EX-99.1 2 a-q12023pressreleasexex991.htm EX-99.1 Document
Exhibit 99.1

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Dream Finders Announces First Quarter 2023 Results

Homebuilding Revenues Up 16%, Home Closings Up 11%

Return on Participating Equity Improved 510 bps to 46.0%

Jacksonville, Fla. – May 4, 2023— Dream Finders Homes, Inc. (the “Company”, “Dream Finders Homes”, “Dream Finders” or “DFH”) (NYSE: DFH) announced its financial results for the first quarter ended March 31, 2023.

First Quarter 2023 Highlights (As Compared to First Quarter 2022, unless otherwise noted)

•Homebuilding revenues increased 16% to $767 million from $662 million

•Home closings increased 11% to 1,517 from 1,371

•Gross margin as a percentage of homebuilding revenues decreased 170 basis points to 17.0% from 18.7%

•Pre-tax income increased 10% to $69 million, compared to $63 million

•Net income attributable to DFH increased 12% to $49 million, or $0.49 per basic share, compared to $44 million, or $0.43 per basic share

•Average sales price of homes closed increased 4% to $490,553 from $470,218

•Active community count increased 7% to 220 from 206

•Backlog of sold homes of 5,479 homes, valued at $2.5 billion

•Return on participating equity increased to 46.0% for the trailing twelve months ended March 31, 2023, compared to 40.9% for the trailing twelve months ended March 31, 2022

•Total liquidity, comprised of cash and cash equivalents, and availability under the revolving credit facility, of $453 million as of March 31, 2023, compared to $487 million as of December 31, 2022

Management Commentary

Patrick Zalupski, Dream Finders Homes Chairman and CEO, said, “Coming off a record fourth quarter in 2022, DFH maintained positive momentum in the first quarter of 2023, delivering revenue growth of 16% along with pre-tax income of $69 million and earnings per basic share of $0.49, which increased 10% and 12%, respectively, compared to the year-ago quarter. These are all first quarter Company records. We are pleased with our modest progress in bringing down construction times, which ultimately will allow us to increase our inventory turns and maintain an industry-leading ROE. Net new orders in the first quarter, while down year over year, felt healthy and this demand persisted, with April net new orders increasing year over year. Supply remains low in our markets, and we believe our high-quality locations offer some resiliency against potential headwinds in the economy. Although plenty of uncertainty remains for 2023, DFH is poised to deliver another solid year.”





First Quarter 2023 Results

Homebuilding revenues in the first quarter 2023 increased 16% to $767 million, compared to $662 million in the first quarter 2022. Home closings increased 11% to 1,517, compared to 1,371 in the first quarter 2022. Average sales price (“ASP”) of homes closed for the first quarter 2023 increased to $490,553, compared to $470,218 in the first quarter 2022.
Homebuilding gross margin percentage in the first quarter 2023 was 17.0%, compared to 18.7% in the first quarter 2022. The gross margin decrease was attributable to increases in cost of funds, as well as closing costs, as we continue to incentivize homebuyers to close homes.

Selling, general and administrative expense (“SG&A”) as a percentage of homebuilding revenues improved 100 basis points (“bps”) to 8% in the first quarter 2023, compared to 9% in the first quarter 2022, as a result of our continued cost management efforts. In the first quarter 2023, SG&A included a $2 million charge related to write-offs of earnest deposits and due diligence costs for lot option contracts that were terminated.

Net income attributable to DFH in the first quarter 2023 was $49 million, or $0.49 per basic share, compared to $44 million, or $0.43 per basic share in the first quarter 2022, representing increases of 12% and 14%, respectively. The Company recorded $5 million of contingent consideration revaluation expense in the first quarter 2023 primarily as a result of better-than-expected financial results and adjusted projections for the McGuyer Homebuilders, Inc. (“MHI”) acquisition.

We consider basic earnings per share (“EPS”) to be a more meaningful metric of our profitability, as the diluted EPS calculation is impacted by the volatility of the price of our common stock and fluctuates outside of our control. In addition, the holders of the convertible preferred stock cannot trigger the conversion feature until September 29, 2026, the fifth year following its issuance. The Company does not intend for the preferred stock to convert into Class A common stock.

Net new orders in the first quarter 2023 were 1,448, a sequential improvement of 31% compared to the fourth quarter 2022 net new orders of 1,107. Net new orders in the first quarter 2022 were 2,402. The decrease from the first quarter 2022 is mainly attributable to built-for-rent sales contracts that did not repeat in the first quarter 2023. Due to the time and effort involved in the execution of these types of bulk sales arrangements, results can be lumpy from quarter to quarter and could vary significantly. The cancellation rate in the first quarter 2023 was 20.9%, an improvement of 1,120 bps compared to the fourth quarter 2022 cancellation rate of 32.1%. The first quarter 2022 cancellation rate was 13.4%, reflective of all-time low levels of cancellations that were observed throughout the industry. Despite continued economic uncertainty and elevated mortgage rates in the first quarter 2023, housing market demand started to show signs of stabilization. These sequential improvements in net new orders and the cancellation rate are reflective of our ability to adjust our operations to current market conditions by focusing on aggressive sales incentives, pacing starts consistently and maintaining adequate levels of quick move-in homes in our communities.

As of March 31, 2023, return on participating equity (“ROE”) was 46.0%, an improvement of 510 bps compared to the first quarter 2022. ROE is calculated as net income attributable to DFH less preferred distributions for the trailing twelve-month period, divided by average participating stockholders’ equity. Average participating stockholders’ equity is based on beginning and ending balances for the trailing twelve-month period.

As of March 31, 2023, DFH had a backlog of 5,479 homes, valued at $2.5 billion, remaining relatively consistent compared to the backlog of 5,548 homes, valued at $2.5 billion as of December 31, 2022. As of March 31, 2023, the ASP in backlog was $462,576.



















Full Year 2023 Outlook

Dream Finders Homes maintains its guidance of approximately 6,000 home closings for the full year 2023. Further deterioration of general economic conditions, including interest rate increases and mortgage availability, as well as any further COVID-19 governmental restrictions on land development, home construction or home sales or additional supply chain challenges could negatively affect the Company’s ability to achieve this number of home closings in 2023. As of March 31, 2023, the Company backlog was 5,479 homes, with approximately 1,649 of the homes in backlog expected to be delivered in 2024 and beyond.

The following table shows the backlog units and ASP as of March 31, 2023 by segment:

As of March 31, 2023
(unaudited)
Backlog:UnitsAverage Sales Price
Jacksonville1,674$316,111 
Colorado88615,284 
Orlando850626,819 
The Carolinas 679319,313 
Texas 1,171688,086 
Other (1)
1,017389,164 
      Total5,479$462,576 
(1)Austin, TX; Washington D.C.; Savannah, GA; Hilton Head and Bluffton, S.C.; Active Adult and Custom Homes. Austin refers to legacy DFH operations in Texas, exclusive of MHI.

About Dream Finders Homes, Inc.

Dream Finders Homes (NYSE: DFH) is a homebuilder based in Jacksonville, FL. Dream Finders Homes builds single-family homes in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, and the Washington, D.C. metropolitan area, which includes Northern Virginia and Maryland. 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 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 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 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
March 31,
(unaudited)
20232022
Revenues:
Homebuilding$767,476 $662,473 
Other1,944 1,593 
Total revenues769,420 664,066 
Homebuilding cost of sales637,344 538,868 
Selling, general and administrative expense60,761 61,710 
Income from unconsolidated entities(2,958)(2,960)
Contingent consideration revaluation5,316 4,192 
Other income, net(430)(956)
Income before income taxes69,387 63,212 
Income tax expense(17,636)(16,878)
Net and comprehensive income51,751 46,334 
Net and comprehensive income attributable to noncontrolling interests(2,662)(2,618)
Net and comprehensive income attributable to Dream Finders Homes, Inc.$49,089 $43,716 
Earnings per share
Basic$0.49 $0.43 
Diluted$0.45 $0.42 
Weighted-average number of shares
Basic92,940,291 92,758,939 
Diluted108,822,306 102,496,876 
Other Financial and Operating Data
Active communities at end of period(1)
220 206 
Home closings1,517 1,371 
Average sales price of homes closed(2)
$490,553 $470,218 
Net new orders1,448 2,402 
Cancellation rate20.9 %13.4 %
Backlog (at period end) - homes5,479 7,413 
Backlog (at period end, in thousands) - value$2,534,454 $3,443,709 
Gross margin (in thousands)(3)
$130,132 $123,605 
Gross margin %(4)
17.0 %18.7 %
Net profit margin %6.4 %6.6 %
(1)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.
(2)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.
(3)Gross margin is homebuilding revenues less homebuilding cost of sales.
(4)Calculated as a percentage of homebuilding revenues.

Three Months Ended
March 31,
2023
 (unaudited)
2022
 (unaudited)
Home Closings:UnitsAverage Sales PriceUnitsAverage Sales Price
Jacksonville287$423,483 269$453,134 
Colorado74592,553 70557,092 
Orlando234492,931 106436,542 
The Carolinas320334,257 252331,425 
Texas 421648,480 483570,236 
Other (1)
181461,114 191411,324 
Total1,517$490,553 1,371 $470,218 
(1)Austin, TX; Washington D.C.; Savannah, GA; Hilton Head and Bluffton, S.C.; Active Adult and Custom Homes. Austin refers to legacy DFH operations in Texas, exclusive of MHI.

Dream Finders Homes, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)

March 31, 2023December 31,
2022
Assets  
Cash and cash equivalents$266,569 $364,531 
Restricted cash (VIE amounts of $8,603 and $4,372)30,882 30,599 
Accounts receivable (VIE amounts of $587 and $580)33,564 43,490 
Inventories: 
Construction in process and finished homes1,138,690 1,175,107 
Company owned land and lots291,106 196,563 
VIE owned land and lots5,064 6,515 
Total inventories1,434,860 1,378,185 
Lot deposits262,323 277,258 
Other assets (VIE amounts of $1,650 and $1,877)64,134 59,438 
Investments in unconsolidated entities13,495 14,008 
Property and equipment, net7,564 7,337 
Operating lease right-of-use assets23,199 24,084 
Goodwill172,207 172,207 
Total assets$2,308,797 $2,371,137 
Liabilities
Accounts payable (VIE amounts of $481 and $353)$134,741 $134,702 
Accrued expenses (VIE amounts of $3,210 and $4,434)103,963 184,051 
Customer deposits165,859 145,654 
Construction lines of credit915,992 966,248 
Operating lease liabilities23,802 24,661 
Contingent consideration113,965 115,128 
Total liabilities$1,458,322 $1,570,444 
Mezzanine Equity  
Preferred mezzanine equity156,259 156,045 
Stockholders’ Equity 
Class A common stock, $0.01 per share, 289,000,000 authorized, 32,775,526 and 32,533,883 outstanding as of March 31, 2023 and December 31, 2022, respectively.327 325 
Class B common stock, $0.01 per share, 61,000,000 authorized, 60,226,153 outstanding602 602 
Additional paid-in capital267,185 264,757 
Retained earnings411,494 365,994 
Noncontrolling interests14,608 12,970 
Total mezzanine and stockholders’ equity850,475 800,693 
Total liabilities, mezzanine equity and stockholders’ equity$2,308,797 $2,371,137 










Contacts:
Investor Contact: investors@dreamfindershomes.com
Media Contact: mediainquiries@dreamfindershomes.com