Dream Finders Announces Second Quarter 2024 Results
Second Quarter Homebuilding Revenues of
Net Income to DFH Up 18%, Basic EPS up 19%
Return on Participating Equity of 33.5%
Second Quarter 2024 Highlights (As Compared to Second Quarter 2023, unless otherwise noted)
-
Homebuilding revenues increased 12% to
$1.1 billion from$943 million - Home closings increased 10% to 2,031 from 1,846
- Net new orders increased 3% to 1,712 from 1,655
-
Average sales price of homes closed increased to
$514,833 from$504,683 - Homebuilding gross margin of 19.0% compared to 19.1%
- Adjusted gross margin (non-GAAP) of 27.0% compared to 27.1%
-
Pre-tax income increased 11% to
$106 million from$96 million -
Net income attributable to DFH increased 18% to
$81 million , or$0.83 per basic share, from$69 million , or$0.70 per basic share - Active community count of 222
-
Backlog of 4,205 sold homes as of
June 30, 2024 , valued at$2.1 billion -
Net debt to net capitalization of 42.7% as of
June 30, 2024 , compared to 38.8% as ofJune 30, 2023 -
Total liquidity, comprised of cash and cash equivalents and availability under the revolving credit facility, of
$475 million as ofJune 30, 2024 -
Return on participating equity of 33.5% for the trailing twelve months ended
June 30, 2024 , compared to 42.2% for the trailing twelve months endedJune 30, 2023 -
Controlled lot pipeline of 40,678 as of
June 30, 2024
Management Commentary
During the second quarter, we repurchased 72,000 shares of our class A common stock under our approved buyback program. We believe buying back our shares is a valuable way to generate shareholder value, and we may continue to do so in the future as part of our long-term capital allocation strategy.
We are also pleased to announce that subsequent to quarter end, we completed the acquisition of Jet HomeLoans (‘Jet HL’) for
While there are plenty of challenges facing the homebuilding industry, we believe DFH is well positioned to continue to capitalize on opportunities going forward. We reiterate our guidance of 8,250 closings for the full year 2024 and are hard at work building the foundation for continued growth in 2025 and beyond.”
Second Quarter 2024 Results
Homebuilding revenues in the second quarter of 2024 increased 12% to
Homebuilding gross margin percentage in the second quarter of 2024 of 19.0% remained consistent compared to 19.1% in the second quarter of 2023. The steady gross margin percentage for the second quarter of 2024 included amortization of purchase accounting adjustments associated with home closings contributed from the recent
Adjusted gross margin as a percentage of homebuilding revenues in the second quarter of 2024 was 27.0%, remaining consistent with the second quarter of 2023 adjusted gross margin of 27.1%. 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 second quarter of 2024 increased 34% to
Net income attributable to DFH in the second quarter of 2024 increased 18% to
Net new orders in the second quarter of 2024 were 1,712, an increase of 3% compared to 1,655 net new orders for the second quarter of 2023. The cancellation rate in the second quarter of 2024 was 13.2%, an improvement of 240 bps compared with the second quarter of 2023 cancellation rate of 15.6%. The consistency of our net new orders and low cancellation rate are indicative of our continued focus on sales incentives and availability of quick, move-in homes in our communities.
Our total available liquidity as of
Second Quarter 2024 Backlog
As of
The following table shows the backlog units and ASP as of
|
As of |
||||
Backlog: |
Units |
|
Average Sales Price |
||
Southeast |
1,723 |
|
$ |
411,727 |
|
Mid- |
1,202 |
|
|
467,772 |
|
Midwest |
1,280 |
|
|
665,587 |
|
Total |
4,205 |
|
$ |
505,022 |
Jet HomeLoans Acquisition
On
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) |
|||||||
|
|
|
|
|
|||
Assets |
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
274,797 |
|
|
$ |
494,145 |
Restricted cash |
|
|
21,834 |
|
|
|
54,311 |
Accounts receivable |
|
|
33,003 |
|
|
|
30,874 |
Inventories |
|
|
1,897,518 |
|
|
|
1,440,249 |
Lot deposits |
|
|
301,167 |
|
|
|
247,207 |
Other assets |
|
|
108,993 |
|
|
|
80,759 |
Investments in unconsolidated entities |
|
|
20,556 |
|
|
|
15,364 |
Property and equipment, net |
|
|
8,775 |
|
|
|
7,043 |
Right-of-use assets |
|
|
18,248 |
|
|
|
20,280 |
|
|
|
300,313 |
|
|
|
172,207 |
Total assets |
|
$ |
2,985,204 |
|
|
$ |
2,562,439 |
|
|
|
|
|
|||
Liabilities |
|
|
|
|
|||
Accounts payable |
|
$ |
180,856 |
|
|
$ |
134,115 |
Accrued expenses |
|
|
181,668 |
|
|
|
207,389 |
Customer deposits |
|
|
129,043 |
|
|
|
172,574 |
Construction lines of credit |
|
|
890,876 |
|
|
|
530,384 |
Senior unsecured notes, net |
|
|
294,564 |
|
|
|
293,918 |
Lease liabilities |
|
|
19,116 |
|
|
|
21,114 |
Contingent consideration |
|
|
67,549 |
|
|
|
116,795 |
Total liabilities |
|
$ |
1,763,672 |
|
|
$ |
1,476,289 |
Mezzanine Equity |
|
|
|
|
|||
Redeemable preferred stock |
|
|
148,500 |
|
|
|
148,500 |
Redeemable noncontrolling interest |
|
|
21,451 |
|
|
|
— |
Equity |
|
|
|
|
|||
Class A common stock, |
|
|
345 |
|
|
|
329 |
Class B common stock, |
|
|
592 |
|
|
|
602 |
Additional paid-in capital |
|
|
271,296 |
|
|
|
275,241 |
Retained earnings |
|
|
777,099 |
|
|
|
648,412 |
|
|
|
(1,846 |
) |
|
|
— |
|
|
|
1,047,486 |
|
|
|
924,584 |
Noncontrolling interests |
|
|
4,095 |
|
|
|
13,066 |
Total equity |
|
|
1,051,581 |
|
|
|
937,650 |
Total liabilities, mezzanine equity and equity |
|
$ |
2,985,204 |
|
|
$ |
2,562,439 |
|
||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income |
||||||||||||||||
(In thousands, except share and per share amounts) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||||
Homebuilding |
|
$ |
1,052,236 |
|
|
$ |
942,880 |
|
|
$ |
1,877,457 |
|
|
$ |
1,710,356 |
|
Other |
|
|
3,511 |
|
|
|
2,459 |
|
|
|
6,090 |
|
|
|
4,403 |
|
Total revenues |
|
|
1,055,747 |
|
|
|
945,339 |
|
|
|
1,883,547 |
|
|
|
1,714,759 |
|
Homebuilding cost of sales |
|
|
852,837 |
|
|
|
762,855 |
|
|
|
1,531,477 |
|
|
|
1,400,199 |
|
Selling, general and administrative expense |
|
|
98,926 |
|
|
|
73,709 |
|
|
|
180,719 |
|
|
|
134,470 |
|
Income from unconsolidated entities |
|
|
(5,299 |
) |
|
|
(4,704 |
) |
|
|
(10,202 |
) |
|
|
(7,662 |
) |
Contingent consideration revaluation |
|
|
4,638 |
|
|
|
18,266 |
|
|
|
7,845 |
|
|
|
23,582 |
|
Other income, net |
|
|
(1,363 |
) |
|
|
(635 |
) |
|
|
(3,124 |
) |
|
|
(1,065 |
) |
Income before taxes |
|
|
106,008 |
|
|
|
95,848 |
|
|
|
176,832 |
|
|
|
165,235 |
|
Income tax expense |
|
|
(23,245 |
) |
|
|
(24,206 |
) |
|
|
(38,386 |
) |
|
|
(41,842 |
) |
Net and comprehensive income |
|
|
82,763 |
|
|
|
71,642 |
|
|
|
138,446 |
|
|
|
123,393 |
|
Net and comprehensive income attributable to noncontrolling interests |
|
|
(1,820 |
) |
|
|
(2,878 |
) |
|
|
(3,009 |
) |
|
|
(5,540 |
) |
Net and comprehensive income attributable to |
|
$ |
80,943 |
|
|
$ |
68,764 |
|
|
$ |
135,437 |
|
|
$ |
117,853 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
0.83 |
|
|
$ |
0.70 |
|
|
$ |
1.38 |
|
|
$ |
1.19 |
|
Diluted |
|
$ |
0.81 |
|
|
$ |
0.65 |
|
|
$ |
1.35 |
|
|
$ |
1.09 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
93,722,953 |
|
|
|
93,108,277 |
|
|
|
93,524,396 |
|
|
|
93,025,626 |
|
Diluted |
|
|
100,125,681 |
|
|
|
105,439,519 |
|
|
|
100,030,603 |
|
|
|
107,704,859 |
|
|
||||||||||||||||
Other Financial and Operating Data |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Other Financial and Operating Data |
|
|
|
|
|
|
|
|
||||||||
Home closings |
|
|
2,031 |
|
|
|
1,846 |
|
|
|
3,686 |
|
|
|
3,363 |
|
Average sales price of homes closed(1) |
|
$ |
514,833 |
|
|
$ |
504,683 |
|
|
$ |
505,926 |
|
|
$ |
498,309 |
|
Net new orders |
|
|
1,712 |
|
|
|
1,655 |
|
|
|
3,436 |
|
|
|
3,103 |
|
Cancellation rate |
|
|
13.2 |
% |
|
|
15.6 |
% |
|
|
16.8 |
% |
|
|
18.1 |
% |
Gross margin (in thousands)(2) |
|
$ |
199,399 |
|
|
$ |
180,025 |
|
|
$ |
345,980 |
|
|
$ |
310,157 |
|
Gross margin %(3) |
|
|
19.0 |
% |
|
|
19.1 |
% |
|
|
18.4 |
% |
|
|
18.1 |
% |
Adjusted gross margin (in thousands)(4) |
|
$ |
284,571 |
|
|
$ |
255,912 |
|
|
$ |
501,784 |
|
|
$ |
442,105 |
|
Adjusted gross margin %(3)(4) |
|
|
27.0 |
% |
|
|
27.1 |
% |
|
|
26.7 |
% |
|
|
25.8 |
% |
Active communities(5) |
|
|
|
|
|
|
222 |
|
|
|
220 |
|
||||
Backlog - units |
|
|
|
|
|
|
4,205 |
|
|
|
5,288 |
|
||||
Backlog - value (in thousands) |
|
|
|
|
|
$ |
2,123,618 |
|
|
$ |
2,486,375 |
|
||||
Return on participating equity(6) |
|
|
|
|
|
|
33.5 |
% |
|
|
42.2 |
% |
||||
Net debt to net capitalization(7) |
|
|
|
|
|
|
42.7 |
% |
|
|
38.8 |
% |
(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
|
|
Six Months Ended
|
|||||||||||||||||
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|||||||||||||
Home Closings: |
Units |
|
Average
|
|
Units |
|
Average
|
|
Units |
|
Average
|
|
Units |
|
Average
|
|||||
Southeast |
668 |
|
$ |
508,511 |
|
799 |
|
$ |
461,085 |
|
1,246 |
|
$ |
492,320 |
|
1,433 |
|
$ |
456,264 |
|
Mid- |
610 |
|
|
433,941 |
|
386 |
|
|
384,865 |
|
1,101 |
|
|
430,155 |
|
756 |
|
|
374,985 |
|
Midwest |
753 |
|
|
585,971 |
|
661 |
|
|
627,353 |
|
1,339 |
|
|
580,889 |
|
1,174 |
|
|
629,045 |
|
Total |
2,031 |
|
$ |
514,833 |
|
1,846 |
|
$ |
504,683 |
|
3,686 |
|
$ |
505,926 |
|
3,363 |
|
$ |
498,309 |
|
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
|
|
Six Months Ended
|
|||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|||||||||
Gross margin(1) |
$ |
199,399 |
|
|
$ |
180,025 |
|
|
$ |
345,980 |
|
|
$ |
310,157 |
|
|
Interest expense in homebuilding cost of sales(2) |
|
41,662 |
|
|
|
32,798 |
|
|
|
72,404 |
|
|
|
55,217 |
|
|
Amortization in homebuilding cost of sales(3) |
|
2,518 |
|
|
|
— |
|
|
|
7,100 |
|
|
|
— |
|
|
Commission expense |
|
40,992 |
|
|
|
43,089 |
|
|
|
76,300 |
|
|
|
76,731 |
|
|
Adjusted gross margin |
$ |
284,571 |
|
|
$ |
255,912 |
|
|
$ |
501,784 |
|
|
$ |
442,105 |
|
|
Gross margin %(4) |
|
19.0 |
% |
|
|
19.1 |
% |
|
|
18.4 |
% |
|
|
18.1 |
% |
|
Adjusted gross margin %(4) |
|
27.0 |
% |
|
|
27.1 |
% |
|
|
26.7 |
% |
|
|
25.8 |
% |
(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/20240801911477/en/
Investor Contact:
investors@dreamfindershomes.com
Media Contact
:
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