Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | Sep. 09, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity Registrant Name | Legacy Housing Corporation | |
Entity File Number | 001-38761 | |
Entity Incorporation, State or Country Code | TX | |
Entity Tax Identification Number | 20-2897516 | |
Entity Address, Address Line One | 1600 Airport Freeway | |
Entity Address, Address Line Two | #100 | |
Entity Address, City or Town | Bedford | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 76022 | |
City Area Code | 817 | |
Local Phone Number | 799-4900 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock ($0.001 par value) | |
Trading Symbol | LEGH | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 24,406,020 | |
Entity Central Index Key | 0001436208 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS د.ت in Thousands, $ in Thousands | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Current assets: | ||
Cash and cash equivalents | $ 2,528 | $ 1,042 |
Accounts receivable, net | 6,928 | 5,118 |
Accounts receivable - dealer financed | 6,715 | 3,496 |
Current portion of consumer loans receivable | 6,203 | 6,080 |
Current portion of notes receivable from mobile home parks ("MHP") | 8,311 | 10,049 |
Current portion of other notes receivable | 26,556 | 21,070 |
Inventories | 47,783 | 41,230 |
Prepaid expenses and other current assets | 4,067 | 4,456 |
Total current assets | 109,091 | 92,541 |
Consumer loans receivable, net | 121,056 | 119,543 |
Notes receivable from mobile home parks ("MHP") | 102,069 | 92,943 |
Other notes receivable, net | 12,192 | 20,930 |
Inventories, net | 3,738 | 2,678 |
Other assets - leased mobile homes | 9,767 | 9,419 |
ROU assets - operating leases | 3,258 | |
Other assets | 1,480 | 1,097 |
Property, plant and equipment, net | 28,016 | 27,516 |
Total assets | 390,667 | 366,667 |
Current liabilities: | ||
Accounts payable | 7,381 | 4,155 |
Accrued liabilities | 19,998 | 20,686 |
Customer deposits | 8,617 | 7,749 |
Escrow liability | 9,142 | 9,350 |
Operating lease obligation | 652 | |
Total current liabilities | 45,790 | 41,940 |
Long-term liabilities: | ||
Operating lease obligation, less current portion | 2,706 | |
Lines of credit | 5,077 | 7,993 |
Deferred income taxes, net | 3,004 | 3,004 |
Dealer incentive liability | 4,597 | 4,336 |
Total liabilities | 61,174 | 57,273 |
Commitments and contingencies (Note 13) | ||
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; 24,851,085 and 24,654,621 issued and 24,406,020 and 24,209,556 outstanding at March 31, 2022 and December 31, 2021, respectively | 29 | 25 |
Treasury stock at cost, 445,065 shares at March 31, 2022 and December 31, 2021 | (4,477) | (4,477) |
Additional paid-in-capital | 179,626 | 175,623 |
Retained earnings | 154,315 | 138,223 |
Total stockholders' equity | 329,493 | 309,394 |
Total liabilities and stockholders' equity | $ 390,667 | $ 366,667 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
CONDENSED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 24,851,085 | 24,654,621 |
Common stock, shares outstanding | 24,406,020 | 24,209,556 |
Treasury stock, shares | 445,065 | 445,065 |
CONDENSED STATEMENTS OF INCOME
CONDENSED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Net revenue: | ||
Product sales | $ 51,787 | $ 32,274 |
Consumer and MHP loans interest | 6,765 | 6,638 |
Other | 1,376 | 1,028 |
Total net revenue | 59,928 | 39,940 |
Operating expenses: | ||
Cost of product sales | 33,727 | 22,001 |
Selling, general and administrative expenses | 7,659 | 4,793 |
Dealer incentive | 275 | 463 |
Income from operations | 18,267 | 12,683 |
Other income (expense): | ||
Non-operating interest income | 853 | 248 |
Miscellaneous, net | 586 | 204 |
Interest expense | (56) | (226) |
Total other income | 1,383 | 226 |
Income before income tax expense | 19,650 | 12,909 |
Income tax expense | (3,558) | (2,208) |
Net income | $ 16,092 | $ 10,701 |
Weighted average shares outstanding: | ||
Basic | 24,351,223 | 24,199,107 |
Diluted | 24,661,426 | 24,211,182 |
Net income per share: | ||
Basic | $ 0.66 | $ 0.44 |
Diluted | $ 0.65 | $ 0.44 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities: | ||
Net income | $ 16,092 | $ 10,701 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization expense | 430 | 368 |
Amortization of deferred revenue | (408) | 122 |
Provision for accounts and notes receivable | 37 | 550 |
Provision for long term inventory | (130) | 17 |
Share based payment expense | 4,007 | 44 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,843) | (62) |
Consumer loans activity, net | (1,617) | (2,542) |
Notes receivable MHP activity, net | (7,336) | (5,038) |
Inventory loan activity, net | (3,249) | |
Inventories | (7,484) | (3,502) |
Prepaid expenses and other current assets | 389 | 120 |
Other assets | (4,058) | (337) |
Accounts Payable | 3,035 | (3,635) |
Customer deposits | 1,025 | 1,234 |
Escrow liability | (208) | 286 |
Dealer incentive liability | 261 | 203 |
Net cash used in operating activities | (1,057) | (1,471) |
Investing activities: | ||
Purchases of property, plant and equipment | (863) | (1,717) |
Issuance of notes receivable | (1,561) | (5,708) |
Notes receivable collections | 5,046 | 76 |
Collections from purchased loans | 132 | 1,222 |
Net cash provided by (used in) investing activities | 2,754 | (6,127) |
Financing activities: | ||
Proceeds from other liabilities | 2,706 | |
Proceeds from lines of credit | 20,331 | 22,667 |
Payments on lines of credit | (23,248) | (13,429) |
Net cash provided by (used in) financing activities | (211) | 9,238 |
Net increase in cash and cash equivalents | 1,486 | 1,640 |
Cash and cash equivalents at beginning of period | 1,042 | 768 |
Cash and cash equivalents at end of period | 2,528 | 2,408 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 44 | 206 |
Cash paid for taxes | $ 3,064 | $ 2,900 |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Treasury stock | Additional paid-in-capital | Retained earnings | Total |
Beginning Balance at Dec. 31, 2020 | $ 25 | $ (4,477) | $ 175,293 | $ 88,352 | $ 259,193 |
Beginning Balance (in shares) at Dec. 31, 2020 | 24,639,125 | ||||
Share based compensation expense and stock units vested | 44 | 44 | |||
Share based compensation expense and stock units vested (in shares) | 8,571 | ||||
Net income | 10,701 | 10,701 | |||
Ending Balance at Mar. 31, 2021 | $ 25 | (4,477) | 175,337 | 99,053 | 269,938 |
Ending Balance (in shares) at Mar. 31, 2021 | 24,647,696 | ||||
Beginning Balance at Dec. 31, 2021 | $ 25 | (4,477) | 175,623 | 138,223 | $ 309,394 |
Beginning Balance (in shares) at Dec. 31, 2021 | 24,654,621 | 24,654,621 | |||
Share based compensation expense and stock units vested | $ 4 | 4,003 | $ 4,007 | ||
Share based compensation expense and stock units vested (in shares) | 158,571 | ||||
Net income | 16,092 | 16,092 | |||
Ending Balance at Mar. 31, 2022 | $ 29 | $ (4,477) | $ 179,626 | $ 154,315 | $ 329,493 |
Ending Balance (in shares) at Mar. 31, 2022 | 24,813,192 | 24,851,085 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 3 Months Ended |
Mar. 31, 2022 | |
NATURE OF OPERATIONS | |
NATURE OF OPERATIONS | 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 dealers and mobile home parks. In December 2018, the Company sold 4,000,000 shares of its common stock through an initial public offering (“IPO”) at $12.00 per share. Proceeds from the IPO, net of $4,504 of underwriting discounts and offering expenses paid by the Company, were $43,492. In January 2019, the Company sold an additional 600,000 shares of its common stock as part of the IPO at $12.00 per share. Proceeds from the January 2019 issuance, net of $505 of underwriting discounts and offering expenses paid by the Company, were $6,695. On April 17, 2019, the Company purchased 300,000 shares of its common stock at the price of $10.20 per share, pursuant to the Company’s repurchase program. During the year ended December 31, 2020, the Company purchased 145,065 shares of its common stock at an average price of $9.77 per share, pursuant to the Company’s repurchase program. Under the repurchase program, the Company may purchase up to $10,000 of its common stock. Share purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice. Corporate Conversion Effective January 1, 2018, the Partnership converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Legacy Housing Corporation. In order to consummate the corporate conversion completed on January 1, 2018, a certificate of conversion was filed with the Secretary of State of the State of Delaware and with the Secretary of State of the State of Texas. Holders of partnership interests in Legacy Housing, Ltd. received an initial allocation, on a proportional basis, of 20,000,000 shares of common stock of Legacy Housing Corporation. Following the corporate conversion, Legacy Housing Corporation continues to hold all property and assets of Legacy Housing, Ltd. and all of the debts and obligations of Legacy Housing, Ltd. On the effective date of the corporate conversion, the officers of Legacy Housing, Ltd. became the officers of Legacy Housing Corporation. As a result of the corporate conversion, the Company is now a federal corporate taxpayer. Basis of Presentation The accompanying unaudited interim condensed financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") as required by Regulation S-X, Rule 8-03. In the opinion of management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company's financial position for the periods presented. The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or any other period. The accompanying balance sheet as of December 31, 2021 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2021 (the "Form 10-K"). The accompanying financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the Form 10-K. Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net income. Restatement of Previously Issued Condensed Financial Statements (unaudited) As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company has restated its interim financial statements for the period ended March 31, 2021 to correct (i) an overstatement of costs errantly assigned to accounts payable for inventory received but not invoiced, (ii) a reclassification between prepaid expenses and other current assets and other assets, (iii) a reclassification between prepaid expenses and other current assets and lines of credit, and (iv) a change in accrued liabilities and income tax expense. The effects of the restatement on the line items within the Company’s condensed statement of operations for the three months ended March 31, 2021 were as follows: Three Months Ended March 31, 2021 As Originally As Reported Adjustments Restated Operating expenses: Cost of product sale $ 24,024 $ (2,023) $ 22,001 Income from operations $ 10,660 $ 2,023 $ 12,683 Income before income tax expense $ 10,886 $ 2,023 $ 12,909 Income tax expense $ (1,862) $ (346) $ (2,208) Net income $ 9,024 $ 1,677 $ 10,701 Net income per share: Basic $ 0.37 $ 0.07 $ 0.44 Diluted $ 0.37 $ 0.07 $ 0.44 The effects of the restatement on the line items within the Company’s condensed statement of cash flows for the three months ended March 31, 2021 were as follows: Three months March 31, 2021 As Originally As Reported Adjustments Restated Operating activities: Net income $ 9,024 $ 1,677 $ 10,701 Inventories $ (3,502) $ — $ (3,502) Prepaid expenses and other current assets $ (433) $ 553 $ 120 Other assets $ (5) $ (332) $ (337) Accounts payable $ (775) $ (2,023) $ (2,798) Accrued liabilities $ (1,183) $ 346 $ (837) Net cash provided by (used in) operating activities $ (1,692) $ 221 $ (1,471) Investing activities: Purchases of property, plant and equipment $ (1,717) $ — $ (1,717) Net cash used in investing activities $ (6,127) $ — $ (6,127) Financing activities: Payments on lines of credit $ (13,208) $ (221) $ (13,429) Net cash provided by (used in) financing activities $ 9,459 $ (221) $ 9,238 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. Material estimates that are susceptible to significant change in the near term primarily relate to the determination of accounts receivable, loans to mobile home parks, consumer loans, other notes receivable, inventory obsolescence, income taxes, fair value of financial instruments and contingent liabilities. Actual results could differ from these estimates. Revenue Recognition Product sales Revenue from product sales is recognized at a point in time 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 customer. For 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 separately recorded 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 expenses in the statements of income. For the three months ended March 31, 2022 and 2021, sales to an independent third-party and its affiliates accounted for $3,134 or 6.1% and $2,664 or 8.3% of our product sales, respectively. For the three months ended March 31, 2022 and 2021, total cost of product sales included $2,999 and $2,182 of costs relating to subcontracted production for commercial sales, reimbursed dealer expenses for consignment sales, and certain other similar costs incurred for retail store and commercial sales Other revenue 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 are 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. Disaggregation of Revenue Three months ended March 31, 2022 2021 Product sales: Direct sales $ 10,863 $ 3,422 Commercial sales 14,059 12,318 Consignment sales 20,040 10,599 Retail store sales 4,160 3,321 Other (1) 2,665 2,614 Total product sales 51,787 32,274 Consumer and MHP loans interest: Interest - consumer installment notes 4,457 4,143 Interest - MHP notes 2,308 2,495 Total consumer and MHP loans interest 6,765 6,638 Other 1,376 1,028 Total net revenue $ 59,928 $ 39,940 (1) Other product sales revenue from ancillary products and services including parts, freight and other services Share-Based Compensation The Company accounts for share-based compensation in accordance with the provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation 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 unit (the ”RSU”) 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 each RSU with market based conditions is estimated using the Monte-Carlo Simulation valuation model. 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. As a recently formed public entity with a small public float and limited trading of its common shares on the NASDAQ Global Market, it was not practicable for the Company to estimate the volatility of its common shares; therefore, management estimated volatility based on the historical volatilities of a small group of companies considered as close to comparable to the Company as available, all equally weighted, over the expected life of the option. Management concluded that this group is more characteristic of the Company’s business than a broad industry index. 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. The Company does not expect to pay dividends on its common stock. The fair value of RSU awards with market based conditions on the date of grant is estimated using the Monte-Carlo Simulation valuation model, and the Company uses the following methods to determine its underlying assumptions: expected volatilities are based on the Company’s historic stock price volatility; the expected term of the awards is based on performance measurement period; the risk-free interest rate is based on the U.S. Treasury bond yield issued with similar life terms to the expected life of the grant. The Company does not expect to pay dividends on its common stock. Accounts Receivable Included in accounts receivable “net” are receivables from direct sales of mobile homes, sales of parts and supplies to customers, consignment fees and interest. Accounts receivable “dealer financed” are receivables for interest, fees and curtailments owed from dealers under their inventory finance agreements. Accounts receivables “net” are generally due within 30 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts receivables “dealer financed” are due upon receipt and are 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 March 31, 2022 and December 31, 2021, the allowance for doubtful accounts totaled $375 and $343, respectively. 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 title for the mobile homes remains with the Company. The standard lease agreement is typically for 96 months or 120 months. Under the lease arrangement, the lessee (mobile home park operator) uses the mobile homes as personal property to be rented as a residence at the lessee's mobile home park. The lessee makes monthly, periodic lease payments to the Company over the term of the lease. The lessee is responsible for maintaining the homes during the term of the lease. The lessee is also responsible for repairing all damages caused by force majeure events even in cases of total or partial loss of the property. At the end of the lease term or in the event of default, the lessee is required to deliver to the Company the homes with all improvements in good repair and condition in substantially the same condition as existed at the commencement of the lease. The lessee may terminate the lease with 30 days written notice to the Company and pay a lease termination fee equal to 10% of the remaining lease payments or six month’s rent, whichever is greater. The lessee has an option to purchase the homes at the end of the lease term for fair market value based on an agreed upon determination of fair market value by both parties using comparable sales, recent appraisal, or NADA official guidance. The lessee must provide the Company with 30 days written notice prior to expiration of the lease of intent to purchase the property for fair market value. The lease also includes a renewal option whereby the lessee has the option to extend the lease for an additional 48 months (the extended term) at the same terms and conditions as the original lease. The lessee must notify the Company of the intent to exercise the renewal extension option not less than six months prior to expiration of the lease term. 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 will be sold by the Company through its standard sales and distribution channels. Future minimum lease income under all operating leases for each of the next five years at March 31, 2022, are as follows: 2022 $ 1,563 2023 2,091 2024 2,091 2025 2,091 2026 2,091 Thereafter 4,685 Total $ 14,612 Recent Accounting Pronouncements The Company has elected to use longer phase-in periods for the adoption of new or revised financial accounting standards under the JOBS Act as an emerging growth company. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) liabilities In June 2016, the FASB issued ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments 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. |
CONSUMER LOANS
CONSUMER LOANS | 3 Months Ended |
Mar. 31, 2022 | |
CONSUMER LOANS | |
CONSUMER LOANS | 2. CONSUMER LOANS Consumer loans 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 13.5% as of March 31, 2022 and December 31, 2021, respectively. Consumer loans receivable have maturities that range from 3 to 30 years. Loan applications go through an underwriting process that considers credit history to evaluate credit risk of the consumer. Interest rates on approved loans are determined 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 $9,142 and $9,350 as of March 31, 2022 and December 31, 2021, respectively, and are included in escrow liability in the condensed balance sheets. 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 condensed 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 loss rate for the last three years, adjusted for the estimated loss discovery period 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 is when either principal or interest is past due and remains unpaid for more than 90 days or other indications of distress. 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 where it is probable 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 are: (1) the length of time the unit was unsold after construction; (2) the amount of time the house was occupied; (3) the cooperation level of the borrowers, i.e., loans requiring legal action or extensive field collection efforts; (4) units located on private property as opposed to a manufactured home park; (5) the length of time the borrower has lived in the house without making payments; (6) location, size, 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 fair value of the collateral is 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 totaled $793 and $517 as of March 31, 2022 and December 31, 2021, respectively, and are included in other assets in the condensed balance sheets. Consumer loans receivable, net of allowance for loan losses and deferred financing fees, consists of the following: As of March 31, As of December 31, 2022 2021 Consumer loans receivable $ 130,539 $ 129,119 Loan discount and deferred financing fees (2,556) (2,612) Allowance for loan losses (724) (884) Consumer loans receivable, net $ 127,259 $ 125,623 The following table presents a detail of the activity in the allowance for loan losses: Three Months Ended March 31, 2022 2021 Allowance for loan losses, beginning of period $ 884 $ 905 Provision for loan losses (309) 535 Charge offs (recoveries) 149 (513) Allowance for loan losses $ 724 $ 927 The reserve for loan losses consists of the following: As of March 31, As of December 31, 2022 2021 Total consumer loans $ 130,539 $ 129,119 Allowance for loan losses $ 724 $ 884 Impaired loans individually evaluated for impairment $ 1,274 $ 1,239 Specific reserve against impaired loans $ 452 $ 533 Other loans collectively evaluated for allowance $ 129,265 $ 127,880 General allowance for loan losses $ 272 $ 351 As of March 31, 2022 and December 31, 2021, the total principal outstanding for consumer loans on nonaccrual status was $1,274 and $1,239, respectively. A detailed aging of consumer loans receivable that are past due as of March 31, 2022 and December 31, 2021 were as follows: As of March 31, As of December 31, 2022 % 2021 % Total consumer loans receivable $ 130,539 100.0 $ 129,119 100.0 Past due consumer loans: 31 - 60 days past due $ 243 0.2 $ 594 0.5 61 - 90 days past due 111 0.1 407 0.3 91 - 120 days past due 109 0.1 114 0.1 Greater than 120 days past due 1,071 0.8 967 0.7 Total past due $ 1,534 1.2 $ 2,082 1.6 |
NOTES RECEIVABLE FROM MOBILE HO
NOTES RECEIVABLE FROM MOBILE HOME PARKS | 3 Months Ended |
Mar. 31, 2022 | |
NOTES RECEIVABLE FROM MOBILE HOME PARKS | |
NOTES RECEIVABLE FROM MOBILE HOME PARKS | 3. 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 call for monthly principal and interest payments. The interest rate on the MHP Notes can be fixed or variable. Approximately $98 million of the MHP Notes have a fixed interest rate ranging from 6.9% to 8.9%. The remaining MHP Notes have a variable rate typically set at 4.0% above prime with a minimum of 8.0%. The average interest rate per loan was approximately 7.7% and 7.6% as of March 31, 2022 and December 31, 2021, respectively, with maturities that range from 1 to 18 years. The collateral underlying the MHP Notes are individual mobile homes which can be repossessed and resold. The MHP Notes are generally guaranteed by the borrowers personally. As of March 31, 2022, the Company had concentrations of MHP Notes with two independent third-parties and their respective affiliates that equaled 29.1% and 12.9% of the principal balance outstanding, all of which was secured by the mobile homes. As of December 31, 2021, the Company had concentrations of MHP Notes with two independent third-parties and their respective affiliates that equaled 30.1% and 10.4% of the principal balance outstanding, all of which was secured by the mobile homesrespectively. 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 reserve composed of specific and general reserve amounts. As of March 31, 2022 and December 31, 2021, the MHP Note balance is presented net of unamortized finance fees of $591 and $445, respectively. The finance fees are amortized over the life of the MHP Notes. There were minimal past due balances on the MHP Notes as of March 31, 2022 and December 31, 2021 and no charge offs were recorded for MHP Notes during the three months ended March 31, 2022 and 2021, respectively. Allowance for loan loss is considered immaterial and accordingly no loss is recorded against the MHP Notes as of March 31, 2022 and December 31, 2021. There were no impaired MHP Notes as of March 31, 2022 and December 31, 2021, respectively, and there were no repossessed homes balances as of March 31, 2022 and December 31, 2021, 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. |
OTHER NOTES RECEIVABLE
OTHER NOTES RECEIVABLE | 3 Months Ended |
Mar. 31, 2022 | |
OTHER NOTES RECEIVABLE | |
OTHER NOTES RECEIVABLE | 4. OTHER NOTES RECEIVABLE Other notes receivable relate to various notes issued to mobile home park owners and dealers, which are not directly tied to sales of mobile homes. The other notes have varying maturity dates and call for monthly principal and interest payments. The other notes are collateralized by mortgages on real estate, units being financed and used as offices, as well as vehicles, and are typically guaranteed by the borrowers personally. The interest rate on the other notes are fixed and range from 5.00% to 12.00%. 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. There were no past due balances for other notes as of March 31, 2022 and December 31, 2021, respectively, and there were no impaired balances for other notes as of March 31, 2022 and December 31, 2021, respectively. The balance outstanding on the other notes receivable were as follows: As of March 31, As of December 31, 2022 2021 Outstanding principal balance $ 38,800 $ 42,074 Allowance for loan losses (52) (74) Total $ 38,748 $ 42,000 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2022 | |
LEASES | |
LEASES | 5. The Company currently has 13 operating leases, 8 of which are for the Company’s Heritage Housing and Tiny Homes retail locations, three which are subleased by the Company and two are 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, a modified retrospective transition is required, applying the new standard to all leases at the date of initial application. The Company chose to use the adoption date of January 1, 2022 for ASC 842. As such, all periods presented after January 1, 2022, are under ASC 842 whereas periods presented prior to January 1, 2022, are in accordance with prior lease accounting of ASC 840. Financial information was not updated and the disclosures required under ASC 842 were not provided for dates and periods before January 1, 2022. We determine if an arrangement is a lease at inception. Operating leases are right-of-use (“ROU”) assets and are shown as ROU assets – operating leases on our Condensed Balance Sheet. The lease liabilities are shown as Operating lease obligation and Operating lease obligation, less current portion on our Condensed Balance Sheet. 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 certain at 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 we are reasonably certain 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 have to pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment. The remaining weighted-average lease term is 5.2 years and the weighted-average discount rate is 2.12%. 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 three months ended March 31, 2022. Short-term leases, those with a term of 12 months or less, are not recorded on our Condensed Balance Sheet. Our short-term lease costs were not material for the three months ended March 31, 2022. As of March 31, 2022, future minimum lease payments under our operating lease liabilities were as follows: 2022 $ 522 2023 709 2024 644 2025 608 2026 546 Thereafter 429 Total lease payments $ 3,458 Less amount representing interest (100) Total lease liability $ 3,358 Less current lease liability (652) Total non-current lease liability $ 2,706 |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2022 | |
INVENTORIES | |
INVENTORIES | 6 Inventories consists of the following: As of March 31, As of December 31, 2022 2021 Raw materials $ 19,199 $ 15,431 Work in progress 799 714 Finished goods (1) 31,825 28,195 Allowance for obsolescence (302) (432) Total $ 51,521 $ 43,908 (1) Finished goods includes $3,738 and $2,678 as of March 31, 2022 and December 31, 2021, respectively , held for more than twelve months and classified as long-term. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 7 Property, plant and equipment consists of the following: As of March 31, As of December 31, 2022 2021 Land $ 14,949 $ 14,949 Buildings and leasehold improvements 13,863 13,722 Vehicles 1,702 1,682 Machinery and equipment 5,841 5,058 Furniture and fixtures 300 298 Total 36,655 35,709 Less accumulated depreciation (8,639) (8,193) Total property, plant and equipment $ 28,016 $ 27,516 Depreciation expense was $260 with $121 included as a component of cost of product sales for the three months ended March 31, 2022 and $264 with $104 included as a component of cost of product sales for the three months ended March 31, 2021. |
OTHER ASSETS
OTHER ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
OTHER ASSETS. | |
OTHER ASSETS | 8. OTHER ASSETS Other assets consists of the following: As of March 31, As of December 31, 2022 2021 Prepaid rent $ 355 $ 248 Other 332 332 Repossessed homes 793 517 Total $ 1,480 $ 1,097 Depreciation expense for the leased property was $170 and $98 for the three months ended March 31, 2022 and 2021, respectively. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED LIABILITIES. | |
ACCRUED LIABILITIES | 9 Accrued liabilities consists of the following: As of March 31, As of December 31, 2022 2021 Warranty reserve $ 2,047 $ 2,876 Litigation reserve 2,707 2,764 Payroll 2,399 1,685 Portfolio taxes and title 2,399 2,467 Property tax 233 546 Dealer rebates 838 1,160 Sales tax 66 310 Federal and state income taxes 7,939 7,445 Other 1,370 1,433 Total accrued liabilities $ 19,998 $ 20,686 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2022 | |
DEBT | |
DEBT | 10 Lines of Credit Revolver 1 At December 31, 2019, the Company had a revolving line of credit (“Revolver 1”) with Capital One, N.A. with a maximum credit limit of $45,000 and a maturity date of May 11, 2020. On March 30, 2020, the Company entered into an agreement with Capital One, N.A. to replace Revolver 1 with a new revolving line of credit (“New Revolver”). The New Revolver has a maximum credit limit of $70,000 and a maturity date of March 30, 2024. For the period January 1, 2020 through March 30, 2020, Revolver 1 accrued interest at one-month LIBOR plus 2.40%. Amounts available under Revolver 1 were subject to a formula based on eligible consumer loans and MHP Notes and were secured by all accounts receivable, consumer loans and MHP Notes. The New Revolver accrues interest at one-month LIBOR plus 2.00%. The interest rate in effect as of March 31, 2022 and December 31, 2021 was 2.23% and 2.10%, respectively. As with Revolver 1, amounts available under the New Revolver are subject to a formula based on eligible consumer loans and MHP Notes and are secured by all accounts receivable, consumer loans and MHP Notes. The amount of available credit under the New Revolver was $64,923 and $61,841 as of March 31, 2022 and December 31, 2021, respectively. In connection with the New Revolver, the Company paid certain arrangement fees and other fees of approximately $295, which were capitalized as unamortized debt issuance costs and will be amortized to interest expense over the life of the New Revolver. For the three months ended March 31, 2022 and 2021, interest expense under the New Revolver was $56 and $226, respectively. The outstanding balance as of March 31, 2022 and December 31, 2021 was $5,224 and $8,159, respectively. The New Revolver requires the Company to comply with certain financial and non-financial covenants. As of March 31, 2022, the Company was in compliance with all financial covenants, including that it maintain a tangible net worth of at least $120,000 and that it maintain a ratio of debt to EBITDA of 4 to 1, or less. As of March 31, 2022, the Company was not in compliance with certain non-financial covenants and obtained a waiver from Capital One. PILOT Agreement In December 2016, the Company entered into a Payment in Lieu of Taxes (“PILOT”) agreement commonly offered in Georgia by local community development programs to encourage industry development. The net effect of the PILOT agreement is to provide the Company with incentives through the abatement of local, city and county property taxes and to provide financing for improvements to the Company’s Georgia plant (the “Project”). In connection with the PILOT agreement, the Putman County Development Authority provides a credit facility for up to $10,000, which can be drawn upon to fund Project improvements and capital expenditures as defined in the agreement. If funds are drawn, the Company would pay transaction costs and debt service payments. The PILOT agreement requires interest payments of 6.00% per annum on outstanding balances, which are due each December 1st through maturity on December 1, 2021, at which time all unpaid principal and interest are due. The PILOT agreement is collateralized by the assets of the Project. As of March 31, 2022, the Company had not drawn on this credit facility. |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
SHARE BASED COMPENSATION | |
SHARE BASED COMPENSATION | 11. SHARE-BASED COMPENSATION Pursuant to the Legacy Housing Corporation 2018 Incentive Compensation Plan (the “Compensation 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 and stock appreciation rights. Stock options may be granted with a contractual life of up to ten years. At March 31, 2022, the Company had 9.2 million shares available for grant under the Compensation Plan. In February 2019, the Company granted 120,000 restricted shares of its common stock to members of senior management. The shares were granted on February 7, 2019 and had a grant date fair value of $1,636. The shares vest at a rate of 14.3% annually, beginning on February 7, 2019, and becoming fully vested on February 7, 2025. During the second quarter of 2020, 42,857 of these restricted shares were forfeited due to the departure of a member of senior management. In December 2020, the Company granted 2,022 restricted shares of its common stock to the independent directors on the Company’s Board of Directors. The shares were granted on December 2, 2020 and had a grant date fair value of $30. The shares become fully vested on October 4, 2021. In November 2021, the Company granted 1,202 restricted shares of its common stock to the independent directors on the Company’s Board of Directors. The shares were granted on November 30, 2021 and had a grant date fair value of $30. The shares become fully vested on October 24, 2022. In January 2022, the Company granted 150,000 restricted shares of its common stock to the Executive Chairman of the Company pursuant to an amended and restated employment agreement. The shares were granted on January 6, 2022 and had a grant date fair value of $3,741. The shares became fully vested upon grant. On January 6, 2022, the Company gave contingent equity awards of 350,000 shares of the Company’s restricted stock to the Executive Chairman of the Company pursuant to an amended and restated employment agreement. An equity award of 175,000 shares will be granted if the Company’s stock price reaches and remains for a period of fifteen fifteen The following is a summary of restricted stock units (the “RSU”) activity (in thousands, except per unit data): Number of Units Weighted Average Grant Date Fair Value Per Unit Nonvested, January 1, 2022 35 $ 14.01 Granted 500 $ 11.67 Vested (158) $ 24.33 Nonvested, March 31, 2022 377 $ 6.57 As of March 31, 2022, approximately 377,000 RSUs remained unvested. Unrecognized compensation expense related to these RSUs at March 31, 2022 was $2,238 and is expected to be recognized over 2.30 years. The Company granted 34,626 incentive stock options to a member of senior management. The options were granted on August 10, 2020 at an exercise price of $14.44 per share. The options vest at a rate of 20.0% annually, beginning on August 10, 2021, and becoming fully vested on August 10, 2025. All options expire ten years after the date of grant. Weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows: risk free interest rate of 0.24%; dividend yield of 0.00%; expected volatility of common stock of 75.0% and expected life of options of 6.5 years. During the first quarter of 2022, 27,701 of these options were forfeited due to the departure of the senior manager. The Company granted 55,490 incentive stock options to a member of management. The options were granted on September 23, 2021 at an exercise price of $18.02 per share. The options vest at a rate of 10.0% annually, beginning on September 23, 2022, and becoming fully vested on September 23, 2031. All options expire ten years after the date of grant. Weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows: risk free interest rate of 1.41%; dividend yield of 0.00%; expected volatility of common stock of 75.0% and expected life of options of 7.8 years. The following is a summary of option activity (in thousands, except per unit data): Number of Units Weighted Average Exercise Price Per Unit Weighted Average Grant Date Fair Value Per Unit Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding, January 1, 2022, nonvested 83 $ 16.83 $ 12.27 9.36 Granted — $ — $ — — Exercised — $ — $ — — Forfeited (28) 14.44 8.67 — Outstanding, March 31, 2022, nonvested 55 $ 18.02 $ 14.07 9.49 $ 191 Exercisable, March 31, 2022 — $ — $ — — $ — As of March 31, 2022, approximately 55,000 options remained nonvested. Unrecognized compensation expense related to these options at March 31, 2022 was $740 and is expected to be recognized over 9.49 years. On March 31, 2020, the Company filed a registration statement on Form S-8 to register with the SEC approximately 2.3 million shares of Legacy common stock available for issuance under the 2018 Incentive Compensation Plan. The registration statement became effective upon filing. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES The provision for income tax expense for the three months ended March 31, 2022 and 2021 was $3,558 and $2,208, respectively. The effective tax rate for the three months ended March 31, 2022 was 18.1% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and partially offset by state income taxes. The effective tax rate for the three months ended March 31, 2021 was 17.1% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and partially offset by state income taxes. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES As of January 1, 2020, the Company instituted a self-insured health benefits plan with a stop-loss policy, 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. At March 31, 2022 and December 31, 2021, the Company accrued a $326 and $373, respectively, liability for incurred but not reported claims. 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 maximum amount for which the Company was liable under such agreements totaled $14,749 and $4,908 at March 31, 2022 and December 31, 2021, respectively, without reduction for the resale value of the homes. The Company considers its obligations on current contracts to be insignificant and accordingly have not recorded any reserve for repurchase commitment as of March 31, 2022 and December 31, 2021. Leases. 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 $2,707 and $2,764 as of March 31, 2022 and December 31, 2021, 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. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2022 | |
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 14. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Derivative Financial Instruments On February 2, 2012, the Company entered into a master interest rate swap agreement. The Company elected not to designate the interest rate swap agreements as cash flow hedges and, therefore, gains or losses on the agreements as well as the other offsetting gains or losses on the hedged items attributable to the hedged risk are recognized in current earnings. ASC 815-10, Derivatives and Hedging The Company entered into interest rate swap agreement with Capital One Bank on June 12, 2017 to fix the variable rate portion for Fair Value Measurements The Company accounts for its investments and derivative instruments in accordance with ASC 820-10, Fair Value Measurement, Fair Value Measurement 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; (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 has used derivatives to manage risks related to interest rate movements. The Company does not enter into derivative contracts for speculative purposes. Interest rate swap contracts are recognized as assets or liabilities on the balance sheets and are measured at fair value. The fair value was calculated and provided by the lender, a Level II valuation technique. Management reviewed the fair values for the instruments as provided by the lender and determined the related asset and liability to be an accurate estimate of future gains and losses to the Company. The Company is not a party to any interest rate swaps as of March 31, 2022. Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, consumer loans, MHP Notes, other note receivables, accounts payable, lines of credit, notes payable, and dealer portion of consumer loans. The carrying amounts of cash and cash equivalents, 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, notes payable, part of the MHP Notes and part of the other note 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. The Company determined that the fair value of the consumer loan portfolio was approximately $127,600 compared to the book value of $127,259 as of March 31, 2022, and a fair value of approximately $125,600 compared to the book value of $125,623 as of December 31, 2021. The Company determined that the fair value of the fixed rate MHP Notes was approximately $92,000 compared to the book value of $97,782 as of March 31, 2022, and a fair value of approximately $83,000 compared to the book value of $83,773 as of December 31, 2021. The Company determined that the fair value of the other notes was approximately $33,300 compared to the book value of $38,748 as of March 31, 2022, and a fair value of approximately $38,500 compared to the book value of $38,886 as of December 31, 2021. This is a Level III valuation technique. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 15. EARNINGS PER SHARE Basic earnings per common share (“EPS”) is computed based on the weighted-average number of common shares outstanding during each reporting period. 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. Three months ended March 31, 2022 2021 Numerator: Net income (in 000's) $ 16,092 $ 10,701 Denominator: Basic weighted-average common shares outstanding 24,351,223 24,199,107 Effect of dilutive securities: Restricted stock grants 267,515 5,126 Stock options 42,688 6,949 Diluted weighted-average common shares outstanding 24,661,426 24,211,182 Earnings per share attributable to Legacy Housing Corporation Basic $ 0.66 $ 0.44 Diluted $ 0.65 $ 0.44 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS Bell Mobile Homes, a retailer owned by one of the Company’s significant owners, purchases manufactured homes from the Company. Accounts receivable balances due from Bell Mobile Homes were $139 and $1 as of March 31, 2022 and December 31, 2021, respectively. Accounts payable balances due to Bell Mobile Homes for maintenance and related services were $69 and $49 as of March 31, 2022 and December 31, 2021, respectively. Home sales to Bell Mobile Homes were $632 and $699 for the three months ended March 31, 2022 and 2021, respectively. Shipley Bros., Ltd. (“Shipley Bros.”), a retailer owned by one of the Company’s significant shareholders, purchases manufactured homes from the Company. Accounts receivable balances due from Shipley Bros. were $424 and zero as of March 31, 2022 and December 31, 2021, respectively. Home sales to Shipley Bros. were $693 and $914 for the three months ended March 31, 2022 and 2021, respectively. There were no accounts payable balances due to Shipley Bros. as of March 31, 2022 and December 31, 2021, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS On May 30, 2022, the Company submitted to Nasdaq a plan to regain compliance with Nasdaq Listing Rule 5250(c)(1) (the “Rule”) regarding the Company’s failure to file timely Form 10-K for the year ended December 31, 2021 and Form 10-Q for the period ended March 31, 2022. On June 9, 2022, the Company received a response from Nasdaq informing the Company that Nasdaq granted an exception to the filing requirements set forth in the Rule that allows the Company to file these reports and any other required filings as required by the Rule on or before September 27, 2022. On August 3, 2022, the Company filed Form 10-K for the year ended December 31, 2021. On August 11, 2022, the Company received notice from Nasdaq regarding the Company’s failure to file timely Form 10-Q for the period ending June 30, 2022. As a result of this delinquency, the Company must submit an update to its original plan to regain compliance with the Rule. The updated plan must be submitted to Nasdaq by September 12, 2022. On June 7, 2022, the Company entered into an employment agreement (the “Employment Agreement”) with Duncan Bates, to serve as President and Chief Executive Officer of the Company. The Employment Agreement provides for a term that commences on June 7, 2022 and expires on June 7, 2027 (the “Initial Employment Period”). The Employment Agreement provides for Mr. Bates to receive a base salary of $300 per year and a signing bonus of 14,700 shares of restricted stock, which shall vest 50% on June 7, 2023 and 50% on June 7, 2024. Mr. Bates also received 62,460 incentive stock options, an option to purchase 300,000 shares of the Company’s common stock at an exercise price of $36 per share and an option to purchase 600,000 shares of the Company’s common stock at an exercise price of $48 per share. The incentive stock options have an exercise price of $16.01 per share. The incentive stock options and the options to purchase shares vest at a rate of 10.0% annually, beginning on June 7, 2023, becoming fully vested on June 7, 2032. On June 7, 2022, the Company granted 62,460 incentive stock options to Ronald Arrington, the Chief Financial Officer. The options were granted on June 7, 2022 at an exercise price of $16.01 per share. The options vest at a rate of 10.0% annually, beginning on June 7, 2023, and becoming fully vested on June 7, 2032. On June 21, 2022, the Company received a Reservation of Rights notice from Capital One, N.A. The letter stated that the Company’s New Revolver was in default. The default condition occurred due to the Company’s failure to timely file the Form 10-K and deliver certain financial statement to Capital One, N.A. On July 28, 2022, the Company executed a forbearance agreement with Capital One, N.A. On August 24, 2022, the Company received a Notice of Default and Partial Suspension of Loan Commitments from Capital One, N.A. The notice stated that the July 28, 2022 forbearance agreement had been terminated and that Capital One, N.A. was permitted to suspend loan commitment in the New Revolver. As a result, the available line of credit in the New Revolver is . The Company is not currently using any of the available credit under the New Revolver. In connection with the preparation of these financial statements, an evaluation of subsequent events was performed through the date of filing. The Company recently updated its management of escrow collections. Historically, escrow collections were deposited in an unsegregated deposit account subject to the Company's credit agreement with Capital One, N.A. On June 28, 2022, the Company segregated escrow collections by purchasing an $8.5M certificate of deposit that is not subject to the credit agreement. The certificate of deposit principal amount will be adjusted periodically. The Company will continue to hold escrow collections separately from its other operating funds where required by law. |
NATURE OF OPERATIONS (Policies)
NATURE OF OPERATIONS (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
NATURE OF OPERATIONS | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") as required by Regulation S-X, Rule 8-03. In the opinion of management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company's financial position for the periods presented. The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or any other period. The accompanying balance sheet as of December 31, 2021 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2021 (the "Form 10-K"). The accompanying financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the Form 10-K. Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net income. |
Restatement of Previously Issued Condensed Financial Statements (unaudited) | Restatement of Previously Issued Condensed Financial Statements (unaudited) As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company has restated its interim financial statements for the period ended March 31, 2021 to correct (i) an overstatement of costs errantly assigned to accounts payable for inventory received but not invoiced, (ii) a reclassification between prepaid expenses and other current assets and other assets, (iii) a reclassification between prepaid expenses and other current assets and lines of credit, and (iv) a change in accrued liabilities and income tax expense. The effects of the restatement on the line items within the Company’s condensed statement of operations for the three months ended March 31, 2021 were as follows: Three Months Ended March 31, 2021 As Originally As Reported Adjustments Restated Operating expenses: Cost of product sale $ 24,024 $ (2,023) $ 22,001 Income from operations $ 10,660 $ 2,023 $ 12,683 Income before income tax expense $ 10,886 $ 2,023 $ 12,909 Income tax expense $ (1,862) $ (346) $ (2,208) Net income $ 9,024 $ 1,677 $ 10,701 Net income per share: Basic $ 0.37 $ 0.07 $ 0.44 Diluted $ 0.37 $ 0.07 $ 0.44 The effects of the restatement on the line items within the Company’s condensed statement of cash flows for the three months ended March 31, 2021 were as follows: Three months March 31, 2021 As Originally As Reported Adjustments Restated Operating activities: Net income $ 9,024 $ 1,677 $ 10,701 Inventories $ (3,502) $ — $ (3,502) Prepaid expenses and other current assets $ (433) $ 553 $ 120 Other assets $ (5) $ (332) $ (337) Accounts payable $ (775) $ (2,023) $ (2,798) Accrued liabilities $ (1,183) $ 346 $ (837) Net cash provided by (used in) operating activities $ (1,692) $ 221 $ (1,471) Investing activities: Purchases of property, plant and equipment $ (1,717) $ — $ (1,717) Net cash used in investing activities $ (6,127) $ — $ (6,127) Financing activities: Payments on lines of credit $ (13,208) $ (221) $ (13,429) Net cash provided by (used in) financing activities $ 9,459 $ (221) $ 9,238 |
Use of Estimates | 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. Material estimates that are susceptible to significant change in the near term primarily relate to the determination of accounts receivable, loans to mobile home parks, consumer loans, other notes receivable, inventory obsolescence, income taxes, fair value of financial instruments and contingent liabilities. Actual results could differ from these estimates. |
Revenue Recognition | Revenue Recognition Product sales Revenue from product sales is recognized at a point in time 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 customer. For 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 separately recorded 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 expenses in the statements of income. For the three months ended March 31, 2022 and 2021, sales to an independent third-party and its affiliates accounted for $3,134 or 6.1% and $2,664 or 8.3% of our product sales, respectively. For the three months ended March 31, 2022 and 2021, total cost of product sales included $2,999 and $2,182 of costs relating to subcontracted production for commercial sales, reimbursed dealer expenses for consignment sales, and certain other similar costs incurred for retail store and commercial sales Other revenue 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 are 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. Disaggregation of Revenue Three months ended March 31, 2022 2021 Product sales: Direct sales $ 10,863 $ 3,422 Commercial sales 14,059 12,318 Consignment sales 20,040 10,599 Retail store sales 4,160 3,321 Other (1) 2,665 2,614 Total product sales 51,787 32,274 Consumer and MHP loans interest: Interest - consumer installment notes 4,457 4,143 Interest - MHP notes 2,308 2,495 Total consumer and MHP loans interest 6,765 6,638 Other 1,376 1,028 Total net revenue $ 59,928 $ 39,940 (1) Other product sales revenue from ancillary products and services including parts, freight and other services |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based compensation in accordance with the provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation 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 unit (the ”RSU”) 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 each RSU with market based conditions is estimated using the Monte-Carlo Simulation valuation model. 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. As a recently formed public entity with a small public float and limited trading of its common shares on the NASDAQ Global Market, it was not practicable for the Company to estimate the volatility of its common shares; therefore, management estimated volatility based on the historical volatilities of a small group of companies considered as close to comparable to the Company as available, all equally weighted, over the expected life of the option. Management concluded that this group is more characteristic of the Company’s business than a broad industry index. 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. The Company does not expect to pay dividends on its common stock. The fair value of RSU awards with market based conditions on the date of grant is estimated using the Monte-Carlo Simulation valuation model, and the Company uses the following methods to determine its underlying assumptions: expected volatilities are based on the Company’s historic stock price volatility; the expected term of the awards is based on performance measurement period; the risk-free interest rate is based on the U.S. Treasury bond yield issued with similar life terms to the expected life of the grant. The Company does not expect to pay dividends on its common stock. |
Accounts Receivable | Accounts Receivable Included in accounts receivable “net” are receivables from direct sales of mobile homes, sales of parts and supplies to customers, consignment fees and interest. Accounts receivable “dealer financed” are receivables for interest, fees and curtailments owed from dealers under their inventory finance agreements. Accounts receivables “net” are generally due within 30 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts receivables “dealer financed” are due upon receipt and are 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 March 31, 2022 and December 31, 2021, the allowance for doubtful accounts totaled $375 and $343, respectively. |
Leased Property | 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 title for the mobile homes remains with the Company. The standard lease agreement is typically for 96 months or 120 months. Under the lease arrangement, the lessee (mobile home park operator) uses the mobile homes as personal property to be rented as a residence at the lessee's mobile home park. The lessee makes monthly, periodic lease payments to the Company over the term of the lease. The lessee is responsible for maintaining the homes during the term of the lease. The lessee is also responsible for repairing all damages caused by force majeure events even in cases of total or partial loss of the property. At the end of the lease term or in the event of default, the lessee is required to deliver to the Company the homes with all improvements in good repair and condition in substantially the same condition as existed at the commencement of the lease. The lessee may terminate the lease with 30 days written notice to the Company and pay a lease termination fee equal to 10% of the remaining lease payments or six month’s rent, whichever is greater. The lessee has an option to purchase the homes at the end of the lease term for fair market value based on an agreed upon determination of fair market value by both parties using comparable sales, recent appraisal, or NADA official guidance. The lessee must provide the Company with 30 days written notice prior to expiration of the lease of intent to purchase the property for fair market value. The lease also includes a renewal option whereby the lessee has the option to extend the lease for an additional 48 months (the extended term) at the same terms and conditions as the original lease. The lessee must notify the Company of the intent to exercise the renewal extension option not less than six months prior to expiration of the lease term. 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 will be sold by the Company through its standard sales and distribution channels. Future minimum lease income under all operating leases for each of the next five years at March 31, 2022, are as follows: 2022 $ 1,563 2023 2,091 2024 2,091 2025 2,091 2026 2,091 Thereafter 4,685 Total $ 14,612 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has elected to use longer phase-in periods for the adoption of new or revised financial accounting standards under the JOBS Act as an emerging growth company. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) liabilities In June 2016, the FASB issued ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments 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. |
Fair Value Measurements | Fair Value Measurements The Company accounts for its investments and derivative instruments in accordance with ASC 820-10, Fair Value Measurement, Fair Value Measurement 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; (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 has used derivatives to manage risks related to interest rate movements. The Company does not enter into derivative contracts for speculative purposes. Interest rate swap contracts are recognized as assets or liabilities on the balance sheets and are measured at fair value. The fair value was calculated and provided by the lender, a Level II valuation technique. Management reviewed the fair values for the instruments as provided by the lender and determined the related asset and liability to be an accurate estimate of future gains and losses to the Company. The Company is not a party to any interest rate swaps as of March 31, 2022. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, consumer loans, MHP Notes, other note receivables, accounts payable, lines of credit, notes payable, and dealer portion of consumer loans. The carrying amounts of cash and cash equivalents, 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, notes payable, part of the MHP Notes and part of the other note 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. The Company determined that the fair value of the consumer loan portfolio was approximately $127,600 compared to the book value of $127,259 as of March 31, 2022, and a fair value of approximately $125,600 compared to the book value of $125,623 as of December 31, 2021. The Company determined that the fair value of the fixed rate MHP Notes was approximately $92,000 compared to the book value of $97,782 as of March 31, 2022, and a fair value of approximately $83,000 compared to the book value of $83,773 as of December 31, 2021. The Company determined that the fair value of the other notes was approximately $33,300 compared to the book value of $38,748 as of March 31, 2022, and a fair value of approximately $38,500 compared to the book value of $38,886 as of December 31, 2021. This is a Level III valuation technique. |
NATURE OF OPERATIONS (Tables)
NATURE OF OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
NATURE OF OPERATIONS | |
Schedule of restatement of previously issued condensed consolidated financial statements | The effects of the restatement on the line items within the Company’s condensed statement of operations for the three months ended March 31, 2021 were as follows: Three Months Ended March 31, 2021 As Originally As Reported Adjustments Restated Operating expenses: Cost of product sale $ 24,024 $ (2,023) $ 22,001 Income from operations $ 10,660 $ 2,023 $ 12,683 Income before income tax expense $ 10,886 $ 2,023 $ 12,909 Income tax expense $ (1,862) $ (346) $ (2,208) Net income $ 9,024 $ 1,677 $ 10,701 Net income per share: Basic $ 0.37 $ 0.07 $ 0.44 Diluted $ 0.37 $ 0.07 $ 0.44 The effects of the restatement on the line items within the Company’s condensed statement of cash flows for the three months ended March 31, 2021 were as follows: Three months March 31, 2021 As Originally As Reported Adjustments Restated Operating activities: Net income $ 9,024 $ 1,677 $ 10,701 Inventories $ (3,502) $ — $ (3,502) Prepaid expenses and other current assets $ (433) $ 553 $ 120 Other assets $ (5) $ (332) $ (337) Accounts payable $ (775) $ (2,023) $ (2,798) Accrued liabilities $ (1,183) $ 346 $ (837) Net cash provided by (used in) operating activities $ (1,692) $ 221 $ (1,471) Investing activities: Purchases of property, plant and equipment $ (1,717) $ — $ (1,717) Net cash used in investing activities $ (6,127) $ — $ (6,127) Financing activities: Payments on lines of credit $ (13,208) $ (221) $ (13,429) Net cash provided by (used in) financing activities $ 9,459 $ (221) $ 9,238 |
Schedule of disaggregation of revenue | Three months ended March 31, 2022 2021 Product sales: Direct sales $ 10,863 $ 3,422 Commercial sales 14,059 12,318 Consignment sales 20,040 10,599 Retail store sales 4,160 3,321 Other (1) 2,665 2,614 Total product sales 51,787 32,274 Consumer and MHP loans interest: Interest - consumer installment notes 4,457 4,143 Interest - MHP notes 2,308 2,495 Total consumer and MHP loans interest 6,765 6,638 Other 1,376 1,028 Total net revenue $ 59,928 $ 39,940 (1) Other product sales revenue from ancillary products and services including parts, freight and other services |
Schedule of future minimum lease income | 2022 $ 1,563 2023 2,091 2024 2,091 2025 2,091 2026 2,091 Thereafter 4,685 Total $ 14,612 |
CONSUMER LOANS (Tables)
CONSUMER LOANS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CONSUMER LOANS | |
Schedule of consumer loans, net of allowance for loan losses and deferred financing fees | As of March 31, As of December 31, 2022 2021 Consumer loans receivable $ 130,539 $ 129,119 Loan discount and deferred financing fees (2,556) (2,612) Allowance for loan losses (724) (884) Consumer loans receivable, net $ 127,259 $ 125,623 |
Schedule of allowance for loan losses | Three Months Ended March 31, 2022 2021 Allowance for loan losses, beginning of period $ 884 $ 905 Provision for loan losses (309) 535 Charge offs (recoveries) 149 (513) Allowance for loan losses $ 724 $ 927 |
Schedule of impaired and general reserve for allowance for loan losses | As of March 31, As of December 31, 2022 2021 Total consumer loans $ 130,539 $ 129,119 Allowance for loan losses $ 724 $ 884 Impaired loans individually evaluated for impairment $ 1,274 $ 1,239 Specific reserve against impaired loans $ 452 $ 533 Other loans collectively evaluated for allowance $ 129,265 $ 127,880 General allowance for loan losses $ 272 $ 351 |
Schedule of consumer loans receivable that are past due | As of March 31, As of December 31, 2022 % 2021 % Total consumer loans receivable $ 130,539 100.0 $ 129,119 100.0 Past due consumer loans: 31 - 60 days past due $ 243 0.2 $ 594 0.5 61 - 90 days past due 111 0.1 407 0.3 91 - 120 days past due 109 0.1 114 0.1 Greater than 120 days past due 1,071 0.8 967 0.7 Total past due $ 1,534 1.2 $ 2,082 1.6 |
OTHER NOTES RECEIVABLE (Tables)
OTHER NOTES RECEIVABLE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
OTHER NOTES RECEIVABLE | |
Schedule of other notes receivable, net of allowance for loan losses and deferred financing fees | As of March 31, As of December 31, 2022 2021 Outstanding principal balance $ 38,800 $ 42,074 Allowance for loan losses (52) (74) Total $ 38,748 $ 42,000 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
LEASES | |
Schedule of future minimum lease payments under operating lease liabilities | 2022 $ 522 2023 709 2024 644 2025 608 2026 546 Thereafter 429 Total lease payments $ 3,458 Less amount representing interest (100) Total lease liability $ 3,358 Less current lease liability (652) Total non-current lease liability $ 2,706 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INVENTORIES | |
Schedule of inventory | As of March 31, As of December 31, 2022 2021 Raw materials $ 19,199 $ 15,431 Work in progress 799 714 Finished goods (1) 31,825 28,195 Allowance for obsolescence (302) (432) Total $ 51,521 $ 43,908 (1) Finished goods includes $3,738 and $2,678 as of March 31, 2022 and December 31, 2021, respectively , held for more than twelve months and classified as long-term. |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of property, plant and equipment | As of March 31, As of December 31, 2022 2021 Land $ 14,949 $ 14,949 Buildings and leasehold improvements 13,863 13,722 Vehicles 1,702 1,682 Machinery and equipment 5,841 5,058 Furniture and fixtures 300 298 Total 36,655 35,709 Less accumulated depreciation (8,639) (8,193) Total property, plant and equipment $ 28,016 $ 27,516 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
OTHER ASSETS. | |
Schedule of Other Assets | As of March 31, As of December 31, 2022 2021 Prepaid rent $ 355 $ 248 Other 332 332 Repossessed homes 793 517 Total $ 1,480 $ 1,097 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED LIABILITIES. | |
Schedule of accrued liabilities | As of March 31, As of December 31, 2022 2021 Warranty reserve $ 2,047 $ 2,876 Litigation reserve 2,707 2,764 Payroll 2,399 1,685 Portfolio taxes and title 2,399 2,467 Property tax 233 546 Dealer rebates 838 1,160 Sales tax 66 310 Federal and state income taxes 7,939 7,445 Other 1,370 1,433 Total accrued liabilities $ 19,998 $ 20,686 |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
SHARE BASED COMPENSATION | |
Schedule of restricted stock units activity | The following is a summary of restricted stock units (the “RSU”) activity (in thousands, except per unit data): Number of Units Weighted Average Grant Date Fair Value Per Unit Nonvested, January 1, 2022 35 $ 14.01 Granted 500 $ 11.67 Vested (158) $ 24.33 Nonvested, March 31, 2022 377 $ 6.57 |
Schedule of stock option activity | The following is a summary of option activity (in thousands, except per unit data): Number of Units Weighted Average Exercise Price Per Unit Weighted Average Grant Date Fair Value Per Unit Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding, January 1, 2022, nonvested 83 $ 16.83 $ 12.27 9.36 Granted — $ — $ — — Exercised — $ — $ — — Forfeited (28) 14.44 8.67 — Outstanding, March 31, 2022, nonvested 55 $ 18.02 $ 14.07 9.49 $ 191 Exercisable, March 31, 2022 — $ — $ — — $ — |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
EARNINGS PER SHARE | |
Summary of reconciliation of the numerators and denominators used in the computations of both basic and diluted EPS | Three months ended March 31, 2022 2021 Numerator: Net income (in 000's) $ 16,092 $ 10,701 Denominator: Basic weighted-average common shares outstanding 24,351,223 24,199,107 Effect of dilutive securities: Restricted stock grants 267,515 5,126 Stock options 42,688 6,949 Diluted weighted-average common shares outstanding 24,661,426 24,211,182 Earnings per share attributable to Legacy Housing Corporation Basic $ 0.66 $ 0.44 Diluted $ 0.65 $ 0.44 |
NATURE OF OPERATIONS - IPO and
NATURE OF OPERATIONS - IPO and Corporate Conversion (Details) $ / shares in Units, د.ت in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Apr. 17, 2019 $ / shares shares | Jan. 01, 2018 shares | Jan. 31, 2019 USD ($) $ / shares shares | Dec. 31, 2018 USD ($) $ / shares shares | Dec. 31, 2020 TND (د.ت) $ / shares shares | |
Nature of operations | |||||
Shares issued upon incorporation (in shares) | 20,000,000 | ||||
Shares repurchased | 300,000 | 145,065 | |||
Share repurchase price (in dollars per share) | $ / shares | $ 10.20 | $ 9.77 | |||
Value of shares authorized for repurchase | د.ت | $ 10,000 | ||||
IPO | |||||
Nature of operations | |||||
Shares issued from sale of common stock | 600,000 | 4,000,000 | |||
Share price (in dollars per share) | $ / shares | $ 12 | $ 12 | |||
Offering costs | $ | $ 505 | $ 4,504 | |||
Proceeds from IPO net of underwriting discounts and offering expenses | $ | $ 6,695 | $ 43,492 |
NATURE OF OPERATIONS - Condense
NATURE OF OPERATIONS - Condensed Consolidated Statements Of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating expenses: | ||
Cost of product sales | $ 33,727 | $ 22,001 |
Income from operations | 18,267 | 12,683 |
Income before income tax expense | 19,650 | 12,909 |
Income tax expense | (3,558) | (2,208) |
Net income | $ 16,092 | $ 10,701 |
Net income per share: | ||
Basic | $ 0.66 | $ 0.44 |
Diluted | $ 0.65 | $ 0.44 |
As Originally Reported | ||
Operating expenses: | ||
Cost of product sales | $ 24,024 | |
Income from operations | 10,660 | |
Income before income tax expense | 10,886 | |
Income tax expense | (1,862) | |
Net income | $ 9,024 | |
Net income per share: | ||
Basic | $ 0.37 | |
Diluted | $ 0.37 | |
Adjustments | ||
Operating expenses: | ||
Cost of product sales | $ (2,023) | |
Income from operations | 2,023 | |
Income before income tax expense | 2,023 | |
Income tax expense | (346) | |
Net income | $ 1,677 | |
Net income per share: | ||
Basic | $ 0.07 | |
Diluted | $ 0.07 |
NATURE OF OPERATIONS - Conden_2
NATURE OF OPERATIONS - Condensed Consolidated Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities: | ||
Net income | $ 16,092 | $ 10,701 |
Inventories | (7,484) | (3,502) |
Prepaid expenses and other current assets | 389 | 120 |
Other assets | (4,058) | (337) |
Accounts payable | (2,798) | |
Accrued liabilities | (837) | |
Net cash provided by (used in) operating activities | (1,057) | (1,471) |
Investing activities: | ||
Purchases of property, plant and equipment | (863) | (1,717) |
Net cash used in investing activities | 2,754 | (6,127) |
Financing activities: | ||
Payments on lines of credit | (23,248) | (13,429) |
Net cash provided by (used in) financing activities | $ (211) | 9,238 |
As Originally Reported | ||
Operating activities: | ||
Net income | 9,024 | |
Inventories | (3,502) | |
Prepaid expenses and other current assets | (433) | |
Other assets | (5) | |
Accounts payable | (775) | |
Accrued liabilities | (1,183) | |
Net cash provided by (used in) operating activities | (1,692) | |
Investing activities: | ||
Purchases of property, plant and equipment | (1,717) | |
Net cash used in investing activities | (6,127) | |
Financing activities: | ||
Payments on lines of credit | (13,208) | |
Net cash provided by (used in) financing activities | 9,459 | |
Adjustments | ||
Operating activities: | ||
Net income | 1,677 | |
Prepaid expenses and other current assets | 553 | |
Other assets | (332) | |
Accounts payable | (2,023) | |
Accrued liabilities | 346 | |
Net cash provided by (used in) operating activities | 221 | |
Financing activities: | ||
Payments on lines of credit | (221) | |
Net cash provided by (used in) financing activities | $ (221) |
NATURE OF OPERATIONS - Revenue
NATURE OF OPERATIONS - Revenue Recognition (Details) د.ت in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2022 USD ($) | Mar. 31, 2022 TND (د.ت) | Mar. 31, 2021 USD ($) | Mar. 31, 2021 TND (د.ت) | |
Disaggregation of Revenue | ||||
Incremental costs of obtaining a contract | true | true | ||
Product sales | $ 51,787 | $ 32,274 | ||
Dealer commission, reimbursed dealer expenses and other similar costs | د.ت | د.ت 2,999 | د.ت 2,182 | ||
Revenue from contract with customer product and service benchmark | Customer concentration risk | Independent third party and affiliates | ||||
Disaggregation of Revenue | ||||
Product sales | $ 3,134 | $ 2,664 | ||
Concentration risk percentage | 6.10% | 6.10% | 8.30% | 8.30% |
Minimum | ||||
Disaggregation of Revenue | ||||
Term of lease agreement | 96 months | 96 months | ||
Maximum | ||||
Disaggregation of Revenue | ||||
Term of lease agreement | 120 months | 120 months |
NATURE OF OPERATIONS - Disaggre
NATURE OF OPERATIONS - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue | ||
Product sales | $ 51,787 | $ 32,274 |
Consumer and MHP loans interest: | ||
Interest - consumer installments notes | 4,457 | 4,143 |
Interest - MHP notes | 2,308 | 2,495 |
Total consumer and MHP loans interest | 6,765 | 6,638 |
Other | 1,376 | 1,028 |
Total net revenue | 59,928 | 39,940 |
Direct sales | ||
Disaggregation of Revenue | ||
Product sales | 10,863 | 3,422 |
Commercial sales | ||
Disaggregation of Revenue | ||
Product sales | 14,059 | 12,318 |
Consignment sales | ||
Disaggregation of Revenue | ||
Product sales | 20,040 | 10,599 |
Retail store sales | ||
Disaggregation of Revenue | ||
Product sales | 4,160 | 3,321 |
Other | ||
Disaggregation of Revenue | ||
Product sales | $ 2,665 | $ 2,614 |
NATURE OF OPERATIONS - Accounts
NATURE OF OPERATIONS - Accounts Receivable (Details) - TND (د.ت) د.ت in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Accounts Receivable | ||
Credit period | 30 days | |
Allowance for doubtful accounts | د.ت 375 | د.ت 343 |
NATURE OF OPERATIONS - Leased P
NATURE OF OPERATIONS - Leased Property (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Lessor, Description Of Leases [Line Items] | |
Notice period for lease termination | 30 days |
Termination fees as a percentage of remaining lease payments | 10% |
Number of month's rent to be paid | 6 months |
Notice period for purchase of property | 30 days |
Extended term of lease | 48 months |
Notice period for exercise of renewal extension | 6 months |
Useful life | 15 years |
Minimum | |
Lessor, Description Of Leases [Line Items] | |
Term of lease agreement | 96 months |
Maximum | |
Lessor, Description Of Leases [Line Items] | |
Term of lease agreement | 120 months |
NATURE OF OPERATIONS - Future m
NATURE OF OPERATIONS - Future minimum lease income (Details) $ in Thousands | Mar. 31, 2022 USD ($) |
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
2022 | $ 1,563 |
2023 | 2,091 |
2024 | 2,091 |
2025 | 2,091 |
2026 | 2,091 |
Thereafter | 4,685 |
Total | $ 14,612 |
NATURE OF OPERATIONS - Recent A
NATURE OF OPERATIONS - Recent Accounting Pronouncements (Details) $ in Thousands | Mar. 31, 2022 USD ($) | Mar. 31, 2022 TND (د.ت) | Dec. 31, 2021 USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Assets | $ 390,667 | $ 366,667 | |
Liabilities | 61,174 | $ 57,273 | |
Cumulative effect, period of adoption, adjustment | ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Assets | د.ت | د.ت 3,258,000 | ||
Liabilities | $ 3,258 |
CONSUMER LOANS - Narrative (Det
CONSUMER LOANS - Narrative (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) | |
Average contractual interest rate | 13.50% | 13.50% |
Escrow liability | $ 9,142 | $ 9,350 |
Number of components comprising the allowance for loan losses | item | 2 | |
Number of years historical loss rate considers for calculation | 3 years | |
Repossessed assets | $ 793 | 517 |
Principal outstanding on consumer loans | $ 1,274 | $ 1,239 |
Minimum | ||
Consumer loans receivable term | 3 years | |
Maximum | ||
Consumer loans receivable term | 30 years |
CONSUMER LOANS - Consumer loans
CONSUMER LOANS - Consumer loans receivable, net (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
CONSUMER LOANS | ||||
Consumer loans receivable | $ 130,539 | $ 129,119 | ||
Loan discount and deferred financing fees | (2,556) | (2,612) | ||
Allowance for loan losses | (724) | (884) | $ (927) | $ (905) |
Consumer loans receivable, net | $ 127,259 | $ 125,623 |
CONSUMER LOANS - Allowance for
CONSUMER LOANS - Allowance for loan losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CONSUMER LOANS | ||
Allowance for loan losses, beginning of period | $ 884 | $ 905 |
Provision for loan losses | (309) | 535 |
Charge offs (recoveries) | 149 | (513) |
Allowance for loan losses | $ 724 | $ 927 |
CONSUMER LOANS - Impaired and g
CONSUMER LOANS - Impaired and general reserve for allowance for loan losses (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
CONSUMER LOANS | ||||
Total consumer loans receivable | $ 130,539 | $ 129,119 | ||
Allowance for loan losses | 724 | 884 | $ 927 | $ 905 |
Impaired loans individually evaluated for impairment | 1,274 | 1,239 | ||
Specific reserve against impaired loans | 452 | 533 | ||
Other loans collectively evaluated for allowance | 129,265 | 127,880 | ||
General allowance for loan losses | $ 272 | $ 351 |
CONSUMER LOANS - Aging of consu
CONSUMER LOANS - Aging of consumer loans receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Past due consumer loans: | ||
Total consumer loans receivable | $ 130,539 | $ 129,119 |
Total consumer loans receivable (as a percent) | 100% | 100% |
Financial Asset, Past Due | ||
Past due consumer loans: | ||
Consumer loans receivable | $ 1,534 | $ 2,082 |
Consumer loans receivable past due (Percent) | 1.20% | 1.60% |
31 - 60 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable | $ 243 | $ 594 |
Consumer loans receivable past due (Percent) | 0.20% | 0.50% |
61 - 90 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable | $ 111 | $ 407 |
Consumer loans receivable past due (Percent) | 0.10% | 0.30% |
91 - 120 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable | $ 109 | $ 114 |
Consumer loans receivable past due (Percent) | 0.10% | 0.10% |
Greater than 120 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable | $ 1,071 | $ 967 |
Consumer loans receivable past due (Percent) | 0.80% | 0.70% |
NOTES RECEIVABLE FROM MOBILE _2
NOTES RECEIVABLE FROM MOBILE HOME PARKS (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 TND (د.ت) | Dec. 31, 2021 TND (د.ت) | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Notes Receivable | ||||
Impaired loans individually evaluated for impairment | $ 1,274 | $ 1,239 | ||
Repossessed homes | 793 | 517 | ||
Notes Receivable from Mobile Home Parks | ||||
Notes Receivable | ||||
Unamortized finance fees | 591 | 445 | ||
Note receivable with fixed rate of interest | $ 98,000 | |||
Charge offs | د.ت | د.ت 0 | د.ت 0 | ||
Interest rate spread (as a percent) | 4% | |||
Interest rate on the MHP Notes | 7.70% | 7.60% | ||
Allowance for loan losses | $ 0 | 0 | ||
Impaired loans individually evaluated for impairment | 0 | 0 | ||
Repossessed homes | $ 0 | $ 0 | ||
Notes Receivable from Mobile Home Parks | Credit concentration risk | Independent third party and affiliates | Independent Third Party One | ||||
Notes Receivable | ||||
Concentration risk percentage | 29.10% | 30.10% | ||
Notes Receivable from Mobile Home Parks | Credit concentration risk | Independent third party and affiliates | Independent Third Party Two | ||||
Notes Receivable | ||||
Concentration risk percentage | 12.90% | 10.40% | ||
Minimum | Notes Receivable from Mobile Home Parks | ||||
Notes Receivable | ||||
Fixed rate of interest (as a percent) | 6.90% | |||
Term Of Notes Receivables | 1 year | |||
Interest rate spread (as a percent) | 8% | |||
Maximum | Notes Receivable from Mobile Home Parks | ||||
Notes Receivable | ||||
Fixed rate of interest (as a percent) | 8.90% | |||
Term Of Notes Receivables | 18 years |
OTHER NOTES RECEIVABLE (Details
OTHER NOTES RECEIVABLE (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Notes Receivable | ||
Impaired loans individually evaluated for impairment | $ 1,274 | $ 1,239 |
Financial Asset, Past Due | ||
Notes Receivable | ||
Outstanding principal balance | 1,534 | 2,082 |
Other Note Receivable | ||
Notes Receivable | ||
Outstanding principal balance | 38,800 | 42,074 |
Allowance for loan losses | (52) | (74) |
Total | 38,748 | 42,000 |
Impaired loans individually evaluated for impairment | $ 0 | 0 |
Other Note Receivable | Minimum | ||
Notes Receivable | ||
Interest rate on the other notes | 5% | |
Other Note Receivable | Maximum | ||
Notes Receivable | ||
Interest rate on the other notes | 12% | |
Other Note Receivable | Financial Asset, Past Due | ||
Notes Receivable | ||
Outstanding principal balance | $ 0 | $ 0 |
LEASES (Details)
LEASES (Details) | 3 Months Ended |
Mar. 31, 2022 USD ($) lease | |
LEASES | |
Number of operating leases | 13 |
Number of operating leases subleased | 3 |
Operating lease, term of contract (in years) | 10 years |
Options to renew | true |
Variable lease cost | $ | $ 0 |
Operating weighted average lease term | 5 years 2 months 12 days |
Operating weighted average discount rate (as a percent) | 2.12% |
Minimum | |
LEASES | |
Operating lease, term of contract (in years) | 5 years |
Maximum | |
LEASES | |
Operating lease, term of contract (in years) | 10 years |
Heritage Housing and Tiny Homes retail locations | |
LEASES | |
Number of operating leases | 8 |
Corporate and administrative offices in Bedford, TX and Norcross, GA | |
LEASES | |
Number of operating leases subleased | 2 |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) $ in Thousands | Mar. 31, 2022 USD ($) |
LEASES | |
2022 | $ 522 |
2023 | 709 |
2024 | 644 |
2025 | 608 |
2026 | 546 |
Thereafter | 429 |
Total lease payments | 3,458 |
Less amount representing interest | (100) |
Total lease liability | 3,358 |
Less current lease liability | (652) |
Total non-current lease liability | $ 2,706 |
INVENTORIES (Details)
INVENTORIES (Details) د.ت in Thousands, $ in Thousands | Mar. 31, 2022 USD ($) | Mar. 31, 2022 TND (د.ت) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 TND (د.ت) |
INVENTORIES | ||||
Raw materials | $ 19,199 | $ 15,431 | ||
Work in progress | 799 | 714 | ||
Finished goods (1) | 31,825 | 28,195 | ||
Allowance for obsolescence | (302) | (432) | ||
Total | 51,521 | 43,908 | ||
Inventories, net | $ 3,738 | د.ت 3,738 | $ 2,678 | د.ت 2,678 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
PROPERTY, PLANT AND EQUIPMENT | |||
Total | $ 36,655 | $ 35,709 | |
Less accumulated depreciation | (8,639) | (8,193) | |
Total property, plant and equipment | 28,016 | 27,516 | |
Depreciation expense | 260 | $ 264 | |
Cost of product sales | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Depreciation expense | 121 | $ 104 | |
Land | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Total | 14,949 | 14,949 | |
Buildings and leasehold improvements | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Total | 13,863 | 13,722 | |
Vehicles | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Total | 1,702 | 1,682 | |
Machinery and equipment | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Total | 5,841 | 5,058 | |
Furniture and fixtures | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Total | $ 300 | $ 298 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
OTHER ASSETS. | |||
Prepaid rent | $ 355 | $ 248 | |
Other | 332 | 332 | |
Repossessed homes | 793 | 517 | |
Total | 1,480 | $ 1,097 | |
Depreciation expense on leased property | $ 170 | $ 98 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
ACCRUED LIABILITIES. | ||
Warranty reserve | $ 2,047 | $ 2,876 |
Litigation reserve | 2,707 | 2,764 |
Payroll | 2,399 | 1,685 |
Portfolio taxes and title | 2,399 | 2,467 |
Property tax | 233 | 546 |
Dealer rebates | 838 | 1,160 |
Sales tax | 66 | 310 |
Federal and state income taxes | 7,939 | 7,445 |
Accrued expenses & other accrued liabilities | 1,370 | 1,433 |
Total accrued liabilities | $ 19,998 | $ 20,686 |
DEBT - Lines of Credit (Details
DEBT - Lines of Credit (Details) - Revolver 1 - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2019 | |
Lines of Credit | |||||
Maximum borrowing capacity | $ 70,000 | $ 45,000 | |||
Effective interest rate | 2.23% | 2.10% | |||
Amount of available credit | $ 64,923 | $ 61,841 | |||
Interest expense | 56 | $ 226 | |||
Outstanding balance | 5,224 | 8,159 | |||
Tangible net worth | $ 120,000 | ||||
Debt to EBITDA ratio | 4 | ||||
Deferred debt issuance costs | $ 295 | ||||
London Interbank Offered Rate (LIBOR) | |||||
Lines of Credit | |||||
Spread rate | 2% | 2.40% |
DEBT - PPP Loans (Details)
DEBT - PPP Loans (Details) - PILOT Agreement | Dec. 31, 2016 TND (د.ت) |
Notes Payable | |
Maximum borrowing capacity | د.ت 10,000,000 |
Interest rate | 6% |
SHARE BASED COMPENSATION - Plan
SHARE BASED COMPENSATION - Plan (Details) $ / shares in Units, د.ت in Thousands, $ in Thousands | 3 Months Ended | |||||||
Jan. 06, 2022 USD ($) $ / shares shares | Nov. 30, 2021 USD ($) shares | Sep. 23, 2021 | Dec. 02, 2020 USD ($) shares | Aug. 10, 2020 | Feb. 07, 2019 TND (د.ت) shares | Mar. 31, 2022 shares | Jun. 30, 2020 shares | |
SHARE-BASED COMPENSATION | ||||||||
Number of shares may be issued to employees, directors, consultants and nonemployee service providers in the form of stock options, stock and stock appreciation rights | 10,000,000 | |||||||
Number of shares available for grant | 9,200,000 | |||||||
$36 Equity Award | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Granted (in dollars per share) | $ / shares | $ 36 | |||||||
$48 Equity Award | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Granted (in dollars per share) | $ / shares | $ 48 | |||||||
Stock options | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Contractual life | 10 years | |||||||
Stock options | Senior management | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Contractual life | 10 years | 10 years | ||||||
Vesting percentage | 10% | 20% | ||||||
Restricted shares | Senior management | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Restricted shares granted (in shares) | 120,000 | |||||||
Grant date fair value | د.ت | د.ت 1,636 | |||||||
Vesting percentage | 14.30% | |||||||
Restricted shares forfeited (in shares) | 42,857 | |||||||
Restricted shares | Independent directors | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Restricted shares granted (in shares) | 1,202 | 2,022 | ||||||
Grant date fair value | $ | $ 30 | $ 30 | ||||||
Restricted shares | Executive Chairman | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Restricted shares granted (in shares) | 150,000 | |||||||
Grant date fair value | $ | $ 3,741 | |||||||
Contingent equity awards | $36 Equity Award | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Restricted shares granted (in shares) | 175,000 | |||||||
Threshold market days remained granted | 15 days | |||||||
Granted (in dollars per share) | $ / shares | $ 36 | |||||||
Grant date fair value | $ | $ 1,412 | |||||||
Contingent equity awards | $36 Equity Award | Vested at granted | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Vesting percentage | 50% | |||||||
Contingent equity awards | $36 Equity Award | Vested on June 16, 2024 | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Vesting percentage | 50% | |||||||
Contingent equity awards | $48 Equity Award | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Restricted shares granted (in shares) | 175,000 | |||||||
Threshold market days remained granted | 15 days | |||||||
Granted (in dollars per share) | $ / shares | $ 48 | |||||||
Grant date fair value | $ | $ 683 | |||||||
Contingent equity awards | $48 Equity Award | Vested at granted | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Vesting percentage | 50% | |||||||
Contingent equity awards | $48 Equity Award | Vested on June 16, 2024 | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Vesting percentage | 50% | |||||||
Contingent equity awards | Executive Chairman | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Restricted shares granted (in shares) | 350,000 |
SHARE BASED COMPENSATION - Rest
SHARE BASED COMPENSATION - Restricted stock units (Details) - Restricted stock units $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2022 USD ($) $ / shares shares | |
Number of units | |
Nonvested at the beginning | shares | 35,000 |
Granted | shares | 500,000 |
Vested | shares | (158,000) |
Nonvested at the end | shares | 377,000 |
Weighted average grant date fair value | |
Nonvested at the beginning (in dollars per share) | $ / shares | $ 14.01 |
Granted (in dollars per share) | $ / shares | 11.67 |
Vested (in dollars per share) | $ / shares | 24.33 |
Nonvested at the end (in dollars per share) | $ / shares | $ 6.57 |
Unrecognized compensation expense | $ | $ 2,238 |
Unrecognized compensation expense, recognition period | 2 years 3 months 18 days |
SHARE BASED COMPENSATION - Stoc
SHARE BASED COMPENSATION - Stock options (Details) - Stock options - $ / shares | 3 Months Ended | ||
Sep. 23, 2021 | Aug. 10, 2020 | Mar. 31, 2022 | |
SHARE-BASED COMPENSATION | |||
Stock option forfeited (in shares) | 28,000 | ||
Fair value assumptions for options granted | |||
Expiration period | 10 years | ||
Senior management | |||
SHARE-BASED COMPENSATION | |||
Stock options granted (in shares) | 55,490 | 34,626 | |
Exercise price (in dollar per share) | $ 18.02 | $ 14.44 | |
Vesting percentage | 10% | 20% | |
Fair value assumptions for options granted | |||
Risk free interest rate | 1.41% | 0.24% | |
Dividend yield | 0% | 0% | |
Expected volatility | 75% | 75% | |
Expiration period | 10 years | 10 years | |
Expected life | 7 years 9 months 18 days | 6 years 6 months | |
Senior management | Departure of senior manager | |||
SHARE-BASED COMPENSATION | |||
Stock option forfeited (in shares) | 27,701 |
SHARE BASED COMPENSATION - Summ
SHARE BASED COMPENSATION - Summary of Stock options activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2020 | |
2018 Incentive Compensation Plan | |||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||
Common stock available for issuance | 2,300,000 | ||
Stock options | |||
Number of units | |||
Outstanding, nonvested | 83,000 | ||
Forfeited | (28,000) | ||
Outstanding, nonvested | 55,000 | 83,000 | |
Weighted Average Exercise Price Per Unit | |||
Outstanding at the beginning (in dollars per share) | $ 16.83 | ||
Forfeited (in dollars per share) | 14.44 | ||
Outstanding at the end (in dollars per share) | 18.02 | $ 16.83 | |
Weighted Average Grant Date Fair Value Per Unit | |||
Outstanding at the beginning (in dollars per share) | 12.27 | ||
Forfeited (in dollars per share) | 8.67 | ||
Outstanding at the end (in dollars per share) | $ 14.07 | $ 12.27 | |
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||
Outstanding (in years) | 9 years 5 months 26 days | 9 years 4 months 9 days | |
Outstanding at the end (in dollars) | $ 191 | ||
Non-vested shares | 55,000 | 83,000 | |
Unrecognized compensation expense | $ 740 | ||
Unrecognized compensation expense, recognition period | 9 years 5 months 26 days |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
INCOME TAXES | ||
Tax expense | $ 3,558 | $ 2,208 |
Effective tax rate (as a percent) | 18.10% | 17.10% |
Federal statutory rate | 21% | 21% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Commitment | ||
Self-insured liability | $ 326 | $ 373 |
Repurchase agreements | Maximum | ||
Commitment | ||
Repurchase commitment | $ 14,749 | $ 4,908 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases (Details) - TND (د.ت) د.ت in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating Leased Assets [Line Items] | ||
Operating lease, term of contract (in years) | 10 years | |
Rent expense | د.ت 163 | د.ت 151 |
Sublease rental income | د.ت 82 | د.ت 91 |
Minimum | ||
Operating Leased Assets [Line Items] | ||
Operating lease, term of contract (in years) | 5 years | |
Sublease, term of contract (in years) | 3 years | |
Maximum | ||
Operating Leased Assets [Line Items] | ||
Operating lease, term of contract (in years) | 10 years | |
Sublease, term of contract (in years) | 11 years |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Legal Matters (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
COMMITMENTS AND CONTINGENCIES | ||
Legal reserves | $ 2,707 | $ 2,764 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Details) $ in Thousands | Jun. 12, 2017 USD ($) |
Interest rate swap agreement | Line of credit | |
Derivative instruments | |
Interest rate swap agreement | $ 8,000 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value | Level 3 | Consumer Loan | ||
Receivables, Fair Value Disclosure [Abstract] | ||
Loans | $ 127,600 | $ 125,600 |
Fair Value | Level 3 | Notes Receivable from Mobile Home Parks | ||
Receivables, Fair Value Disclosure [Abstract] | ||
Notes receivable | 92,000 | 83,000 |
Fair Value | Level 3 | Other Note Receivable | ||
Receivables, Fair Value Disclosure [Abstract] | ||
Notes receivable | 33,300 | 38,500 |
Book Value | Consumer Loan | ||
Receivables, Fair Value Disclosure [Abstract] | ||
Loans | 127,259 | 125,623 |
Book Value | Notes Receivable from Mobile Home Parks | ||
Receivables, Fair Value Disclosure [Abstract] | ||
Notes receivable | 97,782 | 83,773 |
Book Value | Other Note Receivable | ||
Receivables, Fair Value Disclosure [Abstract] | ||
Notes receivable | $ 38,748 | $ 38,886 |
EARNINGS PER SHARE- Tabular (De
EARNINGS PER SHARE- Tabular (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Numerator: | ||
Net income (in 000's) | $ 16,092 | $ 10,701 |
Denominator: | ||
Basic weighted-average common shares outstanding | 24,351,223 | 24,199,107 |
Effect of dilutive securities: | ||
Diluted weighted-average common shares outstanding | 24,661,426 | 24,211,182 |
Earnings per share attributable to Legacy Housing Corporation | ||
Basic | $ 0.66 | $ 0.44 |
Diluted | $ 0.65 | $ 0.44 |
Restricted stock units | ||
Effect of dilutive securities: | ||
Dilutive securities | 267,515 | 5,126 |
Stock options | ||
Effect of dilutive securities: | ||
Dilutive securities | 42,688 | 6,949 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2022 USD ($) | Mar. 31, 2021 USD ($) | Mar. 31, 2022 TND (د.ت) | Mar. 31, 2022 USD ($) | Dec. 31, 2021 TND (د.ت) | Dec. 31, 2021 USD ($) | |
Bell Mobile Homes | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Accounts receivable related parties | د.ت | د.ت 139,000 | د.ت 1,000 | ||||
Accounts payable related parties | $ 69 | د.ت 49,000 | ||||
Home sales to related parties | $ 632 | $ 699 | ||||
Shipley Bros. | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Accounts receivable related parties | 424 | $ 0 | ||||
Accounts payable related parties | $ 0 | $ 0 | ||||
Home sales to related parties | $ 693 | $ 914 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 24, 2022 | Jun. 07, 2022 | Jun. 28, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 30, 2020 | Dec. 31, 2019 |
Revolver 1 | |||||||
SUBSEQUENT EVENTS | |||||||
Maximum borrowing capacity | $ 70,000 | $ 45,000 | |||||
Amount of available credit | $ 64,923 | $ 61,841 | |||||
Subsequent event | |||||||
SUBSEQUENT EVENTS | |||||||
Certificate of deposit | $ 8,500 | ||||||
Subsequent event | Revolver 1 | |||||||
SUBSEQUENT EVENTS | |||||||
Credit facility suspended amount | $ 50,000 | ||||||
Maximum borrowing capacity | 70,000 | ||||||
Amount of available credit | $ 20,000 | ||||||
Subsequent event | Mr. Duncan Bates, President and Chief Executive Officer | Employment Agreement | Restricted shares | |||||||
SUBSEQUENT EVENTS | |||||||
Base salary | $ 300 | ||||||
Granted | 14,700 | ||||||
Subsequent event | Mr. Duncan Bates, President and Chief Executive Officer | Employment Agreement | Restricted shares | Vested on June 7, 2023 | |||||||
SUBSEQUENT EVENTS | |||||||
Vesting percentage | 50% | ||||||
Subsequent event | Mr. Duncan Bates, President and Chief Executive Officer | Employment Agreement | Restricted shares | Vested on June 7, 2024 | |||||||
SUBSEQUENT EVENTS | |||||||
Vesting percentage | 50% | ||||||
Subsequent event | Mr. Duncan Bates, President and Chief Executive Officer | Employment Agreement | Stock options | |||||||
SUBSEQUENT EVENTS | |||||||
Granted | 62,460 | ||||||
Exercise price (in dollar per share) | $ 16.01 | ||||||
Vesting percentage | 10% | ||||||
Subsequent event | Mr. Duncan Bates, President and Chief Executive Officer | Employment Agreement | Stock options | Stock Price Reaches Closing Price of $36 Per Share | |||||||
SUBSEQUENT EVENTS | |||||||
Option to purchase | 300,000 | ||||||
Exercise price | $ 36 | ||||||
Subsequent event | Mr. Duncan Bates, President and Chief Executive Officer | Employment Agreement | Stock options | Stock Price Reaches Closing Price of $48 Per Share | |||||||
SUBSEQUENT EVENTS | |||||||
Option to purchase | 600,000 | ||||||
Exercise price | $ 48 | ||||||
Subsequent event | Ronald Arrington, the Chief Financial Officer | Employment Agreement | Stock options | |||||||
SUBSEQUENT EVENTS | |||||||
Granted | 62,460 | ||||||
Exercise price (in dollar per share) | $ 16.01 | ||||||
Vesting percentage | 10% |