Legacy Housing Corp 10-K

ITEM 8. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS ​ ​ Page AUDITED FINANCIAL STATEMENTS OF LEGACY HOUSING CORPORATION ​ ​ ​ Reports of Frazier & Deeter, LLC, Independent Registered Public Accounting Firm (PCAOB ID: 215 ) 26 Balance Sheets as of December 31, 2024 and 2023 30 Statements of Income for the Years Ended December 31, 2024 and 2023 31 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 32 Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 33 Notes to Financial Statements 34 ​ ​ ​ 25 Table of Contents Report Of Independent Registered Public Accounting Firm ​ To the Shareholders and Board of Directors of Legacy Housing Corporation ​ Opinion on the Financial Statements ​ We have audited the accompanying balance sheets of Legacy Housing Corporation (the "Company") as of December 31, 2024 and 2023, and the related statements of income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. ​ We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the Company's internal control over financial reporting as of December 31, 2024 and 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 12, 2025 expressed an adverse opinion on the effectiveness of the Company's internal control over financial reporting. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB" and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matters ​ The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. ​ Allowance for Loan Losses related to the New Note ​ As described in Note 2 to the financial statements, the allowance for loan losses represents management's estimate of the expected credit losses in the Company's loan portfolios. Within the notes receivable from mobile home parks (“MHP”) portfolio balance, there is a $48.6 million loan (the “New Note” as disclosed). As of December 31, 2024, there is no allowance for loan losses associated with the New Note. The analysis for this estimate was made using quantitative methods that consider a variety of collateral based factors such as current replacement value of collateral, current value of collateral, and other precedent and comparable transactions. ​ 26 Table of Contents The principal considerations for our determination that the allowance for loan losses on the New Note is a critical audit matter are the judgments and estimation used by management in estimating collateral value, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures and in evaluating audit evidence obtained. ​ Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The procedures performed in evaluating the reasonableness of management’s estimate for the allowance for loan losses related to the New Note, included, among others, (i) understanding management’s methodology to calculate the estimate, (ii) evaluating comparable transactions used to determine the value of the collateral associated with the loan, and (iii) calculating an independent estimate of the allowance for loan losses. ​ /s/ Frazier & Deeter, LLC ​ We have served as the Company's auditor since 2023. ​ Tampa, Florida March 12, 2025 ​ ​ ​ 27 Table of Contents Report Of Independent Registered Public Accounting Firm ​ ​ ​ To the Shareholders and Board of Directors of Legacy Housing Corporation ​ ​ Adverse Opinion on the Internal Control over Financial Reporting ​ We have audited the internal control over financial reporting of Legacy Housing Corporation (the "Company") as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by COSO. ​ A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management's assessment: ​ (i) control activities are not sufficiently designed, implemented, monitored or tested, and there is a lack of documentation, review and approval of certain of these control activities, (ii) management does not have sufficient qualified accounting personnel to support the preparation of financial statements that comply with U.S. GAAP and SEC reporting requirements, and (iii) information technology general controls are not sufficiently designed, implemented or maintained over in-scope business processes and financial reporting systems. ​ We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the "PCAOB"), the balance sheets as of December 31, 2024 and 2023, and the related statements of income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements) of the Company and our report dated March 12, 2025 expressed an unqualified opinion on those financial statements. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements as of and for the year ended December 31, 2024, of the Company, and this report does not affect our report on such financial statements. ​ Basis for Opinion ​ The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 28 Table of Contents ​ Definition and Limitations of Internal Control over Financial Reporting ​ A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. ​ Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ​ /s/ Frazier & Deeter, LLC ​ Tampa, Florida March 12, 2025 ​ ​ 29 Table of Contents ​ LEGACY HOUSING CORPORATION BALANCE SHEETS (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2024 ​ 2023 Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ Cash ​ $ 1,149 ​ $ 748 Accounts receivable, net ​ 3,985 ​ 4,656 Dealer financed receivables, net ​ ​ 32,585 ​ ​ 32,538 Consumer loans receivable, current ​ 8,623 ​ 7,682 Notes receivable from mobile home parks (“MHP”), current ​ 23,770 ​ 18,156 Other notes receivable, current ​ 12,152 ​ 6,013 Inventories ​ 37,538 ​ 40,969 Prepaid expenses and other current assets ​ 4,504 ​ 4,915 Total current assets ​ 124,306 ​ 115,677 Consumer loans receivable, net ​ 165,482 ​ 148,818 Notes receivable from mobile home parks (“MHP”), net ​ 182,694 ​ 163,824 Other notes receivable, net ​ 2,764 ​ 28,577 Other assets - leased mobile homes ​ ​ 4,557 ​ ​ 7,601 ROU assets - operating leases ​ ​ 1,321 ​ ​ 1,794 Other assets ​ 5,485 ​ 2,571 Property, plant and equipment, net ​ 47,585 ​ 37,880 Total assets ​ $ 534,194 ​ $ 506,742 Liabilities and Stockholders' Equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 5,091 ​ $ 4,090 Accrued liabilities ​ 13,672 ​ 18,504 Customer deposits ​ 1,880 ​ 4,146 Escrow liability ​ 11,623 ​ 10,104 Operating lease obligation ​ ​ 476 ​ ​ 489 Total current liabilities ​ 32,742 ​ 37,333 Long‑term liabilities: ​ ​ Operating lease obligation, less current portion ​ ​ 920 ​ ​ 1,396 Lines of credit ​ — ​ 23,680 Deferred income taxes, net ​ ​ 2,206 ​ ​ 2,338 Dealer incentive liability ​ 4,370 ​ 5,260 Total liabilities ​ 40,238 ​ 70,007 Commitments and contingencies (Note 15) ​ ​ Stockholders' equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ .001 par value, 10,000,000 shares authorized: no shares issued or outstanding ​ ​ — ​ ​ — Common stock, $ .001 par value, 90,000,000 shares authorized; 24,865,906 and 24,843,494 issued and 24,158,311 and 24,398,429 outstanding at December 31, 2024 and 2023, respectively ​ ​ 31 ​ ​ 30 Treasury stock at cost, 707,595 and 445,065 shares at December 31, 2024 and 2023, respectively ​ ​ ( 9,875 ) ​ ​ ( 4,477 ) Additional paid-in-capital ​ ​ 182,400 ​ ​ 181,424 Retained earnings ​ ​ 321,400 ​ ​ 259,758 Total stockholders' equity ​ ​ 493,956 ​ ​ 436,735 Total liabilities and stockholders' equity ​ $ 534,194 ​ $ 506,742 ​ See accompanying notes to financial statements ​ 30 Table of Contents LEGACY HOUSING CORPORATION StatementS of Income (in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Net revenue: ​ ​ Product sales ​ $ 129,345 ​ $ 145,100 Consumer, MHP and dealer loans interest ​ 41,182 ​ 37,420 Other revenue ​ 13,664 ​ 6,624 Total net revenue ​ 184,191 ​ 189,144 Operating expenses: ​ ​ Cost of product sales ​ 90,071 ​ 99,692 Cost of other sales ​ ​ 8,218 ​ ​ — Selling, general and administrative expenses ​ 23,222 ​ 24,279 Dealer incentive ​ ( 930 ) ​ 586 Total operating expenses ​ ​ 120,581 ​ ​ 124,557 Income from operations ​ 63,610 ​ 64,587 Other income (expense): ​ ​ Non‑operating interest income ​ 2,635 ​ 3,019 Miscellaneous, net ​ 10,482 ​ 2,060 Interest expense ​ ( 689 ) ​ ( 930 ) Total other income ​ 12,428 ​ 4,149 Income before income tax expense ​ 76,038 ​ 68,736 Income tax expense ​ ( 14,396 ) ​ ( 14,276 ) Net income ​ $ 61,642 ​ $ 54,460 Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ Basic ​ ​ 24,217,631 ​ ​ 24,385,190 Diluted ​ ​ 24,853,778 ​ ​ 25,070,626 Net income per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 2.55 ​ $ 2.23 Diluted ​ $ 2.48 ​ $ 2.17 ​ See accompanying notes to financial statements. ​ 31 Table of Contents LEGACY HOUSING CORPORATION STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury ​ Additional ​ Retained ​ ​ ​ ​ Shares Amount stock paid-in-capital earnings Total Balances, December 31, 2022 ​ 24,814,695 ​ $ 30 ​ $ ( 4,477 ) ​ $ 180,555 ​ $ 205,996 ​ $ 382,104 Cumulative change in accounting principle, net of taxes ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 698 ) ​ ​ ( 698 ) Balances, January 1, 2023 (as adjusted for change in accounting principle) ​ 24,814,695 ​ $ 30 ​ $ ( 4,477 ) ​ $ 180,555 ​ $ 205,298 ​ $ 381,406 Share based compensation ​ 28,799 ​ ​ — ​ ​ — ​ ​ 869 ​ ​ — ​ ​ 869 Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 54,460 ​ ​ 54,460 Balances, December 31, 2023 ​ 24,843,494 ​ $ 30 ​ $ ( 4,477 ) ​ $ 181,424 ​ $ 259,758 ​ $ 436,735 Share based compensation ​ 9,920 ​ ​ — ​ ​ — ​ ​ 777 ​ ​ — ​ ​ 777 Proceeds from exercise of stock options ​ 12,492 ​ ​ 1 ​ ​ — ​ ​ 199 ​ ​ — ​ ​ 200 Purchase of treasury stock ​ — ​ ​ — ​ ​ ( 5,398 ) ​ ​ — ​ ​ — ​ ​ ( 5,398 ) Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 61,642 ​ ​ 61,642 Balances, December 31, 2024 ​ 24,865,906 ​ $ 31 ​ $ ( 9,875 ) ​ $ 182,400 ​ $ 321,400 ​ $ 493,956 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See accompanying notes to financial statements ​ 32 Table of Contents LEGACY HOUSING CORPORATION STATEMENTS OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 Operating activities: ​ ​ Net income $ 61,642 ​ $ 54,460 Adjustments to reconcile net income to net cash provided by (used in) operating activities: ​ Depreciation and amortization expense 1,906 ​ 1,726 Amortization of deferred revenue ​ ( 2,031 ) ​ ​ ( 1,285 ) Amortization of other costs ​ — ​ ​ ( 76 ) Amortization of lines of credit cost ​ 68 ​ ​ 70 Provision for accounts and notes receivable ​ ( 240 ) ​ ​ 1,354 Provision for long term inventory ​ 249 ​ ​ 49 Gain from sale of assets ​ ( 2,062 ) ​ ​ ( 507 ) Gain from loan settlements ​ ( 6,084 ) ​ ​ — Non-cash operating lease expense ( 44 ) ​ ( 50 ) Deferred income taxes ​ ( 132 ) ​ ​ ( 524 ) Share based payment expense ​ 777 ​ ​ 769 Other non cash items ​ — ​ ​ ( 12 ) Changes in operating assets and liabilities: ​ Accounts receivable 744 ​ ( 155 ) Consumer loans activity, net ( 17,102 ) ​ ( 17,362 ) Notes receivable MHP activity, net ( 1,349 ) ​ ( 39,192 ) Dealer inventory loan activity, net ​ 200 ​ ​ ( 2,930 ) Inventories 3,181 ​ ( 1,956 ) Prepaid expenses and other current assets ( 1,065 ) ​ ( 1,323 ) Other assets - leased mobile homes ​ 2,524 ​ ​ — Other assets ( 155 ) ​ ( 1,246 ) Accounts payable and accrued liabilities ( 3,487 ) ​ ( 5 ) Right of use activity, net 27 ​ 33 Customer deposits ( 2,203 ) ​ ( 5,569 ) Escrow liability ​ 1,519 ​ ​ 451 Dealer incentive liability ( 890 ) ​ ( 256 ) Net cash provided by (used in) operating activities 35,993 ​ ( 13,536 ) Investing activities: ​ Purchases of property, plant and equipment ( 9,212 ) ​ ( 7,713 ) Proceeds from sale of leased property ​ — ​ ​ 1,108 Proceeds from sale of property ​ 1,573 ​ ​ — Sale of investments - treasury notes ​ — ​ ​ 8,500 Issuance of notes receivable ( 5,541 ) ​ ( 14,786 ) Notes receivable collections ​ 6,449 ​ ​ 2,745 Purchases of loans ​ ( 217 ) ​ ​ — Collections from purchased loans ​ 234 ​ ​ 377 Net cash used in investing activities ( 6,714 ) ​ ( 9,769 ) Financing activities: ​ Proceeds from exercise of stock options ​ 200 ​ ​ 100 Purchases of treasury stock ​ ( 5,398 ) ​ ​ — Proceeds from lines of credit 46,410 ​ 110,761 Payments on lines of credit ( 70,090 ) ​ ( 89,626 ) Net cash (used in) provided by financing activities ( 28,878 ) ​ 21,235 Net increase (decrease) in cash 401 ​ ( 2,070 ) Cash at beginning of period 748 ​ 2,818 Cash at end of period $ 1,149 ​ $ 748 Supplemental disclosure of cash flow information: ​ Cash paid for interest $ 1,004 ​ $ 478 Cash paid for taxes $ 14,997 ​ $ 18,859 ​ See accompanying notes to financial statements ​ ​ 33 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) 1. NATURE OF OPERATIONS Legacy Housing Corporation (referred herein as ”Legacy”, “we”, “our”, “us”, or the “Company”) was formed on January 1, 2018 as a Delaware corporation through a corporate conversion of Legacy Housing, Ltd. (the “Partnership”), a Texas limited partnership formed in May 2005. Effective December 31, 2019, the Company reincorporated from a Delaware corporation to a Texas corporation. The Company is headquartered in Bedford, Texas. The Company (1) manufactures and provides for the transport of mobile homes, (2) provides wholesale financing to dealers and mobile home parks, (3) provides retail financing to consumers and (4) is involved in financing and developing new manufactured home communities. The Company manufactures its mobile homes at plants located in Fort Worth, Texas, Commerce, Texas and Eatonton, Georgia. The Company relies on a network of dealers to market and sell its mobile homes. The Company also sells homes directly to consumers, through its own retail stores, and to dealers and mobile home parks. Basis of Presentation The financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Use of Estimates The preparation of our financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting period. Significant estimates made in connection with the accompanying financial statements primarily relate to the determination and valuation of notes receivable from mobile home parks, consumer loans receivable, other notes receivable, dealer financed receivables and fair value of financial instruments. Actual results could differ from these estimates. Segment Reporting The Company has one reportable segment. All of our activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, the sale of manufactured homes includes providing transportation for dealers. We also provide financing options for customers to facilitate home sales. Accordingly, all significant operating and strategic decisions by the chief operating decision maker, the Chief Executive Officer, are based upon analyses of our company as one operating segment. ​ ​ ​ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash The Company maintains cash balances in bank accounts that may, at times, exceed federally insured limits. The Company has not incurred any losses from such accounts and management considers the risk of loss to be minimal. As of December 31, 2024, the Company had two bank accounts that exceeded the FDIC limit by $ 635 . ​ 34 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Revenue Recognition Product sales primarily consist of sales of mobile homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, Inventory Finance Sales, and Retail Store Sales. Direct Sales include homes sold directly to independent retailers or customers that are not financed by the Company and are not sold under an inventory finance arrangement. These types of homes are generally paid for prior to shipment. Commercial Sales include homes sold to mobile home parks under commercial loan programs or paid for upfront. Inventory Finance Sales include sales of homes to independent retailers, or dealers, who then resell the homes to consumers. Retail Store Sales are homes sold through Company-owned retail locations. Inventory Finance Sales and Retail Store Sales of homes may be financed by the Company or a third party, or they may be paid in cash. Consumer, MHP and dealer loans interest includes interest income from the consumer, MHP and dealer finance loan portfolios. Other revenue consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income. Accounts Receivable “Accounts receivable, net” includes receivables from direct sales of mobile homes, sales of parts and supplies to customers, inventory finance fees and interest. Accounts receivable related to inventory finance fees and interest generally are due upon receipt, and all other accounts receivable generally are due within 30 days . Accounts receivable is stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines the allowance by considering several factors, including the aging of the past due balance, the customer’s payment history, and the Company’s previous loss history. The Company establishes an allowance for doubtful accounts for amounts that are deemed to be uncollectible. At December 31, 2024, 2023 and 2022, the allowance for doubtful accounts totaled $ 578 , $ 651 and $ 279 , respectively. At December 31, 2024, 2023 and 2022, accounts receivable, net was $ 3,985 , $ 4,656 and $ 4,873 , respectively. Consumer Loans Receivable Consumer loans receivable result from financing transactions entered into with retail consumers of mobile homes sold through independent retailers and company-owned retail locations. Consumer loans receivable generally consist of the sales price and any additional financing fees, less the buyer’s down payment. Interest income is recognized monthly per the terms of the financing agreements. The average contractual interest rate per loan was approximately 13.1 % and 13.2 % as of December 31, 2024 and 2023, respectively. Consumer loans receivable have maturities that range from 3 to 30 years . The Company reviews loan applications in an underwriting process which considers credit history, among other things, to evaluate credit risk of the consumer and determines interest rates on approved loans based on consumer credit score, payment ability and down payment amount. The Company uses payment history to monitor the credit quality of the consumer loans on an ongoing basis. The Company may also receive escrow payments for property taxes and insurance included in its consumer loan collections. The liabilities associated with these escrow collections totaled $ 11,623 and $ 10,104 as of December 31, 2024 and 2023, respectively, and are included in escrow liability in the accompanying balance sheets. 35 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Allowance for Loan Losses—Consumer Loans Receivable The allowance for loan losses reflects management’s estimate of losses inherent in the consumer loans that may be uncollectible based upon review and evaluation of the consumer loan portfolio as of the date of the balance sheet. An allowance for loan losses is determined after giving consideration to, among other things, the loan characteristics, including the financial condition of borrowers, the value and liquidity of collateral, delinquency and historical loss experience. The allowance for loan losses is comprised of two components: the general reserve and specific reserves. The Company’s calculation of the general reserve considers the historical loan default rates and collateral recovery rates for the last three years and any qualitative factors both internal and external to the Company. Specific reserves are determined based on probable losses on specific classified impaired loans. The Company’s policy is to place a loan on nonaccrual status when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which generally is when either principal or interest is past due and remains unpaid for more than 90 days. Management implemented this policy based on an analysis of historical data, current performance of loans and the likelihood of recovery once principal or interest payments became delinquent and were aged more than 90 days. Payments received on nonaccrual loans are accounted for on a cash basis, first to interest and then to principal, as long as the remaining book balance of the asset is deemed to be collectible. The accrual of interest resumes when the past due principal or interest payments are brought within 90 days of being current. Impaired loans are those loans for which it is probable that the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impaired loans, or portions thereof, are charged off when deemed uncollectible. A loan is generally deemed impaired if it is more than 90 days past due on principal or interest, is in bankruptcy proceedings, or is in the process of repossession. A specific reserve is created for impaired loans based on fair value of underlying collateral value, less estimated selling costs. The Company uses various factors to determine the value of the underlying collateral for impaired loans. These factors include: (1) the length of time the unit remained unsold after construction; (2) the amount of time the house was occupied; (3) the cooperation level of the borrowers (for example, loans requiring legal action or extensive field collection efforts may have a reduced value); (4) the physical location of the home; (5) the length of time the borrower has lived in the house without making payments; (6) the size of the home and market conditions; and (7) the experience and expertise of the particular dealer assisting in collection efforts. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell. At repossession, the collateral is recorded at the same amount as the principal balance of the loan. The fair value of the collateral is then computed based on the historical recovery rates of previously charged off loans, the loan is charged off and the loss is charged to the allowance for loan losses. At each reporting period, the fair value of the collateral is adjusted to the lower of the amount recorded at repossession or the estimated sales price less estimated costs to sell, based on current information. Repossessed homes from the consumer loan portfolio totaled $ 3,931 and $ 2,215 as of December 31, 2024 and 2023, respectively, and are included in other assets in the accompanying balance sheets. Notes Receivable from Mobile Home Parks The notes receivable from mobile home parks (“MHP Notes”) relate to mobile homes sold to mobile home parks and financed through notes receivable. The MHP Notes have varying maturity dates and require monthly principal and interest payments. The interest rate on the MHP Notes can be fixed or variable, and the interest rates range from 4.9 % to 11.5 %. The average interest rate per loan was approximately 7.8 % as of December 31, 2024 and 8.0 % as of December 31, 2023, with maturities that range from 1 to 10 years . The collateral underlying the MHP Notes are 36 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) individual mobile homes which can be repossessed and resold. The MHP Notes are generally personally guaranteed by borrowers. Allowance for Loan Losses—MHP Notes MHP Notes are stated at amounts due from customers, net of allowance for loan losses. The Company determines the allowance by considering several factors, including the aging of the past due balance, the customer’s payment history, and the Company’s previous loss history. The Company establishes an allowance composed of specific and general reserve amounts. As of December 31, 2024 and December 31, 2023, the MHP Notes balance is presented net of unamortized finance fees of $ 1,057 and $ 1,565 , respectively. The finance fees are amortized over the life of the MHP Notes. As of December 31, 2024, there were past due balances of $ 17 on MHP Notes. As of December 31, 2023, there were past due balances of $ 98 on the MHP Notes excluding any amounts attributed to the Notes, as defined in Note 5, Notes Receivable from Mobile Home Parks. For the years ended December 31, 2024 and 2023, there were no charge offs recorded for MHP Notes. Allowance for loan loss for the MHP Notes was $ 654 and $ 735 as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, there was a minimal impaired balance of MHP Notes. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell. Other Notes Receivable Other notes receivable relate to notes issued to mobile home park owners and dealers and are not directly tied to the sale of mobile homes. These other notes have varying maturity dates and generally require monthly principal and interest payments. They are collateralized by mortgages on real estate, mobile homes that we have financed for which the borrower uses as offices, as well as vehicles. These notes typically are personally guaranteed by the borrowers. The interest rates on the other notes generally are fixed and range from 5.00 % to 17.50 %. The Company reserves for estimated losses on the other notes based on current economic conditions that may affect the borrower’s ability to pay, the borrower’s financial strength, and historical loss experience. As of December 31, 2024, there were past due balances of $ 1,357 on other notes. As of December 31, 2023, there were past due balances of $ 22 on other notes, excluding any amounts attributable to the Notes, as defined in Note 5, Notes Receivable from Mobile Home Parks. For the years ended December 31, 2024 and 2023, there were no charge offs recorded for other notes. Allowance for loan loss for the other notes was $ 364 and $ 236 as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the impaired balance of other notes was $ 141 and $ 84 , respectively. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell. Dealer Finance Receivable Dealer finance receivable are receivables for loans that we make to independent retailers, or dealers, for the purchase of mobile homes so that dealers can then market them for sale to consumers. The loans are part of our inventory finance program. In late 2022 and early 2023, the Company transitioned many of its dealers from a traditional consignment arrangement to an inventory finance arrangement. 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 by the retailer to its customer or the end of the term. ​ 37 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Inventories Inventories consist of raw materials, work-in-process, and finished goods and are stated at the lower of cost or net realizable value. The cost of raw materials is based on the first-in first-out method. Finished goods and work-in-process are based on a standard cost system that approximates actual costs using the specific identification method. Estimates of the lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business based on current market and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory. For the periods ending, December 31, 2024 and 2023, the Company recorded an insignificant amount of inventory write-downs. Leased Property The Company offers mobile home park operators the opportunity to lease mobile homes for rent in lieu of purchasing the homes for cash or under a longer-term financing agreement. In this arrangement, the title for the mobile homes remains with the Company, and the lease is accounted for as an operating lease. Our typical lease agreement is for 96 months or 120 months . It requires the lessee to maintain the home and to return the home to us at the end of the lease in good condition. It provides the lessee with a termination option for a fee, an option to extend the lease and a purchase option at fair market value. The leased mobile homes are included in other assets on the Company’s balance sheet, capitalized at manufactured cost and depreciated over a 15 year useful life. Homes returned to the Company upon expiration of the lease or in the event of default are sold by the Company through its standard sales and distribution channels. During the year ended December 31, 2024, the Company sold 128 leased mobile homes for $ 5,609 to two mobile home park customers which is included in Product sales on the accompanying statements of income. Future minimum lease income under all operating leases for each of the next five years at December 31, 2024, is as follows: ​ ​ ​ ​ 2025 $ 1,165 2026 ​ 1,165 2027 ​ 993 2028 ​ 821 2029 ​ 472 Thereafter ​ 106 Total ​ $ 4,722 ​ ​ Property, Plant, and Equipment Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation expense is calculated using the straight-line method over the estimated useful lives of each asset. Estimated useful lives for significant classes of assets are as follows: buildings and improvements, 30 to 39 years ; vehicles, 5 years ; machinery and equipment, 7 years ; and furniture and fixtures, 7 years . Repair and maintenance charges are expensed as incurred. Expenditures for major renewals or betterments which extend the useful lives of existing property, plant and equipment are capitalized and depreciated. 38 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Assets are grouped at the lowest level in which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. In such cases, if the future undiscounted cash flows of the underlying assets are less than the carrying amount, then the carrying amount of the long-lived asset will be adjusted for impairment. No impairment for long-lived assets was recorded for the years ended December 31, 2024 and 2023. Dealer Incentive Liability The Company has entered into agreements with qualifying independent retailers, or dealers, that provides incentives to retailers when their customers finance the purchase of a home with the Company. The agreements provide for a profit sharing arrangement between the Company and the dealer for these consumer loans. The independent retailer is eligible to receive a dealer incentive, which is a portion of total collections expected on this consumer loan portfolio after the Company recovers its contribution (the collection thresholds are set per the terms of the dealer agreement, and the contribution includes the Company’s initial contribution, interest and fees). A dealer incentive liability is recorded in the Company’s balance sheet based on the total outstanding balance of individual dealer loan portfolios at period end, less the remaining portion of the Company’s contribution in respective portfolios. As of December 31, 2024 and 2023, the dealer incentive liability was $ 4,370 and $ 5,260 , respectively. Dealer incentive income for the year ended December 31, 2024 was $ 930 , dealer incentive expense for the year ended December 31, 2023 was $ 586 , and these amounts are included in the Company’s statements of income. Product Warranties The Company provides retail home buyers with a one-year warranty from the date of purchase on manufactured inventory. At this time, we do not provide any warranties with respect to tiny houses. Product warranty costs are accrued when the covered homes are sold to customers. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Factors used to determine the warranty liability include the number of homes under warranty and the historical costs incurred in servicing the warranties. The accrued warranty liability is reduced as costs are incurred and the warranty liability balance is included as part of accrued liabilities in the Company’s balance sheet. The following table summarizes activity within the warranty liability for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 Warranty liability, beginning of period ​ $ 2,910 ​ $ 3,049 Product warranty reserve accrued ​ 840 ​ 2,552 Warranty costs incurred ​ ( 1,800 ) ​ ( 2,691 ) Warranty liability, end of period ​ $ 1,950 ​ $ 2,910 ​ ​ 39 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Fair Value Measurements and Fair Value of Financial Instruments The Company accounts for its investments and derivative instruments in accordance with the provisions of Accounting Standards Codification (“ASC”) 820 10, Fair Value Measurement, which among other things provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurement) and the lowest priority to unobservable inputs (Level III measurements). The three levels of fair value hierarchy under ASC 820 10, Fair Value Measurement, are as follows: Level I Quoted prices are available in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. ​ Level II Significant observable inputs other than quoted prices in active markets for which inputs to the valuation methodology include: (1) Quoted prices for similar assets or liabilities in active markets; (2) Quoted prices for identical or similar assets or liabilities in inactive markets; (3) Inputs other than quoted prices that are observable; and (4) Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability. ​ Level III Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities. The asset or liability fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial instruments consist primarily of cash, accounts receivable, consumer loans, MHP Notes, other notes, accounts payable, and lines of credit. The carrying amounts of cash, accounts receivable, and accounts payable approximate their respective fair values because of the short-term maturities or expected settlement dates of these instruments. This is considered a Level I valuation technique. The lines of credit, part of the MHP Notes and part of the other notes receivables have variable interest rates that reflect market rates and their fair value approximates their carrying value. This is considered a Level II valuation technique. The Company also assessed the fair value of the consumer loans receivable, the fixed rate MHP Notes and the portion of other note receivables with fixed rates based on the discounted value of the remaining principal and interest cash flows. This is considered a Level III valuation technique. The following table shows the fair market value and book value of these portfolios, net of allowances, loan discount fees and deferred financing fees, as of December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, ​ ​ 2024 ​ 2023 Consumer loan portfolio, fair value ​ $ 164,755 ​ $ 155,146 Consumer loan portfolio, book value ​ 174,105 ​ 156,500 Fixed rate MHP Notes, fair value ​ ​ 181,697 ​ 174,027 Fixed rate MHP Notes, book value ​ ​ 183,108 ​ 176,481 Variable rate MHP Notes, book value ​ ​ 23,356 ​ ​ 5,499 Fixed rate other notes, fair value ​ ​ 14,730 ​ 34,340 Fixed rate other notes, book value ​ ​ 14,916 ​ 34,590 ​ 40 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Reserve for Repurchase Commitments In accordance with customary business practice in the manufactured housing industry, the Company has entered into certain repurchase agreements with certain financial institutions and other credit sources who provide floor plan financing to industry retailers, which provides that the Company will be obligated, under certain circumstances, to repurchase homes sold to retailers in the event of a default by a retailer in its obligation to such credit sources. The Company’s obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The Company applies ASC 460, Guarantees and ASC 450-20, Loss Contingencies , to account for its liability for repurchase commitments. The Company considers its current obligations on current contracts to be immaterial and accordingly have not recorded any reserve for repurchase commitments as of December 31, 2024 and 2023. Interest Income Interest on consumer loans, MHP Notes and other notes is recognized using the effective-interest method on the daily balances of the principal amounts outstanding and recorded as part of total revenue. Fees associated with the origination of loans and certain direct loan origination costs are netted and the net amount is deferred and recognized over the life of the loan as an adjustment of yield. Interest related to other notes receivable balances and interest income earned on cash balances is shown in Non-operating Interest Income on the statements of income. Share-Based Compensation The Company accounts for share-based compensation in accordance with the provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation . Share-based compensation expense is recognized based on an award’s estimated grant date fair value in order to recognize compensation cost for those shares expected to vest. The Company has elected to record forfeitures as they occur. Compensation cost is recognized on a straight-line basis over the vesting period of the awards and adjusted as forfeitures occur. The fair value of each option grant with only service-based conditions is estimated using the Black-Scholes pricing model. The fair value of each restricted stock grant with only service-based conditions is calculated based on the closing price of the Company’s common stock on the grant date. The fair value of stock option awards on the date of grant is estimated using the Black-Scholes option pricing model, which requires the Company to make certain predictive assumptions. The risk-free interest rate is based on the implied yield of U.S. Treasury zero-coupon securities that correspond to the expected life of the award. The volatility is estimated based on the historical volatility of the Company’s common stock. The expected life of awards granted represents the period of time that the awards are expected to be outstanding based on the “simplified” method, which is allowed for companies that cannot reasonably estimate the expected life of options based on its historical award exercise experience. 41 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Pursuant to the Legacy Housing Corporation 2018 Incentive Compensation Plan (the “Plan”), the Company may issue up to 10.0 million equity awards to employees, directors, consultants and nonemployee service providers in the form of stock options, stock, restricted stock and stock appreciation rights. Stock options may be granted with a contractual life of up to ten years . At December 31, 2024, the Company had 8.7 million shares available for grant under the Plan. As of December 31, 2024, approximately 1,013,000 options were outstanding, 189,000 options were exercisable, and 824,000 options remained nonvested. Unrecognized compensation expense related to these options at December 31, 2024 was $ 4,220 and is expected to be recognized over 7.2 years. Compensation expense for stock option awards for the years ended December 31, 2024 and 2023 was $ 630 and $ 535 , respectively. The Company does not expect to pay dividends on its common stock. Earnings Per Share Basic earnings per common share (“EPS”) is computed based on the weighted-average number of common shares outstanding during the reporting period. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s balance sheets. Diluted EPS is based on the weighted-average number of common shares outstanding plus the number of additional shares that would have been outstanding had the dilutive common shares been issued. Income Taxes The Company is subject to U.S. federal and state income taxes as a corporation. Income tax expense for the Company is recognized for the tax effects of the transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized. In addition, management does not believe there are any unrecorded deferred tax liabilities that are material to the financial statements. The determination of the provision for income taxes requires judgment, use of estimates, and the interpretation and application of complex tax laws. Judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. For the periods presented, management has determined there are no material uncertain tax positions for the tax years that remain subject to examination by major tax jurisdictions as of December 31, 2024, which includes the tax years 2021, 2022 and 2023. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable, consumer loans, MHP Notes, inventory finance loans and other notes receivable. Management believes that 42 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) its credit policies are adequate to minimize potential credit risk related to accounts receivable and other notes receivable. The consumer loans and inventory finance loans are secured by the mobile homes that were financed through the loans. The MHP Notes are secured by mobile homes, other assets, and are personally guaranteed. The MHP Notes personal guarantor may cover multiple parks and each park is treated as a customer. As of December 31, 2024, the Company had concentrations of MHP Notes with three independent third-parties and their respective affiliates that equaled 11.4 %, 23.5 % and 14.6 % of the principal balance outstanding, all of which was secured by the mobile homes. As of December 31, 2023, the Company had concentrations of MHP Notes with three independent third-parties and their respective affiliates that equaled 14.0 %, 17.9 % and 24.5 % of the principal balance outstanding, all of which was secured by the mobile homes. As of December 31, 2024, the Company had concentrations of other notes receivable with three independent third-parties and their respective affiliates that equaled 33.7 %, 22.7 % and 10.5 %, respectively, of the principal balance outstanding. As of December 31, 2023, the Company had concentration of other notes receivable with one independent third-party and its affiliates that equaled 64.4 % of the principal balance outstanding.The other notes are secured by land and other assets and are personally guaranteed. Reclassifications For purposes of comparability, certain reclassifications have been made to amounts previously reported to conform with the current period presentation. Recent Accounting Pronouncements The Company elected to use longer phase-in periods for the adoption of new or revised financial accounting standards under the JOBS Act while it was an emerging growth company. In June 2016, the FASB issued ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to previous GAAP, however Topic 326 requires that credit losses be presented as an allowance rather than as a write-down and affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affected loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company used the longer phase-in period for adoption, and accordingly this ASU became effective for the Company’s fiscal year beginning January 1, 2023. The adoption of ASU 2016-13 resulted in an increase in portfolio allowances of $ 900 at transition. The $ 900 was comprised of a $ 225 increase for MHP notes, a $ 187 increase for dealer financed contracts and a $ 488 increase for other notes receivable. The cumulative effect of the adoption was a net decrease of $ 698 to beginning retained earnings at January 1, 2023. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 . The amendments in this update extend the transition relief period for reference rate reform from December 31, 2022 to December 31, 2024. The amendments in ASU 2022-06 apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2022-06 was effective upon issuance. The new standard has had no material impact on the Company's financial statements. In November, 2023 the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 enhances current and interim annual reportable segment disclosures and requires additional disclosures about significant segment expenses. Public entities with a single 43 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as existing segment disclosures and reconciliation requirements in ASC 280 – Segment Reporting on an interim and annual basis. In 2024, we adopted ASU 2023-07 on a retrospective basis for annual periods starting with this Annual Report on Form 10-K. For additional information, refer to “Note 18 Segment Information.” From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted by the Company as of the specified effective dates. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s Financial Statements upon adoption. 3. REVENUE Product sales primarily consist of sales of mobile homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, Inventory Finance Sales, and Retail Store Sales. Direct Sales include homes sold directly to independent retailers or customers that are not financed by the Company and are not sold under an inventory finance arrangement. These types of homes are generally paid for prior to shipment. Commercial Sales include homes sold to mobile home parks under commercial loan programs or paid for upfront. Inventory Finance Sales include sales of homes to independent retailers, or dealers, who then resell the homes to consumers. Retail Store Sales are homes sold through Company-owned retail locations. Inventory Finance Sales and Retail Store Sales of homes may be financed by the Company or a third party, or they may be paid in cash. Revenue from product sales is recognized when the performance obligation under the terms of a contract with our customer is satisfied, which typically occurs upon delivery and transfer of title of the home, as this depicts when control of the promised good is transferred to our customers. For inventory financed sales, the independent dealer enters into a financing arrangement with the Company and is required to make monthly interest payments. Interest income is recorded separately in the statement of income. For other financed sales by the Company, the individual customer enters into a sales and financing contract and is required to make a down payment. These financed sales contain a significant financing component and any interest income is recorded separately in the statement of income. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the homes to the customers. Sales and other similar taxes collected concurrently with revenue-producing activities are excluded from revenue. The Company made an accounting policy election to account for any shipping and handling costs that occur after the transfer of control as a fulfillment cost that is accrued when control is transferred. Warranty obligations associated with the sale of a unit are assurance-type warranties for a period of twelve months that are a guarantee of the home’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract. The Company has elected to use the practical expedient to expense the incremental costs of obtaining a contract if the amortization period of the asset that the Company would have otherwise recognized is one year or less. Contract costs, which include commissions incurred related to the sale of homes, are expensed at the point-in-time when the related revenue is recognized. Warranty costs and contract costs are included in selling, general and administrative 44 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) expenses in the statements of income. Warranty and contract costs were $ 1,800 and $ 2,691 for the years ended December 31, 2024 and 2023. For the years ended December 31, 2024 and 2023, total cost of product sales included $ 6,357 and $ 10,188 of costs relating to subcontracted production for commercial sales, transportation and delivery costs, and certain other costs incurred for retail store and commercial sales. Other revenue consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income. Consignment fees are charged to independent retailers on a monthly basis for homes held by the independent retailers pursuant to a consignment arrangement until the home is sold to an individual customer. Consignment fees are determined as a percentage of the home’s wholesale price to the independent dealer. Revenue recognition for consignment fees is recognized over time using the output method as it provides a faithful depiction of the Company’s performance toward completion of the performance obligation under the contract and the value transferred to the independent retailer for the time the home is held under consignment. Revenue for commercial leases is recognized as earned monthly over a contractual period of 96 or 120 months . Revenue for service fees and miscellaneous income is recognized at a point in time when the performance obligation is satisfied. Land sales revenue is comprised of sales of land (real property) that was acquired as a result of maintaining or furthering our primary business of producing, selling and financing mobile homes. Land sale revenue for 2024 was $ 8,904 for the sale of two properties. Sales Concentration. The following table presents mobile home park (“MHP”) sales to independent third parties and their affiliates that are greater than 5.0% of our total product sales for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ ​ Product ​ ​ ​ ​ Product ​ ​ Sales Sales ​ Sales Sales Customer A ​ $ 10,733 ​ 8.3 ​ $ 4,782 ​ 3.3 Customer B ​ $ 2,405 ​ 1.9 ​ $ 10,134 ​ 7.0 Customer C ​ $ — ​ — ​ $ 10,033 ​ 6.9 ​ ​ 45 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Disaggregation of Revenue. The following table summarizes customer contract revenues disaggregated by source of the revenue for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 2023 Product sales: ​ ​ ​ ​ ​ ​ Direct sales ​ $ 9,156 ​ $ 17,540 Commercial sales ​ 55,131 ​ 54,955 Inventory finance sales ​ ​ 36,740 ​ ​ 44,135 Retail store sales ​ ​ 20,026 ​ ​ 19,169 Other product sales (1) ​ 8,292 ​ 9,301 Total product sales ​ 129,345 ​ 145,100 Loan portfolio interest: ​ ​ Interest - consumer installment notes ​ 21,006 ​ 19,360 Interest - MHP notes ​ 16,962 ​ 14,330 Interest - dealer finance notes ​ ​ 3,214 ​ ​ 3,730 Total loan portfolio interest ​ 41,182 ​ 37,420 Other revenue ​ 13,664 ​ 6,624 Total net revenue ​ $ 184,191 ​ $ 189,144 ​ (1) Other product sales revenue from ancillary products and services including parts, freight and other services 4. CONSUMER LOANS RECEIVABLE Consumer loans receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, As of December 31, ​ ​ 2024 ​ 2023 ​ 2022 Consumer loans receivable ​ $ 177,289 ​ $ 159,738 ​ $ 142,340 Loan discount and deferred financing fees ​ ( 2,490 ) ​ ( 2,473 ) ​ ( 2,501 ) Allowance for loan losses ​ ( 694 ) ​ ( 765 ) ​ ( 830 ) Consumer loans receivable, net ​ $ 174,105 ​ $ 156,500 ​ $ 139,009 ​ The following table presents a detail of the activity in the allowance for loan losses for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2024 2023 Allowance for loan losses, beginning of period ​ $ 765 ​ $ 830 ​ Provision for loan losses ​ ( 207 ) ​ ( 114 ) ​ Recoveries ​ 136 ​ 49 ​ Allowance for loan losses, end of period ​ $ 694 ​ $ 765 ​ ​ 46 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) The following table presents impaired and general reserve for allowance for loan losses at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, ​ ​ 2024 ​ 2023 Total consumer loans ​ $ 177,289 ​ $ 159,738 Allowance for loan losses ​ $ 694 ​ $ 765 Impaired loans individually evaluated for impairment ​ $ 3,582 ​ $ 1,565 Specific reserve against impaired loans ​ $ 680 ​ $ 562 Other loans collectively evaluated for allowance ​ $ 173,707 ​ $ 158,173 General allowance for loan losses ​ $ 14 ​ $ 203 ​ A detailed aging of consumer loans receivable that are past due as of December 31, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, ​ ​ ​ 2024 ​ % ​ 2023 ​ % Total consumer loans receivable ​ $ 177,289 100.0 $ 159,738 100.0 Past due consumer loans: ​ ​ 31 - 60 days past due ​ $ 2,014 1.1 ​ $ 624 0.4 61 - 90 days past due ​ 297 0.2 ​ 149 0.1 91 - 120 days past due ​ 462 0.3 ​ 123 0.1 Greater than 120 days past due ​ 3,120 1.8 ​ 1,449 0.9 Total past due ​ $ 5,893 3.4 ​ $ 2,345 1.5 ​ We evaluate the credit quality of our consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting generally is based on borrower payment activity relative to the contractual terms of the loan. The following table disaggregates the outstanding principal balance of consumer loans receivable by credit quality indicator based on delinquency status and fiscal year of origination: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year of Origination ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ Prior ​ Total ​ % of Portfolio < 30 days past due ​ $ 35,453 ​ $ 28,611 ​ $ 21,954 ​ $ 18,698 ​ $ 12,087 ​ $ 54,594 ​ $ 171,397 ​ % 96.7 30-90 days past due ​ ​ 434 ​ ​ 367 ​ ​ 244 ​ ​ 176 ​ ​ — ​ ​ 1,090 ​ ​ 2,311 ​ ​ 1.3 > 90 days past due ​ ​ 134 ​ ​ 487 ​ ​ 808 ​ ​ 1,254 ​ ​ 53 ​ ​ 845 ​ ​ 3,581 ​ ​ 2.0 Total ​ $ 36,021 ​ $ 29,465 ​ $ 23,006 ​ $ 20,128 ​ $ 12,140 ​ $ 56,529 ​ $ 177,289 ​ % 100.0 ​ ​ ​ ​ ​ ​ 5. NOTES RECEIVABLE FROM MOBILE HOME PARKS (“MHP Notes”) The notes receivable from mobile home parks (“MHP Notes”) relate to mobile homes sold to mobile home parks and financed through notes receivable. 47 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Settlement Agreement Legacy and numerous entities owned or operated by one individual (the “Makers”) previously entered into several Promissory Notes (the “Notes”) valued at approximately $ 55 million. In January 2024, the Makers defaulted on, and Legacy accelerated, a portion of the Notes valued at approximately $ 37 million. The Notes were secured by mobile homes and mobile-home parks located in Texas, Mississippi, and Louisiana, and personally guaranteed by individuals (the “Personal Guarantors”). During 2024, Legacy filed several lawsuits against the Makers and the Personal Guarantors and aggressively pursued the collateral. On July 27, 2024, Legacy, the Makers, and the Personal Guarantors entered into a Settlement Agreement and Release (the “Agreement”). The parties to the Agreement are Legacy, Legacy’s Executive Chairman, Curtis D. Hodgson (collectively, the “Plaintiffs”), William Rodwell, Cynthia Rodwell, Tony Hartsgrove, Robert T. Hutson II, Yakov Plotnikov, Eric D. Wooten (collectively, the “Individual Defendants”), Cleveland MHC, LLC (“Cleveland”), Country Aire Homes of LA, LLC, Forest Hollow, LLC (“Forest Hollow”), Gulf Stream Homes of LA, LLC, Gulf Stream Homes of MS, LLC, Stellar GS Homes, LLC, SINOP GS Homes, LLC, Gulf Stream Manor Phase 2 Homes, LLC, Iowa Homes, LLC, Southern Pointe Homes, LLC, Southern Pointe Investments, LLC, Southern Pointe Investments II, LLC, Stellar GS Homes LLC, and Country Aire MHP LLC (collectively, the “Entity Defendants”). As consideration for the mutual releases contained in the Agreement: ● Forest Hollow conveyed clear title, and the undisputed right to possess, all real and personal property located on or at the Forest Hollow Mobile Home Community, 6650 Broad Oak Street, Beaumont, TX 77713 (the “Forest Hollow Mobile Home Community”) to Legacy; ● Cleveland conveyed clear title, and the undisputed right to possess, all real and personal property located on or at the Cleveland Mobile Home Community, 110 Old Hwy 49 S. Richland, MS 39218 (the “Cleveland Mobile Home Community”) to Legacy; ● Cleveland and Forest Hollow assigned all intangible assets, including all leases, contracts, and goodwill applicable or related to the real and personal property located on or at the Forest Hollow Mobile Home Community and the Cleveland Mobile Home Community to Legacy; ● The Individual and Entity Defendants irrevocably waived any and all claims related to existing deposits; and ● Legacy refinanced the Entity and Individual Defendants’ remaining debt, pursuant to a new two-year , $ 48.6 million Promissory Note (the “New Note”). The New Note bears interest at a fixed rate of 7.9 % , requires monthly payments of interest only for twenty-four months , and matures in July, 2026. The New Note is secured by a first priority interest in more than 1,000 mobile homes and two mobile-home parks located in Louisiana, and personal guarantees signed by the Individual Defendants. The New Note is secured by the same Louisiana collateral as the old Notes, while providing additional legal efficiencies. The Individual Defendants have personally guaranteed the New Note to the same extent they personally guaranteed the Entity Defendants’ prior debt. The Company presents the entire New Note on the accompanying balance sheets under the heading Notes receivable from mobile home parks (“MHP”), and interest income associated with the New Note is presented on the accompanying statement of income under the heading Consumer, MHP and dealer loans interest. Prior to the three months ending September 30, 2024, the Company classified the old Notes as MHP notes and other notes. The Company sold the Forest Hollow Mobile Home Community in December, 2024. The Company recorded the fair value of the real property from Cleveland on the accompanying balance sheets under the heading Property, plant and equipment, net and the fair value of the personal property from Cleveland on the accompanying balance sheets under the heading Other assets. The Company recorded a gain of $ 5.4 million in 2024 on the settlement agreement and transactions related to the Cleveland Mobile Home Community and the Forest Hollow Mobile Home Community. 48 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) The Company evaluated the recoverability of the New Note as of December 31, 2024 and determined a provision for expected loan losses is not necessary based on the analysis of the fair value of underlying collateral. Notes receivable from mobile home parks, net of allowance for loan losses and deferred financing fees, consisted of the following at December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, ​ As of December 31, ​ ​ 2024 ​ 2023 ​ 2022 Outstanding principal balance ​ $ 208,175 ​ $ 184,280 ​ $ 143,810 Loan discount and deferred financing fees ​ ​ ( 1,057 ) ​ ​ ( 1,565 ) ​ ​ ( 1,068 ) Allowance for loan losses ​ ( 654 ) ​ ( 735 ) ​ — Total ​ $ 206,464 ​ $ 181,980 ​ $ 142,742 ​ ​ The following table presents a detail of the activity in the allowance for loan losses for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 ​ 2023 Allowance for loan losses, beginning of period ​ $ 735 ​ $ — Provision for loan losses ​ ​ ( 81 ) ​ ​ 735 (Charge offs) recoveries ​ — ​ — Allowance for loan losses, end of period ​ $ 654 ​ $ 735 ​ ​ The following table presents impaired and general reserve for allowance for loan losses at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, ​ ​ 2024 ​ 2023 Total MHP loans ​ $ 208,175 ​ $ 184,280 Allowance for loan losses ​ ​ 654 ​ ​ 735 Impaired loans individually evaluated for impairment ​ ​ — ​ ​ 31,215 Specific reserve against impaired loans ​ ​ — ​ ​ 5 Other loans collectively evaluated for allowance ​ 208,175 ​ 153,065 General allowance for loan losses ​ ​ 654 ​ ​ 730 ​ ​ We evaluate the credit quality of our MHP portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is generally based upon borrower payment activity relative to the contractual terms of the loan. The following table disaggregates the outstanding principal balance of MHP receivable by credit quality indicator based on delinquency status and fiscal year of origination: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year of Origination ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ Prior ​ Total ​ % of Portfolio < 30 days past due ​ $ 89,545 ​ $ 41,630 ​ $ 33,509 ​ $ 21,346 ​ $ 20,362 ​ $ 1,371 ​ $ 207,763 ​ % 99.8 30-90 days past due ​ ​ 410 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1 ​ ​ — ​ ​ 411 ​ ​ 0.2 > 90 days past due ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1 ​ ​ — ​ ​ 1 ​ ​ — Total ​ $ 89,955 ​ $ 41,630 ​ $ 33,509 ​ $ 21,346 ​ $ 20,364 ​ $ 1,371 ​ $ 208,175 ​ % 100.0 ​ 49 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) ​ ​ ​ 6. Other Notes Receivable Other notes receivable relate to notes issued to mobile home park owners and dealers and are not directly tied to the sale of mobile homes. Note 5, Notes Receivable from Mobile Home Parks, in these Notes to Financial Statements for the year ended December 31, 2024 provides details regarding a settlement agreement related to prior debt. Prior to the three months ending September 30, 2024, the Company recorded the old Notes described in Note 5 in MHP notes and other notes. The New Note is recorded in MHP notes only. Other notes receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, As of December 31, ​ ​ 2024 ​ 2023 ​ 2022 Outstanding principal balance ​ $ 15,412 ​ $ 35,353 ​ $ 23,017 Loan discount and deferred financing fees ​ ​ ( 132 ) ​ ​ ( 527 ) ​ ​ ( 295 ) Allowance for loan losses ​ ( 364 ) ​ ( 236 ) ​ — Total ​ $ 14,916 ​ $ 34,590 ​ $ 22,722 ​ ​ ​ The following table presents a detail of the activity in the allowance for loan losses for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 ​ 2023 Allowance for loan losses, beginning of period ​ $ 236 ​ $ — Provision for loan losses ​ ​ 128 ​ ​ 236 (Charge offs) recoveries ​ — ​ — Allowance for loan losses, end of period ​ $ 364 ​ $ 236 ​ ​ ​ The following table presents impaired and general reserve for allowance for loan losses at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, ​ ​ 2024 ​ 2023 Total Other notes receivable ​ $ 15,412 ​ $ 35,353 Allowance for loan losses ​ ​ 364 ​ ​ 236 Impaired loans individually evaluated for impairment ​ ​ 2,038 ​ ​ 25,135 Specific reserve against impaired loans ​ ​ 141 ​ ​ 84 Other notes receivable collectively evaluated for allowance ​ 13,374 ​ 10,218 General allowance for loan losses ​ ​ 223 ​ ​ 152 50 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) ​ We evaluate the credit quality of our Other notes receivable portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is generally based upon borrower payment activity, relative to the contractual terms of the loan. The following table disaggregates the outstanding principal balance of Other notes receivable by credit quality indicator based on delinquency status and fiscal year of origination and is presented as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year of Origination ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ Prior ​ Total ​ % of Portfolio < 30 days past due ​ $ 12,049 ​ $ 1,980 ​ $ — ​ $ — ​ $ 300 ​ $ 35 ​ $ 14,364 ​ % 93.2 30-90 days past due ​ ​ — ​ ​ 284 ​ ​ 541 ​ ​ 163 ​ ​ — ​ ​ 60 ​ ​ 1,048 ​ ​ 6.8 > 90 days past due ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total ​ $ 12,049 ​ $ 2,264 ​ $ 541 ​ $ 163 ​ $ 300 ​ $ 95 ​ $ 15,412 ​ % 100.0 ​ ​ ​ 7. DEALER FINANCED RECEIVABLES Dealer finance receivable are receivables for loans that we make to independent retailers, or dealers, for the purchase of mobile homes so that dealers can then market them for sale to consumers. The loans are part of our inventory finance program. In late 2022 and early 2023, the Company transitioned many of its dealers from a traditional consignment arrangement to an inventory finance arrangement. 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 by the retailer to its customer or the end of the term. Dealer financed notes receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, ​ As of December 31, ​ ​ 2024 ​ 2023 ​ 2022 Outstanding principal balance ​ $ 32,779 ​ $ 32,980 ​ $ 30,049 Allowance for loan losses ​ ( 194 ) ​ ( 442 ) ​ ( 13 ) Total ​ $ 32,585 ​ $ 32,538 ​ $ 30,036 ​ The following table presents a detail of the activity in the allowance for loan losses for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 ​ 2023 Allowance for loan losses, beginning of period ​ $ 442 ​ $ 13 Provision for loan losses ​ ​ ( 248 ) ​ ​ 429 (Charge offs) recoveries ​ — ​ — Allowance for loan losses, end of period ​ $ 194 ​ $ 442 ​ The dealer financed loan portfolio was established primarily in late 2022 and 2023 as a result of converting from consignment arrangements with dealers to inventory finance arrangements with dealers. As such, there is relatively little historical data to measure credit quality of the loans in this portfolio. 51 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) ​ 8. LEASES As of December 31, 2024, the Company had 12 operating leases, eight of which were for the Company’s Heritage Housing and Tiny Homes retail locations, two were subleased by the Company and two were for corporate and administrative offices in Bedford, TX and Norcross, GA. These leases typically have initial terms ranging from 5 to 10 years and include one or more options to renew. Under ASC 842, the Company elected the modified retrospective approach, applying the new standard to all leases at the date of initial application. We determine if an arrangement is or contains a lease at inception. Operating leases are right-of-use (“ROU”) assets and are shown as ROU assets – operating leases on our balance sheets. The lease liabilities are shown as Operating lease obligation and Operating lease obligation, less current portion on our balance sheets. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We have elected the practical expedient to not separate lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a ROU asset for an amount equal to the lease liability, increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and ROU asset when a change to our future minimum lease payments occurs. Key assumptions and judgments included in the determination of the lease liability include the discount rate used in the present value calculation and the exercise of renewal options. Many of our leases contain renewal options. As the exercise of the renewal options is not likely at the commencement of a lease, we generally do not include the option periods in the lease term when determining the lease liabilities and ROU assets. We remeasure the lease liability and ROU asset when it is reasonably likely that we will exercise a renewal option. Our leases do not provide information about the rate implicit in the lease. Therefore, we utilize an incremental borrowing rate to calculate the present value of our future lease obligations. The incremental borrowing rate represents the rate of interest we would otherwise pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment. As of December 31, 2024, the remaining weighted-average lease term was 3.12 years and the weighted-average discount rate was 2.81 %. We consider lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from our calculation of lease liabilities. There were no variable lease costs for the year ended December 31, 2024. Short-term leases, those with a term of 12 months or less, are not recorded on our balance sheet. Our short-term lease costs were not material for the year ended December 31, 2024. Lease expense for operating leases consists of fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Amortization of the ROU asset for operating leases reflects 52 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) amortization of the lease liability, any differences between straight-line expense and related lease payments during the accounting period, and any impairments. As of December 31, 2024, present value of future lease payments under our operating lease liabilities were as follows: ​ ​ ​ ​ 2025 $ 495 2026 ​ 431 2027 ​ 345 2028 ​ 145 2029 ​ — Thereafter ​ — Total lease payments ​ $ 1,416 Less amount representing interest ​ ​ ( 20 ) Total lease liability ​ $ 1,396 Less current lease liability ​ ​ ( 476 ) Total non-current lease liability ​ $ 920 ​ ​ 9. INVENTORIES Inventories consisted of the following at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, ​ ​ 2024 ​ 2023 Raw materials ​ $ 13,172 ​ $ 13,506 Work in progress ​ 478 ​ 552 Finished goods, net ​ ​ 23,888 ​ ​ 26,911 Total ​ $ 37,538 ​ $ 40,969 ​ Finished goods includes an allowance of $ 688 and $ 439 as of December 31, 2024 and December 31, 2023, respectively. ​ 10. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, ​ ​ 2024 ​ 2023 Land ​ $ 17,025 ​ $ 14,953 Buildings and leasehold improvements ​ 13,353 ​ 13,419 Construction in Progress ​ ​ 19,719 ​ ​ 11,576 Vehicles ​ 1,594 ​ 1,571 Machinery and equipment ​ 7,160 ​ 6,527 Furniture and fixtures ​ 338 ​ 329 Total ​ 59,189 ​ 48,375 Less accumulated depreciation ​ ( 11,604 ) ​ ( 10,495 ) Total property, plant and equipment ​ $ 47,585 ​ $ 37,880 ​ 53 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) Depreciation expense was $ 1,819 and $ 1,663 for the year ended December 31, 2024 and 2023, respectively, and includes depreciation expense for leased mobile homes. Depreciation expense also includes $ 663 and $ 512 as a component of cost of product sales for the year ended December 31, 2024 and 2023, respectively. 11. OTHER ASSETS Other assets consisted of the following at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, ​ ​ 2024 ​ 2023 Prepaid rent ​ $ 349 ​ $ 349 Other ​ 7 ​ 7 Repossessed homes ​ 5,129 ​ 2,215 Total ​ $ 5,485 ​ $ 2,571 ​ ​ Repossessed homes balance as of December 31, 2024 includes $ 3,931 for homes repossessed from the consumer loan portfolio and $ 1,198 for homes repossessed from the MHP loan portfolio. Repossessed homes balance as of December 31, 2023 includes $ 2,215 for homes repossessed from the consumer loan portfolio. ​ 12. ACCRUED LIABILITIES Accrued liabilities consist of the following at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, ​ ​ 2024 ​ 2023 Warranty reserve ​ $ 1,950 ​ $ 2,910 Litigation reserve ​ 328 ​ 990 Payroll ​ ​ 1,544 ​ ​ 879 Portfolio taxes and title ​ 1,246 ​ 2,234 Property tax ​ ​ 1,145 ​ ​ 1,018 Dealer rebates ​ ​ 1,012 ​ ​ 1,040 Sales tax ​ 216 ​ 190 Federal and state income taxes ​ 3,295 ​ 3,759 Other ​ 2,936 ​ 5,484 Total accrued liabilities ​ $ 13,672 ​ $ 18,504 ​ ​ 13. LINES OF CREDIT On July 28, 2023, the Company entered into a new Credit Agreement (the “Revolver”), by and among the Company as borrower, the financial institutions from time to time party thereto, as lenders, and Prosperity Bank as administrative agent. Subsequently, the Company repaid in full the balance due on its prior line of credit with Capital One, N.A. and all commitments under this prior line of credit were terminated. The Revolver provides for a four-year senior secured revolving credit facility with an initial commitment of $ 50,000 and an additional $ 25,000 commitment under an accordion feature. 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. The Company paid certain arrangement fees and other fees in connection with the Revolver of approximately $ 271 , which were capitalized 54 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) as unamortized debt issuance costs and included within lines of credit balance in the accompanying balance sheets and are amortized to interest expense over the life of the Revolver. The Revolver matures July 28, 2027. For the year ended December 31, 2024 and 2023, interest expense under the Revolver was $ 689 and $ 930 , respectively. The outstanding balance of the Revolver as of December 31, 2024 and 2023 was $ 0 and $ 23,680 , respectively. The interest rate in effect as of December 31, 2024 and 2023 for the Revolver was 7.61 % and 7.95 %, respectively. The amount of available credit under the Revolver was $ 50,000 and $ 26,320 as of December 31, 2024 and 2023, respectively. The Revolver requires the Company to comply with certain financial and non-financial covenants. As of December 31, 2024, 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. ​ 14. INCOME TAXES The provision for income tax expense for the years ended December 31, 2024 and 2023 was $ 14,396 and $ 14,276 , respectively. The effective tax rates for the years ended December 31, 2024 and 2023 were 18.9 % and 20.8 %, respectively. These rates differ from the federal statutory rate of 21 % primarily due to a federal tax credit for the sale of energy efficient homes under the Internal Revenue Code §45L, partially offset by state income taxes. The §45L tax credit was initially established under the Federal Energy Policy Act of 2005 and was extended through December 31, 2032 by the Inflation Reduction Act of 2022. Significant components of the provision for income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 2023 Current: ​ ​ ​ ​ ​ ​ Federal ​ $ 13,213 ​ $ 13,763 State ​ ​ 1,315 ​ ​ 1,037 Total current income tax provision ​ ​ 14,528 ​ ​ 14,800 Deferred: ​ ​ ​ ​ ​ ​ Federal ​ ​ ( 126 ) ​ ​ ( 445 ) State ​ ​ ( 6 ) ​ ​ ( 79 ) Total deferred income tax provision ​ ​ ( 132 ) ​ ​ ( 524 ) Provision for income taxes ​ $ 14,396 ​ $ 14,276 ​ A reconciliation of the Company’s effective tax rate from operations to the U.S. federal income tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ December 31, ​ ​ ​ 2024 2023 ​ Federal statutory rate ​ 21.0 % ​ 21.0 % State income taxes, net of federal tax benefit ​ 1.2 ​ ​ 0.9 ​ Energy efficiency credit ​ ( 3.3 ) ​ ​ ( 1.1 ) ​ Effective tax rate ​ 18.9 % ​ 20.8 % ​ 55 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) The tax effects of cumulative temporary differences that give rise to deferred tax assets and liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ Allowance for doubtful accounts ​ $ 964 ​ $ 983 Reserve accounts ​ ​ 3 ​ ​ 231 State taxes ​ ​ 169 ​ ​ 124 Payroll taxes ​ ​ - ​ ​ — Uniform capitalization ​ ​ 25 ​ ​ 19 Other ​ ​ ( 8 ) ​ ​ 199 Total deferred tax assets ​ ​ 1,153 ​ ​ 1,556 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Installment sale revenue ​ ​ ( 386 ) ​ ​ ( 530 ) Depreciation ​ ​ ( 2,179 ) ​ ​ ( 2,601 ) Accrued interest receivable ​ ​ ( 777 ) ​ ​ ( 742 ) Other ​ ​ ( 17 ) ​ ​ ( 21 ) Total deferred tax liabilities ​ ​ ( 3,359 ) ​ ​ ( 3,894 ) Net deferred tax liabilities ​ $ ( 2,206 ) ​ $ ( 2,338 ) ​ ​ ​ ​ 15. COMMITMENTS AND CONTINGENCIES The Company maintains a self-insured health benefits plan which provides medical benefits to employees electing coverage under the plan. The Company estimates and records costs for incurred but not reported medical claims and claim development. This reserve is based on historical experience and other assumptions, some of which are subjective. The Company will adjust its self-insured medical benefits reserve based on actual experience, estimated costs and changes to assumptions. As of December 31, 2024 and 2023, the Company accrued a $ 861 and $ 242 liability, respectively, for incurred but not reported claims, respectively. These accrued amounts are included in accrued liabilities on the accompanying balance sheets. The Company is contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for independent retailers of its products. These arrangements, which are customary in the industry, provide for the repurchase of products sold to retailers in the event of default by the retailer. The Company’s obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The Company believes that risk of loss is mitigated due to the resale value of the repurchased homes and the fact that the agreements are spread over many retailers. The maximum amount for which the Company was liable under such agreements approximated $ 805 and $ 3,030 at December 31, 2024 and 2023, respectively, without reduction for the resale value of the homes. The Company considers its obligations on current contracts to be immaterial and accordingly has not recorded any reserve for repurchase commitment as of December 31, 2024 and 2023, respectively. Leases. The Company leases facilities under operating leases that typically have 10 year terms. These leases usually offer the Company a right of first refusal that affords the Company the option to purchase the leased premises under certain terms in the event the landlord attempts to sell the leased premises to a third party. Rent expense for the years ended December 31, 2024 and 2023 was $ 631 and $ 645 , respectively. The Company also subleases properties to third parties, ranging from 3-year to 11-year terms with various renewal options. Rental income from the subleased properties for the years ended December 31, 2024 and 2023 was approximately $ 150 and $ 245 , respectively. See Note 8 – Leases, for a schedule of the Company’s future minimum lease commitments. 56 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) ​ Legal Matters The Company is party to certain legal proceedings that arise in the ordinary course and are incidental to its business. Certain of the claims pending against the Company in these proceedings allege, among other things, breach of contract and warranty, product liability and personal injury. The Company has determined that it is probable that it has some liability related to the claims. The Company has included legal reserves of $ 328 and $ 990 as of December 31, 2024 and 2023, respectively, in accrued liabilities on the accompanying balance sheets. Although litigation is inherently uncertain, based on past experience and the information currently available, management does not believe that the currently pending and threatened litigation or claims will have a material adverse effect on the Company’s financial position, liquidity or results of operations. However, future events or circumstances currently unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on the Company’s financial position, liquidity or results of operations in any future reporting periods. ​ 16. EARNINGS PER SHARE Basic earnings per common share (“EPS”) is computed based on the weighted-average number of common shares outstanding during the reporting period. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s balance sheets. Diluted EPS is based on the weighted-average number of common shares outstanding plus the number of additional shares that would have been outstanding had the dilutive common shares been issued. The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 2023 Numerator: ​ ​ ​ ​ ​ ​ Net income (in 000's) ​ $ 61,642 ​ $ 54,460 Denominator: ​ ​ ​ ​ ​ ​ Basic weighted-average common shares outstanding ​ ​ 24,217,631 ​ ​ 24,385,190 Effect of dilutive securities: ​ ​ ​ ​ ​ ​ Restricted stock grants ​ ​ - ​ ​ 2,283 Stock options ​ ​ 636,147 ​ ​ 683,153 Diluted weighted-average common shares outstanding ​ ​ 24,853,778 ​ ​ 25,070,626 Earnings per share attributable to Legacy Housing Corporation ​ ​ ​ ​ ​ ​ Basic ​ $ 2.55 ​ $ 2.23 Diluted ​ $ 2.48 ​ $ 2.17 ​ ​ ​ In November 2022, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $ 10.0 million of the Company’s common stock. On August 6, 2024, our Board of Directors authorized the repurchase of an additional $ 10.0 million of the Company’s common stock under the share repurchase program. We repurchased 262,530 shares of common stock for $ 5,398 in the open market during the year ended December 31, 2024. As of December 31, 2024, we had a remaining authorization of approximately $ 14,602 . Between January 1, 2025 and March 10, 2025 we repurchased 29,385 shares of common stock for $ 674 in the open market. ​ ​ ​ 57 Table of Contents LEGACY HOUSING CORPORATION NOTES TO FINANCIAL STATEMENTS December 31, 2024 and 2023 (Dollars in thousands, except per share amounts) 17. RELATED PARTY TRANSACTIONS Bell Mobile Homes (“Bell”), a retailer owned by one of the Company’s significant stockholders, purchases manufactured homes from the Company. Accounts receivable balances due from Bell were $ 115 and $ 403 as of December 31, 2024 and 2023, respectively. Accounts payable balances due to Bell were $ 58 and $ 18 as of December 31, 2024 and 2023, respectively. Home sales to Bell were $ 5,748 and $ 4,543 for the years ended December 31, 2024 and 2023, respectively. Shipley Bros., Ltd. And Crazy Red’s Mobile Homes (together, “Shipley”), retailers owned by one of the Company’s significant shareholders, purchase manufactured homes from the Company. Accounts receivable balances due from Shipley were $ 78 and $ 143 as of December 31, 2024 and 2023, respectively. Accounts payable balances due to Shipley were $ 22 and $ 67 as of December 31, 2024 and 2023. Home sales to Shipley were $ 2,545 and $ 1,199 for the years ended December 31, 2024 and 2023, respectively. 18. SEGMENT INFORMATION We have determined that we have one operating and reportable segment. We define the segment primarily based on how internally reported financial and operating information is regularly reviewed by our chief operating decision maker (“CODM”) to evaluate financial performance, make decisions and allocate resources. Our CODM is the Chief Executive Officer. The CODM assesses the Company’s operating and financial performance based on net income, total revenue and return on investment. The Company determined that it does not have significant segment expenses. 19. SUBSEQUENT EVENTS In connection with the preparation of these financial statements, we evaluated subsequent events after the balance sheet date of December 31, 2024 and through the date of this filing and determined that no events occurred that would require adjustments or disclosures in the financial statements. ​ ​ ​ ​ 58 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.