Legacy Housing Q1 Earnings Call Highlights

Key Points

• Legacy reported Q1 net revenue of $34.4 million (‑3.7% YoY) while net income rose to $10.9 million and diluted EPS to $0.46, helped by slightly stronger gross margins, lower SG&A and a favorable tax rate from the Section 45L credit.
• Sales mix shifted sharply away from dealer inventory finance (down ~68%) with strong growth in retail (+81%), direct (+80%) and park/commercial channels, and management received about $8 million of non‑refundable deposits for workforce housing — roughly 600 units with deposits and expected deliveries of 200–300 units in Q2.
• Loan interest income rose 6.2% to $11.3 million and credit metrics remained strong (over 97% of consumer and park loans <30 days past due); the company ended the quarter with $14.1 million cash, ~ $49 million available on its revolver and repurchased ~31,000 shares, though inventories rose and tariffs/input costs pose ongoing risks.

Legacy Housing NASDAQ: LEGH reported first-quarter 2026 results that showed modest revenue pressure but improved profitability, helped by lower operating expenses and a favorable tax rate. Management also pointed to a meaningful mix shift in sales channels, a growing contribution from its loan portfolio, and a pipeline of workforce housing orders that it expects will begin shipping in the second quarter.

Quarterly results: revenue dipped, earnings rose

Chief Financial Officer Jon Langbert said total net revenue was $34.4 million, down 3.7% from $35.7 million in the prior-year quarter. Net income increased to $10.9 million from $10.3 million, while diluted EPS rose to $0.46 from $0.41.

Langbert attributed the improved earnings to “slightly stronger gross margins, lower SG&A, and a lower effective tax rate,” despite softer revenue.

Shipments fell as channel mix shifted toward retail and direct

Langbert said product sales were $21.6 million, down 11.3% year over year, as Legacy shipped 312 units compared with 350 a year ago. Average revenue per unit was “essentially flat at roughly $69,100.”

Management highlighted a sharp decline in dealer inventory finance activity, which was partially offset by gains in other channels. Langbert said inventory finance sales declined by about $7.6 million, or 68%, as dealers worked through inventory already on their lots.

At the same time, Legacy reported strength in:

• Retail store sales: up 81% to $6.1 million
• Direct sales: up 80% to $2.7 million
• Commercial sales to mobile home parks: up 12% to $7.6 million

Executive Chairman Curtis Hodgson said the retail growth reflected progress in a strategy to expand company-owned distribution, noting the company’s 14 retail locations under the Heritage Housing, Tiny House Outlet, and AmeriCasa names. Hodgson added that part of the year-over-year increase also stemmed from the AmeriCasa acquisition completed last year.

Finance segment: interest income grew; credit metrics stayed strong

Langbert said loan portfolio interest income rose 6.2% to $11.3 million, with “essentially all of that growth coming from our consumer book.” He said the consumer portfolio ended the quarter at $204.8 million, up modestly from year-end. He also reported mobile home park notes of $199.5 million and dealer inventory finance receivables of $26.5 million at quarter end.

On credit quality, Langbert said more than 97% of both consumer loans and mobile home park notes were less than 30 days past due. He added that the company increased loan loss reserves modestly, reflecting portfolio growth and “a slightly more conservative posture given the broader economic backdrop.”

Hodgson echoed that performance, saying the loan portfolios were “performing very well” and that the company had not seen deterioration that would require a major shift in reserving beyond the modest increases already made.

Costs and taxes: SG&A declined; effective tax rate benefited from credits

Langbert said cost of product sales fell 13.1%, broadly in line with lower volumes. SG&A totaled $5.8 million, down 8.3%, driven by lower payroll, health benefit, and legal costs, partially offset by a higher loan loss provision and modestly higher property taxes.

The company’s effective tax rate was 16.1% for the quarter, down from 19.3% a year earlier and below the 21% statutory rate. Langbert attributed the lower rate to the Section 45L Federal Energy Efficient Home Improvement Credit, which provides a per-home tax credit for qualifying energy-efficient homes, and to a discount on transferable tax credits purchased during the quarter. He noted that the Section 45L credit is set to terminate on June 30 under last year’s tax legislation, and the company expects its tax rate to move closer to the statutory rate after that.

Balance sheet, buybacks, and key updates: inventory build, tariffs, orders, and litigation

Langbert described the balance sheet as remaining in “excellent shape.” The company ended the quarter with $14.1 million in cash, up from $8.5 million at year-end, supported by $7 million of operating cash flow. Inventories increased to $50.4 million from $39.9 million, “primarily in finished goods,” which management tied to production for a major project that Hodgson discussed in the context of workforce housing tied to data center activity.

Legacy’s $50 million revolving credit facility with Prosperity Bank had less than $1 million drawn at quarter end, leaving roughly $49 million of available capacity, and Langbert said the company remained in compliance with financial covenants. Total stockholders’ equity was $539 million, up from $528.6 million at year-end.

On capital allocation, Langbert said Legacy repurchased about 31,000 shares for roughly $600,000 during the quarter under a new $10 million authorization approved in February, leaving about $9.4 million available through February 2029. Hodgson said management views repurchases as a “sensible use of our capital” while the stock trades near book value, alongside reinvestment.

Hodgson also discussed several business issues and developments:

• Tariffs and input costs: He said tariffs were a “meaningful theme” during the quarter. Hodgson cited a February Supreme Court ruling that emergency tariffs imposed in 2025 were not authorized and said the company is seeking a $683,000 refund as U.S. Customs winds down those duties. He added that new Section 301 investigations began in March and that additional Section 232 duties on materials such as aluminum, steel, and copper took effect April 6, after quarter end, continuing to pressure costs.
• Workforce housing orders: Hodgson said the company received about $8 million of non-refundable deposits in the quarter tied to large workforce housing orders, began production in Q1, but made no deliveries in the quarter. Entering Q2, he said he expected 200–300 units to be delivered. In the Q&A, he estimated the company had “somewhere around 600 units with deposit” in this category in Texas, with at least half expected to ship in Q2 and the remainder in Q3 and Q4, and said substantially all would be recognized during calendar 2026.
• AmeriCasa litigation: Hodgson said Legacy filed a lawsuit in March related to alleged “misrepresentations and omissions” in the AmeriCasa acquisition. He characterized the matter as early-stage and said it was not material to the company’s consolidated financial position, liquidity, or operations.
• Promissory note maturity: Hodgson discussed a short-term $48.6 million promissory note bearing 7.9% interest that matures in July. He said the borrower has made required payments and that the parties are discussing a partial payment and renewal, adding that the company still believes there will not be a negative effect but that negotiations are ongoing.
• Operating outlook by geography: Hodgson said Texas demand tied to “non-traditional” areas like data centers and the oil field was strong, while “traditional demand is not great,” particularly in Georgia, where he said the company did not yet have workforce housing orders and was relying on dealer, park, and company-store sales that “does not have enough volume to keep us running at profitable production.”

Looking ahead, Hodgson said the company’s next two quarters “should be pretty doggone impressive” based on homes already built and shipping to major Texas customers. He also said SG&A reductions could continue, telling analysts he expected “maybe a 10% reduction by the end of the year in SG&A,” while cautioning that items such as loan loss provisioning and warranty-related costs can affect the total.

During Q&A, Hodgson added that deportations have hurt sentiment in the Hispanic retail customer base, but he said the loan portfolio has not been affected. He noted repossessions had moved back toward historical norms, estimating roughly 4% per year.

About Legacy Housing NASDAQ: LEGH

Legacy Housing Corp. designs, builds and markets factory-built homes, focusing on both single-section and multi-section manufactured housing products. The company offers a range of floor plans and customization options, including energy-efficient features and accessible design elements. Its core business activities encompass in-house design, procurement of building materials, plant-based construction and nationwide distribution through an independent network of retail partners.

Founded in 2009 and headquartered in Dallas, Texas, Legacy Housing operates in key regions across the southeastern and southwestern United States.

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