What Legacy Housing (LEGH) Said on Its Q3 Earnings Call

Key Points

• Third-quarter results surged: Revenue rose 72.2% to $69.7 million and net income increased to $20.1 million. Home sales climbed to 635, while product-sales gross margin expanded to 36.9% from 20.2%.
• Growth opportunities remain, but production is constrained: Management cited a growing workforce-housing pipeline and expects sales at its Bastrop development to begin in 2027. Recruiting and retaining trained workers is the main near-term limit on production.
• Liquidity strengthened: Legacy ended the quarter with $36.1 million in cash and short-term CDs, and its $50 million revolving credit facility was undrawn. Operating cash flow for the first nine months was $35.3 million, up from $18.2 million a year earlier.

Legacy Housing NASDAQ: LEGH reported a 72.2% increase in third-quarter revenue as the manufactured housing company sold more homes and benefited from higher product margins.

Revenue rose to $69.7 million, while net income increased to $20.1 million, or $0.85 per diluted share, from $8.6 million, or $0.35 per share, a year earlier. Product sales climbed 92% to $55.2 million, and the company sold 635 homes, up from 420 in the third quarter of 2025.

Chief Financial Officer Jon Langbert said gross margin on product sales increased to 36.9% from 20.2%, reflecting a shift in product mix and price increases implemented during 2026. He noted that tariffs and rising material costs had weighed on the year-earlier quarter.

Sales at Legacy’s Heritage Housing stores grew as the stores made room for 2027 models, which began shipping in July. Inventory finance sales declined, however, as dealer demand weakened and fewer new dealers joined the program, Langbert said.

Workforce Housing and Production Capacity

Management described a pipeline of opportunities that includes housing for construction and industrial sites, HUD-code homes and park rentals. Chairman and Chief Executive Officer Kenneth Shipley said backlogs were continuing to build and pointed to a recently completed oil-field workforce housing project involving approximately 200 buildings.

Langbert said some workforce housing units are larger and more complex, with slightly higher selling prices. He said the company’s overall average selling price could decline if dealer sales pick up, but Legacy’s goal is to fill its pipeline with profitable business.

Securing and retaining trained workers remains the company’s principal near-term constraint, Langbert said. Recruiting and retention programs are underway, and Legacy’s Georgia plant has room to grow with modest additional investment.

Asked whether the company could replace business as an initial large workforce housing contract winds down, Shipley said he believed Legacy was in good shape, while acknowledging uncertainty about future conditions. Management did not provide the number of units shipped under the contract during the quarter or the number still to be shipped.

Langbert also discussed a repurchase option in that contract. If the customer returns eligible units between four and five years after delivery, Legacy would buy them back for 33% of the original unit invoice price; between years five and six, the price would be 25%. The amounts exclude extras, and the customer must return the units clean, he said.

Langbert said Legacy considers a return unlikely but believes it could resell the units profitably if the option is exercised. Shipley said he could not accurately predict how long the customer’s project would last.

Bastrop Development Nears Sales

Legacy expects its Bastrop County development to begin lot and home sales in 2027. Shipley said sales could start late in the first half of the year, although regulatory approvals and infrastructure work have slowed the project.

The company has received approval for an entrance and is building it, while sewer work is expected to be completed by the end of December, according to Shipley. More road work and a bridge remain to be built.

The development covers more than 350 acres. Shipley estimated it has room for approximately 260 lots for sale and about 800 rentals in a park, along with space for an RV park. Management said the plans include selling homes and land, selling homes within the park, and potentially selling or leasing commercial lots.

Langbert said Legacy was approaching $50 million in spending on the development and that most of the spending had been completed. He cautioned that the project would not fill up in one year and that plans could change as the market develops.

Cash Position and Loan Modification

Legacy ended the quarter with $30.8 million in cash and $5.3 million in short-term certificates of deposit, a combined $36.1 million, up from $8.5 million at year-end. Operating cash flow for the first nine months was $35.3 million, compared with $18.2 million a year earlier.

The company’s $50 million Prosperity Bank revolving credit facility remained undrawn, and Legacy intends to renew it before its July 2027 maturity, Langbert said. Legacy made no share repurchases during the quarter; approximately $9.3 million remained available under its authorization through February 2029.

Langbert said documentation was complete on the modification of a mobile home park note that had matured in July. The borrowers paid down $2 million of principal, reducing the balance to $46.6 million, pledged additional collateral and increased their personal guarantees.

The modified note carries a fixed 7.9% rate through April 2028, followed by prime plus 3%, and matures in April 2031. Interest was abated from July 3 through October 3, so Legacy recognized no interest income on the note during the third quarter. Langbert said the note was not past due at quarter-end and that the company determined no allowance was required based on its collateral analysis.

Legal and Control Updates

Legacy’s litigation against the sellers of AmeriCasa has moved into discovery in Texas Business Court, Langbert said. He described the proceedings as early and said the outcome could not be predicted.

The company also continues to address material weaknesses disclosed in its annual report. Langbert said Legacy expanded its accounting and finance team, hired a SOX compliance director in September and completed a migration to Microsoft Dynamics 365 Business Central. The weaknesses will not be considered remediated until new controls have been tested and operated effectively for a sufficient period, he said.

About Legacy Housing (NASDAQ:LEGH)

Legacy Housing Corporation is a manufacturer and seller of manufactured homes. The company produces homes in a range of sizes and floor plans, including single-section and multi-section models designed for residential use. Its products are marketed under the Legacy Housing brand and are intended to provide an alternative to traditionally built housing.

The company sells manufactured homes through a combination of retail locations, independent dealers and wholesale channels. Legacy Housing also provides financing options to qualified homebuyers and dealers, supporting the purchase of its homes.

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