Legacy Housing (LEGH) Q1 2026 earnings summary

Executive summary

• Net revenue for Q1 2026 was $34.4 million, down 3.7% year-over-year, while net income rose 6.3% to $10.9 million and diluted EPS increased 12% to $0.46, reflecting operational resilience amid macro headwinds.

• Product sales declined 11.3% with 312 units shipped, but retail and direct sales surged, offsetting dealer declines and reflecting a strategic shift toward end consumers.

• Loan portfolio interest income grew 6.2% to $11.3 million, with consumer loans and mobile home park notes maintaining strong credit quality.

• SG&A expenses fell 8.3% due to lower payroll, benefits, and legal costs, supporting margin expansion.

• Ended the quarter with $14.1 million in cash, minimal debt, and strong liquidity.

Financial highlights

• Operating income rose 6.9% to $12.4 million, with total operating expenses down 8.7%.

• Retail store sales grew 81% to $6.1 million; direct sales up 80% to $2.7 million; commercial sales up 12% to $7.6 million.

• Inventory finance sales dropped 68% as dealers worked through existing stock.

• Cost of product sales declined 13.1%, and SG&A was down 8.3%.

• Effective tax rate was 16.1%, benefiting from energy efficiency credits and tax credit purchases.

Outlook and guidance

• Deliveries for a large workforce housing order, backed by a $7.1 million advance deposit, are expected to begin in Q2 2026, with most of the $8 million in deposits recognized in 2026.

• Anticipates strong performance in Q2–Q4 due to large workforce housing and data center orders in Texas.

• Gross margins may remain pressured by elevated input costs and tariffs, but mitigation efforts are underway.

• Effective tax rate expected to rise after Section 45L credit expires in June.

• Sufficient liquidity is anticipated for at least the next 12–18 months.