United Homes Group Inc (UHG, Financial) released its 8-K filing on November 8, 2024, detailing its financial performance for the third quarter ended September 30, 2024. The company, a homebuilder operating in the Southeast with a focus on affordable homes, reported significant growth in revenue and home closings, despite facing challenges in profit margins.
Performance Overview
United Homes Group Inc (UHG, Financial) reported a revenue of $118.6 million for the third quarter of 2024, marking a 35% increase from $87.7 million in the same period last year. This growth was driven by a 30% increase in home closings, totaling 369 homes, and a 25% rise in net new home orders, reaching 341 orders compared to 272 in the previous year.
Despite the revenue growth, the company faced a net loss of $7.3 million, or $0.15 per diluted share, primarily due to a $7.8 million change in the fair value of derivative liabilities. This non-cash item was influenced by stock price fluctuations affecting potential earn-out considerations.
Financial Achievements and Challenges
United Homes Group Inc (UHG, Financial) achieved an average sale price of $320,000 for its production-built homes, slightly up from $316,000 in the third quarter of 2023. However, the gross profit margin decreased to 18.9% from 19.8% last year, with the adjusted gross profit margin also declining to 20.6% from 22.1%. The decrease was attributed to increased sales incentives offered to homebuyers.
Available liquidity stood at $89.0 million, comprising $25.8 million in cash and $63.2 million in unused credit facility capacity. The company's adjusted EBITDA for the quarter was $9.0 million, a slight increase from $8.8 million in the previous year.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $118.6 million | $87.7 million |
| Net Income (Loss) | $(7.3) million | $150.8 million |
| Gross Profit Margin | 18.9% | 19.8% |
| Adjusted EBITDA | $9.0 million | $8.8 million |
Analysis and Outlook
The increase in revenue and home closings reflects United Homes Group Inc (UHG, Financial)'s successful operational initiatives and market demand in the Southeast. However, the decline in profit margins highlights the competitive pressures and cost challenges in the homebuilding industry. The company's focus on entry-level and first-move-up segments positions it well in high-growth markets, but maintaining profitability amidst rising costs remains a key challenge.
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," said Jamie Pirrello, Interim Chief Executive Officer of United Homes Group.
As United Homes Group Inc (UHG, Financial) continues to navigate the dynamic housing market, its strategic focus on high-growth regions and maintaining a land-light operating model will be crucial for sustaining growth and improving financial performance.
Explore the complete 8-K earnings release (here) from United Homes Group Inc for further details.
