United Homes Group, Inc · NASDAQ:UHG
United Homes — SPAC Merger (September 2022)
49 slides from United Homes's SPAC merger presentation, Sep 12, 2022
Slide 1: United Homes Group September 2022 Investor Presentation
United Homes Group (“UHG”) September 202 2 Investor Presentation
Slide 2: Table of Contents
Table of Contents I. Executive Summary II. Macro Housing Overview III. Operational Overview IV. UHG Growth Strategy V. Financial Summary
Slide 3: I. Executive Summary
I. Executive Summary
Slide 4: UHG + DiamondHead = Uniquely Positioned Partnership
4 UHG + DiamondHead = Uniquely Positioned Partnership Combination creates a publicly listed homebuilder capitalizing on key industry trends DiamondHead's Acquisition Criteria Competitive Differentiation Attractive Growth Profile Proven Operating History Desired Product Set Fundamental Value with Sig
Slide 5: Dynamic Partnership Between Seasoned Experts
Michael Nieri Chairman, President & CEO, United Homes Group Dynamic Partnership Between Seasoned Experts The business combination showcases both operational and capital markets expertise 5 Michael Nieri is the Founder, President, & CEO of United Homes Group (formally Great Southern Homes) known for
Slide 6: Transaction Overview and Pro-Forma Capitalization
6 Pro - Forma Capitalization Share Price $10.00 Pro - Forma Shares Outstanding 80 (3) Pro - Forma Equity Value $799 Pro Forma Cash (320) UHG Rollover Net Debt 93 Pro - Forma Enterprise Value $572 Pro - Forma Ownership (2)(3) Sources ($ in millions) UHG Equity Rollover $407 DHHC Cash in Trust (1) (2)
Slide 7: Key Facts
Key Facts » HQ : C olumbia, SC » Employees: 160+ » 202 3 E Rev: $630.2 million » 202 3 E EBITDA: $118.2 million 7 Great Southern Homes is being r ebranded under the parent c ompany United Homes Group Michael Nieri is awarded the Richard N. Sendler award by the Central South Carolina Building Industr
Slide 8: UHG has multiple levers to drive strong growth rates
Source: (1) Company model. ( 2 ) Reference page 32 for UHG's targeted M&A opportunity set and calculations of how total closings were derived. (3) U.S. Census Bureau (BOC); Moody's Analytics Estimated and Forecasted 2022 Housing Starts. (4) US Census Bureau. (5) reference page 35 for additional info
Slide 9: Land-Light Model Provides a Competitive Advantage
Land - Light Model Provides a Competitive Advantage UHG is strategically positioned to outperform the operating models of traditional homebuilders Traditional Model Land - Light Model Higher ROE Optioned land provides a higher return on capital with more flexibility De - Risks Balance Sheet Land mos
Slide 10: % of Lots Owned vs Optioned; Capital Efficient Land-Light Model
9% 2% 13% 25% 38% 46% 47% 48% 53% 58% 67% 81% 91% 98% 87% 75% 62% 54% 53% 52% 47% 42% 33% 19% Owned % Optioned % -35.0% -25.0% -15.0% -5.0% 5.0% 15.0% 25.0% Traditional Homebuilders Land-light Homebuilders 10 % of Lots Owned vs Optioned (1) Peers Average 43% Owned Optioned % LTM ROE (4) Optioned Lot
Slide 11: Rapid population & job growth in the southeast presents a dynamic opportunity
Rapid population & job growth in the southeast presents a dynamic opportunity for UHG 11 Comparison of UHG Markets to National Averages C l e m s on Savannah Charlotte Columbia Charleston Jacksonville Atlanta Raleigh Nashville Tallahassee Knoxville Greensboro Birmingham Richmond Huntsville Montgomer
Slide 12: The United Homes Group Management Team
The United Homes Group Management Team Tenured management team with deep operational and public company experience 12 Note: (1) Currently CFO of DHHC and will become CFO of UHG post - acquisition Michael Nieri Chairman, President & CEO, UHG Keith Feldman (1) Chief Financial Officer at UHG Dan Goldst
Slide 13: 1H 2022 Performance Outpaced Historical Results
539 615 796 873 13 1H 2022 Performance Outpaced Historical Results Despite the rise in interest rates, UHG continues to deliver strong operating & financial performance Total Unit Closings in 1 st Half of the Year Total Value in Closings in 1 st Half of the Year $114 $139 $193 $251 Despite the rise
Slide 14: II. Macro Housing Overview
II. Macro Housing Overview
Slide 15: Large Supply & Demand Gap in the U.S. Housing Market
200 400 600 800 1,000 1,200 1,400 1,600 SF Starts Pent-Up Demand 15 Total Housing Starts Normal Production (4) Housing Depression » Sustained underbuilding since 2007 » Shortage of 5.5 to 6.8 million housing units as of June 2021 NAR study » In addition, the U.S. would need to construct more than 2.
Slide 16: Fundamental drivers supporting the housing market
“ The many fundamental drivers that have supported the housing market in recent years remained firmly in place. These include favorable demographics, with 150 million millennials and baby boomers experiencing life events that are driving home demand. The supply and demand imbalance resulting from ov
Slide 17: Homebuyers Continue to Flock to Southeast
3.0x 3.2x 3.4x 3.6x 3.8x 4.3x 4.3x 4.1x 3.6x 3.4x 3.4x 3.3x 3.3x 3.6x 3.7x 3.7x 3.8x 3.9x 4.0x 3.9x 4.2x 4.7x 5.3x 3.4x 3.6x 3.9x 4.1x 4.3x 4.7x 4.6x 4.2x 3.8x 3.4x 3.5x 3.3x 3.4x 3.7x 3.9x 4.0x 4.1x 4.1x 4.2x 4.1x 4.4x 5.1x 5.6x 2.9x 3.4x 3.9x 4.4x 4.9x 5.4x 5.9x 6.4x Average Home Price / Average M
Slide 18: Historical Relationship Between Mortgage Rates & Housing
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 0 200 400 600 800 1000 New Home Sales 30 Year Mortgage Rate Unemployment Rate Source: (1) FRED, Federal Reserve Bank of St. L ouis , (2) Bloomberg, (3) FRED, Federal Reserve Bank of St. Louis Note: R - Squared calculation is from 2013 - 2020 pre - pan
Slide 19: Single-Family Rental (SFR) Market
Single - Family Rentals Make - up 1/3 rd of U.S. Rentals (1) Cumulative Investor Commitments to SFR <$50B (2) Single - Family Rents Are Up More Than 13% YoY (3) The Current Single - Family - Rental Yield is ~6% (2) Nationally SFR rents have been increasing over 10% annually in recent years driven by
Slide 20: III. Operational Overview
III. Operational Overview
Slide 21: UHG is one of the largest production homebuilders and lowest cost producers
21 » UHG is one of the largest production homebuilders - and one of the lowest cost producers - in its markets » UHG produced attractive profit margins in 2021: x Higher gross profit margins than the land - light public peer group x Significant flexibility to build rentals to desired yields » Entry
Slide 22: Land & Lot Sourcing Relationships
22 Land & Lot Sourcing Relationships Traditional Third - Party Lot Developer Purchase Contracts: » Lots are controlled through purchased option contracts with third - party developers » Local land development companies produce finished lots (pad - ready, utilities stubbed, roads paved) for sale to b
Slide 23: Less Capital Required Per Closing; Performance Through Last Housing Cycle
$99,498 $152,574 $232,265 $246,542 $313,873 $378,117 $383,871 $445,382 $462,017 $573,507 $587,134 $882,866 UHG NVR DFH DHI LSEA KBH PHM LEN GRBK TPH TMHC TOL 23 11 11 10 9 6 6 6 4 3 3 3 NVR DHI LEN TOL MTH BZH KBH WLH MHO HOV MDC PHM Less Capital Required Per Closing (1) 23 % of Builders Generating
Slide 24: Build-to-Rent Operating Segment
2% 1% 2% 2% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 3% 2% 3% 2% 3% 3% 3% 2% 3% 3% 2% 2% 3% 4% 3% 5% 4% 6% 3% 4% 4% 4% 4% 5% 5% 5% 5% 5% Percentage of Single - Family - Homes Started For Rent (1) Source: U.S. Census Bureau. (1) Data excludes production started sold directly to BTR operators. UHG’s low - cos
Slide 25: Case Study: Walnut Creek – Elgin, SC
132 Homes Delivered 3.6 Closings Per Month ~$36.1 Homes Sales Revenue ($ millions) $273,092 ASP » Walnut Creek is a UHG community that began construction in July 2019 » Subdivision community of 137 lots » To date, 132 single family detached homes have been constructed & delivered » Averaging 3.6 hom
Slide 26: Case Study: Harvest Glen – Piedmont, SC
Project Overview 89 Homes Delivered 4.9 Closings Per Month ~$24.9 Homes Sales Revenue ($ millions) $279,467 ASP » Harvest Glen is a UHG community that began construction in December 2020 » Subdivision community of 160 lots » To date, 89 single family detached homes have been constructed & delivered
Slide 27: Seasoned Board Provides Deep Strategic Insight
Michael Nieri Chairman, President & CEO, UHG Tom O’ Grady Board Member & Chief Administrative Officer at UHG James Clements Board Member & President of Clemson University Nikki Haley Board Member & Former Governor of South Carolina and U.S. Ambassador to the U.N. David Hamamoto (1) Chairman & Co - C
Slide 28: IV. UHG Growth Strategy
IV. UHG Growth Strategy
Slide 29: UHG's Growth Strategy
29 A strategic buyer of choice, targeting builders in high - value markets with successful track records to expand operationally Expand community count in current operating divisions & continue to expand organically into high growth southeastern markets Expansion of institutional programmatic BTR se
Slide 30: Key Target Acquisition Criteria
30 Key Target Acquisition Criteria Identified Geography Number of Potential Targets Alabama Florida Georgia North Carolina Tennessee 3x – 4x EBITDA Multiple (Discount to Public Comps) 250 – 1,000 Annual Deliveries $225k – $400k ASP 15+% Accretive IRR Virginia 5 – 10 10+ 5 – 10 15+ 5 – 10 5 – 10 Oppo
Slide 31: Expansive Array of Regional Acquisition Opportunities
31 UHG in 2021 Georgia North Carolina ~1,705 Closings ~$433M Revenue Florida Tennessee Alabama Virginia Expansive Array of Regional Acquisition Opportunities Uniquely positioned for regional acquisition strategy with established network of private M&A targets Note: UHG Management believes that being
Slide 32: United Home Group of Tomorrow
32 Columbia Virginia 1% market share of 2022 starts: 413 Implied Revenue: ~$123 million North Carolina 1% market share of 2022 starts: 982 Implied Revenue: ~$291 million Georgia 1% market share of 2022 starts: 761 Implied Revenue: ~$226 million Florida 1% market share of 2022 starts: 2,064 Implied R
Slide 33: Illustrative EBITDA Uplift from M&A
33 Illustrative EBITDA Uplift from M&A Acquiring small to mid - size regional homebuilders operating in high growth markets has the potential to drive significant EBITDA upside Incremental Closing s & EBITDA Added from Homebuilder Acquisitions (1)(2) Illustrative Financial Upside from M&A Strategy S
Slide 34: Build-to-Rent (BTR) Strategy Overview
34 Strategic Relationships UHG’s programmatic BTR strategy is centered upon scalable relationships with single - family rental (“SFR”) operators & investors Develop Purpose Built Rental Communities Predetermined takedown schedule to deliver properties over a multiple year period giving investors rev
Slide 35: Homeowners Mortgage JV
35 Minimal capital required to create scalable mortgage JV that has customer stickiness Allows management to have a valuable backlog conversion function Mortgage JV is accretive to EBITDA margin Monetize customer base in a capital - efficient manner Broker model minimizes risk Homeowners Mortgage TM
Slide 36: V. Financial Summary
V. Financial Summary
Slide 37: Historical Backlog & Revenue Relationship
Note: Backlog is defined as h omes under a purchase contract that are signed by homebuyers who have met the preliminary criteria to obtain mortgage financing, but such home sales to end buyers have not yet closed. Contracts for backlog have a total deposit value of 1% of the purchase price of the ho
Slide 38: Financial Forecast
38 Financial Forecast (1) High growth end markets and community plans position UHG for solid growth 38 Note: UHG projections are based on current land supply that UHG has the option to purchase and are aggregated from a communit y - l evel analysis and driven by: ( i ) new selling communities, (ii)
Slide 39: Valuation & Operational Benchmarking
Valuation & Operational Benchmarking (1) UHG compared to the land - light homebuilder peer group Source: (1) Capital IQ Consensus CY2022 & CY2023 Estimates. (2) Enterprise value is as of August 16 th , 2022. (3) Dream Finders Homes’ gross margin includes a commission expense which is different from
Slide 40: Reconciliations of Non-GAAP Metrics
Reconciliations of Non - GAAP Metrics (1)(2) 40 Source: (1) Corporate Model. (2) 15% mark up on self developed lots in cluded in cost of goods sold and net income for the projection period. ($ millions) FY 2021A FY 2022E FY 2023E Adjusted Gross Profit Revenue $432.9 $515.5 $630.2 Cost of Goods Sold
Slide 41: Financial Model Assumptions
41 Financial Model Assumptions Financial Projections • Included in this Presentation are the UHG’s estimates of its financial performance for fiscal years 2022 through 2023 (the “Financial Projections”), based on information known as of the date of this Presentation . For more information relating t
Slide 42: Risk Factors
Unless the context requires otherwise, references to “UHG,” “we,” “us” or “our” in this section are to Great Southern Homes, Inc . prior to the potential business combination (the “Potential Business Combination”) and to the combined company following the Business Combination (the “Post - Combinatio
Slide 43: Risk Factors: Risks Related to UHG's Business and Industry (continued)
43 Risk Factors Risks Related to UHG’s Business and Industry (continued) • Supply shortages and other risks related to acquiring land, building materials and skilled labor could increase UHG’s costs and delay deliveries causing an adverse effect its business or financial results . • UHG is required
Slide 44: Risk Factors: Risks Related to the Potential Business Combination
44 Risk Factors Risks Related to the Potential Business Combination, DiamondHead and the Post - Combination Company • The consummation of the Potential Business Combination is subject to a number of conditions . If those conditions are not satisfied or waived, the Potential Business Combination may
Slide 45: Risk Factors: Risks Related to Redemption
45 Risk Factors Risks Related to Redemption • Significant redemptions among DiamondHead’s public stockholders may require the post - combination Company to raise future financing after the closing of the Business Combination . • There is no guarantee that a public stockholder’s decision whether to r
Slide 46: About this Presentation
About this Presentation • This presentation (together with oral statements made in connection herewith, this “Presentation”) is provided for informational purposes only . This Presentation shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there
Slide 47: Use of Data; Forward Looking Statements
Use of Data • Certain information contained in this Presentation relates to or is based on the Company's own internal estimates and research . In addition, all of the market data included in this Presentation involves a number of assumptions and limitations, and there can be no guarantee as to the a
Slide 48: Additional Information
Additional Information • The Company intends to file with the SEC a proxy statement / prospectus on Form S - 4 relating to the Proposed Business Combination, which will be mailed to DiamondHead’s shareholders once definitive . This Presentation does not contain all the information that should be con
Slide 49: Use of Projections
Use of Projections • This Presentation contains financial forecasts with respect to UHG’s projected financial results for fiscal years 2022 through 2023 . All projections, estimates, goals, targets, plans, trends or other statements with respect to future results or future events in this Presentatio