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UH

United Homes Group, Inc. (UHG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $87.0M (-14% YoY) and diluted EPS was $0.31; EPS includes a $21.2M non-cash gain from the change in fair value of derivative liabilities tied to stock-price-contingent earnout, which materially boosted GAAP earnings .
  • Closings fell 19% YoY to 252 and net new orders declined 23% YoY to 296, driven by a slow January and elevated incentives; average sales price (ASP) rose 2.9% to ~$345K .
  • Margins improved intra-quarter: gross margins rose ~400bps from January to March; redesigned “refreshed” plans carried ~24% gross margins and are increasingly represented in backlog and April closings, supporting sequential margin trajectory into Q2–Q3 .
  • Liquidity was $86.9M ($25.0M cash + $61.9M undrawn revolver); refinancing lowered cash interest with ~$1M savings vs Q4 and guidance for ~$4M annual savings, supporting capital flexibility despite competitive conditions .

What Went Well and What Went Wrong

What Went Well

  • “Gross margins increased 400 basis points between January and March,” aided by higher-margin refreshed plans and pre-sales; 23 refreshed homes in Q1 had ~24% margins, with 27 closed in April and 91 in backlog at ~24% margins .
  • ASP increased to ~$345K (+2.9% YoY), and gross margin ticked up to 16.2% (from 16.0% YoY) on lower interest expense in cost of sales despite a competitive incentive environment .
  • Liquidity stood at $86.9M, and the December debt refinancing drove ~$1M cash interest savings in Q1 vs Q4, with ~$4M expected annually, supporting execution in opening 10 new communities in Q2 and 18 in Q3 .

What Went Wrong

  • Sales pace in January and early February was “disappointing,” compounded by abnormal snowfall in SC; with many closings back-half weighted, the slow January materially reduced Q1 closings .
  • Elevated incentives (financing incentives ~4% of ASP) and price discounting to move finished inventory depressed margins; adjusted gross margin fell to 18.8% (from 20.4% YoY) .
  • Adjusted EBITDA dropped to $2.9M (from $7.3M YoY) as incentives and discounting weighed on profitability; GAAP net income was boosted by non-cash derivative liability fair-value changes .

Financial Results

Quarterly progression (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$118.644 $134.812 $87.001
Diluted EPS ($USD)$(0.15) $0.01 $0.31
Gross Margin %18.9% 16.2% 16.2%
Adjusted Gross Margin %20.6% 18.1% 18.8%
EBITDA Margin %(1.4)% (1.8)% 24.6%
Adjusted EBITDA Margin %7.6% 5.7% 3.3%

Notes:

  • Q1 2025 EPS includes $21.2M non-cash derivative liability fair-value income; EBITDA similarly benefits from GAAP adjustments and derivative effects .

Year-over-year comparison (Q1 2024 vs Q1 2025)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$100.838 $87.001
Diluted EPS ($USD)$0.44 $0.31
Gross Margin %16.0% 16.2%
Adjusted Gross Margin %20.4% 18.8%
Closings (Units)311 252
Net New Orders (Units)384 296
ASP (Production-built) ($USD)~$335,000 ~$345,000
Adjusted EBITDA ($USD Millions)$7.283 $2.873

KPIs and balance sheet

KPIQ4 2024Q1 2025
Backlog (Units)157 201
Backlog Value ($USD Millions)$58.3 $75.3
Liquidity ($USD Millions)n/a$86.9 ($25.0 cash; $61.9 revolver capacity)
SG&A % of Revenue14.3% 18.6%
Adjusted SG&A %13.1% 16.3%
Lot Pipeline (Owned/Controlled)~7,700 (12/31/24) ~7,500 (3/31/25)
Active Communities50 (as of call) 50 (as of call)

Market/Segment breakdown (orders and closings)

MarketQ1 2024 Net New OrdersQ1 2024 ClosingsQ1 2025 Net New OrdersQ1 2025 Closings
Coastal68 45 39 45
Midlands209 150 151 124
Upstate95 98 72 55
Rosewood8 14 17 13
Raleigh4 4 17 15
Total384 311 296 252

Backlog by market

MarketBacklog Units (3/31/24)Backlog Value (3/31/24) ($M)Backlog Units (3/31/25)Backlog Value (3/31/25) ($M)
Coastal37 $12.3 42 $16.1
Midlands132 $44.1 94 $33.1
Upstate80 $19.2 45 $13.6
Rosewood10 $6.0 14 $10.0
Raleigh3 $1.9 6 $2.5
Total262 $83.5 201 $75.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross margin trajectoryFY 2025None issuedMargins expected to improve as refreshed plans and pre-sales comprise a larger share; 24% margins on refreshed plans; gross margins +400bps from Jan to MarQualitative “raised” trajectory
Direct construction cost savingsFY 2025 (2H impact)None issuedIdentified >$3.5M direct cost savings; “meaningful impact on earnings” in 2H25New initiative
Community openingsQ2–Q3 2025None issuedExpect 10 new communities in Q2 and 18 in Q3New rollout
Cash interest expenseFY 2025None issued~$4M annual savings from Dec refinancing; ~$1M savings realized in Q1 vs Q4Improved leverage/cash interest
Liquidity focus2025None issuedLiquidity $86.9M (cash + revolver capacity) maintained to support growthMaintained, highlighted

No formal quantitative ranges (revenue, EPS, margin, capex, tax rate) were provided for Q2/Q3 FY25.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Incentives & affordabilityIncentives elevated; adjusted GM 20.6% vs 22.1% YoY Incentives spiked, mortgage buydowns ~5% of revenue; adjusted GM 18.1% Financing incentives ~4% of ASP; margins sequentially improved late Q1 Incentives still high; margin trend improving sequentially
Product refreshOperational initiatives re-accelerating growth Redesign plans >500bps better than trailing margins; majority of starts since Nov 1 24% margins on refreshed plans; 91 in backlog; 27 closed in April Growing mix of refreshed plans improving margins
Shift to pre-salesNot highlightedManaging spec levels; redesign driving pricing power Strategic shift from high-spec to balanced, with pre-sales at higher margins Transition to higher-margin pre-sales underway
Debt & interestHigh derivative liabilities; convert outstanding Convertible notes redeemed; term loan; ~$4M annual interest savings ~$1M Q1 cash interest savings vs Q4; liquidity $86.9M Improved capital structure and cash interest
Communities & lotsActive communities 55; lots ~8,600 Lots ~7,700 YE; improving backlog margins 50 active communities; lots ~7,500; 10/18 new communities in Q2/Q3 Focused expansion with asset-light lot control
Regulatory/legalStandard forward-looking risks Material weaknesses note; standard risks External shareholder investigation PR (Levi & Korsinsky) Legal overhang headline risk (non-company PR)

Management Commentary

  • “Gross margins increased 400 basis points between January and March, due in part to the closings of 23 homes that were newly refreshed plans with average gross margins of approximately 24%…as of April 30th, we have 91 homes…in backlog…approximately 24%” — Jack Micenko, President .
  • “We have already identified over $3.5 million of direct construction cost savings this year, and we expect to see a meaningful impact on earnings…in the second half of 2025.” — Keith Feldman, CFO .
  • “Our sales pace in January and the first half of February was disappointing…The slower sales pace had a material impact on our results…pre-sold homes…are currently producing much higher margins.” — Jamie Pirrello, Interim CEO .

Q&A Highlights

  • No analyst Q&A occurred on the call; the operator closed without questions .
  • Management reiterated margin trajectory improvement, cost reduction ramp in 2H, planned community openings, and liquidity/capital discipline in prepared remarks .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable at time of review; no comparison to estimates can be made.
  • Implication: With intra-quarter margin improvement and higher-margin mix building into Q2–Q3, consensus revisions may focus on margin trajectory and adjusted profitability rather than GAAP EPS (which is influenced by non-cash derivative fair-value changes) . Note: Consensus values were not available from S&P Global for Q1 2025 at time of retrieval.

Key Takeaways for Investors

  • Sequential margin momentum is building via refreshed product and pre-sales; expect mix-driven margin improvement to continue into Q2–Q3 as backlog and starts skew to refreshed plans with ~24% margins .
  • Profitability remains sensitive to incentives; financing incentives at ~4% of ASP and competitive discounting weighed on adjusted EBITDA in Q1 (to $2.9M), but interest savings and cost reductions should aid 2H .
  • Liquidity and reduced cash interest (~$1M benefit in Q1; ~$4M annualized) provide flexibility for community rollouts (10 in Q2; 18 in Q3) and inventory management while shifting mix toward higher-margin pre-sales .
  • Watch Raleigh and Coastal markets showing stronger growth vs prior year; Midlands and Upstate are normalizing with lower backlog, suggesting targeted pricing/incentive actions and product mix adjustments by market .
  • GAAP EPS/EBITDA are influenced by non-cash derivative revaluations; focus on adjusted gross margin, adjusted SG&A, and adjusted EBITDA for core operational performance .
  • Legal headline risk: a shareholder investigation press release (Levi & Korsinsky) surfaced in February; monitor for any developments, though it’s external and not an internal UHG filing .
  • Near-term trading: stock likely reacts to evidence of margin mix shift (monthly/quarterly closings of refreshed plans) and April/May order trends; medium-term thesis hinges on execution of cost reductions, community openings, and sustained pre-sale mix to lift adjusted margins and EBITDA .