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LH

Legacy Housing Corp (LEGH)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 missed Street on revenue and EPS as product margins compressed on higher input costs/tariffs and SG&A rose; revenue was $40.48m vs $45.53m est. and diluted EPS $0.35 vs $0.58 est. (EBITDA also below) (estimates marked with *; values retrieved from S&P Global). The company cited tariffs, raw materials inflation, and higher legal/loan loss costs as key drivers .
  • Founders re-engaged after recent CEO/CFO/GC departures, emphasizing cost discipline, inventory/work­ing capital reduction, and a pivot to company-owned retail aided by the AmeriCasa/FutureHomeX acquisition expected to close by Nov 28, 2025 .
  • Order momentum from the late-September show supports “normal” Texas production through year-end with company-wide Q4 run-rate of ~8–10 floors/day; management expects the manufacturing business to contribute nicely in Q4, with further improvement into Q1 2026 .
  • Strategic focus: expand retail mix (higher ASP/margins), deploy AI-enabled FutureHomeX to scale sales ops, and potentially divest non-core land to recycle capital; balance sheet remains strong (cash $13.6m; undrawn $50m revolver) .
  • Potential stock catalysts: execution on AmeriCasa integration and retail uplift, visible Q4 production normalization, and demonstrable SG&A relief in Q4/Q1 alongside tariff normalization in inputs .

What Went Well and What Went Wrong

  • What Went Well

    • Orders rebound and production outlook: September industry show drove orders that ensure Texas plants run at typical 3–4 floors/day through year-end; mgmt targets company-wide 8–10 floors/day in Q4, with Q1 2026 looking better .
    • Retail/ASP mix and finance income: Net revenue per unit rose to ~$68.5k (7.9% YoY) as retail/direct mix improved; loan interest income rose 5.4% YoY in Q3 and the consumer loan book grew to $188.1m (+12.8% YoY) .
    • Strategic acquisition to expand retail and add AI platform: Agreement to acquire AmeriCasa assets incl. a high-performing Houston dealership and the AI/automation FutureHomeX platform; expected to accelerate company-owned retail sales and scale processes .

  • What Went Wrong

    • Margin compression from tariffs/materials: Product gross margin fell to 20.28% (vs 29.2% LY) as material and tariff costs rose (tariffs add ~$1,200 per standard floor); SG&A up 20.6% on legal/professional and loan loss expenses .
    • Volume soft in key channels: Q3 product sales -4.6% YoY; units -11.6% to 420; MHP sales and inventory finance sales declined YoY; “Other revenue” down 79% YoY on tough land-sale compare .
    • Southeast (GA) demand remains challenged; industry over-capacity likely requires tough decisions absent disaster-relief demand; mgmt expressed caution vs Texas tailwinds .

Financial Results

Headline metrics and estimate comparison (oldest → newest)

MetricQ3 2024Q2 2025Q3 2025Q3 2025 Consensus*Beat/Miss*
Revenue ($m)$44.27 $50.16 $40.48 $45.53*Miss*
Net Income ($m)$15.80 $14.70 $8.65 ——
Diluted EPS ($)$0.64 $0.60 $0.35 $0.58*Miss*
EBITDA ($m)—$17.25*$10.13*$16.76*Miss*
  • QoQ: Revenue -19.3% (Q3 vs Q2); EPS -42% (Q3 vs Q2) . YoY: Revenue -8.6%; EPS -45% .
  • S&P Global disclaimer: Values marked with * are from S&P Global.

Segment/channel and KPI detail

MetricQ3 2024Q3 2025
Product Sales ($m)$30.17 $28.79
• Direct Sales ($m)$2.08 $2.74
• Commercial (MHP) Sales ($m)$12.51 $11.17
• Inventory Finance Sales ($m)$7.78 $7.08
• Retail Store Sales ($m)$5.72 $5.92
• Other Product Sales ($m)$2.10 $1.87
Loan Interest ($m)$10.33 $10.89
• Consumer$5.28 $5.90
• MHP$4.25 $4.23
• Dealer$0.80 $0.77
Other Revenue ($m)$3.77 $0.80
Units Sold (sections)475 420
Net Revenue per Unit ($000)$63.5 $68.5
Product Gross Margin %29.2% 20.28%
Net Income Margin %35.7% 21.4%
Book Value/Share (non-GAAP)—$21.85

Balance sheet and liquidity notes

  • Cash $13.6m; undrawn $50m revolver (7.25% at 9/30/25); in compliance with covenants .
  • Consumer loans receivable $188.1m; MHP notes $201.5m; dealer finance $30.3m .
  • Finished goods inventory $25.0m; mgmt views inventory/working capital as too high and plans to reduce .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Texas production run-rateQ4 2025Not specified“Typical pace” 3–4 floors/day per plant through year-end (orders from Sept show) Initiated
Company-wide productionQ4 2025Not specified~8–10 floors/day; Q4 manufacturing to contribute nicely; Q1 2026 “even better” Initiated
PricingH2 2025–2026Not specifiedIndustry price increases taken; Legacy June increase; overall ~3–4% price actions; further rational pricing likely if costs persist Initiated/maintained
SG&A trajectoryQ4 2025 → Q1 2026Elevated in 1H/3QExpect “immediate reversal” in Q4 and “significant relief” in Q1 as % of sales Lowering expected
AmeriCasa acquisition closeNov 2025N/AClose on/before Nov 28, 2025; ~$22m total consideration (about half retail paper) New
Retail volume outlook2026N/ATarget +50–100% company retail units vs 2025 with AmeriCasa/FutureHomeX New

Note: Company does not provide formal revenue/EPS guidance.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Tariffs/materials inflationPricing steps in Feb/June; watching commodities; labor not falling Tariffs raised costs (~$1,200 per floor); noted tariff rate volatility (45% vs recent 55%); mix effect offset by cost pressures Persistent headwind; some recent relief
Pricing strategyRaised prices (Feb; mid/late June) to offset costs; ASP elevated on mix Industry-wide 3–4% increases; focus on not sacrificing margin to fill capacity Rational pricing holding
Retail/company storesBuilding retail team/process; Q2 retail sales up 64% YoY AmeriCasa/FutureHomeX to scale remote-managed stores; aim to lift retail to ~50% of mix over time Acceleration via acquisition/tech
MHP/community demandSoft/lumpy; financing headwinds; working to land larger orders MHP model economics pressured (rents lag costs); Southeast particularly challenged Cautious
Regional trendsTX stronger; SE slower TX tailwinds incl. data center workforce housing; GA/Southeast remain weak Divergence widens
Loan portfolio creditLow delinquencies; portfolio growth 99% MHP and ~97.5% consumer loans within 30 days; post-COVID repos recoveries lower but portfolio strong Solid but normalizing
Land development (Bastrop)Phase 1 roads/utilities completed; bridge under construction; exploring sales Target lots $115–$120k; selling contingent on access/wastewater timing (2Q26 for plant) Monetization likely staged
Leadership/controlsPrior commentary under legacy teamCEO/CFO/GC resigned; founders back; material weaknesses in ICFR persist Transition; remediation needed
Technology/AI—FutureHomeX (AI/automation) to modernize sales ops across retail/communities New initiative

Management Commentary

  • “Product gross margin was 20.28% for the third quarter of 2025, down from 29.2% for the third quarter of 2024.”
  • “Tariffs… add roughly $1,200 to the cost of a standard floor plan.”
  • “Orders booked [at the September show] will ensure higher production rates for the fourth quarter over the third quarter… into the first quarter of 2026.”
  • “We’ll be able to complete the AmeriCasa purchase without incurring any debt… the net result is about $9–$10 million will be allocated… including the… Home X [FutureHomeX] model.”
  • “We should be up 60% in 2026 versus 2025 on the number of units we retail. It could be as much as 100%.”
  • “Our working capital is too high… finished goods inventory was $24 million… probably double what it should be.”

Q&A Highlights

  • AmeriCasa/FutureHomeX economics: ~$22m deal (~half retail paper; ~16% average chattel rate on acquired loans); expected to materially lift company retail volumes starting 2026; close before Thanksgiving .
  • Production outlook: Texas plants to average 6–7 floors/day; Georgia 2–3; company ~8–10; manufacturing expected to be profitable in Q4; Q1 2026 better .
  • Pricing vs costs: Industry-wide increases (~3–4%); Legacy moved first in June; aim to protect margins rather than chase utilization .
  • Southeast challenges: Weak community model economics and overcapacity; demand relies more on retail landowners and disaster relief .
  • Capital allocation: Undrawn $50m revolver; history of repurchases; will be opportunistic outside blackout windows .

Estimates Context

  • Q3 2025: Revenue $40.48m vs $45.53m* consensus (miss); diluted EPS $0.35 vs $0.58* (miss); EBITDA $10.13m* vs $16.76m* (miss) .
  • Q2 2025: Revenue $50.16m vs $43.53m* (beat); EPS $0.60 vs $0.55* (beat) .
  • Q1 2025: Revenue $35.70m vs $43.13m* (miss); EPS $0.43 basic vs $0.58* (miss) .
  • Implication: Street likely lowers near-term margin assumptions (tariff/materials, SG&A) and trims Q4/Q1 estimates ex-Texas normalization; upward revisions could follow visible retail uplift post-AmeriCasa and SG&A relief.
  • S&P Global disclaimer: Values marked with * are from S&P Global.

Key Takeaways for Investors

  • Near-term reset on margins/earnings reflects transitory cost/tariff pressures and elevated SG&A; management expects SG&A to normalize starting Q4 with more relief in Q1 2026 .
  • Order momentum plus “normal” Texas production should stabilize Q4, with sequential improvement likely; the mix pivot to retail/direct supports higher ASP and margin longer term .
  • AmeriCasa/FutureHomeX is a structural lever: adds a strong Houston store and an AI-enabled platform to scale remote-managed retail, targeting +50–100% company retail units in 2026 .
  • Regional bifurcation: Texas enjoys incremental demand (including data center workforce housing); Southeast remains challenged—watch for capacity discipline or disaster-relief orders .
  • Balance sheet optionality: $13.6m cash, zero revolver draw, $50m availability; flexibility to fund M&A, retail buildout, and opportunistic buybacks near book value .
  • Risks to monitor: Tariff volatility/materials inflation, Southeast demand, internal control remediation, integration execution at AmeriCasa .
  • Setup: If Q4 confirms production/mix improvement and SG&A abates, estimate momentum can inflect positively; the acquisition integration pace is the key 2026 driver .

References:

  • 10-Q (Q3 2025) financials, revenue disaggregation, liquidity, ICFR status .
  • 8-K/Press release (Q3 2025 preliminary/production commentary) .
  • Q3 2025 Earnings call transcript (margins, tariffs, production, AmeriCasa, SG&A outlook, regional) .
  • AmeriCasa acquisition press release (FutureHomeX, scope, close timing) .
  • Prior quarter press releases and calls for trend context .

S&P Global note: All items marked with * are values retrieved from S&P Global.