UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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LEGACY HOUSING CORPORATION
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | ||
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PART I – FINANCIAL INFORMATION
Item 1.Financial Statements
LEGACY HOUSING CORPORATION
BALANCE SHEETS
(in thousands, except share and per value data)
| March 31, | | December 31, | |||
2026 (unaudited) | 2025 | |||||
Assets | ||||||
Current assets: |
| |
| | ||
Cash | $ | | $ | | ||
Accounts receivable, net |
| |
| | ||
Interest receivable loan portfolios, net | | | ||||
Income tax refund receivable | — | | ||||
Dealer financed receivables, net | | | ||||
Consumer loans receivable, net |
| |
| | ||
Notes receivable from mobile home parks (“MHP”), net |
| |
| | ||
Other notes receivable, net |
| |
| | ||
Inventories, net |
| |
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Prepaid expenses and other current assets |
| |
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Total current assets |
| |
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Property, plant and equipment, net |
| |
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Consumer loans receivable, net |
| |
| | ||
Notes receivable from mobile home parks (“MHP”), net |
| |
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Other notes receivable, net |
| |
| | ||
Other assets - leased mobile homes | | | ||||
ROU assets - operating leases | | | ||||
Other assets |
| |
| | ||
Deferred income taxes, net | | | ||||
Intangible assets, net | | | ||||
Goodwill | | | ||||
Total assets | $ | | $ | | ||
Liabilities and Stockholders' Equity |
| |
| | ||
Current liabilities: |
| |
| | ||
Accounts payable | $ | | $ | | ||
Accrued liabilities |
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Customer deposits |
| |
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Escrow liability |
| |
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Operating lease obligation | | | ||||
Total current liabilities |
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Long‑term liabilities: |
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Operating lease obligation, less current portion | | | ||||
Lines of credit | | | ||||
Dealer incentive liability |
| |
| | ||
Total liabilities |
| |
| | ||
Commitments and contingencies (Note 13) |
| |
| | ||
Stockholders' equity: | ||||||
Preferred stock, $ | ||||||
Common stock, $ | | | ||||
Treasury stock at cost, | ( | ( | ||||
Additional paid-in-capital | | | ||||
Retained earnings | | | ||||
Total stockholders' equity | | | ||||
Total liabilities and stockholders' equity | $ | | $ | | ||
See accompanying notes to unaudited interim financial statements.
2
LEGACY HOUSING CORPORATION
STATEMENTS OF INCOME
(in thousands, except share data)
(unaudited)
Three months ended March 31, | ||||||
2026 | 2025 | |||||
Net revenue: |
| |
| |||
Product sales | $ | | $ | | ||
Consumer, MHP and dealer loans interest |
| |
| | ||
Other revenue |
| |
| | ||
Total net revenue |
| |
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Operating expenses: |
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Cost of product sales |
| | | |||
Cost of other sales | | | ||||
Selling, general and administrative expenses |
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Total operating expenses | | | ||||
Income from operations |
| |
| | ||
Other income (expense): |
| |
| | ||
Non‑operating interest income |
| | | |||
Miscellaneous, net |
| | | |||
Interest expense |
| ( | ( | |||
Total other income |
| |
| | ||
Income before income tax expense |
| |
| | ||
Income tax expense |
| ( | ( | |||
Net income | $ | | $ | | ||
Weighted average shares outstanding: | ||||||
Basic | | | ||||
Diluted | | | ||||
Earnings per share: | ||||||
Basic | $ | | $ | | ||
Diluted | $ | | $ | | ||
See accompanying notes to unaudited interim financial statements.
3
LEGACY HOUSING CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
| Treasury | Additional | Retained | ||||||||||||||
| Shares (1) | Amount | | stock | | paid-in-capital | | earnings | | Total | |||||||
Balances, December 31, 2024 | | $ | | $ | ( | $ | | $ | | $ | | ||||||
Share based compensation | | | — | | — | | |||||||||||
Purchase of treasury stock | ( | — | ( | — | — | ( | |||||||||||
Net income | — | — | — | — | | | |||||||||||
Balances, March 31, 2025 | | $ | | $ | ( | $ | | $ | | $ | | ||||||
Treasury | Additional | Retained | |||||||||||||||
| Shares (1) | Amount | | stock | | paid-in-capital | | earnings | | Total | |||||||
Balances, December 31, 2025 | | $ | | $ | ( | $ | | $ | | $ | | ||||||
Share based compensation | — | — | — | |
| | |||||||||||
Purchase of treasury stock | ( | — | ( | — | — | ( | |||||||||||
Net income | — | — | — | — | | | |||||||||||
Balances, March 31, 2026 | | $ | | $ | ( | $ | | $ | | $ | | ||||||
| (1) |
See accompanying notes to unaudited interim financial statements.
4
LEGACY HOUSING CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Three Months Ended March 31, | ||||||
| 2026 | | 2025 | |||
Operating activities: |
| |
| | ||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: |
| |||||
Depreciation and amortization expense |
| |
| | ||
Amortization of deferred revenue | ( | ( | ||||
Operating lease amortization, net | ( | ( | ||||
Amortization of lines of credit cost | | — | ||||
Provision for accounts and notes receivable | | | ||||
(Gain) or Loss from sale of property | | ( | ||||
Provision for inventories | ( | | ||||
Deferred income taxes | ( | — | ||||
Share based compensation expense | | | ||||
Changes in operating assets and liabilities: |
|
| ||||
Accounts receivable |
| |
| ( | ||
Interest receivable, net | ( | — | ||||
Consumer loans activity, net |
| ( |
| ( | ||
Notes receivable MHP activity, net |
| ( |
| | ||
Dealer inventory loan activity, net | | | ||||
Inventories, net |
| ( |
| ( | ||
Prepaid expenses and other current assets |
| ( |
| ( | ||
Other assets - leased mobile homes | | | ||||
Other assets |
| ( |
| ( | ||
Accounts payable and accrued liabilities |
| ( |
| ( | ||
Right of use activity, net |
| |
| — | ||
Customer deposits |
| |
| | ||
Escrow liability | | | ||||
Dealer incentive liability |
| ( |
| | ||
Net cash provided by operating activities |
| |
| | ||
Investing activities: |
| |
| | ||
Purchases of property, plant and equipment |
| ( |
| ( | ||
Proceeds from sale of property | | | ||||
Issuance of notes receivable |
| ( |
| ( | ||
Notes receivable collections | | | ||||
Collections from purchased loans | | | ||||
Net cash used in investing activities |
| ( |
| ( | ||
Financing activities: |
| |
| | ||
Purchases of treasury stock | ( | ( | ||||
Proceeds from lines of credit |
| |
| — | ||
Payments on lines of credit |
| ( |
| — | ||
Net cash used in financing activities |
| ( |
| ( | ||
Net increase in cash |
| |
| | ||
Cash at beginning of period |
| |
| | ||
Cash at end of period | $ | | $ | | ||
Supplemental disclosure of cash flow information: |
| |
| | ||
Cash paid for interest | $ | — | $ | — | ||
Cash paid for taxes | $ | | $ | | ||
See accompanying notes to unaudited interim financial statements.
5
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 manufactured homes, (2) provides wholesale financing to dealers and mobile home parks, (3) provides retail financing to consumers and (4) is involved in financing and developing new manufactured home communities. The Company manufactures its 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 manufactured homes. The Company also sells homes directly to consumers, through its own retail stores, and to dealers and mobile home parks.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") as required by Regulation S-X, Rule 8-03. In the opinion of management, the unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company's financial position for the periods presented. The results for the three months ending March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or any other period. The accompanying balance sheet as of December 31, 2025 was derived from audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”), filed on March 12, 2026. The accompanying financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the Form 10-K.
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. Significant estimates made in connection with the accompanying financial statements primarily relate to the determination and valuation of notes receivable from mobile home parks, consumer loans receivable, other notes receivable, dealer financed receivables and fair value of financial instruments. Actual results could differ from these estimates.
Segment Reporting
The Company has
We generate revenues through the manufacture and sales of manufactured homes and “Tiny Houses” and the related interest income associated with financing these homes sales. We define the segment primarily based on how internally reported financial and operating information is regularly reviewed by our co-chief operating decision makers (“co-CODMs”) to evaluate financial performance, make decisions and allocate resources. Our co-CODMs are our Executive Chairman and Chief Executive Officer. The co-CODMs assess performance for the segment based on net
6
income and total assets that are also reported on the statements of income and balance sheet as net income and total assets, respectively. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The co-CODMs assess our operating and financial performance on a company-wide or consolidated basis.
Revenue Recognition
Product sales primarily consist of sales of manufactured homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, Inventory Finance 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 an inventory finance 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. Inventory Finance Sales include sales of homes to independent retailers, or dealers, who then resell the homes to consumers. Retail Store Sales are homes sold through Company-owned retail locations. Inventory Finance Sales and Retail Store Sales of homes may be financed by the Company or a third party, or they may be paid in cash.
Consumer, MHP and dealer loans interest includes interest income from the consumer, MHP and dealer finance loan portfolios. Other revenue consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income.
Accounts Receivable
Net accounts receivable includes receivables from direct sales of manufactured homes, sales of parts and supplies to customers, inventory finance fees and interest.
Accounts receivable related to inventory finance fees and interest generally are due upon receipt, and all other accounts receivable generally are due within
Interest Receivable Loan Portfolios
Interest receivable loan portfolios, net relates to accrued interest for consumer loans receivable, notes receivable from mobile home parks, and other notes receivable. The interest accrual is calculated within the Company’s loan management system from the date of last customer payment received through the end of the period. Separately an interest receivable allowance is established for all interest payments past due more than 90 days. The interest receivable is stated net of the allowance. At March 31, 2026, December 31, 2025, and December 31, 2024 the interest receivable, net was $
Leased Property
The Company offers mobile home park operators the opportunity to lease manufactured homes for rent in lieu of purchasing the homes for cash or under a longer-term financing agreement. In this arrangement, the title for the manufactured homes remains with the Company, and the lease is accounted for as an operating lease.
Our typical lease agreement is for
7
The leased manufactured homes are included in other assets on the Company’s balance sheet, capitalized at manufactured cost and depreciated over a
Future minimum lease income under all operating leases for each of the next five years at March 31, 2026, is as follows (in thousands):
2026 | | $ | |
2027 |
| | |
2028 |
| | |
2029 |
| | |
2030 |
| | |
Thereafter |
| | |
Total | $ | |
Product Warranties
The Company provides retail home buyers with a
The following table summarizes activity within the warranty liability (in thousands):
Three Months Ended March 31, | ||||||
2026 | | 2025 | ||||
Warranty liability, beginning of period | $ | | $ | | ||
Product warranty reserve accrued |
| ( |
| | ||
Warranty costs incurred |
| ( |
| ( | ||
Warranty liability, end of period | $ | | $ | | ||
Intangible Assets, Net
Our intangible assets consist of trade name, internally developed software, customer contracts, and non-compete agreements, are considered finite-lived, and are amortized over their useful lives. Finite-lived intangibles are generally amortized over
whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Amortization expenses recognized on intangible assets was $
Finite-lived intangible have a weighted average remaining life of
The following table summarizes intangible asset amortization expense (in thousands):
As of March 31, | |||
Year | 2026 | ||
2026 | $ | | |
2027 | | ||
2028 | | ||
2029 | | ||
2030 | | ||
Thereafter | | ||
Total | $ | | |
8
Share-Based Compensation
The Company accounts for share-based compensation in accordance with the provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation. Share-based compensation expense is recognized based on an award’s estimated grant date fair value in order to recognize compensation cost for those shares expected to vest. 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 grant 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 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. The volatility is estimated based on the historical volatility of the Company’s common stock. The expected life of awards granted represents the period during which the awards are expected to remain outstanding, based on the “simplified” method, which is allowed for companies that cannot reasonably estimate the expected life of options based on their historical award exercise experience. The Company does not expect to pay dividends on its common stock.
Pursuant to the Legacy Housing Corporation 2018 Incentive Compensation Plan (the “Plan”), the Company may issue up to
As of March 31, 2026, stock options to purchase approximately
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting - Comprehensive Income Expense - Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses. The standard update improves the disclosures about a public business entity’s expenses by requiring more detailed information about certain types of costs and expenses in the notes to the financial statements. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The standard updates are to be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact of the disclosure requirements related to the new standard on its financial statements.
2. REVENUE
Product sales primarily consist of sales of manufactured homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, Inventory Finance 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 an inventory finance 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. Inventory Finance Sales include sales of homes to independent retailers, or dealers, who then resell the homes to consumers. Retail Store Sales are homes sold through Company-owned retail locations. Inventory Finance Sales and Retail Store Sales of homes may be financed by the Company or a third party, or they may be paid in cash.
9
Revenue from product sales is recognized 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. Interest income is recorded separately 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 recorded separately 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
For the three months ended March 31, 2026 and 2025, total cost of product sales included $
Other revenue consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, 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
For the three months ended March 31, 2026, there was
During the three months ended March 31, 2026, the Company received a non-refundable advance deposit of approximately $
10
Disaggregation of Revenue. The following table summarizes customer contract revenues disaggregated by the source of the revenue (in thousands):
Three months ended | ||||||
March 31, | ||||||
2026 | | 2025 | ||||
Product sales: | ||||||
Direct sales | $ | | $ | | ||
Commercial sales |
| |
| | ||
Inventory finance sales | | | ||||
Retail store sales | | | ||||
Other product sales (1) |
| |
| | ||
Total product sales |
| |
| | ||
Loan portfolio interest: |
| |
| | ||
Interest - consumer installment notes |
| |
| | ||
Interest - MHP notes |
| |
| | ||
Interest - dealer finance notes | | | ||||
Total loan portfolio interest |
| |
| | ||
Other revenue |
| |
| | ||
Total net revenue | $ | | $ | | ||
| (1) | Other product sales revenue from ancillary products and services including parts, freight and other services |
3. CONSUMER LOANS RECEIVABLE
Consumer loans receivable result from financing transactions entered into with retail consumers of manufactured homes sold through independent retailers and company-owned retail locations. Consumer loans receivable generally consists 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 agreement. The average contractual interest rate per loan was approximately
The Company reviews loan applications in an underwriting process which considers credit history, among other things, to evaluate credit risk of the consumer and determines interest rates on approved loans 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 $
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.
11
The allowance for loan losses is comprised of
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 generally is 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.
Impaired loans are those loans for which it is probable that 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 uses various factors to determine the value of the underlying collateral for impaired loans. These factors include: (1) the length of time the unit remained unsold after construction; (2) the amount of time the house was occupied; (3) the cooperation level of the borrowers (for example, loans requiring legal action or extensive field collection efforts may have a reduced value); (4) the physical location of the home; (5) the length of time the borrower has lived in the house without making payments; (6) the size of the home 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 of 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 from the consumer loan portfolio totaled $
Consumer loans receivable, net of allowance for loan losses and deferred financing fees, consists of the following (in thousands):
| As of March 31, | | As of December 31, | | As of December 31, | ||||
2026 | 2025 | 2024 | |||||||
Consumer loans receivable | $ | | $ | | $ | | |||
Loan discount and deferred financing fees |
| ( |
| ( |
| ( | |||
Allowance for loan losses |
| ( |
| ( |
| ( | |||
Consumer loans receivable, net | $ | | $ | | $ | | |||
12
The following table presents a detail of the activity in the allowance for loan losses (in thousands):
| Three months ended March 31, | |||||
2026 | | 2025 | ||||
Allowance for loan losses, beginning of period | $ | | $ | | ||
Provision for loan losses |
| |
| | ||
(Charge offs) recoveries |
| ( |
| ( | ||
Allowance for loan losses, end of period | $ | | $ | | ||
A detailed aging of consumer loans receivable that are past due is as follows (in thousands):
As of March 31, | | | As of December 31, | | ||||||
2026 | % | 2025 | % | |||||||
Total consumer loans receivable | $ | |
| | | $ | |
| | |
Past due consumer loans: |
| |
| |
| |
| | ||
31 - 60 days past due | $ | |
| | $ | |
| | ||
61 - 90 days past due |
| |
| |
| |
| — | ||
91 - 120 days past due |
| |
| |
| |
| | ||
Greater than 120 days past due |
| |
| |
| |
| | ||
Total past due | $ | |
| | $ | |
| | ||
We evaluate the credit quality of our consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting generally is based on borrower payment activity relative to the contractual terms of the loan.
Year of Origination | ||||||||||||||||||||||||
2026 | 2025 | 2024 | 2023 | 2022 | Prior | Total | % of Portfolio | |||||||||||||||||
< 30 days past due | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||
30-90 days past due | — | | | | — | | | |||||||||||||||||
> 90 days past due | — | | | | | | | |||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | | |||||||||
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4. NOTES RECEIVABLE FROM MOBILE HOME PARKS
The notes receivable from mobile home parks (“MHP Notes”) relate to manufactured homes sold to mobile home parks and financed through notes receivable. The MHP Notes have varying maturity dates and require monthly principal and interest payments. The interest rate on the MHP Notes can be fixed or variable, and the interest rates range from
As of March 31, 2026, the Company had concentrations of MHP Notes with
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 composed of specific and general reserve amounts. As of March 31, 2026 and December 31, 2025, the MHP Notes balance is presented net of unamortized finance fees of $
Settlement Agreement
In 2024, the Company and various borrowers and guarantors (the “Makers”) entered into a Settlement Agreement and Release (the “Agreement”) to resolve disputes related to previously existing promissory notes with an aggregate principal balance of approximately $
As of March 31, 2026, the Company evaluated the recoverability of the New Note and based on an analysis of the fair value of the underlying collateral, the current payment status of the borrowers, and other relevant credit quality indicators, determined that a provision for expected loan losses on the New Note was not necessary.
Notes receivable from mobile home parks, net of allowance for loan losses and deferred financing fees, consisted of the following (in thousands):
As of March 31, | As of December 31, | As of December 31, | |||||||
2026 | 2025 | 2024 | |||||||
Outstanding principal balance | $ | | $ | | $ | | |||
Loan discount and deferred financing fees | ( | ( | ( | ||||||
Allowance for loan losses |
| ( |
| ( |
| ( | |||
Total | $ | | $ | | $ | | |||
14
The following table presents a detail of the activity in the allowance for loan losses (in thousands):
Three months ended | ||||||
March 31, | ||||||
2026 | 2025 | |||||
Allowance for loan losses, beginning of period | $ | | $ | | ||
Provision for loan losses | | | ||||
Allowance for loan losses, end of period | $ | | $ | | ||
We evaluate the credit quality of our MHP portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is generally based upon borrower payment activity relative to the contractual terms of the loan.
Year of Origination | ||||||||||||||||||||||||
2026 | 2025 | 2024 | 2023 | 2022 | Prior | Total | % of Portfolio | |||||||||||||||||
< 30 days past due | $ | | $ | | $ | | $ | | $ | | $ | | $ | | | |||||||||
30-90 days past due | — | | | — | — | — | | | ||||||||||||||||
> 90 days past due | — | | | — | — | | | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | | |||||||||
5. OTHER NOTES RECEIVABLE
Other notes receivable relate to notes issued to mobile home park owners and dealers and are not directly tied to the sale of manufactured homes. These other notes have varying maturity dates and generally require monthly principal and interest payments. They are collateralized by mortgages on real estate, manufactured homes that we have financed for which the borrower uses as offices, as well as vehicles. These notes typically are personally guaranteed by the borrowers. The interest rates on the other notes generally are fixed and range from
As of March 31, 2026, the Company had concentrations of other notes receivable with
As of March 31, 2026, there were past due balances of $
For the three months ended March 31, 2026 and 2025, there were
15
| As of March 31, | As of December 31, | | As of December 31, | |||||
2026 | 2025 | 2024 | |||||||
Outstanding principal balance | $ | | $ | | $ | | |||
Loan discount and deferred financing fees | ( | ( | ( | ||||||
Allowance for loan losses |
| ( |
| ( |
| ( | |||
Total | $ | | $ | | $ | | |||
Three months ended | ||||||
March 31, | ||||||
2026 | 2025 | |||||
Allowance for loan losses, beginning of period | $ | | $ | | ||
Provision for loan losses | | | ||||
Allowance for loan losses, end of period | $ | | $ | | ||
We evaluate the credit quality of our Other notes receivable portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting generally is based on borrower payment activity relative to the contractual terms of the loan.
Year of Origination | ||||||||||||||||||||||||
2026 | 2025 | 2024 | 2023 | 2022 | Prior | Total | % of Portfolio | |||||||||||||||||
< 30 days past due | $ | — | $ | | $ | | $ | | $ | — | $ | | $ | | | |||||||||
30-90 days past due | — | | — | | — | — | | | ||||||||||||||||
> 90 days past due | — | — | | | — | — | | | ||||||||||||||||
Total | $ | — | $ | | $ | | $ | | $ | — | $ | | $ | | | |||||||||
6. DEALER FINANCED RECEIVABLES
Dealer financed receivables are receivables for loans that we make to independent retailers, or dealers, for the purchase of manufactured homes so that dealers can then market them for sale to consumers. The loans are part of our inventory finance program. In late 2022 and early 2023, the Company transitioned many of its dealers from a traditional consignment arrangement to an inventory finance arrangement. The terms of the financing typically include a
Dealer financed notes receivable, net of allowance for loan losses, consisted of the following at March 31, 2026, December 31, 2025 and December 31, 2024 (in thousands):
As of March 31, | As of December 31, | As of December 31, | |||||||
2026 | 2025 | 2024 | |||||||
Outstanding principal balance | $ | | $ | | $ | | |||
Allowance for loan losses |
| ( |
| ( |
| ( | |||
Total | $ | | $ | | $ | | |||
16
The following table presents a detail of the activity in the allowance for loan losses (in thousands):
Three months ended | ||||||
March 31, | ||||||
2026 | 2025 | |||||
Allowance for loan losses, beginning of period | $ | | $ | | ||
Provision for loan losses | | | ||||
Allowance for loan losses, end of period | $ | | $ | | ||
The allowance for loan losses reflects management’s estimate of losses inherent in the dealer loans that may be uncollectible based on review and evaluation of the dealer loan portfolio as of the date of the balance sheet. An allowance for loan losses is determined after considering, among other things, the loan characteristics, the financial condition of the dealer and the value and liquidity of collateral.
We evaluate the credit quality of our dealer financed receivables based on the length of time the Company’s collateral has remained unsold by the dealer in dealer inventory.
Year of Origination | |||||||||||||||||||||
| 2026 | | 2025 | | 2024 | | 2023 | | 2022 | | Total | | % of Portfolio | ||||||||
< 1 year on lot | $ | | $ | | $ | — | $ | — | $ | — | $ | | | ||||||||
1-2 years on lot | — | | | — | — | | | ||||||||||||||
2-3 years on lot | — | — | | | — | | | ||||||||||||||
> 3 years on lot | — | — | — | | | | | ||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | | ||||||||
7. INVENTORIES, NET
Inventories, net consisted of the following (in thousands):
| As of March 31, | | As of December 31, | |||
2026 | 2025 | |||||
Raw materials | $ | | $ | | ||
Work in progress |
| |
| | ||
Finished goods, net | | | ||||
Total | $ | | $ | | ||
Finished goods includes an allowance of $
17
8. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
| As of March 31, | | As of December 31, | |||
2026 | 2025 | |||||
Land | $ | | $ | | ||
Buildings and leasehold improvements |
| |
| | ||
Construction in Progress | | | ||||
Vehicles |
| |
| | ||
Machinery and equipment |
| |
| | ||
Furniture and fixtures |
| |
| | ||
Total |
| |
| | ||
Less accumulated depreciation |
| ( |
| ( | ||
Total property, plant and equipment | $ | | $ | | ||
Depreciation expense was $
9. OTHER ASSETS
Other assets consisted of the following (in thousands):
| As of March 31, | | As of December 31, | |||
2026 | 2025 | |||||
Prepaid rent | $ | | $ | | ||
Repossessed homes |
| |
| | ||
Investment in Corpus AmeriCasa | | | ||||
Total | $ | | $ | | ||
Repossessed homes, net of allowances, as of March 31, 2026 include $
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10. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in thousands):
| As of March 31, | | As of December 31, | |||
2026 | 2025 | |||||
Warranty reserve | $ | | $ | | ||
Litigation reserve |
| |
| | ||
Payroll | | | ||||
Portfolio taxes and title |
| |
| | ||
Property tax | | | ||||
Dealer rebates | | | ||||
Sales tax |
| |
| | ||
Federal and state income taxes |
| |
| | ||
Unclaimed Property | | | ||||
Other |
| |
| | ||
Total accrued liabilities | $ | | $ | | ||
11. LINES OF CREDIT
The Company has a Credit Agreement (the “Revolver”), by and among the Company as borrower, the financial institutions from time to time party thereto, as lenders, and Prosperity Bank as administrative agent. The Revolver provides for a
For the three months ended March 31, 2026 and 2025, interest expense under the Revolver was $
As part of the acquisition of AmeriCasa, we assumed a line of credit with 21st Mortgage in the amount of $
12. INCOME TAXES
The provision for income tax expense for the three months ended March 31, 2026 and 2025 was $
19
31, 2026. The Company's effective tax rate for the three month period ended March 31, 2025 was
13. 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. As of March 31, 2026 and December 31, 2025, the Company accrued a $
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 Company believes that risk of loss is mitigated due to the resale value of the repurchased homes and the fact that the agreements are spread over many retailers. The maximum amount for which the Company was liable under such agreements approximated $
Leases
The Company leases facilities under operating leases that typically have
Legal Matters
Legal Proceedings
The Company is party to certain legal proceedings that arise in the ordinary course of business 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 such claims. The Company has included legal reserves of $
AmeriCasa Litigation
On March 13, 2026, the Company filed an Original Petition in the District Court of Tarrant County, Texas against the seller entities and certain individuals related to the Company's November 2025 acquisition of substantially all
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of the assets of AmeriCasa Solutions, LLC and its affiliates. The Company's claims relate principally to alleged misrepresentations and omissions made in connection with the acquisition and to the alleged post-closing misappropriation of receipts attributable to the acquired assets. A description of the proceeding is included in Part II, Item 1, Legal Proceedings, of this Quarterly Report on Form 10-Q. For information regarding events occurring subsequent to March 31, 2026 related to this matter, see Note 17 — Subsequent Events.
The litigation is not material to the Company's financial position, liquidity, or results of operations. The Company has not accrued a loss contingency with respect to this matter. The acquired assets remain within the measurement period under ASC 805, Business Combinations, and the Company continues to evaluate the facts and circumstances surrounding the acquisition, including information that may become available through the litigation, for purposes of finalizing its acquisition accounting and assessing recoverability of the acquired assets. An adverse outcome in the litigation, or further developments concerning the underlying facts, could result in an adjustment to the provisional amounts recorded in connection with the acquisition, or both, in a future period. For information regarding receivables and payables between the Company and the Seller arising from post-closing operations of the acquired business, see Note 16 — Related Party Transactions.
14. FAIR VALUE MEASUREMENTS
The Company accounts for its investments and derivative instruments in accordance with the provisions of “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; and (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’s financial instruments consist primarily of cash, accounts receivable, consumer loans, MHP Notes, other notes, accounts payable, and lines of credit. The carrying amounts of cash, 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.
21
As of March 31, | As of December 31, | |||||
2026 | 2025 | |||||
Consumer loan portfolio, fair value | $ | | $ | | ||
Consumer loan portfolio, book value |
| |
| | ||
Fixed rate MHP Notes, fair value | |
| | |||
Fixed rate MHP Notes, book value | |
| | |||
Variable rate MHP Notes, book value | | | ||||
Fixed rate other notes, fair value | |
| | |||
Fixed rate other notes, book value | |
| | |||
Variable rate other notes, book value | — |
| — | |||
Part of the MHP Notes, part of the other notes receivable, and our line of credit 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 notes receivable with fixed rates based on the discounted value of the remaining principal and interest cash flows. This is considered a Level III valuation technique.
15. 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. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s balance sheets. 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.
Three months ended | |||||||
March 31, | |||||||
2026 | | 2025 | |||||
Numerator: | |||||||
Net income (in 000's) | $ | | $ | | |||
Denominator: | |||||||
Basic weighted-average common shares outstanding | | | |||||
Effect of dilutive securities: | |||||||
Restricted stock | | | |||||
Stock options | | | |||||
Diluted weighted-average common shares outstanding | | | |||||
Earnings per share | |||||||
Basic | $ | | $ | | |||
Diluted | $ | | $ | | |||
We repurchased
22
On February 6, 2026, the Board of Directors authorized a stock repurchase program (the "Repurchase Program") under which the Company may repurchase up to $
During the three months ended March 31, 2026, the Company repurchased
Open market repurchases under the Repurchase Program are intended to be made in compliance with the non-exclusive safe harbor conditions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Repurchase Program does not obligate the Company to acquire any particular amount of common stock, has no expiration date prior to February 28, 2029, and may be suspended, modified or discontinued at any time without prior notice. Shares repurchased under the program will be held as treasury shares. The Company has determined that repurchases under the Repurchase Program are permitted under the terms of its existing bank credit facilities and other indebtedness.
16. RELATED PARTY TRANSACTIONS
Bell Mobile Homes (“Bell”), a retailer owned by one of the Company’s significant stockholders, purchases manufactured homes from the Company. Accounts receivable balances due from Bell were $
Shipley Bros., Ltd. and Crazy Red’s Mobile Homes (together, “Shipley”), retailers owned by one of the Company’s significant shareholders, purchase manufactured homes from the Company. Accounts receivable balances due from Shipley were $
AmeriCasa Solutions, LLC and its affiliates ("AmeriCasa") are the seller entities from which the Company acquired substantially all of the assets of AmeriCasa's business in November 2025 pursuant to the Asset and Membership Interest Purchase Agreement dated October 30, 2025, as amended. The Company and AmeriCasa continue to reconcile amounts arising from operations of the acquired business between the November 1, 2025 effective date and March 31, 2026. As of March 31, 2026, the Company had recorded approximately $
17. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through May 7, 2026, the date these unaudited financial statements were available to be issued. Other than the matter described below, the Company is not aware of any subsequent events that would require recognition or disclosure in these unaudited financial statements.
23
AmeriCasa Litigation — Subsequent Developments
As described in Note 13 — Commitments and Contingencies and in Part II, Item 1, Legal Proceedings, of this Quarterly Report on Form 10-Q, on March 13, 2026, the Company filed an action in the District Court of Tarrant County, Texas against the seller entities and certain individuals related to the Company's November 2025 acquisition of substantially all of the assets of AmeriCasa Solutions, LLC and its affiliates.
On April 7, 2026, the Company filed an Amended Petition and Application for Temporary Restraining Order, Temporary Injunction, and Permanent Injunction. On April 10, 2026, the District Court declined to issue the temporary restraining order, citing the availability of an adequate remedy at law. The Company's application for temporary and permanent injunctive relief, along with its claims for damages and other relief, remains pending.
On April 16, 2026, the seller defendants removed the matter to the Texas Business Court, Eighth Division (Cause No. 26-BC08B-0013), where it is now pending. On April 20, 2026, the seller defendants filed an answer asserting affirmative defenses and counterclaims against the Company. The counterclaims allege breach of contract (including alleged underpayment of the purchase price under the Asset and Membership Interest Purchase Agreement and alleged failure to honor assumed contracts), unjust enrichment, constructive termination of Norman Newton’s employment, and fraud, and seek monetary damages stated as $
The Company does not believe that the counterclaims, even if resolved adversely to the Company, would result in a loss that is material to the Company's financial position, liquidity, or results of operations. The Company has not accrued a loss contingency with respect to the counterclaims.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the financial statements and accompanying notes and the information contained in other sections of this Form 10-Q. It contains forward looking statements that involve risks and uncertainties, and is based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those anticipated by our management in these forward looking statements as a result of various factors, including those discussed in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025, particularly under the heading “Risk Factors.” Dollar amounts are in thousands unless otherwise noted.
Overview
We build, sell and finance manufactured homes and “Tiny Houses” that are distributed through a network of independent retailers and company-owned stores and are sold directly to manufactured housing communities. We are one of the largest producers of manufactured homes in the United States. With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 395 to 2,667 square feet consisting of 1 to 5 bedrooms, with 1 to 31/2 bathrooms. Our homes range in price, at retail, from approximately $47,000 to $200,000. For the three months ended March 31, 2026 and 2025 we sold 312 (consisting of 364 floors) and 350 units (consisting of 427 floors) (which are entire homes or single floors that are combined to create complete homes), respectively.
We have one reportable segment. All of our activities are interrelated, and each activity is dependent and assessed based on how each of the activities of our company supports the others. For example, the sale of manufactured homes includes coordinating or providing transportation for dealers. We also provide financing options for customers to facilitate home sales. Accordingly, all significant operating and strategic decisions by the co-chief operating decision makers, the Executive Chairman and Chief Executive Officer, are based upon analyses of our company as one operating segment.
We believe our company is one of the most vertically integrated in the manufactured housing industry, allowing us to offer a complete solution to our customers. We manufacture custom-made homes using quality materials, distribute those homes through our expansive network of independent retailers and company-owned distribution locations and provide tailored financing solutions for our customers. Our homes are constructed in the United States at one of our three manufacturing facilities in accordance with the construction and safety standards of the U.S. Department of Housing and Urban Development (“HUD”). Our factories employ high-volume production techniques that allow us to produce up to, on average, approximately 70 home sections, or 60 fully-completed homes depending on product mix, in total per week. We use quality materials and operate our own component manufacturing facilities for many of the items used in the construction of our homes. Each home can be configured according to a variety of floor plans and equipped with features such as fireplaces, central air conditioning and state-of-the-art kitchens.
Our homes are marketed under our premier “Legacy” brand name and currently are sold primarily across 15 states through a large network of independent retail locations, 14 company-owned retail locations and through direct sales to owners of manufactured home communities. Our 14 company-owned retail locations, including 13 Heritage Housing stores and one Tiny House Outlet store exclusively sell our homes. One company-owned location operates under the AmeriCasa name and sells both our homes and those of several other manufacturers.
For the three months ended March 31, 2026, approximately 42% of our manufactured homes were sold in Texas, followed by 7% per-state in North Carolina, Kentucky, and Ohio, 6% in Florida, and 4% per-state in Oklahoma, Georgia, and New Mexico.
We offer three types of financing solutions to our customers. We provide inventory financing for our independent retailers who purchase homes from us and then sell them to consumers. We provide consumer financing for our products which are sold to end-users through both independent and company-owned retail locations. We also provide financing solutions to manufactured housing community owners that buy our products for use in their manufactured housing communities. Our ability to offer competitive financing options at our retail locations provides us
25
with several competitive advantages and allows us to capture sales which may not have otherwise occurred without our ability to offer consumer financing.
Factors Affecting Our Performance
We believe that the growth of our business and our future success depend on various opportunities, challenges, trends and other factors, including the following:
| ● | We have acquired several properties in our market area for the purpose of developing manufactured housing communities and subdivisions. As of March 31, 2026, these properties include the following (in thousands): |
Location | | Description | Date of Acquisition | | Land | | Improvements | | Total | ||||
Bastrop County, Texas |
| 368 Acres |
| April 2018 | $ | 4,215 | $ | 26,114 | $ | 30,329 | |||
Bexar County, Texas | | 69 Acres | | November 2018 | | 842 | | 138 | | 980 | |||
Horseshoe Bay, Texas | 38 Acres |
| Various 2018-2019 |
| 1,212 |
| 2,455 |
| 3,667 | ||||
Johnson County, Texas | 91.5 Acres |
| July 2019 |
| 449 |
| (11) |
| 438 | ||||
Venus, Texas | 50 Acres |
| August 2019 |
| 422 |
| 52 |
| 474 | ||||
Wise County, Texas | 81.5 Acres | September 2020 | 889 | - | 889 | ||||||||
Bexar County, Texas | 233 Acres | February 2021 | 1,550 | 556 | 2,106 | ||||||||
Richland, Mississippi (1) | 22 Acres | February 2024 | 1,141 | 554 | 1,695 | ||||||||
Bonham, Texas | 124.71 Acres | December 2024 & Sept 2025 | 1,826 | - | 1,826 | ||||||||
Balch Springs, Texas (2) | 7.47 Acres | December 2024 & July 2025 | 450 | - | 450 | ||||||||
Austin, Texas (Travis County) | 1.52 Acres | June 2025 | 2,077 | 60 | 2,137 | ||||||||
$ | 15,073 | $ | 29,918 | $ | 44,991 | ||||||||
| (1) | Land and improvement values do not include the value of Company owned homes located in this community. |
| (2) | Decrease in total land is due to a partial land sale. |
| ● | We also may provide financing solutions to certain manufactured housing community-owner customers in a manner that includes developing new sites for products in or near urban locations where there is a shortage of sites to place our products. These solutions are structured to give us an attractive return on investment when coupled with the gross margin we expect to make on products specifically targeted for sale to these new manufactured housing communities. |
| ● | During the first quarter of 2026, U.S. inflation remained above the Federal Reserve's long-term target. The annual rate of inflation reached 3.3% in March 2026, up from 2.4% in February, due in significant part to a sharp rise in energy prices following geopolitical events in the Middle East, with core inflation (excluding food and energy) at 2.6%. Our ability to maintain gross margins can be adversely impacted by sudden increases in specific costs, such as raw materials, transportation, and labor. The Federal Reserve held its benchmark interest rate steady at its March 2026 meeting following three rate cuts in late 2025, and average 30-year mortgage rates remained above 6%. Although chattel financing rates for manufactured homes generally move independently of mortgage rates, sustained elevated borrowing costs can affect the ability of home buyers to obtain affordable financing. We continue to explore opportunities to minimize the impact of inflation and elevated borrowing costs on our future profitability. |
| ● | Our financial performance depends on how well we can fulfill orders from dealers and customers for our manufactured homes. Our Georgia facility has room to grow, and with additional investment, we can expand capacity to produce more homes. Sustained growth requires accurate forecasting across several dimensions: the volume of business we pursue and accept, our product mix, production scheduling, and the management of inventory, equipment, and staffing levels. We continue to evaluate both organic expansion and acquisition opportunities to add capacity in regions where demand is strongest. |
26
| ● | During the first quarter of 2026, the Company received a non-refundable advance deposit of approximately $7.1 million from a single customer in connection with a large order of manufactured homes intended for use as workforce housing. Production of the related units commenced during the first quarter of 2026 and no units had shipped as of March 31, 2026. Deliveries are expected to begin during the second quarter of 2026, with substantially all of the related product sales expected to be recognized during the remainder of 2026 upon delivery and transfer of title of the units. The Company's ability to fulfill this order on schedule depends on production capacity, raw material availability, and other factors discussed elsewhere in this Quarterly Report. |
| ● | During the first quarter of 2026, the Company continued to experience elevated input costs attributable in part to tariffs on imported goods, including goods imported from China. Certain materials and components used in the manufacture of our homes — including electrical fixtures, hardware, appliances, and other finished products — are sourced either directly from China or through domestic suppliers affected by these tariffs. The U.S. tariff environment evolved significantly during the quarter and shortly thereafter. In February 2026, the U.S. Supreme Court held that the International Emergency Economic Powers Act ("IEEPA") did not authorize certain of the emergency tariffs imposed in 2025, and U.S. Customs and Border Protection began winding down collection of those duties. The U.S. Trade Representative subsequently initiated new Section 301 investigations in March 2026 that could provide an alternative legal basis for tariffs on imports from China and other trading partners. In addition, effective April 6, 2026, additional Section 232 duties were imposed on aluminum, steel, and copper products and their derivatives, which are inputs used by certain of our suppliers. Pursuant to the November 2025 U.S.–China understanding, the lowered reciprocal tariff rate on Chinese imports has been extended through November 10, 2026, but combined effective rates on most Chinese-origin goods remain materially above pre-2025 levels. The resulting cost pressures have continued to weigh on our gross margins and may continue to do so depending on how these legal and trade-policy developments evolve. Management is taking steps to mitigate these effects through supplier diversification, increased domestic sourcing where practical, and selective price adjustments. The Company is also evaluating its eligibility for refunds of IEEPA duties previously paid in light of the Supreme Court's ruling and the refund procedures recently announced by U.S. Customs and Border Protection. The full impact of the current tariff environment, the outcome of pending Section 301 investigations, and the resolution of refund and litigation matters remain uncertain and could affect our cost structure and profitability in future periods. |
27
Results of Operations
The following discussion should be read in conjunction with the information set forth in the financial statements and the accompanying notes appearing elsewhere in this Form 10-Q.
Comparison of Three Months ended March 31, 2026 and 2025 (in thousands)
Three months ended | | |
| |||||||||
March 31, | ||||||||||||
| 2026 | | 2025 | | $ change | | % change |
| ||||
Net revenue: | ||||||||||||
Product sales | $ | 21,550 | $ | 24,290 | $ | (2,740) |
| (11.3) | % | |||
Consumer, MHP and dealer loans interest |
| 11,318 |
| 10,655 |
| 663 |
| 6.2 | % | |||
Other |
| 1,498 |
| 725 |
| 773 |
| 106.6 | % | |||
Total net revenue |
| 34,366 |
| 35,670 |
| (1,304) |
| (3.7) | % | |||
Operating expenses: |
| |
| |
| |
| | ||||
Cost of product sales |
| 14,936 |
| 17,192 |
| (2,256) |
| (13.1) | % | |||
Cost of other sales | 1,201 |
| 515 | 686 | 133.2 | % | ||||||
Selling, general administrative expenses |
| 5,840 |
| 6,372 |
| (532) |
| (8.3) | % | |||
Total operating expenses | 21,977 | 24,079 | (2,102) | (8.7) | % | |||||||
Income from operations |
| 12,389 |
| 11,591 |
| 798 |
| 6.9 | % | |||
Other income (expense) |
| |
| |
| |
| | ||||
Non‑operating interest income |
| 356 |
| 467 |
| (111) |
| (23.8) | % | |||
Miscellaneous, net |
| 307 |
| 675 |
| (368) |
| (54.5) | % | |||
Interest expense |
| (28) |
| (5) |
| (23) |
| 460.0 | % | |||
Total other income |
| 635 |
| 1,137 |
| (502) |
| (44.2) | % | |||
Income before income tax expense |
| 13,024 |
| 12,728 |
| 296 |
| 2.3 | % | |||
Income tax expense |
| (2,096) |
| (2,452) |
| 356 |
| (14.5) | % | |||
Net income | $ | 10,928 | $ | 10,276 | $ | 652 |
| 6.3 | % | |||
Product sales primarily consist of direct sales, commercial sales, inventory finance sales and retail store sales. Product sales decreased $2.7 million, or 11.3%, during the three months ended March 31, 2026 as compared to the same period in 2025. This decrease was driven by a decrease in unit volumes shipped, primarily in inventory finance sales.
Net revenue attributable to our factory-built housing consisted of the following during the three months ended March 31, 2026, and 2025:
| Three months ended | | |
| ||||||||
March 31, | ||||||||||||
(in thousands) |
| |||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| ||||
Net revenue: |
| |
| |
| |
| | ||||
Product Sales | $ | 21,550 | $ | 24,290 | $ | (2,740) |
| (11.3) | % | |||
Total units sold |
| 312 |
| 350 |
| (38) |
| (10.9) | % | |||
Net revenue per unit sold | $ | 69.1 | $ | 69.4 | $ | (0) |
| (0.5) | % | |||
For the three months ended March 31, 2026, our total product sales decreased by 11.3% as compared to the same period in 2025. The decrease was driven by a decline in unit volume of 10.9% (from 350 units in Q1 2025 to 312 units in Q1 2026), while net revenue per unit (in thousands) was essentially flat at $69.1, compared to $69.4 in Q1 2025. The shift in mix toward retail store sales — which generally carry higher per-unit prices — substantially offset the volume decline. We had increases in direct, commercial, retail, and other product sales, which were more than offset by decreases in inventory finance sales. Inventory finance sales decreased $7.6 million, or 68.3% during the three months ended March 31, 2026 as compared to the same period in 2025. Retail sales increased $2.7 million, or 81.1% during the three months ended March 31, 2026 as compared to the same period in 2025. Mobile home park sales increased $0.8 million, or 12.4% during the three months ended March 31, 2026 as compared to the same period in 2025. Direct sales increased $1.2 million, or 80.2% during the three months ended March 31, 2026 as compared to the same period in 2025.
28
Other product sales increased $0.1 million, or 7.5% during the three months ended March 31, 2026 as compared to the same period in 2025. Our revenue decreased primarily due to a lower volume of unit sales partially offset by an increase in net revenue per unit sold.
Consumer, MHP and dealer loans interest income increased $0.6 million, or 6.2% during the three months ended March 31, 2026 as compared to the same period in 2025, with essentially all of the gain coming from consumer loan portfolio interest as MHP and dealer interest gradually decreased.
Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, portfolio service revenue, park rental income, storage fees, and other miscellaneous income which increased $0.8 million, or 106.6%, during the three months ended March 31, 2026 as compared to the same period in 2025. This increase was primarily due to a $1 million increase in land sales.
The cost of product sales decreased $2.3 million, or 13.1%, during the three months ended March 31, 2026 as compared to the same period in 2025. The decrease in costs is primarily related to the 11.3% decrease in product sales specifically in the Inventory Finance category. The cost of other sales was $1.2 million during the three months ended March 31, 2026.
Inventories, net increased $10.5 million from $39.9 million at December 31, 2025 to $50.4 million at March 31, 2026, driven primarily by an increase in finished goods inventory. The increase in finished goods inventory reflects, in part, units produced during the first quarter of 2026 in connection with the workforce-housing customer order described above for which deliveries are expected to begin during the second quarter of 2026.
Selling, general and administrative expenses decreased $0.5 million, or 8.3%, during the three months ended March 31, 2026 as compared to the same period in 2025. We had a $0.6 million increase in loan portfolio loss expense, and a $0.1 million increase in property tax expense offset by a $0.7 million decrease in payroll health benefit expense, $0.6 million decrease in payroll corp & general expense, and a $0.2 million decrease in legal expense.
Other income decreased $0.5 million, or 44.2%, during the three months ended March 31, 2026 as compared to the same period in 2025. The majority of the decrease came from a $0.3 million fee a customer paid during the three months ended March 31, 2025 for breaking a contract by not purchasing homes.
Income tax decreased $0.4 million during the three months ended March 31, 2026 as compared to the same period in 2025 due to a decrease in income before tax as well as the purchase of tax credits at a discount during the three months ended March 31, 2026. The effective tax rate for the three months ended March 31, 2026 was 16.1% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and federal tax credits purchased at a discount by the Company in the three months ending March 31, 2026. The effective tax rate for the three months ended March 31, 2025 was 19.3%.
29
Liquidity and Capital Resources
Liquidity
We believe that cash flow from operations and cash at March 31, 2026, and availability on our lines of credit will be sufficient to fund our operations and provide for growth for the next 12 to 18 months and into the foreseeable future. See Lines of Credit, below, for additional information.
Cash
We maintain cash balances in bank accounts that may, at times, exceed federally insured limits. We have not incurred any losses from such accounts, and management considers the risk of loss to be minimal. As of March 31, 2026, we had approximately $14.1 million in cash, compared to $8.5 million as of December 31, 2025. We consider all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents.
Cash Flow Activities
Three Months Ended | ||||||
March 31, | ||||||
(in thousands) | ||||||
| 2026 | | 2025 | |||
Net cash provided by operating activities | $ | 6,951 | $ | 4,908 | ||
Net cash used in investing activities | $ | (654) | $ | (1,968) | ||
Net cash used in financing activities | $ | (664) | $ | (675) | ||
Net change in cash | $ | 5,633 | $ | 2,265 | ||
Cash at beginning of period | $ | 8,478 | $ | 1,149 | ||
Cash at end of period | $ | 14,111 | $ | 3,414 | ||
Comparison of Cash Flow Activities from March 31, 2025 to March 31, 2026
Net cash provided by operating activities was $7.0 million during the three months ended March 31, 2026, compared to net cash of $4.9 million provided by operating activities during the three months ended March 31, 2025, an increase of approximately $2.1 million. This change was primarily a result of cash provided from net income of $10.9 million augmented by positive non cash adjustments of $1.4 million. Non-cash adjustments included increases to operating cash due to increased depreciation and amortization expense, provision for accounts and notes receivable, and loss from sale of property offset by decreases to operating cash from amortization of deferred revenue and deferred income taxes. Changes in assets and liabilities reduced net cash provided by operations by $5.4 million. Decreases to net cash provided by operations from changes in assets and liabilities were primarily the result of increases to the consumer loan portfolio, notes receivable MHP portfolio, inventories, and other assets, as well as decreases to accounts payable and accrued liabilities and dealer incentive liability. These were offset by a $5.6 million decrease in accounts receivable primarily related to a federal income tax refund, a decrease in the dealer inventory loan portfolio, and a $9.3 million increase in customer deposits. Approximately $7.1 million of the increase in customer deposits was attributable to a non-refundable advance deposit received during the first quarter of 2026 from a single customer in connection with a large order of manufactured homes intended for use as workforce housing. Production of the related units commenced during the first quarter of 2026, no units had shipped as of March 31, 2026, and deliveries are expected to begin during the second quarter of 2026.
Net cash used in investing activities was $0.7 million for the three months ended March 31, 2026 compared to $2.0 million net cash used in investing activities for the three months ended March 31, 2025. Net cash used in investing activities for the three months ended March 31, 2026 was primarily attributable to $1.5 million used in development of property and purchases of machinery and equipment as well as $0.4 million related to the issuance and modification of notes receivable. This was offset by increases to net cash from investing activities of $1.0 million from the sale of property, $0.2 million from notes receivable collections, and $0.1 million from purchased loan collections.
Net cash used in financing activities was $0.7 million for the three months ended March 31, 2026 compared to $0.7 million net cash used in financing activities for the three months ended March 31, 2025. Net cash used in financing
30
activities for the three months ended March 31, 2026 was primarily attributable to $0.6 million of stock repurchases and net payments of $0.1 million on lines of credit.
On February 6, 2026, our Board of Directors authorized a new stock repurchase program under which the Company may repurchase up to $10.0 million of its outstanding common stock, par value $0.001 per share, from time to time through February 28, 2029. Repurchases may be made in the open market or through privately negotiated transactions, with the timing, manner, price and volume of any repurchases determined by the Company's Executive Chairman and Chief Executive Officer, or either of them, in their sole discretion, based on market conditions, the Company's cash reserves and cash flow, and the relative attractiveness of alternative uses of capital for operations, growth and share repurchases. Open market repurchases under the program are intended to be made in compliance with the non-exclusive safe harbor conditions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Shares repurchased under the program will be held as treasury shares. The program does not obligate the Company to acquire any particular amount of common stock, has no expiration date prior to February 28, 2029, and may be suspended, modified or discontinued at any time without prior notice. The Company has determined that repurchases under the program are permitted under the terms of its existing bank credit facilities and other indebtedness. During the three months ended March 31, 2026, the Company repurchased 30,740 shares of common stock for $573 under this program. As of March 31, 2026, the Company had a remaining authorization of approximately $9.4 million under this program.
Lines of Credit
On July 28, 2023, the Company entered into a Credit Agreement (the “Revolver”), by and among the Company as borrower, the financial institutions from time to time party thereto, as lenders, and Prosperity Bank as administrative agent. The Revolver provides for a four-year senior secured revolving credit facility with an initial commitment of $50 million and an additional $25 million commitment under an accordion feature. The Revolver is secured by the Company’s consumer loans receivables. At the Company's option, borrowings will bear interest at a per annum rate equal to, (i) Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 2.5% or 2.75% based upon the Company's average quarterly borrowings under the Revolver or (ii) a base rate plus an applicable margin of 2.5% or 2.75% based upon the Company's average quarterly borrowings under the Revolver. The Company paid certain arrangement fees and other fees in connection with the Revolver of approximately $271, which were capitalized as unamortized debt issuance costs and included in Prepaid Expenses and Other Current Assets in the accompanying balance sheets and are amortized to interest expense over the life of the Revolver. The Revolver matures July 28, 2027.
For the three months ended March 31, 2026 and 2025, interest expense under the Revolver was $11 and $0, respectively. The outstanding balance of the Revolver as of March 31, 2026 and December 31, 2025 was $0.9 million and $0, respectively. The interest rate in effect as of March 31, 2026 and December 31, 2025 for the Revolver was 6.13% and 6.69%, respectively. The amount of available credit under the Revolver was $49.1 million and $50 million as of March 31, 2026 and December 31, 2025, respectively. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of March 31, 2026, the Company was in compliance with all financial covenants, including that it maintain a maximum leverage ratio of no more than 1.00 to 1.00 and a minimum fixed charge coverage ratio of no less than 1.75 to 1.00.
31
Contractual Obligations
The following table is a summary of contractual cash obligations as of March 31, 2026:
| Payments Due by Period (in thousands) | ||||||||||
|
|
|
|
| |||||||
Contractual Obligations | | Total | | 2026 | | 2027 - 2028 | | 2029 - 2030 | | After 2030 | |
Lines of credit | $ | 899 |
| — |
| 899 |
| — |
| — | |
Operating lease obligations | $ | 1,345 |
| 386 | 670 |
| 195 |
| 94 | ||
Off Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, net sales, results of operations, liquidity or capital expenditures. However, we do have repurchase agreements with financial institutions providing inventory financing for independent retailers of our products. Under these agreements, we have agreed to repurchase homes at declining prices over the term of the agreement. Our obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The maximum amount of our contingent obligations under such repurchase agreements was approximately $1.4 million and $0.8 million as of March 31, 2026 and December 31, 2025, respectively, without reduction for the resale value of the homes. We may be required to honor contingent repurchase obligations in the future and may incur additional expenses as a consequence of these repurchase agreements. We consider our obligations on current contracts to be immaterial and accordingly we have not recorded any reserve for repurchase commitment as of March 31, 2026.
Critical Accounting Estimates
Critical accounting estimates are those that we believe are both significant and require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or conditions. Our critical accounting estimates are identified and described in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our March 31, 2026 Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We are subject to the periodic reporting requirements of the Exchange Act which requires designing disclosure controls and procedures to provide reasonable assurance that information we disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosures.
32
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of such date due to material weaknesses in internal control over financial reporting.
In light of the conclusion that our disclosure controls and procedures were not effective as of March 31, 2026, we have applied procedures and processes as necessary to ensure the reliability of our financial reporting in regard to this quarterly report. Accordingly, the Company believes, based on its knowledge, that: (i) this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this report; and (ii) the financial statements, and other financial information included in this quarterly report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this quarterly report.
Material Weaknesses in Internal Control Over Financial Reporting
As previously disclosed in our Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2025, we identified material weaknesses in our internal control over financial reporting during the preparation of our financial statements. Under standards established by the PCAOB, a material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
The material weaknesses in financial reporting as of March 31, 2026 are summarized as follows:
| ● | We determined that we have not sufficiently designed, implemented, monitored or tested control activities, and we have not adequately maintained documentation or performed reviews and approvals of certain of these control activities; |
| ● | We determined that we do not have sufficient qualified accounting personnel to support the preparation of financial statements that comply with U.S. GAAP and SEC reporting requirements; and |
| ● | We determined that we have not sufficiently designed, implemented or maintained information technology general controls over in-scope business processes and financial reporting systems. |
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the first quarter of fiscal 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple errors, mistakes or fraud. Additionally, controls can be circumvented by individuals or groups of persons or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements in our public reports due to error or fraud may occur and not be detected.
33
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On March 13, 2026, Legacy Housing Corporation (the "Company") filed an Original Petition in the District Court of Tarrant County, Texas, captioned Legacy Housing Corporation v. AmeriCasa Solutions, LLC, et al. (Cause No. 342-375661-26). The defendants are AmeriCasa Solutions, LLC, AmeriCasa Dream Homes, Inc. (f/k/a Mobile Housing of Texas, Inc.), First Home Financial, LLC (f/k/a MHOT Financial, LLC), MHOT Insurance Agency LLC, AmeriCasa Communities LLC, AmeriCasa Asset Management, LLC, and Newton Visioncorp2, LLC (collectively, the "Seller Entities"); Norman Newton, the former principal of the Seller Entities, who served as the Company's Chief Revenue Officer following the closing and resigned from that position effective February 11, 2026; and Gregg T. Reyes. The action arises out of the Company's November 17, 2025 acquisition of substantially all of the assets of the Seller Entities pursuant to an Asset and Membership Interest Purchase Agreement dated October 30, 2025, as amended (the "APA").
On April 7, 2026, the Company filed an Amended Petition and Application for Temporary Restraining Order, Temporary Injunction, and Permanent Injunction (the "Amended Petition"). The Amended Petition added AmeriCasa IP Holdings, LLC as a defendant and seeks, among other things, an order requiring certain of the defendants to account for and segregate specified categories of funds attributable to the acquired assets, including escrow balances, consumer loan payments received on or after November 1, 2025, sales proceeds from inventory at the Houston dealership, insurance commissions, and operational credits.
The Amended Petition asserts claims for fraudulent inducement and fraud, fraud by omission, statutory fraud in a real estate and stock transaction, breach of contract (under both the APA and Mr. Newton's employment agreement with the Company), conversion, money had and received, tortious interference with employment relationships, and declaratory judgment. The Company's claims relate principally to alleged misrepresentations and omissions made in connection with the APA regarding the historical performance and financial condition of the acquired assets and to the alleged post-closing misappropriation of receipts attributable to the acquired assets. The Company seeks monetary damages in excess of $1.0 million, exemplary damages, attorneys' fees, pre- and post-judgment interest, declaratory and injunctive relief, and, in the alternative, specific performance.
On April 10, 2026, the District Court declined to issue the temporary restraining order requested by the Company, citing the availability of an adequate remedy at law. The Company's application for temporary and permanent injunctive relief, along with its claims for damages and other relief, remains pending.
On April 16, 2026, the seller defendants removed the matter to the Texas Business Court, Eighth Division (Cause No. 26-BC08B-0013). On April 20, 2026, the seller defendants filed an answer asserting affirmative defenses and counterclaims against the Company. The counterclaims allege breach of contract (including alleged underpayment of the purchase price under the APA and alleged failure to honor assumed contracts), unjust enrichment, constructive termination of Mr. Newton's employment, and fraud, and seek monetary damages stated as $1.0 million or more, exemplary damages, and attorneys' fees. The Company believes the counterclaims are without merit and intends to defend against them.
The Company believes its claims are meritorious and intends to pursue them. The litigation is in its early stages, and the Company is unable at this time to predict the outcome or to reasonably estimate the amount or range of any potential loss or recovery. An adverse outcome in the litigation, or further developments concerning the underlying facts, could result in an adjustment to the provisional amounts recorded in connection with the acquisition, or both, in a future period. For additional information, see Note 13 — Commitments and Contingencies, Note 16 — Related Party Transactions, and Note 17 — Subsequent Events to the Company's unaudited financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
34
Item 1A. Risk Factors.
You should carefully consider the factors discussed under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026, as such factors could materially affect our business, financial condition and future results. The risks described in our Annual Report are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may have a material adverse impact on our business, financial condition or results of operations. There have been no material changes to the risk factors identified in our most recent Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Repurchases of Equity Securities
The following table sets forth information regarding purchases of our common stock by us during the three months ended March 31, 2026:
Period | Total number of shares purchased (1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or program | Approximate dollar value of shares that may yet be purchased under the plans or programs | ||||||
January 1-31, 2026 | — | $ | — | — | $ | — | ||||
February 1-28, 2026 | — | — | — | — | ||||||
March 1-31, 2026 | 30,740 | 18.63 | — | — | ||||||
(1) The 30,740 shares repurchased during March 2026 were repurchased pursuant to a stock repurchase program approved by the Board of Directors on February 6, 2026 authorizing the repurchase of up to $10.0 million of the Company's outstanding common stock through February 28, 2029. The Repurchase Program had not been publicly announced as of March 31, 2026. As of March 31, 2026, approximately $9.4 million remained available for future repurchases under the Repurchase Program. For additional information, see Note 15 — Earnings Per Share to the unaudited financial statements included in Part I, Item 1 of this Quarterly Report.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
None
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended
35
Item 6. Exhibits.
Exhibit No. | | Description |
EXHIBIT 3.3 | Bylaws of Legacy Housing Corporation (formerly Legacy Housing Merger Sub, Inc.). (1) | |
EXHIBIT 3.4 | Amendment No. 1 to the Bylaws of Legacy Housing Corporation. (1) | |
EXHIBIT 3.5 | Amendment No. 2 to the Bylaws of Legacy Housing Corporation. (1) | |
EXHIBIT 3.6 | Amendment No. 3 to the Bylaws of Legacy Housing Corporation. (1) | |
EXHIBIT 3.7 | ||
EXHIBIT 3.8 | ||
EXHIBIT 4.1 | ||
EXHIBIT 4.2 | ||
EXHIBIT 31.1 * | Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer. | |
EXHIBIT 31.2 * | Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer. | |
EXHIBIT 32.1 ** | ||
EXHIBIT 32.2 ** | ||
EXHIBIT 101.INS * | XBRL Instance Document. | |
EXHIBIT 101.SCH * | Inline XBRL Taxonomy Extension Schema Document. | |
EXHIBIT 101.CAL * | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
EXHIBIT 101.DEF * | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
EXHIBIT 101.LAB * | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
EXHIBIT 101.PRE * | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Filed with this Form 10-Q.
** Furnished with Form 10-Q.
| (1) | Incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 3, 2025. |
| (2) | Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026. |
| (3) | Incorporated herein by reference to the Company’s Quarterly Report Form 10-Q for the quarter ended September 30, 2025 filed with the SEC on November 7, 2025. |
| (4) | Incorporated herein by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on November 9, 2018 |
36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LEGACY HOUSING CORPORATION | ||
Date: May 7, 2026 | By: | /s/ KENNETH E. SHIPLEY |
Kenneth E. Shipley | ||
Chief Executive Officer (Principal Executive Officer) | ||
Date: May 7, 2026 | By: | /s/ JON A. LANGBERT |
Jon A. Langbert | ||
Chief Financial Officer (Principal Financial and Accounting Officer) | ||
37
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kenneth E. Shipley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Legacy Housing Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 7, 2026 | /s/ Kenneth E. Shipley |
| Name: Kenneth Shipley |
| Title: Interim Chief Executive Officer (Principal Executive Officer) |
| |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ronald C. Arrington, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Legacy Housing Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 7, 2026 | /s/ Ronald C. Arrington |
| Name: Ronald C. Arrington |
| Title: Interim Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Legacy Housing Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth E. Shipley, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: May 7, 2026 | /s/ Kenneth E. Shipley |
| Name: Kenneth E. Shipley |
| Title: Interim Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Legacy Housing Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald C. Arrington, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: May 7, 2026 | /s/ Ronald C. Arrington |
| Name: Ronald C. Arrington |
| Title: Interim Chief Financial Officer (Principal Financial and Accounting Officer) |