Legacy Housing Corp

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 31/2 bathrooms. Our homes range in price, at retail, from approximately $33 to $180. For the three months ended March 31, 2025 and 2024 we sold 427 and 645 home sections (which are entire homes or single floors that are combined to create complete homes), 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 31/2 bathrooms. Our homes range in price, at retail, from approximately $33 to $180. For the three months ended June 30, 2025 and 2024 we sold 697 and 578 home sections (which are entire homes or single floors that are combined to create complete homes), respectively. For the six months ended June 30, 2025 and 2024 we sold 1,124 and 1,223 home sections respectively.

Previous wording

Our homes are marketed under our premier “Legacy” brand name and currently are sold primarily across 15 states through a network of over 125 independent retail locations, 13 company-owned retail locations and through direct sales to owners of manufactured home communities. Our 13 company-owned retail locations, including 12 Heritage Housing stores and one Tiny House Outlet stores exclusively sell our homes.

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, 13 company-owned retail locations and through direct sales to owners of manufactured home communities. Our 13 company-owned retail locations, including 12 Heritage Housing stores and one Tiny House Outlet stores exclusively sell our homes.

Previous wording

For the three months ended March 31, 2025, approximately 62% of our manufactured homes were sold in Texas, followed by 10% in Oklahoma, 8% in Georgia, 4% in Alabama and 3% in New Mexico. For the three months ended March 31, 2024, approximately 54% of our manufactured homes were sold in Texas, followed by 18% in North Carolina, 8% in Oklahoma, 4% in Georgia and 2% in New Mexico.

Current wording

For the six months ended June 30, 2025, approximately 58% of our manufactured homes were sold in Texas, followed by 10% in Georgia, 7% in Oklahoma, 4% in Tennessee and 3% in Alabama. For the six months ended June 30, 2024, approximately 49% of our manufactured homes were sold in Texas, followed by 12% in North Carolina, 9% in Georgia, 7% in Oklahoma and 4% in Michigan.

Previous wording

Product sales primarily consist of direct sales, commercial sales, inventory finance sales and retail store sales. Product sales decreased $6.5 million, or 21.2%, during the three months ended March 31, 2025 as compared to the same period in 2024. This decrease was driven by a decrease in unit volumes shipped, primarily in mobile home park sales, retail sales, direct sales and other product sales categories.

Current wording

Product sales primarily consist of direct sales, commercial sales, inventory finance sales and retail store sales. Product sales increased $6.7 million, or 21.3%, during the three months ended June 30, 2025 as compared to the same period in 2024. This increase was driven by an increase in unit volumes shipped, primarily in inventory finance sales, retail sales and mobile home park sales categories.

Previous wording

For the three months ended March 31, 2025, our net revenue per product sold increased by 23.1% as compared to the same period in 2024. The increase is primarily due to a decrease in units sold to mobile home parks, which are sold at wholesale prices, and an increase in units sold to consumers, which are sold at higher retail prices. We had decreases in direct sales, commercial sales, retail sales and other product sales, partially offset by an increase in inventory finance sales. Direct sales decreased $0.3 million, or 17.0% during the three months ended March 31, 2025 as compared to the same period in 2024. Commercial sales decreased $6.8 million, or 50.0% during the three months ended March 31, 2025 as compared to the same period in 2024. Retail sales decreased $1.5 million, or 30.3% during the three months ended March 31, 2025 as compared to the same period in 2024. Inventory finance sales increased $2.7 million,

Current wording

For the three months ended June 30, 2025, our net revenue per product sold increased by 10.5% as compared to the same period in 2024. The increase is primarily due to an increase in units sold to consumers, which are sold at higher retail prices. We had increases in inventory finance sales, retail sales and commercial sales, partially offset by decreases in direct sales and other product sales Inventory finance sales increased $4.9 million, or 53.3% during the three months ended June 30, 2025 as compared to the same period in 2024. Retail sales increased $2.9 million, or 64.2% during the three months ended June 30, 2025 as compared to the same period in 2024. Commercial sales increased $0.6 million, or 5.3% during the three months ended June 30, 2025 as compared to the same period in 2024. Direct sales decreased $0.6 million, or 16.9% during the three months ended June 30, 2025 as compared to the same period in 2024. Other product

Previous wording

or 31.5% during the three months ended March 31, 2025 as compared to the same period in 2024. Other product sales decreased $0.6 million, or 29.6% during the three months ended March 31, 2025 as compared to the same period in 2024. Our revenue has decreased primarily due to a lower volume of shipments and a slowdown in our retail and mobile home park sales.

Current wording

sales decreased $1.0 million, or 29.7% during the three months ended June 30, 2025 as compared to the same period in 2024. Our revenue increased primarily due to a higher volume of shipments and an increase in inventory finance sales and retail sales.

Previous wording

Consumer, MHP and dealer loans interest income did not change during the three months ended March 31, 2025 as compared to the same period in 2024. Between March 31, 2025 and March 31, 2024 our consumer loan portfolio increased by $20.3 million, our MHP loan portfolio increased by $20.1 million, and our dealer finance notes decreased by $2.4 million.

Current wording

Consumer, MHP and dealer loans interest income increased $1.0 million, or 10.6% during the three months ended June 30, 2025 as compared to the same period in 2024. Between June 30, 2025 and June 30, 2024 our consumer loan portfolio increased by $24.6 million, our MHP loan portfolio increased by $20.3 million, and our dealer finance notes decreased by $0.5 million.

Previous wording

The cost of product sales decreased $3.3 million, or 16.0%, during the three months ended March 31, 2025 as compared to the same period in 2024. The decrease in costs is primarily related to the decrease in units sold. The cost of other sales was $0.5 million during the three months ended March 31, 2025.

Current wording

The cost of product sales increased $4.4 million, or 20.3%, during the three months ended June 30, 2025 as compared to the same period in 2024. The increase in costs is primarily related to the increase in units sold. The cost of other sales was $0.6 million during the three months ended June 30, 2025.

Previous wording

Other income (expense) decreased $0.6 million, or 35.5%, during the three months ended March 31, 2025 as compared to the same period in 2024. We had a decrease of $0.8 million in Non-operating interest income primarily as a result of the Settlement Agreement described in Note 4, Notes Receivable from Mobile Home Parks, in these Notes to Condensed Financial Statements (Unaudited) for the quarter ended March 31, 2025 offset by a decrease of $0.2 million in interest expense.

Current wording

Other income (expense) decreased $2.8 million, or 74.5%, during the three months ended June 30, 2025 as compared to the same period in 2024. We had a (i) decrease of $0.5 million in Non-operating interest income reflecting a lower balance of other notes receivable, (ii) a $2.5 million decrease in miscellaneous income primarily due to land sales and a reversal of accrued liabilities during the three months ended June 30, 2024 that did not occur during the three months ended June 30, 2025, and (iii) a decrease of $0.2 million in interest expense.

Previous wording

Income tax decreased $0.9 million during the three months ended March 31, 2025 as compared to the same period in 2024. The effective tax rate for the three months ended March 31, 2025 and 2024 was 19.3% and 18.2%, respectively, and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction, partially offset by state income taxes.

Current wording

Income tax decreased $0.5 million during the three months ended June 30, 2025 as compared to the same period in 2024. The effective tax rate for the three months ended June 30, 2025 was 17.3% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and a federal tax credit purchased by the Company in this second quarter, both partially offset by state income taxes. The effective tax rate for the three months ended June 30, 2024 was 18.2% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction, partially offset by state income taxes.

Previous wording

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income and decreased $1.0 million, or 59.2%, during the three months ended March 31, 2025 as compared to the same period in 2024. This decrease was primarily due to a $1.1 million decrease in forfeited deposits partially offset by a $0.2 million increase in portfolio fees and service revenue and land sales and a net $0.1 million decrease in other miscellaneous revenue.

Current wording

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income and decreased $1.2 million, or 41.8%, during the six months ended June 30, 2025 as compared to the same period in 2024. This decrease was primarily due to a $1.3 million decrease in forfeited deposits and a $0.2 million decrease in service sales partially offset by a $0.3 million increase in portfolio fees and service revenue.

Previous wording

Selling, general and administrative expenses increased $0.4 million, or 6.9%, during the three months ended March 31, 2025 as compared to the same period in 2024. We had a $0.6 million increase in legal expense, a $0.5 million increase in loan loss provision and a $0.3 million increase in other miscellaneous expense offset by a $0.4 million decrease in warranty expense, $0.3 million decrease in payroll and related expense and a $0.3 million decrease in professional fees.

Current wording

Selling, general and administrative expenses increased $1.5 million, or 12.8%, during the six months ended June 30, 2025 as compared to the same period in 2024. We had a $0.7 million increase in warranty expense, a $0.6 million increase in loan loss provision and a $0.6 million increase repossessed home expense, a $0.2 million increase in bad debt expense offset by a $0.3 million decrease in payroll and related expense, a $0.2 million decrease in professional fees and a net $0.1 million decrease in other miscellaneous expense.

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 March 31, 2025, we had approximately $3.4 million in cash, compared to $1.1 million as of December 31, 2024. 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 June 30, 2025, we had approximately $2.6 million in cash, compared to $1.1 million as of December 31, 2024. 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 $4.9 million during the three months ended March 31, 2025, compared to net cash of $10.8 million provided by operating activities during the three months ended March 31, 2024. This change was predominantly the result of decreased net income, increased consumer loan originations net of collections, change in accounts receivable, change in inventories, change in accounts payable and accrued liabilities and change in other assets – leased mobile homes.

Current wording

Net cash provided by operating activities was $11.0 million during the six months ended June 30, 2025, compared to net cash of $14.3 million provided by operating activities during the six months ended June 30, 2024. This change was predominantly the result of decreased net income, increased consumer loan originations net of collections and change in inventories, partially offset by decreased MHP loan originations net of collections, and change in other assets – leased mobile homes.

Previous wording

Net cash used in investing activities of $2.0 million during the three months ended March 31, 2025 was primarily attributable to $1.3 million used in improvements and development of property, plant and equipment and $1.0 million used to issue notes to third parties for the development of manufactured housing parks, offset by $0.2 million in proceeds from the sale of property and $0.1 million of collections of loans we made to third parties for development of manufactured housing parks. Net cash provided by investing activities of $2.7 million during the three months ended March 31, 2024 was primarily attributable to $4.1 million of collections of loans we made to third parties for development of manufactured housing parks, offset by $0.9 million used in improvements and development of property, plant and equipment and $0.6 million used to issue notes to third parties for the development of manufactured housing parks.

Current wording

Net cash used in investing activities of $3.1 million during the six months ended June 30, 2025 was primarily attributable to $3.6 million used in improvements and development of property, plant and equipment and $1.3 million used to issue notes to third parties for the development of manufactured housing parks, offset by $1.6 million of collections of loans we made to third parties for development of manufactured housing parks and $0.2 million in proceeds from the sale of property. Net cash provided by investing activities of $2.1 million during the six months ended June 30, 2024 was primarily attributable to $4.8 million of collections of loans we made to third parties for development of manufactured housing parks and $1.6 million in proceeds from the sale of property, offset by $2.6 million used in improvements and development of property, plant and equipment and $1.7 million used to issue notes to third parties for the development of manufactured housing parks.

Previous wording

Net cash used in financing activities of $0.7 million during the three months ended March 31, 2025 was attributable $0.7 million of stock repurchases. Net cash used in financing activities of $13.7 million during the three months ended March 31, 2024 was attributable to net payments of $11.9 million on our lines of credit, $1.9 million of stock repurchases and $0.1 million received from the exercise of stock options.

Current wording

Net cash used in financing activities of $6.3 million during the six months ended June 30, 2025 was attributable $6.5 million of stock repurchases offset by net uses of $0.2 million on our lines of credit. Net cash used in financing activities of $17.1 million during the six months ended June 30, 2024 was attributable to net payments of $11.8 million on our lines of credit, $5.4 million of stock repurchases and $0.1 million received from the exercise of stock options.

Previous wording

In November 2022, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $10.0 million of the Company’s common stock. On August 6, 2024, our Board of Directors authorized the repurchase of an additional $10.0 million of the Company’s common stock under the share repurchase program. We repurchased 262,530 shares of common stock for $5,398 in the open market during the year ended December 31, 2024.

Current wording

In November 2022, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $10.0 million of the Company’s common stock. On August 6, 2024, our Board of Directors authorized the repurchase of an additional $10.0 million of the Company’s common stock under the share repurchase program. We repurchased 262,530 shares of common stock for $5,398 in the open market during the year ended December 31, 2024. We repurchased 29,385 shares of common stock for $675 in the open market during the three months ended March 31, 2025. We repurchased 260,635 shares of common stock for $5,817 in the open market during the three months ended June 30, 2025. As of June 30, 2025, we had a remaining authorization of approximately $8,110.

Previous wording

For the three months ended March 31, 2025 and 2024, interest expense under the Revolver was $0 and $276, respectively. The outstanding balance of the Revolver as of March 31, 2025 and December 31, 2024 was $0. The interest rate in effect as of March 31, 2025 and December 31, 2024 for the Revolver was 6.76% and 7.61%, respectively. The amount of available credit under the Revolver was $50,000 as of March 31, 2025 and December 31, 2024. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of March 31, 2025, 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 June 30, 2025 and 2024, interest expense under the Revolver was $3 and $235, respectively. For the six months ended June 30, 2025 and 2024, interest expense under the Revolver was $3 and $511, respectively. The outstanding balance of the Revolver as of June 30, 2025 and December 31, 2024 was $142 and $0, respectively. The interest rate in effect as of June 30, 2025 and December 31, 2024 for the Revolver was 6.76% and 7.61%, respectively. The amount of available credit under the Revolver was $49,858 and $50,000 as of June 30, 2025 and December 31, 2024, respectively. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of June 30, 2025, 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 $672 and $805 as of March 31, 2025 and December 31, 2024, 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 expense 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, 2025.

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 $512 and $805 as of June 30, 2025 and December 31, 2024, 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 expense 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, 2025.