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COMMITMENTS AND CONTINGENCIES | 6 Months Ended
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Jun. 30, 2026
COMMITMENTS AND CONTINGENCIES |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES As of January 1, 2020, the Company instituted a self-insured health benefits plan with a stop-loss policy, which provides medical benefits to employees electing coverage under the plan. The Company estimates and records costs for incurred but not reported medical claims and claim development. This reserve is based on historical experience and other assumptions, some of which are subjective. The Company will adjust its self-insured medical benefits reserve based on actual experience, estimated costs and changes to assumptions. As of June 30, 2026 and December 31, 2025, the Company accrued a $0.2 million and $0.8 million liability for incurred but not reported claims, respectively. These accrued amounts are included in accrued liabilities on the accompanying balance sheet. 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 Company believes that risk of loss is mitigated due to the resale value of the repurchased homes and the fact that the agreements are spread over many retailers. The maximum amount for which the Company was liable under such agreements approximated $0.5 million and $0.8 million at June 30, 2026 and December 31, 2025 respectively without reduction for the resale value of the homes. The Company considers its obligations on current contracts to be immaterial and accordingly has not recorded any reserve for repurchase commitment as of June 30, 2026 and December 31, 2025. 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 for the three months ended June 30, 2026 and 2025 was $0.2 million and $0.1 million respectively. Rent expense for the six months ended June 30, 2026 and 2025 was $0.3 million. 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 properties for the three and six months ended June 30, 2026 and 2025 was immaterial. Legal Matters Legal Proceedings The Company is party to certain legal proceedings that arise in the ordinary course of business and are incidental to its business. Certain of the claims pending against the Company in these proceedings allege, among other things, breach of contract and warranty, product liability, and personal injury. The Company has determined that it is probable that it has some liability related to such claims. The Company has included legal reserves of $0.9 million and $1.0 million as of June 30, 2026 and December 31, 2025 respectively, in accrued liabilities on the accompanying balance sheets. Although litigation is inherently uncertain, based on past experience and the information currently available, management does not believe that the currently pending and threatened ordinary course 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. AmeriCasa Litigation On March 13, 2026, the Company filed an Original Petition in the District Court of Tarrant County, Texas against the seller entities and certain individuals related to the Company's November 2025 acquisition of substantially all of the assets of AmeriCasa Solutions, LLC and its affiliates. The Company's claims relate principally to alleged misrepresentations and omissions made in connection with the acquisition and to the alleged post-closing misappropriation of receipts attributable to the acquired assets. A description of the proceeding is included in Part II, Item 1, Legal Proceedings, of this Quarterly Report on Form 10-Q. The litigation is not material to the Company's financial position, liquidity, or results of operations. The Company has not accrued a loss contingency with respect to this matter. The acquired assets remain within the measurement period under ASC 805, Business Combinations, and the Company continues to evaluate the facts and circumstances surrounding the acquisition, including information that may become available through the litigation, for purposes of finalizing its acquisition accounting and assessing recoverability of the acquired assets. An adverse outcome in the litigation, or further developments concerning the underlying facts, could result in an adjustment to the provisional amounts recorded in connection with the acquisition, or both, in a future period. For information regarding receivables and payables between the Company and the Seller arising from post-closing operations of the acquired business, see Note 16 — Related Party Transactions. ​

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