Legacy Housing Corp

Previous wording

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.

Current wording

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.

Previous wording

For the three months ended June 30, 2026, total net revenue was $66.3 million, an increase of 32.3% over the same period in 2025, and net income was $23.5 million, or $0.99 per diluted share, compared to net income of $14.7 million, or $0.60 per diluted share, in the prior-year quarter. Overall net income increased $8.8 million for the quarter, up 59.8%. The increase was driven primarily by a 40.0% increase in product sales, reflecting the commencement of deliveries under a large workforce-housing order that contributed approximately $25.5 million of product sales during the quarter, partially offset by lower inventory finance sales. For the six months ended June 30, 2026, total net revenue was $100.7 million and net income was $34.4 million, or $1.44 per diluted share. We ended the quarter with $29.0 million of cash and no borrowings outstanding under our $50.0 million revolving credit facility. Gross margin during the quarter benefited from approximately $0.7 million of tariff refunds, although uncertainty regarding future tariff levels remains. We continue to see growing demand for workforce housing across our markets and view our ability to recruit and retain trained labor as our principal near-term constraint on growth.

Current wording

For the three months ended September 30, 2026, total net revenue was $69.7 million, an increase of 72.2% over the same period in 2025, and net income was $20.1 million, or $0.85 per diluted share, compared to net income of $8.6 million, or $0.35 per diluted share, in the prior-year quarter. Overall net income increased $11.5 million for the quarter, up 132.8%. The increase was driven primarily by a 91.7% increase of $26.4 million in product sales over the same period in 2025, reflecting the impact of deliveries under workforce housing orders, which contributed $30.6 million of product sales during the quarter, partially offset by a decrease in inventory finance sales of $3.2 million. For the nine months ended September 30, 2026, total net revenue was $170.4 million and net income was $54.5 million, or $2.29 per diluted share. We ended the quarter with $30.8 million in cash, $5.3 million in short-term investments, and no borrowings outstanding under our $50.0 million revolving credit facility.

Previous wording

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 3½ bathrooms. Our homes range in price, at retail, from approximately $47,000 to $200,000. For the three months ended June 30, 2026 and 2025 we sold 718 (consisting of 774 floors) and 564 units (consisting of 697 floors) (which are entire homes or single floors that are combined to create complete homes), respectively. For the six months ended June 30, 2026 and 2025 we sold 1,030 (consisting of 1,138 floors) and 914 units (consisting of 1,124 floors), respectively.

Current wording

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 3½ bathrooms. Our homes range in price, at retail, from approximately $47,000 to $200,000. For the three months ended September 30, 2026 and 2025, we sold 635 (consisting of 687 floors) and 420 units (consisting of 686 floors), respectively. For the nine months ended September 30, 2026 and 2025, we sold 1,665 (consisting of 1,825 floors) and 1,334 units (consisting of 1,811 floors), respectively.

Previous wording

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. While substantially all of the homes we sell are constructed at our three manufacturing facilities, we also purchase a limited number of homes at wholesale from third-party manufacturers for resale. These purchased homes have historically represented approximately 50 units per quarter but exceeded 100 units during the three months ended June 30, 2026.

Current wording

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. While substantially all of the homes we sell are constructed at our three manufacturing facilities, we also purchase a limited number of homes at wholesale from third-party manufacturers for resale authorized to build proprietary company models. The Company sold 30 purchased homes for a total of $1.5 million for the three months ended September 30, 2026. The Company sold 176 purchased homes for a total of $8.2 million for the nine months ended September 30, 2026.

Previous wording

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 consist of 13 Heritage Housing stores, which exclusively sell our homes, and one location that operates under the AmeriCasa name and sells both our homes and those of several other manufacturers.

Current wording

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 consist of 13 Heritage Housing stores, which exclusively sell our homes, and one location that operates under the AmeriCasa name.

Previous wording

For the six months ended June 30, 2026, approximately 65% of our manufactured homes were sold in Texas, followed by 4% per state in Ohio and Georgia, and 3% per state in Oklahoma, North Carolina, Kansas, Florida, and Illinois. The remaining 12% sold are from thirteen other states.

Current wording

For the nine months ended September 30, 2026, approximately 71% of our manufactured homes were sold in Texas, followed by 4% in Georgia, 3% per state in Oklahoma and Ohio, and 2% per state in Illinois, North Carolina, Florida, Kansas, New Mexico, and Missouri. The remaining 7% sold are in twelve other states.

Previous wording

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 communities. Our ability to offer competitive financing options at our retail locations provides us with several competitive advantages and allows us to capture sales which may not have otherwise occurred without our ability to offer consumer financing.

Current wording

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 communities. Our ability to offer competitive financing options at our retail locations provides us with several competitive advantages and allows us to capture sales which may not have otherwise occurred without our ability to offer consumer financing.

Previous wording

On July 17, 2026, Curtis D. Hodgson notified the Company of his decision to retire from his positions as Executive Chairman and as a member of the Board of Directors, effective July 21, 2026 at 5:00 p.m. Central Time. The Board of Directors has not yet named a successor Chairman or appointed a replacement director, and the timing of any such action has not been determined. Kenneth E. Shipley continues to serve as the Company’s Chief Executive Officer. Prior to Mr. Hodgson’s retirement, Mr. Hodgson and Mr. Shipley together served as the Company’s co-chief operating decision makers; following his retirement, Mr. Shipley serves as the Company’s sole chief operating decision maker. This change did not affect the Company’s single reportable segment or the manner in which the Company reviews financial and operating performance and allocates resources. The Company does not expect Mr. Hodgson’s retirement to have a material effect on its results of operations, financial position, or liquidity. See Note 1 — Nature of Operations (Segment Reporting) and Note 17 — Subsequent Events.

Current wording

On July 17, 2026, Curtis D. Hodgson notified the Company of his decision to retire from his positions as Executive Chairman and as a member of the Board of Directors, effective July 21. On August 13, 2026, the Board of Directors appointed Kenneth E. Shipley, a co-founder of the Company and a member of the Board, as Chairman of the Board and Chief Executive Officer, effective immediately.

Previous wording

During the second quarter of 2026, U.S. inflation remained above the Federal Reserve's long-term target but moderated late in the quarter. After rising to a three-year high of 4.2% in May 2026 — driven in significant part by a sharp increase in energy prices following geopolitical events in the Middle East — the annual rate of inflation eased to 3.5% in June 2026 as energy prices declined, 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 June 2026 meeting, 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.

Current wording

During the third quarter of 2026, U.S. inflation remained above the Federal Reserve's long-term target but moderated late in the quarter. After rising to a three-year high of 4.2% in May 2026 — driven in significant part by a sharp increase in energy prices following geopolitical events in the Middle East — the annual rate of inflation eased to 3.7% in September 2026 as energy prices declined, 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. In September 2026, the Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75% to 4.00%, its first increase since 2023, and average 30-year mortgage rates rose above 7% by the end of the quarter. 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.

Previous wording

given the number of projects currently underway or planned in those areas, we believe there is a meaningful opportunity for additional orders of this type. The Company's ability to fulfill this order, and any future orders, on schedule depends on production capacity, the availability of trained labor, raw material availability, and other factors discussed elsewhere in this Quarterly Report.

Current wording

Workforce housing is receiving significant attention across our market areas and given the number of projects currently underway or planned in those areas, we believe there is a meaningful opportunity for additional orders of this type. The Company's ability to fulfill these orders, and any future orders, on schedule depends on production capacity, the availability of trained labor, and raw material availability.

Previous wording

During the second quarter of 2026, the Company continued to incur 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. In contrast to the significant volatility in tariff rates during the first half of 2025, rates remained essentially stable between the first and second quarters of 2026, which improved our ability to forecast input costs. The U.S. tariff environment nonetheless continued to evolve. 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. During the second quarter, the Company applied for and received tariff refunds of approximately $0.7 million from U.S. Customs and Border Protection in connection with the IEEPA ruling, which benefited gross margin during the quarter. Notwithstanding these refunds and the recent stability in rates, considerable uncertainty remains as to the ultimate level and legal basis of tariffs, and the resulting cost pressures may continue to weigh on our gross margins depending on how these legal and trade-policy developments evolve. Management continues to take steps to mitigate these effects through supplier diversification, increased domestic sourcing where practical, and selective price adjustments.

Current wording

During the third quarter of 2026, the Company continued to incur elevated input costs attributable in part to tariffs on imported goods, including goods imported from China. Certain materials and components used in our homes, including electrical fixtures, hardware, appliances, and other finished products, are sourced directly from China or through domestic suppliers affected by these tariffs. Approximately 9.0% of the Company’s material costs, or $2.7 thousand per home produced, include raw materials purchased internationally, and tariffs on these materials increased the average material cost per home by an additional $0.7 thousand during the nine months ended September 30, 2026. To mitigate these effects, the Company implemented price increases averaging approximately 3.8% over the nine months and continues to pursue supplier diversification and increased domestic sourcing where practical.

Previous wording

Product sales primarily consist of direct sales, commercial sales, inventory finance sales, retail store sales and workforce housing sales. Product sales increased $15.4 million, or 40.0%, during the three months ended June 30, 2026 as compared to the same period in 2025. This increase was driven primarily by the commencement of deliveries under the workforce-housing order described above, together with higher commercial sales, partially offset by lower inventory finance sales.

Current wording

Product sales primarily consist of direct sales, commercial sales, inventory finance sales, retail store sales and workforce housing sales. Product sales increased $26.4 million, or 91.7%, during the three months ended September 30, 2026 as compared to the same period in 2025. This increase was driven primarily by workforce housing sales, together with higher retail store and other product sales, partially offset by lower inventory finance, direct and commercial sales.

Previous wording

For the three months ended June 30, 2026, our total product sales increased by 40.0% as compared to the same period in 2025. The increase reflected both an increase in unit volume of 27.3% (from 564 units in Q2 2025 to 718 units in Q2 2026) and an increase in net revenue per unit to $74.9 thousand from $68.1 thousand in Q2 2025, the latter driven by a shift in product mix. The most significant driver was the commencement of deliveries under the workforce-housing order, which contributed $25.5 million of product sales in the quarter, compared to $1.1 million in the prior-year period. Mobile home park (commercial) sales increased $1.5 million, or 12.5%, and other product sales increased $0.9 million, or 39.1%. These increases were partially offset by inventory finance sales, which decreased $10.1 million, or 73.6%, direct

Current wording

For the three months ended September 30, 2026, our total product sales increased by 91.7% as compared to the same period in 2025. The increase reflected both an increase in unit volume of 51.2% (from 420 units in Q3 2025 to 635 units in Q3 2026) and an increase in net revenue per unit to $86.9 thousand from $68.5 thousand in Q3 2025, the latter driven by a shift in product mix, as workforce housing units are larger, higher-specification and more complex to build than our traditional homes. The most significant driver was workforce housing sales, which contributed $30.6 million of product sales in the quarter compared to $2.3 million in the prior-year period. Other product sales increased $1.8 million, or 96.2%, and retail store sales increased $1.1 million, or 17.7%. These increases were partially offset by inventory finance sales, which decreased $3.2 million, or 51.6%, direct sales, which decreased $0.9 million, or 42.1%, and commercial sales,

Previous wording

Consumer, MHP and dealer loans interest income increased $0.6 million, or 5.4%, during the three months ended June 30, 2026 as compared to the same period in 2025, with the increase driven primarily by consumer loan portfolio interest.

Current wording

Consumer, MHP and dealer loans interest income increased $0.4 million, or 4.0%, during the three months ended September 30, 2026 as compared to the same period in 2025, with the increase driven primarily by consumer loan portfolio interest.

Previous wording

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 $0.2 million, or 25.0%, during the three months ended June 30, 2026 as compared to the same period in 2025, primarily due to higher land sales associated with the sale of a small land parcel in Celina, TX.

Current wording

Other revenue primarily consists of consignment fees, commercial lease rents, land sales, portfolio service revenue, park rental income, storage fees, and other miscellaneous income, which increased $2.4 million, or 300.0%, during the three months ended September 30, 2026, as compared to the same period in 2025. This increase was primarily due to the gain on the sale of a mobile home park the Company had acquired as collateral in settlement of notes receivable.

Previous wording

Selling, general and administrative expenses increased $1.2 million, or 21.1%, during the three months ended June 30, 2026 as compared to the same period in 2025. The increase was driven primarily by a $0.9 million increase in professional and consulting fees, a $0.2 million increase in Heritage Housing payroll, a $0.2 million increase in service and warranty costs, and a combined $0.3 million increase in corporate general payroll and healthcare benefits expense, partially offset by a $0.3 million decrease in incentive compensation and a $0.1 million decrease in property tax.

Current wording

Selling, general and administrative expenses increased $1.3 million, or 20.3%, during the three months ended September 30, 2026 as compared to the same period in 2025. The increase was driven primarily by a $0.6 million increase in service and warranty costs, a $0.5 million increase in professional and consulting fees, a $0.1 million increase in Heritage Housing payroll, a $0.3 million increase in legal fees, and a combined $0.2 million increase in corporate general payroll and healthcare benefits expense, partially offset by a $0.2 million decrease in SG&A overhead allocation and $0.2 million decrease in advertising and shows expense.

Previous wording

During the second quarter of 2026, the Company began presenting provision for loan loss as a separate line item, previously included in selling, general and administrative expenses. Provision for loan loss was $(0.6) million and $1.1 million for the three months ended June 30, 2026 and 2025, respectively.

Current wording

During the second quarter of 2026, the Company began presenting provision for loan loss as a separate line item, previously included in selling, general and administrative expenses. Provision for loan loss was $2.1 million and $1.0 million for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

Income tax expense decreased $0.1 million during the three months ended June 30, 2026 as compared to the same period in 2025. The effective tax rate for the three months ended June 30, 2026 was 11.2%, compared to 17.3% for the same period in 2025, and differs from the federal statutory rate of 21% primarily due to the federal energy-efficient-home tax credit and the reversal of certain uncertain tax position accruals during the quarter.

Current wording

Income tax expense increased $2.4 million during the three months ended September 30, 2026 as compared to the same period in 2025. The effective tax rate for the three months ended September 30, 2026 was 16.6%, compared to 15.7% for the same period in 2025, and differs from the federal statutory rate of 21% primarily due to the Section 45L new energy efficient home credit and the discrete treatment of the discount on transferable tax credits.

Previous wording

Comparison of Six Months ended June 30, 2026 and 2025 (in thousands)

Current wording

Comparison of Nine Months ended September 30, 2026 and 2025 (in thousands)

Previous wording

Product sales increased $12.6 million, or 20.2%, during the six months ended June 30, 2026 as compared to the same period in 2025. This increase was driven primarily by the commencement of deliveries under the workforce-housing order and by higher commercial and retail store sales, partially offset by lower inventory finance sales.

Current wording

Product sales increased $39.0 million, or 42.7%, during the nine months ended September 30, 2026 as compared to the same period in 2025. This increase was driven primarily by workforce housing sales and by higher commercial and retail store sales, partially offset by lower inventory finance sales

Previous wording

Net revenue attributable to our factory-built housing consisted of the following during the six months ended June 30, 2026 and 2025:

Current wording

Net revenue attributable to our factory-built housing consisted of the following during the nine months ended September 30, 2026 and 2025:

Previous wording

For the six months ended June 30, 2026, product sales increased $12.6 million, or 20.2%, reflecting a 12.7% increase in units sold and a 6.6% increase in net revenue per unit, the latter driven by a shift in mix toward higher-value units, including units delivered under the workforce-housing order. The commencement of deliveries under that order contributed $27.2 million of product sales, compared to $1.2 million in the prior-year period. Commercial sales increased $1.6 million, or 8.6%, retail store sales increased $2.2 million, or 20.5%, and other product sales increased $1.1 million, or 26.8%. These increases were partially offset by inventory finance sales, which decreased $17.7 million, or 71.5%, and direct sales, which decreased $0.6 million, or 15.5%, each during the six months ended June 30, 2026 as compared to the same period in 2025.

Current wording

For the nine months ended September 30, 2026, product sales increased $39.0 million, or 42.7%, reflecting a 24.8% increase in units sold and a 14.3% increase in net revenue per unit, the latter driven by a shift in mix toward higher-value units, including units delivered under the workforce housing orders. Workforce housing sales were $57.9 million for the nine months, compared to $3.5 million in the prior-year period. Commercial sales increased $0.9 million, or 3.3%, retail store sales increased $3.2 million, or 19.5%, and other product sales increased $2.9 million, or 49.2%. These increases were partially offset by inventory finance sales, which decreased $20.9 million, or 67.5%, and direct sales, which decreased $1.5 million, or 25.4%, each during the nine months ended September 30, 2026 as compared to the same period in 2025.

Previous wording

Consumer, MHP and dealer loans interest income increased $1.3 million, or 5.8%, during the six months ended June 30, 2026 as compared to the same period in 2025, with the increase driven primarily by consumer loan portfolio interest, while MHP and dealer interest were essentially flat.

Current wording

Consumer, MHP and dealer loans interest income increased $1.7 million, or 5.2%, during the nine months ended September 30, 2026 as compared to the same period in 2025, with the increase driven primarily by consumer loan portfolio interest, while MHP and dealer interest were essentially flat.

Previous wording

Other revenue increased $1.0 million, or 61.6%, during the six months ended June 30, 2026 as compared to the same period in 2025. This increase was primarily due to a $1 million increase in land sales compared to the same period in 2025.

Current wording

Other revenue increased $3.4 million, or 140.5%, during the nine months ended September 30, 2026 as compared to the same period in 2025. This increase was primarily due to the gain on the sale of a mobile home park the Company had acquired as collateral in settlement of notes receivable, as well as an additional $1.0 million land sale during the period.

Previous wording

The cost of product sales increased $5.3 million, or 12.3%, during the six months ended June 30, 2026 as compared to the same period in 2025, primarily as a result of the increase in units sold, including deliveries under the workforce-housing order. The cost of other sales was $1.2 million during the six months ended June 30, 2026.

Current wording

The cost of product sales increased $17.2 million, or 26.0%, during the nine months ended September 30, 2026 as compared to the same period in 2025, primarily as a result of the increase in units sold. The cost of other sales were $3.1 million and $1.7 million during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Selling, general and administrative expenses decreased $0.2 million, or 2.1%, during the six months ended June 30, 2026 as compared to the same period in 2025. Increases in Heritage Housing payroll $0.5 million, professional and consulting fees $0.6 million, and depreciation and amortization $0.3 million were substantially offset by decreases in payroll-related healthcare costs $0.5 million, corporate and general payroll $0.4 million, payroll incentive compensation $0.5 million, and service and warranty costs $0.2 million.

Current wording

Selling, general and administrative expenses increased $1.0 million, or 5.8%, during the nine months ended September 30, 2026 as compared to the same period in 2025. Increases in Heritage Housing payroll $0.7 million, professional and consulting fees $1.0 million, service and warranty costs $0.4 million, and depreciation and amortization $0.1 million were substantially offset by decreases in payroll-related healthcare costs $0.2 million, corporate and general payroll $0.4 million, payroll incentive compensation $0.6 million.

Previous wording

Other income (expense) decreased $1.5 million, or 70.3%, during the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to lower miscellaneous income (including a $0.3 million contract cancellation fee received during the six months ended June 30, 2025) and lower non-operating interest income.

Current wording

Other income (expense) decreased $1.3 million, or 49.7%, during the nine months ended September 30, 2026 as compared to the same period in 2025, primarily due to lower miscellaneous and lower non-operating interest income.

Previous wording

Income tax expense decreased $0.5 million during the six months ended June 30, 2026 as compared to the same period in 2025. The effective tax rate for the six months ended June 30, 2026 was 12.8%, compared to 18.1% for the same period in 2025, and differs from the federal statutory rate of 21% primarily due to the federal energy-efficient-home tax credit and the reversal of certain uncertain tax position accruals.

Current wording

Income tax expense increased $1.9 million during the nine months ended September 30, 2026 as compared to the same period in 2025. The effective tax rate for the nine months ended September 30, 2026 was 14.3%, compared to 17.5% for the same period in 2025, and differs from the federal statutory rate of 21% primarily due to the discrete activity related to the release of uncertain tax benefits, Section 45L new energy efficient home credit, and the discrete treatment of the discount on transferable tax credits. The Section 45L new energy efficient home credit does not apply to homes sold after June 30, 2026, which is expected to increase the Company's effective tax rate in future periods.

Previous wording

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 June 30, 2026, we had approximately $29.0 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.

Current wording

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 September 30, 2026, we had approximately $36.1 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.

Previous wording

Net cash provided by operating activities was $24.4 million during the six months ended June 30, 2026, compared to net cash of $11.0 million provided by operating activities during the six months ended June 30, 2025, an increase of approximately $13.4 million. This change was primarily a result of cash provided from net income of $34.4 million, increased by non-cash adjustments of $1.1 million. Non-cash adjustments included increases to operating cash from depreciation and amortization expense, the provision for accounts and notes receivable, and the writeoff of investment in Corpus AmeriCasa, offset by decreases from amortization of deferred revenue, Loss from sale of property, deferred income taxes, and share based compensation expense. Changes in operating assets and liabilities reduced net cash provided by operations by $11.1 million, primarily as a result of increases in the consumer loan portfolio, notes receivable MHP portfolio, inventory, and other assets, together with decreases in accounts payable and accrued liabilities and the dealer incentive liability. These were partially offset by a $3.9 million decrease in accounts receivable, primarily related to a federal income tax refund, a decrease in the dealer inventory loan portfolio, and a $10.7 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; deliveries under that order commenced during the second quarter of 2026.

Current wording

Net cash provided by operating activities was $35.3 million during the nine months ended September 30, 2026, compared to net cash of $18.2 million provided by operating activities during the nine months ended September 30, 2025, an increase of approximately $17.1 million. This change was primarily a result of cash provided from net income of $54.5 million as well as increases in non-cash adjustments of $4.5 million. Non-cash adjustments included increases to operating cash from depreciation and amortization expense, the provision for accounts and notes receivable, the write-off of the investment in Corpus AmeriCasa, amortization of operating lease right of use assets, and deferred income taxes, offset by decreases to operating cash from amortization of deferred revenue, gains on the sale of property, the provision for inventories, and share based compensation expense. Changes in operating assets and liabilities reduced net cash provided by operations by $23.7 million, primarily as a result of increases in accounts receivable, interest receivable net, the consumer loan portfolio, the notes receivable MHP portfolio, prepaid expenses, and other assets, along with decreases in accounts payable and accrued liabilities, and the dealer incentive liability. This decrease in cash provided by operations was partially offset by an increase in customer deposits, a decrease in the dealer inventory loan portfolio, a decrease in income tax refund receivable, an increase in customer escrow liability, an increase in product refund liability, and a slight decrease in inventories. The increase in accounts receivable primarily reflects invoices to our workforce housing customer, which pays within 35 days of invoice.

Previous wording

Net cash used in investing activities was $2.3 million for the six months ended June 30, 2026 compared to $3.1 million net cash used in investing activities for the six months ended June 30, 2025. Net cash used in investing activities for the six months ended June 30, 2026 was primarily attributable to $6.6 million used in development of property and purchases of machinery and equipment, as well as $0.8 million related to the issuance and modification of notes receivable. This was offset by increases to net cash from investing activities of $1.3 million from the sale of property, $3.7 million from notes receivable collections, and $0.1 million from purchased loan collections.

Current wording

Net cash used in investing activities was $11.3 million for the nine months ended September 30, 2026 compared to $0.7 million net cash provided by investing activities for the nine months ended September 30, 2025. Net cash used in investing activities for the nine months ended September 30, 2026 was primarily attributable to $10.2 million used in development of property and purchases of machinery and equipment, purchase of short-term certified deposits of $5.3 million, as well as $1.1 million related to the issuance and modification of notes receivable. This was offset by increases to net cash from investing activities of $1.3 million from the sale of property, $3.7 million from notes receivable collections, and $0.2 million from purchased loan collections.

Previous wording

Net cash used in financing activities was $1.7 million for the six months ended June 30, 2026 compared to $6.4 million net cash used in financing activities for the six months ended June 30, 2025. Net cash used in financing activities for the six months ended June 30, 2026 was primarily attributable to $0.7 million of stock repurchases and net payments of $1.0 million on lines of credit.

Current wording

Net cash used in financing activities was $1.7 million for the nine months ended September 30, 2026 compared to $6.5 million net cash used in financing activities for the nine months ended September 30, 2025. Net cash used in financing activities for the nine months ended September 30, 2026 was primarily attributable to $0.7 million of stock repurchases and net payments of $1.0 million on lines of credit.

Previous wording

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 $0.7 million under this program. The Company made no

Current wording

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 Chief Executive Officer, 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

Previous wording

repurchases in the three months ended June 30, 2026. As of June 30, 2026, the Company had a remaining authorization of approximately $9.3 million under this program.

Current wording

indebtedness. During the nine months ended September 30, 2026, the Company repurchased 30,740 shares of common stock for $0.7 million under this program. The Company made no repurchases in the three months ended September 30, 2026. As of September 30, 2026, the Company had a remaining authorization of approximately $9.3 million under this program.

Previous wording

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 and all escrow accounts associated with the 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.

Current wording

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 and all escrow accounts associated with the 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. The Company intends to renew the Revolver before maturity and, given its strong positive operating cash flow, significant cash and equivalents, and absence of outstanding borrowings, does not currently expect to seek an increase in commitment.

Previous wording

For the three months ended June 30, 2026 and 2025, interest expense under the Revolver was $0 and $3 thousand, respectively. The outstanding balance of the Revolver as of June 30, 2026 and December 31, 2025 was $0 and $0, respectively. The interest rate in effect as of June 30, 2026 and December 31, 2025 for the Revolver was 6.13% and 6.69%, respectively. The amount of available credit under the Revolver was $50 million and $50 million as of June 30, 2026 and December 31, 2025, respectively. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of June 30, 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.

Current wording

For the three months ended September 30, 2026 and 2025, interest expense under the Revolver was $0 and $2 thousand, respectively. The outstanding balance of the Revolver as of September 30, 2026 and December 31, 2025 was $0 and $0, respectively. The interest rate in effect as of September 30, 2026 and December 31, 2025 for the Revolver was 6.13% and 6.69%, respectively. The amount of available credit under the Revolver was $50 million and $50 million as of September 30, 2026 and December 31, 2025, respectively. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of September 30, 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.

Previous wording

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 $0.5 million and $0.8 million as of June 30, 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 June 30, 2026.

Current wording

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 $0 and $0.8 million as of September 30, 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 September 30, 2026.

Previous wording

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. Our critical accounting estimates are identified and described in our Annual Report on Form 10-K for the year ended December 31,

Current wording

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. Our critical accounting estimates are identified and described in our Annual Report on Form 10-K for the year ended December 31, 2025. We discuss below the estimate areas in which there were material developments during the period covered by this report.

Previous wording

The allowance for loan losses on our consumer loan, manufactured housing community (MHP) note, dealer financed receivable, and other note receivable portfolios reflects management's estimate of losses inherent in those portfolios as of the balance sheet date. The allowance is composed of two components: a general reserve, calculated using the trailing three-year historical loss rate adjusted for an estimated loss discovery period and qualitative factors (including delinquency trends, borrower financial condition, collateral values and liquidity, and macroeconomic conditions); and specific reserves on individually identified impaired loans. The consumer loan portfolio is the largest and most judgment-intensive of these portfolios, with a balance of approximately $202.2 million as of June 30, 2026, compared to $199.3 million as of March 31, 2026 and $198.8 million as of December 31, 2025.

Current wording

The allowance for loan losses on our consumer loan, manufactured housing community (MHP) note, dealer financed receivable, and other note receivable portfolios reflects management's estimate of losses inherent in those portfolios as of the balance sheet date. The allowance is composed of two components: a general reserve, calculated using the trailing three-year historical loss rate adjusted for an estimated loss discovery period and qualitative factors (including delinquency trends, borrower financial condition, collateral values and liquidity, and macroeconomic conditions); and specific reserves on individually identified impaired loans. The consumer loan portfolio is the largest and most judgment-intensive of these portfolios, with a balance of approximately $205.1 million as of September 30, 2026 compared to $202.2 million as of June 30, 2026, $199.3 million as of March 31, 2026 and $198.8 million as of December 31, 2025.

Previous wording

The total allowance for loan loss was $5.8 million as of June 30, 2026, compared to $6.7 million as of March 31, 2026 and $5.8 million as of December 31, 2025. Changes in delinquency, borrower condition, collateral values, or the qualitative factors described above could result in changes to the allowance that would be recognized in earnings in the period of change. We did not change our allowance methodology during the period.

Current wording

The total allowance for loan loss was $6.6 million as of September 30, 2026 compared to $5.8 million as of June 30, 2026, $6.7 million as of March 31, 2026, and $5.8 million as of December 31, 2025. Changes in delinquency, borrower condition, collateral values, or the qualitative factors described above could result in changes to the allowance that would be recognized in earnings in the period of change. We did not change our allowance methodology during the period.