Q3 2025 United Homes Group Inc Earnings Call

Speaker #2: Ladies and gentlemen , thank you for standing by . My name is Desiree , and I will be your conference operator today . At this time , I would like to welcome everyone to the United Homes Group, Inc. third Quarter 2020 Earnings Call and webcast .

Speaker #2: All lines have been placed on mute to prevent any background noise . Please be advised that this call is being recorded . Thank you .

Speaker #2: I would now like to turn the conference over to Erin Reeves McGinnis with United Homes Group, Inc. . You may begin .

Speaker #3: Good morning and welcome to United Homes Group, Inc. . Third quarter of 2025 Earnings Call . Before the call begins , I would like to note that this call will include forward looking statements within the meaning of the federal securities laws .

Speaker #3: United Homes Group, Inc. cautions that forward looking statements are subject to numerous assumptions , risks and uncertainties which change over time . These risks and uncertainties include , but are not limited to , the risk factors described by United Homes Group, Inc. filings with the Securities and Exchange Commission .

Speaker #3: Accordingly , forward looking statements should not be relied upon as representing our views as of any subsequent date , and you should not place undue reliance on these forward looking statements .

Speaker #3: We do not undertake any obligation to update forward looking statements to reflect events or circumstances after the date they were made , whether as a result of new information , future events or otherwise , except as may be required under applicable securities laws .

Speaker #3: Additionally , reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be accessed through the company's website and in its SEC filings .

Speaker #3: Hosting the call today are United Homes Group, Inc. Chief Executive Officer Jack Mischenko and Chief Financial officer Keith Feldman , with that , I'd like to turn the call over to Jack .

Speaker #4: Thanks , Aaron , and good morning to . We appreciate you joining us today to discuss Home third quarter performance and our outlook for the period ahead .

Speaker #4: Let me begin with an important update on governance . Earlier this year , our board formed a special committee of independent directors to review a full range of strategic alternatives for our company .

Speaker #4: After a comprehensive process and in consultation with our legal and financial advisors , the special Committee unanimously determined that continuing to execute as an independent public company is the best path forward given the current macroeconomic environment .

Speaker #4: In connection with the conclusion of this review , several members of our board notified us of their intention to resign effective November 14th .

Speaker #4: We are taking steps to identify and appoint new independent directors in a timely manner to maintain compliance with our Nasdaq listing requirements . While transition to this nature can understandably raise questions .

Speaker #4: I want to highlight that in their resignation letters , the departing directors expressed their views on governance and structure , while also noting the capability of the company's current management team to address the current market environment and operational challenges .

Speaker #4: We're grateful for their service and we wish them well in their future endeavors . Turning now to market conditions , we experienced uneven demand in the third quarter as elevated new and existing home sale inventory levels , combined with affordability pressures and a lack of consumer confidence , continue to weigh on the industry .

Speaker #4: That said , we saw encouraging trends in the quarter , progressed , culminating in September being our best order month year to date .

Speaker #4: Traffic also improved meaningfully , averaging between 350 and 400 weekly visits during the third quarter , compared to around 200 per week in the first half of the year .

Speaker #4: The increase in buyer engagement is an encouraging leading indicator , especially as we continue to expand our community footprint . On the margin front , we delivered reported home sales , gross margins of 17.7 or 19.6% on an adjusted basis .

Speaker #4: While these levels remain under pressure due to elevated incentive activity and higher discounting , to move finished inventory in a competitive environment , our efforts to rightsize the business , including targeted headcount reductions and cost savings , are positioning us to better navigate current market conditions while maintaining the capacity to drive growth .

Speaker #4: Looking ahead , new community openings should help increase sales and closings , as we currently have 58 active communities versus 46 at the beginning of the year .

Speaker #4: To sum up , while industry conditions remain uneven for September rebound , improving traffic trends and successful new community openings demonstrate the resilience of our business .

Speaker #4: We remain realistic about near-term market challenges , but confident that fundamentals of housing demand , namely the need for new construction , favorable demographics and consumer aspiration for home ownership position US well for the future .

Speaker #4: With that , I'd like to turn the call over to Keith , who will provide more detail on our operational and financial results .

Speaker #5: Thank you , Jack , and good morning . For the third quarter of 2025 , we reported a net loss of 31.3 million , which includes a loss from the change in fair value of derivative liabilities of 27.2 million .

Speaker #5: Primarily related to the accounting for contingent earnout and warrant liabilities , which fluctuates each quarter based on our ending stock price and warrant price .

Speaker #5: The Earnout will be settled exclusively in common shares upon reaching certain stock price hurdles , and will never result in a cash expense for the company .

Speaker #5: For the nine months ended September 30th , 2025 , net loss was 19.5 million , which includes a loss from the change in fair value of 12.2 million , related to the accounting for potential earnout and warrant liabilities .

Speaker #5: Revenue for the third quarter of 2025 was 90.8 million , a decrease of 27.8 million from 118.6 million in the third quarter of 2020 .

Speaker #5: For revenue for the nine months ended September 30th , 2025 was 283.3 million , compared to 328.9 million for the nine months ended September 30th , 2020 .

Speaker #5: For the year over year , decline was primarily driven by lower home closings , partially offset by an increase in average sales price .

Speaker #5: Home closings for the third quarter of 2025 totaled 262 homes , down from 369 homes in the prior year . Home closings for the nine months ended September 30th , 2025 were 817 homes , compared to 1017 homes for the same period in 2024 .

Speaker #5: The average sales price for production built homes during the quarter was approximately 346,008.1% increase , compared to the 320,000 in the third quarter of 2020 .

Speaker #5: For net new orders for the third quarter were 324 homes , down from 341 homes in the prior year period . As Jack mentioned , we saw encouraging sequential improvement in sales as the quarter progressed .

Speaker #5: Net new orders for the nine months ended September 30th , 2025 were 924 homes , compared to 1048 homes in 2024 . Backlog .

Speaker #5: As of September 30th , 2025 stood at 264 homes , representing approximately 94.3 million in value . Gross profit for the third quarter of 2025 was 16 million , down 6.4 million from 22.4 million in the prior year period .

Speaker #5: Gross margin declined by 120 basis points to 17.7% , compared to the same period last year . Gross margin for the third quarter reflected continued pricing pressure as we increased discounting and incentives to move inventory .

Speaker #5: This was partially offset by ongoing construction cost savings driven by our systematic rebid Initiativ . Adjusted gross margin was 19.6% , down from 20.6% for the nine months ended September 30th , 2025 .

Speaker #5: Gross profit was 50.1 million , which decreased from 58.1 million in the same period in 2020 . For gross margin remained consistent from the prior year at 17.7% in the nine months ended September 30th , 2025 , adjusted gross margin was 20% for the nine months ended September 30th , 2025 .

Speaker #5: A decrease from 20.7% in the prior period . Selling , general and administrative expenses for the third quarter were 17.6 million , excluding approximately 2.6 million in stock based compensation expense and transaction costs .

Speaker #5: Adjusted for totaled 15 million , or 16.5% of revenue for the nine months ended September 30th , 2025 , expense was 51.7 million and adjusted SG&A expense was 44.9 million , or 15.9% of revenue as of September 30th , 2025 .

Speaker #5: We had 56 active communities , up slightly from 55 a year ago . Community count began to trend upward in the second half of 2025 .

Speaker #5: As of today , we have 58 active communities . As of September 30th , 2025 , we control the proximately 7700 lots , which include a mix of owned , optioned and land banked assets , positioning us to drive further growth and capture market opportunities .

Speaker #5: We had approximately 83.1 million of liquidity in cash and availability on our credit facility as of Q3 . In light of the announcement , Jack previously discussed , we were focused on improving operations and profitability by executing on our key initiatives and driving efficiencies through cost savings objectives .

Speaker #5: That concludes our prepared remarks .