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 primarily 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 , 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
19,900 home sales through September 30, 2022 and have been profitable every year
since inception.
During the three months ended September 30, 2022 , we received 1,110 net new
orders, a decrease of 191, or 15%, as compared to the 1,301 net new orders
received for the three months ended September 30, 2021 . For the three months
ended September 30, 2022 , we closed 1,542 homes, an increase of 626, or 68%, as
compared to the 916 homes closed for the three months ended September 30, 2021 .
During the nine months ended September 30, 2022 , we received 4,938 net new
orders, an increase of 108, or 2%, as compared to the 4,830 net new orders
received for the nine months ended September 30, 2021 . For the nine months ended
September 30, 2022 , we closed 4,562 homes, an increase of 1,648, or 57%, as
compared to the 2,914 homes closed for the nine months ended September 30, 2021 .
As of September 30, 2022 , our backlog of sold homes was 6,758 valued at $3.1
billion . In addition, as of September 30, 2022 , we owned and controlled 44,774
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 , Century Homes and Coventry Homes brands.
During the three months ended September 30, 2022 , housing demand was further
impacted as rising mortgage rates created strains on affordability. In response
to the negative effect on housing demand, we have introduced sales incentives
primarily focused on mortgage buy down programs and continue to monitor sales
traffic at the community level. Our asset-light business model, and conservative
balance sheet management, allow us to effectively navigate market volatility.
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Recent Developments
OnOctober 10, 2022 , the Company transferred the listing of its Class A common stock from the Nasdaq Global Select Market to theNew York Stock Exchange . The Company's Class A common stock continues to trade under the stock symbol "DFH."
Key Results
Key financial results as of and for the three months ended
•Revenues increased 116% to
•Net new orders decreased 15% to 1,110 from 1,301.
•Homes closed increased 68% to 1,542 from 916.
•Backlog of sold homes increased 50% to 6,758 from 4,520.
•Average sales price of homes closed increased 30% to
•Gross margin as a percentage of homebuilding revenues increased to 18.6% from 16.0%.
•Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased to 24.9% from 21.8%.
•Net and comprehensive income increased 204% to
•Net and comprehensive income attributable to
•EBITDA (non-GAAP) as a percentage of total revenues increased to 12.5% from 8.2%.
•Active communities at
•Return on participating equity was 50.3% for the trailing twelve months ended
•Basic earnings per share was
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Key financial results for the nine months endedSeptember 30, 2022 , as compared to the nine months endedSeptember 30, 2021 (unless otherwise noted), were as follows:
•Revenues increased 109% to
•Net new orders increased 2% to 4,938 from 4,830.
•Homes closed increased 57% to 4,562 from 2,914.
•Average sales price of homes closed increased 33% to
•Gross margin as a percentage of homebuilding revenues increased to 19.0% from 15.9%.
•Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased to 25.0% from 22.3%.
•Net and comprehensive income increased 152% to
•Net and comprehensive income attributable to
•EBITDA (non-GAAP) as a percentage of total revenues increased to 12.4% from 9.7%.
•Basic earnings per share was
For reconciliations of the non-GAAP financial measures, including adjusted gross
margin and 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
September 30,
(unaudited)
2022 2021 Amount Change % Change
Revenues:
Homebuilding $ 783,945 $ 361,322 $ 422,623 117 %
Other 1,724 1,662 62 4 %
Total revenues 785,669 362,984 422,685 116 %
Homebuilding cost of sales 638,456 303,387 335,069 110 %
Selling, general and administrative expense 68,839 33,907 34,932 103 %
Income from equity in earnings of
unconsolidated entities (5,137) (1,373) (3,764) 274 %
Contingent consideration revaluation 2,641 602 2,039 339 %
Other (income) expense, net (1,124) (1,232) 108 (9 %)
Interest expense 5 14 (9) (64 %)
Income before taxes 81,989 27,679 54,310 196 %
Income tax expense (10,371) (4,111) (6,260) 152 %
Net and comprehensive income 71,618 23,568 48,050 204 %
Net and comprehensive income attributable to
non-controlling interests (1,977) (4,433) 2,456 (55 %)
Net and comprehensive income attributable to
Dream Finders Homes, Inc. $ 69,641 $ 19,135 $ 50,506 264 %
Earnings per share(1)
Basic $ 0.71 $ 0.20 $ 0.51 255 %
Diluted $ 0.64 $ 0.20 $ 0.44 220 %
Weighted-average number of shares
Basic 92,760,013 92,521,482 238,531 0 %
Diluted 108,286,433 92,695,197 15,591,236 17 %
Consolidated Balance Sheets Data (at period
end):
Cash and cash equivalents 123,692 85,539 38,153 45 %
Total assets 2,287,262 1,232,582 1,054,680 86 %
Long-term debt 976,440 443,913 532,527 120 %
Preferred mezzanine equity 155,830 154,893 937 1 %
Common stock - Class A 323 323 - 100 %
Common stock - Class B 602 602 - 100 %
Additional paid-in capital 262,783 256,762 6,021 100 %
Retained earnings 283,326 64,552 218,774 100 %
Non-controlling interests 13,508 22,772 (9,264) (41 %)
Other Financial and Operating Data
Active communities at end of period(2) 197 107 90 84 %
Home closings 1,542 916 626 68 %
Average sales price of homes closed(3) $ 487,852 $ 375,693 $ 112,159 30 %
Net new orders 1,110 1,301 (191) (15 %)
Cancellation rate 25.5 % 13.9 % 11.6 % 83 %
Backlog (at period end) - homes 6,758 4,520 2,238 50 %
Backlog (at period end, in thousands) -
value $ 3,137,243 $ 1,819,300 $ 1,317,943 72 %
Gross margin (in thousands)(4) $ 145,489 $ 57,936 $ 87,553 151 %
Gross margin %(5) 18.6 % 16.0 % 2.6 % 16 %
Net profit margin % 8.9 % 5.3 % 3.6 % 68 %
Adjusted gross margin (in thousands)(6) $ 195,042 $ 78,694 $ 116,348 148 %
Adjusted gross margin %(5) 24.9 % 21.8 % 3.1 % 14 %
EBITDA (in thousands)(6) $ 97,939 $ 29,776 $ 68,163 229 %
EBITDA margin %(7) 12.5 % 8.2 % 4.3 % 52 %
Adjusted EBITDA (in thousands)(6) $ 99,515 $ 31,248 $ 68,267 218 %
Adjusted EBITDA margin %(7) 12.7 % 8.6 % 4.1 % 48 %
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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
September 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 September 30, 2022 were $786
million , an increase of $423 million , or 116%, from $363 million for the three
months ended September 30, 2021 . The increase in revenues was primarily
attributable to an increase in home closings of 626 homes, or 68%, during the
three months ended September 30, 2022 as compared to the three months ended
September 30, 2021 . Our October 2021 acquisition of MHI contributed 550 home
closings and $330 million in homebuilding revenues for the three months ended
September 30, 2022 . The average sales price of homes closed for the three months
ended September 30, 2022 was $487,852 , an increase of $112,159 or 30%, over an
average sales price of homes closed of $375,693 for the three months ended
September 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,
which increased at a higher pace than cost inflation.
Homebuilding Cost of Sales and Gross Margin. Homebuilding cost of sales for the
three months ended September 30, 2022 was $638 million , an increase of $335
million , or 110%, from $303 million for the three months ended September 30,
2021 . The increase in homebuilding cost of sales was primarily due to the
increase in home closings for the three months ended September 30, 2022 as
compared to the three months ended September 30, 2021 . Homebuilding gross margin
for the three months ended September 30, 2022 was $145 million , an increase of
$88 million , or 151%, from $58 million for the three months ended September 30,
2021 . Homebuilding gross margin as a percentage of homebuilding revenues was
18.6% for the three months ended September 30, 2022 , an increase of 260 basis
points, or 16%, from 16.0% for the three months ended September 30, 2021 . The
increase in gross margin was due to price appreciation, which increased at a
higher pace than cost inflation.
Adjusted Gross Margin. Adjusted gross margin for the three months ended
September 30, 2022 was $195 million , an increase of $116 million , or 148%, from
$79 million for the three months ended September 30, 2021 . Adjusted gross margin
as a percentage of homebuilding revenues for the three months ended
September 30, 2022 was 24.9%, an increase of 310 basis points, or 14%, as
compared to 21.8% for the three months ended September 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 September 30, 2022 was $69 million , an
increase of $35 million , or 103%, from $34 million for the three months ended
September 30, 2021 . The increase in selling, general and administrative expense
was primarily due to higher closing volume and the inclusion of $30 million in
expenses from the MHI segment for the third quarter of 2022. Selling, general
and administrative expenses as a percentage of homebuilding revenues was 9% in
the third quarter 2022, remaining consistent when compared to 9% in the year-ago
quarter.
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Table of Contents ,
Income from Equity in Earnings and Unconsolidated Entities. Income from equity in earnings of unconsolidated entities for the three months endedSeptember 30, 2022 was$5 million , an increase of$4 million , or 274%, as compared to$1 million for the three months endedSeptember 30, 2021 . The increase in income from equity in earnings of unconsolidated entities was largely attributable to$2 million of income from mortgage and title JVs acquired in conjunction with the MHI acquisition, for the three months endedSeptember 30, 2022 as compared to the three months endedSeptember 30, 2021 , which did not include the MHI acquisition. Contingent Consideration Revaluation. Contingent consideration expense for the three months endedSeptember 30, 2022 was$3 million , an increase of$2 million or 339%, as compared to$1 million for the three months endedSeptember 30, 2021 . The increase in contingent consideration expense is primarily due to fair value adjustments of future expected earn-out payments from the acquisition of MHI. The MHI acquisition occurred subsequent to the period endedSeptember 30, 2021 .
Other (Income) Expense, Net. Other income for the three months ended
Net and Comprehensive Income. Net and comprehensive income for the three months endedSeptember 30, 2022 was$72 million , an increase of$48 million , or 204%, from$24 million for the three months endedSeptember 30, 2021 . The increase in net and comprehensive income was primarily attributable to an increase in gross margin on homes closed of$88 million , or 151%, during the three months endedSeptember 30, 2022 as compared to the three months endedSeptember 30, 2021 . Net and Comprehensive Income Attributable toDream Finders Homes, Inc. Net and comprehensive income attributable to Dream Finders for the three months endedSeptember 30, 2022 was$70 million , an increase of$51 million , or 264%, from$19 million for the three months endedSeptember 30, 2021 . The increase was primarily attributable to the increase in home closings and gross margin. We closed 1,542 homes for the three months endedSeptember 30, 2022 , an increase of 626 units, or 68%, from the 916 homes closed for the three months endedSeptember 30, 2021 . Gross margin for the three months endedSeptember 30, 2022 was$145 million , an increase of$88 million , or 151%, from$58 million for the three months endedSeptember 30, 2021 . 27
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Table of Contents ,
Nine Months Ended
The following table sets forth our results of operations for the periods
indicated:
For the Nine Months Ended
September 30,
(unaudited)
2022 2021 Amount Change % Change
Revenues:
Homebuilding $ 2,237,648 $ 1,067,232 $ 1,170,416 110 %
Other 5,221 4,588 633 14 %
Total revenues 2,242,869 1,071,820 1,171,049 109 %
Homebuilding cost of sales 1,812,746 898,013 914,733 102 %
Selling, general and administrative expense 196,564 93,359 103,205 111 %
Income from equity in earnings of
unconsolidated entities (11,431) (4,230) (7,201) 170 %
Contingent consideration revaluation 11,875 5,762 6,113 106 %
Other (income) expense, net (1,815) (8,385) 6,570 (78 %)
Interest expense 31 672 (641) (95 %)
Income before taxes 234,899 86,629 148,270 171 %
Income tax expense (50,576) (13,405) (37,171) 277 %
Net and comprehensive income 184,323 73,224 111,099 152 %
Net and comprehensive income attributable to
non-controlling interests (8,342) (9,394) 1,052 (11 %)
Net and comprehensive income attributable to
Dream Finders Homes, Inc. $ 175,981 $ 63,830 $ 112,151 176 %
Earnings per share(1)
Basic $ 1.78 $ 0.69 $ 1.09 158 %
Diluted $ 1.67 $ 0.69 $ 0.98 142 %
Weighted-average number of shares
Basic 92,760,013 92,521,482 238,531 0 %
Diluted 105,117,234 92,658,878 12,458,356 13 %
Consolidated Balance Sheets Data (at period
end):
Cash and cash equivalents 123,692 85,539 38,153 45 %
Total assets 2,287,262 1,232,582 1,054,680 86 %
Long-term debt 976,440 443,913 532,527 120 %
Preferred mezzanine equity 155,830 154,893 937 1 %
Common stock - Class A 323 323 - 100 %
Common stock - Class B 602 602 - 100 %
Additional paid-in capital 262,783 256,762 6,021 100 %
Retained earnings 283,326 64,552 218,774 100 %
Non-controlling interests 13,508 22,772 (9,264) (41 %)
Other Financial and Operating Data
Active communities at end of period(2) 197 107 90 84 %
Home closings 4,562 2,914 1,648 57 %
Average sales price of homes closed(3) $ 471,621 $ 354,222 $ 117,399 33 %
Net new orders 4,938 4,830 108 2 %
Cancellation rate 18.6 % 11.8 % 6.8 % 58 %
Backlog (at period end) - homes 6,758 4,520 2,238 50 %
Backlog (at period end, in thousands) -
value $ 3,137,243 $ 1,819,300 $ 1,317,943 72 %
Gross margin (in thousands)(4) $ 424,902 $ 169,219 $ 255,683 151 %
Gross margin %(5) 19.0 % 15.9 % 3.1 % 20 %
Net profit margin % 7.9 % 6.0 % 1.9 % 32 %
Adjusted gross margin (in thousands)(6) $ 560,329 $ 238,373 $ 321,956 135 %
Adjusted gross margin %(5) 25.0 % 22.3 % 2.7 % 12 %
EBITDA (in thousands)(6) $ 277,098 $ 103,488 $ 173,610 168 %
EBITDA margin %(7) 12.4 % 9.7 % 2.7 % 28 %
Adjusted EBITDA (in thousands)(6) $ 281,918 $ 108,760 $ 173,158 159 %
Adjusted EBITDA margin %(7) 12.6 % 10.1 % 2.5 % 25 %
See notes (1) to (7) on page 25.
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Revenues. Revenues for the nine months endedSeptember 30, 2022 were$2,243 million , an increase of$1,171 million , or 109%, from$1,072 million for the nine months endedSeptember 30, 2021 . The increase in revenues was primarily attributable to an increase in home closings of 1,648 homes, or 57%, during the nine months endedSeptember 30, 2022 as compared to the nine months endedSeptember 30, 2021 . OurOctober 2021 acquisition of MHI contributed 1,560 home closings and$910 million in homebuilding revenues for the nine months endedSeptember 30, 2022 . The average sales price of homes closed for the nine months endedSeptember 30, 2022 was$471,621 , an increase of$117,399 or 33%, over an average sales price of homes closed of$354,222 for the nine months endedSeptember 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 higher than cost inflation. Homebuilding Cost of Sales and Gross Margin. Homebuilding cost of sales for the nine months endedSeptember 30, 2022 was$1,813 million , an increase of$915 million , or 102%, from$898 million for the nine months endedSeptember 30, 2021 . The increase in homebuilding cost of sales was primarily due to the increase in home closings for the nine months endedSeptember 30, 2022 as compared to the nine months endedSeptember 30, 2021 . Homebuilding gross margin for the nine months endedSeptember 30, 2022 was$425 million , an increase of$256 million , or 151%, from$169 million for the nine months endedSeptember 30, 2021 . Homebuilding gross margin as a percentage of homebuilding revenues was 19.0% for the nine months endedSeptember 30, 2022 , an increase of 310 basis points, or 20%, from 15.9% for the nine months endedSeptember 30, 2021 . The increase in gross margin was due to overall price appreciation, which increased at a higher pace than cost inflation. Adjusted Gross Margin. Adjusted gross margin for the nine months endedSeptember 30, 2022 was$560 million , an increase of$322 million , or 135%, from$238 million for the nine months endedSeptember 30, 2021 . Adjusted gross margin as a percentage of homebuilding revenues for the nine months endedSeptember 30, 2022 was 25.0%, an increase of 270 basis points, or 12%, as compared to 22.3% for the nine months endedSeptember 30, 2021 . The increase in adjusted gross margin is attributable to overall price appreciation, which increased at a higher pace than 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 nine months endedSeptember 30, 2022 was$197 million , an increase of$103 million , or 111%, from$93 million for the nine months endedSeptember 30, 2021 . The increase in selling, general and administrative expense was primarily due to higher closing volume and the inclusion of$82 million in expenses from MHI for the first nine months of 2022. Selling, general and administrative expenses as a percentage of homebuilding revenues for the nine months endedSeptember 30, 2022 was 9%, remaining consistent when compared to 9% in the year-ago quarter. Income from Equity in Earnings and Unconsolidated Entities. Income from equity in earnings of unconsolidated entities for the nine months endedSeptember 30, 2022 was$11 million , an increase of$7 million , or 170%, as compared to$4 million for the nine months endedSeptember 30, 2021 . The increase in income from equity in earnings of unconsolidated entities was largely attributable to$5 million of income from mortgage and title JVs acquired in conjunction with the MHI acquisition, for the nine months endedSeptember 30, 2022 , which was not included in the nine months endedSeptember 30, 2021 . Contingent Consideration Revaluation. Contingent consideration expense for the nine months endedSeptember 30, 2022 was$12 million , an increase of$6 million or 106%, as compared to$6 million for the nine months endedSeptember 30, 2021 . The contingent consideration adjustment increased for the three and nine months endedSeptember 30, 2022 due to the MHI acquisition, which had not yet occurred as ofSeptember 30, 2021 . As a result of the acquisition, we recorded a$95 million liability within the opening balance sheet, representing the present value of the expected earn-out payments over the earnout period, concluding 48 months post-acquisition. Contingent consideration liabilities are impacted by various inputs and estimates in addition to the fair value accretion, including: (i) updates to the discount rate used quarterly, (ii) changes to current year assumptions based on year to date actual results, (iii) changes to future year's forecast assumptions, which are affected by macro-economic conditions and local market conditions, as well as management actions including capital allocation, growth plans, and restructuring, and (iv) contractual modifications that may merit additional adjustments to final pre-tax income prior to the calculation of the annual earn out payments. The change in estimates used to calculate the contingent consideration adjustment could be material at times and could potentially fluctuate from expense or income. Our policy is to separately disclose the impact of contingent consideration liability adjustments on the face of the Income Statement. 29
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Table of Contents ,
Other (Income) Expense, Net. Other income for the nine months endedSeptember 30, 2022 was$2 million , as compared to$8 million in other income, a decrease of$7 million or 78% for the nine months endedSeptember 30, 2021 . The decrease in other income, net is primarily due to the forgiveness of the Company's$7.2 million Paycheck Protection Program ("PPP") loan included in the previous period endedSeptember 30, 2021 , which did not repeat in the current period ended. Net and Comprehensive Income. Net and comprehensive income for the nine months endedSeptember 30, 2022 was$184 million , an increase of$111 million , or 152%, from$73 million for the nine months endedSeptember 30, 2021 . The increase in net and comprehensive income was primarily attributable to an increase in gross margin on homes closed of$256 million , or 151%, during the nine months endedSeptember 30, 2022 as compared to the nine months endedSeptember 30, 2021 . Net and Comprehensive Income Attributable toDream Finders Homes, Inc. Net and comprehensive income attributable to Dream Finders for the nine months endedSeptember 30, 2022 was$176 million , an increase of$112 million , or 176%, from$64 million for the nine months endedSeptember 30, 2021 . The increase was primarily attributable to the increase in home closings and gross margin. We closed 4,562 homes for the nine months endedSeptember 30, 2022 , an increase of 1,648 units, or 57%, from the 2,914 homes closed for the nine months endedSeptember 30, 2021 . Gross margin for the nine months endedSeptember 30, 2022 was$425 million , an increase of$256 million , or 151%, from$169 million for the nine months endedSeptember 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 Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Gross margin(1) $ 145,489 $ 57,936 $ 424,902 $ 169,219
Interest expense in homebuilding cost of
sales 14,470 5,600 36,107 21,240
Amortization in homebuilding cost of
sales(3) 601 - 6,422 1,621
Commission expense 34,482 15,158 92,898 46,293
Adjusted gross margin $ 195,042 $ 78,694 $ 560,329 $ 238,373
Gross margin %(2) 18.6 % 16.0 % 19.0 % 15.9 %
Adjusted gross margin %(2) 24.9 % 21.8 % 25.0 % 22.3 %
(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.
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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 Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Net and comprehensive income attributable
to Dream Finders Homes, Inc. $ 69,641 $ 19,135 $ 175,981 $ 63,830
Interest income (35) - (108) (4)
Interest expensed in cost of sales 14,470 5,600 36,107 21,240
Interest expense 5 14 31 672
Income tax expense 10,371 4,112 50,576 13,406
Depreciation and amortization 3,487 915 14,511 4,344
EBITDA $ 97,939 $ 29,776 $ 277,098 $ 103,488
Stock-based compensation expense 1,576 1,472 4,820 5,272
Adjusted EBITDA $ 99,515 $ 31,248 $ 281,918 $ 108,760
EBITDA margin %(1) 12.5 % 8.2 % 12.4 % 9.7 %
Adjusted EBITDA margin %(1) 12.7 % 8.6 % 12.6 % 10.1 %
(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 endedSeptember 30, 2022 was 25.5%, an increase of 1,160 basis points when compared to the 13.9% cancellation rate for the three months endedSeptember 30, 2021 . Our cancellation rate for the nine months endedSeptember 30, 2022 was 18.6%, an increase of 680 basis points compared to the 11.8% cancellation rate for the nine months endedSeptember 30, 2021 . During the third quarter of 2022, demand further tightened in response to additional increases in mortgage rates. The market's reaction to the deteriorating economic conditions negatively affected net new orders and continues to have an impact in the cancellation rate for the Company. The year to date cancellation rate remains within the Company's pre-pandemic range of historical cancellation rates. 31
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The following tables present information concerning our new home sales (net), starts and closings in each of our homebuilding segments for the three and nine months endedSeptember 30, 2022 and 2021: For the Three Months Ended Period Over Period September 30, Percent Change 2022 2021 Segment Sales Starts Closings Sales Starts Closings Sales Starts Closings Jacksonville 414 301 265 545 327 305 -24 % -8 % -13 % Colorado 21 111 65 44 71 60 -52 % 56 % 8 % Orlando 215 333 129 222 124 123 -3 % 169 % 5 % DC Metro 27 80 33 14 24 32 93 % 233 % 3 % The Carolinas 139 162 333 362 483 249 -62 % -66 % 34 % Texas (1) 239 355 550 - - - - - - Other(2) 55 95 167 114 275 147 -52 % -65 % 14 % Grand Total 1,110 1,437 1,542 1,301 1,304 916 -15 % 10 % 68 % For the Nine Months Ended Period Over Period September 30, Percent Change 2022 2021 Segment Sales Starts Closings Sales Starts Closings Sales Starts Closings Jacksonville 1,331 1,277 911 1,412 1,109 865 -6 % 15 % 5 % Colorado 162 326 204 210 253 141 -23 % 29 % 45 % Orlando 503 896 335 831 462 431 -39 % 94 % -22 % DC Metro 171 209 69 86 105 91 99 % 99 % -24 % The Carolinas 621 825 936 1,506 1,480 907 -59 % -44 % 3 % Texas (1) 1,374 1,597 1,560 - - - - - - Other(2) 776 430 547 785 869 479 -1 % -51 % 14 % Grand Total 4,938 5,560 4,562 4,830 4,278 2,914 2 % 30 % 57 % (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 or that are signed by third-party investors who have placed a non-refundable deposit. 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. Sustained supply chain challenges during 2022 could have temporarily elongated cycle times impacting the Company's backlog turnover rate. In addition, 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. 32
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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 Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Net New Orders 1,110 1,301 4,938 4,830
Cancellation Rate 25.5 % 13.9 % 18.6 % 11.8 %
As of
September 30,
2022 2021
Ending Backlog - Homes 6,758 4,520
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% for finished lot option and land bank option contracts) and, in the case of land bank option contracts, any related interest and 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 ofSeptember 30, 2022 andDecember 31, 2021 : As of As of September 30, December 31, 2022 2021 Segment Owned (2) Controlled Total Owned Controlled Total % Change Jacksonville 1,132 9,277 10,409 774 10,311 11,085 -6 % Colorado 305 6,347 6,652 152 4,883 5,035 32 % Orlando 1,043 4,763 5,806 537 5,487 6,024 -4 % DC Metro 214 1,688 1,902 97 1,680 1,777 7 % The Carolinas 1,220 5,481 6,701 1,452 5,196 6,648 1 % Texas 1,509 6,628 8,137 1,569 6,304 7,873 3 % Other(1) 766 4,401 5,167 764 4,634 5,398 -4 % Grand Total 6,189 38,585 44,774 5,345 38,495 43,840 2 % (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
September 30, 2022 December 31, 2021
% of Owned Real Estate % of Owned Real Estate
Inventory Inventory
Construction in process and finished homes (1) 91 % 92 %
Company owned land and lots (2) 9 % 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 ofSeptember 30, 2022 , we had 197 active communities, an increase of 90 communities, or 84%, as compared to 107 active communities as ofSeptember 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 ofSeptember 30, 2022 , the Company had 31 built-for-rent active communities, which comprised approximately 34% of the homes in the Company's backlog.
Our Mortgage Banking Business
For the three months endedSeptember 30, 2022 , our mortgage banking joint venture,Jet LLC , originated and funded 507 home loans with an aggregate principal amount of approximately$188 million as compared to 556 home loans with an aggregate principal amount of approximately$182 million for the three months endedSeptember 30, 2021 . For the nine months endedSeptember 30, 2022 , our mortgage banking joint venture,Jet LLC , originated and funded 1,657 home loans with an aggregate principal amount of approximately$604 million as compared to 1,565 home loans with an aggregate principal amount of approximately$501 million for the nine months endedSeptember 30, 2021 . For the three months endedSeptember 30, 2022 and 2021, respectively,Jet LLC had net income of approximately$2 million and$3 million . For the nine months endedSeptember 30, 2022 and 2021, respectively,Jet LLC had net income of approximately$8 million and$8 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 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 costs for construction
loans, internal and external realtor commissions and other miscellaneous closing
costs. Homesite costs range from 20-30% of the average cost of a home. Building
materials range from 40-50% of the average cost to build the home, labor ranges
from 25-30% of the average cost to build the home, and interest, commissions and
closing costs range from 5-10% of the average cost to build the home.
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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. 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 ofSeptember 30, 2022 , we had$124 million in cash and cash equivalents, excluding$38 million of restricted cash. Additionally, the Company had$150 million of availability under the Amended and Restated Credit Agreement for a total of$274 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% 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% 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. Although currently there is economic uncertainty that is impacting the homebuilding industry, we continue to operate in geographic regions with consistent increases 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 ofSeptember 30, 2022 , our lot deposits and investments related to finished lot option contracts and land bank option contracts were$291 million .
Cash Flows
The following table summarizes our cash flows for the periods indicated:
For the Nine Months Ended
September 30,
2022 2021
Net cash used in operating activities
(4,025) (24,513)
Net cash provided by financing activities 160,770
329,836
Net cash used in operating activities was$276 million for the nine months endedSeptember 30, 2022 , as compared to$118 million of net cash used in operating activities for the nine months endedSeptember 30, 2021 . The change in net cash used in operating activities was primarily driven by an increase in inventories partially offset by the increase in net income generated on home closings for the nine months endedSeptember 30, 2022 . Net cash used in investing activities was$4 million for the nine months endedSeptember 30, 2022 , as compared to$25 million of cash used in investing activities for the nine months endedSeptember 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 nine months of 2022. Net cash provided by financing activities was$161 million for the nine months endedSeptember 30, 2022 , as compared to$330 million of cash provided by financing activities for the nine months endedSeptember 30, 2021 . The change in net cash provided by financing activities was primarily attributable to the Corporate Reorganization, which included IPO net proceeds of$130 million , no such transaction occurred in the first nine months of 2022.
Credit Facilities, Letters of Credit, Surety Bonds and Financial Guarantees
As ofSeptember 30, 2022 , under our Amended and Restated Credit Agreement, we had a maximum availability of$1.1 billion , an outstanding balance of$975 million , and we could borrow an additional$150 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 ofSeptember 30, 2022 , we were in compliance with the covenants set forth in our Amended and Restated Credit Agreement.
We enter into surety bonds and letters 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. As of
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Series B Preferred Units
Following the Corporate Reorganization and upon completion of theIPO, MOF II DF Home LLC andPhenixFin Investment Holdings LLC 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. The series B preferred units are not convertible into the Company's common stock. The Series B preferred units shall automatically be deemed to be cancelled when a holder of a Series B preferred unit receives aggregate distributions fromDFH LLC on a Series B preferred unit equal to the sum of (i)$1,000 per unit and (ii) the unreturned capital contributions per unit plus an 8% per annum cumulative preferred return (the "Series B Distribution Amount"). 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 to receive the Series B Distribution Amount. 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 , andDFH LLC does not distribute the Series B Distribution Amount within 90 days of such event, 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 Distribution Amount (less prior distributions on such shares).
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 partially 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 for finished lot option and land bank option contracts. As ofSeptember 30, 2022 , we controlled 38,585 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$291 million in lot deposits as ofSeptember 30, 2022 . In addition, we have capitalized costs of$122 million relating to our off-balance sheet arrangements and land development due diligence. 37
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Surety Bonds and Letters of Credit
We enter into letters 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 ofSeptember 30, 2022 , we had outstanding letters of credit and surety bonds totaling$1 million and$82 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 ofSeptember 30, 2022 , there have been no material changes to our contractual obligations appearing in the "Contractual Obligations, Commitments and Contingencies" section of 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 .
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 nine months endedSeptember 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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