Legacy Housing Corporation Q1 FY2026 earnings call

Curtis Hodgson started by thanking for joining. Jon Langbert walked through the quarter's results. Total net revenue down but net income and EPS up. Product sales mixed with inventory finance sales down but other channels up. Loan portfolio interest income up. Expenses had cost of product sales down and SG&A down. Curtis then discussed operating environment, business updates like retail and dealer activity, finance division performance, capital allocation, workforce housing orders, AmeriCasa litigation, and a note related to borrowers. Also mentioned Q1 was solid, balance sheet in great shape, workforce housing orders encouraging, and Georgia being a question mark.

Total net revenue for the quarter was $34.4 million, down 3.7% from $35.7 million a year ago. Net income grew to $10.0 million from $10.3 million, and diluted EPS came in at $0.46, up from $0.41 in 2025. Product sales were $21.6 million, down 11.3%. Inventory finance sales were down about $7.6 million, or 68%. Retail store sales nearly doubled, up 81% to $6.1 million. Direct sales were up 80% to $2.7 million. Commercial sales to mobile home parks grew 12% to $7.6 million. Loan portfolio interest income was $11.3 million, up 6.2%. Cost of product sales was down 13.1%, SG&A came in at $5.8 million, down 8.3%.

Q1 was solid and 2026 has kept the streak of no quarterly loss going. Next two quarters should be impressive based on houses already built. Expect good three quarters ahead but being conservative. SG&A expected to have further declines, maybe 10% reduction by end of year. Business in Texas good probably all the way through 2027 and maybe beyond that.

Inflation picked up, Fed holding benchmark rate steady, 30-year mortgage rates above 6% affecting affordability. Tariffs still affecting cost structure with Supreme Court ruling on some tariffs and new investigations. Deportations affecting sentiment of people buying mobile homes but not significantly affecting loan portfolio yet. AmeriCasa litigation is early and not material but could have unknown outcomes. The note related to borrowers is in negotiation and outcome unknown.

Q: How has the environment changed over the last three months?

A: Demographics not healthy, growth geographically particular. Higher interest rates good for industry but struggle with where to put mobile homes. Industry not good at providing community solutions like site-built housing.

Q: Comment on demand in April and early May?

A: Traditional demand not great, nontraditional like data centers and oilfield good.

Q: Detail on workforce housing deal size, timing of revenue recognition?

A: Around 600 units with deposits in Texas, half shipped in Q2, remaining in Q3 and Q4.

Q: Sustainability of SG&A, further cuts or areas to add?

A: Expect further declines in SG&A, maybe 10% reduction by end of year.

Q: Pressure on labor and ability to hit new production goals?

A: Deportations affect sales to Spanish market but retail portfolio with 70% Hispanic behaving well, repossession at historical norm.