PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements present the company's financial position, operations, equity changes, and cash flows, highlighting a shift from a **$31.2 million** deficit to **$25.7 million** positive equity and a decrease in cash from **$56.7 million** to **$24.9 million** [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$284.0 million** from **$298.6 million**, while total liabilities significantly reduced to **$258.3 million** from **$329.8 million**, leading to a shift from a **$31.2 million** equity deficit to a **$25.7 million** positive equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $24,916 | $56,671 | | Inventories | $168,789 | $182,810 | | Total Assets | $284,033 | $298,647 | | **Liabilities & Equity** | | | | Homebuilding debt | $72,724 | $80,451 | | Derivative liabilities | $69,168 | $127,611 | | Convertible note payable | $69,041 | $68,039 | | Total Liabilities | $258,288 | $329,830 | | Total Stockholders' equity (deficit) | $25,745 | $(31,183) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2024 revenue decreased to **$109.4 million** with net income of **$28.6 million**, while H1 2024 revenue was **$210.3 million** with net income of **$53.6 million**, both significantly impacted by non-cash derivative gains Key Operating Results (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $109,420 | $122,092 | $210,258 | $216,918 | | Gross profit | $19,578 | $23,917 | $35,672 | $40,695 | | Change in fair value of derivative liabilities | $32,056 | $242,343 | $58,435 | $35,278 | | Net income | $28,640 | $245,363 | $53,578 | $40,858 | | Diluted EPS | $0.50 | $4.27 | $0.93 | $0.89 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity improved from a **$31.2 million** deficit at year-end 2023 to a **$25.7 million** positive balance by June 30, 2024, primarily due to **$53.6 million** in net income - The company's equity position shifted from a deficit of **$(31,182,536)** at year-end 2023 to a positive equity of **$25,745,352** at June 30, 2024[17](index=17&type=chunk) - The primary driver for the improvement in stockholders' equity was the net income of **$53,578,257** recorded during the first six months of 2024[15](index=15&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities used **$19.1 million** in cash for H1 2024, a reversal from **$50.3 million** provided in H1 2023, with overall cash and cash equivalents decreasing by **$31.8 million** Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $(19,142,916) | $50,316,249 | | Net cash from investing activities | $(12,733,095) | $37,966 | | Net cash from financing activities | $120,322 | $30,148,781 | | **Net change in cash** | **$(31,755,689)** | **$80,502,996** | - The significant decrease in operating cash flow in H1 2024 compared to H1 2023 was primarily due to changes in working capital, particularly a smaller positive change in inventories (**$8.0 million** in 2024 vs. **$65.6 million** in 2023)[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the land-light strategy, segment reporting, the **Creekside Custom Homes** acquisition, debt and convertible note terms, derivative liabilities, and a significant August 2024 credit agreement amendment - The company operates under a land-light strategy, constructing single-family homes in South Carolina, North Carolina, and Georgia[23](index=23&type=chunk)[24](index=24&type=chunk) - On January 26, 2024, the company acquired **Creekside Custom Homes** for **$12.7 million** in cash, recognizing **$3.6 million** in goodwill[59](index=59&type=chunk)[60](index=60&type=chunk) - The company has a **$240 million** syndicated credit facility with Wells Fargo, amended on August 2, 2024, to waive a debt service coverage ratio covenant default, extend maturity, and reduce capacity to **$220 million**[91](index=91&type=chunk)[95](index=95&type=chunk)[162](index=162&type=chunk) - The company has **$80 million** in principal of convertible notes outstanding, maturing in 2028 with a **15%** interest rate[123](index=123&type=chunk)[124](index=124&type=chunk) - Derivative liabilities, primarily from contingent earnout shares and warrants, are significant and subject to fair value changes based on the company's stock price, causing large non-cash gains or losses in the income statement[82](index=82&type=chunk)[148](index=148&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A covers decreased revenue from fewer home closings, declining gross margins due to incentives and costs, net income impacted by derivative gains, and liquidity supported by cash and an amended credit line, all within a land-light strategy facing higher mortgage rates - The company's strategy is multifaceted, focusing on organic growth, expansion of business verticals like its mortgage joint venture, and targeted acquisitions of private homebuilders[168](index=168&type=chunk) - Macro-economic headwinds, particularly higher mortgage rates, have negatively impacted new home demand, leading the company to offer additional sales incentives like mortgage rate buy-downs[172](index=172&type=chunk) - A key component of the company's strategy is acquiring developed lots via lot option contracts with related parties and third-party developers, which limits financial risk associated with long-term land holdings[217](index=217&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q2 2024 revenue decreased **10.4%** to **$109.4 million** due to fewer closings, despite an **8.9%** ASP increase, with gross margin contracting to **17.9%**, while H1 2024 saw similar trends Q2 2024 vs Q2 2023 Performance | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $109.4M | $122.1M | (10.4)% | | Home Closings | 337 | 385 | (12.5)% | | Average Sales Price | $340,803 | $313,075 | 8.9% | | Gross Profit % | 17.9% | 19.6% | (1.7) p.p. | | Net New Orders | 323 | 341 | (5.3)% | H1 2024 vs H1 2023 Performance | Metric | H1 2024 | H1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $210.3M | $216.9M | (3.0)% | | Home Closings | 648 | 713 | (9.1)% | | Average Sales Price | $337,994 | $313,591 | 7.8% | | Gross Profit % | 17.0% | 18.8% | (1.8) p.p. | | Net New Orders | 707 | 730 | (3.2)% | - Selling, general and administrative (SG&A) expenses increased **20.2%** in Q2 2024 and **11.2%** in H1 2024, driven by higher stock compensation, severance costs from a June 2024 workforce reduction, and increased advertising[184](index=184&type=chunk)[198](index=198&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP Adjusted Gross Profit for Q2 2024 was **$22.8 million** (**20.9%** margin), and Adjusted EBITDA was **$7.7 million** (**7.0%** margin), both lower year-over-year, providing a clearer view of core operating performance Adjusted Gross Profit Reconciliation (in thousands) | | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Gross profit (GAAP) | $19,578 | $23,917 | $35,672 | $40,695 | | Adjustments | $3,267 | $2,160 | $7,787 | $4,547 | | **Adjusted gross profit (Non-GAAP)** | **$22,845** | **$26,077** | **$43,459** | **$45,242** | Adjusted EBITDA Reconciliation (in thousands) | | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | $28,640 | $245,363 | $53,578 | $40,858 | | EBITDA (Non-GAAP) | $34,571 | $253,940 | $64,493 | $49,929 | | Adjustments | $(26,911) | $(240,831) | $(49,550) | $(28,303) | | **Adjusted EBITDA (Non-GAAP)** | **$7,660** | **$13,109** | **$14,944** | **$21,626** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2024, the company held **$24.9 million** in cash and **$55.5 million** in available credit, with cash decreasing by **$31.8 million** in H1 2024, and its primary credit facility recently amended after a covenant default - Cash and cash equivalents stood at **$24.9 million** as of June 30, 2024, down from **$56.7 million** at the end of 2023[211](index=211&type=chunk) - The company's main credit facility, the Wells Fargo Syndicated Line, was amended on August 2, 2024, to waive a debt service coverage ratio covenant default that occurred on June 30, 2024, and modified other financial covenants[227](index=227&type=chunk)[228](index=228&type=chunk) Cash Flow Summary - H1 2024 vs H1 2023 (in millions) | Activity | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Operating | $(19.1) | $50.3 | | Investing | $(12.7) | $0.04 | | Financing | $0.1 | $30.1 | [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk, impacting homebuyer affordability and variable-rate debt costs, with a **100 basis point** rate increase potentially reducing annual net income by **$0.7 million** on its **$71.2 million** outstanding balance - The company's main market risk is interest rate sensitivity, which affects both housing demand and the cost of its variable-rate debt[243](index=243&type=chunk) - The interest rate on the Syndicated Line is variable (SOFR plus a margin); a hypothetical **100 basis point (1%)** increase in rates would reduce annual net income by about **$0.7 million** based on the June 30, 2024 outstanding balance[245](index=245&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identified multiple material weaknesses in internal controls, including tax review, process-level reviews, IT controls, and a new issue with a related party lease, with remediation efforts underway - The company has identified multiple material weaknesses in its internal controls over financial reporting, including issues with tax review, process-level reviews, IT controls, and segregation of duties[248](index=248&type=chunk) - A new material weakness was identified in Q2 2024 concerning the timely execution of a related party lease transaction after its approval[249](index=249&type=chunk) - Remediation efforts are underway, including enhancing the control system, improving review processes, and realigning personnel, but the weaknesses are not yet fully remediated[251](index=251&type=chunk)[252](index=252&type=chunk)[255](index=255&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company faces ordinary course legal claims, primarily construction defects, which management expects will not materially impact financial statements - The company faces ordinary course legal claims, primarily related to construction defects, but does not expect them to have a material financial impact[122](index=122&type=chunk)[257](index=257&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported for the quarter - No material changes to risk factors were reported for the quarter[258](index=258&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported for the quarter that were not previously disclosed - No unregistered sales of equity securities were reported for the quarter[259](index=259&type=chunk) [Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[260](index=260&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[261](index=261&type=chunk) [Other Information](index=49&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[262](index=262&type=chunk) [Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including officer certifications, XBRL data, and the Third Amendment to the credit agreement - The Exhibit Index lists all documents filed with the report, including officer certifications and interactive data files[263](index=263&type=chunk)[266](index=266&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number: 001-39936 United Homes Group, Inc. (Exact name of Registrant as specified in its charter) Delaware 85-3460766 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-39936 UNITED HOMES GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 85-3460766 (State or ...

FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For the transition period from ___ to ___ Commission File Number: 001-39936 United Homes Group, Inc. (Exact name of Registrant as specified in its charter) Delaware 85-3460766 (Stat ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number: 001-39936 United Homes Group, Inc. (Exact name of Registrant as specified in its charter) Delaware 85-3460766 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number: 001-39936 United Homes Group, Inc. (Exact name of Registrant as specified in its charter) | Delaware | 85-3460766 | | - ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 001-39936 DIAMONDHEAD HOLDINGS CORP. (Exact name of registrant as specified in its charter) Delaware 85-3 ...