United Homes Group Inc - Ordinary Shares (UHG) 8 Aug 24 2024 Q2 Earnings call transcript

United Homes Group recently held its second quarter 2024 earnings call, providing insights into the company's financial performance and strategic direction. In this article, we will analyze the call transcript to highlight key themes and trends, and provide an overview of the company's current market position and future outlook.

Company Overview and Strategy

United Homes Group is focused on acquiring lots in a capital-efficient manner and building out its homebuilding platform in high-growth Southeastern markets. The company's strategy is to cater to the more affordable segments of the market and sell homes that meet the needs of buyers. United Homes Group's approach is to reduce the risk and upfront costs associated with land acquisition and development by controlling lots through option agreements or land banking arrangements. This land-light strategy allows the company to focus on building and selling homes, rather than land development, which is seen as a more effective and sustainable path to enhanced returns.

Financial Performance and Market Outlook

The company reported revenue of $109 million for the second quarter, with a home sales gross margin of 17.9% on a GAAP basis and 20.9% on an adjusted basis. Adjusted EBITDA for the period was $7.7 million. While the company faced challenges in the second quarter due to consolidating recent acquisitions and rationalizing its workforce, it remains optimistic about its future prospects.

United Homes Group's focus on high-growth Southeastern markets has been well-positioned, with steady job growth, low levels of inventory, and consistent in-migration patterns. The company plans to continue growing its homebuilding presence throughout the Southeast through a combination of M&A and organic growth, targeting small local builders in the region.

Operational Highlights

The company delivered 337 homes in the second quarter, generating revenue of $109 million. Shelton Twine, Chief Operating Officer, highlighted improvements on the construction side of the business, with better availability of building materials and labor. However, the company continues to face challenges with higher lot costs and other variables offsetting potential savings from lower lumber costs.

United Homes Group is actively seeking potential acquisition targets to expand its homebuilding footprint, with a focus on maintaining the acquired companies' operations and workforce. The company's goal is to maintain its reputation as a preeminent homebuilder in the markets it serves.

Market Conditions and Future Outlook

The earnings call provided insights into the competitive landscape and market conditions for United Homes Group. The company is facing a busy acquisition market, with a robust volume of deals being presented. However, it is selective in its acquisitions, focusing on deals that fit its size and geographic footprint.

Regarding interest rates, United Homes Group is focused on meeting the market with an affordable product, targeting the first-time buyer and first-time move-up buyer segments. The company is actively buying down interest rates and monitoring market conditions to remain competitive.

Conclusion

In summary, United Homes Group's second quarter 2024 earnings call highlighted the company's strategic focus on acquiring lots in a capital-efficient manner and building out its homebuilding platform in high-growth Southeastern markets. Despite facing challenges in the second quarter, the company remains optimistic about its future prospects, with a focus on growth through a combination of M&A and organic expansion. United Homes Group's strategic approach, coupled with its focus on affordability and value perception, positions it well for continued success in the Southeastern housing market.