UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2021
 
OR

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _________ to _________.
 
Commission file number 001-39916



DREAM FINDERS HOMES, INC.

(Exact name of registrant as specified in its charter)

Delaware
 
85-2983036
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

14701 Philips Highway, Suite 300, Jacksonville, FL
 
32256
(Address of principal executive offices)

(Zip code)

(904) 644-7670
(Registrants Telephone Number, Including Area Code)


 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading symbol(s)
Name of each exchange on which registered
     
Class A Common Stock, par value $0.01 per share
DFH
NASDAQ Global Select Market


 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒    No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company

   
Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of August 10, 2021, there were 32,295,329 shares of the registrant’s Class A common stock, par value $0.01 per share, issued and outstanding and 60,226,153 shares of the registrant’s Class B common stock, par value $0.01 per share, issued and outstanding.




TABLE OF CONTENTS

3
   
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4
     
 
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7
     
 
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24
   
45
   
46
   
48
   
48
   
48
   
48
   
48
   
 
49



PART I. FINANCIAL INFORMATION
 
ITEM 1.
DREAM FINDERS HOMES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

   
June 30,
2021
   
December 31,
2020
 
             
Assets
           
Cash and cash equivalents
 
$
6,154,320
   
$
35,495,595
 
Restricted cash (VIE amounts of $5,946,424 and $8,793,201
   
46,936,952
     
49,715,553
 
Accounts receivable
    51,021,302       24,927,903  
Inventories:
               
Construction in process and finished homes
   
537,758,853
     
396,630,945
 
Joint venture owned land and lots (VIE amounts of $18,151,982 and $40,900,552)
   
18,152,136
     
40,900,552
 
Company owned land and lots
   
75,083,602
     
46,839,616
 
Lot deposits
   
107,717,122
     
66,272,347
 
Equity method investments
   
7,453,783
     
4,545,349
 
Property and equipment, net
   
4,228,857
     
4,309,071
 
Operating lease right-of-use assets
   
12,788,540
     
14,219,248
 
Finance lease right-of-use assets
   
256,612
     
335,791
 
Intangible assets, net of amortization
   
2,161,250
     
2,660,003
 
Goodwill
   
30,360,997
     
28,566,232
 
Deferred tax asset
   
3,312,736
     
-
 
Other assets (VIE amounts of $2,159,645 and $1,288,359)
   
28,894,891
     
18,262,036
 
Total assets
 
$
932,281,953
   
$
733,680,241
 
Liabilities
               
Accounts payable (VIE amounts of $0 and $1,315,582)
 

34,204,013
   

37,418,693
 
Accrued expenses (VIE amounts of $8,571,439 and $9,977,268)
   
65,908,878
     
67,401,055
 
Customer deposits
   
93,275,468
     
59,392,135
 
Construction lines of credit
   
365,000,000
     
289,878,716
 
Notes payable (VIE amounts of $2,992,531 and $8,821,282)
   
4,048,531
     
29,653,282
 
Operating lease liabilities
   
13,064,645
     
14,410,560
 
Finance lease liabilities
   
267,198
     
345,062
 
Contingent consideration
   
27,110,480
     
23,157,524
 
Total liabilities
 
$
602,879,213
   
$
521,657,027
 
Commitments and contingencies (Note 6)
   
       
Mezzanine Equity
               
Preferred mezzanine equity
   
6,703,460
     
55,638,450
 
Common mezzanine equity
   
-
     
20,593,001
 
Total mezzanine equity
 
$
6,703,460
   
$
76,231,451
 
                 
Members' Equity
               
Common members' equity
   
-
     
103,852,646
 
Total members' equity
 
$
-
   
$
103,852,646
 
                 
Stockholders' Equity - Dream Finders Homes, Inc.
               
Class A common stock, $0.01 per share, 289,000,000 authorized, 32,295,329 outstanding
   
322,953
     
-
 
Class B common stock, $0.01 per share, 61,000,000 authorized, 60,226,153 outstanding
   
602,262
     
-
 
Additional paid-in capital
   
255,289,812
     
-
 
Retained earnings
   
45,610,738
     
-
 
Non-controlling interests
   
20,873,515
     
31,939,117
 
Total stockholders' and members' equity
   
329,402,740
     
212,023,214
 
Total liabilities, mezzanine equity, members' equity and stockholders' equity
 
$
932,281,953
   
$
733,680,241
 

The accompanying notes are an integral part of these condensed consolidated financial statements.


DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2021
   
2020
   
2021
    2020
 
                         
Revenues
 
$
365,276,101
   
$
199,801,128
   
$
708,836,466
   
$
388,539,561
 
Cost of sales
   
303,589,420
     
171,236,637
     
594,626,181
     
334,982,320
 
Selling, general and administrative expense
   
28,686,162
     
17,062,297
     
55,652,375
     
34,581,082
 
Income from equity in earnings of unconsolidated entities
   
(1,125,001
)
   
(1,926,702
)
   
(2,857,394
)
   
(3,286,090
)
Loss/(Gain) on sale of assets
   
48,034
     
(200
)
   
(17,483
)
   
(34,295
)
Loss on extinguishment of debt
   
-
     
-
     
697,423
     
-
 
Other Income                                
Other
   
(1,668,263
)
   
(785,153
)
   
(2,150,482
)
   
(919,214
)
Paycheck Protection Program forgiveness
   
(7,219,794
)
   
-
     
(7,219,794
)
   
-
 
Other Expense                                
Other
   
2,434,780
     
1,360,526
     
5,337,828
     
2,555,837
 
Contingent consideration revaluation
   
3,976,980
     
316,772
     
5,159,725
     
316,772
 
Interest expense
   
15,796
     
45,948
     
657,657
     
81,653
 
Income before taxes
   
36,537,987
     
12,491,003
     
58,950,430
      20,261,496  
Income tax expense
   
(4,478,317
)
   
-
     
(9,294,799
)
   
-
 
Net and comprehensive income
 
$
32,059,670
   
$
12,491,003
   
$
49,655,631
   
$
20,261,496
 
Net and comprehensive income attributable to non-controlling interests
   
(3,485,789
)
   
(766,902
)
   
(4,961,107
)
   
(1,957,361
)
Net and comprehensive income attributable to Dream Finders Homes, Inc.
 
$
28,573,881
   
$
11,724,101
   
$
44,694,524
    $ 18,304,135  
Earnings per share(1)
                               
Basic
 
$
0.31
   
$
-
   
$
0.49
   
$
-
 
Diluted
 
$
0.31
   
$
-
   
$
0.49
   
$
-
 
Weighted-average number of share
                               
Basic
   
92,521,482
     
-
     
92,521,482
     
-
 
Diluted
   
92,670,727
     
-
     
92,641,222
     
-
 

(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 – 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. For the six months ended June 30, 2021, the diluted shares of common stock outstanding were 92,641,222.
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY 
(Unaudited)

   
Redeemable Preferred
Units
Mezzanine
   
Redeemable Common
Units
Mezzanine
   
Common Units
Members'
   
Total
Non-Controlling
Interests
   
Total Equity
 
   
Units
   
Amount
   
Units
   
Amount
   
Units
   
Amount
             
Balance at March 31, 2020
   
49,549
    $
53,435,881
     
7,010
    $
16,701,798
     
76,655
    $
61,476,244
    $
30,091,204
    $
161,705,127
 
Unit compensation
   
-
     
-
     
-
     
-
     
-
     
223,750
     
-
     
223,750
 
Contributions
   
-
     
-
     
-
     
-
     
-
     
-
     
1,789,482
     
1,789,482
 
Contributions from non-controlling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Conversion of units
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Redemptions
   
(1,000
)
   
(1,000,000
)
   
-
     
-
     
-
     
-
     
-
     
(1,000,000
)
Distributions
   
-
     
(344,592
)
   
-
     
-
     
-
     
(1,809,469
)
   
(1,237,665
)
   
(3,391,726
)
Net income (loss)
   
-
     
1,943,190
     
-
     
817,339
     
-
     
8,963,572
     
766,902
     
12,491,003
 
Balance at June 30, 2020
 
48,549

$
54,034,479

 

7,010


$
17,519,137

 

76,655

 
$
68,854,097

 
$
31,409,923


$
171,817,636


   
Redeemable Preferred
Units
Mezzanine
   
Redeemable Common
Units
Mezzanine
   
Common Units
Members'
   
Total
Non-Controlling
Interests
   
Total Equity
 
   
Units
   
Amount
   
Units
   
Amount
   
Units
   
Amount
             
Balance December 31, 2019
   
49,555
    $
58,269,166
     
5,774
    $
16,248,246
     
76,655
    $
56,502,464
    $
30,471,371
    $
161,491,247
 
Unit compensation
   
-
     
-
     
-
     
-
     
-
     
447,500
     
-
     
447,500
 
Contributions
   
-
     
-
     
1,236
     
-
     
-
     
-
     
-
     
-
 
Contributions from non-controlling interests
    -
     
-
     
-
     
-
     
-
     
-
     
3,558,328
     
3,558,328
 
Conversion of units
    -
      -
      -
      -
      -
      -
      -
      -
 
Redemptions
    (1,006 )     (7,000,000 )     -       -       -       -       -       (7,000,000 )
Distributions
   
-
     
(344,591
)
   
-
     
-
     
-
     
(2,019,207
)
   
(4,577,137
)
   
(6,940,935
)
Net income (loss)
   
-
     
3,109,904
     
-
     
1,270,891
     
-
     
13,923,340
     
1,957,361
     
20,261,496
 
Balance at June 30, 2020
   
48,549
   
$
54,034,479
     
7,010
   
$
17,519,137
     
76,655
   
$
68,854,097
   
$
31,409,923
   
$
171,817,636
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY 
CONTINUED
(Unaudited)

   
Redeemable Preferred
Units
Mezzanine
   
Redeemable Common
Units
Mezzanine
   
Common Units
Members'
   
Common Stock - Class A
   
Common Stock - Class B
   
Additional Paid-
in Capital
   
Retained Earnings
   
Total
Non-Controlling
Interests
   
Total Equity
 
   
Units
   
Amount
   
Units
   
Amount
   
Units
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
                         
Balance at March 31, 2021
   
7,143
   
$
6,515,415
     
-
   
$
-
     
-
   
$
-
     
32,295,329
   
$
322,953
     
60,226,153
   
$
602,262
   
$
253,837,981
   
$
17,224,902
   
$
21,696,487
   
$
300,200,000
 
Equity-based compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
1,451,831
     
-
     
-
     
1,451,831
 
Contributions
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Contribution from non-controlling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Conversion of units
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Distributions
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(4,308,761
)
   
(4,308,761
)
Net income
   
-
     
188,045
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
28,385,836
     
3,485,789
     
32,059,670
 
Balance at June 30, 2021
   
7,143
   
$
6,703,460
     
-
   
$
-
     
-
   
$
-
     
32,295,329
   
$
322,953
     
60,226,153
   
$
602,262
   
$
255,289,812
   
$
45,610,738
   
$
20,873,515
   
$
329,402,740
 

   
Redeemable Preferred
Units
Mezzanine
   
Redeemable Common
Units
Mezzanine
   
Common Units
Members'
   
Common Stock - Class A
   
Common Stock - Class B
   
Additional Paid-
in Capital
   
Retained Earnings
   
Total
Non-Controlling
Interests
   
Total Equity
 
   
Units
   
Amount
   
Units
   
Amount
   
Units
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
                         
Balance December 31, 2020
   
48,543
    $
55,638,450
     
7,010
    $
20,593,001
     
76,655
    $
103,852,646
     
-
    $
-
     
-
    $
-
    $
-
    $
-
    $
31,939,117
    $
212,023,214
 
Unit compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Contributions
   
-
     
-
     
-
     
-
     
-
     
-
      -      
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Contributions from non-controlling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Conversion of units
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Redemptions
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Distributions
   
-
     
(3,617,390
)
   
-
     
(1,274,690
)
   
-
     
(18,384,243
)
   
-
     
-
     
-
     
-
     
-
     
-
     
(3,476,258
)
   
(26,752,581
)
Net income (loss)
   
-
     
(157,451
)
   
-
     
(91,043
)
   
-
     
(995,588
)
   
-
     
-
     
-
     
-
     
-
     
-
     
210,340
     
(1,033,742
)
Balance at January 20, 2021 - prior to reorganization transactions and IPO
   
48,543
   
$
51,863,609
     

7,010
   
$
19,227,268
     

76,655
   
$
84,472,815
     
-
   
$
-
     

-
   
$
-
   
$
-
   
$
-
   
$
28,673,199
   
$
184,236,891
 
Reorganization transactions
   
(15,400
)
   
(19,957,513
)
   
(7,010
)
   
(19,227,268
)
   
(76,655
)
   
(84,472,815
)
   
21,255,329
     
212,553
     
60,226,153
     
602,262
     
122,842,781
     
-
     
-
      -  
Issuance of common stock in IPO, net
   
-
     
-
     
-
     
-
     
-
     
-
     
11,040,000
     
110,400
     
-
     
-
     
129,886,962
     
-
     
-
     
129,997,362
 
Equity-based compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
2,560,069
     
-
     
-
     
2,560,069
 
Contributions
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Contributions from non-controlling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Conversion of units
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Redemptions
   
(26,000
)
   
(25,530,504
)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(25,530,504
)
Distributions
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(12,550,451
)
   
(12,550,451
)
Net income (loss)
   
-
     
327,868
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
45,610,738
     
4,750,767
     
50,689,373
 
Balance at June 30, 2021
   
7,143
   
$
6,703,460
     
-
   
$
-
     
-
   
$
-
     
32,295,329
   
$
322,953
     

60,226,153
   
$
602,262
   
$
255,289,812
   
$
45,610,738
   
$
20,873,515
   
$
329,402,740
 

The accompanying notes are an integral part of these condensed consolidated financial statements.



DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited)

   
Six Months Ended June 30,
 
   
2021
   
2020
 
Cash Flows from Operating Activities
           
Net income
 
$
49,655,631
   
$
20,261,496
 
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities
               
Depreciation
   
1,927,248