On August 8, 2024, United Homes Group Inc (UHG, Financial) released its 8-K filing for the second quarter of 2024. UHG, a homebuilder operating in the Southeast with a focus on high-quality, affordable homes for entry-level and first-move-up segments, reported mixed results for the quarter.
Performance Overview
United Homes Group Inc (UHG, Financial) reported revenue of $109.4 million for Q2 2024, a decrease from $122.1 million in Q2 2023. The company closed 337 homes in Q2 2024 compared to 385 homes in Q2 2023. Despite the decline in revenue and home closings, the average sale price (ASP) of production-built homes increased to approximately $341,000 from $313,000 in the same period last year.
Financial Achievements and Challenges
Net income for Q2 2024 was $28.6 million, or $0.50 per diluted share, including a change in fair value of derivative liabilities of $32.1 million. This compares to a net income of $245.4 million, or $4.27 per diluted share, in Q2 2023. The significant decrease in net income is primarily due to the non-cash expense item related to the fair value of derivative liabilities.
Gross profit as a percentage of revenue decreased to 17.9% from 19.6% in Q2 2023. Adjusted gross profit percentage also saw a slight decline to 20.9% from 21.4% in the previous year. The decrease in gross profit percentage is attributed to amortization of purchase accounting adjustments, severance costs, and abandoned project costs.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $109.4 million | $122.1 million |
| Net Income | $28.6 million | $245.4 million |
| Gross Profit % | 17.9% | 19.6% |
| Adjusted Gross Profit % | 20.9% | 21.4% |
| Adjusted EBITDA | $7.7 million | $13.1 million |
Operational Highlights
UHG's active community count stood at 59 as of June 30, 2024, with approximately 9,300 lots owned or controlled. The company maintained available liquidity of $80.4 million, comprising $24.9 million in cash and $55.5 million of undrawn revolver capacity under its credit facility.
Net new home orders for Q2 2024 were 323, slightly down from 341 in Q2 2023. The company continues to focus on its land-light operating model, with over 95% of its lots controlled via option agreements or land banking arrangements.
Commentary
"United Homes Group continued to execute on its long-term goals in the second quarter of acquiring lots in a capital efficient manner and building out its homebuilding platform in high-growth Southeastern markets, while selling and delivering homes that cater to the more affordable segments of the market," said Michael Nieri, Chief Executive Officer of United Homes Group.
Analysis
United Homes Group Inc (UHG, Financial) faced challenges in Q2 2024 with a decline in revenue and net income compared to the previous year. However, the increase in average sale price and strategic land acquisitions highlight the company's focus on long-term growth and capital efficiency. The slight decrease in adjusted gross profit percentage and adjusted EBITDA indicates the impact of ongoing operational costs and strategic investments.
Overall, UHG's performance in Q2 2024 reflects a balanced approach to managing short-term challenges while positioning itself for future growth in the high-demand Southeastern markets.
Explore the complete 8-K earnings release (here) from United Homes Group Inc for further details.
