United Homes Group Faces Challenges Amid Revenue Growth in Q3 2024
United Homes Group, Inc. (UHG) reported a loss per share of 15 cents for the third quarter of 2024, a stark contrast to earnings of $2.35 per share during the same quarter last year.
Revenue Highlights
In the third quarter, United Homes achieved revenues of $118.6 million, reflecting a significant 35.2% increase compared to the previous year.
Home closings reached 369, marking a 30.4% rise from 283 closings in the prior year. The company secured 341 new home orders, which is a 25.4% increase from 272 in the same period last year.
The average sale price (ASP) of the closed production-built homes was approximately $320,000 this quarter, up from $316,000 in the third quarter of 2023. This indicates a modest increase of 1.3%.
As of September 30, 2024, UHG was active in 55 communities and controlled 8,600 lots.
In after-hours trading, shares of United Homes increased by nearly 1.7%.
Explore the latest EPS estimates and surprises on Zacks Earnings Calendar.
Gross Margin Analysis
United Homes reported a gross profit of $22.4 million for the quarter, an increase of 28.6% from the previous year. However, the gross margin declined by 98 basis points to 18.9%.
The adjusted gross margin stood at 20.6%, down from 22.1% in the same period last year. Management attributes this decrease to the increased sales incentives offered to homebuyers.
Price and Earnings Consensus
View United Homes Group, Inc. price, consensus, and EPS surprise chart
Operating Expense Overview
Selling, general, and administrative expenses rose by 37.1% year over year to $18.7 million.
Profitability Insights
The operating loss for the third quarter was $7.4 million, in contrast to an operating profit of $152.6 million in the previous year. Additionally, the net loss amounted to $7.3 million, compared to a net profit of $150.8 million in the prior year.
Adjusted EBITDA reached $8.9 million, a 2.1% increase from the same quarter last year.
Liquidity and Debt Management
By the end of the third quarter of 2024, United Homes reported cash and cash equivalents of $25.8 million, up from $24.9 million at the end of the second quarter.
Summary
UHG showed solid revenue growth in the third quarter of 2024, driven by higher home closings and new orders. Furthermore, the increase in ASP for production-built homes was a positive sign.
During the earnings call, management discussed new initiatives aimed at growth, lowering costs, and upgrading product offerings to stay competitive. Although these efforts are promising, disappointing bottom-line results and the decline in gross margins cast a shadow over overall performance.
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