United Homes Group Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: Home sales revenue reached $105.5 million with 303 deliveries at an average price of $349,000, and gross margin improved by 100 basis points to 18.9% year-over-year.
  • Negative Sentiment: Net new orders declined 5.9% year-over-year to 304 homes, driven by a 10% decrease in average community count despite a steady sales pace of 1.9 homes per community per month.
  • Positive Sentiment: United Homes’ average sales price of $349,000 remains well below the U.S. median of $402,000, and the company is offering mortgage rate buydowns and financing incentives to address affordability concerns.
  • Positive Sentiment: Refreshed floor plan introductions have generated strong buyer response and boosted profitability, with margins on updated homes trending about 300 basis points above legacy product.
  • Neutral Sentiment: As of June 30, the company controls roughly 7,300 lots across 55 active communities, with new community openings planned in the second half of the year and $95.2 million of liquidity available.
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Earnings Conference Call
United Homes Group Q2 2025
00:00 / 00:00

There are 4 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the United Homes Group Second Quarter twenty twenty five Earnings Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. As a reminder, today's call is being recorded. I will now hand today's call over to Erin Reeves McGinnis, General Counsel.

Operator

Please go ahead.

Speaker 1

Good morning, and welcome to UnitedHealth Group's Second Quarter of twenty twenty five Earnings Call. Before the call begins, I would like to note that this call will include forward looking statements within the meaning of the federal securities laws. UnitedHealth Group cautions that forward looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These risks and uncertainties include, but are not limited to, the risk factors described by United Homes Group in its filings with the Securities and Exchange Commission. Accordingly, forward looking statements should not be relied upon as representing our views as of any subsequent date, and you should not place undue reliance on these forward looking statements.

Speaker 2

We do

Speaker 1

not undertake any obligation to update forward looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Additionally, reconciliations of non GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be accessed through the company's website and in its SEC filings. Hosting the call today are United Homes Group's Chief Executive Officer, Jack Lisenko and Chief Financial Officer, Keith Feldman. With that, I'd like to turn the call over to Jack.

Speaker 3

Thank you, Aaron, and good morning to everyone joining us on the call. Home sales revenue came in at $105,500,000 on three zero three new home deliveries at an average sales price of $349,000 Home sales gross margin for the quarter was 18.9%, representing a 100 basis point improvement over the 2024 and counter to the broader industry trend. Net new orders declined 5.9% year over year, primarily due to a 10% decrease in average community count. Our sales pace was relatively consistent on a year over year basis coming in at 1.9 homes per community per month. Overall, I'm pleased with our company's performance this quarter as we continue to navigate changing market conditions.

Speaker 3

Demand trends during the second quarter were inconsistent as homebuyers continue to weigh their desire for homeownership in the reality of high mortgage rates and concerns over affordability. On a positive note, we saw fairly resilient traffic patterns through the quarter both online and in our communities, which we feel is a sign that buyers in our markets remain engaged and interested in buying a home provided it fits within their budget. We continue to offer mortgage rate buy downs and other financing incentives as a way to address affordability concerns with our buyers. Another way we combat the rising cost of homeownership is by keeping the price of our homes well below the industry average. In June, the median sales price of new homes sold in The US was $402,000 an average of 501,000 This compares to United Home's average sales price of $349,000 in the second quarter.

Speaker 3

Keeping our home prices affordable for the vast majority of homebuyers in our markets continue to be a focus in our communities. Another focus for our company will be the continued rollout of our updated new home designs to each of our markets. Last year, we embarked on a company wide review of our floor plans and product offerings and realized there was an opportunity to enhance the appeal of our homes. Since that time, we've systematically introduced refreshed product into our communities and the response has been extremely positive. Not only has this initiative given a boost to our sales base, it also aided in our profitability with gross margins on our refreshed homes trending approximately 300 basis points higher than the legacy product.

Speaker 3

We believe our gross margins will be higher in 2025 compared to 2024 as a result of this product transition. We continue to be disciplined in our approach to land acquisition adhering to an asset light strategy while making sure each deal meets or exceeds our underwriting criteria. Lot costs continue to be the key driver of home price inflation as we've been successful in stabilizing and in some cases lowering the direct costs that go into building our home, in part to the rebidding initiative we've implemented last year. We've also seen some builders walk away from land deals in our markets recently, and we're optimistic this will lead to some softening in lot costs in the future. To sum up, I'm pleased with our progress in the quarter and I believe United Homes is well positioned as we head into the back half of the year.

Speaker 3

Now I'd like to turn the call over to Keith who will provide more detail on our operational and financial results for the quarter.

Speaker 2

Keith? Thank you, Jack, and good morning. For the 2025, we reported a net loss of $6,300,000 which includes a fair value adjustment of $6,200,000 primarily related to the accounting for the contingent earn out liability, which fluctuates each quarter based on our ending stock price. The earn out will be settled exclusively in common shares upon reaching certain stock price hurdles and will never result in a cash expense for the company. For the six months ended 06/30/2025, net income was $11,800,000 which included a change in fair value of $15,000,000 primarily related to the accounting for potential earn out liabilities.

Speaker 2

As Jack mentioned, revenue for the 2025 was $105,500,000 a decrease of 3,900,000 or 3.6% from $109,400,000 in the 2024. Revenue for the six months ended 06/30/2025 was $192,500,000 compared to $210,300,000 for the six months ended 06/30/2024. The year over year decline was primarily driven by lower home closings, partially offset by an increase in our average sales price. Home closings for the 2025 totaled three zero three homes, down from three thirty seven homes in the prior year period. Home closings for the six months ended 06/30/2025, were five fifty five homes compared to six forty eight homes for the same period in 2024.

Speaker 2

Net new orders for the second quarter was three zero four homes, down from three twenty three homes in the prior year period. Net new orders for the six months ended 06/30/2025 were 600 homes compared to seven zero seven homes in 2024. Backlog as of 06/30/2025 stood at two zero two homes representing approximately $74,900,000 in value. Gross profit for the 2025 was $19,900,000 up $300,000 or 1.5% from $19,600,000 in the prior year period. Gross margin improved by 100 basis points to 18.9% compared to the same period last year and two seventy basis points compared to the 2025.

Speaker 2

Adjusted gross margin was also up when compared to the prior year period from 20.9% to 21.3%. We believe the margin expansion is driven by the success of our Refresh Floor Plan portfolio and direct construction cost savings attributed to the rebidding initiative. For the six months ended 06/30/2025, gross profit was $34,000,000 which decreased from $35,700,000 from the six months ended 06/30/2024. However, gross margin increased from 17% in the six months ended 06/30/2024 to 17.7% in the six months ended 06/30/2025. Adjusted gross margin was 20.2% for the six months ended 06/30/2025, a slight decrease from the 20.7% from the six months ended 06/30/2024.

Speaker 2

Selling, general and administrative expenses for the second quarter was $18,000,000 Excluding approximately $2,200,000 in stock based compensation expense, transaction costs and severance expense, adjusted SG and A totaled $15,800,000 or 14.9% of revenue. For the six months ended 06/30/2025, SG and A expense was $34,200,000 and adjusted SG and A expense was $30,000,000 or 15.6% of revenue. As of today, we have 55 active communities, down from 59 a year ago. As previously mentioned, new communities are expected to become available in the second half of the year, which should provide a boost to our sales efforts later in the year. As of 06/30/2025, we controlled approximately 7,300 lots, which included a mix of owned, optioned and land banked assets, positioning us to drive future growth and capture market opportunities.

Speaker 2

We have approximately $95,200,000 of liquidity in cash and availability on our credit facility as of Q2. We remain focused on driving margin expansion, maintaining cost discipline and supporting our growth through strategic community openings and product enhancements. That concludes our prepared remarks. Operator, please open up the line for questions.

Operator

At this time, there are no questions in queue. I will now hand the call back over to the presenters for any closing remarks.

Speaker 3

Okay. If there's no questions, thank you, Tamika. We'd just like to thank everybody for their interest in United Home Group. Hope everybody enjoys the rest of their summer, and look forward to speaking with you again in coming months. Thanks.

Operator

This concludes today's call. Thank you for joining. You may now disconnect your lines.

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