Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 27, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | Legacy Housing Corp | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 24,762,462 | ||
Entity Central Index Key | 0001436208 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 67,725,024 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,724 | $ 2,599 |
Accounts receivable, net of allowance for doubtful accounts | 1,767 | 2,953 |
Current portion of consumer loans | 5,994 | 4,945 |
Current portion of notes receivable from mobile home parks (“MHP”) | 10,969 | 7,297 |
Current portion of other notes receivable | 428 | 379 |
Inventories | 27,228 | 42,033 |
Prepaid expenses and other current assets | 4,857 | 2,938 |
Total current assets | 52,967 | 63,144 |
Property, plant and equipment, net | 21,038 | 17,128 |
Consumer loans, net of deferred financing fees and allowance for loan losses | 99,048 | 92,230 |
Notes receivable from mobile home parks (“MHP”) | 81,375 | 50,638 |
Other notes receivable, net of allowance for loan losses | 13,050 | 1,912 |
Other assets | 4,212 | 2,587 |
Inventory non‑current | 11,930 | 7,399 |
Total assets | 283,620 | 235,038 |
Current liabilities: | ||
Accounts payable | 5,168 | 2,828 |
Accrued liabilities | 8,808 | 9,156 |
Customer deposits | 1,567 | 2,222 |
Escrow liability | 7,530 | 5,951 |
Line of credit | 28,860 | |
Current portion of notes payable | 228 | |
Total current liabilities | 51,933 | 20,385 |
Long‑term liabilities: | ||
Lines of credit | 2,001 | 13,679 |
Deferred income taxes | 1,766 | 1,842 |
Note payable, net of current portion | 3,737 | |
Dealer incentive liability | 5,531 | 6,115 |
Total liabilities | 61,231 | 45,758 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Preferred stock, $.001 par value, 10,000,000 shares authorized: issued -0- | ||
Common stock, $.001 par value, 90,000,000 shares authorized; 24,620,079 and 24,000,000 issued and 24,320,079 and 24,000,000 outstanding at December 31, 2019 and 2018, respectively | 25 | 24 |
Treasury stock at cost, 300,000 and -0- shares at December 31, 2019 and 2018, respectively | (3,060) | |
Additional paid-in-capital | 175,067 | 167,743 |
Retained earnings | 50,357 | 21,513 |
Total stockholders' equity | 222,389 | 189,280 |
Total liabilities and stockholders' equity | $ 283,620 | $ 235,038 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
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 |
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 | 24,620,079 | 24,000,000 |
Common stock, shares outstanding | 24,320,079 | 24,000,000 |
Treasury stock, shares | 300,000 | 0 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net revenue: | ||
Product sales | $ 143,196 | $ 139,165 |
Consumer and MHP loans interest | 22,188 | 18,759 |
Other | 3,572 | 3,953 |
Total net revenue | 168,956 | 161,877 |
Operating expenses: | ||
Cost of product sales | 104,903 | 107,231 |
Selling, general administrative expenses | 25,482 | 21,017 |
Dealer incentive | 731 | 829 |
Income from operations | 37,840 | 32,800 |
Other income (expense): | ||
Non‑operating interest income | 300 | 190 |
Miscellaneous, net | 152 | 162 |
Interest expense | (702) | (2,507) |
Total other | (250) | (2,155) |
Income before income tax expense | 37,590 | 30,645 |
Income tax expense | (8,746) | (9,132) |
Net income | $ 28,844 | $ 21,513 |
Weighted average shares outstanding: | ||
Basic | 24,379,667 | 20,197,260 |
Diluted | 24,436,954 | 20,197,260 |
Net income per share: | ||
Basic | $ 1.18 | $ 1.07 |
Diluted | $ 1.18 | $ 1.07 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Partner's Capital | Common Stock | Treasury stock | Additional paid-in-capital | Retained earnings | Total |
Partners Capital at Dec. 31, 2017 | $ 124,271 | |||||
Shares issued | $ (124,271) | |||||
Shares issued upon incorporation | $ 20 | $ 124,251 | $ 124,271 | |||
Shares issued upon incorporation (in shares) | 20,000,000 | |||||
Sale of common stock, net of offering costs of $505 and $4,504 costs during 2019 and 2018, respectively | $ 4 | 43,492 | 43,496 | |||
Shares issued from sale of common stock | 4,000,000 | |||||
Net income | $ 21,513 | 21,513 | ||||
Ending Balance at Dec. 31, 2018 | $ 24 | 167,743 | 21,513 | $ 189,280 | ||
Ending Balance (in shares) at Dec. 31, 2018 | 24,000,000 | 24,000,000 | ||||
Sale of common stock, net of offering costs of $505 and $4,504 costs during 2019 and 2018, respectively | $ 1 | 6,694 | $ 6,695 | |||
Shares issued from sale of common stock | 600,000 | |||||
Share based compensation expense and stock units vested | 630 | 630 | ||||
Share based compensation expense and stock units vested (in shares) | 20,079 | |||||
Purchase of treasury stock | $ (3,060) | (3,060) | ||||
Net income | 28,844 | 28,844 | ||||
Ending Balance at Dec. 31, 2019 | $ 25 | $ (3,060) | $ 175,067 | $ 50,357 | $ 222,389 | |
Ending Balance (in shares) at Dec. 31, 2019 | 24,620,079 | 24,620,079 |
STATEMENTS OF CHANGES IN STOC_2
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY | ||
Sale common stock offering, offering costs | $ 505 | $ 4,504 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities: | ||
Net income | $ 28,844 | $ 21,513 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 1,014 | 838 |
Provision for loan loss—consumer loans | 769 | 851 |
Deferred income taxes | (76) | 1,842 |
Share based payment expense | 630 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 826 | 839 |
Consumer loans originations | (18,961) | (19,615) |
Consumer loans principal collections | 9,729 | 9,455 |
Notes receivable MHP originations | (60,969) | (37,893) |
Notes receivable MHP principal collections | 26,561 | 29,459 |
Inventories | 10,275 | (2,493) |
Prepaid expenses and other current assets | (1,876) | (1,138) |
Other assets | (1,712) | (382) |
Accounts payable | 2,340 | (3,452) |
Accrued liabilities | (348) | 4,335 |
Customer deposits | (655) | (681) |
Dealer incentive liability | (584) | (658) |
Net cash provided by (used in) operating activities | (4,193) | 2,820 |
Investing activities: | ||
Purchases of property, plant and equipment | (4,206) | (6,137) |
Issuance of notes receivable | (11,875) | (1,231) |
Notes receivable collections | 372 | 4,146 |
Purchases of consumer loans | (359) | (1,443) |
Collections from purchased consumer loans | 955 | 212 |
Net cash used in investing activities | (15,113) | (4,453) |
Financing activities: | ||
Proceeds from sale of common stock in initial public offering | 7,200 | 48,000 |
Offering costs for initial public offering | (505) | (4,504) |
Treasury stock purchase | (3,060) | |
Escrow liability, net | 1,579 | 1,444 |
Principal payments on affiliate note payable | (1,500) | |
Principal payments on note payable | (3,965) | (221) |
Proceeds from lines of credit | 65,686 | 63,052 |
Payments on lines of credit | (48,504) | (102,467) |
Net cash provided by financing activities | 18,431 | 3,804 |
Net increase (decrease) in cash and cash equivalents | (875) | 2,171 |
Cash and cash equivalents at beginning of year | 2,599 | 428 |
Cash and cash equivalents at end of year | 1,724 | 2,599 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 722 | 2,746 |
Cash paid for taxes | 9,306 | $ 5,153 |
Supplemental disclosure of non-cash transactions: | ||
Asset received in exchange of accounts receivable | 422 | |
Asset received in exchange of note receivable | $ 254 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2019 | |
NATURE OF OPERATIONS | |
NATURE OF OPERATIONS | 1. NATURE OF OPERATIONS Legacy Housing Corporation (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 converted 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 and (3) provides retail financing to consumers. 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. 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 financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). 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, consumer loans and notes receivable, inventory obsolescence, income taxes, fair value of financial instruments and contingent liabilities. Actual results could differ from these estimates. Segment Reporting The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, the sale of manufactured homes is done through wholesale and retail operations that include providing transportation and consignment arrangements with dealers. The Company also provides financing options to the customers to facilitate such sale of homes. In addition, the sale of homes is directly related to financing provided by the Company. Accordingly, all significant operating and strategic decisions by the chief operating decision‑maker, the Executive Chairman of the Board, are based upon analyses of the Company as one segment or unit. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents The Company considers all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances in bank accounts that may, at times, exceed federally insured limits. The Company has not incurred any losses from such accounts and management considers the risk of loss to be minimal. As of December 31, 2019, the Company had one bank account that exceeded the FDIC limit by an aggregate amount of $1,531. Accounts Receivable Included in accounts receivable are receivables from direct sales of mobile homes and sales of parts and supplies to customers, consignment fees and interest receivables. Accounts receivables are generally due within 30 days 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 December 31, 2019 and 2018, the allowance for doubtful accounts totaled $457 and $341, respectively. Consumer Loans Receivable Consumer loans receivable 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 14.0% as of December 31, 2019 and 2018. Consumer loans receivable have maturities that range from 5 to 25 years. Loan applications go through an underwriting process which 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 $7,530 and $5,951 as of December 31, 2019 and 2018, respectively, and are included in escrow liability in the 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 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 normally when either principal or interest is past due and remains unpaid for more than 90 days. 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. As of December 31, 2019 and 2018, total principal outstanding for consumer loans on nonaccrual status was $1,677 and $1,445, respectively. 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 used various factors to determine the value of the underlying collateral for impaired loans. These factors were: (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 $1,846 and $1,175 as of December 31, 2019 and 2018, respectively, and are included in other assets in the balance sheets. Notes Receivable from Mobile Home Parks The notes receivable from mobile home parks (“MHP Notes” or “Notes”) relate to mobile homes sold to mobile home parks and financed through notes receivable. The Notes have varying maturity dates and call for monthly principal and interest payments. The interest rate on the MHP Notes are typically set at 4.0% above prime with a minimum of 8.0%. The average interest rate per loan was approximately 8.7% and 9.2% as of December 31, 2019 and 2018, respectively with maturities that range from 4 to 15 years. The collateral underlying the Notes are individual mobile homes which can be repossessed and resold. The MHP Notes are generally personally guaranteed by the borrowers with substantial financial resources. The Company had concentrations of MHP Notes with an independent third-party and its affiliates that equaled 38.3% and 8.1% of the principal balance outstanding, all of which was secured, as of December 31, 2019 and 2018, respectively. Allowance for Loan Losses—MHP Notes 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. There were minimal past due balances on the MHP Notes as December 31, 2019 and 2018 and no charge offs were recorded for MHP Notes for the years ended December 31, 2019 and 2018, respectively. Allowance for loan loss is considered immaterial and accordingly no provision is recorded against the MHP Notes as of December 31, 2019 and 2018. Other Notes Receivable Other notes receivable relate to various notes issued to mobile park owners and dealers, which are not directly tied to sale 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 personally guaranteed by the borrowers. The interest rate on the other notes are fixed and range from 6.25% 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. As of December 31, 2019 and 2018, the allowance for loan losses on other notes was $74 and $63, respectively. Inventories Inventories consist of raw materials, work‑in‑process, and finished goods and are stated at the lower of cost or net realizable value. The cost of raw materials is based on the first‑in first‑out method. Finished goods and work‑in‑process are based on a standard cost system that approximates actual costs using the specific identification method. Estimates of the lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business based on current market and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory. For the periods ending, December 31, 2019 and 2018, the Company recorded an insignificant amount of inventory write‑down. The Company evaluates inventory based on historical experience to estimate its inventory not expected to be sold in less than a year. The Company classifies its inventory not expected to be sold in one year as non‑current. As of December 31, 2019 and 2018, non‑current inventory was $11,930 and $7,399, respectively. Property, Plant, and Equipment Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation expense is calculated using the straight‑line method over the estimated useful lives of each asset. Estimated useful lives for significant classes of assets are as follows: buildings and improvements, 30 to 39 years; vehicles, 5 years; machinery and equipment, 7 years; and furniture and fixtures, 7 years. Repair and maintenance charges are expensed as incurred. Expenditures for major renewals or betterments which extend the useful lives of existing property, plant and equipment are capitalized and depreciated. Impairment of Long‑Lived Assets The Company reviews long‑lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Assets are grouped at the lowest level in which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. In such cases, if the future undiscounted cash flows of the underlying assets are less than the carrying amount, then the carrying amount of the long‑lived asset will be adjusted for impairment to a level commensurate with a discounted cash flow analysis of the underlying asset or its determinable fair value. No impairment for long‑lived assets was recorded for the years ended December 31, 2019 or 2018. Dealer Incentive Liability Under a dealer agreement with qualifying independent retailers, a portfolio is created for houses sold by the independent retailer with consumer loan arrangements financed by the Company. The independent retailer is eligible to a receive dealer incentive, which is a portion of total collections expected on a consumer loan portfolio after the Company’s contribution (collection thresholds set per the terms of dealer agreement which includes Legacy’s initial contribution, plus an allocation of interest and other agreed upon periodic fees) is met. A dealer incentive liability is recorded in the Company’s balance sheet based on total outstanding balance of individual dealer loan portfolios at period end, less the remaining portion of the Company’s contribution in respective portfolios. As of December 31, 2019 and 2018, the dealer incentive liability was $5,531 and $6,115, respectively. Dealer incentive expense for the years ended December 31, 2019 and 2018 totaled $731 and $829, respectively, and is included in the Company’s statements of operations. Product Warranties The Company provides retail home buyers with a one‑year warranty from the date of purchase on manufactured inventory. Product warranty costs are accrued when the covered homes are sold to customers. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Factors used to determine the warranty liability include the number of homes under warranty and the historical costs incurred in servicing the warranties. The accrued warranty liability is reduced as costs are incurred and warranty liability balance is included as part of accrued liabilities in the Company’s balance sheet. A tabular presentation of the activity within the warranty liability account for the years ended December 31, 2019 and 2018 is presented below: 2019 2018 Warranty liability, beginning of period $ 3,027 $ 2,602 Product warranty accrued 3,593 2,957 Warranty costs incurred (3,542) (2,532) Warranty liability, end of period $ 3,078 $ 3,027 Advertising Costs The Company expenses all advertising and marketing expenses in the period incurred. Advertising costs for the years ended December 31, 2019 and 2018 were $1,139 and $762, respectively. Fair Value Measurements The Company accounts for its investments and derivative instruments in accordance with ASC 820‑10, Fair Value Measurement, which among other things provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurement) and the lowest priority to unobservable inputs (Level III measurements). The three levels of fair value hierarchy under ASC 820‑10, Fair Value Measurement , are as follows: 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 uses 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 fair values of the interest rate swap were valued at an $3 asset as of December 31, 2019 and an $80 asset as of December 31, 2018. Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, consumer loans, MHP Notes, other notes, 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 MHP Notes, other notes, lines of credit, and notes payable 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 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 $119,000 compared to the book value of $105,042 as of December 31, 2019, and a fair value of approximately $109,000 compared to the book value of $97,175 as of December 31, 2018. This is a Level III valuation technique. Revenue Recognition In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers (Topic 606) , which outlines a comprehensive five‑step model for entities to use in accounting for revenue arising from contracts with customers and supersedes most previous revenue recognition guidance, including industry‑specific guidance. The standard requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements intended to provide users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the requirements of the new revenue standard on January 1, 2019 using the modified retrospective transition method, applied to contracts that were not completed as of the date of initial application, which did not have a material impact on the financial statements. The new guidance under ASU 2014-09 is applicable to our product sales which includes sales of homes through various sales channels, and other revenue which includes consignment fees, service fees and miscellaneous income. Income generated from interest, other lending activities, and investment income are excluded from ASU 2014-09 and will continue to be accounted for under existing guidance. For those revenue streams that are subject to ASU 2014-09, the Company evaluated the impact of adopting the new standard on our revenue recognition policies under existing guidance and determined there is no impact. The adoption did not have a significant impact on the consolidated operating results, financial position or cash flows of the Company. The Company’s evaluation of ASU 2014-09 impact on primary revenue streams are as follows: Product sales, primarily consist of sales of mobile homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, Consignment Sales, and Retail Store Sales. Direct Sales include homes sold directly to independent retailers or customers that are not financed by the Company and are not sold under a consignment arrangement. These types of homes are generally paid for prior to shipment. Commercial Sales include homes sold to mobile home parks under commercial loan programs or paid for upfront. The Company provides floor plan financing for independent retailers, which takes the form of a consignment arrangement. Consignment Sales are considered sales of consigned homes from independent dealers to individual customers. Retail Store Sales are homes sold through Company-owned retail locations. Consignment Sales and Retail Sales of homes may be financed by the Company, by a third party, or in paid in cash. Revenue from product sales is recognized at a point in time when the performance obligation under the terms of a contract with our customers 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 customers. 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 operations. 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. For the years ended December 31, 2019 and 2018, sales to an independent third-party and its affiliates accounted for $38,439 or 26.8% and $5,462 or 3.9% of our product sales, respectively. For the years ended December 31 , 2019 and 2018, total cost of product sales included $23,760 and $20,419 of costs, mainly relating to up front dealer commission and reimbursed dealer expenses for consignment sales and certain other similar costs incurred for retail store and commercial sales. Other revenue consists of consignment fees, service fees and other miscellaneous income. Consignment fees are charged to independent retailers on a monthly basis for homes held by the independent 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 service fees and miscellaneous income is recognized at a point in time when the performance obligation is satisfied. Disaggregation of Revenue . The following table summarizes customer contract revenues disaggregated by source of the revenue for the years ended December 31, 2019 and 2018: Year ended December 31, 2019 2018 Product sales: Direct sales $ 15,186 $ 32,743 Commercial sales 64,358 33,051 Consignment sales 42,934 54,824 Retail store sales 16,114 13,157 Other (1) 4,604 5,390 Total product sales 143,196 139,165 Consumer and MHP loans interest: Interest - consumer installment notes 15,908 13,718 Interest - MHP notes 6,280 5,041 Total consumer and MHP loans interest 22,188 18,759 Other 3,572 3,953 Total net revenue $ 168,956 $ 161,877 (1) Other product sales revenue from ancillary products and services including parts, freight and other services Reserve for Repurchase Commitments In accordance with customary business practice in the manufactured housing industry, the Company has entered into certain repurchase agreements with certain financial institutions and other credit sources who provide floor plan financing to industry retailers, which provided that the Company will be obligated, under certain circumstances, to repurchase homes sold to retailers in the event of a default by a retailer in its obligation to such credit sources. The Company’s obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The Company applies ASC 460, Guarantees and ASC 450‑20, Loss Contingencies , to account for its liability for repurchase commitments. The Company considers its current obligations on current contracts to be immaterial and accordingly have not recorded any reserve for repurchase commitments as of December 31, 2019 and 2018. Other Income, Net Other income primarily consists of interest related to commercial loan receivable balances and interest income earned on cash balances, reduced by interest expenses. Interest Income Interest on consumer loans, MHP Notes and other notes is recognized using the effective‑interest method on the daily balances of the principal amounts outstanding and recorded as part of total revenue. Fees associated with the origination of loans and certain direct loan origination costs are netted and the net amount is deferred and recognized over the life of the loan as an adjustment of yield. Share-Based Compensation The Company accounts for share-based compensation in accordance with the provisions of ASC 718, Compensation—Stock Compensation . Share-based compensation expense is recognized based on the award’s estimated grant date fair value in order to recognize compensation cost for those shares expected to vest. The Company has elected to record forfeitures as they occur. Compensation cost is recognized on a straight-line basis over the vesting period of the awards and adjusted as forfeitures occur. 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”) is calculated based on the closing price of the Company’s common stock on the grant date. 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. Shipping and Handling Costs Shipping and handling costs incurred to deliver product to our customers are included as a component of cost of product sales in the statement of operations. Shipping and handling costs for the years ended December 31, 2019 and 2018 were $525 and $1,625, respectively. Income Taxes The Company is subject to U.S. federal and state income taxes as a corporation. Prior to the corporate conversion, the Partnership was treated as a flow‑through entity for U.S. federal income tax purposes, and as such, was generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to its taxable income was passed through to its partners. Accordingly, prior to the corporate conversion, the Partnership only recorded a provision for Texas franchise tax as the Partnership’s taxable income was included in the income tax returns of the individual partners. Income tax expense for the Company is recognized for the tax effects of the transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized. In addition, management does not believe there are any unrecorded deferred tax liabilities that are material to the financial statements. In December 2017, a comprehensive U.S. tax reform package, the Tax Cuts and Jobs Act, or Tax Act, was enacted which, among other things, lowered the corporate income tax rate from 35% to 21%. As a result of the corporate conversion on January 1, 2018, the Company measured its opening deferred tax assets and liabilities at the newly enacted rate. The determination of the provision for income taxes requires significant judgment, use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more‑likely‑than‑not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. For the periods presented, management has determined there are no material uncertain tax positions. There are no open tax years for the Company and 2018 was the first filing year as a corporation. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable, consumer loans, MHP Notes and s of December 31, 2019 and 2018, the Company had concentrations of MHP Notes with an independent third-party and its affiliates that equaled 38.3% and 8.1%, respectively of the principal balance outstanding, all of which was secured. 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 FASB issued ASU 2016‑02, Leases (Topic 842) , to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and an asset representing its right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous requirement |
CONSUMER LOANS RECEIVABLE
CONSUMER LOANS RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
CONSUMER LOANS RECEIVABLE | |
CONSUMER LOANS RECEIVABLE | 3. CONSUMER LOANS RECEIVABLE Consumer loans receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at December 31, 2019 and 2018: 2019 2018 Consumer loans receivable $ 109,005 $ 101,049 Loan discount and deferred financing fees, net (3,050) (3,162) Allowance for loan losses (913) (712) Consumer loans receivable, net $ 105,042 $ 97,175 The following table presents a detail of the activity in the allowance for loan losses for the years ended December 31, 2019 and 2018: 2019 2018 Allowance for loan losses, beginning of period $ 712 $ 805 Provision for loan losses 769 851 Charge offs (568) (944) Allowance for loan losses $ 913 $ 712 The impaired and general reserve for allowance for loan losses at December 31, 2019 and 2018: 2019 2018 Total consumer loans $ 109,005 $ 101,049 Total allowance for loan losses 913 712 Impaired loans individually evaluated for impairment 1,677 1,445 Specific reserve against impaired loans 529 427 Other loans collectively evaluated for allowance 107,328 99,604 General allowance for loan losses 384 285 A detailed aging of consumer loans receivable that are past due as of December 31, 2019 were as follows: 2019 % 2018 % Total consumer loans receivable $ 109,005 100.0 $ 101,049 100.0 Past due consumer loans: 31 - 60 days past due $ 267 0.2 $ 968 1.0 61 - 90 days past due 122 0.1 404 0.4 91 - 120 days past due 103 0.1 133 0.1 Greater than 120 days past due 1,065 1.0 843 0.8 Total past due $ 1,557 1.4 $ 2,348 2.3 |
NOTES RECEIVABLE FROM MOBILE HO
NOTES RECEIVABLE FROM MOBILE HOME PARKS (MHP Notes) | 12 Months Ended |
Dec. 31, 2019 | |
NOTES RECEIVABLE FROM MOBILE HOME PARKS (“MHP Notes”) | |
NOTES RECEIVABLE FROM MOBILE HOME PARKS (“MHP Notes”) | 4 . NOTES RECEIVABLE FROM MOBILE HOME PARKS (“MHP Notes”) 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. The Company had concentrations of MHP Notes with an independent third-party and its affiliates that equaled 38.3% and 8.1% of the principal balance outstanding, all of which was secured, as of December 31, 2019 and 2018, respectively. There were minimal past due balances on the MHP Notes as of December 31, 2019 and 2018, respectively, and no charge offs were recorded for MHP Notes during the for the years ended December 31, 2019 and 2018, respectively. Allowance for loan loss is considered immaterial and accordingly no loss is recorded against the MHP Notes as of December 31, 2019 and 2018. |
OTHER NOTES RECEIVABLE
OTHER NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
OTHER NOTES RECEIVABLE | |
OTHER NOTES RECEIVABLE | 5 . Other Notes Receivable The balances outstanding on the other notes receivable were as follows as of December 31, 2019 and 2018: 2019 2018 Outstanding principal balance $ 13,552 $ 2,354 Allowance for loan losses (74) (63) Total $ 13,478 $ 2,291 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES | |
INVENTORIES | 6 . INVENTORIES Inventories consisted of the following at December 31, 2019 and 2018: 2019 2018 Raw materials $ 9,434 $ 13,481 Work in progress 383 526 Finished goods 29,341 35,425 Total $ 39,158 $ 49,432 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 7 . PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following at December 31, 2019 and 2018: 2019 2018 Land $ 11,659 $ 8,081 Buildings and leasehold improvements 10,059 9,234 Vehicles 1,580 1,477 Machinery and equipment 3,653 3,385 Furniture and fixtures 214 161 Total 27,165 22,338 Less accumulated depreciation (6,127) (5,210) Total property, plant and equipment $ 21,038 $ 17,128 Depreciation expense was $929 with $370 included as a component of cost of product sales for the year ended December 31, 2019 and $838 with $306 included as a component of cost of product sales for the year ended December 31, 2018. |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
OTHER ASSETS | |
OTHER ASSETS | 8 . OTHER ASSETS Other assets consisted of the following at December 31, 2019 and 2018: 2019 2018 Leased property $ 2,067 $ 1,088 Prepaid rent 299 324 Repossessed loans 1,846 1,175 Total $ 4,212 $ 2,587 Depreciation expense for leased property was $85 for the year ended December 31, 2019. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 9. ACCRUED LIABILITIES Accrued liabilities consisted of the following at December 31, 2019 and 2018: 2019 2018 Warranty liability $ 3,078 $ 3,027 Litigation reserve 325 570 Federal and state taxes payable 1,761 2,252 Accrued expenses & other accrued liabilities 3,644 3,307 Total $ 8,808 $ 9,156 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2019 | |
DEBT | |
DEBT | 10. DEBT Lines of Credit Revolver 1 The Company has a revolving line of credit (“Revolver 1”) with Capital One, N.A. with a maximum credit limit of $45,000 as of December 31, 2019. On May 12, 2017, Revolver 1 was amended to extend the maturity date to May 11, 2020 and increase the maximum borrowing availability to $45,000. For the years ended December 31, 2019 and 2018, Revolver 1 accrued interest at one-month LIBOR plus 2.40%. The interest rates in effect as of December 31, 2019 and 2018 were 4.09% and 4.78%, respectively. Amounts available under Revolver 1 are subject to a formula based on eligible consumer loans and MHP Notes and are secured by all accounts receivable and a percentage of the consumer loans receivable and MHP Notes. The amount of available credit under Revolver 1 was $16,140 and $41,321 at December 31, 2019 and 2018, respectively. The Company was in compliance with all required covenants as of December 31, 2019. For the years ended December 31, 2019 and 2018, interest expense was $396 and $1,701, respectively. The outstanding balance as of December 31, 2019 and 2018 was $28,860 and $3,679, respectively. The Company was in compliance with the other financial covenants that it maintain a tangible net worth of at least $90,000 and that it maintain a ratio of debt to EBITDA of 4 to 1 or less. The Company has negotiated a new credit agreement with Capital One, N.A. that will replace, expand, and extend our credit availability. Management expects to close and execute the new agreement in the near future. Revolver 2 In April 2016, the Company entered into an agreement with Veritex Community Bank to secure an additional revolving line of credit of $15,000 (“Revolver 2”). Revolver 2 accrues interest at one-month LIBOR plus 2.50% and all unpaid principal and interest is due at maturity on April 4, 2021. Revolver 2 is secured by all finished goods inventory excluding repossessed homes. Amounts available under Revolver 2 are subject to a formula based on eligible inventory. The interest rates in effect as of December 31, 2019 and 2018 were 4.19% and 4.85%, respectively. On May 12, 2017, the Company entered into an agreement to increase the line of credit to $20,000. On October 15, 2018, Revolver 2 was amended to extend the maturity date from April 4, 2019 to April 4, 2021. The amount of available credit under Revolver 2 was $11,262 and $9,906 at December 31, 2019 and 2018, respectively. The Company was in compliance with all required covenants as of December 31, 2019. For the years ended December 31, 2019 and 2018, interest expense was $131 and $700, respectively. The outstanding balance as of December 31, 2019 and 2018 was $2,001 and $10,000. The Company was in compliance with the other financial covenants that it maintain a tangible net worth of at least $80,000. Notes Payable On April 7, 2011, the Company signed a promissory note for $4,830 with Woodhaven Bank. The amount due under the promissory note accrues interest at an annual rate of 3.85% through February 2, 2017 and then at the prime interest rate plus 0.60% through maturity on April 7, 2018. On April 7, 2018, the promissory note with Woodhaven Bank was renewed with varying amounts of principal and interest due through the maturity date, April 7, 2033. The promissory note calls for monthly payments of $30 with a final payment due at maturity. The interest rates in effect at December 31, 2019 and 2018 were 4.25% and 4.25%, respectively. The note is secured by certain real property of the Company. Interest expense was $135 and $159 for the years ended December 31, 2019 and 2018, respectively. The balance outstanding on the note payable at December 31, 2018 was $3,552. In October 2019, this note was paid in full. On May 24, 2016, the Company signed a promissory note for $515 with Eagle One, LLC collateralized by the purchase of real property located in Oklahoma City, Oklahoma. The amount due under the promissory note accrues interest at an annual rate of 6.00%. The promissory note calls for monthly principal and interest payments of $6 until June 1, 2026. Interest expense was $1 and $26 for the years ended December 31, 2019 and 2018, respectively. The balance outstanding on the note payable at December 31, 2018 was $414. In January 2019, this note was paid in full. Note Payable to an Affiliate On February 2, 2016, the Company entered into a $1,500 note payable agreement with stated annual interest rates of 3.75% with a related party through common ownership. The note was due on demand. Interest paid on the note payable was $47 for the year ended December 31, 2018. In October 2018, this note payable was paid in full. 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 transactions 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 December 31, 2019, the Company had not drawn on this credit facility. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | 11. INCOME TAXES The Company became a corporation subject to federal income taxes on January 1, 2018, see corporate conversion in Note 1. The change in tax status required the recognition of a deferred tax asset or liability for the initial temporary differences at the time of the change in status. The resulting net deferred tax liability of $2,066 was recorded as income tax expense at the date of the completion of the corporate conversion. Significant components of the provision for income taxes are as follows (in thousands): Year ended December 31, 2019 2018 Current: Federal $ 7,849 $ 6,567 State 973 723 Total current income tax provision 8,822 7,290 Deferred: Federal (70) 1,777 State (6) 65 Total deferred income tax provision (76) 1,842 Provision for income taxes $ 8,746 $ 9,132 A reconciliation of the Company’s effective tax rate from operations to the U.S. federal income tax rate is as follows: Year ended December 31, 2019 2018 Federal statutory rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 2.0 2.3 Tax adjustment related to corporate conversion — 6.5 Other 0.3 — Effective tax rate 23.3 % 29.8 % The tax effects of cumulative temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands): Year ended December 31, 2019 2018 Deferred tax assets: Allowance for doubtful accounts $ 547 $ 368 Reserve accounts 111 148 State taxes 223 — Uniform capitalization 45 54 Total deferred tax assets 926 570 Deferred tax liabilities: Installment sale revenue (1,221) (1,356) Depreciation (969) (732) Accrued interest receivable (465) (288) Other (37) (36) Total deferred tax liabilities (2,692) (2,412) Net deferred tax liabilities $ (1,766) $ (1,842) |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 12. 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 December 31, 2019, the Company had 9.8 million shares available for grant under the Compensation Plan. 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. The Company granted 2,936 restricted shares of its common stock to the independent directors on the Company’s Board of Directors. The shares were granted on February 7, 2019 and became fully vested on December 13, 2019. The Company granted 39,526 restricted shares of its common stock to a member of senior management. The shares were granted on August 2, 2019 and had a grant date fair value of $496. The shares vest at a rate of 20.0% annually, beginning on August 2, 2020, and becoming fully vested on August 2, 2024. 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 Nonvested, January 1, 2019 - - Granted 162 $ 13.37 Vested 20 $ 13.63 Nonvested, December 31, 2019 142 $ 13.34 As of Dec ember 31, 2019, approximately 142,000 RSUs remained unvested. Unrecognized compensation expense related to these RSUs at Dec ember 31, 2019 was $1,648 and is expected to be recognized over 4.97 years. The Company granted 58,694 incentive stock options to a member of senior management. The options were granted on February 7, 2019 at an exercise price of $13.63 per share. The options vest at a rate of 12.5% annually, beginning on February 7, 2019, and becoming fully vested on February 7, 2026. 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 2.41%; dividend yield of 0.00%; expected volatility of common stock of 65.0% and expected life of options of 7.9 years. The following is a summary of option activity (in thousands, except per unit data): Number of Units Weighted Weighted Weighted Aggregate Outstanding, January 1, 2019 — — — — — Granted 59 $ 13.63 $ 7.69 9.10 $ Exercised — — — — — Forfeited — — — — Outstanding, December 31, 2019 59 $ 13.63 $ 7.69 9.10 $ 177 Exercisable, December 31, 2019 7 $ 13.63 $ 7.69 9.10 $ 22 As of Dec ember 31, 2019, approximately 51,000 options remained unvested. Unrecognized compensation expense related to these options at Dec ember 31, 2019 was $344 and is expected to be recognized over 6.11 years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES 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 approximated $260 and $2,186 at December 31, 2019 and 2018, respectively, without reduction for the resale value of the homes. The Company considers its obligations on current contracts to be immaterial and accordingly have not recorded any reserve for repurchase commitment as of December 31, 2019 or 2018. Leases. The Company leases facilities under operating leases that typically have 10‑year terms. These leases usually offer the Company a right of first refusal that affords the Company the option to purchase the leased premises under certain terms in the event the landlord attempts to sell the leased premises to a third party. Rent expense was $593 and $569 for the years ended December 31, 2019 and 2018, respectively. The Company also subleases properties to third parties, ranging from 3‑year to 11‑year terms with various renewal options. Rental income from the subleased property is included in other revenue in the Company’s statements of operations and was approximately $710 and $540 for the years ended December 31, 2019 and 2018, respectively. Future minimum lease commitments under all non‑cancelable operating leases for each of the next five years at December 31, 2019, are as follows: 2020 $ 604 2021 548 2022 476 2023 425 2024 314 Thereafter 809 Total $ 3,176 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. 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. |
DERIVATIVES
DERIVATIVES | 12 Months Ended |
Dec. 31, 2019 | |
DERIVATIVES | |
DERIVATIVES | 14. DERIVATIVES 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 , requires derivative instruments to be measured at fair value and recorded in the statements of financial position as either assets or liabilities. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
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 the 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. Year ended December 31, 2019 2018 Numerator: Net income (in 000's) $ 28,844 $ 21,513 Denominator: Basic weighted-average common shares outstanding 24,379,667 20,197,260 Effect of dilutive securities: Restricted stock grants 26,396 — Stock options 30,891 — Diluted weighted-average common shares outstanding 24,436,954 20,197,260 Earnings per share attributable to Legacy Housing Corporation Basic $ 1.18 $ 1.07 Diluted $ 1.18 $ 1.07 The diluted earnings per share calculation excludes 143,027 potential shares for the year ended December 31, 2019, because the effect of including these potential shares would be antidilutive. There were no potential shares excluded from the December 31, 2018 diluted earnings per share calculation. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS Bell Mobile Homes, a retailer owned by one of the Company’s significant shareholders, purchases manufactured homes from the Company. Accounts receivable balances due from Bell Mobile Homes were $549 and $414 as of December 31, 2019 and 2018, respectively. Accounts payable balances due to Bell Mobile Homes for maintenance and related services were $74 and $123 as of December 31, 2019 and 2018, respectively. Home sales to Bell Mobile Homes were $4,533 and $3,640 for the years ended December 31, 2019 and 2018, respectively. On February 2, 2016, the Company entered into a $1,500 note payable agreement with stated annual interest rates of 3.75% with a related party through common ownership. The note was due on demand. Interest paid on the note payable to an affiliate was $47 for the year ended December 31, 2018. On October 18, 2018, this note payable was paid in full. At December 31, 2018, the Company had a receivable of $375 from a principal shareholder for certain business expenses related to a potential business venture. This amount is included in the Company’s accounts receivable balance as of December 31, 2018. In September, 2019, this receivable was paid in full by the principal shareholder through a non-cash exchange of property. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS Between March 11, 2020 and March 19, 2020, the Company purchased 62,943 shares of its common stock at an average price of $10.83 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. The purchases were made in the open market and 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. The coronavirus pandemic is an evolving threat to the economy and all businesses. At this time both the duration of the pandemic and the magnitude of the economic consequences are unknown. Risks to the Company include but are not limited to: o increased loan losses or deferred loan payments as loan obligors suffer cash flow issues resulting from reduced employment, reduced rental income or unit sales, or other factors; o reduced sales volume as potential customers are unable to shop for new homes or cannot qualify for a home purchase, retail dealers or company stores reduce or stop operations, or MHP owners reduce their future home purchases; o reduced production resulting from factors such as the spread of the illness through the Company’s workforce, reduced product demand, or government-mandated closures of our factories, company-owned stores, or retail lots of independent dealers who carry our products; o delays in development projects as zoning, regulatory, and permitting decisions are likely to be postponed and the expected negative impact of the pandemic on the construction industry; o reduced raw material availability related to global supply chain disruption from the pandemic, including possible border closures; o decreased cash flow from operations which could negatively affect our liquidity; o an outbreak of illness among our management and accounting staff could negatively affect our ability to maintain operations, operate our financial systems, delay our statutory reporting, and reduce our internal control of financial reporting. We continue to monitor government responses to support the economy and evaluate how those actions might mitigate the risks noted above. At this time, we believe that the pandemic will have a negative effect on our financial results that could range from minor to material. Management has taken a number of actions in recent weeks, including stimulating demand by offering discounts and modified purchase terms, reducing production labor, suspending overtime, and reducing rates of pay for non-production workers. Additionally, the Company has negotiated a new credit agreement with its primary bank that will expand and extend our credit facility. Management expects to close and execute the new agreement in the near future. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). |
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, consumer loans and notes receivable, inventory obsolescence, income taxes, fair value of financial instruments and contingent liabilities. Actual results could differ from these estimates. |
Segment Reporting | Segment Reporting The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, the sale of manufactured homes is done through wholesale and retail operations that include providing transportation and consignment arrangements with dealers. The Company also provides financing options to the customers to facilitate such sale of homes. In addition, the sale of homes is directly related to financing provided by the Company. Accordingly, all significant operating and strategic decisions by the chief operating decision‑maker, the Executive Chairman of the Board, are based upon analyses of the Company as one segment or unit. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances in bank accounts that may, at times, exceed federally insured limits. The Company has not incurred any losses from such accounts and management considers the risk of loss to be minimal. As of December 31, 2019, the Company had one bank account that exceeded the FDIC limit by an aggregate amount of $1,531. |
Accounts Receivable | Accounts Receivable Included in accounts receivable are receivables from direct sales of mobile homes and sales of parts and supplies to customers, consignment fees and interest receivables. Accounts receivables are generally due within 30 days 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 December 31, 2019 and 2018, the allowance for doubtful accounts totaled $457 and $341, respectively. |
Consumer Loans Receivable | Consumer Loans Receivable Consumer loans receivable 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 14.0% as of December 31, 2019 and 2018. Consumer loans receivable have maturities that range from 5 to 25 years. Loan applications go through an underwriting process which 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 $7,530 and $5,951 as of December 31, 2019 and 2018, respectively, and are included in escrow liability in the 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 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 normally when either principal or interest is past due and remains unpaid for more than 90 days. 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. As of December 31, 2019 and 2018, total principal outstanding for consumer loans on nonaccrual status was $1,677 and $1,445, respectively. 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 used various factors to determine the value of the underlying collateral for impaired loans. These factors were: (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 $1,846 and $1,175 as of December 31, 2019 and 2018, respectively, and are included in other assets in the balance sheets. |
Notes Receivable from Mobile Home Parks | Notes Receivable from Mobile Home Parks The notes receivable from mobile home parks (“MHP Notes” or “Notes”) relate to mobile homes sold to mobile home parks and financed through notes receivable. The Notes have varying maturity dates and call for monthly principal and interest payments. The interest rate on the MHP Notes are typically set at 4.0% above prime with a minimum of 8.0%. The average interest rate per loan was approximately 8.7% and 9.2% as of December 31, 2019 and 2018, respectively with maturities that range from 4 to 15 years. The collateral underlying the Notes are individual mobile homes which can be repossessed and resold. The MHP Notes are generally personally guaranteed by the borrowers with substantial financial resources. The Company had concentrations of MHP Notes with an independent third-party and its affiliates that equaled 38.3% and 8.1% of the principal balance outstanding, all of which was secured, as of December 31, 2019 and 2018, respectively. Allowance for Loan Losses—MHP Notes 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. There were minimal past due balances on the MHP Notes as December 31, 2019 and 2018 and no charge offs were recorded for MHP Notes for the years ended December 31, 2019 and 2018, respectively. Allowance for loan loss is considered immaterial and accordingly no provision is recorded against the MHP Notes as of December 31, 2019 and 2018. |
Other Notes Receivable | Other Notes Receivable Other notes receivable relate to various notes issued to mobile park owners and dealers, which are not directly tied to sale 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 personally guaranteed by the borrowers. The interest rate on the other notes are fixed and range from 6.25% 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. As of December 31, 2019 and 2018, the allowance for loan losses on other notes was $74 and $63, respectively. |
Inventories | Inventories Inventories consist of raw materials, work‑in‑process, and finished goods and are stated at the lower of cost or net realizable value. The cost of raw materials is based on the first‑in first‑out method. Finished goods and work‑in‑process are based on a standard cost system that approximates actual costs using the specific identification method. Estimates of the lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business based on current market and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory. For the periods ending, December 31, 2019 and 2018, the Company recorded an insignificant amount of inventory write‑down. The Company evaluates inventory based on historical experience to estimate its inventory not expected to be sold in less than a year. The Company classifies its inventory not expected to be sold in one year as non‑current. As of December 31, 2019 and 2018, non‑current inventory was $11,930 and $7,399, respectively. |
Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation expense is calculated using the straight‑line method over the estimated useful lives of each asset. Estimated useful lives for significant classes of assets are as follows: buildings and improvements, 30 to 39 years; vehicles, 5 years; machinery and equipment, 7 years; and furniture and fixtures, 7 years. Repair and maintenance charges are expensed as incurred. Expenditures for major renewals or betterments which extend the useful lives of existing property, plant and equipment are capitalized and depreciated. |
Impairment of Long‑Lived Assets | Impairment of Long‑Lived Assets The Company reviews long‑lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Assets are grouped at the lowest level in which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. In such cases, if the future undiscounted cash flows of the underlying assets are less than the carrying amount, then the carrying amount of the long‑lived asset will be adjusted for impairment to a level commensurate with a discounted cash flow analysis of the underlying asset or its determinable fair value. No impairment for long‑lived assets was recorded for the years ended December 31, 2019 or 2018. |
Dealer Incentive Liability | Dealer Incentive Liability Under a dealer agreement with qualifying independent retailers, a portfolio is created for houses sold by the independent retailer with consumer loan arrangements financed by the Company. The independent retailer is eligible to a receive dealer incentive, which is a portion of total collections expected on a consumer loan portfolio after the Company’s contribution (collection thresholds set per the terms of dealer agreement which includes Legacy’s initial contribution, plus an allocation of interest and other agreed upon periodic fees) is met. A dealer incentive liability is recorded in the Company’s balance sheet based on total outstanding balance of individual dealer loan portfolios at period end, less the remaining portion of the Company’s contribution in respective portfolios. As of December 31, 2019 and 2018, the dealer incentive liability was $5,531 and $6,115, respectively. Dealer incentive expense for the years ended December 31, 2019 and 2018 totaled $731 and $829, respectively, and is included in the Company’s statements of operations. |
Product Warranties | Product Warranties The Company provides retail home buyers with a one‑year warranty from the date of purchase on manufactured inventory. Product warranty costs are accrued when the covered homes are sold to customers. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Factors used to determine the warranty liability include the number of homes under warranty and the historical costs incurred in servicing the warranties. The accrued warranty liability is reduced as costs are incurred and warranty liability balance is included as part of accrued liabilities in the Company’s balance sheet. A tabular presentation of the activity within the warranty liability account for the years ended December 31, 2019 and 2018 is presented below: 2019 2018 Warranty liability, beginning of period $ 3,027 $ 2,602 Product warranty accrued 3,593 2,957 Warranty costs incurred (3,542) (2,532) Warranty liability, end of period $ 3,078 $ 3,027 |
Advertising Costs | Advertising Costs The Company expenses all advertising and marketing expenses in the period incurred. Advertising costs for the years ended December 31, 2019 and 2018 were $1,139 and $762, respectively. |
Fair Value Measurements | Fair Value Measurements The Company accounts for its investments and derivative instruments in accordance with ASC 820‑10, Fair Value Measurement, which among other things provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurement) and the lowest priority to unobservable inputs (Level III measurements). The three levels of fair value hierarchy under ASC 820‑10, Fair Value Measurement , are as follows: 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 uses 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 fair values of the interest rate swap were valued at an $3 asset as of December 31, 2019 and an $80 asset as of December 31, 2018. |
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 notes, 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 MHP Notes, other notes, lines of credit, and notes payable 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 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 $119,000 compared to the book value of $105,042 as of December 31, 2019, and a fair value of approximately $109,000 compared to the book value of $97,175 as of December 31, 2018. This is a Level III valuation technique. |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers (Topic 606) , which outlines a comprehensive five‑step model for entities to use in accounting for revenue arising from contracts with customers and supersedes most previous revenue recognition guidance, including industry‑specific guidance. The standard requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements intended to provide users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the requirements of the new revenue standard on January 1, 2019 using the modified retrospective transition method, applied to contracts that were not completed as of the date of initial application, which did not have a material impact on the financial statements. The new guidance under ASU 2014-09 is applicable to our product sales which includes sales of homes through various sales channels, and other revenue which includes consignment fees, service fees and miscellaneous income. Income generated from interest, other lending activities, and investment income are excluded from ASU 2014-09 and will continue to be accounted for under existing guidance. For those revenue streams that are subject to ASU 2014-09, the Company evaluated the impact of adopting the new standard on our revenue recognition policies under existing guidance and determined there is no impact. The adoption did not have a significant impact on the consolidated operating results, financial position or cash flows of the Company. The Company’s evaluation of ASU 2014-09 impact on primary revenue streams are as follows: Product sales, primarily consist of sales of mobile homes to consumers and mobile home parks through various sales channels, which include Direct Sales, Commercial Sales, Consignment Sales, and Retail Store Sales. Direct Sales include homes sold directly to independent retailers or customers that are not financed by the Company and are not sold under a consignment arrangement. These types of homes are generally paid for prior to shipment. Commercial Sales include homes sold to mobile home parks under commercial loan programs or paid for upfront. The Company provides floor plan financing for independent retailers, which takes the form of a consignment arrangement. Consignment Sales are considered sales of consigned homes from independent dealers to individual customers. Retail Store Sales are homes sold through Company-owned retail locations. Consignment Sales and Retail Sales of homes may be financed by the Company, by a third party, or in paid in cash. Revenue from product sales is recognized at a point in time when the performance obligation under the terms of a contract with our customers 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 customers. 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 operations. 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. For the years ended December 31, 2019 and 2018, sales to an independent third-party and its affiliates accounted for $38,439 or 26.8% and $5,462 or 3.9% of our product sales, respectively. For the years ended December 31 , 2019 and 2018, total cost of product sales included $23,760 and $20,419 of costs, mainly relating to up front dealer commission and reimbursed dealer expenses for consignment sales and certain other similar costs incurred for retail store and commercial sales. Other revenue consists of consignment fees, service fees and other miscellaneous income. Consignment fees are charged to independent retailers on a monthly basis for homes held by the independent 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 service fees and miscellaneous income is recognized at a point in time when the performance obligation is satisfied. Disaggregation of Revenue . The following table summarizes customer contract revenues disaggregated by source of the revenue for the years ended December 31, 2019 and 2018: Year ended December 31, 2019 2018 Product sales: Direct sales $ 15,186 $ 32,743 Commercial sales 64,358 33,051 Consignment sales 42,934 54,824 Retail store sales 16,114 13,157 Other (1) 4,604 5,390 Total product sales 143,196 139,165 Consumer and MHP loans interest: Interest - consumer installment notes 15,908 13,718 Interest - MHP notes 6,280 5,041 Total consumer and MHP loans interest 22,188 18,759 Other 3,572 3,953 Total net revenue $ 168,956 $ 161,877 (1) Other product sales revenue from ancillary products and services including parts, freight and other services |
Reserve for Repurchase Commitments | Reserve for Repurchase Commitments In accordance with customary business practice in the manufactured housing industry, the Company has entered into certain repurchase agreements with certain financial institutions and other credit sources who provide floor plan financing to industry retailers, which provided that the Company will be obligated, under certain circumstances, to repurchase homes sold to retailers in the event of a default by a retailer in its obligation to such credit sources. The Company’s obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The Company applies ASC 460, Guarantees and ASC 450‑20, Loss Contingencies , to account for its liability for repurchase commitments. The Company considers its current obligations on current contracts to be immaterial and accordingly have not recorded any reserve for repurchase commitments as of December 31, 2019 and 2018. |
Other Income, Net | Other Income, Net Other income primarily consists of interest related to commercial loan receivable balances and interest income earned on cash balances, reduced by interest expenses. |
Interest Income | Interest Income Interest on consumer loans, MHP Notes and other notes is recognized using the effective‑interest method on the daily balances of the principal amounts outstanding and recorded as part of total revenue. Fees associated with the origination of loans and certain direct loan origination costs are netted and the net amount is deferred and recognized over the life of the loan as an adjustment of yield. |
Share-based Compensation | Share-Based Compensation The Company accounts for share-based compensation in accordance with the provisions of ASC 718, Compensation—Stock Compensation . Share-based compensation expense is recognized based on the award’s estimated grant date fair value in order to recognize compensation cost for those shares expected to vest. The Company has elected to record forfeitures as they occur. Compensation cost is recognized on a straight-line basis over the vesting period of the awards and adjusted as forfeitures occur. 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”) is calculated based on the closing price of the Company’s common stock on the grant date. 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. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs incurred to deliver product to our customers are included as a component of cost of product sales in the statement of operations. Shipping and handling costs for the years ended December 31, 2019 and 2018 were $525 and $1,625, respectively. |
Income Taxes | Income Taxes The Company is subject to U.S. federal and state income taxes as a corporation. Prior to the corporate conversion, the Partnership was treated as a flow‑through entity for U.S. federal income tax purposes, and as such, was generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to its taxable income was passed through to its partners. Accordingly, prior to the corporate conversion, the Partnership only recorded a provision for Texas franchise tax as the Partnership’s taxable income was included in the income tax returns of the individual partners. Income tax expense for the Company is recognized for the tax effects of the transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized. In addition, management does not believe there are any unrecorded deferred tax liabilities that are material to the financial statements. In December 2017, a comprehensive U.S. tax reform package, the Tax Cuts and Jobs Act, or Tax Act, was enacted which, among other things, lowered the corporate income tax rate from 35% to 21%. As a result of the corporate conversion on January 1, 2018, the Company measured its opening deferred tax assets and liabilities at the newly enacted rate. The determination of the provision for income taxes requires significant judgment, use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more‑likely‑than‑not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. For the periods presented, management has determined there are no material uncertain tax positions. There are no open tax years for the Company and 2018 was the first filing year as a corporation. |
Concentrations | Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable, consumer loans, MHP Notes and s of December 31, 2019 and 2018, the Company had concentrations of MHP Notes with an independent third-party and its affiliates that equaled 38.3% and 8.1%, respectively of the principal balance outstanding, all of which was secured. |
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 FASB issued ASU 2016‑02, Leases (Topic 842) , to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and an asset representing its right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous requirements. The Company plans to use longer phase‑in period for adoption and accordingly this ASU is effective for the Company’s fiscal year beginning January 1, 2021. Modified retrospective application and early adoption is permitted. The Company expects that the adoption of this standard will result in a material increase to assets and liabilities on the balance sheet but will not have a material impact on the statement of operations. While the Company is continuing to assess all the effects of adoption, it currently believes the most significant effects relate to (i) the recognition of new right-of-use assets and lease liabilities on its balance sheet for its property and equipment operating leases and (ii) providing significant new disclosures about its leasing activities. In June 2016, the FASB issued an accounting standards update ASU 2016‑13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write‑down and affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company plans to use longer phase‑in period for adoption and accordingly this ASU is effective for the Company’s fiscal year beginning January 1, 2023. The Company is continuing to evaluate the impact of the adoption of this ASU and is uncertain of the impact on the financial statements and disclosures at this point in time. In March 2017, the FASB issued ASU 2017‑08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310‑20), Premium Amortization on Purchased Callable Debt Securities (“ASU 2017‑08”), which requires the premium on callable debt securities to be amortized to the earliest call date as opposed to the contractual life of the security. ASU 2017‑08 will be effective beginning with the first quarter of the Company’s fiscal year 2020. Adoption of this guidance will not have a material impact on the financial statements and disclosures. 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 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of the activity within the warranty liability account | 2019 2018 Warranty liability, beginning of period $ 3,027 $ 2,602 Product warranty accrued 3,593 2,957 Warranty costs incurred (3,542) (2,532) Warranty liability, end of period $ 3,078 $ 3,027 |
Schedule of disaggregation of revenue | Year ended December 31, 2019 2018 Product sales: Direct sales $ 15,186 $ 32,743 Commercial sales 64,358 33,051 Consignment sales 42,934 54,824 Retail store sales 16,114 13,157 Other (1) 4,604 5,390 Total product sales 143,196 139,165 Consumer and MHP loans interest: Interest - consumer installment notes 15,908 13,718 Interest - MHP notes 6,280 5,041 Total consumer and MHP loans interest 22,188 18,759 Other 3,572 3,953 Total net revenue $ 168,956 $ 161,877 (1) Other product sales revenue from ancillary products and services including parts, freight and other services |
CONSUMER LOANS RECEIVABLE (Tabl
CONSUMER LOANS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
CONSUMER LOANS RECEIVABLE | |
Schedule of Consumer loans receivable, net of allowance for loan losses and deferred financing fees | 2019 2018 Consumer loans receivable $ 109,005 $ 101,049 Loan discount and deferred financing fees, net (3,050) (3,162) Allowance for loan losses (913) (712) Consumer loans receivable, net $ 105,042 $ 97,175 |
Schedule of allowance for loan losses | 2019 2018 Allowance for loan losses, beginning of period $ 712 $ 805 Provision for loan losses 769 851 Charge offs (568) (944) Allowance for loan losses $ 913 $ 712 |
Schedule of impaired and general reserve for allowance for loan losses | 2019 2018 Total consumer loans $ 109,005 $ 101,049 Total allowance for loan losses 913 712 Impaired loans individually evaluated for impairment 1,677 1,445 Specific reserve against impaired loans 529 427 Other loans collectively evaluated for allowance 107,328 99,604 General allowance for loan losses 384 285 |
Schedule of consumer loans receivable that are past due | 2019 % 2018 % Total consumer loans receivable $ 109,005 100.0 $ 101,049 100.0 Past due consumer loans: 31 - 60 days past due $ 267 0.2 $ 968 1.0 61 - 90 days past due 122 0.1 404 0.4 91 - 120 days past due 103 0.1 133 0.1 Greater than 120 days past due 1,065 1.0 843 0.8 Total past due $ 1,557 1.4 $ 2,348 2.3 |
OTHER NOTES RECEIVABLE (Tables)
OTHER NOTES RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER NOTES RECEIVABLE | |
Schedule of balance outstanding on the other notes receivable | 2019 2018 Outstanding principal balance $ 13,552 $ 2,354 Allowance for loan losses (74) (63) Total $ 13,478 $ 2,291 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES | |
Schedule of inventory | 2019 2018 Raw materials $ 9,434 $ 13,481 Work in progress 383 526 Finished goods 29,341 35,425 Total $ 39,158 $ 49,432 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of property, plant and equipment | 2019 2018 Land $ 11,659 $ 8,081 Buildings and leasehold improvements 10,059 9,234 Vehicles 1,580 1,477 Machinery and equipment 3,653 3,385 Furniture and fixtures 214 161 Total 27,165 22,338 Less accumulated depreciation (6,127) (5,210) Total property, plant and equipment $ 21,038 $ 17,128 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER ASSETS | |
Schedule of Other Assets | 2019 2018 Leased property $ 2,067 $ 1,088 Prepaid rent 299 324 Repossessed loans 1,846 1,175 Total $ 4,212 $ 2,587 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | 2019 2018 Warranty liability $ 3,078 $ 3,027 Litigation reserve 325 570 Federal and state taxes payable 1,761 2,252 Accrued expenses & other accrued liabilities 3,644 3,307 Total $ 8,808 $ 9,156 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Summary of significant components of the provision for income taxes | Significant components of the provision for income taxes are as follows (in thousands): Year ended December 31, 2019 2018 Current: Federal $ 7,849 $ 6,567 State 973 723 Total current income tax provision 8,822 7,290 Deferred: Federal (70) 1,777 State (6) 65 Total deferred income tax provision (76) 1,842 Provision for income taxes $ 8,746 $ 9,132 |
Schedule of reconciliation of the Company’s effective tax rate from operations to the U.S. federal income tax rate | Year ended December 31, 2019 2018 Federal statutory rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 2.0 2.3 Tax adjustment related to corporate conversion — 6.5 Other 0.3 — Effective tax rate 23.3 % 29.8 % |
Summary of deferred tax assets and liabilities | The tax effects of cumulative temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands): Year ended December 31, 2019 2018 Deferred tax assets: Allowance for doubtful accounts $ 547 $ 368 Reserve accounts 111 148 State taxes 223 — Uniform capitalization 45 54 Total deferred tax assets 926 570 Deferred tax liabilities: Installment sale revenue (1,221) (1,356) Depreciation (969) (732) Accrued interest receivable (465) (288) Other (37) (36) Total deferred tax liabilities (2,692) (2,412) Net deferred tax liabilities $ (1,766) $ (1,842) |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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 Nonvested, January 1, 2019 - - Granted 162 $ 13.37 Vested 20 $ 13.63 Nonvested, December 31, 2019 142 $ 13.34 |
Schedule of stock option activity | The following is a summary of option activity (in thousands, except per unit data): Number of Units Weighted Weighted Weighted Aggregate Outstanding, January 1, 2019 — — — — — Granted 59 $ 13.63 $ 7.69 9.10 $ Exercised — — — — — Forfeited — — — — Outstanding, December 31, 2019 59 $ 13.63 $ 7.69 9.10 $ 177 Exercisable, December 31, 2019 7 $ 13.63 $ 7.69 9.10 $ 22 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum lease commitments | 2020 $ 604 2021 548 2022 476 2023 425 2024 314 Thereafter 809 Total $ 3,176 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
Summary of reconciliation of the numerators and denominators used in the computations of both basic and diluted EPS | Year ended December 31, 2019 2018 Numerator: Net income (in 000's) $ 28,844 $ 21,513 Denominator: Basic weighted-average common shares outstanding 24,379,667 20,197,260 Effect of dilutive securities: Restricted stock grants 26,396 — Stock options 30,891 — Diluted weighted-average common shares outstanding 24,436,954 20,197,260 Earnings per share attributable to Legacy Housing Corporation Basic $ 1.18 $ 1.07 Diluted $ 1.18 $ 1.07 |
NATURE OF OPERATIONS - IPO and
NATURE OF OPERATIONS - IPO and Corporate Conversion (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 17, 2019 | Jan. 01, 2018 | Jan. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Nature of operations | ||||||
Shares issued upon incorporation (in shares) | 20,000,000 | |||||
Offering costs | $ 505 | $ 4,504 | ||||
Shares repurchased | 300,000 | |||||
Share repurchase price (in dollars per share) | $ 10.20 | |||||
Stock Repurchase Program, Authorized Amount | $ 10,000 | |||||
IPO | ||||||
Nature of operations | ||||||
Shares issued from sale of common stock | 600,000 | 4,000,000 | ||||
Share price (in dollars per share) | $ 12 | $ 12 | $ 12 | |||
Offering costs | $ 505 | $ 4,504 | ||||
Proceeds from IPO net of underwriting discounts and offering expenses | $ 6,695 | $ 43,492 |
NATURE OF OPERATIONS - Segment
NATURE OF OPERATIONS - Segment Reporting (Details) | 12 Months Ended |
Dec. 31, 2019segment | |
NATURE OF OPERATIONS | |
Number of Reportable Segments | 1 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) $ in Thousands | Dec. 31, 2019USD ($)item |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of banks exceeding the FDIC limit | item | 1 |
Cash in excess of FDIC limit | $ | $ 1,531 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable, Consumer Loans Receivable, Notes Receivable from Mobile Home Parks, Other Notes Receivable (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Accounts Receivable | ||
Credit period | 30 days | |
Allowance for doubtful accounts | $ 457 | $ 341 |
Consumer Loans Receivable | ||
Average contractual interest rate | 14.00% | 14.00% |
Escrow liability | $ 7,530 | $ 5,951 |
Number of components comprising the allowance for loan losses | item | 2 | |
General reserve calculation, period of historical loss rate | 3 years | |
Principal outstanding on consumer loans | $ 1,677 | 1,445 |
Repossessed Assets | $ 1,846 | $ 1,175 |
Interest rate spread on the MHP Notes | 4.00% | |
Interest rate on the MHP notes above prime | 8.00% | |
Interest rate on the MHP Notes | 8.70% | 9.20% |
Minimum | ||
Consumer Loans Receivable | ||
Consumer loans receivable term | 5 years | |
Term of notes receivables | 4 years | 4 years |
Interest rate on the other notes | 6.25% | |
Maximum | ||
Consumer Loans Receivable | ||
Consumer loans receivable term | 25 years | |
Term of notes receivables | 15 years | 15 years |
Interest rate on the other notes | 12.00% | |
Notes Receivable from Mobile Home Parks | ||
Consumer Loans Receivable | ||
Charge offs | $ 0 | $ 0 |
Allowance for loan losses | 0 | 0 |
Other Note Receivable | ||
Consumer Loans Receivable | ||
Allowance for loan losses | $ 74 | $ 63 |
Notes Receivable from Mobile Home Parks | Customer concentration risk | Independent third party and affiliates | ||
Consumer Loans Receivable | ||
Concentration risk percentage | 38.30% | 8.10% |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory, Property, plant and equipment, Impairment of Long Lived Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Impairment for long-lived assets | $ 0 | $ 0 |
Non current inventory | $ 11,930 | $ 7,399 |
Buildings and improvements | Minimum | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Useful lives | 30 years | |
Buildings and improvements | Maximum | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Useful lives | 39 years | |
Vehicles | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Useful lives | 5 years | |
Machinery and equipment | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Useful lives | 7 years | |
Furniture and fixtures | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Useful lives | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Dealer Incentive Liability, Advertising Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Dealer Incentive Liability | ||
Dealer incentive liability | $ 5,531 | $ 6,115 |
Dealer incentive expense | $ 731 | $ 829 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Product Warranty (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Term of product warranty | 1 year | |
Warranty liability, beginning of period | $ 3,027 | $ 2,602 |
Product warranty accrued | 3,593 | 2,957 |
Warranty costs incurred | (3,542) | (2,532) |
Warranty liability, end of period | 3,078 | 3,027 |
Advertising Costs | $ 1,139 | $ 762 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair value measurement (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Interest rate swap agreement | Level 2 | ||
Interest Rate Derivative Assets, at Fair Value | $ 3 | $ 80 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair value of financial instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value | Level 3 | ||
Fair value of financial instruments | ||
Loans | $ 119,000 | $ 109,000 |
Book Value | ||
Fair value of financial instruments | ||
Loans | $ 105,042 | $ 97,175 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2019 | |
Disaggregation of revenue | |||
Product sales | $ 143,196 | $ 139,165 | |
Incremental costs of obtaining a contract | true | ||
Dealer commission, reimbursed dealer expenses and other similar costs | $ 23,760 | 20,419 | |
Revenue from contract with customer product and service benchmark | Customer concentration risk | Independent third party and affiliates | |||
Disaggregation of revenue | |||
Product sales | $ 38,439 | $ 5,462 | |
Concentration risk percentage | 26.80% | 3.90% | |
ASU 2014-09 | |||
Disaggregation of revenue | |||
Impact of adoption | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Product sales | $ 143,196 | $ 139,165 |
Consumer and MHP loans interest: | ||
Interest - consumer installments notes | 15,908 | 13,718 |
Interest - MHP notes | 6,280 | 5,041 |
Total consumer and MHP loans interest | 22,188 | 18,759 |
Other | 3,572 | 3,953 |
Total net revenue | 168,956 | 161,877 |
Direct sales | ||
Disaggregation of Revenue [Line Items] | ||
Product sales | 15,186 | 32,743 |
Commercial sales | ||
Disaggregation of Revenue [Line Items] | ||
Product sales | 64,358 | 33,051 |
Consignment sales | ||
Disaggregation of Revenue [Line Items] | ||
Product sales | 42,934 | 54,824 |
Retail store sales | ||
Disaggregation of Revenue [Line Items] | ||
Product sales | 16,114 | 13,157 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Product sales | $ 4,604 | $ 5,390 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Shipping and handling costs | $ 525 | $ 1,625 | |
Federal tax rate | 21.00% | 21.00% | 35.00% |
Uncertain tax positions | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Notes Receivable from Mobile Home Parks | Independent third party and affiliates | Customer concentration risk | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration risk percentage | 38.30% | 8.10% |
CONSUMER LOANS RECEIVABLE - Con
CONSUMER LOANS RECEIVABLE - Consumer loans receivable, net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
CONSUMER LOANS RECEIVABLE | |||
Consumer loans receivable | $ 109,005 | $ 101,049 | |
Loan discount and deferred financing fees, net | (3,050) | (3,162) | |
Allowance for loan losses | (913) | (712) | $ (805) |
Consumer loans receivable, net | $ 105,042 | $ 97,175 |
CONSUMER LOANS RECEIVABLE - All
CONSUMER LOANS RECEIVABLE - Allowance for loan losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSUMER LOANS RECEIVABLE | ||
Allowance for loan losses, beginning of period | $ 712 | $ 805 |
Provision for loan losses | 769 | 851 |
Charge offs | (568) | (944) |
Allowance for loan losses, end of period | $ 913 | $ 712 |
CONSUMER LOANS RECEIVABLE - Imp
CONSUMER LOANS RECEIVABLE - Impaired and general reserve for allowance for loan losses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
CONSUMER LOANS RECEIVABLE | |||
Total consumer loans | $ 109,005 | $ 101,049 | |
Total allowance for loan losses | 913 | 712 | $ 805 |
Impaired loans individually evaluated for impairment | 1,677 | 1,445 | |
Specific reserve against impaired loans | 529 | 427 | |
Other loans collectively evaluated for allowance | 107,328 | 99,604 | |
General allowance for loan losses | $ 384 | $ 285 |
CONSUMER LOANS RECEIVABLE - Agi
CONSUMER LOANS RECEIVABLE - Aging of consumer loans receivable (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Past due consumer loans: | ||
Principal outstanding on consumer loans | $ 1,677 | $ 1,445 |
Total consumer loans | $ 109,005 | $ 101,049 |
Total consumer loans receivable (as a percent) | 100.00% | 100.00% |
Consumer loans receivable past due | $ 1,557 | $ 2,348 |
Consumer loans receivable past due (Percent) | 1.40% | 2.30% |
31 - 60 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable past due | $ 267 | $ 968 |
Consumer loans receivable past due (Percent) | 0.20% | 1.00% |
61 - 90 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable past due | $ 122 | $ 404 |
Consumer loans receivable past due (Percent) | 0.10% | 0.40% |
91 - 120 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable past due | $ 103 | $ 133 |
Consumer loans receivable past due (Percent) | 0.10% | 0.10% |
Greater than 120 days past due | ||
Past due consumer loans: | ||
Consumer loans receivable past due | $ 1,065 | $ 843 |
Consumer loans receivable past due (Percent) | 1.00% | 0.80% |
NOTES RECEIVABLE FROM MOBILE _2
NOTES RECEIVABLE FROM MOBILE HOME PARKS (MHP Notes) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Notes Receivable from Mobile Home Parks | ||
Notes Receivable | ||
Charge offs | $ 0 | $ 0 |
Allowance for loan losses | $ 0 | $ 0 |
Notes Receivable from Mobile Home Parks | Credit concentration risk | Independent third party and affiliates | ||
Notes Receivable | ||
Concentration risk percentage | 38.30% | 8.10% |
OTHER NOTES RECEIVABLE (Details
OTHER NOTES RECEIVABLE (Details) - Other Note Receivable - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Notes Receivable | ||
Outstanding principal balance | $ 13,552 | $ 2,354 |
Allowance for loan losses | (74) | (63) |
Total | $ 13,478 | $ 2,291 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
INVENTORIES | ||
Raw materials | $ 9,434 | $ 13,481 |
Work in progress | 383 | 526 |
Finished goods | 29,341 | 35,425 |
Total | $ 39,158 | $ 49,432 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
PROPERTY, PLANT AND EQUIPMENT | ||
Total | $ 27,165 | $ 22,338 |
Less accumulated depreciation | (6,127) | (5,210) |
Total property, plant and equipment | 21,038 | 17,128 |
Depreciation expense | 929 | 838 |
Cost of product sales | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Depreciation expense | 370 | 306 |
Land | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Total | 11,659 | 8,081 |
Buildings and leasehold improvements | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Total | 10,059 | 9,234 |
Vehicles | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Total | 1,580 | 1,477 |
Machinery and equipment | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Total | 3,653 | 3,385 |
Furniture and fixtures | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Total | $ 214 | $ 161 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
OTHER ASSETS | ||
Leased property | $ 2,067 | $ 1,088 |
Prepaid rent | 299 | 324 |
Repossessed homes | 1,846 | 1,175 |
Total | 4,212 | $ 2,587 |
Depreciation expense on leased property | $ 85 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
ACCRUED LIABILITIES | ||
Warranty liability | $ 3,078 | $ 3,027 |
Litigation reserve | 325 | 570 |
Federal and state taxes payable | 1,761 | 2,252 |
Accrued expenses & other accrued liabilities | 3,644 | 3,307 |
Total | $ 8,808 | $ 9,156 |
DEBT - Lines of Credit (Details
DEBT - Lines of Credit (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | May 12, 2017USD ($) | Apr. 30, 2016USD ($) | |
Revolver 1 | ||||
Lines of Credit | ||||
Maximum borrowing capacity | $ 45,000 | $ 45,000 | ||
Effective interest rate | 4.09% | 4.78% | ||
Amount of available credit | $ 16,140 | $ 41,321 | ||
Interest expense | 396 | 1,701 | ||
Outstanding balance | 28,860 | $ 3,679 | ||
Tangible net worth | $ 90,000 | |||
Debt to EBITDA ratio | 4 | |||
Revolver 1 | London Interbank Offered Rate (LIBOR) | ||||
Lines of Credit | ||||
Spread rate | 2.40% | 2.40% | ||
Revolver 2 | ||||
Lines of Credit | ||||
Maximum borrowing capacity | $ 20,000 | $ 15,000 | ||
Effective interest rate | 4.19% | 4.85% | ||
Amount of available credit | $ 11,262 | $ 9,906 | ||
Interest expense | 131 | 700 | ||
Outstanding balance | 2,001 | $ 10,000 | ||
Tangible net worth | $ 80,000 | |||
Revolver 2 | London Interbank Offered Rate (LIBOR) | ||||
Lines of Credit | ||||
Spread rate | 2.50% |
DEBT - Notes Payable (Details)
DEBT - Notes Payable (Details) - USD ($) $ in Thousands | Apr. 07, 2018 | May 24, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Apr. 07, 2018 | Dec. 31, 2016 | Feb. 02, 2016 | Apr. 07, 2011 |
Promissory note with Woodhaven Bank | ||||||||
Notes Payable | ||||||||
Face amount | $ 4,830 | |||||||
Interest rate | 3.85% | |||||||
Frequency of periodic payment | monthly | |||||||
Principal and interest payments | $ 30 | |||||||
Effective interest rate | 4.25% | 4.25% | ||||||
Interest expense | $ 135 | $ 159 | ||||||
Outstanding balance | 3,552 | |||||||
Promissory note with Woodhaven Bank | Prime Rate | ||||||||
Notes Payable | ||||||||
Spread rate | 0.60% | |||||||
Promissory note with Eagle One LLC | ||||||||
Notes Payable | ||||||||
Face amount | $ 515 | |||||||
Interest rate | 6.00% | |||||||
Frequency of periodic payment | monthly | |||||||
Principal and interest payments | $ 6 | |||||||
Interest expense | $ 1 | 26 | ||||||
Outstanding balance | 414 | |||||||
Related party notes payable | ||||||||
Notes Payable | ||||||||
Face amount | $ 1,500 | |||||||
Interest rate | 3.75% | |||||||
Interest expense | $ 47 | |||||||
PILOT Agreement | ||||||||
Notes Payable | ||||||||
Maximum borrowing capacity | $ 10,000 | |||||||
Interest rate | 6.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Income Taxes | ||||
Change in tax status net deferred tax liability | $ 2,066 | |||
Current: | ||||
Federal | $ 7,849 | $ 6,567 | ||
State | 973 | 723 | ||
Total current income tax provision | 8,822 | 7,290 | ||
Deferred: | ||||
Federal | (70) | 1,777 | ||
State | (6) | 65 | ||
Total deferred income tax provision | (76) | 1,842 | ||
Provision for income taxes | $ 8,746 | $ 9,132 | ||
Effective Income Tax Rate Reconciliation | ||||
Federal statutory rate | 21.00% | 21.00% | 35.00% | |
State income taxes, net of federal tax benefit | 2.00% | 2.30% | ||
Tax adjustment related to corporate conversion | 6.50% | |||
Other | 0.30% | |||
Effective tax rate | 23.30% | 29.80% | ||
Deferred tax assets: | ||||
Allowance for doubtful accounts | $ 547 | $ 368 | ||
Reserve accounts | 111 | 148 | ||
State taxes | 223 | |||
Uniform capitalization | 45 | 54 | ||
Total deferred tax assets | 926 | 570 | ||
Deferred tax liabilities: | ||||
Installment sale revenue | (1,221) | (1,356) | ||
Depreciation | (969) | (732) | ||
Accrued interest receivable | (465) | (288) | ||
Other | (37) | (36) | ||
Total deferred tax liabilities | (2,692) | (2,412) | ||
Net deferred tax liabilities | $ (1,766) | $ (1,842) |
SHARE-BASED COMPENSATION - Plan
SHARE-BASED COMPENSATION - Plan (Details) - $ / shares $ / shares in Thousands | Aug. 02, 2019 | Feb. 07, 2019 | Dec. 31, 2019 |
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 | 9,800,000 | ||
Stock options | |||
SHARE-BASED COMPENSATION | |||
Contractual life | 10 years | ||
Senior management | Restricted shares | |||
SHARE-BASED COMPENSATION | |||
Restricted shares granted (in shares) | 39,526 | 120,000 | |
Grant date fair value | $ 496 | $ 1,636 | |
Vesting percentage | 20.00% | 14.30% | |
Senior management | Stock options | |||
SHARE-BASED COMPENSATION | |||
Vesting percentage | 12.50% | ||
Independent directors | Restricted shares | |||
SHARE-BASED COMPENSATION | |||
Restricted shares granted (in shares) | 2,936 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted stock units (Details) - Restricted stock units $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Number of units | |
Granted | shares | 162 |
Vested | shares | 20 |
Nonvested at the end | shares | 142 |
Weighted average grant date fair value | |
Granted (in dollars per share) | $ / shares | $ 13.37 |
Vested (in dollars per share) | $ / shares | 13.63 |
Nonvested at the end (in dollars per share) | $ / shares | $ 13.34 |
Unrecognized compensation expense | $ | $ 1,648 |
Unrecognized compensation expense, recognition period | 4 years 11 months 19 days |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock options (Details) - Stock options - $ / shares | Feb. 07, 2019 | Dec. 31, 2019 |
Fair value assumptions for options granted | ||
Risk free interest rate | 2.41% | |
Dividend yield | 0.00% | |
Expected volatility | 65.00% | |
Expected life | 7 years 10 months 24 days | |
Stock options granted (in shares) | 59,000 | |
Exercise price (in dollar per share) | $ 13.63 | |
Expiration period | 10 years | |
Senior management | ||
Fair value assumptions for options granted | ||
Stock options granted (in shares) | 58,694 | |
Exercise price (in dollar per share) | $ 13.63 | |
Vesting percentage | 12.50% |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary of Stock options activity (Details) - Stock options $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Number of units | |
Awards granted | shares | 59,000 |
Outstanding at the end | shares | 59,000 |
Exercisable | shares | 7,000 |
Weighted Average Exercise Price | |
Granted (in dollars per share) | $ 13.63 |
Outstanding at the end (in dollars per share) | 13.63 |
Exercisable (in dollars per share) | 13.63 |
Weighted Average Fair Value | |
Granted (in dollars per share) | 7.69 |
Outstanding at the end (in dollars per share) | 7.69 |
Exercisable (in dollars per share) | $ 7.69 |
Weighted Average Remaining Contractual Life and Intrinsic Value | |
Granted (in years) | 9 years 1 month 6 days |
Outstanding at the end (in years) | 9 years 1 month 6 days |
Exercisable (in years) | 9 years 1 month 6 days |
Outstanding at the end (in dollars) | $ | $ 177 |
Exercisable (in dollars) | $ | $ 22 |
Non-vested shares | shares | 51,000 |
Unrecognized compensation expense | $ | $ 344 |
Unrecognized compensation expense, recognition period | 6 years 1 month 10 days |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Repurchase agreements | Maximum | ||
Commitment | ||
Repurchase commitment | $ 260 | $ 2,186 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases | ||
Operating lease, term of contract (in years) | 10 years | |
Rent expense | $ 593 | $ 569 |
Sublease rental income | 710 | $ 540 |
Future minimum lease commitments | ||
2020 | 604 | |
2021 | 548 | |
2022 | 476 | |
2023 | 425 | |
2024 | 314 | |
Thereafter | 809 | |
Total | $ 3,176 | |
Minimum | ||
Leases | ||
Sublease, term of contract (in years) | 3 years | |
Maximum | ||
Leases | ||
Sublease, term of contract (in years) | 11 years |
DERIVATIVES (Details)
DERIVATIVES (Details) - Interest rate swap agreement - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jun. 12, 2017 | |
Derivative instruments | |||
Gains resulted from changes in fair values of the interest rate swap agreement | $ 85 | $ 87 | |
Line of credit | |||
Derivative instruments | |||
Interest rate swap agreement | $ 8,000 | ||
Prepaid Expenses and Other Current Assets | |||
Derivative instruments | |||
Fair values of interest rate swap agreement | $ 3 | $ 80 |
EARNINGS PER SHARE- Tabular (De
EARNINGS PER SHARE- Tabular (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | ||
Net income (in 000's) | $ 28,844 | $ 21,513 |
Denominator: | ||
Basic weighted-average common shares outstanding | 24,379,667 | 20,197,260 |
Effect of dilutive securities: | ||
Diluted weighted-average common shares outstanding | 24,436,954 | 20,197,260 |
Earnings per share attributable to Legacy Housing Corporation | ||
Basic | $ 1.18 | $ 1.07 |
Diluted | $ 1.18 | $ 1.07 |
Restricted stock units | ||
Effect of dilutive securities: | ||
Dilutive securities | 26,396 | |
Stock options | ||
Effect of dilutive securities: | ||
Dilutive securities | 30,891 |
EARNINGS PER SHARE - Antidiluti
EARNINGS PER SHARE - Antidilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share, Diluted, Other Disclosures [Abstract] | ||
Antidilutive shares excluded from calculation of earnings per share | 143,027 | 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Feb. 02, 2016 | |
Related party notes payable | |||
RELATED PARTY TRANSACTIONS | |||
Face amount | $ 1,500 | ||
Interest on notes payable (as a percentage) | 3.75% | ||
Interest paid | $ 47 | ||
Bell Mobile Homes | |||
RELATED PARTY TRANSACTIONS | |||
Accounts receivable related parties | $ 549 | 414 | |
Accounts payable related parties | 74 | 123 | |
Home sales to related parties | $ 4,533 | 3,640 | |
Potential Business Venture | |||
RELATED PARTY TRANSACTIONS | |||
Accounts receivable related parties | $ 375 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | |
Mar. 28, 2020 | Apr. 17, 2019 | |
SUBSEQUENT EVENTS | ||
Stock Repurchase Program, Authorized Amount | $ 10,000 | |
Subsequent event | ||
SUBSEQUENT EVENTS | ||
Number of shares purchased | 62,943 | |
Share price (in dollars per share) | $ 10.83 | |
Stock Repurchase Program, Authorized Amount | $ 10,000 |