On March 14, 2024, United Homes Group Inc (UHG, Financial) released its 8-K filing, detailing the financial outcomes for the fourth quarter and the full fiscal year of 2023. The company, a homebuilder operating in the Southeast with a land-light strategy, reported a mix of advancements and challenges in its latest earnings report.
UHG's revenue for Q4 2023 was $116.8 million, a slight increase from $115.1 million in Q4 2022. The fiscal year revenue stood at $421.5 million, a decrease from the previous year's $477.0 million. The company closed 387 homes in the last quarter, contributing to a total of 1,383 homes for the year. The Average Sale Price (ASP) of production-built homes rose to approximately $320,000 in Q4 2023, up from $300,000 in the same quarter of the previous year.
Financial Performance and Challenges
Despite the revenue growth, UHG experienced a net loss of $66.6 million in Q4 2023, primarily due to a change in the fair value of derivative liabilities, which was a non-cash expense item related to potential earn-out consideration. This contrasts with a net income of $10.9 million in Q4 2022. However, for the full fiscal year, UHG reported a net income of $125.1 million, which included a non-cash income item from the change in fair value of derivative liabilities.
The company's gross profit percentage for Q4 2023 was 18.5%, slightly down from 18.8% in the same quarter of the previous year. The adjusted gross profit percentage, a non-GAAP measure, showed an improvement from 20.7% to 21.8%. Selling, general, and administrative expenses (SG&A) as a percentage of revenues were 15.8% for the quarter, with adjusted SG&A at 14.3%.
Adjusted EBITDA for Q4 2023 was $10.0 million, a decrease from $17.4 million in Q4 2022. The fiscal year's adjusted EBITDA was $40.5 million, down from $82.8 million in the previous year. These figures reflect the challenges UHG faced, including market volatility and competition from larger builders.
Strategic Acquisitions and Market Expansion
During the year, UHG expanded its market presence through strategic acquisitions. The company acquired Rosewood Communities, enhancing its footprint in South Carolina's Upstate region, and Creekside Custom Homes, which bolstered its presence in the coastal market of Myrtle Beach, South Carolina.
CEO Michael Nieri commented on the company's performance, stating,
In the fourth quarter of 2023, UHG saw orders increase 8% over the same period a year ago despite higher rates and increased competition by larger builders in our market,"and highlighted the continued positive trend in early 2024.
United Homes Group Inc's balance sheet as of December 31, 2023, showed $56.7 million in cash and cash equivalents, with total assets amounting to $298.6 million. The company's liquidity position was strong, with $81.1 million available, including undrawn revolver capacity.
The company's operational strategy and recent acquisitions suggest a focus on growth and market penetration. However, the net loss in Q4 2023, driven by non-cash items, indicates the need for investors to consider both the operational success and the financial complexities of derivative liabilities when evaluating UHG's performance.
For more detailed information, investors and interested parties can access the full earnings report and listen to the earnings conference call on UHG's website.
As United Homes Group Inc navigates a dynamic market, its land-light operating model and strategic acquisitions position it to potentially capitalize on the growing demand for affordable homes in the Southeast. However, the company must continue to manage market volatility and competition to maintain its growth trajectory.
For further insights and detailed financial data, please refer to the full 8-K filing and visit GuruFocus.com for comprehensive investment analysis.
Explore the complete 8-K earnings release (here) from United Homes Group Inc for further details.
