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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2023
OR
oTransition 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
___________________________________________________________
DFH_Logo 2.jpg
DREAM FINDERS HOMES, INC.
(Exact name of registrant as specified in its charter)
Delaware85-2983036
(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 classTrading symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01 per shareDFH New York Stock Exchange
___________________________________________________________
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 x No o
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 x No o
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 fileroAccelerated filerx
Non-accelerated fileroSmaller reporting company
o
Emerging growth company
o

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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 3, 2023, there were 32,882,124 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
2

Table of Contents,
PART I. FINANCIAL INFORMATION
ITEM 1. DREAM FINDERS HOMES, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
June 30,
2023
December 31,
2022
Assets 
Cash and cash equivalents$292,510$364,531 
Restricted cash (VIE amounts of $9,312 and $4,372)
33,08130,599 
Accounts receivable (VIE amounts of $590 and $580)
31,43343,490 
Inventories: 
Construction in process and finished homes1,212,289 1,175,107 
Company owned land and lots203,932 196,563 
VIE owned land and lots1,037 6,515 
Total inventories1,417,258 1,378,185 
Lot deposits247,903 277,258 
Other assets (VIE amounts of $2,238 and $1,877)
50,315 59,438 
Investments in unconsolidated entities13,948 14,008 
Property and equipment, net7,948 7,337 
Operating lease right-of-use assets21,624 24,084 
Goodwill172,207 172,207 
Total assets$2,288,227 $2,371,137 
Liabilities  
Accounts payable (VIE amounts of $15 and $353)
$124,185 $134,702 
Accrued expenses (VIE amounts of $2,575 and $4,434)
89,854 184,051 
Customer deposits163,237 145,654 
Construction lines of credit875,672 966,248 
Operating lease liabilities22,300 24,661 
Contingent consideration93,500 115,128 
Total liabilities$1,368,748 $1,570,444 
Commitments and contingencies (Note 4)
  
Mezzanine Equity  
Preferred mezzanine equity156,479 156,045 
Stockholders’ Equity  
Class A common stock, $0.01 per share, 289,000,000 authorized, 32,882,124 and 32,533,883 outstanding as of June 30, 2023 and December 31, 2022, respectively
329 325 
Class B common stock, $0.01 per share, 61,000,000 authorized, 60,226,153 outstanding
602 602 
Additional paid-in capital270,905 264,757 
Retained earnings476,663 365,994 
Noncontrolling interests14,501 12,970 
Total mezzanine and stockholders’ equity919,479 800,693 
Total liabilities, mezzanine equity and stockholders’ equity$2,288,227 $2,371,137 
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
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Revenues:
Homebuilding$942,880 $791,230 $1,710,356 $1,453,703 
Other2,459 1,904 4,403 3,497 
Total revenues945,339 793,134 1,714,759 1,457,200 
Homebuilding cost of sales762,855 635,422 1,400,199 1,174,290 
Selling, general and administrative expense73,709 66,015 134,470 127,725 
Income from unconsolidated entities(4,704)(3,334)(7,662)(6,294)
Contingent consideration revaluation18,266 5,042 23,582 9,234 
Other (income) expense, net(635)291 (1,065)(665)
Income before taxes
95,848 89,698 165,235 152,910 
Income tax expense
(24,206)(23,327)(41,842)(40,205)
Net and comprehensive income71,642 66,371 123,393 112,705 
Net and comprehensive income attributable to noncontrolling interests(2,878)(3,747)(5,540)(6,365)
Net and comprehensive income attributable to Dream Finders Homes, Inc.$68,764 $62,624 $117,853 $106,340 
Earnings per share
Basic$0.70 $0.64 $1.19 $1.07 
Diluted$0.65 $0.60 $1.09 $1.02 
Weighted-average number of shares
Basic93,108,277 92,758,939 93,025,626 92,758,939 
Diluted105,439,519 104,566,243 107,704,859 103,531,560 

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 EQUITY
Three and six months ended June 30, 2023
(In thousands, except share amounts)
(Unaudited)



Redeemable Preferred
Mezzanine
Common Stock - Class ACommon Stock - Class BAdditional
Paid-in
Capital
Retained
Earnings
Total
Non-
Controlling
Interests
Total Equity
UnitsAmountSharesAmountSharesAmount
Balance as of March 31, 2023157,143$156,259 32,775,526$327 60,226,153$602 $267,185 $411,494 $14,608 $850,475 
Stock-based compensation— — — 4,044 — — 4,044 
Vesting of stock-based compensation— 130,0082 — (2)— —  
Withholding of common stock for taxes— (23,410)— — (322)— — (322)
Distributions— — — — — (2,985)(2,985)
Preferred dividends declared— — — — (3,375)— (3,375)
Net and comprehensive income220 — — — 68,544 2,878 71,642 
Balance as of June 30, 2023157,143$156,479 32,882,124$329 60,226,153$602 $270,905 $476,663 $14,501 $919,479 

Redeemable Preferred
Mezzanine
Common Stock - Class ACommon Stock - Class BAdditional
Paid-in
Capital
Retained
Earnings
Total
Non-
Controlling
Interests
Total Equity
UnitsAmountSharesAmountSharesAmount
Balance as of December 31, 2022157,143$156,045 32,533,883$325 60,226,153$602 $264,757 $365,994 $12,970 $800,693 
Stock-based compensation— — — 6,474 — — 6,474 
Vesting of stock-based compensation— 371,8414 — (4)— —  
Withholding of common stock for taxes— (23,600)— — (322)— — (322)
Distributions— — — — — (4,009)(4,009)
Preferred dividends declared— — — — (6,750)— (6,750)
Net and comprehensive income434 — — — 117,419 5,540 123,393 
Balance as of June 30, 2023157,143$156,479 32,882,124$329 60,226,153$602 $270,905 $476,663 $14,501 $919,479 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)
Three and six months ended June 30, 2022
(In thousands, except share amounts)
(Unaudited)



Redeemable Preferred
Mezzanine
Common Stock - Class ACommon Stock - Class BAdditional
Paid-in
Capital
Retained
Earnings
Total
Non-
Controlling
Interests
Total Equity
UnitsAmountSharesAmountSharesAmount
Balance as of March 31, 2022157,143$155,417 32,295,329$323 60,226,153$602 $259,328 $158,611 $21,511 $595,792 
Stock-based compensation— 83,610— 153,847— 1,879 — — 1,879 
Distributions— — — — — (13,202)(13,202)
Preferred dividends declared— — — — (3,685)— (3,685)
Net and comprehensive income204 — — — 62,420 3,747 66,371 
Balance as of June 30, 2022157,143$155,621 32,378,939$323 60,380,000$602 $261,207 $217,346 $12,056 $647,155 

Redeemable Preferred
Mezzanine
Common Stock - Class ACommon Stock - Class BAdditional
Paid-in
Capital
Retained
Earnings
Total
Non-
Controlling
Interests
Total Equity
UnitsAmountSharesAmountSharesAmount
Balance as of December 31, 2021157,143$155,220 32,295,329$323 60,226,153$602 $257,963 $118,194 $24,081 $556,383 
Stock-based compensation— 83,610— 153,847— 3,244 — — 3,244 
Distributions— — — — — (18,390)(18,390)
Preferred dividends declared— — — — (6,787)— (6,787)
Net and comprehensive income401 — — — 105,939 6,365 112,705 
Balance as of June 30, 2022157,143$155,621 32,378,939$323 60,380,000$602 $261,207 $217,346 $12,056 $647,155 


The accompanying notes are an integral part of these condensed consolidated financial statements.
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DREAM FINDERS HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
20232022
Cash Flows from Operating Activities
Net and comprehensive income$123,393 $112,705 
Adjustments to Reconcile Net Income to Net cash provided by/(used in) operating activities
Depreciation and amortization5,312 4,230 
Gain on sale of property and equipment(20)(16)
Amortization of debt issuance costs2,264 1,860 
Extinguishment of unamortized debt issuance costs 282 
Amortization of right-of-use operating lease assets3,617 2,489 
Stock-based compensation6,474 3,244 
Deferred tax (benefit) expense(2,036)16,633 
Return on investments, net of income from unconsolidated entities60 1,372 
Revaluation of contingent consideration23,582 9,234 
Payments of contingent consideration(12,618) 
Changes in Operating Assets and Liabilities
Accounts receivable12,057 3,203 
Inventories(39,073)(289,355)
Lot deposits29,355 (47,021)
Other assets6,069 (32,058)
Accounts payable and accrued expenses(104,715)(13,374)
Customer deposits17,583 13,260 
Operating lease liabilities(3,518)(2,439)
Net cash provided by/(used in) operating activities67,786 (215,751)
Cash Flows from Investing Activities
Purchase of property and equipment(3,003)(1,923)
Proceeds from disposal of property and equipment52 42 
Return of investments from unconsolidated entities 407 
Net cash used in investing activities(2,951)(1,474)
Cash Flows from Financing Activities
Proceeds from construction lines of credit5,410,000 230,578 
Principal payments on construction lines of credit(5,500,576)(117,301)
Payments of debt issuance costs(125)(5,069)
Payments of preferred stock dividends(6,750)(6,787)
Payments for common stock withheld for taxes(322) 
Distributions to noncontrolling interests(4,009)(18,390)
Payments of contingent consideration(32,592)(17,735)
Net cash (used in)/provided by financing activities(134,374)65,296 
Net decrease in cash, cash equivalents and restricted cash(69,539)(151,929)
Cash, cash equivalents and restricted cash at beginning of period
395,130 281,322 
Cash, cash equivalents and restricted cash at end of period
$325,591 $129,393 
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$292,510 $84,097 
Restricted cash33,081 45,296 
Total cash, cash equivalents and restricted cash$325,591 $129,393 
Supplemental disclosures of noncash activities:
Noncash Financing Activities
Accrued distributions$434 $ 
Leased assets obtained in exchange for new operating lease liabilities1,157 8,239 
Total noncash activities$1,591 $8,239 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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DREAM FINDERS HOMES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.    Nature of Business and Significant Accounting Policies
Nature of Business
Dream Finders Homes, Inc. (together with its subsidiaries, “Dream Finders”, the “Company” or “DFH, Inc.”) designs, builds and sells homes in markets throughout the United States. The Company also offers title insurance and mortgage banking solutions. The Company was incorporated in the State of Delaware on September 11, 2020.
Basis of Presentation and Consolidation
The accompanying unaudited, condensed consolidated financial statements include the accounts of DFH, Inc., its wholly owned subsidiaries and its investments that qualify for consolidation treatment (see Note 5, Variable Interest Entities), including Dream Finders Holdings, LLC (“DFH LLC”), which is the legal entity that issued the outstanding Series B Preferred Units. The accompanying statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for a complete set of financial statements. As such, the accompanying statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The accompanying statements include all adjustments that are of a normal, recurring nature and necessary for the fair presentation of our results for the interim periods presented, which are not necessarily indicative of results to be expected for the full year. All intercompany accounts and transactions have been eliminated in consolidation. There are no other components of comprehensive income not already reflected in net and comprehensive income on our Condensed Consolidated Statements of Comprehensive Income.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.
Contingent Consideration
In connection with applicable business combinations, the Company records the fair value of contingent consideration as a liability on the acquisition date as prescribed by the underlying agreement. The initial measurement of contingent consideration is based on projected cash flows such as revenues, gross margin, overhead expenses and pre-tax income of the acquired business and is discounted to present value using the discounted cash flow method. The remaining estimated contingent consideration payments are subsequently remeasured to fair value at each reporting date based on the estimated future earnings of the acquired entities and the re-assessment of risk-adjusted discount rates that reflect current market conditions.
Maximum potential exposure for contingent consideration is not estimable based on the contractual terms of the contingent consideration agreements, which allow for a percentage payout based on a potentially unlimited range of pre-tax net income.
As of June 30, 2023 and December 31, 2022, the Company remeasured the fair value of contingent consideration related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC and adjusted the liability to $10.2 million and $11.6 million, respectively, based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability. The Company recorded contingent consideration adjustments resulting in $1.7 million of expense and $0.7 million of expense for the three months ended June 30, 2023 and 2022, and $3.2 million of expense and $2.5 million of expense for the six months ended June 30, 2023 and 2022, respectively.

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As of June 30, 2023 and December 31, 2022, the Company remeasured the fair value of contingent consideration related to the 2021 acquisition of McGuyer Homebuilders, Inc. (“MHI”) and adjusted the liability to $83.3 million and $102.1 million, respectively, based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability. The Company recorded contingent consideration adjustments resulting in $16.6 million of expense and $1.9 million of expense for the three months ended June 30, 2023 and 2022, and $20.0 million of expense and $3.9 million of expense for the six months ended June 30, 2023 and 2022, respectively. The increase in contingent consideration expense is primarily due to fair value adjustments from actual results achieved being better-than-projected and the related increase in expected future earnout payments from the MHI acquisition.
See Note 8, Fair Value Disclosures for the fair value measurement of contingent consideration.
Share Buyback Program
In June 2023, the Company’s Board of Directors (the “Board”) approved a share buyback program under which the Company can repurchase up to $25 million of its Class A common stock through June 30, 2026 in open market purchases, privately negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The actual timing, number and value of shares repurchased under the share buyback program will depend on a number of factors, including constraints specified in any Rule 10b5-1 trading plans, price, general business and market conditions, and alternative investment opportunities. The share buyback program does not obligate the Company to acquire any specific number of shares in any period, and may be expanded, extended, modified or discontinued at any time. The Company has not repurchased any stock under the share buyback program.
Reclassifications
Certain reclassifications have been made in the condensed consolidated financial statements for 2022 to conform to the classifications used in 2023.
2.    Construction Lines of Credit

On June 2, 2022, the Company entered into an agreement to amend and restate its previous credit agreement (the “Existing Credit Agreement” or the “Credit Agreement”). The Existing Credit Agreement (i) provides for aggregate commitments under the facility up to $1.1 billion, inclusive of an additional commitment of $50.0 million under the terms of the accordion feature; (ii) allows the facility to expand to a borrowing base of up to $1.6 billion through its accordion feature; (iii) has a maturity date of June 2, 2025; and (iv) references a Secured Overnight Financing Rate (“SOFR”) based rate, as described below. Certain of our subsidiaries guaranteed the Company’s obligations under the Existing Credit Agreement.

Under the Existing Credit Agreement, loans bear interest at the Company’s option of (1) a “Base Rate”, which means, for any day, a fluctuating rate per annum equal to credit spreads of 1.5% to 2.6%, which are determined based on the Company’s net debt-to-capitalization ratio, plus the highest of (a) the Federal Funds Rate plus 0.5%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” (c) Term SOFR plus 1.0% and (d) 1.0%, or (2) a “Term SOFR/Letter of Credit Rate”, which means for any day a fluctuating rate per annum equal to credit spreads of 2.5% to 3.6%, which are determined based on the Company’s debt-to-capitalization ratio, plus the adjusted term SOFR rate (based on one, three or six-month interest periods).

As of June 30, 2023 and December 31, 2022, the outstanding balance under the Existing Credit Agreement was $875.0 million and $965.0 million, respectively. Under the Existing Credit Agreement, the funds available are unsecured and availability under the borrowing base is calculated based on specified percentages of finished lots, construction in process, and finished homes inventory on the Condensed Consolidated Balance Sheets.

The Company had capitalized debt issuance costs related to the line of credit and notes payable, net of amortization, of $4.8 million and $7.3 million as of June 30, 2023 and December 31, 2022, respectively, which were included in other assets on the Condensed Consolidated Balance Sheets. The Company amortized $1.2 million and $1.1 million of debt issuance costs for the three months ended June 30, 2023 and 2022, and $2.3 million and $1.9 million of debt issuance costs for the six months ended June 30, 2023 and 2022, respectively. Debt issuance costs are expensed in cost of sales as the homes close.

The Existing Credit Agreement contains restrictive covenants and financial covenants. The Company was in compliance with all debt covenants as of June 30, 2023 and December 31, 2022. The Company expects to remain in compliance with all debt covenants over the next twelve months.

Refer to Note 11, Subsequent Events, for changes to the Existing Credit Agreement.
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3.    Inventories
Inventories consist of finished lots, construction in process (“CIP”) and finished homes, including capitalized interest. In addition, lot option fees related to off-balance sheet arrangements and due diligence costs related to land development are also capitalized into inventory. Finished lots are purchased with the intent of building and selling a home, and are generally purchased just-in-time for construction. CIP represents the homebuilding activity associated with homes to be sold and speculative homes. CIP includes the cost of finished lots and all of the direct costs incurred to build homes. The cost of homes is expensed on a specific identification basis.
Interest is capitalized and included within each inventory category above. Capitalized interest activity is summarized in the table below for the three and six months ended June 30, 2023 and 2022 (in thousands):
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2023 202220232022
Capitalized interest at the beginning of the period$108,900  $49,392 $94,603 $33,266 
Interest incurred41,293  25,447 78,009 50,433 
Interest expensed(1) (13)(1)(26)
Interest charged to homebuilding cost of sales(32,798)(12,790)(55,217)(21,637)
Capitalized interest at the end of the period$117,394  $62,036 $117,394 $62,036 
The Company reviews the performance and outlook of its inventories for indicators of potential impairment on a quarterly basis at the community level. In addition to considering market and economic conditions, the Company assesses current sales absorption levels and recent profitability. The Company looks for instances where sales prices for a home in backlog or potential sales prices for a future sold home would be at a level at which the carrying value of the home may not be recoverable. There were no inventory impairment charges and $0.6 million in inventory impairment charges recorded for the three and six months ended June 30, 2023, respectively, and no inventory impairment charges recorded for the three and six months ended June 30, 2022. The Company reviews lot deposits for impairment on a quarterly basis and will record an impairment charge if it believes it will forfeit its deposit on an individual or portfolio of lots. There were $0.7 million and $1.6 million in lot deposit impairment charges recorded for the three and six months ended June 30, 2023, respectively, and no lot deposit impairment charges recorded for the three and six months ended June 30, 2022.
4.    Commitments and Contingencies
Silver Meadows Townhome Owners Association, Inc. Lawsuit
On October 9, 2019, Silver Meadows Townhome Owners Association, Inc. filed a lawsuit in Boulder County Colorado District Court against DFH Mandarin, LLC (“Mandarin”) and Dream Finders Homes, LLC (collectively with Mandarin, “DFH”), both wholly owned subsidiaries of the Company, as well as other named defendants. The lawsuit alleges certain construction and development defects. Mandarin successfully compelled arbitration. On March 2, 2022 during arbitration proceedings, the parties settled the matter for $12.0 million subject to the execution of a mutually acceptable settlement agreement, including a denial of any admission of liability on behalf of DFH. DFH’s insurance carrier agreed to pay the policy limit of $4.0 million toward the settlement. In April 2022, the parties executed a mutually acceptable settlement agreement and DFH paid the settlement amount, net of the insurance proceeds received. In April 2022, DFH also commenced arbitration to seek contribution toward DFH’s portion of the settlement amount from responsible subcontractors and vendors who performed work on the project. Subsequent to the settlement with the Silver Meadows Townhome Owners Association, Inc., DFH settled with one subcontractor for contribution toward DFH's amounts paid toward the settlement and continued its proceedings to collect additional contributions from responsible subcontractors and vendors, which is still in progress as of the date of this filing. No such additional contributions from the vendors have been collected for the three and six months ended June 30, 2023 and 2022. However, the arbitrator entered a scheduling order on May 1, 2023, which set the final arbitration hearing for October 4, 2024, with the next status conference set for August 8, 2023.

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5.    Variable Interest Entities
The Company holds investments in certain limited partnerships and similar entities that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located, which are considered variable interests. The Company also has an interest in Jet Home Loans LLC (“Jet Home Loans” or “Jet LLC”), where the primary activities include underwriting, originating and selling home mortgages.
The Company’s investments create a variable interest in a variable interest entity (“VIE”), depending on the contractual terms of the arrangement. Additionally, the Company, in the ordinary course of business, enters into option contracts with third parties and unconsolidated entities for the ability to acquire rights to finished lots for the construction of homes. Under these contracts, the Company typically makes a specified earnest money deposit in consideration for the right to purchase finished lots in the future, usually at a predetermined price.
The VIEs are funded by initial capital contributions from the Company, as well as its other partners, and generally do not have significant debt. In some cases, an unrelated third party is the general partner or managing member and, in others, the general partner or managing member is a related party. The primary risk of loss associated with the Company’s involvement in these VIEs is limited to the Company’s initial capital contributions due to bankruptcy or insolvency of the VIE; however, management has deemed the likelihood of this as remote. The maximum exposure to loss related to the VIEs is disclosed below for both consolidated and unconsolidated VIEs, which equals the Company’s capital investment in each entity.
Pursuant to ASC 810 and subtopics related to the consolidation of VIEs, management analyzes the Company’s investments first under the variable interest model to determine if they are VIEs and, if so, whether the Company is the primary beneficiary. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion if changes to the Company’s involvement arise. To make this determination, management considers factors such as whether the Company could direct finance, determine or limit the scope of the entity, sell or transfer property, direct development or direct other operating decisions. The primary beneficiary is defined as the entity having both of the following characteristics: 1) the power to direct the activities that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses and rights to receive the returns from the VIE that would be potentially significant to the VIE. Management consolidates the entity if the Company is the primary beneficiary or if a standalone primary beneficiary does not exist and the Company and its related parties collectively meet the definition of a primary beneficiary. If the investment does not qualify as a VIE under the variable interest model, management then evaluates the entity under the voting interest model to assess if consolidation is appropriate.
Consolidated VIEs
For VIEs that the Company does consolidate, management has the power to direct the activities that most significantly impact the VIEs’ economic performance. The Company typically serves as the party with homebuilding expertise in the VIE. The Company does not guarantee the debts of the VIEs, and creditors of the VIEs have no recourse against the Company.
The table below displays the carrying amounts of the assets and liabilities related to the consolidated VIEs (in thousands):
As of
June 30,
As of
December 31,
Consolidated20232022
Assets$13,177 $13,344 
Liabilities$2,590 $4,787 
Unconsolidated VIEs
For VIEs that the Company does not consolidate, the Company does not hold the power to direct the activities that most significantly impact the VIEs’ economic performance. The Company’s maximum exposure to loss is limited to its investment in the entities because the Company is not obligated to provide them any additional capital and does not guarantee any of the unconsolidated VIEs’ debt.
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The table below shows the Company’s investments in the unconsolidated VIEs (in thousands):
As of
June 30,
As of
December 31,
Unconsolidated20232022
Jet Home Loans$8,081 $7,102 
Other unconsolidated VIEs5,867 6,906 
Total investment in unconsolidated VIEs$13,948 $14,008 
Lot Option Contracts
The Company generally does not engage in the land development business. Instead, the Company employs an asset-light land financing strategy, providing us optionality to purchase lots on a ‘‘just-in-time’’ basis for construction and affording us flexibility to acquire lots at a rate that matches the expected sales pace in a given community. The Company primarily employs two variations of our asset-light land financing strategy—finished lot option contracts and land bank option contracts—pursuant to which the Company secures the right to purchase finished lots at predetermined market prices from various land sellers and land bank partners, by paying deposits based on the aggregate purchase price of the finished lots. These option contracts generally allow us, at our option, to forfeit our right to purchase the lots controlled for any reason, and our sole legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid pursuant to such option contracts and, in the case of land bank option contracts, our loss is limited to the related lot option fees paid to the land bank partner, any potential performance obligations, management of the land development to completion and any cost overruns relative to the project.

None of the creditors of any of the land bank entities with which the Company enters into lot option contracts have recourse to our general credit. The Company generally does not have any specific performance obligations to purchase a certain number or any of the lots or guarantee any of the land bankers’ financial or other liabilities. The Company is not involved in the design or creation of the land bank entities from which the Company purchases lots under lot option contracts. The land bankers’ equity holders have the power to direct 100% of the operating activities of the land bank entity. The Company has no voting rights in any of the land bank entities. The sole purpose of the land bank entity’s activities is to generate positive cash flow returns for such entity’s equity holders. Further, the Company does not share in any of the profit or loss generated by the project’s development. The profits and losses are passed directly to the land bankers’ equity holders.
The deposit placed by us pursuant to the lot option contracts is deemed to be a variable interest in the respective land bank entities. Certain of those land bank entities are deemed to be VIEs. Therefore, the land bank entities with which the Company enters into lot option contracts are evaluated for possible consolidation by the Company.
The Company believes the activities that most significantly impact a land bank entity’s economic performance are the operating activities of the land bank entity. In the case of development projects, unless and until a land bank entity delivers finished lots for sale, the land bank entity’s equity investors bear the risk of land ownership and do not earn any revenues, except for lot option fees paid by the Company. The operating development activities are directed by the land bank entity’s equity investors.
Dream Finders possesses no more than limited protective legal rights through the lot option contracts in the specific finished lots that are purchased, and possesses no participative rights in the land bank entities. Accordingly, the Company does not have the power to direct the activities of a land bank entity that most significantly impact its economic performance. For the aforementioned reasons, the Company concluded that it is not the primary beneficiary of the land bank entities with which it enters into lot option contracts, and therefore the Company does not consolidate any of these VIEs. The Company’s risk of loss related to finished lot option and land bank option deposits and related fees and interest was $316.7 million and $461.6 million as of June 30, 2023 and December 31, 2022, respectively.
6.    Income Taxes
The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 is estimated to be 25.3% and 26.3%, respectively. The effective tax rate decrease of 1.0% is primarily attributable to including an estimate of the 45L tax credit during the six months ended June 30, 2023, but not during the six months ended June 30, 2022 due to the timing of the enactment of the legislation.
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7.    Segment Reporting
The Company primarily operates in the homebuilding business and is organized and reported by division. There are six reportable segments: (i) Jacksonville, (ii) Colorado, (iii) Orlando, (iv) The Carolinas, (v) Texas and (vi) Jet LLC, the Company’s mortgage operations. The MHI operations comprise the Texas segment, which excludes legacy Austin, Texas operations. The remaining operating segments are combined into the “Other” category, along with the corporate component, which is not considered an operating segment. During the second quarter of 2023, the CODM’s most relevant measure of profit and loss for segment reporting changed from net and comprehensive income to income before taxes. The comparative disclosures below reflect this change in segment reporting for the three and six months ended June 30, 2022.
The following tables summarize revenues and income before taxes by segment for the three and six months ended June 30, 2023 and 2022, as well as total assets and goodwill by segment as of June 30, 2023 and December 31, 2022 (in thousands):
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
Revenues:2023202220232022
Jacksonville$164,161 $180,853 $307,102 $315,684 
Colorado46,936 39,431 92,840 77,584 
Orlando144,027 60,468 260,089 107,311 
The Carolinas121,004 118,180 225,977 201,763 
Texas362,110 305,068 640,037 580,492 
Jet Home Loans8,647 6,695 17,062 13,653 
Other (1)
107,101 89,134 188,714 174,366 
Total segment revenues953,986 799,829 1,731,821 1,470,853 
Reconciling items from equity method investments(8,647)(6,695)(17,062)(13,653)
Consolidated revenues$945,339 $793,134 $1,714,759 $1,457,200 
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
Income before taxes2023202220232022
Jacksonville$23,873 $36,615 $39,018 $60,218 
Colorado3,331 6,483 6,699 12,595 
Orlando19,236 5,359 32,300 9,298 
The Carolinas6,677 8,695 10,879 11,642 
Texas39,815 31,364 67,472 54,919 
Jet Home Loans4,310 2,908 8,962 6,003 
Other (1)
765 (269)4,395 1,321 
Total segment income before taxes98,007 91,155 169,725 155,996 
Reconciling items from equity method investments(2,159)(1,457)(4,490)(3,086)
Consolidated income before taxes$95,848 $89,698 $165,235 $152,910 
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Assets: Goodwill:
As of
June 30,
As of
December 31,
As of
June 30,
As of
December 31,
2023202220232022
Jacksonville$280,527 $300,491 $ $ 
Colorado210,497 187,813   
Orlando303,250 276,720 1,795 1,795 
The Carolinas259,669 311,469 16,853 16,853 
Texas660,045 793,219 141,071 141,071 
Jet Home Loans73,864 96,108   
Other (1)
565,931 494,150 12,488 12,488 
Total segments2,353,783 2,459,970 172,207 172,207 
Reconciling items from equity method investments(65,556)(88,833)  
Consolidated$2,288,227 $2,371,137 $172,207 $172,207 
(1)Other includes the Company’s title operations, homebuilding operations in non-reportable segments, operations of the corporate component, and corporate assets such as cash and cash equivalents, cash held in trust, prepaid insurance, operating and financing leases, as well as property and equipment.
8.    Fair Value Disclosures
Fair value represents the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values are determined using a fair value hierarchy based on the inputs used to measure fair value. Level 1 inputs are unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable and significant to the fair value.
The following table presents a summary of the change in fair value measurement of contingent consideration, which is based on Level 3 inputs and is the only asset or liability measured at fair value on a recurring basis (in thousands):
Beginning balance, December 31, 2022$115,128 
Fair value adjustments related to prior year acquisitions23,582 
Contingent consideration payments(45,210)
Ending balance, June 30, 2023$93,500 
Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets and inventory. The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, notes payable and customer deposits, approximate their carrying amounts due to the short-term nature of these instruments. The fair value of the construction lines of credit approximate their carrying amounts since they are subject to short-term fixed interest rates that reflect current market rates.
9.    Related Party Transactions
The Company enters into or participates in related party transactions. The majority of these transactions are entered into to secure finished lots for the construction of new homes.
Consolidated VIEs
The Company has arrangements to acquire land, develop finished lots and build homes. Certain stockholders, directors and members of management of the Company, have invested in these VIEs and some are limited partners in these VIEs. DFH Investors LLC is the managing member of certain of these VIEs. The VIEs are consolidated for accounting purposes (see Note 5, Variable Interest Entities).

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DF Residential I, LP
DF Residential I, LP (“Fund I”) is a real estate investment vehicle organized to acquire and develop finished lots. DF Capital Management, LLC (“DF Capital”) is the investment manager of Fund I. The Company owns a 49% membership interest in DF Capital. DF Capital is controlled by unaffiliated parties. The general partner of Fund I is DF Management GP, LLC (“DF Management”). Dream Finders Homes LLC is one of four members of DF Management with a 25.8% membership interest. Fund I was fully committed in 2019 for a total of $36.7 million. Dream Finders Homes LLC and DFH Investors LLC, collectively invested $1.4 million or 3.8% of the total committed capital of Fund I. Dream Finders Homes LLC has entered into six joint ventures and ten land bank projects with Fund I since its formation in January 2017.
DF Residential II, LP
DF Residential II, LP (“Fund II”) initiated its first close on March 11, 2021. DF Management GP II, LLC, a Florida limited liability company, serves as the general partner of Fund II (the “General Partner”). Fund II raised total capital commitments of $322.1 million and was fully committed as of January 2022. DF Capital is the investment manager of Fund II.
The Company indirectly owns 72.0% of the membership interests in the General Partner and receives 72.0% of the economic interests. The General Partner is controlled by unaffiliated parties. The Company’s investment commitment in Fund II is $3.0 million or 0.9% of the total committed capital of Fund II.
On March 11, 2021, the Company entered into land bank financing arrangements and a Memorandum of Right of First Offer with Fund II, under which Fund II has an exclusive right of first offer on any land bank financing projects that meet its investment criteria and are undertaken by the Company during Fund II’s investment period.
Certain directors, executive officers and members of management have made investment commitments as limited partners in Fund II in an aggregate amount of $133.9 million or 41.6% of the total committed capital of Fund II as of June 30, 2023, inclusive of a $100.0 million commitment from Rockpoint Group, LLC discussed below.
Land Bank Transactions with DF Capital
DF Capital raised additional commitments from limited partners through deals other than Fund I and Fund II, which provided land bank financing for specific projects. One of the Company’s officers invested $0.2 million in one of these funds managed by DF Capital as a limited partner in 2019. The Company continues to purchase lots controlled by these funds.

As of June 30, 2023 and December 31, 2022, the Company had $58.1 million and $58.6 million, respectively, in outstanding lot deposits primarily related to Fund II and other land bank transaction deals in relation to DF Capital projects, controlling approximately 4,800 lots.
Transactions with Rockpoint Group, LLC and affiliates

From time to time, the Company enters into land bank option contracts with Rockpoint Group, LLC (“Rockpoint”) or its affiliates in connection with the Company’s acquisition and development of land. Rockpoint or its affiliate provides the funding for the land acquisition and the Company secures the right to purchase finished lots at market prices by paying deposits based on the aggregate purchase price of the finished lots and any related fees, similar to land bank option contracts with third-party land bankers. William H. Walton III is the founding principal and chief executive officer of Rockpoint. Mr. Walton served as a member of the Board through May 21, 2023. During the six months ended June 30, 2023, no transactions were entered into between Rockpoint and the Company.
Jet Home Loans
Jet LLC performs mortgage origination activities for the Company, including underwriting and originating home mortgages for Company customers and non-Company customers. The Company owns 49.9% of Jet LLC, but is not the primary beneficiary. Jet LLC is accounted for under the equity method and is a related party of the Company (Note 7, Segment Reporting).
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10.    Earnings per Share
The following weighted-average shares and share equivalents were used to calculate basic and diluted earnings per share (“EPS”) for the three and six months ended June 30, 2023 and 2022 (in thousands, except share amounts):
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2023202220232022
Numerator 
Net and comprehensive income attributable to Dream Finders Homes, Inc.$68,764 $62,624 $117,853 $106,340 
Less: Preferred dividends3,595 3,616 7,184 7,195 
Net and comprehensive income available to common stockholders(1)
$65,169 $59,008 $110,669 $99,145 
Denominator  
Weighted-average number of common shares outstanding - basic93,108,277 92,758,939 93,025,626 92,758,939 
Add: Common stock equivalent shares(2)
12,331,242 11,807,304 14,679,233 10,772,621 
Weighted-average number of shares outstanding - diluted105,439,519 104,566,243 107,704,859 103,531,560 
(1)For the diluted earnings per share calculation, $3.4 million and $6.8 million in preferred dividends associated with convertible preferred stock that are assumed to be converted have been added back to the numerator, for both the three months ended June 30, 2023 and 2022, and for both the six months ended June 30, 2023 and 2022, respectively. The remaining amount of preferred dividends that are not added back to the numerator are associated with paid-in-kind dividends for preferred mezzanine equity which is not convertible into the Company’s common stock. Since the conversion price of the Company’s convertible preferred stock is based on an average of the closing price of Class A common stock for the 90 trading days immediately preceding the end of the current period, changes in the price of the Class A common stock may significantly affect the number of additional assumed common shares outstanding under the if-converted method for diluted earnings per share, even when the number of convertible preferred stock shares outstanding is unchanged.
(2)Stock-based compensation awards are excluded from the calculation of diluted EPS in the event they are antidilutive. There were no common stock equivalent shares and 0.9 million of common stock equivalent shares excluded from the diluted earnings per share calculation during the three months ended June 30, 2023 and 2022, respectively, and 1.2 million and 0.7 million of common stock equivalent shares excluded from the diluted earnings per share calculation during the six months ended June 30, 2023 and 2022, respectively, related to unvested restricted stock that were antidilutive.













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11.    Subsequent Events
On July 19, 2023, the Company entered into amendments to its Existing Credit Agreement (as amended, the “Amended Credit Agreement”). The amendments, among other things, (i) provide for an increase in the aggregate commitments under the revolving credit facility from $1.1 billion to $1.2 billion, subject to a borrowing base; (ii) extend the maturity date from June 2, 2025 to July 17, 2026 for certain new and existing lenders comprising $1.1 billion of the $1.2 billion of aggregate commitments under the Amended Credit Agreement; (iii) authorize the non-extending lenders to extend their maturity dates to July 17, 2026, with the consent of the Company; and (iv) provide the Company with the ability to incur certain additional unsecured debt. The amendments also increase the Company’s minimum tangible net worth covenant by increasing the base component of such covenant from $385 million to $607 million. The Amended Credit Agreement retains an accordion feature that allows the aggregate commitments to increase up to $1.6 billion, subject to a borrowing base.
Under the Amended Credit Agreement, loans bear interest, at the Company’s option, at (1) a “Base Rate”, which means for any day a fluctuating rate per annum equal to credit spreads of 1.5% to 2.3%, which are determined based on the Company’s net debt to capitalization ratio, plus the highest of (a) the Federal Funds Rate plus 0.5%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” (c) Term SOFR plus 1.0% and (d) 1.0%, or (2) a “Term SOFR Rate” or “Daily SOFR Rate”, which means for any day a fluctuating rate per annum equal to credit spreads of 2.5% to 3.3%, which are determined based on the Company’s net debt to capitalization ratio, plus either the Daily SOFR Rate (including a SOFR adjustment of 10 basis points) or the Term SOFR Rate, which is based on one, three or six-month interest periods (including a SOFR adjustment of 10 basis points for a one-month interest period, 15 basis points for a three-month interest period and 25 basis points for a six-month interest period), as applicable. The Company may not request a borrowing of, or conversion to, a Base Rate Loan unless Daily Simple SOFR Loans and Term SOFR Rate Loans are unavailable under the Amended Credit Agreement.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless otherwise indicated or the context requires, “DFH,” “Dream Finders,” the “Company,” “we,” “our” and “us” refer collectively to Dream Finders Homes, Inc. and its subsidiaries.
Business Overview and Outlook
We design, build and sell homes in high-growth markets, including Charlotte, Raleigh, Jacksonville, Orlando, Denver, the Washington D.C. metropolitan area, Austin, Dallas, and Houston. We sell homes under the Dream Finders Homes, DF Luxury, Craft Homes and Coventry Homes brands. 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 through DF Title, LLC, doing business as Golden Dog Title & Trust (“DF Title”) and mortgage banking solutions primarily through our mortgage banking joint venture, Jet Home Loans, LLC (“Jet LLC”).
The economic uncertainty impacting the housing market persisted into the first half of 2023, to which we have anticipated and reacted. Our asset-light business model and conservative balance sheet management have allowed us to effectively navigate market volatility. Housing demand was negatively impacted by rising mortgage rates and inflationary pressures, which continue to strain affordability. However, demand is improving as homebuyers are adjusting to the higher rate environment and inventory levels remain constrained in our markets. Additionally, we have implemented sales incentives primarily focused on reducing homebuyer closing costs through mortgage buydown programs and continue to monitor net new orders and traffic at the community level. We also continue to review our lot option contracts and strategically renegotiate to match the current sales pace, as needed. These strategies have contributed to our better-than-expected revenues, net new orders and home closings in the first half of 2023.
-Key Results
Key financial results as of and for the three months ended June 30, 2023, as compared to as of and for the three months ended June 30, 2022 (unless otherwise noted), were as follows:
Revenues increased 19% to $945 million from $793 million.
Net new orders increased 16% to 1,655 from 1,426.
Home closings increased 12% to 1,846 from 1,649.
Backlog of sold homes decreased 26% to 5,288 from 7,190.
Average sales price of homes closed increased 9% to $504,683 from $463,447.
Gross margin as a percentage of homebuilding revenues decreased 60 basis points to 19.1% from 19.7%.
Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased 140 basis points to 27.1% from 25.7%.
Net and comprehensive income increased 8% to $72 million from $66 million.
Net and comprehensive income attributable to DFH increased to $69 million from $63 million.
EBITDA (non-GAAP) as a percentage of total revenues increased 30 basis points to 13.5% from 13.2%.
Active community count increased to 220 from 203.
Return on participating equity (“ROE”) was 42.2% for the trailing twelve months ended June 30, 2023, compared to 44.0% for the trailing twelve months ended June 30, 2022.
Basic earnings per share was $0.70 and diluted earnings per share was $0.65, compared to $0.64 and $0.60, respectively.
Total liquidity, comprised of cash and cash equivalents, and availability under the revolving credit facility, of $511 million as of June 30, 2023, compared to $487 million as of December 31, 2022.
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Key financial results for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022 (unless otherwise noted), were as follows:
Revenues increased 18% to $1,715 million from $1,457 million.
Net new orders decreased 19% to 3,103 from 3,828.
Homes closed increased 11% to 3,363 from 3,020.
Average sales price of homes closed increased 8% to $498,309 from $463,318.
Gross margin as a percentage of homebuilding revenues decreased 110 basis points to 18.1% from 19.2%.
Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased to 25.8% from 25.1%.
Net and comprehensive income increased 9% to $123 million from $113 million.
Net and comprehensive income attributable to Dream Finders Homes, Inc. increased 11% to $118 million from $106 million.
EBITDA (non-GAAP) as a percentage of total revenues increased 50 basis points to 12.8% from 12.3%.
Basic earnings per share was $1.19 and diluted earnings per share was $1.09 compared to $1.07 and $1.02, respectively.
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 June 30, 2023 Compared to Three Months Ended June 30, 2022
The following table sets forth our results of operations for the periods indicated:
For the Three Months Ended
June 30,
(unaudited)
20232022Amount Change% Change
Revenues:
Homebuilding$942,880 $791,230 $151,650 19 %
Other2,459 1,904 555 29 %
Total revenues945,339 793,134 152,205 19 %
Homebuilding cost of sales762,855 635,422 127,433 20 %
Selling, general and administrative expense73,709 66,015 7,694 12 %
Income from unconsolidated entities(4,704)(3,334)(1,370)41 %
Contingent consideration revaluation18,266 5,042 13,224 262 %
Other (income) expense, net(635)291 (926)(318 %)
Income before taxes
95,848 89,698 6,150 %
Income tax expense
(24,206)(23,327)(879)%
Net and comprehensive income71,642 66,371 5,271 %
Net and comprehensive income attributable to noncontrolling interests(2,878)(3,747)869 (23 %)
Net and comprehensive income attributable to Dream Finders Homes, Inc.$68,764 $62,624 $6,140 10 %
Earnings per share(1)
Basic$0.70 $0.64 $0.06 %
Diluted$0.65 $0.60 $0.05 %
Weighted-average number of shares
Basic93,108,277 92,758,939 349,338 %
Diluted105,439,519 104,566,243 873,276 %
Condensed Consolidated Balance Sheets Data (at period end):
Cash and cash equivalents292,510 84,097 208,413 248 %
Total assets2,288,227 2,112,786 175,441 %
Construction lines of credit875,672 875,000 672 %
Preferred mezzanine equity156,479 155,621 858 %
Noncontrolling interests14,501 12,056 2,445 20 %
Total mezzanine and stockholders’ equity919,479 647,155 272,324 42 %
Other Financial and Operating Data
Active communities at end of period(2)
220 203 17 %
Home closings1,846 1,649 197 12 %
Average sales price of homes closed(3)
$504,683 $463,447 $41,236 %
Net new orders1,655 1,426 229 16 %
Cancellation rate15.6 %21.0 %(5.4 %)(26 %)
Backlog (at period end) - homes5,288 7,190 (1,902)(26 %)
Backlog (at period end, in thousands) - value$2,486,375 $3,334,945 $(848,570)(25 %)
Gross margin (in thousands)(4)
$180,025 $155,808 $24,217 16 %
Gross margin %(5)
19.1 %19.7 %(0.6 %)(3 %)
Net profit margin %7.3 %7.9 %(0.6 %)(8 %)
Adjusted gross margin (in thousands)(6)
$255,912 $203,731 $52,181 26 %
Adjusted gross margin %(5)
27.1 %25.7 %1.4 %%
EBITDA (in thousands)(6)
$127,819 $104,973 $22,846 22 %
EBITDA margin %(7)
13.5 %13.2 %0.3 %%
Adjusted EBITDA (in thousands)(6)
$131,863 $106,765 $25,098 24 %
Adjusted EBITDA margin %(7)
13.9 %13.5 %0.4 %%

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(1)Refer to Note 10, Earnings per Share to the condensed consolidated financial statements for disclosure related to the calculation of earnings per share (“EPS”). 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 net new order. A community becomes inactive when it has fewer than five units remaining to sell.
(3)Average sales price of homes closed is calculated based on homebuilding revenues, excluding the impact of deposit forfeitures, percentage of completion revenues and land sales, over homes closed.
(4)Gross margin is homebuilding revenues less homebuilding cost of sales.
(5)Calculated as a percentage of homebuilding revenues.
(6)Adjusted gross margin, EBITDA and adjusted EBITDA are non-GAAP financial measures. For definitions of these non-GAAP financial measures and a reconciliation to our most directly comparable financial measures calculated and presented in accordance with GAAP, see “—Non-GAAP Financial Measures.”
(7)Calculated as a percentage of total revenues.

Revenues. Revenues for the three months ended June 30, 2023 were $945 million, an increase of $152 million, or 19%, from $793 million for the three months ended June 30, 2022. The increase in revenues was primarily attributable to 1,846 home closings for the three months ended June 30, 2023, an increase of 197 homes, or 12%, from the 1,649 home closings for the three months ended June 30, 2022. The average sales price of homes closed for the three months ended June 30, 2023 was $504,683, an increase of $41,236, or 9%, over an average sales price of homes closed of $463,447 for the three months ended June 30, 2022. The increase was primarily due to product mix, as a higher number of closings in the second quarter of 2023 occurred in our Texas and Orlando segments that have higher price-points, and a lower number of closings occurred in our Jacksonville and Carolinas segments, when compared to the second quarter of 2022.
Homebuilding Cost of Sales and Gross Margin. Homebuilding cost of sales for the three months ended June 30, 2023 was $763 million, an increase of $128 million, or 20%, from $635 million for the three months ended June 30, 2022. The increase in homebuilding cost of sales was primarily due to the increase in home closings for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. Homebuilding gross margin for the three months ended June 30, 2023 was $180 million, an increase of $24 million, or 16%, from $156 million for the three months ended June 30, 2022. Homebuilding gross margin as a percentage of homebuilding revenues was 19.1% for the three months ended June 30, 2023, a decrease of 60 basis points, or 3%, from 19.7% for the three months ended June 30, 2022. The decrease in gross margin percentage was primarily due to increases in cost of funds as well as closing costs, as we continue to assist entry-level and first-time homebuyers to close homes through our mortgage buydown programs. The decrease was partially offset by cost management and cycle time improvement across our segments.
Adjusted Gross Margin. Adjusted gross margin for the three months ended June 30, 2023 was $256 million, an increase of $52 million, or 26%, from $204 million for the three months ended June 30, 2022. Adjusted gross margin as a percentage of homebuilding revenues for the three months ended June 30, 2023 was 27.1%, an increase of 140 basis points, or 5%, from 25.7% for the three months ended June 30, 2022. The adjusted gross margin percentage increased due to proactive cost management efforts and cycle time improvements across our segments, partially offset by increased closing costs. 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 ( “SG&A”) for the three months ended June 30, 2023 was $74 million, an increase of $8 million, or 12%, from $66 million for the three months ended June 30, 2022. SG&A as a percentage of homebuilding revenues was 8% in the second quarter 2023, remaining consistent compared to the second quarter 2022. In the second quarter of 2023, SG&A included a $1 million charge related to write-offs of earnest deposits and due diligence costs for lot option contracts that were terminated.
Income from Unconsolidated Entities. Income from unconsolidated entities for the three months ended June 30, 2023 was $5 million, an increase of $2 million, or 41%, compared to $3 million for the three months ended June 30, 2022. The increase in income from unconsolidated entities is primarily attributable to income from Jet Home Loans, and to a lesser extent, distributions of profits from DF Capital funds.
Contingent Consideration Revaluation. Contingent consideration revaluation expense for the three months ended June 30, 2023 was $18 million, an increase of $13 million or 262%, as compared to $5 million for the three months ended June 30, 2022.
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The increase in contingent consideration expense is primarily due to actual results achieved being better-than-projected and the related fair value adjustments of revised expected future earnout payments from the MHI acquisition. Revised projections for the remainder of 2023 and beyond in the Texas segment were a result of the improved sales activity and management’s ability to release starts timely for the 2023 fiscal year.
Other (Income) Expense, Net. Other income for the three months ended June 30, 2023 was $1 million, an increase of $1 million, or 318%, when compared to $0 million of other expense for the three months ended June 30, 2022. The shift from expense to income was primarily due to earnings from consolidated joint ventures and increased interest income.
Net and Comprehensive Income. Net and comprehensive income for the three months ended June 30, 2023 was $72 million, an increase of $6 million, or 8%, from $66 million for the three months ended June 30, 2022. The change in net and comprehensive income was primarily attributable to an increase in gross margin on home closings of $24 million during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. However, as discussed above, better-than-projected results, particularly for the Texas segment, resulted in an increase of contingent consideration expense related to the MHI acquisition, during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, which partially offset the increased gross margin from home closings. The changes in net and comprehensive income attributable to Dream Finders Homes, Inc. are consistent with the changes in net and comprehensive income as there was no significant change in noncontrolling interests for the period.
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Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
The following table sets forth our results of operations for the periods indicated:
For the Six Months Ended
June 30,
(unaudited)
20232022Amount Change% Change
Revenues:
Homebuilding$1,710,356 $1,453,703 $256,653 18 %
Other4,403 3,497 906 26 %
Total revenues1,714,759 1,457,200 257,559 18 %
Homebuilding cost of sales1,400,199 1,174,290 225,909 19 %
Selling, general and administrative expense134,470 127,725 6,745 %
Income from unconsolidated entities(7,662)(6,294)(1,368)22 %
Contingent consideration revaluation23,582 9,234 14,348 155 %
Other (income) expense, net(1,065)(665)(400)60 %
Income before taxes
165,235 152,910 12,325 %
Income tax expense
(41,842)(40,205)(1,637)%
Net and comprehensive income123,393 112,705 10,688 %
Net and comprehensive income attributable to noncontrolling interests(5,540)(6,365)825 (13)%
Net and comprehensive income attributable to Dream Finders Homes, Inc.$117,853 $106,340 $11,513 11 %
Earnings per share(1)
Basic$1.19 $1.07 $0.12 11 %
Diluted$1.09 $1.02 $0.07 %
Weighted-average number of shares
Basic93,025,626 92,758,939 266,687 %
Diluted107,704,859 103,531,560 4,173,299 %
Other Financial and Operating Data
Home closings3,363 3,020 343 11 %
Average sales price of homes closed(3)
$498,309 $463,318 $34,991 %
Net new orders3,103 3,828 (725)(19 %)
Cancellation rate18.1 %16.4 %1.7 %10 %
Gross margin (in thousands)(4)
$310,157 $279,413 $30,744 11 %
Gross margin %(5)
18.1 %19.2 %(1.1 %)(6 %)
Net profit margin %6.9 %7.3 %(0.4 %)(5 %)
Adjusted gross margin (in thousands)(6)
$442,105 $365,287 $76,818 21 %
Adjusted gross margin %(5)
25.8 %25.1 %0.7 %%
EBITDA (in thousands)(6)
$219,498 $179,159 $40,339 23 %
EBITDA margin %(7)
12.8 %12.3 %0.5 %%
Adjusted EBITDA (in thousands)(6)
$225,972 $182,403 $43,569 24 %
Adjusted EBITDA margin %(7)
13.2 %12.5 %0.7 %%
See notes (1) to (7) under results of operations for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.
Revenues. Revenues for the six months ended June 30, 2023 were $1,710 million, an increase of $256 million, or 18%, from $1,454 million for the six months ended June 30, 2022. The increase in revenues was primarily attributable to 3,363 home closings for the six months ended June 30, 2023, an increase of 343 homes, or 11%, from the 3,020 home closings for the six months ended June 30, 2022. The average sales price of homes closed for the six months ended June 30, 2023 was $498,309, an increase of $34,991, or 8%, over an average sales price of homes closed of $463,318 for the six months ended June 30, 2022. The increase was due to overall price appreciation, as well as product mix.
Homebuilding Cost of Sales and Gross Margin. Homebuilding cost of sales for the six months ended June 30, 2023 was $1,400 million, an increase of $226 million, or 19%, from $1,174 million for the six months ended June 30, 2022. The increase in homebuilding cost of sales was primarily due to the increase in home closings for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.
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Homebuilding gross margin for the six months ended June 30, 2023 was $310 million, an increase of $31 million, or 11%, from $279 million for the six months ended June 30, 2022. Homebuilding gross margin as a percentage of homebuilding revenues was 18.1% for the six months ended June 30, 2023, a decrease of 110 basis points, or 6%, from 19.2% for the six months ended June 30, 2022. The decrease in gross margin percentage was primarily due to increased costs of funds, and closing costs as management implemented proactive measures to assist homebuyers to close the homes in backlog, partially offset by cost management and cycle time improvement.
Adjusted Gross Margin. Adjusted gross margin for the six months ended June 30, 2023 was $442 million, an increase of $77 million, or 21%, from $365 million for the six months ended June 30, 2022. Adjusted gross margin as a percentage of homebuilding revenues for the six months ended June 30, 2023 was 25.8%, an increase of 70 basis points, or 3%, when compared to 25.1% for the six months ended June 30, 2022. The adjusted gross margin percentage increased due to overall price appreciation combined with proactive cost management efforts, partially offset by increased closing costs. 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 (“SG&A”) for the six months ended June 30, 2023 was $134 million, an increase of $6 million, or 5%, from $128 million for the six months ended June 30, 2022. SG&A as a percentage of homebuilding revenues was 8% for the six months ended June 30, 2023, a decrease of 100 bps compared to 9% for the six months ended June 30, 2022. The decrease in SG&A as a percentage of homebuilding revenues was primarily due to overall cost management efforts. For the six months ended June 30, 2023, SG&A included $2 million in charges related to write-offs of earnest deposits and due diligence costs for lot option contracts that were terminated.
Income from Unconsolidated Entities. Income from unconsolidated entities for the six months ended June 30, 2023 was $8 million, an increase compared to $6 million for the six months ended June 30, 2022. The increase in income from unconsolidated entities is primarily attributable to income from Jet Home Loans.
Contingent Consideration Revaluation. Contingent consideration revaluation expense for the six months ended June 30, 2023 was $24 million, an increase of $15 million or 155%, as compared to $9 million for the six months ended June 30, 2022. The increase in contingent consideration expense is primarily due to actual results achieved during the second quarter 2023 being better-than-projected and the related fair value adjustments of revised expected future earnout payments from the MHI acquisition. Revised projections for the remainder of 2023 and beyond in the Texas segment were a result of the improved sales activity and management’s ability to release starts timely for the 2023 fiscal year.
Other (Income) Expense, Net. Other income for the six months ended June 30, 2023 remained consistent when compared to the six months ended June 30, 2022.
Net and Comprehensive Income. Net and comprehensive income for the six months ended June 30, 2023 was $123 million, an increase of $10 million, or 9%, from $113 million for the six months ended June 30, 2022. The increase in net and comprehensive income was primarily attributable to an increase in gross margin on home closings of $31 million during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. This increase was partially offset by an increase in contingent consideration expense from the MHI acquisition of $14 million during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, primarily due to better-than-expected results and revised projections for the Texas segment. The changes in net and comprehensive income attributable to Dream Finders Homes, Inc. are consistent with the changes in net and comprehensive income as there was no significant change in noncontrolling interests for the period.
Land Acquisition and Development Process
We operate an asset-light and capital-efficient lot acquisition strategy to meet our growth objectives. We 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 asset-light lot acquisition strategy generally enables us to purchase land in a “just-in-time” manner in both new and existing markets with reduced up-front capital commitments, and, in turn, allows us to increase our inventory turnover rate, enhance our ROE and contributes to our growth. Our strategy is intended to avoid the financial commitments and risks associated with direct land ownership and land development by allowing us to increase optionality and control a significant number of lots for a relatively low capital cost. We believe our asset-light business model reduces our balance sheet risk relative to other homebuilders that own a higher percentage of their land supply.
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Table of Contents,
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 predetermined fixed contractual pricing from various land developers, land sellers and land bank partners.
As of June 30, 2023, our lot deposits and investments in finished lot option and land bank option contracts were $248 million. As of June 30, 2023, we controlled 31,783 lots under lot option and land bank option contracts.
Owned and Controlled Lots
Our owned and controlled lot supply is a critical input to the future revenue of our business. The following table presents our owned finished lots purchased just-in-time for production and controlled lots by homebuilding segment as of June 30, 2023 and December 31, 2022:
As of
June 30,
As of
December 31,
20232022
Segment
Owned (2)
ControlledTotalOwned ControlledTotal% Change
Jacksonville1,259 7,286 8,545 1,083 8,893 9,976 -14 %
Colorado515 6,648 7,163 366 7,555 7,921 -10 %
Orlando927 3,813 4,740 976 4,878 5,854 -19 %
The Carolinas1,020 4,316 5,336 1,003 4,849 5,852 -9 %
Texas1,416 5,545 6,961 1,282 6,835 8,117 -14 %
Other(1)
1,146 4,175 5,321 1,233 4,605 5,838 -9 %
Grand Total6,283 31,783 38,066 5,943 37,615 43,558 -13 %
(1)Austin, DC Metro, Savannah, GA, Hilton Head and Bluffton, S.C., Active Adult and Custom Homes. Austin refers to legacy DFH operations exclusive of MHI. See Note 7, Segment Reporting to the condensed consolidated financial statements for further explanation of our reportable segments.
(2)As of June 30, 2023, the Company had 6,283 owned lots, of which 4,816 were included in construction in process (“CIP”) and finished homes within the condensed consolidated balance sheet. Of the 4,816 owned lots included in CIP and finished homes, 4,440 were under construction, 260 were completed spec homes and 116 were model homes. The remaining owned lots were purchased just-in-time to start construction through existing lot option contracts.
Owned Real Estate Inventory Status
The following table presents our owned real estate inventory status as of June 30, 2023 and December 31, 2022:
As of
June 30, 2023
As of
December 31, 2022
% of Owned Real Estate
 Inventory
% of Owned Real Estate
Inventory
Construction in process and finished homes (1)
86 %86 %
Company owned land and lots (2)
14 %14 %
Total100 %100 %
(1)Represents our owned homes that are completed or under construction, including sold, spec and model homes. Land and lots from consolidated VIEs are excluded from total owned real estate inventory.
(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, includ