Third Quarter 2024 Highlights
- 369 homes closed, resulting in revenue, net of sales
discounts, of $118.6 million
- Average sale price (“ASP”) of production-built homes was
approximately $320,000 compared to $316,000 in Q3 2023
- 341 net new home orders in Q3 2024 compared to 272 net new
home orders in Q3 2023
- Active community count of 55 as of September 30,
2024
- Approximately 8,600 lots currently owned or controlled by
the Company or related parties
- Available liquidity of $89.0 million as of September 30,
2024, comprised of $25.8 million of cash and $63.2 million of
unused committed capacity under our credit facility
United Homes Group, Inc. (the “Company”) (NASDAQ: UHG) today
announced results for the third quarter ended September 30,
2024.
Third Quarter 2024 Operating Results
For the third quarter 2024, net loss was $7.3 million, or $0.15
per diluted share, which included change in fair value of
derivative liabilities of $7.8 million, with that change
predominantly due to changes in fair value on potential earn-out
consideration due to fluctuation in the stock price during the
measurement period, representing a non-cash item. The earnout
consideration would be paid in common shares upon reaching certain
stock price hurdles. The Company is required to record the fair
value of this earnout as derivative liabilities on the Condensed
Consolidated Balance Sheets and to record changes in fair value of
derivative liabilities on the Condensed Consolidated Statements of
Operations, in each case until UHG shares reach certain
predetermined values or expiration of the five year earnout period.
Net income for the third quarter 2023 was $150.8 million, or $2.35
per diluted share, which included change in fair value of
derivative liabilities of $149.7 million. Total Stockholders'
equity for the third quarter 2024 was $19.8 million. Adjusted book
value1, which excludes the derivative liability and goodwill, was
$87.7 million.
“We are pleased to report that growth re-accelerated at UHG in
3Q24, as a number of operational initiatives we've put in place
have begun to bear fruit. This was evidenced by a 25%
year-over-year increase in net new orders and a 30% year-over-year
increase in closings, which translated into a 35% year-over-year
increase in top-line revenues,” said Jamie Pirrello, Interim Chief
Executive Officer of United Homes Group.
Revenue, net of sales discounts, for the third quarter 2024 was
$118.6 million, compared to $87.7 million in the third quarter
2023. Home closings during the third quarter 2024 were 369 compared
to 283 in the third quarter 2023. Net new home orders during the
third quarter 2024 were 341 compared to 272 in the third quarter
2023. ASP of 369 production-built homes (which does not include
general contractor, custom, and build-to-rent homes) closed during
the third quarter 2024 was approximately $320,000, compared to
$316,000 during the third quarter 2023 for 268 production-built
homes (which does not include 15 general contractor, custom, and
build-to-rent homes), representing a 1.4% increase.
Gross profit percentage during the third quarter of 2024 was
18.9% compared to 19.8% during the third quarter 2023. Adjusted
gross profit percentage2 in the third quarter 2024 was 20.6%,
compared to 22.1% in the third quarter 2023. UHG's gross profit and
adjusted gross profit percentage decreased primarily due to the
Company continuing to offer attractive sales incentives to
homebuyers.
Selling, general and administrative expenses (“SG&A”) as a
percentage of revenues was 15.8% in the third quarter 2024, which
included $1.6 million of stock-based compensation and $0.7 million
of transaction-related expenses. Excluding stock-based
compensation, and transaction-related expenses, Adjusted SG&A3
for the third quarter 2024 was 13.9% of revenues.
Adjusted EBITDA4 during the third quarter 2024 was $9.0 million
compared to $8.8 million during the third quarter 2023.
Nine Months Ended September 30, 2024 Operating
Results
For the nine months ended September 30, 2024, net income was
$46.2 million, or $0.86 per diluted share, which included change in
fair value of derivative liabilities of $50.7 million, with that
change predominantly due to changes in fair value on potential
earn-out consideration due to fluctuation in the stock price during
the measurement period, representing a non-cash item. Net income
for the nine months ended September 30, 2023 was $191.7 million, or
$3.61 per diluted share, which included change in fair value of
derivative liabilities of $185.0 million.
Revenues for the nine months ended September 30, 2024 were
$328.9 million, compared to $304.6 million in the nine months ended
September 30, 2023. Home closings during the nine months ended
September 30, 2024 were 1,017 compared to 996 in the nine months
ended September 30, 2023. Net new orders during the nine months
ended September 30, 2024 were 1,048 compared to 1,002 in the nine
months ended September 30, 2023.
Gross profit percentage during the nine months ended September
30, 2024 was 17.7% compared to 19.1% during the nine months ended
September 30, 2023. Adjusted gross profit percentage in the nine
months ended September 30, 2024 was 20.7%, compared to 21.2% in the
nine months ended September 30, 2023. The decrease in gross profit
percentage is primarily attributable to higher cost of sales due to
higher level of incentives and amortization from purchase price
accounting adjustments. The Company's adjusted gross profit
percentage decreased due largely to the Company continuing to offer
attractive sales incentives to homebuyers.
SG&A expenses as a percentage of revenues was 16.8% in the
nine months ended September 30, 2024, which included $4.9 million
of stock-based compensation, $2.4 million of transaction-related
expenses, and $1.2 million related to severance costs associated
with the June 2024 workforce reduction. Excluding these stock-based
compensation, transaction-related, and severance cost expenses,
Adjusted SG&A for the nine months ended September 30, 2024 was
14.2% of revenues.
Adjusted EBITDA during the nine months ended September 30, 2024
was $23.9 million compared to $30.4 million during the nine months
ended September 30, 2023.
Earnings Conference Call
The Company will host a conference call via live webcast for
investors and other interested parties beginning at 8:30 a.m.
Eastern Time on Friday, November 8, 2024. Interested parties can
listen to the call live and view the related slides on the Internet
under the Events & Presentations heading in the Investors
section of the Company’s website at www.unitedhomesgroup.com.
Listeners should log into the website at least fifteen minutes
prior to the call to download and install any necessary audio
software. The call can also be accessed toll free at 800-715-9871,
or 646-307-1963 for international participants, Conference ID: 3685495. Those dialing in should do
so at least ten minutes prior to the start of the call. An archive
of the webcast will also be available on the Company’s website.
About United Homes Group, Inc.
UHG is a publicly traded residential builder headquartered in
Columbia, SC. The company focuses on southeastern markets with 55
active communities in South Carolina, North Carolina and
Georgia.
UHG employs a land-light operating strategy with a focus on the
design, construction and sale of entry-level, first move-up and
second move-up single-family houses. UHG currently designs, builds
and sells detached single-family homes, and, to a lesser extent,
attached single-family homes, including duplex homes and town homes
in three major market regions in South Carolina: Midlands, Upstate,
and Coastal, and also has a presence in Georgia and North Carolina.
UHG seeks to operate its homebuilding business in high-growth
markets, with substantial in-migrations and employment growth.
Under its land-light lot operating strategy, UHG controls its
supply of finished building lots through lot option contracts with
third parties, related parties, and land bank partners, which
provide UHG with the right to purchase finished lots after they
have been developed by the applicable third party or related party.
This land-light operating strategy provides UHG with the ability to
amass a pipeline of lots without the same risks associated with
acquiring and developing raw land.
As UHG reviews potential geographic markets into which it could
expand its homebuilding business, either organically or through
strategic acquisitions, it intends to focus on selecting markets
with positive population and employment growth trends, favorable
migration patterns, attractive housing affordability, low state and
local income taxes, and desirable lifestyle and weather
characteristics.
Forward-Looking Statements
Certain statements contained in this earnings release, other
than historical facts, may be considered forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”) and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). We intend
for all such forward-looking statements to be covered by the
applicable safe harbor provisions for forward-looking statements
contained in Section 27A of the Securities Act and Section 21E of
the Exchange Act, as applicable. Such forward-looking statements
can generally be identified by our use of forward-looking
terminology such as “may,” “will,” “expect,” “intend,”
“anticipate,” “estimate,” “believe,” “seek,” “continue,” or other
similar words.
Any such forward-looking statements are based on current
expectations, estimates and projections about the industry and
markets in which we operate, and beliefs of, and assumptions made
by, our management and involve uncertainties that could
significantly affect our financial results. Such statements
include, but are not limited to, statements about our future
financial performance, strategy, expansion plans, future
operations, future operating results, estimated revenues, losses,
projected costs, prospects, plans and objectives of management.
Such statements are subject to known and unknown risks and
uncertainties, which could cause actual results to differ
materially from those projected or anticipated, including, without
limitation:
- disruption in the terms or availability of mortgage financing
or an increase in the number of foreclosures in our markets;
- volatility and uncertainty in the credit markets and broader
financial markets;
- a slowdown in the homebuilding industry or changes in
population growth rates in our markets;
- shortages of, or increased prices for, labor, land or raw
materials used in land development and housing construction,
including due to changes in trade policies;
- material weaknesses in our internal control over financial
reporting that we have identified, which, if not corrected, could
affect the reliability of our consolidated financial
statements;
- our ability to recognize the anticipated benefits of the
business combination, which may be affected by, among other things,
competition and the ability of the combined business to grow and
manage growth profitably;
- our ability to execute our business model, including the
success of our operations in new markets and our ability to expand
into additional new markets;
- our ability to successfully integrate homebuilding operations
that we acquire;
- delays in land development or home construction resulting from
natural disasters, adverse weather conditions or other events
outside our control;
- changes in applicable laws or regulations;
- the outcome of any legal proceedings;
- our ability to continue to leverage our land-light operating
strategy;
- the ability to maintain the listing of our securities on Nasdaq
or any other exchange; and
- the possibility that we may be adversely affected by other
economic, business or competitive factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
release and are not intended to be a guarantee of our performance
in future periods. We cannot guarantee the accuracy of any such
forward-looking statements contained in this release, and we do not
intend to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise.
For further information regarding other risks and uncertainties
associated with our business, and important factors that could
cause our actual results to vary materially from those expressed or
implied in such forward-looking statements, please refer to the
factors listed and described under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and the
“Risk Factors” sections of the documents we file from time to time
with the U.S. Securities and Exchange Commission, including, but
not limited to, our Annual Report on Form 10-K and our quarterly
reports on Form 10-Q, copies of which may be obtained from our
website at
https://ir.unitedhomesgroup.com/financials/sec-filings/default.aspx
UNITED HOMES GROUP,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30, 2024
December 31, 2023
ASSETS
Cash and cash equivalents
$
25,818,156
$
56,671,471
Accounts receivable, net
2,913,219
1,661,206
Inventories
164,461,543
182,809,702
Real estate inventory not owned
11,010,256
—
Due from related party
—
88,000
Related party note receivable
551,979
610,189
Income tax receivable
2,483,582
—
Lot deposits
45,748,632
33,015,812
Investment in joint venture
2,443,734
1,430,177
Property and equipment, net
955,369
1,073,961
Operating right-of-use assets
2,392,662
5,411,192
Deferred tax asset
5,559,864
2,405,417
Prepaid expenses and other assets
8,992,846
7,763,565
Goodwill
9,279,676
5,706,636
Total Assets
$
282,611,518
$
298,647,328
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
20,825,459
$
38,680,764
Homebuilding debt and other affiliate
debt
72,196,208
80,451,429
Liabilities from real estate inventory not
owned
8,627,228
—
Due to related party
167,349
—
Operating lease liabilities
2,583,802
5,565,320
Other accrued expenses and liabilities
11,679,818
8,353,824
Income tax payable
—
1,128,804
Derivative liabilities
77,161,397
127,610,943
Convertible Notes payable
69,580,943
68,038,780
Total Liabilities
262,822,204
329,829,864
Commitments and contingencies
Preferred Stock, $0.0001 par value;
40,000,000 shares authorized; none issued or outstanding.
—
—
Class A common stock, $0.0001 par value;
350,000,000 shares authorized; 11,434,050 and 11,382,282 shares
issued and outstanding on September 30, 2024, and December 31,
2023, respectively.
1,143
1,138
Class B common stock, $0.0001 par value;
60,000,000 shares authorized; 36,973,876 shares issued and
outstanding on September 30, 2024, and December 31, 2023,
respectively.
3,697
3,697
Additional paid-in capital
7,527,316
2,794,493
Retained earnings (Accumulated
deficit)
12,257,158
(33,981,864
)
Total Stockholders' equity
19,789,314
(31,182,536
)
Total Liabilities and Stockholders'
equity
$
282,611,518
$
298,647,328
UNITED HOMES GROUP,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenue, net of sales discounts
$
118,643,955
$
87,728,091
$
328,902,237
$
304,646,422
Cost of sales
96,260,928
70,317,796
270,847,467
246,540,874
Gross profit
22,383,027
17,410,295
58,054,770
58,105,548
Selling, general and administrative
expense
18,690,057
13,629,713
55,358,040
46,652,432
Net income from operations
3,692,970
3,780,582
2,696,730
11,453,116
Other expense, net
(3,710,079
)
(1,199,140
)
(9,255,039
)
(3,291,755
)
Equity in net earnings from investment in
joint venture
419,312
293,923
1,075,983
930,405
Change in fair value of derivative
liabilities
(7,784,965
)
149,703,161
50,650,309
184,981,652
(Loss) income before taxes
(7,382,762
)
152,578,526
45,167,983
194,073,418
Income tax (benefit) expense
(43,527
)
1,735,839
(1,071,039
)
2,372,300
Net (loss) income
$
(7,339,235
)
$
150,842,687
$
46,239,022
$
191,701,118
Basic and diluted (loss) earnings per
share
Basic
$
(0.15
)
$
3.12
$
0.96
$
4.29
Diluted
$
(0.15
)
$
2.35
$
0.86
$
3.61
Basic and diluted weighted-average
number of shares
Basic
48,389,085
48,356,057
48,375,213
44,723,915
Diluted
48,389,085
64,806,024
63,406,166
54,155,557
UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
Adjusted gross profit is a non-GAAP financial measure used by
management of the Company as a supplemental measure in evaluating
operating performance. The Company defines adjusted gross profit as
gross profit excluding the effects of capitalized interest expensed
in cost of sales, amortization included in homebuilding cost of
sales (primarily adjustments resulting from the application of
purchase accounting in connection with acquisitions), severance
expense in cost of sales, abandoned project costs, and
non-recurring remediation costs. The Company’s management believes
this information is meaningful because it separates the impact that
capitalized interest and non-recurring costs directly expensed in
cost of sales have on gross profit to provide a more specific
measurement of the Company’s gross profits. However, because
adjusted gross profit information excludes certain balances
expensed in cost of sales, which have real economic effects and
could impact the Company’s results of operations, the utility of
adjusted gross profit information as a measure of the Company’s
operating performance may be limited. Other companies may not
calculate adjusted gross profit information in the same manner that
the Company does. Accordingly, adjusted gross profit information
should be considered only as a supplement to gross profit
information as a measure of the Company’s performance.
The following table presents a reconciliation of adjusted gross
profit to the GAAP financial measure of gross profit for each of
the periods indicated.
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenue, net of sales discounts
$
118,643,955
$
87,728,091
$
328,902,237
$
304,646,422
Cost of sales
96,260,928
70,317,796
270,847,467
246,540,874
Gross profit
$
22,383,027
$
17,410,295
$
58,054,770
$
58,105,548
Interest expense in cost of sales
1,524,748
1,531,318
6,696,856
6,078,117
Amortization in homebuilding cost of
sales(a)
573,183
—
2,434,356
—
Severance expense in cost of sales
—
—
324,540
—
Abandoned project costs
—
—
320,000
—
Non-recurring remediation costs
—
447,327
109,422
447,327
Adjusted gross profit
$
24,480,958
$
19,388,940
$
67,939,944
$
64,630,992
Gross profit %(b)
18.9
%
19.8
%
17.7
%
19.1
%
Adjusted gross profit %(b)
20.6
%
22.1
%
20.7
%
21.2
%
______________________________
(a) Represents expense recognized
resulting from purchase accounting adjustments
(b) Calculated as a percentage of
revenue
UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
Earnings before interest, taxes, depreciation and amortization,
or EBITDA, and adjusted EBITDA are supplemental non-GAAP financial
measures used by management of the Company. The Company defines
EBITDA as net income before (i) capitalized interest expensed in
cost of sales, (ii) interest expensed in other (expense) income,
net, (iii) depreciation and amortization, and (iv) taxes. The
Company defines adjusted EBITDA as EBITDA before stock-based
compensation expense, transaction cost expense, severance expense,
abandoned project costs, non-recurring remediation costs,
amortization included in homebuilding cost of sales (adjustments
resulting from the application of purchase accounting in connection
with acquisitions), change in fair value of derivative liabilities,
and non-recurring loss on disposal of leasehold improvements.
Management of the Company believes EBITDA and adjusted EBITDA are
useful because they provide a more effective evaluation of UHG’s
operating performance and allow comparison of UHG’s results of
operations from period to period without regard to UHG’s financing
methods or capital structure or other items that impact
comparability of financial results from period to period such as
fluctuations in interest expense or effective tax rates, levels of
depreciation or amortization, or unusual items. EBITDA and adjusted
EBITDA should not be considered as alternatives to, or more
meaningful than, net income or any other measure as determined in
accordance with GAAP. UHG’s computations of EBITDA and adjusted
EBITDA may not be comparable to EBITDA or adjusted EBITDA of other
companies.
The following table presents a reconciliation of EBITDA and
adjusted EBITDA to the GAAP financial measure of net income for
each of the periods indicated.
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net (loss) income
$
(7,339,235
)
$
150,842,687
$
46,239,022
$
191,701,118
Interest expense in cost of sales
1,524,748
1,531,318
6,696,856
6,078,117
Interest expense in other expense, net
3,649,305
2,039,512
9,369,598
5,458,821
Depreciation and amortization
522,483
381,917
1,448,777
848,693
Taxes
7,879
1,766,398
(896,148
)
2,404,242
EBITDA
$
(1,634,820
)
$
156,561,832
$
62,858,105
$
206,490,991
Stock-based compensation expense
1,567,945
1,106,014
4,918,036
6,015,700
Transaction cost expense
687,440
385,180
2,428,344
2,451,298
Severance expense
—
—
1,504,416
—
Abandoned project costs
—
—
320,000
—
Non-recurring remediation costs
—
447,327
109,422
447,327
Amortization in homebuilding cost of
sales(b)
573,183
—
2,434,356
—
Change in fair value of derivative
liabilities
7,784,965
(149,703,161
)
(50,650,309
)
(184,981,652
)
Adjusted EBITDA
$
8,978,713
$
8,797,192
$
23,922,370
$
30,423,664
EBITDA margin(a)
(1.4
)%
178.5
%
19.1
%
67.8
%
Adjusted EBITDA margin(a)
7.6
%
10.0
%
7.3
%
10.0
%
______________________________
(a) Calculated as a percentage of
revenue
(b) Represents expense recognized
resulting from purchase accounting adjustments
UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS
Continued
Adjusted selling, general and administrative expense, or
adjusted SG&A, is a supplemental non-GAAP financial measure
used by management of the Company. UHG defines adjusted SG&A as
SG&A, excluding the effects of stock-based compensation
expense, transaction cost expense, and severance expense included
in SG&A. Management of UHG believes adjusted SG&A provides
useful information to investors because it enables an alternative
assessment of the Company's operating results in a manner that is
focused on its operating performance.
The following table presents a reconciliation of Adjusted
SG&A to the GAAP financial measure of SG&A for the three
and nine months ended September 30, 2024.
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2024
Selling, general and administrative
expense
$
18,690,057
$
55,358,040
Stock-based compensation expense
1,567,945
4,918,036
Transaction cost expense
687,440
2,428,344
Severance expense in SG&A
—
1,179,876
Adjusted SG&A
$
16,434,672
$
46,831,784
SG&A %(a)
15.8
%
16.8
%
Adjusted SG&A %(a)
13.9
%
14.2
%
______________________________
(a) Calculated as a percentage of
revenue
UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS
Continued
Adjusted book value is a supplemental non-GAAP financial measure
used by management of the Company. UHG defines adjusted book value
as total stockholders' equity (book value), excluding the effect of
goodwill and derivative instruments. Management of UHG believes
adjusted book value is useful to investors because it excludes the
impact of purchase accounting and fair value adjustments on
derivative instruments which are not expected to result in economic
gain or loss.
The following table presents a reconciliation of adjusted book
value to the GAAP financial measure of total stockholders' equity
for the period indicated.
September 30, 2024
Total Stockholders' equity
$
19,789,314
Contingent earnout liability
64,702,340
Derivative private placement warrant
liability
3,352,328
Derivative public warrant liability
8,622,413
Derivative stock option liability
484,316
Total Derivative Liability
77,161,397
Goodwill
(9,279,676
)
Adjusted Book Value
$
87,671,035
UNITED HOMES GROUP, INC
OPERATIONAL METRICS BY MARKET
$’s in millions
Three Months Ended September
30,
2024
2023
Period Over Period %
Change
Market
Net New Orders
Closings
Net New Orders
Closings
Net New Orders
Closings
Coastal
54
59
22
50
145
%
18
%
Midlands
188
193
155
157
21
%
23
%
Upstate
93
108
95
76
-2
%
42
%
Raleigh
6
9
—
—
NM
NM
Total
341
369
272
283
25
%
30
%
Nine Months Ended September
30,
2024
2023
Period Over Period %
Change
Market
Net New Orders
Closings
Net New Orders
Closings
Net New Orders
Closings
Coastal
184
152
131
188
40
%
-19
%
Midlands
566
518
597
574
-5
%
-10
%
Upstate
278
326
274
234
1
%
39
%
Raleigh
20
21
—
—
NM
NM
Total
1,048
1,017
1,002
996
5
%
2
%
As of September 30,
2024
As of December 31,
2023
Period Over Period %
Change
Market
Backlog Inventory5
Backlog Value6
Backlog Inventory5
Backlog Value6
Backlog Inventory
Backlog Value
Coastal
47
$
17.1
14
$
4.2
236
%
307
%
Midlands
118
40.0
72
23.4
64
%
71
%
Upstate
51
20.7
100
28.1
-49
%
-26
%
Raleigh
4
2.1
3
1.9
33
%
11
%
Total
220
$
79.9
189
$
57.6
16
%
39
%
______________________________
NM - Not Meaningful
1 Adjusted book value is a non-GAAP
financial measure. See “Reconciliation of Non-GAAP Financial
Measures.”
2 Adjusted gross profit percentage is a
non-GAAP financial measure. See “Reconciliation of Non-GAAP
Financial Measures.”
3 Adjusted SG&A is a non-GAAP
financial measure. See “Reconciliation of Non-GAAP Financial
Measures.”
4 Adjusted EBITDA is a non-GAAP financial
measure. See “Reconciliation of Non-GAAP Financial Measures.”
5 Backlog inventory consists of homes that
are under a sales contract but have not closed. Backlog may be
impacted by customer cancellations.
6 Backlog value is calculated as the total
contract value of homes in backlog.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241107793214/en/
Investor Relations Contact: Drew Mackintosh
drew@mackintoshir.com Mobile: 310-924-9036
Media Contact: Erin Reeves McGinnis
erinreevesmcginnis@unitedhomesgroup.com Phone: 844-766-4663
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