What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-07 · 113 added, 140 removed, 103 unchanged (71% of the section changed)

7 unchanged sentences

Our homes range in price, at retail, from approximately $47,000 to $200,000.

For the three months ended September 30, 2025 and 2024 we sold 420 and 475 home sections (which are entire homes or single floors that are combined to create complete homes), respectively.

For the nine months ended September 30, 2025 and 2024 we sold 1,334 and 1,536 home sections respectively.

The Company has one reportable segment.

All of our activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others.

For the three months ended March 31, 2026 and 2025 we sold 312 (consisting of 364 floors) and 350 units (consisting of 427 floors) (which are entire homes or single floors that are combined to create complete homes), respectively.

We have one reportable segment.

All of our activities are interrelated, and each activity is dependent and assessed based on how each of the activities of our company supports the others.

For example, the sale of manufactured homes includes coordinating or providing transportation for dealers.

We also provide financing options for customers to facilitate home sales.

Accordingly, all significant operating and strategic decisions by the chief operating decision maker, the Chief Executive Officer, are based upon analyses of our company as one operating segment.

We believe our company is one of the most vertically integrated in the manufactured housing industry, allowing us to offer a complete solution for our customers.

Accordingly, all significant operating and strategic decisions by the co-chief operating decision makers, the Executive Chairman and Chief Executive Officer, are based upon analyses of our company as one operating segment.

We believe our company is one of the most vertically integrated in the manufactured housing industry, allowing us to offer a complete solution to our customers.

We manufacture custom-made homes using quality materials, distribute those homes through our expansive network of independent retailers and company-owned distribution locations and provide tailored financing solutions for our customers.

Our homes are constructed in the United States at our three manufacturing facilities in accordance with the construction and safety standards of the U.S.

Our homes are constructed in the United States at one of our three manufacturing facilities in accordance with the construction and safety standards of the U.S.

Department of Housing and Urban Development (“HUD”).

3 unchanged sentences

Our homes are marketed under our premier “Legacy” brand name and currently are sold primarily across 15 states through a large network of independent retail locations, 14 company-owned retail locations and through direct sales to owners of manufactured home communities.

Our 13 company-owned retail locations, including 12 Heritage Housing stores and one Tiny House Outlet stores exclusively sell our homes.

For the nine months ended September 30, 2025, approximately 56% of our manufactured homes were sold in Texas, followed by 8% in Georgia, 7% in Oklahoma, 5% in Tennessee, 4% in Florida, and 3% in Louisiana.

For the nine months ended September 30, 2024, approximately 48% of our manufactured homes were sold in Texas, followed by 9% in North Carolina, 9% in Georgia, 8% in Oklahoma, 3% in Michigan, and 3% in Florida.

Our 14 company-owned retail locations, including 13 Heritage Housing stores and one Tiny House Outlet store exclusively sell our homes.

One company-owned location operates under the AmeriCasa name and sells both our homes and those of several other manufacturers.

For the three months ended March 31, 2026, approximately 42% of our manufactured homes were sold in Texas, followed by 7% per-state in North Carolina, Kentucky, and Ohio, 6% in Florida, and 4% per-state in Oklahoma, Georgia, and New Mexico.

We offer three types of financing solutions to our customers.

2 unchanged sentences

We also provide financing solutions to manufactured housing community owners that buy our products for use in their manufactured housing communities.

Our ability to offer competitive financing options at our retail locations provides us with several competitive advantages and allows us to capture sales which may not have otherwise occurred without our ability to offer consumer financing.

Our ability to offer competitive financing options at our retail locations provides us

with several competitive advantages and allows us to capture sales which may not have otherwise occurred without our ability to offer consumer financing.

Factors Affecting Our Performance

1 unchanged sentence

● We have acquired several properties in our market area for the purpose of developing manufactured housing communities and subdivisions.

As of September 30, 2025, these properties include the following (dollars in thousands):

As of March 31, 2026, these properties include the following (in thousands):

Date of Acquisition

17 unchanged sentences

(1) Land and improvement values do not include the value of Company owned homes located in this community .

(2) Decrease in total land is due to a partial land sale.

● We also may provide financing solutions to certain manufactured housing community-owner customers in a manner that includes developing new sites for products in or near urban locations where there is a shortage of sites to place our products.

These solutions are structured to give us an attractive return on investment when coupled with the gross margin we expect to make on products specifically targeted for sale to these new manufactured housing communities .

● Inflation rates have been high in the U.S.

Our ability to maintain gross margins can be adversely impacted by sudden increases in specific costs, such as increases in material and labor.

In addition, measures used to combat inflation, such as increases in interest rates, could also have an impact on the ability of home buyers to obtain affordable financing.

We continue to explore opportunities to minimize the impact of inflation on our future profitability.

● During the quarter, the Company experienced higher input costs attributable in part to increased tariffs on goods imported from China.

Certain materials and components used in the manufacture of our homes, including electrical fixtures, hardware, and other finished products, are sourced either directly from China or through domestic suppliers affected by these tariffs.

The resulting cost increases have placed pressure on our gross margins and may continue to do so if tariff levels remain elevated or expand to additional product categories.

While management is taking steps to mitigate these effects through supplier diversification and selective price adjustments, the full impact of the current tariff environment remains uncertain and could affect our cost structure and profitability in future periods.

● During the first quarter of 2026, U.S.

inflation remained above the Federal Reserve's long-term target.

The annual rate of inflation reached 3.3% in March 2026, up from 2.4% in February, due in significant part to a sharp rise in energy prices following geopolitical events in the Middle East, with core inflation (excluding food and energy) at 2.6%.

Our ability to maintain gross margins can be adversely impacted by sudden increases in specific costs, such as raw materials, transportation, and labor.

The Federal Reserve held its benchmark interest rate steady at its March 2026 meeting following three rate cuts in late 2025, and average 30-year mortgage rates remained above 6%.

Although chattel financing rates for manufactured homes generally move independently of mortgage rates, sustained elevated borrowing costs can affect the ability of home buyers to obtain affordable financing.

We continue to explore opportunities to minimize the impact of inflation and elevated borrowing costs on our future profitability.

● Our financial performance depends on how well we can fulfill orders from dealers and customers for our manufactured homes.

Our Georgia facility has room to grow, and with additional investment, we can expand capacity to produce more homes.

Sustained growth requires accurate forecasting across several dimensions:

the volume of business we pursue and accept, our product mix, production scheduling, and the management of inventory, equipment, and staffing levels.

We continue to evaluate both organic expansion and acquisition opportunities to add capacity in regions where demand is strongest.

● During the first quarter of 2026, the Company received a non-refundable advance deposit of approximately $7.1 million from a single customer in connection with a large order of manufactured homes intended for use as workforce housing.

Production of the related units commenced during the first quarter of 2026 and no units had shipped as of March 31, 2026.

Deliveries are expected to begin during the second quarter of 2026, with substantially all of the related product sales expected to be recognized during the remainder of 2026 upon delivery and transfer of title of the units.

The Company's ability to fulfill this order on schedule depends on production capacity, raw material availability, and other factors discussed elsewhere in this Quarterly Report.

● During the first quarter of 2026, the Company continued to experience elevated input costs attributable in part to tariffs on imported goods, including goods imported from China.

Certain materials and components used in the manufacture of our homes — including electrical fixtures, hardware, appliances, and other finished products — are sourced either directly from China or through domestic suppliers affected by these tariffs.

tariff environment evolved significantly during the quarter and shortly thereafter.

In February 2026, the U.S.

Supreme Court held that the International Emergency Economic Powers Act ("IEEPA") did not authorize certain of the emergency tariffs imposed in 2025, and U.S.

Customs and Border Protection began winding down collection of those duties.

Trade Representative subsequently initiated new Section 301 investigations in March 2026 that could provide an alternative legal basis for tariffs on imports from China and other trading partners.

In addition, effective April 6, 2026, additional Section 232 duties were imposed on aluminum, steel, and copper products and their derivatives, which are inputs used by certain of our suppliers.

Pursuant to the November 2025 U.S.–China understanding, the lowered reciprocal tariff rate on Chinese imports has been extended through November 10, 2026, but combined effective rates on most Chinese-origin goods remain materially above pre-2025 levels.

The resulting cost pressures have continued to weigh on our gross margins and may continue to do so depending on how these legal and trade-policy developments evolve.

Management is taking steps to mitigate these effects through supplier diversification, increased domestic sourcing where practical, and selective price adjustments.

The Company is also evaluating its eligibility for refunds of IEEPA duties previously paid in light of the Supreme Court's ruling and the refund procedures recently announced by U.S.

Customs and Border Protection.

The full impact of the current tariff environment, the outcome of pending Section 301 investigations, and the resolution of refund and litigation matters remain uncertain and could affect our cost structure and profitability in future periods .

Results of Operations

The following discussion should be read in conjunction with the information set forth in the financial statements and the accompanying notes appearing elsewhere in this Form 10-Q.

Comparison of Three Months ended September 30, 2025 and 2024 (in thousands)

Comparison of Three Months ended March 31, 2026 and 2025 (in thousands)

Three months ended

September 30,

Product sales

5 unchanged sentences

Selling, general administrative expenses

Dealer incentive

Total operating expenses

4 unchanged sentences

Interest expense

Total other income (expense)

Total other income

Income before income tax expense

1 unchanged sentence

Product sales primarily consist of direct sales, commercial sales, inventory finance sales and retail store sales.

Product sales decreased $1.4 million, or 4.6%, during the three months ended September 30, 2025 as compared to the same period in 2024.

This decrease was driven by a decrease in unit volumes shipped, primarily in inventory finance sales, retail sales and mobile home park sales categories.

Net revenue attributable to our factory-built housing consisted of the following during the three months ended September 30, 2025 and 2024:

Product sales decreased $2.7 million, or 11.3%, during the three months ended March 31, 2026 as compared to the same period in 2025.

This decrease was driven by a decrease in unit volumes shipped, primarily in inventory finance sales.

Net revenue attributable to our factory-built housing consisted of the following during the three months ended March 31, 2026, and 2025:

Three months ended

September 30,

(in thousands)

2 unchanged sentences

Net revenue per unit sold

For the three months ended September 30, 2025, our net revenue per product sold increased by 7.9% as compared to the same period in 2024.

The increase is primarily due to an increase in units sold to consumers, which are sold at higher retail prices than our other channels.

We had increases in retail and direct sales, which were more than offset by decreases in inventory finance sales, mobile home park sales, and other product sales.

Inventory finance sales decreased $0.7 million, or 9% during the three months ended September 30, 2025 as compared to the same period in 2024.

Retail sales increased $0.2 million, or 3.6% during the three months ended September 30, 2025 as compared to the same period in 2024.

Mobile home park sales decreased $1.3 million, or 10.7% during the three months ended September 30, 2025 as compared to the same period in 2024.

Direct sales increased $0.7 million, or 32.1% during the

three months ended September 30, 2025 as compared to the same period in 2024.

Other product sales decreased $0.2 million, or 10.6% during the three months ended September 30, 2025 as compared to the same period in 2024.

For the three months ended March 31, 2026, our total product sales decreased by 11.3% as compared to the same period in 2025.

The decrease was driven by a decline in unit volume of 10.9% (from 350 units in Q1 2025 to 312 units in Q1 2026), while net revenue per unit (in thousands) was essentially flat at $69.1, compared to $69.4 in Q1 2025.

The shift in mix toward retail store sales — which generally carry higher per-unit prices — substantially offset the volume decline.

We had increases in direct, commercial, retail, and other product sales, which were more than offset by decreases in inventory finance sales.

Inventory finance sales decreased $7.6 million, or 68.3% during the three months ended March 31, 2026 as compared to the same period in 2025.

Retail sales increased $2.7 million, or 81.1% during the three months ended March 31, 2026 as compared to the same period in 2025.

Mobile home park sales increased $0.8 million, or 12.4% during the three months ended March 31, 2026 as compared to the same period in 2025.

Direct sales increased $1.2 million, or 80.2% during the three months ended March 31, 2026 as compared to the same period in 2025.

Other product sales increased $0.1 million, or 7.5% during the three months ended March 31, 2026 as compared to the same period in 2025.

Our revenue decreased primarily due to a lower volume of unit sales partially offset by an increase in net revenue per unit sold.

Consumer, MHP and dealer loans interest income increased $0.6 million, or 5.4% during the three months ended September 30, 2025 as compared to the same period in 2024, with essentially all of the gain coming from consumer loan portfolio interest.

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, portfolio service revenue, park rental income, storage fees, and other miscellaneous income which decreased $3.0 million, or 78.8%, during the three months ended September 30, 2025 as compared to the same period in 2024.

This decrease was primarily due to a $2.7 million decrease in land sales.

The cost of product sales increased $1.6 million, or 7.5%, during the three months ended September 30, 2025 as compared to the same period in 2024.

The increase in costs is primarily related to an increase in raw material and tariff costs from 39.4% to 47.7% of sales, which is particularly notable given the favorable shift in sales mix towards higher margin products.

The cost of other sales was $0.6 million during the three months ended September 30, 2025.

Selling, general and administrative expenses increased $1.3 million, or 20.6%, during the three months ended September 30, 2025 as compared to the same period in 2024.

We had a $0.9 million increase in legal expense, $0.5 million increase in loan portfolio loss expense, $0.5 million increase in professional and consulting fee expense, and a $0.1 million increase in property tax expense offset by a $0.6 million decrease in payroll health benefit expense due to a significant medical claim accrual during the comparable period of 2024.

Other income (expense) decreased $3.5 million, or 86.3%, during the three months ended September 30 , 2025 as compared to the same period in 2024.

We had an (i) increase of $0.3 million in non-operating interest income due to a decrease in the required interest accrual allowance related to development loans in default offset by a reduction in interest income due to the decrease in development notes receivable over the comparable period of 2024, (ii) a decrease of $3.9 million in other income/expense primarily due to a fair market valuation gain adjustment on property acquired in foreclosure during the third quarter of 2024 related to the Rodwell default settlement, and (iii) a savings of $0.2 million in interest expense due to a reduction in the line of credit balance.

Income tax decreased $1.9 million during the three months ended September 30, 2025 as compared to the same period in 2024 due to a decrease in before tax income as well as the purchase of tax credits at a discount during the three months ended September 30, 2025.

The effective tax rate for the three months ended September 30, 2025 was 15.7% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and federal tax credits purchased at a discount by the Company in both the second and third quarters of 2025.

The effective tax rate for the three months ended September 30, 2024 was 18.2%

Comparison of Nine Months ended September 30, 2025 and 2024 (in thousands)

Nine months ended

September 30,

Product sales

Consumer, MHP and dealer loans interest

Other revenue

Total net revenue

Operating expenses:

Cost of product sales

Cost of other sales

Selling, general administrative expenses

Dealer incentive

Total operating expenses

Income from operations

Other income (expense)

Non‑operating interest income

Miscellaneous, net

Interest expense

Total other income

Income before income tax expense

Income tax expense

Product sales primarily consist of direct sales, commercial sales, inventory finance sales and retail store sales.

Product sales decreased $1.2 million, or 1.3%, during the nine months ended September 30, 2025 as compared to the same period in 2024.

This decrease was driven by a $6.8 million increase in inventory finance sales and a $1.6 million increase in retail sales, offset by a decrease of $7.5 million in mobile home park sales, a $0.2 million decrease in direct sales, and a $1.9 million decrease in other product sales.

Net revenue attributable to our factory-built housing consisted of the following during the nine months ended September 30, 2025 and 2024:

Nine Months Ended

September 30,

($ in thousands)

Product Sales

Total units sold

Net revenue per unit sold

For the nine months ended September 30, 2025, our net revenue per product sold increased by 13.7% as compared to the same period in 2024.

The increase is primarily due to a decrease in units sold to mobile home parks, which are sold at wholesale prices, and an increase in units sold to consumers, which are sold at higher retail prices.

We had increases in inventory finance sales and retail sales, partially offset by decreases in mobile home park sales, direct sales, and other product sales.

Inventory finance sales increased $6.8 million, or 27.0% during the nine months ended September 30, 2025 as compared to the same period in 2024.

Retail sales increased $1.6 million, or 10.7% during the nine months ended September 30, 2025 as compared to the same period in 2024.

Mobile home park sales decreased $7.5 million, or 20.2% during the nine months ended September 30, 2025 as compared to the same period in 2024.

Direct sales decreased $0.2 million, or 2.9% during the nine months ended September 30, 2025 as compared to the same period in 2024.

Other product sales decreased $1.9 million, or 24.4% during the nine months ended September 30, 2025 as compared to the same period in 2024.

Consumer, MHP and dealer loans interest income increased $1.6 million, or 5.3%, during the nine months ended September 30, 2025 as compared to the same period in 2024.

Our consumer loan portfolio interest income increased by $2.0 million, our MHP loan portfolio interest income decreased by $0.2 million, and our dealer finance interest income decreased by $0.1 million.

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, portfolio service fees, storage fees, and other miscellaneous income and decreased $4.1 million, or 63.1%, during the nine months ended September 30, 2025 as compared to the same period in 2024.

This decrease was primarily due to a $2.6 million decrease in land sale revenue and a $1.1 million decrease in deposit forfeitures.

The cost of product sales increased $2.7 million, or 4.3%, during the nine months ended September 30, 2025 as compared to the same period in 2024.

The increase in costs is primarily related to an increase in raw materials and tariffs from 39.1% to 41.3% of sales, partially offset by a decrease in labor and factory overhead costs.

Selling, general and administrative expenses increased $2.7 million, or 15.5%, during the nine months ended September 30, 2025 as compared to the same period in 2024.

We had a $1.7 million increase in loan portfolio loss expense, a $0.8 million increase in legal expense, a $0.7 million increase in service warranty expense, a $0.4 million increase in professional and consulting expense, and a $0.2 million increase in retail operations’ payroll expense offset by a $0.7 million decrease in health benefits expense, a $0.4 million decrease in corporate and general payroll expense, a $0.15 million decrease in depreciation and amortization expense, and a $0.15 million decrease in postage and shipping expense.

Professional and consulting expense increased primarily for due diligence related to pursuing corporate opportunities.

Other income (expense) decreased $6.9 million, or 72.3%, during the nine months ended September 30, 2025 as compared to the same period in 2024.

We had (i) a decrease of $1.0 million in non-operating interest income primarily due to a lower balance of other development notes receivable, (ii) a $6.5 million decrease in other income/expense primarily due to land sales, reversal of accrued liabilities, and fair value gain adjustments related to settlements during the nine months ended September 30, 2024 that did not occur during the nine months ended September 30, 2025, and (iii) a decrease of $0.7 million in interest expense related to the reduction in the company’s line of credit utilization.

Income tax decreased $3.4 million during the nine months ended September 30, 2025 as compared to the same period in 2024.

This is primarily due to a $16.9 million decrease in before tax income between comparable nine month periods for 2025 and 2024 as well as the purchase of tax credits at a discount during 2025.

The effective tax rate for the nine months ended September 30 , 2025 was 17.5% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and federal tax credits purchased at a discount by the Company during the second and third quarters, both partially offset by state income taxes.

The effective tax rate for the nine months ended September 30, 2024 was 18.2%.

Consumer, MHP and dealer loans interest income increased $0.6 million, or 6.2% during the three months ended March 31, 2026 as compared to the same period in 2025, with essentially all of the gain coming from consumer loan portfolio interest as MHP and dealer interest gradually decreased.

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, portfolio service revenue, park rental income, storage fees, and other miscellaneous income which increased $0.8 million, or 106.6%, during the three months ended March 31, 2026 as compared to the same period in 2025.

This increase was primarily due to a $1 million increase in land sales.

The cost of product sales decreased $2.3 million, or 13.1%, during the three months ended March 31, 2026 as compared to the same period in 2025.

The decrease in costs is primarily related to the 11.3% decrease in product sales specifically in the Inventory Finance category.

The cost of other sales was $1.2 million during the three months ended March 31, 2026.

Inventories, net increased $10.5 million from $39.9 million at December 31, 2025 to $50.4 million at March 31, 2026, driven primarily by an increase in finished goods inventory.

The increase in finished goods inventory reflects, in part, units produced during the first quarter of 2026 in connection with the workforce-housing customer order described above for which deliveries are expected to begin during the second quarter of 2026.

Selling, general and administrative expenses decreased $0.5 million, or 8.3%, during the three months ended March 31, 2026 as compared to the same period in 2025.

We had a $0.6 million increase in loan portfolio loss expense, and a $0.1 million increase in property tax expense offset by a $0.7 million decrease in payroll health benefit expense, $0.6 million decrease in payroll corp & general expense, and a $0.2 million decrease in legal expense.

Other income decreased $0.5 million, or 44.2%, during the three months ended March 31, 2026 as compared to the same period in 2025.

The majority of the decrease came from a $0.3 million fee a customer paid during the three months ended March 31, 2025 for breaking a contract by not purchasing homes.

Income tax decreased $0.4 million during the three months ended March 31, 2026 as compared to the same period in 2025 due to a decrease in income before tax as well as the purchase of tax credits at a discount during the three months ended March 31, 2026.

The effective tax rate for the three months ended March 31, 2026 was 16.1% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and federal tax credits purchased at a discount by the Company in the three months ending March 31, 2026.

The effective tax rate for the three months ended March 31, 2025 was 19.3%.

Liquidity and Capital Resources

We believe that cash flow from operations and cash at September 30, 2025, and availability on our lines of credit will be sufficient to fund our operations and provide for growth for the next 12 to 18 months and into the foreseeable future.

On July 28, 2023, we terminated our credit agreement with Capital One, N.A.

and entered into a new credit agreement with Prosperity Bank that expanded and extended our credit availability (see Lines of Credit , below).

We believe that cash flow from operations and cash at March 31, 2026, and availability on our lines of credit will be sufficient to fund our operations and provide for growth for the next 12 to 18 months and into the foreseeable future.

See Lines of Credit , below, for additional information.

We maintain cash balances in bank accounts that may, at times, exceed federally insured limits.

We have not incurred any losses from such accounts, and management considers the risk of loss to be minimal.

As of September 30, 2025, we had approximately $13.6 million in cash, compared to $1.1 million as of December 31, 2024.

As of March 31, 2026, we had approximately $14.1 million in cash, compared to $8.5 million as of December 31, 2025.

We consider all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents.

Cash Flow Activities

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash used in financing activities

2 unchanged sentences

Cash at end of period

Comparison of Cash Flow Activities from September 30, 2025 to September 30, 2024

Net cash provided by operating activities was $18.1 million during the nine months ended September 30, 2025, compared to net cash of $28.1 million provided by operating activities during the nine months ended September 30, 2024.

This change was predominantly the result of decreased net income, increased consumer loan originations net of collections due to a higher percentage of sales being financed by the company, increased other assets, decreased accounts payable and accrued liabilities, increased inventories, and increased accounts receivable partially offset by decreased MHP loan originations net of collections, decreased dealer inventory loan originations, and increased customer escrow liability.

Net cash provided by investing activities of $0.8 million during the nine months ended September 30, 2025 was primarily attributable to $6.0 million of development notes receivable collections net of originations offset by $5.7 million used in development of property and purchases of machinery and equipment.

Net cash used in investing activities of $1.5 million during the nine months ended September 30, 2024 was primarily attributable to $7.3 million used in development of property and purchases of machinery and equipment offset by $4.1 million of development notes receivable collections net of originations, and proceeds of $1.6 million from the sale of company property.

Net cash used in financing activities of $6.5 million during the nine months ended September 30, 2025 was attributable $6.5 million of stock repurchases.

Net cash used in financing activities of $26.8 million during the nine months ended September 30, 2024 was attributable to net payments of $21.6 million on our lines of credit, and $5.4 million of stock repurchases and $0.2 million received from the exercise of stock options.

In November 2022, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $10.0 million of the Company’s common stock.

On August 6, 2024, our Board of Directors authorized the repurchase of an additional $10.0 million of the Company’s common stock under the share repurchase program.

We repurchased 262,530 shares of common stock for $5,398 in the open market during the year ended December 31, 2024.

We repurchased 29,385 shares of common stock for $675 in the open market during the three months ended March 31, 2025.

We repurchased 260,635 shares of common stock for $5,817 in the open market during the three months ended June 30, 2025.

As of September 30, 2025, we had a remaining authorization of approximately $8,110.

Comparison of Cash Flow Activities from March 31, 2025 to March 31, 2026

Net cash provided by operating activities was $7.0 million during the three months ended March 31, 2026, compared to net cash of $4.9 million provided by operating activities during the three months ended March 31, 2025, an increase of approximately $2.1 million.

This change was primarily a result of cash provided from net income of $10.9 million augmented by positive non cash adjustments of $1.4 million.

Non-cash adjustments included increases to operating cash due to increased depreciation and amortization expense, provision for accounts and notes receivable, and loss from sale of property offset by decreases to operating cash from amortization of deferred revenue and deferred income taxes.

Changes in assets and liabilities reduced net cash provided by operations by $5.4 million.

Decreases to net cash provided by operations from changes in assets and liabilities were primarily the result of increases to the consumer loan portfolio, notes receivable MHP portfolio, inventories, and other assets, as well as decreases to accounts payable and accrued liabilities and dealer incentive liability.

These were offset by a $5.6 million decrease in accounts receivable primarily related to a federal income tax refund, a decrease in the dealer inventory loan portfolio, and a $9.3 million increase in customer deposits.

Approximately $7.1 million of the increase in customer deposits was attributable to a non-refundable advance deposit received during the first quarter of 2026 from a single customer in connection with a large order of manufactured homes intended for use as workforce housing.

Production of the related units commenced during the first quarter of 2026, no units had shipped as of March 31, 2026, and deliveries are expected to begin during the second quarter of 2026.

Net cash used in investing activities was $0.7 million for the three months ended March 31, 2026 compared to $2.0 million net cash used in investing activities for the three months ended March 31, 2025.

Net cash used in investing activities for the three months ended March 31, 2026 was primarily attributable to $1.5 million used in development of property and purchases of machinery and equipment as well as $0.4 million related to the issuance and modification of notes receivable.

This was offset by increases to net cash from investing activities of $1.0 million from the sale of property, $0.2 million from notes receivable collections, and $0.1 million from purchased loan collections.

Net cash used in financing activities was $0.7 million for the three months ended March 31, 2026 compared to $0.7 million net cash used in financing activities for the three months ended March 31, 2025.

Net cash used in financing

activities for the three months ended March 31, 2026 was primarily attributable to $0.6 million of stock repurchases and net payments of $0.1 million on lines of credit.

On February 6, 2026, our Board of Directors authorized a new stock repurchase program under which the Company may repurchase up to $10.0 million of its outstanding common stock, par value $0.001 per share, from time to time through February 28, 2029.

Repurchases may be made in the open market or through privately negotiated transactions, with the timing, manner, price and volume of any repurchases determined by the Company's Executive Chairman and Chief Executive Officer, or either of them, in their sole discretion, based on market conditions, the Company's cash reserves and cash flow, and the relative attractiveness of alternative uses of capital for operations, growth and share repurchases.

Open market repurchases under the program are intended to be made in compliance with the non-exclusive safe harbor conditions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

Shares repurchased under the program will be held as treasury shares.

The program does not obligate the Company to acquire any particular amount of common stock, has no expiration date prior to February 28, 2029, and may be suspended, modified or discontinued at any time without prior notice.

The Company has determined that repurchases under the program are permitted under the terms of its existing bank credit facilities and other indebtedness.

During the three months ended March 31, 2026, the Company repurchased 30,740 shares of common stock for $573 under this program.

As of March 31, 2026, the Company had a remaining authorization of approximately $9.4 million under this program.

Lines of Credit

On July 28, 2023, the Company entered into a new Credit Agreement (the “Revolver”), by and among the Company as borrower, the financial institutions from time to time party thereto, as lenders, and Prosperity Bank as administrative agent.

Subsequently, the Company repaid in full the balance due on its prior line of credit with Capital One, N.A.

and all commitments under this prior line of credit were terminated.

The Revolver provides for a four-year senior secured revolving credit facility with an initial commitment of $50,000 and an additional $25,000 commitment under an accordion feature.

On July 28, 2023, the Company entered into a Credit Agreement (the “Revolver”), by and among the Company as borrower, the financial institutions from time to time party thereto, as lenders, and Prosperity Bank as administrative agent.

The Revolver provides for a four-year senior secured revolving credit facility with an initial commitment of $50 million and an additional $25 million commitment under an accordion feature.

The Revolver is secured by the Company’s consumer loans receivables.

At the Company's option, borrowings will bear interest at a per annum rate equal to, (i) Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 2.5% or 2.75% based upon the Company's average quarterly borrowings under the Revolver or (ii) a base rate plus an applicable margin of 2.5% or 2.75% based upon the Company's average quarterly borrowings under the Revolver.

The Company paid certain arrangement fees and other fees in connection with the Revolver of approximately $271, which were capitalized as unamortized debt issuance costs and included within lines of credit balance in the accompanying balance sheets and are amortized to interest expense over the life of the Revolver.

The Company paid certain arrangement fees and other fees in connection with the Revolver of approximately $271, which were capitalized as unamortized debt issuance costs and included in Prepaid Expenses and Other Current Assets in the accompanying balance sheets and are amortized to interest expense over the life of the Revolver.

The Revolver matures July 28, 2027.

For the three months ended September 30, 2025 and 2024, interest expense under the Revolver was $2 and $175, respectively.

For the nine months ended September 30, 2025 and 2024, interest expense under the Revolver was $3 and $686, respectively.

The outstanding balance of the Revolver as of September 30, 2025 and December 31, 2024 was $0 and $0, respectively.

The interest rate in effect as of September 30, 2025 and December 31, 2024 for the Revolver was 7.25% and 7.61%, respectively.

The amount of available credit under the Revolver was $50,000 and $50,000 as of September 30, 2025 and December 31, 2024, respectively.

For the three months ended March 31, 2026 and 2025, interest expense under the Revolver was $11 and $0, respectively.

The outstanding balance of the Revolver as of March 31, 2026 and December 31, 2025 was $0.9 million and $0, respectively.

The interest rate in effect as of March 31, 2026 and December 31, 2025 for the Revolver was 6.13% and 6.69%, respectively.

The amount of available credit under the Revolver was $49.1 million and $50 million as of March 31, 2026 and December 31, 2025, respectively.

The Revolver requires the Company to comply with certain financial and non-financial covenants.

As of September 30, 2025, the Company was in compliance with all financial covenants, including that it maintain a maximum leverage ratio of no more than 1.00 to 1.00 and a minimum fixed charge coverage ratio of no less than 1.75 to 1.00.

As of March 31, 2026, the Company was in compliance with all financial covenants, including that it maintain a maximum leverage ratio of no more than 1.00 to 1.00 and a minimum fixed charge coverage ratio of no less than 1.75 to 1.00.

Contractual Obligations

The following table is a summary of contractual cash obligations as of September 30, 2025:

The following table is a summary of contractual cash obligations as of March 31, 2026:

Payments Due by Period (in thousands)

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Our obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer.

The maximum amount of our contingent obligations under such repurchase agreements was approximately $713 and $805 as of September 30, 2025 and December 31, 2024, respectively, without reduction for the resale value of the homes.

We may be required to honor contingent repurchase obligations in the future and may incur additional expense as a consequence of these repurchase agreements.

We consider our obligations on current contracts to be immaterial and accordingly we have not recorded any reserve for repurchase commitment as of September 30, 2025.

The maximum amount of our contingent obligations under such repurchase agreements was approximately $1.4 million and $0.8 million as of March 31, 2026 and December 31, 2025, respectively, without reduction for the resale value of the homes.

We may be required to honor contingent repurchase obligations in the future and may incur additional expenses as a consequence of these repurchase agreements.

We consider our obligations on current contracts to be immaterial and accordingly we have not recorded any reserve for repurchase commitment as of March 31, 2026.

Critical Accounting Estimates

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Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our September 30, 2025 Condensed Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.

For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our March 31, 2026 Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.

Quantitative and Qualitative Disclosures About Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis