Good morning. This is Curt Hodgson, Executive Chairman.

I'm here with Jon Langbert, our Chief Financial Officer. Thanks for joining our first quarter 2026 conference call.

John will now read the Safe Harbor disclosure before we get started. Hi.

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 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.

Thanks, John. I'll turn the call back to John 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. John?

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. Despite the modest top-line decline, net income grew to $10.9 million from $10.3 million, and diluted EPS came in at 46 cents, up from 41 cents in Q1 of '25.

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 million, 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.

Inventory finance sales were down about $7.6 million or 68% as our dealers continue 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. 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 high 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. 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 quarters during the quarter. As a reminder, the Section 45L credit terminates on June 30th 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. 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. Curt 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 cap 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.

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 $9.4 million available for future repurchases through February of 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 Curt.

Thanks, John. 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 Fed is now holding its benchmark rates steady, and 30-year or the 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 who are 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.

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.

We are in the process of asking for $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 April 6th, 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, and we're still absorbing real input cost pressures. On a few other specific items, on retail and dealer activity, the shift toward retail and 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 America's Castle last year, which sells our homes, but they also sell three other brands at that location.

Across our four 14 company-owned retail locations, we call it Heritage Housing, our Tiny House Outlet, and America's Castle, 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. 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.

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 two calls I've mentioned. During this quarter, we received nonrefundable deposits of about $8 million from customers for large workforce housing orders.

We started production on that 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 200 to 300 units to be delivered on those fairly high-margin 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 America's Castle 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. 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.

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 going to be very deleterious either. Let's see now.

We have 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% on a short-term $48.6 million promissory note bearing 7.9% 7.9% interest.

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.

We are now talking to them about, we're not, 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, but we are in the process of negotiating, and you never know how it might turn out. A couple 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. Net income was up over 6%, and on diluted earning-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 in cash, essentially no debt, and I'm proud to say $539 million of stockholders' equity and an drawn revolver. 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. 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 managed to keep it running, but 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 it running at profitable production. As I've said before, Legacy has never had a quarter of a 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 U.S. 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.

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, I'm curious in your views how you think that has changed over the last three months.

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, and our birth rate is below two.

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 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, and from 1980 to 1982—you young men that weren't living through it have read the history books, hit 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 to 1982, to things that we sell. Higher interest rates are not a bad fact for the manufactured housing industry; if anything, they're a good fact.

We still struggle on where you going to put them. 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 we're trying to do things in Texas, but we don't have a good answer to where are we going to 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 homebuilders have, of which I know you follow many of them. 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 put in 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 huge development outside of Austin, which has got a lot of good news this week, if anybody was paying attention.

Within 4 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?

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?

Sure. 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 to where we were able to turn the spigot back on. What we don't have much backlog in Georgia.

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 to street dealers and to parks is rather tepid. I don't mind going on record on that saying, and 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 two quarters should be pretty doggone impressive based on houses already built and in our yard that we're starting to ship to these major, 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 oilfield, is as good as I've seen it ever since we had Katrina in 2005.

A lot of good news, but a little bit of bad news. 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, and when might we hear about other sort of big orders into this market?

In Texas, we're working several big orders. Huge orders.

None of them have turned into a deposit yet, but we're working that angle. The Big Seven 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 U.S. government, because, in size, the stimulus that these seven are giving the economy is comparable to the stimulus that the U.S.

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. 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, 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.

Business is good in Texas. That's all I can tell you.

Good to hear. Thank you very much.

Hi, guys. I wanted to ask just for a little more detail, if you can, Curt, on this workforce housing deal.

Just maybe any more insight you can give us on kind of the size and maybe the timing of revenue recognition as we work through the year.

I can do that. I would guess that we have already had somewhere around 600 units with deposit and in this category out of Texas, which 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, we built them anyway. Out 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 question, Mark, I tipped the hand and said we are in the process of taking even more orders.

Think the double whammy we have here, Mark: 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 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, I might have a different opinion.

If this $90 to $100 a barrel holds, we're not only going to have lots of orders for data centers, we're going to have lots of orders for the Permian Basin as well. It'll lift all boats.

Every manufacturer is going to get a benefit. We're not uniquely qualified.

There's 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. We won't even need our own company stores.

We keep growing them, but I would rather build a fast sale to Google than create too much inventory in my company stores in a rather tepid business climate. 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 and with real numbers.

We're in good shape for a long time, and it's going to show up beginning in Q2, blossom in Q3 and 4, and we may have three of the best quarters coming up in front of us. I don't like to over-promise and under-deliver.

You've known me for, shoot, Mark, probably eight or nine years, and you know that I'm pretty conservative in these projections. I know what's in impact, and it would be nonsensical for me to not reveal it, but we're going to have good three quarters starting in Q2.

Okay. Perfect.

The other one was just pretty impressive cut in SG&A this quarter, and I know there's obviously been some changes there, but could you just talk maybe about the sustainability of SG&A, if there's further cuts or maybe with the orders coming in, if there's some stuff that you need to add?

I wish this was a video call because 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, but come on now, we have $500 million worth of money invested in paper.

That doesn't take any SG&A, or hardly any, and 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, 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.

It includes things like warranty. It includes things like reserves and provisions for loan losses.

This all gets put in SG&A. From a pure people and expense of the S and the G and the A, I would expect further declines.

I don't know what our auditor is going to require for loan provisions that I think are nonsensical, and I don't know what skeletons are going to come up in the warranty department from the yesteryear, because we built some stuff that has been a legal issue. 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 in SG&A.

Okay. Then you spoke earlier about inflationary pressures, tariffs, whatnot.

Do you think your SG&A cuts and then is that enough to make up for maybe some of the inflationary pressures that you could see, and is there anywhere that you could kind of within COGS to get the product costs down?

I got to 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 that the product isn't all that desirable.

It doesn't have basic features like, say, medicine cabinets. 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 going to spiral this into who can sell the cheapest one for the lowest margin, because that's a recipe for failure. We're going to abandon that philosophy and concentrate on the middle market.

I kind of danced around your question, and I'm not even sure I can remember what the question was because I got off on a different subjects. 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 turn more of a turn-key solutions to housing, and get off the idea that guy has to buy his own medicine cabinet, if you know what I mean. That, I think, was a little probative of what you asked, but maybe I went too far.

I don't know. Let me know.

Anything else, Mark?

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, are you seeing pressure on labor and your ability to kind of hit your production goals?

As the younger generation would say, Mark, 100%. Deportations have hurt our sales to Hispanic market.

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.

We haven't experienced a big uptick in repossession, just a little bit. I would say we're now repossessing at 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 a 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 four years ago.

In four years, we've had no substantial increase in prices in this industry since COVID. 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.

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.

It has affected who we sell to retail, how we sell to them, but it has not affected our portfolio. I think that does answer your question, correct?

That does. Thank you.

Yep.

Sure. Thanks, everybody who joined the call today.

I appreciate your interest in our company, and that ends the call from our perspective.