Legacy Housing Corporation Q4 FY2025 earnings call

Full year 2025 net revenue $164.6M vs $184.2M in 2024, down 10.7%. Product sales $116.9M, down 9.6% due to commercial sales decline but offset by direct and retail store sales increases. Interest income from loans increased, consumer loan portfolio grew 14% to $203.6M. Q4 2025 shaped by stronger production volumes from fall show but offset by cost pressures, net income down 43% from Q4 2024. Manufactured housing industry faces headwinds but long - term case for affordable manufactured housing is strong. Retail and dealer side: unit sales down but revenue up due to price increases and growth in company - owned retail locations. Community side: commercial sales to park owners/developers fell, but underlying tenant demand stable. Finance division: loan portfolio generated $43M in interest income last year, expect continued growth, credit quality strong. Monitoring tariffs and raw materials closely, repurchased 346,000 shares last year, initiated $10M buyback program. Development projects: one big project in Austin, 10 land development projects total, manufacturing facilities produced 1,549 homes in 2025, expect more in 2026. Exploiting workforce housing and data center opportunities, took orders for over 500 houses in 2026, small acquisition in November added consumer loan portfolio, retail location, and technology.

For the full year ended December 31st, 2025, total net revenue was $164.6 million compared to $184.2 million in 2024, a decrease of 19.6 million or 10.7%. Product sales decreased 12.4 million or 9.6% to $116.9 million. They sold 1,703 units in 2025, down from 2,129 in 2024, a decline of about 20%. Net revenue per unit sold increased 13% to $68,700. Consumer, mobile home park, and dealer loan interest income increased to $43.7 million up $2.5 million or 6.1% compared to 2024. Other revenue decreased $9.7 million, or 71%. Cost of product sales decreased $5.2 million, or 5.8%. Product gross margin was 27.5% for the full year, down from 30.4% in 2024. SG&A expenses increased $7.3 million, or 33% for the full year. Other non - operating income decreased $9.3 million versus 2024. Net income was $41.8 million compared to $61.6 million in 2024, a decrease of $19.8 million, or 32.2%. For the fourth quarter, net income came in at approximately $8.2 million, compared to $14.5 million in Q4 of 2024, a decline of roughly 43%. Net revenue decreased $16 million, or 29% compared to Q4 of 2024. Loan interest income for the fourth quarter reached approximately $11.3 million. At December 31st, 2025, 98.4% of mobile home park notes and 97.4% of consumer loans are current or fewer than 30 days past due.

Expect continued growth in consumer loan portfolio. Will be evaluating ongoing share repurchase based on the $10M buyback program initiated. Anticipate a better year in 2026 in product profits at all levels due to data center push creating demand.

Tariffs on Chinese source inputs currently add about $1,200 to the cost of each home, and tariff situation is volatile. SG&A expenses increased due to factors like loan loss provisions, legal costs, and warranty costs, and credit quality concerns could impact SG&A. Regulatory challenges in development projects, such as getting approvals for wastewater treatment plants, school board agreements, and highway connections, which can delay projects. Uncertainty in the manufactured housing industry regarding market demand, especially in commercial sales to park operators due to capital caution and tight financing conditions.

Q: Reconciling ASP per section drop sequentially but ASP increase and gross margin improvement.

A: Kurt explained it's due to more double - wides having higher prices and greater margins in specialty product like workforce housing.

Q: Volume growth and trade show backlog impact on Q1 revenue.

A: A lot of workforce housing orders won't show up in revenue until Q2 as finished good inventory has big customer names with delayed shipment.

Q: Impact of Roads Housing Act.

A: Removing permanent chassis from manufactured home definition may have some minor effects like potentially reducing house height but not material in terms of cost savings.

Q: Demand perspective and commercial sales for 2026.

A: Bright spot in workforce housing for data centers, but challenges in commercial sales due to park operator pull - back and high park rent vs mobile home payment.

Q: Industry inventory and lag effect.

A: Industry is niche, with half of 106,000 mobile homes built last year in niche categories, and too many plants chasing too little market without government help.

Q: ASP, pricing, and cost pressure impact on gross profit margin.

A: Labor costs are double - triple pre - COVID, commodities like lumber, steel, copper are not at lows, price increases led to initial sales drop but competition falling in line, expecting industry to sell in 60s per square foot wholesale.

Q: SG&A breakdown and run rate.

A: John explained SG&A has non - recurring items like loan loss reserve increase (mostly behind us), legal expenses dialed back, and SG&A should drop back to historical rate as a percentage of sales.

Q: Final hurdle in Austin development and Georgia plan.

A: Austin development has hurdles like wastewater treatment plant, school board, and highway connections, but expected to put houses in 2026. Georgia factory has not contributed to earnings and options are to dispose or turn it.

Q: Maricasa acquisition update.

A: Norm Newton's employment agreement is no longer valid, management boost not materialized, but hard assets are justifiable and software is being installed in some locations.