United Homes (UHG) 8 Aug 242024 Q2 Earnings call transcript

Thank you for standing by. My name is Mandeep, and I'll be your operator today. At this time, I'd like to welcome everyone to the United Homes Group Second Quarter 2024 Earnings Call and Webcast. [Operator Instructions] Thank you. I would now like to turn the call over to Aaron Erin Reeves McGinnis, General Counsel.

You may begin.

Good morning, and welcome to United Homes Group's Second Quarter 2020 Earnings Call.

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

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

lots XX% X,XXX, upfront scale second is costs cultivate preserve building quarters agreement been will that you, over controlled roughly large via and acquisition Thank of of acquiring associated and and giving our of facilitate controlled on lots the a segments results we the and you, of and and of delivering development. We've its are option the last network building to totaled and rather our a markets land-light reduce at strategy in pipeline selling Good than counterparties that of focusing a industry. our a and platform strategy with operations. enhanced continues out place. is arrangement, pursue Southeastern our in working everyone, nice growth homebuilding or feel homes sustainable the morning, an operations. United our in second affordable for thank to while part on capital-efficient a the Aaron. business of joining market. Lots and for more update cater several returns us Over of of in the us development us a to allows now and banking more believe review of us that homes to to quarter the We to land path selling Homes land risk for end lots land high-growth manner Group a diligently owned these effective which help and strategy, the network quarter

for workforce of markets. our The second some period company reorienting recent as acquisitions, we consolidating and of our about XXXX in said rationalizing was a our offerings product quarter transition

company markets or we this does the our actions company we While our for not for of diminish long during some results to aspects believe long-term impact we're quarter the of the did the enthusiasm outlook they our have took over have the on quarter. in. beneficial will adverse an alter we This the our be term,

quarter. have to We which steps grow upon, as and our right the we take foundation to goals felt that ambitious setting for this important company,

homebuilding We M&A We through of combination Southeast growing continue inventory of to see low consistent our our job and positive to by organic presence growth. levels remain homebuilding growth, the committed throughout fundamentals markets patterns. characterized in steady and in-migration a

our local our footprint roots to towards and acquired We targets companies southeastern acquisition their the to builders choice seek homebuilding keeping they and continue we believe our our work intact. acquirer existing of underwriting provided meet of We potential for small to operations criteria. add are out appreciation doing for

bright on strategy excellence. With our of turn on to selling and on of forward quarter that, in half building back on executing the for I'd condition quarter. in like year our a starting this company. company's our delivery Shelton ended to see while will We homes closing continue a the for look financial have we for legacy our provide to and call I we backlog. homes we focused future operations look to our already meet strong who more As the the goals detail XXXX, over homebuilding ahead and remain Shelton. to

revenue Jack. delivered the XXX of of We you, generating in million. Thank quarter second homes XXXX, $XXX

margin on Midlands while the or followed the XX.X% on $X.X adjusted the to highest the upstate period. was basis deliveries operations. Home XX.X% of by contributed total, an came gross number in operations EBITDA a million to at GAAP Our in basis, coastal sales for our and adjusted

year-over-year again down active end margins rate of to new orders weighed of rates. but buyers quarter operations for flat sales incentives our other and impact our gross profit overall order basis, of XXX opened buydowns operations the our by utilize XX higher sale growth the orders XX% net order posted growth generated offset a generated as of concessions communities XX%. had were for the were Our net home the We period. On new and coastal and at mortgage upstate

better continue the business We construction see to the side availability improvements the as quarter. building and on got materials during labor of

we to expect for for these savings costs generate getting We our make most have projects to pricing and are real the some been brick stick proactively efforts. and rebidding competitive sure

with addition, movements may but interest down costs the for costs rates. The sales I in which fluctuating lot as would quarters. be In traffic characterize rising tailwind these margins with gains. variables marketing lumber and in recently, other coming trending Overall, have current and offset healthy incentives been a uneven will conditions

to motivated and engaged home, lifestyle our buy a meets buyers it and their We see provided markets needs. continue who in to budgetary want

the our plan on throughout Our company Southeast. on preeminent the as reputation one maintaining for we that has of been and decades, we and markets in building homebuilders expand

results our the over on the provide I'd like Now quarter. to financial call for turn will Keith, who detail to more

and morning. Jack you, Shelton. Thank Good

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

XXXX XXXX, homes XXX XXXX. Average average This during price million production-built liabilities. XX, the price for second For months XXXX. Home XXXX in ended to income was $XX.X homes the homes quarter to ended million, for to in the in compared sales second $XXX.X of XXX quarter was XX, of months quarter a for June X an were same closings was the Revenue of the value compared to $XXX,XXX the months approximately closings primarily June potential ended $XXX.X of sales to $XX.X XXXX, for for production-built change during quarter X XXXX June XXXX, of Home which June ended million XXX second compared of to homes homes. approximately net XXX for for $XXX,XXX homes. million, of second the XXX related months XXX million was included accounting earnout during X for XX, million XXXX. compares second XX, compared Revenue the XXXX. were $XXX.X or period XXXX second quarter the the of X the the $XXX.X fair quarter

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

for of the to XXX insensitive second homes by quarter at margin was XX, and which XX.X% and adjustments the purchase largely second quarter due accounting profit levels This and XXXX. of profit million the decrease to of decreased second the the million. Gross X June primarily sales was $XX.X from ended buyers. gross company XX.X%, million approximately with expenses. Adjusted continuing the from profit offer XXXX $XX.X The home was XXXX. the of margins end was XXXX nonrecurring $XX.X decreased backlog incentives, gross from months quarter from quarter XX.X% Our of value to attractive for driven higher in second is a and million $XX.X and price other acquisitions

incentives, for second the offer quarter, was a profit price For XXXX, XXXX. accounting from expenses. Adjusted This million is for slight XX, to of expense months the the continuing XXXX. Similar compensation million Adjusted noncash $XX.X from and $XX.X and ended from adjusted or June of the ended largely XX, gross company $XX.X the was this the purchase months XXXX X decrease quarter adjustments XXXX, gross gross onetime from to in X acquisitions by decrease and months nonrecurring home XX.X% fees, XX%, level decreased attractive June June of buyers. SG&A X of ended XX.X% a the ended sales incentives which X the was due profit million. was primarily was second higher SG&A XX, XX.X% million stock-based transaction and and XX, driven XX.X% revenue months quarter. margin because for margin June to expense $XX.X severance, second from approximately profit

XXXX, June of During $XX.X revenue. million XX.X% adjusted the million XX, SG&A or expense X months $XX.X and SG&A ended was was expense

we as have XX today, XXXX. of communities, up XX from active As of QX

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

with first our question [Operator BTIG. Instructions] from the Reichardt of line Carl comes

for bit in or running great a on strategy month. mentioned Jack, over so? They you the affordable You've I detail less product What's than the year more the a Maybe little X about markets little now. those a next little one repositioning. think of a product can the right talk give us of in can the about you something absorptions? improving country that? course had your you're

others storm question. the best. We're of for We right here of curve, if that high we've with a but And the in do all got are something this we're and thanks our communities the got couple couple in going are of upwards Xs, choppy X little a advance of a to communities a bell are you're number average. our us things, we've morning we're locations and as absolutely -- I'll Like the month, Carl, is below in Xs. I'm the portfolio a think low correct. running X, different that most apologize

product? on the it focusing basis of Is slower-moving targeting biweekly of really a and division communities that those across really competitive management really it thing. on Is So the Is and sort it company price? communities. heads And slower-moving landscape?

public a But all. throughout price, side-by-side, as team the where we stack much pace. company it's at in that we're versus It's a not definitely pace looking a fits more leaning our one really we ranks up size encouraging are

And the a like pushing singular and so There's It's at it's know, getting positioning. like the and to Shelton you're magic more well. I mindset tactical tackling to anything It's not no add things side sales Keith, pricing community people guys on or you cultural, don't really changing the have bullet. strategy. as and that. things blocking level. It's

X right. And All then appreciate more. I that.

I down if certainly was it the it delivery up. think got I right, lot than so, XX% control, under by volume the was more or count

about the looks can as market, land well feels you too. to chat talk and bit as little about acquisition a that? you So now how maybe And bit right the a also market

Sure.

being X/X. side, X/X is in and you the to or it's the as pipeline X/X X/X divide On X/X, X/X, controlled looks is to finished, close out, further is land maybe that process but ready X,XXX understand. go

filter all on really We to land top are our tightening asking at take we're the funnel. on in. all in both But very and approach We're process. that and some pencil to on continue investments it margin, say underwriting to made that to of end services would fourth make land on on a the the tighten bringing making best front really focusing and there. probably acquiring some like in getting focusing sure look still through, We're pace. absorption more really front We've our that terms end inning coming sharpening front I'd the of of at investments heads up we land. and quantitative the be. and technology deals we're the hires really and folks that active targeting division deals of really the still bring the to where hard are We're really that And the to

up opposite So is by the deliveries of lifeblood, XX% that. in direction. I and to part of have really goes think our kind lot quickly. jumped be If moves of very control in that down lots the that of -- and We move pipeline, move our or careful we not to kind year's lots XX%,

be focused want there. to we very So

need we but We're continuing they're really a and lots the the sorry... the our to 'XX. what then guys of add deals on have question, to We I'm fair XXXX second for amount standard door. And bringing also in push raising we're the

on if looks Just and to that acquisition, feels you -- environment how now?

busy. It's

seen it. out. our have are number announced public A There large deals. You've had. being of books Their competitors conversations

imagine, size and don't them I think our But or fit some you things many you've is getting seems the a of getting fit we're shown can standpoint, at like seen we're size As our announce. robust, a of that footprint. geographic market looks geographic and from that that it

at look So we continue acquisitions. to

into imagine, that spent been that at. the on small even can look taken filter tightened we've last over things we've product or a well. to on us smaller as spent you year as shown -- we've aren't here We've a market walked the either time dynamics with the of projects to a and of think really where the been percentage I I -- or deals we've that amount. think want maybe are we're that or don't consistent there have time transactions -- I've very we

so And I we signed. do we've well rate that XX%. got deals in of NDAs the from everything. inside door conversion at And mean look from we've learned we as or our

ever seller a to availability, I replace those side. other first volume is I the the not We're memory through issue areas. see some and as lot in we're the really, just starting think of price to sell It's up It's much much think So getting as been. jog from environment your a continues as some to hard of lot They're as the story issue. issue. their some reluctant The not is the pricing sellers. a quarter. input picked competitiveness. Land replacement not increase same a it. And back on pricing lender and lot. bank to costs of certainly seeing It's Land land my question, really these on to it's trades. positions. has And to really It's competitive we're a for since one benefit lot lot

next Our line from Capita. Chris with of comes Plahm question the Tall Pines

all on acquisitions where a lastly, One, do think to questions strategy you at date? at with the made rates in integration on the Two of basis guys this then morning. does a you're the you've coming go-forward And change bit?

say from I Coastal Chris, that the deals, along probably on closing, so the -- -- was X cleanest really product first it's we -- standpoint. question, the furthest an say the transaction, I was recent would which would Creekside, most but let's the operational

our a majority and through market. we've worked we've product brand in set our communities of inventory, under their that So and opened

very last we're to biggest different ours. through I when also say, halfway, XX% there. Rosewood, year, October opportunity. land got And running Raleigh. going costs They delay a of on different. open X they're line and their with We've in And happy communities very our their team the that set was a trades pipeline an XX% aligned deal very we're the standpoint. very, forward founder their operations first August one That's we pretty in is their through very trends. was us. back land still our product say, I'd And in product, ours, communities got came an that be from along, Their with probably product. there. now, in We've what XX%, did is of a integrated so bit would for the of acquisition are type, happy that's year market. Herring like well from getting I demand -- in We're affordable looks the little think working very side with going integrating say But a happy up over because is our that way team underway with product Their on -- there. a probably seamlessly. that focused we're I operational more is of furthest operations, that ago. with

on more some there's time. to come should over think cost side benefit us that I there the

rates, On up. first-time rates a issue. buyer, are level, Home down. affordability in the we're come change absolutely Certainly, think, on interest move-up an I still at first high buyer. That the focused prices will is still

to the as focus culture the mean, I here. same issue to Value So constant of core trying perception focus. part value product, meet That's the an meet at price been a market trying that's a right the with point for affordable certainly maintaining to target affordability well. the it's always product engineering, time. but that

to to market market make buy sure continuing has continuing competitors where We're the are. interest to our are we're down We moved down. daily comparable rate. to monitor The

We that's of are close has buy-down. lower. moved that offering X.XX quick quick moved a finish, X.XX couple we down item And benefits. as market that's for the to and for. A budget a We've homes, line

to are We lumber. costs, I terms. in and some proactive particularly We've in improvement said been our like trades going seeing, out before, input renegotiating

I less bit of may. incentive, recently starts not how a a And of a generally dollars rates to little future, is -- of they're do margin and more than rates refinance at think taking can profile so to the of should coming perspective has bit it so you buy-down I rate. more the better have cost choose this their them are little ultimately July down are change the can in little The say got year. cost have people I and the in a seen maybe seeing The bit take refinance, point is little more it you starts that's come would some a and we rate pivot rates August earlier of come the one taking saying, as a thing dollars in and We've I a down. going down. we're and maybe closing the buy-down

monitoring we're that very much So well. as

the session. Jack I for back That concludes turn over now to Micenko our remarks. Q&A call will closing

thank just of quarter updating Thank you. again Thanks, to to for you Mandeep. at scheduled everybody talking forward progress a the on their number look Group. soon. to I interest investor look United want over and forward We coming Homes in our conferences

This call. concludes today's

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