DIAD HLDG Item 8.01 Other Events
Preliminary Unaudited Financial Results for
In addition, the estimated preliminary results for GSH set forth below are
forward-looking statements and are not guarantees of future performance and may
differ from actual results. See "Forward-Looking Statements," "Risk Factors" and
GSH's financial statements and related notes included in our proxy
statement/prospectus dated
Additionally, the estimates reported below include certain financial measures that are not required by, or presented in accordance with, GAAP. Management of GSH believes these non-GAAP financial measures are useful because they provide a more effective evaluation of GSH's operating performance and allow comparison of GSH's results of operations from period to period without regard to GSH's financing methods or capital structure or other items that impact comparability of financial results from period to period such as fluctuations in interest expense or effective tax rates, levels of depreciation or amortization, or unusual items. Non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. GSH's computations of non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. GSH presents non-GAAP financial measures because it believes they provide useful information regarding the factors and trends affecting GSH's business.
All of the estimated preliminary unaudited financial information for GSH set forth below has been prepared by and is the responsibility of GSH management.
Set forth below are certain preliminary estimates for our results of operations
for the year ended
(dollars in millions) 2022 2021 Home closings(a)
1,605 1,705
Revenue, net of sales discount $ 477.0 $ 432.9
Gross profit 118.8 100.6
Gross profit %(b) 24.9 % 23.2 %
Adjusted gross profit(c) 124.3 104.2
Adjusted gross profit %(b) 26.0 % 24.1 %
Net income $ 69.5 $ 62.4
EBITDA(d) 75.9 66.6
EBITDA margin %(b) 15.9 % 15.4 %
Adjusted EBITDA(d) $ 82.8 $ 67.2
Adjusted EBITDA margin %(b) 17.4 % 15.5 %
(a) Revenues from home sales are recorded at the time each home sale is closed
and closing conditions are met.
(b) Calculated as a percentage of revenue.
(c) Adjusted gross profit is gross profit less capitalized interest expensed in
cost of sales. Adjusted gross profit for the years ended December 31, 2022
and 2021 includes approximately $5.5 million and $3.6 million of interest
expense, respectively.
(d) Earnings before interest, taxes, depreciation and amortization, or EBITDA,
and adjusted EBITDA are supplemental non-GAAP financial measures used by
management of GSH. GSH defines EBITDA as net income before (i) capitalized
interest expensed in cost of sales, (ii) depreciation and amortization, and
(iii) taxes. GSH defines adjusted EBITDA as EBITDA before stock-based
compensation expense, gain on extinguishment of debt, and transaction costs
related to the Business Combination. Management of GSH believes EBITDA and
adjusted EBITDA are useful because they provide a more effective evaluation
of GSH's operating performance and allow comparison of GSH's results of
operations from period to period without regard to GSH's financing methods or
capital structure or other items that impact comparability of financial
results from period to period such as fluctuations in interest expense or
effective tax rates, levels of depreciation or amortization, or unusual
items. EBITDA and adjusted EBITDA should not be considered as alternatives
to, or more meaningful than, net income or any other measure as determined in
accordance with GAAP. GSH's computations of EBITDA and adjusted EBITDA may
not be comparable to EBITDA or adjusted EBITDA of other companies. GSH
presents EBITDA and adjusted EBITDA because it believes they provide useful
information regarding the factors and trends affecting GSH's business.
The following table presents a reconciliation of EBITDA and adjusted EBITDA to the GAAP financial measure of net income for each of the periods indicated (unaudited).
(dollars in millions) 2022 2021 Net income
$ 69.5 $ 62.4
Interest expense in cost of sales 5.5 3.6 Depreciation and amortization 0.7 0.4 Taxes(a)
0.2 0.2
EBITDA 75.9 66.6
Stock-based compensation expense 1.4 --
Transaction costs 5.5 0.6
Adjusted EBITDA 82.8 67.2
EBITDA margin(b) 15.9 % 15.4 %
Adjusted EBITDA margin(b) 17.4 % 15.5 %
(a) GSH is included in the tax filing of the shareholders of GSH, which was taxed
individually. As such, Taxes does not include the effect of income tax
expense.
(b) Calculated as a percentage of revenue.
Factors Affecting GSH's Results of Operations
GSH believes that its future performance will depend on many factors, including
those described below and in the sections entitled "Risk Factors" and
"Forward-Looking Statements" included in our proxy statement/prospectus dated
Availability of Mortgages; Applicable Interest Rates
GSH's business is impacted by the availability and affordability of mortgages. In 2022, approximately 90% of GSH's homebuyers obtained a mortgage to purchase their home. A prospective customer's ability to obtain or afford a mortgage will be impacted by among other things market conditions, interest rates and the amount required as a down payment, each of which are factors outside of GSH's control. If mortgages are unavailable, or are not available on terms that make the purchase of GSH's homes affordable, prospective customers may choose to forgo the purchase of a home or purchase a less expensive home, which could negatively impact GSH's business.
In response to rising inflation, the
Costs of
The cost of home construction fluctuates with market conditions and costs
related to building materials and labor. The residential construction industry
experiences labor and material shortages from time to time, including shortages
in qualified subcontractors, tradespeople and supplies such as insulation,
drywall, cement, steel, and lumber. These labor and material shortages can be
more severe during periods of strong demand for housing, during periods
following natural disasters that have a significant impact on existing
residential and commercial structures or as a result of broader economic
disruptions, such as the COVID-19 pandemic. For example, the cost of lumber has
been volatile due to the
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
This Current Report on Form 8-K relates to a proposed transaction between
PARTICIPANTS IN SOLICITATION
DHHC and GSH and their respective directors and officers may be deemed to be
participants in the solicitation of proxies from DHHC's stockholders in favor of
the approval of the proposed transactions. Information about DHHC's directors
and executive officers and their ownership of DHHC's securities is set forth in
DHHC's filings with the
This Current Report on 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such other jurisdiction.
FORWARD-LOOKING STATEMENTS
Certain statements, estimates, targets and projections in this Current Report on Form 8-K may be considered forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between DHHC and GSH. Forward looking statements generally relate to future events or involving, or future performance of, DHHC or GSH. For example, statements regarding anticipated growth in the industry in which GSH operates and anticipated growth in demand for GSH's products, projections of GSH's future financial results and other metrics, the satisfaction of closing conditions to the proposed transaction between DHHC and GSH and the timing of the completion of the proposed transaction are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "pro forma", "may", "should", "could", "might", "plan", "possible", "project", "strive", "budget", "forecast", "expect", "intend", "will", "estimate", "anticipate", "believe", "predict", "potential" or "continue", or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements.
These forward-looking statements are based upon estimates and assumptions that,
while considered reasonable by DHHC and its management, and GSH and its
management, as the case may be, are inherently uncertain. Factors that may cause
actual results to differ materially from current expectations include, but are
not limited to: (i) the risk that the proposed transaction may not be completed
in a timely manner or at all, which may adversely affect the price of DHHC's
securities; (ii) the risk that the proposed transaction may not be completed by
DHHC's business combination deadline and the potential failure to obtain an
extension of the business combination deadline if sought by DHHC; (iii) the lack
of a third party valuation in determining whether or not to pursue the proposed
transaction; (iv) the amount of the costs, fees, expenses and other charges
related to the proposed transaction; (v) the outcome of any legal proceedings
that may be instituted against DHHC, GSH, the combined company or others
following the announcement of the business combination agreement relating to the
proposed transaction, the ancillary agreements contemplated thereby and the
transactions contemplated thereby; (vi) the inability to complete the proposed
transaction due to the failure to obtain approval of the stockholders of DHHC or
DHHC's failure to satisfy other conditions to closing; (vii) the risk that DHHC
will not be able to raise third-party financing to meet the Minimum Cash
Condition (as defined in the Registration Statement) if redemptions of DHHC
public shares cause the DHHC trust account to have insufficient funds (after
giving effect to redemptions) to achieve the Minimum Cash Condition;
(viii) changes to the proposed structure of the proposed transaction that may be
required or appropriate as a result of applicable laws or regulations; (ix) the
ability to meet stock exchange listing standards following the consummation of
the proposed transaction; (x) the risk that the proposed transaction disrupts
current plans and operations of GSH or diverts management's attention from GSH's
ongoing business; (xi) the ability to recognize the anticipated benefits of the
proposed transaction, which may be affected by, among other things, competition,
the ability of the combined company to grow and manage growth profitably, and
maintain relationships with customers and suppliers; (xii) costs related to the
proposed transaction; (xiii) changes in applicable laws or regulations;
(xiv) the possibility that GSH or the combined company may be adversely affected
by other economic, business, regulatory, and/or competitive factors such as
rising interest rates or an economic downturn; (xv) GSH's estimates of expenses
and profitability; (xvi) the evolution of the markets in which GSH competes;
(xvii) the ability of GSH to implement its strategic initiatives; and (xviii)
other risks and uncertainties set forth in the section entitled "Risk Factors"
and "Cautionary Note Regarding Forward-Looking Statements" in DHHC's Annual
Report on Form 10-K for the year ended
Readers are cautioned not to put undue reliance on forward-looking statements, and DHHC and GSH assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither DHHC nor GSH gives any assurance that either DHHC or GSH will achieve its expectations. The inclusion of any statement in this communication does not constitute an admission by DHHC or GSH or any other person that the events or circumstances described in such statement are material.
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