materials is based on the first-in first-out method. Finished goods and work-in-process are based on a standard cost system that approximates actual costs using the specific identification method.

Estimates of the lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business based on current market and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory. For the periods ending, December 31, 2022 and 2021, the Company recorded an insignificant amount of inventory write-down.

The Company evaluates inventory based on historical experience to estimate its inventory not expected to be sold in less than a year. The Company classifies its inventory not expected to be sold in one year as non-current. As of December 31, 2022 and 2021, non-current inventory was $6,987 and $2,678, respectively.

Leased Property

The Company offers mobile home park operators the opportunity to lease mobile homes for rent in lieu of purchasing the homes for cash or under a longer-term financing agreement. In this arrangement title for the mobile homes remains with the Company, and the lease is accounted for as an operating lease.

The standard lease agreement is typically for 96 months or 120 months. Under the lease arrangement, the lessee (mobile home park operator) uses the mobile homes as personal property to be rented as a residence at the lessee's mobile home park. The lessee makes monthly, periodic lease payments to the Company over the term of the lease. The lessee is responsible for maintaining the homes during the term of the lease. The lessee is also responsible for repairing all damages caused by force majeure events even in cases of total or partial loss of the property. At the end of the lease term or in the event of default, the lessee is required to deliver to the Company the homes with all improvements in good repair and condition in substantially the same condition as existed at the commencement of the lease. The lessee may terminate the lease with 30 days written notice to the Company and pay a lease termination fee equal to 10% of the remaining lease payments or six month’s rent, whichever is greater. The lessee has an option to purchase the homes at the end of the lease term for fair market value based on an agreed upon determination of fair market value by both parties using comparable sales, recent appraisal, or NADA official guidance. The lessee must provide the Company with 30 days written notice prior to expiration of the lease of intent to purchase the property for fair market value. The lease also includes a renewal option whereby the lessee has the option to extend the lease for an additional 48 months (the extended term) at the same terms and conditions as the original lease. The lessee must notify the Company of the intent to exercise the renewal extension option not less than six months prior to expiration of the lease term. The leased mobile homes are included in other assets on the Company’s balance sheet, capitalized at manufactured cost and depreciated over a 15 year useful life. Homes returned to the Company upon expiration of the lease or in the event of default will be sold by the Company through its standard sales and distribution channels. Depreciation expense for the leased property was $582 and $442 for the years ended December 31, 2022 and 2021, respectively.

Future minimum lease income under all operating leases for each of the next five years at December 31, 2022, are as follows:


2023	$	1,964
2024		1,964
2025		1,964
2026		1,964
2027		1,792
Thereafter		2,561
Total	$	12,209

Property, Plant, and Equipment

Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation expense is calculated using the straight-line method over the estimated useful lives of each asset. Estimated useful lives for significant classes of assets are as follows: buildings and improvements, 30 to 39 years; vehicles, 5 years; machinery and equipment, 7 years; and furniture and fixtures, 7 years. Repair and maintenance charges are expensed as incurred. Expenditures for major renewals or betterments which extend the useful lives of existing property, plant and equipment are capitalized and depreciated.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Assets are grouped at the lowest level in which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. In such cases, if the future undiscounted cash flows of the underlying assets are less than the carrying amount, then the carrying amount of the long-lived asset will be adjusted for impairment to a level commensurate with a discounted cash flow analysis of the underlying asset or its determinable fair value. No impairment for long-lived assets was recorded for the years ended December 31, 2022 and 2021.

Dealer Incentive Liability

Under a dealer agreement with qualifying independent retailers, a portfolio is created for houses sold by the independent retailer with consumer loan arrangements financed by the Company. The independent retailer is eligible to a receive dealer incentive, which is a portion of total collections expected on a consumer loan portfolio after the Company’s contribution (collection thresholds set per the terms of dealer agreement which includes Legacy’s initial contribution, plus an allocation of interest and other agreed upon periodic fees) is met.

A dealer incentive liability is recorded in the Company’s balance sheet based on total outstanding balance of individual dealer loan portfolios at period end, less the remaining portion of the Company’s contribution in respective portfolios. As of December 31, 2022 and 2021, the dealer incentive liability was $5,516 and $4,336, respectively. Dealer incentive expense for the years ended December 31, 2022 and 2021 totaled $1,315 and $1,235, respectively, and is included in the Company’s statements of income.

Product Warranties

The Company provides retail home buyers with a one-year warranty from the date of purchase on manufactured inventory. Product warranty costs are accrued when the covered homes are sold to customers. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Factors used to determine the warranty liability include the number of homes under warranty and the historical costs incurred in servicing the warranties. The accrued warranty liability is reduced as costs are incurred and warranty liability balance is included as part of accrued liabilities in the Company’s balance sheet.

A tabular presentation of the activity within the warranty liability account for the years ended December 31, 2022 and 2021 is presented below:


	2022		2021
Warranty liability, beginning of year	$	2,876	$	2,594
Product warranty accrued		2,874		2,152
Warranty costs incurred		(2,701)		(1,870)
Warranty liability, end of year	$	3,049	$	2,876

Advertising Costs

The Company expenses all advertising and marketing expenses in the period incurred. Advertising costs for the years ended December 31, 2022 and 2021 were $120 and $367, respectively.

Fair Value Measurements

The Company accounts for its investments and derivative instruments in accordance with the provisions of Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurement, which among other things provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurement) and the lowest priority to unobservable inputs (Level III measurements). The three levels of fair value hierarchy under ASC 820-10, Fair Value Measurement, are as follows:


Level I	Quoted prices are available in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level II	Significant observable inputs other than quoted prices in active markets for which inputs to the valuation methodology include: (1) Quoted prices for similar assets or liabilities in active markets; (2) Quoted prices for identical or similar assets or liabilities in inactive markets; (3) Inputs other than quoted prices that are observable; (4) Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability.
Level III	Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

The asset or liability fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company has used derivatives to manage risks related to interest rate movements. The Company does not enter into derivative contracts for speculative purposes. Interest rate swap contracts are recognized as assets or liabilities on the balance sheets and are measured at fair value. The fair value was calculated and provided by the lender, a Level II valuation technique. Management reviewed the fair values for the instruments as provided by the lender and determined the related asset and liability to be an accurate estimate of future gains and losses to the Company. The Company was not a party to any interest rate swap agreements during the years ended December 31, 2022 and 2021.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, consumer loans, MHP Notes, other notes, accounts payable, lines of credit, notes payable, and dealer portion of consumer loans.

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their respective fair values because of the short-term maturities or expected settlement dates of these instruments. This is considered a Level I valuation technique. The lines of credit, notes payable, part of the MHP Notes and part of the other note receivables have variable interest rates that reflect market rates and their fair value approximates their carrying value. This is considered a Level II valuation technique. The Company also assessed the fair value of the consumer loans receivable, the fixed rate MHP Notes and the portion of other note receivables with fixed rates based on the discounted value of the remaining principal and interest cash flows. The Company determined that the fair value of the consumer loan portfolio was approximately $138,800 compared to the book value of $139,009 as of December 31, 2022, and a fair value of approximately $125,600 compared to the book value of $125,623 as of December 31, 2021. The Company determined that the fair value of the fixed rate MHP Notes was approximately $128,400 compared to the book value of $129,966 as of December 31, 2022, and a fair value of approximately $83,000 compared to the book value of $83,773 as of December 31, 2021. The Company determined that the fair value of the fixed rate other notes was approximately $21,600 compared to the book value of $22,722 as of December 31, 2022, and a fair value of approximately $38,500 compared to the book value of $38,886 as of December 31, 2021. This is a Level II valuation technique.

Revenue Recognition

Product sales, primarily consist of sales of mobile homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, Consignment Sales, and Retail Store Sales. Direct Sales include homes sold directly to independent retailers or customers that are not financed by the Company and are not sold under a consignment arrangement. These types of homes are generally paid for prior to shipment. Commercial Sales include homes sold to mobile home parks under commercial loan programs or paid for upfront. The Company provides floor plan financing for independent retailers, which can take the form of a consignment arrangement or an inventory financing arrangement. Consignment Sales under the consignment arrangement are considered sales of consigned homes from independent dealers to individual customers. Consignment Sales under the inventory financing arrangement are considered sales of homes to the independent dealer. Retail Store Sales are homes sold through Company-owned retail locations. Consignment Sales and Retail Sales of homes may be financed by the Company, by a third party, or paid in cash.

Revenue from product sales is recognized at a point in time when the performance obligation under the terms of a contract with our customer is satisfied, which typically occurs upon delivery and transfer of title of the home, as this depicts when control of the promised good is transferred to our customers. For inventory financed sales, the independent dealer enters into a financing arrangement with the Company and is required to make monthly interest payments and an annual curtailment payment for the first two years. After three years, they are required to payoff any remaining principle balance. Interest income is separately recorded in the statement of income. For other financed sales by the Company, the individual customer enters into a sales and financing contract and is required to make a down payment. These financed sales contain a significant financing component and any interest income is separately recorded in the statement of income.

Revenue is measured as the amount of consideration expected to be received in exchange for transferring the homes to the customers. Sales and other similar taxes collected concurrently with revenue-producing activities are excluded from revenue.

The Company made an accounting policy election to account for any shipping and handling costs that occur after the transfer of control as a fulfillment cost that is accrued when control is transferred. Warranty obligations associated with the sale of a unit are assurance-type warranties for a period of twelve months that are a guarantee of the home’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract. The Company has elected to use the practical expedient to expense the incremental costs of obtaining a contract if the amortization period of the asset that the Company would have otherwise recognized is one year or less. Contract costs, which include commissions incurred related to the sale of homes, are expensed at the point-in-time when the related revenue is recognized. Warranty costs and contract costs are included in selling, general and administrative expenses in the statements of income.

For the year ended December 31, 2022, sales to two independent third-parties and their affiliates accounted for $13,008 or 5.9% and $11,879 or 5.4% of our product sales, respectively. For the years ended December 31, 2021, sales to an independent third-party and its affiliates accounted for $9,165 or 5.5% of our product sales, respectively.

For the years ended December 31, 2022 and 2021, total cost of product sales included $11,588 and $11,303 of costs relating to subcontracted production for commercial sales, reimbursed dealer expenses for consignment sales, and certain other similar costs incurred for retail store and commercial sales.

Other revenue consists of consignment fees, commercial lease rents, service fees and other miscellaneous income. Consignment fees are charged to independent retailers on a monthly basis for homes held by the independent retailers pursuant to a consignment arrangement until the home is sold to an individual customer. Consignment fees are determined as a percentage of the home’s wholesale price to the independent dealer. Revenue recognition for consignment fees is recognized over time using the output method as it provides a faithful depiction of the Company’s performance toward completion of the performance obligation under the contract and the value transferred to the independent retailer for the time the home is held under consignment. Revenue for commercial leases is recognized as earned monthly over a contractual period of 96 or 120 months. Revenue for service fees and miscellaneous income is recognized at a point in time when the performance obligation is satisfied.

Disaggregation of Revenue. The following table summarizes customer contract revenues disaggregated by source of the revenue for the years ended December 31, 2022 and 2021:


	Year ended
	December 31,
	2022		2021
Product sales:
Direct sales	$	45,549	$	25,173
Commercial sales		61,373		46,835
Consignment sales		84,037		63,496
Retail store sales		19,629		20,011
Other (1)		11,464		10,480
Total product sales		222,052		165,995
Consumer and MHP loans interest:
Interest - consumer installment notes		18,369		16,658
Interest - MHP notes		10,195		10,537
Total consumer and MHP loans interest		28,564		27,195
Other		6,399		4,317
Total net revenue	$	257,015	$	197,507

(1)	Other product sales revenue from ancillary products and services including parts, freight and other services

Reserve for Repurchase Commitments

In accordance with customary business practice in the manufactured housing industry, the Company has entered into certain repurchase agreements with certain financial institutions and other credit sources who provide floor plan financing to industry retailers, which provided that the Company will be obligated, under certain circumstances, to repurchase homes sold to retailers in the event of a default by a retailer in its obligation to such credit sources. The Company’s obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The Company applies ASC 460, Guarantees and ASC 450-20, Loss Contingencies, to account for its liability for repurchase commitments. The Company considers its current obligations on current contracts to be immaterial and accordingly have not recorded any reserve for repurchase commitments as of December 31, 2022 and 2021.

Other Income, Net

Other income primarily consists of interest related to other notes receivable balances and interest income earned on cash balances, reduced by interest expenses.

Interest Income

Interest on consumer loans, MHP Notes and other notes is recognized using the effective-interest method on the daily balances of the principal amounts outstanding and recorded as part of total revenue. Fees associated with the origination of loans and certain direct loan origination costs are netted and the net amount is deferred and recognized over the life of the loan as an adjustment of yield.

Share-Based Compensation

The Company accounts for share-based compensation in accordance with the provisions of ASC 718, Compensation—Stock Compensation. Share-based compensation expense is recognized based on the award’s estimated grant date fair value in order to recognize compensation cost for those shares expected to vest. The Company has elected to record forfeitures as they occur. Compensation cost is recognized on a straight-line basis over the vesting period of the awards and adjusted as forfeitures occur.

The fair value of each option grant with only service-based conditions is estimated using the Black-Scholes pricing model. The fair value of each restricted stock unit (the ”RSU”) with only service-based conditions is calculated based on the closing price of the Company’s common stock on the grant date. The fair value of each RSU with market based conditions is estimated using the Monte-Carlo Simulation valuation model.

The fair value of stock option awards on the date of grant is estimated using the Black-Scholes option pricing model, which requires the Company to make certain predictive assumptions. The risk-free interest rate is based on the implied yield of U.S. Treasury zero-coupon securities that correspond to the expected life of the award. As a recently formed public entity with a small public float and limited trading of its common shares on the NASDAQ Global Market, it was not practicable for the Company to estimate the volatility of its common shares; therefore, management estimated volatility based on the historical volatilities of a small group of companies considered as close to comparable to the Company as available, all equally weighted, over the expected life of the option. Management concluded that this group is more characteristic of the Company’s business than a broad industry index. The expected life of awards granted represents the period of time that the awards are expected to be outstanding based on the “simplified” method, which is allowed for companies that cannot reasonably estimate the expected life of options based on its historical award exercise experience. The Company does not expect to pay dividends on its common stock.

The fair value of RSU awards with market based conditions on the date of grant is estimated using the Monte-Carlo Simulation valuation model, and the Company uses the following methods to determine its underlying assumptions: expected volatilities are based on the Company’s historic stock price volatility; the expected term of the awards is based on performance measurement period; the risk-free interest rate is based on the U.S. Treasury bond yield issued with similar life terms to the expected life of the grant.

Shipping and Handling Costs

Shipping and handling costs incurred to deliver product to our customers are included as a component of cost of product sales in the statement of operations. Shipping and handling costs for the years ended December 31, 2022 and 2021 were $1,804 and $1,981, respectively.

Income Taxes

The Company is subject to U.S. federal and state income taxes as a corporation. Prior to the corporate conversion, the Partnership was treated as a flow-through entity for U.S. federal income tax purposes, and as such, was generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to its taxable income was passed through to its partners. Accordingly, prior to the corporate conversion, the Partnership only recorded a provision for Texas franchise tax as the Partnership’s taxable income was included in the income tax returns of the individual partners.

Income tax expense for the Company is recognized for the tax effects of the transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates

applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized. In addition, management does not believe there are any unrecorded deferred tax liabilities that are material to the financial statements.

The determination of the provision for income taxes requires significant judgment, use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. For the periods presented, management has determined there are no material uncertain tax positions for the tax years that remain subject to examination by major tax jurisdictions as of December 31, 2022, which includes the tax years 2019, 2020 and 2021.

Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable, consumer loans, MHP Notes and other notes receivable. Management believes that its credit policies are adequate to minimize potential credit risk related to accounts receivable and other notes receivable. The consumer loans are secured by the mobile homes that were financed through the loans. The MHP Notes are secured by mobile homes, other assets, and are personally guaranteed. The MHP Notes personal guarantor may cover multiple parks and each park is treated as a customer. As of December 31, 2022, the Company had concentrations of MHP Notes with three independent third-parties and their respective affiliates that equaled 12.3%, 16.6% and 34.0% of the principal balance outstanding, all of which was secured by the mobile homes. As of December 31, 2021, the Company had concentrations of MHP Notes with two independent third-parties and their respective affiliates that equaled 10.4% and 30.1% of the principal balance outstanding, all of which was secured by the mobile homes.

Recent Accounting Pronouncements

The Company has elected to use longer phase-in periods for the adoption of new or revised financial accounting standards under the JOBS Act as an emerging growth company.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and an asset representing its right to use the underlying asset for the lease term. As an emerging growth company, ASU 2016-02 is effective for fiscal years beginning after December 15, 2021, and interim periods within those years. The Company adopted this standard in the first quarter of fiscal 2022 and elected certain practical expedients permitted under the transition guidance, including the package of practical expedients; however, the Company did not elect the hindsight practical expedient. Additionally, the Company elected the optional transition method that allowed for a cumulative-effect adjustment in the period of adoption and did not restate prior periods. The adoption of ASU 2016-02 resulted in an increase in total assets and total liabilities of $3,258 at transition. However, this standard did not have a material impact on the consolidated statement of income or the consolidated statement of cash flows. See Note 6 for further discussion on leases.

In June 2016, the FASB issued ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down and affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company plans to use the longer phase-in period for adoption, and accordingly this ASU is effective for the Company’s fiscal year beginning January 1, 2023. The Company expects that allowance amounts will increase due to the adoption of this ASU.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendments in this update extend the transition relief period for reference rate reform from December 31, 2022 to December 31, 2024. The amendments in ASU 2022-06 apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2022-06 was effective upon issuance. The new standard has had no material impact on the Company's financial statements.

From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted by the Company as of the specified effective dates. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s Financial Statements upon adoption.

CONSUMER LOANS RECEIVABLE

12 Months Ended

Dec. 31, 2022

CONSUMER LOANS RECEIVABLE

CONSUMER LOANS RECEIVABLE

3. CONSUMER LOANS RECEIVABLE

Consumer loans receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at December 31, 2022 and 2021:


	2022		2021
Consumer loans receivable	$	142,340	$	129,119
Loan discount and deferred financing fees		(2,501)		(2,612)
Allowance for loan losses		(830)		(884)
Consumer loans receivable, net	$	139,009	$	125,623

The following table presents a detail of the activity in the allowance for loan losses for the years ended December 31, 2022 and 2021:


	2022		2021
Allowance for loan losses, beginning of period	$	884	$	905
Provision for loan losses		(243)		725
Charge offs (recoveries)		189		(746)
Allowance for loan losses	$	830	$	884

The impaired and general reserve for allowance for loan losses at December 31, 2022 and 2021:


	2022		2021
Total consumer loans	$	142,340	$	129,119
Allowance for loan losses	$	830	$	884
Impaired loans individually evaluated for impairment	$	1,610	$	1,239
Specific reserve against impaired loans	$	612	$	533
Other loans collectively evaluated for allowance	$	140,730	$	127,880
General allowance for loan losses	$	218	$	351

A detailed aging of consumer loans receivable that are past due as of December 31, 2022 and 2021 were as follows:


	2022		%	2021		%
Total consumer loans receivable	$	142,340	100.0	$	129,119	100.0
Past due consumer loans:
31 - 60 days past due	$	1,150	0.8	$	594	0.5
61 - 90 days past due		108	0.1		407	0.3
91 - 120 days past due		486	0.3		114	0.1
Greater than 120 days past due		1,255	0.9		967	0.7
Total past due	$	2,999	2.1	$	2,082	1.6

NOTES RECEIVABLE FROM MOBILE HOME PARKS ("MHP Notes")

12 Months Ended

Dec. 31, 2022

NOTES RECEIVABLE FROM MOBILE HOME PARKS ("MHP Notes")

NOTES RECEIVABLE FROM MOBILE HOME PARKS ("MHP Notes")

4. NOTES RECEIVABLE FROM MOBILE HOME PARKS (“MHP Notes”)

MHP Notes are stated at amounts due from customers, net of allowance for loan losses. The Company determines the allowance by considering several factors including the aging of the past due balance, the customer’s payment history, and the Company’s previous loss history. The Company establishes an allowance reserve composed of specific and general reserve amounts. As of December 31, 2022 and 2021, the MHP Note balance is presented net of unamortized finance fees of $1,068 and $445, respectively. The finance fees are amortized over the life of the MHP Notes.

There were minimal past due balances on the MHP Notes as of December 31, 2022 and 2021, respectively, and no charge offs were recorded for MHP Notes during the for the years ended December 31, 2022 and 2021, respectively. Allowance for loan loss is considered immaterial and accordingly no loss is recorded against the MHP Notes as of December 31, 2022 and 2021.

OTHER NOTES RECEIVABLE

12 Months Ended

Dec. 31, 2022

OTHER NOTES RECEIVABLE

OTHER NOTES RECEIVABLE

5. Other Notes Receivable

Other notes receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at December 31, 2022 and 2021:


	2022		2021
Outstanding principal balance	$	22,722	$	41,235
Allowance for loan losses		—		(5)
Total	$	22,722	$	41,230

LEASES

12 Months Ended

Dec. 31, 2022

LEASES

LEASES

6. LEASES

The Company currently has 13 operating leases, eight of which are for the Company’s Heritage Housing and Tiny Homes retail locations, three which are subleased by the Company and two are for corporate and administrative offices in Bedford, TX and Norcross, GA. These leases typically have initial terms ranging from 5 to 10 years and include one or more options to renew.

Under ASC 842, a modified retrospective transition is required, applying the new standard to all leases at the date of initial application. The Company chose to use the adoption date of January 1, 2022 for ASC 842. As such, all periods presented after January 1, 2022, are under ASC 842 whereas periods presented prior to January 1, 2022, are in accordance with prior lease accounting of ASC 840. Financial information was not updated and the disclosures required under ASC 842 were not provided for dates and periods before January 1, 2022.

We determine if an arrangement is a lease at inception. Operating leases are right-of-use (“ROU”) assets and are shown as ROU assets – operating leases on our Condensed Balance Sheet. The lease liabilities are shown as Operating lease obligation and Operating lease obligation, less current portion on our Condensed Balance Sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We have elected the practical expedient to not separate lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a ROU asset for an amount equal to the lease liability, increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and ROU asset when a change to our future minimum lease payments occurs. Key assumptions and judgments included in the determination of the lease liability include the discount rate used in the present value calculation and the exercise of renewal options.

Many of our leases contain renewal options. As the exercise of the renewal options is not certain at commencement of a lease, we generally do not include the option periods in the lease term when determining the lease liabilities and ROU assets. We remeasure the lease liability and ROU asset when we are reasonably certain that we will exercise a renewal option.

Our leases do not provide information about the rate implicit in the lease. Therefore, we utilize an incremental borrowing rate to calculate the present value of our future lease obligations. The incremental borrowing rate represents the rate of interest we would have to pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment. The remaining weighted-average lease term is 4.54 years and the weighted-average discount rate is 2.12%.

We consider lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from our calculation of lease liabilities. There were no variable lease costs for the year ended December 31, 2022.

Short-term leases, those with a term of 12 months or less, are not recorded on our Balance Sheet. Our short-term lease costs were not material for the year ended December 31, 2022.

As of December 31, 2022, future minimum lease payments under our operating lease liabilities were as follows:


2023	$	683
2024		610
2025		588
2026		526
2027		311
Thereafter		113
Total lease payments	$	2,831
Less amount representing interest		(60)
Total lease liability	$	2,771
Less current lease liability		(650)
Total non-current lease liability	$	2,121

INVENTORIES

12 Months Ended

Dec. 31, 2022

INVENTORIES

INVENTORIES

7. INVENTORIES

Inventories consisted of the following at December 31, 2022 and 2021:


	2022		2021
Raw materials	$	17,442	$	15,431
Work in progress		592		714
Finished goods (1)		21,429		29,034
Allowance for obsolescence		(401)		(501)
Total	$	39,062	$	44,678

(1) Finished goods includes $6,987 and $2,678 as of December 31, 2022 and 2021, respectively, held for more than twelve months and classified as long-term.

PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2022

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at December 31, 2022 and 2021:


	2022		2021
Land	$	14,953	$	14,949
Buildings and leasehold improvements		16,949		13,722
Vehicles		1,556		1,682
Machinery and equipment		5,750		5,058
Furniture and fixtures		300		298
Total		39,508		35,709
Less accumulated depreciation		(9,402)		(8,193)
Total property, plant and equipment	$	30,106	$	27,516

Depreciation expense was $1,137 with $568 included as a component of cost of product sales for the year ended December 31, 2022 and $1,145 with $450 included as a component of cost of product sales for the year ended December 31, 2021.

OTHER ASSETS

12 Months Ended

Dec. 31, 2022

OTHER ASSETS.

OTHER ASSETS

9. OTHER ASSETS

Other assets consisted of the following at December 31, 2022 and 2021:


	2022		2021
Prepaid rent	$	349	$	248
Other		338		332
Repossessed homes		795		517
Total	$	1,482	$	1,097

DEBT SECURITIES

12 Months Ended

Dec. 31, 2022

DEBT SECURITIES

DEBT SECURITIES

10. DEBT SECURITIES

Debt Securities have been classified according to management’s intent. The Company purchased US Treasury Notes in November 2022 and they mature in November 2023. The debt securities have been classified as held-to-maturity and the amortized cost are $8,412 and $0 at December 31, 2022 and 2021, respectively.

ACCRUED LIABILITIES

12 Months Ended

Dec. 31, 2022

ACCRUED LIABILITIES.

ACCRUED LIABILITIES

11. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 2022 and 2021:


	2022		2021
Warranty reserve	$	3,049	$	2,876
Litigation reserve		753		2,764
Payroll		1,006		1,685
Portfolio taxes and title		1,610		2,467
Property tax		54		546
Dealer rebates		1,402		1,160
Sales tax		61		310
Federal and state income taxes		6,699		7,445
Other		2,261		1,433
Total accrued liabilities	$	16,895	$	20,686

DEBT

12 Months Ended

Dec. 31, 2022

DEBT

DEBT

12. DEBT

Lines of Credit

Revolver 1

On March 30, 2020, the Company entered into an agreement with Capital One, N.A. for a new revolving line of credit (“Revolver”). The Revolver had a maximum credit limit of $70,000 and a maturity date of March 30, 2024.

On June 21, 2022, the Company received a Reservation of Rights notice from Capital One, N.A. The letter stated that the Company’s Revolver was in default. The default condition occurred due to the Company’s failure to timely file the Form 10-K and deliver certain financial statement to Capital One, N.A. On July 28, 2022, the Company entered into a Limited Waiver and First Amendment to Credit Agreement (the “Amendment”) with Capital One, N.A.

The Amendment replaced the LIBOR borrowing rate with a secured overnight financing rate (“SOFR”) and waived a default arising out of a monetary judgement against the Company that exceeded the amount allowed in the Revolver. On August 24, 2022, the Company received a Notice of Default and Partial Suspension of Loan Commitments from Capital One, N.A. The notice stated that the July 28, 2022 forbearance agreement had been terminated and that Capital One, N.A. was permitted to suspend $50,000 of the $70,000 loan commitment under the Revolver. As a result, the available line of credit in the Revolver has been limited to $20,000.

The Revolver accrues interest at one-month SOFR plus 2.00%. The interest rates in effect as of December 31, 2022 and 2022 were 6.12% and 2.10%, respectively. Amounts available under the Revolver are subject to a formula based on eligible consumer loans and MHP Notes and are secured by all accounts receivable, consumer loans and MHP Notes. The amount of available credit under the Revolver was $17,400 and $61,841 as of December 31, 2022 and 2021, respectively. In connection with the Revolver, the Company paid certain arrangement fees and other fees of approximately $295, which were capitalized as unamortized debt issuance costs and will be amortized to interest expense over the life of the Revolver.

For the years ended December 31, 2022 and 2021, interest expense under the Revolver was $225 and $887, respectively. The outstanding balance as of December 31, 2022 and 2021 was $2,545 and $7,993, respectively. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of December 31, 2022, the Company was in compliance with all financial covenants, including that it maintain a tangible net worth of at least $120,000 and that it maintain a ratio of debt to EBITDA of 4 to 1, or less.

PILOT Agreement

In December 2016, the Company entered into a Payment in Lieu of Taxes (“PILOT”) agreement commonly offered in Georgia by local community development programs to encourage industry development. The net effect of the PILOT agreement was to provide the Company with incentives through the abatement of local, city and county property taxes and to provide financing for improvements to the Company’s Georgia plant (the “Project”). In connection with the PILOT agreement, the Putman County Development Authority provided a credit facility for up to $10,000 which could have been drawn upon to fund Project improvements and capital expenditures as defined in the agreement. If funds had been drawn, the Company would have paid transaction costs and debt service payments. The PILOT agreement required interest payments of 6.00% per annum on outstanding balances, which would have been due each December 1st through maturity on December 1, 2021, at which time all unpaid principal and interest would have been due. The PILOT agreement was collateralized by the assets of the Project. No amounts were drawn on this credit facility.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

INCOME TAXES

12 Months Ended

Dec. 31, 2022

INCOME TAXES

INCOME TAXES

13. INCOME TAXES

Significant components of the provision for income taxes are as follows (in thousands):


	Year ended
	December 31,
	2022		2021
Current:
Federal	$	13,092	$	8,443
State		1,222		1,280
Total current income tax provision		14,314		9,723
Deferred:
Federal		51		934
State		10		99
Total deferred income tax provision		61		1,033
Provision for income taxes	$	14,375	$	10,756

A reconciliation of the Company’s effective tax rate from operations to the U.S. federal income tax rate is as follows:


	Year ended
	December 31,
	2022		2021
Federal statutory rate	21.0	%		21.0	%
State income taxes, net of federal tax benefit	1.5			1.9
Energy efficiency credit	(5.0)			(5.2)
Effective tax rate	17.5	%		17.7	%

The tax effects of cumulative temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands):


	Year ended
	December 31,
	2022		2021
Deferred tax assets:
Allowance for doubtful accounts	$	439	$	486
Reserve accounts		204		636
State taxes		76		44
Payroll taxes		8		157
Uniform capitalization		15		58
Other		256
Total deferred tax assets		998		1,381
Deferred tax liabilities:
Installment sale revenue		(674)		(853)
Depreciation		(2,808)		(2,998)
Accrued interest receivable		(581)		(518)
Other		—		(16)
Total deferred tax liabilities		(4,063)		(4,385)
Net deferred tax liabilities	$	(3,065)	$	(3,004)

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2022

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

14. SHARE BASED COMPENSATION

Pursuant to the Legacy Housing Corporation 2018 Incentive Compensation Plan (the “Compensation Plan”), the Company may issue up to 10.0 million equity awards to employees, directors, consultants and nonemployee service providers in the form of stock options, stock and stock appreciation rights. Stock options may be granted with a contractual life of up to ten years. At December 31, 2022, the Company had 9.7 million shares available for grant under the Compensation Plan.

In February 2019, the Company granted 120,000 restricted shares of its common stock to members of senior management. The shares were granted on February 7, 2019 and had a grant date fair value of $1,636. The shares vest at a rate of 14.3% annually, beginning on February 7, 2019, and becoming fully vested on February 7, 2025. During the second quarter of 2020, 42,857 of these restricted shares were forfeited due to the departure of a member of senior management.

In December 2020, the Company granted 2,022 restricted shares of its common stock to the independent directors on the Company’s Board of Directors. The shares were granted on December 2, 2020 and had a grant date fair value of $30. The shares became fully vested on October 4, 2021.

In November 2021, the Company granted 1,202 restricted shares of its common stock to the independent directors on the Company’s Board of Directors. The shares were granted on November 30, 2021 and had a grant date fair value of $30. The shares became fully vested on October 24, 2022.

In January 2022, the Company granted 150,000 restricted shares of its common stock to the Executive Chairman of the Company pursuant to an amended and restated employment agreement. The shares were granted on January 6, 2022 and had a grant date fair value of $3,741. The shares became fully vested upon grant.

On January 6, 2022, the Company gave contingent equity awards of 350,000 shares of the Company’s restricted stock to the Executive Chairman of the Company pursuant to an amended and restated employment agreement. An equity award of 175,000 shares will be granted if the Company’s stock price reaches and remains for a period of fifteen consecutive market days at a closing price of $36 per share (the “$36 Equity Award”). The $36 Equity Awards had a grant date fair value of $1,412 and fifty percent of the shares shall be vested at grant and fifty percent shall vest on June 16, 2024, so long as the Executive Chairman is employed by the Company on that date. An additional equity award of 175,000 shares of the Company’s restricted stock will be granted if the Company’s stock price reaches and remains for a period of fifteen consecutive market days at a closing price of $48 per share (the “$48 Equity Award”). The $48 Equity Awards had a grant date fair value of $683 and fifty percent of the shares shall be vested at grant and fifty percent shall vest on June 16, 2024, so long as the Executive Chairman is employed by the Company on that date.

On November 15, 2022, the Company entered into a rescission and relinquishment agreement (the “Rescission Agreement”) with the Executive Chairman. The Rescission Agreement allows the Executive Chairman to rescind and relinquish the $36 Equity Awards and the $48 Equity Awards granted under the amended and restated employment agreement and allows the Company to accept such rescission and relinquishment, without any payment therefor. The effective date of the Rescission Agreement is October 1, 2022.

On June 7, 2022, the Company granted 14,700 restricted shares of its common stock to the Chief Executive Officer of the Company pursuant to an employment agreement. The shares were granted on June 7, 2022 and had a grant date fair value of $235. One-half of the shares vest on June 7, 2023 and the remaining half vest on June 7, 2024.

On June 7, 2022, the Company granted 301 restricted shares of its common stock to an independent director on the Company’s Board of Directors. The shares were granted on June 7, 2022 and had a grant date fair value of $5. The shares became fully vested on October 24, 2022.

In November 2022, the Company granted 1,734 restricted shares of its common stock to the independent directors on the Company’s Board of Directors. The shares were granted on November 29, 2022 and had a grant date fair value of $30. The shares became fully vested on October 23, 2023.

The following is a summary of restricted stock units (the “RSU”) activity (in thousands, except per unit data):


	Number of Units		Weighted Average Grant Date Fair Value Per Unit
Nonvested, January 1, 2022	35	$	14.01
Granted	517	$	11.82
Vested	(160)	$	24.32
Canceled	(350)	$	5.99
Nonvested, December 31, 2022	42	$	6.93

As of December 31, 2022, approximately 42,000 RSUs remained unvested. Unrecognized compensation expense related to these RSUs at December 31, 2022 was $442 and is expected to be recognized over 1.77 years.

The Company granted 34,626 incentive stock options to a member of senior management. The options were granted on August 10, 2020 at an exercise price of $14.44 per share. The options vest at a rate of 20.0% annually, beginning on August 10, 2021, and becoming fully vested on August 10, 2025. All options expire ten years after the date of grant. Weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows: risk free interest rate of 0.24%; dividend yield of 0.00%; expected volatility of common stock of 75.0% and expected life of options of 6.5 years. During the first quarter of 2022, 27,701 of these options were forfeited due to the individual’s departure.

The Company granted 55,490 incentive stock options to a member of management. The options were granted on September 23, 2021 at an exercise price of $18.02 per share. The options vest at a rate of 10.0% annually, beginning on September 23, 2022, and becoming fully vested on September 23, 2031. All options expire ten years after the date of grant. Weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows: risk free interest rate of 1.41%; dividend yield of 0.00%; expected volatility of common stock of 75.0% and expected life of options of 7.8 years. During the fourth quarter of 2022, these options were forfeited due to the individual’s departure.

The Company granted 62,460 incentive stock options to the Chief Executive Officer. The options were granted on June 7, 2022 at an exercise price of $16.01 per share. The options vest at a rate of 10.0% annually, beginning on June 7, 2023, and becoming fully vested on June 7, 2032. All options expire ten years after the date of grant. Weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows: risk free interest rate of 2.98%; dividend yield of 0.00%; expected volatility of common stock of 45.7% and expected life of options of 7.8 years.

The Company granted options to purchase 900,000 shares of the Company’s stock to the Chief Executive Officer. An option to purchase 300,000 shares of the Company’s stock was granted on June 7, 2022 at an exercise price of $36.00 per share and an option to purchase 600,000 shares of the Company’s stock was granted on June 7, 2022 at an exercise price of $48.00 per share. The options vest at a rate of 10.0% annually, beginning on June 7, 2023, and

becoming fully vested on June 7, 2032. All options expire ten years after the date of grant. Weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows: risk free interest rate of 2.98%; dividend yield of 0.00%; expected volatility of common stock of 45.7% and expected life of options of 7.8 years.

The Company granted 62,460 incentive stock options to the Chief Financial Officer. The options were granted on June 7, 2022 at an exercise price of $16.01 per share. The options vest at a rate of 10.0% annually, beginning on June 7, 2023, and becoming fully vested on June 7, 2032. All options expire ten years after the date of grant. Weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows: risk free interest rate of 2.98%; dividend yield of 0.00%; expected volatility of common stock of 45.7% and expected life of options of 7.8 years.

The following is a summary of option activity (in thousands, except per unit data):


	Number of Units	Weighted Average Exercise Price Per Unit		Weighted Average Grant Date Fair Value Per Unit		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2021	35	$	14.44	$	8.67	9.61
Granted	55	$	18.02	$	14.07	9.73
Exercised	(7)	$	14.44	$	8.67	—
Outstanding, December 31, 2021	83	$	16.83	$	12.27	9.36	$	802
Exercisable, December 31, 2021	—	$	—	$	—	—	$	—

Outstanding, January 1, 2022	83	$	16.83	$	12.27	9.36
Granted	1,025	$	40.59	$	4.99	9.44
Exercised	—	$	—	$	—	—
Forfeited	(83)	$	16.83	$	12.27	—
Outstanding, December 31, 2022	1,025	$	40.59	$	4.99	9.44	$	—
Exercisable, December 31, 2022	—	$	—	$	—	—	$	—

As of December 31, 2022, approximately 1,025,000 options remain nonvested. Unrecognized compensation expense related to these options at December 31, 2022 was $4,825 and is expected to be recognized over 9.44 years.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2022

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

As of January 1, 2020, the Company instituted a self-insured health benefits plan with a stop-loss policy, which provides medical benefits to employees electing coverage under the plan. The Company estimates and records costs for incurred but not reported medical claims and claim development. This reserve is based on historical experience and other assumptions, some of which are subjective. The Company will adjust its self-insured medical benefits reserve based on actual experience, estimated costs and changes to assumptions. At December 31, 2022 and 2021, the Company accrued a $149 and $373 liability for incurred but not reported claims, respectively.

The Company is contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for independent retailers of its products. These arrangements, which are customary in the industry,

provide for the repurchase of products sold to retailers in the event of default by the retailer. The Company’s obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The maximum amount for which the Company was liable under such agreements approximated $8,925 and $4,908 at December 31, 2022 and 2021, respectively, without reduction for the resale value of the homes. The Company considers its obligations on current contracts to be immaterial and accordingly have not recorded any reserve for repurchase commitment as of December 31, 2022 or 2021.

Leases. The Company leases facilities under operating leases that typically have 10-year terms. These leases usually offer the Company a right of first refusal that affords the Company the option to purchase the leased premises under certain terms in the event the landlord attempts to sell the leased premises to a third party. Rent expense was $710 and $698 for the years ended December 31, 2022 and 2021, respectively. The Company also subleases properties to third parties, ranging from 3-year to 11-year terms with various renewal options. Rental income from the subleased property was approximately $326 and $394 for the years ended December 31, 2022 and 2021, respectively. See Note 6 – Leases, for a schedule of the Company’s future minimum lease commitments.

Legal Matters

The Company is party to certain legal proceedings that arise in the ordinary course and are incidental to its business. Certain of the claims pending against the Company in these proceedings allege, among other things, breach of contract and warranty, product liability and personal injury. The Company has determined that it is probable that it has some liability related to the claims. The Company has included legal reserves of $753 and $2,764 as of December 31, 2022 and 2021, respectively, in accrued liabilities on the accompanying balance sheets. Although litigation is inherently uncertain, based on past experience and the information currently available, management does not believe that the currently pending and threatened litigation or claims will have a material adverse effect on the Company’s financial position, liquidity or results of operations. However, future events or circumstances currently unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on the Company’s financial position, liquidity or results of operations in any future reporting periods.

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2022

EARNINGS PER SHARE

EARNINGS PER SHARE

16. EARNINGS PER SHARE

Basic earnings per common share (“EPS”) is computed based on the weighted-average number of common shares outstanding during the reporting period. Diluted EPS is based on the weighted-average number of common shares outstanding plus the number of additional shares that would have been outstanding had the dilutive common shares been

issued. The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS.


	Year ended
	December 31,
	2022		2021
Numerator:
Net income (in 000's)	$	67,773	$	49,871
Denominator:
Basic weighted-average common shares outstanding		24,357,785		24,204,437
Effect of dilutive securities:
Restricted stock grants		13,286		12,846
Stock options		371,348		58,706
Diluted weighted-average common shares outstanding		24,742,419		24,275,989
Earnings per share attributable to Legacy Housing Corporation
Basic	$	2.78	$	2.06
Diluted	$	2.74	$	2.05

The diluted earnings per share calculation excludes 102,408 and zero potential shares related to stock grants and stock options for the years ended December 31, 2022 and 2021, respectively, because the effect of including these potential shares would be antidilutive.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2022

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

17. RELATED PARTY TRANSACTIONS

Bell Mobile Homes, a retailer owned by one of the Company’s significant shareholders, purchases manufactured homes from the Company. Accounts receivable balances due from Bell Mobile Homes were $0 and $1 as of December 31, 2022 and 2021, respectively. Accounts payable balances due to Bell Mobile Homes for maintenance and related services were $132 and $49 as of December 31, 2022 and 2021, respectively. Home sales to Bell Mobile Homes were $4,499 and $3,724 for the years ended December 31, 2022 and 2021, respectively.

Shipley Bros., Ltd. (“Shipley Bros.”), a retailer owned by one of the Company’s significant shareholders, purchases manufactured homes from the Company. Home sales to Shipley Bros. were $3,181 and $2,825 as of December 31, 2022 and 2021, respectively. There were no accounts receivable balances or accounts payable balances due from/to Shipley Bros. as of December 31, 2022 and 2021, respectively.

At December 31, 2022, the Company had a receivable of $68 from a principal shareholder. This amount is included in the Company’s accounts receivable balance as of December 31, 2022.

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

18. SUBSEQUENT EVENTS

In connection with the preparation of these financial statements, an evaluation of subsequent events was performed through the date of filing.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

Use of Estimates

Use of Estimates

Segment Reporting

Segment Reporting

Cash and Cash Equivalents

Held to Maturity Securities

Accounts Receivable

Consumer Loans Receivable

The Company uses payment history to monitor the credit quality of the consumer loans on an ongoing basis.

Allowance for Loan Losses—Consumer Loans Receivable

Notes Receivable from Mobile Home Parks

Allowance for Loan Losses—MHP Notes

Other Notes Receivable

Inventories

Leased Property

Future minimum lease income under all operating leases for each of the next five years at December 31, 2022, are as follows:


2023	$	1,964
2024		1,964
2025		1,964
2026		1,964
2027		1,792
Thereafter		2,561
Total	$	12,209

Property, Plant, and Equipment

Impairment of Long-Lived Assets

Dealer Incentive Liability

Product Warranties

A tabular presentation of the activity within the warranty liability account for the years ended December 31, 2022 and 2021 is presented below:


	2022		2021
Warranty liability, beginning of year	$	2,876	$	2,594
Product warranty accrued		2,874		2,152
Warranty costs incurred		(2,701)		(1,870)
Warranty liability, end of year	$	3,049	$	2,876

Advertising Costs

The Company expenses all advertising and marketing expenses in the period incurred. Advertising costs for the years ended December 31, 2022 and 2021 were $120 and $367, respectively.

Fair Value Measurements


Level I	Quoted prices are available in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level II	Significant observable inputs other than quoted prices in active markets for which inputs to the valuation methodology include: (1) Quoted prices for similar assets or liabilities in active markets; (2) Quoted prices for identical or similar assets or liabilities in inactive markets; (3) Inputs other than quoted prices that are observable; (4) Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability.
Level III	Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

The asset or liability fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Fair Value of Financial Instruments

Revenue Recognition

Disaggregation of Revenue. The following table summarizes customer contract revenues disaggregated by source of the revenue for the years ended December 31, 2022 and 2021:


	Year ended
	December 31,
	2022		2021
Product sales:
Direct sales	$	45,549	$	25,173
Commercial sales		61,373		46,835
Consignment sales		84,037		63,496
Retail store sales		19,629		20,011
Other (1)		11,464		10,480
Total product sales		222,052		165,995
Consumer and MHP loans interest:
Interest - consumer installment notes		18,369		16,658
Interest - MHP notes		10,195		10,537
Total consumer and MHP loans interest		28,564		27,195
Other		6,399		4,317
Total net revenue	$	257,015	$	197,507

(1)	Other product sales revenue from ancillary products and services including parts, freight and other services

Reserve for Repurchase Commitments

Other Income, Net

Other income primarily consists of interest related to other notes receivable balances and interest income earned on cash balances, reduced by interest expenses.

Interest Income

Share-Based Compensation

Share-Based Compensation

Shipping and Handling Costs

Income Taxes

Concentrations

Recent Accounting Pronouncements

The Company has elected to use longer phase-in periods for the adoption of new or revised financial accounting standards under the JOBS Act as an emerging growth company.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of future minimum lease income

Future minimum lease income under all operating leases for each of the next five years at December 31, 2022, are as follows:


2023	$	1,964
2024		1,964
2025		1,964
2026		1,964
2027		1,792
Thereafter		2,561
Total	$	12,209

Schedule of the activity within the warranty liability account


	2022		2021
Warranty liability, beginning of year	$	2,876	$	2,594
Product warranty accrued		2,874		2,152
Warranty costs incurred		(2,701)		(1,870)
Warranty liability, end of year	$	3,049	$	2,876

Schedule of disaggregation of revenue


	Year ended
	December 31,
	2022		2021
Product sales:
Direct sales	$	45,549	$	25,173
Commercial sales		61,373		46,835
Consignment sales		84,037		63,496
Retail store sales		19,629		20,011
Other (1)		11,464		10,480
Total product sales		222,052		165,995
Consumer and MHP loans interest:
Interest - consumer installment notes		18,369		16,658
Interest - MHP notes		10,195		10,537
Total consumer and MHP loans interest		28,564		27,195
Other		6,399		4,317
Total net revenue	$	257,015	$	197,507

(1)	Other product sales revenue from ancillary products and services including parts, freight and other services

CONSUMER LOANS RECEIVABLE (Tables)

12 Months Ended

Dec. 31, 2022

CONSUMER LOANS RECEIVABLE

Schedule of consumer loans, net of allowance for loan losses and deferred financing fees


	2022		2021
Consumer loans receivable	$	142,340	$	129,119
Loan discount and deferred financing fees		(2,501)		(2,612)
Allowance for loan losses		(830)		(884)
Consumer loans receivable, net	$	139,009	$	125,623

Schedule of allowance for loan losses


	2022		2021
Allowance for loan losses, beginning of period	$	884	$	905
Provision for loan losses		(243)		725
Charge offs (recoveries)		189		(746)
Allowance for loan losses	$	830	$	884

Schedule of impaired and general reserve for allowance for loan losses


	2022		2021
Total consumer loans	$	142,340	$	129,119
Allowance for loan losses	$	830	$	884
Impaired loans individually evaluated for impairment	$	1,610	$	1,239
Specific reserve against impaired loans	$	612	$	533
Other loans collectively evaluated for allowance	$	140,730	$	127,880
General allowance for loan losses	$	218	$	351

Schedule of consumer loans receivable that are past due


	2022		%	2021		%
Total consumer loans receivable	$	142,340	100.0	$	129,119	100.0
Past due consumer loans:
31 - 60 days past due	$	1,150	0.8	$	594	0.5
61 - 90 days past due		108	0.1		407	0.3
91 - 120 days past due		486	0.3		114	0.1
Greater than 120 days past due		1,255	0.9		967	0.7
Total past due	$	2,999	2.1	$	2,082	1.6

OTHER NOTES RECEIVABLE (Tables)

12 Months Ended

Dec. 31, 2022

OTHER NOTES RECEIVABLE

Schedule of other notes receivable, net of allowance for loan losses and deferred financing fees


	2022		2021
Outstanding principal balance	$	22,722	$	41,235
Allowance for loan losses		—		(5)
Total	$	22,722	$	41,230

LEASES (Tables)

12 Months Ended

Dec. 31, 2022

LEASES

Schedule of future minimum lease payments under operating lease liabilities


2023	$	683
2024		610
2025		588
2026		526
2027		311
Thereafter		113
Total lease payments	$	2,831
Less amount representing interest		(60)
Total lease liability	$	2,771
Less current lease liability		(650)
Total non-current lease liability	$	2,121

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2022

INVENTORIES

Schedule of inventory


	2022		2021
Raw materials	$	17,442	$	15,431
Work in progress		592		714
Finished goods (1)		21,429		29,034
Allowance for obsolescence		(401)		(501)
Total	$	39,062	$	44,678

(1) Finished goods includes $6,987 and $2,678 as of December 31, 2022 and 2021, respectively, held for more than twelve months and classified as long-term.

PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2022

PROPERTY, PLANT AND EQUIPMENT

Schedule of property, plant and equipment


	2022		2021
Land	$	14,953	$	14,949
Buildings and leasehold improvements		16,949		13,722
Vehicles		1,556		1,682
Machinery and equipment		5,750		5,058
Furniture and fixtures		300		298
Total		39,508		35,709
Less accumulated depreciation		(9,402)		(8,193)
Total property, plant and equipment	$	30,106	$	27,516

OTHER ASSETS (Tables)

12 Months Ended

Dec. 31, 2022

OTHER ASSETS.

Schedule of Other Assets


	2022		2021
Prepaid rent	$	349	$	248
Other		338		332
Repossessed homes		795		517
Total	$	1,482	$	1,097

ACCRUED LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2022

ACCRUED LIABILITIES.

Schedule of accrued liabilities


	2022		2021
Warranty reserve	$	3,049	$	2,876
Litigation reserve		753		2,764
Payroll		1,006		1,685
Portfolio taxes and title		1,610		2,467
Property tax		54		546
Dealer rebates		1,402		1,160
Sales tax		61		310
Federal and state income taxes		6,699		7,445
Other		2,261		1,433
Total accrued liabilities	$	16,895	$	20,686

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

INCOME TAXES

Summary of significant components of the provision for income taxes

Significant components of the provision for income taxes are as follows (in thousands):


	Year ended
	December 31,
	2022		2021
Current:
Federal	$	13,092	$	8,443
State		1,222		1,280
Total current income tax provision		14,314		9,723
Deferred:
Federal		51		934
State		10		99
Total deferred income tax provision		61		1,033
Provision for income taxes	$	14,375	$	10,756

Schedule of reconciliation of the Company's effective tax rate from operations to the U.S. federal income tax rate


	Year ended
	December 31,
	2022		2021
Federal statutory rate	21.0	%		21.0	%
State income taxes, net of federal tax benefit	1.5			1.9
Energy efficiency credit	(5.0)			(5.2)
Effective tax rate	17.5	%		17.7	%

Summary of deferred tax assets and liabilities

The tax effects of cumulative temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands):


	Year ended
	December 31,
	2022		2021
Deferred tax assets:
Allowance for doubtful accounts	$	439	$	486
Reserve accounts		204		636
State taxes		76		44
Payroll taxes		8		157
Uniform capitalization		15		58
Other		256
Total deferred tax assets		998		1,381
Deferred tax liabilities:
Installment sale revenue		(674)		(853)
Depreciation		(2,808)		(2,998)
Accrued interest receivable		(581)		(518)
Other		—		(16)
Total deferred tax liabilities		(4,063)		(4,385)
Net deferred tax liabilities	$	(3,065)	$	(3,004)

SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2022

SHARE-BASED COMPENSATION

Schedule of restricted stock units activity

The following is a summary of restricted stock units (the “RSU”) activity (in thousands, except per unit data):


	Number of Units		Weighted Average Grant Date Fair Value Per Unit
Nonvested, January 1, 2022	35	$	14.01
Granted	517	$	11.82
Vested	(160)	$	24.32
Canceled	(350)	$	5.99
Nonvested, December 31, 2022	42	$	6.93

Schedule of stock option activity

The following is a summary of option activity (in thousands, except per unit data):


	Number of Units	Weighted Average Exercise Price Per Unit		Weighted Average Grant Date Fair Value Per Unit		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2021	35	$	14.44	$	8.67	9.61
Granted	55	$	18.02	$	14.07	9.73
Exercised	(7)	$	14.44	$	8.67	—
Outstanding, December 31, 2021	83	$	16.83	$	12.27	9.36	$	802
Exercisable, December 31, 2021	—	$	—	$	—	—	$	—

Outstanding, January 1, 2022	83	$	16.83	$	12.27	9.36
Granted	1,025	$	40.59	$	4.99	9.44
Exercised	—	$	—	$	—	—
Forfeited	(83)	$	16.83	$	12.27	—
Outstanding, December 31, 2022	1,025	$	40.59	$	4.99	9.44	$	—
Exercisable, December 31, 2022	—	$	—	$	—	—	$	—

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2022

EARNINGS PER SHARE

Summary of reconciliation of the numerators and denominators used in the computations of both basic and diluted EPS


	Year ended
	December 31,
	2022		2021
Numerator:
Net income (in 000's)	$	67,773	$	49,871
Denominator:
Basic weighted-average common shares outstanding		24,357,785		24,204,437
Effect of dilutive securities:
Restricted stock grants		13,286		12,846
Stock options		371,348		58,706
Diluted weighted-average common shares outstanding		24,742,419		24,275,989
Earnings per share attributable to Legacy Housing Corporation
Basic	$	2.78	$	2.06
Diluted	$	2.74	$	2.05

NATURE OF OPERATIONS - IPO and Corporate Conversion (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended		12 Months Ended
	Apr. 17, 2019	Jan. 01, 2018	Jan. 31, 2019	Dec. 31, 2018	Dec. 31, 2020	Nov. 30, 2022
Nature of operations
Shares issued upon incorporation (in shares)		20,000,000
Shares repurchased	300,000				145,065
Share repurchase price (in dollars per share)	$ 10.20				$ 9.77
Value of shares authorized for repurchase						$ 10,000
IPO
Nature of operations
Shares issued from sale of common stock			600,000	4,000,000
Share price (in dollars per share)			$ 12.00	$ 12.00
Offering costs			$ 505	$ 4,504
Proceeds from IPO net of underwriting discounts and offering expenses			$ 6,695	$ 43,492

NATURE OF OPERATIONS - Segment Reporting (Details)	12 Months Ended
NATURE OF OPERATIONS - Segment Reporting (Details)	Dec. 31, 2022 segment
NATURE OF OPERATIONS
Number of reportable segment	1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) $ in Thousands	Dec. 31, 2022 USD ($) item
Cash and Cash Equivalents [Line Items]
Number of banks exceeding the FDIC limit \| item	2
Bank Account One
Cash and Cash Equivalents [Line Items]
Cash in excess of FDIC limit	$ 1,504
Bank Account Two
Cash and Cash Equivalents [Line Items]
Cash in excess of FDIC limit	$ 133

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable, Consumer Loans Receivable, Notes Receivable from Mobile Home Parks, Other Notes Receivable (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) item	Dec. 31, 2021 USD ($) item
Accounts Receivable
Credit period	30 days
Allowance for doubtful accounts	$ 279	$ 343
Consumer Loans Receivable
Average contractual interest rate	13.40%	13.50%
Escrow liability	$ 9,653	$ 9,350
Number of components comprising the allowance for loan losses \| item	2
General reserve calculation, period of historical loss rate	3 years
Principal outstanding on consumer loans	$ 1,610	1,239
Repossessed Assets	795	517
Impaired loans individually evaluated for impairment	1,610	1,239
Financial Asset, Past Due [Member]
Consumer Loans Receivable
Consumer loans receivable	$ 2,999	2,082
Minimum
Consumer Loans Receivable
Consumer loans receivable term	2 years
Maximum
Consumer Loans Receivable
Consumer loans receivable term	30 years
Notes Receivable from Mobile Home Parks
Consumer Loans Receivable
Repossessed Assets	$ 0	$ 0
Note receivable with fixed rate of interest	$ 130,000
Interest rate spread on the MHP Notes	4.00%
Interest rate on the MHP Notes	8.10%	7.60%
Charge offs	$ 0	$ 0
Allowance for loan losses	0	0
Impaired loans individually evaluated for impairment	$ 0	$ 0
Notes Receivable from Mobile Home Parks \| Minimum
Consumer Loans Receivable
Fixed rate of interest (as a percent)	6.90%
Interest rate spread (as a percent)	8.00%
Term of notes receivables	1 year	1 year
Notes Receivable from Mobile Home Parks \| Maximum
Consumer Loans Receivable
Fixed rate of interest (as a percent)	11.50%
Term of notes receivables	10 years	10 years
Other Note Receivable
Consumer Loans Receivable
Allowance for loan losses	$ 0	$ 5
Impaired loans individually evaluated for impairment	0	0
Consumer loans receivable	22,722	41,235
Other Note Receivable \| Financial Asset, Past Due [Member]
Consumer Loans Receivable
Consumer loans receivable	$ 0	$ 0
Other Note Receivable \| Minimum
Consumer Loans Receivable
Interest rate on the other notes	5.00%
Other Note Receivable \| Maximum
Consumer Loans Receivable
Interest rate on the other notes	17.90%
Notes Receivable from Mobile Home Parks \| Credit concentration risk \| Independent third party and affiliates
Consumer Loans Receivable
Number of Independent third parties \| item	3	2
Notes Receivable from Mobile Home Parks \| Credit concentration risk \| Independent third party and affiliates \| Independent Third Party One
Consumer Loans Receivable
Concentration risk percentage	12.30%	10.40%
Notes Receivable from Mobile Home Parks \| Credit concentration risk \| Independent third party and affiliates \| Independent Third Party Two
Consumer Loans Receivable
Concentration risk percentage	16.60%	30.10%
Notes Receivable from Mobile Home Parks \| Credit concentration risk \| Independent third party and affiliates \| Independent Third party Three
Consumer Loans Receivable
Concentration risk percentage	34.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory, Property, plant and equipment, Impairment of Long Lived Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Inventories
Noncurrent finished goods inventory	$ 6,987	$ 2,678
Impairment for long-lived assets	$ 0	$ 0
Useful lives	15 years
Buildings and improvements \| Minimum
Inventories
Useful lives	30 years
Buildings and improvements \| Maximum
Inventories
Useful lives	39 years
Vehicles
Inventories
Useful lives	5 years
Machinery and equipment
Inventories
Useful lives	7 years
Furniture and fixtures
Inventories
Useful lives	7 years

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leased Property (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Lessor, Description Of Leases [Line Items]
Notice period for lease termination	30 days
Termination fees as a percentage of remaining lease payments	10.00%
Number of month's rent to be paid	6 months
Notice period for purchase of property	30 days
Extended term of lease	48 months
Notice period for exercise of renewal extension	6 months
Useful life	15 years
Depreciation expense on leased property	$ 582	$ 442
Minimum
Lessor, Description Of Leases [Line Items]
Term of lease agreement	96 months
Maximum
Lessor, Description Of Leases [Line Items]
Term of lease agreement	120 months

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leased Property - Future Minimum Lease Income (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Operating Leases, Future Minimum Payments Receivable [Abstract]
2023	$ 1,964
2024	1,964
2025	1,964
2026	1,964
2027	1,792
Thereafter	2,561
Total	$ 12,209

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Dealer Incentive Liability, Advertising Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Dealer Incentive Liability
Dealer incentive liability	$ 5,516	$ 4,336
Dealer incentive expense	$ 1,315	$ 1,235

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Product Warranty (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Term of product warranty	1 year
Warranty liability, beginning of year	$ 2,876	$ 2,594
Product warranty accrued	2,874	2,152
Warranty costs incurred	(2,701)	(1,870)
Warranty liability, end of year	3,049	2,876
Advertising Costs	$ 120	$ 367

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair value of financial instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Consumer Loan \| Fair Value \| Level 3
Fair value of financial instruments
Loans	$ 138,800	$ 125,600
Consumer Loan \| Book Value
Fair value of financial instruments
Loans	139,009	125,623
Notes Receivable from Mobile Home Parks \| Fair Value \| Level 3
Fair value of financial instruments
Notes receivable	128,400	83,000
Notes Receivable from Mobile Home Parks \| Book Value
Fair value of financial instruments
Notes receivable	129,966	83,773
Other Note Receivable \| Fair Value \| Level 3
Fair value of financial instruments
Notes receivable	21,600	38,500
Other Note Receivable \| Book Value
Fair value of financial instruments
Notes receivable	$ 22,722	$ 38,886

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) item	Dec. 31, 2021 USD ($)
Disaggregation of revenue
Annual curtail payment period	2 years
Period required to pay off remaining principle balance	3 years
Incremental costs of obtaining a contract	true
Term Of Product Warranty	1 year
Product sales	$ 222,052	$ 165,995
Dealer commission, reimbursed dealer expenses and other similar costs	$ 11,588	11,303
Minimum
Disaggregation of revenue
Term of lease agreement	96 months
Maximum
Disaggregation of revenue
Term of lease agreement	120 months
Revenue from contract with customer product and service benchmark \| Customer concentration risk \| Independent third party and affiliates
Disaggregation of revenue
Product sales		$ 9,165
Number of Independent third parties \| item	2
Concentration risk percentage		5.50%
Revenue from contract with customer product and service benchmark \| Customer concentration risk \| Independent Third Party One
Disaggregation of revenue
Product sales	$ 13,008
Concentration risk percentage	5.90%
Revenue from contract with customer product and service benchmark \| Customer concentration risk \| Independent Third Party Two
Disaggregation of revenue
Product sales	$ 11,879
Concentration risk percentage	5.40%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue
Product sales	$ 222,052	$ 165,995
Consumer and MHP loans interest:
Interest - consumer installments notes	18,369	16,658
Interest - MHP notes	10,195	10,537
Total consumer and MHP loans interest	28,564	27,195
Other	6,399	4,317
Total net revenue	257,015	197,507
Direct sales
Disaggregation of Revenue
Product sales	45,549	25,173
Commercial sales
Disaggregation of Revenue
Product sales	61,373	46,835
Consignment sales
Disaggregation of Revenue
Product sales	84,037	63,496
Retail store sales
Disaggregation of Revenue
Product sales	19,629	20,011
Other
Disaggregation of Revenue
Product sales	$ 11,464	$ 10,480

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling Costs & Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Shipping and handling costs	$ 1,804	$ 1,981

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) - Notes Receivable from Mobile Home Parks - Independent third party and affiliates - Credit concentration risk - item	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of Independent third parties	3	2
Independent Third Party One
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration risk percentage	12.30%	10.40%
Independent Third Party Two
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration risk percentage	16.60%	30.10%
Independent Third party Three
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration risk percentage	34.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	Jan. 01, 2022	Dec. 31, 2022	Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets		$ 436,813	$ 366,667
Liabilities		$ 54,709	$ 57,273
Lease, Practical Expedients, Package [true false]	true
Lease, Practical Expedient, Use of Hindsight [true false]	false
Cumulative effect, period of adoption, adjustment \| ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets	$ 3,258
Liabilities	$ 3,258

- Definition

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

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-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(A))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 20: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(ii))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

+ Details

CONSUMER LOANS RECEIVABLE - Consumer loans receivable, net (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
CONSUMER LOANS RECEIVABLE
Consumer loans receivable	$ 142,340	$ 129,119
Loan discount and deferred financing fees	(2,501)	(2,612)
Allowance for loan losses	(830)	(884)	$ (905)
Consumer loans receivable, net	$ 139,009	$ 125,623

CONSUMER LOANS RECEIVABLE - Allowance for loan losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
CONSUMER LOANS RECEIVABLE
Allowance for loan losses, beginning of period	$ 884	$ 905
Provision for loan losses	(243)	725
Charge offs (recoveries)	189	(746)
Allowance for loan losses	$ 830	$ 884

CONSUMER LOANS RECEIVABLE - Impaired and general reserve for allowance for loan losses (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
CONSUMER LOANS RECEIVABLE
Total consumer loans receivable	$ 142,340	$ 129,119
Allowance for loan losses	830	884	$ 905
Impaired loans individually evaluated for impairment	1,610	1,239
Specific reserve against impaired loans	612	533
Other loans collectively evaluated for allowance	140,730	127,880
General allowance for loan losses	$ 218	$ 351

CONSUMER LOANS RECEIVABLE - Aging of consumer loans receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Past due consumer loans:
Total consumer loans receivable	$ 142,340	$ 129,119
Total consumer loans receivable (as a percent)	100.00%	100.00%
Financial Asset, Past Due
Past due consumer loans:
Consumer loans receivable	$ 2,999	$ 2,082
Consumer loans receivable past due (Percent)	2.10%	1.60%
31 - 60 days past due
Past due consumer loans:
Consumer loans receivable	$ 1,150	$ 594
Consumer loans receivable past due (Percent)	0.80%	0.50%
61 - 90 days past due
Past due consumer loans:
Consumer loans receivable	$ 108	$ 407
Consumer loans receivable past due (Percent)	0.10%	0.30%
91 - 120 days past due
Past due consumer loans:
Consumer loans receivable	$ 486	$ 114
Consumer loans receivable past due (Percent)	0.30%	0.10%
Greater than 120 days past due
Past due consumer loans:
Consumer loans receivable	$ 1,255	$ 967
Consumer loans receivable past due (Percent)	0.90%	0.70%

NOTES RECEIVABLE FROM MOBILE HOME PARKS ("MHP Notes") (Details) - Notes Receivable from Mobile Home Parks - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Notes Receivable
Unamortized finance fees	$ 1,068	$ 445
Charge offs	0	0
Allowance for loan losses	$ 0	$ 0

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

OTHER NOTES RECEIVABLE (Details) - Other Note Receivable - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Notes Receivable
Outstanding principal balance	$ 22,722	$ 41,235
Allowance for loan losses	0	(5)
Total	$ 22,722	$ 41,230

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

- Definition

Amount, before allowance for credit loss, of financing receivable.

+ References + Details

LEASES (Details)	12 Months Ended
LEASES (Details)	Dec. 31, 2022 USD ($) lease
LEASES
Number of operating leases	13
Number of operating leases subleased	3
Operating lease, term of contract (in years)	10 years
Options to renew	true
Operating lease weighted average remaining lease term1	4 years 6 months 14 days
Weighted Average Discount Rate	2.12%
Variable lease cost \| $	$ 0
Minimum
LEASES
Operating lease, term of contract (in years)	5 years
Maximum
LEASES
Operating lease, term of contract (in years)	10 years
Heritage Housing and Tiny Homes retail locations
LEASES
Number of operating leases	8
Corporate and administrative offices in Bedford, TX and Norcross, GA
LEASES
Number of operating leases subleased	2

LEASES - Future minimum lease payments (Details) $ in Thousands	Dec. 31, 2022 USD ($)
LEASES
2023	$ 683
2024	610
2025	588
2026	526
2027	311
Thereafter	113
Total Lease payments	2,831
Less amount representing interest	(60)
Total Lease liability	2,771
Less current lease liability	(650)
Total noncurrent lease liability	$ 2,121

INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
INVENTORIES
Raw materials	$ 17,442	$ 15,431
Work in progress	592	714
Finished goods (1)	21,429	29,034
Allowance for obsolescence	(401)	(501)
Total	39,062	44,678
Inventories, net	$ 6,987	$ 2,678

PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
PROPERTY, PLANT AND EQUIPMENT
Total	$ 39,508	$ 35,709
Less accumulated depreciation	(9,402)	(8,193)
Total property, plant and equipment	30,106	27,516
Depreciation expense	1,137	1,145
Cost of product sales
PROPERTY, PLANT AND EQUIPMENT
Depreciation expense	568	450
Land
PROPERTY, PLANT AND EQUIPMENT
Total	14,953	14,949
Buildings and leasehold improvements
PROPERTY, PLANT AND EQUIPMENT
Total	16,949	13,722
Vehicles
PROPERTY, PLANT AND EQUIPMENT
Total	1,556	1,682
Machinery and equipment
PROPERTY, PLANT AND EQUIPMENT
Total	5,750	5,058
Furniture and fixtures
PROPERTY, PLANT AND EQUIPMENT
Total	$ 300	$ 298

OTHER ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
OTHER ASSETS.
Prepaid rent	$ 349	$ 248
Other	338	332
Repossessed homes	795	517
Total	$ 1,482	$ 1,097

DEBT SECURITIES (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
DEBT SECURITIES
Held to Maturity Securities	$ 8,412	$ 0

ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
ACCRUED LIABILITIES.
Warranty reserve	$ 3,049	$ 2,876
Litigation reserve	753	2,764
Payroll	1,006	1,685
Portfolio taxes and title	1,610	2,467
Property tax	54	546
Dealer rebates	1,402	1,160
Sales tax	61	310
Federal and state income taxes	6,699	7,445
Other	2,261	1,433
Total accrued liabilities	$ 16,895	$ 20,686

DEBT - Lines of Credit (Details) - Revolver 1 - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Jul. 28, 2022	Mar. 30, 2020
Lines of Credit
Maximum borrowing capacity			$ 70,000	$ 70,000
Effective interest rate	6.12%	2.10%
Amount of available credit	$ 17,400	$ 61,841
Interest expense	225	887
Outstanding balance	2,545	$ 7,993
Tangible net worth	$ 120,000
Debt to EBITDA ratio	4
Deferred debt issuance costs	$ 295
Borrowing amount suspended			50,000
Current borrowing capacity			$ 20,000
SOFR
Lines of Credit
Spread rate	2.00%

DEBT - PPP Loans (Details) - PILOT Agreement - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2016
Notes Payable
Maximum borrowing capacity		$ 10,000
Interest rate		6.00%
Outstanding balance	$ 0

INCOME TAXES (Details) - USD ($) $ in Thousands	12 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current:
Federal	$ 13,092	$ 8,443
State	1,222	1,280
Total current income tax provision	14,314	9,723
Deferred:
Federal	51	934
State	10	99
Total deferred income tax provision	61	1,033
Provision for income taxes	$ 14,375	$ 10,756
Effective Income Tax Rate Reconciliation
Federal statutory rate	21.00%	21.00%
State income taxes, net of federal tax benefit	1.50%	1.90%
Energy efficiency credit	(5.00%)	(5.20%)
Effective tax rate (as a percent)	17.50%	17.70%
Deferred tax assets:
Allowance for doubtful accounts	$ 439	$ 486
Reserve accounts	204	636
State taxes	76	44
Payroll taxes	8	157
Uniform capitalization	15	58
Other	256
Total deferred tax assets	998	1,381
Deferred tax liabilities:
Installment sale revenue	(674)	(853)
Depreciation	(2,808)	(2,998)
Accrued interest receivable	(581)	(518)
Other		(16)
Total deferred tax liabilities	(4,063)	(4,385)
Net deferred tax liabilities	$ (3,065)	$ (3,004)

SHARE-BASED COMPENSATION - Plan (Details) - USD ($) $ / shares in Units, $ in Thousands										3 Months Ended	12 Months Ended
	Nov. 29, 2022	Nov. 15, 2022	Jun. 07, 2022	Jan. 06, 2022	Nov. 30, 2021	Sep. 23, 2021	Dec. 02, 2020	Aug. 10, 2020	Feb. 07, 2019	Jun. 30, 2020	Dec. 31, 2022
SHARE-BASED COMPENSATION
Number of shares may be issued to employees, directors, consultants and nonemployee service providers in the form of stock options, stock and stock appreciation rights											10,000,000.0
Number of shares available for grant											9,700,000
Vesting percentage				50.00%
Stock options
SHARE-BASED COMPENSATION
Contractual life											10 years
Stock options \| Senior management
SHARE-BASED COMPENSATION
Contractual life						10 years		10 years
Vesting percentage						10.00%		20.00%
Stock options \| Chief Executive Officer
SHARE-BASED COMPENSATION
Contractual life			10 years
Vesting percentage			10.00%
Restricted shares \| Senior management
SHARE-BASED COMPENSATION
Restricted shares granted (in shares)									120,000
Grant date fair value									$ 1,636
Vesting percentage									14.30%
Restricted shares forfeited (in shares)										42,857
Restricted shares \| Independent directors
SHARE-BASED COMPENSATION
Restricted shares granted (in shares)	1,734		301		1,202		2,022
Grant date fair value	$ 30		$ 5		$ 30		$ 30
Restricted shares \| Executive Chairman
SHARE-BASED COMPENSATION
Restricted shares granted (in shares)				150,000
Grant date fair value				$ 3,741
Restricted shares \| Chief Executive Officer
SHARE-BASED COMPENSATION
Restricted shares granted (in shares)			14,700
Grant date fair value			$ 235
Vesting percentage			50.00%
Contingent equity awards \| $36 Equity Award
SHARE-BASED COMPENSATION
Restricted shares granted (in shares)				175,000
Threshold market days remained granted				15 days
Granted (in dollars per share)		$ 36		$ 36
Grant date fair value				$ 1,412
Contingent equity awards \| $36 Equity Award \| Vested at granted
SHARE-BASED COMPENSATION
Vesting percentage				50.00%
Contingent equity awards \| $48 Equity Award
SHARE-BASED COMPENSATION
Restricted shares granted (in shares)				175,000
Threshold market days remained granted				15 days
Granted (in dollars per share)		$ 48		$ 48
Grant date fair value				$ 683
Contingent equity awards \| $48 Equity Award \| Vested at granted
SHARE-BASED COMPENSATION
Vesting percentage				50.00%
Contingent equity awards \| Executive Chairman
SHARE-BASED COMPENSATION
Restricted shares granted (in shares)				350,000

SHARE-BASED COMPENSATION - Restricted stock units (Details) - Restricted stock units $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) $ / shares shares
Number of units
Nonvested at the beginning \| shares	35,000
Granted \| shares	517,000
Vested \| shares	(160,000)
Canceled \| shares	(350,000)
Nonvested at the end \| shares	42,000
Weighted average grant date fair value
Nonvested at the beginning (in dollars per share) \| $ / shares	$ 14.01
Granted (in dollars per share) \| $ / shares	11.82
Vested (in dollars per share) \| $ / shares	24.32
Canceled (in dollars per share) \| $ / shares	5.99
Nonvested at the end (in dollars per share) \| $ / shares	$ 6.93
Unrecognized compensation expense \| $	$ 442
Unrecognized compensation expense, recognition period	1 year 9 months 7 days

SHARE-BASED COMPENSATION - Stock options (Details) - $ / shares					3 Months Ended	12 Months Ended
	Jun. 07, 2022	Jan. 06, 2022	Sep. 23, 2021	Aug. 10, 2020	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
SHARE-BASED COMPENSATION
Vesting percentage		50.00%
Stock options
SHARE-BASED COMPENSATION
Stock options granted (in shares)						1,025,000	55,000
Exercise price (in dollar per share)						$ 40.59	$ 18.02
Stock option forfeited (in shares)						83,000
Fair value assumptions for options granted
Expiration period						10 years
Stock options \| Senior management
SHARE-BASED COMPENSATION
Stock options granted (in shares)			55,490	34,626
Exercise price (in dollar per share)			$ 18.02	$ 14.44
Vesting percentage			10.00%	20.00%
Fair value assumptions for options granted
Risk free interest rate			1.41%	0.24%
Dividend yield			0.00%	0.00%
Expected volatility			75.00%	75.00%
Expiration period			10 years	10 years
Expected life			7 years 9 months 18 days	6 years 6 months
Stock options \| Senior management \| Departure of senior manager
SHARE-BASED COMPENSATION
Stock option forfeited (in shares)					27,701
Stock options \| Chief Executive Officer
SHARE-BASED COMPENSATION
Stock options granted (in shares)	900,000
Vesting percentage	10.00%
Fair value assumptions for options granted
Risk free interest rate	2.98%
Dividend yield	0.00%
Expected volatility	45.70%
Expiration period	10 years
Expected life	7 years 9 months 18 days
Stock options \| Chief Executive Officer \| Tranche One
SHARE-BASED COMPENSATION
Stock options granted (in shares)	300,000
Exercise price (in dollar per share)	$ 36.00
Stock options \| Chief Executive Officer \| Tranche Two
SHARE-BASED COMPENSATION
Stock options granted (in shares)	600,000
Exercise price (in dollar per share)	$ 48.00
Incentive stock options \| Chief Executive Officer
SHARE-BASED COMPENSATION
Stock options granted (in shares)	62,460
Exercise price (in dollar per share)	$ 16.01
Vesting percentage	10.00%
Fair value assumptions for options granted
Risk free interest rate	2.98%
Dividend yield	0.00%
Expected volatility	45.70%
Expiration period	10 years
Expected life	7 years 9 months 18 days

SHARE-BASED COMPENSATION - Summary of Stock options activity (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Number of units
Outstanding	83,000	35,000
Granted	1,025,000	55,000
Exercised		(7,000)
Forfeited	(83,000)
Outstanding	1,025,000	83,000	35,000
Weighted Average Exercise Price Per Unit
Outstanding at the beginning (in dollars per share)	$ 16.83	$ 14.44
Granted (in dollars per share)	40.59	18.02
Exercised (in dollars per share)		14.44
Forfeited (in dollars per share)	16.83
Outstanding at the end (in dollars per share)	40.59	16.83	$ 14.44
Weighted Average Grant Date Fair Value Per Unit
Outstanding at the beginning (in dollars per share)	12.27	8.67
Granted (in dollars per share)	4.99	14.07
Exercised (in dollars per share)		8.67
Forfeited (in dollars per share)	12.27
Outstanding at the end (in dollars per share)	$ 4.99	$ 12.27	$ 8.67
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value
Outstanding (in years)	9 years 5 months 8 days	9 years 4 months 9 days	9 years 7 months 9 days
Granted (in years)	9 years 5 months 8 days	9 years 8 months 23 days
Outstanding at the end (in dollars)		$ 802
Non-vested shares	1,025,000
Unrecognized compensation expense	$ 4,825
Unrecognized compensation expense, recognition period	9 years 5 months 8 days

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Commitment
Self-insured liability	$ 149	$ 373
Repurchase agreements \| Maximum
Commitment
Repurchase commitment	$ 8,925	$ 4,908

COMMITMENTS AND CONTINGENCIES - Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Operating Leased Assets [Line Items]
Operating lease, term of contract (in years)	10 years
Rent expense	$ 710	$ 698
Sublease rental income	$ 326	$ 394
Minimum
Operating Leased Assets [Line Items]
Operating lease, term of contract (in years)	5 years
Sublease, term of contract (in years)	3 years
Maximum
Operating Leased Assets [Line Items]
Operating lease, term of contract (in years)	10 years
Sublease, term of contract (in years)	11 years

COMMITMENTS AND CONTINGENCIES - Legal Matters (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
COMMITMENTS AND CONTINGENCIES
Legal reserves	$ 753	$ 2,764

EARNINGS PER SHARE- Tabular (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Numerator:
Net income (in 000's)	$ 67,773	$ 49,871
Denominator:
Basic weighted-average common shares outstanding	24,357,785	24,204,437
Effect of dilutive securities:
Diluted weighted-average common shares outstanding	24,742,419	24,275,989
Earnings per share attributable to Legacy Housing Corporation
Basic	$ 2.78	$ 2.06
Diluted	$ 2.74	$ 2.05
Restricted stock units
Effect of dilutive securities:
Dilutive securities	13,286	12,846
Stock options
Effect of dilutive securities:
Dilutive securities	371,348	58,706

EARNINGS PER SHARE - Antidilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share, Diluted, Other Disclosures [Abstract]
Antidilutive shares excluded from calculation of earnings per share	102,408	0

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Bell Mobile Homes
RELATED PARTY TRANSACTIONS
Accounts receivable related parties	$ 0	$ 1
Accounts payable related parties	132	49
Home sales to related parties	4,499	3,724
Shipley Bros.
RELATED PARTY TRANSACTIONS
Accounts receivable related parties	0	0
Accounts payable related parties	0	0
Home sales to related parties	3,181	$ 2,825
Principal Shareholder
RELATED PARTY TRANSACTIONS
Accounts receivable related parties	$ 68

- Definition

Amount of revenue, fees and commissions earned from transactions between (a) a parent company and its subsidiaries; (b) subsidiaries of a common parent; (c) an entity and trusts for the benefit of employees, for example, but not limited to, pension and profit-sharing trusts that are managed by or under the trusteeship of the entity's management; (d) an entity and its principal, owners, management, or members of their immediate families; and (e) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 946
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07.1(c))
-URI http://asc.fasb.org/extlink&oid=120401555&loc=SL114874292-224272

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(B))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(C))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.1(e))
-URI http://asc.fasb.org/extlink&oid=123367319&loc=SL114868664-224227

+ Details