Second Quarter 2023 Highlights
- Average sale price (ASP) of production-built homes increased
to $313,000 from $300,000 in Q2 2022
- 385 homes closed resulted in $122.1 million of
revenues
- 341 net new home orders during Q2 2023
- Backlog value was $94.2 million as of June 30, 2023
- Active community count of 53 as of June 30, 2023
- Approximately 8,000 lots owned or controlled by the Company
or affiliates as of June 30, 2023
- Total liquidity of $178.7 million as of June 30, 2023,
comprised of $92.7 million of cash and $86.0 million of undrawn
revolver capacity under our credit facility
- Subsequent to the second quarter, closed on new credit
facility for $240 million with 3-year term, increasing liquidity by
$90 million.
United Homes Group, Inc. (the “Company”) (NASDAQ: UHG) today
announced results for the second quarter ended June 30, 2023.
Second Quarter 2023 Operating Results
For the second quarter 2023, net income was $245.4 million, or
$4.27 per diluted share, which included change in fair value of
derivative liabilities of $242.3 million, predominantly due to
changes in fair value on potential earn-out consideration due to
fluctuation in the stock price during the measurement period. The
earn-out consideration would be paid in common shares upon reaching
certain stock price hurdles. The Company is required to record the
non-cash fair value of this earn-out as derivative liabilities on
the consolidated balance sheets until UHG shares reach certain
predetermined values. Excluding the derivative liability, our
adjusted book value1 was $91.0 million. Net income for the second
quarter 2022 was $25.9 million, or $0.69 per diluted share.
“United Homes Group produced solid results in the second quarter
of 2023, generating adjusted EBITDA2 of approximately $13.1
million,” said Michael Nieri, Chief Executive Officer of United
Homes Group. “Order activity throughout the quarter was strong, and
as the mix of closings with high lumber costs started to decline,
we began realizing margin expansion. Based on current market
conditions and what’s already in backlog, we expect to see further
sequential margin improvement in the second half of the year.”
Keith Feldman, Chief Financial Officer commented, “Our balance
sheet is solid with approximately $93 million of cash and having
recently significantly increased our line of credit to $240
million, we have ample liquidity to execute on our various growth
initiatives which include acquiring other homebuilders that
complement our business.”
Mr. Nieri concluded, “We see a clear runway for growth for
well-capitalized homebuilders moving forward. Millions of existing
homeowners who financed their homes with lower-rate mortgages are
staying in their existing homes, resulting in a massive supply
shortage in the existing home market. I believe this creates a huge
opportunity for the homebuilding industry and especially for United
Homes Group given our focus on affordability and markets with
favorable in-migration trends. We are excited for what the future
holds for our company.”
Homebuilding revenues for the second quarter 2023 were $122.1
million, compared to $142.5 million in the second quarter 2022.
Home closings during the second quarter 2023 were 385 compared to
459 in the year-ago quarter. Average sales price (“ASP”) of 376
production-built homes (which excludes nine general contractor and
build for rent homes) closed during the second quarter 2023 was
$313,000, compared to $300,000 during the second quarter 2022 of
451 production-built homes (which excludes eight general contractor
and build for rent homes), representing a 4.3% increase.
Homebuilding gross profit margin during the second quarter of
2023 was 19.6% compared to 28.8% during the second quarter 2022.
Homebuilding adjusted gross profit margin3 in the second quarter
2023 was 21.4%, compared to 29.2% in the second quarter 2022. UHG’s
year-over-year decline in both gross profit margin and adjusted
gross profit margin can be largely attributable to the Company
offering sales incentives and selling inventory with higher lumber
costs that contracted in the second half of 2022. The Company
expects margins to expand throughout the year due to closings on
homes with current lumber costs and as we see price increases on
new sales.
Selling, general and administrative expenses (SG&A) as a
percentage of homebuilding revenues was 13.4% in the second quarter
2023, which included $410,530 of equity-based compensation.
Excluding equity-based compensation and transaction related
expenses, SG&A for the second quarter 2023 was 12.1% of
homebuilding revenues.
Adjusted EBITDA during the second quarter 2023 was $13.1 million
compared to $27.8 million during the second quarter 2022. This
decrease is largely related to fewer closings and lower gross
margins as described above.
1 Adjusted book value is a non-GAAP financial measure. See
“Reconciliation of Non-GAAP Financial Measures.” 2 Adjusted EBITDA
is a non-GAAP financial measure. See “Reconciliation of Non-GAAP
Financial Measures.” 3 Adjusted gross profit margin is a non-GAAP
financial measure. See “Reconciliation of Non-GAAP Financial
Measures.”
Six Months Ended June 30, 2023 Operating Results
Net income was $40.9 million, or $0.89 per diluted share, which
included change in fair value of derivative liabilities of $35.3
million predominantly due to changes in fair value on potential
earn-out consideration due to fluctuation in the stock price during
the measurement period. The earn-out consideration would be paid in
common shares upon reaching certain stock price hurdles. The
Company is required to record the non-cash fair value of this
earn-out as derivative liabilities on the consolidated balance
sheets until UHG shares reach certain predetermined values. Net
income for the six months ended 2022 was $42.9 million, or $1.15
per diluted share.
For the six months ended June 30, 2023, homebuilding revenues
were $216.9 million, compared to $250.9 million in the same period
of fiscal 2022. Home closings for the six months ended June 30,
2023 were 713 compared to 873 in the same period of fiscal
2022.
Homebuilding gross profit margin for the six months ended June
30, 2023 was 18.8% compared to 27.2% during the same period of
fiscal 2022. Homebuilding adjusted gross profit margin for the six
months ended June 30, 2023 was 20.9%, compared to 27.8% for the six
months ended June 30, 2022. This reduction in margin is largely
attributable to fewer closings and selling through inventory
constructed with higher lumber costs.
Adjusted EBITDA for the six months ended June 30, 2023 was $21.6
million compared to $47.1 million during the same period of fiscal
2022.
Credit Facility
In August, UHG closed a new $240 million credit facility,
replacing the previous $150 million facility, which was due to
expire in June 2024. The new facility has a three-year term, with a
one-year extension option. The new facility’s covenants and
reporting requirements are materially consistent with the previous
facility. Wells Fargo continues to serve as the Administrative
Agent on the new facility, as the number of participating lenders
remains at five, of which, three lenders are new to the syndication
group.
Earnings Conference Call
The Company will host a conference call via live webcast for
investors and other interested parties beginning at 5:00 p.m.
Eastern Time on Thursday, August 10, 2023. 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 888-259-6580,
or 416-764-8624 for international participants, Conference ID: 29788545. 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 53
active communities in South Carolina and Georgia.
UHG employs an asset-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, with a smaller presence in Georgia. UHG seeks to
operate its homebuilding business in high-growth markets, with
substantial in-migrations and employment growth.
Under its asset-light lot operating strategy, UHG controls its
supply of finished building lots through lot purchase agreements
with third parties including its Land Development Affiliates, which
provide UHG with the right to purchase finished lots after they
have been developed by the applicable third party. This asset-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. UHG believes that the Southeastern states
generally offer these characteristics to a greater extent than
other geographic regions of the country, and expects the
Southeastern states to be the principal focus of any future
expansion of its homebuilding business.
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:
- the outcome of any legal proceedings;
- 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;
- changes in applicable laws or regulations;
- 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;
- a slowdown in the homebuilding industry or changes in
population growth rates in our markets;
- volatility and uncertainty in the credit markets and broader
financial markets;
- disruption in the terms or availability of mortgage financing
or an increase in the number of foreclosures 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;
- delays in land development or home construction resulting from
natural disasters, adverse weather conditions or other events
outside our control;
- our ability to continue to leverage our asset-light operating
strategy;
- that we have identified material weaknesses in our internal
control over financial reporting which, if not corrected, could
affect the reliability of our consolidated financial
statements;
- 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 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 JUNE 30, 2023 and DECEMBER 31, 2022
(UNAUDITED)
June 30, 2023
December 31, 2022 (2)
ASSETS
Cash and cash equivalents
$
92,741,831
$
12,238,835
Accounts receivable, net
1,919,934
1,976,334
Inventories:
Homes under construction and finished
homes
89,756,401
163,997,487
Developed lots
24,801,833
16,205,448
Due from related party
8,420,919
1,437,235
Related party note receivable
647,106
—
Lot purchase agreement deposits
16,416,693
3,804,436
Investment in Joint Venture
822,568
186,086
Property and equipment, net
639,470
1,385,698
Operating right-of-use assets
656,772
1,001,277
Deferred tax asset
3,495,518
—
Prepaid expenses and other assets
6,565,316
6,112,044
Total Assets
$
246,884,361
$
208,344,880
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
18,031,023
$
22,077,240
Homebuilding debt and other affiliate
debt
63,961,416
120,797,006
Operating lease liabilities
656,772
1,001,277
Other accrued expenses and liabilities
4,759,106
5,465,321
Income tax payable
1,320,104
—
Derivative liabilities
208,155,641
—
Convertible note payable
67,133,585
—
Total Liabilities
364,017,647
149,340,844
Class A common stock, $0.0001 par value;
350,000,000 shares authorized; 11,381,736 shares issued and
outstanding on June 30, 2023, and December 31, 2022, respectively.
(1)
1,137
37
Class B common stock, $0.0001 par value;
60,000,000 shares authorized; 36,973,877 shares issued and
outstanding on June 30, 2023, and December 31, 2022, respectively.
(1)
3,697
3,697
Preferred Stock, $0.0001 par value;
40,000,000 shares authorized; none issued or outstanding.
—
—
Additional paid-in capital(1)
764,887
1,422,630
Retained Earnings/(accumulated deficit)
(1)
(117,903,007
)
57,577,672
Total Stockholders' equity(1)
(117,133,286
)
59,004,036
Total Liabilities and Stockholders'
equity
$
246,884,361
$
208,344,880
(1)
Retroactively restated as of December 31,
2022 for the Reverse Recapitalization as a result of the Business
Combination
(2)
The Condensed Consolidated Balance Sheet
as of December 31, 2022 (“Legacy UHG financial statements”) has
been prepared from Legacy UHG’s historical financial records and
reflect the historical financial position of Legacy UHG for the
period presented on a carve-out basis in accordance with generally
accepted accounting principles in the United States of America
(“GAAP”). The Legacy UHG financial statements present historical
information and results attributable to the homebuilding operations
of Great Southern Homes, Inc.
UNITED HOMES GROUP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND SIX MONTHS ENDED
JUNE 30, 2023 AND 2022 (UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue, net of sales discounts
$
122,091,629
$
142,468,681
$
216,918,331
$
250,905,541
Cost of sales
98,174,149
101,458,330
176,223,078
182,623,290
Gross profit
23,917,480
41,010,351
40,695,253
68,282,251
Selling, general and administrative
expense
16,335,318
15,200,745
33,022,719
25,625,795
Net income from operations
$
7,582,162
$
25,809,606
$
7,672,534
$
42,656,456
Other (expense) income, net
(2,295,330
)
92,400
(2,092,615
)
263,478
Equity in net earnings from investment in
joint venture
390,674
—
636,482
—
Change in fair value of derivative
liabilities
242,342,979
—
35,278,491
—
Income before taxes
$
248,020,485
$
25,902,006
$
41,494,892
$
42,919,934
Income tax expense
(2,657,726
)
—
(636,461
)
—
Net income
$
245,362,759
$
25,902,006
$
40,858,431
$
42,919,934
Basic and diluted earnings per
share
Basic
$
5.10
$
0.69
$
0.95
$
1.15
Diluted
$
4.27
$
0.69
$
0.89
$
1.15
Basic and diluted weighted-average
number of shares (1)
Basic
48,122,141
37,347,350
42,877,744
37,347,350
Diluted
57,874,253
37,444,348
48,800,225
37,395,849
(1)
Retroactively restated for the three and
six months ending June 30, 2022 for the Reverse Recapitalization as
a result of the Business Combination
UNITED HOMES GROUP, INC. GAAP TO NON-GAAP RECONCILIATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2023 and 2022 (UNAUDITED)
Adjusted gross profit is a non-GAAP financial measure used by
management of UHG as a supplemental measure in evaluating operating
performance. UHG defines adjusted gross profit as gross profit
excluding the effects of capitalized interest expensed in cost of
sales. UHG’s management believes this information is meaningful
because it separates the impact that capitalized interest expensed
in cost of sales has on gross profit to provide a more specific
measurement of UHG’s gross profits. However, because adjusted gross
profit information excludes capitalized interest expensed in cost
of sales, which has real economic effects and could impact UHG’s
results of operations, the utility of adjusted gross profit
information as a measure of UHG’s operating performance may be
limited. Other companies may not calculate adjusted gross profit
information in the same manner that UHG does. Accordingly, adjusted
gross profit information should be considered only as a supplement
to gross profit information as a measure of UHG’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 June
30
Six Months Ended June
30
2023
2022
2023
2022
Revenue, net of sales discounts
$
122,091,629
$
142,468,681
$
216,918,331
$
250,905,541
Cost of sales
98,174,149
101,458,330
176,223,078
182,623,290
Gross profit
$
23,917,480
$
41,010,351
$
40,695,253
$
68,282,251
Interest expense in cost of sales
2,159,967
627,369
4,546,799
1,585,269
Adjusted gross profit
$
26,077,447
$
41,637,720
$
45,242,052
$
69,867,520
Gross profit %(a)
19.6
%
28.8
%
18.8
%
27.2
%
Adjusted gross profit %(a)
21.4
%
29.2
%
20.9
%
27.8
%
(a) Calculated as a percentage of
revenue
UNITED HOMES GROUP, INC. GAAP TO NON-GAAP RECONCILIATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2023 and 2022 (UNAUDITED)
Earnings before interest, taxes, depreciation and amortization,
or EBITDA, and adjusted EBITDA are supplemental non-GAAP financial
measures used by management of UHG. UHG 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, (iv) taxes. UHG defines adjusted
EBITDA as EBITDA before stock-based compensation expense,
transaction cost expense and change in fair value of derivative
liabilities. Management of UHG 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. UHG presents EBITDA and adjusted EBITDA because they
believe these metrics provide useful information regarding the
factors and trends affecting UHG’s business.
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income
$
245,362,759
$
25,902,006
$
40,858,431
$
42,919,934
Interest expense in cost of sales
2,159,967
627,369
4,546,799
1,585,269
Interest expense in other (expense)
income, net
3,419,309
—
3,419,309
—
Depreciation and amortization
251,846
2,606
466,776
175,217
Taxes
2,745,736
2,952
637,844
(44,306
)
EBITDA
$
253,939,617
$
26,534,933
$
49,929,159
$
44,636,114
Stock-based compensation expense
410,530
53,288
4,909,686
1,321,510
Transaction cost expense
1,102,094
1,163,894
2,066,118
1,163,894
Change in fair value of derivative
liabilities
(242,342,979
)
—
(35,278,491
)
—
Adjusted EBITDA
$
13,109,262
$
27,752,115
$
21,626,472
$
47,121,518
EBITDA margin(a)
208.0
%
18.6
%
23.0
%
17.8
%
Adjusted EBITDA margin(a)
10.7
%
19.5
%
10.0
%
18.8
%
(a) Calculated as a percentage of
revenue
UNITED HOMES GROUP, INC. GAAP TO NON-GAAP RECONCILIATIONS
Continued
The Company does not use derivative instruments to hedge
exposure to cash flow, market or foreign currency risks. The
Company evaluates all of its financial instruments, including
issued warrants to determine if such instruments are derivatives or
contain features that qualify as embedded derivatives. The
classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is
re-assessed at the end of each reporting period. The following
table presents information about the Company’s Stockholders’
equity, removing all derivative liabilities that are measured at
fair value as of June 30, 2023 to present the Company’s Adjusted
Total Stockholders’ equity. The Company believes adjusted Total
Stockholders’ equity is useful because it believes this non-GAAP
measure provides a more accurate depiction of the Company’s true
equity to its Stockholders’, removing these longer-term, non-cash
liabilities, which fluctuate with their valuation.
June 30, 2023
Total Stockholders' equity
$
(117,133,286
)
Contingent earnout liability
199,711,577
Derivative private placement warrant
liability
2,343,664
Derivative public warrant liability
5,606,250
Derivative stock option liability
494,150
Total Derivative Liability
208,155,641
Adjusted Book Value
$
91,022,355
UNITED HOMES GROUP, INC.
OPERATIONAL METRICS BY MARKET
$’s in millions
Three Months Ended June
30,
Period Over Period %
Change
2023
2022
Market
Net New Orders
Closings
Net New Orders
Closings
Net New Orders
Closings
Coastal
39
67
42
25
-7%
168%
Midlands
245
241
196
286
25%
-16%
Upstate
57
77
101
148
-44%
-48%
Total
341
385
339
459
1%
-16%
As of June 30,
As of June 30,
Period Over Period %
Change
2023
2022
Market
Backlog Inventory
Revenue
Backlog Inventory
Revenue
Backlog Inventory
Revenue
Coastal
49
$
16.9
125
$
40.4
-61%
-58%
Midlands
172
$
53.0
333
$
99.1
-48%
-46%
Upstate
72
$
24.3
133
$
42.5
-46%
-43%
Total
293
$
94.2
591
$
182.0
-50%
-48%
Six Months Ended June
30,
Period Over Period %
Change
2023
2022
Market
Net New Orders
Closings
Net New Orders
Closings
Net New Orders
Closings
Coastal
109
138
91
102
20%
35%
Midlands
442
417
482
530
-8%
-21%
Upstate
179
158
240
241
-25%
-34%
Total
730
713
813
873
-10%
-18%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809693664/en/
Investor Relations Contact: Drew Mackintosh
drew@mackintoshir.com Mobile: 310-924-9036
Media Contact: Allen Hutto
allenhutto@greatsouthernhomes.com Mobile: 803-665-2764
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