Financial Data and Key Metrics Changes - For Q3 2025, the company 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 [8] - Revenue for Q3 2025 was $90.8 million, a decrease of $27.8 million from $118.6 million in Q3 2024 [8] - For the nine months ending September 30, 2025, revenue was $283.3 million, compared to $328.9 million for the same period in 2024 [9] - Gross profit for Q3 2025 was $16 million, down from $22.4 million in the prior year period [10] - Selling, general, and administrative expenses for Q3 were $17.6 million, with adjusted SG&A totaling $15 million, or 16.5% of revenue [11] Business Line Data and Key Metrics Changes - Home closings for Q3 2025 totaled 262 homes, down from 369 homes in the prior year [9] - The average sales price for production-built homes during the quarter was approximately $346,000, an 8.1% increase compared to $320,000 in Q3 2024 [9] - Net new orders for Q3 were 324 homes, down from 341 homes in the prior year period [10] Market Data and Key Metrics Changes - The company experienced uneven demand in Q3 due to elevated inventory levels and affordability pressures [5] - Traffic improved significantly, averaging between 350-400 weekly visits during Q3, compared to around 200 per week in the first half of the year [5] Company Strategy and Development Direction - The board formed a special committee to review strategic alternatives, concluding that remaining an independent public company is the best path forward [4] - The company is focused on improving operations and profitability through key initiatives and cost savings [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged near-term market challenges but expressed confidence in housing demand fundamentals, including the need for new construction and favorable demographics [7] - The company noted that September was the best order month year-to-date, indicating a potential rebound [6] Other Important Information - As of September 30, 2025, the company controlled approximately 7,700 lots, positioning it for future growth [12] - The company had approximately $83.1 million of liquidity in cash and credit facility availability as of Q3 [12] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session

Financial Performance - For Q3 2025, the net loss was $31.3 million, or $0.53 per diluted share, compared to a net loss of $7.3 million, or $0.15 per diluted share in Q3 2024[2] - Revenue for Q3 2025 was $90.8 million, a decrease of 23% from $118.6 million in Q3 2024[4] - Adjusted EBITDA for Q3 2025 was $3.8 million, compared to $9.0 million in Q3 2024[5] - For the nine months ended September 30, 2025, net loss was $19.5 million, or $0.33 per diluted share, compared to net income of $46.2 million, or $0.86 per diluted share in the same period of 2024[6] - Revenue for the nine months ended September 30, 2025 was $283.3 million, down from $328.9 million in the same period of 2024[7] - Gross profit for the three months ended September 30, 2025, was $16,048,000, down 28.4% from $22,383,000 in the prior year[26] - Adjusted EBITDA for the three months ended September 30, 2025, was $3,815,000, compared to $8,978,000 in the same period of 2024, a decline of 57.5%[34] Sales and Orders - Home closings in Q3 2025 were 262, down 29% from 369 in Q3 2024, while net new orders decreased by 5% to 324 from 341[4] - Total net new orders for the three months ended September 30, 2025, decreased by 5.0% year-over-year to 324, while total closings decreased by 29.0% to 262[43] - For the nine months ended September 30, 2025, total net new orders decreased by 11.8% to 924, and total closings decreased by 19.7% to 817[43] Margins and Expenses - Gross margin for Q3 2025 was 17.7%, a decrease of 120 basis points from 18.9% in Q3 2024, while adjusted gross margin was 19.6%, down from 20.6%[3] - Adjusted gross profit for the three months ended September 30, 2025, was $17,814,000, down from $24,481,000 in 2024, reflecting a decrease of 27.2%[29] - Selling, general and administrative expenses for the three months ended September 30, 2025, were $17,573,000, slightly down from $18,690,000 in 2024[26] Assets and Liabilities - Total assets increased to $293,114,000 as of September 30, 2025, up from $265,381,000 on December 31, 2024, representing an increase of 10.5%[23] - Total liabilities increased to $240,205,000 as of September 30, 2025, from $198,514,000 on December 31, 2024, marking a rise of 20.9%[24] - Cash and cash equivalents rose to $25,649,000 as of September 30, 2025, compared to $22,629,000 at the end of 2024, an increase of 13.4%[23] - Available liquidity as of September 30, 2025 was $83.1 million, including $25.6 million in cash and $57.5 million in unused committed capacity under the credit facility[4] Market Performance - The backlog inventory as of September 30, 2025, increased by 20.0% to 264 homes, with a backlog value of $94.3 million, up 18.0% from the previous year[43] - In the Coastal market, net new orders decreased by 16.8% to 153, while closings decreased by 3.9% to 146 for the nine months ended September 30, 2025[43] - The Midlands market experienced a 21.9% decrease in net new orders to 442 and a 27.8% decrease in closings to 374 for the same period[43] - The Upstate market showed a slight decrease of 0.4% in net new orders to 252, with closings down 24.7% to 223[43] - Rosewood market saw a significant increase in net new orders by 92.0% to 48, and closings increased by 43.3% to 43[43] - Raleigh market reported a 45.0% increase in net new orders to 29, while closings increased by 47.6% to 31[43] - The backlog value in the Coastal market increased by 15.2% to $19.7 million, while the Midlands market's backlog value increased by 17.8% to $47.1 million[43] Stockholders' Equity - Total stockholders' equity as of September 30, 2025, is $52,909 million, with an adjusted book value of $94,846 million[42]

Core Points - United Homes Group, Inc. (UHG) is under investigation for potential violations of federal securities laws following the resignation of six board members after the Executive Chairman refused to step down [1][2] - UHG's stock price experienced a significant decline of $2.23, or 52.5%, closing at $2.03 per share on October 20, 2025, impacting investors adversely [3] Company Developments - On October 20, 2025, UHG disclosed the resignation of six board members, which was prompted by the Executive Chairman's refusal to resign and forgo compensation after a strategic review [2] - The investigation by Glancy Prongay & Murray LLP is aimed at protecting the rights of UHG investors who may have suffered financial losses due to these developments [1][4] Legal Context - Glancy Prongay & Murray LLP is a prominent law firm specializing in securities litigation and has a history of successful recoveries for investors [7][8] - The firm encourages individuals with non-public information regarding UHG to consider participating in the SEC Whistleblower Program, which offers rewards for original information leading to successful recoveries [6]

Core Insights - Holzer & Holzer, LLC is investigating United Homes Group, Inc. for potential compliance issues with federal securities laws following the resignation of several board members after the Executive Chairman refused to step down, which led to a decline in the company's stock price [1] Company Summary - United Homes Group, Inc. (NASDAQ: UHG) experienced a significant event with multiple board member resignations, raising concerns about governance and compliance with federal regulations [1] - The stock price of United Homes Group dropped in response to the news of the board resignations [1] Legal Context - Holzer & Holzer, LLC is a law firm specializing in securities litigation, representing shareholders and investors in cases of corporate misconduct [3] - The firm has a history of recovering substantial amounts for shareholders affected by fraud, indicating a proactive approach to protecting investor rights [3]

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud and unlawful business practices involving United Homes Group, Inc. (UHG) and its officers or directors [1]. Group 1: Company Developments - On October 20, 2025, six board members of UHG resigned after Executive Chairman Michael Nieri refused to step down or forgo future compensation, despite a special committee's recommendation for strategic changes [2]. - Following the board resignations, UHG's stock price dropped by $2.24 per share, a decline of 52.46%, closing at $2.03 per share on the same day [2]. Group 2: Legal Context - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of advocating for victims of securities fraud and corporate misconduct [3].

Core Viewpoint - An investigation has been announced regarding United Homes Group, Inc. (UHG) for potential violations of federal securities laws, indicating possible legal issues that may affect investors [1] Group 1 - The Law Offices of Howard G. Smith are representing UHG investors who may have suffered losses [1] - Investors are encouraged to contact the law firm to discuss their legal rights and potential claims for recovering losses [1]

Core Viewpoint - United Homes Group, Inc. (UHG) is under investigation for potential violations of federal securities laws, which may impact investor confidence and the company's market performance [1]. Investigation Details - The investigation is initiated by the Law Offices of Frank R. Cruz on behalf of investors who may have suffered financial losses due to UHG's actions [1]. - UHG disclosed on October 20, 2025, that six of its board members are involved in the investigation, raising concerns about corporate governance and compliance [1].

Core Viewpoint - United Homes Group, Inc. has completed its review of strategic alternatives, including potential sale, merger, or other transactions, as conducted by the Special Committee of independent directors [1] Summary by Relevant Categories Strategic Alternatives - The Special Committee evaluated a full range of strategic alternatives [1]

Core Viewpoint - United Homes Group, Inc. (UHG) reported a decline in revenues and net income for the second quarter of 2025, while experiencing a significant increase in share price over the past month, indicating mixed performance amidst challenging market conditions. Financial Performance Summary - UHG's revenues for Q2 2025 were $105.5 million, a decrease of 3.6% from $109.4 million in Q2 2024, with home closings down 10.1% to 303 units from 337 units [2] - The average sales price increased by 2.3% to $349,000 from $341,000, partially offsetting the decline in volume [2] - Gross margin improved by 100 basis points year over year to 18.9% from 17.9%, driven by cost efficiencies and higher-margin redesigned floor plans [2] - Adjusted gross margin rose to 21.3% from 20.9% in the same period [2] Net Income and Adjusted EBITDA - UHG incurred a net loss of $6.3 million, or $0.11 per share, compared to a net income of $28.6 million, or $0.50 per share, in the previous year, primarily due to a $6.2 million non-cash fair value adjustment [3] - Adjusted EBITDA was $7.2 million, down 5.5% from $7.7 million year-over-year, with an adjusted EBITDA margin of 6.9% [3] Key Business Metrics - Net new orders fell 5.9% year over year to 304 homes from 323, with most markets declining except for Upstate and Rosewood, which saw increases of 26% and 78%, respectively [4] - Backlog as of June 30, 2025, was 202 homes valued at approximately $74.9 million, down from 248 homes valued at approximately $85.7 million a year earlier [4] Liquidity Position - Available liquidity as of June 30, 2025, totaled $95.2 million, including $36.5 million in cash and $58.7 million in unused credit capacity [5] Management Commentary - CEO Jack Micenko noted the positive impact of the refreshed product initiative on sales and profitability, with gross margins trending about 300 basis points above legacy designs [6] - CFO Keith Feldman highlighted a 270-basis-point sequential improvement in gross margin due to product mix and cost-saving measures [6] Influencing Factors - Revenue decline was attributed to lower unit volumes and high mortgage rates affecting affordability, despite an increase in average sales price and gross margin expansion [7] - Operating expenses remained elevated as a percentage of revenue due to reduced top-line performance, even though they were slightly lower in dollar terms year over year [7] Guidance - Management expressed confidence in further margin gains in 2025 compared to 2024, citing ongoing product enhancements and disciplined land acquisition strategies [8] Strategic Developments - On May 19, 2025, UHG's board initiated a strategic review process to explore options including a potential sale of the company or asset sales to maximize shareholder value, with no definitive outcome or timeline disclosed [10]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for United Homes Group, Inc [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of United Homes Group, Inc. (UHG) for the period ended June 30, 2025, including balance sheets, statements of operations, changes in stockholders' equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $36,538 | $22,629 | $13,909 | 61.5% | | Inventories | $144,454 | $139,270 | $5,184 | 3.7% | | Total assets | $281,066 | $265,381 | $15,685 | 5.9% | | Syndicated line of credit | $64,196 | $50,196 | $14,000 | 27.9% | | Derivative liabilities | $24,011 | $39,158 | $(15,147) | (38.7)% | | Total liabilities | $198,904 | $198,514 | $390 | 0.2% | | Total stockholders' equity | $82,162 | $66,867 | $15,295 | 22.9% | - Total assets increased by **5.9%** from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents and inventories[13](index=13&type=chunk) - Total stockholders' equity saw a significant increase of **22.9%**, while total liabilities remained relatively stable[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) Condensed Consolidated Statements of Operations (Three Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $105,506 | $109,420 | $(3,914) | (3.6)% | | Gross profit | $19,919 | $19,578 | $341 | 1.7% | | Net (loss) income | $(6,341) | $28,640 | $(34,981) | (122.1)% | | Basic (loss)/earnings per share | $(0.11) | $0.59 | $(0.70) | (118.6)% | | Diluted (loss)/earnings per share | $(0.11) | $0.50 | $(0.61) | (122.0)% | | Change in fair value of derivative liabilities | $(6,171) | $32,055 | $(38,226) | (119.2)% | Condensed Consolidated Statements of Operations (Six Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $192,507 | $210,258 | $(17,751) | (8.4)% | | Gross profit | $34,047 | $35,672 | $(1,625) | (4.6)% | | Net income | $11,839 | $53,578 | $(41,739) | (78.0)% | | Basic earnings per share | $0.20 | $1.11 | $(0.91) | (82.0)% | | Diluted earnings per share | $0.20 | $0.93 | $(0.73) | (78.5)% | | Change in fair value of derivative liabilities | $15,038 | $58,435 | $(43,397) | (74.3)% | - The significant decline in net income/loss for both the three and six months ended June 30, 2025, was primarily driven by a substantial negative change in the fair value of derivative liabilities[17](index=17&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20(unaudited)) - Total stockholders' equity increased from **$66,867 thousand** at December 31, 2024, to **$82,162 thousand** at June 30, 2025[19](index=19&type=chunk) - The increase was primarily due to retained earnings of **$24,763 thousand** and additional paid-in capital of **$57,393 thousand** as of June 30, 2025[19](index=19&type=chunk) - Stock-based compensation expense contributed **$3,368 thousand** to additional paid-in capital for the six months ended June 30, 2025[19](index=19&type=chunk)[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change ($) | | :------------------------------------------ | :----- | :----- | :--------- | | Net cash flows provided by (used in) operating activities | $2,780 | $(19,143) | $21,923 | | Net cash flows used in investing activities | $(176) | $(12,733) | $12,557 | | Net cash flows provided by financing activities | $9,937 | $120 | $9,817 | | Net change in cash, cash equivalents, and restricted cash | $12,541 | $(31,756) | $44,297 | | Cash, cash equivalents, and restricted cash, end of period | $38,090 | $24,916 | $13,174 | - Operating activities generated **$2.8 million** in cash in H1 2025, a significant improvement from a **$19.1 million** outflow in H1 2024, primarily due to increased cash from accounts payable and adjusted net income[21](index=21&type=chunk)[173](index=173&type=chunk) - Investing activities used less cash in H1 2025 (**$0.2 million**) compared to H1 2024 (**$12.7 million**), mainly because there were no business acquisition payments in 2025[21](index=21&type=chunk)[175](index=175&type=chunk) - Financing activities provided **$9.9 million** in H1 2025, largely from net proceeds of the syndicated line of credit[22](index=22&type=chunk)[176](index=176&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1 - Nature of business and summary of significant accounting policies](index=10&type=section&id=Note%201%20-%20Nature%20of%20business%20and%20summary%20of%20significant%20accounting%20policies) - UHG is a homebuilding business operating in South Carolina, North Carolina, and Georgia, employing a land-light strategy for single-family residential homes[24](index=24&type=chunk) - Revenue recognized from speculative home closings was **$105.5 million** for Q2 2025 and **$192.0 million** for H1 2025[29](index=29&type=chunk)[30](index=30&type=chunk) - Advertising and marketing costs decreased to **$0.7 million** for Q2 2025 (from $0.9 million in Q2 2024) and **$1.4 million** for H1 2025 (from $1.6 million in H1 2024)[31](index=31&type=chunk) [Note 2 - Variable interest entities](index=11&type=section&id=Note%202%20-%20Variable%20interest%20entities) - UHG uses lot option and land bank option contracts to procure land, deferring acquisition and reducing financial risks[34](index=34&type=chunk) - Lot deposits related to option contracts totaled **$44.9 million** as of June 30, 2025, with an aggregate remaining purchase price of **$340.9 million**[35](index=35&type=chunk) - The maximum exposure to loss from involvement with Variable Interest Entities (VIEs) is limited to non-refundable lot deposits and capitalized pre-acquisition costs[34](index=34&type=chunk) [Note 3 - Segment reporting](index=12&type=section&id=Note%203%20-%20Segment%20reporting) - UHG operates through three reportable segments: GSH South Carolina (entry-level and first-move-up homes), Rosewood (second and third move-up homes), and Other (Raleigh, NC operations and mortgage joint venture)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) Segment Revenue (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change (%) | | :----------------- | :----- | :----- | :--------- | | GSH South Carolina | $90,924 | $98,207 | (7.4)% | | Rosewood | $10,797 | $6,085 | 77.4% | | Other | $3,785 | $5,128 | (26.2)% | | **Total** | **$105,506** | **$109,420** | **(3.6)%** | Segment Income (Loss) Before Taxes (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :----------------- | :----- | :----- | :--------- | :--------- | | GSH South Carolina | $5,017 | $6,615 | $(1,598) | (24.2)% | | Rosewood | $(173) | $(549) | $376 | (68.5)% | | Other | $(12) | $(1,443) | $1,431 | (99.2)% | [Note 4 - Fair value measurement](index=15&type=section&id=Note%204%20-%20Fair%20value%20measurement) - Derivative liabilities (contingent earnout, private placement warrants, stock options) and contingent consideration are valued using Level 3 inputs, while public warrant liability uses Level 1 inputs[54](index=54&type=chunk) Fair Value Measurements of Liabilities (June 30, 2025, in thousands) | Liability | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Contingent earnout liability | $— | $— | $14,295 | $14,295 | | Derivative private placement warrant liability | $— | $— | $2,640 | $2,640 | | Derivative public warrant liability | $6,986 | $— | $— | $6,986 | | Derivative stock option liability | $— | $— | $90 | $90 | | **Total derivative liability** | **$6,986** | **$—** | **$17,025** | **$24,011** | | Contingent consideration | $— | $— | $881 | $881 | | **Total fair value** | **$6,986** | **$—** | **$17,906** | **$24,892** | - Total derivative liability decreased from **$39,158 thousand** at December 31, 2024, to **$24,011 thousand** at June 30, 2025[55](index=55&type=chunk) [Note 5 - Inventories](index=17&type=section&id=Note%205%20-%20Inventories) Inventory Breakdown (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :---------------- | | Pre-acquisition land costs | $8,528 | $4,737 | | Developed lots | $30,137 | $15,491 | | Homes under construction | $48,755 | $43,982 | | Finished homes | $57,034 | $75,060 | | **Total inventories** | **$144,454** | **$139,270** | - Total inventories increased by **$5.2 million (3.7%)** from December 31, 2024, to June 30, 2025[58](index=58&type=chunk) - Capitalized interest at the end of H1 2025 was **$2,003 thousand**, with **$3,133 thousand** expensed in cost of sales during the period[58](index=58&type=chunk) [Note 6 - Debt](index=17&type=section&id=Note%206%20-%20Debt) Debt Outstanding (June 30, 2025, in thousands) | Debt Instrument | Weighted average interest rate | Outstanding Balance | | :---------------------- | :----------------------------- | :------------------ | | Syndicated line of credit | 7.61% | $64,196 | | Term loan, net | 11.59% | $67,314 | - The syndicated line of credit's outstanding balance increased to **$64.2 million**, with a weighted average interest rate of **7.61%** as of June 30, 2025[60](index=60&type=chunk)[166](index=166&type=chunk) - The term loan had an outstanding balance of **$67.3 million** with a weighted average interest rate of **11.59%** as of June 30, 2025[60](index=60&type=chunk)[169](index=169&type=chunk) - UHG was in compliance with all debt covenants for both the syndicated line of credit and the term loan as of June 30, 2025[65](index=65&type=chunk)[69](index=69&type=chunk)[167](index=167&type=chunk)[170](index=170&type=chunk) [Note 7 - Related party transactions](index=20&type=section&id=Note%207%20-%20Related%20party%20transactions) - Lot deposits with related parties totaled **$5.1 million** as of June 30, 2025, down from **$6.8 million** at December 31, 2024[71](index=71&type=chunk) - The Company leases office spaces and model homes from related parties, with a lease modification in Q2 2024 resulting in a **$0.2 million** gain[72](index=72&type=chunk) - No overhead costs were allocated to related parties during Q2 and H1 2025, a decrease from **$0.1 million** and **$0.2 million** in the respective prior-year periods[73](index=73&type=chunk) [Note 8 - Warranty reserves](index=20&type=section&id=Note%208%20-%20Warranty%20reserves) Warranty Reserves Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Warranty reserves at beginning of the period | $1,866 | $1,302 | | Reserves provided | $500 | $558 | | Payments for warranty costs | $(293) | $(434) | | **Warranty reserves at end of the period** | **$2,073** | **$1,426** | - Warranty reserves increased to **$2,073 thousand** at June 30, 2025, from **$1,866 thousand** at the beginning of the period[79](index=79&type=chunk) [Note 9 - Commitments and contingencies](index=21&type=section&id=Note%209%20-%20Commitments%20and%20contingencies) - Total undiscounted operating lease liabilities as of June 30, 2025, were **$2,856 thousand**, with a weighted-average remaining lease term of **2.78 years**[82](index=82&type=chunk)[81](index=81&type=chunk) - Outstanding surety bonds totaled **$9.2 million** and letters of credit totaled **$1.3 million** as of June 30, 2025[83](index=83&type=chunk) - An accrual of **$0.2 million** was recorded for a probable settlement related to Rosewood proceedings[85](index=85&type=chunk) [Note 10 - Convertible Notes payable](index=22&type=section&id=Note%2010%20-%20Convertible%20Notes%20payable) - UHG redeemed its **$80.0 million** Convertible Notes on December 11, 2024, resulting in a **$45.6 million** loss on extinguishment[86](index=86&type=chunk) - The redemption involved a cash payment of **$70.0 million** plus **10,168,850 shares** of Class A Common Stock[86](index=86&type=chunk) - There is no remaining debt balance associated with the Convertible Notes as of June 30, 2025[86](index=86&type=chunk) [Note 11 - Stock-based compensation](index=22&type=section&id=Note%2011%20-%20Stock-based%20compensation) - Total unrecognized stock compensation expense related to unvested stock options was **$12.6 million** as of June 30, 2025, expected to be recognized over **2.39 years**[90](index=90&type=chunk) - Unrecognized pre-tax compensation expense for time-based restricted stock units (RSUs) was **$0.6 million**, expected over **2.72 years**[92](index=92&type=chunk) - Unrecognized pre-tax compensation expense for performance-based restricted stock units (PSUs) was **$1.1 million**, expected over **1.47 years**[93](index=93&type=chunk) [Note 12 - Earnout shares](index=24&type=section&id=Note%2012%20-%20Earnout%20shares) - The fair value of earnout shares decreased significantly from December 31, 2024, to June 30, 2025, primarily due to changes in the company's stock price[95](index=95&type=chunk)[96](index=96&type=chunk) Earnout Shares Fair Value and Assumptions | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Current stock price | $2.90 | $4.23 | | Expected volatility | 64% | 52% | | Fair value per share (Triggering Event I) | $0.81 | $1.59 | | Fair value per share (Triggering Event II) | $0.63 | $1.25 | | Fair value per share (Triggering Event III) | $0.50 | $0.99 | - For the six months ended June 30, 2025, the change in fair value of earnout shares resulted in a gain of **$13.9 million**[96](index=96&type=chunk) [Note 13 - Warrant liability](index=24&type=section&id=Note%2013%20-%20Warrant%20liability) - The change in fair value of private placement warrant liability resulted in a loss of **$0.6 million** for Q2 2025 and a gain of **$0.3 million** for H1 2025[98](index=98&type=chunk) - The change in fair value of public warrant liability resulted in a loss of **$1.5 million** for Q2 2025 and a gain of **$0.7 million** for H1 2025[99](index=99&type=chunk) Warrant Valuation Assumptions | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Current stock price | $2.90 | $4.23 | | Exercise price | $11.50 | $11.50 | | Expected volatility | 64% | 52% | [Note 14 - Income taxes](index=25&type=section&id=Note%2014%20-%20Income%20taxes) - UHG recognized an income tax benefit of **$0.3 million** for Q2 2025 and **$1.6 million** for H1 2025[100](index=100&type=chunk) - The estimated effective tax rate for H1 2025 was **33.1%**, significantly higher than **15.3%** in H1 2024, primarily due to state income tax expense and nondeductible stock compensation[100](index=100&type=chunk) [Note 15 - Earnings per share](index=25&type=section&id=Note%2015%20-%20Earnings%20per%20share) Earnings Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :----------- | :----- | :----- | | Basic EPS | $(0.11) | $0.59 | | Diluted EPS | $(0.11) | $0.50 | Earnings Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------- | :----- | :----- | | Basic EPS | $0.20 | $1.11 | | Diluted EPS | $0.20 | $0.93 | - Approximately **18.8 million** potentially anti-dilutive securities were excluded from diluted EPS calculation for Q2 2025, including stock warrants, private placement warrants, public warrants, and stock options[102](index=102&type=chunk) - **21,886,379 earnout shares** and **752,000 PSUs** were excluded from diluted EPS for Q2/H1 2025 as their triggering events/conditions had not been satisfied[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on UHG's financial condition and results of operations, highlighting the company's business model, market challenges, operational improvements, and financial performance for the three and six months ended June 30, 2025 [Overview](index=27&type=section&id=Overview) - UHG operates in high-growth markets (South Carolina, North Carolina, Georgia) with a land-light strategy, focusing on single-family homes ranging from **$200,000 to $600,000**[105](index=105&type=chunk)[107](index=107&type=chunk) - The company initiated a review of strategic alternatives in Q2 2025 to maximize shareholder value[108](index=108&type=chunk) - Market conditions in Q2 2025 were challenging due to elevated mortgage rates and affordability concerns, leading to a **5.9% decrease** in net new orders for the quarter and **15.1%** for the six months[109](index=109&type=chunk) - Gross margin improved by **100 basis points** for Q2 2025 and **70 basis points** for H1 2025, driven by redesigned floor plans, expanded customization, and strategic rebidding of supplier contracts[110](index=110&type=chunk) [Results of Operations - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=28&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Key Financial and Operating Data (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $105,506 | $109,420 | $(3,914) | (3.6)% | | Home closings | 303 | 337 | (34) | (10.1)% | | Average sales price of homes closed | $349,265 | $340,803 | $8,462 | 2.5% | | Gross profit | $19,919 | $19,578 | $341 | 1.7% | | Gross margin | 18.9% | 17.9% | 1.0% | 5.6% | | Selling, general and administrative expense | $18,016 | $19,614 | $(1,598) | (8.2)% | | Net new orders | 304 | 323 | (19) | (5.9)% | | Cancellation rate | 11.4% | 12.7% | (1.3)% | (10.2)% | | Backlog | 202 | 248 | (46) | (18.5)% | - Revenue decreased by **3.6%** due to a **10.1% decrease** in home closings, partially offset by a **2.5% increase** in average sales price[116](index=116&type=chunk)[117](index=117&type=chunk) - Gross margin improved by **1.0 percentage point** to **18.9%**, driven by redesigned floor plans, direct construction cost savings, and fewer non-recurring expenses[119](index=119&type=chunk) - Net loss before taxes was **$(6.6) million**, a significant decrease from **$28.8 million** income in Q2 2024, primarily due to a **$38.3 million** negative change in the fair value of derivative liabilities[115](index=115&type=chunk)[127](index=127&type=chunk) [Results of Operations - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=31&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) Key Financial and Operating Data (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue, net of sales discounts | $192,507 | $210,258 | $(17,751) | (8.4)% | | Home closings | 555 | 648 | (93) | (14.4)% | | Average sales price of homes closed | $347,231 | $337,994 | $9,237 | 2.7% | | Gross profit | $34,047 | $35,672 | $(1,625) | (4.6)% | | Gross margin | 17.7% | 17.0% | 0.7% | 4.1% | | Selling, general and administrative expense | $34,176 | $36,668 | $(2,492) | (6.8)% | | Net new orders | 600 | 707 | (107) | (15.1)% | | Cancellation rate | 12.0% | 11.1% | 0.9% | 8.1% | - Revenue decreased by **8.4%** due to a **14.4% decrease** in home closings, partially offset by a **2.7% increase** in average sales price[139](index=139&type=chunk) - Gross margin increased by **0.7 percentage points** to **17.7%**, driven by redesigned floor plans and lower interest expense in cost of sales, partially offset by higher incentive costs[142](index=142&type=chunk) - Net income before taxes decreased by **80.4%** to **$10.3 million**, primarily due to a **$43.4 million** decrease in the gain from the change in fair value of derivative liabilities[148](index=148&type=chunk)[150](index=150&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) - UHG uses Adjusted Gross Profit, EBITDA, and Adjusted EBITDA as supplemental non-GAAP measures to evaluate operating performance by excluding certain non-recurring or non-operational items[155](index=155&type=chunk)[159](index=159&type=chunk) Non-GAAP Financial Measures (Three Months Ended June 30, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :----- | :----- | :--------- | :--------- | | Adjusted gross profit | $22,436 | $22,845 | $(409) | (1.8)% | | Adjusted gross margin | 21.3% | 20.9% | 0.4% | 1.9% | | EBITDA | $(2,062) | $34,571 | $(36,633) | (106.0)% | | EBITDA margin | (2.0)% | 31.6% | (33.6)% | (106.3)% | | Adjusted EBITDA | $7,237 | $7,660 | $(423) | (5.5)% | | Adjusted EBITDA margin | 6.9% | 7.0% | (0.1)% | (1.4)% | Non-GAAP Financial Measures (Six Months Ended June 30, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :----- | :----- | :--------- | :--------- | | Adjusted gross profit | $38,801 | $43,459 | $(4,658) | (10.7)% | | Adjusted gross margin | 20.2% | 20.7% | (0.5)% | (2.4)% | | EBITDA | $19,327 | $64,493 | $(45,166) | (70.0)% | | EBITDA margin | 10.0% | 30.7% | (20.7)% | (67.4)% | | Adjusted EBITDA | $10,110 | $14,944 | $(4,834) | (32.3)% | | Adjusted EBITDA margin | 5.3% | 7.1% | (1.8)% | (25.4)% | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - UHG had **$36.5 million** in cash and cash equivalents as of June 30, 2025, an increase of **$13.9 million** from December 31, 2024[162](index=162&type=chunk) - The company had **$58.7 million** in unused committed capacity under its syndicated line of credit as of June 30, 2025[162](index=162&type=chunk)[166](index=166&type=chunk) - Net cash flows provided by operating activities for H1 2025 were **$2.8 million**, a significant improvement from a **$19.1 million** outflow in H1 2024[173](index=173&type=chunk) - Lot deposits related to option contracts totaled **$44.9 million** as of June 30, 2025, with an aggregate remaining purchase price of **$340.9 million**[165](index=165&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no significant changes to UHG's critical accounting policies and estimates during the six months ended June 30, 2025[177](index=177&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) - UHG's land-light strategy involves lot option and land bank option contracts, limiting the risk of loss to **$44.9 million** in lot deposits and **$8.5 million** in capitalized pre-acquisition costs as of June 30, 2025[178](index=178&type=chunk)[179](index=179&type=chunk) - The company had **$9.2 million** in outstanding surety bonds and **$1.3 million** in letters of credit as of June 30, 2025[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) UHG is primarily exposed to market risk from fluctuations in interest rates, which can impact housing demand, financing costs, and the company's financial performance - UHG's operations are sensitive to interest rate fluctuations, which can adversely affect housing demand, financing costs, revenues, gross profits, and net income[182](index=182&type=chunk) - The company utilizes variable-rate debt, with **$64.2 million** outstanding under the syndicated line of credit (**7.61%** weighted average interest rate) and **$67.3 million** under the term loan (**11.59%** weighted average interest rate) as of June 30, 2025[183](index=183&type=chunk)[185](index=185&type=chunk) - A **100 basis point** increase in overall interest rates would negatively affect the company's net income by approximately **$1.3 million**[185](index=185&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) UHG's management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, evaluated and concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[186](index=186&type=chunk) - There have been no material changes in the company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[187](index=187&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and exhibits for United Homes Group, Inc [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) UHG is involved in various legal proceedings, primarily construction defect claims, which management believes will not have a material adverse effect on the financial statements, with a specific accrual made for a probable settlement related to Rosewood proceedings - UHG is subject to various claims and lawsuits, mainly construction defect claims, arising in the ordinary course of business[84](index=84&type=chunk) - Management believes the disposition of these matters will not have a material adverse effect on the company's Condensed Consolidated Financial Statements[84](index=84&type=chunk) - An accrual of **$0.2 million** was recorded for a probable and reasonably estimable settlement related to Rosewood proceedings[85](index=85&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) UHG faces significant risks due to the cyclical nature of the homebuilding industry, which is sensitive to economic conditions, interest rates, and consumer confidence. Additionally, changes in trade policies, natural disasters, and the ongoing exploration of strategic alternatives pose potential threats to the company's business and financial results - The residential homebuilding industry is highly cyclical and significantly affected by changes in local and general economic conditions, including interest rates, employment, and consumer confidence[192](index=192&type=chunk) - Changes in U.S. trade policies and tariffs could increase costs or limit supplies of building materials, negatively impacting margins[197](index=197&type=chunk) - Weather conditions and natural disasters can decrease buyer traffic, delay construction, affect material/labor costs, and damage homes[195](index=195&type=chunk) - The exploration of strategic alternatives may be disruptive, incur substantial expenses, and cause stock price fluctuations without assurance of a successful transaction[198](index=198&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2025, UHG did not engage in any unregistered sales of equity securities that were not previously reported - There were no unregistered sales of the Company's securities during the quarter ended June 30, 2025, that were not reported in a Current Report on Form 8-K[199](index=199&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) UHG reported no defaults upon senior securities for the period - The Company reported no defaults upon senior securities[200](index=200&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to UHG's operations - Mine Safety Disclosures are not applicable to United Homes Group, Inc[201](index=201&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item for the period - No other information was disclosed under this item[202](index=202&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements, corporate governance documents, and certifications, providing supplementary information to the financial report - The exhibit index lists documents such as the Business Combination Agreement, Amended and Restated Certificate of Incorporation and Bylaws, Warrant Agreement, and various certifications[206](index=206&type=chunk) - Includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[206](index=206&type=chunk)