3 unchanged sentences
Forward-looking statements include statements concerning business strategy, among other things, including anticipated trends and developments in and management plans for our business and the markets in which we operate.
−Removed: In some cases, you can identify these statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” "would,"
−Removed: "can,"
−Removed: “could,” “predict,” and “continue,” the negative or plural of these words and other comparable terminology.
+Added: In some cases, you can identify these statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” "would," "can," “could,” “predict,” and “continue,” the negative or plural of these words and other comparable terminology.
All forward-looking statements included in this Form 10-K are based upon information available to us as of the filing date of this Form 10-K, and we undertake no obligation to update any of these forward-looking statements for any reason.
5 unchanged sentences
We build, sell and finance manufactured homes and “tiny houses” that are distributed through a network of independent retailers and company- owned stores and also sold directly to manufactured home communities.
−Removed: The company was founded in 2005 as a Texas limited partnership named Legacy Housing, Ltd.
−Removed: Effective January 1, 2018, we converted into a Delaware corporation and changed our name to Legacy Housing Corporation.
−Removed: Effective December 31, 2019, we converted from a Delaware corporation to a Texas corporation.
−Removed: Our corporate office is located in Bedford, Texas (between Dallas and Fort Worth).
−Removed: We completed our initial public offering (the “IPO”) in December 2018 and our common stock trades on The NASDAQ Global Market under the symbol “LEGH.”
−Removed: We are the fifth largest producer of manufactured homes in the United States as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute and IBTS for the twelve month period ending September 30, 2022.
−Removed: With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 395 to 2,667 square feet consisting of 1 to 5 bedrooms, with 1 to 3 1 / 2 bathrooms.
+Added: The company was founded in 2005, and our corporate office is located in Bedford, Texas (between Dallas and Fort Worth).
+Added: We completed our initial public offering (the “IPO”) in December 2018 and our common stock trades on The NASDAQ Global Select Market under the symbol “LEGH.”
+Added: We are the sixth largest producer of manufactured homes in the United States as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute and IBTS for the nine month period ending September 30, 2023.
+Added: With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 395 to 2,667 square feet consisting of 1 to 5 bedrooms, and 1 to 3 1 / 2 bathrooms.
Our homes range in price, at retail, from approximately $33,000 to $180,000.
−Removed: During 2022, we sold 4,189 home sections (which are entire modules or single floors) and in 2021 we sold 3,635 home sections.
−Removed: We commenced operations in 2005 and have experienced strong sales growth since our inception.
+Added: During 2023, we sold 2,877 home sections (which are entire modules or single floors).
Our homes address the significant need in the United States for affordable housing.
4 unchanged sentences
Census Bureau.
−Removed: 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, from manufacturing custom-made homes using quality materials and distributing those homes through our expansive network of independent retailers and company-owned distribution locations, to providing tailored financing solutions for our customers.
−Removed: Our homes are constructed in the United States at
−Removed: one of our three manufacturing facilities in accordance with the construction and safety standards of the U.S.
+Added: 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.
+Added: 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.
+Added: 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”).
−Removed: Our factories employ high-volume production techniques that allow us to produce approximately 70 home sections, or approximately 60 fully-completed homes on average depending on product mix, in total per week.
+Added: Our factories employ high-volume production techniques that allow us to produce approximately 70 home sections, or approximately 60 fully-completed homes on average depending on product mix, in
+Added: total per week.
We use quality materials and operate our own component manufacturing facilities for many of the items used in the construction of our homes.
−Removed: Each home can be configured according to a variety of floor plans and equipped with such features as fireplaces, central air conditioning and state-of-the-art kitchens.
−Removed: Our homes are marketed under our premier “Legacy” brand name and, as of December 31, 2022, are sold to consumers, primarily across 15 states through a network of 156 independent retail locations, 13 company-owned retail locations and through direct sales to owners of manufactured home communities.
+Added: 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.
+Added: Our homes are marketed under our premier “Legacy” brand name and, as of December 31, 2023, are sold to consumers, primarily across 15 states through a network of over 150 independent retail locations, 13 company-owned retail locations and through direct sales to owners of manufactured home communities.
Our 13 company-owned retail locations, including 11 Heritage Housing stores and two Tiny House Outlet stores, exclusively sell our homes.
−Removed: During 2022, approximately 53% of our manufactured homes were sold in Texas, followed by 9% in Georgia, 5 % in Florida, 5% in Alabama, 5% in Arizona and 4% in Louisiana.
−Removed: During 2021, approximately 50% of our manufactured homes were sold in Texas, followed by 16% in Georgia, 8% in Louisiana and 5% in Alabama.
We offer three types of financing solutions to our customers.
−Removed: We provide floor plan financing for our independent retailers, which takes the form of a consignment arrangement or a financed sale between the retailer and us.
−Removed: We also provide consumer financing for our products which are sold to end-users through both independent and company-owned retail locations, and we provide financing solutions to manufactured housing community owners that buy our products for use in their housing communities.
+Added: We provide inventory financing for our independent retailers who purchase homes from us and then sell them to consumers.
+Added: We provide consumer financing for our products which are sold to end-users through both independent and company-owned retail locations.
+Added: And we provide financing solutions to manufactured housing community owners that buy our products for use in their 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.
−Removed: Corporate Conversion
−Removed: Prior to January 1, 2018, we were a Texas limited partnership named Legacy Housing, Ltd.
−Removed: Effective January 1, 2018, we converted into a Delaware corporation pursuant to a statutory conversion, or the Corporate Conversion, and changed our name to Legacy Housing Corporation.
−Removed: All of our outstanding partnership interests were converted on a proportional basis into shares of common stock of Legacy Housing Corporation.
−Removed: The conversion qualified as a tax free transaction under Section 351 of the Internal Revenue Code.
−Removed: Effective December 31, 2019, the Company reincorporated from a Delaware corporation to a Texas corporation.
−Removed: Following the Corporate Conversion, Legacy Housing Corporation continues to hold all of the property and assets of Legacy Housing, Ltd.
−Removed: and all of the debts and obligations of Legacy Housing, Ltd.
−Removed: continue as the debts and obligations of Legacy Housing Corporation.
−Removed: The purpose of the Corporate Conversion was to reorganize our corporate structure so that the top-tier entity in our corporate structure, the entity that offered common stock to the public in the IPO, was a corporation rather than a limited partnership.
−Removed: Except as otherwise noted, the financial statements included in this Form 10-K are those of Legacy Housing Corporation.
Our Market Opportunity
Manufactured housing is a competitive alternative to other forms of affordable housing, whether new or existing, or located in urban, suburban or rural areas.
−Removed: We believe the target universe of manufactured home buyers consists of households with total annual income below $75,000 which comprised 52% of total U.S.
+Added: We believe the target market of manufactured home buyers consists of households with total annual income below $75,000 which comprised 50% of total U.S.
households in 2022.
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Census Bureau, the Institute for Building Technology and Safety, and the Manufactured Housing Institute.
−Removed: Manufactured homes are an attractive alternative for consumers as new single-family home prices continue to rise at a rapid rate.
+Added: Manufactured homes are an attractive alternative for consumers as new single-family home prices have risen over the past several years..
As shown in the chart below, there is a growing gap between the average sale price for new single-family homes (including the land on which they were built) and the price of the average manufactured home;
5 unchanged sentences
Census Bureau.
−Removed: The manufactured housing industry shipped 112,882 and 105,772 manufactured homes in 2022 and 2021, respectively, according to data published by the U.S.
+Added: The manufactured housing industry shipped 89,200 manufactured homes in 2023 and 112,882 manufactured homes in 2022 according to data published by the U.S.
Census Bureau.
−Removed: Manufactured housing shipments have increased by 22% over the past five years and represent approximately 8% of total completed privately owned housing units.
+Added: Manufactured housing shipments represent approximately 4% of total completed privately owned housing units.
Census Bureau
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All of our homes are constructed in one of our three U.S.-based manufacturing facilities.
−Removed: By utilizing an assembly-line process that employs from approximately 150 to 275 individuals per facility, we are able to manufacture a home in approximately three to six days and, are on average producing approximately 70 home sections, or 60 fully-completed homes depending on product mix, in total per week.
−Removed: We utilize local market research to design homes that meet the specific needs of our customers and offer a variety of structural and decorative customization options, including, among others,
−Removed: fireplaces, central air conditioning, overhead heat ducts, stipple-textured ceilings, decorative woodgrain vinyl floors, wood cabinetry and energy conservation elements.
−Removed: Additionally, our homes have vaulted ceilings in every room, have numerous proprietary advantages such as our copyrighted “furniture friendly” floor plans and, in most cases, are wider, have taller ceilings and a steeper roof pitch than our competitors’ products.
−Removed: Taken together, we believe our ability to offer our customers a range of home sizes and styles, as well as sophisticated design and customization, allows us to accommodate virtually all reasonable customer requests.
−Removed: Our vertical integration allows us the ability to respond quickly to our customers’ needs and modify designs during the construction process.
+Added: By utilizing an assembly-line process that employs from approximately 150 to 275 individuals per facility, we are able to manufacture a home in approximately three to six days and can produce, on average, approximately 70 home sections, or 60 fully-completed homes depending on product mix, in total per week.
+Added: We use local market research to design homes that meet the specific needs of our customers and offer a variety of structural and decorative customization options, including, fireplaces, central air conditioning, overhead heat ducts, stipple-textured ceilings, decorative woodgrain vinyl floors, wood cabinetry and energy conservation elements.
+Added: Additionally, our homes have vaulted ceilings in every room, have our copyrighted “furniture friendly” floor plans and, in most cases, are wider, have taller ceilings and steeper roof pitches than our competitors’ products.
+Added: Altogether, we believe our ability to offer our customers a range of home sizes and styles, as well as sophisticated design and customization, allows us to accommodate virtually all reasonable customer requests.
+Added: Our vertical integration enables us to respond quickly to our customers’ needs and modify designs during the construction process.
● Manufacturing Facilities Strategically Located Near Customers in Key Markets.
−Removed: Our three manufacturing facilities are strategically located to allow us to serve our 156 independent and 13 company-owned retail locations primarily across 15 states.
+Added: Our three manufacturing facilities are strategically located to allow us to serve over 150 independent retail locations and 13 company-owned retail locations primarily across 15 states.
Currently, we have a manufacturing plant in Fort Worth, Texas that measures 97,000 square feet in size and produced 779 homes in 2023 and 1,082 homes in 2022, a manufacturing plant in Commerce, Texas that measures 130,000 square feet in size and produced 726 homes in 2023 and 946 homes in 2022, and a manufacturing plant in Eatonton, Georgia that measures 388,000 square feet in size and produced 640 homes in 2023 and 913 homes in 2022.
Once our homes are constructed and equipped at our facilities, we have the ability to transport the finished products directly to customers ensuring timely and efficient delivery of our manufactured homes.
−Removed: We currently have approximately 52 company-owned trucks, which transported approximately 79% of our production during 2022 to manufactured home communities, our company-owned retail locations and independent dealers.
● Expansive and Growing Distribution Network.
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Our first company-owned retail location opened in June 2016.
−Removed: We believe our company-owned stores will, on average, carry higher gross margins.
+Added: We believe our company-owned stores, on average, carry higher gross margins.
● Competitive Production Strategies and Direct Sourcing.
−Removed: We develop and maintain the resources necessary to build custom homes efficiently that incorporate unique and varied customer-requested features.
−Removed: We are constantly seeking ways in which to directly source materials to be used in the manufacturing process, which allows us to ensure the materials are of high-quality and can be customized to meet our customers’ needs.
+Added: We develop and maintain the resources necessary to build custom homes efficiently and with unique and varied customer-requested features.
+Added: We constantly seek ways to directly source materials used in the manufacturing process, which allows us to ensure the materials are of high-quality and can be customized to meet our customers’ needs.
Customization enables us to attract additional retailers and consumers who seek individualized homes that are assembled on a factory production line.
−Removed: When these custom homes are sold through company-owned retail stores, we expect to capture higher gross margins.
● Available Financing for our Dealers and Retail Customers.
1 unchanged sentence
We offer three types of financing solutions to our customers.
−Removed: We provide floor plan financing for our independent retailers, which takes the form of a consignment arrangement between the retailer and us.
−Removed: We also provide consumer financing for our products sold to end-users through both independent and our company-owned retail locations, and we provide financing to community owners that buy our products for use in their rental housing communities.
−Removed: Our company has been providing floor plan financing to our independent retailers since our formation and we now have 156 independent retailers using our consignment solution.
−Removed: We now have more than 3,400 retail customers that purchased their homes utilizing our retail financing solutions.
+Added: We provide inventory financing for our independent retailers.
+Added: We provide consumer financing for our products sold to end-users through both independent and our company-owned retail locations.
+Added: And we provide financing to mobile home community owners that buy our products for use in their rental housing communities.
+Added: Our company has been providing inventory financing to our independent retailers since our formation, and we now have over 150 independent retailers using our inventory financing solutions.
+Added: We now have more than 3,500 retail customers that purchased their homes using our retail financing solutions.
● Support for Owners of Manufactured Home Communities.
1 unchanged sentence
Such development projects can vary, but generally include custom park development financing and large purchase orders of manufactured homes.
−Removed: We also make loans to community owners for the purpose of acquiring or developing properties and, as part of the arrangement, these community owners contract to buy homes from us.
+Added: We also make loans to community owners for the purpose of acquiring or developing properties, and generally these community owners contract to buy homes from us.
These financing solutions are structured to give us an attractive return on investment, when coupled with the gross margin we realize on products specifically targeted for these new manufactured housing communities.
● Strong Alignment of Interests through Co-Founders’ Ownership.
−Removed: We believe that a strong alignment of interests with stockholders and investors exists through the ownership of a significant percentage of our outstanding shares by our co-founders, Curtis D.
+Added: We believe that our interests are strongly aligned with our stockholders as our co-founders, Curtis D.
Hodgson (Executive Chairman of the Board) and Kenneth E.
−Removed: Shipley (Executive Vice President and Director).
−Removed: Hodgson and Shipley acquired their ownership in 2005 when they founded the company.
−Removed: Each individual has received a minimal annual salary ($50,000).
−Removed: Shipley continues to receive a minimal annual salary ($50,000).
−Removed: In January 2022, Messr.
−Removed: Hodgson entered into an amended and restated employment agreement which provides him with an annual salary of $200,000 and a signing bonus of 150,000 shares of restricted stock, which vested upon grant.
−Removed: Under this new agreement, he is also eligible for an annual incentive bonus and equity awards.
+Added: Shipley (Executive Vice President and Director) own a significant percentage of outstanding shares.
By providing structural and economic alignment with the performance of our company, Messrs.
Hodgson’s and Shipley’s continuing controlling interests are directly aligned with those of our investors.
−Removed: We believe the combination of these characteristics has promoted long-term planning, an enhanced culture among our customers, strategic partners and employees, and ultimately the creation of value for our investors.
+Added: We believe that the controlling interests and involvement of our co-founders has promoted long-term planning, an enhanced culture among our customers, development of strategic partners and employees, and ultimately the creation of value for our stockholders.
Our Growth Strategy
We have a strong operating history of investing in successful growth initiatives over the past 19 years.
−Removed: We believe that the solution we are able to provide for our customers, as a result of the vertical integration of our company, enhances our brand recognition as a leading producer, results in higher and more efficient utilization of our manufacturing factories and expands our direct-to-consumer outreach on the competitive advantages of our wide variety of customizable homes.
+Added: We believe that the solution we are able to provide for our customers, as a result of the vertical integration of our company,
+Added: enhances our brand recognition as a leading producer, results in higher and more efficient utilization of our manufacturing factories and expands our direct-to-consumer outreach on the competitive advantages of our wide variety of customizable homes.
This operational focus has provided us with sustainable net sales and net income growth over the years.
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Providing financing improves our responsiveness to the needs of prospective purchasers while also providing us with opportunities for interest and servicing revenues, which act as additional drivers of net income for us.
−Removed: During the years ended December 31, 2022 and 2021, we financed approximately 45% and 46% of the homes we sold to customers, respectively.
We intend to expand financing and leasing solutions to 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.
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● Pursue Selective Development Opportunites.
−Removed: We seek to grow through selective acquisition of developable land in proximity to our manufacturing footprint which will serve as a future revenue stream for the underlying land as well as ensuring high utilization of our expertise in manufacturing and distribution.
−Removed: In April 2018, we acquired approximately 420 acres of raw land located in Bastrop County near Austin, Texas for $4.2 million.
−Removed: In November 2018, we acquired approximately 69 acres of raw land located near Adkins, Texas for $0.8 million.
−Removed: In July and August 2019, we acquired approximately 140 acres of raw land in Johnson County, Texas for $0.9 million.
−Removed: In September 2020, we acquired
−Removed: approximately 80 acres of raw land in Wise County, Texas for $0.9 million.
−Removed: In February 2021, we acquired approximately 233 acres of raw land in Bexar County, Texas for $1.6 million.
−Removed: We will continue to evaluate opportunities to develop the remaining land, or to provide financing to third party developers of additional manufactured housing communities in order to provide locations for manufactured homes for our customers.
−Removed: Management estimates that our land holdings will yield approximately 3000 manufactured home pad sites.
+Added: We seek to grow through selective acquisition of developable land in proximity to our manufacturing footprint.
+Added: This will provide for a future revenue stream for the underlying land as well as ensure high utilization of our expertise in manufacturing and distribution.
+Added: The Company owns over 1,000 acres of land in several counties in Texas:
+Added: Bastrop County, Johnson County, Wise County, and Bexar County.
+Added: We continue to evaluate opportunities to develop the remaining land, or to provide financing to third party developers of additional manufactured housing communities in order to provide locations for manufactured homes for our customers.
● Focus on our Retail Process.
−Removed: As of December 31, 2022, we distribute our products primarily across 15 states through a combination of 13 company-owned retail locations and 156 independent retail locations.
−Removed: We believe that a focused network of company-owned retail locations will allow us to be more responsive and improve the customer experience at all stages, from manufacturing and design to sales, financing and customer service.
−Removed: We believe our company-owned stores will, on average, carry higher gross margins due to our ability to select critical markets and develop highly-trained sales representatives who possess a deep understanding of our business and customer needs.
−Removed: We are the fifth largest producer of manufactured homes in the United States as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute and IBTS for the twelve month period ending September 30, 2022.
+Added: As of December 31, 2023, we distribute our products primarily across 15 states through a combination of 13 company-owned retail locations and over 150 independent retail locations.
+Added: We believe that a focused network of company-owned retail locations allows us to be more responsive and improve the customer experience at all stages, from manufacturing and design to sales, financing and customer service.
+Added: We believe our company-owned stores, on average, carry higher gross margins due to our ability to select critical markets and develop highly-trained sales representatives who possess a deep understanding of our business and customer needs.
+Added: We are the sixth largest producer of manufactured homes in the United States as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute and IBTS for the nine month period ending September 30, 2023.
We produce a wide variety of homes that can be used by our customers in a number of ways.
5 unchanged sentences
Each home typically contains a living room, dining area, kitchen, 1 to 5 bedrooms and 1 to 3 1 / 2 bathrooms, and each home can be customized to include certain features including, among others, fireplaces, central air conditioning, mini-split climate control, overhead heat ducts, stipple-textured ceilings, decorative wood grain vinyl floors, wood cabinetry and energy conservation elements.
−Removed: The manufactured homes we build are constructed in accordance with the construction and safety standards of HUD.
+Added: The manufactured homes we build are constructed in accordance with the construction and safety standards of the U.S.
+Added: Department of Housing and Urban Development (“HUD”).
Our Texas factories are certified to build homes according to the Texas Industrialized Housing and Buildings law (known as the Texas Modular Code) and our Georgia factory is certified to build homes according to Georgia state construction codes.
15 unchanged sentences
We currently manufacture a typical home in approximately three to six production days.
−Removed: For the years ended December 31, 2022 and 2021, we produced, on average, approximately 70 home sections per week, or 60 fully-completed homes.
+Added: For the year ended December 31, 2023, we produced, on average, approximately 47 home sections per week, or 41 fully-completed homes.
+Added: For the year ended December 31, 2022 we produced, on average, approximately 70 home sections per week, or 60 fully-completed homes.
Raw Materials and Suppliers.
5 unchanged sentences
The inability to obtain any materials used in the production of our homes, whether resulting from material shortages, limitation of supplier facilities or other events affecting production of component parts, may affect our ability to meet or maintain production requirements.
−Removed: Pricing and availability of certain raw materials were volatile during 2022 and 2021 due to a number of factors in th e economic environment.
+Added: Pricing and availability of certain raw materials fluctuated during 2023 and 2022 due to factors in th e economic environment.
We continue to monitor and react to inflation in these materials by maintaining a focus on our product pricing in response to higher materials costs.
1 unchanged sentence
Our warranty does not extend to installation and setup of the home, which is generally arranged by the retailer.
−Removed: Appliances, carpeting, roofing and similar items are warranted by their original manufacturer for various lengths of time.
+Added: Appliances, carpeting, roofing
+Added: and similar items are warranted by their original manufacturer for various lengths of time.
At this time, we do not provide any warranties with respect to tiny houses.
−Removed: As of December 31, 2022, we distribute our manufactured homes primarily across 15 states through a network of 156 independent retail locations, 13 company-owned retail locations and direct sales to owners of manufactured home communities.
+Added: As of December 31, 2023, we distribute our manufactured homes primarily across 15 states through a network of over 150 independent retail locations, 13 company-owned retail locations and direct sales to owners of manufactured home communities.
As is common in the industry, our independent distributors typically sell manufactured homes produced by other manufacturers in addition to our manufactured homes.
Additionally, some independent retailers operate multiple sales outlets.
−Removed: During the years ended December 31, 2022 and 2021, no independent retailer accounted for 10% or more of our manufacturing sales.
−Removed: Below is a list of the states in which we sold most of our manufactured homes and the approximate percentage of those sales to our total product sales:
−Removed: North Carolina
−Removed: South Carolina
−Removed: In 2022 and 2021, we also sold homes in Arkansas, Iowa, Illinois, Indiana, Michigan, Mississippi, Missouri, Nevada, Ohio, Pennsylvania, Tennessee, Utah, Virginia and Wisconsin.
We continually seek to increase our wholesale shipments by growing sales at our existing independent retailers and by finding new independent retailers to sell our homes.
3 unchanged sentences
We believe we have the most comprehensive printed catalog of manufactured housing products in the industry.
−Removed: Our independent retailers generally either pay cash to purchase inventory or finance their inventory needs through our consignment arrangements or financed sales.
+Added: Our independent retailers generally either pay cash to purchase inventory or finance their inventory needs through our inventory finance program.
Certain of our independent retailers finance a portion of their inventory through wholesale floor plan financing arrangements with third parties.
1 unchanged sentence
Payment is due from the third-party lender upon shipment of the product to the retailer and, depending on the terms of each arrangement, we may or may not have limited repurchase obligations associated with this inventory.
−Removed: The maximum amount of our contingent obligations under such repurchase agreements was approximately $8,925,000 and $4,908,000 as of December 31, 2022 and 2021, respectively, without reduction for the resale value of the homes.
−Removed: Approximately 63% of our 2022 product sales were attributable to our independent retail distributors, 9% to our company-owned retail locations and 29% directly to owners of manufactured housing communities.
−Removed: Approximately 57% of our 2021 product sales were attributable to our independent retail distributors, 13% to our company-owned retail locations and 30% directly to owners of manufactured housing communities.
−Removed: As of December 31, 2022, we operate 13 company-owned retail locations.
−Removed: Our company-owned locations allow us to improve the customer experience through all steps of the buying process, from manufacturing and design to sales, financing and customer service.
+Added: Our 13 company-owned retail locations allow us to improve the customer experience through all steps of the buying process, from manufacturing and design to sales, financing and customer service.
This also gives us a direct window into consumer preferences and lending opportunities.
−Removed: We believe that our company-owned stores will, on average, be more productive than our independent retail locations and carry higher gross margins.
+Added: We believe that our company-owned stores are, on average, more productive than our independent retail locations and carry higher gross margins.
Sales and Marketing
10 unchanged sentences
We offer three types of financing solutions:
−Removed: ● Floor Plan Financing.
−Removed: We consign inventory or provide wholesale financing to our independent retailers.
+Added: ● Inventory Financing.
+Added: We provide inventory financing to our independent retailers, who purchase homes from us and then sell them to consumers.
● Consumer Financing.
2 unchanged sentences
We provide financing to community owners that buy or lease our products for use in their rental housing communities.
−Removed: Floor Plan Financing.
−Removed: We provide floor plan or wholesale financing for most of our independent retailers for products we manufacture and for pre-owned products.
−Removed: This wholesale financing is a consignment from us to our independent retailers.
−Removed: The retailers pay their own freight and pay us a monthly fee ranging from 1.0% to 1.4% per month of the wholesale invoice amount of the home.
−Removed: They are also obligated to pay $1,000 toward the invoice amount each year after the consignment with the first $1,000 reduction due one year following consignment.
−Removed: During 2022, we collected $3,370,000 from the independent retailers.
−Removed: Upon sale, the independent retailer is obligated to pay us the invoice amount, less any prepaid reductions, prior to moving the home away from their retail location.
−Removed: If they provide certain documentation to us, we allow them to move the home to their customer’s location and we notify the customer’s lending source to pay us the amount due upon funding of the loan.
−Removed: We have proprietary technology that we install in many consigned homes that gives us the ability to determine if a consigned home has been moved from the retail location without permission.
−Removed: The independent dealer is free to terminate the consignment agreement by giving us 90-days’ advance notice if it is current on all its obligations to us.
−Removed: Our wholesale consignment contracts require us to defer income recognition until we are paid in full.
−Removed: For the years ended December 31, 2022 and 2021, we recorded consignment sales of $84,037,000 and $63,496,000, respectively.
−Removed: Consignment sales are recorded when a house under one of our consignment agreements is sold to the end consumer.
−Removed: Certain of our wholesale factory-built housing sales to independent retailers are purchased through wholesale floor plan financing arrangements.
−Removed: Under a typical floor plan financing arrangement, an independent financial institution specializing in this line of business provides the retailer with a loan for the purchase price of the home and maintains a security interest in the home as collateral.
−Removed: The financial institution customarily requires us, as the manufacturer of the home, to enter into a separate repurchase agreement with the financial institution under which we are obligated, upon default by the retailer and under certain other circumstances, to repurchase the financed home at declining prices over the term of the repurchase agreement (which is typically 24 months).
−Removed: The price at which we may be obligated to repurchase a home under these agreements is based upon the amount financed, plus certain administrative and shipping expenses.
−Removed: Our obligation under these repurchase agreements ceases upon the purchase of the home by the retail
−Removed: The maximum amount of contingent obligations under our repurchase agreements (without reduction for the resale value of the homes) as of December 31, 2022 was $8,925,000.
−Removed: The risk of loss under these agreements is spread over many retailers and is further reduced by the resale value of the homes.
−Removed: We carry no reserve for this contingent liability.
−Removed: Overview of Consumer and MHP Financing Options as of December 31, 2022
−Removed: ($ in thousands)
+Added: The following table provides an overview of consumer, MHP and dealer financing options as of December 31, 2023 ($ in thousands):
Contractual Rate
1 unchanged sentence
Consumer Financing
−Removed: 13.4% average contractual rate
+Added: 13.2% average annual contractual rate
MHP Community Financing
−Removed: 8.1% average contractual rate
−Removed: We also offer inventory floor plan financing to retailers that takes the form of a consignment arrangement.
−Removed: As of December 31, 2022, we had $5,132,000 of inventory under consignment to our retailers.
+Added: 8.0% average annual contractual rate
+Added: Dealer Financing
+Added: 1.0% average monthly contractual rate
+Added: (1) Dealer finance number includes number of loan agreements which generally is one per dealer
+Added: Inventory Financing.
+Added: We provide inventory financing for most of our independent retailers for products we manufacture and for pre-owned products.
+Added: In an inventory finance arrangement, the Company sells products to our independent retailers and provides financing for the sales.
+Added: The terms of the financing typically include a three year term, a monthly interest payment, an annual curtailment payment and require the retailer to pay the principal amount of the loan to the Company upon the earlier of the sale of the home from by the retailer to its customer or the end of the term.
+Added: In late 2022 and early 2023, the Company transitioned many of its dealers from a traditional consignment arrangement to an inventory finance arrangement.
Consumer Financing.
3 unchanged sentences
At the present time, we currently offer only chattel loans.
−Removed: We provide retail consumer financing to consumers who purchase our full-size manufactured homes and tiny houses and dealer incentive arrangements to encourage independent retailers to use our financing product.
−Removed: Under these arrangements, once a customer executes a home purchase agreement with Legacy financing, we pay to the retailer 80% of the retailer’s gross margin through these consignment arrangements and we retain 20% of the retail gross margins in the consignment portfolio.
−Removed: We transfer the consigned value of the home to the consignment portfolio as our contribution to the consignment arrangement.
−Removed: The retailer is obligated to remarket any repossessions associated with consignment transactions, and obtain 90% of the outstanding balance on the home at the time of repossession.
−Removed: We charge each dealer in the consignment arrangement fees for servicing the loans and receive a preferred return of 10% to 12% per annum for amounts we invest.
−Removed: Upon payback of our contribution, fees and preferred returns, we split the remaining balance with the independent retailer according to a negotiated formula which is accounted for as the dealer incentive liability.
−Removed: As of December 31, 2022, we owned 3,405 retail consumer loans with an average principal balance of $38,891.
−Removed: Our average remaining term on these loans as of December 31, 2022 was 124 months and the average percentage rate (APR) of interest was 13.4%.
−Removed: Our average loan-to-value (“LTV”) at the time of loan origination, which is based on the gross sales price to the borrower, was 83% for the consumer financing portfolio as of December 31, 2022.
+Added: We provide retail consumer financing to consumers who purchase our full- size manufactured homes and tiny houses.
+Added: We also provide dealer incentive arrangements to encourage our independent retailers to use our financing product.
+Added: Under these arrangements, once a customer executes a home purchase agreement with Legacy financing, we pay to the retailer a majority of the retailer’s gross margin, and we retain the remainder.
+Added: We service the loan, charge a servicing fee and receive an annual preferred return for amounts we contribute to the loan.
+Added: Upon recovering our contribution, fees and preferred return, we split the remaining balance with the independent retailer according to a negotiated formula.
+Added: We account for this as a dealer incentive liability.
We have not financed, and have no current plans to finance, new homes manufactured by our competitors in the ordinary course of our business.
−Removed: All loan applications go through an underwriting process conducted at our corporate headquarters to evaluate credit risk that takes into account numerous factors including the down payment, FICO score, monthly income, and total housing payment coverage of the borrower.
−Removed: The interest rates on approved loans are determined by a buyer’s credit score and down payment amount.
−Removed: We use payment history to monitor the credit quality of the consumer loans on an ongoing basis.
Manufactured Housing Community Financing.
We provide financing to owners of manufactured housing communities for our products that they buy in order to rent to their residents.
−Removed: These loans generally have a ten-year term and can have a fixed or variable interest rate.
−Removed: Approximately 97% of the these loans have a fixed interest rate ranging from 6.9% to 11.5%.
−Removed: The remaining loans bear interest at the prime rate plus 4%, with a floor and a ceiling.
−Removed: Down payments, delivery expenses and installation expenses are negotiated on a case-by-case basis.
−Removed: As of December 31, 2022
−Removed: and 2021, loans outstanding from manufactured home communities totaled $143,253,000 and $102,992,000, which comprised 545 and 530 loans, respectively.
−Removed: Our average remaining term on these loans was approximately four years and six years as of December 31, 2022 and 2021, respectively.
We also make loans to community owners for the purpose of acquiring or developing properties and, as part of the arrangement, these community owners contract to buy homes from us.
−Removed: These loans typically range in term from two to five years and carry interest at 5.00% to 12.0%.
−Removed: For the year ended December 31, 2022, we originated loans to owners of manufactured home communities for lot development purposes with a total amount of $4,010,000.
−Removed: The manufactured housing industry is highly competitive at both the manufacturing and retail levels, with competition based upon several factors, including price, product features, reputation for service and quality, depth of distribution, promotion, merchandising and the terms of retail and wholesale consumer financing.
+Added: The manufactured housing industry is highly competitive at both the manufacturing and retail levels and is based upon several factors, including price, product features, reputation for service and quality, depth of distribution, promotion, merchandising and the terms of retail and wholesale consumer financing.
We compete with other producers of manufactured homes and new producers continue to enter the market.
−Removed: We also compete with companies offering for sale homes repossessed from wholesalers or consumers and we compete with new and existing site-built homes, as well as apartments, townhouses and condominiums.
+Added: We also compete with companies offering for sale homes repossessed from wholesalers or consumers and we compete with new and existing site-built homes, apartments, townhouses and condominiums.
In addition to our company, there are a number of other national manufacturers competing for a significant share of the manufactured housing market in the United States, including Clayton Homes, Inc., Cavco Industries, Inc.
2 unchanged sentences
For the past 19 years, the industry has experienced a trend towards consolidation and, as a result, the bulk of the market share is controlled by a small number of companies.
−Removed: We are the country’s fifth largest producer of manufactured homes.
+Added: We are the country’s sixth largest producer of manufactured homes.
Accordingly, we believe we have a significant opportunity to expand in this industry by effectively growing our market share.
−Removed: Among lenders to manufactured home buyers, there are significant competitors including national, regional and local banks, independent finance companies, mortgage brokers and mortgage banks such as 21st Mortgage Corporation, an affiliate of Clayton Homes, Inc., Berkshire Hathaway, Inc., Triad Finance Corporation and CU Factory Built Lending, LP.
+Added: There are significant competitors among lenders to manufactured home buyers including national, regional and local banks, independent finance companies, mortgage brokers and mortgage banks.
+Added: Examples of such lenders include 21st Mortgage Corporation, an affiliate of Clayton Homes, Inc., Berkshire Hathaway, Inc., Triad Finance Corporation and CU Factory Built Lending, LP.
Certain of these competitors are larger than us and have access to substantially more capital and cost efficiencies.
14 unchanged sentences
Construction of manufactured housing is governed by the National Manufactured Housing Construction and Safety Standards Act of 1974, and the regulations issued under such act by HUD.
−Removed: The HUD regulations, known collectively as the Federal Manufactured Home Construction and Safety Standards, cover all aspects of manufactured home construction, including structural integrity, fire safety, wind loads, thermal protection and ventilation.
+Added: The HUD regulations, known collectively as the Federal Manufactured Home Construction and Safety Standards, cover all aspects of manufactured home construction, including structural integrity, fire safety, wind loads, thermal protection and
Our Texas manufacturing facilities, and the plans and specifications of the HUD-compliant homes they produce, have been approved by a HUD-certified inspection agency.
13 unchanged sentences
A number of states have adopted procedures governing the installation of manufactured homes.
−Removed: Utility connections are subject to state and local regulations which must be complied with by the retailer or other person installing the home.
+Added: Utility connections are subject to state and local regulations with which the retailer or other person installing the home must comply.
Warranty Regulations.
Certain warranties we issue may be subject to the Magnuson-Moss Warranty Federal Trade Commission Improvement Act, which regulates the descriptions of warranties on consumer products.
−Removed: For example, warranties that are subject to the act must be included in a single easy-to-read document that is generally made available prior to purchase.
−Removed: The act also prohibits certain attempts to disclaim or modify implied warranties and the use of deceptive or misleading terms.
+Added: For example, warranties that are subject to this act must be included in a single easy-to-read document that is generally made available prior to purchase.
+Added: This act also prohibits certain attempts to disclaim or modify implied warranties and the use of deceptive or misleading terms.
The description and substance of our warranties are also subject to a variety of state laws and regulations.
12 unchanged sentences
Traditionally, manufactured housing retailers have assisted home buyers with securing financing for the purchase of homes, including negotiating rates and the terms for their loans.
−Removed: Under the act, however, these activities are prohibited unless performed by a
−Removed: registered or licensed MLO.
+Added: Under this act, however, these activities are prohibited unless performed by a registered or licensed MLO.
A variety of state laws also regulate the form of financing documents and the allowable deposits, finance charge and fees chargeable pursuant to financing documents.
Regulation C of the Home Mortgage Disclosure Act, among other things, requires certain financial institutions, including non-depository institutions, to collect, record, report and disclose information about their mortgage lending activity, which is used to identify potential discriminatory lending patterns and enforce anti-discrimination statutes.
−Removed: The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed into law and established the Consumer Financial Protection Bureau (“CFPB”) regulates consumer financial products and services.
+Added: The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed into law and established the Consumer Financial Protection Bureau (“CFPB”) which regulates consumer financial products and services.
Certain CFPB mortgage finance rules apply to consumer credit transactions secured by a dwelling, including real property mortgages and chattel loans secured by manufactured homes.
17 unchanged sentences
This will enable buyers to more easily find access to financing and make the overall home buying experience smoother.
−Removed: On January 25, 2018, HUD announced a top-to-bottom review of its manufactured housing rules as part of a broader effort to identify regulations that may be ineffective, overly burdensome, or excessively costly given the critical need for affordable housing.
−Removed: If certain changes are made, our company may be able to more effectively serve buyers of affordable homes.
−Removed: In 2017, our lead lender required an extensive review of our retail installment contract and associated procedures, which we use as part of our consumer financing solutions strategy.
−Removed: Based on that review, we improved certain elements of the language used in our contracts, and modified certain aspects of our practices.
−Removed: Although we believe there are no material compliance issues with our forms and procedures, we are subject to the federal and other regulations described above.
Generally, we experience higher sales volume during the months of March through October.
1 unchanged sentence
As of December 31, 2023, we had approximately 572 employees.
−Removed: Of our employees, approximately 770 individuals are hourly employees and 100 individuals are salaried employees.
+Added: Of our employees, approximately 469 individuals were hourly employees and 103 individuals were salaried employees.
Our employees are currently not represented by any collective bargaining unit.
−Removed: We believe that our relationship with our employees is good.
+Added: Available Information
+Added: We make available free of charge on our website, www.legacyhousingcorp.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments thereto, as soon as reasonably
+Added: practicable after such material is filed with, or furnished to, the Securities and Exchange Commission.
+Added: Information on our Investor Relations page and on our website is not part of this Annual Report on Form 10-K or any of our other securities filings unless specifically incorporated herein by reference.
RISK FACTORS.
Not applicable for smaller reporting companies.
−Removed: UNRESOLVED STAFF COMMENTS.
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.