Q1 2026 Legacy Housing Corp Earnings Call

May 8, 2026

Operator: Good day, and thank you for standing by. Welcome to the Legacy Housing Corporation Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Curtis Hodgson, Executive Chairman of the Board. Please go ahead.

Speaker #2: Good day, and thank you for standing by. Welcome to the Legacy Housing Corporation first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #2: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone.

Speaker #2: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded.

Speaker #2: I would now like to hand the conference over to your speaker today, Curt Hodgson, Executive Chairman of the Board. Please go ahead.

Speaker #3: Good morning. This is Curt Hodgson, Executive Chairman. I'm here with John Langberg, our Chief Financial Officer. Thanks for joining our first quarter 2026 conference call.

Curtis Hodgson: Good morning. This is Curtis Hodgson, Executive Chairman. I'm here with Jon Langbert, our Chief Financial Officer. Thanks for joining our Q1 2026 conference call. Jon will now read the safe harbor disclosure before we get started.

Curt Hodgson: Good morning. This is Curtis Hodgson, Executive Chairman. I'm here with Jon Langbert, our Chief Financial Officer. Thanks for joining our Q1 2026 conference call. Jon will now read the safe harbor disclosure before we get started.

Speaker #3: John will now read the Safe Harbor disclosure before we get started.

Jon Langbert: 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. 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 quarterly report on Form 10-Q filed yesterday with the Securities and Exchange Commission and in our most recent annual report on Form 10-K. 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 #4: 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.

Speaker #4: 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.

Speaker #4: 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 quarterly report on Form 10-Q filed yesterday with the Securities and Exchange Commission, and in our most recent annual report on Form 10-K.

Speaker #4: 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 #3: Thanks, John. I'll turn the call over to John, or back to John. Now, to walk you through the quarter's results. Then I'll come back with some thoughts on the business and a few corporate updates.

Curtis Hodgson: Thanks, Jon. I'll turn the call over to Jon or back to Jon now to walk you through the quarter's results, and then I'll come back with some thoughts on the business and a few corporate updates. After that, we'll open the call up to questions and answers. Jon.

Curt Hodgson: Thanks, Jon. I'll turn the call over to Jon or back to Jon now to walk you through the quarter's results, and then I'll come back with some thoughts on the business and a few corporate updates. After that, we'll open the call up to questions and answers. Jon.

Speaker #3: After that, we'll open the call up to questions and answers. John?

Jon Langbert: Thanks, Kurt. Let's get to the numbers. Total net revenue for the quarter was $34.4 million, down 3.7% from $35.7 million a year ago. Despite the modest top-line decline, net income grew to $10.9 million from $10.3 million, and diluted EPS came in at $0.46, up from $0.41 in Q1 of 2025. Revenue was a touch softer, but the bottom line was stronger, and I'll walk through how we got there. Product sales were $21.6 billion, down 11.3%. We shipped 312 units in the quarter versus 350 a year ago, with average revenue per unit essentially flat at roughly $69,100. The story underneath the headline number is really a mixed story.

Speaker #4: Thanks. Thanks, Curt. Let's get to the numbers. Total net revenue for the quarter was $34.4 million, down 3.7% from $35.7 million a year ago.

Speaker #4: Despite the modest top-line decline, net income grew to $10.9 million from $10.3 million, at $0.46 per share—up from $0.41 in Q1 of '25. So revenue was a touch softer, but the bottom line was stronger, and I'll walk through how we got there.

Speaker #4: Product sales were $21.6 billion, down 11.3%. We shipped 312 units in the quarter versus 350 a year ago, with average revenue per unit essentially flat at roughly $69,100.

Speaker #4: The story underneath the headline number is really a mixed story. Inventory finance sales were down about $7.6 million, or 68%, as our dealers continued to work through existing inventory on their lots.

Jon Langbert: Inventory finance sales were down about $7.6 million or 68% as our dealers continued to work through existing inventory on their lots. That decline was largely offset by strength across our other channels. Retail store sales nearly doubled, up 81% to $6.1 million. Direct sales were up 80% to $2.7 million, and commercial sales to mobile home parks grew 12% to $7.6 million. The shift toward retail and direct selling reflects the strategy we've been executing, getting closer to the end consumer and expanding our company-owned distribution. Loan portfolio interest income was $11.3 million, up 6.2%, with essentially all of that growth coming from our consumer book. The consumer portfolio ended the quarter at $204.8 million, up modestly from year-end.

Speaker #4: That decline was largely offset by strength across our other channels. Retail store sales nearly doubled, up 81% to $6.1 million; direct sales were up 80% to $2.7 million; and commercial sales to mobile home parks grew 12% to $7.6 million.

Speaker #4: The shift toward retail and direct selling reflects the strategy we've been executing—getting closer to the end consumer and expanding our company-owned distribution. Loan portfolio interest income was $11.3 million, up 6.2%, with essentially all of that growth coming from our consumer book.

Speaker #4: The consumer portfolio ended the quarter at $204.8 million, up modestly from year-end. Mobile home park notes finished at $199.5 million, and dealer inventory finance receivables at $26.5 million.

Jon Langbert: Mobile home park notes finished at $199.5 million, and dealer inventory finance receivables at $26.5 million. On the expense side, cost of product sales was down 13.1%, broadly in line with lower volumes, and SG&A came in at $5.8 million, down 8.3%. The SG&A decline reflects lower payroll, health benefit, and legal costs, partially offset by a higher loan loss provision and modestly higher property taxes. The net result is that even with revenue down a touch, we delivered net income growth of about 6% and EPS growth of around 12%, a function of slightly stronger gross margins, lower SG&A, and a lower effective tax rate.

Speaker #4: On the expense side, cost of product sales was down 13.1%, broadly in line with lower volumes, and SG&A came in at $5.8 million, down 8.3%.

Speaker #4: The SG&A decline reflects lower payroll, health benefit, and legal costs, partially offset by a higher loan loss provision and modestly higher property taxes.

Speaker #4: The net result is that, even with revenue down a touch, we delivered net income growth of about 6% and EPS growth of around 12%—a function of slightly stronger gross margins, lower SG&A, and a lower effective tax rate.

Speaker #4: On taxes, our effective rate for the quarter was 16.1% versus 19.3% a year ago and the 21% statutory rate. The benefit reflects two items.

Jon Langbert: On taxes, our effective rate for the quarter was 16.1% versus 19.3% a year ago and the 21% statutory rate. The benefit reflects two items. First, the Federal Energy Efficient Home Improvement Credit, known as Section 45L, which provides a per-home tax credit for manufacturers who build homes meeting specified energy efficiency standards and which we've qualified for on a substantial portion of our production. Second, a discount on transferable tax credits we purchased during the quarter. As a reminder, the Section 45L credit terminates on 30 June of this year under last year's tax legislation. We expect our effective rate to move closer to the statutory rate after that. The balance sheet remains in excellent shape.

Speaker #4: First, the federal energy-efficient home improvement credit, known as Section 45L, provides a per-home tax credit for manufacturers who build homes meeting specified energy efficiency standards, and which we've qualified for on a substantial portion of our production.

Speaker #4: Second, a discount on transferable tax credits we purchased during the quarter. As a reminder, the Section 45L credit terminates on June 30 of this year, under last year's tax legislation.

Speaker #4: So, we expect our effective rate to move closer to the statutory rate after that. The balance sheet remains in excellent shape. We ended the quarter with $14.1 million in cash, up from $8.5 million at year-end.

Jon Langbert: We ended the quarter with $14.1 million in cash, up from $8.5 million at year-end on $7 million of operating cash flow. Inventories rose to $50.4 million from $39.9 million at year-end, primarily in finished goods. Curtis will speak more about the inventory build and the data center project driving it in a moment. Our $50 million Prosperity Bank revolver had less than $1 million drawn at quarter end, leaving roughly $49 million of available capacity, and we're in compliance with all our financial covenants. Total stockholders' equity finished the quarter at $539 million, up from $528.6 million at year-end.

Speaker #4: On $7 million of operating cash flow. Inventories rose to $50.4 million from $39.9 million at year-end, primarily in finished goods. Curt will speak more about the inventory build and the data center project driving it in a moment.

Speaker #4: Our $50 million Prosperity Bank revolver had less than $1 million drawn at quarter-end, leaving roughly $49 million of available capacity, and we're in compliance with all our financial covenants.

Speaker #4: Total stockholders' equity finished the quarter at $539 million, up from $528.6 million at year-end. We repurchased about 31,000 shares for roughly $600,000 during the quarter, under our new $10 million authorization that the board approved in February, leaving approximately $9.4 million available for future repurchases through February of 2029.

Jon Langbert: We repurchased about 31,000 shares for roughly $600,000 during the quarter under our new $10 million authorization that the board approved in February, leaving approximately $9.4 million available for future repurchases through February 2029. The credit quality across our loan portfolios remains solid. At quarter end, more than 97% of both our consumer loans and our mobile home park notes were less than 30 days past due. We did increase loan loss reserves modestly in the quarter, reflecting continued portfolio growth and a slightly more conservative posture given the broader economic backdrop. With that, I'll turn it back to Curtis.

Speaker #4: The credit quality across our loan portfolios remained solid. At quarter-end, more than 97% of both our consumer loans and our mobile home park notes were less than 30 days past due.

Speaker #4: We did increase loan loss reserves modestly in the quarter, reflecting continued portfolio growth and a slightly more conservative posture given the broader economic backdrop.

Speaker #4: With that, I'll turn it back to Curt.

Speaker #3: Thanks, John. Let me hit a few business topics, like the operating environment, some specific business updates, and a couple of items that warrant a closer look.

Curtis Hodgson: Thanks, Jon. Let me hit a few business topics like the operating environment, some specific business updates, and a couple items that warrant a closer look from this quarter. The Q1 environment was a continuation of what I've spoken for in the past. Inflation picked up a little bit during the quarter, and the head is now holding its benchmark rates steady and their 30-year mortgage rates are staying above 6%. Sustained higher borrowing costs continue to weigh on our consumer affordability, which affects our end consumers and particularly affects our park customers. They're just trying to make a return on their investment, and higher interest rates are making it more difficult to do so. Tariffs became a meaningful theme during this quarter, and they continue to affect our cost structure.

Curt Hodgson: Thanks, Jon. Let me hit a few business topics like the operating environment, some specific business updates, and a couple items that warrant a closer look from this quarter. The Q1 environment was a continuation of what I've spoken for in the past. Inflation picked up a little bit during the quarter, and the head is now holding its benchmark rates steady and their 30-year mortgage rates are staying above 6%. Sustained higher borrowing costs continue to weigh on our consumer affordability, which affects our end consumers and particularly affects our park customers. They're just trying to make a return on their investment, and higher interest rates are making it more difficult to do so. Tariffs became a meaningful theme during this quarter, and they continue to affect our cost structure.

Speaker #3: For this quarter, the Q1 environment was a continuation of what I've spoken about in the past. Inflation picked up a little bit during the quarter, and the Fed is now holding its benchmark rates steady.

Speaker #3: And 30-year mortgage rates are staying above 6%. Sustained higher borrowing costs continue to weigh on our consumer affordability, which affects our end consumers and particularly affects our park customers that are just trying to make a return on their investment, and higher interest rates are making it more difficult to do so.

Speaker #3: Tariffs became a meaningful theme during this quarter, and they continue to affect our cost structure. The Supreme Court ruled in February that the emergency tariffs imposed in 2025 were not authorized, and U.S. Customs has begun winding down those duties.

Curtis Hodgson: The Supreme Court ruled in February that the emergency tariffs imposed in 2025 were not authorized. U.S. Customs has begun winding down those duties. We are in the process of asking for a $683,000 refund based on that Supreme Court decision. Meanwhile, the U.S. Trade Representative kicked off new Section 301 investigations in March that could provide a different legal basis for tariffs going forward. Effective 6 April, right after our quarter end, additional 232 duties were imposed on things like aluminum, steel, copper, which does affect our cost structure. The bottom line is, combined effective tariff rates on most Chinese origin goods are still meaningful, we're still absorbing real input cost pressures.

Curt Hodgson: The Supreme Court ruled in February that the emergency tariffs imposed in 2025 were not authorized. U.S. Customs has begun winding down those duties. We are in the process of asking for a $683,000 refund based on that Supreme Court decision. Meanwhile, the U.S. Trade Representative kicked off new Section 301 investigations in March that could provide a different legal basis for tariffs going forward. Effective 6 April, right after our quarter end, additional 232 duties were imposed on things like aluminum, steel, copper, which does affect our cost structure. The bottom line is, combined effective tariff rates on most Chinese origin goods are still meaningful, we're still absorbing real input cost pressures.

Speaker #3: We are in the process of asking for $600 to $83,000 in refunds based on that Supreme Court decision. Meanwhile, the US Trade Representative kicked off new Section 301 investigations in March that could provide a different legal basis for tariffs going forward, and effective April 6th, right after our quarter-end, additional 232 duties were imposed on things like aluminum, steel, and copper, which does affect our cost structure.

Speaker #3: The bottom line is, combined effective tariff rates on most Chinese-origin goods are still meaningful, and we're still absorbing real input cost pressures. On a few other specific items, on retail and dealer activity, the shift towards retail at our own company stores we've been talking about is really showing up this quarter.

Curtis Hodgson: On a few other specific items, on retail and dealer activity, the shift towards retail at our own company stores we've been talking about is really showing up this quarter and I think will continue to improve. Our retail sales are up 81% year over year. Part of that increase came from buying AmeriCasa last year, which sells our homes, but they also sell 3 other brands at that location. Across our 14 company-owned retail locations, we call it Heritage Housing, our Tiny House Outlet, and AmeriCasa, direct access to end consumers continues to be a meaningful part of our strategy. On our finance division, the loan portfolios continue to perform very well. Consumer loan portfolio interest grew.

Curt Hodgson: On a few other specific items, on retail and dealer activity, the shift towards retail at our own company stores we've been talking about is really showing up this quarter and I think will continue to improve. Our retail sales are up 81% year over year. Part of that increase came from buying AmeriCasa last year, which sells our homes, but they also sell 3 other brands at that location. Across our 14 company-owned retail locations, we call it Heritage Housing, our Tiny House Outlet, and AmeriCasa, direct access to end consumers continues to be a meaningful part of our strategy. On our finance division, the loan portfolios continue to perform very well. Consumer loan portfolio interest grew.

Speaker #3: And I think we'll continue to improve. Our retail sales are up 81% year over year. Part of that increase came from buying Americaso last year, which we—which sells our homes, but it also sells three other brands at that location.

Speaker #3: Across our 14 company-owned retail locations—we call it Heritage Housing, our Tiny House Outlet, and Americas—direct access to end consumers continues to be a meaningful part of our strategy.

Speaker #3: In our finance division, the loan portfolios continue to perform very well. Consumer loan portfolio interest grew, credit quality is over 97% across all of our portfolios, and we haven't seen any deterioration that would require us to change our reserving posture beyond the modest increases that we've been making.

Curtis Hodgson: Credit quality is over 97% across all of our portfolios, we haven't seen any deterioration that would require us to change our reserving posture beyond the modest increases that we've been making. On capital allocation, we restarted share repurchases this quarter under the new $10 million authorization. With our stock continuing to trade near book value, we view buybacks as a sensible use of our capital alongside reinvestment in the business. Let me talk a minute about the workforce housing orders that for the last 2 calls I've mentioned. During this quarter, we received non-refundable deposits of about $8 million from customers for large workforce housing orders. We started production on the orders in Q1, had not made any deliveries from those orders in Q1.

Curt Hodgson: Credit quality is over 97% across all of our portfolios, we haven't seen any deterioration that would require us to change our reserving posture beyond the modest increases that we've been making. On capital allocation, we restarted share repurchases this quarter under the new $10 million authorization. With our stock continuing to trade near book value, we view buybacks as a sensible use of our capital alongside reinvestment in the business. Let me talk a minute about the workforce housing orders that for the last 2 calls I've mentioned. During this quarter, we received non-refundable deposits of about $8 million from customers for large workforce housing orders. We started production on the orders in Q1, had not made any deliveries from those orders in Q1.

Speaker #3: On capital allocation, we restarted share repurchases this quarter. Under the new $10 million authorization, and with our stock continuing to trade near book value, we view buybacks as a sensible use of our capital alongside reinvestment in the business.

Speaker #3: Let me talk a minute about the workforce housing orders that, for the last two calls, I've mentioned. During this quarter, we received non-refundable deposits of about $8 million from customers for large workforce housing orders.

Speaker #3: We started production on those orders in the first quarter but had not made any deliveries from those orders in the first quarter. Now that we're in the second quarter, I expect two to three hundred units to be delivered on those fairly high-margin orders that we have deposits in place for.

Curtis Hodgson: Now that we're in Q2, I expect 200 to 300 units to be delivered on those fairly high margin orders or deposits we have in place. We should recognize substantially all of these workforce housing orders that we have in the calendar year 2026. Another topic I'd like to spend a minute on is the AmeriCasa litigation. We filed a lawsuit last month, or in March, I guess it was. Our claim is related to misrepresentations and omissions made in that acquisition. We're early in the litigation.

Curt Hodgson: Now that we're in Q2, I expect 200 to 300 units to be delivered on those fairly high margin orders or deposits we have in place. We should recognize substantially all of these workforce housing orders that we have in the calendar year 2026. Another topic I'd like to spend a minute on is the AmeriCasa litigation. We filed a lawsuit last month, or in March, I guess it was. Our claim is related to misrepresentations and omissions made in that acquisition. We're early in the litigation.

Speaker #3: And we should recognize substantially all of these workforce housing orders that we have in the calendar year 2026. Another topic I'd like to spend a minute on is the AmeriCso litigation.

Speaker #3: So we filed a lawsuit last month, or in March, I guess it was. Our claims relate to misrepresentations and omissions made in that acquisition.

Speaker #3: And we're early in the litigation. I'm not exactly sure where it'll end up. But the litigation was necessary because the acquisition we made last year was not panning out as we expected, and I think it's because of things that were either not disclosed or erroneously disclosed during the due diligence period.

Curtis Hodgson: I'm not exactly sure where it'll end up. The litigation was necessary because the acquisition we made last year was not panning out as we expected, and I think it's because of things that were either not disclosed or were erroneously disclosed during the due diligence period. The litigation is not really material to our consolidated financial position or our liquidity or even our operations. We'll continue to evaluate the facts and circumstances regarding that acquisition. I just want everybody to know that it isn't going to be the savior to the company, but on the other hand, it's not gonna be very deleterious either. Let's see now. We have one other item that's worth flagging.

Curt Hodgson: I'm not exactly sure where it'll end up. The litigation was necessary because the acquisition we made last year was not panning out as we expected, and I think it's because of things that were either not disclosed or were erroneously disclosed during the due diligence period. The litigation is not really material to our consolidated financial position or our liquidity or even our operations. We'll continue to evaluate the facts and circumstances regarding that acquisition. I just want everybody to know that it isn't going to be the savior to the company, but on the other hand, it's not gonna be very deleterious either. Let's see now. We have one other item that's worth flagging.

Speaker #3: But the litigation is not really material to our consolidated financial position, or our liquidity, or even our operations. We're continuing to evaluate the facts and circumstances regarding that acquisition.

Speaker #3: And I just want everybody to know that it isn't going to be the savior to the company. But on the other hand, it's not going to be very deleterious either.

Speaker #3: So let's see now. Yeah, one other item that's worth flagging. In 2024, we came to an agreement with borrowers under which we received clear title to two mobile home communities and a new 48.6% kind of short-term 48.6 million promissory note bearing 7.9% to 7.9% interest.

Curtis Hodgson: In 2024, we came to an agreement with borrowers under which we received clear title to two mobile home communities and a new 48.6% on a short-term $48.6 million dollar promissory note bearing 7.9% interest. This note matures in July. We've been in contact with the borrower, they've now made all required payments under that bridge loan, if you will. We are now talking to them about where now, brown cow. Talking about taking a partial payment and renewing it. We're talking about what possible lending that we are willing to do on a going-forward basis. We still believe that there won't be any negative effect from this note.

Curt Hodgson: In 2024, we came to an agreement with borrowers under which we received clear title to two mobile home communities and a new 48.6% on a short-term $48.6 million dollar promissory note bearing 7.9% interest. This note matures in July. We've been in contact with the borrower, they've now made all required payments under that bridge loan, if you will. We are now talking to them about where now, brown cow. Talking about taking a partial payment and renewing it. We're talking about what possible lending that we are willing to do on a going-forward basis. We still believe that there won't be any negative effect from this note.

Speaker #3: This note matures in July. We've been in contact with the borrower, and they've now made all required payments under that bridge loan, if you will.

Speaker #3: And we are now talking to them about—we're now, brown cow—talking about taking a partial payment and renewing it. We're talking about what possible lending that we are willing to do on a going-forward basis.

Speaker #3: And we still believe that there won't be any negative effect for this note. But we are in the process of negotiating, and you never know how it might turn out.

Curtis Hodgson: We are in the process of negotiating, and you never know how it might turn out. A couple of other closing thoughts that are really short. You know, Q1 was a solid quarter, especially in light of the management transition that happened in the Q4. Net income was up over 6%, and on a diluted earnings per share basis, it was up 12%, helped somewhat because of our share repurchases and somewhat by the exit of executives that no longer have stock options. Our balance sheet is in great shape. $14 million of cash, essentially no debt, and I'm proud to say $539 million of stockholders' equity and an undrawn revolver.

Curt Hodgson: We are in the process of negotiating, and you never know how it might turn out. A couple of other closing thoughts that are really short. You know, Q1 was a solid quarter, especially in light of the management transition that happened in the Q4. Net income was up over 6%, and on a diluted earnings per share basis, it was up 12%, helped somewhat because of our share repurchases and somewhat by the exit of executives that no longer have stock options. Our balance sheet is in great shape. $14 million of cash, essentially no debt, and I'm proud to say $539 million of stockholders' equity and an undrawn revolver.

Speaker #3: A couple of other closing thoughts that are really short. Q1 was a solid quarter, especially in light of the management transition that happened in the fourth quarter.

Speaker #3: Net income was up over 6%. And on a diluted earnings per share basis, it was up 12%. Helped somewhat because of our share repurchases and somewhat by the exit of executives that no longer have stock options.

Speaker #3: Our balance sheet is in great shape—$14 million in cash, essentially no debt. And I'm proud to say $539 million of stockholders' equity and an undrawn revolver.

Speaker #3: People look at us and say, "My gosh, you have a clean balance sheet." We also are a one-entity company—no subsidiaries. And I think that is a very attractive place to be.

Curtis Hodgson: People look at us and say, My gosh, you have a clean balance sheet. We also are a one-entity company, no subsidiaries, I think that is a very attractive place to be. The workforce housing orders are encouraging, especially here in Texas. The strength in our retail and direct sales reflects the strategy that we've been pursuing. Loan portfolios continue to be stable and a growing earnings engine. Georgia continues to be a big question mark. We've managed to keep it running, we don't have any workforce housing orders yet in Georgia, we're relying on the old-fashioned selling to dealers and selling to parks and selling through our company stores. That does not have enough volume to keep us running at profitable production.

Curt Hodgson: People look at us and say, My gosh, you have a clean balance sheet. We also are a one-entity company, no subsidiaries, I think that is a very attractive place to be. The workforce housing orders are encouraging, especially here in Texas. The strength in our retail and direct sales reflects the strategy that we've been pursuing. Loan portfolios continue to be stable and a growing earnings engine. Georgia continues to be a big question mark. We've managed to keep it running, we don't have any workforce housing orders yet in Georgia, we're relying on the old-fashioned selling to dealers and selling to parks and selling through our company stores. That does not have enough volume to keep us running at profitable production.

Speaker #3: The workforce housing orders are encouraging, especially here in Texas. The strength in our retail and direct sales reflects the strategy that we've been pursuing.

Speaker #3: Loan portfolios continue to be stable and a growing earnings engine. Georgia continues to be a big question mark. We've managed to keep it running, but we don't have any workforce housing orders yet in Georgia.

Speaker #3: So we're relying on the old-fashioned selling to dealers, and selling to parks, and selling through our company stores. That does not have enough volume to keep us running at profitable production.

Speaker #3: As I've said before, Legacy has never had a quarter to the loss in our entire history. In Q1 of 2026, has kept that streak going.

Curtis Hodgson: As I've said before, Legacy has never had a quarterly loss in our entire history, and Q1 of 2026 has kept that streak going, as will Q2. We're conservatively capitalized, focused on long-term value creation, confident in our ability to weather some near storm volatility while positioning for long-term growth as housing affordability becomes more and more important to US consumers and policymakers, especially if interest rates remain at 6% or above. Operator, that concludes our prepared remarks. Please open up the line for questions and answers.

Curt Hodgson: As I've said before, Legacy has never had a quarterly loss in our entire history, and Q1 of 2026 has kept that streak going, as will Q2. We're conservatively capitalized, focused on long-term value creation, confident in our ability to weather some near storm volatility while positioning for long-term growth as housing affordability becomes more and more important to US consumers and policymakers, especially if interest rates remain at 6% or above. Operator, that concludes our prepared remarks. Please open up the line for questions and answers.

Speaker #3: As will Q2. We're conservatively capitalized. Focused on long-term value creation. Confident in our ability to manage volatility while positioning for long-term growth as housing affordability becomes more and more important to U.S. consumers and policymakers, especially if interest rates remain at 6% or above.

Speaker #3: Operator, that concludes our prepared remarks. Please open up the line for questions and answers.

Speaker #1: 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. Our first question comes from Alex Rygiel of Texas Capital Securities. Your line is open.

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. Please stand by while we compile the question and answer roster. Our first question comes from Alex Rygiel of Texas Capital Securities. Your line is open.

Speaker #1: Please stand by while we compile the Q&A roster. And our first question comes from Alex Rigel of Texas Capital Securities. Your line is open.

Speaker #2: Good afternoon, Curt and John. Great to hear from you both. Curt, I always appreciate your broader perspective on the economy and broader housing market trends.

Alex Rygiel: Good afternoon, Kurt and John. Great to hear from you both. Kurt, I always appreciate your broader perspective on the economy and broader housing market trends. I'm curious, in your views, how you think that has changed over the last three months.

Speaker #2: So, I'm curious—in your view, how do you think that has changed over the last three months?

Speaker #3: Well, on the 10,000-foot view, Alex, our demographics are not all that healthy. For the first year in history last year, we had more people moving out of the country than moving into the country.

Curtis Hodgson: Well, you know, on the 10,000 foot view, Alex Rygiel, our demographics are not all that healthy. For the first year in history last year, we had more people moving out of the country than moving into the country, and our birth rate is below 2. On a 10,000 foot view, we don't need a lot of new bedrooms. We already have all we need. Growth is basically geographically very particular. We got growth in states like Texas and Florida, and we don't have growth in states like, you know, Indiana and Ohio. Fortunately, we do business south of the Mason-Dixon line, we still have a growing demographic in the states that we do business. As an aside, Kenny and I got into this business in 1980.

Curt Hodgson: Well, you know, on the 10,000 foot view, Alex Rygiel, our demographics are not all that healthy. For the first year in history last year, we had more people moving out of the country than moving into the country, and our birth rate is below 2. On a 10,000 foot view, we don't need a lot of new bedrooms. We already have all we need. Growth is basically geographically very particular. We got growth in states like Texas and Florida, and we don't have growth in states like, you know, Indiana and Ohio. Fortunately, we do business south of the Mason-Dixon line, we still have a growing demographic in the states that we do business. As an aside, Kenny and I got into this business in 1980.

Speaker #3: And our birth rate is below two. So, on a 10,000-foot view, we don't need a lot of new bedrooms. We already have all we need.

Speaker #3: So growth is basically geographically very particular. We got growth in states like Texas and Florida, and we don't have growth in states like Indiana and Ohio.

Speaker #3: Fortunately, we do business south of the Mason-Dixon line, so we still have a growing demographic in the states that we do business. And as an aside, Kenny and I got in this business in 1980.

Speaker #3: And from 1980 to 1982, you young men that weren't living through it have read the history books. Get your history books. That was the highest interest rate environment in the history of our company.

Curtis Hodgson: From 1980 to 1982, you young men that weren't living through it have read the history books, your history books, that was the highest interest rate environment in the history of our company, where the prime rate of interest got all the way, I believe it was to 18%. Those were very good years in the mobile home business because high interest rates locks consumers out of traditional site-built housing. Buying a $500,000 house at a 10% mortgage rate is prohibitive to almost anybody in this economy, which brings them down, just as it did in 1980, 1982, to things that we sell. Higher interest rates are not a bad fact to the manufactured housing industry. If anything, they're a good fact. We still struggle on where you're gonna put them.

Curt Hodgson: From 1980 to 1982, you young men that weren't living through it have read the history books, your history books, that was the highest interest rate environment in the history of our company, where the prime rate of interest got all the way, I believe it was to 18%. Those were very good years in the mobile home business because high interest rates locks consumers out of traditional site-built housing. Buying a $500,000 house at a 10% mortgage rate is prohibitive to almost anybody in this economy, which brings them down, just as it did in 1980, 1982, to things that we sell. Higher interest rates are not a bad fact to the manufactured housing industry. If anything, they're a good fact. We still struggle on where you're gonna put them.

Speaker #3: The prime rate of interest was cut all the way, I believe, to 18%. And those were very good years in the mobile home business because high interest rates locked consumers out of traditional site-built housing.

Speaker #3: Buying a $500,000 house at a 10% mortgage rate is prohibitive to almost anybody in this economy. Which brings them down, just as it did in 1980 to 1982, to things that we sell.

Speaker #3: So higher interest rates are not a bad fact for the manufactured housing industry. If anything, they're a good fact. But we still struggle on where you're going to put them.

Speaker #3: We don't have a lot of vacant spaces in big cities. We don't have very many mobile home parks coming online, although, as you know, we're trying to do things in Texas.

Curtis Hodgson: We don't have a lot of vacant spaces in big cities. We don't have very many mobile home parks coming online, although we're, you know, as you know, we're trying to do things in Texas. We don't have a good answer to where are we gonna put them. Lots of headwinds. The industry itself has not grown in filling that void, and they haven't grown on providing a neighborhood solution as the traditional home builders have, of which I know you follow many of them.

Curt Hodgson: We don't have a lot of vacant spaces in big cities. We don't have very many mobile home parks coming online, although we're, you know, as you know, we're trying to do things in Texas. We don't have a good answer to where are we gonna put them. Lots of headwinds. The industry itself has not grown in filling that void, and they haven't grown on providing a neighborhood solution as the traditional home builders have, of which I know you follow many of them.

Speaker #3: But we don't have a good answer to where we could have put them. Lots of headwinds. And the industry itself has not grown in filling that void.

Speaker #3: And they haven't grown. I'm providing a neighborhood solution like the traditional home builders have, of which I know you follow many of them. So even though we have what should be tailwinds, we haven't done a very good job as an industry of imitating the site-built housing people and selling community solutions as opposed to, say, a Jim Walters solution for those of you that are my age, where we're just providing a house and somebody else has to put in the garage, somebody else has to put in the landscaping, somebody else has to bring their sprinkler system and the fence.

Curtis Hodgson: Even though that we have what should be tailwinds, we haven't done a very good job as an industry of imitating the site-built housing people and selling communities solutions as opposed to, say, a Jim Walter solution, for those of you that are my age, where we're just providing a house and somebody else has to put in the garage, somebody else has to put in the landscaping, somebody else has to bring the sprinkler system and the fence. We basically are providing part of the solution, but not all the solution. Whereas when you follow your site builders, they are solving almost all of the neighborhood problems. We're trying to morph into that with our, with our, you know, the huge development outside of Austin, which has got a lot of good news this week, if anybody was paying attention.

Curt Hodgson: Even though that we have what should be tailwinds, we haven't done a very good job as an industry of imitating the site-built housing people and selling communities solutions as opposed to, say, a Jim Walter solution, for those of you that are my age, where we're just providing a house and somebody else has to put in the garage, somebody else has to put in the landscaping, somebody else has to bring the sprinkler system and the fence. We basically are providing part of the solution, but not all the solution. Whereas when you follow your site builders, they are solving almost all of the neighborhood problems. We're trying to morph into that with our, with our, you know, the huge development outside of Austin, which has got a lot of good news this week, if anybody was paying attention.

Speaker #3: We basically are providing part of the solution, but not all of the solution. Whereas when you follow your site builders, they are solving almost all of the neighborhood problems.

Speaker #3: And we're trying to morph into that with our huge development outside of Austin, which has got a lot of good news this week if anybody was paying attention.

Speaker #3: Within four miles of our location, we have thousands of jobs that have just been announced in the future. So that particular location, I'm very confident of.

Curtis Hodgson: Within four miles of our location, we have thousands of jobs that have just been announced in the future. That particular location, I'm very confident of, and we've made very little progress on our other land holdings. I know I went above and beyond answering your question, but at least I did answer your question. Anything else, Alex?

Curt Hodgson: Within four miles of our location, we have thousands of jobs that have just been announced in the future. That particular location, I'm very confident of, and we've made very little progress on our other land holdings. I know I went above and beyond answering your question, but at least I did answer your question. Anything else, Alex?

Speaker #3: And we've made very little progress on our other land holdings. I know I went above and beyond answering your question, but at least I did answer your question.

Speaker #3: Anything else, Alex?

Speaker #2: Yes, that was very helpful. Historically, the company has seen some positive seasonality after tax season. Since we're past that, can you kind of comment on demand in April and early May?

Alex Rygiel: Yes, that was very helpful. Historically, the company has seen some positive seasonality after tax season, you know, since we're past that, can you kinda comment on demand in April and early May?

Speaker #3: Sure. I mean, I don't know if we could stomach much more demand in Texas. With all our orders we already have in place, we're probably already out to August or September.

Curtis Hodgson: Sure. I mean, I don't know if we can stomach much more demand in Texas. With all our orders we already have in place, we're probably already out to August or September. We'd have to bump somebody in the line to take more orders. We did get a little seasonality bump in Georgia, the way we're able to turn the spigot back on. We don't have much backlog in Georgia. Without the data centers and without, you know, the oil field boom, which Georgia doesn't participate in hardly at all at either of those, good old-fashioned mobile home business, the street dealers, and the parks, is rather tepid.

Curt Hodgson: Sure. I mean, I don't know if we can stomach much more demand in Texas. With all our orders we already have in place, we're probably already out to August or September. We'd have to bump somebody in the line to take more orders. We did get a little seasonality bump in Georgia, the way we're able to turn the spigot back on. We don't have much backlog in Georgia. Without the data centers and without, you know, the oil field boom, which Georgia doesn't participate in hardly at all at either of those, good old-fashioned mobile home business, the street dealers, and the parks, is rather tepid.

Speaker #3: We’d have to bump somebody to the end of the line to take more orders. And we did get a little seasonality bump in Georgia.

Speaker #3: The way we're able to turn the spigot back on, but we don't have much backlog in Georgia. So, without the data centers and without the oilfield boom—which Georgia doesn't participate in hardly at all in either of those—good old-fashioned mobile home business, the street dealers, and the parks is rather tepid.

Speaker #3: And I don't mind going on record on this thing. And I think followers of my peer group are already figuring it out based on the punishment that they gave the stock prices this week.

Curtis Hodgson: I don't mind going on record on this saying. I think followers of my peer group are already figured it out based on the punishment that they gave the stock prices this week. I did notice before the call that our stock was actually up on what I consider fair but not great reports. We're in good shape as a company, and our next 2 quarters should be pretty doggone impressive based on houses already built in our yard that we're starting to ship to these major customers in Texas. That's what I see. To answer your question, in summary, traditional demand is not great, but non-traditional demand, like data centers and oil field, is as good as I've seen it ever since Hurricane Rita and Hurricane Katrina in 2005.

Curt Hodgson: I don't mind going on record on this saying. I think followers of my peer group are already figured it out based on the punishment that they gave the stock prices this week. I did notice before the call that our stock was actually up on what I consider fair but not great reports. We're in good shape as a company, and our next 2 quarters should be pretty doggone impressive based on houses already built in our yard that we're starting to ship to these major customers in Texas. That's what I see. To answer your question, in summary, traditional demand is not great, but non-traditional demand, like data centers and oil field, is as good as I've seen it ever since Hurricane Rita and Hurricane Katrina in 2005.

Speaker #3: But I did notice before the call that our reports are considered fair but not great. But we're in good shape as a company, and our next two quarters should be pretty doggone impressive based on houses already built in that yard that we're starting to ship to these major, major customers in Texas.

Speaker #3: So that's what I see to answer your question. In summary, traditional demand is not great. But non-traditional demand, like data centers and oilfields, is as good as I've seen it ever since Rita-Katrina in 2005.

Speaker #3: So, a lot of good news, but a little bit of bad news.

Curtis Hodgson: A lot of good news, but a little bit of bad news.

Curt Hodgson: A lot of good news, but a little bit of bad news.

Alex Rygiel: Then one last question. As it relates to the workforce housing order that you have, that's fantastic. Kinda turning the page, how do future prospects look, and when might we hear about other sort of big orders into this market?

Speaker #2: And then one last question. As it relates to the workforce housing order that you have—that's fantastic. But kind of turning the page, how do future prospects look?

Speaker #2: And when might we hear about other sort of big orders into this market?

Curtis Hodgson: In Texas, we're working several big orders. I mean, huge orders. You know, none of them have turned into a deposit yet, but we're working that angle. The, you know, the big 7 companies that are involved in data centers are making a multi-trillion-dollar commitment to this space. Compare it to, say, the stimulus that was given to the economy after COVID by the US government, because in size, the stimulus that these 7 are giving the economy is comparable to the stimulus that the US government gave a few years back in COVID, which was significant stimulus. Let's take a data center manufacturer. He is putting on his balance sheet an asset, but he's putting on my balance sheet income, as well as everybody in the construction business in this region.

Curt Hodgson: In Texas, we're working several big orders. I mean, huge orders. You know, none of them have turned into a deposit yet, but we're working that angle. The, you know, the big 7 companies that are involved in data centers are making a multi-trillion-dollar commitment to this space. Compare it to, say, the stimulus that was given to the economy after COVID by the US government, because in size, the stimulus that these 7 are giving the economy is comparable to the stimulus that the US government gave a few years back in COVID, which was significant stimulus. Let's take a data center manufacturer. He is putting on his balance sheet an asset, but he's putting on my balance sheet income, as well as everybody in the construction business in this region.

Speaker #3: In Texas, we're working several big orders. I mean, huge orders. And none of them have turned into deposits yet, but we're working that angle.

Speaker #3: So, the big seven companies that are involved in data centers are making a multi-trillion-dollar commitment to this space. Compared to, say, the stimulus that was given to the economy after COVID, the US government—because, in size, the stimulus that these seven are giving the economy is comparable to the stimulus that the US government gave a few years back in COVID.

Speaker #3: Which was significant stimulus. So let's take a data center manufacturer. He is putting on his balance sheet an asset, but he's putting on my balance sheet income.

Speaker #3: As well as everybody in the construction business in this region. So the fact that income is going to be up for everybody in this region is a pretty remarkable amount of stimulus.

Curtis Hodgson: The fact that income is going to be up for everybody in this region is a pretty remarkable amount of stimulus. There's a little bit of that going on on a nationwide basis, including Georgia, and even on a worldwide basis. In our market, Texas and Louisiana, there is so much data center business that is actually going to happen by these seven companies investing mega capital. I think we're good probably all the way through 2027 and maybe beyond that. Business is good in Texas. That's all I can tell you.

Curt Hodgson: The fact that income is going to be up for everybody in this region is a pretty remarkable amount of stimulus. There's a little bit of that going on on a nationwide basis, including Georgia, and even on a worldwide basis. In our market, Texas and Louisiana, there is so much data center business that is actually going to happen by these seven companies investing mega capital. I think we're good probably all the way through 2027 and maybe beyond that. Business is good in Texas. That's all I can tell you.

Speaker #3: There's a little bit of that going on on a nationwide basis, including Georgia and even on a worldwide basis. But in our market—Texas and Louisiana—there is so much data center business that is actually going to happen by these seven companies investing mega capital, I think we're good probably all the way through '27 and maybe beyond that.

Speaker #3: So, business is good in Texas. That's all I can tell you.

Speaker #2: Good to hear. Thank you very much.

Alex Rygiel: Good to hear. Thank you very much.

Speaker #1: Thank you. And as a reminder, if you have a question, please press star one-one. And our next question comes from Mark Smith of Lake Street.

Operator: Thank you. As a reminder, if you have a question, please press star one one. Our next question comes from Mark Smith of Lake Street.

Speaker #1: Your line is open.

Speaker #3: Hi, guys. I wanted to ask just for a little more detail if you can, Kurt, on this workforce housing deal. Just maybe any more insight you can give us on the size, and maybe the timing of revenue recognition as we work through the year.

Mark Smith: Hi, guys. I wanted to ask just for a little more detail, if you can, Curtis, on this workforce housing deal, just maybe, you know, any more insight you can give us on kinda the size and maybe the, you know, timing of revenue recognition as we work through the year.

Speaker #4: Yeah, I can do that. I would guess that we have already had somewhere around 600 units with deposit in this category out of Texas.

Curtis Hodgson: Yeah, I can do that. I would guess that we have already had somewhere around 600 units with deposit in this category out of Texas. Which it was about half of our entire production last year in Texas, maybe even more than half. The orders actually started in December, but they weren't ready for the houses, but we needed the orders, so we built them anyway. Of the 600, at least half of them will be shipped in Q2, with the remaining being shipped in Q3 and Q4. That's kind of where we're at. Remember, to Alex's question, Mark, I tipped my hand and said we are in the process of taking even more. I mean, think of the double whammy we have here, Mark.

Curt Hodgson: Yeah, I can do that. I would guess that we have already had somewhere around 600 units with deposit in this category out of Texas. Which it was about half of our entire production last year in Texas, maybe even more than half. The orders actually started in December, but they weren't ready for the houses, but we needed the orders, so we built them anyway. Of the 600, at least half of them will be shipped in Q2, with the remaining being shipped in Q3 and Q4. That's kind of where we're at. Remember, to Alex's question, Mark, I tipped my hand and said we are in the process of taking even more. I mean, think of the double whammy we have here, Mark.

Speaker #4: It was about half of our entire production last year in Texas, maybe even more than half. The orders actually started in December. But they weren't ready for the houses, but we needed the orders, so we built them anyway.

Speaker #4: Of the 600, at least half of them will be shipped in Q2, with the remaining being shipped in Q3 and Q4. So that's kind of where we're at.

Speaker #4: And remember, to Alex's question, Mark, I tipped my hand and said we are in the process of taking even more orders. I mean, think of the double whammy we have here, Mark.

Speaker #4: We’ve got data centers all over the state of Texas. And we’ve got West Texas crude selling at nearly $100 a barrel, which we have historically always gotten.

Curtis Hodgson: We got data center all over the state of Texas, and we got West Texas crude selling at nearly $100 a barrel, which we have historically always gotten orders whenever there's a boom in the oil field. I don't know. If you can tell me when the Iran war is gonna be over and what's gonna happen to oil prices, I might have a different opinion. If this $90 to $100 barrel holds, we're not only gonna have lots of orders for data centers, we're gonna have lots of orders for the Permian Basin as well. It'll lift all boats. I mean every manufacturer is gonna get a benefit. We're not uniquely qualified. There's 34 operating plants in the state of Texas.

Curt Hodgson: We got data center all over the state of Texas, and we got West Texas crude selling at nearly $100 a barrel, which we have historically always gotten orders whenever there's a boom in the oil field. I don't know. If you can tell me when the Iran war is gonna be over and what's gonna happen to oil prices, I might have a different opinion. If this $90 to $100 barrel holds, we're not only gonna have lots of orders for data centers, we're gonna have lots of orders for the Permian Basin as well. It'll lift all boats. I mean every manufacturer is gonna get a benefit. We're not uniquely qualified. There's 34 operating plants in the state of Texas.

Speaker #4: Orders come in whenever there is a boom at the oilfield. I don't know if you can tell me when the Iran war is going to be over, and what's going to happen to oil prices.

Speaker #4: I might have a different opinion. But at this $90 to $100 a barrel holds, we're not only going to have lots of orders for data centers.

Speaker #4: We're going to have to—we're going to have lots of orders for the Permian Basin as well. And it'll lift all boats. I mean, every manufacturer is going to get a benefit.

Speaker #4: We're not uniquely qualified. There are 34 operating plants in the state of Texas. But we're all going to rise together. And we won't need independent dealers like we have in the past.

Curtis Hodgson: We're all gonna rise together, and we won't need independent dealers like we have in the past. We won't even need our own company stores. Now we keep growing them, but I would rather build a SaaS sale to Google than create too much inventory in my company stores in a rather tepid work or a business climate. Again, the theme remains the same. If you've been following these calls, 'cause I know you've been on 'em, Mark, all I'm doing is backing up what I already predicted two calls ago and with real numbers. We're in good shape for a long time, and it's gonna show up beginning in Q2, blossom in Q3 and Q4, and we may have three of the best quarters coming up in front of us.

Curt Hodgson: We're all gonna rise together, and we won't need independent dealers like we have in the past. We won't even need our own company stores. Now we keep growing them, but I would rather build a SaaS sale to Google than create too much inventory in my company stores in a rather tepid work or a business climate. Again, the theme remains the same. If you've been following these calls, 'cause I know you've been on 'em, Mark, all I'm doing is backing up what I already predicted two calls ago and with real numbers. We're in good shape for a long time, and it's gonna show up beginning in Q2, blossom in Q3 and Q4, and we may have three of the best quarters coming up in front of us.

Speaker #4: We won't even need our own company stores. We keep growing them. But I would rather build a cash sale to Google than create too much inventory of my company's stores in a rather tepid work or business climate.

Speaker #4: So again, the theme remains the same. And if you've been following these calls—because I know you've been on them, Mark—all I'm doing is backing up what I already predicted two calls ago.

Speaker #4: And with real numbers. So we're in good shape for a long time, and it's going to show up beginning in Q2, blossom in Q3 and Q4.

Speaker #4: And we may have three of the best quarters coming up in front of us. But I don't like to overpromise and under-deliver. You've known me for probably eight or nine years.

Curtis Hodgson: I don't like to overpromise and underdeliver. You've known me for, shit, Mark, probably 8 or 9 years, and you know that I'm pretty conservative in these projections. I know what's in the pack, and it would be nonsensical for me to not reveal it. We're gonna have good 3 quarters starting in Q2.

Curt Hodgson: I don't like to overpromise and underdeliver. You've known me for, shit, Mark, probably 8 or 9 years, and you know that I'm pretty conservative in these projections. I know what's in the pack, and it would be nonsensical for me to not reveal it. We're gonna have good 3 quarters starting in Q2.

Speaker #4: And you know that I'm pretty conservative in these projections. But I know what's intact, and it would be nonsensical for me to not reveal it.

Speaker #4: But we're going to have a good three quarters, starting in Q2.

Speaker #3: Okay, perfect. The other one was just, it was pretty impressive, the cut in SG&A this quarter. And I know there have obviously been some changes there.

Mark Smith: Okay. Perfect. It was pretty impressive cut in SG&A this quarter. I know there's obviously been some changes there. If you could just talk maybe about the sustainability of SG&A, if there's other further cuts or maybe if we, you know, with the orders coming out, if there's some stuff that you need to add?

Speaker #3: But if you can just talk maybe about the sustainability of SG&A, if there's other further cuts, or maybe if with the orders coming in, if there's some stuff that you need to add.

Speaker #4: Well, I wish this was a video call because you'd see a picture of me with a machete. I just began to cut SG&A. And not everybody is supportive of that.

Curtis Hodgson: Well, I wish this was a video call 'cause you'd see a picture of me with a machete. I've just begun to cut SG&A, and not everybody is supportive of that. Come on now. We have $500 million worth of money invested in paper. That doesn't take any SG&A, or hardly any. I'm tired of SG&A growing in the company when the rest of the company is not growing. I would expect to see further declines in SG&A. I don't know how much we can get it down to because, as Jon correctly pointed out, SG&A is not just sales, general, and administrative. It includes things like warranty. It includes things like reserves and provisions for loan losses. This all gets put in SG&A.

Curt Hodgson: Well, I wish this was a video call 'cause you'd see a picture of me with a machete. I've just begun to cut SG&A, and not everybody is supportive of that. Come on now. We have $500 million worth of money invested in paper. That doesn't take any SG&A, or hardly any. I'm tired of SG&A growing in the company when the rest of the company is not growing. I would expect to see further declines in SG&A. I don't know how much we can get it down to because, as Jon correctly pointed out, SG&A is not just sales, general, and administrative. It includes things like warranty. It includes things like reserves and provisions for loan losses. This all gets put in SG&A.

Speaker #4: But come on now. Basically, we have $500 million worth of money invested in paper. That doesn't take any SG&A, or hardly any.

Speaker #4: And I'm tired of SG&A growing in the company when the rest of the company is not growing. So I would expect to see further declines in SG&A.

Speaker #4: And I don't know how much we can get it down to because, as John correctly pointed out, SG&A is not just sales, general, and administrative.

Speaker #4: It includes things like warranty. It includes things like reserves and provisions for loan losses. This all gets put in SG&A. But from a pure people and expense—the S to the G and the A—I would expect further declines, but I don't know what our auditors are going to require for loan provisions that I think are nonsensical.

Curtis Hodgson: From a pure people and expense, the SG&A, I would expect further declines. I don't know what our auditor is gonna require for loan provisions that I think are nonsensical. I don't know what skeletons are gonna come up in the warranty department from yesteryear, 'cause we built some stuff that has been a legal issue. Part of our SG&A is still gonna go down, while part of it may not. I would expect maybe a 10% reduction by the end of the year in SG&A.

Curt Hodgson: From a pure people and expense, the SG&A, I would expect further declines. I don't know what our auditor is gonna require for loan provisions that I think are nonsensical. I don't know what skeletons are gonna come up in the warranty department from yesteryear, 'cause we built some stuff that has been a legal issue. Part of our SG&A is still gonna go down, while part of it may not. I would expect maybe a 10% reduction by the end of the year in SG&A.

Speaker #4: And I don't know what skeletons are going to come up in the warranty department from yesteryear, because we built some stuff that has been a legal issue.

Speaker #4: So, part of our SG&A is still going to go down, while part of it may not. I would expect maybe a 10% reduction by the end of the year.

Speaker #4: In SG&A.

Speaker #3: Okay. And then you spoke earlier about inflationary pressures, tariffs, whatnot. Do you think your SG&A cuts and then is there is that enough to make up for maybe some of the inflationary pressures that you could see?

Mark Smith: Okay. Then you spoke earlier about inflationary pressures, tariffs, whatnot. You know, do you think your SG&A cuts then is that enough to make up for maybe some of the inflationary pressures that you could see? Is there anywhere that you can cut kind of within the COGS to get the product costs down?

Speaker #3: And is there anywhere that you can, kind of within the COGS, get the product costs down?

Speaker #4: Yeah, but I got to go back to a 10,000-foot view. So the problem in the industry is all of the major manufacturers have been trying to build a cheaper product.

Curtis Hodgson: I gotta go back to 10,000 foot view. The problem in the industry is all of the major manufacturers have been trying to build a cheaper product. Anytime they can take $10 out, they consider it a triumph. The natural result of that is the product isn't all that desirable. It doesn't have basic features like, say, medicine cabinet. We've taken a different tack. We're going to not build the cheapest product possible and build to the middle of the market. Just recently, we've begun to prove that theory out at the retail level with our own company stores. We are not gonna spiral this into who can sell the cheapest one at the lowest margin, because that's a recipe for failure.

Curt Hodgson: I gotta go back to 10,000 foot view. The problem in the industry is all of the major manufacturers have been trying to build a cheaper product. Anytime they can take $10 out, they consider it a triumph. The natural result of that is the product isn't all that desirable. It doesn't have basic features like, say, medicine cabinet. We've taken a different tack. We're going to not build the cheapest product possible and build to the middle of the market. Just recently, we've begun to prove that theory out at the retail level with our own company stores. We are not gonna spiral this into who can sell the cheapest one at the lowest margin, because that's a recipe for failure.

Speaker #4: And anytime they can take $10 out, they consider it a triumph. And the natural result of that is the product isn't all that desirable.

Speaker #4: It doesn’t have basic features like, say, Medicine Canvas. And we’ve taken a different path. We’re not going to build the cheapest product possible—we’re going to build to the middle of the market.

Speaker #4: And just recently, we've begun to prove that theory out at the retail level with our own company stores. But we are not going to spiral this into who can sell the cheapest one for the lowest margin.

Speaker #4: Because that's a recipe for failure. We're going to abandon that philosophy and concentrate on the middle market. So I kind of danced around your question.

Curtis Hodgson: We're gonna abandon that philosophy and concentrate on the middle market. I kinda danced around your question, and I'm not even sure I can remember what the question was because I got off on a different subject. The low-end nature of our product is not where I think this market needs to go. This market needs to do more like the site-built housing and sell more of a turnkey solution to housing and get off the idea the guy has to buy his own medicine cabinet, if you know what I mean.

Curt Hodgson: We're gonna abandon that philosophy and concentrate on the middle market. I kinda danced around your question, and I'm not even sure I can remember what the question was because I got off on a different subject. The low-end nature of our product is not where I think this market needs to go. This market needs to do more like the site-built housing and sell more of a turnkey solution to housing and get off the idea the guy has to buy his own medicine cabinet, if you know what I mean.

Speaker #4: And I'm not even sure I can remember what the question was, because I got off on a different subject. But the low-end nature of our product is not where I think this market needs to go.

Speaker #4: This market needs to do more like the site-built housing and sell more of a turnkey solution to housing, and get off the idea that the guy has to buy his own medicine cabinet.

Speaker #4: If you know what I mean. So, that, I think, was a little probative of what you asked, but maybe I went too far. I don't know.

Mark Smith: Yeah

Curtis Hodgson: that I think was a little probative of what you asked, but maybe I went too far. I don't know. Let me know.

Curt Hodgson: that I think was a little probative of what you asked, but maybe I went too far. I don't know. Let me know.

Speaker #4: Let me know—any other thing, Mark?

Mark Smith: No.

Curtis Hodgson: Anything, Mark?

Curt Hodgson: Anything, Mark?

Mark Smith: No, that hit a lot of it. Maybe just another part of it to ask is just with changes in immigration and kind of your own workforce, you know, are you seeing pressure on labor and your ability to kind of hit your production goals?

Speaker #3: No, that hit a lot of it. Maybe just another part of it to ask is, with changes in immigration and kind of your own workforce, are you seeing pressure on labor in your ability to hit your production goals?

Curtis Hodgson: As the younger generation would say, Mark, a hundred percent. I mean, deportations have hurt our sales to the Spanish market. I think that's unfortunate, but it's okay. The interesting fact is our retail portfolio, which is 70% Hispanic, is behaving incredibly well. We haven't experienced a big uptick in repossessions. A little bit. I would say we're now repossessing in roughly 4% per year, but that is the historical norm in this industry. When we were repoing at only 2% per year, it was because there was this quantum leap in prices during COVID, and everybody was right-side up in what they owed on their mobile home. Those increases in prices ended 4 years ago.

Curt Hodgson: As the younger generation would say, Mark, a hundred percent. I mean, deportations have hurt our sales to the Spanish market. I think that's unfortunate, but it's okay. The interesting fact is our retail portfolio, which is 70% Hispanic, is behaving incredibly well. We haven't experienced a big uptick in repossessions. A little bit. I would say we're now repossessing in roughly 4% per year, but that is the historical norm in this industry. When we were repoing at only 2% per year, it was because there was this quantum leap in prices during COVID, and everybody was right-side up in what they owed on their mobile home. Those increases in prices ended 4 years ago.

Speaker #4: As the younger generation would say, Mark, deportations have hurt our sales to disadvantaged markets, and I think that that's unfortunate. But it's okay. The interesting fact is, our retail portfolio, which is 70% Hispanic, is behaving incredibly well.

Speaker #4: So, we haven't experienced a big uptick in replacement—a little bit. I would say we're now repossessing in roughly 4% per year, but that is the historical norm in this industry.

Speaker #4: When we were reploying at only 2% per year, it was because there was this quantum leap in prices during COVID. And everybody was right-side up in what they owed on their mobile home.

Speaker #4: But those increases in prices ended four years ago. So, in four years, we've had no substantial increase in prices in this industry since COVID.

Curtis Hodgson: In 4 years, we've had no substantial increase in prices in this industry since COVID. Because the loans made then in 2022, 2023, 2024, and 2025, we have consumers that aren't, you know, well-covered by the value of their of their mobile home. I think that's the reason why repossessions are increasing back to historical norms. Deportations are not affecting our loan portfolio, but they are affecting the sentiment of people on whether they want to buy a mobile home, you know, with this threat that some family member may be deported, and they all wanna go back home with them. It has affected who we sell to retail and how we sell to them, but it has not affected our portfolio. I think that does answer your question, correct?

Curt Hodgson: In 4 years, we've had no substantial increase in prices in this industry since COVID. Because the loans made then in 2022, 2023, 2024, and 2025, we have consumers that aren't, you know, well-covered by the value of their of their mobile home. I think that's the reason why repossessions are increasing back to historical norms. Deportations are not affecting our loan portfolio, but they are affecting the sentiment of people on whether they want to buy a mobile home, you know, with this threat that some family member may be deported, and they all wanna go back home with them. It has affected who we sell to retail and how we sell to them, but it has not affected our portfolio. I think that does answer your question, correct?

Speaker #4: And because the loans made then in '22, '23, '24, and '25, we have consumers that aren't well covered by the value of their mobile home.

Speaker #4: And I think that's the reason why repossessions are increasing back to historical norms. Deportations are not affecting our loan portfolio, but they are affecting the sentiment of people on whether they want to buy a mobile home with this threat that some family member may be deported and they all want to go back home with them.

Speaker #4: So, it has affected who we sell to retail and how we sell to them. But it has not affected our portfolio. I think that does answer your question.

Speaker #4: Correct?

Mark Smith: That does. Thank you.

Speaker #3: That does. Thank you.

Mark Smith: That does. Thank you.

Speaker #4: Okay.

Curtis Hodgson: Okay.

Curt Hodgson: Okay.

Speaker #1: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Curt Hodgson for closing remarks.

Operator: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Curtis Hodgson for closing remarks.

Speaker #4: Sure. Thanks, everybody who joined the call today. I appreciate your interest in our company. That ends the call from my perspective.

Curtis Hodgson: Sure. Thanks, everybody, who joined the call today. I appreciate your interest in our company. That ends the call from my perspective.

Curt Hodgson: Sure. Thanks, everybody, who joined the call today. I appreciate your interest in our company. That ends the call from my perspective.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.