Dream Finders Announces Second Quarter 2022 Results
08/04/2022 - 07:00 AM
JACKSONVILLE, Fla., Aug. 04, 2022 (GLOBE NEWSWIRE) -- Dream Finders Homes, Inc. (the “Company”, “Dream Finders” or “DFH”) (NASDAQ: DFH), one of the nation’s fastest-growing companies, announced its financial results for the second quarter ended June 30, 2022.
Second Quarter 2022 Highlights (As Compared to Second Quarter 2021, unless otherwise noted)
Homebuilding revenues increased 118% to $791 million from $364 million Gross margin as a percentage of homebuilding revenues increased 320 basis points to 19.7% from 16.5% Pre-tax income increased 145% to $90 million , compared to $37 million Net income attributable to DFH increased 119% to $63 million , or $0.60 per diluted share, compared to $29 million , or $0.31 per diluted share Home closings increased 66% to 1,649 from 996 Average sales price of homes closed increased 29% to $463,447 from $358,604 Net new orders decreased 6% to 1,426 from 1,521 Active community count increased 74% to 203 from 117 Backlog of sold homes increased 74% to 7,190 homes valued at $3.3 billion , compared to 4,137 homes valued at $1.6 billion Return on participating equity was 44.0% for the trailing twelve months ended June 30, 2022, compared to 44.3% for the trailing twelve months ended June 30, 2021 Controlled lot pipeline increased 66% to 37,983 as of June 30, 2022, compared to 22,923 as of June 30, 2021 Commitment on the revolving credit facility increased to $1.1 billion as of June 30, 2022, compared to $818 million as of December 31, 2021 Total liquidity, comprised of cash and cash equivalents, and availability under the revolving credit facility, increased 21% to $334 million as of June 30, 2022, compared to $277 million as of December 31, 2021 Management Commentary
Patrick Zalupski, Dream Finders Homes Chairman and CEO, said, “In DFH’s sixth quarter as a public company, we continued to outperform growth and execution expectations. For the full year 2020 (the year prior to our IPO), DFH had annual pre-tax earnings of $85 million . Less than 18 months after going public, DFH had quarterly pre-tax earnings of $90 million . While we are confident that DFH earnings will continue to grow, it is important to step back and appreciate our employees' hard work to reach this point in a relatively short period of time. These most recent results are a function of several years' hard work. It is rewarding to see all of that work bearing fruit and our accomplishments reinforce the benefits of our culture and business model.
More specific to the quarter, our homebuilding margin improved to 19.7% , another Company record, as our team continues to closely manage sales prices, cost inflation, supply chain challenges and mortgage rates in a quickly changing macro environment. While we acknowledge the rapid increase in mortgage rates and appreciation in home values pose headwinds, we believe the overall shortage of homes available will perpetuate the supply-demand gap. Our net new orders were up year over year in both May and June, however, we were limiting sales across most communities in April to ensure pricing was appropriately placed during a period of enhanced market volatility. This limitation contributed to an overall 6% quarterly decrease in net new orders, however, excluding cancellations, our total gross sales were up year over year.
Our land-light operating model allows us to navigate temporary housing market challenges and quickly change course in light of macroeconomic conditions. We continue to be strategically positioned in high growth markets, providing affordable homes to the entry-level, first and second-time move up homebuyers. Our build-for-rent platform provides a consistent home deliveries pipeline, which is less susceptible to temporary changes in demand from individual homebuyers. While the short-term may be uncertain, we are committed to our business model and focused on generating long-term earnings growth.”
Second Quarter 2022 Results
Homebuilding revenues for the second quarter 2022 increased 118% to $791 million , compared to $364 million in the year-ago quarter. Home closings increased 66% to 1,649, compared to 996 in the year-ago quarter. Average sales price (“ASP”) of homes closed for the second quarter 2022 was $463,447 , compared to $358,604 in the year-ago quarter. The ASP increase was primarily due to the MHI acquisition as well as home price appreciation.
Homebuilding gross margin percentage in the second quarter 2022 improved 320 basis points to 19.7% , compared to 16.5% in the year-ago quarter. The gross margin improvement was attributable to our ability to increase prices while managing cost inflation.
Selling, general and administrative expenses as a percentage of homebuilding revenues was 8% in the second quarter 2022, remaining consistent when compared to 8% in the year-ago quarter.
Net new orders in the second quarter 2022 decreased 6% to 1,426, compared to 1,521 in the year-ago quarter. During the first month of the quarter, the Company delayed the sale of homes until later stages in the construction cycle. Later in June, demand tightened in response to the rapid rise in mortgage rates coupled with continued home price appreciation. The market's reaction to the quickly changing economic conditions negatively impacted new orders for the quarter and drove an uptick in cancellations for the Company and the industry as a whole. Our cancellation rate remains within the Company’s pre-pandemic historical averages at 21.0% for the quarter ended June 30, 2022, compared to 14.4% for the year-ago period. At the end of the second quarter 2022, DFH's large backlog of 7,190 homes, valued at $3.3 billion , represented record increases of 74% and 103% , respectively, compared to the year-ago quarter. As of June 30, 2022, the ASP in backlog was $463,831.
Net income attributable to DFH in the second quarter 2022 was $63 million , or $0.60 per diluted share, compared to $29 million , or $0.31 per diluted share in the second quarter 2021.
Full Year 2022 Outlook
Dream Finders Homes is reaffirming its guidance of a minimum of 7,000 home closings for the full year 2022. This outlook considers the rapid increase in interest rates and overall moderation of the housing market that began at the end of the second quarter of 2022 and assumes general economic conditions, including interest rates and mortgage availability, remain similar to those experienced in the latter half of the second quarter of 2022. Additionally, any further COVID-19 governmental restrictions on land development, home construction or home sales or additional supply chain challenges could negatively impact the Company’s ability to achieve this number of home closings in 2022. As of June 30, 2022, the Company backlog was 7,190 homes, with approximately 32% of the homes in backlog expected to be delivered in 2023 and beyond. The Company continues to believe the backlog of homes sold is the best indicator for future growth.
The following table shows the backlog units and ASP as of June 30, 2022 by segment:
As of June 30, 2022 (unaudited) Backlog: Units Average Sales Price Jacksonville 1,734 $ 364,137 Colorado 135 619,289 Orlando 1,016 550,965 DC Metro 124 502,018 The Carolinas 1,110 330,399 Texas 1,859 633,287 Other (1) 1,212 374,484 Total 7,190 $ 463,831
(1) Austin, Savannah, Village Park Homes, Active Adult and Custom Homes. Austin refers to legacy DFH operations, exclusive of MHI.
About Dream Finders Homes, Inc.
Dream Finders Homes (NASDAQ: DFH) is based in Jacksonville, FL, and is one of the nation’s fastest-growing companies, with industry-leading returns on shareholders’ equity. Dream Finders Homes builds single-family homes in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, Virginia, Maryland, and the DC Metro area. Through its mortgage and title joint ventures, DFH also provides mortgage financing and title services to its 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 2022 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, 2021 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, 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. Consolidated Statements of Comprehensive Income and Operating Activity (In thousands, except per share amounts and Other Financial and Operating Data, unless otherwise noted)
For the Three Months Ended June 30, (unaudited) For the Six Months Ended June 30, (unaudited) 2022 2021 2022 2021 Revenues: Homebuilding $ 791,230 $ 363,743 $ 1,453,703 $ 705,910 Other 1,904 1,533 3,497 2,926 Total revenues 793,134 365,276 1,457,200 708,836 Homebuilding cost of sales 635,422 303,589 1,174,290 594,626 Selling, general and administrative expense 66,015 30,137 127,725 59,452 Income from equity in earnings of unconsolidated entities (3,334 ) (1,125 ) (6,294 ) (2,857 ) Contingent consideration revaluation 5,042 3,977 9,234 5,160 Other (income) expense, net 278 (7,856 ) (691 ) (7,153 ) Interest expense 13 16 26 658 Income before taxes 89,698 36,538 152,910 58,950 Income tax expense (23,327 ) (4,479 ) (40,205 ) (9,295 ) Net and comprehensive income 66,371 32,059 112,705 49,655 Net and comprehensive income attributable to non-controlling interests (3,747 ) (3,486 ) (6,365 ) (4,961 ) Net and comprehensive income attributable to Dream Finders Homes, Inc. $ 62,624 $ 28,573 $ 106,340 $ 44,694 Earnings per share (1) Basic $ 0.64 $ 0.31 $ 1.07 $ 0.49 Diluted $ 0.60 $ 0.31 $ 1.02 $ 0.49 Weighted-average number of shares Basic 92,758,939 92,521,482 92,758,939 92,521,482 Diluted 104,566,243 92,670,727 103,531,560 92,641,222 Other Financial and Operating Data Active communities at end of period(2) 203 117 203 117 Home closings 1,649 996 3,020 1,998 Average sales price of homes closed(3) $ 463,447 $ 358,604 $ 463,318 $ 347,261 Net new orders 1,426 1,521 3,828 3,531 Cancellation rate 21.0 % 14.4 % 16.4 % 10.9 % Backlog (at period end) - homes 7,190 4,137 7,190 4,137 Backlog (at period end, in thousands) - value $ 3,334,945 $ 1,646,725 $ 3,334,945 $ 1,646,725 Gross margin (in thousands)(4) $ 155,808 $ 60,154 $ 279,413 $ 111,284 Gross margin %(5) 19.7 % 16.5 % 19.2 % 15.8 % Net profit margin % 7.9 % 7.8 % 7.3 % 6.3 %
(1) The Company calculated earnings per share (“EPS”) based on net income attributable to common stockholders for the period January 21, 2021 through June 30, 2021 over the weighted average diluted shares outstanding for the same period. EPS was calculated prospectively for the period subsequent to the Company’s initial public offering and corporate reorganization, resulting in 92,521,482 shares of common stock outstanding as of the closing of the initial public offering. The total outstanding shares of common stock are made up of Class A common stock and Class B common stock, which participate equally in their ratable ownership share of the Company. Diluted shares were calculated by using the treasury stock method for stock grants and the if-converted method for the convertible preferred stock and the associated preferred dividends. (2) A community becomes active once the model is completed or the community has its fifth sale. A community becomes inactive when it has fewer than five units remaining to sell. (3) 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. (4) Gross margin is homebuilding revenues less homebuilding cost of sales. (5) Calculated as a percentage of homebuilding revenues.
Three Months Ended June 30, Six Months Ended June 30, 2022 (unaudited) 2021 (unaudited) 2022 (unaudited) 2021 (unaudited) Units Average Sales Price Units Average Sales Price Units Average Sales Price Units Average Sales Price Home Closings: Jacksonville 377 $ 472,065 265 $ 351,496 646 $ 464,182 560 $ 338,077 Colorado 69 584,356 47 494,604 139 570,443 81 473,882 Orlando 100 481,968 147 409,362 206 458,593 308 404,494 DC Metro 21 584,930 35 681,706 36 671,168 59 640,193 The Carolinas 351 330,195 315 301,033 603 330,709 658 293,807 Texas (1) 527 559,770 — — 1,010 555,270 — — Other (2) 204 365,479 187 331,101 380 371,562 332 332,649 Total 1,649 $ 463,447 996 $ 358,604 3,020 $ 463,318 1,998 $ 347,261
(1) Texas consists of the operations of MHI, which was acquired on October 1, 2021. (2) Austin, Savannah, Village Park Homes, Active Adult and Custom Homes. Austin refers to legacy DFH operations, exclusive of MHI.
Dream Finders Homes, Inc. Consolidated Balance Sheets (In thousands, except share and per share amounts) (Unaudited)
June 30, 2022 December 31, 2021 Assets Cash and cash equivalents $ 84,097 $ 227,227 Restricted cash (VIE amounts of $2,944 and $4,275) 45,296 54,095 Accounts receivable (VIE amounts of $1,711 and $2,684) 30,280 33,482 Inventories: Construction in process and finished homes 1,254,199 961,779 Company owned land and lots 93,404 83,197 VIE owned land and lots 8,414 21,686 Total inventories 1,356,017 1,066,662 Lot deposits 288,426 241,406 Other assets (VIE amounts of $2,727 and $2,185) 78,946 43,962 Equity method investments 14,188 15,967 Property and equipment, net 6,511 6,789 Operating lease right-of-use assets 25,108 19,359 Deferred tax asset 4,905 4,232 Intangible assets, net of amortization 7,085 9,140 Goodwill 171,927 171,927 Total assets $ 2,112,786 $ 1,894,248 Liabilities Accounts payable (VIE amounts of $668 and $1,309) $ 130,115 $ 113,498 Accrued expenses (VIE amounts of $6,213 and $6,915) 126,823 139,508 Customer deposits 190,945 177,685 Construction lines of credit 875,000 760,000 Notes payable (VIE amounts of $0 and $1,979) 1,568 3,292 Operating lease liabilities 25,625 19,826 Contingent consideration 115,555 124,056 Total liabilities $ 1,465,631 $ 1,337,865 Commitments and contingencies Mezzanine Equity Preferred mezzanine equity 155,621 155,220 Stockholders’ Equity Class A common stock, $0.01 per share, 289,000,000 authorized, 32,295,329 outstanding 323 323 Class B common stock, $0.01 per share, 61,000,000 authorized, 60,226,153 outstanding 602 602 Additional paid-in capital 261,207 257,963 Retained earnings 217,346 118,194 Non-controlling interests 12,056 24,081 Total mezzanine and stockholders’ equity 647,155 556,383 Total liabilities, mezzanine equity, and stockholders’ equity $ 2,112,786 $ 1,894,248
SOURCE: Dream Finders Homes, Inc .
Investor Contact: investors@dreamfindershomes.com Media Contact : mediainquiries@dreamfindershomes.com
Anabel Fernandez – Chief Financial Officer Robert Riva – General Counsel