The newest publicly traded home builder in the U.S.—United Homes Group—posted a non-cash loss of $204.5 million in its first public report, but it said sales momentum was picking up and it would be able to step up to new opportunities thanks to the money raised in its public offering.
“While our financial results were impacted by the accounting of certain non-cash GAAP related items, we believe the underlying business performance was solid, as we generated adjusted EBITDA of approximately $9 million for the quarter and regained momentum on the sales front following the rate-induced slowdown in the back half of last year,” chairman, president, and CEO Michael Nieri said in its earnings release.
- Home building revenue for the first quarter of the year was $94.8 million, compared with $108.4 million in the first quarter of 2022;
- The first quarter saw 328 home closings, compared with 414 in the year-ago quarter; and
- The average sales price of the 294 production-built homes closed during the first quarter was $314,000, compared with $272,000 during the first quarter of 2022 of 384 production-built homes, a 15.5% increase.
“We believe that we are in a great position to generate strong returns for our shareholders, thanks to our favorable geographic positioning, our affordable product focus, and our land-light strategy,” Nieri said.
“The funds we received as a result of going public have provided us with the necessary capital to achieve our growth objectives, and we are actively pursuing those opportunities,” he added. “We are truly appreciative for everyone who had a hand in getting us to this point and are excited for the journey ahead.”
The company said it was sitting on a war chest of $151.7 million, including $110.9 million of unrestricted operating cash and $40.8 million of undrawn capacity on its revolving credit facility.
- Home building gross profit margin during the first quarter was 17.7%, compared with 25.2% during 2022’s first quarter; and
- Adjusted profit margin in the first quarter was 20.2%, compared with 26% in the first quarter of 2022.
The decline in both gross profit margin and adjusted gross profit margin “can be largely attributable to the company offering sales incentives and selling inventory with higher lumber costs. The company expects margins to expand throughout the year due to closings on homes with current lumber costs and as we see price increases on new sales,” according to the home builder.
- New orders in the first quarter were 389, compared with 474 during the same period last year;
- Its cancellation rate was 13.4% for the first quarter, compared with 14.4% in the first quarter of 2022; and
- As of March 31, the company had a backlog of 320 homes, valued at $103.3 million, compared with a backlog of 276 homes, valued at $85.6 million, as of Dec. 31, 2022.
“We are optimistic that our margins will expand throughout the remainder of the year because of the improved market conditions and lower lumber costs,” Nieri said. “Recent sales on new homes that will be built this year with current lumber costs are expected to generate, on average, adjusted gross margins of 23% and higher.”
