Executive Summary

Q4 2024 revenue rose 15% year over year to $134.8M on 7% higher closings; diluted EPS was $0.01 vs $(1.38) in Q4 2023, aided by non-cash fair value movements and despite a predominantly non-cash $45.6M loss on debt extinguishment .
Pricing pressure and elevated incentives weighed on profitability: gross margin fell to 16.2% (vs 18.5% LY) and adjusted gross margin to 18.1% (vs 21.8% LY); management cited mortgage buydowns costing ~5% of revenue in the quarter .
Demand indicators strengthened: net new orders +19% YoY to 351; ASP of production-built homes was ~$324K (vs ~$320K LY) and backlog stood at 157 homes ($58.3M) at year-end .
Balance sheet/cash flow catalyst: December refinancing is expected to reduce annual cash interest by ~$(4)M, convert debt to floating, and reduce dilution from the prior convert; adjusted book value was $96.7M at 12/31/24 .
No formal FY25 guidance; management highlighted cost-rebids and redesigned plans with gross margins “500+ bps” above trailing levels as potential margin inflection drivers through 2025; 11 new communities are planned in Q2’25 and 15 in Q3’25 .

What Went Well and What Went Wrong

What Went Well

Orders and deliveries accelerated for a second straight quarter: Q4 net new orders +19% YoY to 351; closings +7% YoY to 414; management emphasized competitive wins despite a challenging backdrop .
Product refresh and cost actions: redesigned plans are producing gross margins “over 500 bps better” than trailing reported margin and comprised nearly all permitted starts since Nov 1, positioning for 2025 mix/pricing benefits .
Capital structure improvement: December refinancing replaced 15% converts, cut subordinated debt by $10M to $70M, moved to SOFR+6.75–7.75% and is expected to lower cash interest by ~$4M/yr and reduce potential dilution .

What Went Wrong

Margin compression: gross margin fell 230 bps YoY to 16.2% (adjusted GM down 370 bps to 18.1%) on elevated incentives, purchase accounting amortization, and seasonal competitive discounting .
Incentive cost spike: mortgage buydown costs spiked after rate moves, with the 10-year jump pushing buydown costs to ~5% of revenue in Q4, pressuring unit economics .
Starts and community count down: starts declined 26.5% YoY in Q4 as UHG paused to implement plan refresh; active communities fell to 46 at year-end (55 in Q3; 59 in Q2), creating near-term growth headwinds .

Financial Results

Headline P&L vs prior year and prior quarter

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	$116.83	$118.64	$134.81
Diluted EPS ($)	$(1.38)	$(0.15)	$0.01
Gross Margin %	18.5%	18.9%	16.2%
Adjusted Gross Margin %	21.8%	20.6%	18.1%
SG&A % of Revenue	—	15.8%	14.3%
Adjusted SG&A %	—	13.9%	13.1%
Adjusted EBITDA ($M)	$10.05	$8.98	$7.71

Notes: EPS and margin changes reflect non-cash derivative fair value and debt extinguishment accounting, as well as incentive normalization and acquisition-related amortization .

Segment/Market operational mix (Q4 2024 vs Q4 2023)

Market	Net New Orders Q4’23	Net New Orders Q4’24	Closings Q4’23	Closings Q4’24
Coastal	19	68	28	66
Midlands	158	170	253	215
Upstate	90	95	99	111
Rosewood	24	7	7	9
Raleigh	3	11	—	13
Total	294	351	387	414

KPIs and operating metrics

KPI	Q2 2024	Q3 2024	Q4 2024
Closings (units)	337	369	414
Net New Orders (units)	323	341	351
ASP – Production-built (~$K)	~$341	~$320	~$324
Backlog (units)	248	220	157
Backlog Value ($M)	$81.2	$79.9	$58.3
Active Communities (period end)	59	55	46
Lots Owned/Controlled (approx.)	~9,300	~8,600	~7,700
Liquidity (cash + revolver avail.)	$80.4M	$89.0M	~$60M

Additional Q4-only operational stats: Starts 222 vs 302 LY; spec inventory 338 homes vs 483 LY; total inventory (backlog + spec) 495 vs 672 LY .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cash interest expense (annualized)	2025+	N/A	Lower by ~$(4.0)M/yr based on current rates	Lowered
Debt structure	2025+	15% fixed converts	Replaced with $70M SOFR+6.75–7.75% subordinated term loan; converts redeemed; dilution reduced	Improved structure
Community openings	2025	N/A	Plan to open 11 communities in Q2’25 and 15 in Q3’25	New disclosure
Revenue, EPS, margin guidance	2025	N/A	No formal quantitative guidance provided	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2–Q3 2024)	Current Period (Q4 2024)	Trend
Mortgage incentives/affordability	Elevated incentives; buydowns used to sustain pace; ASP mix shift; margins pressured	Buydown costs spiked to ~5% of revenue amid rate volatility; competition discounted to clear specs	Incentive intensity elevated; near-term margin headwind
Product redesign	Initiated product repositioning, value engineering, rebids to lower direct costs	Redesigned plans driving >500 bps margin uplift vs trailing; majority of permitted starts since Nov 1 are refreshed	Positive margin mix tailwind into 2025
Cost rebidding	Proactive rebids to capture lower stick-and-brick costs; lumber tailwind	Companywide rebid across categories to benchmark 3+ vendors; initial “significant wins”	Ongoing cost-down benefits expected
Land-light strategy & lots	~9,300 lots controlled (95% via options/land banks)	~7,700 lots controlled at YE; emphasis on optioned pipeline for returns	Intentional pruning; rebuild as community count ramps
Community footprint	59 (Q2) to 55 (Q3) active communities	46 at YE; plan to add 26 in Q2–Q3’25	Trough in Q4; rebuild slated in 1H–3Q’25
Backlog/starts/specs	Backlog 248 (Q2) → 220 (Q3); spec management emphasized	Backlog 157; starts down 26.5% YoY as refresh implemented; spec total -30% YoY	Leaner WIP; path to faster turns
M&A/integration	Integrating Raleigh/Rosewood/Creekside; progress varied	Continued integration; focus on Southeast scale	Ongoing
Macro rates	Incentives tied to rate moves; buyers shifting to closing cost credits	Rate volatility impacted buydown costs; competitive year-end discounting	Volatile but manageable

Management Commentary

“This was the second quarter in a row where we achieved significant growth in net new orders… We were also able to grow closings by 7% over the same period a year ago.” — Interim CEO Jamie Pirrello .
“Gross margins in backlog and recent closings of these redesigned plans are over 500 bps better than the company’s trailing reported gross margin… This product transition should allow for better pricing power and faster inventory turns.” — President Jack Micenko .
“The December refinancing… lower[ed] cash interest expense by approximately $4 million per year… [and] significantly reduced potential future shareholder dilution.” — CFO Keith Feldman .
“2025 is going to be a pivotal year for our company… We are making progress on several initiatives that will drive revenue growth and improve gross margins.” — Interim CEO Jamie Pirrello .

Q&A Highlights

There were no analyst questions on the Q4 2024 call; management provided prepared remarks only .

Estimates Context

We attempted to retrieve S&P Global consensus for Q4 2024 EPS and revenue; data was unavailable at the time of request due to a provider rate limit. Values from S&P Global could not be displayed; as a result, comparison to consensus is not provided here. We will update when accessible.

Key Takeaways for Investors

Demand resilience with mix tailwinds: Orders +19% YoY and ASP stability alongside a redesigned product lineup suggest potential for volume and mix-driven margin recovery as refreshed plans scale through 2025 .
Margin inflection watch: Q4 margins compressed on incentives/buydowns (~5% of revenue), but backlog on refreshed plans carries >500 bps higher gross margin vs trailing — monitor conversion of this backlog beginning mid-2025 .
Operating leverage setup: Adjusted SG&A improved to 13.1% of revenue in Q4 (from 13.9% in Q3), while active community count is set to rebuild with 26 planned openings in Q2–Q3’25, offering a path to scale benefits .
Balance sheet/cash flow catalyst: The refinancing should trim annual cash interest by ~$4M and reduce dilution risk, supporting cash generation and capital flexibility into 2025 .
Inventory discipline: Starts were pulled back during the plan refresh and spec inventory fell 30% YoY, positioning for better turns; near-term volumes could be choppy given high backlog conversion and January softness, per management .
Risk: Competitive discounting and rate-driven incentive costs remain the biggest near-term headwind to margins; watch 10-year/TBA dynamics and competitor incentives in core Southeast markets .
Trading lens: Catalysts include evidence of improved gross margin in Q2–Q3’25 closings, community openings hitting plan, and confirmation of interest expense savings in cash flows; downside if incentives remain elevated or community ramp slips .

Appendix: Additional Detail

Q4 2024 revenue $134.8M; gross profit $21.8M; adjusted gross profit $24.47M; adjusted EBITDA $7.71M; SG&A $19.34M; adjusted SG&A $17.67M .
FY 2024: Revenue $463.7M; gross margin 17.2% (adjusted 19.9%); adjusted EBITDA $31.64M; adjusted SG&A 13.9% of revenue .
Preliminary Q4 operational stats: Net new orders 351 (+19.4% YoY), starts 222 (−26.5%), closings 414 (+7.0%); spec inventory 338 (−30.0% YoY) .

United Homes Group, Inc. (UHG)·Q4 2024 Earnings Summary