Harbor Custom Development, Inc.

First-quarter 2023 sales were $9.2 million, down from $28.6 million in the prior-year period. Gross loss was $2.0 million versus gross profit of $6.1 million a year ago; gross margin was a loss of 22.3% versus a 21.2% gross profit margin in Q1 2022. Operating expenses fell to $2.9 million from $3.8 million. Net loss was $4.9 million versus net income of $1.6 million in Q1 2022. Net loss attributable to common stockholders was $6.8 million, or $9.39 per basic share, versus a net loss attributable to common stockholders of $0.4 million, or $0.56 per basic share, last year. EBITDA was a loss of $4.5 million, compared with positive $3.5 million in the prior year; adjusted EBITDA was a loss of $4.4 million versus positive $3.9 million. Net cash used in operating activities was $11.6 million, and real estate assets were $217.8 million as of March 31, 2023, levered approximately 60%. Management did not provide financial guidance, citing uncertainty from interest rates, affordability, and unpredictable sales timing.

Sterling Griffin framed the quarter as one shaped by a difficult housing market, saying rising rates weakened sales volume, pricing, and profitability. He stressed the company’s strategic shift toward multifamily, which now represents about 64% of total real estate assets, and highlighted progress on projects like Pacific Ridge, Belfair, Wyndstone, and Mills Crossing. His tone was defensive but constructive: he repeatedly emphasized cost control, liquidity preservation, and rebuilding shareholder value.

Lance Brown walked through the year-over-year decline in sales, pointing to weaker developed lot, home, entitled land, and fee-build revenue, partly offset by $0.4 million of rental revenue from multifamily projects. He noted the $2.0 million gross loss, the $1.6 million of impairment charges, the drop in operating expenses to $2.9 million, and the $11.6 million of operating cash use. He also highlighted the 1-for-20 reverse stock split and the BankUnited loan restructuring as steps that helped the company regain Nasdaq compliance and strengthen its balance-sheet flexibility.

Analysts asked about the additional impairment on Pacific Ridge and whether more impairments could follow; management said Pacific Ridge was further impaired after a quarter-end review, and Darkhorse and Bunker Ranch were impaired after list prices were reduced below cost, but said the properties are still expected to be profitable. Questions also focused on multifamily sales, liquidity if assets are held longer, and asset sales to raise cash; management said it is trying to sell the multifamily assets but could hold them if needed, though that would require replacing construction loans with more permanent financing. They also confirmed Mills Crossing is expected to close on or before June 16, 2023, with buyer contingencies waived and $400,000 of earnest money released to Harbor.