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United Homes (UHG) Q2 Earnings Decline Y/Y, Gross Margin Down
UHGUnited Homes (UHG) ZACKS·2024-08-09 17:50

Core Insights - United Homes Group, Inc. (UHG) reported a significant decline in earnings per share, which fell to 50 cents in Q2 2024, down 88.3% from 4.27inthesamequarterlastyear[1]−Thecompanyexperiencedadecreaseinrevenues,totaling4.27 in the same quarter last year [1] - The company experienced a decrease in revenues, totaling 109.4 million in Q2 2024, a decline of 10.4% year over year [2] - Home closings decreased to 337 units, down 12.5% from 385 units in the previous year, while net new home orders also fell to 323, down 5.3% from 341 units [2] Revenue Analysis - The average sale price (ASP) of production-built homes increased to approximately 341,000,an8.9341,000, an 8.9% rise from 313,000 in the previous year, driven by changes in product mix due to acquisitions [3] - The active community count as of June 30, 2024, was 59, with 9,300 lots owned or controlled by the company or its affiliates [4] Gross Margin and Profitability - Gross profit declined by 18.1% to 19.6million,withgrossmargincontractingby170basispointsto17.919.6 million, with gross margin contracting by 170 basis points to 17.9% due to amortization of purchase accounting adjustments, severance costs, and abandoned project costs [5] - Adjusted gross margin was reported at 20.9%, down from 21.4% in the previous year, primarily due to continued sales incentives offered to homebuyers [6] - Operating loss was recorded at 0.04 million compared to an operating profit of 7.6millioninthepreviousyear,withnetincomedown88.37.6 million in the previous year, with net income down 88.3% to 28.6 million [8] Operating Expenses - Selling, general and administrative (SG&A) expenses increased by 20.1% to 19.6 million, with SG&A as a percentage of revenues at 17.9% [7] Liquidity and Cash Position - UHG ended Q2 2024 with cash and cash equivalents of 24.9 million, a decrease from $28.7 million at the end of the first quarter [9] Overall Assessment - The company faced disappointing top-line and bottom-line results, with declines in home closings and net new home orders, alongside gross margin contraction [10] - However, the increase in ASP for production-built homes was noted as a positive aspect during the quarter [10]