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
(Registrant’s 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

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2
Table of Contents

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.

3
Table of Contents

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.
4
Table of Contents


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.
5
Table of Contents

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.

6
Table of Contents


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
      
1,644,234
  
Loss on sale of property and equipment
    
17,483
   
(34,295
)
Amortization of debt issuance costs
    
1,429,135
      
1,007,022
  
Amortization of right-of-use operating lease
    
1,694,652
      
1,652,188
  
Amortization of right-of-use financing lease
    
79,179
      
79,179
  
Payments of operating leases
     (263,945 )     -  
Stock compensation expense
    
2,560,069
      
447,500
  
Income fom Paycheck Protection Program