Full Year 2025 Legacy Housing Corp Earnings Call

March 13, 2026

Operator: Good day, and thank you for standing by. Welcome to the Legacy Housing Corporation Q4 2025 Earnings Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Curtis Hodgson, Executive Chairman.

Speaker #1: Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced.

Speaker #1: To withdraw your question, please press star 11 again. I would now like to end the conference and turn it over to your speaker today, Kurt Hodgson, Executive Chairman.

Speaker #1: Good morning. This is Kurt Hodgson, Executive Chairman. I'm here with John Langberg, our Chief Financial Officer. Thank you for joining our fourth quarter and full year 2025 conference call.

Curtis Hodgson: Good morning. This is Curtis Hodgson, Executive Chairman. I'm here with Jon Langbert, our Chief Financial Officer. Thank you for joining our Q4 and Full Year 2025 Conference Call. Jon will read the Safe Harbor disclosure before we get started.

Curtis D. Hodgson: Good morning. This is Curtis Hodgson, Executive Chairman. I'm here with Jon Langbert, our Chief Financial Officer. Thank you for joining our Q4 and Full Year 2025 Conference Call. Jon will read the Safe Harbor disclosure before we get started.

Speaker #1: John will read the Safe Harbor Disclosure before we get started. Great. Before we begin, I'm reminding our listeners that management's prepared remarks today will contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions.

Jon Langbert: Great. Before we begin, I'm reminding our listeners that management's prepared remarks today will contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations. We refer you to a more detailed discussion of the risks and uncertainties in the company's annual report filed yesterday with the Securities and Exchange Commission. Any projections as to the company's future performance represent management's estimates as of today's call. Legacy Housing assumes no obligation to update these projections in the future unless otherwise required by applicable law.

Speaker #1: Therefore, the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations. We refer you to a more detailed discussion of the risks and uncertainties in the company's annual report filed yesterday with the Securities and Exchange Commission.

Speaker #1: Any projections as to the company's future performance represent management's estimates as of today's call. Legacy Housing assumes no obligation to update these projections in the future unless otherwise required by applicable law.

Speaker #1: Thanks, John. I'm going to turn the call back over to John now for review of our full year and fourth quarter 2025 performance, after which I will speak briefly with my thoughts and some additional corporate updates. Then we'll open the call up for Q&A.

Curtis Hodgson: Thanks, Jon. I'm going to turn the call over back to Jon now for a review of our full year and Q4 2025 performance. After which I will speak briefly with my thoughts and some additional corporate updates. We'll open the call up for Q&A.

Curtis D. Hodgson: Thanks, Jon. I'm going to turn the call over back to Jon now for a review of our full year and Q4 2025 performance. After which I will speak briefly with my thoughts and some additional corporate updates. We'll open the call up for Q&A.

Speaker #1: Thanks, Kurt. Let's get straight to the numbers. I'll cover the full year first, then give some color on how the fourth quarter shaped up specifically.

Jon Langbert: Thanks, Kurt. Let's get straight to the numbers. I'll cover the full year first, then give some color on how the Q4 shaped up specifically. For the full year ended December 31, 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. We sold 1,703 units in 2025, down from 2,129 in 2024. A decline of about 20%. However, net revenue per unit sold increased 13% to $68,700 from $60,800 in 2024.

Speaker #1: For the full year ended December 31, 2025, total net revenue was $164.6 million compared to $184.2 million in 2024, a decrease of $19.6 million, or 10.7%.

Speaker #1: Product sales decreased $12.4 million, or 9.6%, to $116.9 million. We sold 1,703 units in 2025, down from 2,129 in 2024—a decline of about 20%.

Speaker #1: However, net revenue per unit sold increased 13% to $68,700 from $60,800 in '24, as we implemented price increases to offset rising raw material costs and the impact of tariffs on goods imported from China.

Jon Langbert: As we implemented price increases to offset rising raw material costs and the impact of tariffs on goods imported from China. Tariffs continue to add roughly $1,200 to the cost of the standard floor plan. The primary driver of the product sales decline was commercial sales to mobile home park customers, which fell $16.8 million or 30% as park operators scaled back orders, due to capital caution following sharp cost inflation, already high occupancy rates, and tighter financing conditions. Partially offsetting this were increases in direct sales of $2.3 million, or 25%, and retail store sales of $2.5 million or 12.7% as we focused on growing our company-owned store network.

Speaker #1: Tariffs continue to add roughly $1,200 to the cost of a standard floor plan. The primary driver of the product sales decline was commercial sales to mobile home park customers, which fell $16.8 million, or 30%, as park operators scaled back orders due to capital caution following sharp cost inflation.

Speaker #1: Already high occupancy rates and tighter financing conditions. Partially offsetting this were increases in direct sales of $2.3 million, or 25%, and retail store sales of $2.5 million, or 12.7%, as we focused on growing our company-owned store network.

Speaker #1: Consumer mobile home park and dealer loan interest income increased to $43.7 million, up $2.5 million, or 6.1%, compared to 2024. This increase was primarily driven by growth in the consumer loan portfolio.

Jon Langbert: Consumer, mobile home park, and dealer loan interest income increased to $43.7 million, up $2.5 million or 6.1% compared to 2024. This increase was primarily driven by growth in the consumer loan portfolio. Our consumer loan portfolio grew $24.7 million to $203.6 million at year-end, up 14%. The mobile home park note portfolio decreased $9.1 million to $199.1 million, primarily due to parks paying off notes early. Dealer inventory finance loans decreased to $28.4 million. Other revenue decreased $9.7 million or 71%, primarily due to an $8.8 million decrease in land sales, both of which were significant non-recurring items in 2024, as well as a $1 million decrease in forfeited deposits.

Speaker #1: Our consumer loan portfolio grew $24.7 million to $203.6 million at year-end, up 14%. The mobile home park note portfolio decreased $9.1 million to $199.1 million, primarily due to parks paying off notes early.

Speaker #1: Dealer inventory finance loans decreased to $28.4 million. Other revenue decreased $9.7 million, or 71%, primarily due to an $8.8 million decrease in land sales, both of which were significant non-recurring items in 2024, as well as a $1 million decrease in forfeited deposits.

Speaker #1: On the cost side, cost of product sales decreased $5.2 million, or 5.8%, related to the lower unit volumes, though this was partially offset by higher raw material costs and tariff impacts.

Jon Langbert: On the cost side, cost of product sales decreased $5.2 million or 5.8% related to the lower unit volumes, though this was partially offset by higher raw material costs and tariff impacts. 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. The primary driver was a $4.5 million increase in the loan loss provision, reflecting our growing loan portfolios and a more conservative reserving posture. Additional increases included $1 million in legal costs and half a million dollars in warranty costs. Other non-operating income decreased $9.3 million versus 2024. This comparison is heavily influenced by a significant one-time gain that ran through 2024.

Speaker #1: 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.

Speaker #1: The primary driver was a $4.5 million increase in the loan loss provision, reflecting our growing loan portfolio and a more conservative reserving posture. Additional increases included $1 million in legal costs and half a million dollars in warranty costs.

Speaker #1: Other non-operating income decreased $9.3 million versus 2024. This comparison is heavily influenced by a significant one-time gain that ran through 2024, specifically a gain related to a loan settlement agreement and a property sale in Georgia.

Jon Langbert: Specifically, a gain related to a loan settlement agreement and a property sale in Georgia. Absent those items, the underlying comparison is more modest. For the full year, net income was $41.8 million compared to $61.6 million in 2024, a decrease of $19.8 million or 32.2%. Net income margin was 25.4%, down from 33.5% in 2024. Diluted earnings per share were $0.74 compared to $2.48 in 2024. From a balance sheet perspective, we ended the year with $8.5 million in cash, up from $1.1 million at the end of 2024.

Speaker #1: Absent those items, the underlying comparison is more modest. For the full year, net income was $41.8 million compared to $61.6 million in 2024, a decrease of $19.8 million, or 32.2%.

Speaker #1: Net income margin was 25.4%, down from 33.5% in 2024. Diluted earnings per share were $1.74, compared to $248 in 2024. From a balance sheet perspective, we ended the year with $8.5 million in cash, up from $1.1 million at the end of 2024.

Speaker #1: Our $50 million revolving credit facility with Prosperity Bank carried essentially zero balance at year-end, with only $1.2 million drawn, which was associated with the Americasa line of credit we assumed and subsequently paid off in January 2026.

Jon Langbert: Our $50 million revolving credit facility with Prosperity Bank carried essentially zero balance at year-end, only $1.2 million drawn, which was associated with the AmeriCasa line of credit we assumed and subsequently paid off in January 2026. The stockholders' equity was $528.6 million. Book value per share was $22.20 at the end of 2025, compared with $20.45 a year ago, an increase of $1.75 per share or about 8.6%. Legacy delivered an 8.2% return on shareholders' equity for 2025, and operating cash flow was strong at $37.2 million. Turning now to the Q4 specifically, it was shaped by two dynamics, stronger production volumes driven by our fall show in Fort Worth in late September, offset by continued cost pressures.

Speaker #1: Stockholders' equity was $528.6 million. Book value per share was $22.20 at the end of 2025, compared with $20.45 a year ago—an increase of $1.75 per share, or about 8.6%.

Speaker #1: Legacy delivered an 8.2% return on shareholders' equity for 2025, and operating cash flow was strong at $37.2 million. Turning now to the fourth quarter specifically, it was shaped by two dynamics: stronger production volumes driven by our fall show in Fort Worth in late September, offset by continued cost pressures.

Speaker #1: Q4 net income came in at approximately $8.2 million, compared to $14.5 million in Q4 of '24, a decline of roughly 43%. Net revenue decreased $16 million, or 29%, compared to Q4 of '24.

Jon Langbert: Q4 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. Fully $12.5 million of the net revenue decrease related to a non-recurring sale of a mobile home park project, including land and homes acquired previously in foreclosure during Q4 of 2024. Also, the decline in net income was impacted by an increase in SG&A of $3.5 million or 60% compared to 2024, as the company absorbed costs associated with the AmeriCasa transaction and increased loan loss provisions based on updates to our loan loss policy.

Speaker #1: Fully $12.5 million of the net revenue decrease related to a non-recurring sale of a mobile home park project, including land and homes acquired previously in foreclosure during Q4 of '24.

Speaker #1: Also, the decline in net income was impacted by an increase in SG&A of $3.5 million, or 60%, compared to 2024, as the company absorbed costs associated with the Americasa transaction and increased loan loss provisions based on updates to our loan loss policy.

Speaker #1: Also, certain one-time non-operating gains and other income during Q4 of '24 resulted in a $2.4 million decline in before-tax income in the comparison between Q4 '25 and '24.

Jon Langbert: Also, certain one-time non-operating gains and other income during Q4 of 2024 resulted in a $2.4 million decline in the before-tax income in the comparison between Q4 2025 and 2024. On the positive side, the fall show generated strong dealer and park customer orders that translated into materially higher production in Q4 relative to Q3. Loan interest income for the Q4 reached approximately $11.3 million, up from the prior year quarter as our consumer portfolio continued to grow throughout the year. On credit quality, we ended the Q4 in strong shape. At December 31, 2025, 98.4% of mobile home park notes and 97.4% of consumer loans are current or fewer than thirty days past due.

Speaker #1: On the positive side, the fall show generated strong dealer and park customer orders that translated into materially higher production in Q4 relative to Q3.

Speaker #1: Loan interest income for the fourth quarter reached approximately $11.3 million, up from the prior year quarter, as our consumer portfolio continued to grow throughout the year.

Speaker #1: On credit quality, we ended the fourth quarter in strong shape. At December 31st, '25, 98.4% of mobile home park notes and 97.4% of consumer loans were current or fewer than 30 days past due.

Speaker #1: We ended the full year with $8.5 million in cash and near zero leverage, a strong position from which to fund future growth. I'll turn things back over to Kurt now.

Jon Langbert: We ended the full year with $8 and a half million in cash and near zero leverage, a strong position from which to fund future growth. I'll turn things back over to Kurt now.

Speaker #1: Thanks, John. Let me quickly cover my perception of our current market environment, then discuss a few strategic topics, and share some concluding thoughts. The main failure is the housing industry is continuing to face headwinds.

Curtis Hodgson: Thanks, John. Let me quickly cover my perception of our current market environment, then discuss a few strategic topics and share some concluding thoughts. The manufactured housing industry is continuing to face headwinds, and it did so throughout 2025. Despite persistent housing affordability problem for our markets, manufactured homes, of course, remain roughly two-thirds less expensive than site-built homes. Falling consumer confidence and tariff-driven price increases restrained growth. Industry shipments were running at an annualized rate of approximately 106,000 last year. Our own unit volumes were down approximately 20% year-over-year. The long-term structural case for affordable manufactured housing has never been stronger. The affordability gap between what we build and a site-built house continues to widen. Manufactured homes average about $98.5 per sq ft versus double that for site-built construction.

Curtis D. Hodgson: Thanks, John. Let me quickly cover my perception of our current market environment, then discuss a few strategic topics and share some concluding thoughts. The manufactured housing industry is continuing to face headwinds, and it did so throughout 2025. Despite persistent housing affordability problem for our markets, manufactured homes, of course, remain roughly two-thirds less expensive than site-built homes. Falling consumer confidence and tariff-driven price increases restrained growth. Industry shipments were running at an annualized rate of approximately 106,000 last year. Our own unit volumes were down approximately 20% year-over-year. The long-term structural case for affordable manufactured housing has never been stronger. The affordability gap between what we build and a site-built house continues to widen. Manufactured homes average about $98.5 per sq ft versus double that for site-built construction.

Speaker #1: And it did so throughout 2025. Despite the persistent housing affordability problem for our markets, manufactured homes, of course, remain roughly two-thirds less expensive than site-built homes.

Speaker #1: Falling consumer confidence and tariff-driven price increases restrain growth. Industry shipments were running at an annualized rate of approximately 106,000 last year. Our own unit volumes were down approximately 20% year over year.

Speaker #1: The long-term structural case for affordable manufactured housing has never been stronger. The affordability gap between what we build and site-built houses continues to widen.

Speaker #1: Manufactured homes average about $85 per square foot, versus double that for site-built construction. We are well positioned to serve the roughly 63 million U.S. households with annual incomes below $75,000.

Curtis Hodgson: We are well-positioned to serve the roughly 63 million US households with annual incomes below $75,000. Let me run through a couple specific topics. On the retail and dealer side, unit sales were lower year-over-year. The revenue rose sharply as price increases took hold and the size of our unit was up slightly. Our 14 company-owned Heritage and Tiny Homes retail locations were 12% higher in 2025 than 2024. On the community side, commercial sales to park owners and developers fell as operators scaled back. Our operators have been unable to raise rents as fast as price increases have been going on in our industry. We believe it's a cyclical pause rather than a structural change. Underlying tenant demand remains stable.

Curtis D. Hodgson: We are well-positioned to serve the roughly 63 million US households with annual incomes below $75,000. Let me run through a couple specific topics. On the retail and dealer side, unit sales were lower year-over-year. The revenue rose sharply as price increases took hold and the size of our unit was up slightly. Our 14 company-owned Heritage and Tiny Homes retail locations were 12% higher in 2025 than 2024. On the community side, commercial sales to park owners and developers fell as operators scaled back. Our operators have been unable to raise rents as fast as price increases have been going on in our industry. We believe it's a cyclical pause rather than a structural change. Underlying tenant demand remains stable.

Speaker #1: But let me run through a couple specific topics. On the retail and dealer side, unit sales were lower year over year.

Speaker #1: The revenue rose sharply as price increases took hold, and the size of our unit was up slightly. Our 14 company-owned Heritage and Tiny House retail locations were 12% higher in '25 than '24.

Speaker #1: On the community side, commercial sales to park owners and developers fell as operators scaled back. Our operators have been unable to raise rents as fast as price increases have been going on in our industry.

Speaker #1: We believe it's a cyclical pause rather than a structural change. Underlying tenant demand remains stable. Occupancy rates in the mobile home parks, particularly in large metropolitan areas, are very high.

Curtis Hodgson: Occupancy rates in the mobile home parks, particularly in large metropolitan areas, are very high. In our finance division, the loan portfolio generated $43 million in interest income last year, and we expect continued growth as consumer portfolio expands. Credit quality remains strong, over 97% current across all of our portfolios. We are seeing modestly higher charge-off activity and have increased our loan loss reserves accordingly, which is reflected in the SG&A increase Jon described. In fact, I believe there's going to be around an $8 million delta between that which we pay taxes on, because we're not allowed to deduct loan loss provisions and our GAAP income that we're reporting to you today. On tariffs and raw materials, we continue to monitor the situation closely. It seems to change almost every day.

Curtis D. Hodgson: Occupancy rates in the mobile home parks, particularly in large metropolitan areas, are very high. In our finance division, the loan portfolio generated $43 million in interest income last year, and we expect continued growth as consumer portfolio expands. Credit quality remains strong, over 97% current across all of our portfolios. We are seeing modestly higher charge-off activity and have increased our loan loss reserves accordingly, which is reflected in the SG&A increase Jon described. In fact, I believe there's going to be around an $8 million delta between that which we pay taxes on, because we're not allowed to deduct loan loss provisions and our GAAP income that we're reporting to you today. On tariffs and raw materials, we continue to monitor the situation closely. It seems to change almost every day.

Speaker #1: In our finance division, the loan portfolio generated $43 million in interest income last year, and we expect continued growth as the consumer portfolio expands. Credit quality remains strong, with over 97% current across all of our portfolios.

Speaker #1: We are seeing modestly higher charge-off activity and have increased our loan loss reserves accordingly, which is reflected in the SG&A increase John described. In fact, I believe there's going to be around an $8 million delta between that which we pay taxes on because we're not allowed to deduct loan loss provisions and our GAAP income that we're reporting to you today.

Speaker #1: On tariffs and raw materials, we continue to monitor the situation closely. It seems to change almost every day. Tariffs on Chinese-sourced inputs currently add about $1,200 to the cost of each of our homes.

Curtis Hodgson: Tariffs on Chinese-sourced inputs currently add about $1,200 to the cost of each of our homes. I have to ask my buyers what's the latest on tariffs, and the bottom line is we currently are paying 35% tariff on anything we import from China. We repurchased 346,000 shares last year, and our existing repurchase program expired in October, although we did initiate a $10 million buyback program at our last board meeting, and we will be evaluating whether to repurchase, you know, on an ongoing basis. On development, we of course have one super big project going on in Austin. I keep predicting that it's near finish.

Curtis D. Hodgson: Tariffs on Chinese-sourced inputs currently add about $1,200 to the cost of each of our homes. I have to ask my buyers what's the latest on tariffs, and the bottom line is we currently are paying 35% tariff on anything we import from China. We repurchased 346,000 shares last year, and our existing repurchase program expired in October, although we did initiate a $10 million buyback program at our last board meeting, and we will be evaluating whether to repurchase, you know, on an ongoing basis. On development, we of course have one super big project going on in Austin. I keep predicting that it's near finish.

Speaker #1: I have to ask my buyers what's the latest on tariffs, and the bottom line is we currently are paying a 35% tariff on anything we import from China.

Speaker #1: We repurchased 346,000 shares last year, and our existing repurchase program expired in October. Although we did initiate a $10 million buyback program at our last board meeting, we will be evaluating whether to repurchase on an ongoing basis.

Speaker #1: On development, we of course have one super big project going on in Austin. I keep predicting that it's near finish. One of these days I'll be right, but I really think we'll be putting homes into consumers in the calendar year 2026, although it may be the third or fourth quarter before that happens.

Curtis Hodgson: One of these days I'll be right, but I really think we'll be putting homes into consumers in the calendar year 2026, although it may be the Q3 or Q4 before that happens. We have 10 land development projects in total, many of which are already engineered and entitled. Our three manufacturing facilities, Fort Worth, Commerce, and Eatonton, produced 1,549 homes in 2025. We're certain to be able to outstrip that this year. We've been running pretty much at capacity at both Texas facilities since the first of the year. We're probably gonna do just in Texas alone the 1,500 units that we did company-wide last year. On workforce housing and data center opportunities, we have continued to exploit that.

Curtis D. Hodgson: One of these days I'll be right, but I really think we'll be putting homes into consumers in the calendar year 2026, although it may be the Q3 or Q4 before that happens. We have 10 land development projects in total, many of which are already engineered and entitled. Our three manufacturing facilities, Fort Worth, Commerce, and Eatonton, produced 1,549 homes in 2025. We're certain to be able to outstrip that this year. We've been running pretty much at capacity at both Texas facilities since the first of the year. We're probably gonna do just in Texas alone the 1,500 units that we did company-wide last year. On workforce housing and data center opportunities, we have continued to exploit that.

Speaker #1: We have 10 land development projects in total, many of which are already engineered and entitled. Our three manufacturing facilities are in Fort Worth, Commerce, and Edenton.

Speaker #1: Produce 1,549 homes in 2025. We're certain to be able to outstrip that this year. We are—we've been running pretty much at capacity at both Texas facilities since the first of the year.

Speaker #1: We're probably going to do, just in Texas alone, the 1,500 units that we did company-wide last year. On workforce housing and data center opportunities, we continue to exploit that.

Speaker #1: We've already taken orders for over 500 houses in this space this year. It's a potentially significant growth avenue. It complements our core business, and it's something that we're pretty good at.

Curtis Hodgson: We've already taken orders for over 500 houses in this space this year. It's a potentially significant growth avenue, and it complements our core business, and it's something that we're pretty good at. We also completed a small tuck-in acquisition, AmeriCasa, in November. It added a consumer loan portfolio, a retail location, and some technology. I don't expect that acquisition to make much of a difference in 2026, although the prospects of some of the financing, especially the technology, still looks pretty strong. For closing thoughts, let me just close on a couple things on where I think we stand. Legacy, you know, delivers consistent profitability. We've never had a quarterly loss in our history.

Curtis D. Hodgson: We've already taken orders for over 500 houses in this space this year. It's a potentially significant growth avenue, and it complements our core business, and it's something that we're pretty good at. We also completed a small tuck-in acquisition, AmeriCasa, in November. It added a consumer loan portfolio, a retail location, and some technology. I don't expect that acquisition to make much of a difference in 2026, although the prospects of some of the financing, especially the technology, still looks pretty strong. For closing thoughts, let me just close on a couple things on where I think we stand. Legacy, you know, delivers consistent profitability. We've never had a quarterly loss in our history.

Speaker #1: We also completed a small tuck-in acquisition, Americasa, in November. It added a consumer loan portfolio, a retail location, and some technology. I don't expect that acquisition to make much of a difference in 2026, although the prospects of some of the foundation, especially in the technology, still look pretty strong.

Speaker #1: For closing thoughts, let me just close a couple things that I'm aware I think where we stand. Legacy delivers consistent profitability. We've never had a quarterly loss in our history.

Speaker #1: This year's increase in book value of eight point something percent is the worst year we've had, but most of that was— it was largely affected, Elizabeth, this way, by increasing provisions for loans. As the economy gets a little less certain, the CECL requirements under accounting increase several million dollars.

Curtis Hodgson: This year's increase in book value of 8-something percent is the worst year we've had, but most of that was largely affected, let's put it this way, by increasing provisions for loans as the economy gets a little less certain. The CECL requirements under accounting increased $several million, and that shows up in Q4. Our balance sheet is conservatively stated. Book value is $22.20 a share. I personally believe that liquidation value is significantly higher than book value because of all the provisions we take. Our valuation when we started was about $700,000. We've grown shareholders' equity to $528 million over these 20 years. A pretty good IRR. I'm not gonna broadcast it because it's just pretty extreme.

Curtis D. Hodgson: This year's increase in book value of 8-something percent is the worst year we've had, but most of that was largely affected, let's put it this way, by increasing provisions for loans as the economy gets a little less certain. The CECL requirements under accounting increased $several million, and that shows up in Q4. Our balance sheet is conservatively stated. Book value is $22.20 a share. I personally believe that liquidation value is significantly higher than book value because of all the provisions we take. Our valuation when we started was about $700,000. We've grown shareholders' equity to $528 million over these 20 years. A pretty good IRR. I'm not gonna broadcast it because it's just pretty extreme.

Speaker #1: And that shows up in the fourth quarter. Our balance sheet is conservatively stated. Book value is $22.20 a share. I personally believe that liquidation value is significantly higher than book value because of all the provisions we take.

Speaker #1: And our valuation when we started was about $700,000. We've grown shareholders' equity to $528 million over these 20 years. A pretty good IRR—I'm not going to broadcast it because it's just pretty extreme.

Speaker #1: But as long as we keep growing at 8, 10, 12 percent per year, we'll be a billion-dollar company probably by the turn of this decade, and beyond that as we progress.

Curtis Hodgson: As long as we keep growing at 8, 10, 12% per year, we'll be a billion-dollar company probably by the turn of this decade and beyond that as we progress. With our stock trading near book value or today below book value, we view this period as an opportunity to reinvigorate growth and innovation, should increase profit margin, increase stock premium. If the stock continues to trade at or below book value, we will use our balance sheet strength to repurchase shares opportunistically. In short, this is a great time to be an owner of Legacy. There really isn't any downside. You own a part of a company that has never lost money in any year since its founding, that's conservatively capitalized, and is perfectly positioned to provide affordable housing to thousands of families as affordability moves to the front of the national agenda.

Curtis D. Hodgson: As long as we keep growing at 8, 10, 12% per year, we'll be a billion-dollar company probably by the turn of this decade and beyond that as we progress. With our stock trading near book value or today below book value, we view this period as an opportunity to reinvigorate growth and innovation, should increase profit margin, increase stock premium. If the stock continues to trade at or below book value, we will use our balance sheet strength to repurchase shares opportunistically. In short, this is a great time to be an owner of Legacy.

Speaker #1: With our stock trading near book value today, below book value, we view this period as an opportunity to reinvigorate growth and innovation. This should increase profit margins and create a stock premium.

Speaker #1: If the stock continues to trade at or below book value, we will use our balance sheet strength to repurchase shares opportunistically. In short, this is a great time to be an owner of Legacy.

Speaker #1: There really isn't any downside. You own a part of a company that has never lost money in any year since its founding, is conservatively capitalized, and is perfectly positioned to provide affordable housing to thousands of families as affordability moves to the front of the national agenda. And Texas, in particular, has a front row in all the data center business, which for us is just what we often do in the oil fields.

Curtis D. Hodgson: There really isn't any downside. You own a part of a company that has never lost money in any year since its founding, that's conservatively capitalized, and is perfectly positioned to provide affordable housing to thousands of families as affordability moves to the front of the national agenda. Texas, in particular, has a front row in all the data center business, which for us is just what we often do in the oil fields. We provide workforce housing for rural areas that are experiencing growth. Operator, this concludes my prepared remarks. Please begin the question and answer.

Curtis Hodgson: Texas, in particular, has a front row in all the data center business, which for us is just what we often do in the oil fields. We provide workforce housing for rural areas that are experiencing growth. Operator, this concludes my prepared remarks. Please begin the question and answer.

Speaker #1: We provide workforce housing for rural areas that are experiencing growth. Operator, this concludes my prepared remarks. Please begin the question and answer.

Speaker #2: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Rohit Seth with B. Riley. You may proceed.

Speaker #2: One moment for questions. Our first question comes from Rohit Seth with B. Reilly. You may proceed.

Speaker #3: Hey, thanks for taking my question. I'm trying to reconcile two things. The ASP per section dropped about 15% sequentially, but the ASP increased 12%.

Rohit Seth: Hey, thanks for taking my question. I'm trying to reconcile two things. The ASP per section dropped about 15% sequentially, but the ASP increased 12% and gross margin improved. Is that purely a function of selling more double wides or per section revenue is lower but unit profitability is higher? Is there a pricing element, maybe discounting to move some excess finished inventory that you bought last quarter?

Speaker #3: And gross margin improved. Is that purely a function of selling more double-wides, or is per-section revenue lower, but unit profitability higher? Is there a pricing element?

Speaker #3: Maybe discounting to move some excess inventory that you'd like moved last quarter?

Speaker #4: Yeah. We measure production with this curve. We measure production per floor, and that's kind of how we track things. So we report to y'all, oftentimes, per unit.

Curtis Hodgson: Yeah. We measure production. This is Curtis Hodgson. We measure production per floor, and that's kinda how we track things. We report to y'all oftentimes per unit. If we have more double wides, our price per unit of course is higher than if we have single wides. Now, in the workforce housing space, it's substantially all single wides. We sell at such high premiums and such high values in workforce housing. I believe the average cost per floor, per unit, one and the same in workforce housing, for the orders we've taken this year is over $85,000. That's part of the disparity you're seeing. We're enjoying greater margins, especially product, and I think that's probably explains why the margin is doing just fine even though the number of units we sold was less.

Curtis D. Hodgson: Yeah. We measure production. This is Curtis Hodgson. We measure production per floor, and that's kinda how we track things. We report to y'all oftentimes per unit. If we have more double wides, our price per unit of course is higher than if we have single wides. Now, in the workforce housing space, it's substantially all single wides. We sell at such high premiums and such high values in workforce housing. I believe the average cost per floor, per unit, one and the same in workforce housing, for the orders we've taken this year is over $85,000. That's part of the disparity you're seeing. We're enjoying greater margins, especially product, and I think that's probably explains why the margin is doing just fine even though the number of units we sold was less. Does that answer your question?

Speaker #4: So if we have more double-wides, our price per unit, of course, is higher than if we have single-wides. Now, in the workforce housing space, it's substantially all single-wides.

Speaker #4: But we sell at such high premiums and such high values in workforce housing. I believe the average cost per floor per unit, one and the same in workforce housing, for the orders we've taken this year is over $85,000.

Speaker #4: So that's part of the disparity you're seeing. We're enjoying greater margins, and especially on product. And I think that probably explains why the margin is doing just fine even though the number of units we sold was less.

Speaker #4: Does that answer your question?

Curtis Hodgson: Does that answer your question?

Speaker #3: Yeah, yeah, it does. If I can get a follow-up—you mentioned on volume growth, you mentioned last quarter in Q1 looking better than Q4, and a trade show backlog that was extending well into the first quarter.

Rohit Seth: Yeah. Yeah, it does. If I can get a follow-up. You mentioned on volume growth last quarter in Q1 looking better than Q4, and it creates your backlog is extending well into Q1. Now, Q4 came in 1,070 sections. So are we in that 650 range for Q1, or has demand picture changed?

Speaker #3: Now, Q4 came in at 570 sections. So, are we in that 650 range for Q1, or has the demand picture changed?

Curtis Hodgson: A lot of our workforce housing orders really won't show up in revenue till Q2. In fact, I think right now we are in finished goods inventory, probably at an all-time high, almost all of which has a very big customer name attached to it. It's like every development project. If you're doing business with one of the big seven tech companies, and they think they're gonna need housing in February, well, they really don't need it till May. But they went ahead and bought it and gave us purchase orders, so we've produced it. We're obligated to produce it, but we won't be recognizing the revenue until shipment. I think a lot of what we've already built in Q1 won't show up as revenue till Q2.

Curtis D. Hodgson: A lot of our workforce housing orders really won't show up in revenue till Q2. In fact, I think right now we are in finished goods inventory, probably at an all-time high, almost all of which has a very big customer name attached to it. It's like every development project. If you're doing business with one of the big seven tech companies, and they think they're gonna need housing in February, well, they really don't need it till May. But they went ahead and bought it and gave us purchase orders, so we've produced it. We're obligated to produce it, but we won't be recognizing the revenue until shipment. I think a lot of what we've already built in Q1 won't show up as revenue till Q2.

Speaker #4: A lot of our workforce housing orders really won't show up in revenue until Q2. In fact, I think right now we are in finished goods inventory probably at an all-time high.

Speaker #4: Almost all of which has a very big customer name attached to it. It's like every developer project. If you're doing business with one of the big seven tech companies and they think they're going to need housing in February, well, they really don't need it until May.

Speaker #4: But they went ahead and bought it and gave us purchase orders. So we've produced it. We were obligated to produce it. But we won't be recognizing the revenue until shipment.

Speaker #4: And I think a lot of what we've already built in Q1 won't show up as revenue until Q2.

Speaker #3: Understood. And then last one, maybe you can talk about this Road to Housing Act that's passing through Congress. They removed the steel component, the chassis—do you want to make any comments on the impact to Legacy?

Rohit Seth: Understood. Last one. Maybe you can talk about this ROAD to Housing Act that's passing through Congress to remove.

Rohit Seth: Understood. Last one. Maybe you can talk about this ROAD to Housing Act that's passing through Congress to remove. We need the steel component, the chassis. Do you wanna make any comments on the impact to Legacy?

Rohit Seth: We need the steel component, the chassis. Do you wanna make any comments on the impact to Legacy?

Speaker #4: Yeah, that's a very interesting piece of legislation that's moving through. The definition of manufactured homes, ever since I've been in it—which is 40-something years—has always included a permanent foundation.

Curtis Hodgson: Yeah. That's a very interesting piece of legislation that's moving through. The definition of manufactured homes ever since I've been in it, which is 40-something years, has always included a permanent foundation. A permanent chassis, I'm sorry. They're removing that, and that's about $2,000 or $3,000 per floor when we manufacture it and leave it. There may be an opportunity to retrieve, return those chassis to the factory depending on how the houses are being set up. I don't look at that being material because by the time we get it back, recondition it, and recycle it, we're not gonna save a significant amount of money. Even if we did, we'd be just passing it on to the consumer.

Curtis D. Hodgson: Yeah. That's a very interesting piece of legislation that's moving through. The definition of manufactured homes ever since I've been in it, which is 40-something years, has always included a permanent foundation. A permanent chassis, I'm sorry. They're removing that, and that's about $2,000 or $3,000 per floor when we manufacture it and leave it. There may be an opportunity to retrieve, return those chassis to the factory depending on how the houses are being set up. I don't look at that being material because by the time we get it back, recondition it, and recycle it, we're not gonna save a significant amount of money. Even if we did, we'd be just passing it on to the consumer.

Speaker #4: A permanent chassis. I'm sorry. They're removing that. And that's about $2,000 or $3,000 per floor when we manufacture and leave it. There may be an opportunity to retrieve, return those chassis to the factory depending on how the house they're being set up.

Speaker #4: I don't look at that being material, because by the time we get it back, recondition it, and recycle it, we're not going to save a significant amount of money.

Speaker #4: And even if we did, we'd be just passing it on to the consumer. So the neat thing about it is, we'll be able to get the houses lower.

Curtis Hodgson: The neat thing about it is we'll be able to get the houses lower because a 12-inch I-beam won't be underneath the house anymore. Normally we install it about 40 to 48 inches above ground level for our finished floor, and we may be able to decrease that by 10 or 12 inches, which would be an advantage to the industry as a whole. That's about it. There's another concept working its way through called duplex. In addition to a permanent chassis being part of the definition, a single family dwelling has also historically been part of the definition. Now they're gonna allow duplex, duplexes. In certain urban environments, that could be some sort of a, some marketing advantage.

Curtis D. Hodgson: The neat thing about it is we'll be able to get the houses lower because a 12-inch I-beam won't be underneath the house anymore. Normally we install it about 40 to 48 inches above ground level for our finished floor, and we may be able to decrease that by 10 or 12 inches, which would be an advantage to the industry as a whole. That's about it. There's another concept working its way through called duplex. In addition to a permanent chassis being part of the definition, a single family dwelling has also historically been part of the definition. Now they're gonna allow duplex, duplexes. In certain urban environments, that could be some sort of a, some marketing advantage.

Speaker #4: Because a 12-inch I-beam won't be underneath the house anymore. So normally, we install at about 40 to 48 inches above ground level for our finished floor.

Speaker #4: And we may be able to decrease that by 10 or 12 inches, which would be an advantage to the industry as a whole. That's about it.

Speaker #4: There's another concept working its way through called 'duplex.' In addition to a permanent chassis being part of the definition, a single-family dwelling has also historically been part of the definition.

Speaker #4: And now they're getting a lot of duplexes, and in certain urban environments, that could be some sort of a marketing advantage. So there's a little bit of governmental tailwinds in our industry, but not nearly as much as I was anticipating.

Curtis Hodgson: There's a little bit of governmental tailwinds in our industry, but not nearly as much as I was anticipating. I was really anticipating that Washington, DC would encourage people to become homeowners, including what we build. But having listened to the entire State of the Union speech the other day, I didn't hear any such proposal on the table. We're not getting much tailwind from a legislative point of view.

Curtis D. Hodgson: There's a little bit of governmental tailwinds in our industry, but not nearly as much as I was anticipating. I was really anticipating that Washington, DC would encourage people to become homeowners, including what we build. But having listened to the entire State of the Union speech the other day, I didn't hear any such proposal on the table. We're not getting much tailwind from a legislative point of view.

Speaker #4: I really anticipated that Washington, DC would encourage people to become homeowners, including what we build. But having listened to the entire State of the Union speech the other day, I didn't hear any such proposal on the table.

Speaker #4: So, we're not getting much tailwind from a legislative point of view.

Speaker #3: Understood. Thank you. I'll pass along.

Rohit Seth: Understood. Thank you. I'll pass it on.

Speaker #2: Thank you. Our next question comes from Mark Smith with Lake Street. You may proceed.

Operator: Thank you. Our next question comes from Mark Smith with Lake Street. You may proceed.

Speaker #5: Hi, guys. Wanted to ask a little bit about sales and demand. Kurt, you called out commercial sales and some weakness there in the fourth quarter.

Mark Smith: Hi, guys. Wanted to ask a little bit about kind of sales and demand. Just, Curtis, you called out commercial sales and some weakness there in Q4 as maybe these operators pulled back. Can you just tell us kind of what you're seeing from a demand perspective today and kinda how you feel about the year for commercial sales?

Speaker #5: Maybe these operators pulled back. Can you just tell us kind of what you're seeing from a demand perspective today, and kind of how you feel about the year for commercial sales?

Curtis Hodgson: You know, the only bright spot, Mark, I see are these workforce housing opportunities in rural places that are particularly robust for data centers. I mean, these people are spending money like, you know, drunken sailors. And that is an extremely bright point, and we're all participating in it. Not just Legacy, but our competition is building towards that. The end user, we still have a place to put 'em problem. In Austin, Texas, it costs $1,300 a month for a space if you can find one. You can always find something 100 miles, you know, out in the middle of nowhere. But if you wanna be within commuting distance of a major metropolitan area, there just isn't many places that are legal to park what we build.

Curtis D. Hodgson: You know, the only bright spot, Mark, I see are these workforce housing opportunities in rural places that are particularly robust for data centers. I mean, these people are spending money like, you know, drunken sailors. And that is an extremely bright point, and we're all participating in it. Not just Legacy, but our competition is building towards that. The end user, we still have a place to put 'em problem. In Austin, Texas, it costs $1,300 a month for a space if you can find one. You can always find something 100 miles, you know, out in the middle of nowhere. But if you wanna be within commuting distance of a major metropolitan area, there just isn't many places that are legal to park what we build.

Speaker #4: The only bright spot, Mark, I see are these workforce housing opportunities in rural places that are particularly robust for data centers. I mean, these people are spending money like drunken sailors.

Speaker #4: And that is an extremely bright point. And we're all participating in it—not just Legacy, but our competition is building towards that. The end user—we still have a place to put a problem.

Speaker #4: In Austin, Texas, it costs $1,300 a month for a space—if you can find one. So, you can always find something 100 miles out in the middle of nowhere, but if you want to be within community distance of a major benchmark area, there just aren't many places that are legal to park what we build.

Speaker #4: And that headwind—we've been fighting that ever since I've gotten in the industry, and it really hasn't improved that much. Fortunately, we had excess mobile home park spaces in many markets.

Curtis Hodgson: That headwind, you know, we've been fighting that ever since I've gotten in the industry, and it really hasn't improved that much. Fortunately, we had excess mobile home park spaces in many markets, and we've all participated in helping fill those. If you visit a metropolitan area of a million or more people, pretty much that mobile home park is now full. I don't care whether it's Austin, Texas, St. Louis, or Cleveland. There just isn't any empty mobile home spaces in significant metropolitan areas. The development side has been very weak. When you try to develop it like we are, and what we thought was gonna cost $40 or 50 thousand a space is actually turning out to cost $70, 80, 90 thousand a space by the time we make all the regulators happy.

Curtis D. Hodgson: That headwind, you know, we've been fighting that ever since I've gotten in the industry, and it really hasn't improved that much. Fortunately, we had excess mobile home park spaces in many markets, and we've all participated in helping fill those. If you visit a metropolitan area of a million or more people, pretty much that mobile home park is now full. I don't care whether it's Austin, Texas, St. Louis, or Cleveland. There just isn't any empty mobile home spaces in significant metropolitan areas. The development side has been very weak. When you try to develop it like we are, and what we thought was gonna cost $40 or 50 thousand a space is actually turning out to cost $70, 80, 90 thousand a space by the time we make all the regulators happy.

Speaker #4: And we all participated in helping fill those, but if it's in a metro area of a million or more people, pretty much that mobile home park is now full.

Speaker #4: I don't care whether it's Austin, Texas, or St. Louis, or Cleveland. There just isn't any empty mobile home spaces in significant metropolitan areas, and the development side has been very weak.

Speaker #4: And when you try to develop it like we are, what we thought was going to cost $40,000 or $50,000 a space is actually turning out to cost $70,000, $80,000, $90,000 a space by the time we make all the regulators happy.

Speaker #4: And that creates a big difference, a big gap, because normally the land component inside mobile housing is about 20 to 25 percent. But people are paying more for their park rent than they are for their payment on their mobile home.

Curtis Hodgson: That creates a big difference, a big gap because normally the land component in site-built housing is about 20% to 25%, but people are paying more for their park rent than they are for their payment on their mobile home. Our average mobile home payment is still under $800 a month in what we build. But yet people are having to pay $1,100, $1,200, $1,300, $1,400 a month to park it. That's the headwind that continues to exist in the industry. It's really not a factor in workforce housing 'cause they build dedicated communities. For run-of-the-mill retail business, where to put 'em and where to put 'em economically is a war, Mark. It just hasn't improved since I met you eight years ago.

Curtis D. Hodgson: That creates a big difference, a big gap because normally the land component in site-built housing is about 20% to 25%, but people are paying more for their park rent than they are for their payment on their mobile home. Our average mobile home payment is still under $800 a month in what we build. But yet people are having to pay $1,100, $1,200, $1,300, $1,400 a month to park it. That's the headwind that continues to exist in the industry. It's really not a factor in workforce housing 'cause they build dedicated communities. For run-of-the-mill retail business, where to put 'em and where to put 'em economically is a war, Mark. It just hasn't improved since I met you eight years ago. It's the same issue. All right.

Speaker #4: Our average mobile home payment is still under $800 a month in what we build. But yet people are having to pay $1,100, $1,200, $1,300, $1,400 a month to park it.

Speaker #4: And that's the headwind that continues to exist in the industry. It's really not a factor in workforce housing, because they build dedicated communities. But for run-of-the-mill retail business, where to put them and where to put them economically, it's a war, Mark.

Speaker #4: And it just hasn't improved since I met you eight years ago. It's the same issue. So, all right.

Curtis Hodgson: It's the same issue.

Mark Smith: Yeah.

Curtis Hodgson: So, um-

Mark Smith: Yeah.

Curtis Hodgson: All right.

Mark Smith: That leads to my next question. It's just as we think about kind of industry or channel inventory that's out there, are we seeing a build that puts a lag here for several quarters, or is that not really an issue?

Speaker #5: And that leads to my next question. Just as we think about industry or channel inventory that's out there, are we seeing a build that puts a lag here for several quarters?

Speaker #5: Or is that not really an—

Speaker #4: Yeah, I really think—I mean, it's a little bit negative to say, but the industry continues to be a niche business. Filling up existing mobile home parks, providing workforce housing, providing emergency housing in places that have been hit by weather issues or something like that.

Curtis Hodgson: Yeah, I really think, I mean, it's a little bit, you know, negative to say, but the industry continues to be a niche business, filling up existing mobile home parks, providing workforce housing, providing, you know, emergency housing in places that have been hit by weather issues or something like that. I would guess of the 106,000 mobile homes that were built last year, at least half of them went into one of those niche categories. So even though we could, and our mobile homes look and feel and act as well as any site-built house, the reality of it is, for general get-to-live-in-it consumer business, we probably are sitting there only really building 50, 60 thousand mobile homes a year for that market across the 134 operating plants in the United States.

Curtis D. Hodgson: Yeah, I really think, I mean, it's a little bit, you know, negative to say, but the industry continues to be a niche business, filling up existing mobile home parks, providing workforce housing, providing, you know, emergency housing in places that have been hit by weather issues or something like that. I would guess of the 106,000 mobile homes that were built last year, at least half of them went into one of those niche categories. So even though we could, and our mobile homes look and feel and act as well as any site-built house, the reality of it is, for general get-to-live-in-it consumer business, we probably are sitting there only really building 50, 60 thousand mobile homes a year for that market across the 134 operating plants in the United States.

Speaker #4: I would guess, of the 106,000 mobile homes that were built last year, at least half of them went into one of those niche categories.

Speaker #4: So even though we could, and our mobile homes look and feel and act as well as any site-built house, the reality of it is, for general get-a-living and consumer business, we're probably sitting there only really building 50,000, 60,000 mobile homes a year for that market across the 134 operating plants in the United States.

Speaker #4: And if you divide one into the other, nobody can make a profit building 400 mobile homes in a mobile home factory. It's just not enough volume.

Curtis Hodgson: If you divide one into the other, you know, nobody can make a profit building 400 mobile homes in a mobile home factory. It's just not enough volume. Unless we get some some sort of help from the Feds or some sort of push towards development in major metro areas, I think we have too many plants chasing too little market, to be quite frank. We're so conservative, you know. We would make money if the stock market went down 30% tomorrow, we would still make money. That's just because we don't have any debt, and we have $40 to 50 million a year interest coming in. This year will be better, Mark, in product profits at all levels.

Curtis D. Hodgson: If you divide one into the other, you know, nobody can make a profit building 400 mobile homes in a mobile home factory. It's just not enough volume. Unless we get some some sort of help from the Feds or some sort of push towards development in major metro areas, I think we have too many plants chasing too little market, to be quite frank. We're so conservative, you know.

Speaker #4: So, unless we get some sort of help from the feds, or some sort of push towards development in major metro areas, I think we have too many plants chasing too little market, to be quite frank.

Speaker #4: And but we're so conservative. We would make money if the stock market went down 30% tomorrow. We would still make money. But that's just because we don't have any debt and we have $40, $50 million a year interest coming in.

Curtis D. Hodgson: We would make money if the stock market went down 30% tomorrow, we would still make money. That's just because we don't have any debt, and we have $40 to 50 million a year interest coming in. This year will be better, Mark, in product profits at all levels. Retailing, manufacturing, even shipping will be better because the data center push nationwide is creating probably a demand of 20,000, 30,000, 40,000 units that frankly wasn't here last year or the year before. That tailwind alone is gonna help not just our company, but the industry as a whole.

Speaker #4: This year will be better, Mark. And product profits at all levels—retailing, manufacturing, even shipping—will be better because the data center push nationwide is creating probably a demand of 20,000, 30,000, 40,000 units that, frankly, wasn't here last year or the year before.

Curtis Hodgson: Retailing, manufacturing, even shipping will be better because the data center push nationwide is creating probably a demand of 20,000, 30,000, 40,000 units that frankly wasn't here last year or the year before. That tailwind alone is gonna help not just our company, but the industry as a whole.

Speaker #4: So that tailwind alone is going to help not just our company, but the industry as a whole.

Speaker #5: Yeah. And as we think about kind of where the demand is for homes, I'm curious, as we look at ASP per product sold here coming up, how much of that is a function of pricing that you guys took, and how much of that is a function of maybe a higher ASP on some of these workforce housing products?

Mark Smith: Yeah. As we think about kind of where the demand is for homes, I'm curious as we look at ASP, you know, per product sold here coming up, how much of that is a function of pricing that you guys took, and how much of that is a function of, you know, maybe a higher ASP on some of these, this workforce housing products?

Speaker #4: There was a lot of pressure to not raise prices. Even with tariffs going up, we're one of the few companies that track our labor costs per square foot.

Curtis Hodgson: There was a lot of pressure to not raise prices, even with tariffs going up. We're one of the few companies that track our labor cost per square foot. I gotta tell you, it's double, triple what it was in the pre-COVID era. Wages didn't go up triple. They didn't even go up double. Basically, the labor we're using today is less efficient than the labor we used five years ago. I don't see any change of that. It's work ethic, it's regulations, it's immigration controls. You know, I'm not gonna publish it 'cause it's proprietary, but I will say that our labor per square foot price is more than double what it was on the onset of COVID, and our wages are probably up 50%, 60%, if that helps you.

Curtis D. Hodgson: There was a lot of pressure to not raise prices, even with tariffs going up. We're one of the few companies that track our labor cost per square foot. I gotta tell you, it's double, triple what it was in the pre-COVID era. Wages didn't go up triple. They didn't even go up double. Basically, the labor we're using today is less efficient than the labor we used five years ago. I don't see any change of that. It's work ethic, it's regulations, it's immigration controls. You know, I'm not gonna publish it 'cause it's proprietary, but I will say that our labor per square foot price is more than double what it was on the onset of COVID, and our wages are probably up 50%, 60%, if that helps you.

Speaker #4: And I got to tell you, it's double, triple what it was in the pre-COVID era. But wages didn't go up triple. They didn't even go up double.

Speaker #4: So basically, the labor we're using today is less efficient than the labor we used five years ago. And I don't see any change in that.

Speaker #4: It's work ethic. It's regulations. It's immigration control. We're at—I'm not going to publish it because it's proprietary, but I will say that our labor per square foot price is more than double what it was at the onset of COVID, and our wages are probably up 50–60%, if that helps you.

Speaker #4: And I don't see a change to higher labor costs. I mean, I think we're all going to endure that in virtually every industry. And we're a pretty labor-intensive business.

Curtis Hodgson: I don't see a change to higher labor costs. I mean, I think we're all gonna endure that in virtually every industry, and we're a pretty labor-intensive business. You know, about 20% of the manufacturing cost of a mobile home is labor. That is the hardest thing to control. The commodities are holding in there too. I don't know if you've been looking at copper or steel or lumber, but none of those are at lows. If anything, they're I mean, obviously they went up in COVID to places that they're not returning to, but we probably pay more for lumber, more for steel, more for windows, significantly more than we did pre-COVID.

Curtis D. Hodgson: I don't see a change to higher labor costs. I mean, I think we're all gonna endure that in virtually every industry, and we're a pretty labor-intensive business. You know, about 20% of the manufacturing cost of a mobile home is labor. That is the hardest thing to control. The commodities are holding in there too. I don't know if you've been looking at copper or steel or lumber, but none of those are at lows. If anything, they're I mean, obviously they went up in COVID to places that they're not returning to, but we probably pay more for lumber, more for steel, more for windows, significantly more than we did pre-COVID. Does that help?

Speaker #4: I mean, about 20% of the manufacturing cost of a mobile home is labor, and that is the hardest thing to control. But the commodities are holding in there too.

Speaker #4: I don't know if you've been looking at copper, or steel, or lumber, but none of those are at lows. If anything, they're—I mean, obviously, they went up in COVID to places that they're not returning to.

Speaker #4: But we probably pay more for lumber, more for steel, more for windows—significantly more than we did pre-COVID.

Mark Smith: Okay.

Speaker #5: Yeah.

Speaker #4: So does that help?

Curtis Hodgson: Does that help?

Mark Smith: No, that helps. Was the pricing that you took and as you look at the mix here going forward, I guess maybe a different way of asking it is, you know, do you feel like you can maintain kind of this level, you know, 25 level of gross profit margin, or do we see a squeeze because of, you know, continued pressure on costs and maybe, you know, inability to take incremental pricing to cover it?

Speaker #5: No, that helps with the pricing that you took. And as you look at the mix here going forward, I guess maybe a different way of asking it is, do you feel like you can maintain kind of this level—20, 25%—level of gross profit margin, or do we see a squeeze because of continued pressure on costs and maybe inability to take incremental pricing to cover it?

Curtis Hodgson: You know, this is a tale of two states. You remember my earnings call three months ago. I kind of cautioned on Georgia. We've actually had days where we haven't worked in Georgia this Q1. Texas, on the other hand, we keep whipping 'em, saying, Can you please increase production 'cause we got plenty of orders? We used to be able to build seven, eight a day in our plant in Fort Worth. The workforce housing that we're building there is pretty sophisticated, and we struggle to get four a day with our labor force with the same number of workers that we're getting, you know, seven, eight a day, six years ago. As long as we've...

Speaker #4: You know, this is tailored to two states. Do you remember my earnings call three months ago? I kind of cautioned on Georgia. We've actually had—we've had days where we haven't worked in Georgia this first quarter.

Curtis D. Hodgson: You know, this is a tale of two states. You remember my earnings call three months ago. I kind of cautioned on Georgia. We've actually had days where we haven't worked in Georgia this Q1. Texas, on the other hand, we keep whipping 'em, saying, Can you please increase production 'cause we got plenty of orders? We used to be able to build seven, eight a day in our plant in Fort Worth. The workforce housing that we're building there is pretty sophisticated, and we struggle to get four a day with our labor force with the same number of workers that we're getting, you know, seven, eight a day, six years ago.

Speaker #4: But Texas, on the other hand, we keep whipping them, saying, "Can you please increase production?" Because we’ve got plenty of orders. We used to be able to build seven, eight a day in our plant in Fort Worth.

Speaker #4: The workforce housing that we're building there is pretty sophisticated. And we struggle to get four a day with our labor force, with the same number of workers that we were getting seven, eight a day six years ago.

Speaker #4: So as long as we, and I think the whole industry, perceive that their plant used to be able to build six a day, but now only builds four a day.

Curtis D. Hodgson: As long as we've... I think the whole industry perceives that their plant used to be able to build 6 a day, but now only builds 4 a day. I don't know what my competition is doing, but I'm coming to the realization that my belief in what capacity is historically correct, but isn't correct for 2026. I don't think we can ever get back to 7, 8 a day at our factories in Texas, where we were able to do that pretty easily for many years. I think even though we have 134 plants running in the United States, the capacity, because of labor challenges, is actually less today for those 134 plants than it was a couple years ago. I think, you know, we led this price increase.

Curtis Hodgson: I think the whole industry perceives that their plant used to be able to build 6 a day, but now only builds 4 a day. I don't know what my competition is doing, but I'm coming to the realization that my belief in what capacity is historically correct, but isn't correct for 2026. I don't think we can ever get back to 7, 8 a day at our factories in Texas, where we were able to do that pretty easily for many years. I think even though we have 134 plants running in the United States, the capacity, because of labor challenges, is actually less today for those 134 plants than it was a couple years ago. I think, you know, we led this price increase.

Speaker #4: And I don't know what my competition is doing. But I'm coming to the realization that my belief in what capacity is, is historically correct, but isn't correct for 2026.

Speaker #4: I don't think we can ever get back to seven, eight a day at our factories in Texas, where we were able to do that pretty easily for many years.

Speaker #4: So I think even though we have 134 plants running in the United States, the capacity because of labor challenges is actually less today for those 134 plants than it was a couple of years ago.

Speaker #4: So, and I think we led this price increase. My sales staff fought me on it every inch of the way, but our competition is now falling in line, and we probably had about an 8–9 percent price increase in the middle of 2025.

Curtis Hodgson: My sales staff fought me on it every inch of the way, but our competition is now falling in line. We probably had about an 8-9% price increase in the middle of 2025. That had a negative effect on our sales 'cause when you go first, people buy from the competition 'cause they're cheaper. Now that everybody's kind of fallen in line, and we really think we build a better house, you know, we're selling now for, you know, in the 50s per sq ft. Seven years ago, we were selling in the 30s per sq ft. I think we'll see the 60s within the next 12 months. I think the industry nationwide will be selling in the 60s per sq ft at a wholesale level.

Curtis D. Hodgson: My sales staff fought me on it every inch of the way, but our competition is now falling in line. We probably had about an 8-9% price increase in the middle of 2025. That had a negative effect on our sales 'cause when you go first, people buy from the competition 'cause they're cheaper. Now that everybody's kind of fallen in line, and we really think we build a better house, you know, we're selling now for, you know, in the 50s per sq ft. Seven years ago, we were selling in the 30s per sq ft.

Speaker #4: And that had a negative effect on our sales, because when you go first, people buy from the competition because they're cheaper. But now that everybody's kind of falling in line, and we really think we build a better house, we're selling now for in the $50s per square foot.

Speaker #4: Seven years ago, we were selling in the $30s per square foot. So, I think we'll see the $60s within the next 12 months.

Curtis D. Hodgson: I think we'll see the 60s within the next 12 months. I think the industry nationwide will be selling in the 60s per sq ft at a wholesale level. That's, you know, that's healthy. You know, the competition is pretty sophisticated. It's not like we have a bunch of people that wanna lose money. I look for the competition to be sophisticated and to make sure that they don't lose money. There's no market share to be gained by, you know, what do they call that? Predatory pricing.

Speaker #4: I think the industry nationwide will be selling in the $60s per square foot at a wholesale level, so that's healthy. At the end, the competition is pretty sophisticated.

Curtis Hodgson: That's, you know, that's healthy. You know, the competition is pretty sophisticated. It's not like we have a bunch of people that wanna lose money. I look for the competition to be sophisticated and to make sure that they don't lose money. There's no market share to be gained by, you know, what do they call that? Predatory pricing.

Speaker #4: It's not like we have a bunch of people that want to lose money. So I look for the competition to be sophisticated and to make sure that they don't lose money. There's no market share to be gained by, what do they call that, predatory pricing.

Mark Smith: Yeah.

Speaker #4: I think everybody knows that. I mean, we don't get together and do breakfast and decide what the price is. Somebody has to go first.

Curtis Hodgson: I think everybody knows that. I mean, we don't get together at breakfast and decide what the price is. Somebody has to go first. Lumber today is the commodity on that market is $600 and when COVID struck, it was $350. That's the number one component. Steel, very similar. Other commodities like copper, very similar. I think the days of being super cheap housing is over. We're selling $100,000 single wides now. Seven years ago, $100,000 would buy a pretty nice double wide, and now buys a nice single wide. I think that price increase has just got to be absorbed.

Curtis D. Hodgson: I think everybody knows that. I mean, we don't get together at breakfast and decide what the price is. Somebody has to go first. Lumber today is the commodity on that market is $600 and when COVID struck, it was $350. That's the number one component. Steel, very similar. Other commodities like copper, very similar. I think the days of being super cheap housing is over. We're selling $100,000 single wides now. Seven years ago, $100,000 would buy a pretty nice double wide, and now buys a nice single wide. I think that price increase has just got to be absorbed.

Speaker #4: But lumber today, as a commodity on the market, is $600. And when COVID struck, it was $350. So, that's the number one component.

Speaker #4: Steel is very similar. Other commodities like copper are very, very similar. And so I think the days of being super cheap housing are over.

Speaker #4: We're selling $100,000 single-wides now. And seven years ago, $100,000 would buy a pretty nice double-wide. And now it buys a nice single-wide.

Speaker #4: And I think that that price increase has just got to be absorbed, and it's hard because the people that live in them aren't used to paying $800, $900, and now they're paying $1,200 rent.

Curtis Hodgson: It's hard because the people that live in them aren't used to paying $800, $900 dollars on their own payment, $1,200 rent. You add those together, you got a $2,000, you know, 3-bedroom, 2-bath house with a yard. Their apartment alternatives really aren't attractive compared to what we do. That's our market. We sell to families that have a puppy dog and a kid, and they want a yard. We're a pretty viable alternative.

Curtis D. Hodgson: It's hard because the people that live in them aren't used to paying $800, $900 dollars on their own payment, $1,200 rent. You add those together, you got a $2,000, you know, 3-bedroom, 2-bath house with a yard. Their apartment alternatives really aren't attractive compared to what we do. That's our market. We sell to families that have a puppy dog and a kid, and they want a yard. We're a pretty viable alternative.

Speaker #4: But you add those together, you got a $2,000 three-bedroom, two-bath house with a yard—their apartment alternatives really aren't attractive compared to what we do.

Speaker #4: And that's our market. We sell to families that have a puppy dog and a kid, and they want a yard. And we're a pretty viable alternative.

Mark Smith: Well, I think the last question for me is just looking at operating expenses here in SG&A in Q4. Can you just give us any more breakdown on maybe what we should look at as one-time in nature? I know you called out a million-dollar legal cost. There was some loan loss reserves. You know, can you just give us maybe a good run rate of where your SG&A is and maybe to be helpful for how we should look at this going forward here in 2026?

Speaker #5: Yeah. Well, I think the last question for me is just looking at operating expenses here in SG&A and Q4. Can you just give us any more breakdown on maybe what we should look at as one-time in nature?

Speaker #5: I know you called out a million-dollar legal cost. There was some loan loss reserves. Can you just give us maybe a good run rate of where your SG&A is, and maybe to be helpful for how we should look at this going forward here in '26?

Speaker #4: Well, I'm sure you know we bought a couple of $12 million airplanes last quarter. And I'm just kidding. I'll turn that question over to John because he's got a pretty good handle on the SG&A that took place in the fourth quarter.

Curtis Hodgson: Well, I'm sure you know we bought a couple of $12 million airplanes last quarter. No, I'm just kidding. I'll turn that question over to Jon, because he's got a pretty good handle on the SG&A that took place in Q4.

Curtis D. Hodgson: Well, I'm sure you know we bought a couple of $12 million airplanes last quarter. No, I'm just kidding. I'll turn that question over to Jon, because he's got a pretty good handle on the SG&A that took place in Q4.

Mark Smith: Yeah.

Speaker #6: Thanks. Yeah, the SG&A has a lot of non-recurring, and it's kind of—it's a grab bag. It's not just the three words that you think of in terms of sales expense and office overhead.

Jon Langbert: Thanks. Yeah, the SG&A has a lot of non-recurring, and it kind of. It's a grab bag. It's not just the three words that you think of in terms of sales expense, office overhead, and administrative, because it includes that loan loss reserve. That's really the big number in there, is we became more conservative in our estimates. That's the big increase. I think that's mostly behind us, so that should drop back, because we've already built up that extra reserve. It's the change in reserve that shows up in SG&A. The legal expenses, those have dialed back. We had some cases got settled as well. I'll put it in air quotes, the "backlog" of legal exposure has declined.

Speaker #6: And administrative, because it includes that loan loss reserve. That's really the big number in there. As we became more conservative in our estimates, that's the big increase.

Speaker #6: I think that's mostly behind us, so that should drop back because we've already built up that extra reserve. It's the change in reserve that shows up in SG&A.

Speaker #6: The legal expenses, those have dialed back. We had some cases got settled as well, so the—I'll put it in air quotes—the backlog of legal exposure has declined.

Speaker #6: So, I think as a percentage of sales, SG&A should drop back to a more normal historical rate. It did bump up last year.

Jon Langbert: I think as a percentage of sales, SG&A should drop back to a more normal historical rate. It did bump up last year.

Speaker #4: Okay. So.

Mark Smith: Okay. It's more of a

Speaker #6: Is that more of the color you're looking for?

Jon Langbert: Does that kind of give you the color you're looking for?

Speaker #4: Yeah, more of a low to mid-teens is a better rate as we look forward, compared to the elevated that we saw here in maybe Q3, but especially Q4.

Mark Smith: Yeah, more of a low to mid-teens is a better rate as we look forward, compared to the elevated that we saw here in maybe Q3, but especially Q4.

Speaker #6: Right. I mean, the wild card is credit quality. We feel like we're good at underwriting, and have been historically. There's a kind of a flip side to that, which is the market for used homes.

Jon Langbert: Right. I mean, the wild card is you know, credit quality. We feel like we're good at underwriting and have been historically. There's a you know, kind of a flip side to that, which is the market for used homes. If you do have a repossession, are you able to recover 100% of the unit's value or 70% of the unit's value? Or in other words, the outstanding balance that might be there. We had a blip post-COVID, where that number was over 100% for a little while. You actually made money on repossessions. It's returned to a more normal number now, and that gets reflected in SG&A as well. A lot of moving parts there.

Speaker #6: If you do have a repossession, are you able to recover 100% of the unit's value, or 70% of the unit's value? Or, in other words, the outstanding balance that might be there.

Speaker #6: We had a blip post-COVID where that number was over 100% for a little while. You actually made money on repossessions. It's returned to a more normal number now.

Speaker #6: And that gets reflected in SG&A as well. So, a lot of moving parts there. Hard to give you an exact estimate, but I think the trend will be favorable in '26 versus '25.

Jon Langbert: Hard to give you an exact estimate, but I think the trend will be favorable in 2026 versus 2025.

Curtis Hodgson: Also, let me chime in a little bit here. You know, our SG&A includes you know, all of our people there are in finance. It includes being public, even though we're only a $500 million market cap company. When you divide SG&A then as a numerator by product sales, you know, $116 million, it's gonna seem high because it includes things that, you know, our peer group doesn't have. You know, a robust finance department. And our size, I don't know what it costs to be public. I hesitate to put a number on it, but it seems like it's a never-ending spiral upwards to between audit fees and, you know, public corporation fees. I would guess that that's almost like a fixed expense. It doesn't change with sales.

Curtis D. Hodgson: Also, let me chime in a little bit here. You know, our SG&A includes you know, all of our people there are in finance. It includes being public, even though we're only a $500 million market cap company. When you divide SG&A then as a numerator by product sales, you know, $116 million, it's gonna seem high because it includes things that, you know, our peer group doesn't have. You know, a robust finance department. And our size, I don't know what it costs to be public. I hesitate to put a number on it, but it seems like it's a never-ending spiral upwards to between audit fees and, you know, public corporation fees. I would guess that that's almost like a fixed expense. It doesn't change with sales. When sales come down, the SG&A ratio goes up. Do you follow me?

Speaker #4: Awesome. I think you're up in a little bit here. Our SG&A includes all of our people that are in finance. It includes being public even though we're only a $500 million market cap company.

Speaker #4: And so, when you divide SG&A, as the numerator, by product sales—$116 million—it's going to seem high because it includes things that our peer group doesn't have.

Speaker #4: A robust finance department, in our size, I don't know what it costs to be public. I hesitate to put a number on it. But it seems like it's a never-ending spiral upwards, between audit fees and public corporation fees.

Speaker #4: I would guess that that’s almost like a fixed expense, though it doesn’t change with sales. And so, when sales come down, the SG&A ratio goes up.

Curtis Hodgson: When sales come down, the SG&A ratio goes up. Do you follow me?

Speaker #4: Do you follow me?

Speaker #6: Yeah, yeah. No, that's helpful. Thank you, guys.

Mark Smith: Yeah. Yeah. No, that's helpful. Thank you, guys.

Speaker #1: Thank you. And as a reminder, to ask a question, please press *11 on your telephone. Our next question comes from Alex Raga with Texas Capital Securities.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Alex Rygiel with Texas Capital Securities. You may proceed.

Speaker #1: You may proceed.

Alex Rygiel: Thanks. Good morning, Kurt.

Speaker #5: Thanks. Good morning, Kurt.

Speaker #4: Good morning, Alex.

Curtis Hodgson: Good morning, Alex.

Curtis D. Hodgson: Good morning, Alex.

Speaker #5: Couple of quick questions here. So, what's the final hurdle in Austin for deliveries? Because I know there are a couple of different things going on there with regards to wastewater treatment plants, road connection, and some questions with the school board.

Alex Rygiel: Couple quick questions here. What's the final hurdle in Austin for deliveries? 'Cause I know there are a couple different things going on there with regards to wastewater treatment plants, road connection, and discussions with the school board.

Speaker #4: Yeah, I think you could probably run our development meeting, because those same issues come up every time we have a meeting, which is monthly.

Curtis Hodgson: Yeah. I think you could probably run our development meeting 'cause those same issues come up every time we have a meeting, which is monthly. The wastewater treatment plant, which is necessary to connect these thousands of spaces, the plant itself is substantially delivered, and that which is not delivered is set to be delivered this year. We have enough delivered that we can run about 40% capacity in that plant without anything further being delivered. We have not let the assembly of that out. We've taken bids. We're close, and I would guess that's a 4- to 6-month lead time item. That is a major deal.

Curtis D. Hodgson: Yeah. I think you could probably run our development meeting 'cause those same issues come up every time we have a meeting, which is monthly. The wastewater treatment plant, which is necessary to connect these thousands of spaces, the plant itself is substantially delivered, and that which is not delivered is set to be delivered this year. We have enough delivered that we can run about 40% capacity in that plant without anything further being delivered. We have not let the assembly of that out. We've taken bids.

Speaker #4: So the wastewater treatment plant, which is necessary to connect these 1,000 spaces, the plant itself is substantially delivered, and that which is not delivered is set to be delivered this year.

Speaker #4: We have enough delivered that we could run about 40% capacity in that plant without anything further being delivered. We have not let the assembly of that out.

Speaker #4: We've taken bids. We're close. And I would guess that's a four- to six-month lead time item. So that is a major, major deal. School board, I mean as soon as they have convinced that we're actually going to put 1,000 rooftops in there, I'm sure they'll rise to the occasion to build the school that we envision on the property.

Curtis D. Hodgson: We're close, and I would guess that's a 4- to 6-month lead time item. That is a major deal. School board, I mean, as soon as they have convinced that we're actually gonna put 1,000 rooftops in there, I'm sure they'll rise to the occasion to build the school that we envision in the property. We have got DOT approval for connecting to the two highways that we abut. It took a long time to get that done, much more than we thought. But as soon as we dot a couple I's and cross a couple T's, that construction should be imminent. You know, I said earlier, Alex, that I expect to actually put houses in there this calendar year. Just remind me in December if I turn out to be wrong, but hopefully I'm conservative enough to be right on this one.

Curtis Hodgson: School board, I mean, as soon as they have convinced that we're actually gonna put 1,000 rooftops in there, I'm sure they'll rise to the occasion to build the school that we envision in the property. We have got DOT approval for connecting to the two highways that we abut. It took a long time to get that done, much more than we thought. But as soon as we dot a couple I's and cross a couple T's, that construction should be imminent. You know, I said earlier, Alex, that I expect to actually put houses in there this calendar year. Just remind me in December if I turn out to be wrong, but hopefully I'm conservative enough to be right on this one.

Speaker #4: We have got DOT approval for connecting to the two highways that we abut. It took a long time to get that done, much more than we thought.

Speaker #4: But as soon as we dot a couple of I's and cross a couple of T's, that construction should be imminent. I said earlier, Alex, that I expect to actually put houses in there this calendar year.

Speaker #4: Just remind me in December if I turn out to be wrong. But hopefully, I am conservative enough to be right on this one. It's a lot harder to get through the regulatory environment than I ever dreamed.

Curtis Hodgson: It's a lot harder to get through the regulatory environment than I ever dreamed, and everybody's got the same problem. I mean, I don't know how Elon Musk can build a factory as quick as he did, but the rest of us have to, you know, play by the rules, get permits, get comments, change the plans, reapply, and have Zoom meetings because nobody wants to meet in person anymore. Building anything now is even that site-built house, which you used to be able to do in six months, a custom, is now two years. This has gone on much longer than I expected. I'm about seven years into this, Alex, and I'd like to see it finished while I'm still on this planet.

Curtis D. Hodgson: It's a lot harder to get through the regulatory environment than I ever dreamed, and everybody's got the same problem. I mean, I don't know how Elon Musk can build a factory as quick as he did, but the rest of us have to, you know, play by the rules, get permits, get comments, change the plans, reapply, and have Zoom meetings because nobody wants to meet in person anymore. Building anything now is even that site-built house, which you used to be able to do in six months, a custom, is now two years.

Speaker #4: And everybody's got the same problem. I don't know how Elon Musk can build a factory as quick as he did, but the rest of us have to play by the rules and get permits, and get comments, and change the plans, and reapply, and have Zoom meetings because nobody wants to meet in person anymore.

Speaker #4: Building anything now—even that site-built house, which you used to be able to do in six months, a custom home—is now two years.

Speaker #4: This has gone on much longer than I expected. I've got seven years into this, Alex, and I'd like to see it finished while I'm still on this planet.

Curtis D. Hodgson: This has gone on much longer than I expected. I'm about seven years into this, Alex, and I'd like to see it finished while I'm still on this planet. I'm working on it as much as I can. I'm the one directing that traffic. I designed it, I bought the land, and it's gonna be a very profitable deal. We're in that thing right. We'll be all in for 60, 70% of what the competition is when they do something similar.

Speaker #4: So I'm working on it as much as I can. I'm the one directing that traffic. I design it. I bought the land. And it's going to be a very—it's going to be a very profitable deal.

Curtis Hodgson: I'm working on it as much as I can. I'm the one directing that traffic. I designed it, I bought the land, and it's gonna be a very profitable deal. We're in that thing right. We'll be all in for 60, 70% of what the competition is when they do something similar.

Speaker #4: We're in that thing, right? We'll be all in for 60–70% of what the competition is when they do something similar.

Speaker #5: And remind me again, how many homes do you think you need to deliver to that site prior to considering liquidating the whole asset?

Alex Rygiel: Remind me again, how many homes do you think you need to deliver to that site prior to considering liquidating the whole asset?

Curtis Hodgson: Zero. 'Cause I consider liquidating it anytime somebody wants to knock on my door. The problem is, how else are we going to have distribution with the independent retailers fading, you know, nationwide and with our own company stores struggling to get ample volume? It was always designed to complement the factories. If, you know, some communities were to come along and pay us 2 or 3 times what we have in it, I suppose we'd have to look at that. It's just such an advantage to be able to sell directly to the consumer. You know, I can see one of our factories taking 2 or 3 years at capacity just on that one project. Now that's a little bit of an exaggeration because I don't think we'll fill that fast.

Curtis D. Hodgson: Zero. 'Cause I consider liquidating it anytime somebody wants to knock on my door. The problem is, how else are we going to have distribution with the independent retailers fading, you know, nationwide and with our own company stores struggling to get ample volume? It was always designed to complement the factories. If, you know, some communities were to come along and pay us 2 or 3 times what we have in it, I suppose we'd have to look at that. It's just such an advantage to be able to sell directly to the consumer. You know, I can see one of our factories taking 2 or 3 years at capacity just on that one project. Now that's a little bit of an exaggeration because I don't think we'll fill that fast.

Speaker #4: Zero. But because I consider liquidating anytime somebody wants to knock on my door. The problem is, how else are we going to have distribution with the independent retailers feeding nationwide, and with our own company's stores struggling to get ample volume?

Speaker #4: So, it was always designed to complement the factories. And if Sun Communities were to come along and pay us two or three times what we have in it, I suppose we'd have to look at that.

Speaker #4: But it's just such an advantage to be able to sell directly to the consumer. I can see one of our factories taking two or three years at capacity just on that one project.

Speaker #4: So that's a little bit of an exaggeration, because I don't think we'll fill that fast. But let's say I can see, of the two Texas factories, one of them—half of their capacity could be used just in that Austin project.

Curtis Hodgson: Let's say I can see of the two Texas factories, one of them, half of their capacity could be used just in that Austin project, and then we wouldn't have to be apologizing for our numbers on these earnings calls. Because Austin, Texas, if there's one market in the entire Southwest of the United States that commands a premium from housing perspective, it's Austin, Texas. More so than Dallas, more so than Houston, more so than Phoenix. It's that kind of market. As you know, from this property, you can see downtown Austin's skyline. It's right next to the Formula One race track, only a few miles from the Tesla factory, only a few miles from the Austin-Bergstrom Airport.

Curtis D. Hodgson: Let's say I can see of the two Texas factories, one of them, half of their capacity could be used just in that Austin project, and then we wouldn't have to be apologizing for our numbers on these earnings calls. Because Austin, Texas, if there's one market in the entire Southwest of the United States that commands a premium from housing perspective, it's Austin, Texas. More so than Dallas, more so than Houston, more so than Phoenix. It's that kind of market. As you know, from this property, you can see downtown Austin's skyline. It's right next to the Formula One race track, only a few miles from the Tesla factory, only a few miles from the Austin-Bergstrom Airport.

Speaker #4: And then we wouldn't have to be apologizing for our numbers on these earnings calls. So, because Austin, Texas—there's one market in the entire Southwest of the United States that commands a premium from a housing perspective.

Speaker #4: It's Austin, Texas—more so than Dallas, more so than Houston, more so than Phoenix. It's that kind of market. And as you know, from this property, you can see downtown Austin's skyline.

Speaker #4: It's right next to the Formula 1 racetrack. Only a few miles from the Tesla factory. Only a few miles from the Austin-Berkshire Airport. It's extremely well located.

Curtis Hodgson: It's extremely well-located, and it is the brightest part of our development portfolio. It's the one that I wanna get across the finish line. The concept is so unique. It's an integrated concept where we're building neighborhoods like PulteGroup or D.R. Horton does, and nobody really has attacked it like that before. We'll have carports, we'll have communal parking, we'll have amenities out the wazoo. We'll be a neighborhood. The industry doesn't really sell neighborhoods like site-built does, but this is a vision. I mean, it's kind of an experiment. If this vision of a true neighborhood with nice amenities and a pretty good location works, then we'll be able to command the premiums I think we can get for it. I think we can sell lots.

Curtis D. Hodgson: It's extremely well-located, and it is the brightest part of our development portfolio. It's the one that I wanna get across the finish line. The concept is so unique. It's an integrated concept where we're building neighborhoods like PulteGroup or D.R. Horton does, and nobody really has attacked it like that before. We'll have carports, we'll have communal parking, we'll have amenities out the wazoo. We'll be a neighborhood. The industry doesn't really sell neighborhoods like site-built does, but this is a vision. I mean, it's kind of an experiment. If this vision of a true neighborhood with nice amenities and a pretty good location works, then we'll be able to command the premiums I think we can get for it. I think we can sell lots.

Speaker #4: And it is the brightest part of our development portfolio. It's the one that I want to get across the finish line, and the concept is so unique—it's an integrated concept where we're building neighborhoods like Pulte or D.R.

Speaker #4: Horton does. And nobody really has attacked it like that before. So we'll have carports. We'll have communal parking. We'll have amenities out the gazoo.

Speaker #4: So we'll be a neighborhood. The industry doesn't really sell neighborhoods like site-built does. But this is a vision. I mean, it's kind of an experiment.

Speaker #4: If this vision of a true neighborhood with nice amenities and a pretty good location works, then we'll be able to command the premiums I think we can get for it.

Speaker #4: I think we can sell lots of about 100 lots there. I think we can get $120,000, $130,000 apiece for those lots. Our cost is about half of that.

Curtis Hodgson: We have about 100 lots there. I think we can get $120,000 to $130,000 a piece for those lots. Our cost is about half of that. Then the rents, heck, if we can get $1,200 a month rent for one of these little, you know, 35 by 90 spaces that we have, that's a pretty good rate of return on our investment. I am looking forward to it. I just wanna live long enough to see it. That's about it.

Curtis D. Hodgson: We have about 100 lots there. I think we can get $120,000 to $130,000 a piece for those lots. Our cost is about half of that. Then the rents, heck, if we can get $1,200 a month rent for one of these little, you know, 35 by 90 spaces that we have, that's a pretty good rate of return on our investment. I am looking forward to it. I just wanna live long enough to see it. That's about it.

Speaker #4: And then the rents, heck, if we could get $1,200 a month rent for one of these little 35-by-90 spaces that we have, that's a pretty good rate of return on our investment.

Speaker #4: So, I am looking forward to it. I just want to live long enough to see it, so that's about it.

Speaker #5: As it relates to the Georgia plan, it sounds like production error is somewhat limited. Can you talk about maybe what your longer-term plan is with regards to that plan?

Alex Rygiel: As it relates to the Georgia plant, it sounds like production there is somewhat limited. Can you talk about maybe what your longer term plan is with regards to that plant?

Speaker #4: Well, I mean, our alternatives are obvious. We either admit that we can't make a profit there and sell the property to one of our competitors, or we are making a profit because we do a lot of ancillary work.

Curtis Hodgson: Well, I mean, our alternatives are obvious. We either admit that we can't make a profit there and sell the property to one of our competitors. We are making a profit because we do a lot of ancillary work. We have a lamination facility that sells $4 or 5 million a year with pretty good margin. But the factory itself, quite frankly, I don't think has added anything to our bottom line in three, four years, and in this quarter isn't any better. You know, me and Kenny get together regularly and lament, "What are we gonna do with Georgia?" You remember on my last earnings call, I pretty much predicted that we'd be struggling with what are we gonna do with Georgia. I probably have Georgia employees that are listening to this call.

Curtis D. Hodgson: Well, I mean, our alternatives are obvious. We either admit that we can't make a profit there and sell the property to one of our competitors. We are making a profit because we do a lot of ancillary work. We have a lamination facility that sells $4 or 5 million a year with pretty good margin. But the factory itself, quite frankly, I don't think has added anything to our bottom line in three, four years, and in this quarter isn't any better. You know, me and Kenny get together regularly and lament, "What are we gonna do with Georgia?" You remember on my last earnings call, I pretty much predicted that we'd be struggling with what are we gonna do with Georgia.

Speaker #4: We have a lamination facility that sells four or five million dollars a year with pretty good margin. But the factory itself, quite frankly, I don't think has added anything to our bottom line in three, four years, and this quarter isn't any better.

Speaker #4: So, me and Kenny get together regularly and lament, 'What are we going to do with Georgia?' And you remember on my last earnings call, I pretty much predicted that we'd be struggling with, 'What are we going to do with Georgia?' And I probably have Georgia employees that are listening to this call.

Curtis D. Hodgson: I probably have Georgia employees that are listening to this call. I'm such an open book. I'm not gonna mince words about it. We're not gonna continue to feed something that doesn't make money. No one, no prudent businessman is gonna do that. Either we turn it, I don't know, this year, 2026, or we dispose of it. It wouldn't change our economics. It hasn't contributed to earnings in so long, I can't remember.

Curtis Hodgson: I'm such an open book. I'm not gonna mince words about it. We're not gonna continue to feed something that doesn't make money. No one, no prudent businessman is gonna do that. Either we turn it, I don't know, this year, 2026, or we dispose of it. It wouldn't change our economics. It hasn't contributed to earnings in so long, I can't remember.

Speaker #4: But I'm such an open book. I'm not going to mince words about it. We're not going to continue to feed something that doesn't make money.

Speaker #4: No prudent businessman is going to do that. So either we turn it, I don't know, this year, '26, or we dispose of it. Dispose of it.

Speaker #4: It wouldn't change our economics. It hasn't contributed to earnings in so long, I can't remember.

Speaker #5: And then lastly, as it relates to Americasa, I know what came with that acquisition was a location in Houston that I think you were hoping to sell 10 or 12 units.

Alex Rygiel: Then lastly, as it relates to AmeriCasa, I know what came with that acquisition was a location in Houston that I think you were hoping to sell 10 or 12 units, I believe it was month. Can you give us an update on how the success of that acquisition has been, and also talked about its strategy to go direct to retail?

Speaker #5: I believe it was months. Can you give us an update on the success of that acquisition and also talk about its strategy to go direct to retail?

Curtis Hodgson: Well, the acquisition was an attempt to try something new in retailerships, company-owned retailerships. I'm gonna spell it out here. We didn't announce it in writing, but the Norman Newton employment agreement is no longer valid. He's not with the company. You know, that management boost that we were looking forward to has not come to pass. As far as the hard assets we bought, we can probably justify those because it was a reasonably good deal. The new launch to something that's never been done before is not gonna happen, at least not anytime soon. Now, we do have the software. We're continuing to install it at some of our locations. We picked up a couple pretty good middle managers in the process.

Curtis D. Hodgson: Well, the acquisition was an attempt to try something new in retailerships, company-owned retailerships. I'm gonna spell it out here. We didn't announce it in writing, but the Norman Newton employment agreement is no longer valid. He's not with the company. You know, that management boost that we were looking forward to has not come to pass. As far as the hard assets we bought, we can probably justify those because it was a reasonably good deal.

Speaker #4: Well, the acquisition was an attempt to try something new in retailerships—company-owned retailerships. I'm going to spell it out here: we didn't announce it in writing, but the norm Newton employment agreement is no longer valid.

Speaker #4: He's not with the company, and so that management boost that we were looking forward to is not coming to pass. As far as the hard assets we bought, we can probably justify those because it was a reasonably good deal.

Speaker #4: But the new launch—something that's never been done before—is not going to happen, at least not anytime soon. Now, we do have the software, and we're continuing to install it at some of our locations.

Curtis D. Hodgson: The new launch to something that's never been done before is not gonna happen, at least not anytime soon. Now, we do have the software. We're continuing to install it at some of our locations. We picked up a couple pretty good middle managers in the process. We have about a dozen Bogotá, Colombia employees that we picked up in the process. It wasn't for naught, but my excitement over it has dwindled a lot since the last earnings call.

Speaker #4: We picked up a couple of pretty good middle managers in the process. We have about a dozen Bogotá, Colombia, employees that we picked up in the process.

Curtis Hodgson: We have about a dozen Bogotá, Colombia employees that we picked up in the process. It wasn't for naught, but my excitement over it has dwindled a lot since the last earnings call.

Speaker #4: So it wasn't for naught. But my excitement over it has dwindled a lot since the last earnings call, so.

Speaker #5: Fair enough. Thank you.

Alex Rygiel: Fair enough. Thank you.

Speaker #6: Thank you. I would now like to turn the call back over to Curtis Hodgson for any closing remarks.

Operator: Thank you. I would now like to turn the call back over to Curtis Hodgson for any closing remarks.

Speaker #4: Well, I just want to thank everybody who joined today's earnings call. We do appreciate your interest in Legacy, and we're pretty transparent on what's going on.

Curtis Hodgson: Well, I just wanna thank everybody who joined today's earnings call. We do appreciate your interest in Legacy, and we're pretty transparent in what's going on. I would have liked better numbers, but quite frankly, the provisions that we took caused pretty much the entire disappointment. We're gonna continue to improve from an earnings point of view. I mean, I've been making money since I was eight years old. I'm not gonna stop now. I think that I'm not satisfied with the earnings or the earnings per share. I personally got back involved in the company only a couple months ago, a few months ago, and I thought, on the last earnings call, I thought it was gonna be a piece of cake. Guess what?

Curtis D. Hodgson: Well, I just wanna thank everybody who joined today's earnings call. We do appreciate your interest in Legacy, and we're pretty transparent in what's going on. I would have liked better numbers, but quite frankly, the provisions that we took caused pretty much the entire disappointment. We're gonna continue to improve from an earnings point of view. I mean, I've been making money since I was eight years old. I'm not gonna stop now. I think that I'm not satisfied with the earnings or the earnings per share.

Speaker #4: I would have liked better numbers. But quite frankly, the provisions that we took caused pretty much the entire disappointment. And we're going to continue to improve from an earnings point of view.

Speaker #4: I mean, I don't—I’ve been making money since I was eight years old. I'm not going to stop now. And I think that I'm not satisfied with the earnings or the earnings per share.

Curtis D. Hodgson: I personally got back involved in the company only a couple months ago, a few months ago, and I thought, on the last earnings call, I thought it was gonna be a piece of cake. Guess what? It hasn't been a piece of cake. I do think that we are gonna have a pretty good year in 2026. Hang on. Don't be selling $18 a share. That's my final words. I appreciate you all participating. Bye.

Speaker #4: But I personally got back involved in the company only a couple of months ago—a few months ago. And I thought it was, at the last earnings call, I thought it was going to be a piece of cake.

Speaker #4: And guess what? It hasn't been a piece of cake. But I do think that we are going to have a pretty good year in 2026.

Curtis Hodgson: It hasn't been a piece of cake. I do think that we are gonna have a pretty good year in 2026. Hang on. Don't be selling $18 a share. That's my final words. I appreciate you all participating. Bye.

Speaker #4: So, hang on. Don't be selling at $18 a share. So that's my final words. I appreciate y'all participating. Bye.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Full Year 2025 Legacy Housing Corp Earnings Call

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