United Homes Group, Inc

Thank you for standing by. My name is Carly and I will be your conference operator today. At this time, I would like to welcome everyone to the United Home Group first quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Erin Reeves McGinnis, General Counsel. Please go ahead.

Good morning, and welcome to United Home Group's first 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. United Homes Group 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 in its filing with the Securities and Exchange Commission. 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. 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. 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. Hosting the call today are United Homes Group's Interim Chief Executive Officer, Jamie Perlow, President Jack Masenko, and Chief Financial Officer Keith Feldman. With that, I'd like to turn the call over to Jamie.

Thank you for joining us today as we go over our results for the first quarter of 2025 and provide an update on our operations. United Homes Group delivered 252 homes in the first quarter, with an average sales price on production-built homes of $345,000, generating home sales revenue of $87 million. Home sales gross margins improved 20 basis points year-over-year, but remained depressed at 16.2% due to elevated incentive activity and our strategic decision to discount move stack inventory. Net new orders came in at 296 units. Our sales pace in January and the first half of February was disappointing and did not meet our expectations. As a result, we had fewer homes available to close during the second half of the first quarter. The slower sales pace had a material impact on our results. Like other builders, we saw improved sales in the second half of February, March met our expectations, and April and the first part of May has been good. Overall, I'm pleased with the progress we made on a number of fronts and then encouraged by the operational momentum we carried into the second quarter. As we mentioned in the last quarter, we've undertaken a product refresh and a direct cost reduction initiative that should improve our competitive position and profitability. While we are still in the early stages of these initiatives, The initial results have been encouraging. Our newly designed homes have been well received by buyers and generated margins well in excess of the company's average in the first quarter of 2025. The 23 newly designed homes we closed during the first quarter had an average gross margin of approximately 24%. We closed 27 of these refreshed homes in April. As of Monday, May 12th, we had 95 newly designed homes in backlog. carrying an average gross margin of approximately 24%. Every day these homes are making up a bigger percentage of our closings in the future. In terms of our cost reduction plan, we have already identified over $3.5 million of direct construction cost savings for homes expected to be closed in 2025. We achieved this through the competitive rebidding of our agreements with subcontractors and material suppliers. We expect the effects of these cost-saving initiatives to begin on a small scale in the second quarter and ramp up through the third and fourth quarters. We have not completed this initiative, so we anticipate additional savings. Another initiative we've undertaken is to place a greater emphasis on pre-sold homes. In prior quarters, it made sense to carry a higher level of spec inventory, given the extended cycle times resulting from the supply chain issues of years past and the entry-level buyer's preference for quick move-in homes. Now that cycle times has come down and move-up buyers have become more active in the market, we have made a strategic decision to shift away from a high-spec home strategy and look for a somewhat more balanced approach in our move-up product lines. Pre-sales are currently producing much higher margins, especially when compared to the discounting we do on completed spec home inventory. This shift will allow us to capitalize on buyers who are willing and able to pay for what they want in a new home. This includes upgrades such as structural and interior option offerings and other upgrades that we sell at higher margins. It will also give us better visibility into our delivery outlook for the year and reduce the capital tied up in standing inventory. With pre-sold homes and newly refreshed products expected to make up a higher percentage of our closings going forward, we are optimistic about the trajectory of our margins. We also remain optimistic about the long-term prospects for our markets. The Carolinas and Georgia continue to attract employers to the region due to their business-friendly economic climate and attractive quality of life. They also boast better housing affordability relative to most major markets, which has led to consistent demigration from other parts of the country. We continue to see greater opportunities for long-term growth in these markets and others throughout the Southeast given these favorable housing fundamentals. As we turn our attention to the latter part of the spring selling season, We remain focused on maintaining a consistent level of new home sales while executing on the initiatives I discussed above. So far this quarter, demand has been fairly solid with April orders up 6% year over year. While incentives continue to run at a higher level than we would like, we believe our improved product design, pre-sold home focus can offset some of their margin impact. As a result, I believe United Homes Group is on the right path to achieve its long-term goals. With that, I'd like to turn the call over to Jack, who will provide more detail on our operational results this quarter.