United Homes (UHG) 14 Mar 242023 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the United Homes Group Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator instructions].

Following the presentation, we will conduct a question-and-answer session. [Operator instructions]. This call is being recorded on Thursday, March 14, 2024.I would now like to turn the conference over to Erin Reeves McGinnis, General Counsel for United Homes Group. ahead. go Please

United XXXX the Fourth and Quarter Welcome Call. Homes Year Earnings Full to Group

statements Before undertake be filings I date, after required the call cautions will federal the our and to begins, they laws. forward-looking that obligation securities include new this note securities information, update any statements. subject forward-looking call are and reflect reliance United forward-looking upon that statements subsequent views statements uncertainties, not the risk date whether a to, Commission. should which and These except as Homes forward-looking to risks limited place Homes circumstances undue to otherwise, within Accordingly, under United representing in should be over time. not you or meaning on Securities or are the events any as not risks result the described as do as not by with and statements assumptions, change would may uncertainties of Exchange of applicable future Group Group these like of its relied include, made, numerous to were the but forward-looking factors laws. events We

SEC the Officer, Jack Group's Additionally, and Twine; Keith Hosting call Jack. can Homes directly like its Operating comparable website the Financial discussed be company's United reconciliations GAAP call Chief that, are to over President, accessed on non-GAAP filings. to Feldman. measures I'd to Officer, of in turn Chief and measures financial today this the most Micenko, call through With Shelton the

by both fourth provide Homes we've with will as full on States. today Southeast market believe year we stretch set an quarter XXXX great a and production executing and large-scale United today XXXX accomplished a Aaron.Thank and believe Thanks, year homebuilder on us several financially the place, pleased for to path the you a us we year initiatives made We're in during in of that than in conditions. what we that and current strides update results on United the Group review better operationally joining ago. we're our becoming a were much

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positive forward existing homebuilding these in integrating platform and done teams to their already have acquisitions Our a contributions our look job XXXX. great into

of land we which remain this more full our know We best, and presence affordable the other in and actively of the homes. as We efforts and cultural pipeline existing on remained as standard. underwriting from market respect operational fortifying lack controlling We creating building through on our we to lots. year capital our the carrying focused which to With for we by a as fit resale associated employ of XXXX, strategy. that us the can development land expanded balance with will home efforts, parties, disciplined an active that believe XXXX. inventory possible our land year, minimizing closing prevailing risk production in via more acquisition time. affordable have price efficiently focus average more pursue company with our our of with can on what of homes need new a issue evidenced our for be well We to by bankers, $XXX,XXX remaining is Throughout remain with avenues opportunities segments the our capital as By we giving selling for we acquisition to utilize standpoint, value the strive continue land the we doing hold goal our the third relationships land it as market some sheet. light while of

buyer demand. the entry-level portion to good will cohort make While of a continue up

successfully operation existing to the group mobile point. part expectation early that to Year. X We with We Homes the of an starting market of broaden are, product a folded into of In lot added begin momentum. to appeal a and buyers exited the portfolio out our United however, into home will New some more at summary, to homebuilders third smaller XXXX our and

our focus We balance land our also sheet great improved in maintained land-light banking keeping and capabilities a shape. while

successes Group As on a build XXXX positioned to well in and into Homes think our United future. the is we result,

to provide call over more to who detail performance our in like will the on operational turn I'd Shelton, Now quarter. the

for of net start over and in new new $XXX, at up Demand quarter Year Net Jack. fourth total February New an as X% for generated of combined. XXX we representing of months Thanks, picked increase fourth orders into January in orders came the quarter XXXX. the the the the

traffic quarter We quarter the for improved was We good by over up a our we in particularly started quarter, handful homes XX.X% first lower communities at prices selling of XX% was a the and X ahead fourth affordability, as evidenced ramp effort that a in experiencing above-average XXX starts months seen our remain X.X% year-over-year have for absorptions. base trends sure XXX raise to though cancellation homes of been coming have and key confidence concerted of a increase selling closed unsold during at the tool, ones last on able year. production communities have make of year.Incentives rates homes buyer quarter, to basis. spring We made drive the the we that to flat which had season. a We the enough our the during which been

Cycle We move are now back healthy The demand closed our timely see will spring. to X building inventory towards through this the more cycle move-in during a in a time. roughly as and turns meet came way continue demand homes long manner. improving months' the shorter ready for homes, go to and to quarter, in we we times we down equipped and well times are getting homes

been last our leading can very optimistic homebuilding as compared and color year, flow initiatives. current motivated forward times With has disposal communities. over start, market that help solid and looking who constantly engaged through provide to we come remains good but to materials as is to spring that.The organization and execute of of the a our Overall, we cycle health and improve a shorter of expanding off for are I'd availability we about to season long-term into and The seeing an our on tools better buyers operations. visibility some Affordability Keith, to markets labor have several selling issue address and performance. the incentive buyers, steady our our existing that, improved at to ways growth a from beginning. greatly of has take We conditions. on part turn financial mindset footprint business that will about for our to more the the of out we processes, our a our are cost look like call feel our We're

Thank Jack Shelton. you, and

ending fourth to the million, which $XX which financial fair the of earn-out, our potential For was stock price of statements included a quarter certain price. upon related This for based on million, in hurdles never loss net will stock each accounting $XX fluctuate value earn-out on our a XXXX, company. the will be reaching primarily and for in result common shares the change quarter can expense in paid only cash

sales was approximately the to price $XXX XX, net related production Revenue earn-out the which December built of in production for the XXXX X,XXX million, change was to XXX for year homes year for the This in sales million for in XXX of X,XXX the fourth XXXX, XXXX. income Closings were quarter Average price This XXXX, an Revenue homes. compares during million of approximately Home the of to sales year fourth built built $XXX,XXX $XXX for million, the primarily million of built value compared X,XXX fourth approximately price quarter liabilities. homes. quarter X,XXX during $XXX homes. $XXX,XXX XXXX quarter average $XXX,XXX during of potential homes fourth the was the compared of in the homes. for $XXX $XXX accounting year. XXXX. production during Average average ended approximately an closings homes fair XXX compared XXX homes XXXX to for for million quarter included production compares for fourth compared to sales was were price prior year of to of quarter the For the fourth to XXXX. was a $XXX,XXX for XXXX the $XXX

XXX our X,XXX fourth homes the in year XXXX. homes X,XXX approximately Net the of orders for the net homes new XXXX. during compared homes to quarter approximately compared XXXX to new were Shelton mentioned, fourth XXX were of in orders quarter As

the onetime the XXXX fourth the XX.X%. stock-based year. $XX for million margin revenue gross XX% gross the and SG&A compensation for noncash cost of million, was SG&A quarter. fourth million profit for the for profit quarter at the Adjusted Gross of gross $XX fourth and and in capitalized a gross million. XXXX value January in was of XXX million. of was quarter interest Our homes up Adjusted accounting February XXX homes, quarter end ‘XX. the orders was with adjusted for were approximately profit was quarter of $XX approximately the fees and new $XX for and adjusted full $XX for year, adjustments from impact was of XX year fourth backlog homes of was which was January XXX margin approximately February or in and sales expense adjusted million, of XXXX profit, XX.X% for $XX Net the quarter excludes transaction million of and fourth fourth $XX profit the the expense, purchase

active and As XX of Creekside recently our acquisitions. today, we closed have Rosewood which communities, included

had parties. XXXX, XX, of as of total December As cash as control December XXXX, our credit and resulting development $XX million up from line the our as million. concludes XX, facility liquidity from we We remarks. million Operator, for had lots availability under third prepared of $XX in well That questions. please our on in $XX approximately affiliate of land X,XXX open

session. Thank question-and-answer instructions]. and the you. Ladies gentlemen, begin now we will [Operator

from Our comes first BTIG. Reichardt the line from of Carl question

Nice to as all, usual. to talk you

saw you a Shelton, pricing communities. So a on power started price there that expand Year? product? a wondered that. sales looking I little been performance traffic a Was where or power? any the few is, a you. could for from sort having and rate or turnover bit at bit first, adjacent a has perspective you you I had you some how of lower-priced point alteration a higher-priced you about And your if And little there New product particular couple difference as an question talked location your are in

Yes.

in On starting increases. upstate markets the starting some we Carl, where we're are see and the the to to see in our primarily first communities, price question, some Midlands

that's a positive. So

good are relatively our short on a keeping that's cancellation lower-priced our incentive terms the what's tied on forward low again, that with high good that's of utilize conversion of selling the completed our terms seeing and On such because, side we commitment been margins we're in product, we rates forward product, piece, in commitment way on in on really and of the inventory. piece the all window

those managing again we're in where that turns that's So cancellation and optimistic getting rate. very

first It's that able see change. Carl, increases around a X XX% I were in probably to first say the seen or in our quarters. we to that some the would was in XX% of X and price time communities quarter, we've refreshing

in be a 'XX. of sense about count bit then for might a ex a how business the count you community little acquisitions, All coming to year? need sort right. can specifics, this I That's looking to from you in perspective helpful. but your talk of And grow rough expansion plans store give

on basis, year comfortable an low 'XX. organic without guidance single-digit, versus full think I store Yes, organic double-digit for a about increase giving count 'XX be we high would full talking year

Is that of percentage or Jack? number stores,

of number the of of the Percentage stores. number

Percentage.

And builders then you're to up does sort of is, X feel I've pricing? the I'm have how is before, their last things it there future. a like months asked structure, the out position a land or as like I or my deals looking. happen. And times now and and environment coming their and this Okay. acquisitions looking on transom feeling, what at heard just curious We've And question couple been X versus easier a seeing It mixed fewer? capital seeing environment. We're wondering think an some ask ago private some just about with of bit seems of you're more

over Like conversion a last there's I if more those or transaction. when homebuilding, to But the from significant know of closed the marketed of course over and headwinds a assets closing know in conversations both lag we've that have a the that actually the have brought think that there's lot when the the and year, think when move few have been XX made you seen than closed have marketed, rates, conversations I the contract the of actually table.I on home there and deals conversations lot you that conversations we gotten of haven't we or we've headlines. were from The don't assets been actively is a to had conversations it the transom. effect

improved looking the a think no entertaining surprise a environment. been is last their about that contending of we don't the to And with. really have sale X this history January. sellers X, We might picture feeling good anybody at since because this that on tell of of So know folks some those increased all -- if the business ago I I be can appetite has gauge, also months But pretty call, year spring. might were you

So of it's kind bag. mixed a

pull a we're know what is We continue another them We mix have conversations. We seller we're does regularly, the them to ongoing trigger. how to decide conversations the potential want option want story when and introductory be that when to to to finally in business. different, our they monetize their

appreciate to I that, talk Thanks Jack. so Nice Great. guys. to you. much

Thank you. gentlemen, instructions]. [Operator Ladies and

our We have from Plahm Capital. line the question Tall from Pines next coming Chris of

year, guys with you versus gross dynamics in overall year are market out terms for there? of margins seeing What last just just this current

Yes.

XX.X% north is I We think XX.X%, something like the outlook us year, with margin, comfortable year-to-year. ended we margin feel year that the that. for last little a bit XX% flat adjusted of

lot a we're or else. the on business think doing side. incentives financing it down. I are And obviously, where cost of come Windows some, like of a anything financing giving costs build lumber moderated or numbers But have is back

The in the on We only a But us be existing are gives these have so spec incentives XX the next forward commitments really these apply time. affordability you is and to that can going our competition impact, do and is days, a to side. remember, long we downs the at up work, homes financing fortunately financing look completed way look it. But and we're market. top because all really at goes and of apply to great multiple for business and -- buy only doing.It to which week leg ways big and look we XX, the part XXX we're us we for a when to it a X it a tranches times headwind like of the a margins. the at point buying that basis line every week, to That's it single builder,

rates would XX% industry, closer if I to that weren't margins range, equal. So be be put I that to would way the interest of X%, else all north guess, our other XX%, think

I've Now the come is free realistic. about if you lunch. be there's And what business got down, do learned rates to no

going You're get back on that costs. some of to

give something loaded But would fully most now, other delta financing back going on biggest margin you assume that You're with materials. to right I in ours, to the talked and is builders to.

any One to company? last leverage if as there guys Okay. EBITDA of question. And comfortable are type increase Is with plans Great. credit the a facility? so, on what the you are

adding of an our look that, acquire the our And Keith credit lines. think we in debt. to I'll let absent the answer ratios kind an would capacity, appetite and think the on on our of subordinated second be incremental outside per stand-alone volume don't today the I given and we million EBITDA. out don't got straight note. I I we think debt we would see the don't I'll We've increase increase M&A number would would have increase first convertible part. part think just I our today to and it. of facility I leverage other se, or $XX would leverage that But weigh assets transaction capital see don't working don't increase.

to here, We have around kills not and businesses, a we’re saying be looking overlevered. cyclical debt

the want you ratios, to Keith, in? On covenants some do the itself chime and of and line

value. we Chris, more mean, on a to look I Yes. it at debt book

we're think like comfortable I So Xx.

I to basis kind on Jack debt-to-book us like Xx So reasonable to today. looking we a overlever. around delever to a we're over debt-to-cap not said, value We're where But or of time. think looking basis seems are

thanks. Great

you. Thank

now questions no closing at Mr. for time. I'd like Micenko this to comments. call the seems to back over turn There be to final further

updating fourth in call on few balance forward our of end selling the progress our call and on in participating spring the to we and quarter first weekend. everybody. and the make great May. Well, the months Thanks, thank season Have a a you, week of quarter everybody, you through for look

We conference for Thank Ladies participating and disconnect and lines. ask concludes that a lovely Have please call today. your your you you, sir. day. for thank gentlemen, this you