United Homes -UHG Stock Gains Despite Q3 Earnings Decline Y/Y, Gross Margins Down

Core Viewpoint - United Homes Group, Inc. reported significant declines in profitability for the third quarter of 2024, despite strong revenue growth and increased home closings and orders [1][7][9]. Revenue Performance - United Homes registered revenues of $118.6 million in the third quarter, reflecting a 35.2% increase year over year [2]. - Home closings during the quarter were 369, up 30.4% from 283 in the same period last year [2]. - Net new home orders were 341, representing a 25.4% increase compared to 272 in the year-ago period [2]. Pricing and Sales Metrics - The average sale price (ASP) of production-built homes was approximately$ 320,000, a 1.3% increase from $316,000 in the previous year [3]. - The active community count as of September 30, 2024, was 55, with 8,600 lots owned or controlled by the company or related parties [3]. Profitability Analysis - Gross profit improved 28.6% year over year to$ 22.4 million, but gross margin contracted by 98 basis points to 18.9% [5]. - Adjusted gross margin was 20.6%, down from 22.1% in the year-ago period [5]. - The operating loss totaled $7.4 million compared to an operating profit of$ 152.6 million in the previous year [7]. - The net loss was $7.3 million against a net profit of$ 150.8 million in the year-ago quarter [7]. - Adjusted EBITDA was $8.9 million, up 2.1% from the previous year [7]. Operating Expenses - Selling, general and administrative expenses increased by 37.1% year over year to$ 18.7 million [6]. Liquidity Position - United Homes ended the third quarter with cash and cash equivalents of $25.8 million, slightly up from$ 24.9 million at the end of the second quarter [8]. Management Insights - Management indicated that the company is implementing initiatives to drive growth, reduce direct costs, and manage overhead effectively [10]. - The company is updating its product offerings to remain competitive and meet market demand [10].