UMH PROPERTIES, INC. (UMH)·Q2 2024 Earnings Summary

Executive Summary

• UMH delivered solid Q2 performance: Total Income rose 9% year over year to $60.3M, Normalized FFO/share increased 10% YoY to $0.23, and sequentially improved from $0.22 in Q1; net income to common turned positive at $0.01, aided by occupancy gains, rent increases, and cost control .
• Same-property NOI grew 11% YoY (fourth consecutive quarter of double‑digit growth), with expense ratio improvement and stronger rent roll; home sales margin expanded to 38% from 30% YoY, providing an additional earnings lever .
• Management initiated FY24 Normalized FFO/share guidance at $0.91–$0.95 and raised the quarterly dividend to $0.215; liquidity strengthened via an unsecured revolver expansion to $260M—key potential stock catalysts as the company signals earnings growth visibility and balance-sheet capacity .
• Estimate comparison: S&P Global consensus data could not be retrieved at this time (SPGI API throttling), so we cannot quantify beat/miss vs Street; we will update when available (Values to be sourced from S&P Global).

What Went Well and What Went Wrong

• What Went Well

  • Double‑digit same‑property NOI growth (+11% YoY) on 9% rental revenue growth and moderated expense growth; management highlighted four straight quarters of double‑digit same‑property NOI increases .
  • Sales execution improved: 105 homes sold (+15% YoY), with gross margin rising to 38% from 30%, positioning for another “solid quarter” of profitable sales in Q3 per management .
  • Capital and liquidity: unsecured revolver expanded to $260M; company kept 92% of debt fixed-rate with total weighted average cost down 32 bps YoY to 4.56% .

• What Went Wrong

  • Absolute net income remains modest due to preferred dividends and non-operating items; net income to common was only $0.5M (EPS $0.01) in Q2 despite strong operating trends .
  • Community operating expenses rose 8% YoY in Q2 (payroll, taxes, rental home costs), partially offsetting revenue gains (expense ratio flat sequentially at 41.9%) .
  • Securities portfolio mark-to-market remained a swing factor (Q2 saw a $3.3M increase in fair value and a $3.8M realized loss), adding volatility below NOI .

Financial Results

Headline metrics – sequential and YoY

Segment breakdown – Q2 2024 vs Q2 2023

KPIs and operating drivers

Notes:

• Home sales gross margin improved to 38% from 30% YoY in Q2 .
• Cash & equivalents: $39.5M at Q2; Net debt to total market cap 29.6%; Interest coverage 3.2x; Fixed charge coverage 2.1x .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Normalized FFO for the second quarter increased to $0.23 from $0.21 last year… Sequentially… increased from $0.22 to $0.23” .
• “Same property NOI increased by 11.0% for the quarter… driven by… occupancy of 380 units and rental rate increases of 4.9%” .
• “Gross margin increased from 30% last year to 38% this year… anticipate another solid quarter of profitable home sales in the third quarter” .
• “We are initiating guidance for the remainder of 2024, with Normalized FFO in a range of $0.91–0.95… approximately 8% annual… growth at the midpoint” .
• “We are one of the few housing solutions that can profitably build and sell units for under $250,000… well positioned to fill our existing 3,300 vacant sites” .

Q&A Highlights

• Capital needs and mix: ~$110–$140M of internal investments in 2024 funded ~50/50 debt/equity; no refis in 2024; ~$117M to refinance in 2025 with expected cash‑out reflecting higher asset values .
• Rental program momentum: 315 homes on site ready/being set up; best month of rental conversions in July; expect continued strength in Q3 .
• Sales outlook: Expansions (e.g., Cinnamon Woods) opening with high‑margin sales; some homes expected to retail >$250K .
• Financing to residents: New homes ~conventional mortgage rates; used homes ~7.5%; brokered ~11.99%—company’s in‑house financing remains cost‑effective and supports demand .
• M&A backdrop: Anticipate fewer buyers/more sellers; UMH positioned for accretive turnarounds versus yield‑spread deals that struggled as rates rose .

Estimates Context

• We attempted to retrieve S&P Global consensus for Q2’24 (EPS, Revenue, FFO/share) but could not access due to SPGI request throttling limits at this time; therefore, we cannot state beat/miss vs Street for this quarter. We will update when consensus data is available (Values to be sourced from S&P Global).

Key Takeaways for Investors

• Sustained same‑property NOI growth with improving expense ratios and resilient collections underpins earnings power into H2; sequential Normalized FFO/share inflected higher in Q1 and Q2 .
• Sales margin expansion to 38% adds a second earnings lever alongside rental growth; near‑term catalysts from high‑margin expansion communities opening now .
• Balance‑sheet flexibility improved (revolver to $260M), with 92% fixed‑rate debt and lower all‑in cost of debt YoY; dividend increase signals confidence in cash flow trajectory .
• 2025 refinancing (~$117M) presents a potential cash‑out catalyst given asset value gains, supporting incremental internal growth or deleveraging .
• Strategic innovation (HUD‑code duplex, factory solar) supports long‑term affordability positioning and potential regulatory goodwill .
• Acquisition setup appears to be turning more favorable; UMH’s value‑add playbook and liquidity give optionality if pricing resets .
• Near‑term stock drivers: execution vs newly initiated FY24 guidance, continued double‑digit same‑property NOI, sales margins, and any M&A/refi updates .

Citations: Q2’24 8‑K and supplemental ; Q2’24 press releases ; Q2’24 call transcript ; Q2’24 operations update ; Dividend declaration ; Q1’24 8‑K and press release ; Q4’23 call transcript .