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United Homes Stock Declines Post Q4 Earnings Despite Higher Revenues
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Shares of United Homes Group, Inc. (UHG - Free Report) have lost 0.3% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 1.8% gain over the same time frame. Over the past month, the stock lost 12.9% compared with the S&P 500’s 7.9% decline.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Earnings Performance
United Homes reported fourth-quarter 2024 revenues of $134.8 million, a 15.4% increase from $116.8 million in the prior-year quarter. Net income for the quarter stood at $0.7 million, or $0.01 per diluted share against a net loss of $66.6 million, or $1.38 per share, in fourth-quarter 2023. The quarter’s results included a non-cash loss on extinguishment of convertible notes totaling $45.6 million and a fair value adjustment of $38 million related to derivative liabilities.
Home closings rose 6.9% year over year to 414 compared with 387 in fourth-quarter 2023. Net new orders increased 19.4% to 351 from 294 in the prior-year period. The average sale price for production-built homes increased 1.3% to approximately $324,000 from $320,000 a year ago.
Gross profit for the quarter was $21.8 million (with a gross margin of 16.2%), up 0.7% from $21.6 million of gross profit and a gross margin of 18.5% in the prior-year period. Adjusted gross profit margin declined to 18.1% from 21.8%, reflecting pricing pressures and sales incentives offered to drive volume.
United Homes Group, Inc. Price, Consensus and EPS Surprise
Selling, general, and administrative (SG&A) expenses were $19.3 million in the quarter, up 4.9% from the prior-year quarter’s $18.4 million. Adjusted SG&A, which excludes stock-based compensation and severance costs, was $17.7 million (13.1% of revenue), down 72.6% from the prior-year quarter’s $64.5 million (13.9% of revenue). UHG reported adjusted EBITDA of $7.7 million, down 23.2% from $10 million in fourth-quarter 2023.
As of Dec. 31, 2024, the backlog stood at 157 homes, valued at approximately $58.3 million, a decline from 189 homes valued at $57.6 million in the prior-year period. UHG’s lot pipeline consisted of approximately 7,700 lots, either owned or controlled by the company or related parties.
In terms of community activity, UHG had 46 active communities at year-end, down from 61 in 2023.
Management Commentary and Market Conditions
Interim CEO Jamie Pirrello noted that the company faced a competitive pricing environment, with most builders sacrificing gross margins for volume. Higher mortgage rates continued to pressure affordability, leading UHG and its peers to use mortgage incentives to support sales. The cost of mortgage buydowns increased during the quarter, reaching approximately 5% of revenue.
UHG focused on streamlining operations by rebidding direct construction costs with multiple vendors to improve cost efficiency. Additionally, the company redesigned its product offerings, launching refreshed home designs in the fourth quarter, which have shown early positive sales traction. Management anticipates that this product transition will contribute to stronger pricing power and faster inventory turnover in 2025.
Financial Restructuring and Capital Allocation
A significant development during the quarter was the refinancing of the company’s convertible notes in December. The transaction reduced UHG’s leverage by $10 million, lowered annual cash interest expenses by approximately $4 million and decreased potential shareholder dilution by eliminating the conversion feature of the previous debt structure. The refinancing included a $70 million subordinated loan with a variable interest rate indexed to SOFR plus a spread of 6.75% to 7.75%.
Outlook and Guidance
Interim CEO Jamie Pirrello emphasized that, while the homebuilding market remains competitive, UHG expects its strategic initiatives — such as product redesigns, cost optimizations, and a balanced build-to-order approach — to positively impact its financial performance in 2025.
President Jack Micenko noted that early sales of the redesigned home plans have demonstrated stronger gross margins, which should contribute to improved profitability as these homes become a larger share of deliveries. He also highlighted that the company expects improved pricing power and faster inventory turnover as it reduces aged inventory.
Other Developments
UHG expanded its presence in the Myrtle Beach market with the acquisition of Creekside Custom Homes, LLC. Management emphasized that the acquisition aligns with the company’s strategic goal of scaling operations in high-growth markets across the Southeast.
UHG plans to open 11 new communities in the second quarter of 2025 and another 15 in the third quarter of 2025, supporting future revenue growth. While January 2025 net new orders declined due to weather-related disruptions, February saw a rebound, and early March trends were consistent with February sales levels.
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United Homes Stock Declines Post Q4 Earnings Despite Higher Revenues
Shares of United Homes Group, Inc. (UHG - Free Report) have lost 0.3% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 1.8% gain over the same time frame. Over the past month, the stock lost 12.9% compared with the S&P 500’s 7.9% decline.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Earnings Performance
United Homes reported fourth-quarter 2024 revenues of $134.8 million, a 15.4% increase from $116.8 million in the prior-year quarter. Net income for the quarter stood at $0.7 million, or $0.01 per diluted share against a net loss of $66.6 million, or $1.38 per share, in fourth-quarter 2023. The quarter’s results included a non-cash loss on extinguishment of convertible notes totaling $45.6 million and a fair value adjustment of $38 million related to derivative liabilities.
Home closings rose 6.9% year over year to 414 compared with 387 in fourth-quarter 2023. Net new orders increased 19.4% to 351 from 294 in the prior-year period. The average sale price for production-built homes increased 1.3% to approximately $324,000 from $320,000 a year ago.
Gross profit for the quarter was $21.8 million (with a gross margin of 16.2%), up 0.7% from $21.6 million of gross profit and a gross margin of 18.5% in the prior-year period. Adjusted gross profit margin declined to 18.1% from 21.8%, reflecting pricing pressures and sales incentives offered to drive volume.
United Homes Group, Inc. Price, Consensus and EPS Surprise
United Homes Group, Inc. price-consensus-eps-surprise-chart | United Homes Group, Inc. Quote
Other Key Business Metrics
Selling, general, and administrative (SG&A) expenses were $19.3 million in the quarter, up 4.9% from the prior-year quarter’s $18.4 million. Adjusted SG&A, which excludes stock-based compensation and severance costs, was $17.7 million (13.1% of revenue), down 72.6% from the prior-year quarter’s $64.5 million (13.9% of revenue). UHG reported adjusted EBITDA of $7.7 million, down 23.2% from $10 million in fourth-quarter 2023.
As of Dec. 31, 2024, the backlog stood at 157 homes, valued at approximately $58.3 million, a decline from 189 homes valued at $57.6 million in the prior-year period. UHG’s lot pipeline consisted of approximately 7,700 lots, either owned or controlled by the company or related parties.
In terms of community activity, UHG had 46 active communities at year-end, down from 61 in 2023.
Management Commentary and Market Conditions
Interim CEO Jamie Pirrello noted that the company faced a competitive pricing environment, with most builders sacrificing gross margins for volume. Higher mortgage rates continued to pressure affordability, leading UHG and its peers to use mortgage incentives to support sales. The cost of mortgage buydowns increased during the quarter, reaching approximately 5% of revenue.
UHG focused on streamlining operations by rebidding direct construction costs with multiple vendors to improve cost efficiency. Additionally, the company redesigned its product offerings, launching refreshed home designs in the fourth quarter, which have shown early positive sales traction. Management anticipates that this product transition will contribute to stronger pricing power and faster inventory turnover in 2025.
Financial Restructuring and Capital Allocation
A significant development during the quarter was the refinancing of the company’s convertible notes in December. The transaction reduced UHG’s leverage by $10 million, lowered annual cash interest expenses by approximately $4 million and decreased potential shareholder dilution by eliminating the conversion feature of the previous debt structure. The refinancing included a $70 million subordinated loan with a variable interest rate indexed to SOFR plus a spread of 6.75% to 7.75%.
Outlook and Guidance
Interim CEO Jamie Pirrello emphasized that, while the homebuilding market remains competitive, UHG expects its strategic initiatives — such as product redesigns, cost optimizations, and a balanced build-to-order approach — to positively impact its financial performance in 2025.
President Jack Micenko noted that early sales of the redesigned home plans have demonstrated stronger gross margins, which should contribute to improved profitability as these homes become a larger share of deliveries. He also highlighted that the company expects improved pricing power and faster inventory turnover as it reduces aged inventory.
Other Developments
UHG expanded its presence in the Myrtle Beach market with the acquisition of Creekside Custom Homes, LLC. Management emphasized that the acquisition aligns with the company’s strategic goal of scaling operations in high-growth markets across the Southeast.
UHG plans to open 11 new communities in the second quarter of 2025 and another 15 in the third quarter of 2025, supporting future revenue growth. While January 2025 net new orders declined due to weather-related disruptions, February saw a rebound, and early March trends were consistent with February sales levels.