United Homes Group, Inc. (UHG) reported significant financial developments in its 10-Q filing for the third quarter of 2024, reflecting both revenue growth and notable challenges in profitability. For the three months ended September 30, 2024, UHG generated revenue of $118.6 million, a substantial increase of 35.2% from $87.7 million in the same period of 2023. Year-to-date revenue for the nine months reached $328.9 million, up 8.0% from $304.6 million in the prior year.

Despite the revenue growth, UHG faced a net loss of $7.3 million for the third quarter, a stark contrast to the net income of $150.8 million reported in the same quarter of 2023. This decline was attributed to a significant loss related to derivative liabilities amounting to $7.8 million, compared to a gain of $149.7 million in the previous year. For the nine months ended September 30, 2024, net income was $46.2 million, down 75.9% from $191.7 million in 2023.

The company’s gross profit for the third quarter was $22.4 million, reflecting a gross profit margin of 18.9%, slightly down from 19.8% in the prior year. Adjusted gross profit also increased to $24.5 million, but the adjusted gross profit margin decreased to 20.6% from 22.1%. Selling, general, and administrative expenses rose significantly to $18.7 million, up 37.5% from $13.6 million in the same quarter of 2023.

UHG's operational strategy has included acquisitions to bolster its market position. The company completed the acquisition of Creekside Custom Homes, LLC for $12.7 million in January 2024, contributing $4.7 million in revenue for the third quarter. Additionally, UHG acquired Rosewood Communities, Inc. in October 2023 for $24.7 million, which included contingent consideration based on future earnings.

The company’s cash and cash equivalents decreased to $25.8 million as of September 30, 2024, down from $56.7 million at the end of 2023. Total assets also declined to $282.6 million from $298.6 million, while total liabilities decreased to $262.8 million from $329.8 million. UHG reported retained earnings of $12.3 million, a significant recovery from an accumulated deficit of $34.0 million at the end of 2023.

UHG's operational challenges have been compounded by rising inflation and interest rates, which have affected homebuyer demand. In response, the company has implemented sales incentives to stimulate interest in its homes. The company’s pipeline currently consists of approximately 8,600 lots, with a focus on homebuilding in South Carolina, North Carolina, and Georgia.