What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-12 compared with 2024-11-12 · 84 added, 148 removed, 99 unchanged (70% of the section changed)

3 unchanged sentences

Our actual results could differ materially from those anticipated by our management in these forward looking statements as a result of various factors, including those discussed in this Form 10-Q and in our Registration Statement on Form S-1, particularly under the heading “Risk Factors.” Dollar amounts are in thousands unless otherwise noted.

We build, sell and finance manufactured homes and “tiny houses” that are distributed through a network of independent retailers and company owned stores and also sold directly to manufactured home communities.

We are the sixth largest producer of manufactured homes in the United States as ranked by the number of homes manufactured based on information available from the Manufactured Housing Institute and the Institute for Building Technology and Safety for the six month period ending June 30, 2024.

With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 395 to 2,667 square feet consisting of 1 to 5 bedrooms and 1 to 3 1/2 bathrooms.

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

We are one of the largest producers of manufactured homes in the United States.

Our homes range in price, at retail, from approximately $33 to $180.

For the three and nine months ended September 30, 2024, we sold 549 and 1,772 home sections, respectively (which are entire modules or single floors).

For the three and nine months ended September 30, 2023, we sold 643 and 2,246 home sections, respectively

For the three months ended March 31, 2025 and 2024 we sold 427 and 645 home sections (which are entire homes or single floors that are combined to create complete homes), respectively.

The Company has one reportable segment.

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

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

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

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

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

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

3 unchanged sentences

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

Our factories employ high volume production techniques that allow us to produce, on average, approximately 70 home sections, or 60 fully completed homes depending on product mix, in total per week.

Our factories employ high-volume production techniques that allow us to produce up to, on average, approximately 70 home sections, or 60 fully-completed homes depending on product mix, in total per week.

We use quality materials and operate our own component manufacturing facilities for many of the items used in the construction of our homes.

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

Our homes are marketed under our premier “Legacy” brand name and, as of September 30, 2024, are sold to consumers, primarily in over 15 states through a network of independent retail locations, 13 company owned retail locations and through direct sales to owners of manufactured home communities.

Our 13 company owned retail locations, including 11 Heritage Housing stores and two Tiny House Outlet stores, exclusively sell our homes.

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

For the nine months ended September 30, 2023, approximately 49% of our manufactured homes were sold in Texas, followed by 15% in Georgia, 9% in Louisiana, 4% in Oklahoma, and 3% in Florida.

Our homes are marketed under our premier “Legacy” brand name and currently are sold primarily across 15 states through a network of over 125 independent retail locations, 13 company-owned retail locations and through direct sales to owners of manufactured home communities.

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

For the three months ended March 31, 2025, approximately 62% of our manufactured homes were sold in Texas, followed by 10% in Oklahoma, 8% in Georgia, 4% in Alabama and 3% in New Mexico.

For the three months ended March 31, 2024, approximately 54% of our manufactured homes were sold in Texas, followed by 18% in North Carolina, 8% in Oklahoma, 4% in Georgia and 2% in New Mexico.

We offer three types of financing solutions to our customers.

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

We provide inventory financing for our independent retailers who purchase homes from us and then sell them to consumers.

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

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

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

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

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

Factors Affecting Our Performance

1 unchanged sentence

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

As of September 30, 2024, these properties include the following (dollars in thousands):

As of March 31, 2025, these properties include the following (dollars in thousands):

Date of Acquisition

11 unchanged sentences

February, 2024

Beaumont, Texas (1)

(1) Land and improvement values for Richland and Beaumont properties do not include the value of Company owned homes located in these communities.

● We also expect to provide financing solutions to owners of manufactured housing communities in a manner that includes developing new sites for products in or near urban locations where there is a shortage of sites to place our products.

These solutions will be structured to give us an attractive return on investment and competitive the gross margins on the sale of homes to these new manufactured housing communities .

● Inflation recently was near its highest rate in the U.S.

over the last 30 years.

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

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

Bonham, Texas

December, 2024

Balch Springs, Texas

December, 2024

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

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

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

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

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

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

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

● Finally, our financial performance will be impacted by our ability to fulfill orders for our manufactured homes from dealers and customers.

Our Georgia manufacturing facility has unutilized space available and, with additional investment, we can add capacity to increase the number of homes that we can manufacture in that facility.

Our future levels of production will depend in part, on our ability to anticipate sales volumes and product mix, to schedule production efficiently, to maintain proper equipment and to manage levels of inventory and personnel.

● Finally, our financial performance may be impacted by our ability to fulfill current orders for our manufactured homes from dealers and customers.

Our Georgia manufacturing facility has space available and with additional investment can add capacity to increase the number of homes that can be manufactured.

In order to continue to grow, we must be able to properly estimate future volumes when making commitments regarding the level of business that we will seek and accept, the mix of products that we intend to manufacture, the timing of production schedules and the levels and utilization of inventory, equipment and personnel.

We actively review organic and inorganic opportunities to add production capacity in attractive regions to meet future demand.

1 unchanged sentence

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

Comparison of Three Months ended September 30, 2024 and 2023 (in thousands)

Comparison of Three Months ended March 31, 2025 and 2024 (in thousands)

Three months ended

September 30,

Product sales

12 unchanged sentences

Interest expense

Total other income (expense)

Income before income tax expense

1 unchanged sentence

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

Product sales decreased $6.8 million, or 18.5%, during the three months ended September 30, 2024 as compared to the same period in 2023.

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

Net revenue attributable to our factory-built housing consisted of the following during the three months ended September 30, 2024 and 2023:

Product sales decreased $6.5 million, or 21.2%, during the three months ended March 31, 2025 as compared to the same period in 2024.

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

Net revenue attributable to our factory-built housing consisted of the following during the three months ended March 31, 2025 and 2024:

Three months ended

September 30,

(in thousands)

2 unchanged sentences

Net revenue per unit sold

For the three months ended September 30, 2024 , our net revenue per product sold did not change significantly as compared to the three months ended September 30, 2023.

We had decreases in direct sales, commercial sales, inventory finance sales and other product sales, partially offset by an increase in retail store sales.

Direct sales decreased $0.5 million, or 19.7% during the three months ended September 30, 2024 as compared to the same period in 2023.

Commercial sales decreased $1.6 million, or 11.2% during the three months ended September 30, 2024 as compared to the same period in 2023.

Inventory finance sales to dealers decreased $4.7 million, or 37.8% during the three months ended September 30, 2024 as compared to the same period in 2023.

Retail store sales increased $0.3 million, or 4.8% during the three months ended September 30, 2024 as compared to the same period in 2023.

Our revenue has decreased

primarily due to a lower volume of shipments, a shift in product mix generally to smaller units and a slowdown in our dealer and mobile home park sales.

Our current business is dependent on dealer sales, as reflected in direct sales and inventory finance sales, and our sales have slowed due to high levels of inventory on dealer lots.

Our retail sales have improved as we have focused on the performance of our company owned stores.

Our mobile home park business has been impacted by higher interest rates, and transaction volumes and new development have declined.

Consumer, MHP and dealer loans interest income increased $1.5 million, or 17.3%, during the three months ended September 30, 2024 as compared to the same period in 2023 due to growth in our loan portfolios.

Between September 30, 2024 and September 30, 2023 our consumer loan portfolio increased by $15.6 million, our MHP loan portfolio increased by $22.0 million, and our dealer finance notes decreased by $0.7 million.

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income and decreased $0.4 million, or 8.7%, during the three months ended September 30, 2024 as compared to the same period in 2023.

This decrease was primarily due to a $2.4 million decrease in forfeited deposits and a $1.0 million decrease in dealer finance fees, partially offset by a $2.7 million increase in land sales and a $0.3 million increase in other miscellaneous revenue.

The cost of product sales decreased $3.5 million, or 13.9%, during the three months ended September 30, 2024 as compared to the same period in 2023.

The decrease in costs is primarily related to the decrease in units sold.

The cost of other sales increased $2.0 million during the three months ended September 30, 2024 as compared to the same period in 2023.

The increase in costs is due to the sale of land.

Selling, general and administrative expenses during the three months ended September 30, 2024 remained flat compared to the same period in 2023.

We had a $0.6 million increase in payroll and healthcare expense, a $0.2 million increase in marketing expense, a $0.1 million increase in other miscellaneous expense offset by a $0.3 million decrease in warranty expense, a $0.2 million decrease in loan loss provision and a $0.2 million decrease in bad debt expense and a $0.2 million decrease in professional fees.

Dealer incentive expense decreased $0.5 million during the three months ended September 30, 2024 as compared to the same period in 2023.

Other income (expense) increased $3.5 million, or 781.3%, during the three months ended September 30, 2024 as compared to the same period in 2023.

We had (i) a decrease of $0.8 million decrease in Non-operating interest income primarily as a result of the Settlement Agreement described in Note 4, Notes Receivable from Mobile Home Parks, in these Notes to Condensed Financial Statements (Unaudited) for the quarter ended September 30, 2024, (ii) an increase of $3.9 million in income in Miscellaneous, net also primarily as a result of the Settlement Agreement above, (iii) an increase of $0.4 million in income Miscellaneous, net due to a gain on conversion of inventory finance loans, (iv) a decrease of $0.1 million in Interest expense and (v) an increase of $0.1 million in expense in Miscellaneous, net related to other expenses.

Income tax increased $0.1 million during the three months ended September 30, 2024 as compared to the same period in 2023.

The effective tax rate for the three months ended September 30, 2024 and 2023 was 18.2% and 17.4%, respectively, and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction, partially offset by state income taxes.

Comparison of Nine Months ended September 30, 2024 and 2023 (in thousands)

Nine months ended

September 30,

Product sales

Consumer, MHP and dealer loans interest

Total net revenue

Operating expenses:

Cost of product sales

Cost of other sales

Selling, general administrative expenses

Dealer incentive

Total operating expenses

Income from operations

Other income (expense)

Non‑operating interest income

Miscellaneous, net

Interest expense

Income before income tax expense

Income tax expense

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

Product sales decreased $29.9 million, or 24.4%, during the nine months ended September 30, 2024 as compared to the same period in 2023.

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

Net revenue attributable to our factory-built housing consisted of the following during nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

($ in thousands)

Product Sales

Total units sold

Net revenue per unit sold

For the nine months ended September 30, 2024, our net revenue per product sold decreased primarily due to a shift in product mix to smaller units and to a large sale of homes in the first quarter of 2024 from our leased home portfolio to a mobile home park customer at a lower than average price than our typical new home.

We had decreases in direct sales, commercial sales and inventory finance sales, partially offset by an increase in retail store sales.

Direct sales decreased $6.5 million, or 47.4% during the nine months ended September 30, 2024 as compared to the same period in 2023.

Commercial sales decreased $8.2 million, or 18.0% during the nine months ended September 30, 2024 as compared to the same period in 2023.

Inventory finance sales to dealers decreased $16.4 million, or 39.2% during the nine months ended September 30, 2024 as compared to the same period in 2023.

Retail store sales increased $1.2 million, or 9.1% during the nine months ended September 30, 2024 as compared to the same period in 2023.

Our revenue has decreased primarily due to a lower volume of shipments, a shift in product mix generally to smaller units and a slowdown in our dealer and mobile home park sales.

Our current business is dependent on dealer sales, as reflected in direct sales and inventory finance sales, and our sales have slowed due to high levels of inventory on dealer lots and

Our retail sales have improved as we have focused on the performance of our company owned stores.

Our mobile home park business has been impacted by higher interest rates, and transaction volumes and new development have declined.

Consumer, MHP and dealer loans interest income increased $5.8 million, or 23.2%, during the nine months ended September 30, 2024 as compared to the same period in 2023 due to growth in our loan portfolios.

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income and decreased $1.4 million, or 17.5%, during the nine months ended September 30, 2024 as compared to the same period in 2023.

This decrease was primarily due to a $2.9 million decrease in dealer finance fees, a $1.3 million decrease in forfeited deposits, partially offset by a $2.7 million increase in land sales and a $0.1 million increase in other miscellaneous revenue.

The cost of product sales decreased $20.1 million, or 24.1%, during the nine months ended September 30, 2024 as compared to the same period in 2023.

For the three months ended March 31, 2025, our net revenue per product sold increased by 23.1% as compared to the same period in 2024.

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

We had decreases in direct sales, commercial sales, retail sales and other product sales, partially offset by an increase in inventory finance sales.

Direct sales decreased $0.3 million, or 17.0% during the three months ended March 31, 2025 as compared to the same period in 2024.

Commercial sales decreased $6.8 million, or 50.0% during the three months ended March 31, 2025 as compared to the same period in 2024.

Retail sales decreased $1.5 million, or 30.3% during the three months ended March 31, 2025 as compared to the same period in 2024.

Inventory finance sales increased $2.7 million,

or 31.5% during the three months ended March 31, 2025 as compared to the same period in 2024.

Other product sales decreased $0.6 million, or 29.6% during the three months ended March 31, 2025 as compared to the same period in 2024.

Our revenue has decreased primarily due to a lower volume of shipments and a slowdown in our retail and mobile home park sales.

Consumer, MHP and dealer loans interest income did not change during the three months ended March 31, 2025 as compared to the same period in 2024.

Between March 31, 2025 and March 31 , 2024 our consumer loan portfolio increased by $20.3 million, our MHP loan portfolio increased by $20.1 million, and our dealer finance notes decreased by $2.4 million.

Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees and other miscellaneous income and decreased $1.0 million, or 59.2%, during the three months ended March 31, 2025 as compared to the same period in 2024.

This decrease was primarily due to a $1.1 million decrease in forfeited deposits partially offset by a $0.2 million increase in portfolio fees and service revenue and land sales and a net $0.1 million decrease in other miscellaneous revenue.

The cost of product sales decreased $3.3 million, or 16.0%, during the three months ended March 31, 2025 as compared to the same period in 2024.

The decrease in costs is primarily related to the decrease in units sold.

The cost of other sales increased $2.0 million during the nine months ended September 30, 2024 as compared to the same period in 2023.

The increase in costs is due to the sale of land.

Selling, general and administrative expenses increased $0.5 million, or 2.8%, during the nine months ended September 30, 2024 as compared to the same period in 2023.

This increase was primarily due to a $0.4 million increase in legal expense, a $0.4 million increase in property tax expense, a $0.4 million increase in marketing expense, a $0.1 million increase in payroll and related expense, and a net $0.4 million increase in other miscellaneous expense partially offset by a $1.0 million decrease in warranty costs and a $0.2 million decrease in loan loss provision.

Dealer incentive expense decreased $1.0 million during the nine months ended September 30, 2024 as compared to the same period in 2023.

Other income (expense) increased $7.1 million, or 296.7%, during the nine months ended September 30, 2024 as compared to the same period in 2023.

We had (i) $0.2 million increase in Non-operating interest income, (ii) a $0.8 million increase in income in Miscellaneous, net as a result of a gain on the sales of real property, (iii) a $1.3 million increase in income in Miscellaneous, net due to a reversal of accrued liabilities, (iv) an increase of $1.1 million in income Miscellaneous, net due to a gain on conversion of inventory finance loans, (v) $0.1 million increase in Interest expense and (vi) a $3.8 million net increase in income in Miscellaneous, net partially as a result of the Settlement Agreement described above,.

Income tax increased $0.6 million during the nine months ended September 30, 2024 as compared to the same period in 2023.

The effective tax rate for the nine months ended September 30, 2024 and 2023 was 18.2% and 17.3%, respectively, and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction, partially offset by state income taxes.

The cost of other sales was $0.5 million during the three months ended March 31, 2025.

Selling, general and administrative expenses increased $0.4 million, or 6.9%, during the three months ended March 31, 2025 as compared to the same period in 2024.

We had a $0.6 million increase in legal expense, a $0.5 million increase in loan loss provision and a $0.3 million increase in other miscellaneous expense offset by a $0.4 million decrease in warranty expense, $0.3 million decrease in payroll and related expense and a $0.3 million decrease in professional fees.

Other income (expense) decreased $0.6 million, or 35.5%, during the three months ended March 31, 2025 as compared to the same period in 2024.

We had a decrease of $0.8 million in Non-operating interest income primarily as a result of the Settlement Agreement described in Note 4, Notes Receivable from Mobile Home Parks, in these Notes to Condensed Financial Statements (Unaudited) for the quarter ended March 31, 2025 offset by a decrease of $0.2 million in interest expense.

Income tax decreased $0.9 million during the three months ended March 31, 2025 as compared to the same period in 2024.

The effective tax rate for the three months ended March 31, 2025 and 2024 was 19.3% and 18.2%, respectively, and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction, partially offset by state income taxes.

Liquidity and Capital Resources

We believe that cash flow from operations and cash at September 30, 2024, and availability on our lines of credit will be sufficient to fund our operations and provide for growth for the next 12 to 18 months and into the foreseeable future.

We believe that cash flow from operations and cash at March 31, 2025, and availability on our lines of credit will be sufficient to fund our operations and provide for growth for the next 12 to 18 months and into the foreseeable future.

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

2 unchanged sentences

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

As of September 30, 2024, we had approximately $0.6 million in cash, compared to $0.7 million as of December 31, 2023.

As of March 31, 2025, we had approximately $3.4 million in cash, compared to $1.1 million as of December 31, 2024.

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

Cash Flow Activities

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Net cash provided by (used in) operating activities

Net cash (used in) investing activities

Net cash (used in) provided by financing activities

Net cash provided by operating activities

Net cash (used in) provided by investing activities

Net cash used in financing activities

Net change in cash

1 unchanged sentence

Cash at end of period

Comparison of Cash Flow Activities from September 30, 2024 to September 30, 2023

Net cash provided by operating activities was $28.1 million during the nine months ended September 30, 2024, compared to net cash of $5.3 million used in operating activities during the nine months ended September 30, 2023.

This change was predominantly the result of decreased MHP loan originations net of collections, decreased consumer loan originations net of collections, and decreased dealer inventory loan originations net of collections.

Net cash used in investing activities of $1.5 million during the nine months ended September 30, 2024 was primarily attributable to $5.8 million of collections of loans we made to third parties for the development of manufactured housing parks, $1.6 million in proceeds from the sale of property and $0.1 million in proceeds from collections of purchased loans, offset by $7.3 million used in improvements and development of property, plant and equipment and $1.7 million used to issue notes to third parties for the development of manufactured housing parks.

Net cash used in investing activities of $7.6 million during the nine months ended September 30, 2023 was primarily attributable to $13.9 million used to issue notes to third parties for the development of manufactured housing parks, $4.6 million used in improvements and development of property, plant and equipment, offset by $8.5 million received from the sale of treasury notes, $1.1 million received from the sale of leases homes, $1.0 million of collections of loans we made to third parties for the development of manufactured housing parks and $0.3 million of collections from other purchased loans.

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

Net cash provided by financing activities of $10.6 million during the nine months ended September 30, 2023 was attributable to net proceeds of $10.5 million on our lines of credit and $0.1 million received from the exercise of stock options.

Comparison of Cash Flow Activities from March 31, 2025 to March 31, 2024

Net cash provided by operating activities was $4.9 million during the three months ended March 31, 2025, compared to net cash of $10.8 million provided by operating activities during the three months ended March 31, 2024.

This change was predominantly the result of decreased net income, increased consumer loan originations net of collections, change in accounts receivable, change in inventories, change in accounts payable and accrued liabilities and change in other assets – leased mobile homes.

Net cash used in investing activities of $2.0 million during the three months ended March 31, 2025 was primarily attributable to $1.3 million used in improvements and development of property, plant and equipment and $1.0 million used to issue notes to third parties for the development of manufactured housing parks, offset by $0.2 million in proceeds from the sale of property and $0.1 million of collections of loans we made to third parties for development of manufactured housing parks.

Net cash provided by investing activities of $2.7 million during the three months ended March 31, 2024 was primarily attributable to $4.1 million of collections of loans we made to third parties for development of manufactured housing parks, offset by $0.9 million used in improvements and development of property, plant and equipment and $0.6 million used to issue notes to third parties for the development of manufactured housing parks.

Net cash used in financing activities of $0.7 million during the three months ended March 31, 2025 was attributable $0.7 million of stock repurchases.

Net cash used in financing activities of $13.7 million during the three months ended March 31, 2024 was attributable to net payments of $11.9 million on our lines of credit, $1.9 million of stock repurchases and $0.1 million received from the exercise of stock options.

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

We repurchased 1,001 shares for $0.02 million in the open market

during the three months ended September 30, 2024, and we repurchased 262,530 shares for $5.4 million in the open market during the nine months ended September 30, 2024.

As of September 30, 2024, we had a remaining authorization of approximately $14.6 million.

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

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

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

As of March 31, 2025, we had a remaining authorization of approximately $13,927.

Between April 1, 2025 and May 12, 2025 we repurchased 11,466 shares of common stock for $261 in the open market.

Lines of Credit

3 unchanged sentences

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.

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

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

1 unchanged sentence

The Revolver matures July 28, 2027.

For the three months ended September 30, 2024, interest expense under the Revolver was $175, and for the three months ended September 30, 2023, interest expense under the Revolver and prior line of credit was $302.

For the nine months ended September 30, 2024, interest expense under the Revolver was $686, and for the nine months ended September 30, 2023, interest expense under the Revolver and prior line of credit was $588.

The outstanding balance of the Revolver as of September 30, 2024 and December 31, 2023 was $2,111 and $23,680, respectively.

The interest rate in effect as of September 30, 2024 and December 31, 2023 for the Revolver was 7.61% and 7.95%, respectively.

The amount of available credit under the Revolver was $47,889 and $26,320 as of September 30, 2024 and December 31, 2023, respectively.

For the three months ended March 31, 2025 and 2024, interest expense under the Revolver was $0 and $276, respectively.

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

The interest rate in effect as of March 31, 2025 and December 31, 2024 for the Revolver was 6.76% and 7.61%, respectively.

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

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

As of September 30, 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.

As of March 31, 2025, the Company was in compliance with all financial covenants, including that it maintain a maximum leverage ratio of no more than 1.00 to 1.00 and a minimum fixed charge coverage ratio of no less than 1.75 to 1.00.

Contractual Obligations

The following table is a summary of contractual cash obligations as of September 30, 2024:

The following table is a summary of contractual cash obligations as of March 31, 2025:

Payments Due by Period (in thousands)

4 unchanged sentences

We did not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, net sales, results of operations, liquidity or capital expenditures.

However, we do have a repurchase agreement with a financial institution that provides inventory financing for independent retailers of our products.

Under this agreement, we have agreed to repurchase homes at declining prices over the term of the agreement (24 months).

Our obligation under this repurchase agreement ceases upon the purchase of the home by the retail customer.

The maximum amount of our contingent obligations under such repurchase agreements was approximately $856 and $3,030 as of September 30, 2024 and December 31, 2023, respectively, without reduction for the resale value of the homes.

However, we do have repurchase agreements with financial institutions providing inventory financing for independent retailers of our products.

Under these agreements, we have agreed to repurchase homes at declining prices over the term of the agreement.

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

The maximum amount of our contingent obligations under such repurchase agreements was approximately $672 and $805 as of March 31, 2025 and December 31, 2024, respectively, without reduction for the resale value of the homes.

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

We consider our obligations on current contracts to be immaterial, and accordingly, we have not recorded any reserve for repurchase commitment as of September 30, 2024.

We consider our obligations on current contracts to be immaterial and accordingly we have not recorded any reserve for repurchase commitment as of March 31, 2025.

Critical Accounting Estimates

4 unchanged sentences

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our September 30, 2024 Condensed Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.

Emerging Growth Company Status

The Company’s status as an “emerging growth company” ended on December 31, 2023.

An “emerging growth company,” as defined in the JOBS Act.

Section 107 of the JOBS Act, provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our March 31, 2025 Condensed Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis