Dream Finders Announces First Quarter 2024 Results
First Quarter Homebuilding Revenues of
Net New Orders Up 19%, Net Income to DFH Up 11%
Return on Participating Equity of 34.9%
First Quarter 2024 Highlights (As Compared to First Quarter 2023, unless otherwise noted)
-
Homebuilding revenues increased 8% to
$825 million from$767 million
- Home closings increased 9% to 1,655 from 1,517
- Net new orders increased 19% to 1,724 from 1,448
-
Average sales price of homes closed increased to
$494,995 from$490,553
- Homebuilding gross margin increased 80 basis points to 17.8% from 17.0%
- Adjusted gross margin (non-GAAP) increased 200 basis points to 26.3% from 24.3%
-
Pre-tax income increased 2% to
$71 million from$69 million
-
Net income attributable to DFH increased 11% to
$54 million , or$0.55 per basic share, from$49 million , or$0.49 per basic share
- Active community count increased 5% to 232 from 220
-
Backlog of 4,524 sold homes as of
March 31, 2024 , valued at$2.3 billion
-
Net debt to net capitalization of 39.9% as of
March 31, 2024 , compared to 43.3% as ofMarch 31, 2023
-
Return on participating equity of 34.9% for the trailing twelve months ended
March 31, 2024 , compared to 46.0% for the trailing twelve months endedMarch 31, 2023
-
Total liquidity, comprised of cash and cash equivalents, and availability under the revolving credit facility, of
$500 million as ofMarch 31, 2024 , compared to$828 million as ofDecember 31, 2023 .The Crescent Homes acquisition (discussed below) was funded by cash on hand and borrowings under the revolving credit facility.
Management Commentary
“We are also very excited about closing the
Acquisition of
On
First Quarter 2024 Results
Homebuilding revenues in the first quarter of 2024 increased 8% to
Homebuilding gross margin percentage in the first quarter of 2024 increased 80 basis points (“bps”) to 17.8% from 17.0% in the first quarter of 2023, primarily attributable to direct cost reductions and, to a lesser extent, cycle time improvements across our homebuilding operations. The increase in gross margin percentage was partially offset by higher land and financing costs. In addition, amortization of purchase accounting adjustments associated with home closings contributed from the
Adjusted gross margin as a percentage of homebuilding revenues in the first quarter of 2024 was 26.3%, an increase of 200 bps compared to 24.3% in the first quarter of 2023. The increase in adjusted gross margin was primarily due to direct cost reductions, partially offset by higher land costs. Adjusted gross margin is a non-GAAP financial measure. See “Reconciliation of Non-GAAP Financial Measures.”
Selling, general and administrative expense (“SG&A”) in the first quarter of 2024 increased 35% to
Net income attributable to DFH in the first quarter of 2024 increased 11% to
Net new orders in the first quarter of 2024 were 1,724, an increase of 19% compared to 1,448 net new orders for the first quarter of 2023. The cancellation rate in the first quarter of 2024 was 21.0%, remaining consistent with the first quarter of 2023 cancellation rate of 20.9%. The Company had one built-for-rent contract of 229 units that was terminated during the first quarter of 2024 based on a strategic decision to convert the controlled lots into future retail sales. Excluding the impact of this unique event, net new orders were 1,953, an increase of 35% over the prior year quarter, and the total cancellation rate was 10.5% for the three months ended
Our total available liquidity as of
First Quarter 2024 Backlog
As of
The following table shows the backlog units and ASP as of
|
As of ( unaudited) |
||||||
Backlog: |
Units |
|
Average Sales Price |
||||
Southeast |
1,933 |
|
$ |
421,208 |
|||
Mid- |
|
1,202 |
|
|
|
490,623 |
|
Midwest |
|
1,389 |
|
|
|
660,881 |
|
Total |
|
4,524 |
|
|
$ |
513,238 |
|
Full Year 2024 Outlook
About
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, benefits of the
Condensed Consolidated Balance Sheets (In thousands, except share and per share amounts) (Unaudited) |
||||||||
|
|
2 024 |
|
2023 |
||||
Assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
239,428 |
|
$ |
494,145 |
||
Restricted cash |
|
|
28,392 |
|
|
|
54,311 |
|
Accounts receivable |
|
|
28,213 |
|
|
|
30,874 |
|
Inventories |
|
|
1,733,488 |
|
|
|
1,440,249 |
|
Lot deposits |
|
|
268,074 |
|
|
|
247,207 |
|
Other assets |
|
|
68,317 |
|
|
|
80,759 |
|
Investments in unconsolidated entities |
|
|
17,688 |
|
|
|
15,364 |
|
Property and equipment, net |
|
|
8,275 |
|
|
|
7,043 |
|
Right-of-use assets |
|
|
19,986 |
|
|
|
20,280 |
|
|
|
|
305,068 |
|
|
|
172,207 |
|
Total assets |
|
$ |
2,716,929 |
|
|
$ |
2,562,439 |
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
||||
Accounts payable |
|
$ |
144,466 |
|
|
$ |
134,115 |
|
Accrued expenses |
|
|
113,808 |
|
|
|
207,389 |
|
Customer deposits |
|
|
169,291 |
|
|
|
172,574 |
|
Construction lines of credit |
|
|
710,288 |
|
|
|
530,384 |
|
Senior unsecured notes, net |
|
|
294,243 |
|
|
|
293,918 |
|
Lease liabilities |
|
|
20,842 |
|
|
|
21,114 |
|
Contingent consideration |
|
|
112,956 |
|
|
|
116,795 |
|
Total liabilities |
|
$ |
1,565,894 |
|
|
$ |
1,476,289 |
|
Mezzanine Equity |
|
|
|
|
||||
Redeemable preferred stock |
|
|
148,500 |
|
|
|
148,500 |
|
Redeemable noncontrolling interest |
|
|
28,533 |
|
|
|
— |
|
Equity |
|
|
|
|
||||
Class A common stock, |
|
|
344 |
|
|
|
329 |
|
Class B common stock, |
|
|
592 |
|
|
|
602 |
|
Additional paid-in capital |
|
|
268,242 |
|
|
|
275,241 |
|
Retained earnings |
|
|
699,531 |
|
|
|
648,412 |
|
|
|
|
968,709 |
|
|
|
924,584 |
|
Noncontrolling interests |
|
|
5,293 |
|
|
|
13,066 |
|
Total equity |
|
|
974,002 |
|
|
|
937,650 |
|
Total liabilities, mezzanine equity and equity |
|
$ |
2,716,929 |
|
|
$ |
2,562,439 |
|
Condensed Consolidated Statements of Comprehensive Income (In thousands, except share and per share amounts) (Unaudited) |
||||||||
|
|
Three Months Ended M arch 31, |
||||||
|
|
|
2024 |
|
|
|
2023 |
|
Revenues: |
|
|
|
|
||||
Homebuilding |
|
$ |
825,221 |
|
|
$ |
767,476 |
|
Other |
|
|
2,579 |
|
|
|
1,944 |
|
Total revenues |
|
|
827,800 |
|
|
|
769,420 |
|
Homebuilding cost of sales |
|
|
678,640 |
|
|
|
637,344 |
|
Selling, general and administrative expense |
|
|
81,793 |
|
|
|
60,761 |
|
Income from unconsolidated entities |
|
|
(4,903 |
) |
|
|
(2,958 |
) |
Contingent consideration revaluation |
|
|
3,207 |
|
|
|
5,316 |
|
Other income, net |
|
|
(1,761 |
) |
|
|
(430 |
) |
Income before taxes |
|
|
70,824 |
|
|
|
69,387 |
|
Income tax expense |
|
|
(15,141 |
) |
|
|
(17,636 |
) |
Net and comprehensive income |
|
|
55,683 |
|
|
|
51,751 |
|
Net and comprehensive income attributable to noncontrolling interests |
|
|
(1,189 |
) |
|
|
(2,662 |
) |
Net and comprehensive income attributable to |
|
$ |
54,494 |
|
|
$ |
49,089 |
|
|
|
|
|
|
||||
Earnings per share |
|
|
|
|
||||
Basic |
|
$ |
0.55 |
|
|
$ |
0.49 |
|
Diluted |
|
$ |
0.55 |
|
|
$ |
0.45 |
|
|
|
|
|
|
||||
Weighted-average number of shares |
|
|
|
|
||||
Basic |
|
|
93,325,838 |
|
|
|
92,940,291 |
|
Diluted |
|
|
99,935,524 |
|
|
|
108,822,306 |
|
Other Financial and Operating Data (Unaudited) |
||||||||
|
|
Three Months Ended M arch 31, |
||||||
|
|
|
2024 |
|
|
|
2023 |
|
Other Financial and Operating Data |
|
|
|
|
||||
Home closings |
|
|
1,655 |
|
|
|
1,517 |
|
Average sales price of homes closed(1) |
|
$ |
494,995 |
|
|
$ |
490,553 |
|
Net new orders |
|
|
1,724 |
|
|
|
1,448 |
|
Cancellation rate |
|
|
21.0 |
% |
|
|
20.9 |
% |
Gross margin (in thousands)(2) |
|
$ |
146,581 |
|
|
$ |
130,132 |
|
Gross margin %(3) |
|
|
17.8 |
% |
|
|
17.0 |
% |
Adjusted gross margin (in thousands)(4) |
|
$ |
217,213 |
|
|
$ |
186,193 |
|
Adjusted gross margin %(3)(4) |
|
|
26.3 |
% |
|
|
24.3 |
% |
Active communities(5) |
|
|
232 |
|
|
|
220 |
|
Backlog - units |
|
|
4,524 |
|
|
|
5,479 |
|
Backlog - value (in thousands) |
|
$ |
2,321,889 |
|
|
$ |
2,534,354 |
|
Return on participating equity(6) |
|
|
34.9 |
% |
|
|
46.0 |
% |
Net debt to net capitalization(7) |
|
|
39.9 |
% |
|
|
43.3 |
% |
(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) |
|
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 a definition of this 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. |
(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 |
(7) |
|
Net debt to net capitalization is defined as the sum of the senior unsecured notes, net and construction lines of credit, less cash and cash equivalents (“net debt”), divided by the sum of net debt, total mezzanine equity and total equity. |
|
Three Months Ended
|
||||||||||||||
|
2024 (unaudited) |
|
2023 (unaudited) |
||||||||||||
Home Closings: |
Units |
|
Average Sales Price |
|
Units |
|
Average Sales Price |
||||||||
Southeast |
578 |
|
$ |
473,608 |
|
634 |
|
$ |
450,188 |
||||||
Mid- |
|
491 |
|
|
|
425,452 |
|
|
|
370 |
|
|
|
364,679 |
|
Midwest |
|
586 |
|
|
|
574,359 |
|
|
|
513 |
|
|
|
631,224 |
|
Total |
|
1,655 |
|
|
$ |
494,995 |
|
|
|
1,517 |
|
|
$ |
490,553 |
|
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):
|
Three Months Ended M arch 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Gross margin(1) |
$ |
146,581 |
|
|
$ |
130,132 |
|
Interest expense in homebuilding cost of sales(2) |
|
30,742 |
|
|
|
22,419 |
|
Amortization in homebuilding cost of sales(3) |
|
4,582 |
|
|
|
— |
|
Commission expense |
|
35,308 |
|
|
|
33,642 |
|
Adjusted gross margin |
$ |
217,213 |
|
|
$ |
186,193 |
|
Gross margin %(4) |
|
17.8 |
% |
|
|
17.0 |
% |
Adjusted gross margin %(4) |
|
26.3 |
% |
|
|
24.3 |
% |
(1) |
|
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 |
(4) |
|
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, 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. Management believes this information is meaningful because it isolates the impact that these excluded items 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, 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 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240502413900/en/
Investor Contact:
investors@dreamfindershomes.com
Media Contact
:
mediainquiries@dreamfindershomes.com
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