Third Quarter Revenues of $1 Billion
Homebuilding Revenues Up 10%, Net New Orders
Up 9%
Return on Participating Equity of
30.4%
Dream Finders Homes, Inc. (the “Company”, “Dream Finders Homes”,
“Dream Finders” or “DFH”) (NYSE: DFH) announced its financial
results for the third quarter ended September 30, 2024.
Third Quarter 2024 Highlights (As Compared to Third Quarter
2023, unless otherwise noted)
- Homebuilding revenues increased 10% to $986 million from $894
million
- Home closings increased 5% to 1,889 from 1,798
- Net new orders increased 9% to 1,680 from 1,535
- Average sales price of homes closed increased 3% to $518,553
from $501,536
- Homebuilding gross margin of 19.2% compared to 20.6%
- Adjusted homebuilding gross margin (non-GAAP) of 27.6% compared
to 28.4%
- Pre-tax income decreased 11% to $92 million from $104
million
- Net income attributable to DFH decreased 7% to $71 million, or
$0.72 per basic share, from $76 million, or $0.79 per basic
share
- Active community count of 235 as of September 30, 2024
- Backlog of 3,996 sold homes as of September 30, 2024, valued at
$2.0 billion
- Controlled lot pipeline of 44,825 as of September 30, 2024,
compared to 30,614 as of September 30, 2023
- Total liquidity, comprised of cash and cash equivalents and
availability under the revolving credit facility, of $493 million
as of September 30, 2024
- Net homebuilding debt to net capitalization (non-GAAP) of 45.6%
as of September 30, 2024, compared to 34.5% as of September 30,
2023
- Return on participating equity of 30.4% for the trailing twelve
months ended September 30, 2024, compared to 38.9% for the trailing
twelve months ended September 30, 2023
- Repurchased 180,164 Class A common shares for $5 million during
the three months ended September 30, 2024
Management Commentary
Patrick Zalupski, Dream Finders Homes Chairman and CEO, said,
“In the third quarter, Dream Finders continued to demonstrate our
focus on long-term growth objectives. We delivered homebuilding
revenue growth of 10%, along with increased home closings and net
sales of 5% and 9%, respectively, compared to the prior year
quarter. While we experienced some margin erosion in Q3, we are
more focused on maintaining our growth expectations.
We completed our acquisition of Jet HomeLoans on July 1, 2024,
our sixth acquisition in five years. This deal was immediately
accretive, contributing revenues of $16 million and pre-tax
profitability of $7 million in the third quarter. Now having 100%
control of this entity, we look to grow this business line into a
highly profitable segment for DFH.
During the third quarter, we repurchased 180,164 shares of our
class A common stock under our approved buyback program. In
addition to investing in the growth and scale of our business, we
remain committed to our capital allocation strategy, which includes
buying back shares when we believe there is an attractive
disconnect between the market price and the intrinsic value of the
shares. We will remain opportunistic in all facets of growing the
per share returns of DFH.
We are focused on closing out another successful year in 2024
while also hard at work building long-term value for 2025 and
beyond. We reiterate our guidance of 8,250 closings for the full
year 2024.”
Acquisition of Jet HomeLoans
On July 1, 2024, we acquired the remaining 40% equity interest
in the previously unconsolidated mortgage joint venture, Jet
HomeLoans, which is now consolidated as of that date in the
Company’s financial statements. Jet HomeLoans continues to be
included in the Company’s Financial Services segment for segment
reporting purposes. Jet HomeLoans contributed financial services
revenue of $16 million in the third quarter of 2024.
Third Quarter 2024 Results
Homebuilding revenues in the third quarter of 2024 increased 10%
to $986 million, compared to $894 million in the third quarter of
2023. Average sales price (“ASP”) of homes closed for the third
quarter of 2024 was $518,553, an increase of 3% compared to the
prior year quarter ASP of $501,536. Home closings increased 5% to
1,889 compared to 1,798 in the third quarter of 2023. The growth in
homebuilding revenue during the third quarter of 2024 when compared
to the third quarter of 2023 was primarily due to the increase in
home closings, as well as higher ASP, both largely due to the
February 2024 Crescent Homes acquisition. Crescent Homes
contributed 223 closings with an ASP of $554,231 during the third
quarter of 2024. Additionally, the increased use of sales
incentives during the third quarter of 2024 had a partially
offsetting impact on our homebuilding revenue growth.
Homebuilding gross margin in the third quarter of 2024 was
19.2%, a decrease of 140 bps, compared to 20.6% in the third
quarter of 2023. The slight decline in homebuilding gross margin
for the third quarter of 2024 was mostly the result of higher land
and financing costs, offset by direct cost reductions and, to a
lesser extent, continued improvements in cycle times.
Adjusted homebuilding gross margin in the third quarter of 2024
was 27.6%, a decrease of 80 bps from the third quarter 2023
adjusted homebuilding gross margin of 28.4%. Adjusted homebuilding
gross margin is a non-GAAP financial measure. See “Reconciliation
of Non-GAAP Financial Measures.”
Selling, general and administrative expense (“SG&A”) in the
third quarter of 2024 increased 30% to $102 million, compared to
$79 million in the third quarter of 2023. SG&A as a percentage
of homebuilding revenues in the third quarter of 2024 increased 150
bps to 10.3% compared to 8.8% in the third quarter of 2023. The
increase was primarily attributable to costs associated with
forward mortgage commitment programs which allow our homebuyers to
lock in their mortgage interest rates at the time of sale, as well
as higher compensation costs as we continue to expand our
operations.
Net income attributable to DFH in the third quarter of 2024
decreased 7% to $71 million, or $0.72 per basic share, from $76
million, or $0.79 per basic share in the third quarter of 2023.
Aside from the operational results discussed above, the decrease
was partially offset by a related decrease in income tax expense
and, to a lesser extent, a reduction in contingent consideration
expense in the third quarter of 2024 compared to the prior year
quarter. As of September 30, 2024, the earnout period for the
H&H acquisition concluded and the final payment is due in the
fourth quarter of 2024.
Net new orders in the third quarter of 2024 were 1,680, an
increase of 9% compared to 1,535 net new orders for the third
quarter of 2023. The cancellation rate in the third quarter of 2024
was 13.8%, an improvement of 110 bps compared with the third
quarter of 2023 cancellation rate of 14.9%. We believe the increase
in net new orders and our lowered cancellation rate are reflective
of our successful sales incentives and availability of quick,
move-in-ready homes in our communities.
Our total available liquidity as of September 30, 2024 was $493
million, including $205 million of unrestricted operating cash. In
addition, net homebuilding debt to net capitalization as of
September 30, 2024 was 45.6%. Net homebuilding debt to net
capitalization is a non-GAAP financial measure. See “Reconciliation
of Non-GAAP Financial Measures.” During the first nine months of
2024, we released a significant number of housing starts and
purchased additional lots for production, increasing our investment
in inventory by $620 million since the end of 2023. This directly
impacted our net homebuilding debt to net capitalization ratio and
liquidity as we prepared to deliver our homes for the remainder of
the year and in order to maintain an active pipeline of quick,
move-in-ready homes.
Third Quarter 2024 Backlog
As of September 30, 2024, DFH had a backlog of 3,996 homes,
valued at $2.0 billion, compared to the backlog of 4,205 homes,
valued at $2.1 billion as of June 30, 2024. As of September 30,
2024, the ASP in backlog was $501,524 compared to $505,022 as of
June 30, 2024. As of September 30, 2024, approximately 1,858 of the
homes in backlog are expected to be delivered in 2025 and
beyond.
The following table shows the backlog units and ASP as of
September 30, 2024 by homebuilding segment:
As of September 30, 2024
(unaudited)
Backlog:
Units
Average Sales Price
Southeast
1,645
$
409,100
Mid-Atlantic
1,109
461,822
Midwest
1,242
659,389
Total
3,996
$
501,524
Full Year 2024 Outlook
Dream Finders Homes maintains its guidance of approximately
8,250 home closings for the full year 2024.
About Dream Finders Homes, Inc.
Dream Finders Homes (NYSE: DFH) is a homebuilder based in
Jacksonville, Florida. Dream Finders Homes builds single-family
homes throughout the Southeast, Mid-Atlantic and Midwest, including
Florida, Texas, Tennessee, North Carolina, South Carolina, Georgia,
Colorado, and the Washington, D.C. metropolitan area, which
comprises Northern Virginia and Maryland. Through its wholly owned
subsidiaries, DFH also provides mortgage financing and title
services to homebuyers. Dream Finders Homes achieves its
industry-leading growth and returns by maintaining an asset-light
homebuilding model. For more information, please visit
www.dreamfindershomes.com.
Forward-Looking Statements
This press release includes forward-looking statements regarding
future events, including projected 2024 home closings and market
conditions, possible or assumed future results of operations and
statements regarding the Company’s strategies and expectations as
they relate to market opportunities and growth. All forward-looking
statements are based on Dream Finders Homes’ beliefs as well as
assumptions made by and information currently available to Dream
Finders Homes. These statements reflect Dream Finders Homes’
current views with respect to future events and are subject to
various risks, uncertainties and assumptions. These risks,
uncertainties and assumptions are discussed in Dream Finders Homes’
Annual Report on Form 10-K for the year ended December 31, 2023,
subsequently filed Form 10-Qs and other filings with the U.S.
Securities and Exchange Commission. Dream Finders Homes undertakes
no obligation to update or revise any forward-looking statement
except as may be required by applicable law.
Dream Finders Homes,
Inc.
Condensed Consolidated Balance
Sheets
(In thousands, except share
and per share amounts)
(Unaudited)
September 30,
2024
December 31,
2023
Assets
Cash and cash equivalents
$
204,906
$
494,145
Restricted cash
27,942
54,311
Accounts receivable
30,202
30,874
Inventories
2,060,168
1,440,249
Lot deposits
367,893
247,207
Other assets
105,578
80,759
Investments in unconsolidated entities
6,558
15,364
Mortgage loans held for sale
177,610
—
Property and equipment, net
24,898
7,043
Right-of-use assets
18,592
20,280
Goodwill
300,313
172,207
Total assets
$
3,324,660
$
2,562,439
Liabilities
Accounts payable
$
168,982
$
134,115
Accrued expenses
186,667
207,389
Customer deposits
130,199
172,574
Construction lines of credit
991,208
530,384
Senior unsecured notes, net
294,713
293,918
Mortgage warehouse facilities
170,167
—
Lease liabilities
19,515
21,114
Contingent consideration
73,497
116,795
Total liabilities
$
2,034,948
$
1,476,289
Mezzanine Equity
Redeemable preferred stock
148,500
148,500
Redeemable noncontrolling interest
21,451
—
Equity
Class A common stock, $0.01 per share,
289,000,000 authorized, 34,502,077 and 32,882,124 issued as of
September 30, 2024 and December 31, 2023, respectively
345
329
Class B common stock, $0.01 per share,
61,000,000 authorized, 59,226,153 and 60,226,153 issued as of
September 30, 2024 and December 31, 2023, respectively
592
602
Additional paid-in capital
276,431
275,241
Retained earnings
844,375
648,412
Treasury stock, at cost, 251,997 shares of
Class A common stock as of September 30, 2024
(6,670
)
—
Total Dream Finders Homes, Inc.
stockholders’ equity
1,115,073
924,584
Noncontrolling interests
4,688
13,066
Total equity
1,119,761
937,650
Total liabilities, mezzanine equity and
equity
$
3,324,660
$
2,562,439
Dream Finders Homes,
Inc.
Condensed Consolidated
Statements of Comprehensive Income
(In thousands, except share
and per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Revenues:
Homebuilding
$
986,257
$
893,502
$
2,863,714
$
2,603,858
Financial services
20,612
2,328
27,140
6,731
Total revenues
1,006,869
895,830
2,890,854
2,610,589
Homebuilding cost of sales
797,110
709,286
2,328,587
2,109,485
Financial services expenses
12,156
1,449
16,254
3,885
Selling, general and administrative
expense
101,886
78,514
278,945
210,548
Income from unconsolidated entities
(99
)
(4,557
)
(10,301
)
(12,219
)
Contingent consideration revaluation
5,948
9,026
13,793
32,608
Other income, net
(2,556
)
(1,646
)
(5,680
)
(2,711
)
Income before taxes
92,424
103,758
269,256
268,993
Income tax expense
(20,780
)
(24,158
)
(59,166
)
(66,000
)
Net and comprehensive income
71,644
79,600
210,090
202,993
Net and comprehensive income attributable
to noncontrolling interests
(993
)
(3,503
)
(4,002
)
(9,043
)
Net and comprehensive income attributable
to Dream Finders Homes, Inc.
$
70,651
$
76,097
$
206,088
$
193,950
Earnings per share
Basic
$
0.72
$
0.79
$
2.10
$
1.98
Diluted
$
0.70
$
0.75
$
2.06
$
1.83
Weighted-average number of
shares
Basic
93,527,205
93,108,277
93,399,681
93,052,507
Diluted
100,736,148
102,052,181
100,140,134
105,819,964
Dream Finders Homes,
Inc.
Other Financial and Operating
Data
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Other Financial and Operating
Data
Home closings
1,889
1,798
5,575
5,161
Average sales price of homes closed(1)
$
518,553
$
501,536
$
510,204
$
499,433
Net new orders
1,680
1,535
5,116
4,638
Cancellation rate
13.8
%
14.9
%
15.8
%
17.1
%
Homebuilding gross margin (in
thousands)(2)
$
189,147
$
184,216
$
535,127
$
494,373
Homebuilding gross margin %(3)
19.2
%
20.6
%
18.7
%
19.0
%
Adjusted homebuilding gross margin (in
thousands)(4)
$
272,117
$
254,172
$
773,901
$
696,276
Adjusted homebuilding gross margin
%(3)(4)
27.6
%
28.4
%
27.0
%
26.7
%
Active communities as of period end(5)
235
219
Backlog - units
3,996
5,025
Backlog - value (in thousands)
$
2,004,091
$
2,410,182
Net homebuilding debt to net
capitalization(4)
45.6
%
34.5
%
Return on participating equity(6)
30.4
%
38.9
%
(1)
Average sales price of homes closed is
calculated based on homebuilding revenues, adjusted for the impact
of percentage of completion revenues, and excluding deposit
forfeitures and land sales, over homes closed.
(2)
Homebuilding gross margin is homebuilding
revenues less homebuilding cost of sales.
(3)
Calculated as a percentage of homebuilding
revenues.
(4)
Adjusted homebuilding gross margin and net
homebuilding debt to net capitalization are non-GAAP financial
measures. For definitions of these non-GAAP financial measures and
reconciliations to our most directly comparable financial measures
calculated and presented in accordance with GAAP, see
“Reconciliation of Non-GAAP Financial Measures.”
(5)
A community becomes active once the model
is completed or the community has its fifth net sale. A community
becomes inactive when it has fewer than five homesites remaining to
sell.
(6)
Return on participating equity is
calculated as net income attributable to DFH, less redeemable
preferred stock distributions, divided by average beginning and
ending total Dream Finders Homes, Inc. stockholders’ equity
(“participating equity”) for the trailing twelve months.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024 (unaudited)
2023 (unaudited)
2024 (unaudited)
2023 (unaudited)
Home Closings:
Units
Average Sales Price
Units
Average Sales Price
Units
Average Sales Price
Units
Average Sales Price
Southeast
592
$
494,163
828
$
467,896
1,838
$
492,913
2,261
$
460,524
Mid-Atlantic
603
461,320
388
407,798
1,704
441,184
1,144
386,114
Midwest
694
589,087
582
611,886
2,033
583,688
1,756
623,358
Total
1,889
$
518,553
1,798
$
501,536
5,575
$
510,204
5,161
$
499,433
Reconciliation of Non-GAAP Financial Measures
Management utilizes specific non-GAAP financial measures as
supplementary tools to evaluate operating performance. These
include adjusted homebuilding gross margin and net homebuilding
debt to net capitalization. Other companies may not calculate
non-GAAP financial measures in the same manner that we do.
Accordingly, these non-GAAP financial measures should be considered
only as a supplement to relevant GAAP information, as reconciled
for each measure below. In the future, we may incorporate
additional adjustments to these non-GAAP financial measures as we
find them relevant and beneficial for both management and
investors.
Adjusted Homebuilding Gross Margin
The following table presents a reconciliation of adjusted
homebuilding gross margin to the GAAP financial measure of
homebuilding gross margin for each of the periods indicated
(unaudited and in thousands, except percentages):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Homebuilding gross margin(1)
$
189,147
$
184,216
$
535,127
$
494,373
Interest expense in homebuilding cost of
sales(2)
41,818
30,369
114,222
85,586
Amortization in homebuilding cost of
sales(3)
(1,186
)
—
5,914
—
Commission expense
42,338
39,587
118,638
116,317
Adjusted homebuilding gross margin
$
272,117
$
254,172
$
773,901
$
696,276
Homebuilding gross margin %(4)
19.2
%
20.6
%
18.7
%
19.0
%
Adjusted homebuilding gross margin
%(4)
27.6
%
28.4
%
27.0
%
26.7
%
(1)
Homebuilding gross margin is homebuilding
revenues less homebuilding cost of sales.
(2)
Includes interest charged to homebuilding
cost of sales related to our construction lines of credit and
senior unsecured notes, net, as well as lot option fees.
(3)
Represents amortization of purchase
accounting adjustments from the Crescent Homes
acquisition.
(4)
Calculated as a percentage of homebuilding
revenues.
We define adjusted homebuilding gross margin as homebuilding
gross margin excluding the effects of capitalized interest, lot
option fees, amortization included in homebuilding cost of sales
(adjustments resulting from the application of purchase accounting
in connection with acquisitions) and commission expense. Our
management believes this information is meaningful because it
isolates the impact that these excluded items have on homebuilding
gross margin. We include internal and external commission expense
in homebuilding cost of sales, not selling, general and
administrative expense, and therefore commission expense is taken
into account in homebuilding gross margin.
As a result, in order to provide a meaningful comparison to the
public company homebuilders that include commission expense below
the homebuilding gross margin line in selling, general and
administrative expense, we have excluded commission expense from
adjusted homebuilding gross margin. However, because adjusted
homebuilding gross margin information excludes capitalized
interest, lot option fees, purchase accounting amortization and
commission expense, which have real economic effects and could
impact our results of operations, the utility of adjusted
homebuilding gross margin information as a measure of our operating
performance may be limited.
Net Homebuilding Debt to Net Capitalization
The following table presents a reconciliation of net
homebuilding debt to net capitalization to the GAAP financial
measure of total debt to total capitalization for each of the
periods indicated (unaudited and in thousands, except
percentages):
As of September 30,
2024
2023
Total debt
$
1,456,088
$
849,116
Total mezzanine equity
169,951
148,500
Total equity
1,119,761
837,572
Total capitalization
$
2,745,800
$
1,835,188
Total debt to total capitalization
53.0
%
46.3
%
Total debt
$
1,456,088
$
849,116
Less: mortgage warehouse facilities
170,167
—
Less: cash and cash equivalents
204,906
330,129
Net homebuilding debt
$
1,081,015
$
518,987
Total mezzanine equity
169,951
148,500
Total equity
1,119,761
837,572
Net capitalization
$
2,370,727
$
1,505,059
Net homebuilding debt to net
capitalization
45.6
%
34.5
%
We define net homebuilding debt to net capitalization as the sum
of construction lines of credit and senior unsecured notes, net
less cash and cash equivalents (“net homebuilding debt”), divided
by the sum of net homebuilding debt, total mezzanine equity and
total equity (“net capitalization”). Net homebuilding debt excludes
borrowings under our mortgage warehouse facilities. Management
believes the net homebuilding debt to net capitalization is
meaningful as it is used to assess our consolidated performance and
the performance of our homebuilding segments, as well as to
establish targets for performance-based compensation. We also use
this ratio as a measure of overall leverage.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241031911839/en/
Investor Contact: investors@dreamfindershomes.com
Media Contact: mediainquiries@dreamfindershomes.com
Dream Finders Homes (NYSE:DFH)
Historical Stock Chart
From Oct 2024 to Nov 2024
Dream Finders Homes (NYSE:DFH)
Historical Stock Chart
From Nov 2023 to Nov 2024