Dream Finders Announces Second Quarter 2023 Results
- Homebuilding revenues increased 19% to $943 million
- Home closings increased 12% to 1,846
- Net new orders increased 16% to 1,655
- Pre-tax income increased 7% to $96 million
- Net income attributable to DFH increased 10% to $69 million
- Average sales price of homes closed increased 9% to $504,683
- Active community count increased 8% to 220
- Backlog of sold homes of 5,288 homes, valued at $2.5 billion
- Return on participating equity of 42.2%
- Gross margin as a percentage of homebuilding revenues decreased 60 basis points to 19.1%
- Cancellation rate in the second quarter 2023 was 15.6%
- ROE decreased from 44.0% to 42.2%
- Share buyback program approved but no shares repurchased
Homebuilding Revenues Up
Return on Participating Equity of
Second Quarter 2023 Highlights (As Compared to Second Quarter 2022, unless otherwise noted)
-
Homebuilding revenues increased
19% to from$943 million $791 million -
Home closings increased
12% to 1,846 from 1,649 -
Net new orders increased
16% to 1,655 from 1,426 -
Gross margin as a percentage of homebuilding revenues decreased 60 basis points to
19.1% from19.7% -
Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased 140 basis points to
27.1% from25.7% -
Pre-tax income increased
7% to from$96 million $90 million -
Net income attributable to DFH increased
10% to , or$69 million per basic share, from$0.70 , or$63 million per basic share$0.64 -
Average sales price of homes closed increased
9% to from$504,683 $463,447 -
Active community count increased
8% to 220 from 203 -
Backlog of sold homes of 5,288 homes, valued at
$2.5 billion -
Return on participating equity of
42.2% for the trailing twelve months ended June 30, 2023, compared to44.0% for the trailing twelve months ended June 30, 2022 -
Total liquidity, comprised of cash and cash equivalents, and availability under the revolving credit facility, of
as of June 30, 2023, compared to$511 million as of December 31, 2022$487 million -
On July 19, 2023, commitments under the revolving credit facility increased to
from$1.2 billion as of June 30, 2023$1.1 billion
Management Commentary
Patrick Zalupski, Dream Finders Homes Chairman and CEO, said, “DFH continued its positive momentum in the second quarter of 2023, delivering revenue growth of
"During the first half of 2023, our MHI acquisition performed better than we anticipated at the beginning of the year. As part of the MHI transaction, we agreed to pay the former owner
"Return on equity of
"Although uncertainty remains for 2023, we have set ourselves up for another successful year and have increased guidance to approximately 6,500 closings for the fiscal calendar year.”
Share Buyback Program
In June 2023, the Company’s Board of Directors approved a share buyback program under which the Company can repurchase up to
Second Quarter 2023 Results
Homebuilding revenues in the second quarter 2023 increased
Homebuilding gross margin percentage in the second quarter 2023 was
Adjusted gross margin as a percentage of homebuilding revenues for the three months ended June 30, 2023 was
Selling, general and administrative expense (“SG&A”) as a percentage of homebuilding revenues in the second quarter 2023 remained consistent at
Net income attributable to DFH in the second quarter 2023 increased
Net new orders in the second quarter 2023 were 1,655, an increase of
As of June 30, 2023, return on participating equity (“ROE”) was
As of June 30, 2023, our construction lines of credit balance decreased by
As of June 30, 2023, DFH had a backlog of 5,288 homes, valued at
Full Year 2023 Outlook
Dream Finders Homes is updating its guidance and now expects approximately 6,500 home closings for the full year 2023 compared to a previous outlook of approximately 6,000 homes. The update is a result of the improved sales activity year-to-date as the housing market continues to assimilate mortgage rates, and management is able to release starts and manage the construction cycle more efficiently. Deterioration of general economic conditions, including interest rate increases and mortgage availability, as well as any governmental restrictions on land development, home construction or home sales or supply chain challenges could negatively affect the Company’s ability to achieve this number of home closings in 2023. As of June 30, 2023, the Company backlog was 5,288 homes, with approximately 2,286 of the homes in backlog expected to be delivered in 2024 and beyond.
The following table shows the backlog units and ASP as of June 30, 2023 by segment:
|
As of June 30, 2023
|
||||
Backlog: |
Units |
|
Average Sales Price |
||
|
1,509 |
$ |
311,473 |
||
|
132 |
|
610,668 |
||
|
784 |
|
639,448 |
||
The Carolinas |
618 |
|
400,953 |
||
|
1,260 |
|
326,814 |
||
Other (1) |
985 |
|
664,696 |
||
Total |
5,288 |
$ |
470,192 |
(1) |
|
About Dream Finders Homes, Inc.
Dream Finders Homes (NYSE: DFH) is a homebuilder based in
Forward-Looking Statements
This press release includes forward-looking statements regarding future events, including projected 2023 home closings and market conditions and possible or assumed future results of operations, including 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, 2022 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, and other filings with the
Dream Finders Homes, Inc. Condensed Consolidated Statements of Comprehensive Income and Other Financial and Operating Data (In thousands, except per share amounts and Other Financial and Operating Data, unless otherwise noted) (Unaudited) |
||||||||||||||||
|
For the Three Months Ended June 30, (unaudited) |
For the Six Months Ended June 30, (unaudited) |
||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenues: |
|
|
|
|
||||||||||||
Homebuilding |
$ |
942,880 |
|
$ |
791,230 |
|
$ |
1,710,356 |
|
$ |
1,453,703 |
|
||||
Other |
|
2,459 |
|
|
1,904 |
|
|
4,403 |
|
|
3,497 |
|
||||
Total revenues |
|
945,339 |
|
|
793,134 |
|
|
1,714,759 |
|
|
1,457,200 |
|
||||
Homebuilding cost of sales |
|
762,855 |
|
|
635,422 |
|
|
1,400,199 |
|
|
1,174,290 |
|
||||
Selling, general and administrative expense |
|
73,709 |
|
|
66,015 |
|
|
134,470 |
|
|
127,725 |
|
||||
Income from unconsolidated entities |
|
(4,704 |
) |
|
(3,334 |
) |
|
(7,662 |
) |
|
(6,294 |
) |
||||
Contingent consideration revaluation |
|
18,266 |
|
|
5,042 |
|
|
23,582 |
|
|
9,234 |
|
||||
Other (income) expense, net |
|
(635 |
) |
|
291 |
|
|
(1,065 |
) |
|
(665 |
) |
||||
Income before taxes |
|
95,848 |
|
|
89,698 |
|
|
165,235 |
|
|
152,910 |
|
||||
Income tax expense |
|
(24,206 |
) |
|
(23,327 |
) |
|
(41,842 |
) |
|
(40,205 |
) |
||||
Net and comprehensive income |
|
71,642 |
|
|
66,371 |
|
|
123,393 |
|
|
112,705 |
|
||||
Net and comprehensive income attributable to noncontrolling interests |
|
(2,878 |
) |
|
(3,747 |
) |
|
(5,540 |
) |
|
(6,365 |
) |
||||
Net and comprehensive income attributable to Dream Finders Homes, Inc. |
$ |
68,764 |
|
$ |
62,624 |
|
$ |
117,853 |
|
$ |
106,340 |
|
||||
|
|
|
|
|
||||||||||||
Earnings per share |
|
|
|
|
||||||||||||
Basic |
$ |
0.70 |
|
$ |
0.64 |
|
$ |
1.19 |
|
$ |
1.07 |
|
||||
Diluted |
$ |
0.65 |
|
$ |
0.60 |
|
$ |
1.09 |
|
$ |
1.02 |
|
||||
Weighted-average number of shares |
|
|
|
|
||||||||||||
Basic |
|
93,108,277 |
|
|
92,758,939 |
|
|
93,025,626 |
|
|
92,758,939 |
|
||||
Diluted |
|
105,439,519 |
|
|
104,566,243 |
|
|
107,704,859 |
|
|
103,531,560 |
|
||||
Other Financial and Operating Data |
|
|
|
|
||||||||||||
Home closings |
|
1,846 |
|
|
1,649 |
|
|
3,363 |
|
|
3,020 |
|
||||
Average sales price of homes closed(1) |
$ |
504,683 |
|
$ |
463,447 |
|
$ |
498,309 |
|
$ |
463,318 |
|
||||
Net New Orders |
|
1,655 |
|
|
1,426 |
|
|
3,103 |
|
|
3,828 |
|
||||
Cancellation rate |
|
15.6 |
% |
|
21.0 |
% |
|
18.1 |
% |
|
16.4 |
% |
||||
Gross margin (in thousands)(2) |
$ |
180,025 |
|
$ |
155,808 |
|
$ |
310,157 |
|
$ |
279,413 |
|
||||
Gross margin %(3) |
|
19.1 |
% |
|
19.7 |
% |
|
18.1 |
% |
|
19.2 |
% |
||||
Adjusted gross margin (in thousands)(4) |
$ |
255,912 |
|
$ |
203,731 |
|
$ |
442,105 |
|
$ |
365,287 |
|
||||
Adjusted gross margin %(4) |
|
27.1 |
% |
|
25.7 |
% |
|
25.8 |
% |
|
25.1 |
% |
||||
Net profit margin % |
|
7.3 |
% |
|
7.9 |
% |
|
6.9 |
% |
|
7.3 |
% |
||||
Active communities at end of period(5) |
|
|
|
220 |
|
|
203 |
|
||||||||
Ending Backlog - Homes |
|
|
|
5,288 |
|
|
7,190 |
|
||||||||
Backlog (at period end, in thousands) - value |
|
|
$ |
2,486,375 |
|
$ |
3,334,945 |
|
(1) |
Average sales price of homes closed is calculated based on homebuilding revenues, excluding the impact of deposit forfeitures, percentage of completion revenues and land sales, over homes closed. |
|
(2) |
Gross margin is homebuilding revenues less homebuilding cost of sales. |
|
(3) |
Calculated as a percentage of homebuilding revenues. |
|
(4) |
Adjusted gross margin is a non-GAAP financial measure. For definitions of non-GAAP financial measures and a reconciliation to our most directly comparable financial measure 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 new order. A community becomes inactive when it has fewer than five units remaining to sell. |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||||||||||
|
2023 (unaudited) |
|
2022 (unaudited) |
|
2023 (unaudited) |
|
2022 (unaudited) |
|||||||||||||
Home Closings: |
Units |
|
Average Sales Price |
|
Units |
|
Average Sales Price |
|
Units |
|
Average Sales Price |
|
Units |
|
Average Sales Price |
|||||
|
394 |
$ |
405,617 |
377 |
$ |
472,065 |
681 |
$ |
413,146 |
646 |
$ |
464,182 |
||||||||
|
78 |
|
598,808 |
69 |
|
584,356 |
152 |
|
595,763 |
139 |
|
570,443 |
||||||||
|
261 |
|
549,355 |
100 |
|
481,968 |
495 |
|
522,682 |
206 |
|
458,593 |
||||||||
The Carolinas |
347 |
|
348,468 |
351 |
|
330,195 |
667 |
|
341,650 |
603 |
|
330,709 |
||||||||
|
566 |
|
638,062 |
527 |
|
559,770 |
987 |
|
642,506 |
1,010 |
|
555,270 |
||||||||
Other (1) |
200 |
|
498,411 |
225 |
|
385,961 |
381 |
|
480,692 |
416 |
|
397,490 |
||||||||
Total |
1,846 |
$ |
504,683 |
1,649 |
$ |
463,447 |
3,363 |
$ |
498,309 |
3,020 |
$ |
463,318 |
(1) |
|
Dream Finders Homes, Inc. Condensed Consolidated Balance Sheets (In thousands, except share and per share amounts) (Unaudited)
|
||||||
|
|
|
|
|
||
|
|
June 30,
|
|
December 31,
|
||
Assets |
|
|
||||
Cash and cash equivalents |
$ |
292,510 |
$ |
364,531 |
||
Restricted cash (VIE amounts of |
|
33,081 |
|
30,599 |
||
Accounts receivable (VIE amounts of |
|
31,433 |
|
43,490 |
||
Inventories: |
|
|
||||
Construction in process and finished homes |
|
1,212,289 |
|
1,175,107 |
||
Company owned land and lots |
|
203,932 |
|
196,563 |
||
VIE owned land and lots |
|
1,037 |
|
6,515 |
||
Total inventories |
|
1,417,258 |
|
1,378,185 |
||
Lot deposits |
|
247,903 |
|
277,258 |
||
Other assets (VIE amounts of |
|
50,315 |
|
59,438 |
||
Investments in unconsolidated entities |
|
13,948 |
|
14,008 |
||
Property and equipment, net |
|
7,948 |
|
7,337 |
||
Operating lease right-of-use assets |
|
21,624 |
|
24,084 |
||
Goodwill |
|
172,207 |
|
172,207 |
||
Total assets |
$ |
2,288,227 |
$ |
2,371,137 |
||
|
|
|
||||
Liabilities |
|
|
||||
Accounts payable (VIE amounts of |
$ |
124,185 |
$ |
134,702 |
||
Accrued expenses (VIE amounts of |
|
89,854 |
|
184,051 |
||
Customer deposits |
|
163,237 |
|
145,654 |
||
Construction lines of credit |
|
875,672 |
|
966,248 |
||
Operating lease liabilities |
|
22,300 |
|
24,661 |
||
Contingent consideration |
|
93,500 |
|
115,128 |
||
Total liabilities |
$ |
1,368,748 |
$ |
1,570,444 |
||
|
|
|
||||
Mezzanine Equity |
|
|
||||
Preferred mezzanine equity |
|
156,479 |
|
156,045 |
||
Stockholders’ Equity |
|
|
||||
Class A common stock, |
|
329 |
|
325 |
||
Class B common stock, |
|
602 |
|
602 |
||
Additional paid-in capital |
|
270,905 |
|
264,757 |
||
Retained earnings |
|
476,663 |
|
365,994 |
||
Noncontrolling interests |
|
14,501 |
|
12,970 |
||
Total mezzanine and stockholders’ equity |
|
919,479 |
|
800,693 |
||
Total liabilities, mezzanine equity and stockholders’ equity |
$ |
2,288,227 |
$ |
2,371,137 |
Reconciliation of Non-GAAP Financial Measures
The following table presents a reconciliation of adjusted gross margin to the GAAP financial measure of gross margin for each of the periods indicated (unaudited and in thousands, except percentages):
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Gross margin(1) |
$ |
180,025 |
|
$ |
155,808 |
|
$ |
310,157 |
|
$ |
279,413 |
|
||||
Interest expense in homebuilding cost of sales |
|
32,798 |
|
|
12,790 |
|
|
55,217 |
|
|
21,637 |
|
||||
Amortization in homebuilding cost of sales(2) |
|
— |
|
|
1,991 |
|
|
— |
|
|
5,821 |
|
||||
Commission expense |
|
43,089 |
|
|
33,142 |
|
|
76,731 |
|
|
58,416 |
|
||||
Adjusted gross margin |
$ |
255,912 |
|
$ |
203,731 |
|
$ |
442,105 |
|
$ |
365,287 |
|
||||
Gross margin %(3) |
|
19.1 |
% |
|
19.7 |
% |
|
18.1 |
% |
|
19.2 |
% |
||||
Adjusted gross margin %(3) |
|
27.1 |
% |
|
25.7 |
% |
|
25.8 |
% |
|
25.1 |
% |
(1) |
Gross margin is homebuilding revenues less homebuilding cost of sales. |
|
(2) |
Represents amortization of purchase accounting adjustments from the Company’s prior acquisitions. |
|
(3) |
Calculated as a percentage of homebuilding revenues. |
Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. The Company defines adjusted gross margin as gross margin excluding the effects of capitalized interest, amortization included in homebuilding cost of sales (adjustments resulting from the application of purchase accounting in connection with acquisitions) and commission expense. Management believes this information is meaningful because it isolates the impact that capitalized interest, purchase accounting amortization and commission expense have on gross margin. The Company includes 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 gross margin. As a result, in order to provide a meaningful comparison to the public company homebuilders that include commission expense below the gross margin line in selling, general and administrative expense, commission expense has been excluded from adjusted gross margin. However, because adjusted gross margin information excludes capitalized interest, purchase accounting amortization and commission expense, which have real economic effects and could impact our results of operations, the utility of adjusted gross margin information as a measure of operating performance may be limited. In addition, other companies may not calculate adjusted gross margin information in the same manner. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of performance.
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Investor Contact: investors@dreamfindershomes.com
Media Contact: mediainquiries@dreamfindershomes.com
Source: Dream Finders Homes, Inc.