United Homes Group, Inc. Q1 FY2024 earnings call

Key Points

• Jack Micenko noted progress in Q1 2024, with M&A as a key growth driver, recent acquisition of Creekside Custom Homes, and integration of acquired builders progressing well. Ended Q1 with over 11,000 lots owned/controlled, and entered a strategic partnership and land fund.
• Shelton Twine reported 311 homes delivered, $101M revenue, Midlands division leading deliveries. Construction cycle times back to pre-pandemic levels, sold 384 homes in Q1 with a sales pace of 2.6 per active community per month, 118 new net orders in April, and cancellation rate at 10%.
• Keith Feldman discussed net income of $24.9M, revenue of $100.8M, gross profit of $16.1M (16% margin), adjusted gross profit $20.6M (20.4% margin), SG&A expense $17.1M, land-light initiatives moving $17M of finished lots, $150M land fund, and $92M liquidity as of March 31, 2024.

In the first quarter of 2024, United Homes delivered 311 homes, generating home sales revenue of $101 million. The Midlands division was the largest contributor to the delivery total, followed by the Upstate and Coastal divisions. Absolute terms: 311 homes delivered, $101M revenue. Revenue contribution details not explicitly provided in percentage terms.

Forward-Looking

• Well positioned to achieve 2024 and beyond goals, with 39% increase in backlog of 262 homes, land-light strategies to focus on core competency, and land fund to provide capital for future land development in core markets.

Risks

• Forward-looking statements subject to numerous assumptions, risks, and uncertainties as described in United Homes Group's SEC filings.

Q: Excluding purchase accounting impact and higher interest rate impact on gross margin, can you talk about the improvement in gross margin and what drove that ex those items?

A: Keith Feldman mentioned that adjusted gross profit was marginally higher due to lower lumber costs from last year as they burned through high lumber costs in inventory last year, with incentives similar to last year but possibly trending up slightly.

Q: Can you talk about sort of the acquisition environment as you look at it today versus, say, what it was 9 months ago? And how does sort of potential forward deal flow look?

A: John Micenko stated that M&A activity has picked up, with more deals, valuations up, and the land-light strategy is nonnegotiable. They have a strategic partner and land fund in place, and more deals are expected in the foreseeable future, with discussion of M&A at the Builder 100 Conference