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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38761

Legacy Housing Corporation

(Exact name of registrant as specified in its charter)

Texas	20-2897516
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1600 Airport Freeway, #100

Bedford, Texas 76022

(Address of principal executive offices)

(Zip Code)

(817) 799-4900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☒

Non-accelerated filer ☐		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock ($0.001 par value)	LEGH	NASDAQ Global Market

There were 23,868,727 shares of Common Stock ($0.001 par value) outstanding as of November 7, 2025.

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LEGACY HOUSING CORPORATION

TABLE OF CONTENTS


			Page
PART I - FINANCIAL INFORMATION			2

	Item 1.	Condensed Financial Statements (Unaudited)	2

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

	Item 4.	Controls and Procedures	35

PART II - OTHER INFORMATION			37

	Item 1.	Legal Proceedings	37

	Item 1A.	Risk Factors	37

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

	Item 3.	Defaults Upon Senior Securities	37

	Item 4.	Mine Safety Disclosures	37

	Item 5.	Other Information	37

	Item 6.	Exhibits	38

SIGNATURES			39

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

LEGACY HOUSING CORPORATION

CONDENSED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)


	September 30,		December 31,
	2025		2024
Assets
Current assets:
Cash	$	13,551	$	1,149
Accounts receivable, net		4,646		3,985
Dealer financed receivables, net		30,300		32,585
Consumer loans receivable, current		9,299		8,623
Notes receivable from mobile home parks (“MHP”), current		66,918		23,770
Other notes receivable, current		4,304		12,152
Inventories, net		39,581		37,538
Prepaid expenses and other current assets		3,974		4,504
Total current assets		172,573		124,306
Property, plant and equipment, net		55,036		47,585
Consumer loans receivable, net		178,837		165,482
Notes receivable from mobile home parks (“MHP”), net		134,609		182,694
Other notes receivable, net		1,648		2,764
Other assets - leased mobile homes		3,948		4,557
ROU assets - operating leases		976		1,321
Other assets		10,300		5,485
Total assets	$	557,927	$	534,194
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,547	$	5,091
Accrued liabilities		11,116		13,672
Customer deposits		1,434		1,880
Escrow liability		13,551		11,623
Operating lease obligation		432		476
Total current liabilities		30,080		32,742
Long‑term liabilities:
Operating lease obligation, less current portion		570		920
Deferred income taxes, net		2,206		2,206
Dealer incentive liability		3,473		4,370
Total liabilities		36,329		40,238
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $.001 par value, 10,000,000 shares authorized: no shares issued or outstanding		—		—
Common stock, $.001 par value, 90,000,000 shares authorized; 24,866,342 and 24,865,906 issued and 23,868,727 and 24,158,311 outstanding at September 30, 2025 and December 31, 2024, respectively		32		31
Treasury stock at cost, 997,615 and 707,595 shares at September 30, 2025 and December 31, 2024, respectively		(16,367)		(9,875)
Additional paid-in-capital		182,917		182,400
Retained earnings		355,016		321,400
Total stockholders' equity		521,598		493,956
Total liabilities and stockholders' equity	$	557,927	$	534,194

See accompanying notes to unaudited interim condensed financial statements.

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LEGACY HOUSING CORPORATION

CONDENSED STATEMENTS OF INCOME

(in thousands, except share and per share data)

(unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Net revenue:
Product sales	$	28,787	$	30,169	$	91,464	$	92,653
Consumer, MHP and dealer loans interest		10,892		10,330		32,431		30,807
Other revenue		799		3,767		2,415		6,544
Total net revenue		40,478		44,266		126,310		130,004
Operating expenses:
Cost of product sales		22,963		21,364		66,095		63,389
Cost of other sales		580		1,988		1,724		1,988
Selling, general and administrative expenses		7,315		6,065		20,249		17,528
Dealer incentive		(89)		(475)		124		(1,005)
Total operating expenses		30,769		28,942		88,192		81,900
Income from operations		9,709		15,324		38,118		48,104
Other income (expense):
Non‑operating interest income		285		(17)		1,251		2,270
Miscellaneous, net		250		4,193		1,414		7,945
Interest expense		13		(175)		(22)		(686)
Total other income		548		4,001		2,643		9,529
Income before income tax expense		10,257		19,325		40,761		57,633
Income tax expense		(1,612)		(3,522)		(7,145)		(10,502)
Net income	$	8,645	$	15,803	$	33,616	$	47,131
Weighted average shares outstanding:
Basic		23,868,727		24,154,779		24,016,152		24,237,405
Diluted		24,433,224		24,810,816		24,576,028		24,870,712
Net income per share:
Basic	$	0.36	$	0.65	$	1.40	$	1.94
Diluted	$	0.35	$	0.64	$	1.37	$	1.90

See accompanying notes to unaudited interim condensed financial statements.

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LEGACY HOUSING CORPORATION

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


	Common Stock			Treasury		Additional		Retained
	Shares	Amount		stock		paid-in-capital		earnings		Total
Balances, December 31, 2023	24,843,494	$	30	$	(4,477)	$	181,424	$	259,758	$	436,735
Share based compensation	3,000		—		—		257		—		257
Proceeds from exercise of stock options	6,246		1		—		99		—		100
Purchase of treasury stock	—		—		(1,871)		—		—		(1,871)
Net income	—		—		—		—		15,140		15,140
Balances, March 31, 2024	24,852,740	$	31	$	(6,348)	$	181,780	$	274,898	$	450,361
Share based compensation	7,350		—		—		174		—		174
Proceeds from exercise of stock options	—		—		—		—		—		—
Purchase of treasury stock	—		—		(3,505)		—		—		(3,505)
Net income	—		—		—		—		16,189		16,189
Balances, June 30, 2024	24,860,090	$	31	$	(9,853)	$	181,954	$	291,087	$	463,219
Share based compensation	(430)		—		—		172		—		172
Proceeds from exercise of stock options	6,246		—		—		100		—		100
Purchase of treasury stock	—		—		(22)		—		—		(22)
Net income	—		—		—		—		15,803		15,803
Balances, September 30, 2024	24,865,906	$	31	$	(9,875)	$	182,226	$	306,890	$	479,272


	Common Stock			Treasury		Additional		Retained
	Shares	Amount		stock		paid-in-capital		earnings		Total
Balances, December 31, 2024	24,865,906	$	31	$	(9,875)	$	182,400	$	321,400	$	493,956
Share based compensation	436		1		—		170		—		171
Purchase of treasury stock	—		—		(675)		—		—		(675)
Net income	—		—		—		—		10,276		10,276
Balances, March 31, 2025	24,866,342	$	32	$	(10,550)	$	182,570	$	331,676	$	503,728
Share based compensation	—		—		—		174		—		174
Purchase of treasury stock	—		—		(5,817)		—		—		(5,817)
Net income	—		—		—		—		14,695		14,695
Balances, June 30, 2025	24,866,342	$	32	$	(16,367)	$	182,744	$	346,371	$	512,780
Share based compensation	—		—		—		173		—		173
Purchase of treasury stock	—		—		—		—		—		—
Net income	—		—		—		—		8,645		8,645
Balances, September 30, 2025	24,866,342	$	32	$	(16,367)	$	182,917	$	355,016	$	521,598

See accompanying notes to unaudited interim condensed financial statements.

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LEGACY HOUSING CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended September 30,
	2025		2024
Operating activities:
Net income	$	33,616	$	47,131
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		1,277		1,402
Amortization of deferred revenue		(1,052)		(1,641)
Provision for accounts and notes receivable		2,130		(205)
Gain from sale of assets		(92)		(1,341)
Gain from loan settlements		(113)		(3,448)
Provision for inventories		123		234
Non-cash operating lease expense		(49)		(34)
Share based compensation expense		518		604
Other non cash items		—		51
Changes in operating assets and liabilities:
Accounts receivable		(1,134)		(388)
Consumer loans activity, net		(14,852)		(10,058)
Notes receivable MHP activity, net		5,139		(3,765)
Dealer inventory loan activity, net		2,123		1,110
Inventories, net		(2,166)		1,709
Prepaid expenses and other current assets		302		1,116
Other assets - leased mobile homes		272		2,560
Other assets		(4,405)		(1,008)
Accounts payable and accrued liabilities		(4,100)		(5,903)
Right of use activity, net				21
Customer deposits		(446)		(1,658)
Escrow liability		1,928		2,596
Dealer incentive liability		(896)		(985)
Net cash provided by operating activities		18,123		28,100
Investing activities:
Purchases of property, plant and equipment		(5,667)		(7,323)
Proceeds from sale of property		194		1,573
Issuance of notes receivable		(1,192)		(1,700)
Notes receivable collections		7,236		5,775
Collections from purchased loans		199		164
Net cash provided by (used in) investing activities		770		(1,511)
Financing activities:
Proceeds from exercise of stock options		—		200
Purchases of treasury stock		(6,491)		(5,398)
Proceeds from lines of credit		2,544		45,391
Payments on lines of credit		(2,544)		(66,960)
Net cash used in financing activities		(6,491)		(26,767)
Net increase (decrease) in cash		12,402		(178)
Cash at beginning of period		1,149		748
Cash at end of period	$	13,551	$	570
Supplemental disclosure of cash flow information:
Cash paid for interest	$	4	$	905
Cash paid for taxes	$	7,877	$	12,188

See accompanying notes to unaudited interim condensed financial statements.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

1. NATURE OF OPERATIONS

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

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

Basis of Presentation

The accompanying unaudited interim condensed 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 condensed 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 and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or any other period. The accompanying balance sheet as of December 31, 2024 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”), filed on March 12, 2025. 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 expense 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, fair value of financial instruments and income taxes. Actual results could differ from these estimates.

Segment

We have determined that we have one operating and reportable segment. We define the segment primarily based on how internally reported financial and operating information is regularly reviewed by our chief operating decision maker (“CODM”) to evaluate financial performance, make decisions and allocate resources. Our CODM is the Chief Executive Officer. The CODM assesses the Company’s operating and financial performance based on consolidated net income, total revenue and return on investment. The measures of profitability and expenses reviewed by the CODM are consistent with the financial statements presented in this filing. The Company determined that it does not have significant segment expenses.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

Revenue Recognition

Product sales primarily consist of sales of mobile homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, 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

“Accounts receivable, net” includes receivables from direct sales of mobile 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 30 days. Accounts receivable is stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines the allowance by considering several factors, including the aging of the past due balance, the customer’s payment history, and the Company’s previous loss history. The Company establishes an allowance for doubtful accounts for amounts that are deemed to be uncollectible. At September 30, 2025, December 31, 2024, and December 31, 2023, the allowance for doubtful accounts totaled $1,052, $578, and $651, respectively. At September 30, 2025, December 31, 2024, and December 31, 2023 accounts receivable, net was $4,646, $3,985, and $4,656, respectively.

Leased Property

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

Our typical lease agreement is for 96 months or 120 months. It requires the lessee to maintain the home and to return the home to us at the end of the lease in good condition. It provides the lessee with a termination option for a fee, an option to extend the lease, and a purchase option at fair market value.

The leased mobile homes are included in other assets on the Company’s balance sheet, capitalized at manufactured cost and depreciated over a 15 year useful life. Homes returned to the Company upon expiration of the lease or in the event of default are sold by the Company through its standard sales and distribution channels.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

Future minimum lease income under all operating leases for each of the next five years at September 30, 2025, is as follows:


2025	$	275
2026		1,098
2027		926
2028		770
2029		495
Thereafter		232
Total	$	3,796

Product Warranties

The Company provides retail home buyers with a one-year warranty from the date of purchase on manufactured inventory. At this time, we do not provide any warranties with respect to tiny houses. Product warranty costs are accrued when the covered homes are sold to customers. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Factors used to determine the warranty liability include the number of homes under warranty and the historical costs incurred in servicing the warranties. The accrued warranty liability is reduced as costs are incurred and the warranty liability balance is included as part of accrued liabilities in the Company’s balance sheet.

The following table summarizes activity within the warranty liability for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Warranty liability, beginning of period	$	2,120	$	2,354	$	1,950	$	2,910
Product warranty reserve accrued		408		287		1,561		544
Warranty costs incurred		(489)		(474)		(1,472)		(1,287)
Warranty liability, end of period	$	2,039	$	2,167	$	2,039	$	2,167

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. The Company has elected to record forfeitures as they occur. Compensation cost is recognized on a straight-line basis over the vesting period of the awards and adjusted as forfeitures occur.

The fair value of each option grant with only service-based conditions is estimated using the Black-Scholes pricing model. The fair value of each restricted stock 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 of time that the awards are expected to be outstanding based on the “simplified” method, which is allowed for companies that cannot reasonably estimate the expected life of options based on its historical award exercise experience.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

Pursuant to the Legacy Housing Corporation 2018 Incentive Compensation Plan (the “Plan”), the Company may issue up to 10.0 million equity awards to employees, directors, consultants and nonemployee service providers in the form of stock options, stock, restricted stock and stock appreciation rights. Stock options may be granted with a contractual life of up to ten years. At September 30, 2025, the Company had 8.7 million shares available for grant under the Plan.

As of September 30, 2025, approximately 1,013,000 options were outstanding, 293,000 options were exercisable, and 720,000 options remained nonvested. Unrecognized compensation expense related to these options at September 30, 2025 was $3,722 and is expected to be recognized over 6.5 years. Total share based compensation expense for the three months ended September 30, 2025 and 2024 was $173 and $172, respectively. Total share based compensation expense for the nine months ended September 30, 2025 and 2024 was $518 and $603, respectively.

The Company does not expect to pay dividends on its common stock.

Fair Value Measurements

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

Level I Quoted prices are available in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level II Significant observable inputs other than quoted prices in active markets for which inputs to the valuation methodology include: (1) Quoted prices for similar assets or liabilities in active markets; (2) Quoted prices for identical or similar assets or liabilities in inactive markets; (3) Inputs other than quoted prices that are observable; 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.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

Recent Accounting Pronouncements

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

In November, 2023 the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 enhances current and interim annual reportable segment disclosures and requires additional disclosures about significant segment expenses. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as existing segment disclosures and reconciliation requirements in ASC 280 – Segment Reporting on an interim and annual basis. We adopted ASU 2023-07 on a retrospective basis for annual periods starting with our Annual Report on Form 10-K for the year ended December 31, 2024.

Pronouncements Issued But Not Yet Adopted

In December 2023, the FASB issued Accounting Standard Update 2023-09, Income taxes (Topic 740): Improvements to Income Tax Disclosures which requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the disclosure requirements related to the new standard.

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. We are currently evaluating the impact of disclosure requirements related to the new standard on our financial statements.

2. REVENUE

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.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

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 incremental costs of obtaining a contract if the amortization period of the asset that the Company would have otherwise recognized is one year or less. Contract costs, which include commissions incurred related to the sale of homes, are expensed at the point-in-time when the related revenue is recognized. Warranty costs and contract costs are included in selling, general and administrative expenses in the statements of income. Warranty and contract costs were $489 and $474 for the three months ended September 30, 2025 and 2024, respectively. Warranty and contract costs were $1,472 and $1,287 for the nine months ended September 30, 2025 and 2024, respectively.

For the three months ended September 30, 2025 and 2024, total cost of product sales included $1,798 and $1,450 of costs relating to subcontracted production for commercial sales, transportation and delivery costs, and certain other costs incurred for retail store and commercial sales. For the nine months ended September 30, 2025 and 2024, total cost of product sales included $6,005 and $4,198 of costs relating to subcontracted production for commercial sales, transportation and delivery costs, and certain other costs incurred for retail store and commercial sales.

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 96 or 120 months. Revenue for service fees and miscellaneous income is recognized at a point in time when the performance obligation is satisfied. Land sales revenue is comprised of sales of land (real property) that was acquired as a result of maintaining or furthering our primary business of producing, selling and financing mobile homes.

For the three and nine months ended September 30, 2025, there were no mobile home park (“MHP”) customers that accounted for more than 5.0% of our product sales. For the three months ended September 30, 2024, MHP sales to one independent third party and their affiliates accounted for $1,628 or 5.4% of our product sales. For the nine months ended September 30, 2024, MHP sales to two independent third party and their affiliates accounted for $5,212 or 5.6% and $5,450 or 5.9% of our product sales, respectively.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

Disaggregation of Revenue. The following table summarizes customer contract revenues disaggregated by the source of the revenue for the three and nine months ended September 30, 2025 and 2024:


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Product sales:
Direct sales	$	2,742	$	2,075	$	7,035	$	7,242
Commercial sales		11,171		12,509		29,810		37,359
Inventory finance sales		7,078		7,775		32,239		25,393
Retail store sales		5,922		5,715		16,556		14,951
Other product sales (1)		1,874		2,095		5,824		7,708
Total product sales		28,787		30,169		91,464		92,653
Loan portfolio interest:
Interest - consumer installment notes		5,897		5,280		17,488		15,535
Interest - MHP notes		4,230		4,246		12,661		12,841
Interest - dealer finance notes		765		804		2,282		2,431
Total loan portfolio interest		10,892		10,330		32,431		30,807
Other revenue		799		3,767		2,415		6,544
Total net revenue	$	40,478	$	44,266	$	126,310	$	130,004

(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 mobile homes sold through independent retailers and company-owned retail locations. Consumer loans receivable generally consist of the sales price and any additional financing fees, less the buyer’s down payment. Interest income is recognized monthly per the terms of the financing agreements. The average contractual interest rate per loan was approximately 13.1% as of September 30, 2025 and December 31, 2024. Consumer loans receivable have maturities that range from 3 to 30 years.

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 $13,551 and $11,623 as of September 30, 2025 and December 31, 2024, respectively, and are included in escrow liability in the accompanying balance sheets.

Allowance for Loan Losses—Consumer Loans Receivable

The allowance for loan losses reflects management’s estimate of losses inherent in the consumer loans that may be uncollectible based upon review and evaluation of the consumer loan portfolio as of the date of the balance sheet. An allowance for loan losses is determined after giving consideration to, among other things, the loan characteristics,

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

including the financial condition of borrowers, the value and liquidity of collateral, delinquency and historical loss experience.

The allowance for loan losses is comprised of two components: the general reserve and specific reserves. The Company’s calculation of the general reserve considers the historical loan default rates and collateral recovery rates for the last three years and any qualitative factors both internal and external to the Company. Specific reserves are determined based on probable losses on specific classified impaired loans.

The Company’s policy is to place a loan on nonaccrual status when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which 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 $7,956 and $3,931 as of September 30, 2025 and December 31, 2024, respectively, and are included in other assets in the accompanying balance sheets.

Consumer loans receivable, net of allowance for loan losses and deferred financing fees, consists of the following:


	As of September 30,		As of December 31,		As of December 31,
	2025		2024		2023
Consumer loans receivable	$	192,301	$	177,289	$	159,738
Loan discount and deferred financing fees		(2,446)		(2,490)		(2,473)
Allowance for loan losses		(1,719)		(694)		(765)
Consumer loans receivable, net	$	188,136	$	174,105	$	156,500

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

The following table presents a detail of the activity in the allowance for loan losses:


	Three months ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Allowance for loan losses, beginning of period	$	1,203	$	526	$	694	$	765
Provision for loan losses		767		77		1,688		(345)
(Charge offs) recoveries		(251)		65		(663)		248
Allowance for loan losses, end of period	$	1,719	$	668	$	1,719	$	668

The following table presents impaired and general reserve for allowance for loan losses:


	As of September 30,		As of December 31,
	2025		2024
Total consumer loans	$	192,301	$	177,289
Allowance for loan losses	$	1,719	$	694
Impaired loans individually evaluated for impairment	$	3,425	$	3,582
Specific reserve against impaired loans	$	1,378	$	680
Other loans collectively evaluated for allowance	$	188,876	$	173,707
General allowance for loan losses	$	341	$	14

A detailed aging of consumer loans receivable that are past due is as follows:


	As of September 30,			As of December 31,
	2025		%	2024		%
Total consumer loans receivable	$	192,301	100.0	$	177,289	100.0
Past due consumer loans:
31 - 60 days past due	$	1,468	0.8	$	2,014	1.1
61 - 90 days past due		175	0.1		297	0.2
91 - 120 days past due		320	0.2		462	0.3
Greater than 120 days past due		3,131	1.6		3,120	1.8
Total past due	$	5,094	2.7	$	5,893	3.4

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. The following table disaggregates the outstanding principal balance of consumer loans receivable by credit quality indicator based on delinquency status and fiscal year of origination and is presented as of September 30, 2025:


	Year of Origination
	2025		2024		2023		2022		2021		Prior		Total		% of Portfolio
< 30 days past due	$	33,215	$	31,465	$	25,732	$	20,011	$	17,548	$	59,237	$	187,208		97.35
30-90 days past due		144		573		205		429		59		232		1,642		0.86
> 90 days past due		45		226		969		454		947		810		3,451		1.79
Total	$	33,404	$	32,264	$	26,906	$	20,894	$	18,554	$	60,279	$	192,301		100.00

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

4. NOTES RECEIVABLE FROM MOBILE HOME PARKS

The notes receivable from mobile home parks (“MHP Notes”) relate to mobile 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 4.9% to 12%. The average interest rate per loan was approximately 8.09% as of September 30, 2025 and 7.8% as of December 31, 2024, with maturities that range from 1 to 10 years. The collateral underlying the MHP Notes are individual mobile homes which can be repossessed and resold. The MHP Notes are generally personally guaranteed by borrowers.

As of September 30, 2025, the Company had concentrations of MHP Notes with three independent third parties and their respective affiliates that equated to 24.1%, 8.6% and 10.3% of the principal balance outstanding, all of which were secured by the mobile homes. As of December 31, 2024, the Company had concentrations of MHP Notes with three independent third-parties and their respective affiliates that equated to 23.5%, 14.6% and 11.4% of the principal balance outstanding, all of which were secured by the mobile homes.

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 September 30, 2025 and December 31, 2024, the MHP Notes balance is presented net of unamortized finance fees of $962 and $1,057, respectively. The finance fees are amortized over the life of the MHP Notes.

As of September 30, 2025, there were past due balances of $702 on MHP Notes. As of December 31, 2024, there were past due balances of $17 on the MHP Notes. For the three and nine months ended September 30, 2025 and 2024, there were no charge offs recorded for MHP Notes. Allowance for loan loss for the MHP Notes was $979 and $654 as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, there was an impaired balance of $410 of MHP Notes. As of December 31, 2024, there was a minimal impaired balance of MHP Notes. 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.

Settlement Agreement

Legacy and numerous entities owned or operated by one individual (the “Makers”) previously entered into several Promissory Notes (the “Notes”) valued at approximately $55 million. In January 2024, the Makers defaulted on, and Legacy accelerated, a portion of the Notes valued at approximately $37 million. The Notes were secured by mobile homes and mobile-home parks located in Texas, Mississippi, and Louisiana, and personally guaranteed by individuals (the “Personal Guarantors”). During 2024, Legacy filed several lawsuits against the Makers and the Personal Guarantors and aggressively pursued the collateral.

On July 27, 2024, Legacy, the Makers, and the Personal Guarantors entered into a Settlement Agreement and Release (the “Agreement”). The parties to the Agreement are Legacy, Legacy’s Executive Chairman, Curtis D. Hodgson (collectively, the “Plaintiffs”), William Rodwell, Cynthia Rodwell, Tony Hartsgrove, Robert T. Hutson II, Yakov Plotnikov, Eric D. Wooten (collectively, the “Individual Defendants”), Cleveland MHC, LLC (“Cleveland”), Country Aire Homes of LA, LLC, Forest Hollow, LLC (“Forest Hollow”), Gulf Stream Homes of LA, LLC, Gulf Stream Homes of MS, LLC, Stellar GS Homes, LLC, SINOP GS Homes, LLC, Gulf Stream Manor Phase 2 Homes, LLC, Iowa Homes, LLC, Southern Pointe Homes, LLC, Southern Pointe Investments, LLC, Southern Pointe Investments II, LLC, Stellar GS Homes LLC, and Country Aire MHP LLC (collectively, the “Entity Defendants”).

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

As consideration for the mutual releases contained in the Agreement:

●

Forest Hollow conveyed clear title, and the undisputed right to possess, all real and personal property located on or at the Forest Hollow Mobile Home Community, 6650 Broad Oak Street, Beaumont, TX 77713 (the “Forest Hollow Mobile Home Community”) to Legacy;

●

Cleveland conveyed clear title, and the undisputed right to possess, all real and personal property located on or at the Cleveland Mobile Home Community, 110 Old Hwy 49 S. Richland, MS 39218 (the “Cleveland Mobile Home Community”) to Legacy;

●

Cleveland and Forest Hollow assigned all intangible assets, including all leases, contracts, and goodwill applicable or related to the real and personal property located on or at the Forest Hollow Mobile Home Community and the Cleveland Mobile Home Community to Legacy;

●

The Individual and Entity Defendants irrevocably waived any and all claims related to existing deposits; and

●

Legacy refinanced the Entity and Individual Defendants’ remaining debt, pursuant to a new two-year, $48.6 million Promissory Note (the “New Note”). The New Note bears interest at a fixed rate of 7.9%, requires monthly payments of interest only for twenty-four months, and matures in July, 2026.

●

Payments due on the New Note are current as of September 30, 2025.

The New Note is secured by a first priority interest in more than 1,000 mobile homes and two mobile-home parks located in Louisiana, and personal guarantees signed by the Individual Defendants. The New Note is secured by the same Louisiana collateral as the old Notes, while providing additional legal efficiencies. The Individual Defendants have personally guaranteed the New Note to the same extent they personally guaranteed the Entity Defendants’ prior debt.

The Company presents the entire New Note on the accompanying balance sheets under the heading Notes receivable from mobile home parks (“MHP”), and interest income associated with the New Note is presented on the accompanying statement of income under the heading Consumer, MHP and dealer loans interest. Prior to the three months ending September 30, 2024, the Company classified the old Notes as MHP notes and other notes.

The Company sold the Forest Hollow Mobile Home Community in December, 2024. The Company recorded the fair value of the real property from Cleveland on the accompanying balance sheets under the heading Property, plant and equipment, net and the fair value of the personal property from Cleveland on the accompanying balance sheets under the heading Other assets. The Company recorded a gain of $5.4 million in 2024 on the settlement agreement and transactions related to the Cleveland Mobile Home Community and the Forest Hollow Mobile Home Community.

The Company evaluated the recoverability of the New Note as of September 30, 2025 and determined a provision for expected loan losses is not necessary based on the analysis of the fair value of underlying collateral.

Notes receivable from mobile home parks, net of allowance for loan losses and deferred financing fees, consisted of the following at September 30, 2025, December 31, 2024, and December 31, 2023:


	As of September 30,		As of December 31,		As of December 31,
	2025		2024		2023
Outstanding principal balance	$	203,467	$	208,175	$	184,280
Loan discount and deferred financing fees		(961)		(1,057)		(1,565)
Allowance for loan losses		(979)		(654)		(735)
Total	$	201,527	$	206,464	$	181,980

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

The following table presents a detail of the activity in the allowance for loan losses for the three and nine months ended September 30, 2025 and 2024:


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Allowance for loan losses, beginning of period	$	900	$	711	$	654	$	735
Provision for loan losses		79		42		325		18
(Charge offs) recoveries		—		—		—		—
Allowance for loan losses, end of period	$	979	$	753	$	979	$	753

The following table presents impaired and general reserve for allowance for loan losses at September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Total MHP loans	$	203,467	$	208,175
Allowance for loan losses		979		654
Impaired loans individually evaluated for impairment		410		—
Specific reserve against impaired loans		29		—
Other loans collectively evaluated for allowance		203,057		208,175
General allowance for loan losses		949		654

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. The following table disaggregates the outstanding principal balance of MHP receivable by credit quality indicator based on delinquency status and fiscal year of origination and is presented as of September 30, 2025:


	Year of Origination
	2025		2024		2023		2022		2021		Prior		Total		% of Portfolio
< 30 days past due	$	31,642	$	83,936	$	31,119	$	28,139	$	16,165	$	11,252	$	202,253		99.4
30-90 days past due		—		—		343		461		—		—		804		0.4
> 90 days past due		—		410		—		—		—		—		410		0.2
Total	$	31,642	$	84,346	$	31,462	$	28,600	$	16,165	$	11,252	$	203,467		100.0

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 mobile homes. These other notes have varying maturity dates and generally require monthly principal and interest payments. They are collateralized by mortgages on real estate, mobile 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 5.00% to 17.50%. The Company reserves for estimated losses on the other notes based on current economic conditions that may affect the borrower’s ability to pay, the borrower’s financial strength, and historical loss experience.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

As of September 30, 2025, the Company had concentrations of other notes receivable with three independent third-parties and their respective affiliates that equated to 56.6%, 11.3% and 9.5% of the principal balance outstanding, all of which were secured by the mobile homes. As of December 31, 2024, the Company had concentrations of other notes receivable with three independent third-parties and their respective affiliates that equated to 33.7%, 22.7% and 10.5% of the principal balance outstanding, all of which were secured by the mobile homes.

As of September 30, 2025, there were past due balances of $154 on other notes. As of December 31, 2024, there were past due balances of $1,357 on other notes.

For the three and nine months ended September 30, 2025, there were $276 in charge offs recorded for other notes. For the three and nine months ended September 30, 2024, there were no charge offs recorded for other notes. Allowance for loan loss for the other notes was $209 and $364 as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025 and December 31, 2024, the impaired balance of other notes was $57 and $141, respectively. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell.

Other notes receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at September 30, 2025, December 31, 2024 and December 31, 2023:


	As of September 30,		As of December 31,		As of December 31,
	2025		2024		2023
Outstanding principal balance	$	6,188	$	15,412	$	35,353
Loan discount and deferred financing fees		(27)		(132)		(527)
Allowance for loan losses		(209)		(364)		(236)
Total	$	5,952	$	14,916	$	34,590

The following table presents a detail of the activity in the allowance for loan losses for the three and nine months ended September 30, 2025 and 2024:


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Allowance for loan losses, beginning of period	$	432	$	211	$	364	$	236
Provision for loan losses		53		(3)		121		(28)
(Charge offs) recoveries		(276)		—		(276)		—
Allowance for loan losses, end of period	$	209	$	208	$	209	$	208

The following table presents impaired and general reserve for allowance for loan losses at September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Total Other notes receivable	$	6,188	$	15,412
Allowance for loan losses		209		364
Impaired loans individually evaluated for impairment		781		2,038
Specific reserve against impaired loans		57		141
Other notes receivable collectively evaluated for allowance		5,407		13,374
General allowance for loan losses		152		223

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

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. The following table disaggregates the outstanding principal balance of Other notes receivable by credit quality indicator based on delinquency status and fiscal year of origination and is presented as of September 30, 2025:


	Year of Origination
	2025		2024		2023		2022		2021		Prior		Total		% of Portfolio
< 30 days past due	$	886	$	4,027	$	467	$	—	$	—	$	26	$	5,406		87.4
30-90 days past due		—		—		—		—		—		—		—		—
> 90 days past due		—		33		568		—		181		—		782		12.6
Total	$	886	$	4,060	$	1,035	$	—	$	181	$	26	$	6,188		100.0

6. DEALER FINANCED RECEIVABLES

Dealer finance receivable are receivables for loans that we make to independent retailers, or dealers, for the purchase of mobile homes so that dealers can then market them for sale to consumers. The loans are part of our inventory finance program. The terms of the financing typically include a three year term, a monthly interest payment, an annual curtailment payment and require the retailer to pay the principal amount of the loan to the Company upon the earlier of the sale of the home by the retailer to its customer or the end of the term.

Dealer financed notes receivable, net of allowance for loan losses, consisted of the following at September 30, 2025, December 31, 2024 and December 31, 2023:


	As of September 30,		As of December 31,		As of December 31,
	2025		2024		2023
Outstanding principal balance	$	30,656	$	32,779	$	32,980
Allowance for loan losses		(356)		(194)		(442)
Total	$	30,300	$	32,585	$	32,538

The following table presents a detail of the activity in the allowance for loan losses for the three and nine months ended September 30, 2025 and 2024:


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Allowance for loan losses, beginning of period	$	295	$	175	$	194	$	442
Provision for loan losses		61		4		162		(263)
(Charge offs) recoveries				—				—
Allowance for loan losses, end of period	$	356	$	179	$	356	$	179

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

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.

7. INVENTORIES, NET

Inventories, net consisted of the following at September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Raw materials	$	14,294	$	13,172
Work in progress		303		478
Finished goods, net		24,984		23,888
Total	$	39,581	$	37,538

Finished goods includes an allowance of $811 and $688 as of September 30, 2025 and December 31, 2024, respectively.

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Land	$	19,830	$	17,025
Buildings and leasehold improvements		13,412		13,353
Construction in Progress		24,990		19,719
Vehicles		1,594		1,594
Machinery and equipment		7,376		7,160
Furniture and fixtures		338		338
Total		67,540		59,189
Less accumulated depreciation		(12,504)		(11,604)
Total property, plant and equipment	$	55,036	$	47,585

Depreciation expense was $396 and $481 for the three months ended September 30, 2025 and 2024, respectively, and includes depreciation expense for leased mobile homes. Depreciation expense also includes $164 and $168 as a component of cost of product sales for the three months ended September 30, 2025 and 2024, respectively. Depreciation expense was $1,186 and $1,337 for the nine months ended September 30, 2025 and 2024, respectively, and includes depreciation expense for leased mobile homes. Depreciation expense also includes $495 and $494 as a component of the cost of product sales for the nine months ended September 30, 2025 and 2024 respectively.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

9. OTHER ASSETS

Other assets consisted of the following at September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Prepaid rent	$	588	$	356
Repossessed homes		9,712		5,129
Total	$	10,300	$	5,485

Repossessed homes balance as of September 30, 2025 includes $7,956 for homes repossessed from the consumer loan portfolio, $1,198 for homes repossessed from the MHP loan portfolio, and $558 for homes repossessed from the development loan portfolio. Repossessed homes balance as of December 31, 2024 includes $3,931 for homes repossessed from the consumer loan portfolio and $1,198 for homes repossessed from the MHP loan portfolio.

10. ACCRUED LIABILITIES

Accrued liabilities consisted of the following at September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Warranty reserve	$	2,039	$	1,950
Litigation reserve		855		328
Payroll		1,650		1,544
Portfolio taxes and title		1,602		1,246
Property tax		1,005		1,145
Dealer rebates		832		1,012
Sales tax		213		216
Federal and state income taxes		(456)		3,295
Other		3,376		2,936
Total accrued liabilities	$	11,116	$	13,672

11. LINES OF CREDIT

On July 28, 2023, the Company entered into a new 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. Subsequently, the Company repaid in full the balance due on its prior line of credit with Capital One, N.A. and all commitments under this prior line of credit were terminated. The Revolver provides for a four-year senior secured revolving credit facility with an initial commitment of $50,000 and an additional $25,000 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 Revolver matures July 28, 2027.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

For the three months ended September 30, 2025 and 2024, interest expense under the Revolver was $2 and $175 respectively. For the nine months ended September 30, 2025 and 2024, interest expense under the Revolver was $3 and $686 respectively. The outstanding balance of the Revolver as of September 30, 2025 and December 31, 2024 was $0 and $0 respectively. The interest rate in effect as of September 30, 2025 and December 31, 2024 for the Revolver was 7.25% and 7.61%, respectively. The amount of available credit under the Revolver was $50,000 and $50,000 as of September 30, 2025 and December 31, 2024, respectively. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of September 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.

12. INCOME TAXES

The provision for income tax expense for the three and nine months ended September 30, 2025 was $1,612 and $7,145 respectively. The effective tax rate for the three and nine months ended September 30, 2025 was 15.7% and 17.5%, respectively. These rates differ from the federal statutory rate of 21% primarily due to a federal tax credit for the sale of energy efficient homes under the Internal Revenue Code §45L and to a $5.0 million federal tax credit purchased by the Company at a discount in the second and third quarters and applied to the current year, both partially offset by state income taxes. The provision for income tax expense for the three and nine months ended September 30, 2024 was $3,522 and $10,502 respectively. The effective tax rate for the three and nine months ended September 30, 2024 was 18.2% This rate differs from the federal statutory rate of 21% primarily due to a federal tax credit for the sale of energy efficient homes under the Internal Revenue Code §45L, partially offset by state income taxes. The §45L tax credit was initially established under the Federal Energy Policy Act of 2005 and ends June 30, 2026 pursuant to the One Big Beautiful Bill Act of 2025.

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 September 30, 2025 and December 31, 2024, the Company accrued a $772 and $861 liability for incurred but not reported claims, respectively. These accrued amounts are included in accrued liabilities on the accompanying balance sheets.

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 $713 and $805 at September 30, 2025 and December 31, 2024 respectively without reduction for the resale value of the homes. The Company considers its obligations on current contracts to be immaterial and accordingly has not recorded any reserve for repurchase commitment as of September 30, 2025 and December 31, 2024.

Leases. The Company leases facilities under operating leases that typically have 10 year terms. These leases usually offer the Company a right of first refusal that affords the Company the option to purchase the leased premises under certain terms in the event the landlord attempts to sell the leased premises to a third party. Rent expense for the three months ended September 30, 2025 and 2024 was $114 and $160 respectively. Rent expense for the nine months ended September 30, 2025 and 2024 was $398 and $480 respectively. The Company also subleases properties to third parties, ranging from 3-year to 11-year terms with various renewal options. Rental income from the subleased properties for the three months ended September 30, 2025 and 2024 was approximately $26 and $17 respectively. Rental income

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

from the subleased properties for the nine months ended September 30, 2025 and 2024 was approximately $69 and $131 respectively.

Legal Matters

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 the claims. The Company has included legal reserves of $855 and $328 as of September 30, 2025 and December 31, 2024, respectively, in accrued liabilities on the accompanying balance sheets. Although litigation is inherently uncertain, based on past experience and the information currently available, management does not believe that the currently pending and threatened litigation or claims will have a material adverse effect on the Company’s financial position, liquidity or results of operations. However, future events or circumstances currently unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on the Company’s financial position, liquidity or results of operations in any future reporting periods.

14. FAIR VALUE MEASUREMENTS

The following table shows the estimated fair market value and book value of our consumer loan portfolio, MHP notes and other notes, net of allowances, loan discount fees and deferred financing fees, as of September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Consumer loan portfolio, fair value	$	176,156	$	164,755
Consumer loan portfolio, book value		188,136		174,105
Fixed rate MHP Notes, fair value		186,830		199,651
Fixed rate MHP Notes, book value		192,349		203,388
Variable rate MHP Notes, book value		7,404		3,075
Fixed rate other notes, fair value		5,909		14,730
Fixed rate other notes, book value		5,952		14,916
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.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

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				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Numerator:
Net income (in 000's)	$	8,645	$	15,803	$	33,616	$	47,131
Denominator:
Basic weighted-average common shares outstanding		23,868,727		24,154,779		24,016,152		24,237,405
Effect of dilutive securities:
Restricted stock		522		636		503		410
Stock options		563,975		655,401		559,373		632,897
Diluted weighted-average common shares outstanding		24,433,224		24,810,816		24,576,028		24,870,712
Earnings per share
Basic	$	0.36	$	0.65	$	1.40	$	1.94
Diluted	$	0.35	$	0.64	$	1.37	$	1.90

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. No shares were repurchased during the three months ended September 30, 2025. As of September 30, 2025, we had a remaining authorization of approximately $8,110.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

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 $269 and $115 as of September 30, 2025 and December 31, 2024, respectively. Accounts payable balances due to Bell were $53 and $58 as of September 30, 2025 and December 31, 2024, respectively. Home sales to Bell were $1,168 and $1,700 for the three months ended September 30, 2025 and 2024, respectively. Home sales to Bell were $2,715 and $4,131 for the nine months ended September 30, 2025 and 2024, respectively.

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 $207 and $78 as of September 30, 2025 and December 31, 2024, respectively. Accounts payable balances due to Shipley were $12 and $22 as of September 30, 2025 and December 31, 2024, respectively. Home sales to Shipley were $324 and $452 for the three months ended September 30, 2025 and 2024, respectively. Home sales to Shipley were $1,521 and $2,113 for the nine months ended September 30, 2025 and 2024, respectively.

17. SUBSEQUENT EVENTS

On September 27, 2025, Robert Duncan Bates, President and Chief Executive Officer of the Company, submitted his resignation, effective October 10, 2025. Mr. Bates’ resignation was a personal decision and is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Effective October 1, 2025, Kenneth E. Shipley, Co-founder, Executive Vice President, and a member of the Board of Directors, assumed the role of Chief Executive Officer on an interim basis while the Company searches for a permanent replacement.

On October 6, 2025, Jeffrey M. Fiedelman, Chief Financial Officer, submitted his resignation, effective October 10, 2025. Mr. Fiedelman’s resignation was a personal decision and is not the result of any disagreement with the Company regarding financial operations, policies, or procedures. On October 7, 2025, the Board of Directors appointed Ronald C. Arrington, a former CFO, as Interim Chief Financial Officer.

The Company's General Counsel also resigned concurrent with these transitions. The Board is currently evaluating both permanent and interim replacements for these senior management roles.

Asset Acquisition of AmeriCasa Solutions LLC and certain affiliated entities

On October 30, 2025, the Company entered into an Asset and Membership Interest Purchase Agreement (the “Agreement”) with AmeriCasa Solutions LLC and certain affiliated entities (collectively, the “Seller Entities”). Pursuant to the terms of the Agreement, the Company agreed to acquire substantially all of the assets and certain membership interests related to the Seller Entities’ business (the “Business”). The Business consists of the sale and distribution of manufactured housing, related real property leasing and sales, financing and insurance services, and the operation of the “FutureHomeX” cloud-based SaaS platform for manufactured home retailers and communities.

Under the Agreement, the Company will acquire intellectual property, real property, inventory, accounts receivable arising after closing, assigned contracts, permits and goodwill, and 28.75% of the membership interests in AmeriCasa-Corpus Christi, LLC, free and clear of all encumbrances other than permitted encumbrances. Certain assets, including cash, specified accounts receivable, excluded contracts, benefit plans and other items set forth in the Agreement, are excluded from the transaction.

The Company will assume only specified liabilities, including certain trade payables and liabilities under assigned contracts arising after the closing, as well as other liabilities set forth in the Agreement. All other liabilities, including those related to taxes for pre-closing periods, benefit plans, excluded assets and pre-closing actions, will remain with the Seller Entities.

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LEGACY HOUSING CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(dollars in thousands)

The aggregate purchase price consists of (i) $12,000 in cash, (ii) 92% of the principal amount of all notes receivable of the Seller Entities not more than 40 days past due as of closing, payable in cash, and (iii) the assumption of the Assumed Liabilities (collectively, the “Purchase Price”). The Purchase Price will be allocated among the Purchased Assets as set forth in an allocation schedule to be agreed upon at closing.

The closing of the transaction is subject to customary conditions, including the accuracy of representations and warranties, performance of covenants, receipt of required consents and permits, absence of material adverse effect, delivery of closing deliverables and release of encumbrances on the purchased assets.

The Agreement may be terminated under certain circumstances, including by mutual consent, failure to satisfy closing conditions by the outside date of November 28, 2025, or the existence of legal prohibitions on consummation of the transaction.

For SEC reporting purposes, this acquisition is not considered to be significant.

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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, 2024, 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 $33 to $180. For the three months ended September 30, 2025 and 2024 we sold 420 and 475 home sections (which are entire homes or single floors that are combined to create complete homes), respectively. For the nine months ended September 30, 2025 and 2024 we sold 1,334 and 1,536 home sections respectively.

The Company has one reportable segment. All of our activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, the sale of manufactured homes includes 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 chief operating decision maker, the 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 for 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 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, 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.

For the nine months ended September 30, 2025, approximately 56% of our manufactured homes were sold in Texas, followed by 8% in Georgia, 7% in Oklahoma, 5% in Tennessee, 4% in Florida, and 3% in Louisiana. For the nine months ended September 30, 2024, approximately 48% of our manufactured homes were sold in Texas, followed by 9% in North Carolina, 9% in Georgia, 8% in Oklahoma, 3% in Michigan, and 3% in Florida.

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 with several competitive advantages and allows us to capture sales which may not have otherwise occurred without our ability to offer consumer financing.

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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 September 30, 2025, these properties include the following (dollars in thousands):


Location	Description	Date of Acquisition	Land		Improvements		Total
Bastrop County, Texas	368 Acres	April 2018	$	4,215	$	21,714	$	25,929
Bexar County, Texas	69 Acres	November 2018		842		138		980
Horseshoe Bay, Texas	39 Acres	Various 2018-2019		1,212		2,322		3,534
Johnson County, Texas	91.5 Acres	July 2019		449		-		449
Venus, Texas	50 Acres	August 2019		422		52		474
Wise County, Texas	81.5 Acres	September 2020		889		0		889
Bexar County, Texas	233 Acres	February 2021		1,550		556		2,106
Richland, Mississippi (1)	22 Acres	February 2024		1,141		148		1,289
Bonham, Texas	124.71 Acres	December 2024 & Sept 2025		1,826		-		1,826
Balch Springs, Texas	15 Acres	December 2024 & July 2025		1,567		-		1,567
Austin, Texas (Travis County)	1.52 Acres	June 2025		2,077		60		2,137
			$	16,190	$	24,990	$	41,180

(1)	Land and improvement values do not include the value of Company owned homes located in this community.

●

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.

●

Inflation rates have been high in the U.S. Our ability to maintain gross margins can be adversely impacted by sudden increases in specific costs, such as increases in material and labor. In addition, measures used to combat inflation, such as increases in interest rates, could also have an impact on the ability of home buyers to obtain affordable financing. We continue to explore opportunities to minimize the impact of inflation on our future profitability.

●

During the quarter, the Company experienced higher input costs attributable in part to increased tariffs on goods imported from China. Certain materials and components used in the manufacture of our homes, including electrical fixtures, hardware, and other finished products, are sourced either directly from China or through domestic suppliers affected by these tariffs. The resulting cost increases have placed pressure on our gross margins and may continue to do so if tariff levels remain elevated or expand to additional product categories. While management is taking steps to mitigate these effects through supplier diversification and selective price adjustments, the full impact of the current tariff environment remains uncertain and could affect our cost structure and profitability in future periods.

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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 September 30, 2025 and 2024 (in thousands)


	Three months ended
	September 30,
	2025		2024		$ change		% change
Net revenue:
Product sales	$	28,787	$	30,169	$	(1,382)	(4.6)	%
Consumer, MHP and dealer loans interest		10,892		10,330		562	5.4	%
Other		799		3,767		(2,968)	(78.8)	%
Total net revenue		40,478		44,266		(3,788)	(8.6)	%
Operating expenses:
Cost of product sales		22,963		21,364		1,599	7.5	%
Cost of other sales		580		1,988		(1,408)	N/A	%
Selling, general administrative expenses		7,315		6,065		1,250	20.6	%
Dealer incentive		(89)		(475)		386	(81.3)	%
Total operating expenses		30,769		28,942		1,827	6.3	%
Income from operations		9,709		15,324		(5,615)	(36.6)	%
Other income (expense)
Non‑operating interest income		285		(17)		302	(1,776.5)	%
Miscellaneous, net		250		4,193		(3,943)	(94.0)	%
Interest expense		13		(175)		188	(107.4)	%
Total other income (expense)		548		4,001		(3,453)	(86.3)	%
Income before income tax expense		10,257		19,325		(9,068)	(46.9)	%
Income tax expense		(1,612)		(3,522)		1,910	(54.2)	%
Net income	$	8,645	$	15,803	$	(7,158)	(45.3)	%

Product sales primarily consist of direct sales, commercial sales, inventory finance sales and retail store sales. Product sales decreased $1.4 million, or 4.6%, during the three months ended September 30, 2025 as compared to the same period in 2024. This decrease was driven by a decrease in unit volumes shipped, primarily in inventory finance sales, retail sales and mobile home park sales categories.

Net revenue attributable to our factory-built housing consisted of the following during the three months ended September 30, 2025 and 2024:


	Three months ended
	September 30,
	(in thousands)
	2025		2024		$ Change		% Change
Net revenue:
Product Sales	$	28,787	$	30,169	$	(1,382)	(4.6)	%
Total units sold		420		475		(55)	(11.6)	%
Net revenue per unit sold	$	68.5	$	63.5	$	5	7.9	%

For the three months ended September 30, 2025, our net revenue per product sold increased by 7.9% 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 than our other channels. We had increases in retail and direct sales, which were more than offset by decreases in inventory finance sales, mobile home park sales, and other product sales. Inventory finance sales decreased $0.7 million, or 9% during the three months ended September 30, 2025 as compared to the same period in 2024. Retail sales increased $0.2 million, or 3.6% during the three months ended September 30, 2025 as compared to the same period in 2024. Mobile home park sales decreased $1.3 million, or 10.7% during the three months ended September 30, 2025 as compared to the same period in 2024. Direct sales increased $0.7 million, or 32.1% during the

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three months ended September 30, 2025 as compared to the same period in 2024. Other product sales decreased $0.2 million, or 10.6% during the three months ended September 30, 2025 as compared to the same period in 2024. 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 5.4% during the three months ended September 30, 2025 as compared to the same period in 2024, with essentially all of the gain coming from consumer loan portfolio interest.

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 decreased $3.0 million, or 78.8%, during the three months ended September 30, 2025 as compared to the same period in 2024. This decrease was primarily due to a $2.7 million decrease in land sales.

The cost of product sales increased $1.6 million, or 7.5%, during the three months ended September 30, 2025 as compared to the same period in 2024. The increase in costs is primarily related to an increase in raw material and tariff costs from 39.4% to 47.7% of sales, which is particularly notable given the favorable shift in sales mix towards higher margin products. The cost of other sales was $0.6 million during the three months ended September 30, 2025.

Selling, general and administrative expenses increased $1.3 million, or 20.6%, during the three months ended September 30, 2025 as compared to the same period in 2024. We had a $0.9 million increase in legal expense, $0.5 million increase in loan portfolio loss expense, $0.5 million increase in professional and consulting fee expense, and a $0.1 million increase in property tax expense offset by a $0.6 million decrease in payroll health benefit expense due to a significant medical claim accrual during the comparable period of 2024.

Other income (expense) decreased $3.5 million, or 86.3%, during the three months ended September 30, 2025 as compared to the same period in 2024. We had an (i) increase of $0.3 million in non-operating interest income due to a decrease in the required interest accrual allowance related to development loans in default offset by a reduction in interest income due to the decrease in development notes receivable over the comparable period of 2024, (ii) a decrease of $3.9 million in other income/expense primarily due to a fair market valuation gain adjustment on property acquired in foreclosure during the third quarter of 2024 related to the Rodwell default settlement, and (iii) a savings of $0.2 million in interest expense due to a reduction in the line of credit balance.

Income tax decreased $1.9 million during the three months ended September 30, 2025 as compared to the same period in 2024 due to a decrease in before tax income as well as the purchase of tax credits at a discount during the three months ended September 30, 2025. The effective tax rate for the three months ended September 30, 2025 was 15.7% 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 both the second and third quarters of 2025. The effective tax rate for the three months ended September 30, 2024 was 18.2%

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Comparison of Nine Months ended September 30, 2025 and 2024 (in thousands)


	Nine months ended
	September 30,
	2025		2024		$ change		% change
Net revenue:
Product sales	$	91,464	$	92,653	$	(1,189)	(1.3)	%
Consumer, MHP and dealer loans interest		32,431		30,807		1,624	5.3	%
Other revenue		2,415		6,544		(4,129)	(63.1)	%
Total net revenue		126,310		130,004		(3,694)	(2.8)	%
Operating expenses:
Cost of product sales		66,095		63,389		2,706	4.3	%
Cost of other sales		1,724		1,988		(264)	N/A	%
Selling, general administrative expenses		20,249		17,528		2,721	15.5	%
Dealer incentive		124		(1,005)		1,129	(112.3)	%
Total operating expenses		88,192		81,900		6,292	7.7	%
Income from operations		38,118		48,104		(9,986)	(20.8)	%
Other income (expense)
Non‑operating interest income		1,251		2,270		(1,019)	(44.9)	%
Miscellaneous, net		1,414		7,945		(6,531)	(82.2)	%
Interest expense

Legacy Housing Corp 10-Q