Ladies and gentlemen, thank you for standing by. Welcome to Legacy Housing Corporation's Second Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answe r session. To ask a question during this session, you would need to press star one one on your telephone. You will then hear an automated message about your hand is raised. To withdraw your question, please press star. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Duncan Bates, President and Chief Executive Officer. Please go ahead, sir. Good morning. This is Duncan Bates, Legacy' s President and CEO. Thank you for joining our second quarter 2025 conference call. Max Africk, Legacy 's General Counsel, will read the Board of disclosure before getting started. Max? Thanks, Duncan. Before we begin, I'll remind our listeners that management's prepared remarks today may contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to requests. Actual results may differ from management's current expectations, and Legacy assumes no obligation to update these projections in the future unless otherwise required by applicable law. Thanks, Max. I'm joined today by Jeff Fiedelman, Legacy's Chief Financial Officer. Jeff will discuss our second quarter financial performance, then I will provide additional corporate updates and open the call for Q&A. Thanks, Duncan. Product sales primarily consist of direct sales, commercial sales, inventory finance sales, and retail store sales. Product sales increased $6.7 million, or 21.3%, during the three months ended June 30, 2025, as compared to the same period in 2024. This increase was driven by an increase in unit volume shipped, primarily in inventory finance sales, retail sales, and mobile home park sales categories. For the three months ended June 30, 2025, our net revenue per product sold increased by 10.5% as compared to the same period in 2024. The increase is primarily due to an increase in units sold to consumers, which are sold at higher retail prices. Consumer MHP and dealer loans interest income increased $1.0 million, or 10.6%, during the three months ended June 30, 2025, as compared to the same period in 2024. Between June 30, 2025, and June 30, 2024, our consumer loan portfolio increased by $24.6 million, our MHP loan portfolio increased by $20.3 million, and our dealer finance notes decreased by $0.5 million. Other revenue primarily consists of contract deposit forfeitures, consignment fees, commercial lease rents, land sales, service fees, and other miscellaneous income, and decreased $0.1 million, or 10.8%, during the three months ended June 30, 2025, as compared to the same period in 2024. This decrease was primarily due to a $0.2 million decrease in forfeited deposits, partially offset by a net $0.1 million increase in other miscellaneous revenue. The cost of product sales increased $4.4 million, or 20.3%, during the three months ended June 30, 2025, as compared to the same period in 2024. The increase in costs is primarily related to the increase in units sold. Gross profit margin was 32.4% of product sales during the three months ended June 30, 2025, as compared to 31.9% during the three months ended June 30, 2024. The cost of other sales was $0.6 million during the three months ended June 30, 2025. Selling, general, and administrative expenses increased $1.1 million, or 19.1%, during the three months ended June 30, 2025, as compared to the same period in 2024. We had a $1.1 million increase in warranty expense, primarily due to an over accrual in warranty costs in the second quarter of 2024 that we reversed. We also had a $0.5 million increase in repossession costs, a $0.2 million increase in bad debt expense, a $0.1 million increase in loan loss provision, offset by a $0.6 million decrease in legal expense, a $0.1 million decrease in property tax expense, and a net $0.1 million decrease in other miscellaneous expense. Other income decreased $2.8 million, or 74.5%, during the three months ended June 30, 2024, as compared to the same period in 2024. We had a one decrease of $0.5 million in non-operating interest income, reflecting a lower balance of other notes receivable, two a $2.5 million decrease in miscellaneous income, primarily due to land sales and a reversal of accrued liabilities during the three months ended June 30, 2024, that did not occur during the three months ended June 30, 2025, and three a decrease of $0.2 million in interest expense. Net income decreased 9.2% to $14.7 million in the second quarter of 2025 compared to the second quarter of 2024. Basic earnings per share decreased 9.0% to $0.61 per share in the second quarter of 2025 compared to the second quarter of 2024. As of June 30, 2025, we had approximately $2.6 million in cash compared to $1.1 million as of December 31, 2024. We drew a small amount on the revolver in the second quarter. The outstanding balance of the revolver was $0.1 million as of June 30, 2025, and was zero as of December 31, 2024. At the end of the second quarter of 2025, Legacy 's book value per basic share outstanding was $21.32, an increase of 11.2% from the same period in 2024. Finally, we repurchased 260,635 shares of common stock for $5.8 million during the three months ended June 30, 2025. As of June 30, 2025, we had a remaining authorization of approximately $8.1 million on our share repurchase program. Thanks, Jeff. I'm pleased with our second quarter results. Our focus has remained on product sales. While there's still uncertainty in the market and weakness in certain geographies and channels, we are seeing positive signs from the changes we've made. Earlier this year, we took a hard look at historical sales data and simplified our product line. That process had its challenges, but some of the adjustments are paying off. As Jeff mentioned, product sales increased 21.3% during the second quarter compared to the same period in 2024. That growth was primarily driven by dealer activity. Product sales were up 58% sequentially over the first quarter of 2025. Inventory finance sales, or floor plan sales to independent dealers, increased $4.9 million, or 53.3% compared to the second quarter of 2024. Retail sales, or sales from our company-owned retail stores, rose $2.9 million, or 64.2% over the same period. These gains reflect stronger demand across our dealer channel and our continued traction from our product line simplification efforts. Commercial sales, or sales to community owners, increased 5.3% during the three months ended June 30 compared to the same period in 2024. Our community customers continue to face headwinds, including elevated interest rates, higher operating costs, and budget constraints among renters. Despite these challenges, we're encouraged by ongoing discussions with both new and existing community owners regarding large orders, which should support volume growth in this channel. Product gross margins were 32.4% in the second quarter of 2025. I'm proud of our team's strong execution in maintaining healthy margins during a rapidly evolving environment for materials and labor costs. We remain disciplined in our pricing strategy and continue to manage expenses carefully to protect profitability. Our top priority for the remainder of 2025 is continuing to build our backlog, which should support increased production volume in the coming quarters. We expect higher output out of our Texas plants, where demand remains stronger, while activity in the Southeast is comparatively slower. We continue to actively manage our loan portfolios. Since the second quarter of 2024, our retail loan portfolio has grown by $24.6 million, while our MHP loan portfolio has grown by $20.3 million. Reflecting strong demand in our dealer channel, retail loan fundings were up 49% in the first half of 2025 compared to the same period in 2024. There were no material land sales during the second quarter of 2025, but we will continue to evaluate opportunities to monetize non-core land when pricing reflects underlying value. In the second quarter of 2024, we completed a non-core land sale that generated a meaningful profit, creating a challenging year-over-year comparison for this quarter's earnings. We are focused on completing phase I of Falcon Ranch, our 1,100-lot development in Bastrop County. Phase I includes 115 lots with roads and utilities already complete. The final remaining project, a bridge, is currently under construction. At the same time, we're making progress on phase II, where utilities are now in place and roadwork is underway for the first 350 lots. Over the last 18 months, we repurchased over 552,000 shares of common stock in the open market for an aggregate cost of $11.9 million, reducing our outstanding share count by over 2%. These repurchases reflect our continued confidence in the long-term value of the business and our disciplined approach to capital allocation. With no debt and over $10 million in cash on the balance sheet today, we remain well-positioned to continue repurchasing shares. We are keeping our eyes on the ROAD to Housing Act, which passed the Senate Banking Committee and is awaiting a full Senate vote. The bill reauthorizes HUD's PRICE program, which provides grants to improve infrastructure like water and sewer systems in manufactured housing communities. It also removes the federal requirement for a permanent chassis, lowering build costs and allowing for more flexible home designs. If passed, the bill should support growth in both home sales and community development. Operator, this concludes our prepared remarks. Please begin the Q&A. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. The first question comes from Rohit Seth with B. Riley Securities. Your line is open. Hi. Thanks for taking my question. Good order flow coming in through the second quarter, a good rebound in volumes. Just curious what you're seeing as we enter July, August. Have you seen the same momentum continue? Is it coming from the same channels? Just get a sense of how you see the rest of the year. Yeah. Hey, Rohit. You know, we're really happy with the second quarter performance. Obviously, the dealer side of our business really drove the revenue growth. We continue to see that this quarter, and we're seeing signs of life on the community side. I think the difficult thing has been the prices for mobile home parks have gone up pretty dramatically. You've got increased financing costs, you got homes are more expensive, operating costs are higher, and you've got a renter that can only afford so much. I think there is a shift to smaller houses, and we're having some success in that, but we really need to land a couple of these large orders to really see an uptick in that side of our business for the rest of the year. Okay. On the Bastrop, it looks like you got, making some progress there. Do you think you'll be selling plots there by the fourth quarter? Is this something happening in 2025, or is this more in 2026? You know, that's the goal. I mean, the final piece of this thing is we've got to build a bridge. The bridge is under construction, and it's well underway. Ultimately, roads and utilities are all in phase I. You got to complete the bridge to connect it to the infrastructure outside of the community. It's not, I wouldn't say we're crossing any waterway, but it's certainly a project. The goal is to get that done. There's a way to shortcut kind of starting to sell lots. That's something we're looking at, where we can go ahead and plat before the bridge is done. We're just well underway on construction there. The goal is certainly to sell lots as soon as possible. There's a lot of demand down there. We've got a dealer on site who's been doing really well with sales this year. What's been interesting for me to watch is we're really gaining ground on phase II, where you've got all the utilities in, and we're putting the roads down for the first 350 rental lots. Good progress. We've made a couple of key hires down there. We've got the cash to push this thing forward, and we're working as hard as we can to get it open. Yeah, fantastic. If I can squeeze one last one in on the SG&A line, it's running up a little bit higher than, you know, as a percentage of sales. Is this like the new normal, or at least for the year? Just any sense of kind of the trajectory on SG&A? No, I think SG&A will kind of dip back in line to where it's been. We had some kind of wonky comparisons with year-over-year accruals for things like warranty expense, legal expense, and others that shifted that upward. All right, fantastic. Thank you. Thanks. The next question will come from Alex Rygiel with Texas Capital Securities. Your line is open. Thank you. Good morning, Duncan. Hey, good morning, Alex. As it relates to being encouraged by discussions with community owners for large orders, what are the primary items that are either sparking these interests or maybe keeping them on hold until an order? We've got a handful of, I would call them, large customers that we've worked with for a long period of time. These guys tend to buy communities that are in disrepair, and they fix them up, and they replace all the homes, and then they move to the next one. Especially through COVID, we had some huge orders as these guys really expanded, and then they took a breather. What we're seeing is we've got some large customers that have either purchased or have communities under contract where they'll need a decent amount of homes. On the other side, on the new customers, we've been, for the past couple of years, growing with some younger guys as we replace the Legacy customer base. Those guys may start by ordering six homes, and the next year they order 20 homes. You just keep growing with them as their portfolio builds. One change is that it seems like the financing markets have opened up a little bit, right? We're seeing some payoffs on the MHP portfolio. Now we've got customers who have parks with newer houses in them, and they're stabilized, and they're monetizing those and rolling those gains into new properties to do the same thing. Makes sense. Can you talk a bit about average selling price? Are you surprised that it's holding up here, and any thoughts there around that? Yeah, I mean, the average selling price for the quarter, we went on a quarter- over- quarter basis from, say, $61,000 to $68,000. I think the bulk of that was just driven by the increase in sales through our company-owned retail stores. We think we were slower to raise prices during COVID. We've raised prices more aggressively as we've figured out the impact of tariffs on our costs. I do expect it to stay elevated, but certainly there's a point where it's to the detriment of volume through the plants. You talked a bit about Georgia being a little bit slower maybe in the second half. Any additional color on that? Yeah, the Southeast market just feels slow. I think Cavco commented on that during their call. Florida's slower. We're seeing similar things in the Southeast. I mean, we've got customers that are doing things. We've won some new customers over there. We've had some workforce housing builds over there. Dealer base isn't as strong out of that plant, so we're more reliant on community customers. It just seems a little bit slower than what we're seeing in Texas. Understood. Thank you. Thanks, Alex. The next question is going to come from Daniel Moore with CJS Securities. Your line is open. Morning, Duncan. Morning, Jeff. I wanted to, so obviously you had a really nice jump in product sales in the quarter. The volume's up double digits. Year-to-date, we're relatively flat. I just want to make sure and just kind of remind me, were there any sales that may have slipped from Q1 to Q2, or is it more demand actually improving, you know, as we've worked through the year? I think we had some orders on the community side that slipped. First quarter wasn't our strongest performance from a product sales standpoint. You see that community sales, at least quarter- over- quarter, were relatively flat. They were up 5% or so. There were certainly some orders that slipped, but they were mainly on the community side. I think what we saw on the dealer side was actually a little bit better strength. The market's still choppy. Parkside's slower than we'd like it to be. Certain geographies, even within areas that we serve out of our Georgia plant or out of our Texas plants, seem to be slower than others. We're cautiously optimistic on the year, but we continue to be here every day working and trying to get houses built and shipped. Got it. Specifically for retail, obviously, retail stores hit their highest quarter, you know, over $7 million in sales, highest quarter that we've seen in multiple years. Is that a function, you know, just talk to the sustainability of that and any update you can provide on how the investments you've been making in retail salesforce are progressing? Yeah, I mean, the key to retail is systems, processes, and people. You need to get people selling houses and making commissions to retain them. I think that's something that we've struggled with for a while. We've got a pretty good team on the retail side. They had a great quarter. We've got certain stores that are performing better than others. The focus right now is bringing the underperforming stores up to some type of baseline and continuing to perform at the stores that are doing better. It was a good quarter for the retail team. I think it's representative of what we can do, and we just got to keep pushing forward on that. July was a little bit slower, but not terrible either. I think some of these changes are helping, but we still have ways to go. I really view that as an opportunity for us. You see what it does if we can push more volume through that channel. It does help us on the revenue side, and it's reflected in the average selling price. Helpful. One or two more. On the gross margin side, overall, saw a little bit of pressure, you know, but then you called out, I think, on product sales gross margin improved. If I look at it holistically, we were at 47% for the company. Is that, would we expect that to be kind of a new level or improve as we move forward? Just talk about the puts and takes there. Yeah, see, when I talk about gross margin, I'm really just looking at the, you know, the product gross margin. So product revenue and the cost of goods sold. In Q2 of 2024, I've got 31.9%, which jumped up to 32.4% for the second quarter of 2025. I think if you look at it as a whole, we had a bump in SG&A due to some expenses, but also due to kind of some mismatches of accruals from the second quarter of 2024 that, if you look at gross margin in total, it's lower for the second quarter. I'm discussing just product gross margin. Makes sense. Lastly, I think you touched on this, but you know, bought back $6 million of stock in the quarter, I think $11 million year to date. At the stock sitting here, you know, not too far above book value, is that a likely continued use of capital and cash flow as we move forward? Yeah, I mean, we've got to weigh it against other opportunities. We're seeing a lot right now, especially on the lending side, to put money to work at good rates of return. The business has, over the last 20 years, generated, say, 10%- 15% after-tax returns pretty consistently. We're watching the stock, but we're going to be opportunistic buyers. We're not just going to buy stock just to buy it if we've got opportunities to deploy the capital elsewhere. Very good. Makes sense. Appreciate the color. Thanks, Dan. The next question comes from Mark Smith with Lake Street. Your line is open. Hi, Duncan. One last first, just you're just talking about products, margin a little bit. We'd love to hear kind of your outlook as we think about tariffs and some inflationary pressure, if you're seeing any items that are, that are moving higher, kind of your outlook here as we think about the second half or even into next year. Yeah, as you can imagine, there's a lot of moving parts. I think from the tariffs and the impact on international goods, we've adjusted our pricing accordingly. You've got moving commodity prices in other materials. I mean, you've seen kind of what lumber futures have crept up. OSB's been low. Steel's been relatively flat. What I don't think is going lower is labor costs. That's something that we're keeping an eye on. I think there's a balance between price and volume. You got to keep the plants running. You can't be underabsorbed on labor. Certainly, the input prices on most of these products that we buy to assemble houses are going up. Yeah, back to pricing a little bit in the ASP, it sounds like it was largely a function of the sales mix. Can you quantify or talk to maybe over the last six months, any kind of pricing action that you guys have taken? Yeah, I mean, we've had a couple of price increases this year. We started in February. We had one that I'd say is more material, kind of mid to late June. It's something that we're keeping an eye on, but it's also a difficult time right now. There just seems to be a lot of moving pieces with commodity prices. I think with a little bit higher prices, it does give you some flexibility to run, like, to put the advertising machine to work and do some sales and other types of incentives, especially as we head into our fall show coming up in September. Okay. The last one for me, just curious your thoughts around kind of consumer behavior, you know, and if you're seeing a difference out there between kind of the renter in how they're holding up versus kind of a homeowner or home buyer. Any differences there? If there's some pressure on renters, if that's maybe hurting the MHP market a bit. I think the renters are, you know, fairly, maybe not tapped out, but they're certainly price sensitive. If your mobile home park model is showing that you're going to continue to raise rents and costs of everything else have gone up, all your operating costs, homes are more expensive, financing's more expensive. I think it does put pressure on the community operators where the spread isn't as great as it was a few years ago, which is shifting a lot of these guys to smaller houses that they can rent at similar prices and keep the monthly payments affordable. I think the second quarter, obviously, dealer business performed a little bit better, but I wouldn't say that demand is off the charts on the dealer business right now. I mean, I think it's spotty. Customers are price conscious. Compared to a stick-built home, you're so much more affordable. Although the next few quarters could be choppy, I really don't think that the affordable housing crisis is fixed in this industry or fixed in this country without this industry. Some of the work at the legislative level is pretty encouraging, where there's been a lot of talks for years about regulatory reform to the HUD code. You're starting to actually see some traction given how bad the affordability problem is in this country. I don't think it, like, we're cautiously optimistic, but I think longer term, our outlook is pretty strong. Excellent. That's helpful. Thank you. All right, thank you. I show no further questions in the queue. I would now like to turn the call back over to Duncan for closing remarks. Thank you for joining today's earnings call. We appreciate your interest in Legacy Housing. We're hosting our fall show in Fort Worth on September 27th and 28th. Feel free to register on our website. Operator, this concludes our call. Thank you. Thank you. This does conclude today's conference call, and thank you for participating. You may now disconnect.