DREAM FINDERS HOMES, INC. Unless otherwise indicated or the context requires, "DFH," "Dream Finders," the "Company," "we," "our" and "us" refer collectively toDream Finders Homes, Inc. and its subsidiaries. OnJanuary 25, 2021 , we completed an initial public offering (the "IPO") of 11,040,000 shares of our Class A common stock. As a result of the reorganization transactions in connection with the IPO, for accounting purposes, our historical results included herein present the combined assets, liabilities and results of operations ofDream Finders Homes, Inc. since the date of its formation andDream Finders Holdings LLC , aFlorida limited liability company ("DFH LLC ") and its direct and indirect subsidiaries prior to the IPO. Business Overview We design, build and sell homes in high-growth markets, includingCharlotte ,Raleigh ,Jacksonville ,Orlando ,Denver , theWashington D.C. metropolitan area,Austin ,Dallas andHouston . We employ an asset-light lot acquisition strategy with a focus on the design, construction and sale of single-family entry-level, first-time move-up and second-time move-up homes. To fully serve our homebuyer customers and capture ancillary business opportunities, we also offer title insurance and mortgage banking solutions through our mortgage banking joint venture,Jet Home Loans, LLC ("Jet LLC "), which comprises our Jet Home Loans segment. Our asset-light lot acquisition strategy enables us to generally purchase land in a "just-in-time" manner with reduced up-front capital commitments, which in turn has increased our inventory turnover rate, enhanced our returns on equity and contributed to our growth.
We are currently engaged in the design, construction and sale of new homes in the following markets:
•Jacksonville, FL
•Denver, CO
•Orlando, FL
•Washington D.C. metropolitan area ("DC Metro")
•Charlotte, NC, Fayetteville, NC , Raleigh, NC , Greensboro, NC , High Point, NC
and Winston-Salem, NC ("The Carolinas")
•Texas
•Austin, TX (legacy operations excluding MHI operations comprising Texas above),
Savannah, GA and Bluffton and Hilton Head, SC , and Active Adult and Custom Homes
in Jacksonville, FL ("Other")
Since breaking ground on our first home on January 1, 2009 we have closed over
18,700 home sales through June 30, 2022 and have been profitable every year
since inception. During the three months ended June 30, 2022 , we received 1,426
net new orders, a decrease of 95, or 6%, as compared to the 1,521 net new orders
received for the three months ended June 30, 2021 . For the three months ended
June 30, 2022 , we closed 1,649 homes, an increase of 653, or 66%, as compared to
the 996 homes closed for the three months ended June 30, 2021 . During the six
months ended June 30, 2022 , we received 3,828 net new orders, an increase of
297, or 8%, as compared to the 3,531 net new orders received for the six months
ended June 30, 2021 . For the six months ended June 30, 2022 , we closed 3,020
homes, an increase of 1,022, or 51%, as compared to the 1,998 homes closed for
the six months ended June 30, 2021 . As of June 30, 2022 , our backlog of sold
homes was 7,190 valued at $3.3 billion . In addition, as of June 30, 2022 , we
owned and controlled 39,400 lots. Our owned and controlled lot supply is a
critical input to the future revenue of our business. We sell homes under the
Dream Finders Homes , DF Luxury, H&H Homes , Village Park Homes , Century Homes and
Coventry Homes brands.
Recent Developments
On June 2, 2022 , the Company entered into an Amended and Restated Credit
Agreement (the "Amended and Restated Credit Agreement") to amend and restate its
existing credit agreement. The Amended and Restated Credit Agreement is
substantially similar to the existing credit agreement except that the Amended
and Restated Credit Agreement, among other things, (i) provides for an increase
in the aggregate commitments under the facility from $818 million to $1.1
billion ; (ii) allows the facility to expand to a borrowing base of up to $1.6
billion through its accordion feature; (iii) extends the maturity date from
January 25, 2024 to June 2, 2025 ; and (iv) transitions the applicable interest
rate from a Eurodollar based rate to a Secured Overnight Financing Rate ("SOFR")
based rate. See Note 3 to our condensed consolidated financial statements for
information on the changes to this revolving credit facility.
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Key Results
Key financial results as of and for the three months ended
•Revenues increased 117% to
•Net new orders decreased 6% to 1,426 from 1,521.
•Homes closed increased 66% to 1,649 from 996.
•Backlog of sold homes increased 74% to 7,190 from 4,137.
•Average sales price of homes closed increased 29% to
•Gross margin as a percentage of homebuilding revenues increased to 19.7% from 16.5%.
•Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased to 25.7% from 23.5%.
•Net and comprehensive income increased 107% to
•Net and comprehensive income attributable to
•EBITDA (non-GAAP) as a percentage of total revenues increased to 13.2% from 11.6%.
•Active communities at
•Return on participating equity was 44.0% for the trailing twelve months ended
•Basic earnings per share was
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Key financial results as of and for the six months ended
•Revenues increased 106% to
•Net new orders increased 8% to 3,828 from 3,531.
•Homes closed increased 51% to 3,020 from 1,998.
•Backlog of sold homes increased 74% to 7,190 from 4,137.
•Average sales price of homes closed increased 33% to
•Gross margin as a percentage of homebuilding revenues increased to 19.2% from 15.8%.
•Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased to 25.1% from 22.6%.
•Net and comprehensive income increased 127% to
•Net and comprehensive income attributable to
•EBITDA (non-GAAP) as a percentage of total revenues increased to 12.3% from 10.5%.
•Active communities at
•Return on participating equity was 44.0% for the trailing twelve months ended
•Basic earnings per share was
For reconciliations of the non-GAAP financial measures, including adjusted gross margin, EBITDA and adjusted EBITDA, to the most directly comparable GAAP financial measures, see "-Non-GAAP Financial Measures."
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Results of Operations
Three Months Ended
The following table sets forth our results of operations for the periods
indicated:
For the Three Months Ended
June 30,
(unaudited)
2022 2021 Amount Change % Change
Revenues:
Homebuilding $ 791,230 $ 363,743 $ 427,487 118 %
Other 1,904 1,533 371 24 %
Total revenues 793,134 365,276 427,858 117 %
Homebuilding cost of sales 635,422 303,589 331,833 109 %
Selling, general and administrative expense 66,015 30,137 35,878 119 %
Income from equity in earnings of
unconsolidated entities (3,334) (1,125) (2,209) 196 %
Contingent consideration revaluation 5,042 3,977 1,065 27 %
Other (income) expense, net 278 (7,856) 8,134 -104 %
Interest expense 13 16 (3) -19 %
Income before taxes 89,698 36,538 53,160 145 %
Income tax expense (23,327) (4,479) (18,848) 421 %
Net and comprehensive income 66,371 32,059 34,312 107 %
Net and comprehensive income attributable to
non-controlling interests (3,747) (3,486) (261) 7 %
Net and comprehensive income attributable to
Dream Finders Homes, Inc. $ 62,624 $ 28,573 $ 34,051 119 %
Earnings per share(1)
Basic $ 0.64 $ 0.31 $ 0.33 106 %
Diluted $ 0.60 $ 0.31 $ 0.29 94 %
Weighted-average number of shares
Basic 92,758,939 92,521,482 237,457 0 %
Diluted 104,566,243 92,670,727 11,895,516 13 %
Consolidated Balance Sheets Data (at period
end):
Cash and cash equivalents 84,097 6,154 77,943 1267 %
Total assets 2,112,786 932,282 1,180,504 127 %
Long-term debt 876,568 369,049 507,519 138 %Preferred mezzanine equity 155,621 6,703 148,918 2222 % Common stock - Class A 323 323 - 100 % Common stock - Class B 602 602 - 100 % Additional paid-in capital 261,207 255,290 5,917 100 % Retained earnings 217,346 45,611 171,735 100 % Non-controlling interests 12,056 20,874 (8,818) -42 % Other Financial and Operating Data Active communities at end of period(2) 203 117 86 74 % Home closings 1,649 996 653 66 % Average sales price of homes closed(3)$ 463,447 $ 358,604 $ 105 29 % Net new orders 1,426 1,521 (95) -6 % Cancellation rate 21.0 % 14.4 % 6.6 % 46 % Backlog (at period end) - homes 7,190 4,137 3,053 74 % Backlog (at period end, in thousands) - value$ 3,334,945 $ 1,646,725 $ 1,688,220 103 % Gross margin (in thousands)(4)$ 155,808 $ 60,154 $ 95,654 159 % Gross margin %(5) 19.7 % 16.5 % 3.2 % 19 % Net profit margin % 7.9 % 7.8 % 0.1 % 1 % Adjusted gross margin (in thousands)(6)$ 203,731 $ 85,452 $ 118,279 138 % Adjusted gross margin %(5) 25.7 % 23.5 % 2.2 % 9 % EBITDA (in thousands)(6)$ 104,974 $ 42,421 $ 62,553 147 % EBITDA margin %(7) 13.2 % 11.6 % 1.6 % 14 % Adjusted EBITDA (in thousands)(6)$ 106,766 $ 43,873 $ 62,893 143 % Adjusted EBITDA margin %(7) 13.5 % 12.0 % 1.5 % 12 % 24
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(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 as described in
Note 1 to our condensed consolidated financial statements, Nature of Business
and Significant Accounting Policies, 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.
(6)Adjusted gross margin, EBITDA and adjusted EBITDA are non-GAAP financial
measures. For definitions of these non-GAAP financial measures and a
reconciliation to our most directly comparable financial measures calculated and
presented in accordance with GAAP, see "-Non-GAAP Financial Measures."
(7)Calculated as a percentage of total revenues.
Revenues. Revenues for the three months ended June 30, 2022 were $793 million ,
an increase of $428 million , or 117%, from $365 million for the three months
ended June 30, 2021 . The increase in revenues was primarily attributable to an
increase in home closings of 653 homes, or 66%, during the three months ended
June 30, 2022 as compared to the three months ended June 30, 2021 . Our October
2021 acquisition of the homebuilding business of McGuyer Homebuilders, Inc.
("MHI"), a Texas company, contributed 527 home closings and $305 million in
homebuilding revenues for the three months ended June 30, 2022 . The average
sales price of homes closed for the three months ended June 30, 2022 was
$463,447 , an increase of $104,843 or 29%, over an average sales price of homes
closed of $358,604 for the three months ended June 30, 2021 . The increase was
due to a higher average sales price of homes closed within the MHI segment, as
well as overall price appreciation ahead of cost inflation.
Homebuilding Cost of Sales and Gross Margin. Homebuilding cost of sales for the
three months ended June 30, 2022 was $635 million , an increase of $332 million ,
or 109%, from $304 million for the three months ended June 30, 2021 . The
increase in homebuilding cost of sales was primarily due to the increase in home
closings for the three months ended June 30, 2022 as compared to the three
months ended June 30, 2021 . Homebuilding gross margin for the three months ended
June 30, 2022 was $156 million , an increase of $96 million , or 159%, from $60
million for the three months ended June 30, 2021 . Homebuilding gross margin as a
percentage of homebuilding revenues was 19.7% for the three months ended
June 30, 2022 , an increase of 320 basis points, or 19%, from 16.5% for the three
months ended June 30, 2021 . The increase in gross margin was due to price
appreciation ahead of cost inflation.
Adjusted Gross Margin. Adjusted gross margin for the three months ended June 30,
2022 was $204 million , an increase of $118 million , or 138%, from $85 million
for the three months ended June 30, 2021 . Adjusted gross margin as a percentage
of homebuilding revenues for the three months ended June 30, 2022 was 25.7%, an
increase of 220 basis points, or 9%, as compared to 23.5% for the three months
ended June 30, 2021 . The increase in adjusted gross margin is attributable to
overall price appreciation ahead of cost inflation. Adjusted gross margin is a
non-GAAP financial measure. For the definition of adjusted gross margin and a
reconciliation to our most directly comparable financial measure calculated and
presented in accordance with GAAP, see "-Non-GAAP Financial Measures."
Selling, General and Administrative Expense. Selling, general and administrative
expense for the three months ended June 30, 2022 was $66 million , an increase of
$36 million , or 119%, from $30 million for the three months ended June 30, 2021 .
The increase in selling, general and administrative expense was primarily due to
higher closing volume and the inclusion of $27 million in expenses from MHI for
the second quarter of 2022. 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.
Income from Equity in Earnings and Unconsolidated Entities. Income from equity
in earnings of unconsolidated entities for the three months ended June 30, 2022
was $3 million , an increase of $2 million , or 196%, as compared to $1 million
for the three months ended June 30, 2021 . The increase in income from equity in
earnings of unconsolidated entities was largely attributable to income from
mortgage and title JV's acquired in conjunction with the MHI acquisition for the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021 .
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Contingent Consideration Revaluation. Contingent consideration expense for the three months endedJune 30, 2022 was$5 million , an increase of$1 million or 27%, as compared to$4 million for the three months endedJune 30, 2021 . The increase in contingent consideration expense is primarily due to to fair value adjustments of future expected earn-out payments from the acquisitions of VPH and MHI. The MHI contingent consideration adjustment was not included in the previous period endedJune 30, 2021 . Other (Income) Expense, Net. Other expense for the three months endedJune 30, 2022 was$0 million , as compared to$8 million in other income, a decrease of$8 million or 104% for the three months endedJune 30, 2021 . The decrease in other income, net is primarily due to the forgiveness of the Company's Paycheck Protection Program ("PPP") loan included in the previous period endedJune 30, 2021 . Net and Comprehensive Income. Net and comprehensive income for the three months endedJune 30, 2022 was$66 million , an increase of$34 million , or 107%, from$32 million for the three months endedJune 30, 2021 . The increase in net and comprehensive income was primarily attributable to an increase in gross margin on homes closed of$96 million , or 159%, during the three months endedJune 30, 2022 as compared to the three months endedJune 30, 2021 . Net and Comprehensive Income Attributable toDream Finders Homes, Inc. Net and comprehensive income attributable to Dream Finders for the three months endedJune 30, 2022 was$63 million , an increase of$34 million , or 119%, from$29 million for the three months endedJune 30, 2021 . The increase was primarily attributable to the increase in home closings and gross margin. We closed 1,649 homes for the three months endedJune 30, 2022 , an increase of 653 units, or 66%, from the 996 homes closed for the three months endedJune 30, 2021 . Gross margin for the three months endedJune 30, 2022 was$156 million , an increase of$96 million , or 159%, from$60 million for the three months endedJune 30, 2021 . 26
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Six Months Ended
The following table sets forth our results of operations for the periods
indicated:
For the Six Months Ended
June 30,
(unaudited)
2022 2021 Amount Change % Change
Revenues:
Homebuilding $ 1,453,703 $ 705,910 $ 747,793 106 %
Other 3,497 2,926 571 20 %
Total revenues 1,457,200 708,836 748,364 106 %
Homebuilding cost of sales 1,174,290 594,626 579,664 97 %
Selling, general and administrative expense 127,725 59,452 68,273 115 %
Income from equity in earnings of
unconsolidated entities (6,294) (2,857) (3,437) 120 %
Contingent consideration revaluation 9,234 5,160 4,074 79 %
Other (income) expense, net (691) (7,153) 6,462 -90 %
Interest expense 26 658 (632) -96 %
Income before taxes 152,910 58,950 93,960 159 %
Income tax expense (40,205) (9,295) (30,910) 333 %
Net and comprehensive income 112,705 49,655 63,050 127 %
Net and comprehensive income attributable to
non-controlling interests (6,365) (4,961) (1,404) 28 %
Net and comprehensive income attributable to
Dream Finders Homes, Inc. $ 106,340 $ 44,694 $ 61,646 138 %
Earnings per share(1)
Basic $ 1.07 $ 0.49 $ 0.58 118 %
Diluted $ 1.02 $ 0.49 $ 0.53 108 %
Weighted-average number of shares
Basic 92,758,939 92,521,482 237,457 0 %
Diluted 103,531,560 92,641,222 10,890,338 12 %
Consolidated Balance Sheets Data (at period
end):
Cash and cash equivalents 84,097 6,154 77,943 1267 %
Total assets 2,112,786 932,282 1,180,504 127 %
Long-term debt 876,568 369,049 507,519 138 %Preferred mezzanine equity 155,621 6,703 148,918 2222 % Common stock - Class A 323 323 - 100 % Common stock - Class B 602 602 - 100 % Additional paid-in capital 261,207 255,290 5,917 100 % Retained earnings 217,346 45,611 171,735 100 % Non-controlling interests 12,056 20,874 (8,818) -42 % Other Financial and Operating Data Active communities at end of period(2) 203 117 86 74 % Home closings 3,020 1,998 1,022 51 % Average sales price of homes closed(3)$ 463,318 $ 347,261 $ 116,057 33 % Net new orders 3,828 3,531 297 8 % Cancellation rate 16.4 % 10.9 % 5.5 % 50 % Backlog (at period end) - homes 7,190 4,137 3,053 74 % Backlog (at period end, in thousands) - value$ 3,334,945 $ 1,646,725 $ 1,688,220 103 % Gross margin (in thousands)(4)$ 279,413 $ 111,284 $ 168,129 151 % Gross margin %(5) 19.2 % 15.8 % 3.4 % 22 % Net profit margin % 7.3 % 6.3 % 1.0 % 16 % Adjusted gross margin (in thousands)(6)$ 365,287 $ 159,683 $ 205,604 129 % Adjusted gross margin %(5) 25.1 % 22.6 % 2.5 % 11 % EBITDA (in thousands)(6)$ 179,160 $ 74,621 $ 104,539 140 % EBITDA margin %(7) 12.3 % 10.5 % 1.8 % 17 % Adjusted EBITDA (in thousands)(6)$ 182,404 $ 78,421 $ 103,983 133 % Adjusted EBITDA margin %(7) 12.5 % 11.1 % 1.4 % 13 % 27
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(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 as described in
Note 1 to our condensed consolidated financial statements, Nature of Business
and Significant Accounting Policies, 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.
(6)Adjusted gross margin, EBITDA and adjusted EBITDA are non-GAAP financial
measures. For definitions of these non-GAAP financial measures and a
reconciliation to our most directly comparable financial measures calculated and
presented in accordance with GAAP, see "-Non-GAAP Financial Measures."
(7)Calculated as a percentage of total revenues.
Revenues. Revenues for the six months ended June 30, 2022 were $1,457 million ,
an increase of $748 million , or 106%, from $709 million for the six months ended
June 30, 2021 . The increase in revenues was primarily attributable to an
increase in home closings of 1,022 homes, or 51%, during the six months ended
June 30, 2022 as compared to the six months ended June 30, 2021 . Our October
2021 acquisition of the homebuilding business of McGuyer Homebuilders, Inc.
("MHI"), a Texas company, contributed 1,010 home closings and $580.5 million in
homebuilding revenues for the six months ended June 30, 2022 . The average sales
price of homes closed for the six months ended June 30, 2022 was $463,318 , an
increase of $116,057 or 33%, over an average sales price of homes closed of
$347,261 for the six months ended June 30, 2021 . The increase was due to a
higher average sales price of homes closed within the MHI segment, as well as
overall price appreciation ahead of cost inflation.
Homebuilding Cost of Sales and Gross Margin. Homebuilding cost of sales for the
six months ended June 30, 2022 was $1,174 million , an increase of $580 million ,
or 97%, from $595 million for the six months ended June 30, 2021 . The increase
in homebuilding cost of sales was primarily due to the increase in home closings
for the six months ended June 30, 2022 as compared to the six months ended
June 30, 2021 . Homebuilding gross margin for the six months ended June 30, 2022
was $279 million , an increase of $168 million , or 151%, from $111 million for
the six months ended June 30, 2021 . Homebuilding gross margin as a percentage of
homebuilding revenues was 19.2% for the six months ended June 30, 2022 , an
increase of 340 basis points, or 22%, from 15.8% for the six months ended
June 30, 2021 . The increase in gross margin was due to overall price
appreciation ahead of cost inflation.
Adjusted Gross Margin. Adjusted gross margin for the six months ended June 30,
2022 was $365 million , an increase of $206 million , or 129%, from $160 million
for the six months ended June 30, 2021 . Adjusted gross margin as a percentage of
homebuilding revenues for the six months ended June 30, 2022 was 25.1%, an
increase of 250 basis points, or 11%, as compared to 22.6% for the six months
ended June 30, 2021 . The increase in adjusted gross margin is attributable to
overall price appreciation ahead of cost inflation. Adjusted gross margin is a
non-GAAP financial measure. For the definition of adjusted gross margin and a
reconciliation to our most directly comparable financial measure calculated and
presented in accordance with GAAP, see "-Non-GAAP Financial Measures."
Selling, General and Administrative Expense. Selling, general and administrative
expense for the six months ended June 30, 2022 was $128 million , an increase of
$68 million , or 115%, from $59 million for the six months ended June 30, 2021 .
The increase in selling, general and administrative expense was primarily due to
higher closing volume and the inclusion of $52 million in expenses from MHI for
the first six months of 2022. Selling, general and administrative expenses as a
percentage of homebuilding revenues was 9% for the six months ended June 30,
2022 , as compared to 8% for the six months ended June 30, 2021 .
Income from Equity in Earnings and Unconsolidated Entities. Income from equity
in earnings of unconsolidated entities for the six months ended June 30, 2022
was $6 million , an increase of $3 million , or 120%, as compared to $3 million
for the six months ended June 30, 2021 . The increase in income from equity in
earnings of unconsolidated entities was largely attributable to income from
mortgage/title JV's acquired in conjunction with the MHI acquisition for the six
months ended June 30, 2022 as compared to the six months ended June 30, 2021 .
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Contingent Consideration Revaluation. Contingent consideration expense for the six months endedJune 30, 2022 was$9 million , an increase of$4 million or 79%, as compared to$5 million for the six months endedJune 30, 2021 . The increase in contingent consideration expense is primarily due to the MHI contingent consideration adjustment, which was not included in the previous period endedJune 30, 2021 . Other (Income) Expense, Net. Other income for the six months endedJune 30, 2022 was$1 million , as compared to$7 million in other income, a decrease of$6 million or 90% for the six months endedJune 30, 2021 . The decrease in other income, net is primarily due to the forgiveness of the Company's Paycheck Protection Program ("PPP") loan included in the previous period endedJune 30, 2021 . Net and Comprehensive Income. Net and comprehensive income for the six months endedJune 30, 2022 was$113 million , an increase of$63 million , or 127%, from$50 million for the six months endedJune 30, 2021 . The increase in net and comprehensive income was primarily attributable to an increase in gross margin on homes closed of$168 million , or 151%, during the six months endedJune 30, 2022 as compared to the six months endedJune 30, 2021 . Net and Comprehensive Income Attributable toDream Finders Homes, Inc. Net and comprehensive income attributable to Dream Finders for the six months endedJune 30, 2022 was$106 million , an increase of$62 million , or 138%, from$45 million for the six months endedJune 30, 2021 . The increase was primarily attributable to the increase in home closings and gross margin. We closed 3,020 homes for the six months endedJune 30, 2022 , an increase of 1,022 units, or 51%, from the 1,998 homes closed for the six months endedJune 30, 2021 . Gross margin for the six months endedJune 30, 2022 was$279 million , an increase of$168 million , or 151%, from$111 million for the six months endedJune 30, 2021 . Non-GAAP Financial Measures Adjusted Gross Margin Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define adjusted gross margin as gross margin excluding the effects of capitalized interest, amortization included in homebuilding cost of sales (including adjustments resulting from the application of purchase accounting in connection with acquisitions) and commission expense. Our management believes this information is meaningful because it isolates the impact that capitalized interest, amortization (including purchase accounting adjustments) and commission expense have on gross margin. However, because adjusted gross margin information excludes capitalized interest, amortization (including purchase accounting adjustments) 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 our operating performance may be limited. We include 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, we have excluded commission expense from adjusted gross margin. In addition, other companies may not calculate adjusted gross margin information in the same manner that we do. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance.
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):
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Gross margin(1) $ 155,808 $ 60,154 $ 279,413 $ 111,284
Interest expense in homebuilding cost of
sales 12,790 7,365 21,637 15,640
Amortization in homebuilding cost of
sales(3) 1,991 2,072 5,821 1,624
Commission expense 33,142 15,861 58,416 31,135
Adjusted gross margin $ 203,731 $ 85,452 $ 365,287 $ 159,683
Gross margin %(2) 19.7 % 16.5 % 19.2 % 15.8 %
Adjusted gross margin %(2) 25.7 % 23.5 % 25.1 % 22.6 %
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(1)Gross margin is homebuilding revenues less homebuilding cost of sales. (2)Calculated as a percentage of homebuilding revenues. (3)Includes purchase accounting adjustments, as applicable.
EBITDA and Adjusted EBITDA
EBITDA and adjusted EBITDA are not measures of net income as determined by GAAP. EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures used by management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define EBITDA as net income before (i) interest income, (ii) capitalized interest expensed in homebuilding cost of sales, (iii) interest expense, (iv) income tax expense and (v) depreciation and amortization. We define adjusted EBITDA as EBITDA before stock-based compensation expense. Management believes EBITDA and adjusted EBITDA are useful because they allow management to more effectively evaluate our operating performance and compare our results of operations from period to period without regard to our financing methods or capital structure or other items that impact the comparability of financial results from period to period. 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. Our computations of EBITDA and adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA of other companies. We present EBITDA and adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our 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 and in thousands, except percentages):
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Net and comprehensive income attributable
to Dream Finders Homes, Inc. $ 62,624 $ 28,573 $ 106,340 $ 44,694
Interest income (32) - (73) (4)
Interest expensed in cost of sales 12,790 7,365 21,637 15,640
Interest expense 13 16 26 658
Income tax expense 23,327 4,479 40,205 9,295
Depreciation and amortization 6,251 1,988 11,024 4,337
EBITDA $ 104,974 $ 42,421 $ 179,160 $ 74,621
Stock-based compensation expense 1,792 1,452 3,244 3,800
Adjusted EBITDA $ 106,766 $ 43,873 $ 182,404 $ 78,421
EBITDA margin %(1) 13.2 % 11.6 % 12.3 % 10.5 %
Adjusted EBITDA margin %(1) 13.5 % 12.0 % 12.5 % 11.1 %
(1)Calculated as a percentage of total revenues.
Backlog, Sales and Closings
A new order (or new sale) is reported when a customer has received preliminary mortgage approval and the sales contract has been signed by the customer, approved by us and secured by a deposit, approximately 3-6% of the purchase price of the home. These deposits are typically not refundable, but each customer situation is evaluated individually.
Net new orders are new orders or sales (gross) for the purchase of homes during the period, less cancellations of existing purchase contracts during the period. Sales to investors that intend to lease the homes are recognized when the Company has received a non-refundable deposit. Our cancellation rate for a given period is calculated as the total number of new (gross) sales purchase contracts canceled during the period divided by the total number of new (gross) sales contracts entered into during the period. Our cancellation rate for the three months endedJune 30, 2022 was 21.0%, an increase of 660 basis points when compared to the 14.4% cancellation rate for the three months endedJune 30, 2021 . Our cancellation rate for the six months endedJune 30, 2022 was 16.4%, an increase of 550 basis points compared to the 10.9% cancellation rate for the six months endedJune 30, 2021 . 30
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The following tables present information concerning our new home sales (net), starts and closings in each of our markets for the three and six months endedJune 30, 2022 and 2021: For the Three Months Ended Period Over Period June 30, Percent Change 2022 2021 Segment Sales Starts Closings Sales Starts Closings Sales Starts Closings Jacksonville 285 529 377 307 379 265 -7 % 40 % 42 % Colorado 55 119 69 27 108 47 104 % 10 % 47 % Orlando 159 329 100 328 166 147 -52 % 98 % -32 % DC Metro 81 71 21 20 49 35 305 % 45 % -40 % The Carolinas 329 375 351 499 584 315 -34 % -36 % 11 % Texas (1) 318 525 527 - - - - - - Other(2) 199 156 204 340 297 187 -41 % -47 % 9 % Grand Total 1,426 2,104 1,649 1,521 1,583 996 -6 % 33 % 66 % For the Six Months Ended Period Over Period June 30, Percent Change 2022 2021 Segment Sales Starts Closings Sales Starts Closings Sales Starts Closings Jacksonville 917 976 646 867 783 560 6 % 25 % 15 % Colorado 141 215 139 166 182 81 -15 % 18 % 72 % Orlando 288 563 206 609 338 308 -53 % 67 % -33 % DC Metro 144 129 36 72 81 59 100 % 59 % -39 % The Carolinas 482 663 603 1,146 997 658 -58 % -34 % -8 % Texas (1) 1,135 1,242 1,010 - - - - - - Other(2) 721 335 380 671 586 332 7 % -43 % 14 % Grand Total 3,828 4,123 3,020 3,531 2,967 1,998 8 % 39 % 51 % (1)MHI was acquired onOctober 1, 2021 . (2)Austin ,Savannah ,Village Park Homes ,Active Adult and Custom Homes .Austin refers to legacy DFH operations exclusive of MHI. See Note 9, Segment Reporting, to our condensed consolidated financial statements for further explanation of our reportable segments. Our "backlog" consists of homes under a purchase contract that are signed by homebuyers who have met the preliminary criteria to obtain mortgage financing but such home sales to end buyers have not yet closed. Ending backlog represents the number of homes in backlog from the previous period plus the number of net new orders generated during the current period minus the number of homes closed during the current period. Our backlog at any given time will be affected by cancellations and the number of our active communities. Homes in backlog are generally closed within one to six months, although we may experience cancellations of purchase contracts at any time prior to such home closings. Certain sales to investors that intend to lease the homes may be delivered over a longer duration. It is important to note that net new orders, backlog and cancellation metrics are operational, rather than accounting data, and should be used only as a general gauge to evaluate performance. Backlog may be impacted by customer cancellations for various reasons that are beyond our control, and, in light of our minimal required deposit, there is little negative impact to the potential homebuyer from the cancellation of the purchase contract. 31
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The following tables present information concerning our new orders, cancellation rate and ending backlog for the periods and as of dates set forth below:
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Net New Orders 1,426 1,521 3,828 3,531
Cancellation Rate 21.0 % 14.4 % 16.4 % 10.9 %
As of
June 30,
2022 2021
Ending Backlog - Homes 7,190 4,137
Ending Backlog - Value (in thousands)
Land Acquisition Strategy and Development Process
We operate an asset-light and capital-efficient lot acquisition strategy and generally seek to avoid engaging in land development, which requires significant capital expenditures and can take several years to realize returns on the investment. Our strategy is intended to avoid the financial commitments and risks associated with direct land ownership and land development by allowing us to control a significant number of lots for a relatively low capital cost. We primarily employ two variations of our asset-light land financing strategy, finished lot option contracts and land bank option contracts, pursuant to which we secure the right to purchase finished lots at market prices by paying deposits based on the aggregate purchase price of the finished lots (typically 10% or less in the case of finished lot option contracts and 15% or less in the case of land bank option contracts) and, in the case of land bank option contracts, any related fees paid to the land bank partner.
As of
Owned and Controlled Lots
The following table presents our owned finished lots purchased just in time for production and controlled lots by homebuilding segment as ofJune 30, 2022 andDecember 31, 2021 : As of As of June 30, December 31, 2022 2021 Segment Owned (2) Controlled Total Owned Controlled Total % Change Jacksonville 1,177 9,613 10,790 774 10,311 11,085 -3 % Colorado 258 5,560 5,818 152 4,883 5,035 16 % Orlando 858 4,908 5,766 537 5,487 6,024 -4 % DC Metro 169 1,775 1,944 97 1,680 1,777 9 % The Carolinas 1,320 5,844 7,164 1,452 5,196 6,648 8 % Texas 1,624 5,701 7,325 1,569 6,304 7,873 -7 % Other(1) 859 4,582 5,441 764 4,634 5,398 1 % Grand Total 6,265 37,983 44,248 5,345 38,495 43,840 1 % (1)Austin ,Savannah ,Village Park Homes ,Active Adult and Custom Homes .Austin refers to legacy DFH operations exclusive of MHI. See Note 9, Segment Reporting, to our condensed consolidated financial statements for further explanation of our reportable segments.
(2)As of
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Owned Real Estate Inventory Status
The following table presents our owned real estate inventory status as of
As of As of
June 30, 2022 December 31, 2021
% of Owned Real Estate % of Owned Real Estate
Inventory Inventory
Construction in process and finished homes (1) 93 % 92 %
Company owned land and lots (2) 7 % 8 %
Total 100 % 100 %
(1)Represents our owned homes that are completed or under construction,
including sold, spec and model homes.
(2)Represents finished lots purchased just-in-time for production and
capitalized costs related to land under development held by third-party land
bank partners, including lot option fees, property taxes and due diligence. Land
and lots from consolidated joint ventures are excluded.
Our Active Communities
We define an active community as a community where we have recorded five net new orders or a model home is currently open to customers. A community is no longer active when we have less than five home sites to sell to customers. Active community count is an important metric to forecast future net new orders for our business. As ofJune 30, 2022 , we had 203 active communities, an increase of 86 communities, or 74%, as compared to 117 active communities as ofJune 30, 2021 . Our active community count excludes communities under the Company's built-for-rent contracts, as all sales to investors occur at one point in time and these communities would have no home sites remaining to sell. As ofJune 30, 2022 , the Company had 24 active communities for built-for-rent contracts and built-for-rent homes comprised approximately 26% of the homes in the Company's backlog.
Our Mortgage Banking Business
For the three months endedJune 30, 2022 , our mortgage banking joint venture,Jet LLC , originated and funded 622 home loans with an aggregate principal amount of approximately$228 million as compared to 540 home loans with an aggregate principal amount of approximately$173 million for the three months endedJune 30, 2021 . For the six months endedJune 30, 2022 , our mortgage banking joint venture,Jet LLC , originated and funded 1,149 home loans with an aggregate principal amount of approximately$415 million as compared to 1,011 home loans with an aggregate principal amount of approximately$319 million for the six months endedJune 30, 2021 . For the three months endedJune 30, 2022 and 2021, respectively,Jet LLC had net income of approximately$3 million and$2 million . For the six months endedJune 30, 2022 and 2021, respectively,Jet LLC had net income of approximately$6 million and$6 million . Our interest inJet LLC is accounted for under the equity investment method and is not consolidated in our condensed consolidated financial statements, as we do not control and are not deemed the primary beneficiary of the variable interest entity ("VIE"). See Note 7, Variable Interest Entities and Investments in Other Entities, to our condensed consolidated financial statements for a description of our joint ventures, including those that were determined to be VIEs and the related accounting treatment.
Costs of
Our cost of sales includes the acquisition and finance costs of homesites or
lots, municipality fees, the costs associated with obtaining building permits,
materials and labor to construct the home, interest rates for construction
loans, internal and external realtor commissions and other miscellaneous closing
costs. Homesite costs range from 20-25% of the average cost of a home. Building
materials range from 40-50% of the average cost to build the home, labor ranges
from 30-40% of the average cost to build the home, and interest, commissions and
closing costs range from 4-10% of the average cost to build the home.
In general, the cost of building materials fluctuates with overall trends in the
underlying prices of raw materials. The cost of certain of our building
materials, such as lumber and oil-based products, fluctuates with market-based
pricing curves. We often obtain volume discounts and/or rebates with certain
suppliers of our building materials, which in turn reduces our cost of sales.
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However, increases in the cost of building materials may reduce gross margin to the extent that market conditions prevent the recovery of increased costs through higher home sales prices. The price changes that most significantly influence our operations are price increases in commodities, including lumber. As a result, significant price increases of these materials may negatively impact our cost of sales and, in turn, our net income.
Seasonality
In all of our markets, we have historically experienced similar variability in our results of operations and capital requirements from quarter to quarter due to the seasonal nature of the homebuilding industry. We generally sell more homes in the first and second quarters and close more homes in our third and fourth quarters. As a result, our revenue may fluctuate on a quarterly basis and we may have higher capital requirements in our second, third and fourth quarters in order to maintain our inventory levels. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular quarter, especially our first quarter, are not necessarily representative of the results we expect at year-end. We expect this seasonal pattern to continue in the long term.
Liquidity and Capital Resources
Overview
We generate cash from the sale of our inventory and we intend to re-deploy the net cash generated from the sale of inventory to acquire and control land and further grow our operations year over year. We believe that our sources of liquidity are sufficient to satisfy our current commitments. We also maintain our Amended and Restated Credit Agreement with a syndicate of lenders providing for a senior unsecured revolving credit facility, which currently has an aggregate commitment of up to$1.1 billion and matures onJune 2, 2025 . As ofJune 30, 2022 , we had$84 million in cash and cash equivalents, excluding$45 million of restricted cash. Additionally, the Company had$250 million of availability under the Amended and Restated Credit Agreement for a total of$334 million in total liquidity. Certain of our subsidiaries guaranteed the Company's obligations under the Amended and Restated credit agreement.
We continue to evaluate our capital structure and explore options to strengthen our Balance Sheet. We will remain opportunistic while assessing available capital in the debt and equity markets.
Our principal uses of capital are lot deposits and purchases, vertical home construction, operating expenses and the payment of routine liabilities.
Cash flows generated by our projects can differ materially from our results of
operations, as these depend upon the stage in the life cycle of each project.
The majority of our projects begin at the land acquisition stage when we enter
into finished lot option contracts by placing a deposit with a land seller or
developer. Our lot deposits are an asset on our balance sheets and these cash
outflows are not recognized in our results of operations. Early stages in our
communities require material cash outflows relating to finished rolling option
lot purchases, entitlements and permitting, construction and furnishing of model
homes, roads, utilities, general landscaping and other amenities, as well as
ongoing association fees and property taxes. These costs are capitalized within
our real estate inventory and are not recognized in our operating income until a
home sale closes. As such, we incur significant cash outflows prior to the
recognition of earnings. In later stages of the life cycle of a community, cash
inflows could significantly exceed our results of operations, as the cash
outflows associated with land purchase and home construction and other expenses
were previously incurred.
We actively enter into finished lot option contracts by placing deposits with
land sellers of typically 10% or less of the aggregate purchase price of the
finished lots. When entering into these contracts, we also agree to purchase
finished lots at predetermined time frames and quantities that match our
expected selling pace in the community.
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We also enter into land development arrangements with land sellers, land developers and land bankers. We typically provide a lot deposit of 10% or less, or 15% or less in the case of land bank option contracts, of the total investment required to develop lots that we will have the option to acquire in the future. In these transactions, we also incur lot option fees that have historically been 15% or less of the outstanding capital balance held by the land banker. The initial investment and lot option fees require our ability to allocate liquidity resources to projects that will not materialize into cash inflows or operating income in the near term. The above cash strategies allow us to maintain adequate lot supply in our existing markets and support ongoing growth and profitability. In spite of the current economic uncertainty, we continue to operate in an environment with consistent increase in the demand for new homes and constrained lot supply compared to population and job growth trends, we intend to continue to reinvest our earnings into our business and focus on expanding our operations. In addition, as the opportunity to purchase finished lots in desired locations becomes increasingly more limited and competitive, we are committed to allocating additional liquidity to land bank deposits on land development projects, as this strategy mitigates the risks associated with holding undeveloped land on our balance sheet, while allowing us to control adequate lot supply in our key markets to support forecasted growth. As ofJune 30, 2022 , our lot deposits and investments related to finished lot option contracts and land bank option contracts were$288 million .
Cash Flows
The following table summarizes our cash flows for the periods indicated:
For the Six Months Ended
June 30,
2022 2021
Net cash used in operating activities
(1,474) (23,485)
Net cash provided by financing activities 72,083
112,652
Net cash used in operating activities was$223 million for the six months endedJune 30, 2022 , as compared to$93 million of net cash used in operating activities for the six months endedJune 30, 2021 . The change in net cash used in operating activities was driven by an increase in inventories of$289 million . The decrease in cash balance was partially offset by higher customer deposits of$13 million and the increase in net income generated on home closings for the six months endedJune 30, 2022 . Net cash used in investing activities was$1 million for the six months endedJune 30, 2022 , as compared to$23 million of cash used in investing activities for the six months endedJune 30, 2021 . The change in net cash used in investing activities was primarily attributable to the acquisition ofCentury Homes during the first quarter of 2021 compared to no acquisitions in the first quarter of 2022. Net cash provided by financing activities was$72 million for the six months endedJune 30, 2022 , as compared to$113 million of cash provided by financing activities for the six months endedJune 30, 2021 . The change in net cash provided by financing activities was primarily attributable to the following activities in the first quarter of 2021, which did not recur in the first quarter of 2022: the Corporate Reorganization, which included IPO net proceeds of$130 million , partially offset by the redemption of the Series C preferred units ofDFH LLC of$26 million .
Credit Facilities, Letters of Credit, Surety Bonds and Financial Guarantees
As ofJune 30, 2022 , under our Amended and Restated Credit Agreement, we had a maximum availability of$1.1 billion , an outstanding balance of$875 million , and we could borrow an additional$250 million . As ofDecember 31, 2021 , we had total outstanding borrowings of$760 million under our credit agreement prior to its amendment and restatement and an additional$8 million in letters of credit with the lenders such that we could borrow an additional$49 million under the agreement. As ofJune 30, 2022 , we were in compliance with the covenants set forth in our Amended and Restated Credit Agreement.
We enter into surety bonds and letter of credit arrangements with local
municipalities, government agencies and land developers. These arrangements
relate to certain performance-related obligations and serve as security for
certain land option agreements. At
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Series B Preferred Units
Following the Corporate Reorganization and upon completion of theIPO, MOF II DF Home LLC andMCC Investment Holdings LLC (both controlled byMedley Capital Corporation ) continue to hold the Series B preferred units ofDFH LLC . As such, they have certain rights and preferences with regard toDFH LLC that holders of our Class A common stock do not have. At any time on or prior toSeptember 30, 2022 ,DFH LLC has the right to redeem some or all of the outstanding Series B preferred units at a price equal to the sum of (i) the difference of (A)$1,000 and (B) the amount of previous distributions having already been paid towards each such unit and (ii) unreturned capital contributions for such unit plus the Series B Preferred Return (the "Series B Redemption Price"). In the event of a liquidation or dissolution ofDFH LLC , the holders of Series B preferred units shall have preference over our membership interest inDFH LLC . Further, in the event of (i) a sale of substantially all ofDFH LLC's assets or (ii) a merger or reorganization resulting in the members ofDFH LLC immediately prior to such transaction no longer beneficially owning at least 50% of the voting power ofDFH LLC , the holders of the Series B preferred units may demand redemption of their Series B preferred units at a price equal to the Series B Redemption Price. Series C Preferred Units
On
Convertible Preferred Stock
OnSeptember 29, 2021 , we sold 150,000 shares of newly-created Convertible Preferred Stock with an initial liquidation preference of$1,000 per share and a par value of$0.01 per share, for an aggregate purchase price of$150 million . We used the proceeds from the sale of the Convertible Preferred Stock to fund the MHI acquisition and for general corporate purposes. Pursuant to the Certificate of Designations, the Convertible Preferred Stock ranks senior to the Class A and B common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Accordingly, upon liquidation, dissolution or winding up of the Company, each share of Convertible Preferred Stock is entitled to receive the initial liquidation preference of$1,000 per share, subject to adjustment, plus all accrued and unpaid dividends thereon. Refer to Note 6 to the condensed consolidated financial statements herein and Note 9 to the consolidated financial statements within our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 for further details on the terms.
Off-Balance Sheet Arrangements
Asset-Light Lot Acquisition Strategy
We operate an asset-light and capital-efficient lot acquisition strategy and generally seek to avoid engaging in land development. We primarily employ two variations of our asset-light land financing strategy, finished lot option contracts and land bank option contracts, pursuant to which we secure the right to purchase finished lots at market prices from various land sellers and land bank partners by paying deposits based on the aggregate purchase price of the finished lots. The deposits required are typically 10% or less in the case of finished lot option contracts and 15% or less in the case of land bank option contracts. As ofJune 30, 2022 , we controlled 37,983 lots through finished lot option contracts and land bank option contracts. Our entire risk of loss pertaining to the aggregate purchase price of contractual commitments resulting from our non-performance under our finished lot option contracts and land bank option contracts is limited to approximately$288 million in lot deposits as ofJune 30, 2022 . In addition, we have capitalized costs of$67 million relating to our off-balance sheet arrangements and land development due diligence. 36
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Surety Bonds and Letters of Credit
We enter into letter of credit and surety bond arrangements with local municipalities, government agencies and land developers. These arrangements relate to certain performance-related obligations and serve as security for certain land option agreements. As ofJune 30, 2022 , we had outstanding letters of credit and surety bonds totaling$1 million and$77 million , respectively. We believe we will fulfill our obligations under the related arrangements and do not anticipate any material losses under these letters of credit or surety bonds.
Contractual Obligations
As of
Critical Accounting Policies
We prepare our condensed consolidated financial statements in accordance with GAAP. Our critical accounting policies are those that we believe have the most significant impact on the presentation of our financial position and results of operations and require the most difficult, subjective or complex judgments. In many cases, the accounting treatment of a transaction is specifically dictated by GAAP without the need for the application of judgment. In certain circumstances, however, the preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. We believe that there have been no significant changes to our critical accounting policies during the six months endedJune 30, 2022 as compared to those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 .
Cautionary Statement about Forward-Looking Statements
The information in this Quarterly Report on Form 10-Q includes "forward-looking statements." Many statements included in this Quarterly Report on Form 10-Q are not statements of historical fact, including statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "predict," "projection," "should" or "will" or the negative thereof or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
•our market opportunity and the potential growth of that market;
•trends with respect to interest rates;
•the expected impact of the COVID-19 pandemic;
•our strategy, expected outcomes and growth prospects;
•trends in our operations, industry and markets;
•our future profitability, indebtedness, liquidity, access to capital and financial condition; and
•our integration of companies that we have acquired into our operations.
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We have based these forward-looking statements on our current expectations and assumptions about future events based on information available to our management at the time the statements were made. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the operation of our business. These risks include, but are not limited to, the risks described under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 and in our Quarterly Report on Form 10-Q for the three months endedMarch 31, 2022 . Should one or more of such risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
COVID-19 Impact
There remains uncertainty regarding the extent and timing of the disruption to our business that may result from the COVID-19 pandemic and any future related governmental actions. There is also uncertainty as to the effects of the COVID-19 pandemic and related economic relief efforts on theU.S. economy, unemployment, consumer confidence, demand for our homes and the mortgage market, including lending standards, interest rates and secondary mortgage markets. We are unable to predict the extent to which this will impact our operational and financial performance, including the impact of future developments such as the duration and spread of the COVID-19 virus or variants thereof, corresponding governmental actions and the impact of such developments and actions on our employees, customers and trade partners and the supply chain in general. Our primary focus remains on doing everything we can to ensure the safety and well-being of our employees, customers and trade partners. In all markets where we are permitted to operate, we are operating in accordance with the guidelines issued by theCenters for Disease Control and Prevention , as well as state and local guidelines.
For more information, see Item 1A. Risk Factors in Part I of our Annual Report
on Form 10-K for the fiscal year ended
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