What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-07 · 177 added, 105 removed, 111 unchanged (72% of the section changed)

3 unchanged sentences

Our actual results could differ materially from those anticipated by our management in these forward looking statements as a result of various factors, including those discussed in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025, particularly under the heading “Risk Factors.” Dollar amounts are in thousands unless otherwise noted.

For the three months ended June 30, 2026, total net revenue was $66.3 million, an increase of 32.3% over the same period in 2025, and net income was $23.5 million, or $0.99 per diluted share, compared to net income of $14.7 million, or $0.60 per diluted share, in the prior-year quarter.

Overall net income increased $8.8 million for the quarter, up 59.8%.

The increase was driven primarily by a 40.0% increase in product sales, reflecting the commencement of deliveries under a large workforce-housing order that contributed approximately $25.5 million of product sales during the quarter, partially offset by lower inventory finance sales.

For the six months ended June 30, 2026, total net revenue was $100.7 million and net income was $34.4 million, or $1.44 per diluted share.

We ended the quarter with $29.0 million of cash and no borrowings outstanding under our $50.0 million revolving credit facility.

Gross margin during the quarter benefited from approximately $0.7 million of tariff refunds, although uncertainty regarding future tariff levels remains.

We continue to see growing demand for workforce housing across our markets and view our ability to recruit and retain trained labor as our principal near-term constraint on growth.

We build, sell and finance manufactured homes and “Tiny Houses” that are distributed through a network of independent retailers and company-owned stores and are sold directly to manufactured housing communities.

2 unchanged sentences

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

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

For the three months ended June 30, 2026 and 2025 we sold 718 (consisting of 774 floors) and 564 units (consisting of 697 floors) (which are entire homes or single floors that are combined to create complete homes), respectively.

For the six months ended June 30, 2026 and 2025 we sold 1,030 (consisting of 1,138 floors) and 914 units (consisting of 1,124 floors), respectively.

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.

5 unchanged sentences

Each home can be configured according to a variety of floor plans and equipped with features such as fireplaces, central air conditioning and state-of-the-art kitchens.

While substantially all of the homes we sell are constructed at our three manufacturing facilities, we also purchase a limited number of homes at wholesale from third-party manufacturers for resale.

These purchased homes have historically represented approximately 50 units per quarter but exceeded 100 units during the three months ended June 30, 2026.

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 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.

Our 14 company-owned retail locations consist of 13 Heritage Housing stores, which exclusively sell our homes, and one location that operates under the AmeriCasa name and sells both our homes and those of several other manufacturers.

For the six months ended June 30, 2026, approximately 65% of our manufactured homes were sold in Texas, followed by 4% per state in Ohio and Georgia, and 3% per state in Oklahoma, North Carolina, Kansas, Florida, and Illinois.

The remaining 12% sold are from thirteen other states.

We offer three types of financing solutions to our customers.

1 unchanged sentence

We provide consumer financing for our products which are sold to end-users through both independent and company-owned retail locations.

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.

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

Management Transition

On July 17, 2026, Curtis D.

Hodgson notified the Company of his decision to retire from his positions as Executive Chairman and as a member of the Board of Directors, effective July 21, 2026 at 5:00 p.m.

Central Time.

The Board of Directors has not yet named a successor Chairman or appointed a replacement director, and the timing of any such action has not been determined.

Shipley continues to serve as the Company’s Chief Executive Officer.

Hodgson’s retirement, Mr.

Hodgson and Mr.

Shipley together served as the Company’s co-chief operating decision makers;

following his retirement, Mr.

Shipley serves as the Company’s sole chief operating decision maker.

This change did not affect the Company’s single reportable segment or the manner in which the Company reviews financial and operating performance and allocates resources.

The Company does not expect Mr.

Hodgson’s retirement to have a material effect on its results of operations, financial position, or liquidity.

See Note 1 — Nature of Operations (Segment Reporting) and Note 17 — Subsequent Events.

Factors Affecting Our Performance

We believe that the growth of our business and our future success depend on various opportunities, challenges, trends and other factors, including the following:

During the second quarter of 2026, U.S.

inflation remained above the Federal Reserve's long-term target but moderated late in the quarter.

After rising to a three-year high of 4.2% in May 2026 — driven in significant part by a sharp increase in energy prices following geopolitical events in the Middle East — the annual rate of inflation eased to 3.5% in June 2026 as energy prices declined, 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 June 2026 meeting, 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.

Given the strength of our balance sheet and our sustained profitability, we believe we are well positioned to fund that growth;

our most significant near-term constraint is securing and retaining enough trained labor to meet demand — a challenge that would intensify if we are successful in converting a meaningful portion of our current workforce-housing opportunities.

To address this, management is implementing new recruiting and retention programs intended to expand and stabilize our skilled workforce.

Sustained growth also 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.

The order covers a total of 380 units.

Amounts received from the customer are recorded as customer deposits until the related units are delivered, at which point the corresponding product sales are recognized.

Production commenced during the first quarter of 2026 and continued during the second quarter, and the Company began deliveries during the second quarter of 2026, shipping 113 units during the quarter.

The Company expects to complete deliveries under the contract during the remainder of 2026.

Workforce housing is receiving significant attention across our market areas, and

given the number of projects currently underway or planned in those areas, we believe there is a meaningful opportunity for additional orders of this type.

The Company's ability to fulfill this order, and any future orders, on schedule depends on production capacity, the availability of trained labor, raw material availability, and other factors discussed elsewhere in this Quarterly Report.

During the second quarter of 2026, the Company continued to incur 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.

In contrast to the significant volatility in tariff rates during the first half of 2025, rates remained essentially stable between the first and second quarters of 2026, which improved our ability to forecast input costs.

tariff environment nonetheless continued to evolve.

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.

During the second quarter, the Company applied for and received tariff refunds of approximately $0.7 million from U.S.

Customs and Border Protection in connection with the IEEPA ruling, which benefited gross margin during the quarter.

Notwithstanding these refunds and the recent stability in rates, considerable uncertainty remains as to the ultimate level and legal basis of tariffs, and the resulting cost pressures may continue to weigh on our gross margins depending on how these legal and trade-policy developments evolve.

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

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

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

As of June 30, 2026, these properties include the following (in thousands):

Date of Acquisition

20 unchanged sentences

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.

● 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%.

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.

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.

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 March 31, 2026 and 2025 (in thousands)

Comparison of Three Months ended June 30, 2026 and 2025 (in thousands)

Three months ended

5 unchanged sentences

Cost of other sales

Selling, general administrative expenses

Selling, general and administrative expenses

Provisions for loan loss (income)

Total operating expenses

4 unchanged sentences

Interest expense

Total other income

Total other income (loss)

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 $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:

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

Product sales increased $15.4 million, or 40.0%, during the three months ended June 30, 2026 as compared to the same period in 2025.

This increase was driven primarily by the commencement of deliveries under the workforce-housing order described above, together with higher commercial sales, partially offset by lower inventory finance sales.

Net revenue attributable to our factory-built housing consisted of the following during the three months ended June 30, 2026 and 2025:

Three months ended

3 unchanged sentences

Net revenue per unit sold

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 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%.

For the three months ended June 30, 2026, our total product sales increased by 40.0% as compared to the same period in 2025.

The increase reflected both an increase in unit volume of 27.3% (from 564 units in Q2 2025 to 718 units in Q2 2026) and an increase in net revenue per unit to $74.9 thousand from $68.1 thousand in Q2 2025, the latter driven by a shift in product mix.

The most significant driver was the commencement of deliveries under the workforce-housing order, which contributed $25.5 million of product sales in the quarter, compared to $1.1 million in the prior-year period.

Mobile home park (commercial) sales increased $1.5 million, or 12.5%, and other product sales increased $0.9 million, or 39.1%.

These increases were partially offset by inventory finance sales, which decreased $10.1 million, or 73.6%, direct

sales, which decreased $0.9 million, or 40.0%, and retail store sales, which decreased $0.5 million, or 7.3%, each during the three months ended June 30, 2026 as compared to the same period in 2025.

Consumer, MHP and dealer loans interest income increased $0.6 million, or 5.4%, during the three months ended June 30, 2026 as compared to the same period in 2025, with the increase driven primarily by 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 increased $0.2 million, or 25.0%, during the three months ended June 30, 2026 as compared to the same period in 2025, primarily due to higher land sales associated with the sale of a small land parcel in Celina, TX.

The cost of product sales increased $7.6 million, or 29.2%, during the three months ended June 30, 2026 as compared to the same period in 2025, primarily as a result of the increase in units sold, including deliveries under the workforce-housing order.

The cost of other sales decreased $0.6 million, or 94.9%, during the three months ended June 30, 2026 as compared to the same period in 2025.

Inventories, net increased $4.1 million from $39.9 million at December 31, 2025 to $43.9 million at June 30, 2026, driven primarily by an increase in finished goods inventory to support continued production, including units remaining to be delivered under the workforce-housing order described above.

Selling, general and administrative expenses increased $1.2 million, or 21.1%, during the three months ended June 30, 2026 as compared to the same period in 2025.

The increase was driven primarily by a $0.9 million increase in professional and consulting fees, a $0.2 million increase in Heritage Housing payroll, a $0.2 million increase in service and warranty costs, and a combined $0.3 million increase in corporate general payroll and healthcare benefits expense, partially offset by a $0.3 million decrease in incentive compensation and a $0.1 million decrease in property tax.

Other income (expense) decreased $1.0 million, or 101.2%, during the three months ended June 30, 2026 as compared to the same period in 2025, primarily due to lower non-operating interest income and increased non-operating expense associated with the write-off of a partial ownership interest in a mobile home park located in Corpus Christi, Texas.

During the second quarter of 2026, the Company began presenting provision for loan loss as a separate line item, previously included in selling, general and administrative expenses.

Provision for loan loss was $(0.6) million and $1.1 million for the three months ended June 30, 2026 and 2025, respectively.

Income tax expense decreased $0.1 million during the three months ended June 30, 2026 as compared to the same period in 2025.

The effective tax rate for the three months ended June 30, 2026 was 11.2%, compared to 17.3% for the same period in 2025, and differs from the federal statutory rate of 21% primarily due to the federal energy-efficient-home tax credit and the reversal of certain uncertain tax position accruals during the quarter.

Comparison of Six Months ended June 30, 2026 and 2025 (in thousands)

Six months ended

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 and administrative expenses

Provisions for loan loss

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 increased $12.6 million, or 20.2%, during the six months ended June 30, 2026 as compared to the same period in 2025.

This increase was driven primarily by the commencement of deliveries under the workforce-housing order and by higher commercial and retail store sales, partially offset by lower inventory finance sales.

Net revenue attributable to our factory-built housing consisted of the following during the six months ended June 30, 2026 and 2025:

Six Months Ended

($ in thousands)

Product Sales

Total units sold

Net revenue per unit sold

For the six months ended June 30, 2026, product sales increased $12.6 million, or 20.2%, reflecting a 12.7% increase in units sold and a 6.6% increase in net revenue per unit, the latter driven by a shift in mix toward higher-value units, including units delivered under the workforce-housing order.

The commencement of deliveries under that order contributed $27.2 million of product sales, compared to $1.2 million in the prior-year period.

Commercial sales increased $1.6 million, or 8.6%, retail store sales increased $2.2 million, or 20.5%, and other product sales increased $1.1 million, or 26.8%.

These increases were partially offset by inventory finance sales, which decreased $17.7 million, or 71.5%, and direct sales, which decreased $0.6 million, or 15.5%, each during the six months ended June 30, 2026 as compared to the same period in 2025.

Consumer, MHP and dealer loans interest income increased $1.3 million, or 5.8%, during the six months ended June 30, 2026 as compared to the same period in 2025, with the increase driven primarily by consumer loan portfolio interest, while MHP and dealer interest were essentially flat.

Other revenue increased $1.0 million, or 61.6%, during the six months ended June 30, 2026 as compared to the same period in 2025.

This increase was primarily due to a $1 million increase in land sales compared to the same period in 2025.

The cost of product sales increased $5.3 million, or 12.3%, during the six months ended June 30, 2026 as compared to the same period in 2025, primarily as a result of the increase in units sold, including deliveries under the workforce-housing order.

The cost of other sales was $1.2 million during the six months ended June 30, 2026.

Selling, general and administrative expenses decreased $0.2 million, or 2.1%, during the six months ended June 30, 2026 as compared to the same period in 2025.

Increases in Heritage Housing payroll $0.5 million, professional and consulting fees $0.6 million, and depreciation and amortization $0.3 million were substantially offset by decreases in payroll-related healthcare costs $0.5 million, corporate and general payroll $0.4 million, payroll incentive compensation $0.5 million, and service and warranty costs $0.2 million.

Other income (expense) decreased $1.5 million, or 70.3%, during the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to lower miscellaneous income (including a $0.3 million contract cancellation fee received during the six months ended June 30, 2025) and lower non-operating interest income.

Provisions for loan loss were $0.8 million and $1.6 million for the six months ended June 30, 2026 and 2025, respectively.

Income tax expense decreased $0.5 million during the six months ended June 30, 2026 as compared to the same period in 2025.

The effective tax rate for the six months ended June 30, 2026 was 12.8%, compared to 18.1% for the same period in 2025, and differs from the federal statutory rate of 21% primarily due to the federal energy-efficient-home tax credit and the reversal of certain uncertain tax position accruals.

Liquidity and Capital Resources

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.

We believe that cash flow from operations and cash at June 30, 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.

1 unchanged sentence

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

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

As of June 30, 2026, we had approximately $29.0 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

Three Months Ended

Six Months Ended

(in thousands)

5 unchanged sentences

Cash at end of period

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.

Comparison of Cash Flow Activities from June 30, 2025 to June 30, 2026

Net cash provided by operating activities was $24.4 million during the six months ended June 30, 2026, compared to net cash of $11.0 million provided by operating activities during the six months ended June 30, 2025, an increase of approximately $13.4 million.

This change was primarily a result of cash provided from net income of $34.4 million, increased by non-cash adjustments of $1.1 million.

Non-cash adjustments included increases to operating cash from depreciation and amortization expense, the provision for accounts and notes receivable, and the writeoff of investment in Corpus AmeriCasa, offset by decreases from amortization of deferred revenue, Loss from sale of property, deferred income taxes, and share based compensation expense.

Changes in operating assets and liabilities reduced net cash provided by operations by $11.1 million, primarily as a result of increases in the consumer loan portfolio, notes receivable MHP portfolio, inventory, and other assets, together with decreases in accounts payable and accrued liabilities and the dealer incentive liability.

These were partially offset by a $3.9 million decrease in accounts receivable, primarily related to a federal income tax refund, a decrease in the dealer inventory loan portfolio, and a $10.7 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.

deliveries under that order commenced during the second quarter of 2026.

Net cash used in investing activities was $2.3 million for the six months ended June 30, 2026 compared to $3.1 million net cash used in investing activities for the six months ended June 30, 2025.

Net cash used in investing activities for the six months ended June 30, 2026 was primarily attributable to $6.6 million used in development of property and purchases of machinery and equipment, as well as $0.8 million related to the issuance and modification of notes receivable.

This was offset by increases to net cash from investing activities of $1.3 million from the sale of property, $3.7 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.

Net cash used in financing activities was $1.7 million for the six months ended June 30, 2026 compared to $6.4 million net cash used in financing activities for the six months ended June 30, 2025.

Net cash used in financing activities for the six months ended June 30, 2026 was primarily attributable to $0.7 million of stock repurchases and net payments of $1.0 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.

4 unchanged sentences

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.

During the three months ended March 31, 2026, the Company repurchased 30,740 shares of common stock for $0.7 million under this program.

The Company made no

repurchases in the three months ended June 30, 2026.

As of June 30, 2026, the Company had a remaining authorization of approximately $9.3 million under this program.

Lines of Credit

1 unchanged sentence

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.

The Revolver is secured by the Company’s consumer loans receivables and all escrow accounts associated with the 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.

1 unchanged sentence

The Revolver matures July 28, 2027.

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.

For the three months ended June 30, 2026 and 2025, interest expense under the Revolver was $0 and $3 thousand, respectively.

The outstanding balance of the Revolver as of June 30, 2026 and December 31, 2025 was $0 and $0, respectively.

The interest rate in effect as of June 30, 2026 and December 31, 2025 for the Revolver was 6.13% and 6.69%, respectively.

The amount of available credit under the Revolver was $50 million and $50 million as of June 30, 2026 and December 31, 2025, respectively.

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

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.

As of June 30, 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 March 31, 2026:

The following table is a summary of contractual cash obligations as of June 30, 2026:

Payments Due by Period (in thousands)

7 unchanged sentences

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 $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.

The maximum amount of our contingent obligations under such repurchase agreements was approximately $0.5 million and $0.8 million as of June 30, 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.

We consider our obligations on current contracts to be immaterial and accordingly we have not recorded any reserve for repurchase commitment as of June 30, 2026.

Critical Accounting Estimates

Critical accounting estimates are those that we believe are both significant and require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters.

We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances.

Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or conditions.

Our critical accounting estimates are identified and described in our Annual Report on Form 10-K for the year ended December 31,

We discuss below the estimate areas in which there were material developments during the period covered by this report.

Allowance for Loan Losses on Consumer, MHP, Dealer, and Other Notes Receivable

The allowance for loan losses on our consumer loan, manufactured housing community (MHP) note, dealer financed receivable, and other note receivable portfolios reflects management's estimate of losses inherent in those portfolios as of the balance sheet date.

The allowance is composed of two components:

a general reserve, calculated using the trailing three-year historical loss rate adjusted for an estimated loss discovery period and qualitative factors (including delinquency trends, borrower financial condition, collateral values and liquidity, and macroeconomic conditions);

and specific reserves on individually identified impaired loans.

The consumer loan portfolio is the largest and most judgment-intensive of these portfolios, with a balance of approximately $202.2 million as of June 30, 2026, compared to $199.3 million as of March 31, 2026 and $198.8 million as of December 31, 2025.

The total allowance for loan loss was $5.8 million as of June 30, 2026, compared to $6.7 million as of March 31, 2026 and $5.8 million as of December 31, 2025.

Changes in delinquency, borrower condition, collateral values, or the qualitative factors described above could result in changes to the allowance that would be recognized in earnings in the period of change.

We did not change our allowance methodology during the period.

Recent Accounting Pronouncements

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.

For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our June 30, 2026 Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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