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What changed in United Homes Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of United Homes Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+385 added−450 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-15)

Top changes in United Homes Group, Inc.'s 2024 10-K

385 paragraphs added · 450 removed · 256 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+24 added−27 removed38 unchanged
Biggest changeYear Ended December 31, Period Over Period % Change 2023 2022 Market Sales Starts Closings Sales Starts Closings Sales Starts Closings Coastal 150 145 216 160 241 242 (6) % (40) % (11) % Midlands 755 689 827 744 695 942 1 % (1) % (12) % Upstate 388 399 340 355 337 421 9 % 18 % (19) % Raleigh 3 15 0 0 0 0 NM NM NM Total 1,296 1,248 1,383 1,259 1,273 1,605 3 % (2) % (14) % ______________________________ NM - Not Meaningful The following table presents information concerning UHG’s new orders, cancellation rate and ending backlog for years ended December 31, 2023 and 2022. 9 Table of Contents Year Ended December 31, 2023 2022 Net New Orders 1,296 1,259 Cancellation Rate 13.6 % 17.5 % Year Ended December 31, 2023 2022 Ending Backlog - Homes 189 276 Ending Backlog - Value (in thousands) $57,600 $86,000 Materials, Procurement and Construction UHG uses various materials and components and is dependent upon building material suppliers for a continuous flow of raw materials.
Biggest changeYear Ended December 31, 2024 2023 Net New Orders 1,399 1,296 Cancellation Rate 11.4 % 13.6 % As of December 31, 2024 2023 Backlog inventory 157 189 Backlog inventory - Value (in thousands) $58,300 $57,600 Materials, Procurement and Construction 9 Table of Contents UHG uses various materials and components and is dependent upon building material suppliers for a continuous flow of raw materials.
The homes are targeted for entry-level buyers, first-time move-ups, second-time move-ups, third-time move-ups, and some custom builds. Entry-level homebuyers are typically seeking an economical path to home ownership and desire square footage, quality design and construction at affordable prices. First-time move-up homebuyers generally desire the opportunity to select and upgrade features in their homes.
The homes are targeted for entry-level buyers, first, second, and third-time move-ups, and some custom builds. Entry-level homebuyers are typically seeking an economical path to home ownership and desire square footage, quality design and construction at affordable prices. First-time move-up homebuyers generally desire the opportunity to select and upgrade features in their homes.
The regional concentration of UHG markets, mostly within a two-hour drive from corporate headquarters in Columbia in the Midlands market, allows UHG to retain a light, cost-effective team and infrastructure footprint in the Upstate, Coastal and Raleigh markets. UHG offers its team members generous benefits, including paid time off, health insurance and a 401k retirement plan.
The regional concentration of UHG markets, mostly within a two-hour drive from corporate headquarters near Columbia in the Midlands market, allows UHG to retain a light, cost-effective team and infrastructure footprint in the Upstate, Coastal and Raleigh markets. UHG offers its team members generous benefits, including paid time off, health insurance and a 401k retirement plan.
Item 1. Business Unless the context otherwise requires, for purposes of this section, the terms “we,” “us,” “the Company” or “UHG” refer to GSH and its subsidiaries prior to the Business Combination and to the Company and UHG and its subsidiaries, after giving effect to the Business Combination.
Item 1. Business Unless the context otherwise requires, for purposes of this section, the terms “we,” “us,” “the Company” or “UHG” refer to GSH and its subsidiaries prior to the Business Combination and to UHG and its subsidiaries, after giving effect to the Business Combination.
UHG’s internet address is www.unitedhomesgroup.com. Information contained on, or accessible through, these websites is not incorporated by reference into and does not constitute a part of this prospectus. UHG’s principal executive offices are located at 917 Chapin Road, Chapin, South Carolina 29036 and its telephone number is (844) 766-4663.
UHG’s internet address is www.unitedhomesgroup.com. Information contained on, or accessible through, these websites is not incorporated by reference into and does not constitute a part of this report. UHG’s principal executive offices are located at 917 Chapin Road, Chapin, South Carolina 29036 and its telephone number is (844) 766-4663.
UHG values its team members and understands the importance of them to the success of the business. No UHG team members are members of a labor union or covered by a collective bargaining agreement, there have been no work stoppages or strikes, and relations between UHG and team members are believed to be positive.
UHG values its team members and understands their importance to the success of the business. No UHG team members are members of a labor union or covered by a collective bargaining agreement, there have been no work stoppages or strikes, and relations between UHG and its team members are believed to be positive.
Some of these laws and regulations directly apply to Homeowners Mortgage, while other obligations apply indirectly through its relationship with the MLOs. The states in which Homeowners Mortgage operates have corollary legal and regulatory regimes, as well as additional restrictions on the conduct of mortgage brokerage businesses that are specific to transactions within the given state.
Some 11 Table of Contents of these laws and regulations directly apply to Homeowners Mortgage, while other obligations apply indirectly through its relationship with the MLOs. The states in which Homeowners Mortgage operates have corollary legal and regulatory regimes, as well as additional restrictions on the conduct of mortgage brokerage businesses that are specific to transactions within the given state.
UHG’s competition includes national, regional, and local homebuilders, as well as the individual 10 Table of Contents home resale market and available rental housing. Homebuilders compete for, among other things, homebuyers, desirable lots, financing, raw materials and skilled labor. Competition for homebuyers is primarily based upon factors such as price, location, design, quality, and the reputation of the builder.
UHG’s competition includes national, regional, and local homebuilders, as well as the individual home resale market and available rental housing. Homebuilders compete for, among other things, homebuyers, desirable lots, financing, raw materials and skilled labor. Competition for homebuyers is primarily based upon factors such as price, location, design, quality, and the reputation of the builder.
Regulators frequently inspect UHG homes for compliance with these measures, and fines and other penalties causing delays may be imposed if such inspections reveal that these regulations have not been complied with.
Regulators frequently inspect UHG communities for compliance with these measures, and fines and other penalties causing delays may be imposed if such inspections reveal that these regulations have not been complied with.
The digital marketing methods that UHG employs include strategic e- 8 Table of Contents marketing efforts to its current database of potential customers, internet advertising enhanced by search engine marketing, search engine optimization and campaigns and promotions across an array of social media platforms.
The digital marketing methods that UHG employs include strategic e-marketing efforts to its current database of potential customers, internet advertising enhanced by search engine marketing, search engine optimization and campaigns and promotions across an array of social media platforms.
Local jurisdictions may also pass moratoriums on development or issuing building permits that can affect the supply of lots to UHG. While UHG will generally purchase developed and entitled lots from the Land Development Affiliates and other third-party developers, these lots may be subject to subsequent restrictions and regulations by local authorities, which can increase costs.
Local jurisdictions may also pass moratoriums on development or issuing building permits that can affect the supply of lots to UHG. While UHG will generally purchase developed and entitled lots from related party developers, third-party developers and land banks, these lots may be subject to subsequent restrictions and regulations by local authorities, which can increase costs.
The supply of lots from these companies is affected by a number of federal, state, and local statutes, regulations, and ordinances, and can lead to substantially increased costs, delays, or even cancellation of the construction of communities.
The supply of lots is affected by a number of federal, state, and local statutes, regulations, and ordinances, and can lead to substantially increased costs, delays, or even cancellation of the construction of communities.
This includes markets like Nashville, Jacksonville and Orlando, which carry the potential for expansion both organically and via strategic acquisitions. UHG’s proximity to growing population centers of the Southeast provide a unique advantage over homebuilders with less of a focus in these regions. • Land-light Operating Model Drives Superior Returns with Less Capital at Risk.
This includes markets like Nashville, Jacksonville and Orlando, which carry the potential for expansion. UHG’s proximity to growing population centers of the Southeast provide a unique advantage over homebuilders with less of a focus in these regions. • Land-light Operating Model Drives Superior Returns with Less Capital at Risk.
UHG primarily uses subcontractors to build homes, and UHG believes it has good relationships with these subcontractors. 12 Table of Contents Available Information UHG’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports are filed with the SEC.
UHG primarily uses subcontractors to build homes, and UHG believes it has good relationships with these subcontractors. Available Information UHG’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports are filed with the SEC.
Owned and Controlled Lots The following table presents UHG’s owned or controlled lots by market as of December 31, 2023 and 2022.
Owned and Controlled Lots The following table presents UHG’s owned or controlled lots by market as of December 31, 2024 and 2023.
As a result, UHG and the homebuilding industry tends to experience more new home sales in the first half of a calendar year and increased closings and revenue recognition in the second half of a calendar year.
As a result, UHG and the homebuilding industry tends to experience more new orders in the first half of a calendar year and increased closings and revenue recognition in the second half of a calendar year.
Led by Michael Nieri since its inception, UHG has closed approximately 14,000 homes since 2004. • Leading Share in Existing Markets and Close Proximity to Adjacent High-Growth Markets. According to the U.S.
Founded by Michael Nieri in 2004, UHG has closed approximately 15,000 homes since its inception. • Leading Share in Existing Markets and Close Proximity to Adjacent High-Growth Markets. According to the U.S.
UHG 5 Table of Contents believes that the following strengths position it well to execute its business strategy and capitalize on opportunities in the Southeastern United States and across the country. • Established Track Record of Strong Organic Growth. Proven growth and operating successes are hallmarks of UHG’s history.
UHG believes that the following strengths position it well to execute its business strategy and capitalize on opportunities in the Southeastern United States and across the country. • Established Track Record. Proven growth and operating successes are hallmarks of UHG’s history.
It typically takes UHG between 90 and 120 days to construct a single-family home and typically longer for certain higher-end homes.
It typically takes UHG between 90 and 120 days to construct a single-family home and typically longer for certain second move-up and higher-end homes.
As UHG reviews potential geographic markets into which it could expand its homebuilding business, either organically or through strategic acquisitions, it intends to focus on selecting markets with positive population and employment growth trends, favorable migration patterns, attractive housing affordability, low state and local income taxes, and desirable lifestyle and weather characteristics.
As UHG reviews potential geographic markets into which it could expand its homebuilding business it intends to focus on selecting markets with positive population and employment growth trends, favorable migration patterns, attractive housing affordability, low state and local income taxes, and desirable lifestyle and weather characteristics.
Given its focus on entry-level and first-time move-up buyers, UHG also expects to take advantage of the continued inflation in rental rates to encourage renters to consider home buying as an alternative to renting.
Given its focus on entry-level and first-time move-up buyers, UHG also expects to take advantage of high rental rates to encourage renters to consider home buying as an alternative to renting.
For reporting purposes, the total number of sales is reported as the number of sales during the applicable period, minus the cancellation of existing contracts during that same period. Cancellation rate is determined by the total number of cancellations for the period divided by total number of sales during the same period.
For reporting purposes, the total number of net new orders is reported as the number of new orders during the applicable period, minus the cancellation of existing contracts during that same period. Cancellation rate is determined by the total number of cancellations for the period divided by total number of new orders during the same period.
Backlog is calculated as the number of homes in backlog from the prior period, plus sales for the current period, minus the number of closings for the current period. Backlog value is determined based on the selling prices of the homes in backlog.
Backlog is calculated as the number of homes in backlog from the prior period, plus net new orders for the current period, minus the number of closings for the current period. Backlog value is determined based on the selling prices of the homes in backlog.
UHG and other land-light builders do not hold large land positions on balance, but rather partner with land developers including the Land Development Affiliates that hold land and finished lots and deliver them to the builder on a “just-in-time” basis.
UHG and other land-light builders do not hold large land positions on balance sheet, but rather partner with land banks and land developers including related parties that hold land and finished lots and deliver them to the builder on a “just-in-time” basis.
UHG does some limited custom home construction as well. UHG uses a variety of marketing tools to reach potential homebuyers, but online marketing has become a key strength of the UHG business model, allowing it to reach a broad range of potential homebuyers at relatively low expense compared to traditional advertising platforms.
UHG uses a variety of marketing tools to reach potential homebuyers, but online marketing has become a key strength of the UHG business model, allowing it to reach a broad range of potential homebuyers at relatively low expense compared to traditional advertising platforms.
UHG’s executive officers and key employees have over 100 years of cumulative experience in the homebuilding industry. UHG believes its management team’s wide-ranging industry experience, combined with its incentivized executive compensation structure, have been and will continue to be the key to its success. Growth Strategy UHG’s management and Board of Directors have established a multi-pronged growth strategy.
UHG believes its management team’s wide-ranging industry experience, combined with its incentivized executive compensation structure, have been and will continue to be the key to its success. Growth and Operations UHG’s management and Board of Directors have established a multi-pronged growth strategy.
UHG believes that this land-light model results in a more balance sheet efficient strategy, which is expected to drive higher returns while offering more flexibility in response to changing economic conditions and expects this to result in more stable financial performance through the housing cycle due to lower invested capital and equity at risk limited to the lot deposit.
UHG believes that this land-light model reduces both operating and financial risk, which is expected to drive higher returns while offering more flexibility in response to changing economic conditions and expects this to result in more stable financial performance through the housing cycle due to lower invested capital and equity at risk limited to the lot deposit. • Highly Experienced, Aligned and Proven Management Team.
Typically, prospective home buyers search for homes beginning in late winter to early spring, which in industry parlance is often referred to as the “spring buying season.” As homes are constructed, those contracts are then closed upon through the summer into fall.
Census Bureau), trade groups (National Association of Realtors) and public company reports. Typically, prospective home buyers search for homes beginning in late winter to early spring, which in industry parlance is often referred to as the 10 Table of Contents “spring buying season.” As homes are constructed, those contracts are then closed upon through the summer into fall.
These conditions are expected to allow well-capitalized homebuilders with a meaningful presence in these markets to grow faster than industry averages. For UHG going forward, market share take, growth in community count, and a re-composition of community size are expected to drive organic growth.
These conditions are expected to allow well-capitalized homebuilders with a meaningful presence in these markets to grow faster than industry averages. For UHG going forward, increased market share through growth in community count, higher sales pace per community and quicker inventory turnover count are expected to drive organic growth.
A certain number of sales will not be closed for one reason or another, and these are reported as “cancellations.” Homes in “backlog” are those that are under a sales contract but have not closed.
“Closing” occurs when the legal process for completing the sale of the home has been finalized and UHG has been paid for the sale. A certain number of sales will not be closed for one reason or another, and these are reported as “cancellations.” Homes in “backlog” are those that are under a sales contract but have not closed.
Second-time move-up homebuyers generally seek larger floorplans with a higher level of finish with the ability to upgrade additional features. Third-time move-up homebuyers are similar to second-time move-ups but desire a higher level of finish and top-shelf options and upgrades. Land Acquisition Strategy and Development Process Locating and analyzing attractive land positions is a critical challenge for any homebuilder.
Second-time move-up homebuyers generally seek larger floorplans with a higher level of finish with the ability to upgrade additional features. Third-time move-up homebuyers are similar to second-time move-ups but desire a higher level of finish and top-shelf options and upgrades.
UHG has in place dedicated personnel focused on M&A opportunities. • Programmatic Build to Rent (BTR) Relationships. Institutional owners of residential rental homes are increasingly turning to homebuilders to help meet the need for more housing supply. Further, newly constructed rental homes tend to come with lower maintenance costs and higher rents than older homes.
Institutional owners of residential rental homes are increasingly turning to homebuilders to help meet the need for more housing supply. Further, newly constructed rental homes tend to come with lower maintenance costs and higher rents than older homes.
The table below report sales, starts, closings, and backlog in each of UHG’s primary markets for the years ended December 31, 2023 and 2022.
The table below reports net new orders, starts, and closings in each of UHG’s primary markets for the years ended December 31, 2024 and 2023.
Home construction ranges from attached single-family product such as townhomes and duplexes to detached single-family homes up to five-bedroom two-story product, primarily using plans designed in-house by UHG. The UHG build-on-demand market entails a homebuyer selecting a lot in a UHG development and picking from a selection of UHG predesigned home plans and options.
UHG bases the decision on what type of home to build according to its market analysis of potential homebuyers. Home construction ranges from attached single-family product such as townhomes and duplexes to detached single-family homes up to five-bedroom two-story product, primarily using plans designed in-house by UHG.
UHG expects to achieve its growth goals through successful execution of the following strategies: • Continue to Leverage Key Macro Housing Trends. UHG plans to continue to capitalize on the macro housing trends including the ongoing migration from higher-cost areas in the Northeast to more affordable markets in the Southeast.
UHG has historically relied upon the following strategies and anticipates utilizing many of these strategies to achieve additional growth going forward: • Continue to Leverage Key Macro Housing Trends. UHG plans to continue to capitalize on the macro housing trends including the ongoing migration from higher-cost areas in the Northeast to more affordable markets in the Southeast.
Market Opportunity UHG believes that there is a significant housing shortage in the United States. Long-term favorable fundamentals of low housing inventory, high employment growth over a trailing five-year period, and affordability relative to the national average home price create an opportunity for UHG to expand its homebuilding operations.
Long-term favorable fundamentals of low housing inventory, high employment growth over a trailing five-year period, and affordability relative to the national average home price create an opportunity for UHG to expand its homebuilding operations. UHG presently operates in three major market regions in South Carolina: Midlands, Upstate, and Coastal, as well as Augusta, Georgia, and Raleigh, North Carolina.
(2) On a limited basis, the Company acquires raw parcels of land already zoned for its intended use to develop into finished lots, typically as a result of business acquisitions. Land under development represented 5% and 0% of total inventory as of December 31, 2023 and 2022, respectively.
As of December 31, 2024 As of December 31, 2023 Owned Real Estate Inventory Status % of Owned Real Estate Inventory % of Owned Real Estate Inventory Homes under construction and finished homes 85% 81% Developed lots, land under development, and pre-acquisition costs (1) 15% 19% Total 100% 100% ______________________________ (1) On a limited basis, the Company acquires raw parcels of land already zoned for its intended use to develop into finished lots, typically as a result of business acquisitions.
One area of strength in UHG’s digital marketing has been to leverage virtual home tours of inventory and model homes, which has been particularly effective in selling homes to buyers moving into the area from other regions of the country.
One area of strength in UHG’s digital marketing has been to leverage virtual home tours of inventory and model homes, which has been particularly effective in selling homes to buyers moving into UHG’s markets from other regions of the country. 8 Table of Contents While digital marketing is a key component of the UHG home sales process, most homebuyers will ultimately want to visit a UHG product in person prior to purchasing.
UHG management continuously looks for accretive sources of EBITDA growth, not just in product line opportunities, but also in opportunities to drive additional EBITDA from existing operations. A key example of this is the recent formation and launch of Homeowners Mortgage, which began generating revenue in July 2022.
UHG management continuously looks for accretive sources of EBITDA growth, not just in product line opportunities, but also in opportunities to drive additional EBITDA from existing operations.
UHG believes that its reputation, commitment to excellence and its support for its customers through the home buying process sets it apart from other public company homebuilders.
Competitive Strengths UHG’s primary business objective is to create long-term returns for stockholders through its commitment to produce quality-built homes at affordable prices. UHG believes that its reputation, commitment to excellence and its support for its customers through the home buying process sets it apart from other public company homebuilders.
The creation of Homeowners Mortgage, structured as a joint venture with a leading national lender, will arrange mortgage financing for potential homebuyers and is anticipated to deliver incremental high margin revenue to UHG and its stockholders.
A key example of this is Homeowners Mortgage, which is a joint venture with a leading national lender that arranges mortgage financing for potential homebuyers and delivers incremental revenue to UHG and its stockholders.
UHG Products and Customers UHG’s Homes and Homebuyers UHG’s homebuilding business is driven by its commitment to building high quality homes at affordable prices in attractive locations, while delivering excellent customer service.
Further, the Company’s land light strategy often employs the use of third-party capital, which has led the Company to increase the hurdle rate requirements on future land investments. UHG Products and Customers UHG’s Homes and Homebuyers UHG’s homebuilding business is driven by its commitment to building high quality homes at affordable prices in attractive locations, while delivering excellent customer service.
UHG and its predecessors have demonstrated an ability to capitalize on these trends for more than 20 years, and capital provided from the Business Combination is expected to support additional growth in the future. • Accretive Mergers and Acquisitions (M&A).
UHG and its predecessors have demonstrated an ability to capitalize on these trends for more than 20 years. • Accretive Mergers and Acquisitions (M&A). Homebuilding is a business that benefits from scale, where the benefits of operating as a larger entity can result in lower costs and higher margins.
Onsite sales representatives are present seven days a week in UHG developments to answer questions and provide potential homebuyers with a point-of-sale contact.
UHG maintains model homes in most developments for potential buyers to see in-person the quality and design features of UHG’s homes, as well as the different options that may be available. Onsite sales representatives are present seven days a week in UHG developments to answer questions and provide potential homebuyers with a point-of-sale contact.
Homes subject to these conditions, or certain naturally occurring conditions like methane or radon, may require a mitigation plan, and a home subject to a mitigation plan may be less attractive to buyers.
Homes subject to these conditions, or certain naturally occurring conditions like methane or radon, may require a mitigation plan, and a home subject to a mitigation plan may be less attractive to buyers. Use of building material by UHG that is found to be hazardous and to cause injury could also result in UHG being held liable for damages.
UHG believes that this gives it a competitive advantage over other builders who rely almost solely on in-house marketing efforts. Backlog, Sales and Closings For reporting purposes, a new home “sale” occurs when a buyer has been pre-approved by a mortgage lender, has signed a sales contract with UHG, and has placed a deposit towards the purchase of the home.
Backlog, Net new orders and Closings For reporting purposes, a “new order” occurs when a buyer has been pre-approved by a mortgage lender, has signed a sales contract with UHG, and has placed a deposit towards the purchase of the home. A “start” occurs when a permit has been obtained and groundbreaking on a home is forthcoming.
Beyond being a new source of revenue and EBITDA for UHG with little incremental expense or capital investment, it is anticipated that the Homeowners Mortgage joint venture will improve buyer traffic conversion and reduce backlog cancellation rates as well.
Beyond being a new source of revenue and EBITDA for UHG with little incremental expense or capital investment, Homeowners Mortgage, through its use of incentives, has helped improve buyer traffic conversion and reduce backlog cancellation rates. Operational Initiatives 6 Table of Contents UHG launched multi-faceted operational improvement initiatives in 2024.
As of December 31, 2023 As of December 31, 2022 Market/Division Owned Controlled Total Owned Controlled Total Midlands 110 5,018 5,128 94 5,145 5,239 Coastal 76 1,066 1,142 34 1,157 1,191 Upstate 163 2,354 2,517 145 1,953 2,098 Raleigh 46 215 261 — — — Total 395 8,653 9,048 273 8,255 8,528 Owned Real Estate Inventory Status The following table presents UHG’s owned real estate inventory status as of December 31, 2023 and 2022.
As of December 31, 2024 As of December 31, 2023 Market/Division Owned Controlled Total Owned Controlled Total Midlands 67 4,733 4,800 110 5,018 5,128 Coastal 17 1,204 1,221 76 1,066 1,142 Upstate 7 1,383 1,390 39 2,195 2,234 Rosewood 15 180 195 124 159 283 Raleigh 19 65 84 46 215 261 Total 125 7,565 7,690 395 8,653 9,048 Owned Real Estate Inventory Status The following table presents UHG’s owned real estate inventory status as of December 31, 2024 and 2023.
See “ Risk Factors ” for additional information regarding these risks. UHG is dependent upon building material suppliers for a continuous flow of raw materials. Whenever possible, UHG attempts to utilize standard products available from multiple sources. Seasonality The sale of both new and existing homes in the United States exhibit demonstrable seasonality over the course of a calendar year.
See “ Risk Factors ” for additional information regarding these risks. Seasonality The sale of both new and existing homes in the United States exhibit demonstrable seasonality over the course of a calendar year. This seasonality can be evidenced across multiple sources including, but not limited to, government data (U.S.
Homebuilding, Marketing and Sales Process UHG is a production builder, primarily focused on entry-level, first, and second move-up homebuyers, with some third move-up and custom construction. UHG bases the decision on what type of home to build according to its market analysis of potential homebuyers.
Land under development represented zero and 5% of total inventory as of December 31, 2024 and 2023, respectively. Homebuilding, Marketing and Sales Process UHG is a production builder, primarily focused on entry-level, first, and second move-up homebuyers, with some third move-up and custom construction.
UHG’s existing product set, geared towards entry-level and first-time move-up buyers, is highly consistent with the rental product desired by institutional cap ital. UHG has considerable experience developing single-family rental homes and is in discussions with and expects to enter programmatic relationships with institutional investors for development of Built to Rent (“BTR”) communities.
UHG’s existing product set, geared towards entry-level and first-time move-up buyers, is highly consistent with the rental product desired by institutional cap ital. UHG expects to continue to explore opportunities in the BTR sector from time to time to augment its core for-sale business. • Ancillary Revenue Growth Opportunities.
Following the separation of the land development business, which is now primarily conducted by the Land Development Affiliates that are outside of the corporate structure of UHG, UHG employs a land-light operating strategy, with a focus on the design, construction and sale of entry-level, first move-up, second move-up and third move-up single-family houses.
Overview UHG designs, builds and sells homes in high growth markets, including South Carolina, North Carolina, and Georgia. UHG employs a land-light operating strategy, with a focus on the design, construction and sale of entry-level, first, second and third move-up single-family houses.
Through January 2024, UHG completed three acquisitions, allowing the Company to further grow operations in the upstate and coastal regions of South Carolina, and expand operations into Raleigh, NC. Management believes UHG continues to have an opportunity to be an “acquirer of choice” for smaller builders as UHG’s acquisition strategy is focused on retaining local operations and brands.
Further, UHG believes that the changing macroeconomic environment has resulted in an increased willingness of smaller builders to explore partnerships with larger organizations. Through January 2024, UHG completed three acquisitions, allowing the Company to further grow operations in the upstate and coastal regions of South Carolina, and expand operations into Raleigh, NC. • Build to Rent (BTR) Relationships.
Census Bureau, UHG’s home state of South Carolina experienced population growth of more than 10% from 2010 to 2022 exceeding the national average of 7.4% over the same period of time.
Census Bureau, UHG’s home state of South Carolina experienced an estimated population growth of more than 13.5% from 2014 to 2024 exceeding the estimated national average of 6.6% over the same period of time. 5 Table of Contents UHG is based within 500 miles of some of the fastest growing markets in the U.S based on new home sales.
UHG is organized into two segments, South Carolina (consisting primarily of the Company’s homebuilding operations in South Carolina and a small amount of operations in Georgia) and Other (consisting of homebuilding operations in Raleigh, NC, as well as the Company’s mortgage banking joint venture).
UHG is currently organized into three segments: • GSH South Carolina - This segment represents GSH’s homebuilding operations in South Carolina and a small amount of operations in Georgia.
Because of the higher and more stable return profile, land light builders tend to trade at higher valuation multiples than peers that own considerable land positions. • Highly Experienced, Aligned and Proven Management Team. UHG benefits from a highly experienced management team that has demonstrated the ability to adapt to ever-changing market conditions while generating substantial growth and innovation.
UHG benefits from a highly experienced management team that has demonstrated the ability to adapt to ever-changing market conditions while generating substantial growth and innovation. UHG’s executive officers and key employees have over 100 years of cumulative experience in the homebuilding industry.
See Note 4 - Segment Reporting of the Notes to the Consolidated Financial Statements for further details. Under its land-light operating strategy, UHG controls its supply of finished lots through lot purchase agreements with the Land Development Affiliates and third parties, which provide UHG with the right to purchase finished lots after they have been developed.
See Note 4 - Segment reporting of the Notes to the Consolidated Financial Statements for further details. Pursuant to the Company’s land-light business model, finished lots are typically purchased through lot option contracts from third party and related party land developers or land bank partners.
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Overview UHG designs, builds and sells homes in high growth markets, including South Carolina, North Carolina, and Georgia. Prior to the Business Combination (discussed below in Management’s Discussion and Analysis of Financial Condition and Results of Operations ), UHG’s business historically consisted of both homebuilding operations and land development operations.
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The main products for GSH South Carolina include entry-level and first-move-up homes, catering to a wide range of buyers transitioning into homeownership or seeking to upgrade from their initial purchase. • Rosewood - This segment consists of UHG’s operations focused on delivering second and third move-up homes in the South Carolina market.
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Recently, UHG separated its land development operations and its homebuilding operations across separate entities in an effort to adopt best practices in the homebuilding industry associated with ownership and control of land and lots and production efficiency.
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These homes cater to buyers seeking more luxurious and customized living spaces, and typically feature larger floor plans, high-end finishes, and premium amenities. • Other - This segment includes the Company’s homebuilding operations in Raleigh, NC, and mortgage operations conducted through a mortgage banking joint venture, Homeowners Mortgage, LLC (“Homeowners Mortgage”).
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UHG pays deposits based on the aggregate purchase price of the finished lots, typically 15% - 20% of the purchase price. These lot purchase agreements generally provide UHG with the right to purchase the lots pursuant to the terms and conditions of the agreement, or to terminate the agreement for any reason.
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This lot acquisition strategy reduces up-front capital requirements and generally provides for “just-in-time” lot delivery, which closely aligns with home starts and sales pace. This lot acquisition strategy reduces operating and financial risk relative to other homebuilders that own a higher percentage of their land supply on balance sheet.
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If UHG declines to close on the purchase of lots, its primary legal obligation and economic loss as a result of such termination is limited to the amount of the deposit paid.
Added
As of December 31, 2024, 98% of approximately 7,700 controlled lots were controlled through lot option contracts. Market Opportunity UHG believes that there is a significant housing shortage in the United States.
Removed
UHG believes that the use of lot purchase agreements is a capital-efficient way of operating as it provides the Company with the ability to amass a pipeline of lots without the risks associated with acquiring and developing raw land.
Added
Through an increased use of data, analytics, and standardization of processes, the Company expects to improve profitability and returns over time. While there are eight distinct workstreams related to these operational initiatives, the Company believes the following should have the largest impact on profitability in the near term: • Product Improvement.
Removed
UHG’s pipeline as of December 31, 2023 consists of approximately 9,000 lots, which includes lots that are owned or controlled by Land Development Affiliates, and which UHG expects to obtain the contractual right to acquire, in addition to lots that UHG may acquire from third party lot option contracts.
Added
UHG has undertaken a comprehensive review of its portfolio of house plans, rationalizing its offering, refreshing designs, and offering new customization options to buyers. The Company expects the refreshed offering to accelerate sales activity, increase pre-sales, and reduce the number of finished homes in inventory, resulting in a lower need for incentives and increased profitability from options and upgrades.
Removed
As previously noted, UHG presently operates in three major market regions in South Carolina: Midlands, Upstate, and Coastal, Augusta, Georgia, and Raleigh, North Carolina. Competitive Strengths UHG’s primary business objective is to create long-term returns for stockholders through its commitment to produce quality-built homes at affordable prices.
Added
Construction has begun on many of these revised plans and the Company expects they will comprise a meaningful part of closings by mid-2025. The Company expects to offer new product lines going forward as well. • Lowering Construction Costs.
Removed
Not only does UHG enjoy leading market share in a majority of the submarkets they serve in South Carolina and Georgia, but UHG is based within 500 miles of some of the fastest growing markets in the U.S based on new home sales.
Added
The Company has launched a formalized program aimed at reducing direct construction costs through the renegotiation and rebidding of major supplier, vendor, and subcontractor agreements. Combined with the product repositioning, lower costs and a higher level of standardization going forward is aimed at improving gross margin. • Comprehensive Land Underwriting.
Removed
Specifically, community count is expected to increase in 2024, and UHG expects average community size to increase in its target markets. Management of UHG expects that larger communities will allow the Company to better manage sales cadence and even-flow production schedules, thereby generating increased operating leverage.
Added
UHG has and will continue to make investments in land opportunities for future communities. The Company has and will continue to add to its team in this area and has increased the use of data and analytics to better align its communities and homes with market opportunities.
Removed
Homebuilding is a business that benefits from scale, where the benefits of operating as a larger entity can result in lower costs and higher margins. Further, UHG believes that the changing macroeconomic environment has resulted in an increased willingness of smaller builders to explore 6 Table of Contents partnerships with larger organizations.
Added
Land Acquisition Strategy Obtaining control of high-quality land positions is critical to the Company’s overall success, especially the Company’s growth and profitability. UHG remains focused on controlling anywhere from 4 - 5 years of high-quality land positions in its markets.
Removed
In 2 023, UHG was contracted to deliver 108 units in one BTR community. Institutional owners closed on 36 of the 108 units in this BTR community in the fourth quarter of 2023 and the remaining 72 units are expected to close in 2024. • Ancillary Revenue Growth Opportunities.
Added
The Company operates a land-light business model which minimizes its upfront capital commitment to a deposit and seeks to avoid the financial commitment of land development, which requires significant capital expenditures over an extended timeframe. UHG utilizes a comprehensive land underwriting process and will continue to add to its land acquisition teams.
Removed
UHG controls its supply of land positions through lot purchase agreements. UHG’s land selection process begins with key economic drivers: population, demographic trends and employment growth. Following the separation of the land development business, UHG operates under a land-light lot operating strategy that allows UHG to avoid engaging in land development activities, which requires significant capital expenditures.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

102 edited+60 added−57 removed205 unchanged
Biggest changeThe Wells Fargo Facility also contains affirmative, negative, and financial covenants, including (a) a minimum tangible net worth of no less than the sum of (i) $70 million, (ii) 25% of positive consolidated earnings earned in any fiscal quarter, (iii) 100% of new equity contributed to the Borrower (as defined in the Wells Fargo Facility), (iv) 100% of any increase in tangible net worth resulting from an equity issuance upon the conversion or exchange of any security constituting indebtedness that is convertible or exchangeable, or is being converted or exchanged, for equity interests; and (v) 100% of the amount of any repurchase of equity interests in the Company; (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.25 to 1.00; (c) a minimum debt service coverage ratio to be no less than 2.00 to 1.00 for any fiscal quarter; (d) a minimum liquidity amount of not less than the greater of (y) $30,000,000 or (z) an amount equal to 1.5 times the trailing twelve month interest incurred; and (e) unrestricted cash of not less than 50% of the liquidity required at all times.
Biggest changeThe Syndicated Line also contains affirmative, negative, 23 Table of Contents and financial covenants, including (a) a minimum tangible net worth of no less than the sum of (i) $70 million, (ii) 25% of positive consolidated earnings earned in any fiscal quarter, (iii) 100% of new equity contributed to the Borrower (as defined in the Wells Fargo Facility), (iv) 100% of any increase in tangible net worth resulting from an equity issuance upon the conversion or exchange of any security constituting indebtedness that is convertible or exchangeable, or is being converted or exchanged, for equity interests, and (v) 100% of the amount of any repurchase of equity interests in the Company; (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.25 to 1.00, except for up to two quarterly measurement periods in which the ratio shall not exceed 2.50 to 1.00 during the period beginning on August 2, 2024 and ending on December 31, 2025; (c) a minimum debt service coverage ratio of no less than 1.50 to 1.00 for the period from and after June 30, 2024 until June 30, 2025, and a minimum of 2.00 to 1.00 thereafter, provided that a minimum debt service coverage ratio of no less than 1.35 to 1.00 will be permitted for up to two quarterly measurement periods during the period beginning on August 2, 2024 and ending on June 30, 2025; (d) a minimum liquidity amount of not less than $37,500,000 from and after June 30, 2024, provided that during any period in which the debt service coverage ratio is less than 1.50 to 1.00, the minimum liquidity threshold will be at least the greater of (i) $45,000,000, or (ii) an amount equal to 1.50x the trailing twelve month interest incurred; and (e) unrestricted cash of not less than $15,000,000 at all times.
The residential homebuilding industry is highly cyclical and can be significantly affected by changes in local and general economic conditions that are outside of UHG’s control, including changes in: • the availability of construction and permanent mortgages; 20 Table of Contents • the supply of developable land in markets in which UHG operates; • the supply of building materials and appliances; • consumer confidence, income and spending generally and the confidence, income and spending of potential homebuyers in particular; • levels of employment, job and personal income growth, and household debt-to-income levels; • the availability and costs of financing for homebuyers; • private and federal mortgage financing programs and federal, state, and local regulation of lending practices related to the purchase of homes; • short- and long-term interest rates; • federal and state income tax provisions, including provisions for the deduction of mortgage interest payments; • real estate taxes; • inflation; • the ability of existing homeowners to sell their existing homes at prices that are acceptable to them; • housing demand from population growth and other demographic changes (including immigration levels and trends in urban and suburban migration); • the supply of new or existing homes and other housing alternatives to new homes, such as apartments, foreclosed homes, homes held for sale by investors, and other existing residential and rental property; • inclement weather, natural disasters, other calamities and other environmental conditions that can delay the delivery of UHG’s homes and/or increase its costs; • demographic trends; and • U.S. and global financial system and credit markets, including stock market and credit market volatility.
The residential homebuilding industry is highly cyclical and can be significantly affected by changes in local and general economic conditions that are outside of UHG’s control, including changes in: • the availability of construction and permanent mortgages; • the supply of developable land in markets in which UHG operates; • the supply of building materials and appliances; • consumer confidence, income and spending generally and the confidence, income and spending of potential homebuyers in particular; • levels of employment, job and personal income growth, and household debt-to-income levels; • the availability and costs of financing for homebuyers; • private and federal mortgage financing programs and federal, state, and local regulation of lending practices related to the purchase of homes; • short- and long-term interest rates; • federal and state income tax provisions, including provisions for the deduction of mortgage interest payments; • real estate taxes; • inflation; • the ability of existing homeowners to sell their existing homes at prices that are acceptable to them; • housing demand from population growth and other demographic changes (including immigration levels and trends in urban and suburban migration); • the supply of new or existing homes and other housing alternatives to new homes, such as apartments, foreclosed homes, homes held for sale by investors, and other existing residential and rental property; • inclement weather, natural disasters, other calamities and other environmental conditions that can delay the delivery of UHG’s homes and/or increase its costs; • demographic trends; and • U.S. and global financial system and credit markets, including stock market and credit market volatility.
An increase in the level of UHG’s home order cancellations could have a negative impact on its business, prospects, liquidity, financial condition and results of operations. Tax law changes that increase the after-tax costs of owning a home could prevent potential customers from buying UHG’s homes and adversely affect its business or financial results.
An increase in the level of UHG’s home order cancellations could have a negative impact on its business, prospects, liquidity, financial condition and results of operations. Tax law changes that increase the costs of owning a home could prevent potential customers from buying UHG’s homes and adversely affect its business or financial results.
These laws, regulations, and rules include, without limitation, the following: 32 Table of Contents • As an employer, UHG will be subject to state and federal laws relating to employment practices, health and safety of employees, employee benefits and other employment-related matters. • As a company whose common stock is listed for trading on Nasdaq, UHG is subject to Nasdaq’s continued listing requirements, which include requirements relating corporate governance matters, the size of the public float of UHG’s shares, and the minimum bid price of UHG’s shares. • UHG is an SEC reporting company and therefore UHG is required to comply with the various rules and regulations of the SEC that relate to, among other things, the timing and content of annual, quarterly and current reports, the process to register additional shares for sale to the public or for resale by existing investors, and disclosures in connection with meetings of stockholders.
These laws, regulations, and rules include, without limitation, the following: • As an employer, UHG will be subject to state and federal laws relating to employment practices, health and safety of employees, employee benefits and other employment-related matters. • As a company whose common stock is listed for trading on Nasdaq, UHG is subject to Nasdaq’s continued listing requirements, which include requirements relating corporate governance matters, the size of the public float of UHG’s shares, and the minimum bid price of UHG’s shares. • UHG is an SEC reporting company and therefore UHG is required to comply with the various rules and regulations of the SEC that relate to, among other things, the timing and content of annual, quarterly and current reports, the process to register additional shares for sale to the public or for resale by existing investors, and disclosures in connection with meetings of stockholders.
UHG’s Amended and Restated Certificate of Incorporation provides that unless UHG consents to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action brought by a stockholder on behalf of UHG, (ii) any claim of breach of a fiduciary duty owed by any of UHG’s directors, officers, stockholders, or employees, (iii) any claim against UHG arising under its charter or bylaws or the DGCL and (iv) any claim against UHG governed by the internal affairs doctrine.
UHG’s Amended and Restated Certificate of Incorporation provides that unless UHG consents to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action brought by a stockholder on behalf of UHG, (ii) any claim of breach of a fiduciary duty owed by any of UHG’s directors, officers, stockholders, or employees, (iii) any claim against 28 Table of Contents UHG arising under its charter or bylaws or the DGCL and (iv) any claim against UHG governed by the internal affairs doctrine.
On March 30, 2024, an aggregate of approximately 20.8 million shares of UHG’s Class A common stock (which includes approximately 18.5 million shares of UHG’s Class B common stock that are convertible into shares of UHG’s Class A common stock but excludes shares issuable upon conversion of the Notes) will become available for sale without restriction, other than applicable securities laws.
On March 30, 2025, an aggregate of approximately 20.8 million shares of UHG’s Class A common stock (which includes approximately 18.5 million shares of UHG’s Class B common stock that are convertible into shares of UHG’s Class A common stock but excludes shares issuable upon conversion of the Notes) will become available for sale without restriction, other than applicable securities laws.
The trading prices and valuations of these stocks, and of UHG’s securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to UHG could depress UHG’s share price regardless of its business, prospects, financial conditions or results of operations.
The trading prices and valuations of these stocks, and of UHG’s securities, are not predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to UHG could depress UHG’s share price regardless of its business, prospects, financial conditions or results of operations.
If UHG defaults on one or more of its debt agreements, it could have a material adverse effect on UHG’s business, prospects, liquidity, financial condition and results of operations. Failure to further extend the Wells Fargo Facility in 2026 could have a material adverse effect on UHG’s ability to meet the financing requirements of its business.
If UHG defaults on one or more of its debt agreements, it could have a material adverse effect on UHG’s business, prospects, liquidity, financial condition and results of operations. Failure to further extend the Wells Fargo Facility in 2027 could have a material adverse effect on UHG’s ability to meet the financing requirements of its business.
Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to UHG’s stockholders for their vote or approval, except as otherwise required by applicable law or UHG’s Amended and Restated Certificate of Incorporation. Accordingly, Nr.
Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to UHG’s stockholders for their vote or approval, except as otherwise required by applicable law or UHG’s Amended and Restated Certificate of Incorporation. Accordingly, Mr.
Additionally, UHG could incur substantial costs, penalties and damages, including back pay, unpaid benefits, taxes, expense reimbursement and attorneys’ fees in defending future challenges to its employment classification or compensation practices. UHG is required to obtain performance bonds and other government approvals, the unavailability of which could adversely affect its results of operations and cash flows.
Additionally, UHG could incur substantial costs, penalties and damages, including back pay, unpaid benefits, taxes, expense reimbursement and attorneys’ fees in defending future challenges to its employment classification or compensation practices. 17 Table of Contents UHG is required to obtain performance bonds and other government approvals, the unavailability of which could adversely affect its results of operations and cash flows.
Homeowners Mortgage is subject to numerous federal, state and local laws and regulations, which, among other things: prohibit discrimination and establish underwriting guidelines; require appraisals and/or credit reports on prospective borrowers and disclosure of 19 Table of Contents certain information concerning credit and settlement costs; establish maximum loan amounts; prohibit predatory lending practices; and regulate the referral of business to affiliated entities.
Homeowners Mortgage is subject to numerous federal, state and local laws and regulations, which, among other things: prohibit discrimination and establish underwriting guidelines; require appraisals and/or credit reports on prospective borrowers and disclosure of certain information concerning credit and settlement costs; establish maximum loan amounts; prohibit predatory lending practices; and regulate the referral of business to affiliated entities.
A failure to comply with investor or customer expectations and 34 Table of Contents standards, which are evolving, or if UHG is perceived to not have responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, could also cause reputational harm to UHG’s business and could have a material adverse effect on UHG.
A failure to comply with investor or customer expectations and standards, which are evolving, or if UHG is perceived to not have responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, could also cause reputational harm to UHG’s business and could have a material adverse effect on UHG.
UHG cannot make any assurances that it will be able to maintain compliance with these covenants in the future and, if UHG fails to do so, that UHG will be able to obtain waivers from the lenders or investors in the Notes and/or amend the covenants.
UHG cannot make any assurances that it will be able to maintain compliance with these covenants in the future and, if UHG fails to do so, that UHG will be able to obtain waivers from the lenders and/or amend the covenants.
UHG faces high costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect UHG’s business, financial condition, and results of operations. 29 Table of Contents As a public company, UHG is subject to the reporting requirements of the Exchange Act, the listing standards of Nasdaq and other applicable securities rules and regulations.
UHG faces high costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect UHG’s business, financial condition, and results of operations. As a public company, UHG is subject to the reporting requirements of the Exchange Act, the listing standards of Nasdaq and other applicable securities rules and regulations.
Moreover, in a highly inflationary environment, UHG’s cost of capital, labor and materials can increase, and the purchasing power of its cash resources can decline, which could have an adverse impact on its business or financial results. Alternatively, a significant period of deflation could cause a decrease in overall spending and borrowing levels.
Moreover, in a highly inflationary environment, UHG’s cost of capital, labor, and materials can increase, and the purchasing power of its cash resources can decline, which could have an adverse impact on its business or financial results. 13 Table of Contents Alternatively, a significant period of deflation could cause a decrease in overall spending and borrowing levels.
Decreases in the availability of credit and increases in the cost of credit adversely affect the ability of homebuyers to obtain or service mortgage debt. Entry-level and first-time move-up homebuyers are the primary source of demand for UHG’s new homes. Entry-level homebuyers are generally more affected by the availability of financing than other 14 Table of Contents potential homebuyers.
Decreases in the availability of credit and increases in the cost of credit adversely affect the ability of homebuyers to obtain or service mortgage debt. Entry-level and first-time move-up homebuyers are the primary source of demand for UHG’s new homes. Entry-level homebuyers are generally more affected by the availability of financing than other potential homebuyers.
Potential changes, if any, with respect to such classification could have a significant effect on UHG’s operating model. 17 Table of Contents Further, the costs associated with any such potential changes could have a significant effect on UHG’s results of operations and financial condition if it were unable to pass through an increase in price corresponding to such increased costs to its customers.
Potential changes, if any, with respect to such classification could have a significant effect on UHG’s operating model. Further, the costs associated with any such potential changes could have a significant effect on UHG’s results of operations and financial condition if it were unable to pass through an increase in price corresponding to such increased costs to its customers.
UHG may not be able to compete effectively against competitors in the homebuilding industry. UHG operates in a very competitive environment which is characterized by competition from a number of other homebuilders in each market in which it operates. Additionally, there are relatively low barriers to entry into the business.
UHG may not be able to compete effectively against competitors in the homebuilding industry. 18 Table of Contents UHG operates in a very competitive environment which is characterized by competition from a number of other homebuilders in each market in which it operates. Additionally, there are relatively low barriers to entry into the business.
UHG is subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq. In particular, UHG is required to comply with certain SEC, Nasdaq and other legal or regulatory requirements of businesses providing financial services. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly.
UHG is subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq. In particular, UHG is required to comply with certain SEC, Nasdaq and other legal or regulatory requirements of businesses 32 Table of Contents providing financial services. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly.
Government authorities in 22 Table of Contents many markets have implemented no growth or growth-control initiatives. New housing developments may also be subject to various assessments for schools, parks, streets and other public improvements. Any of these may limit, delay or increase the costs of home construction.
Government authorities in many markets have implemented no growth or growth-control initiatives. New housing developments may also be subject to various assessments for schools, parks, streets and other public improvements. Any of these may limit, delay or increase the costs of home construction.
Such a failure could generate significant negative publicity and have a corresponding impact on UHG’s reputation, its 18 Table of Contents relationships with relevant regulatory agencies, governmental authorities and local communities, which in turn could have a material adverse effect on its business, prospects, liquidity, financial condition and results of operations.
Such a failure could generate significant negative publicity and have a corresponding impact on UHG’s reputation, its relationships with relevant regulatory agencies, governmental authorities and local communities, which in turn could have a material adverse effect on its business, prospects, liquidity, financial condition and results of operations.
Further, to the extent that the purchase price of an acquisition is paid in the form of an earn out on future financial results, the success of such an 16 Table of Contents acquisition will not be fully realized by UHG for a period of time as it is shared with the sellers.
Further, to the extent that the purchase price of an acquisition is paid in the form of an earn out on future financial results, the success of such an acquisition will not be fully realized by UHG for a period of time as it is shared with the sellers.
Homebuilding is subject to home warranty and construction defect claims in the ordinary course of business that can be significant, and reliance on subcontractors exposes builders such as UHG to regulatory risks that could adversely affect business or financial results. 21 Table of Contents UHG is subject to home warranty and construction defect claims arising in the ordinary course of its homebuilding business.
Homebuilding is subject to home warranty and construction defect claims in the ordinary course of business that can be significant, and reliance on subcontractors exposes builders such as UHG to regulatory risks that could adversely affect business or financial results. UHG is subject to home warranty and construction defect claims arising in the ordinary course of its homebuilding business.
The Wells Fargo Facility has a stated maturity date in 2026, which date may be extended by one year upon UHG’s request and subject to the terms of the Wells Fargo Facility.
The Wells Fargo Facility has a stated maturity date in 2027, which date may be extended by one year upon UHG’s request and subject to the terms of the Wells Fargo Facility.
This may give competitors an advantage in securing materials and labor at lower prices, marketing their products and allowing their homes to be delivered to customers more quickly and at more favorable prices. This competition could reduce UHG’s market share and limit its ability to expand the business as planned.
This may give competitors an advantage in securing materials and labor at lower prices, marketing their products and allowing their homes to be delivered to customers more quickly and at more favorable prices. This competition could reduce UHG’s market share and limit its ability to expand its business.
These conflicts may include, without limitation: conflicts arising from the enforcement of agreements between UHG and the Land Development Affiliates; conflicts in determining whether UHG may be able to obtain more beneficial terms by purchasing lots from other third-party developers; and conflicts in determining the terms of current or future agreements and transactions.
These conflicts may include, without limitation: conflicts arising from the enforcement of agreements between UHG and the related party land developers; conflicts in determining whether UHG may be able to obtain more beneficial terms by purchasing lots from other third-party developers; and conflicts in determining the terms of current or future agreements and transactions.
The difficulties facing these buyers in selling their homes during periods of economic downturn may adversely affect UHG’s sales, and moreover, during such periods UHG may need to reduce its sale prices and offer greater incentives to buyers to compete for sales, which may reduce its margins.
The difficulties facing these buyers in selling their homes during periods of economic downturn may adversely affect UHG’s sales, and moreover, 20 Table of Contents during such periods UHG may need to reduce its sale prices and offer greater incentives to buyers to compete for sales, which may reduce its margins.
In addition, because UHG employs a land-light business model, it may have access to fewer and less attractive homebuilding lots than if it owned lots outright, like some of its competitors who do not operate under a land-light model.
In addition, because UHG employs a land-light business model, UHG may have access to fewer and less attractive homebuilding lots than if UHG owned lots outright, like some of UHG’s competitors who do not operate under a land-light model.
Together, these provisions may make 28 Table of Contents more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for UHG’s securities.
Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for UHG’s securities.
Each of these events could reduce demand for UHG’s homes and adversely impact its business, prospects, liquidity, financial condition and results of operations. Negative publicity may affect UHG’s business performance and could affect its stock price.
Each of these events could reduce demand for UHG’s homes and adversely impact its business, prospects, liquidity, financial condition and results of operations. 34 Table of Contents Negative publicity may affect UHG’s business performance and could affect its stock price.
Adverse developments affecting financial institutions, including bank failures, could adversely affect UHG’s liquidity and financial performance. Additionally if such banks or financial institutions, or any substitute or additional banks or financial institutions, participate in the Wells Fargo Facility, adverse developments may result in such bank or financial instituting defaulting 25 Table of Contents under such facility.
Adverse developments affecting financial institutions, including bank failures, could adversely affect UHG’s liquidity and financial performance. Additionally if such banks or financial institutions, or any substitute or additional banks or financial institutions, participate in the Wells Fargo Facility, adverse developments may result in such bank or financial instituting defaulting under such facility.
UHG also expects that these new rules and regulations will make it more expensive for UHG to obtain director and officer liability insurance, and UHG may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
UHG also expects that these new rules and regulations will make it more expensive for UHG to obtain director and officer liability insurance, and UHG may be required to accept reduced coverage or incur substantially higher costs to 30 Table of Contents obtain coverage.
UHG may face challenges with respect to integration of its operations in new markets. In addition, UHG may not be able to successfully finance or integrate any businesses that it acquires. Furthermore, the integration of any acquisition may divert management’s time and resources from UHG’s core business and disrupt its operations.
In addition, UHG may not be able to successfully finance or integrate any businesses that it acquires. Furthermore, the integration of any acquisition may divert management’s time and resources from UHG’s core business and disrupt its operations.
However, because Mr. Nieri has material interests in the Land Development Affiliates, there may be situations in which UHG’s interests and Mr. Nieri’s interests are inherently not fully aligned in transactions that involve both UHG and one or more of the Land Development Affiliates, and in some cases Mr. Nieri’s interests may directly conflict with the interest of UHG.
However, because Mr. Nieri has material interests in these entities, there may be situations in which UHG’s interests and Mr. Nieri’s interests are inherently not fully aligned in transactions that involve both UHG and one or more of the related party land developers, and in some cases Mr. Nieri’s interests may directly conflict with the interest of UHG.
UHG may also issue up to 21,886,379 shares of Class A common stock in connection with the earnout related to the Business Combination, and may issue shares of Class A common stock in connection with equity based awards, 3,950,841 of which were outstanding as of December 31, 2023 (such equity-based compensatory awards are generally subject to vesting requirements).
UHG may also issue up to 21,886,379 shares of Class A common stock in connection with the earnout related to the Business Combination, and may issue shares of Class A common stock in connection with equity based awards, 5,569,803 of which were outstanding as of December 31, 2024 (such equity-based compensatory awards are generally subject to vesting requirements).
Consequently, UHG relied principally on its cash on hand to meet its working capital needs and repay outstanding indebtedness during those times. There likely will be similar periods in the future when financial market upheaval will increase UHG’s cost of capital or limit UHG’s ability to access the debt markets or obtain bank financing.
There likely will be similar periods in the future when financial market upheaval will increase UHG’s cost of capital or limit UHG’s ability to access the debt markets or obtain bank financing. During such times, UHG may not have sufficient cash on hand to meet its working capital needs and repay outstanding indebtedness.
UHG intends to achieve its primary business objectives by executing on its growth strategies of continuing to leverage key macro housing trends, capitalizing on strong growth in core markets, engaging in accretive mergers and acquisitions, entering into programmatic build-to-rent partnerships, and identifying ancillary revenue growth opportunities.
UHG intends to achieve its primary business objectives by executing on its growth strategies of continuing to leverage key macro housing trends, capitalizing on strong growth in core markets, engaging in accretive mergers and acquisitions, entering into programmatic build-to-rent partnerships, and identifying ancillary revenue growth opportunities. Past successes in any of these areas are not an indicator of future successes.
If UHG fails to comply with the covenants, restrictions or limitations in its financing arrangements, UHG would be in default under such financing arrangements and its lenders could elect to declare outstanding amounts due and payable and terminate their commitments.
The obligations under the Kennedy Lewis Credit Agreement are guaranteed by UHG. If UHG fails to comply with the covenants, restrictions or limitations in its financing arrangements, UHG would be in default under such financing arrangements and its lenders could elect to declare outstanding amounts due and payable and terminate their commitments.
For example, UHG has recorded intangible assets, including goodwill, in connection with the acquisition of selected assets of Herring Homes, LLC (which was accounted for as a business combination) and acquisition of common stock of Rosewood Communities, Inc. totaling $7.1 million.
For example, UHG has recorded intangible assets, including goodwill, in connection with the acquisition of selected assets of Herring Homes, LLC and Creekside Custom Homes, LLC (which were accounted for as a business combination) and acquisition of common stock of Rosewood Communities, Inc. totaling $10.7 million as of December 31, 2024.
If remediation of these material weaknesses is not effective, or if UHG identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls, UHG may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect investor confidence and, as a result, the value of the Class A common stock.
If UHG identifies a material weakness in its internal control over financial reporting, or if UHG fails to maintain an effective system of internal controls, UHG may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect investor confidence and, as a result, the value of the Class A common stock.
In addition, UHG would be restricted in its ability to acquire new investments, and UHG’s independent registered public accounting firm could raise an issue as to UHG’s ability to continue as a going concern. UHG may be unable to obtain additional financing to fund its operations and growth.
In addition, UHG would be restricted in its ability to acquire new investments, and UHG’s independent registered public accounting firm could raise an issue as to UHG’s ability to continue as a going concern.
UHG does not have long-term contractual commitments with any subcontractors, and there can be no assurance that skilled subcontractors will continue to be available at reasonable rates and in the areas in which UHG conducts its operations.
Accordingly, the timing and quality of UHG’s construction depends on the availability and skill of its subcontractors. UHG does not have long-term contractual commitments with any subcontractors, and there can be no assurance that skilled subcontractors will continue to be available at reasonable rates and in the areas in which UHG conducts its operations.
Securities and industry analysts do not currently, and may never, publish research on UHG. If no securities or industry analysts commence coverage of UHG, the stock price and trading volume of the Class A common stock and public warrants of UHG would likely be negatively impacted.
If no securities or industry analysts commence coverage of UHG, the stock price and trading volume of the Class A common stock and public warrants of UHG would likely be negatively impacted.
In addition, tariffs, duties and/or trade restrictions imposed or increased on imported materials and goods that are used in connection with the construction and delivery of UHG’s homes, including steel, aluminum and lumber, may raise its costs for these items or for the products made with them.
In addition, tariffs, duties and/or trade restrictions imposed or increased on imported materials and goods that are used in connection with the construction and delivery of UHG’s homes, including steel, aluminum and lumber, may raise its costs for these items or for the products made with them, and changes in immigration laws and/or their enforcement could result in tighter overall labor conditions and a shortage of labor.
UHG’s existing financing agreements contain, and the financing arrangements UHG enters into in the future likely will contain, covenants that limit UHG’s ability to take certain actions. UHG’s revolving credit facility with Wells Fargo Bank, National Association (“Wells Fargo”) (the “Wells Fargo Facility”) contains significant restrictions on UHG’s ability to incur additional debt.
UHG’s existing financing agreements contain, and the financing arrangements UHG enters into in the future likely will contain, covenants that limit UHG’s ability to take certain actions. UHG’s Syndicated Line with Wells Fargo contains significant restrictions on UHG’s ability to incur additional debt.
UHG’s Class A common stock has one vote per share, and UHG’s Class B common stock has two votes per share. All of UHG’s Class B common stock is held by Michael Nieri, UHG’s Chief Executive Officer and Chairman of the Board of Directors, and family trusts established for the benefit of certain of Mr.
UHG’s Class A common stock has one vote per share, and UHG’s Class B common stock has two votes per share. All of UHG’s Class B common stock is held by Michael Nieri, UHG’s Executive Chairman, and family trusts established for the benefit of certain of Mr. Nieri’s family members (such trusts collectively, the “Nieri Trusts”). As a result, Mr.
If any of UHG’s key personnel were to cease employment with it, its operating results could suffer. Further, the process of attracting and retaining suitable replacements for key personnel whose services it may lose would result in transition costs and would divert the attention of other members of senior management from existing operations.
Further, the process of attracting and retaining suitable replacements for key personnel whose services it may lose would result in transition costs and would divert the attention of other members of senior management from existing operations.
There is no assurance that cash generated from UHG’s operations, borrowings incurred under its current credit agreements or project-level financing arrangements, or proceeds raised in capital markets transactions will be sufficient to finance UHG’s projects or otherwise fund its liquidity needs.
The homebuilding industry is capital-intensive and requires significant up-front expenditures to acquire lots and begin construction on homes. There is no assurance that cash generated from UHG’s operations, borrowings incurred under its current credit agreements or project-level financing arrangements, or proceeds raised in capital markets transactions will be sufficient to finance UHG’s projects or otherwise fund its liquidity needs.
Any of these initiatives could also expose UHG to material liabilities not discovered in the due diligence process and may lead to litigation. If these initiatives under-perform expectations or are unsuccessful, UHG may incur significant expenses or write-offs of inventory, other assets or intangible assets such as goodwill and company brand, which would adversely affect UHG’s business and financial results.
If these initiatives under-perform expectations or are unsuccessful, UHG may incur significant expenses or write-offs of inventory, other assets or intangible assets such as goodwill and company brand, which would adversely affect UHG’s business and financial results.
If UHG is required to seek financing to fund its working capital requirements, volatility in credit or capital markets may restrict its flexibility to successfully obtain additional financing on terms acceptable to UHG, or at all.
If UHG is required to seek financing to fund its working capital requirements, volatility in credit or capital markets may restrict its flexibility to successfully obtain additional financing on terms acceptable to UHG, or at all. The failure to secure additional financing could have a material adverse effect on the continued development or growth of UHG.
Under any of these circumstances, UHG may expose itself to different and more significant risks in the future, which could have a material adverse effect on its business, prospects, liquidity, financial condition, and results of operations.
This could result in UHG conducting operational matters, making investments, or pursuing different business or growth strategies than those contemplated in this Annual Report. Under any of these circumstances, UHG may expose itself to different and more significant risks in the future, which could have a material adverse effect on its business, prospects, liquidity, financial condition, and results of operations.
These, or other factors that increase the risk of significant deflation, could have a negative impact on UHG’s business or financial results. Public health issues such as a major epidemic or pandemic could adversely affect UHG’s business or financial results.
These, or other factors that increase the risk of significant deflation, could have a negative impact on UHG’s business or financial results.
Further, unexpected risks may arise and previously known risks may materialize in a manner not consistent with UHG’s risk analysis. Even though these charges may be non-cash items and not have an immediate impact on UHG’s liquidity, the fact that UHG reports charges of this nature could contribute to negative market perceptions about UHG or its securities.
Even though these charges may be non-cash items and not have an immediate impact on UHG’s liquidity, the fact that UHG reports charges of this 16 Table of Contents nature could contribute to negative market perceptions about UHG or its securities. Accordingly, UHG’s securities could suffer a reduction in value.
In a highly inflationary environment, depending on industry and other economic conditions, UHG may be precluded from raising home prices enough to keep up with the rate of inflation, which could reduce its profit margins.
In addition, significant inflation is often accompanied by higher interest rates, which have a negative impact on housing affordability, thereby further decreasing demand. In a highly inflationary environment, depending on industry and other economic conditions, UHG may be precluded from raising home prices enough to keep up with the rate of inflation, which could reduce its profit margins.
Changes in governmental regulation with respect to mortgage brokers and lenders could adversely affect the financial results of Homeowners Mortgage, which in turn could adversely affect UHG’s business.
For these reasons, Homeowners Mortgage may not be able to compete effectively in the mortgage banking business. Homeowners Mortgage may be adversely affected by changes in governmental regulation. Changes in governmental regulation with respect to mortgage brokers and lenders could adversely affect the financial results of Homeowners Mortgage, which in turn could adversely affect UHG’s business.
Accordingly, UHG’s securities could suffer a reduction in value. Failure to find suitable subcontractors may have a material adverse effect on UHG’s standards of service. Substantially all of UHG’s construction work is done by third-party subcontractors with UHG acting as the general contractor. Accordingly, the timing and quality of UHG’s construction depends on the availability and skill of its subcontractors.
These appraisal issues could have a material adverse effect on UHG’s business and results of operations. Failure to find suitable subcontractors may have a material adverse effect on UHG’s standards of service. Substantially all of UHG’s construction work is done by third-party subcontractors with UHG acting as the general contractor.
UHG relies on subcontractors to perform the actual construction of its homes, and in many cases, to select and obtain construction materials. Despite UHG’s detailed specifications and monitoring of the construction process, its subcontractors may not meet adequate quality standards in the construction of its homes. When UHG finds these issues, it repairs them in accordance with its warranty obligations.
These claims are common to the homebuilding industry and can be costly. UHG relies on subcontractors to perform the actual construction of its homes, and in many cases, to select and obtain construction materials. Despite UHG’s detailed specifications and monitoring of the construction process, its subcontractors may not meet adequate quality standards in the construction of its homes.
Under various environmental laws, current or former owners of real estate, as well as certain other categories of parties, may be required to investigate and clean up hazardous or toxic substances or petroleum product releases, and may be held liable to a governmental entity or to third parties for related damages, including for bodily injury, and for investigation or clean-up costs incurred by such parties in connection with the contamination.
Government agencies also routinely initiate audits, reviews or investigations of developers and homebuilders’ business practices to ensure compliance with these laws and regulations, which could cause UHG to incur costs or create other disruptions in its business that can be significant. 22 Table of Contents Under various environmental laws, current or former owners of real estate, as well as certain other categories of parties, may be required to investigate and clean up hazardous or toxic substances or petroleum product releases, and may be held liable to a governmental entity or to third parties for related damages, including for bodily injury, and for investigation or clean-up costs incurred by such parties in connection with the contamination.
UHG may change its operational policies, investment guidelines, and business and growth strategies without stockholder consent which may subject it to different and more significant risks in the future that may adversely impact its business and financial results. 27 Table of Contents The Board of Directors determines UHG’s operational policies, investment guidelines, and business and growth strategies.
These provisions may delay, discourage, or prevent an attempted acquisition or change in control. UHG may change its operational policies, investment guidelines, and business and growth strategies without stockholder consent which may subject it to different and more significant risks in the future that may adversely impact its business and financial results.
If UHG relies on these exemptions, its stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements. Michael Nieri and the Nieri Trusts control a majority of the voting power of the outstanding UHG Common Shares, and UHG is therefore a “controlled company” within the meaning of applicable rules of Nasdaq.
UHG is a “controlled company” within the meaning of the applicable rules of Nasdaq and, as a result, may qualify for exemptions from certain corporate governance requirements. If UHG relies on these exemptions, its stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements.
The UHG Related Party Transactions Committee has established and monitors procedures to be followed to ensure that sale prices reflect actual fair market value and will review all agreements and transactions entered into or to be entered into involving any of the Land Development Affiliates and UHG to ensure any such agreements and transactions are at arm’s length.
The UHG Related Party Transactions Committee has established and monitors procedures to be followed in connection with transactions with these related party land developers and reviews all agreements and transactions entered into or to be entered into involving any of the related party land developers and UHG to ensure any such agreements and transactions are at arm’s length.
Any difficulty in obtaining sufficient capital for planned construction expenditures could cause project delays and any such delay could result in cost increases and may adversely affect UHG’s sales and future results of operations and cash flows. The risks associated with UHG’s inventories could adversely affect its business or financial results.
Any difficulty in obtaining sufficient capital for planned construction expenditures could cause project delays and any such delay could result in cost increases and may adversely affect UHG’s sales and future results of operations and cash flows. 25 Table of Contents UHG may be unable to obtain additional financing to fund its operations and growth.
Nieri’s and the Nieri Trusts’ concentration of stock ownership, may have the effect of depriving the UHG’s stockholders of an opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace directors and management. 26 Table of Contents UHG is a “controlled company” within the meaning of the applicable rules of Nasdaq and, as a result, may qualify for exemptions from certain corporate governance requirements.
Nieri’s and the Nieri Trusts’ concentration of stock ownership, may have the effect of depriving the UHG’s stockholders of an opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace directors and management.
Its business is also affected by financial, political, business and other factors, many of which are beyond its control. The factors that affect its ability to generate cash can also affect its ability to raise additional funds for these purposes through the sale of debt or equity, the refinancing of debt or the sale of assets.
The factors that affect its ability to generate cash can also affect its ability to raise additional funds for these purposes through the sale of debt or equity, the refinancing of debt or the 24 Table of Contents sale of assets.
UHG’s corporate organizational documents and provisions of state law to which it is subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult, or prevent an attempted acquisition that stockholders may favor or an attempted replacement of the Board of Directors or management.
UHG has not obtained and does not expect to obtain key man life insurance that would provide it with proceeds in the event of death or disability of any of its key personnel. 27 Table of Contents UHG’s corporate organizational documents and provisions of state law to which it is subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult, or prevent an attempted acquisition that stockholders may favor or an attempted replacement of the Board of Directors or management.
UHG currently builds and sells homes in South Carolina, with a smaller presence in Georgia and North Carolina. UHG’s business strategy is focused on the design, construction, and sale of single-family homes and townhomes across these key markets.
UHG’s business strategy is focused on the design, construction, and sale of single-family homes and townhomes across these key markets.
If securities or industry analysts do not publish or cease publishing research or reports about UHG, its business, or its market, or if they change their recommendations regarding the Class A common stock of UHG adversely, then the price and trading volume of the Class A common stock could decline. 31 Table of Contents The trading market for UHG’s Class A common stock and public warrants will be influenced by the research and reports that industry or securities analysts may publish about UHG, its business, its market, or its competitors.
The trading market for UHG’s Class A common stock and public warrants will be influenced by the research and reports that industry or securities analysts may publish about UHG, its business, its market, or its competitors. Securities and industry analysts do not currently, and may never, publish research on UHG.
The Board of Directors may make changes to, or approve transactions that deviate from, those policies, guidelines, and strategies without a vote of, or notice to, stockholders. This could result in UHG conducting operational matters, making investments, or pursuing different business or growth strategies than those contemplated in this Annual Report.
The Board of Directors determines UHG’s operational policies, investment guidelines, and business and growth strategies. The Board of Directors may make changes to, or approve transactions that deviate from, those policies, guidelines, and strategies without a vote of, or notice to, stockholders.
The failure of banks, or other adverse conditions in the financial or credit markets impacting financial institutions at which UHG maintains balances, could adversely impact UHG’s liquidity and financial performance.
Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. The failure of banks, or other adverse conditions in the financial or credit markets impacting financial institutions at which UHG maintains balances, could adversely impact UHG’s liquidity and financial performance.
Nieri’s family members (such trusts collectively, the “Nieri Trusts”). As a result, Mr. Nieri and the Nieri Trusts control a majority of the voting power of the outstanding UHG Common Shares.
Nieri and the Nieri Trusts control a majority of the voting power of the outstanding UHG Common Shares.
There is no guarantee that the warrants will be in the money at any given time prior to their expiration, and as such, the warrants may expire worthless.
There is no guarantee that the warrants will be in the money at any given time prior to their expiration, and as such, the warrants may expire worthless. General Risk Factors 33 Table of Contents An information systems interruption or breach in security could adversely affect UHG.
Additionally, UHG is subject to construction defect claims which can be costly to defend and resolve in the legal system. Warranty and construction defect matters can also result in negative publicity in the media and on the internet, which can damage UHG’s reputation and adversely affect its ability to sell homes.
When UHG finds these issues, it repairs them in accordance with its warranty obligations. Warranty and construction defect matters can also result in negative publicity in the media and on the internet, which can damage UHG’s reputation and adversely affect its ability to sell homes.
UHG may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless.
Non-U.S. holders should consult their tax advisors concerning the consequences of disposing of shares of UHG’s common stock. UHG may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless.
UHG holds domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks which exceed the FDIC insurance limits. Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints.
Adverse developments affecting financial institutions, including bank failures, could adversely affect UHG’s liquidity and financial performance. UHG holds domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks which exceed the FDIC insurance limits.
In January 2024, UHG completed the acquisition of selected assets of Creekside Custom Homes, LLC. From time to time, UHG may evaluate additional possible acquisitions, some of which may be material. These acquisitions may pose significant risks to UHG’s existing operations if they cannot be successfully integrated.
During 2023, UHG completed the acquisition of selected assets of Herring Homes, LLC and the acquisition of 100% of the outstanding stock of Rosewood Communities, Inc. In January 2024, UHG completed the acquisition of selected assets of Creekside Custom Homes, LLC. From time to time, UHG may evaluate additional possible acquisitions, some of which may be material.
As of December 31, 2023, UHG had outstanding (i) public warrants and private placement warrants to purchase up to an aggregate of 11,591,663 shares of Class A common stock, (ii) warrants to purchase up to 746,947 shares of Class A common stock that were issued in connection with warrant agreements of Great Southern Homes, Inc.
UHG may issue additional shares of common or preferred stock (including upon the exercise of warrants), which would dilute the interest of UHG’s stockholders and may present other risks. 29 Table of Contents As of December 31, 2024, UHG had outstanding (i) public warrants and private placement warrants to purchase up to an aggregate of 11,591,663 shares of Class A common stock, and (ii) warrants to purchase up to 746,947 shares of Class A common stock that were issued in connection with warrant agreements of GSH that existed prior to the Business Combination.
UHG’s mortgage brokering joint venture may not be able to compete effectively in this area. UHG participates in the brokering of mortgage loans through its engagement in its joint venture mortgage brokerage company, Homeowners Mortgage, which was recently launched and brokers loans for financing UHG’s home sales.
UHG participates in the brokering of mortgage loans through its engagement in its joint venture mortgage brokerage company, Homeowners Mortgage, which brokers loans for financing UHG’s home sales. The competitors to Homeowners Mortgage include mortgage brokers and lenders, including national, regional and local mortgage brokers, banks, and other financial institutions.
If UHG is forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, UHG’s results of operations and financial condition could be adversely affected. Adverse developments affecting financial institutions, including bank failures, could adversely affect UHG’s liquidity and financial performance.
If UHG is forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, UHG’s results of operations and financial condition could be adversely affected. Constriction of the credit and capital markets could limit UHG’s ability to access financing and increase its costs of capital.
UHG could be an emerging growth company until the last day of the fiscal year following the fifth anniversary of the Initial Public Offering (January 25, 2026), although a variety of circumstances could cause it to lose that status earlier. 30 Table of Contents In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised financial accounting standards.
In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised financial accounting standards.
UHG’s ability to meet its debt service obligations, including the convertible notes (the “Notes”), will depend, in part, upon its future financial performance. Future results are subject to the risks and uncertainties described in this Annual Report. UHG’s revenues and earnings vary with the level of general economic activity in the markets it serves.
Future results are subject to the risks and uncertainties described in this Annual Report. UHG’s revenues and earnings vary with the level of general economic activity in the markets it serves. Its business is also affected by financial, political, business and other factors, many of which are beyond its control.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−1 removed14 unchanged
Biggest changeThese third-party relationships enable UHG to leverage specialized knowledge and insights, to ensure UHG’s cybersecurity strategies and processes are aligned with industry best practices. In addition to collaboration with various third-parties, all of UHG’s employees are required to complete cybersecurity training at least once every three years and also have access to more frequent cybersecurity training through online training courses.
Biggest changeIn addition to collaboration with various third parties, all of UHG’s employees are required to complete cybersecurity training at least once every three years and also have access to more frequent cybersecurity training through online training courses. Oversee Third Party Risk 35 Table of Contents UHG utilizes various third-party software applications in the functioning of its core business.
UHG’s Chief Administrative Officer represented companies in IT integration, AI, and SaaS businesses over a span of two decades in private legal practice, and UHG’s Director of IT has more than 17 years of experience in data, application, and server security.
UHG’s Chief Administrative Officer represented companies in IT integration, AI, and SaaS businesses over a span of two decades in private legal practice, and UHG’s Director of IT has more than 18 years of experience in data, application, and server security.
These policies go through an internal review process and are approved by appropriate members of management. Managing Material Risks & Integrated Overall Risk Management 35 Table of Contents UHG has integrated cybersecurity risk management into its broader risk management framework. This integration ensures that cybersecurity considerations are an integral part of UHG’s decision-making process.
These policies go through an internal review process and are approved by appropriate members of management. Managing Material Risks & Integrated Overall Risk Management UHG has integrated cybersecurity risk management into its broader risk management framework. This integration ensures that cybersecurity considerations are an integral part of UHG’s decision-making process.
Management’s Role Managing Risk and Reporting to the Board 36 Table of Contents The Chief Administrative Officer and the Director of IT play a pivotal role in informing the Audit Committee on cybersecurity risks. They provide comprehensive briefings to the Audit Committee on a regular basis, with a minimum frequency of once per year.
Management’s Role Managing Risk and Reporting to the Board The Chief Administrative Officer and the Director of IT play a pivotal role in informing the Audit Committee on cybersecurity risks. They provide comprehensive briefings to the Audit Committee on a regular basis, with a minimum frequency of once per year.
The Audit Committee conducts an annual review of the company’s cybersecurity posture and the effectiveness of its risk management strategies. This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework.
The Audit Committee conducts an annual review of the company’s cybersecurity posture and the effectiveness of its risk management 36 Table of Contents strategies. This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework.
The internal business owners of the hosted applications are required to document user access reviews at least annually and provide from the vendor a System and Organization Controls (SOC) 1 or SOC 2 report.
UHG conducts assessments of all third-party providers and maintains ongoing reviews to ensure compliance with its cybersecurity standards. The internal business owners of the hosted applications are required to document user access reviews at least annually and provide from the vendor a System and Organization Controls (SOC) 1 or SOC 2 report.
Removed
Oversee Third Party Risk UHG utilizes various third-party software applications in the functioning of its core business. UHG conducts assessments of all third-party providers and maintains ongoing reviews to ensure compliance with its cybersecurity standards.
Added
These third-party relationships enable UHG to leverage specialized knowledge and insights, to ensure UHG’s cybersecurity strategies and processes are aligned with industry best practices.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSee “Business - Land Acquisition Strategy and Development Process - Owned and Controlled Lots” for a summary of the other properties that UHG owned or controlled as of December 31, 2023.
Biggest changeSee “Business - Land Acquisition Strategy and Development Process - Owned and Controlled Lots” for a summary of the other properties that UHG owned or controlled as of December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed3 unchanged
Biggest changeSuch numbers do not include beneficial owners holding UHG’s securities through nominee names. Dividends UHG has not paid any cash dividends on Class A common shares to date. UHG may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future.
Biggest changeSuch numbers include Cede & Co. but do not include beneficial owners holding UHG’s securities through nominee names. Dividends UHG has not paid any cash dividends on Class A common shares to date. UHG may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future.
UHG’s Class B common shares and private warrants are not listed or traded on any exchange. As of March 4, 2024, there were 67 holders of record of UHG’s Class A common shares, 5 holders of record of UHG’s Class B common shares, 1 holder of record of UHG’s public warrants, and 1 holder of record of UHG’s private warrants.
UHG’s Class B common shares and private warrants are not listed or traded on any exchange. As of March 10, 2025, there were 53 holders of record of UHG’s Class A common shares, 5 holders of record of UHG’s Class B common shares, 1 holder of record of UHG’s public warrants, and 1 holder of record of UHG’s private warrants.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+42 added−105 removed38 unchanged
Biggest changeAdjusted Gross Profit Adjusted gross profit, a non-GAAP measure, is gross profit less capitalized interest expensed in cost of sales, amortization included in homebuilding cost of sales (primarily adjustments resulting from the application of purchase accounting in connection with acquisitions) and non-recurring remediation costs. 43 Table of Contents Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table presents summary results of operations for the periods indicated: Year Ended December 31, Amount Change 2023 2022 % Change Statements of Operations Revenue, net of sales discounts $ 421,474,101 $ 477,045,949 $ (55,571,848) (11.6) % Cost of sales 341,748,481 358,238,703 (16,490,222) (4.6) % Selling, general and administrative expense 65,094,444 49,685,730 15,408,714 31.0 % Other income (expense), net (3,762,613) 230,692 (3,993,305) NM Equity in net earnings from investment in joint venture 1,244,091 137,086 1,107,005 NM Change in fair value of derivative liabilities 115,904,646 — 115,904,646 NM Income before taxes $ 128,017,300 $ 69,489,294 $ 58,528,006 84.2 % Income tax expense 2,957,016 — 2,957,016 NM Net income $ 125,060,284 $ 69,489,294 $ 55,570,990 80.0 % Other Financial and Operating Data: Active communities at end of period (a) 61 56 5 8.9 % Home closings 1,383 1,605 (222) (13.8) % Average sales price of homes closed (b) $ 315,718 $ 296,233 $ 19,485 6.6 % Net new orders (units) 1,296 1,259 37 2.9 % Cancellation rate 13.6 % 17.5 % (3.9) % (22.3) % Backlog 189 276 (87) (31.5) % Gross profit $ 79,725,620 $ 118,807,246 $ (39,081,626) (32.9) % Gross profit % (c) 18.9 % 24.9 % (6.0) % (24.1) % Adjusted gross profit (d) $ 90,080,976 $ 124,262,476 $ (34,181,500) (27.5) % Adjusted gross profit % (c) 21.4 % 26.0 % (4.6) % (17.7) % EBITDA (d) $ 144,815,138 $ 75,933,460 $ 68,881,678 90.7 % EBITDA margin % (c) 34.4 % 15.9 % 18.5 % 116.4 % Adjusted EBITDA (d) $ 40,470,122 $ 82,835,216 $ (42,365,094) (51.1) % Adjusted EBITDA margin % (c) 9.6 % 17.4 % (7.8) % (44.8) % ______________________________ NM - Not Meaningful (a) UHG had 7 communities in closeout for the year ended December 31, 2023 and 8 communities in closeout for the year ended December 31, 2022.
Biggest changeFluctuations in the fair value of derivative liabilities as a result of Level 3 inputs may impact the comparability of UHG’s results of operations. 40 Table of Contents Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table presents summary results of operations for the periods indicated: Year Ended December 31, Amount Change 2024 2023 % Change Statements of Operations Revenue, net of sales discounts $ 463,714,017 $ 421,474,101 $ 42,239,916 10.0 % Cost of sales 383,883,751 341,748,481 42,135,270 12.4 % Selling, general and administrative expense 74,699,741 65,094,444 9,605,297 14.7 % Other expense, net (12,482,940) (3,762,613) (8,720,327) NM Equity in net earnings from investment in joint venture 1,528,984 1,244,091 284,893 22.9 % Loss on extinguishment of Convertible Notes (45,642,497) — (45,642,497) NM Change in fair value of derivative liabilities 88,652,980 115,904,646 (27,251,666) (23.5) % Income before taxes $ 37,187,052 $ 128,017,300 $ (90,830,248) (71.0) % Income tax (benefit) expense (9,718,688) 2,957,016 (12,675,704) NM Net income $ 46,905,740 $ 125,060,284 $ (78,154,544) (62.5) % Other Financial and Operating Data: Active communities at end of period (a) 46 61 (15) (24.6) % Home closings 1,431 1,383 48 3.5 % Average sales price of homes closed (b) $ 329,111 $ 315,718 $ 13,393 4.2 % Net new orders (units) 1,399 1,296 103 7.9 % Cancellation rate 11.4 % 13.6 % (2.2) % (16.2) % Backlog 157 189 (32) (16.9) % Gross profit $ 79,830,266 $ 79,725,620 $ 104,646 0.1 % Gross profit % (c) 17.2 % 18.9 % (1.7) % (9.0) % Adjusted gross profit (d) $ 92,407,360 $ 90,080,976 $ 2,326,384 2.6 % Adjusted gross profit % (c) 19.9 % 21.4 % (1.5) % (7.0) % EBITDA (d) $ 60,431,172 $ 144,815,138 $ (84,383,966) (58.3) % EBITDA margin % (c) 13.0 % 34.4 % (21.3) % (62.1) % Adjusted EBITDA (d) $ 31,636,133 $ 40,470,122 $ (8,833,989) (21.8) % Adjusted EBITDA margin % (c) 6.8 % 9.6 % (2.8) % (29.2) % ______________________________ NM - Not Meaningful (a) UHG had 13 communities in closeout as of the year ended December 31, 2024 and 7 communities in closeout as of the year ended December 31, 2023.
To address uncertainty in these budgets, UHG assesses, updates and revises project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs. Developed lots are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot.
To address uncertainty in these budgets, UHG assesses, updates and revises project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot.
UHG generally relies upon its revolving lines of credit to fund building costs, and timing of draws is such that UHG may from time to time be in receipt of funds from the line of credit in advance of such funds being utilized.
UHG generally relies upon its revolving lines of credit to fund building costs, and timing of draws is such that UHG may from time to time be in receipt of funds from the Syndicated Line in advance of such funds being utilized.
Cash flows generated by UHG’s projects can differ materially from its results of operations, as these depend upon the stage in the life cycle of each project.
Cash flows generated by UHG’s projects can differ materially in timing from its results of operations, as these depend upon the stage in the life cycle of each project.
Inventories are carried at the lower of accumulated cost or net realizable value. UHG periodically reviews the performance and outlook of its inventories for indicators of potential impairment. 52 Table of Contents UHG records rebates with certain suppliers as a reduction in cost of sales based on a specific identification basis.
Inventories are carried at the lower of accumulated cost or net realizable value. UHG periodically reviews the performance and outlook of its inventories for indicators of potential impairment. 47 Table of Contents UHG records rebates with certain suppliers as a reduction in cost of sales based on a specific identification basis.
Factors Affecting the Comparability of UHG's Financial Condition and Results of Operations UHG’s historical financial condition and results of operations for the periods presented are not expected to be indicative of UHG’s future performance, either from period to period or going forward as a result of UHG’s recent acquisitions as well as the following reasons: Merger and Reverse Recapitalization The Company is a former blank check company incorporated on October 7, 2020 under the name DiamondHead Holdings Corp.
Factors Affecting the Comparability of UHG's Financial Condition and Results of Operations UHG’s historical financial condition and results of operations for the periods presented are not expected to be indicative of UHG’s future performance, either from period to period or going forward as a result of UHG’s recent acquisitions as well as the following reasons: 39 Table of Contents Merger and Reverse Recapitalization The Company is a former blank check company incorporated on October 7, 2020 under the name DiamondHead Holdings Corp.
At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. Sold units are expensed to cost of sales based on a specific identification basis. Cost of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lots, and closing costs applicable to the home.
At the time construction of the home begins, developed lot costs are transferred to homes under construction within inventory. Sold units are expensed to cost of sales based on a specific identification basis. Cost of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lot costs, and closing costs applicable to the home.
Refer to Note 15 - Share-based compensation of the Notes to the Consolidated Financial Statements contained in this report for additional information. Derivative Liabilities The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
Refer to Note 15 - Stock-based compensation of the Notes to the Consolidated Financial Statements contained in this report for additional information. Derivative Liabilities The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
Management of the Company believes EBITDA and adjusted EBITDA are useful because they provide a more effective evaluation of UHG’s operating performance and allow comparison of UHG’s results of operations from period to period without regard to UHG’s financing methods or capital structure or other items that impact comparability of financial results from period to 46 Table of Contents period such as fluctuations in interest expense or effective tax rates, levels of depreciation or amortization, or unusual items.
Management of the Company believes EBITDA and adjusted EBITDA are useful because they provide a more effective evaluation of UHG’s operating performance and allow comparison of UHG’s results of operations from period to period without regard to UHG’s financing methods or capital structure or other items that impact comparability of financial results from period to period such as fluctuations in interest expense or effective tax rates, levels of depreciation or amortization, or unusual items.
Recently, GSH separated its land development operations and homebuilding operations across separate entities in an effort to adopt best practices in the homebuilding industry associated with ownership and control of land and lots and production efficiency.
In 2023, GSH separated its land ownership and development operations and its homebuilding operations across separate entities in an effort to adopt best practices in the homebuilding industry associated with ownership and control of land and lots and production efficiency.
As a result, UHG 47 Table of Contents incurs significant cash outflows prior to the recognition of associated earnings. In later stages of projects, cash inflows could exceed UHG’s results of operations, as the cash outflows associated with land purchase and home construction and other expenses were previously incurred.
As a result, UHG incurs significant cash outflows prior to the recognition of associated earnings. In later stages of projects, cash inflows could exceed UHG’s results of operations, as the cash outflows associated with land purchase and home construction and other expenses were previously incurred.
Income Taxes Prior to the Business Combination, Legacy UHG was included in the tax filing of shareholders of GSH, which was taxed individually under the provision of Subchapter S and Subchapter K of the Internal Revenue Code.
Income Taxes Prior to the Business Combination, Legacy UHG was included in the tax filings of shareholders of GSH, which were taxed individually under the provision of Subchapter S and Subchapter K of the Internal Revenue Code.
The Company’s management believes this information is meaningful because it separates the impact that capitalized interest, purchase accounting adjustments, and non-recurring remediation costs directly expensed in cost of sales have on gross profit to provide a more specific measurement of the Company’s gross profits.
The Company’s management believes this information is meaningful because it separates the impact that capitalized interest and non-recurring costs directly expensed in cost of sales have on gross profit to provide a more specific measurement of the Company’s gross profits.
Land Development Operations Prior to the Business Combination until the Closing Date, Legacy UHG historically transacted with affiliates that were owned by the shareholders of GSH. The Legacy UHG financial statements contained herein present historical information and results attributable to the homebuilding operations of GSH.
Land Development Operations Prior to the Business Combination until the Closing Date, Legacy UHG historically transacted with affiliates that were owned by the shareholders of GSH. The Company’s Consolidated Financial Statements contained herein include historical information and results attributable to the homebuilding operations of GSH.
The Company defines adjusted gross profit as gross profit excluding the effects of capitalized interest expensed in cost of sales, amortization included in homebuilding cost of sales (primarily adjustments resulting from the application of purchase accounting in connection with acquisitions), and non-recurring remediation costs.
The Company defines adjusted gross profit as gross profit excluding the effects of capitalized interest expensed in cost of sales, amortization included in homebuilding cost of sales (primarily adjustments resulting from the application of purchase accounting in connection with acquisitions), severance expense in cost of sales, abandoned project costs, and non-recurring remediation costs.
The Company defines EBITDA as net income before (i) capitalized interest expensed in cost of sales, (ii) interest expensed in other (expense) income, net, (iii) depreciation and amortization, and (iv) taxes.
The Company defines EBITDA as net income before (i) capitalized interest expensed in cost of sales, (ii) interest expensed in other (expense) income, net, (iii) 43 Table of Contents depreciation and amortization, and (iv) taxes.
Revenues from home sales in which the buyer retains title to the homesite while UHG builds the home are recognized based on the percentage of completion of the home construction. Percentage of completion is based on costs incurred as compared to total estimated project costs.
Revenues from home sales in which the buyer retains title to the homesite while UHG builds the home are recognized based on the percentage of completion of the home construction as that is considered to represent the transfer of control. Percentage of completion is based on costs incurred as compared to total estimated project costs.
UHG defines adjusted EBITDA as EBITDA before stock-based compensation expense, transaction cost expense, non-recurring loss on disposal of leasehold improvements, non-recurring remediation costs, amortization included in homebuilding cost of sales (adjustments resulting from the application of purchase accounting in connection with acquisitions), and change in fair value of derivative liabilities.
The Company defines adjusted EBITDA as EBITDA before stock-based compensation expense, transaction cost expense, non-recurring loss on disposal of leasehold improvements, non-recurring remediation costs, amortization included in homebuilding cost of sales (adjustments resulting from the application of purchase accounting in connection with acquisitions), severance expense, abandoned project costs, loss on extinguishment of Convertible Notes, and change in fair value of derivative liabilities.
Since the Business Combination, developed lots acquired by UHG from the Land Development Affiliates and third parties have been 40 Table of Contents acquired at fair market value, which, when compared to Legacy UHG’s historical acquisition of developed lots from non-third parties at cost, affects the comparability of Cost of sales.
Since the Business Combination, developed lots acquired by UHG from related parties and third parties have been acquired at fair market value, which, when compared to Legacy UHG’s historical acquisition of developed lots from non-third parties at cost, affects the comparability of Cost of sales.
The Company performs a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount.
The first step is a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that 48 Table of Contents the fair value of a reporting unit is less than its carrying amount.
This model requires the input of highly subjective assumptions, including the option's expected term and stock price volatility. The grant date fair value of the RSUs is the closing price of UHG’s common stock on the date of the grant.
These models require the input of highly subjective assumptions, including the option's expected term and stock price volatility. The grant date fair value of the RSUs is the closing price of UHG’s common stock on the date of the grant.
Refer to Note 1 - Nature of operations and basis of presentation and Note 2 - Merger and reverse recapitalization of the Notes to the Consolidated Financial Statements contained in this report for more information on the Business Combination and Basis of Presentation.
Refer to Note 1 - Nature of operations and basis of presentation of the Notes to the Consolidated Financial Statements contained in this report for more information on the Basis of Presentation.
For the definition of adjusted gross profit and a reconciliation to the Company’s most directly comparable financial measure calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures.” S elling, General and Administrative Expense: Selling, general and administrative expense for the year ended December 31, 2023 was $65.1 million, an increase of $15.4 million, or 31.0%, from $49.7 million for the year ended December 31, 2022.
For the definition of adjusted gross profit and a reconciliation to UHG’s most directly comparable financial measure calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures.” S elling, General and Administrative Expense: Selling, general and administrative expense for the year ended December 31, 2024 was $74.7 million, an increase of $9.6 million, or 14.7%, from $65.1 million for the year ended December 31, 2023.
In response to softer demand for new homes, UHG introduced additional sales incentives starting in the second half of 2022 and continuing through 2023, mostly in the form of buyer financing incentives such as mortgage rate buy downs, mortgage forward commitments, or cash incentives applied against closing costs.
In response to softer demand for new homes, UHG and the industry have introduced additional sales incentives, mostly in the form of buyer financing incentives such as mortgage rate buy downs, mortgage forward commitments, or cash incentives applied against closing costs.
Equity in Net Earnings from Investment in Joint Venture: Equity in net earnings from investment in joint venture for the year ended December 31, 2023 was $1.2 million, an increase of $1.1 million, as compared to $0.1 million for the year ended December 31, 2022, due to the joint venture establishing operations in 2022.
Equity in Net Earnings from Investment in Joint Venture: Equity in net earnings from investment in joint venture for the year ended December 31, 2024 was $1.5 million, an increase of $0.3 million, as compared to $1.2 million for the year ended December 31, 2023.
Finished homes represent completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes and selling, general, and administrative costs are expensed as incurred. UHG relies on certain estimates to determine its construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs.
Costs incurred in connection with completed homes and selling, general, and administrative costs are expensed as incurred. UHG relies on certain estimates to determine its construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs.
Stock option and RSU awards are expensed on a straight-line basis over the requisite service period of the entire award from the date of grant through the period of the last separately vesting portion of the grant. The Company accounts for forfeitures when they occur.
Stock option, RSU, and PSU awards are expensed on a straight-line basis over the requisite service period of the entire award from the date of grant through the period of the last separately vesting portion of the grant.
UHG’s pipeline as of December 31, 2023 consists of approximately 9,000 lots, which includes lots that are owned or controlled by Land Development Affiliates, and which UHG expects to obtain the contractual right to acquire, in addition to lots that UHG may acquire from third party lot option contracts.
UHG’s pipeline as of December 31, 2024 consists of approximately 7,700 lots, which includes lots that UHG may acquire from third party lot option contracts or land bank option contracts, in addition to lots that are owned or controlled by related parties and which UHG expects to obtain the contractual right to acquire.
UHG’s pipeline as of December 31, 2023 consists of approximately 9,000 lots, which includes lots that are owned or controlled by Land Development Affiliates, and which UHG expects to obtain the contractual right to acquire, in addition to lots that UHG may acquire from third party lot option contracts.
UHG’s pipeline as of December 31, 2024 consists of approximately 7,700 lots, which includes lots that are owned or controlled by related parties, and which UHG expects to obtain the contractual right to acquire, in addition to lots that UHG may acquire from third party lot option contracts or land bank option contracts.
UHG has used proceeds received from the Business Combination and the PIPE Investments for general corporate purposes, including corporate operating expenses and for the acquisitions of homebuilders which closed in 2023 and January of 2024.
In March 2023, UHG received net proceeds from the Business Combination and the PIPE investments (“PIPE Investments”) of approximately $94.4 million. UHG used proceeds received from the Business Combination and the PIPE Investments for general corporate purposes, including corporate operating expenses and for the acquisitions of homebuilders which closed in 2023 and January of 2024.
Net cash provided by financing activities was $40.5 million for the year ended December 31, 2023, as compared to net cash used in financing activities of $73.7 million for the year ended December 31, 2022. The difference in cash flows year over year is $114.2 million.
Financing Activities Net cash used in financing activities was $34.0 million for the year ended December 31, 2024, as compared to net cash provided by financing activities of $40.5 million for the year ended December 31, 2023. The difference in cash flows year over year is $74.5 million.
If the qualitative assessment indicates that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, then a quantitative assessment is performed to determine the reporting unit’s fair value.
If the qualitative assessment indicates that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, then a quantitative assessment is performed to determine the reporting unit’s fair value. The Company may, at its election, skip the qualitative assessment and move directly to the second step.
For definitions of adjusted gross profit, EBITDA and adjusted EBITDA and a reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP, see “ Non-GAAP Financial Measures. ” Revenues: Revenues for the year ended December 31, 2023 were $421.5 million, a decrease of $55.5 million, or 11.6%, from $477.0 million for the year ended December 31, 2022.
For definitions of adjusted gross profit, EBITDA and adjusted EBITDA and a reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP, see “ Non-GAAP Financial Measures. ” Revenues: Revenues for the year ended December 31, 2024 were $463.7 million, an increase of $42.2 million, or 10.0%, from $421.5 million for the year ended December 31, 2023.
As of December 31, 2023, there were no triggering events or impairments recorded. Recently Issued/Adopted Accounting Standards Refer to the sections titled “Recently Adopted Accounting Pronouncements” and “Recent Accounting Pronouncements Not Yet Adopted” in Note 3 of the Notes to the Consolidated Financial Statements contained in this report, for more information.
Recently Issued/Adopted Accounting Standards Refer to the sections titled “Recently Adopted Accounting Pronouncements” and “Recent Accounting Pronouncements Not Yet Adopted” in Note 3 of the Notes to the Consolidated Financial Statements contained in this report, for more information.
Real Estate Inventory and Cost of Home Sales Inventory includes land under development, developed lots, homes under construction, and finished homes. Land under development consists of raw parcels of land already zoned for its intended use to develop into finished lots. Developed lots consist of land that has been developed for or acquired by UHG, and vertical construction is imminent.
Land under development consists of raw parcels of land already zoned for its intended use to develop into finished lots. Developed lots consist of land that has been developed for or acquired by UHG, and vertical construction is imminent. At the time construction begins, developed lots are transferred to homes under construction.
At the time construction begins, developed lots are transferred to homes under construction. Homes under construction represents costs associated with active homebuilding activities which include, but are not limited to, direct material, labor, and overhead costs related to home construction, capitalized interest, real estate taxes, and land option fees.
Homes under construction represents costs associated with active homebuilding activities which include, but are not limited to, direct material, labor, and overhead costs related to home construction, capitalized interest, real estate taxes, and land option fees. Finished homes represent substantially completed but unsold homes at the end of the reporting period.
Net cash used in investing activities was $24.3 million for the year ended December 31, 2023, as compared to $0.2 million of net cash used in investing activities for the year ended December 31, 2022. The difference in cash flows year over year is $24.1 million.
Investing Activities Net cash used in investing activities was $12.6 million for the year ended December 31, 2024, as compared to $24.3 million for the year ended December 31, 2023. The difference in cash flows year over year is $11.7 million.
UHG recognized the excess purchase price over the fair value of the net assets acquired as goodwill of $0.5 million. The goodwill arising from the acquisition consists largely of the expected synergies from establishing a market presence in Raleigh and the experience and reputation of the acquired management team.
In the preliminary purchase price allocation, UHG recognized the excess purchase price over the fair value of the net assets acquired as goodwill of $3.6 million. The goodwill arising from the acquisition consists largely of the expected synergies from expanding the Company’s market presence in South Carolina and the experience and reputation of the acquired management team.
Stock warrant awards do not contain a service condition and are expensed on the grant date. The fair value of stock option awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, using the Black‑Scholes option pricing model.
The fair value of stock option awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, using the Black‑Scholes option pricing model. The fair value and requisite service period of PSU awards with a market condition are determined using a Monte Carlo simulation model.
Adjusted gross profit as a percentage of revenue for the year ended December 31, 2023 was 21.4%, a decrease of 4.6%, as compared to 26.0% for the year ended December 31, 2022.
Adjusted gross profit as a percentage of revenue for the year ended December 31, 2024 was 19.9%, a decrease of 1.5%, as compared to 21.4% for the year ended December 31, 2023.
The models used to fair value the derivative liabilities rely on significant assumptions and inputs, including the Company’s stock price, which may cause volatility in the fair value each reporting period. Fluctuations in the fair value of derivative liabilities as a result of Level 3 inputs may impact the comparability of UHG’s results of operations.
The models used to fair value the derivative liabilities rely on significant assumptions and inputs, including the Company’s stock price, which may cause volatility in the fair value each reporting period.
Refer to Note 15 - Share-based compensation and Note 16 - Earnout shares of the Notes to the Consolidated Financial Statements contained in this report for additional information, including definitions.
Refer to Note 15 - Stock-based compensation and Note 16 - Earnout shares of the Notes to the Consolidated Financial Statements contained in this report for additional information, including definitions. Business Acquisitions and Valuation of Contingent Consideration The Company accounts for business acquisitions using the acquisition method.
Since its founding in 2004, UHG has delivered approximately 14,000 homes and, as of December 31, 2023, builds in approximately 61 active subdivisions at prices that generally range from approximately $200,000 to approximately $500,000.
Since its founding in 2004, UHG has delivered approximately 15,000 homes and currently builds in 46 active subdivisions at prices that generally range from approximately $200,000 to approximately $600,000.
Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired and liabilities assumed in business acquisitions. In accordance with ASC 350, the Company analyzes goodwill for impairment on an annual basis (or more often if indicators of impairment exist).
Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired and liabilities assumed in business acquisitions. In accordance with ASC 350, the Company analyzes goodwill for impairment on at least an annual basis as of October 1 of each year using a two-step process.
Cash Flows Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table summarizes the Company’s cash flows for the periods indicated: Year Ended December 31, 2023 2022 Net cash flows provided by operating activities $ 28,224,880 $ 34,616,722 Net cash flows used in investing activities (24,300,985) (206,877) Net cash flows provided by (used in) financing activities 40,508,741 (73,675,897) Net cash provided by operating activities was $28.2 million for the year ended December 31, 2023, as compared to $34.6 million of net cash provided by operating activities for the year ended December 31, 2022.
Cash Flows Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table summarizes the Company’s cash flows for the periods indicated: Year Ended December 31, 2024 2023 Net cash flows provided by operating activities $ 15,443,642 $ 28,224,880 Net cash flows used in investing activities (12,586,245) (24,300,985) Net cash flows (used in) provided by financing activities (33,979,799) 40,508,741 Operating Activities Net cash provided by operating activities was $15.4 million for the year ended December 31, 2024, as compared to $28.2 million for the year ended December 31, 2023.
The entire risk of loss pertaining to the aggregate purchase price of contractual commitments resulting from non-performance under finished lot purchase agreements is limited to approximately $33.0 million in Lot purchase agreement deposits as of December 31, 2023.
The risk of loss pertaining to the aggregate purchase price of contractual commitments resulting from non-performance under finished lot purchase agreements is limited to approximately $48.2 million in Lot deposits and $4.7 million of capitalized pre-acquisition costs in Inventories as of December 31, 2024.
UHG believes that its current cash holdings, including proceeds from the Business Combination and PIPE Investments, cash generated from operations, as well as cash available under its revolving lines of credit, will be sufficient to satisfy its short term and long term cash requirements for working capital to support its daily operations, meet current commitments under its contractual obligations, and support the potential acquisition of complementary businesses.
UHG believes that its current cash holdings, as well as cash generated from continuing operations, cash available under the Syndicated Line, and cash obtained from land banking arrangements, will be sufficient to satisfy its short term and long term cash requirements for working capital to support its daily operations and meet current commitments under its contractual obligations.
Adjusted Gross Profit: Adjusted gross profit for the year ended December 31, 2023 was $90.1 million, a decrease of $34.2 million, or 27.5%, as compared to $124.3 million for the year ended December 31, 2022.
Adjusted Gross Profit: Adjusted gross profit for the year ended December 31, 2024 was $92.4 million, an increase of $2.3 million, or 2.6%, as compared to $90.1 million for the year ended December 31, 2023.
Year Ended December 31, 2023 2022 Revenue, net of sales discounts $ 421,474,101 $ 477,045,949 Cost of sales 341,748,481 358,238,703 Gross profit $ 79,725,620 $ 118,807,246 Interest expense in cost of sales 9,385,970 5,455,230 Amortization in homebuilding cost of sales (a) 442,231 — Non-recurring remediation costs 527,155 — Adjusted gross profit $ 90,080,976 $ 124,262,476 Gross profit % (b) 18.9 % 24.9 % Adjusted gross profit % (b) 21.4 % 26.0 % ______________________________ (a) Represents expense recognized resulting from purchase accounting adjustments (b) Calculated as a percentage of revenue EBITDA and Adjusted EBITDA Earnings before interest, taxes, depreciation and amortization, or EBITDA, and adjusted EBITDA are supplemental non-GAAP financial measures used by management of the Company.
Year Ended December 31, 2024 2023 Revenue, net of sales discounts $ 463,714,017 $ 421,474,101 Cost of sales 383,883,751 341,748,481 Gross profit $ 79,830,266 $ 79,725,620 Interest expense in cost of sales 8,563,039 9,385,970 Amortization in homebuilding cost of sales (a) 3,049,453 442,231 Severance expense in cost of sales 347,680 — Abandoned project costs 507,500 — Non-recurring remediation costs 109,422 527,155 Adjusted gross profit $ 92,407,360 $ 90,080,976 Gross profit % (b) 17.2 % 18.9 % Adjusted gross profit % (b) 19.9 % 21.4 % ______________________________ (a) Represents expense recognized resulting from purchase accounting adjustments (b) Calculated as a percentage of revenue EBITDA and Adjusted EBITDA Earnings before interest, taxes, depreciation and amortization, or EBITDA, and adjusted EBITDA are supplemental non-GAAP financial measures used by management of the Company.
Year Ended December 31, 2023 2022 Net income $ 125,060,284 $ 69,489,294 Interest expense in cost of sales 9,385,970 5,455,230 Interest expense in other (expense) income, net 6,042,358 — Depreciation and amortization 1,217,778 759,712 Taxes 3,108,748 229,224 EBITDA $ 144,815,138 $ 75,933,460 Stock-based compensation expense 7,019,183 1,422,630 Transaction cost expense 3,239,637 5,479,126 Non-recurring loss on disposal of leasehold improvements 331,424 — Non-recurring remediation costs 527,155 — Amortization in homebuilding cost of sales (a) 442,231 — Change in fair value of derivative liabilities (115,904,646) — Adjusted EBITDA $ 40,470,122 $ 82,835,216 EBITDA margin (b) 34.4 % 15.9 % Adjusted EBITDA margin (b) 9.6 % 17.4 % ______________________________ (a) Represents expense recognized resulting from purchase accounting adjustments (b) Calculated as a percentage of revenue Liquidity and Capital Resources Overview UHG funds its operations from its current cash holdings and cash flows generated by operating activities, as well as its available revolving lines of credit, as further described below.
Year Ended December 31, 2024 2023 Net income $ 46,905,740 $ 125,060,284 Interest expense in cost of sales 8,563,039 9,385,970 Interest expense in other expense, net 12,438,514 6,042,358 Depreciation and amortization 1,945,296 1,217,778 Taxes (9,421,417) 3,108,748 EBITDA $ 60,431,172 $ 144,815,138 Stock-based compensation expense 6,475,649 7,019,183 Transaction cost expense 2,428,344 3,239,637 Non-recurring loss on disposal of leasehold improvements — 331,424 Non-recurring remediation costs 109,422 527,155 Amortization in homebuilding cost of sales (a) 3,049,453 442,231 Severance expense 1,645,076 — Abandoned project costs 507,500 — Loss on extinguishment of Convertible Notes 45,642,497 — Change in fair value of derivative liabilities (88,652,980) (115,904,646) Adjusted EBITDA $ 31,636,133 $ 40,470,122 EBITDA margin (b) 13.0 % 34.4 % Adjusted EBITDA margin (b) 6.8 % 9.6 % ______________________________ (a) Represents expense recognized resulting from purchase accounting adjustments (b) Calculated as a percentage of revenue Liquidity and Capital Resources Overview UHG funds its operations from its current cash holdings and cash flows generated by operating activities, as well as borrowings under the revolving credit facility (“Syndicated Line”), as further described below.
The average sales price of production-built homes closed for the year ended December 31, 2023 was $315,718, an increase of $19,484, or 6.6%, from the average sales price of production-built homes closed of $296,233 for the year ended December 31, 2022.
T he average sales price of production-built homes closed for the year ended December 31, 2024 was $329,111, an increase of $13,393, or 4.2%, from the average sales price of production-built homes closed of $315,718 for the year ended December 31, 2023.
Change in Fair Value of Derivative Liabilities: Change in fair value of derivative liabilities for the year ended December 31, 2023 was a gain of $115.9 million as compared to zero for the year ended December 31, 2022.
The majority of the loss on extinguishment is attributable to the make-whole payment of $37.1 million. Change in Fair Value of Derivative Liabilities: Change in fair value of derivative liabilities for the year ended December 31, 2024 was a gain of $88.7 million as compared to a gain of $115.9 million for the year ended December 31, 2023.
At the time of closing, costs that were incurred as part of the construction of the home but not paid at the time of closing are accrued. The accrual is recorded within cost of sales. Share-Based Compensation As of December 31, 2023, the Company had outstanding three types of share-based compensation: stock options, restricted stock units (“RSUs”) and stock warrants.
At the time of closing, costs that were incurred as part of the construction of the home but not paid at the time of closing are accrued. The accrual is recorded within Cost of sales.
For the year ended December 31, 2023, UHG generated net income of approximately $125.1 million, which included $115.9 million related to the change in fair value of derivative liabilities, gross profit of 18.9%, adjusted gross profit of 21.4%, and adjusted EBITDA margin of 9.6%, representing an increase of $55.6 million, and decreases of (6.0)%, (4.6)%, and (7.8)%, respectively, from the year ended December 31, 2022.
For the year ended December 31, 2024, UHG generated net income 38 Table of Contents of approximately $46.9 million, which included a gain of $88.7 million related to the change in fair value of derivative liabilities and a loss of $45.6 million related to the extinguishment of Convertible Notes, gross profit of 17.2%, adjusted gross profit of 19.9%, and adjusted EBITDA margin of 6.8%, representing a decrease of $78.2 million, and percentage decreases of 1.7%, 1.5%, and 2.8%, respectively, from the year ended December 31, 2023.
Creekside Custom Homes Acquisition On January 26, 2024, the Company completed the acquisition of selected assets of Creekside Custom Homes, LLC, a South Carolina corporation (“Creekside”) (the “Creekside Acquisition”) for $16.9 million in cash. The acquisition allows UHG to further expand its presence in the coastal region of South Carolina, particularly in the Myrtle Beach, SC area.
Recent Developments Creekside Custom Homes Acquisition On January 26, 2024, the Company completed the acquisition of selected assets of Creekside Custom Homes, LLC, a South Carolina corporation (“Creekside”) (the “Creekside Acquisition”) for $12.7 million in cash.
Refer to Components of UHG’s Operating Results above for additional information related to those instruments that the Company accounts for as a derivative liability. Earnout Shares The Earnout Shares were recognized at fair value on the Closing Date and are subsequently remeasured at each reporting date with changes in fair value recorded in the Company’s Consolidated Statements of Operations.
Earnout Shares The Earnout Shares were recognized at fair value on the Closing Date and are subsequently remeasured at each reporting date with changes in fair value recorded in the Company’s Consolidated Statements of Operations.
The office leases have a remaining lease term of up to five years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease.
The office leases have a remaining lease term of up to five years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised.
Gross profit as a percentage of revenue for the year ended December 31, 2023 was 18.9%, a decrease of 6.0%, as compared 24.9% for the year ended December 31, 2022.
Gross profit for the year ended December 31, 2024 was $79.8 million, an increase of $0.1 million, or 0.1%, from $79.7 million for the year ended December 31, 2023. Gross profit as a percentage of revenue for the year ended December 31, 2024 was 17.2%, a decrease of 1.7%, as compared to 18.9% for the year ended December 31, 2023.
The increase was offset by a decrease in commission expense of $2.0 million. Other Income (Expense), Net: Total other income (expense), net for the year ended December 31, 2023 was $(3.8) million, a decrease of $4.0 million as compared to $0.2 million for the year ended December 31, 2022.
Other Expense, Net: Total other expense, net for the year ended December 31, 2024 was an expense of $12.5 million, an increase of $8.7 million as compared to an expense of $3.8 million for the year ended December 31, 2023.
For the year ended December 31, 2023 and 2022, UHG had 1,296 and 1,259 net new orders, and generated approximately $421.5 million and $477.0 million in revenue on 1,383 and 1,605 closings, respectively. 38 Table of Contents UHG’s plan to grow its business is multifaceted.
For the years ended December 31, 2024 and 2023, UHG had 1,399 and 1,296 net new orders, and generated approximately $463.7 million and $421.5 million in revenue on 1,431 and 1,383 closings, respectively. UHG’s strategy to grow its business is multifaceted. UHG expects to grow organically, both arising out of its historical operations and through expansion of its business verticals.
The increase in income before taxes is primarily attributable to the change in fair value of derivative liabilities, offset by the decrease in revenue, net of sales discounts. Non-GAAP Financial Measures Adjusted Gross Profit Adjusted gross profit is a non-GAAP financial measure used by management of the Company as a supplemental measure in evaluating operating performance.
Non-GAAP Financial Measures Adjusted Gross Profit Adjusted gross profit is a non-GAAP financial measure used by management of the Company as a supplemental measure in evaluating operating performance.
In contrast, for the year ended December 31, 2022, cash flows used in financing activities included $171.7 million for repayment of homebuilding and other affiliate debt, $54.2 million of cash flows used in distributions and net transfers to stockholders and other affiliates, and $37.8 million in changes in net due to and due from stockholders and other affiliates, partially offset by $179.3 million of proceeds from homebuilding debt and $10.9 million of proceeds from other affiliate debt. 51 Table of Contents Critical Accounting Estimates UHG prepared the Consolidated Financial Statements in accordance with GAAP.
In contrast, during the year ended December 31, 2023, cash flows provided by financing activities included cash received of $94.4 million as a result of the Business Combination, PIPE, and recapitalization transactions, partially offset by the net repayment of homebuilding debt of $32.7 million, distributions and net transfers to shareholders and Other Affiliates of $17.9 million, and debt issuance costs of $3.2 million. 46 Table of Contents Critical Accounting Policies and Estimates UHG prepared the Consolidated Financial Statements in accordance with GAAP.
The decrease in other income (expense), net was primarily attributable to an increase of $6.0 million of interest expense on the Notes issued in connection with the Business Combination and an increase of $0.6 million of amortization expense, offset by an increase in investment income of $2.6 million.
The increase in other expense, net was primarily attributable to an increase in interest expense of $6.4 million partially from the issuance of the Convertible Notes in March 2023 , a decrease in investment income of $1.8 million primarily from lower cash balances, and an increase of $0.4 million in amortization expense.
If the reporting unit’s carrying value exceeds its fair value, then an impairment loss is recognized for the amount of the excess of the carrying amount over the reporting unit’s fair value. The evaluation of goodwill for possible impairment includes estimating fair value using one or a combination of valuation techniques, such as discounted cash flows.
In the quantitative assessment, the evaluation of goodwill for possible impairment includes estimating fair value using one or a combination of valuation techniques, including discounted expected future cash flows.
Refer to Note 3 - Summary of significant accounting policies and Note 14 - Convertible note payable of the Notes to the Consolidated Financial Statements contained in this report for additional information.
Refer to Note 3 - Summary of significant accounting policies of the Notes to the Consolidated Financial Statements for additional information related to those instruments that the Company accounts for as a derivative liability.
The decrease in cost of sales was primarily attributable to the decrease in number of homes sold. The Company closed 1,383 homes during the year ended December 31, 2023, a decrease of 222 home closings, or 13.8%, as compared to 1,605 homes closed during the year ended December 31, 2022.
The Company closed 1,431 homes during the year ended December 31, 2024, an increase of 48 home closings, or 3.5%, as compared to 1,383 homes closed during the year ended December 31, 2023.
Refer to Note 21 - Subsequent events of the Notes to the Consolidated Financial Statements contained in this report for additional information.
Refer to Note 9 - Debt of the Notes to the Consolidated Financial Statements contained in this report for additional information. The Credit Agreement contains various customary representations, warranties by the Company and covenants that are described in Note 9 - Debt of the Notes to the Consolidated Financial Statements contained in this report.
The remaining basis of approximately $1.7 million is primarily comprised of the fair value of 12 acquired developed lots and lot purchase agreement deposits with limited other assets and liabilities.
The remaining basis is primarily comprised of the fair value of inventory, lot deposits acquired, and intangible assets of $10.5 million, $3.1 million, and $0.4 million respectively, offset by $4.8 million of liabilities acquired.
As a result there is no remaining debt balance associated with Other Affiliates as of December 31, 2023. Other Notes Payable The Company had other borrowings totaling $3,255,221 as of December 31, 2023, which are comprised of other notes payable acquired in the normal course of business. These notes have maturities ranging up to two years.
The Company had other borrowings with private investors totaling zero and $3.3 million as of December 31, 2024 and December 31, 2023 , respectively, which are comprised of other notes payable and mortgage loans acquired in the normal course of business.
Income Tax Expense: Income tax expense for the year ended December 31, 2023 was $3.0 million as compared to zero for the year ended December 31, 2022. The increase in income tax expense was due to the Company’s change in tax status.
Income Tax (Benefit) Expense: Income tax (benefit) expense for the year ended December 31, 2024 was a benefit of $9.7 million as compared to an expense of $3.0 million for the year ended December 31, 2023. The Company's estimated annual effective tax rate as of December 31, 2024 is (26.1)% as compared to 2.4% as of December 31, 2023 .
These valuations require the Company to make estimates and assumptions regarding future operating results, cash flows, changes in capital expenditures, selling prices, profitability, and the cost of capital. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.
These valuation techniques require significant judgments including estimation of future cash flows, which is dependent on internal projections, estimation of the long-term growth rate for the business, and determination of the respective weighted-average cost of capital. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.
The accompanying results of operations for the year ended December 31, 2022 (“Legacy UHG financial statements”) have been prepared from Legacy UHG’s historical financial records and reflect the historical financial position. Results of operations of Legacy UHG for the year is presented on a carve-out basis in accordance with GAAP.
Prior to the Closing Date, Legacy UHG’s historical financial records, including the historical financial position, results of operations, and cash flows of Legacy UHG were prepared on a carve-out basis in accordance with GAAP. The carve-out methodology was used since Legacy UHG’s inception until the Closing date.
Finished Lot Deposits The Company’s strategy is to acquire developed lots through related parties and unrelated third party land developers pursuant to lot purchase agreements. Most lot purchase agreements require the Company to pay a nonrefundable cash deposit of approximately 15% - 20% of the agreed-upon fixed purchase price of the developed lots.
Most lot option contracts require the Company to pay a nonrefundable cash deposit of approximately 15% - 20% of the agreed-upon fixed purchase price of the developed lots. Refer to Note 11 - Lot deposits of the Notes to the Consolidated Financial Statements and “ Off-Balance Sheet Arrangements” for additional information.
UHG’s business verticals positioned to further drive the Company’s growth include its mortgage joint venture Homeowners Mortgage, LLC (the “Joint Venture”) and its build-to-rent (“BTR”) platform, pursuant to which UHG will continue to work together with institutional investors for development of BTR communities.
UHG’s business verticals positioned to further drive the Company’s growth include its mortgage joint venture Homeowners Mortgage, LLC (the “Joint Venture”). UHG expects that continued operation of the Joint Venture will add to UHG’s revenue and EBITDA growth, improve buyer traffic conversion, and reduce backlog cancellation rates.
Following the separation of the land development business, which is now primarily conducted by affiliated land development companies (collectively, the “Land Development Affiliates”) that are outside of the corporate structure of UHG, it employs a land-light operating strategy, with a focus on the design, construction and sale of entry-level, first move-up and second move-up single-family houses.
The Company employs a land-light lot operating strategy, with a focus on the design, construction and sale of entry-level, first, second and third move-up single-family houses. UHG principally builds detached single-family houses, and, to a lesser extent, attached single-family houses, including duplex houses and town houses.
The decrease in revenues was also attributable to a decrease in revenue recognized over time from land owned by customers of $8.3 million. 44 Table of Contents Cost of Sales and Gross Profit: Cost of sales for the year ended December 31, 2023 was $341.7 million, a decrease of $16.5 million, or 4.6%, from $358.2 million for the year ended December 31, 2022.
The increase is primarily attributable to the product mix from acquisitions. 41 Table of Contents Cost of Sales and Gross Profit: Cost of sales for the year ended December 31, 2024 was $383.9 million, an increase of $42.2 million, or 12.4%, from $341.7 million for the year ended December 31, 2023.
The increase in selling, general and administrative expense was attributable to an increase of $5.6 million related non-cash stock compensation expense, public company expenses of $2.2 million, consulting fees of $2.3 million, insurance expenses of $1.9 million, miscellaneous expenses of $1.1 million, and an increase in salaries and related expenses of $4.3 million as a result of a higher headcount.
The increase in selling, general and administrative expense was primarily attributable to an increase of $4.4 million in commission expense due to an increase in home closings and additional broker incentives, an increase of $3.9 million in salaries, wages, and related expenses due to increased headcount from corporate personnel as a public company and acquisitions, an increase of $1.2 million related to severance costs associated with the June 2024 workforce reduction, and an increase of $1.0 million in advertising costs, partially offset by a decrease in insurance expense.
See “Cautionary Note Regarding Forward-Looking Statements.” Overview UHG designs, builds and sells homes in South Carolina, North Carolina and Georgia. UHG’s principal markets are located within 500 miles of 10 of the top 15 fastest growing markets in the United States, including Nashville, Jacksonville and Orlando, which provides what management believes are attractive expansion opportunities.
See “Cautionary Note Regarding Forward-Looking Statements.” Overview UHG designs, builds and sells homes in South Carolina, North Carolina and Georgia. The geographical markets in which UHG presently operates its homebuilding business are high-growth markets, with substantial in-migrations and employment growth.
Refer to Note 14 - Convertible note payable of the Notes to the Consolidated Financial Statements contained in this report for additional information. 50 Table of Contents Leases The Company leases several office spaces in South Carolina under operating leases with related parties, and one office space in North Carolina with a third party.
During the second quarter of 2024, the Company settled the remaining private investor debt and recognized a loss on extinguishment of debt amounting to $0.1 million. Leases The Company leases several office spaces in South Carolina under operating lease agreements with related parties, and one office space in North Carolina with a third party.
As of December 31, 2022, revenue and cost of sales were $5,188,716 and $4,508,819, respectively. Further information regarding these transactions is provided in Note 10 - Related party transactions of the Notes to the Consolidated Financial Statements contained in this report.
As of December 31, 2024, the future minimum lease payments required under these leases totaled $3.4 million, with $1.2 million payable within 12 months. Further information regarding the Company’s leases is provided in Note 13 - Commitments and contingencies of the Notes to the Consolidated Financial Statements contained in this report.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+2 added−4 removed1 unchanged
Biggest changeUHG has not entered into, nor does it intend to enter into in the future, derivative financial instruments for trading or speculative purposes or to hedge against interest rate fluctuations The interest rate on the borrowings under the Syndicated Line is based upon adjusted daily simple SOFR plus an applicable margin ranging between 275 basis points and 350 basis points, based upon UHG’s leverage ratio.
Biggest changeThe interest rate on the borrowings under the Syndicated Line is based upon adjusted daily simple SOFR plus an applicable margin ranging between 275 basis points and 350 basis points, based upon UHG’s leverage ratio.
UHG is subject to market risk on its debt instruments primarily due to fluctuations in interest rates. UHG utilizes both fixed-rate and variable-rate debt. For fixed-rate debt, changes in interest rates generally affect the fair value of the debt instrument but not earnings or cash flows.
UHG is subject to market risk on its debt instruments primarily due to fluctuations in interest rates. The Company currently utilizes variable-rate debt. For variable-rate debt, changes in interest rates generally do not impact the fair value of the debt instrument, but may affect the Company’s future earnings and cash flows.
Therefore, UHG is exposed to market risks related to fluctuations in interest rates on its outstanding debt under the Syndicated Line. As of December 31, 2023, UHG had $77.2 million outstanding under the Syndicated Line, which carried a weighted average interest rate of 8.13%.
Therefore, UHG is exposed to market risks related to fluctuations in interest rates on its outstanding debt under the Syndicated Line and Term Loan. As of December 31, 2024, UHG had $50.2 million and $67.2 million outstanding under the Syndicated Line and Term Loan, respectively, which carried weighted average interest rates of 8.41% and 11.70%, respectively.
A 100 basis point increase in overall interest rates would negatively affect the Company’s net income by approximately $0.8 million. The fair value of the outstanding Notes is subject to market risk and other factors due to the convertible features.
A 100 basis point increase in overall interest rates would negatively affect the Company’s net income by approximately $1.2 million. 50 Table of Contents
Removed
Conversely, for variable-rate debt, changes in interest rates generally do not impact the fair value of the debt instrument, but may affect the Company’s future earnings and cash flows.
Added
UHG has not entered into, nor does it intend to enter into in the future, derivative financial instruments for trading or speculative purposes or to hedge against interest rate fluctuations.
Removed
The Notes are convertible at the holder’s option into UHG Class A Common Shares at any time after March 30, 2024 through March 30, 2028, at a per share price (“Initial Conversion Price”) equal to 80% of volume-weighted average trading sale price (“VWAP”) per UHG Class A Common Share during the 30 consecutive trading days prior to the first anniversary of the Closing Date.
Added
In addition, 49 Table of Contents the interest rate on the borrowings under the Term Loan is based upon adjusted daily simple SOFR plus an applicable margin ranging between 675 basis points and 775 basis points, based upon UHG’s leverage ratio.
Removed
The Initial Conversion Price has a floor of $5.00 per share and a cap of $10.00 per share. Once the conversion price is established on March 30, 2024, the fair value of the Notes will generally increase as the common stock price increases and will generally decrease as the common stock price declines in value.
Removed
The Notes are carried at amortized cost and the fair value is presented for disclosure purposes only. The interest and market value changes affect the fair value of the Notes, but do not impact UHG’s financial position, cash flows, or results of operations due to the fixed nature of the debt obligation. 55 Table of Contents

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