COLUMBIA, S.C.--(BUSINESS WIRE)--United Homes Group, Inc. (the “Company”) (NASDAQ: UHG) today announced results for the first quarter ended March 31, 2025.
First Quarter 2025 Operating Results
For the first quarter 2025, net income was $18.2 million, or $0.31 per diluted share, which included income from the change in fair value of derivative liabilities of $21.2 million, with that change predominantly due to changes in fair value on potential earn-out consideration due to fluctuation in the stock price during the measurement period, representing a non-cash item. The earnout consideration would be paid in common shares upon reaching certain stock price hurdles. The Company is required to record the fair value of this earnout as derivative liabilities on the Condensed Consolidated Balance Sheets and to record changes in fair value of derivative liabilities on the Condensed Consolidated Statements of Operations, in each case until UHG shares reach certain predetermined values or expiration of the five year earnout period. Net income for the first quarter 2024 was $24.9 million, or $0.44 per diluted share, which included income from the change in fair value of derivative liabilities of $26.4 million. Total Stockholders' equity for the first quarter 2025 was $87.1 million. Adjusted book value1, which excludes the derivative liability and goodwill, was $95.7 million.
“We previously reported our first quarter sales and closings. Our sales pace began to improve during the second half of February, but given the slow sales pace in January, our closing volume was down during the quarter as we close a high proportion of homes sold during the first half of the quarter in the second half of the quarter," said Jamie Pirrello, Interim Chief Executive Officer of United Homes Group.
Pirrello continued, “We continued to make progress moving completed homes of an older design with low gross margins. Sequentially we saw meaningful improvement in sales and gross margins during the quarter. Our new home designs continue to achieve significantly higher gross margins. Our strategy of moving away from building all-spec inventory, and now offering pre-sales, is also achieving higher gross margins than our traditional spec sales. Additionally, our direct cost reduction initiative is delivering meaningful results. We expect to generate a vast majority of these savings in the second half of the year as they run through cost of sales.”
Revenue, net of sales discounts, for the first quarter 2025 was $87.0 million, compared to $100.8 million in the first quarter 2024. Home closings during the first quarter 2025 were 252 compared to 311 in the first quarter 2024. Net new home orders during the first quarter 2025 were 296 compared to 384 in the first quarter 2024. ASP of 251 production-built homes (which excludes one percentage of completion home) closed during the first quarter 2025 was approximately $345,000, compared to $335,000 during the first quarter 2024 for 286 production-built homes (which excludes one percentage of completion home and 24 build to rent homes), representing a 2.9% increase.
Gross profit percentage during the first quarter of 2025 was 16.2% compared to 16.0% during the first quarter 2024. The slight increase is attributable to a reduction in interest expense in cost of sales as a percentage of revenue, partially offset by an increase in incentive costs and price reductions to accelerate the sale of finished inventory. Adjusted gross profit percentage2 in the first quarter 2025 was 18.8%, compared to 20.4% in the first quarter 2024. UHG's adjusted gross profit percentage decreased primarily due to the Company continuing to offer attractive sales incentives and price reductions to homebuyers.
“Gross margins increased 400 basis points between January and March, due in part to the closings of 23 homes that were newly refreshed plans with average gross margins of approximately 24%,” said Jack Micenko, President of United Homes Group. “In April we closed an additional 27 redesigned homes, and as of April 30th, we have 91 homes built with these newly refreshed plans in backlog with average gross margins of approximately 24% and another approximately 200 of these homes in various stages of construction," continued Micenko.
“Gross margins in April were stronger than the first quarter as we closed more of our higher margin refreshed plans and pre-sales,” stated Keith Feldman, Chief Financial Officer of United Homes Group. “Our direct cost reduction initiative is actively underway, and we are seeing strong results. We have already identified over $3.5 million of direct construction cost savings this year, and we expect to see a meaningful impact on earnings related to this initiative in the second half of 2025," continued Feldman.
Selling, general and administrative expenses ("SG&A") as a percentage of revenues was 18.6% in the first quarter 2025, which included $2.0 million of stock-based compensation. Excluding stock-based compensation, Adjusted SG&A3 for the first quarter 2025 was 16.3% of revenues.
Adjusted EBITDA4 during the first quarter 2025 was $2.9 million compared to $7.3 million during the first quarter 2024.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 8:30 a.m. Eastern Time on Wednesday, May 14, 2025. Interested parties can listen to the call live on the Internet under the Events & Presentations heading in the Investors section of the Company’s website at www.unitedhomesgroup.com. Listeners should log into the website at least fifteen minutes prior to the call to download and install any necessary audio software. The call can also be accessed toll free at 800-715-9871, or 646-307-1963 for international participants, Conference ID: 4731284. Those dialing in should do so at least ten minutes prior to the start of the call. An archive of the webcast will also be available on the Company’s website.
About United Homes Group, Inc.
The Company is a publicly traded residential builder headquartered near Columbia, SC. The Company focuses on southeastern markets with active communities in South Carolina, North Carolina and Georgia.
The Company employs a land-light operating strategy with a focus on the design, construction and sale of entry-level, first, second and third move-up single-family houses. The Company principally builds detached single-family houses, and, to a lesser extent, attached single-family houses, including duplex houses and town houses. The Company seeks to operate its homebuilding business in high-growth markets, with substantial in-migrations and employment growth.
Under its land-light lot operating strategy, the Company controls its supply of finished building lots through lot option contracts with third parties, related parties, and land bank partners, which provide the Company with the right to purchase finished lots after they have been developed. This land-light operating strategy provides the Company with the ability to amass a pipeline of lots without the risks associated with acquiring and developing raw land.
As the Company reviews potential geographic markets into which it could expand its homebuilding business, it intends to focus on selecting markets with positive population and employment growth trends, favorable migration patterns, attractive housing affordability, low state and local income taxes, and desirable lifestyle and weather characteristics.
Forward-Looking Statements
Certain statements contained in this earnings release, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “seek,” “continue,” or other similar words.
Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, our management and involve uncertainties that could significantly affect our financial results. Such statements include, but are not limited to, statements about our future financial performance, strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation:
- disruption in the terms or availability of mortgage financing or an increase in the number of foreclosures in our markets;
- volatility and uncertainty in the credit markets and broader financial markets;
- a slowdown in the homebuilding industry or changes in population growth rates in our markets;
- shortages of, or increased prices for, labor, land or raw materials used in land development and housing construction, including due to changes in trade policies;
- increases in interest rates or inflationary pressures, including potential tariffs;
- our ability to execute our business model, including the success of our operations in new markets and our ability to expand into additional new markets;
- our ability to successfully integrate homebuilding operations that we acquire;
- our ability to realize the expected results of strategic initiatives;
- delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control;
- changes in applicable laws or regulations;
- the outcome of any legal proceedings;
- our ability to continue to leverage our land-light operating strategy;
- the ability to maintain the listing of our securities on Nasdaq or any other exchange; and
- the possibility that we may be adversely affected by other economic, business or competitive factors.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release and are not intended to be a guarantee of our performance in future periods. We cannot guarantee the accuracy of any such forward-looking statements contained in this release, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
For further information regarding other risks and uncertainties associated with our business, and important factors that could cause our actual results to vary materially from those expressed or implied in such forward-looking statements, please refer to the factors listed and described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” sections of the documents we file from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K and our quarterly reports on Form 10-Q, copies of which may be obtained from our website at https://ir.unitedhomesgroup.com/financials/sec-filings/default.aspx.
