United Homes (UHG) - 2025 Q2 - Quarterly Results

Report Overview Second Quarter 2025 Highlights 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] - 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] - 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] - CFO Keith Feldman noted gross margin expansion was driven by the appeal of redesigned floor plans and re-bidding initiatives[3][5] Financial Performance - Three Months Ended June 30, 2025 Operating Results Details - Q2 2025 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] 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 Operating Results Details - 6 Months 2025 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] 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 Recent Developments 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] - The process is ongoing, and its outcome and timing remain uncertain[11] About United Homes Group, Inc. 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] - Its primary markets are concentrated in the Southeast, including South Carolina, North Carolina, and Georgia[14] - 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][16] - 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] Forward-Looking Statements 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] - 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] - 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] - 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] Consolidated Financial Statements Condensed Consolidated Balance Sheets 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 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 Adjusted Gross Profit Reconciliation 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 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 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 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 Market Performance Overview 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] Additional Information Earnings Conference Call 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] - Investors can listen to the live webcast on the company's website at www.unitedhomesgroup.com under the "Investors" section, "Events & Presentations" heading[12] - Dial-in numbers are 800-715-9871 (toll-free) or 646-307-1963 (international), with Conference ID: 3108794[12][13] Investor and Media Contacts 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] - Media Contact: Erin Reeves-McGinnis (erinreevesmcginnis@unitedhomesgroup.com, Phone: 844-766-4663)[20]