Core Viewpoint - United Homes Group, Inc. (UHG) reported a decline in revenues and net income for the second quarter of 2025, while experiencing a significant increase in share price over the past month, indicating mixed performance amidst challenging market conditions. Financial Performance Summary - UHG's revenues for Q2 2025 were $105.5 million, a decrease of 3.6% from $109.4 million in Q2 2024, with home closings down 10.1% to 303 units from 337 units [2] - The average sales price increased by 2.3% to $349,000 from $341,000, partially offsetting the decline in volume [2] - Gross margin improved by 100 basis points year over year to 18.9% from 17.9%, driven by cost efficiencies and higher-margin redesigned floor plans [2] - Adjusted gross margin rose to 21.3% from 20.9% in the same period [2] Net Income and Adjusted EBITDA - UHG incurred a net loss of $6.3 million, or $0.11 per share, compared to a net income of $28.6 million, or $0.50 per share, in the previous year, primarily due to a $6.2 million non-cash fair value adjustment [3] - Adjusted EBITDA was $7.2 million, down 5.5% from $7.7 million year-over-year, with an adjusted EBITDA margin of 6.9% [3] Key Business Metrics - Net new orders fell 5.9% year over year to 304 homes from 323, with most markets declining except for Upstate and Rosewood, which saw increases of 26% and 78%, respectively [4] - Backlog as of June 30, 2025, was 202 homes valued at approximately $74.9 million, down from 248 homes valued at approximately $85.7 million a year earlier [4] Liquidity Position - Available liquidity as of June 30, 2025, totaled $95.2 million, including $36.5 million in cash and $58.7 million in unused credit capacity [5] Management Commentary - CEO Jack Micenko noted the positive impact of the refreshed product initiative on sales and profitability, with gross margins trending about 300 basis points above legacy designs [6] - CFO Keith Feldman highlighted a 270-basis-point sequential improvement in gross margin due to product mix and cost-saving measures [6] Influencing Factors - Revenue decline was attributed to lower unit volumes and high mortgage rates affecting affordability, despite an increase in average sales price and gross margin expansion [7] - Operating expenses remained elevated as a percentage of revenue due to reduced top-line performance, even though they were slightly lower in dollar terms year over year [7] Guidance - Management expressed confidence in further margin gains in 2025 compared to 2024, citing ongoing product enhancements and disciplined land acquisition strategies [8] Strategic Developments - On May 19, 2025, UHG's board initiated a strategic review process to explore options including a potential sale of the company or asset sales to maximize shareholder value, with no definitive outcome or timeline disclosed [10]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for United Homes Group, Inc [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of United Homes Group, Inc. (UHG) for the period ended June 30, 2025, including balance sheets, statements of operations, changes in stockholders' equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $36,538 | $22,629 | $13,909 | 61.5% | | Inventories | $144,454 | $139,270 | $5,184 | 3.7% | | Total assets | $281,066 | $265,381 | $15,685 | 5.9% | | Syndicated line of credit | $64,196 | $50,196 | $14,000 | 27.9% | | Derivative liabilities | $24,011 | $39,158 | $(15,147) | (38.7)% | | Total liabilities | $198,904 | $198,514 | $390 | 0.2% | | Total stockholders' equity | $82,162 | $66,867 | $15,295 | 22.9% | - Total assets increased by **5.9%** from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents and inventories[13](index=13&type=chunk) - Total stockholders' equity saw a significant increase of **22.9%**, while total liabilities remained relatively stable[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) Condensed Consolidated Statements of Operations (Three Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $105,506 | $109,420 | $(3,914) | (3.6)% | | Gross profit | $19,919 | $19,578 | $341 | 1.7% | | Net (loss) income | $(6,341) | $28,640 | $(34,981) | (122.1)% | | Basic (loss)/earnings per share | $(0.11) | $0.59 | $(0.70) | (118.6)% | | Diluted (loss)/earnings per share | $(0.11) | $0.50 | $(0.61) | (122.0)% | | Change in fair value of derivative liabilities | $(6,171) | $32,055 | $(38,226) | (119.2)% | Condensed Consolidated Statements of Operations (Six Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $192,507 | $210,258 | $(17,751) | (8.4)% | | Gross profit | $34,047 | $35,672 | $(1,625) | (4.6)% | | Net income | $11,839 | $53,578 | $(41,739) | (78.0)% | | Basic earnings per share | $0.20 | $1.11 | $(0.91) | (82.0)% | | Diluted earnings per share | $0.20 | $0.93 | $(0.73) | (78.5)% | | Change in fair value of derivative liabilities | $15,038 | $58,435 | $(43,397) | (74.3)% | - The significant decline in net income/loss for both the three and six months ended June 30, 2025, was primarily driven by a substantial negative change in the fair value of derivative liabilities[17](index=17&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20(unaudited)) - Total stockholders' equity increased from **$66,867 thousand** at December 31, 2024, to **$82,162 thousand** at June 30, 2025[19](index=19&type=chunk) - The increase was primarily due to retained earnings of **$24,763 thousand** and additional paid-in capital of **$57,393 thousand** as of June 30, 2025[19](index=19&type=chunk) - Stock-based compensation expense contributed **$3,368 thousand** to additional paid-in capital for the six months ended June 30, 2025[19](index=19&type=chunk)[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change ($) | | :------------------------------------------ | :----- | :----- | :--------- | | Net cash flows provided by (used in) operating activities | $2,780 | $(19,143) | $21,923 | | Net cash flows used in investing activities | $(176) | $(12,733) | $12,557 | | Net cash flows provided by financing activities | $9,937 | $120 | $9,817 | | Net change in cash, cash equivalents, and restricted cash | $12,541 | $(31,756) | $44,297 | | Cash, cash equivalents, and restricted cash, end of period | $38,090 | $24,916 | $13,174 | - Operating activities generated **$2.8 million** in cash in H1 2025, a significant improvement from a **$19.1 million** outflow in H1 2024, primarily due to increased cash from accounts payable and adjusted net income[21](index=21&type=chunk)[173](index=173&type=chunk) - Investing activities used less cash in H1 2025 (**$0.2 million**) compared to H1 2024 (**$12.7 million**), mainly because there were no business acquisition payments in 2025[21](index=21&type=chunk)[175](index=175&type=chunk) - Financing activities provided **$9.9 million** in H1 2025, largely from net proceeds of the syndicated line of credit[22](index=22&type=chunk)[176](index=176&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1 - Nature of business and summary of significant accounting policies](index=10&type=section&id=Note%201%20-%20Nature%20of%20business%20and%20summary%20of%20significant%20accounting%20policies) - UHG is a homebuilding business operating in South Carolina, North Carolina, and Georgia, employing a land-light strategy for single-family residential homes[24](index=24&type=chunk) - Revenue recognized from speculative home closings was **$105.5 million** for Q2 2025 and **$192.0 million** for H1 2025[29](index=29&type=chunk)[30](index=30&type=chunk) - Advertising and marketing costs decreased to **$0.7 million** for Q2 2025 (from $0.9 million in Q2 2024) and **$1.4 million** for H1 2025 (from $1.6 million in H1 2024)[31](index=31&type=chunk) [Note 2 - Variable interest entities](index=11&type=section&id=Note%202%20-%20Variable%20interest%20entities) - UHG uses lot option and land bank option contracts to procure land, deferring acquisition and reducing financial risks[34](index=34&type=chunk) - Lot deposits related to option contracts totaled **$44.9 million** as of June 30, 2025, with an aggregate remaining purchase price of **$340.9 million**[35](index=35&type=chunk) - The maximum exposure to loss from involvement with Variable Interest Entities (VIEs) is limited to non-refundable lot deposits and capitalized pre-acquisition costs[34](index=34&type=chunk) [Note 3 - Segment reporting](index=12&type=section&id=Note%203%20-%20Segment%20reporting) - UHG operates through three reportable segments: GSH South Carolina (entry-level and first-move-up homes), Rosewood (second and third move-up homes), and Other (Raleigh, NC operations and mortgage joint venture)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) Segment Revenue (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change (%) | | :----------------- | :----- | :----- | :--------- | | GSH South Carolina | $90,924 | $98,207 | (7.4)% | | Rosewood | $10,797 | $6,085 | 77.4% | | Other | $3,785 | $5,128 | (26.2)% | | **Total** | **$105,506** | **$109,420** | **(3.6)%** | Segment Income (Loss) Before Taxes (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :----------------- | :----- | :----- | :--------- | :--------- | | GSH South Carolina | $5,017 | $6,615 | $(1,598) | (24.2)% | | Rosewood | $(173) | $(549) | $376 | (68.5)% | | Other | $(12) | $(1,443) | $1,431 | (99.2)% | [Note 4 - Fair value measurement](index=15&type=section&id=Note%204%20-%20Fair%20value%20measurement) - Derivative liabilities (contingent earnout, private placement warrants, stock options) and contingent consideration are valued using Level 3 inputs, while public warrant liability uses Level 1 inputs[54](index=54&type=chunk) Fair Value Measurements of Liabilities (June 30, 2025, in thousands) | Liability | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Contingent earnout liability | $— | $— | $14,295 | $14,295 | | Derivative private placement warrant liability | $— | $— | $2,640 | $2,640 | | Derivative public warrant liability | $6,986 | $— | $— | $6,986 | | Derivative stock option liability | $— | $— | $90 | $90 | | **Total derivative liability** | **$6,986** | **$—** | **$17,025** | **$24,011** | | Contingent consideration | $— | $— | $881 | $881 | | **Total fair value** | **$6,986** | **$—** | **$17,906** | **$24,892** | - Total derivative liability decreased from **$39,158 thousand** at December 31, 2024, to **$24,011 thousand** at June 30, 2025[55](index=55&type=chunk) [Note 5 - Inventories](index=17&type=section&id=Note%205%20-%20Inventories) Inventory Breakdown (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :---------------- | | Pre-acquisition land costs | $8,528 | $4,737 | | Developed lots | $30,137 | $15,491 | | Homes under construction | $48,755 | $43,982 | | Finished homes | $57,034 | $75,060 | | **Total inventories** | **$144,454** | **$139,270** | - Total inventories increased by **$5.2 million (3.7%)** from December 31, 2024, to June 30, 2025[58](index=58&type=chunk) - Capitalized interest at the end of H1 2025 was **$2,003 thousand**, with **$3,133 thousand** expensed in cost of sales during the period[58](index=58&type=chunk) [Note 6 - Debt](index=17&type=section&id=Note%206%20-%20Debt) Debt Outstanding (June 30, 2025, in thousands) | Debt Instrument | Weighted average interest rate | Outstanding Balance | | :---------------------- | :----------------------------- | :------------------ | | Syndicated line of credit | 7.61% | $64,196 | | Term loan, net | 11.59% | $67,314 | - The syndicated line of credit's outstanding balance increased to **$64.2 million**, with a weighted average interest rate of **7.61%** as of June 30, 2025[60](index=60&type=chunk)[166](index=166&type=chunk) - The term loan had an outstanding balance of **$67.3 million** with a weighted average interest rate of **11.59%** as of June 30, 2025[60](index=60&type=chunk)[169](index=169&type=chunk) - UHG was in compliance with all debt covenants for both the syndicated line of credit and the term loan as of June 30, 2025[65](index=65&type=chunk)[69](index=69&type=chunk)[167](index=167&type=chunk)[170](index=170&type=chunk) [Note 7 - Related party transactions](index=20&type=section&id=Note%207%20-%20Related%20party%20transactions) - Lot deposits with related parties totaled **$5.1 million** as of June 30, 2025, down from **$6.8 million** at December 31, 2024[71](index=71&type=chunk) - The Company leases office spaces and model homes from related parties, with a lease modification in Q2 2024 resulting in a **$0.2 million** gain[72](index=72&type=chunk) - No overhead costs were allocated to related parties during Q2 and H1 2025, a decrease from **$0.1 million** and **$0.2 million** in the respective prior-year periods[73](index=73&type=chunk) [Note 8 - Warranty reserves](index=20&type=section&id=Note%208%20-%20Warranty%20reserves) Warranty Reserves Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Warranty reserves at beginning of the period | $1,866 | $1,302 | | Reserves provided | $500 | $558 | | Payments for warranty costs | $(293) | $(434) | | **Warranty reserves at end of the period** | **$2,073** | **$1,426** | - Warranty reserves increased to **$2,073 thousand** at June 30, 2025, from **$1,866 thousand** at the beginning of the period[79](index=79&type=chunk) [Note 9 - Commitments and contingencies](index=21&type=section&id=Note%209%20-%20Commitments%20and%20contingencies) - Total undiscounted operating lease liabilities as of June 30, 2025, were **$2,856 thousand**, with a weighted-average remaining lease term of **2.78 years**[82](index=82&type=chunk)[81](index=81&type=chunk) - Outstanding surety bonds totaled **$9.2 million** and letters of credit totaled **$1.3 million** as of June 30, 2025[83](index=83&type=chunk) - An accrual of **$0.2 million** was recorded for a probable settlement related to Rosewood proceedings[85](index=85&type=chunk) [Note 10 - Convertible Notes payable](index=22&type=section&id=Note%2010%20-%20Convertible%20Notes%20payable) - UHG redeemed its **$80.0 million** Convertible Notes on December 11, 2024, resulting in a **$45.6 million** loss on extinguishment[86](index=86&type=chunk) - The redemption involved a cash payment of **$70.0 million** plus **10,168,850 shares** of Class A Common Stock[86](index=86&type=chunk) - There is no remaining debt balance associated with the Convertible Notes as of June 30, 2025[86](index=86&type=chunk) [Note 11 - Stock-based compensation](index=22&type=section&id=Note%2011%20-%20Stock-based%20compensation) - Total unrecognized stock compensation expense related to unvested stock options was **$12.6 million** as of June 30, 2025, expected to be recognized over **2.39 years**[90](index=90&type=chunk) - Unrecognized pre-tax compensation expense for time-based restricted stock units (RSUs) was **$0.6 million**, expected over **2.72 years**[92](index=92&type=chunk) - Unrecognized pre-tax compensation expense for performance-based restricted stock units (PSUs) was **$1.1 million**, expected over **1.47 years**[93](index=93&type=chunk) [Note 12 - Earnout shares](index=24&type=section&id=Note%2012%20-%20Earnout%20shares) - The fair value of earnout shares decreased significantly from December 31, 2024, to June 30, 2025, primarily due to changes in the company's stock price[95](index=95&type=chunk)[96](index=96&type=chunk) Earnout Shares Fair Value and Assumptions | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Current stock price | $2.90 | $4.23 | | Expected volatility | 64% | 52% | | Fair value per share (Triggering Event I) | $0.81 | $1.59 | | Fair value per share (Triggering Event II) | $0.63 | $1.25 | | Fair value per share (Triggering Event III) | $0.50 | $0.99 | - For the six months ended June 30, 2025, the change in fair value of earnout shares resulted in a gain of **$13.9 million**[96](index=96&type=chunk) [Note 13 - Warrant liability](index=24&type=section&id=Note%2013%20-%20Warrant%20liability) - The change in fair value of private placement warrant liability resulted in a loss of **$0.6 million** for Q2 2025 and a gain of **$0.3 million** for H1 2025[98](index=98&type=chunk) - The change in fair value of public warrant liability resulted in a loss of **$1.5 million** for Q2 2025 and a gain of **$0.7 million** for H1 2025[99](index=99&type=chunk) Warrant Valuation Assumptions | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Current stock price | $2.90 | $4.23 | | Exercise price | $11.50 | $11.50 | | Expected volatility | 64% | 52% | [Note 14 - Income taxes](index=25&type=section&id=Note%2014%20-%20Income%20taxes) - UHG recognized an income tax benefit of **$0.3 million** for Q2 2025 and **$1.6 million** for H1 2025[100](index=100&type=chunk) - The estimated effective tax rate for H1 2025 was **33.1%**, significantly higher than **15.3%** in H1 2024, primarily due to state income tax expense and nondeductible stock compensation[100](index=100&type=chunk) [Note 15 - Earnings per share](index=25&type=section&id=Note%2015%20-%20Earnings%20per%20share) Earnings Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :----------- | :----- | :----- | | Basic EPS | $(0.11) | $0.59 | | Diluted EPS | $(0.11) | $0.50 | Earnings Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------- | :----- | :----- | | Basic EPS | $0.20 | $1.11 | | Diluted EPS | $0.20 | $0.93 | - Approximately **18.8 million** potentially anti-dilutive securities were excluded from diluted EPS calculation for Q2 2025, including stock warrants, private placement warrants, public warrants, and stock options[102](index=102&type=chunk) - **21,886,379 earnout shares** and **752,000 PSUs** were excluded from diluted EPS for Q2/H1 2025 as their triggering events/conditions had not been satisfied[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on UHG's financial condition and results of operations, highlighting the company's business model, market challenges, operational improvements, and financial performance for the three and six months ended June 30, 2025 [Overview](index=27&type=section&id=Overview) - UHG operates in high-growth markets (South Carolina, North Carolina, Georgia) with a land-light strategy, focusing on single-family homes ranging from **$200,000 to $600,000**[105](index=105&type=chunk)[107](index=107&type=chunk) - The company initiated a review of strategic alternatives in Q2 2025 to maximize shareholder value[108](index=108&type=chunk) - Market conditions in Q2 2025 were challenging due to elevated mortgage rates and affordability concerns, leading to a **5.9% decrease** in net new orders for the quarter and **15.1%** for the six months[109](index=109&type=chunk) - Gross margin improved by **100 basis points** for Q2 2025 and **70 basis points** for H1 2025, driven by redesigned floor plans, expanded customization, and strategic rebidding of supplier contracts[110](index=110&type=chunk) [Results of Operations - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=28&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Key Financial and Operating Data (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $105,506 | $109,420 | $(3,914) | (3.6)% | | Home closings | 303 | 337 | (34) | (10.1)% | | Average sales price of homes closed | $349,265 | $340,803 | $8,462 | 2.5% | | Gross profit | $19,919 | $19,578 | $341 | 1.7% | | Gross margin | 18.9% | 17.9% | 1.0% | 5.6% | | Selling, general and administrative expense | $18,016 | $19,614 | $(1,598) | (8.2)% | | Net new orders | 304 | 323 | (19) | (5.9)% | | Cancellation rate | 11.4% | 12.7% | (1.3)% | (10.2)% | | Backlog | 202 | 248 | (46) | (18.5)% | - Revenue decreased by **3.6%** due to a **10.1% decrease** in home closings, partially offset by a **2.5% increase** in average sales price[116](index=116&type=chunk)[117](index=117&type=chunk) - Gross margin improved by **1.0 percentage point** to **18.9%**, driven by redesigned floor plans, direct construction cost savings, and fewer non-recurring expenses[119](index=119&type=chunk) - Net loss before taxes was **$(6.6) million**, a significant decrease from **$28.8 million** income in Q2 2024, primarily due to a **$38.3 million** negative change in the fair value of derivative liabilities[115](index=115&type=chunk)[127](index=127&type=chunk) [Results of Operations - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=31&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) Key Financial and Operating Data (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $192,507 | $210,258 | $(17,751) | (8.4)% | | Home closings | 555 | 648 | (93) | (14.4)% | | Average sales price of homes closed | $347,231 | $337,994 | $9,237 | 2.7% | | Gross profit | $34,047 | $35,672 | $(1,625) | (4.6)% | | Gross margin | 17.7% | 17.0% | 0.7% | 4.1% | | Selling, general and administrative expense | $34,176 | $36,668 | $(2,492) | (6.8)% | | Net new orders | 600 | 707 | (107) | (15.1)% | | Cancellation rate | 12.0% | 11.1% | 0.9% | 8.1% | - Revenue decreased by **8.4%** due to a **14.4% decrease** in home closings, partially offset by a **2.7% increase** in average sales price[139](index=139&type=chunk) - Gross margin increased by **0.7 percentage points** to **17.7%**, driven by redesigned floor plans and lower interest expense in cost of sales, partially offset by higher incentive costs[142](index=142&type=chunk) - Net income before taxes decreased by **80.4%** to **$10.3 million**, primarily due to a **$43.4 million** decrease in the gain from the change in fair value of derivative liabilities[148](index=148&type=chunk)[150](index=150&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) - UHG uses Adjusted Gross Profit, EBITDA, and Adjusted EBITDA as supplemental non-GAAP measures to evaluate operating performance by excluding certain non-recurring or non-operational items[155](index=155&type=chunk)[159](index=159&type=chunk) Non-GAAP Financial Measures (Three Months Ended June 30, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :----- | :----- | :--------- | :--------- | | Adjusted gross profit | $22,436 | $22,845 | $(409) | (1.8)% | | Adjusted gross margin | 21.3% | 20.9% | 0.4% | 1.9% | | EBITDA | $(2,062) | $34,571 | $(36,633) | (106.0)% | | EBITDA margin | (2.0)% | 31.6% | (33.6)% | (106.3)% | | Adjusted EBITDA | $7,237 | $7,660 | $(423) | (5.5)% | | Adjusted EBITDA margin | 6.9% | 7.0% | (0.1)% | (1.4)% | Non-GAAP Financial Measures (Six Months Ended June 30, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :----- | :----- | :--------- | :--------- | | Adjusted gross profit | $38,801 | $43,459 | $(4,658) | (10.7)% | | Adjusted gross margin | 20.2% | 20.7% | (0.5)% | (2.4)% | | EBITDA | $19,327 | $64,493 | $(45,166) | (70.0)% | | EBITDA margin | 10.0% | 30.7% | (20.7)% | (67.4)% | | Adjusted EBITDA | $10,110 | $14,944 | $(4,834) | (32.3)% | | Adjusted EBITDA margin | 5.3% | 7.1% | (1.8)% | (25.4)% | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - UHG had **$36.5 million** in cash and cash equivalents as of June 30, 2025, an increase of **$13.9 million** from December 31, 2024[162](index=162&type=chunk) - The company had **$58.7 million** in unused committed capacity under its syndicated line of credit as of June 30, 2025[162](index=162&type=chunk)[166](index=166&type=chunk) - Net cash flows provided by operating activities for H1 2025 were **$2.8 million**, a significant improvement from a **$19.1 million** outflow in H1 2024[173](index=173&type=chunk) - Lot deposits related to option contracts totaled **$44.9 million** as of June 30, 2025, with an aggregate remaining purchase price of **$340.9 million**[165](index=165&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no significant changes to UHG's critical accounting policies and estimates during the six months ended June 30, 2025[177](index=177&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) - UHG's land-light strategy involves lot option and land bank option contracts, limiting the risk of loss to **$44.9 million** in lot deposits and **$8.5 million** in capitalized pre-acquisition costs as of June 30, 2025[178](index=178&type=chunk)[179](index=179&type=chunk) - The company had **$9.2 million** in outstanding surety bonds and **$1.3 million** in letters of credit as of June 30, 2025[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) UHG is primarily exposed to market risk from fluctuations in interest rates, which can impact housing demand, financing costs, and the company's financial performance - UHG's operations are sensitive to interest rate fluctuations, which can adversely affect housing demand, financing costs, revenues, gross profits, and net income[182](index=182&type=chunk) - The company utilizes variable-rate debt, with **$64.2 million** outstanding under the syndicated line of credit (**7.61%** weighted average interest rate) and **$67.3 million** under the term loan (**11.59%** weighted average interest rate) as of June 30, 2025[183](index=183&type=chunk)[185](index=185&type=chunk) - A **100 basis point** increase in overall interest rates would negatively affect the company's net income by approximately **$1.3 million**[185](index=185&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) UHG's management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, evaluated and concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[186](index=186&type=chunk) - There have been no material changes in the company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[187](index=187&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and exhibits for United Homes Group, Inc [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) UHG is involved in various legal proceedings, primarily construction defect claims, which management believes will not have a material adverse effect on the financial statements, with a specific accrual made for a probable settlement related to Rosewood proceedings - UHG is subject to various claims and lawsuits, mainly construction defect claims, arising in the ordinary course of business[84](index=84&type=chunk) - Management believes the disposition of these matters will not have a material adverse effect on the company's Condensed Consolidated Financial Statements[84](index=84&type=chunk) - An accrual of **$0.2 million** was recorded for a probable and reasonably estimable settlement related to Rosewood proceedings[85](index=85&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) UHG faces significant risks due to the cyclical nature of the homebuilding industry, which is sensitive to economic conditions, interest rates, and consumer confidence. Additionally, changes in trade policies, natural disasters, and the ongoing exploration of strategic alternatives pose potential threats to the company's business and financial results - The residential homebuilding industry is highly cyclical and significantly affected by changes in local and general economic conditions, including interest rates, employment, and consumer confidence[192](index=192&type=chunk) - Changes in U.S. trade policies and tariffs could increase costs or limit supplies of building materials, negatively impacting margins[197](index=197&type=chunk) - Weather conditions and natural disasters can decrease buyer traffic, delay construction, affect material/labor costs, and damage homes[195](index=195&type=chunk) - The exploration of strategic alternatives may be disruptive, incur substantial expenses, and cause stock price fluctuations without assurance of a successful transaction[198](index=198&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2025, UHG did not engage in any unregistered sales of equity securities that were not previously reported - There were no unregistered sales of the Company's securities during the quarter ended June 30, 2025, that were not reported in a Current Report on Form 8-K[199](index=199&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) UHG reported no defaults upon senior securities for the period - The Company reported no defaults upon senior securities[200](index=200&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to UHG's operations - Mine Safety Disclosures are not applicable to United Homes Group, Inc[201](index=201&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item for the period - No other information was disclosed under this item[202](index=202&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements, corporate governance documents, and certifications, providing supplementary information to the financial report - The exhibit index lists documents such as the Business Combination Agreement, Amended and Restated Certificate of Incorporation and Bylaws, Warrant Agreement, and various certifications[206](index=206&type=chunk) - Includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[206](index=206&type=chunk)

Financial Data and Key Metrics Changes - Home sales revenue for Q2 2025 was $105.5 million, a decrease of $3.9 million or 3.6% from $109.4 million in Q2 2024 [10] - The company reported a net loss of $6.3 million for Q2 2025, influenced by a fair value adjustment of $6.2 million related to contingent earn-out liabilities [9] - Gross profit for Q2 2025 was $19.9 million, up $300,000 or 1.5% from $19.6 million in the prior year [11] - Gross margin improved by 100 basis points to 18.9% compared to the same period last year [11] Business Line Data and Key Metrics Changes - Home closings for Q2 2025 totaled 303 homes, down from 337 homes in the prior year [10] - Net new orders for Q2 2025 were 304 homes, down from 323 homes in the prior year [10] - The average sales price for homes was $349,000, significantly lower than the U.S. median sales price of $402,000 [5] Market Data and Key Metrics Changes - Demand trends were inconsistent due to high mortgage rates and affordability concerns, but traffic patterns remained resilient [5] - The company maintained home prices below the industry average to address affordability [5] Company Strategy and Development Direction - The company is focused on rolling out updated home designs, which have shown positive responses and improved profitability [6] - An asset-light strategy is being adhered to in land acquisition, with a focus on stabilizing or lowering direct construction costs [8] - The company aims to drive margin expansion and maintain cost discipline while supporting growth through strategic community openings [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning for the second half of the year, despite challenges in the market [8] - The company believes gross margins will be higher in 2025 compared to 2024 due to product transitions [7] Other Important Information - As of June 30, 2025, the company controlled approximately 7,300 lots, positioning it for future growth [13] - The company had approximately $95.2 million in liquidity as of Q2 2025 [13] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded without further inquiries [15][16]

[Report Overview](index=1&type=section&id=Report%20Overview) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) United Homes Group, Inc. reported a Q2 2025 net loss, primarily due to derivative liability fair value changes, despite improved gross margin and average selling price, with declining home deliveries and new orders Key Financial and Operational Metrics for Q2 2025 | Metric | Q2 2025 | Q2 2024 | Year-over-Year Change | | :------------------------------------ | :-------------- | :-------------- | :-------------------- | | Net (Loss) Income (million USD) | $(6.3) | $28.6 | Decrease | | Diluted (Loss) Earnings Per Share | $(0.11) | $0.50 | Decrease | | Revenue (Net of Sales Discounts) (million USD) | $105.5 | $109.4 | -4% | | Home Deliveries | 303 | 337 | -10% | | New Orders | 304 | 323 | -6% | | Gross Margin | 18.9% | 17.9% | +100 Basis Points | | Production Home Average Selling Price (ASP) (USD) | ~$349,000 | ~$341,000 | +2.5% | | Total Stockholders' Equity (million USD) | $82.2 | N/A | N/A | | Adjusted Book Value (million USD) | $96.9 | N/A | N/A | - As of June 30, 2025, the company owned or controlled approximately **7,300** land lots[4](index=4&type=chunk) - As of June 30, 2025, available liquidity was **$95.2 million**, comprising **$36.5 million** in cash and **$58.7 million** in unused credit facility capacity[4](index=4&type=chunk) - CEO Jack Micenko stated the company made progress in product updates and improving direct cost efficiency through systematic re-bidding of materials and labor[2](index=2&type=chunk) - CFO Keith Feldman noted gross margin expansion was driven by the appeal of redesigned floor plans and re-bidding initiatives[3](index=3&type=chunk)[5](index=5&type=chunk) [Financial Performance - Three Months Ended June 30, 2025](index=1&type=section&id=Financial%20Performance%20-%20Three%20Months%20Ended%20June%2030,%202025) [Operating Results Details - Q2 2025](index=1&type=section&id=Operating%20Results%20Details%20-%20Q2%202025) In Q2 2025, the company reported a net loss, primarily due to changes in the fair value of derivative liabilities, with a slight revenue decrease year-over-year but improved gross margin from product optimization and cost savings Q2 2025 Condensed Statements of Operations Summary | Metric (thousand USD) | Q2 2025 | Q2 2024 | | :------------------------------------ | :------------- | :------------- | | Revenue (Net of Sales Discounts) | $105,506 | $109,420 | | Cost of Sales | $85,587 | $89,842 | | Gross Profit | $19,919 | $19,578 | | Selling, General and Administrative Expenses | $18,016 | $19,614 | | Net (Loss) Income from Operations | $1,903 | $(36) | | Change in Fair Value of Derivative Liabilities | $(6,171) | $32,055 | | Net (Loss) Income | $(6,341) | $28,640 | | Diluted (Loss) Earnings Per Share | $(0.11) | $0.50 | Q2 2025 Gross Margin Analysis | Metric | Q2 2025 | Q2 2024 | | :------------------ | :------------- | :------------- | | Gross Margin | 18.9% | 17.9% | | Adjusted Gross Margin | 21.3% | 20.9% | - Gross margin improvement was primarily driven by a healthy mix of redesigned floor plans, direct construction cost savings from re-bidding initiatives, and reduced non-recurring expenses[3](index=3&type=chunk) Q2 2025 Selling, General and Administrative Expenses (SG&A) | Metric | Q2 2025 | | :--------------------------- | :------------- | | SG&A as a Percentage of Revenue | 17.1% | | Adjusted SG&A as a Percentage of Revenue | 14.9% | Q2 2025 Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | | :------------- | :------------- | :------------- | | Adjusted EBITDA (million USD) | $7.2 | $7.7 | [Financial Performance - Six Months Ended June 30, 2025](index=2&type=section&id=Financial%20Performance%20-%20Six%20Months%20Ended%20June%2030,%202025) [Operating Results Details - 6 Months 2025](index=2&type=section&id=Operating%20Results%20Details%20-%206%20Months%202025) For the first half of 2025, the company experienced significant year-over-year declines in net income, revenue, home deliveries, and new orders, with GAAP gross margin slightly up but adjusted gross margin down due to increased incentives H1 2025 Condensed Statements of Operations Summary | Metric (thousand USD) | H1 2025 | H1 2024 | | :------------------------------------ | :------------- | :------------- | | Net Income | $11,839 | $53,578 | | Diluted Earnings Per Share | $0.20 | $0.93 | | Revenue (Net of Sales Discounts) | $192,507 | $210,258 | | Home Deliveries | 555 | 648 | | New Orders | 600 | 707 | | Production Home Average Selling Price (ASP) (USD) | ~$347,000 | ~$338,000 | H1 2025 Gross Margin Analysis | Metric | H1 2025 | H1 2024 | | :------------------ | :------------- | :------------- | | Gross Margin | 17.7% | 17.0% | | Adjusted Gross Margin | 20.2% | 20.7% | - GAAP gross margin slightly increased due to a higher mix of redesigned floor plan home deliveries and a lower percentage of capitalized interest expense in cost of sales, partially offset by higher incentive-related costs; adjusted gross margin decreased primarily due to higher incentives[8](index=8&type=chunk) H1 2025 Selling, General and Administrative Expenses (SG&A) | Metric | H1 2025 | | :--------------------------- | :------------- | | SG&A as a Percentage of Revenue | 17.8% | | Adjusted SG&A as a Percentage of Revenue | 15.6% | H1 2025 Adjusted EBITDA | Metric | H1 2025 | H1 2024 | | :------------- | :------------- | :------------- | | Adjusted EBITDA (million USD) | $10.1 | $14.9 | [Strategic and Company Information](index=2&type=section&id=Strategic%20and%20Company%20Information) [Recent Developments](index=2&type=section&id=Recent%20Developments) The company's Board of Directors initiated a process on May 19, 2025, to explore strategic alternatives, including a sale of the company, asset sales, and refinancing existing debt, to maximize shareholder value, with the process ongoing - The Board of Directors initiated a process on May 19, 2025, to explore strategic alternatives, including a sale of the company, asset sales, and refinancing existing debt, to maximize shareholder value[11](index=11&type=chunk) - The process is ongoing, and its outcome and timing remain uncertain[11](index=11&type=chunk) [About United Homes Group, Inc.](index=3&type=section&id=About%20United%20Homes%20Group,%20Inc.) United Homes Group, Inc. is a publicly traded homebuilder based in South Carolina, focusing on the Southeast market with an "asset-light" strategy, controlling land supply through option contracts, and building entry-level to third-move-up single-family and townhomes - The company is a publicly traded homebuilder headquartered near Columbia, South Carolina[14](index=14&type=chunk) - Its primary markets are concentrated in the Southeast, including South Carolina, North Carolina, and Georgia[14](index=14&type=chunk) - It employs an "asset-light" operating strategy, controlling developed lot supply through option contracts with third parties, affiliates, and land bank partners, thereby avoiding the risks of acquiring and developing raw land[15](index=15&type=chunk)[16](index=16&type=chunk) - The company focuses on designing, building, and selling entry-level, first-time, second-move-up, and third-move-up single-family homes, along with a limited number of attached homes, including duplexes and townhomes[15](index=15&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements protected by safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, based on current expectations and assumptions, involving known and unknown risks and uncertainties that could cause actual results to differ materially from projections - Certain statements in this earnings release are considered forward-looking statements, protected by the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934[17](index=17&type=chunk) - Forward-looking statements are based on current expectations, estimates, and projections about the industry and markets, as well as management's beliefs and assumptions, involving uncertainties that could significantly impact financial performance[18](index=18&type=chunk) - Risks and uncertainties include disruptions in mortgage financing, credit market volatility, slowdowns in the homebuilding industry, labor/land/material shortages, rising interest rates, ability to execute business model, successful execution of strategic alternatives, and legal proceedings[18](index=18&type=chunk) - Readers are cautioned not to place undue reliance on these forward-looking statements, and the company does not intend to publicly update or revise any forward-looking statements[19](index=19&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets and stockholders' equity increased, with a rise in cash and cash equivalents and a significant reduction in derivative liabilities, reflecting changes in its financial position Condensed Consolidated Balance Sheets Summary (thousand USD) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--------------------------- | :------------- | :---------------- | :------- | | Cash and Cash Equivalents | $36,538 | $22,629 | +$13,909 | | Inventory | $144,454 | $139,270 | +$5,184 | | Lot Deposits | $44,938 | $48,153 | -$3,215 | | Goodwill | $9,280 | $9,280 | $0 | | **Total Assets** | **$281,066** | **$265,381** | **+$15,685** | | Accounts Payable | $22,257 | $17,801 | +$4,456 | | Syndicated Credit Facility | $64,196 | $50,196 | +$14,000 | | Derivative Liabilities | $24,011 | $39,158 | -$15,147 | | Term Loan, Net | $67,314 | $67,150 | +$164 | | **Total Liabilities** | **$198,904** | **$198,514** | **+$390** | | **Total Stockholders' Equity** | **$82,162** | **$66,867** | **+$15,295** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) In Q2 2025, the company shifted from profit to loss, and H1 net income significantly declined, primarily due to changes in the fair value of derivative liabilities; both revenue and cost of sales decreased, but gross profit slightly increased in Q2 Condensed Consolidated Statements of Operations Summary (thousand USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------------- | :------------- | :------------- | :------------- | | Revenue (Net of Sales Discounts) | $105,506 | $109,420 | $192,507 | $210,258 | | Cost of Sales | $85,587 | $89,842 | $158,460 | $174,586 | | Gross Profit | $19,919 | $19,578 | $34,047 | $35,672 | | Selling, General and Administrative Expenses | $18,016 | $19,614 | $34,176 | $36,668 | | Net (Loss) Income from Operations | $1,903 | $(36) | $(129) | $(996) | | Change in Fair Value of Derivative Liabilities | $(6,171) | $32,055 | $15,038 | $58,435 | | (Loss) Income Before Income Taxes | $(6,610) | $28,776 | $10,279 | $52,551 | | Net (Loss) Income | $(6,341) | $28,640 | $11,839 | $53,578 | | Diluted (Loss) Earnings Per Share | $(0.11) | $0.50 | $0.20 | $0.93 | [Non-GAAP Financial Measures Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliations) [Adjusted Gross Profit Reconciliation](index=7&type=section&id=Adjusted%20Gross%20Profit%20Reconciliation) This section provides a reconciliation of GAAP gross profit to adjusted gross profit, with adjustments for capitalized interest, amortization, abandoned project costs, severance, and non-recurring remediation costs, to offer a more specific measure of gross profit Adjusted Gross Profit Reconciliation Summary (thousand USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------------- | :------------- | :------------- | :------------- | | Gross Profit | $19,919 | $19,578 | $34,047 | $35,672 | | Interest Expense in Cost of Sales | $1,632 | $1,659 | $3,133 | $5,172 | | Amortization in Homebuilding Cost of Sales | $882 | $913 | $1,563 | $1,861 | | Abandoned Project Costs | $3 | $320 | $58 | $320 | | Severance in Cost of Sales | $0 | $325 | $0 | $325 | | Non-Recurring Remediation Costs | $0 | $50 | $0 | $109 | | **Adjusted Gross Profit** | **$22,436** | **$22,845** | **$38,801** | **$43,459** | | Gross Margin | 18.9% | 17.9% | 17.7% | 17.0% | | Adjusted Gross Margin | 21.3% | 20.9% | 20.2% | 20.7% | [EBITDA and Adjusted EBITDA Reconciliation](index=8&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) This section reconciles GAAP net income to EBITDA and adjusted EBITDA, excluding items such as interest, taxes, depreciation, amortization, stock-based compensation, transaction costs, and changes in fair value of derivative liabilities, to better assess the company's operating performance EBITDA and Adjusted EBITDA Reconciliation Summary (thousand USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------------- | :------------- | :------------- | :------------- | | Net (Loss) Income | $(6,341) | $28,640 | $11,839 | $53,578 | | EBITDA | $(2,062) | $34,571 | $19,327 | $64,493 | | Stock-Based Compensation Expense | $1,411 | $1,840 | $3,368 | $3,350 | | Transaction Costs Expense | $707 | $517 | $707 | $1,742 | | Amortization in Homebuilding Cost of Sales | $882 | $913 | $1,563 | $1,861 | | Severance | $125 | $1,504 | $125 | $1,504 | | Abandoned Project Costs | $3 | $320 | $58 | $320 | | Change in Fair Value of Derivative Liabilities | $6,171 | $(32,055) | $(15,038) | $(58,435) | | Non-Recurring Remediation Costs | $0 | $50 | $0 | $109 | | **Adjusted EBITDA** | **$7,237** | **$7,660** | **$10,110** | **$14,944** | | EBITDA Margin | (2.0)% | 31.6% | 10.0% | 30.7% | | Adjusted EBITDA Margin | 6.9% | 7.0% | 5.3% | 7.1% | [Adjusted SG&A Reconciliation](index=9&type=section&id=Adjusted%20SG%26A%20Reconciliation) This section provides a reconciliation of GAAP selling, general, and administrative expenses (SG&A) to adjusted SG&A, by excluding stock-based compensation expense, transaction costs expense, and severance in SG&A, to more clearly reflect the company's operating performance Adjusted SG&A Reconciliation Summary (thousand USD) | Metric | Q2 2025 | H1 2025 | | :------------------------------------ | :------------- | :------------- | | Selling, General and Administrative Expenses | $18,016 | $34,176 | | Stock-Based Compensation Expense | $1,411 | $3,368 | | Transaction Costs Expense | $707 | $707 | | Severance in SG&A | $125 | $125 | | **Adjusted SG&A** | **$15,773** | **$29,976** | | SG&A Percentage | 17.1% | 17.8% | | Adjusted SG&A Percentage | 14.9% | 15.6% | [Adjusted Book Value Reconciliation](index=10&type=section&id=Adjusted%20Book%20Value%20Reconciliation) This section provides a reconciliation of GAAP total stockholders' equity to adjusted book value, by excluding the impact of goodwill and derivatives, to offer a measure that management believes better reflects the company's operating performance Adjusted Book Value Reconciliation Summary (thousand USD) | Metric | June 30, 2025 | | :--------------------------- | :------------- | | Total Stockholders' Equity | $82,162 | | Derivative Liabilities | $24,011 | | Goodwill | $(9,280) | | **Adjusted Book Value** | **$96,893** | [Operational Metrics by Market](index=11&type=section&id=Operational%20Metrics%20by%20Market) [Market Performance Overview](index=11&type=section&id=Market%20Performance%20Overview) The company's operational performance varied across market regions, with total new orders and deliveries declining year-over-year in both Q2 and H1, though the Rosewood and Raleigh markets showed strong growth, and total backlog units and value decreased as of June 30 Q2 2025 Operational Metrics by Market | Market | Q2 2025 New Orders | Q2 2025 Deliveries | Q2 2024 New Orders | Q2 2024 Deliveries | New Orders YoY Change | Deliveries YoY Change | | :------- | :----------------- | :----------------- | :----------------- | :----------------- | :-------------------- | :-------------------- | | Coastal | 58 | 49 | 62 | 48 | -6% | 2% | | Midlands | 130 | 145 | 169 | 175 | -23% | -17% | | Upstate | 92 | 84 | 73 | 98 | 26% | -14% | | Rosewood | 16 | 16 | 9 | 8 | 78% | 100% | | Raleigh | 8 | 9 | 10 | 8 | -20% | 13% | | **Total** | **304** | **303** | **323** | **337** | **-6%** | **-10%** | H1 2025 Operational Metrics by Market | Market | H1 2025 New Orders | H1 2025 Deliveries | H1 2024 New Orders | H1 2024 Deliveries | New Orders YoY Change | Deliveries YoY Change | | :------- | :----------------- | :----------------- | :----------------- | :----------------- | :-------------------- | :-------------------- | | Coastal | 97 | 94 | 130 | 93 | -25% | 1% | | Midlands | 281 | 269 | 378 | 325 | -26% | -17% | | Upstate | 164 | 139 | 168 | 196 | -2% | -29% | | Rosewood | 33 | 29 | 17 | 22 | 94% | 32% | | Raleigh | 25 | 24 | 14 | 12 | 79% | 100% | | **Total** | **600** | **555** | **707** | **648** | **-15%** | **-14%** | Backlog as of June 30, 2025 | Market | Backlog Units | Backlog Value (million USD) | | :------- | :------------ | :-------------------------- | | Coastal | 52 | $19.1 | | Midlands | 83 | $29.4 | | Upstate | 49 | $16.0 | | Rosewood | 14 | $8.7 | | Raleigh | 4 | $1.7 | | **Total** | **202** | **$74.9** | - As of June 30, 2025, total backlog units decreased by **19%** to **202** units, and total backlog value decreased by **13%** to **$74.9 million** year-over-year[37](index=37&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) [Earnings Conference Call](index=2&type=section&id=Earnings%20Conference%20Call) The company will host an earnings conference call on August 7, 2025, allowing investors to participate via webcast or dial-in to discuss Q2 results - The company will host an investor conference call via webcast on Thursday, August 7, 2025, at 8:30 AM ET[12](index=12&type=chunk) - Investors can listen to the live webcast on the company's website at www.unitedhomesgroup.com under the "Investors" section, "Events & Presentations" heading[12](index=12&type=chunk) - Dial-in numbers are 800-715-9871 (toll-free) or 646-307-1963 (international), with Conference ID: 3108794[12](index=12&type=chunk)[13](index=13&type=chunk) [Investor and Media Contacts](index=4&type=section&id=Investor%20and%20Media%20Contacts) This section provides detailed contact information for United Homes Group, Inc.'s investor relations and media representatives - Investor Relations Contact: Drew Mackintosh (drew@mackintoshir.com, Mobile: 310-924-9036)[20](index=20&type=chunk) - Media Contact: Erin Reeves-McGinnis (erinreevesmcginnis@unitedhomesgroup.com, Phone: 844-766-4663)[20](index=20&type=chunk)

Group 1 - The housing industry is viewed positively due to perpetual undersupply, stability as an asset, and benefits from a growing population [1] - The focus is on identifying companies in the oil and gas sector that are trading at significant discounts to their intrinsic value [1] - The investment approach combines Benjamin Graham's philosophy with a contrarian market perspective [1]

Core Viewpoint - United Homes Group, Inc. (UHG) has experienced significant declines in stock performance and financial metrics for the first quarter of 2025, primarily due to reduced home closings and increased operational challenges [1][2][3]. Revenue and Earnings Overview - UHG reported revenues of $87 million for Q1 2025, a decrease of 13.7% from $100.8 million in Q1 2024, driven by an 18.9% drop in home closings to 252 units [2] - The average sales price of production-built homes increased by 2.9% to approximately $345,000 compared to $335,000 in the previous year [2] - Net income fell to $18.2 million, or $0.31 per diluted share, down 27.1% from $24.9 million, or $0.44 per share, in the prior-year quarter [3] - Adjusted EBITDA decreased by 60.6% to $2.9 million from $7.3 million in the prior year, indicating ongoing margin pressure [3] Other Key Business Metrics - Gross profit declined by 12.2% year over year to $14.1 million, with a reported gross margin of 16.2%, slightly up from 16% in Q1 2024 [4] - Adjusted gross profit was $16.4 million, down 20.4% from $20.6 million, with adjusted gross margin dropping to 18.8% from 20.4% due to elevated incentives [4] - Net new orders decreased by 22.9% to 296 homes from 384, although there was a sequential improvement in sales pace and margins as the quarter progressed [5] Management Commentary - Interim CEO Jamie Pirrello described the quarter as a "tale of two halves," noting a rebound in demand starting in late February [7] - President Jack Micenko highlighted a 400 basis-point sequential gross margin improvement, driven by new home designs achieving gross margins around 24% [8] Cost Management and Efficiency - CFO Keith Feldman reported over $3.5 million in direct construction savings identified through cost-reduction strategies, with benefits expected in the second half of the year [9] - The company achieved $1 million in savings from reduced interest expenses following a refinancing initiative [9] - Average construction cycle time improved by 16 days compared to the previous year due to better material and labor availability [12] Guidance and Outlook - Management expressed optimism for the remainder of 2025, with April orders up 6% year over year and expectations for continued margin enhancement [13] - UHG plans to launch 10 new communities in Q2 and 18 in Q3, featuring new home designs that are well-received by buyers [13] Other Developments - UHG maintains an asset-light, land-light strategy, controlling approximately 7,500 lots through various arrangements [14] - The company is evaluating geographic expansion based on favorable demographic and economic trends [14]

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%3A) Unaudited condensed consolidated financial statements for Q1 2025 reflect decreased revenue and net income, stable total assets, reduced liabilities, and improved operating cash flow compared to Q1 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28unaudited%29) As of March 31, 2025, total assets slightly increased to **$266.2 million**, while total liabilities decreased to **$179.1 million**, boosting stockholders' equity to **$87.1 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$266,227** | **$265,381** | | Cash and cash equivalents | $25,016 | $22,629 | | Inventories | $138,449 | $139,270 | | **Total Liabilities** | **$179,126** | **$198,514** | | Syndicated line of credit | $53,196 | $50,196 | | Derivative liabilities | $17,836 | $39,158 | | Term loan, net | $67,230 | $67,150 | | **Total Stockholders' Equity** | **$87,101** | **$66,867** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28unaudited%29) Q1 2025 net income decreased to **$18.2 million** on **$87.0 million** revenue, influenced by a non-cash gain from derivative liabilities, resulting in diluted EPS of **$0.31** Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net | $87,001 | $100,838 | | Gross Profit | $14,128 | $16,094 | | Net loss from operations | $(2,032) | $(960) | | Change in fair value of derivative liabilities | $21,209 | $26,380 | | **Net Income** | **$18,180** | **$24,938** | | Diluted EPS | $0.31 | $0.44 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28unaudited%29) Total stockholders' equity increased by **$20.2 million** to **$87.1 million** in Q1 2025, primarily driven by net income and stock-based compensation expense - Stockholders' equity grew from **$66.9 million** at the end of 2024 to **$87.1 million** at the end of Q1 2025, mainly due to net income of **$18.2 million**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28unaudited%29) Q1 2025 saw net cash provided by operating activities of **$1.2 million**, a significant improvement from Q1 2024, with total cash ending at **$27.9 million** Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $1,221 | $(17,898) | | Net cash from investing activities | $63 | $(12,752) | | Net cash from financing activities | $1,103 | $2,629 | | **Net change in cash** | **$2,387** | **$(28,021)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) Notes detail accounting policies, business nature, and key disclosures including land-light strategy, VIEs, segment performance, fair value measurements, debt, and stock-based compensation - The company operates a land-light strategy, primarily constructing single-family homes in South Carolina, North Carolina, and Georgia[25](index=25&type=chunk) - The company has determined that its counterparties to option contracts are Variable Interest Entities (VIEs), but it is not the primary beneficiary and therefore does not consolidate them, with maximum exposure to loss limited to non-refundable lot deposits[35](index=35&type=chunk) - In December 2024, the company redeemed its outstanding Convertible Notes, financing the transaction in part by entering into a new **$70.0 million** term loan[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses challenging Q1 2025 market conditions, leading to decreased revenue and orders, and outlines responses including sales incentives and operational improvements, while confirming sufficient liquidity Key Operating Metrics Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue, net | $87,001K | $100,838K | (13.7)% | | Home closings | 252 | 311 | (19.0)% | | Net new orders | 296 | 384 | (22.9)% | | Backlog (units) | 201 | 262 | (23.3)% | | Cancellation rate | 12.7% | 9.6% | 32.3% | - Market conditions in Q1 2025 were challenging due to elevated mortgage rates, economic uncertainty, and housing affordability concerns, leading to softer demand[111](index=111&type=chunk) - The company is responding to market conditions with sales incentives (e.g., mortgage rate buy-downs) and operational improvements like revising house plans and rebidding supplier contracts to reduce costs[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from interest rate fluctuations impacting housing demand and variable-rate debt, with a 100 basis point increase potentially reducing annual net income by **$1.2 million** - The company is exposed to market risk from interest rate fluctuations on its variable-rate debt, which includes a **$53.2 million** syndicated line of credit and a **$67.2 million** term loan as of March 31, 2025[167](index=167&type=chunk) - A **100 basis point** increase in overall interest rates would negatively impact the company's net income by approximately **$1.2 million** annually[167](index=167&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - Management concluded that disclosure controls and procedures were effective as of the end of the quarter[168](index=168&type=chunk) - No changes occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[169](index=169&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company faces ordinary course legal claims, including a specific lawsuit against its subsidiary Rosewood for pre-acquisition construction defects, with potential losses currently unestimable - The company's subsidiary, Rosewood, is a co-defendant in a lawsuit alleging negligence and breach of implied warranties related to construction prior to its acquisition[85](index=85&type=chunk) - Management believes a loss is reasonably possible but cannot estimate the amount or range of loss at this time[86](index=86&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the latest 10-K, but key risks include cyclical homebuilding industry sensitivity to economic conditions, trade policies, and adverse weather events - The residential homebuilding industry is highly cyclical and significantly affected by changes in economic conditions, including interest rates, employment levels, and consumer confidence[173](index=173&type=chunk) - Changes in U.S. trade policies and tariffs on imported materials like steel, aluminum, and lumber could significantly increase construction costs and negatively impact margins[178](index=178&type=chunk) - Adverse weather, such as the abnormal snow events in South Carolina in early 2025, can harm business by decreasing buyer traffic and delaying construction[176](index=176&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&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 ended March 31, 2025, not previously disclosed in a Form 8-K - No unregistered sales of the Company's securities were reported for the quarter ended March 31, 2025[183](index=183&type=chunk) [Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the quarter - No defaults upon senior securities were reported[183](index=183&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[181](index=181&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No other material events or information were reported for the quarter ended March 31, 2025, not covered elsewhere in the report - No other information was reported for the quarter[182](index=182&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL files for financial data - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[188](index=188&type=chunk)

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $18.2 million, which includes a fair value adjustment of $21.2 million related to contingent earn-out liability [19] - Revenue for Q1 2025 was $87 million, a decrease of $13.8 million or 13.7% from $100.8 million in Q1 2024, primarily due to lower home closings [19][20] - Gross profit for Q1 2025 was $14.1 million, down $2 million or 12.4% from $16.1 million in the prior year [21] - Adjusted gross margin was 18.8%, down from 20.4%, reflecting elevated incentive costs and price reductions [21] Business Line Data and Key Metrics Changes - The company delivered 252 homes in Q1 2025, with an average sales price of $345,000, generating home sales revenue of $87 million [5][19] - Home closings decreased from 311 homes in Q1 2024 to 252 homes in Q1 2025 [20] - Net new orders for Q1 2025 were 296 homes, down from 384 homes in the prior year [20] Market Data and Key Metrics Changes - The company noted that affordability continues to be an issue for buyers, necessitating financing incentives [14] - April orders were up 6% year over year, indicating a positive trend in demand [11][14] Company Strategy and Development Direction - The company is focusing on a product refresh and direct cost reduction initiatives to improve competitive positioning and profitability [6][8] - A strategic shift towards presold homes is being implemented, moving away from a high spec home strategy to balance offerings [9][10] - The company plans to open 10 new communities in Q2 and 18 in Q3, featuring newly refreshed products that have been well received [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term prospects in markets like the Carolinas and Georgia, citing favorable housing fundamentals [10][11] - The company is adapting to shifting market dynamics and remains focused on execution and capital allocation [23] Other Important Information - The company controlled approximately 7,500 lots as of Q1 2025, positioning it for future growth [23] - Cash and liquidity stood at approximately $86.9 million as of Q1 2025 [23] Summary of Q&A Session - There were no questions during the Q&A session, and the call concluded with management expressing gratitude to participants and optimism for the future [25][28]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $18.2 million, which includes a fair value adjustment of $21.2 million related to contingent earn-out liability [18] - Revenue for Q1 2025 was $87 million, a decrease of $13.8 million or 13.7% from $100.8 million in Q1 2024, primarily due to lower home closings [18][19] - Home closings totaled 252 homes, down from 311 homes in the prior year period [19] - The average sales price for production built homes was approximately $345,000, a 2.9% increase compared to $335,000 in Q1 2024 [19] - Gross profit for Q1 2025 was $14.1 million, down $2 million or 12.4% from $16.1 million in the prior year [20] - Gross margin improved slightly to 16.2% from 16% [20] Business Line Data and Key Metrics Changes - The company delivered 252 homes in Q1 2025, with an average sales price of $345,000, generating home sales revenue of $87 million [4] - Net new orders for Q1 2025 were 296 homes, down from 384 homes in the prior year period [19] - The backlog as of March 31, 2025, stood at 201 homes, representing approximately $75.3 million in value [20] Market Data and Key Metrics Changes - The company noted that affordability continues to be an issue for buyers, necessitating the use of financing incentives [13] - April orders were up 6% year over year, indicating a positive trend in demand [10][13] Company Strategy and Development Direction - The company has undertaken a product refresh and direct cost reduction initiative to improve competitive positioning and profitability [5][6] - A strategic shift towards presold homes is being emphasized, moving away from a high spec home strategy [8][9] - The company plans to open 10 new communities in Q2 and 18 communities in Q3, which are expected to boost sales efforts [15][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term prospects for markets in the Carolinas and Georgia due to favorable housing fundamentals [10] - The company is adapting to shifting market dynamics and remains focused on execution and capital allocation [22] - Management noted that the spring selling season started slowly but showed momentum exiting the quarter into April [22] Other Important Information - The company controlled approximately 7,500 lots as of March 31, 2025, positioning it for future growth [22] - Selling, general and administrative expenses for Q1 were $16.2 million, with adjusted SG&A totaling $14.2 million or 16.3% of revenue [21] Summary of Q&A Session - There were no questions during the Q&A session, and the call concluded with management expressing optimism about the future of the company [24][25]

[United Homes Group, Inc. Reports 2025 First Quarter Results](index=1&type=section&id=United%20Homes%20Group%2C%20Inc.%20Reports%202025%20First%20Quarter%20Results) [First Quarter 2025 Operating Results and Highlights](index=1&type=section&id=First%20Quarter%202025%20Operating%20Results) Q1 2025 saw United Homes Group's revenue at $87.0 million and net income at $18.2 million, boosted by a $21.2 million non-cash gain Q1 2025 vs. Q1 2024 Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue, net | $87.0 million | $100.8 million | -14% | | Net Income | $18.2 million | $24.9 million | -26.9% | | Diluted EPS | $0.31 | $0.44 | -29.5% | | Home Closings | 252 | 311 | -19% | | Net New Home Orders | 296 | 384 | -23% | | ASP (Production-built) | ~$345,000 | ~$335,000 | +2.9% | | Gross Profit % | 16.2% | 16.0% | +0.2 p.p. | | Adjusted Gross Profit % | 18.8% | 20.4% | -1.6 p.p. | | Adjusted EBITDA | $2.9 million | $7.3 million | -60.5% | - Net income for Q1 2025 included a significant non-cash income of **$21.2 million** from the change in fair value of derivative liabilities, related to potential earn-out consideration tied to stock price hurdles[3](index=3&type=chunk) - The company is strategically shifting from building all-spec inventory to offering pre-sales, which are achieving higher gross margins[4](index=4&type=chunk) - Gross margins improved sequentially by **400 basis points** between January and March, largely due to closings of newly redesigned home plans which average gross margins of approximately **24%**[7](index=7&type=chunk) - A direct cost reduction initiative has identified over **$3.5 million** in savings for the year, with the financial impact expected to be more meaningful in the second half of 2025[7](index=7&type=chunk) - As of March 31, 2025, the company had available liquidity of **$86.9 million**, consisting of **$25.0 million** in cash and **$61.9 million** in unused credit facility capacity[6](index=6&type=chunk) [Company Overview and Strategy](index=2&type=section&id=About%20United%20Homes%20Group%2C%20Inc.) United Homes Group is a South Carolina-based residential builder in high-growth southeastern markets, employing a 'land-light' strategy - The company is a residential builder focused on high-growth southeastern markets: South Carolina, North Carolina, and Georgia[9](index=9&type=chunk) - UHG primarily builds detached and attached single-family houses for the entry-level, first, second, and third move-up segments[10](index=10&type=chunk) - The company employs a 'land-light' operating strategy, using lot option contracts to control its supply of finished lots, reducing financial risks associated with acquiring and developing raw land[11](index=11&type=chunk) - Future expansion will target markets with positive population and employment growth, housing affordability, low taxes, and desirable lifestyle characteristics[12](index=12&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) Forward-looking statements are subject to risks like market disruptions, industry slowdowns, supply chain issues, and interest rate increases - The report contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[14](index=14&type=chunk)[15](index=15&type=chunk) - Key risk factors include: - Disruption in mortgage financing availability - A slowdown in the homebuilding industry - Shortages or price increases for labor, land, or raw materials - Increases in interest rates or inflationary pressures - Ability to execute business model and integrate acquisitions[18](index=18&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets were $266.2 million, liabilities $179.1 million, and equity $87.1 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$266,227** | **$265,381** | | Cash and cash equivalents | $25,016 | $22,629 | | Inventories | $138,449 | $139,270 | | **Total Liabilities** | **$179,126** | **$198,514** | | Derivative liabilities | $17,836 | $39,158 | | Syndicated line of credit | $53,196 | $50,196 | | **Total Stockholders' equity** | **$87,101** | **$66,867** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 revenue was $87.0 million, gross profit $14.1 million, and net income $18.2 million, boosted by a $21.2 million non-cash gain Statement of Operations Summary (in thousands, except per share data) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net of sales discounts | $87,001 | $100,838 | | Gross profit | $14,128 | $16,094 | | Net loss from operations | $(2,032) | $(960) | | Change in fair value of derivative liabilities | $21,209 | $26,380 | | **Net income** | **$18,180** | **$24,938** | | **Diluted EPS** | **$0.31** | **$0.44** | [GAAP to Non-GAAP Reconciliations](index=6&type=section&id=GAAP%20TO%20NON-GAAP%20RECONCILIATIONS) [Adjusted Gross Profit](index=6&type=section&id=Adjusted%20Gross%20Profit) Q1 2025 Adjusted Gross Profit was $16.4 million (18.8% margin), adjusted from GAAP by adding back interest and amortization Adjusted Gross Profit Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross profit (GAAP) | $14,128 | $16,094 | | Interest expense in cost of sales | 1,501 | 3,513 | | Amortization in homebuilding cost of sales | 681 | 948 | | **Adjusted gross profit (Non-GAAP)** | **$16,365** | **$20,614** | | Gross profit % (GAAP) | 16.2% | 16.0% | | **Adjusted gross profit % (Non-GAAP)** | **18.8%** | **20.4%** | [EBITDA and Adjusted EBITDA](index=7&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) Q1 2025 Adjusted EBITDA was $2.9 million (3.3% margin), a decline from Q1 2024, after subtracting a $21.2 million non-cash gain Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (GAAP) | $18,180 | $24,938 | | EBITDA (Non-GAAP) | $21,389 | $29,921 | | Change in fair value of derivative liabilities | (21,209) | (26,380) | | Stock-based compensation expense | 1,957 | 1,510 | | **Adjusted EBITDA (Non-GAAP)** | **$2,873** | **$7,283** | | Adjusted EBITDA margin % | 3.3% | 7.2% | [Adjusted SG&A](index=8&type=section&id=Adjusted%20SG%26A) Q1 2025 Adjusted SG&A was $14.2 million (16.3% of revenue), excluding stock-based compensation from GAAP SG&A Adjusted SG&A Reconciliation - Q1 2025 (in thousands) | Line Item | Amount | | :--- | :--- | | Selling, general and administrative expense (GAAP) | $16,160 | | Stock-based compensation expense | 1,957 | | **Adjusted SG&A (Non-GAAP)** | **$14,203** | | SG&A % (GAAP) | 18.6% | | **Adjusted SG&A % (Non-GAAP)** | **16.3%** | [Adjusted Book Value](index=9&type=section&id=Adjusted%20Book%20Value) As of March 31, 2025, Adjusted Book Value was $95.7 million, adjusting equity for derivative liabilities and goodwill Adjusted Book Value Reconciliation - March 31, 2025 (in thousands) | Line Item | Amount | | :--- | :--- | | Total Stockholders' equity (GAAP) | $87,101 | | Add: Derivative liabilities | 17,836 | | Less: Goodwill | (9,280) | | **Adjusted book value (Non-GAAP)** | **$95,657** | [Operational Metrics](index=10&type=section&id=OPERATIONAL%20METRICS%20BY%20MARKET) [Operational Metrics by Market](index=10&type=section&id=Operational%20Metrics%20by%20Market) Q1 2025 saw total net new orders and closings decrease year-over-year, with Raleigh showing significant growth despite declines elsewhere Q1 2025 Net New Orders & Closings by Market (vs. Q1 2024) | Market | Net New Orders (YoY %) | Closings (YoY %) | | :--- | :--- | :--- | | Coastal | -43% | 0% | | Midlands | -28% | -17% | | Upstate | -24% | -44% | | Rosewood | +113% | -7% | | Raleigh | +325% | +275% | | **Total** | **-23%** | **-19%** | Backlog as of March 31, 2025 (vs. March 31, 2024) | Market | Backlog Inventory (YoY %) | Backlog Value (YoY %) | | :--- | :--- | :--- | | Coastal | +14% | +31% | | Midlands | -29% | -25% | | Upstate | -44% | -29% | | Rosewood | +40% | +67% | | Raleigh | +100% | +32% |