United Homes Group, Inc. Q1 FY2025 earnings call

• First quarter was a tale of two halves, with the second half materially better. January was slow due to seasonality and snow, but February and March showed improvement.
• Undertaken product refresh and direct cost reduction initiatives; newly designed homes well received with margins above average.
• Shifted to a more balanced approach from high-spec home strategy to presold homes for higher margins.
• Average cycle time reduced by 16 days in Q1 due to labor/material availability and efficiency efforts.
• Own or control approximately 7,500 lots; expect to open 10 new communities in Q2 and 18 in Q3, mostly featuring refreshed products.

United Home Group delivered 252 homes in the first quarter with home sales revenue of $87 million and an average sales price of $345,000 for production-built homes. Home sales gross margins were 16.2%, improving 20 basis points year-over-year but remaining depressed due to elevated incentive activity. Net new orders were 296 units. Newly designed homes closed in the first quarter had an average gross margin of approximately 24%, with 27 closed in April and 95 in backlog carrying an average margin of ~24%. The company identified over $3.5 million of direct construction cost savings for homes expected to be closed in 2025.

• Anticipate margins to improve throughout the year as direct cost reduction efforts materialize and fresh floor plan homes make up a larger share of closings.
• Expect incentive activity to remain elevated but believe shift to presale homes and fresh product will dampen their impact on margins.
• Plan to open 10 new communities in Q2 and 18 in Q3 to boost sales efforts.