|
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip code)
|
(
|
(Registrant’s Telephone Number, Including Area
Code)
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
||
|
|
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
☒
|
Smaller reporting company
|
|
Emerging growth company
|
|
Page
|
||
PART I
|
||
Item 1.
|
1 |
|
Item 1A.
|
15 |
|
Item 1B.
|
39 |
|
Item 2.
|
39 |
|
Item 3.
|
39 |
|
Item 4.
|
40 |
|
PART II
|
||
Item 5.
|
40 |
|
Item 6.
|
41 |
|
Item 7.
|
41 |
|
Item 7A.
|
61 |
|
Item 8.
|
63 |
|
Item 9.
|
97 |
|
Item 9A.
|
97 |
|
Item 9B.
|
98 |
|
Item 9C.
|
98 |
|
PART III
|
||
Item 10.
|
99 |
|
Item 11.
|
105 |
|
Item 12.
|
117 |
|
Item 13.
|
120 |
|
Item 14.
|
122 |
|
PART IV
|
||
Item 15.
|
124 |
|
Item 16.
|
127 |
|
128 |
ITEM 1. |
BUSINESS
|
As of December 31,
|
|||||||||||||||||||||||
2021
|
2020
|
||||||||||||||||||||||
Segment
|
Owned
|
Controlled
|
Total
|
Owned
|
Controlled
|
Total
|
|||||||||||||||||
Jacksonville
|
774
|
10,311
|
11,085
|
715
|
4,445
|
5,160
|
|||||||||||||||||
Colorado
|
152
|
4,883
|
5,035
|
106
|
4,145
|
4,251
|
|||||||||||||||||
Orlando
|
537
|
5,487
|
6,024
|
256
|
2,504
|
2,760
|
|||||||||||||||||
DC Metro
|
97
|
1,680
|
1,777
|
77
|
566
|
643
|
|||||||||||||||||
The Carolinas
|
1,452
|
5,196
|
6,648
|
1,348
|
4,107
|
5,455
|
|||||||||||||||||
Texas
|
1,569
|
6,304
|
7,873
|
-
|
-
|
-
|
|||||||||||||||||
Other(1)
|
764
|
4,634
|
5,398
|
629
|
3,509
|
4,138
|
|||||||||||||||||
Grand Total
|
5,345
|
38,495
|
43,840
|
3,131
|
19,276
|
22,407
|
(1)
|
Austin, Savannah, Village Park Homes, Active Adult and Custom Homes. Austin refers to legacy DFH operations exclusive of MHI. See Note
13. Segment Reporting to our consolidated financial statements for further explanation of our reportable segments.
|
% of Owned Real Estate Inventory
|
||||||||
|
As of
December 31, 2021
|
As of
December 31, 2020
|
||||||
Construction in process and finished homes (1)
|
92.0
|
%
|
88.8
|
%
|
||||
Finished lots and land under development(2)
|
8.0
|
%
|
11.2
|
%
|
||||
Total
|
100
|
%
|
100
|
%
|
(1)
|
Represents our owned homes that are completed or under construction, including sold, spec and model homes.
|
(2)
|
Represents finished lots purchased just-in-time for production and capitalized costs related to land under development held by third party land bank partners, including lot
option fees, property taxes and due diligence. Land and lots from consolidated joint ventures are excluded.
|
Year Ended December 31,
|
Period Over Period
|
|||||||||||||||||||||||||||||||||||
2021(2)
|
2020(3)
|
Percent Change
|
||||||||||||||||||||||||||||||||||
Segment
|
Sales
|
Starts
|
Closings
|
Sales
|
Starts
|
Closings
|
Sales
|
Starts
|
Closings
|
|||||||||||||||||||||||||||
Jacksonville
|
1,933
|
1,448
|
1,237
|
1,712
|
1,418
|
1,395
|
12.9
|
%
|
2.1
|
%
|
-11.3
|
%
|
||||||||||||||||||||||||
Colorado
|
296
|
313
|
230
|
277
|
254
|
269
|
6.9
|
%
|
23.2
|
%
|
-14.5
|
%
|
||||||||||||||||||||||||
Orlando
|
1,101
|
614
|
604
|
508
|
471
|
355
|
116.7
|
%
|
30.4
|
%
|
70.1
|
%
|
||||||||||||||||||||||||
DC Metro
|
104
|
135
|
140
|
228
|
195
|
232
|
-54.4
|
%
|
-30.8
|
%
|
-39.7
|
%
|
||||||||||||||||||||||||
The Carolinas
|
1,859
|
1,751
|
1,233
|
379
|
318
|
312
|
390.5
|
%
|
450.6
|
%
|
295.2
|
%
|
||||||||||||||||||||||||
Texas
|
579
|
512
|
689
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Other(1)
|
936
|
998
|
741
|
1,082
|
757
|
591
|
-13.5
|
%
|
31.8
|
%
|
25.4
|
%
|
||||||||||||||||||||||||
Grand Total
|
6,808
|
5,771
|
4,874
|
4,186
|
3,413
|
3,154
|
62.6
|
%
|
69.1
|
%
|
54.5
|
%
|
Year Ended December 31,
|
||||||||
2021
|
2020 | |||||||
Net New Orders
|
6,804
|
|
4,186
|
|||||
Cancellation Rate
|
12.2 |
%
|
|
12.8
|
%
|
As of December 31,
|
||||||||
2021
|
2020
|
|||||||
Ending Backlog - Homes
|
6,381
|
2,424
|
||||||
Ending Backlog - Value (in thousands)
|
$ |
|
2,913,170
|
$ |
|
865,109
|
ITEM 1A. |
RISK FACTORS
|
• |
providing that the Board of Directors is expressly authorized to determine the size of our Board of Directors;
|
• |
limiting the ability of our stockholders to call special meetings;
|
• |
establishing advance notice provisions for stockholder proposals and nominations for elections to the Board of Directors to be acted upon at meetings of stockholders;
|
• |
providing that the Board of Directors is expressly authorized to adopt, or to alter or repeal, our bylaws; and
|
• |
establishing advance notice and certain information requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder
meetings.
|
• |
a majority of such company’s board of directors consist of independent directors;
|
• |
such company have a nominating and governance committee that is composed entirely of independent directors with a written charter addressing such committee’s purpose and responsibilities;
|
• |
such company have a compensation committee that is composed entirely of independent directors with a written charter addressing such committee’s purpose and responsibilities; and
|
• |
such company conduct an annual performance evaluation of the nominating and governance and compensation committees.
|
•
|
general market conditions;
|
•
|
the duration and effects of the COVID-19 pandemic;
|
•
|
the market’s perception of our growth potential;
|
•
|
with respect to acquisition and/or development financing, the market’s perception of the value of the land parcels to be acquired and/or developed;
|
•
|
our current debt levels;
|
•
|
our current and expected future earnings;
|
•
|
our cash flow; and
|
•
|
the market price per share of our common stock.
|
• |
our market opportunity and the potential growth of that market;
|
• |
the expected impact of the COVID-19 pandemic;
|
• |
our strategy, expected outcomes and growth prospects;
|
• |
trends in our operations, industry and markets;
|
• |
our future profitability, indebtedness, liquidity, access to capital and financial condition; and
|
• |
our integration of companies that we have acquired into our operations.
|
• |
adverse effects of the COVID-19 pandemic on our business, financial condition and results of operations and our suppliers and trade partners;
|
• |
adverse effects of the COVID-19 pandemic and other economic changes either nationally or in the markets in which we operate, including, among other things, increases in unemployment, volatility of mortgage
interest rates and inflation and decreases in housing prices;
|
• |
a slowdown in the homebuilding industry or changes in population growth rates in our markets;
|
• |
volatility and uncertainty in the credit markets and broader financial markets;
|
• |
our future operating results and financial condition;
|
• |
the success of our operations in new markets and our ability to expand into additional new markets;
|
• |
our ability to continue to leverage our asset-light and capital efficient lot acquisition strategy;
|
• |
our ability to develop our projects successfully or within expected timeframes;
|
• |
our ability to identify potential acquisition targets and close such acquisitions;
|
• |
our ability to successfully integrate acquired businesses with our existing operations;
|
• |
availability of land to acquire and our ability to acquire such land on favorable terms, or at all;
|
• |
availability, terms and deployment of capital and ability to meet our ongoing liquidity needs;
|
• |
restrictions in our debt agreements that limit our flexibility in operating our business;
|
• |
disruption in the terms or availability of mortgage financing or an increase in the number of foreclosures in our markets;
|
• |
decline in the market value of our inventory or controlled lot positions;
|
• |
shortages of, or increased prices for, labor, land or raw materials used in land development and housing construction, including due to changes in trade policies;
|
• |
delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control;
|
• |
uninsured losses in excess of insurance limits;
|
• |
the cost and availability of insurance and surety bonds;
|
• |
changes in (including as a result of the change in the U.S. presidential administration), liabilities under, or the failure or inability to comply with, governmental laws and regulations, including
environmental laws and regulations;
|
• |
the timing of receipt of regulatory approvals and the opening of projects;
|
• |
the degree and nature of our competition;
|
• |
decline in the financial performance of our joint ventures, our lack of sole decision-making authority thereof and maintenance of relationships with our joint venture partners;
|
• |
negative publicity or poor relations with the residents of our projects;
|
• |
existing and future warranty and liability claims;
|
• |
existing and future litigation, arbitration or other claims;
|
• |
availability of qualified personnel and third-party contractors and subcontractors;
|
• |
information system failures, cyber incidents or breaches in security;
|
• |
our ability to retain our key personnel;
|
• |
our ability to maintain an effective system of internal control and produce timely and accurate financial statements or comply with applicable regulations;
|
• |
our leverage and future debt service obligations;
|
• |
the impact on our business of any future government shutdown;
|
• |
the impact on our business of acts of war or terrorism;
|
• |
our reliance on dividends, distributions and other payments from our subsidiaries to meet our obligations;
|
• |
other risks and uncertainties inherent in our business; and
|
• |
other factors we discuss under the section entitled “Risk Factors.”
|
ITEM 1B. |
UNRESOLVED STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
ITEM 3. |
LEGAL PROCEEDINGS
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6. |
RESERVED
|
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
• |
Revenues increased 69.7% to $1,923.9 million from $1,133.8 million.
|
• |
Net new orders increased 62.5% to 6,804 net new orders from 4,186 net new orders.
|
• |
Homes closed increased 54.5% to 4,874 homes from 3,154 homes.
|
• |
Backlog of sold homes increased 163.2% to 6,381 homes from 2,424 homes.
|
• |
Average sales price of homes closed increased 8.8% to $389,094 from $357,633.
|
• |
Gross margin as a percentage of home sales revenues increased to 16.0% from 14.6%.
|
• |
Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 21.7% from 22.5%.
|
• |
Net and comprehensive income increased 59.3% to $134.6 million from $84.5 million.
|
• |
Net and comprehensive income attributable to Dream Finders Homes, Inc. increased 53.2% to $121.1 million from $79.1 million.
|
• |
EBITDA (non-GAAP) as a percentage of revenues decreased to 10.1% from 10.7%.
|
• |
Adjusted EBITDA (non-GAAP) as a percentage of revenues decreased to 10.5% from 10.7%.
|
• |
Active communities at the end of 2021 increased to 205 from 126.
|
• |
Total owned and controlled lots increased 95.7% to 43,840 lots from 22,407 lots.
|
• |
Return on participating equity was 44.3% compared to 47.0%.
|
• |
Basic earnings per share was $1.27 and diluted earnings per share was $1.27.
|
Year Ended December 31,
|
||||||||||||||||
2021
|
2020
|
Amount Change
|
% Change
|
|||||||||||||
Revenues
|
$
|
1,923,909,806
|
$
|
1,133,806,607
|
$
|
790,103,199
|
69.7
|
%
|
||||||||
Cost of sales
|
1,610,331,738
|
962,927,606
|
647,404,132
|
67.2
|
%
|
|||||||||||
Selling, general and administrative expense
|
154,404,500
|
90,359,182
|
64,045,318
|
70.9
|
%
|
|||||||||||
Income from equity in earnings of unconsolidated entities
|
(9,427,868
|
)
|
(7,991,764
|
)
|
(1,436,104
|
)
|
18.0
|
%
|
||||||||
Gain on sale of assets
|
(87,023
|
)
|
(117,840
|
)
|
30,817
|
-26.2
|
%
|
|||||||||
Loss on extinguishment of debt
|
711,485
|
-
|
711,485
|
100.0
|
%
|
|||||||||||
Other Income
|
||||||||||||||||
Other
|
(7,827,391
|
)
|
(1,321,741
|
)
|
(6,505,650
|
)
|
492.2
|
%
|
||||||||
Paycheck Protection Program forgiveness
|
(7,219,794
|
)
|
-
|
(7,219,794
|
)
|
100.0
|
%
|
|||||||||
Other Expense
|
||||||||||||||||
Other
|
12,770,697
|
3,188,183
|
9,582,514
|
300.6
|
%
|
|||||||||||
Contingent consideration revaluation
|
7,532,830
|
1,378,686
|
6,154,144
|
446.4
|
%
|
|||||||||||
Interest expense
|
672,172
|
870,868
|
(198,696
|
)
|
-22.8
|
%
|
||||||||||
Income before taxes
|
$
|
162,048,460
|
$
|
84,513,427
|
$
|
77,535,033
|
0.0
|
%
|
||||||||
Income tax expense
|
(27,454,642
|
)
|
-
|
(27,454,642
|
)
|
100.0
|
%
|
|||||||||
Net and comprehensive income
|
$
|
134,593,818
|
$
|
84,513,427
|
$
|
50,080,391
|
59.3
|
%
|
||||||||
Net and comprehensive income attributable to non-controlling interests
|
(13,461,317
|
)
|
(5,419,972
|
)
|
(8,041,345
|
)
|
148.4
|
%
|
||||||||
Net and comprehensive income attributable to Dream Finders Homes, Inc.
|
$
|
121,132,501
|
$
|
79,093,455
|
$
|
42,039,046
|
53.2
|
%
|
||||||||
Earnings per share(1)
|
||||||||||||||||
Basic
|
$
|
1.27
|
$
|
-
|
$
|
1.27
|
100.0
|
%
|
||||||||
Diluted
|
$
|
1.27
|
$
|
-
|
$
|
1.27
|
100.0
|
%
|
||||||||
Weighted-average number of shares
|
||||||||||||||||
Basic
|
92,521,482
|
-
|
92,521,482
|
100.0
|
%
|
|||||||||||
Diluted
|
95,313,593
|
-
|
95,313,593
|
100.0
|
%
|
|||||||||||
Consolidated Balance Sheets Data (at period end):
|
||||||||||||||||
Cash and cash equivalents
|
$
|
227,227,020
|
$
|
43,657,779
|
$
|
183,569,241
|
420.5
|
%
|
||||||||
Total assets
|
$
|
1,894,247,623
|
$
|
733,680,241
|
$
|
1,160,567,382
|
158.2
|
%
|
||||||||
Long-term debt, net
|
$
|
763,291,389
|
$
|
319,531,998
|
$
|
443,759,391
|
138.9
|
%
|
||||||||
Finance lease liabilities
|
$
|
139,581
|
$
|
345,062
|
$
|
(205,481
|
)
|
-59.5
|
%
|
|||||||
Preferred mezzanine equity
|
$
|
155,219,576
|
$
|
55,638,450
|
$
|
99,581,126
|
179.0
|
%
|
||||||||
Common mezzanine equity
|
$
|
-
|
$
|
20,593,001
|
$
|
(20,593,001
|
)
|
-100.0
|
%
|
|||||||
Common members' equity
|
$
|
-
|
$
|
103,852,646
|
$
|
(103,852,646
|
)
|
-100.0
|
%
|
|||||||
Common stock - Class A
|
$
|
322,953
|
$
|
-
|
$
|
322,953
|
100.0
|
%
|
||||||||
Common stock - Class B
|
$
|
602,262
|
$
|
-
|
$
|
602,262
|
100.0
|
%
|
||||||||
Additional paid-in capital
|
$
|
257,963,419
|
$
|
-
|
$
|
257,963,419
|
100.0
|
%
|
||||||||
Retained earnings
|
$
|
118,193,998
|
$
|
-
|
$
|
118,193,998
|
100.0
|
%
|
||||||||
Non-controlling interests
|
$
|
24,081,070
|
$
|
31,939,117
|
$
|
(7,858,047
|
)
|
-24.6
|
%
|
|||||||
Other Financial and Operating Data (unaudited)
|
||||||||||||||||
Active communities at end of period(2)
|
205
|
126
|
79
|
62.7
|
%
|
|||||||||||
Home closings
|
4,874
|
3,154
|
1,720
|
54.5
|
%
|
|||||||||||
Average sales price of homes closed(3)
|
$
|
389,094
|
$
|
357,633
|
$
|
31,461
|
8.8
|
%
|
||||||||
Net new orders
|
6,804
|
4,186
|
2,618
|
62.5
|
%
|
|||||||||||
Cancellation rate
|
12.2
|
%
|
12.8
|
%
|
-0.6
|
%
|
-4.7
|
%
|
||||||||
Backlog (at period end) - homes
|
6,381
|
2,424
|
3,957
|
163.2
|
%
|
|||||||||||
Backlog (at period end, in thousands) - value
|
$
|
2,913,170
|
$
|
865,109
|
$
|
2,048,061
|
236.7
|
%
|
||||||||
Gross margin (in thousands)(4)
|
$
|
306,969
|
$
|
165,048
|
$
|
141,921
|
86.0
|
%
|
||||||||
Gross margin %(5)
|
16.0
|
%
|
14.6
|
%
|
0
|
9.4
|
%
|
|||||||||
Net profit margin %
|
6.3
|
%
|
7.0
|
%
|
-0.7
|
%
|
-10.1
|
%
|
||||||||
Adjusted gross margin (in thousands)(6)
|
$
|
416,382
|
$
|
252,695
|
$
|
163,687
|
64.8
|
%
|
||||||||
Adjusted gross margin %(5)(6)
|
21.7
|
%
|
22.5
|
%
|
-0.8
|
%
|
-3.5
|
%
|
||||||||
EBITDA (in thousands)(6)
|
$
|
194,992
|
$
|
120,885
|
$
|
74,107
|
61.3
|
%
|
||||||||
EBITDA margin %(6)(7)
|
10.1
|
%
|
10.7
|
%
|
-0.6
|
%
|
-5.3
|
%
|
||||||||
Adjusted EBITDA (in thousands)6 |
$ |
201,466 |
$ |
121,832 | $ |
79,634 | 65.4 | % |
||||||||
Adjusted EBITDA margin %(6)(7) | 10.5 | % |
10.7 | % |
-0.2 | % |
-2.1 | % |
(1)
|
The Company calculated earnings per share (“EPS”) based on net income attributable to common stockholders for the period January 21, 2021 through December 31, 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. Diluted shares were calculated by using the treasury stock method for stock grants and the if-converted method for the convertible preferred
stock and the associated preferred dividends.
|
(2)
|
A community becomes active once the model is completed or the community has its fifth sale. A community becomes inactive when it has fewer than five units remaining to sell.
|
(3)
|
Average sales price of homes closed is calculated based on home sales revenue, excluding the impact of deposit forfeitures and percentage of completion revenues, over homes closed.
|
(4)
|
Gross margin is home sales revenue less cost of sales.
|
(5)
|
Calculated as a percentage of home sales revenue.
|
(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 revenues.
|
Year Ended December 31,
|
||||||||||||||||
2020
|
2019
|
Amount Change
|
% Change
|
|||||||||||||
Revenues
|
$
|
1,133,806,607
|
$
|
744,292,323
|
$
|
389,514,284
|
52.3
|
%
|
||||||||
Cost of sales
|
962,927,606
|
641,340,496
|
321,587,110
|
50.1
|
%
|
|||||||||||
Selling, general and administrative expense
|
90,359,182
|
63,572,811
|
26,786,371
|
42.1
|
%
|
|||||||||||
Income from equity in earnings of unconsolidated entities
|
(7,991,764
|
)
|
(2,208,182
|
)
|
(5,783,582
|
)
|
261.9
|
%
|
||||||||
Gain on sale of assets
|
(117,840
|
)
|
(28,652
|
)
|
(89,188
|
)
|
311.3
|
%
|
||||||||
Other Income
|
||||||||||||||||
Other
|
(1,321,741
|
)
|
(2,447,879
|
)
|
1,126,138
|
-46.0
|
%
|
|||||||||
Paycheck Protection Program forgiveness
|
-
|
-
|
-
|
0.0
|
%
|
|||||||||||
Other Expense
|
||||||||||||||||
Other
|
3,188,183
|
2,888,526
|
299,657
|
10.4
|
%
|
|||||||||||
Contingent consideration revaluation
|
1,378,686
|
(3,944,030
|
)
|
5,322,716
|
386.1
|
%
|
||||||||||
Interest expense
|
870,868
|
221,449
|
649,419
|
293.3
|
%
|
|||||||||||
Income tax expense
|
-
|
-
|
-
|
0.0
|
%
|
|||||||||||
Net and comprehensive income
|
$
|
84,513,427
|
$
|
44,897,784
|
39,615,643
|
46.9
|
%
|
|||||||||
Net and comprehensive income attributable to non-controlling interests
|
(5,419,972
|
)
|
(5,706,518
|
)
|
286,546
|
-5.0
|
%
|
|||||||||
Net and comprehensive income attributable to Dream Finders Homes, Inc.
|
$
|
79,093,455
|
$
|
39,191,266
|
$
|
39,902,189
|
50.4
|
%
|
||||||||
Earnings per share
|
||||||||||||||||
Basic
|
$
|
-
|
$
|
-
|
$
|
-
|
0.0
|
%
|
||||||||
Diluted
|
$
|
-
|
$
|
-
|
$
|
-
|
0.0
|
%
|
||||||||
Weighted-average number of shares
|
||||||||||||||||
Basic
|
-
|
-
|
-
|
0.0
|
%
|
|||||||||||
Diluted
|
-
|
-
|
-
|
0.0
|
%
|
|||||||||||
Consolidated Balance Sheets Data (at period end):
|
||||||||||||||||
Cash and cash equivalents
|
$
|
43,657,779
|
$
|
50,597,392
|
$
|
(6,939,613
|
)
|
-13.7
|
%
|
|||||||
Total assets
|
$
|
733,680,241
|
$
|
514,919,450
|
$
|
218,760,791
|
42.5
|
%
|
||||||||
Long-term debt, net
|
$
|
319,531,998
|
$
|
232,013,468
|
$
|
87,518,530
|
37.7
|
%
|
||||||||
Finance lease liabilities
|
$
|
345,062
|
$
|
498,691
|
$
|
(153,629
|
)
|
-30.8
|
%
|
|||||||
Preferred mezzanine equity
|
$
|
55,638,450
|
$
|
58,269,166
|
$
|
(2,630,716
|
)
|
-4.5
|
%
|
|||||||
Common mezzanine equity
|
$
|
20,593,001
|
$
|
16,248,246
|
$
|
4,344,755
|
26.7
|
%
|
||||||||
Common members' equity
|
$
|
103,852,646
|
$
|
56,502,464
|
$
|
47,350,182
|
83.8
|
%
|
||||||||
Non-controlling interests
|
$
|
31,939,117
|
$
|
30,471,371
|
$
|
1,467,746
|
4.8
|
%
|
||||||||
Other Financial and Operating Data (unaudited)
|
||||||||||||||||
Active communities at end of period(1)
|
126
|
85
|
41
|
48.2
|
%
|
|||||||||||
Home closings
|
3,154
|
2,048
|
1,106
|
54.0
|
%
|
|||||||||||
Average sales price of closed homes(2)
|
$
|
357,633
|
$
|
362,728
|
$
|
(5,095
|
)
|
-1.4
|
%
|
|||||||
Net new orders
|
4,186
|
2,139
|
2,047
|
95.7
|
%
|
|||||||||||
Cancellation rate
|
12.8
|
%
|
15.6
|
%
|
-2.8
|
%
|
-17.9
|
%
|
||||||||
Backlog (at period end) - homes
|
2,424
|
854
|
1,570
|
183.8
|
%
|
|||||||||||
Backlog (at period end, in thousands) - value
|
$
|
865,109
|
$
|
334,783
|
$
|
530,326
|
158.4
|
%
|
||||||||
Gross margin (in thousands)(3)
|
$
|
165,048
|
$
|
98,405
|
$
|
66,643
|
67.7
|
%
|
||||||||
Gross margin %(4)
|
14.6
|
%
|
13.3
|
%
|
1.3
|
%
|
10.0
|
%
|
||||||||
Adjusted gross margin (in thousands)(5)
|
$
|
252,695
|
$
|
156,344
|
$
|
96,351
|
61.6
|
%
|
||||||||
Adjusted gross margin %(3)
|
22.5
|
%
|
21.1
|
%
|
1.4
|
%
|
6.6
|
%
|
||||||||
EBITDA (in thousands)(5)
|
$
|
120,885
|
$
|
70,522
|
$
|
50,363
|
71.4
|
%
|
||||||||
EBITDA margin %(5)(6)
|
10.7
|
%
|
9.5
|
%
|
1.2
|
%
|
12.6
|
%
|
||||||||
Adjusted EBITDA (in thousands) (5)
|
$
|
121,832
|
$
|
71,417
|
$
|
50,415
|
70.6
|
%
|
||||||||
Adjusted EBITDA margin (5)(6)
|
10.7
|
%
|
9.6
|
%
|
1.1
|
%
|
11.5
|
%
|
(1)
|
A community becomes active once the model is completed or the community has its fifth sale. A community becomes inactive when it has fewer than five units remaining to sell.
|
(2)
|
Average sales price of homes closed is calculated based on home sales revenue, excluding the impact of deposit forfeitures and percentage of completion revenues, over homes closed.
|
(3)
|
Gross margin is home sales revenue less cost of sales.
|
(4)
|
Calculated as a percentage of home sales revenue.
|
(5)
|
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.”
|
(6)
|
Calculated as a percentage of revenues.
|
Year Ended December 31,
|
||||||||||||
2021
|
2020
|
2019
|
||||||||||
Revenues
|
$
|
1,923,910
|
$
|
1,133,807
|
$
|
744,292
|
||||||
Other revenue
|
6,609
|
5,831
|
4,547
|
|||||||||
Home sales revenue
|
1,917,301
|
1,127,976
|
739,745
|
|||||||||
Cost of sales
|
1,610,332
|
962,928
|
641,340
|
|||||||||
Gross margin(1)
|
306,969
|
165,048
|
98,405
|
|||||||||
Interest expense in cost of sales
|
32,508
|
32,044
|
21,055
|
|||||||||
Amortization in cost of sales(3)
|
9,873
|
5,070
|
7,119
|
|||||||||
Commission expense
|
67,032
|
50,533
|
29,765
|
|||||||||
Adjusted gross margin
|
$
|
416,382
|
$
|
252,695
|
$
|
156,344
|
||||||
Gross margin %(2)
|
16.0
|
%
|
14.6
|
%
|
13.3
|
%
|
||||||
Adjusted gross margin %(2)
|
21.7
|
%
|
22.5
|
%
|
21.1
|
%
|
(1) |
Gross margin is home sales revenue less cost of sales.
|
(2) |
Calculated as a percentage of home sales revenues.
|
(3) |
Includes purchase accounting adjustments, as applicable.
|
Year Ended December 31,
|
||||||||||||
2021
|
2020
|
2019
|
||||||||||
Net income
|
$
|
121,133
|
$
|
79,093
|
$
|
39,191
|
||||||
Interest income
|
(6
|
)
|
(45
|
)
|
(99
|
)
|
||||||
Interest expensed in cost of sales
|
32,533
|
32,044
|
21,055
|
|||||||||
Interest expense
|
672
|
871
|
221
|
|||||||||
Income tax expense
|
27,455
|
-
|
-
|
|||||||||
Depreciation and amortization
|
13,205
|
8,922
|
10,154
|
|||||||||
EBITDA
|
$
|
194,992
|
$
|
120,885
|
$
|
70,522
|
||||||
Stock-based compensation expense
|
6,474
|
947
|
895
|
|||||||||
Adjusted EBITDA
|
$
|
201,466
|
$
|
121,832
|
$
|
71,417
|
||||||
EBITDA margin %(1)
|
10.1
|
%
|
10.7
|
%
|
9.5
|
%
|
||||||
Adjusted EBITDA margin %(1)
|
10.5
|
%
|
10.7
|
%
|
9.6
|
%
|
(1) |
Calculated as a percentage of revenues.
|
• |
Cumulative Dividends: The Convertible Preferred Stock accumulates cumulative dividends at a rate per annum equal to 9.00% payable quarterly in arrears.
|
• |
Duration: The Convertible Preferred Stock is perpetual with call and conversion rights. The Convertible Preferred Stock is not convertible by the Purchasers in the first five years following issuance, with
the exception of the acceleration of the Conversion Right (as defined below) upon breach of the protective covenants (described below). We can call the outstanding Convertible Preferred Stock at any time for one-hundred and two percent
(102%) of its liquidation preference during the fourth year following its issuance and for one-hundred and one percent (101%) of its liquidation preference during the fifth year following its issuance (in each case, for the avoidance of
doubt, plus accrued but unpaid dividends, if any). Subsequent to the fifth anniversary of its issuance, a purchaser can convert the Convertible Preferred Stock into Class A common stock (the “Conversion Right”). The conversion price will
be based on the average of the trailing 90 days’ closing price of Class A common stock, less 20% of the average and subject to a floor conversion price of $4.00 (the “Conversion Discount”).
|
• |
Protective Covenants: The protective covenants of the Convertible Preferred Stock require us to maintain compliance with all covenants related to (i) the Credit Agreement, as may be further amended from
time to time; provided that any amendment, restatement, modification or waiver of the Credit Agreement that would adversely and materially affect the rights of the Purchasers will require the written consent of holders of a majority of
the then-outstanding shares of Convertible Preferred Stock; and (ii) any agreement between the Company and any Purchaser (the covenants referred to in clauses (i) and (ii), collectively, the “Protective Covenants”). Non-compliance beyond
any applicable cure period with the Protective Covenants (in the case of the Protective Covenants related to the Credit Agreement) will accelerate the Conversion Right, and in the event of such acceleration that occurs before the fifth
anniversary following the issuance of the Convertible Preferred Stock, the “Conversion Discount” shall be increased from 20% to 25%.
|
• |
Voting Rights: Except as may be expressly required by Delaware law, the shares of Convertible Preferred Stock have no voting rights.
|
• |
Redemption in a Change of Control: The Convertible Preferred Stock will be redeemed, contingent upon and concurrently with the consummation of a change of control of the Company. Shares of Convertible
Preferred Stock will be redeemed in a change of control of the Company at a price, in cash, equal to the liquidation preference, subject to adjustment, plus all accumulated and unpaid dividends, plus, if the change of control occurs
before the fourth anniversary of the date of issuance of the Convertible Preferred Stock, a premium equal to the dividends that would have accumulated on such share of Convertible Preferred Stock from and after the change of control
redemption date and through the fourth anniversary of the issuance of the Convertible Preferred Stock.
|
Year Ended December 31,
|
||||||||||||
2021
|
2020
|
2019
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
65,109
|
$
|
96,911
|
$
|
30,429
|
||||||
Net cash provided by (used in) investing activities
|
(523,025
|
)
|
(13,027
|
)
|
(17,820
|
)
|
||||||
Net cash provided by (used in) financing activities
|
645,882
|
(65,830
|
)
|
26,077
|
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Report of Independent Registered Public Accounting Firm (
) |
64
|
|
Consolidated Financial Statements
|
||
Consolidated Balance Sheets
|
66 |
|
Consolidated Statements of Comprehensive Income
|
67 |
|
Consolidated Statements of Mezzanine Equity, Members’ Equity and Stockholders’ Equity
|
68 |
|
Consolidated Statements of Cash Flows
|
69 |
|
Notes to Consolidated Financial Statements
|
70-96 |
December 31, | December 31, | ||||||
2021
|
2020
|
||||||
Assets
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
|||
Restricted cash (VIE amounts of $
|
|
|
|||||
Accounts receivable (VIE amounts of $
|
|||||||
Inventories:
|
|||||||
Construction in process and finished homes
|
|
|
|||||
VIE owned land and lots
|
|
|
|||||
Company owned land and lots
|
|
|
|||||
Lot deposits
|
|
|
|||||
Equity method investments
|
|
|
|||||
Property and equipment, net
|
|
|
|||||
Operating lease right-of-use assets
|
|
|
|||||
Finance lease right-of-use assets
|
|
|
|||||
Intangible assets, net of amortization
|
|
|
|||||
Goodwill
|
|
|
|||||
Deferred tax asset
|
|||||||
Other assets (VIE amounts of $
|
|
|
|||||
Total assets
|
$
|
|
$
|
|
|||
Liabilities
|
|||||||
Accounts payable (VIE amounts of $
|
$
|
|
$
|
|
|||
Accrued expenses (VIE amounts of $
|
|
|
|||||
Customer deposits
|
|
|
|||||
Construction lines of credit
|
|
|
|||||
Notes payable (VIE amounts of $
|
|
|
|||||
Operating lease liabilities
|
|
|
|||||
Finance lease liabilities
|
|
|
|||||
Contingent consideration
|
|
|
|||||
Total liabilities
|
$
|
|
$
|
|
|||
Commitments and contingencies (Note 8)
|
|||||||
Mezzanine Equity
|
|||||||
Preferred mezzanine equity
|
|
|
|||||
Common mezzanine equity
|
|
|
|||||
Total mezzanine equity
|
$
|
|
$
|
|
|||
Members’ Equity
|
|||||||
Common members’ equity
|
|
|
|||||
Total members’ equity
|
$
|
|
$
|
|
|||
Stockholders’ Equity - Dream Finders Homes, Inc.
|
|||||||
Class A common stock, $
|
|||||||
Class B common stock, $
|
|||||||
Additional paid-in capital
|
|||||||
Retained earnings
|
|||||||
Non-controlling interests
|
|
|
|||||
Total mezzanine equity, members’ equity and stockholders’ equity
|
|||||||
Total liabilities, mezzanine equity, members’ equity and stockholders’ equity
|
$
|
|
$
|
|
Twelve Months Ended December 31,
|
||||||||||||
2021
|
2020
|
2019
|
||||||||||
Revenues
|
$
|
|
$
|
|
$
|
|
||||||
Cost of sales
|
|
|
|
|||||||||
Selling, general and administrative expense
|
|
|
|
|||||||||
Income from equity in earnings of unconsolidated entities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Gain on sale of assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Loss on extinguishment of debt
|
||||||||||||
Other Income
|
||||||||||||
Other
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Paycheck Protection Program forgiveness
|
( |
) | ||||||||||
Other Expense |
||||||||||||
Other
|
|
|
|
|||||||||
Contingent consideration revaluation
|
( |
) | ||||||||||
Interest expense
|
|
|
|
|||||||||
Income before taxes
|
||||||||||||
Income tax expense
|
( |
) | ||||||||||
Net and comprehensive income
|
$
|
|
$
|
|
$
|
|
||||||
Net and comprehensive income attributable to non-controlling interests
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net and comprehensive income attributable to Dream Finders Homes, Inc.
|
$
|
|
$
|
|
$
|
|
||||||
Earnings per share(1)
|
||||||||||||
Basic
|
$
|
|
$
|
|
$
|
|
||||||
Diluted
|
$
|
|
$
|
|
$
|
|
||||||
Weighted-average number of shares
|
||||||||||||
Basic
|
|
|
|
|||||||||
Diluted
|
|
|
|
(1)
|
The Company calculated earnings per share (“EPS”) based on net income attributable to common stockholders for the period January 21, 2021
through December 31, 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,
resulting in 92,521,482 shares of common stock outstanding as of the closing of the initial public offering. The total outstanding shares of common stock are made up of Class A common stock and Class B common stock, which participate
equally in their ratable ownership share of the Company. Diluted shares were calculated by using the treasury stock method for stock grants and the if‐converted method for the convertible preferred stock and the associated preferred
dividends.
|
|
Redeemable Preferred
Units/Stock
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 December 31, 2018
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$
|
|
$
|
|
|||||||||||||||||||||||||||||||||
Unit compensation
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling
interests
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Conversion of units
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Redemptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Distributions
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
|
-
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||||
Net income
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||
Unit compensation
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling
interests
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Conversion of units
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Redemptions
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||||||||||||||||||||||
Distributions
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
|
-
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||||
Net income
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||
Unit compensation
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling
interests
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Conversion of units
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Redemptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Distributions
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
|
-
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||||
Net income
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
(
|
)
|
-
|
|
-
|
|
|
|
|
(
|
)
|
||||||||||||||||||||||||||||||||||||||
Balance at
January 20, 2021 - prior to reorganiation and transactions and IPO
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||
Reorganization transactions
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Issuance of common stock in IPO, net
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Issuance of convertible preferred
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Contibutions from non-controlling
interests
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Conversion of units
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Redemptions
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||||||||||||||||||||||
Distributions
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||||||
Preferred dividends declared
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||||||||||||||||||||
Net income (loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Twelve Months Ended December 31,
|
||||||||||||
2021
|
2020
|
2019
|
||||||||||
Cash Flows from Operating Activities
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Gain on sale of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Amortization of debt issuance costs
|
|
|
|
|||||||||
Extinguishment of unamortized debt issuance costs
|
||||||||||||
Amortization of right-of-use operating lease
|
|
|
|
|||||||||
Amortization of right-of-use financing lease
|
|
|
|
|||||||||
Stock compensation expense
|
|
|
|
|||||||||
Income from Paycheck Protection Program
|
||||||||||||
Deferred tax benefit
|
( |
) | ||||||||||
Income from equity method investments, net of distributions received
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Remeasurement of contingent consideration
|
|
|
(
|
)
|
||||||||
Changes in Operating Assets and Liabilities, Net of Effects from Acquisitions
|
||||||||||||
Inventories
|
(
|
)
|
|
(
|
)
|
|||||||
Lot deposits
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other assets and accounts receivable
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Accounts payable and accrued expenses
|
|
|
|
|||||||||
Customer deposits
|
|
|
|
|||||||||
Operating lease ROU Assets
|
( |
) | ||||||||||
Operating lease liabilities
|
|
(
|
)
|
(
|
)
|
|||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
Cash Flows from Investing Activities
|
||||||||||||
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from disposal of property and equipment
|
|
|
|
|||||||||
Investments in equity method investments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Return of investments from equity method investments
|
|
|
|
|||||||||
Business combinations, net of cash acquired
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash Flows from Financing Activities
|
||||||||||||
Proceeds from issuance of common stock in IPO, net
|
||||||||||||
Proceeds from issuance of convertible preferred stock, net
|
||||||||||||
Proceeds from construction lines of credit
|
|
|
|
|||||||||
Principal payments on construction lines of credit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from notes payable
|
|
|
|
|||||||||
Principal payments on notes payable
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Payment of debt issue costs
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Payments of equity issuance costs
|
( |
) | ||||||||||
Payments on financing leases
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Payments on contingent consideration
|
( |
) | ||||||||||
Other financing activities
|
( |
) | ||||||||||
Contributions from non-controlling interests
|
|
|
|
|||||||||
Distributions to non-controlling interests
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Contributions
|
|
|
|
|||||||||
Distributions
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Redemptions
|
(
|
)
|
(
|
)
|
|
|||||||
Contribution from conversion of converted LLC units
|
||||||||||||
Conversion of LLC units
|
( |
) | ||||||||||
Net cash provided by (used in) financing activities
|
|
(
|
)
|
|
||||||||
Net increase in cash, cash equivalents and restricted cash
|
|
|
|
|||||||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
|
|||||||||
Cash, cash equivalents and restricted cash at end of period
|
|
|
|
|||||||||
Supplemental Disclosure of Cash Flow Information
|
||||||||||||
Cash paid for interest, net of amounts capitalized
|
|
|
|
|||||||||
Non-cash Financing Activities
|
||||||||||||
Financed land payments to seller
|
|
|
|
|||||||||
Leased assets obtained in exchange for new operating lease liabilities
|
|
|
|
|||||||||
Accrued distributions
|
|
|
|
|||||||||
Equity issuance costs incurred
|
||||||||||||
Contingent Consideration
|
||||||||||||
Non-cash Investing Activities
|
||||||||||||
Investment capital reallocation
|
(
|
)
|
|
|
||||||||
Total non-cash financing and investing activities
|
|
|
|
|||||||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash
|
||||||||||||
Cash and cash equivalents
|
|
|
|
|||||||||
Restricted cash
|
|
|
|
|||||||||
Total cash, cash equivalents and restricted cash shown on the Consolidated Statements of Cash Flows
|
$
|
|
$
|
|
$
|
|
1.
|
Nature of Business and Significant Accounting Policies
|
Asset Class
|
Useful Lives
|
||
Furnitures and fixtures
|
|
||
Office equipment
|
|
||
Software
|
|
||
Vehicles
|
|
||
Buildings |
As of and for the year ended December 31, 2021:
|
Under previous
accounting
principle
|
Under current
accounting
principle
|
Effect of change
|
|||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
||||||
Accounts receivable
|
|
|
(
|
)
|
||||||||
Net cash provided by operating activities
|
$
|
|
$
|
|
$
|
|
As of and for the year ended December 31, 2020:
|
As previously reported
|
As adjusted
|
Effect of change
|
|||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
||||||
Other assets
|
|
|
$
|
(
|
)
|
|||||||
Net cash provided by operating activities
|
$
|
|
$
|
|
$
|
|
For the year ended December 31, 2019:
|
As previously reported
|
As adjusted
|
Effect of change
|
|||||||||
Net cash provided by operating activities
|
$
|
|
$
|
|
$
|
|
2.
|
Business Acquisitions
|
|
As Originally Reported
|
Measurement period adjustments (1)
|
Acquired Value
|
|||||||||
|
||||||||||||
Cash acquired
|
$
|
|
|
|||||||||
Other assets
|
|
|
|
|||||||||
Tradename
|
|
|
||||||||||
Goodwill
|
|
|
|
|||||||||
Inventories
|
|
(
|
)
|
|
||||||||
Construction lines of credit
|
(
|
)
|
(
|
)
|
||||||||
Other liabilities
|
(
|
)
|
(
|
)
|
||||||||
Total purchase price
|
$
|
|
|
|
(1)
|
|
Cash acquired
|
$
|
|
||
Other assets
|
|
|||
Goodwill
|
|
|||
Inventories
|
|
|||
Property and equipment, net
|
|
|||
Liabilities
|
(
|
)
|
||
Total purchase price
|
$
|
|
Cash consideration
|
$
|
|
|
Contingent consideration based on future earnings
|
|
||
Total consideration
|
$
|
|
Cash acquired
|
$
|
|
||
Other assets
|
|
|||
Lot deposits
|
|
|||
Inventories
|
|
|||
Equity method investments
|
|
|||
Intangible assets, net of amortization
|
|
|||
Goodwill
|
|
|||
Property and equipment, net
|
|
|||
Operating lease right-of-use assets
|
|
|||
Accounts payable
|
(
|
)
|
||
Accrued expenses
|
(
|
)
|
||
Customer deposits
|
(
|
)
|
||
Operating lease liabilities
|
(
|
)
|
||
Total purchase price
|
$
|
|
|
For the Year Ended
December 31,
|
||||||
Unaudited Pro Forma
|
2021
|
2020
|
|||||
Total revenue
|
$
|
|
$
|
|
|||
Net and comprehensive income attributable to Dream Finders Homes, Inc.
|
$
|
|
$
|
|
3.
|
Property and Equipment
|
For the Years Ended
December 31,
|
||||||||
2021
|
2020
|
|||||||
Furniture and fixtures
|
$
|
|
$
|
|
||||
Buildings |
||||||||
Land |
||||||||
Vehicles
|
|
|
||||||
Office equipment and software
|
|
|
||||||
Total property and equipment
|
|
|
||||||
Less: Accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Property and equipment, net
|
$
|
|
$
|
|
4. |
Construction Lines of Credit
|
5.
|
Notes Payable
|
As of
December 31,
|
|||||||||||||||||
Maturity Date
|
Payment Terms
|
2021
|
2021
Effective Rate
|
2020
|
2020
Effective Rate
|
||||||||||||
|
Interest is
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
|
|
|
%
|
|
|
%
|
||||||||||
|
Interest is
|
|
|
%
|
|
|
%
|
||||||||||
|
Interest is
|
|
|
%
|
|
|
%
|
||||||||||
|
Interest is
|
|
|
%
|
|
|
%
|
||||||||||
Total notes payable
|
$
|
|
$
|
|
(1)
|
|
Maturity of Notes Payable
|
|||
2022
|
$
|
|
|
2023
|
|
||
2024
|
|
||
2025
|
|
||
2026
|
|
||
Thereafter
|
|
||
Total
|
$
|
|
6. |
Inventories
|
As of
December 31,
|
||||||||
2021
|
2020
|
|||||||
Construction in process and finished homes
|
$
|
|
$
|
|
||||
Finished lots and land
|
|
|
||||||
Inventories owned by the Company
|
|
|
||||||
Inventories owned by consolidated joint ventures
|
|
|
||||||
Total inventories
|
$
|
|
$
|
|
||||
Inventories owned by the Company
|
||||||||
as a percentage of total inventories
|
||||||||
Construction in process and finished homes
|
|
|
|
%
|
||||
Finished lots and land
|
|
|
|
%
|
As of
December 31,
|
||||||||
2021
|
2020
|
|||||||
Capitalized interest at the beginning of the period
|
$
|
|
$
|
|
||||
Interest incurred
|
|
|
||||||
Interest expensed
|
(
|
)
|
(
|
)
|
||||
Interest charged to cost of contract revenues earned
|
(
|
)
|
(
|
)
|
||||
Capitalized interest at the end of the period
|
$
|
|
$
|
|
7. |
Warranty Reserves
|
As of
December 31,
|
|||||||
2021
|
2020
|
||||||
Warranty reserves at the beginning of the year
|
$
|
|
$
|
|
|||
Additions to reserves for new home deliveries
|
|
|
|||||
Payments for warranty costs
|
|
|
|||||
Warranty reserves at the end of the period
|
$
|
|
$
|
|
8. |
Commitments and Contingencies
|
|
For the Years Ended
December 31,
|
||||||||||||
Lease Cost
|
Classification
|
2021
|
2020
|
2019
|
|||||||||
Operating lease cost(1)
|
Selling, general and administrative expenses
|
$
|
|
$
|
|
$
|
|
||||||
Finance lease cost:
|
|||||||||||||
Amortization of right of use assets
|
Selling, general and administrative expenses
|
|
|
|
|||||||||
Interest on lease liabilities
|
Interest expense
|
|
|
|
|||||||||
Total finance lease cost
|
$
|
|
$
|
|
$
|
|
|||||||
Net lease cost
|
$
|
|
$
|
|
$
|
|
(1)
|
|
Maturity of Lease Liabilities
|
Operating
Leases(1)
|
Finance
Leases(1)
|
Total(1)
|
||||||||
2022
|
$
|
|
$
|
|
$
|
|
|||||
2023
|
|
|
|
||||||||
2024
|
|
|
|
||||||||
2025
|
|
|
|
||||||||
2026
|
|
|
|
||||||||
Thereafter
|
|
|
|
||||||||
Total lease payments
|
$
|
|
$
|
|
$
|
|
|||||
Less: Interest
|
|
|
|||||||||
Present value of lease liabilities
|
$
|
|
$
|
|
(1)
|
|
As of December 31,
|
|||||||
2021
|
2020
|
||||||
Weighted average remaining lease term
|
|||||||
Operating leases
|
|
|
|||||
Financing leases
|
|
|
|||||
Weighted average discount rate
|
|||||||
Operating leases
|
|
|
|
||||
Financing leases
|
|
|
|
9. |
Mezzanine Equity, Members’ Equity and Stockholders’ Equity
|
• |
Cumulative Dividends: The Convertible Preferred Stock accumulates cumulative dividends at a rate
per annum equal to
|
• |
Duration:
The Convertible Preferred Stock is perpetual with call and conversion rights. The Convertible Preferred Stock is not convertible by the Purchasers in the first five years following issuance, with the exception of the acceleration of
the Conversion Right (as defined below) upon breach of the protective covenants (described below). The Company can call the outstanding Convertible Preferred Stock at any time for one-hundred and two percent (
|
• |
Protective Covenants: The protective covenants of the Convertible Preferred Stock require the
Company to maintain compliance with all covenants related to (i) the Credit Agreement, as may be further amended from time to time; provided that any amendment, restatement, modification or waiver of the Credit Agreement that would
adversely and materially affect the rights of the Purchasers will require the written consent of holders of a majority of the then-outstanding shares of Convertible Preferred Stock; and (ii) any agreement between the Company and any
Purchaser (the covenants referred to in clauses (i) and (ii), collectively, the “Protective Covenants”). Non-compliance beyond any applicable cure period with the Protective Covenants (in the case of the Protective Covenants related to
the Credit Agreement) will accelerate the Conversion Right, and in the event of such acceleration that occurs before the fifth anniversary following the issuance of the Convertible Preferred Stock, the “Conversion Discount” shall be
increased from
|
• |
Voting Rights: Except as may be expressly required by Delaware law, the shares of Convertible Preferred Stock have no voting rights.
|
• |
Redemption in a Change of Control: The Convertible Preferred Stock will be redeemed, contingent upon and concurrently with the consummation of a change of control of the Company. Shares
of Convertible Preferred Stock will be redeemed in a change of control of the Company at a price, in cash, equal to the liquidation preference, subject to adjustment, plus all accumulated and unpaid dividends, plus, if the change of control
occurs before the fourth anniversary of the date of issuance of the Convertible Preferred Stock, a premium equal to the dividends that would have accumulated on such share of Convertible Preferred Stock from and after the change of control
redemption date and through the fourth anniversary of the issuance of the Convertible Preferred Stock.
|
10. |
Equity-Based Compensation
|
Shares
|
Weighted Average
Grant Date
Fair Value
|
|||||||
Outstanding - December 31, 2020
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Forfeited
|
(
|
)
|
(
|
)
|
||||
Vested
|
|
|
||||||
Outstanding - December 31, 2021
|
|
$
|
|
11. |
Variable Interest Entities and Investments in Other Entities
|
|
|
As of
December 31,
|
|||||
Consolidated
|
|
2021
|
|
|
2020
|
||
Assets
|
|
$
|
|
|
|
$
|
|
Liabilities
|
|
|
|
|
|
|
|
As of
December 31,
|
|||||||
Unconsolidated
|
2021
|
2020
|
|||||
Jet Home Loans
|
$ |
|
$ |
|
|||
Other unconsolidated VIEs
|
|
|
|
|
|||
Total investment in unconsolidated VIEs
|
$
|
|
$
|
|
12.
|
Asset Purchase of Joint Venture Interests
|
13.
|
Segment Reporting
|
|
For the Years Ended
December 31, |
|||||||||||
Revenues:
|
2021
|
2020
|
2019
|
|||||||||
Jacksonville
|
$
|
|
$
|
|
$
|
|
||||||
Colorado
|
|
|
|
|||||||||
Orlando
|
|
|
|
|||||||||
DC Metro
|
|
|
|
|||||||||
The Carolinas
|
|
|
|
|||||||||
Texas
|
|
|
|
|||||||||
Jet Home Loans
|
|
|
|
|||||||||
Other (1)
|
|
|
|
|||||||||
Total segment revenues
|
|
|
|
|||||||||
|
||||||||||||
Reconciling items from equity method investments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
||||||||||||
Consolidated revenues
|
$
|
|
$
|
|
$
|
|
|
For the Years Ended
December 31, |
|||||||||||
Net and comprehensive income:
|
2021
|
2020
|
2019
|
|||||||||
Jacksonville
|
$
|
|
$
|
|
$
|
|
||||||
Colorado
|
|
|
|
|||||||||
Orlando
|
|
|
|
|||||||||
DC Metro
|
|
|
(
|
)
|
||||||||
The Carolinas
|
|
|
|
|||||||||
Texas
|
|
|
|
|||||||||
Jet Home Loans
|
|
|
|
|||||||||
Other (1)
|
|
(
|
)
|
|
||||||||
Total segment net and comprehensive income
|
|
|
|
|||||||||
|
||||||||||||
Reconciling items from equity method investments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
||||||||||||
Consolidated net and comprehensive income
|
$
|
|
$
|
|
$
|
|
|
Assets:
|
Goodwill: | ||||||||||||||
As of December 31,
|
2021
|
2020
|
2021 |
2020 |
||||||||||||
Jacksonville
|
$
|
|
$
|
|
$ | $ | ||||||||||
Colorado
|
|
|
||||||||||||||
Orlando
|
|
|
||||||||||||||
DC Metro
|
|
|
||||||||||||||
The Carolinas
|
|
|
||||||||||||||
Texas
|
|
|
||||||||||||||
Jet Home Loans
|
|
|
||||||||||||||
Other (1)
|
|
|
||||||||||||||
Total segment
|
|
|
||||||||||||||
|
||||||||||||||||
Reconciling items from equity method investments
|
(
|
)
|
(
|
)
|
||||||||||||
|
||||||||||||||||
Consolidated
|
$
|
|
$
|
|
$ | $ |
(1)
|
|
14. |
Income Taxes
|
|
2021
|
|||
Current expense:
|
||||
Federal
|
$
|
|
||
State
|
|
|||
Total current expense
|
$
|
|
||
Deferred expense:
|
||||
Federal
|
$
|
(
|
)
|
|
State
|
(
|
)
|
||
Total deferred (benefit)
|
$
|
(
|
)
|
|
Total income tax expense
|
$
|
|
|
2021
|
|||
Income taxes at federal statutory rate
|
|
%
|
||
State and local income taxes, net of federal tax
|
|
|||
Federal tax credits
|
(
|
)
|
||
Non-deductible executive compensation
|
|
|||
Other
|
|
|||
Effective rate
|
|
%
|
|
2021
|
|||
Deferred tax assets:
|
||||
Property and equipment, net
|
$
|
|
||
Intangible assets
|
|
|||
Contingent consideration valuation
|
|
|||
Stock options
|
|
|||
Warranty reserve
|
|
|||
|
|
|||
Deferred tax liabilities:
|
||||
Property and equipment, net
|
$
|
(
|
)
|
|
(
|
)
|
|||
Net deferred income tax asset
|
$
|
|
|
15.
|
Fair Value Disclosures
|
Beginning balance, December 31, 2020
|
$
|
|
|
Contingent consideration adjustments related to prior year acquisitions
|
|
||
Contingent consideration increase related to current year acquisition
|
|
||
Ending balance, December 31, 2021
|
$
|
|
16.
|
Related Party Transactions
|
17.
|
Earnings per Share
|
For the Year
Ended
December 31,
|
||||
2021
|
||||
Numerator
|
||||
Net and comprehensive income attributable to Dream Finders Homes, Inc.
|
$
|
|
||
Less: Preferred dividends
|
|
|||
Add: Loss prior to reorganization attributable to DFH LLC members
|
( |
) | ||
Net and comprehensive income available to common stockholders
|
$
|
|
||
Denominator
|
||||
Weighted-average number of common shares outstanding - basic
|
|
|||
Add: Common stock equivalent shares
|
|
|||
Weighted-average number of shares outstanding - diluted
|
|
18.
|
Subsequent Events
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A. |
CONTROLS AND PROCEDURES
|
• |
Developed formal policies specific to corporate governance and accounting.
|
• |
Developed formal policies for IT general controls; executed IT controls focused training; and designed and implemented controls within user access, program change management, and computer operations
domains.
|
• |
Designed and implemented segregation of duties controls over financial reporting and review of journal entries.
|
• |
Performed a financial statement risk assessment and designed and implemented or identified existing controls designed to prevent or detect a material misstatement in our financial statements.
|
• |
Began implementing a formal testing program to evaluate the design and operating effectiveness of key internal controls.
|
• |
Further augmented leadership and staff responsible for internal control over financial reporting, including adding a Vice President of Internal Audit to assess and report on the Company’s processes and
internal controls and a Director of SEC Reporting to address SEC reporting and technical accounting matters.
|
ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
|
Name
|
Age
|
Position
|
Patrick O. Zalupski
|
41
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
J. Douglas Moran
|
50
|
Senior Vice President and Chief Operations Officer
|
L. Anabel Fernandez
|
40
|
Senior Vice President and Interim Chief Financial Officer
|
• |
overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC and
earnings press releases;
|
• |
appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;
|
• |
delineating relationships between our independent registered public accounting firm and us and requesting information from our independent registered public accounting firm and management to determine the
presence or absence of a conflict of interest;
|
• |
reviewing with our independent registered public accounting firm the scope and results of their audit;
|
• |
approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
|
• |
reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and our compliance with legal and regulatory requirements;
|
• |
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters;
|
• |
reviewing and discussing with management cybersecurity, risk assessment and risk management and monitoring controls related to such exposures; and
|
• |
reviewing and approving related-person transactions.
|
• |
establishing the Company’s compensation programs and the compensation of the Company’s executive officers;
|
• |
monitoring incentive and equity-based compensation plans;
|
• |
reviewing and approving director compensation; and
|
• |
monitoring director and executive officer compliance with the stock ownership guidelines.
|
• |
overseeing the evaluation of the Board and its committees;
|
• |
identifying and recommending to the Board individuals qualified, consistent with criteria approved by the Board, for directorships to be filled by the Board or by our stockholders;
|
• |
overseeing the size, composition and structure of the Board in order to discharge the Board’s duties and responsibilities properly and efficiently;
|
• |
developing and recommending to the Board a set of corporate governance guidelines and principles; and
|
• |
reviewing the disclosure regarding corporate governance and the operation of the committee included in our proxy statements and other filings required by the SEC, as applicable.
|
• |
Experience in corporate management, such as serving as an officer, former officer or other leadership role for a publicly held company or large private company;
|
• |
Experience as a board member of another publicly held company or large private company;
|
• |
Real estate industry professional and academic expertise, including homebuilding, land development, sales, marketing and operations;
|
• |
Experience in accounting, finance, capital markets transactions and/or technology;
|
• |
Legal, regulatory and/or risk management expertise; and
|
• |
Information technology and cybersecurity expertise.
|
• |
High personal and professional ethical standards, integrity and values;
|
• |
Strong leadership skills and solid business judgment;
|
• |
Commitment to representing the long-term interests of our stockholders;
|
• |
The time required for preparation, participation and attendance at Board meetings and committee meetings, as applicable; and
|
• |
Lack of potential conflict of interest with other personal and professional pursuits.
|
•
|
Patrick O. Zalupski, our President, Chief Executive Officer and Chairman of the Board;
|
|
•
•
|
J. Douglas Moran, our Senior Vice President and Chief Operations Officer;
L. Anabel Fernandez, our Senior Vice President and Interim Chief Financial Officer (1); and
|
|
•
|
Rick A. Moyer, our Former Senior Vice President and Chief Financial Officer (2).
(1) On October 6, 2021 Ms. Fernandez was appointed to the position of Senior Vice President and Interim Chief Financial Officer.
(2) Mr. Moyer resigned from his position as Senior Vice President and Chief Financial Officer, effective September 30, 2021.
|
•
|
We increased base salaries to reflect competitive market levels, individual merit and internal parity considerations;
|
•
|
We paid certain IPO-related bonuses and will pay certain future bonuses in the form of equity awards that contain a three-year time-based vesting schedule as a retention mechanism; and
|
•
|
We transitioned away from a profit sharing model for certain executives and toward an incentive structure that considers achievement of Company specific performance factors.
|
What We Do
|
|
|
What We Don’t Do
|
||||||
✔
|
|
|
Annual Compensation Review. The Compensation
Committee conducts an annual review of compensation for our NEOs and a review of compensation-related risks.
|
|
|
✘
|
|
|
No “Single Trigger” Change of Control Arrangements. No change of control payments or benefits are triggered simply by the occurrence of a change of control.
|
✔
|
|
|
Compensation At-Risk and Performance-based. A
significant portion of our NEO’s compensation is subject to variable pay arrangements that are determined by the Compensation Committee in connection with our performance.
|
|
|
✘
|
|
|
No Tax “Gross Ups.” We do not provide any tax
reimbursement payments (including “gross ups”) on any tax liability that our NEOs might owe, including as a result of the application of Sections 280G and 4999 of the Code.
|
✔
|
|
|
Multi-Year Vesting Requirements. Time-based
restricted stock awards granted to our NEOs generally vest over three years.
|
|
|
✘
|
|
|
No Special Executive Benefit Plans. Our NEOs
participate in the same company-sponsored benefit programs as our other full time, salaried employees.
|
✔
|
|
|
Rigorous Share Ownership Guidelines. We have
established minimum share ownership requirements of 5x base salary for our Chief Executive Officer and 3x base salary for our other NEOs.
|
|
|
✘
|
|
|
No Hedging. We have a policy that restricts
employees from hedging our securities.
|
✔
|
|
|
Limited Perquisites. We provide minimal
perquisites and other personal benefits to our NEOs, except where they serve a legitimate business purpose.
|
|
|
|
|
• |
consulting with the Chairman of the Compensation Committee between board meetings;
|
• |
providing competitive market data for our NEO positions;
|
• |
advising on market practices for compensation of founder CEOs with significant ownership; and
|
• |
reviewing incentive plan design features and market practices for equity plan pool size
|
• |
assisting in evaluation of the effectiveness of our overall executive compensation program.
|
Beazer Homes USA
|
|
|
Hovnarian Enterprises
|
|
|
Skyline Champion
|
Cavco Industries
|
|
|
LGI Homes
|
|
|
The New Home Company
|
Century Communities
|
|
|
M.D.C Holdings
|
|
|
TRI Pointe Group
|
Green Brick Partners
|
|
|
M/I Homes
|
|
|
Name
|
2021 ($)
|
||
Patrick O. Zalupski
|
1,050,000
|
||
J. Douglas Moran
|
650,000
|
||
L. Anabel Fernandez (1)
|
400,000
|
|
(1)
|
Effective October 6, 2021 when Ms. Fernandez was appointed to the position of Senior Vice President and Interim Chief Financial Officer.
|
Target Bonus
|
|||
Name
|
2021 ($)
|
||
Patrick O. Zalupski
|
2,012,500
|
||
J. Douglas Moran
|
1,812,500
|
||
L. Anabel Fernandez (1)
|
400,000
|
(1) |
In connection with her appointment as Interim CFO, Ms. Fernandez’s target bonus was established as 100% of her base salary.
|
Stock Ownership Guidelines
|
|
|
|
Chief Executive Officer
|
|
|
5X Base Salary
|
Chief Operating Officer and Chief Financial Officer
|
|
|
3X Base Salary
|
Other Executive Officers
|
|
|
1X Base Salary
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards
($)(1)
|
Non-equity
Incentive Plan
Compensation
($)(2)
|
All Other
Compensation
($)(5)
|
Total ($)
|
Patrick O. Zalipski(3)
|
2021
|
1,220,389
|
2,465,625
|
10,684,605
|
—
|
21,045
|
14,391,664
|
President, Chief Executive Officer
|
2020
|
450,000
|
4,000,000
|
—
|
—
|
96,813
|
4,546,813
|
and Chairman of the Board
|
2019
|
375,000
|
—
|
—
|
—
|
159,980
|
534,980
|
Rick A. Moyer
|
2021
|
487,500
|
—
|
890,395
|
—
|
6,051
|
1,383,946
|
Former Senior Vice President
|
2020
|
450,000
|
500,000
|
—
|
—
|
12,856
|
962,856
|
and Chief Financial Officer
|
2019
|
400,000
|
400,000
|
—
|
—
|
9,800
|
809,800
|
J. Douglas Moran
|
2021
|
627,507
|
2,265,625
|
1,669,462
|
—
|
10,150
|
4,572,744
|
Senior Vice President
|
2020
|
350,000
|
—
|
—
|
937,500
|
11,958
|
1,299,458
|
and Chief Operating Officer
|
2019
|
300,000
|
—
|
—
|
1,015,450
|
9,800
|
1,325,250
|
L. Anabel Fernandez
|
2021
|
240,923
|
200,000
|
222,587
|
—
|
10,150
|
673,660
|
Senior Vice President
|
2020
|
—
|
—
|
—
|
—
|
—
|
—
|
and Interim Chief Financial Officer(4)
|
2019
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
Based on grant date fair value of restricted stock awards and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10 to our
consolidated financial statements for the fiscal year ended December 31, 2021, included herewith. Mr. Moyer’s stock awards were forfeited upon his resignation.
|
(2)
|
Mr. Moran earned a profit sharing bonus for 2020 and 2019 in an amount equal to 2.5% of the yearly pre-tax net profits of DFH LLC, as provided in his prior employment agreement. Such profit sharing bonus
amount in 2020 and 2021 was paid 50% in cash and 50% in the form of a restricted stock award with a three-year vesting schedule, while such profit sharing bonus amount was paid in cash for 2019.
|
(3)
|
Mr. Zalupski does not receive any additional compensation for serving as the Chairman of our Board.
|
(4)
|
Ms. Fernandez was appointed to the position of Senior Vice President and Interim Chief Financial Officer on October 6, 2021.
|
(5)
|
Amounts reflected within the “All Other Compensation” column are comprised of the following amounts:
|
Name and Principal Position
|
Year
|
Employer
Contributions
to 401(k) Plan ($)
|
Key Man Life Insurance Premiums ($)
|
Reimbursements
for
Personal
Expenses ($)
|
Total
($)
|
Patrick O. Zalupski
|
2021
|
10,150
|
10,895
|
—
|
21,045
|
2020
|
11,112
|
16,342
|
65,000
|
92,454
|
|
2019
|
9,800
|
16,342
|
126,202
|
152,344
|
|
Rick A. Moyer
|
2021
|
6,051
|
—
|
—
|
6,051
|
2020
|
12,856
|
—
|
—
|
12,856
|
|
2019
|
9,800
|
—
|
—
|
9,800
|
|
J. Douglas Moran
|
2021
|
10,150
|
—
|
—
|
10,150
|
2020
|
11,958
|
—
|
—
|
11,958
|
|
2019
|
9,800
|
—
|
—
|
9,800
|
|
L. Anabel Fernandez
|
2021
|
10,150
|
—
|
—
|
10,150
|
2020
|
—
|
—
|
—
|
—
|
|
2019
|
—
|
—
|
—
|
—
|
Name
|
Type
|
Grant Date
|
All Other Stock Awards ($)
|
Grant Date Fair Value of Stock Awards ($) (1)
|
Patrick O. Zalupski
|
Restricted stock - 2021 Equity Incentive Plan
|
1/29/2021
|
—
|
10,684,605
|
J. Douglas Moran
|
Restricted stock - 2021 Equity Incentive Plan
|
1/29/2021
|
—
|
1,669,462
|
L. Anabel Fernandez
|
Restricted stock - 2021 Equity Incentive Plan
|
1/29/2021
|
—
|
222,587
|
Rick A. Moyer
|
Restricted stock - 2021 Equity Incentive Plan
|
1/29/2021
|
—
|
890,395
|
(1) |
Based on grant date fair value of restricted stock awards and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10 to our
consolidated financial statements for the fiscal year ended December 31, 2021, included herewith. Mr. Moyer’s stock awards were forfeited upon his resignation.
|
Stock Awards
|
||
Name
|
Number of shares that
have not vested (#)(1)
|
Value of shares that
have not vested ($)(2)
|
Patrick O. Zalupski
|
461,538
|
8,976,923
|
J. Douglas Moran
|
72,115
|
1,402,637
|
L. Anabel Fernandez
|
9,615
|
187,019
|
|
(1)
|
Restricted stock awards as of December 31, 2021, which were granted under the 2021 Equity Incentive Plan in connection with our IPO in January 2021.
|
|
(2)
|
Market value of unvested restricted stock awards is based on a closing price of $19.45 for a share of our common stock on the Nasdaq Global Select Market on December 31, 2021.
|
Name
|
|
|
Executive contributions
in last fiscal year ($)(1)
|
|
|
Aggregate withdrawals/
distributions ($)(2)
|
|
|
Aggregate balance at
last fiscal year end ($)(3)
|
|
J. Douglas Moran
|
|
|
—
|
|
|
195,182
|
|
|
101,546
|
(1)
|
For the year ended December 31, 2021, Mr. Moran’s bonus structure transitioned from profit sharing to an incentive structure comprised of a cash bonus and equity awards in line with the other NEOs. The
cash portion is included in the Summary Compensation Table under the heading “Bonus” and the equity award portion is included in “Long Term Incentive Plan Compensation.”
|
(2)
|
Represents deferred amounts paid to Mr. Moran in 2021 attributable to his 2018 and 2019 profit sharing bonuses.
|
(3)
|
Represents remaining deferred amounts as of December 31, 2021 attributable to Mr. Moran’s 2019 profit sharing bonuses.
|
Name | Event |
Salary
($)
|
Bonus
($)
|
Health/Welfare
Benefits
($)
|
Other Benefits
($)
|
Equity Acceleration
($)
|
Total
($)
|
|||||||||||||||||
L. Anabel Fernandez
|
Voluntary Termination (1)
|
—
|
—
|
—
|
150,000
|
—
|
150,000
|
|||||||||||||||||
Involuntary Termination (2)
|
350,000
|
—
|
2,681
|
—
|
— |
352,681
|
||||||||||||||||||
J. Douglas Moran(3)
|
Involuntary Termination
|
350,000
|
—
|
22,572
|
—
|
—
|
372,572
|
|||||||||||||||||
Change in Control
|
604,444
|
—
|
—
|
—
|
—
|
604,444
|
||||||||||||||||||
|
Retirement(4)
|
—
|
—
|
—
|
101,546
|
—
|
101,546
|
|||||||||||||||||
Patrick O. Zalupski
|
Involuntary Termination
|
—
|
—
|
4,191
|
—
|
—
|
4,191
|
(1)
|
In the event the Company hires a full time Chief Financial Officer and Ms. Fernandez terminates her employment with the Company within 30 days thereafter, the Company will pay Ms. Fernandez $150,000
following the execution by Ms. Fernandez of a general release.
|
(2)
|
In the event Ms. Fernandez is terminated by the Company without Cause (as defined in the employment agreement) prior to the payment of any bonus for 2021, Ms. Fernandez shall receive a severance payment
of $350,000 following the execution by Ms. Fernandez of a general release.
|
(3)
|
Mr. Moran’s employment agreement provides that if we terminate Mr. Moran’s employment involuntarily without cause, he would be entitled to receive severance payments equal to 12 months’ worth of his
then-current base salary as in effect at the time of such termination, plus 12 months’ worth of company-paid COBRA premiums. If we terminate Mr. Moran’s employment involuntarily without cause within the 24-month period following a
change in control of the Company, Mr. Moran would be entitled to receive severance payments equal to two years’ then-current base salary as in effect at the time of such termination, plus 24 months’ worth of company-paid COBRA premiums.
|
(4)
|
Mr. Moran’s prior employment agreement provided for accelerated payment of accrued, unpaid profit sharing bonuses on his “Retirement,” which was generally defined as a voluntary resignation after
reaching age 65.
|
|
|
W. Radford Lovett II (Chair)
Megha H. Parekh
William H. Walton, III
|
•
|
an annual cash retainer of $50,000; and
|
•
|
an annual restricted stock award granted under our 2021 Equity Incentive Plan with an aggregate fair market value of approximately $50,000 on the date of grant.
|
Name
|
Fees earned or
paid in cash
($)(1)
|
Stock awards
($)(2)
|
Total ($)
|
||||||||
William H. Walton, III
|
50,000
|
89,035
|
139,035
|
||||||||
W. Radford Lovett II
|
50,000
|
89,035
|
139,035
|
||||||||
Justin W. Udelhofen
|
50,000
|
267,105
|
317,105
|
||||||||
Megha H. Parekh
|
50,000
|
89,035
|
139,035
|
(1)
|
Represents annual retainers which directors received in cash.
|
(2)
|
Based on grant date fair value of restricted stock awards granted during 2021 and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in
Note 10 to our consolidated financial statements for the fiscal year ended December 31, 2021, included herewith.
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Shares Beneficially Owned(1)
|
||||||||||||||||||||||||
Class A
|
Class B
|
Combined
|
||||||||||||||||||||||
Common Stock
|
Common Stock
|
Voting Power(2)
|
||||||||||||||||||||||
5% Stockholders:
|
Number
|
%
|
Number
|
%
|
Number
|
%
|
||||||||||||||||||
Patrick O. Zalupski(3)(4)
|
— |
|
0% |
|
|
60,687,691 |
|
100.0% |
|
|
182,063,073 |
|
84.9% |
|
|
|||||||||
W. Radford Lovett II(9)(10)
|
5,069,729 |
|
15.4% |
|
|
— |
|
0.0% |
|
|
5,069,729 |
|
*% |
|
|
|||||||||
Boston Omaha Corporation (13)
|
2,868,037 |
|
8.8% |
|
|
— |
|
0.0% |
|
|
2,868,037 |
|
3.1% |
|
|
|||||||||
The Vanguard Group (14)
|
1,646,559 |
|
5.1% |
|
|
— |
|
0.0% |
|
|
1,646,559 |
|
1.8% |
|
|
|||||||||
Directors and Named Executive Officers:
|
||||||||||||||||||||||||
Patrick O. Zalupski(3)(4)
|
— |
|
0.0% |
|
|
60,687,691 |
|
100.0% |
|
|
182,063,073 |
|
84.9% |
|
|
|||||||||
J. Douglas Moran(5)
|
887,605 |
|
2.7% |
|
|
— |
|
0.0% |
|
|
887,605 |
|
*% |
|
|
|||||||||
L. Anabel Fernandez(6)
|
32,615 |
|
*% |
|
|
— |
|
0.0% |
|
|
32,615 |
|
*% |
|
|
|||||||||
William H. Walton, III(7)(8)
|
2,536,787 |
|
7.7% |
|
|
— |
|
0.0% |
|
|
2,536,787 |
|
1.2% |
|
|
|||||||||
W. Radford Lovett II(9)(10)
|
5,069,729 |
|
15.4% |
|
|
— |
|
0.0% |
|
|
5,069,729 |
|
2.4% |
|
|
|||||||||
Justin W. Udelhofen(11)
|
86,538 |
|
*% |
|
|
— |
|
0.0% |
|
|
86,538 |
|
*% |
|
|
|||||||||
Megha H. Parekh(12)
|
5,846 |
|
*% |
|
|
— |
|
0.0% |
|
|
5,846 |
|
*% |
|
|
|||||||||
Directors and executive officers as a group (7 persons)
|
8,619,120 |
|
26.2% |
|
|
60,687,691 |
|
100% |
|
|
190,682,193 |
|
89.3% |
|
|
*
|
Less than 1%.
|
(1)
|
Subject to the terms of our Certificate of Incorporation and our Bylaws, our Class B common stock is convertible at any time by the holder into shares of our Class A common stock on a share-for-share
basis. The table above does not reflect shares of our Class A common stock issuable upon conversion of our Class B common stock.
|
(2)
|
Each holder of our Class A common stock shall be entitled to one vote per share of our Class A common stock, and each holder of our Class B common stock shall be entitled to three votes per share of our
Class B common stock. Holders of our Class A common stock and our Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise
required by law, our Certificate of Incorporation or our Bylaws. Represents percentage of voting power of our Class A common stock and our Class B common stock, voting together as a single class, reflecting (i) all shares of our Class A
common stock held by such holder and (ii) all shares of our Class B common stock held by such holder. The table above does not reflect voting power of shares of our Class A common stock issuable upon conversion of our Class B common
stock.
|
(3)
|
Includes 596,158 shares of our Class B common stock held by POZ Holdings, Inc., an entity Mr. Zalupski controls. The address for POZ Holdings, Inc. is 14701 Philips Highway, Suite 300, Jacksonville, FL
32256.
|
(4)
|
Includes 461,538 shares of our Class B common stock granted to Mr. Zalupski on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class B common stock will vest in three equal
annual installments beginning on January 21, 2022 and each anniversary thereof.
|
(5)
|
Includes 72,115 shares of our Class A common stock granted to Mr. Moran on January 29, 2021 pursuant to a restricted stock award. Such shares of our Class A common stock will vest in three equal annual
installments beginning on January 21, 2022 and each anniversary thereof.
|
(6)
|
Includes 9,615 shares of our Class A common stock granted to Ms. Fernandez on January 29, 2021 pursuant to a restricted stock award.
Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.
|
(7)
|
Consists of (i) 633,235 shares of our Class A common stock owned directly by William H. Walton, III Living Trust, u/a dated
6/6/2014, of which Mr. Walton is the sole trustee, and (ii) 1,899,706 shares of our Class A common owned directly by The Theodora D. and William H. Walton, III Irrevocable Trust, of which Mr. Walton’s brother is one of three trustees.
|
(8)
|
Includes 3,846 shares of our Class A common stock granted to Mr. Walton on January 29, 2021 pursuant to a restricted stock award.
Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.
|
(9)
|
Consists of 5,065,883 shares of our Class A common stock owned directly by the W. Radford Lovett II GST Exempt Trust u/a dated
12/28/2004, of which Mr. Lovett is the sole trustee.
|
(10)
|
Includes 3,846 shares of our Class A common stock granted to Mr. Lovett on January 29, 2021 pursuant to a restricted stock award.
Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.
|
(11)
|
Includes 11,538 shares of our Class A common stock granted to Mr. Udelhofen on January 29, 2021 pursuant to a restricted stock
award. Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.
|
(12)
|
Includes 3,846 shares of our Class A common stock granted to Ms. Parekh on January 29, 2021 pursuant to a restricted stock award.
Such shares of our Class A common stock will vest in three equal annual installments beginning on January 21, 2022 and each anniversary thereof.
|
(13)
|
Information from Schedule 13G/A filed on October 7, 2021. Boston Omaha Corporation has shared voting power and shared dispositive
power with regard to 2,868,037 shares. United Casualty & Surety Insurance Company has shared voting power and shared dispositive power with regard to 120,000 shares. BOC DFH LLC has shared voting power and shared dispositive power
with regard to 2,748,037 shares. The address of Boston Omaha Corporation is 1411 Harney St., Suite 200, Omaha, NE 68102.
|
(14)
|
Information from Schedule 13G filed on February 9, 2022. The Vanguard Group, Inc.'s clients, including investment companies
registered under the Investment Company Act of 1940 and other managed accounts, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities included herein. The
Vanguard Group, Inc.'s address is 100 Vanguard Blvd., Malvern, PA 19355.
|
(a)
|
(b)
|
(c)
|
|||||||||
Number of Securities
|
|||||||||||
Number of Securities
|
remaining available
|
||||||||||
to be issued upon
|
Weighted average
|
for future issuance
|
|||||||||
exercise of
|
exercise price of
|
(excluding securities
|
|||||||||
Directors, Nominees
|
outstanding options,
|
outstanding options,
|
reflected in
|
||||||||
and Executive Officers
|
warrants and rights
|
warrants and rights
(1)
|
column (a))
|
||||||||
Equity Compensation Plans:
|
|||||||||||
Approved by security holders
|
721,598
|
$
|
-
|
8,378,402
|
|||||||
Not approved by security holders
|
-
|
$
|
-
|
-
|
|||||||
Total
|
721,598
|
$
|
-
|
8,378,402
|
(1)
|
All of the outstanding shares are restricted stock awards, which do not have exercise prices.
|
Item 13. |
Certain Relationships and Related Transactions, and Director Independence.
|
|
Lot Deposit Amount
|
|
|
Lot Option Fees
|
|
|
Up to 20% of the total transaction price of all lots.
|
|
|
Up to 15% paid currently or 20% accrued and paid at lot purchase.
|
|
Name
|
Commitment Amount ($)
|
||
Rockpoint Group, LLC(1)
|
100,000,000
|
||
Patrick O. Zalupski
|
25,000,000
|
||
W. Radford Lovett II
|
5,000,000
|
||
J. Douglas Moran
|
500,000
|
||
L. Anabel Fernandez
|
175,000
|
(1) |
Mr. Walton is the founding principal of Rockpoint Group, LLC
|
Item 14. |
Principal Accountant Fees and Services.
|
|
2021
|
2020
|
|||||
Audit Fees(1)
|
$
|
1,395,000
|
$
|
1,970,093
|
|||
Audit-Related Fees – aggregate fees for
audit-related services
|
—
|
—
|
|||||
Tax Fees(2)
|
225,000
|
199,050
|
|||||
All Other Fees – aggregate fees for all other
services
|
—
|
—
|
|||||
Total
|
$
|
1,615,000
|
$
|
2,169,143
|
(1)
|
Audit Fees include the annual audit, services related to the review of quarterly financial information and registration statement filings with the SEC. The decreased audit fees in
2021 are due to one-time fees in 2020 related to the issuance of consents and comfort letters to underwriters in connection with our IPO and related filings with the SEC.
|
|
(2)
|
Tax Fees generally consist of fees for tax compliance and return preparation, and tax planning and advice.
|
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
|
Dream Finders Homes, Inc.
|
Report of Independent Registered Public Accounting Firm
|
Consolidated Balance Sheets
|
Consolidated Statements of Comprehensive Income
|
Consolidated Statements of Mezzanine Equity, Members’ Equity, and Stockholders’ Equity
|
Consolidated Statements of Cash Flows
|
Notes to the Consolidated Financial Statements
|
Exhibit No.
|
Description
|
|
Agreement and Plan of Merger, dated as of January 20, 2021, by and among Dream Finders Homes, Inc., Dream Finders Holdings LLC and DFH Merger Sub LLC (incorporated herein by reference to Exhibit 2.1 to the
Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).
|
||
Membership Interest Purchase Agreement, dated as of January 29, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit 2.1 to the
Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
First Amendment to Membership Interest Purchase Agreement, dated as of March 17, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit
2.2 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Second Amendment to Membership Interest Purchase Agreement, dated as of April 30, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit
2.3 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Third Amendment to Membership Interest Purchase Agreement, dated as of June 30, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit
2.4 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Fourth Amendment to Membership Interest Purchase Agreement, dated as of August 18, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit
2.5 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Fifth Amendment to Membership Interest Purchase Agreement, dated as of August 31, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit
2.6 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Sixth Amendment to Membership Interest Purchase Agreement, dated as of September 18, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to
Exhibit 2.7 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Seventh Amendment to Membership Interest Purchase Agreement, dated as of September 22, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to
Exhibit 2.8 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Eighth Amendment to Membership Interest Purchase Agreement, dated as of October 2, 2020, by and between Dream Finders Holdings LLC and H&H Constructors, Inc. (incorporated herein by reference to Exhibit
2.9 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on December 22, 2020).
|
||
Membership Interest Purchase Agreement, effective as of January 31, 2021, by and between Dream Finders Holdings LLC and Four Seventeen, LLC (incorporated herein by reference to Exhibit
2.11 to the Form 10-K of Dream Finders Homes, Inc. filed with the SEC on March 30, 2021).
|
||
Purchase and Sale Agreement, dated as of June 17, 2021, among Dream Finders Holdings LLC, MHI Partnership, Ltd., MHI Models, Ltd., McGuyer Homebuilders, Inc., FMR IP, LLC, HomeCo
Purchasing Company, Ltd., 2019 Sonoma, LLC, Frank B. McGuyer and McGuyer Interests, Ltd. (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the
SEC on September 13, 2021).
|
||
First Amendment to Purchase and Sale Agreement, dated as of August 31, 2021, among Dream Finders Holdings LLC, MHI Partnership, Ltd., MHI Models, Ltd., McGuyer Homebuilders, Inc., FMR
IP, LLC, HomeCo Purchasing Company, Ltd., 2019 Sonoma, LLC, Frank B. McGuyer and McGuyer Interests, Ltd. (incorporated herein by reference to Exhibit 2.2 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc.
filed with the SEC on September 13, 2021).
|
||
Second Amendment to Purchase and Sale Agreement, dated as of September 7, 2021, among Dream Finders Holdings LLC, DFH Coventry, LLC, MHI Partnership, Ltd., MHI Models, Ltd., McGuyer
Homebuilders, Inc., FMR IP, LLC, HomeCo Purchasing Company, Ltd., 2019 Sonoma, LLC, Frank B. McGuyer and McGuyer Interests, Ltd. (incorporated herein by reference to Exhibit 2.3 to the Current Report on Form 8-K (File No. 001-39916) of
Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).
|
||
Amended and Restated Certificate of Incorporation of Dream Finders Homes, Inc. (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes,
Inc. filed with the SEC on January 25, 2021).
|
||
Amended and Restated Bylaws of Dream Finders Homes, Inc. (incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the
SEC on January 25, 2021).
|
||
Certificate of Designations of Dream Finders Homes, Inc., dated September 29, 2021 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders
Homes, Inc. filed with the SEC on October 5, 2021).
|
||
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
|
||
Registration Rights Agreement, dated January 25, 2021, by and among Dream Finders Homes, Inc. and certain stockholders party thereto (incorporated herein by reference to Exhibit 4.1 to the Current Report on
Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).
|
||
Credit Agreement, dated as of January 25, 2021, among Dream Finders Homes, Inc., Bank of America, N.A., as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties
thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on January 25, 2021).
|
Dream Finders Homes, Inc. 2021 Equity Incentive Plan. (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC
on January 25, 2021).
|
||
Form of Restricted Stock Grant Notice and Restricted Stock Agreement under the 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (File
No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on January 11, 2021).
|
||
Form of Stock Option Grant Notice and Stock Option Agreement under the 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form S-1 (File No.
333-251612) of Dream Finders Homes, Inc. filed with the SEC on January 14, 2021).
|
||
Form of Director and Employee Indemnification Agreement (incorporated herein by reference to Exhibit 10.8 to the Registration Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed
with the SEC on January 11, 2021).
|
||
Employment Agreement, effective as of January 25, 2021, by and between Dream Finders Homes, Inc. and Patrick Zalupski (incorporated herein by reference to Exhibit 10.6 to the Form 10-K
of Dream Finders Homes, Inc. filed with the SEC on March 30, 2021).
|
||
Employment Agreement between Dream Finders Homes, Inc. and L. Anabel Fernandez (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K/A (File No. 001-39916)
of Dream Finders Homes, Inc. filed with the SEC on October 12, 2021).
|
||
Employment Agreement, effective as of January 25, 2021, by and between Dream Finders Homes, Inc. and Douglas Moran (incorporated herein by reference to Exhibit 10.8 to the Form 10-K of
Dream Finders Homes, Inc. filed with the SEC on March 30, 2021).
|
||
Form of Restricted Stock Grant Notice and Restricted Stock Agreement, by and between Dream Finders Homes, Inc. and Patrick Zalupski (incorporated herein by reference to Exhibit 10.12 to the Registration
Statement on Form S-1 (File No. 333-251612) of Dream Finders Homes, Inc. filed with the SEC on January 14, 2021).
|
||
First Amendment and Commitment Increase Agreement, dated as of September 8, 2021, among Dream Finders Homes, Inc., Bank of
America, N.A., as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-39916) of
Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).
|
||
Joinder, Commitment Increase, and Reallocation Agreement, dated as of September 29, 2021, among Dream Finders Homes, Inc., Bank of America, N.A., as administrative agent, collateral agent and issuing bank,
and the lenders named therein as parties thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on October 5, 2021).
|
Registration Rights Agreement, dated September 29, 2021, by and among Dream Finders Homes, Inc. and the Purchasers listed
thereto (incorporated herein by reference to Exhibit 10.2 to the
Current Report on Form 8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on October 5, 2021).
|
||
Subscription Agreement, dated September 8, 2021, by and between Dream Finders Homes, Inc. and the Purchasers listed thereto (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form
8-K (File No. 001-39916) of Dream Finders Homes, Inc. filed with the SEC on September 13, 2021).
|
||
List of Subsidiaries of Dream Finders Homes, Inc.
|
||
Consent of Independent Registered Public Accounting Firm
|
||
Preferability Letter of Independent Registered Public Accounting Firm
|
||
CEO Certification, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
CFO Certification, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101.INS |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* |
Filed herewith.
|
† |
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
|
+ |
Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon
request by the SEC.
|
ITEM 16. |
FORM 10-K SUMMARY
|
Dream Finders Homes, Inc.
|
||
Date:
|
March 16, 2022
|
/s/ Patrick O. Zalupski
|
Patrick O. Zalupski
|
||
President, Chief Executive Officer and Chairman of the Board of Directors
|
Signature
|
Title
|
Date
|
||
/s/ Patrick O. Zalupski
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
March 16, 2022
|
||
Patrick O. Zalupski
|
(Principal Executive Officer)
|
|||
/s/ L. Anabel Fernandez
|
Vice President, Treasurer and Interim Chief Financial Officer
|
March 16, 2022
|
||
L. Anabel Fernandez
|
(Principal Financial Officer)
|
|||
/s/ John O. Blanton
|
Vice President and Chief Accounting Officer
|
March 16, 2022
|
||
John O. Blanton
|
(Principal Accounting Officer)
|
|||
/s/ Radford Lovett
|
Director
|
March 16, 2022
|
||
Radford Lovett
|
||||
/s/ Megha H. Parekh
|
Director
|
March 16, 2022
|
||
Megha H. Parekh
|
||||
/s/ Justin Udelhofen
|
Director
|
March 16, 2022
|
||
Justin Udelhofen
|
||||
/s/ William H. Walton, III
|
Director
|
March 16, 2022
|
||
William H. Walton, III
|
• |
Cumulative Dividends: The convertible
preferred stock accumulates cumulative dividends at a rate per annum equal to 9.00% payable quarterly in arrears.
|
• |
Duration: The convertible preferred stock is
perpetual with call and conversion rights. The convertible preferred stock is not convertible in the first five years following issuance, with the exception of the acceleration of the Conversion Right (as defined below) upon breach of
the protective covenants (described below). We can call the outstanding convertible preferred stock at any time for one-hundred and two percent (102%) of its liquidation preference during the fourth year following its issuance and for
one-hundred and one percent (101%) of its liquidation preference during the fifth year following its issuance (in each case, for the avoidance of doubt, plus accrued, but unpaid dividends, if any). Subsequent to the fifth anniversary of
its issuance, a holder can convert the Convertible Preferred Stock into Class A common stock of the Company (the “Conversion Right”). The conversion price will be based on the average of the trailing 90 days’ closing price of Class A
common stock, less 20% of the average and subject to a floor conversion price of $4.00 (the “Conversion Discount”).
|
• |
Protective Covenants: The protective covenants
of the convertible preferred stock require us to maintain compliance with all covenants related to (i) our Credit Agreement, dated as of January 25, 2021, as amended and as may be further amended from time to time; provided that any
amendment, restatement, modification or waiver of the Credit Agreement that would adversely and materially affect the rights of holders will require the written consent of holders of a majority of the then-outstanding shares of
convertible preferred stock; and (ii) any agreement between the Company and any purchaser (the covenants referred to in clauses (i) and (ii), collectively, the “Protective Covenants”). Non-compliance beyond any applicable cure period
with the Protective Covenants (in the case of the Protective Covenants related to the Credit Agreement) will accelerate the Conversion Right, and in the event of such acceleration that occurs before the fifth anniversary following the
issuance of the convertible preferred stock, the “Conversion Discount” shall be increased from 20% to 25%.
|
• |
Voting Rights. Except as may be expressly
required by Delaware law, the shares of convertible preferred stock have no voting rights.
|
• |
Redemption in a Change of Control: The
convertible preferred stock will be redeemed, contingent upon and concurrently with the consummation of a change of control of the Company. Shares of convertible preferred stock will be redeemed in a change of control of the Company
at a price, in cash, equal to the liquidation preference, subject to adjustment, plus all accumulated and unpaid dividends, plus, if the change of control occurs before the fourth anniversary of the date of issuance of the Convertible
Preferred Stock, a premium equal to the dividends that would have accumulated on such share of Convertible Preferred Stock from and after the change of control redemption date and through the fourth anniversary of the issuance of the
convertible preferred stock.
|
By:
|
/s/ Patrick O. Zalupski
|
|
|
Patrick O. Zalupski
|
|
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
|
By:
|
/s/ L. Anabel Fernandez
|
|
|
L. Anabel Fernandez
|
|
|
Vice President, Treasurer and Interim Chief Financial Officer
|
|
March 16, 2022
|
/s/ Patrick O. Zalupski
|
|
Patrick O. Zalupski
|
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
March 16, 2022
|
/s/ L. Anabel Fernandez
|
|
L. Anabel Fernandez
|
|
Vice President, Treasurer and Interim Chief Financial Officer
|
Consolidated Balance Sheets (Parenthetical) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Assets | ||
Restricted cash, VIE amounts | $ 54,094,838 | $ 49,715,553 |
Accounts receivable, VIE amounts | 33,482,341 | 16,765,719 |
Other assets, VIE amounts | 43,821,512 | 18,262,036 |
Liabilities | ||
Accounts payable, VIE amounts | 113,498,063 | 37,418,693 |
Accrued expenses, VIE amounts | 139,367,902 | 67,401,055 |
Notes payable, VIE amounts | $ 3,291,389 | 29,653,282 |
Common Class A [Member] | ||
Stockholders' Equity - Dream Finders Homes, Inc. | ||
Common stock par value (in dollars per share) | $ 0.01 | |
Common stock shares authorized (in shares) | 289,000,000 | |
Common stock shares outstanding (in shares) | 32,295,329 | |
Common Class B [Member] | ||
Stockholders' Equity - Dream Finders Homes, Inc. | ||
Common stock par value (in dollars per share) | $ 0.01 | |
Common stock shares authorized (in shares) | 61,000,000 | |
Common stock shares outstanding (in shares) | 60,226,153 | |
Variable Interest Entity [Member] | ||
Assets | ||
Restricted cash, VIE amounts | $ 4,275,399 | 8,793,201 |
Accounts receivable, VIE amounts | 2,683,870 | 1,288,359 |
Other assets, VIE amounts | 2,185,265 | 0 |
Liabilities | ||
Accounts payable, VIE amounts | 1,308,806 | 1,315,582 |
Accrued expenses, VIE amounts | 6,914,975 | 9,977,268 |
Notes payable, VIE amounts | $ 1,979,389 | $ 8,821,282 |
Consolidated Statements of Comprehensive Income - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Consolidated Statements of Comprehensive Income [Abstract] | |||
Revenues | $ 1,923,909,806 | $ 1,133,806,607 | $ 744,292,323 |
Cost of sales | 1,610,331,738 | 962,927,606 | 641,340,496 |
Selling, general and administrative expense | 154,404,500 | 90,359,182 | 63,572,811 |
Income from equity in earnings of unconsolidated entities | (9,427,868) | (7,991,764) | (2,208,182) |
Loss/(Gain) on sale of assets | (87,023) | (117,840) | (28,652) |
Loss on extinguishment of debt | 711,485 | 0 | 0 |
Other Income | |||
Other | (7,827,391) | (1,321,741) | (2,447,879) |
Paycheck Protection Program forgiveness | (7,219,794) | 0 | 0 |
Other Expense | |||
Other | 12,770,697 | 3,188,183 | 2,888,526 |
Contingent consideration revaluation | 7,532,830 | 1,378,686 | (3,944,030) |
Interest expense | 672,172 | 870,868 | 221,449 |
Income before taxes | 162,048,460 | 84,513,427 | 44,897,784 |
Income tax expense | (27,454,642) | 0 | 0 |
Net income | 134,593,818 | 84,513,427 | 44,897,784 |
Net income attributable to non-controlling interests | (13,461,317) | (5,419,972) | (5,706,518) |
Net income attributable to Dream Finders Homes, Inc. | 121,132,501 | 79,093,455 | 39,191,266 |
Comprehensive income | 134,593,818 | 84,513,427 | 44,897,784 |
Comprehensive income attributable to non-controlling interests | (13,461,317) | (5,419,972) | (5,706,518) |
Comprehensive income attributable to Dream Finders Homes, Inc. | $ 121,132,501 | $ 79,093,455 | $ 39,191,266 |
Earnings per share | |||
Basic (in dollars per share) | $ 1.27 | $ 0 | $ 0 |
Diluted (in dollars per share) | $ 1.27 | $ 0 | $ 0 |
Weighted-average number of shares | |||
Basic (in shares) | 92,521,482 | 0 | 0 |
Diluted (in shares) | 95,313,593 | 0 | 0 |
Consolidated Statements of Mezzanine Equity, Members' Equity and Stockholders' Equity - USD ($) |
Redeemable Preferred Units/Stock Mezzanine [Member] |
Redeemable Common Units Mezzanine [Member] |
Common Units Members' [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Noncontrolling Interest [Member] |
Total |
Common Stock - Class A [Member] |
Common Stock - Class B [Member] |
---|---|---|---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2018 | $ 15,875,538 | $ 13,534,739 | |||||||
Beginning balance (in shares) at Dec. 31, 2018 | 49,543 | 5,774 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Contributions | $ 38,530,504 | $ 0 | |||||||
Contributions (in shares) | 12 | 0 | |||||||
Redemptions | $ 0 | $ 0 | |||||||
Redemptions (in shares) | 0 | 0 | |||||||
Distributions | $ (2,235,752) | $ (401,296) | |||||||
Net income (loss) | 6,098,876 | 3,114,803 | |||||||
Ending balance at Dec. 31, 2019 | $ 58,269,166 | $ 16,248,246 | |||||||
Ending balance (in shares) at Dec. 31, 2019 | 49,555 | 5,774 | |||||||
Balance at Dec. 31, 2018 | $ 33,093,591 | $ 0 | $ 0 | $ 28,929,857 | $ 91,433,725 | $ 0 | $ 0 | ||
Balance (in shares) at Dec. 31, 2018 | 76,655 | 0 | 0 | ||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Unit compensation | $ 895,000 | 0 | 0 | 0 | 895,000 | $ 0 | $ 0 | ||
Contributions | $ 0 | 0 | 0 | 0 | 38,530,504 | $ 0 | $ 0 | ||
Contributions (in shares) | 0 | 0 | 0 | ||||||
Contributions from non-controlling interests | $ 0 | 0 | 0 | 9,783,372 | 9,783,372 | $ 0 | $ 0 | ||
Conversion of units | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
Redemptions | $ 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 | ||
Redemptions (in shares) | 0 | 0 | 0 | ||||||
Distributions | $ (7,463,714) | 0 | 0 | (13,948,376) | (24,049,138) | $ 0 | $ 0 | ||
Net income (loss) | 29,977,587 | 0 | 0 | 5,706,518 | 44,897,784 | 0 | 0 | ||
Balance at Dec. 31, 2019 | $ 56,502,464 | 0 | 0 | 30,471,371 | 161,491,247 | $ 0 | $ 0 | ||
Balance (in shares) at Dec. 31, 2019 | 76,655 | 0 | 0 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Contributions | $ 0 | $ 0 | |||||||
Contributions (in shares) | 0 | 1,236 | |||||||
Redemptions | $ (13,000,000) | $ 0 | |||||||
Redemptions (in shares) | (1,012) | 0 | |||||||
Distributions | $ (2,521,991) | $ (1,201,947) | |||||||
Net income (loss) | 12,891,275 | 5,546,702 | |||||||
Ending balance at Dec. 31, 2020 | $ 55,638,450 | $ 20,593,001 | |||||||
Ending balance (in shares) at Dec. 31, 2020 | 48,543 | 7,010 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Unit compensation | $ 946,609 | 0 | 0 | 0 | 946,609 | $ 0 | $ 0 | ||
Contributions | $ 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 | ||
Contributions (in shares) | 0 | 0 | 0 | ||||||
Contributions from non-controlling interests | $ 0 | 0 | 0 | 3,882,625 | 3,882,625 | $ 0 | $ 0 | ||
Conversion of units | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
Redemptions | $ 0 | 0 | 0 | 0 | (13,000,000) | $ 0 | $ 0 | ||
Redemptions (in shares) | 0 | 0 | 0 | ||||||
Distributions | $ (14,251,905) | 0 | 0 | (7,834,851) | (25,810,694) | $ 0 | $ 0 | ||
Net income (loss) | 60,655,478 | 0 | 0 | 5,419,972 | 84,513,427 | 0 | 0 | ||
Balance at Dec. 31, 2020 | $ 103,852,646 | 0 | 0 | 31,939,117 | 212,023,214 | $ 0 | $ 0 | ||
Balance (in shares) at Dec. 31, 2020 | 76,655 | 0 | 0 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Contributions | $ 0 | $ 0 | |||||||
Contributions (in shares) | 0 | 0 | |||||||
Redemptions | $ 0 | $ 0 | |||||||
Redemptions (in shares) | 0 | 0 | |||||||
Distributions | $ (3,617,390) | $ (1,274,690) | |||||||
Net income (loss) | (157,451) | (91,043) | |||||||
Ending balance at Jan. 20, 2021 | $ 51,863,609 | $ 19,227,268 | |||||||
Ending balance (in shares) at Jan. 20, 2021 | 48,543 | 7,010 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Unit compensation | $ 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 | ||
Contributions | $ 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 | ||
Contributions (in shares) | 0 | 0 | 0 | ||||||
Contributions from non-controlling interests | $ 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 | ||
Conversion of units | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
Redemptions | $ 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 | ||
Redemptions (in shares) | 0 | 0 | 0 | ||||||
Distributions | $ (18,384,243) | 0 | 0 | (3,476,258) | (26,752,581) | $ 0 | $ 0 | ||
Net income (loss) | (995,588) | 0 | 0 | 210,340 | (1,033,742) | 0 | 0 | ||
Balance at Jan. 20, 2021 | $ 84,472,815 | 0 | 0 | 28,673,199 | 184,236,891 | $ 0 | $ 0 | ||
Balance (in shares) at Jan. 20, 2021 | 76,655 | 0 | 0 | ||||||
Beginning balance at Dec. 31, 2020 | $ 55,638,450 | $ 20,593,001 | |||||||
Beginning balance (in shares) at Dec. 31, 2020 | 48,543 | 7,010 | |||||||
Ending balance at Dec. 31, 2021 | $ 155,219,576 | $ 0 | |||||||
Ending balance (in shares) at Dec. 31, 2021 | 157,143 | 0 | |||||||
Balance at Dec. 31, 2020 | $ 103,852,646 | 0 | 0 | 31,939,117 | 212,023,214 | $ 0 | $ 0 | ||
Balance (in shares) at Dec. 31, 2020 | 76,655 | 0 | 0 | ||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Net income (loss) | 134,593,818 | ||||||||
Balance at Dec. 31, 2021 | $ 0 | 257,963,419 | 118,193,998 | 24,081,070 | 556,383,278 | $ 322,953 | $ 602,262 | ||
Balance (in shares) at Dec. 31, 2021 | 0 | 32,295,329 | 60,226,153 | ||||||
Beginning balance at Jan. 20, 2021 | $ 51,863,609 | $ 19,227,268 | |||||||
Beginning balance (in shares) at Jan. 20, 2021 | 48,543 | 7,010 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Reorganization transactions | $ (19,957,513) | $ (19,227,268) | |||||||
Reorganization transactions (in shares) | (15,400) | (7,010) | |||||||
Issuance of convertible preferred stock, net | $ 148,124,400 | $ 0 | |||||||
Issuance of convertible preferred stock, net (in shares) | 150,000 | 0 | |||||||
Contributions | $ 0 | $ 0 | |||||||
Contributions (in shares) | 0 | 0 | |||||||
Redemptions | $ (25,530,505) | $ 0 | |||||||
Redemptions (in shares) | (26,000) | 0 | |||||||
Distributions | $ 0 | $ 0 | |||||||
Net income (loss) | 719,585 | 0 | |||||||
Ending balance at Dec. 31, 2021 | $ 155,219,576 | $ 0 | |||||||
Ending balance (in shares) at Dec. 31, 2021 | 157,143 | 0 | |||||||
Balance at Jan. 20, 2021 | $ 84,472,815 | 0 | 0 | 28,673,199 | 184,236,891 | $ 0 | $ 0 | ||
Balance (in shares) at Jan. 20, 2021 | 76,655 | 0 | 0 | ||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Reorganization transactions | $ (84,472,815) | 122,842,781 | 0 | 0 | 0 | $ 212,553 | $ 602,262 | ||
Reorganization transactions (in shares) | (76,655) | 21,255,329 | 60,226,153 | ||||||
Issuance of common stock in IPO, net | $ 0 | 129,886,962 | 0 | 0 | 129,997,362 | $ 110,400 | $ 0 | ||
Issuance of common stock in IPO, net (in shares) | 0 | 11,040,000 | 0 | ||||||
Issuance of convertible preferred stock, net | $ 0 | 0 | 0 | 0 | 148,124,400 | $ 0 | $ 0 | ||
Issuance of convertible preferred stock, net (in shares) | 0 | 0 | 0 | ||||||
Unit compensation | $ 0 | 5,233,676 | 0 | 0 | 5,233,676 | $ 0 | $ 0 | ||
Contributions | $ 0 | 0 | 0 | 2,000,000 | 2,000,000 | $ 0 | $ 0 | ||
Contributions (in shares) | 0 | 0 | 0 | ||||||
Contributions from non-controlling interests | $ 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 | ||
Conversion of units | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
Redemptions | $ 0 | 0 | 0 | 0 | (25,530,505) | $ 0 | $ 0 | ||
Redemptions (in shares) | 0 | 0 | 0 | ||||||
Distributions | $ 0 | 0 | (13,000) | (19,843,105) | (19,856,105) | $ 0 | $ 0 | ||
Preferred dividends declared | 0 | 0 | (3,450,000) | 0 | (3,450,000) | 0 | 0 | ||
Net income (loss) | 0 | 0 | 121,656,998 | 13,250,976 | 135,627,559 | 0 | 0 | ||
Balance at Dec. 31, 2021 | $ 0 | $ 257,963,419 | $ 118,193,998 | $ 24,081,070 | $ 556,383,278 | $ 322,953 | $ 602,262 | ||
Balance (in shares) at Dec. 31, 2021 | 0 | 32,295,329 | 60,226,153 |
Consolidated Statements of Cash Flows - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Cash Flows from Operating Activities | |||
Net income | $ 134,593,818 | $ 84,513,427 | $ 44,897,784 |
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities | |||
Depreciation and amortization | 5,938,061 | 3,851,876 | 3,035,451 |
Gain on sale of property and equipment | (87,023) | (117,840) | (28,652) |
Amortization of debt issuance costs | 1,959,943 | 2,090,711 | 2,318,286 |
Extinguishment of unamortized debt issuance costs | 506,466 | 0 | 0 |
Amortization of right-of-use operating lease | 3,786,381 | 3,842,801 | 2,622,569 |
Amortization of right-of-use financing lease | 126,568 | 158,358 | 366,241 |
Stock compensation expense | 5,233,676 | 946,609 | 895,000 |
Income from Paycheck Protection Program | 7,219,794 | 0 | 0 |
Deferred tax benefit | (945,534) | 0 | 0 |
Income from equity method investments, net of distributions received | (3,918,264) | (2,679,894) | (86,242) |
Remeasurement of contingent consideration | 7,532,830 | 1,378,786 | (3,944,030) |
Changes in Operating Assets and Liabilities, net of Effects from Acquisitions | |||
Inventories | (80,195,985) | 23,512,992 | (30,902,010) |
Lot deposits | (134,238,066) | (37,913,129) | (11,216,250) |
Other assets and accounts receivable | (20,421,568) | (22,793,864) | (1,325,489) |
Accounts payable and accrued expenses | 63,360,881 | 6,197,891 | 19,398,115 |
Customer deposits | 78,167,415 | 37,556,519 | 6,792,918 |
Operating lease ROU Assets | (7,418,285) | ||
Operating lease liabilities | 3,907,881 | (3,633,859) | (2,394,942) |
Net cash provided by operating activities | 65,108,989 | 96,911,384 | 30,428,749 |
Cash Flows from Investing Activities | |||
Purchase of property and equipment | (2,774,372) | (2,924,040) | (2,892,130) |
Proceeds from disposal of property and equipment | 508,168 | 241,918 | 91,397 |
Investments in equity method investments | (1,979,813) | (89,767) | (2,717,593) |
Return of investments from equity method investments | 668,139 | 6,578,525 | 704,703 |
Business combinations, net of cash acquired | (519,464,971) | (16,833,369) | (13,006,396) |
Net cash used in investing activities | (523,042,849) | (13,026,733) | (17,820,019) |
Cash Flows from Financing Activities | |||
Proceeds from issuance of common stock in IPO, net | 143,630,400 | 0 | 0 |
Proceeds from issuance of convertible preferred stock, net | 148,500,000 | 0 | 0 |
Proceeds from construction lines of credit | 1,894,574,866 | 713,917,939 | 550,865,562 |
Principal payments on construction lines of credit | (1,424,960,047) | (758,681,883) | (522,926,492) |
Proceeds from notes payable | 2,964,323 | 28,472,680 | 12,696,227 |
Principal payments on notes payable | (25,679,162) | (13,180,967) | (11,454,898) |
Payment of debt issue costs | (7,656,655) | (1,994,858) | (2,264,196) |
Payments of equity issuance costs | (14,008,637) | 0 | 0 |
Payments on financing leases | (127,479) | (153,629) | (375,390) |
Payments on contingent consideration | (1,206,769) | 0 | 0 |
Other financing activities | (9,264) | 0 | 0 |
Contributions from non-controlling interests | 2,000,000 | 3,882,625 | 9,783,371 |
Distributions to non-controlling interests | (23,319,363) | (7,834,849) | (13,948,375) |
Contributions | 0 | 0 | 12,000,000 |
Distributions | (23,289,322) | (17,256,938) | (8,298,586) |
Redemptions | (25,530,506) | (13,000,000) | 0 |
Contribution from conversion of converted LLC units | 123,657,597 | 0 | 0 |
Conversion of LLC units | (123,657,596) | 0 | 0 |
Net cash provided by (used in) financing activities | 645,882,386 | (65,829,880) | 26,077,223 |
Net increase in cash, cash equivalents and restricted cash | 187,948,526 | 18,054,771 | 38,685,953 |
Cash, cash equivalents and restricted cash at beginning of period | 93,373,332 | 75,318,561 | 36,632,608 |
Cash, cash equivalents and restricted cash at end of period | 281,321,858 | 93,373,332 | 75,318,561 |
Supplemental Disclosure of Cash Flow Information | |||
Cash paid for interest, net of amounts capitalized | 672,172 | 900,225 | 299,689 |
Non-cash Financing Activities | |||
Financed land payments to seller | 8,916,211 | 0 | 0 |
Leased assets obtained in exchange for new operating lease liabilities | 8,148,973 | 2,962,682 | 3,234,033 |
Accrued distributions | 3,450,000 | 718,907 | 1,802,177 |
Equity issuance costs incurred | 1,281,565 | 0 | 0 |
Contingent Consideration | 94,572,694 | 16,310,000 | 9,412,768 |
Non-cash Investing Activities | |||
Investment capital reallocation, equity method investment to lot deposit | (3,468,761) | 1,171,112 | 0 |
Total non-cash financing and investing activities | 112,900,682 | 21,162,701 | 14,448,978 |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | |||
Cash and cash equivalents | 227,227,020 | 43,657,779 | 50,597,392 |
Restricted cash | 54,094,838 | 49,715,553 | 24,721,169 |
Cash, cash equivalents and restricted cash at end of period | $ 281,321,858 | $ 93,373,332 | $ 75,318,561 |
Nature of Business and Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business and Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business and Significant Accounting Policies |
Nature of Business
Dream Finders Homes, Inc. (the “Company” or “DFH, Inc.”) was incorporated in the State of Delaware on September 11, 2020. The Company was formed for the purpose of
completing an initial public offering (“IPO”) of its common stock and related transactions in order to carry on the business of Dream Finders Holdings LLC, a Florida limited liability company (“DFH LLC”), as a publicly-traded entity. Pursuant to a
corporate reorganization and completion of its Initial Public Offering (“IPO”) on January 25, 2021, the Company became a holding company for DFH LLC and its subsidiaries.
In connection with the IPO and pursuant to the terms of the Agreement and Plan of Merger by and among DFH, Inc., DFH LLC and DFH Merger Sub LLC, a Delaware limited liability company and direct, wholly owned subsidiary of DFH, Inc., DFH Merger Sub LLC merged with and into DFH LLC with DFH LLC as the surviving entity (the “Merger”). As a result of the Merger, all of the outstanding non-voting common units and Series A Preferred Units of DFH LLC converted into 21,255,329 shares of Class A common stock of DFH, Inc., all of the outstanding common units of DFH LLC converted into 60,226,152 shares of Class B common stock of DFH, Inc. and all of the outstanding Series B Preferred Units and Series C Preferred Units of DFH LLC remained outstanding. We refer to this and certain other related events and transactions, as the “Corporate Reorganization”. The Company successfully completed its IPO of 11,040,000 shares of Class A common stock (which included full exercise of the over-allotment option) at an IPO price of $13.00 per share. Shares of the Company’s Class A common stock began trading on the NASDAQ Global Select Market under the ticker symbol “DFH” on January 21, 2021, and the IPO closed on January 25, 2021. The Company is the sole manager of DFH LLC and owns 100% of the voting membership interest in DFH LLC. The following is a description of the significant accounting policies and practices, which conform to accounting principles generally accepted in the United States of America (U.S. GAAP). Principles of Consolidation
The accompanying consolidated financial statements include the accounts of DFH, its wholly owned subsidiaries and its investments that qualify for consolidation treatment
(see Note 11). As a result of the reorganization transactions in connection with the IPO, for accounting purposes, our historical results included herein present the combined assets, liabilities and results of operations of Dream Finders Homes, Inc.
since the date of its formation and Dream Finders Holdings LLC, a Florida limited liability company (“DFH LLC”) and its direct and indirect subsidiaries prior to the IPO. 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 Consolidated Statements of Comprehensive Income.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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. Significant estimates include the
valuation and impairment of goodwill, impairment of inventories and business combination estimates. Actual results could differ materially from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments, with original maturities of three months or less. Cash and cash equivalents includes
cash proceeds from home closings in-transit from or held by third-party escrow agents for the Company’s benefit, typically for less than five days, which are considered deposits in-transit. At various times throughout the year, the Company may have
cash deposited with financial institutions that exceed the federally insured deposit amount. Management reviews the financial viability of these financial institutions on a periodic basis and does not anticipate nonperformance by the financial
institutions. The Company had $372,726 and $9,676,416
of cash and cash equivalents in interest bearing money market accounts at December 31, 2021 and 2020, respectively.
Restricted Cash
Restricted cash represents funds held in accounts that are restricted for specific purposes. Restricted cash at December 31, 2021, includes $48,597,903 of escrow monies held in the title company, and $5,496,935
of funds related to specific future projects. Restricted cash at December 31, 2020, includes $39,837,702 of escrow monies held in the title
company, and $9,877,851 of funds related to specific future projects.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from
Contracts with Customers (“ASC 606”), which requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. We recognize revenue by following the five-step model: (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv)
allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied.
The Company’s revenues consist primarily of home sales in the United States, which is its principal market. Home sale transactions are made pursuant to contracts under which the Company typically has a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. The Company generally determines the selling price per home based on the expected cost-plus margin. The Company has performed an assessment and its contracts do not contain significant financing terms. Performance obligations are satisfied at the point in time when control of the asset is transferred to the customer, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under home sale contracts, the Company typically receives an initial cash deposit from the homebuyer at the time the sales contract is executed and receives the remaining consideration to which the Company is entitled, through an escrow agent, at closing. In certain contracts, the customer controls the underlying land upon which the home is constructed. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts based on the percentage of completion of the project. Typically, the Company has two types of percentage of completion contracts. The first type is with individual customers for which the Company acts as a general contractor on land owned by the homebuyer. The second is with institutional buyers for which the Company acts as a general contractor on land owned by the institution. Individual customers generally have construction-to-permanent loans that are taken out by the customer. During the underwriting process for our individual customers and institutional customers a draw schedule is agreed upon by the bank, the customer and the Company. Funds are disbursed for labor and materials that have been completed or installed. These both result in a contract asset as work is being completed prior to receiving funds. A contract liability would be recorded in cases where we have received funds in excess of costs incurred. At December 31, 2021 and 2020, the contract asset related to percentage of completion contracts was $21,030,708 and $6,259,567, respectively, and included in other assets on the Consolidated Balance Sheets. At December 31, 2021 and 2020, the contract liability related to percentage of completion contracts was $3,906,312 and $0, respectively, included in accrued expenses on the Consolidated Balance Sheets. Sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. The cost of sales incentives
in the form of free or discounted products or services provided to homebuyers, including option upgrades, are reflected as construction and land costs because such incentives are identified in home sale contracts with homebuyers as an intrinsic part
of the Company’s single performance obligation to deliver and transfer title to the home for the transaction price stated in the contracts.
Revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled.
A large portion of the Company’s contracts with customers and the related performance obligations have an original expected duration of one year or
less.
Refer to Note 13 for a more detailed disaggregation of our revenues by reportable segments.
Other Income and Expense
Other income includes income related to the forgiveness of the Paycheck Protection Program (“PPP”) grant, proceeds from sale of non-core assets and
interest income and management fees we earn for managing certain joint ventures. In general, we earn
to percent of the sales price of homes built by us on behalf of the joint ventures. Other expense consists primarily of expenses related to the sale of
non-core assets and contingent consideration valuation changes associated with earn out agreements with former owners of acquired entities.Inventories
Inventories include the costs of direct land acquisition, land development, construction, capitalized interest, real estate taxes and direct overhead
costs incurred related to land acquisition and development and home construction. Indirect overhead costs are charged to selling, general, and administrative expenses (SG&A) as incurred.
Land and development costs are typically allocated to individual residential lots on a pro rata basis based on the number of lots in the development,
and the costs of residential lots are transferred to construction work in progress when home construction begins. Sold units are expensed on a specific identification basis as cost of contract revenues earned. Cost of contract revenues earned for
homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs allocated to each residential lot.
Inventories are carried at the lower of accumulated cost or net realizable value. 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. No impairments were recognized during the years ended December 31, 2021, 2020 or 2019.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred and betterments
are capitalized. When items of property and equipment are sold or otherwise disposed, the asset and related accumulated depreciation accounts are eliminated and any gain or loss is included in operations.
Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets as follows:
Long-Lived Assets
The Company evaluates the carrying value of its long-lived assets for impairment whenever events or changes in circumstances indicate an impairment
may exist. Recoverability is measured by the expected undiscounted future cash flows of the assets compared to the carrying amount of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the
excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals,
and, if appropriate, current estimated net sales proceeds from pending offers. There were no triggering events or impairments recorded
during the years ended December 31, 2021, 2020 or 2019.
Intangibles Asset, Net of Amortization
The Company has intangible assets that consist of tradenames that are recorded in connection with acquisitions at their fair value based on the
results of valuation analyses. Trademarks acquired in business combinations are generally valued using the relief-from-royalty method, which are Level 3-type measurements. Trademarks with finite lives are amortized over five-year periods.
Goodwill
Goodwill represents the excess of purchase price over the fair value of the assets acquired and the liabilities assumed in a business combination. See
Note 2 for details on recent acquisitions. The Company tests for impairment at least annually as of October 1, but the Company tests for impairment more frequently if a triggering event occurs. This test assesses qualitative factors to determine if
it is more likely than not that the fair value of the reporting units is less than their carrying value. These qualitative factors include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall
performance of the reporting unit and other entity and reporting unit specific events. If the qualitative assessment indicates a stable fair value, no further testing is required. However, if the qualitative assessment indicates that the fair value
of a reporting unit has declined past its carrying value, the Company will then calculate the fair value of the reporting unit based on discounted future cash flows. An impairment loss is recorded if this assessment concludes that the fair value of
the reporting unit is less than its current carrying value. The Company completed its most recent goodwill impairment test on October 1, 2021, and determined that the fair value of all the reporting units was not less than carrying value. No impairment was recognized during the years ended December 31, 2021, 2020 or 2019. In addition, the Company has not recognized any impairment
relating to triggering events that would cause additional impairment testing over goodwill.
Leases
The Company determines if an arrangement is, or contains, a lease at inception. We recognize leases when the contract provides us the right to use an
identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Consolidated Balance Sheets. Finance leases are included in
finance lease ROU assets and finance lease liabilities in the Consolidated Balance Sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to
make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an explicit rate,
management uses the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. An explicit rate is used when readily determinable. The ROU assets also include
any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a
straight-line basis over the lease term. The Company elected the practical expedient to combine lease and nonlease components when accounting for the ROU assets and liabilities for all asset classes. Variable lease costs are expensed as incurred.
Leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets.
Lot Deposits
Lot deposits represent amounts paid by the Company to secure the ability to acquire land for development or home sites through a contract. The Company
enters into contracts with different land sellers to ensure it has property on which to build future homes over a
to four-year timeline. The contracts provide for a due diligence period during which the deposit is refundable, after which time the deposit may be partially
or completely forfeited should the Company decide not to proceed. 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 no deposit forfeitures or impairments recorded as of December 31, 2021, 2020 and 2019, and the Company does not
expect any over the next twelve months.Warranty Reserve
The Company provides a limited warranty for its homes for a period of one year. The Company’s standard warranty requires the Company or its subcontractors to repair or replace defective construction during such warranty period at no cost to the homebuyer. At the time a home is sold,
the Company records an estimate of warranty expense based on historical warranty costs. An analysis of the warranty reserve is performed periodically to ensure the reserve’s adequacy. The warranty reserve is classified on the Consolidated Balance
Sheets as an accrued expense.
Contingent Consideration
In connection with the H&H Constructors of Fayetteville (“H&H”) acquisition in October 2020 (Note 2), the Company recorded contingent
consideration based on estimated pre-tax net income of the acquired entity for the fourth quarter of 2020, fiscal years 2021, 2022, 2023 and the first quarter of 2024. In connection with the McGuyer Homebuilders, Inc. (“MHI”) acquisition in October
2021 (Note 2), the Company recorded contingent consideration based on estimated pre-tax net income of the acquired entity for the fourth quarter of 2021, fiscal years 2022, 2023, 2024 and the first three quarters of 2025. The measurement of
contingent consideration was based on projected cash flows such as revenues, gross margin, overhead expenses and pre-tax income and discounted to present value using the discounted cash flow method. The Company recorded the fair value of the
contingent consideration as a liability on the respective acquisition dates. The estimated earn-out 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. The contingent consideration for each acquisition is scheduled to be paid out in April of each year subsequent to the anniversary of the respective acquisition closing date.
At December 31, 2021 and 2020, the Company remeasured contingent consideration related to the 2019 acquisition of Village Park Homes, LLC (“VPH”) and
adjusted the liability to $7,580,126 and $6,847,524,
respectively, based on revised pre-tax income forecasts as of the balance sheet date. The Company recorded contingent consideration adjustments resulting in $732,602
of expense, $1,378,686 of expense, and $3,944,030
of income for the years ended December 31, 2021, 2020 and 2019, respectively. These adjustments are included in Other expense – Contingent consideration valuation on the Consolidated Statements of Comprehensive Income.
At December 31, 2021 and 2020, the Company remeasured contingent consideration related to the acquisition of H&H and adjusted the liability to $19,739,135 and $16,310,000, respectively, based on revised pre-tax income forecasts as of the balance sheet date. The Company recorded contingent consideration adjustments resulting in $4,635,904 of expense and $0 of expense for the years ended December 31, 2021 and 2020, respectively. These adjustments are included in Other expense – Contingent consideration valuation on the Consolidated Statements of Comprehensive Income. The Company measured contingent consideration related to the acquisition of MHI on October 1, 2021, and recorded a liability in the opening balance sheet of $94,572,694. At December 31, 2021, the Company remeasured contingent consideration related to the acquisition and adjusted the liability to $96,737,018, based on revised pre-tax income forecasts as of the balance sheet date. For the year ended December 31, 2021, the Company recorded Other expense - Contingent consideration valuation for MHI of $2,164,324. Total contingent consideration on the Consolidated Balance Sheets is $124,056,279. The Company’s contingent consideration related to acquisition earn-out payments is based on a percentage of pre-tax net and comprehensive income achieved by the acquired entity and is discounted to present value using risk-adjusted discount rates that reflect current market conditions. The payment of the H&H and MHI earn-out is subject to minimal earnings thresholds, which must be met by H&H and MHI, respectively, before an earn-out payment occurs. 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 income. In April 2021, the Company paid $1,206,769 in contingent consideration to H&H. There were no other payments of contingent consideration for the years ended December 31, 2021, 2020 and 2019. See Note 15 — Fair Value Disclosures for additional discussion on fair value measurement inputs related to contingent consideration. Customer Deposits
Customer deposits are amounts collected from customers in conjunction with the execution of the home sale contract. Customer deposits are applied
against the final settlement due at the home closing. In the event of contract default or termination, the customer deposit generally is forfeited and recognized as revenue.
Debt Issuance Costs and Debt Discounts
Debt issuance costs and debt discounts are amortized to interest expense using the effective interest method over the estimated economic life of the
underlying debt instrument. Portions of this amortization are evaluated for capitalization as inventories and subsequently expensed through cost of sales at the home closing.
Variable Interest Entities
The Company participates in joint ventures that conduct land acquisition, land development and/or other homebuilding activities in various markets
where the Company’s homebuilding operations are located. The Company’s investments in these joint ventures may 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 contracts with third parties and unconsolidated entities for the ability to acquire rights to land for the construction of homes. Under these contracts, the Company typically makes a specified
earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. Consideration paid for these contracts is recorded as lot deposits on the Consolidated Balance Sheets.
Pursuant to Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities, the Company analyzes its joint ventures under the variable interest model to determine if such are required to be consolidated in the Company’s consolidated financial statements. The accounting standard requires a VIE to be consolidated by a company if that company is determined to be the primary
beneficiary. 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 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. See Note 11 for a description of the Company’s joint ventures, including those that were determined to be VIEs, and the related accounting treatment.
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 continually. To make this determination, management considers factors such as whether the
Company should direct finance, determine or limit the scope of the entity, sell or transfer property, direct development or direct other operating decisions.
Joint ventures for which the Company is not identified as the primary beneficiary are accounted for as equity method investments. The Company and its
unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to each party’s respective equity interests. The obligations to make capital
contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents. Partners in these unconsolidated joint ventures are unrelated homebuilders, land developers or other real estate
entities.
For distributions received from these unconsolidated joint ventures, the Company has elected to use the cumulative earnings approach for the
Consolidated Statements of Cash Flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that
amount are treated as returns of investment within investing cash flows.
The Company typically has obtained options to acquire portions of the land held by the unconsolidated joint ventures in which the Company currently
participates. When an unconsolidated joint venture sells land to the Company, the Company defers recognition of its share of such unconsolidated joint venture’s earnings (losses) until the Company recognizes revenues on the corresponding home sale.
At that time, the Company accounts for the earnings (losses) as a reduction (increase) to the cost of purchasing the land from the unconsolidated joint venture.
The Company shares in the earnings (losses) of these unconsolidated joint ventures generally in accordance with its respective equity interests. In
some instances, the Company recognizes earnings (losses) that differ from its equity interest in the unconsolidated joint venture. This typically arises from the Company’s deferral of the unconsolidated joint venture’s earnings (losses) from land
sales to the Company.
Non-Controlling Interests
The equity interests held by others in DFH Leyden LLC, DFH Amelia LLC, DFH Clover LLC, DFH Leyden II LLC, DFH MOF Eagle Landing LLC, DCE DFH JV LLC,
DFH Capitol LLC, DFC Mandarin Estates LLC, DFC East Village LLC, DFC Wilford LLC, DFC Amelia Phase III LLC, DFC Sterling Ranch LLC, DFC Grand Landings LLC and FMR IP, LLC. have been reflected as non-controlling interests in the Consolidated Balance
Sheets. Income attributable to these non-controlling interests are presented in the Consolidated Statements of Comprehensive Income as net income attributable to non-controlling interests.
Income Taxes
We are a corporation subject to income taxes in the United States. Our proportional share of the Company’s subsidiaries’ provisions are included in
our consolidated financial statements. Our deferred income tax assets and liabilities are computed for differences between the asset and liability method and financial statement amounts that will result in taxable or deductible amounts in the future.
We compute deferred balances based on enacted tax laws and applicable rates for the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized for deferred tax assets if it is more likely than not that
some portion or all of the net deferred tax assets will not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future
taxable income, tax-planning strategies and results of recent operations. If we determine we would be able to realize our deferred tax assets for which a valuation allowance had been recorded, then we would adjust the deferred tax asset valuation
allowance, which would reduce our provision for income taxes. We evaluate the tax positions taken on income tax returns that remain open and positions expected to be taken on the current year tax returns to identify uncertain tax positions.
Unrecognized tax benefits on uncertain tax positions are recorded on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the
position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is more than 50 percent likely to be realized is recognized. Interest and penalties related to unrecognized tax
benefits are recorded in income tax benefit. See Note 14. Income Taxes.
Advertising
The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2021, 2020 and 2019 was $7,098,015, $6,247,583 and $5,291,652, respectively.
Equity-Based Compensation
Certain individuals on our executive-level management team are eligible for equity-based compensation, which is awarded according to the terms of
individual contracts with those managers. The Company records compensation cost for units awarded to employees in return for employee service. The cost is measured at the grant-date fair value of the award and
recognized as compensation expense over the employee service period, which is normally the vesting period. The Company estimates that there are no forfeitures. In the event of forfeitures, the compensation expense recognized would be adjusted.
Change in Accounting Principle – Cash and cash equivalents
On December 31, 2021, the Company elected to change its accounting policy for presentation of cash proceeds from home closings that are in-transit from or held within title company escrow
accounts for the benefit of the Company. Under the new principle, cash proceeds in-transit from or held by third-party escrow agents for its benefit, typically for less than five days, are included in cash and cash equivalents, whereas
previously, they were considered accounts receivable and included in other assets. This reclassification for cash proceeds from home closings in-transit from or held in escrow represents a change in accounting principle which the Company believes
to be preferable because it is a more accurate reflection of its liquidity at period end and the predominant method used in our industry. This change in accounting principle has been applied retrospectively, and the Consolidated Balance Sheets as
well as Consolidated Statements of Cash Flows reflect the effect of this accounting principle change in all years presented. This reclassification had no impact on the Consolidated Statements of Comprehensive Income or Consolidated Statements of
Mezzanine Equity, Members’ Equity and Stockholders’ Equity. The following financial statement line items for fiscal years 2019, 2020 and 2021 were affected by the change in accounting principle:
Certain Reclassifications
Certain reclassifications have been made in the 2019 and 2020 Consolidated Financial Statements to conform to the classifications used in 2021.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides practical expedients and exceptions for applying GAAP
when modifying contracts and hedging relationships that use LIBOR as a reference rate. In addition, these amendments are not applicable to contract modifications made and hedging relationship entered into or evaluated after December 31, 2022. We do
not anticipate a material increase in interest rates from our creditors as a result of the shift away from LIBOR as a reference rate, and we are currently evaluating the impact of the shift and this guidance on our financial statements and
disclosures.
|
Business Acquisitions |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions |
H&H
On October 5, 2020, the Company acquired 100% of the issued and outstanding membership interests in H&H, an operative
homebuilder, for a purchase price of $44,096,448, net of $1,710,275
in purchase price reduction related to customary closing adjustments. To fund the acquisition, the Company obtained a $20,000,000 bridge loan from Boston Omaha Corporation, LLC, with an interest rate of 14% per annum maturing on May 1, 2021, paid cash of $9,496,723 and agreed to pay contingent consideration in the
amount of $16,310,000 if H&H
met certain financial metrics.
The acquisition was accounted for as a business combination under FASB ASC Topic 805, Business Combinations (“Topic
805”) under the acquisition method, and the acquisition has been included in the Company’s consolidated results of operations since the date of acquisition. We recorded an allocation of the purchase price to H&H tangible assets and
identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of October 1, 2020. The amounts for intangible assets were supported by third-party valuations performed. Goodwill was recorded as the
residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired. Goodwill consists largely of synergies and economies of scale from H&H’s operating footprint, which includes owned properties,
increased future revenue and earnings from organic growth, new business opportunities and strategic initiatives, none of which qualify as separately identifiable intangible assets. Transaction costs were not material and were expensed as
incurred.
The final purchase price allocation is as follows:
Century Homes
On January 31, 2021, the Company completed the acquisition of Century Homes Florida, LLC (“Century Homes”). from Tavistock Development Company for a total purchase price of $35,584,376. The acquisition was accounted for as a business combination under Topic 805. We recorded an allocation of the purchase price to Century Homes tangible assets
acquired and liabilities assumed based on their estimated fair values as of January 31, 2021. There were no identifiable intangible
assets. Goodwill was recorded as the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired and is expected to be fully deductible for tax purposes. Goodwill consists primarily of expected
synergies of combining operations, the acquired workforce, and growth opportunities, none of which qualify as separately identifiable intangible assets. As of January 31, 2022, the Company has completed its allocation of the purchase price and no
measurement period adjustments were identified.
The purchase price allocation as of December 31, 2021 is as follows:
MHI
On October 1, 2021, we completed the acquisition of certain assets, rights and properties, and assumed certain
liabilities of privately held Texas homebuilder McGuyer Homebuilders, Inc. and related affiliates (“MHI”), including: (i) single-family residential home-building; (ii) owning model homes; (iii) acquisition, ownership and licensing of intellectual
property (including architectural plans); (iv) purchasing and reselling homebuilding supplies; (v) development, construction and sale of condominium units in Austin, Texas; (vi) mortgage origination through a mortgage company; and (vii) title
insurance, escrow and closing services through a title company. The acquisition allows the Company to expand its existing footprint in the Texas market.
Total cash paid at closing of approximately $471,000,000 included $463,004,096 in purchase price based on
preliminary value of purchased net assets and a 10% deposit on a separate land bank facility. On December 3, 2021, the Company paid an
additional $25,173,742 in cash for customary post-closing adjustments based on final value of the net assets acquired as of September 30,
2021. Additionally, the Company agreed to the future payment of additional consideration of up to 25% of pre-tax net income for up to five periods, the last of which ends 48
months after the closing subject to certain minimum pre-tax income thresholds and certain overhead expenses, estimated at approximately $94,472,694
as of the acquisition date.
The total purchase price is as follows:
The Company used $20,000,000 of cash on hand and proceeds from the sale of the Convertible Preferred Stock and from unsecured debt
incurred under the Credit Agreement, to fund the MHI acquisition. On October 1, 2021, the Company borrowed approximately $300,000,000
million under the Credit Agreement and paid off MHI’s vertical lines of credit in connection with the closing of the acquisition (See Note 4).
The
acquisition was accounted for as a business combination under Topic 805. We recorded an allocation of the purchase price to MHI tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as
of October 1, 2021. The amounts for intangible assets were based on third-party valuations performed. Goodwill was recorded as the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired and is
expected to be fully deductible for tax purposes. Goodwill consists primarily of expected synergies of combining operations, the acquired workforce, and growth opportunities, none of which qualify as separately identifiable intangible assets. As
of December 31, 2021, the Company has substantially completed its allocation of the purchase price. The principal open items relate to the valuation of certain contingencies as management is awaiting additional information to complete its
assessment. Estimates have been recorded as of the acquisition date and updates to these estimates may increase or decrease goodwill.
Pursuant to Topic 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods. Rather, we will recognize any provisional adjustments during the reporting period in
which the adjustments are determined. We will also be required to record, in the same period’s financial statements, the effect on earnings, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been
completed at the acquisition date. We expect to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.
The purchase price allocation as of
December 31, 2021, is as follows:
The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes
only and have been presented as if the H&H, Century Homes and MHI acquisitions had occurred on January 1, 2020. This unaudited pro forma information should not be relied upon as being indicative of the historical results that would have been
obtained if the acquisition had occurred on that date, nor of the results that may be obtained in the future.
|
Property and Equipment |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
Property and equipment consisted of the following as of December 31, 2021 and 2020:
Depreciation expense was $3,720,011, $3,851,876 and $3,035,451 for the years
ended December 31, 2021, 2020 and 2019, respectively.
|
Construction Lines of Credit |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 | |||
Construction Lines of Credit [Abstract] | |||
Construction Lines of Credit |
On January 25, 2021, the Company entered into a $450,000,000 syndicated senior, unsecured credit facility with Bank of America, N.A. (the “Credit Agreement”), and subsequently repaid $340,000,000 in outstanding debt, including the $20,000,000 bridge loan with Boston Omaha Corporation,
LLC, and terminated all then-existing construction lines of credit. Under the Credit Agreement, the Company has the option to enter into Base Rate or LIBOR Rate contracts. The interest is payable based on the contract terms and is variable dependent
on the Company’s debt to capitalization ratio, and applicable interest rates in the market (LIBOR Rate, Prime Rate, etc.).
On September 8, 2021, the Company entered into a First Amendment and Commitment Increase Agreement (the “Amendment”) to its Credit
Agreement. The Company exercised its right, and the Amendment provides, for an increase in the aggregate commitments under the Credit Agreement of up to $300,000,000.
The aggregate commitments increase amounted to $292,500,000, and the total availability under the Credit Agreement reached $742,500,000. Three new lenders were added
as additional lenders under the Credit Agreement. As amended by the Amendment, the Credit Agreement includes provisions for any existing lender to, at the Company’s request, increase its revolving commitment under the Credit Agreement, add new
revolving loan tranches under the Credit Agreement or add new term loan tranches under the Credit Agreement, in all cases not to exceed an aggregate of $1,050,000,000.
In addition, the Amendment clarified and modified certain definitions and covenants as more fully set forth therein, including modifications of certain financial covenants to facilitate the consummation of the MHI acquisition (Note 2). On September
29, 2021, in connection with the closing of the MHI acquisition, the Company exercised its right to further increase the aggregate commitments under the Credit Agreement to $817,500,000 and one lender was added as an additional lender under
the Credit Agreement. Certain of the Company’s subsidiaries guaranteed the Company’s obligations under the Credit Agreement. The Credit Agreement will mature on January 25, 2024.
As of December 31, 2021, the outstanding balance under the Credit Agreement was $760,000,000 and the effective interest rate was 3.75%. As of
December 31, 2020, the Company had 34 lines of credit with cumulative maximum availability of $762,979,000, and an aggregate outstanding balance of $289,878,716.
During 2020, the effective interest rates for these lines of credit ranged from 3.81% to 10.33%.
Our indebtedness as of December 31, 2020, was fully collateralized by homes under construction and, to a much smaller extent,
finished lots. Under the Credit Agreement, the funds available are unsecured and availability is calculated based on work-in-progress inventory value on the Company’s Balance Sheets.
The outstanding lines of credit were paid in full during 2021 (in connection with the Company entering into the Credit Agreement),
are no longer active and the Company does not intend to renew these facilities. The outstanding balance in the lines of credit were payable upon the delivery of the collateralized individual homes to end-home buyers.
The Company capitalized $7,505,214
and $2,249,683 as of December 31, 2021 and 2020, respectively, and amortized $ 1,959,943 and $2,090,711 of debt issuance costs for the years ended
December 31, 2021 and 2020, respectively. As of December 31, 2021, the Company extinguished unamortized debt issuance costs of $506,466.
Debt issuance costs related to the Company’s lines of credit and notes payable were $5,545,271 and $506,466 as of December 31, 2021 and 2020, respectively, included in other assets on the Consolidated Balance Sheets.
The Credit Agreement contains restrictive covenants and financial covenants. The Company was in compliance with all debt covenants
as of December 31, 2021 and 2020. The Company expects to remain in compliance with all debt covenants over the next twelve months.
|
Notes Payable |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable |
Notes payable consisted of the following as of December 31, 2021 and 2020:
Included within notes payable as of December 31, 2020 is a $20,000,000 bridge loan from Boston Omaha Corporation, LLC, which was utilized to fund a portion of the purchase price of the H&H Homes acquisition (Note 2). This note was
paid off subsequent to the execution of the Credit Agreement in January 2021 (Note 3).
The principal balance on all notes payable is payable upon the sale of project specific collateral, and is collateralized by a real estate mortgage
and a limited guarantee ensuring project completeness and the nonexistence of fraudulent acts.
Contractual maturities of notes payable as of December 31, 2021, are as follows:
During the year ended December 31, 2021, there were no material changes in the contractual maturities of our remaining notes payable.
|
Inventories |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 inventories – finished lots and land. 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 both homes to be sold and speculative homes. CIP includes the cost of the finished lot as well as all of the direct costs incurred to build the home. The cost of the home is
expensed on a specific identification basis.
As mentioned in Note 11, the Company consolidated several joint ventures that own land and finished lots. The Company owns a
percentage of these joint ventures, but does not own the underlying assets. The table below shows the Company’s owned real estate inventory and real estate inventory owned by the joint ventures:
Interest is capitalized and included within each inventory category above. Capitalized interest activity is summarized in the table below for the
years ended December 31, 2021 and 2020:
|
Warranty Reserves |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Reserves |
The Company establishes warranty reserves to provide for estimated future expenses as a result of construction and product defects, product recalls
and litigation incidental to its homebuilding business. Estimates are determined based on management’s judgment considering factors such as historical spend and the most likely current cost of corrective action.
The table below presents the activity related to warranty reserves, which are included in accrued expenses in the accompanying Consolidated Balance Sheets:
|
Commitments and Contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
The
Company is currently involved in the appeals phase of
civil litigation related to defective products provided by Weyerhaeuser NR Company (“Weyerhaeuser”) (NYSE: WY), one of our lumber suppliers. Our Colorado division builds a number of floor plans that include basements using specialized fir lumber.
On July 18, 2017, Weyerhaeuser issued a press release indicating a recall and potential solution for TJI Joists with Flak Jacket Protection manufactured after December 1, 2016. The press release indicated the TJI Joists used a Flak Jacket coating
that included a formaldehyde-based resin that could be harmful to consumers and produced an odor in certain newly constructed homes. We had 38
homes impacted by the harmful and odorous Flak Jacket coating and incurred significant costs directly related to Weyerhaeuser’s defective TJI Joists. Accordingly, we sought remediation and damages from Weyerhaeuser. The press release by
Weyerhaeuser had a pronounced impact on our sales and cancellation rates in Colorado. We filed suit on December 27, 2017—Dream Finders Homes LLC and DFH Mandarin, LLC v. Weyerhaeuser NR Company, No. 17CV34801 (District Court, City and County of
Denver, State of Colorado)—and included claims against Weyerhaeuser for manufacturer’s liability based on negligence, negligent misrepresentation causing financial loss in a business transaction and fraudulent concealment. Weyerhaeuser asserted a
counterclaim asserting an equitable claim for unjust enrichment. After completion of a jury trial on November 18, 2019, the District Court issued a verdict in our favor on our claims, awarding Dream Finders Homes LLC $3,000,000 in damages and DFH Mandarin, LLC $11,650,000
in damages. On February 21, 2020, the District Court dismissed Weyerhaeuser’s counterclaim. Weyerhaeuser appealed the Colorado District Court’s jury verdict and on December 2, 2021, the Colorado Court of Appeals reversed the judgment entered
against Weyerhaeuser for negligence, negligent misrepresentation and fraudulent concealment. As a result, Dream Finders Homes LLC and DFH Mandarin, LLC filed a petition for writ of certiorari to the Colorado Supreme Court on January 13, 2022 to
appeal the Colorado Court of Appeals ruling —Dream Finders Homes LLC and DFH Mandarin, LLC v. Weyerhaeuser NR Company, Case No. 2022SC24 (Colorado Supreme Court)—and that appeal is currently pending. We are awaiting the Colorado Supreme Court’s
decision on whether it will grant our petition for writ of certiorari. We have incurred all costs to date related to the Weyerhaeuser matter and have recognized no gain on the damages awarded to us by the District Court.
In April 2020, the Company received proceeds
from the PPP grant in the amount $7,219,794, which is classified in accrued expenses on the Consolidated Balance Sheets and accounted for
as an in-substance grant. The Company utilized all of the PPP proceeds to pay payroll and permissible operating expenses. On June 16, 2021, approximately the total amount of the PPP proceeds were forgiven by the Small Business Association (“SBA”).
As such, the Company has included the PPP proceeds as other income on the Consolidated Statements of Comprehensive Income for the year ended December 31, 2021.
Leases
The Company has operating leases primarily associated with office space that is used by divisions outside of the Jacksonville area,
model home sale-leasebacks and a corporate office building sale-leaseback. This corporate office building lease has a remaining lease term of 12
years. The Company also has finance leases for corporate office furniture.
Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for
these leases on a straight-line basis over the lease term. Lease and nonlease components for new and reassessed leases are combined. There are no significant operating or finance leases that have not yet commenced as of December 31, 2021. Most leases
include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at the Company’s sole discretion. The Company only includes these renewal options in its lease terms if they are
reasonably certain to be exercised.
Finance lease assets are recorded net of accumulated amortization of $333,407 and $919,552 as of December 31, 2021 and 2020, respectively.
Model Home Sale-Leaseback
On May 30, 2019, the Company sold 11
completed Model Homes for $4,417,674. The Company simultaneously entered into 11 individual lease agreements. The Company is responsible for paying the operating expenses associated with the homes while under lease. The Company is also responsible for preparing and
actively marketing the homes for sale. The Company recorded a gain related to this transaction in the amount of $321,128.
On December 27, 2019, the Company sold 20
completed Model Homes for $9,240,680. The Company simultaneously entered into 17 individual lease agreements. The Company is responsible for paying the operating expenses associated with the homes while under lease. The Company is also responsible for preparing and
actively marketing the homes for sale. The Company recorded a gain related to this transaction in the amount of $1,928,671.
The following table shows the maturities of our lease liabilities as of December 31, 2021:
During the year ended December 31, 2021, there have been no material changes in our lease liabilities for the next five years.
|
Mezzanine Equity, Members' Equity and Stockholders' Equity |
12 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||
Mezzanine Equity, Members' Equity and Stockholders' Equity [Abstract] | ||||||||||||||||||
Members' Equity, Mezzanine Equity and Stockholders' Equity |
All of the Company’s outstanding preferred units are classified in mezzanine equity as they can be redeemed in a deemed liquidation of the Company outside of the
Company’s control. Additionally, prior to the Corporate Reorganization, the Company had certain non-voting common units that could have been redeemed outside the Company’s control, and therefore, were classified in mezzanine equity (the “Redeemable
Common Units Mezzanine”). In April 2020, the
Company redeemed 1,000 Series C Preferred Units for $1,000,000 plus accrued unpaid preferred distributions of $62,500.
Pursuant to the Corporate Reorganization effective January 25, 2021, the Company is authorized to issue 350,000,000 shares of common stock, par value of $0.01 per share,
consisting of 289,000,000 shares of Class A common stock and 61,000,000 shares of Class B common stock. The Board of Directors of the Company (the “Board of Directors”) has the authority to issue one or more series of preferred stock, par value $0.01 per share, without
stockholder approval.
As a result of the Corporate Reorganization, all of the outstanding non-voting common units and Series A Preferred Units of DFH LLC converted into 21,255,329 shares of the Company’s Class A common stock and all of the outstanding common units of DFH LLC converted into 60,226,153 shares of the Company’s Class B common stock. On
January 27, 2021, the Company redeemed
all of the outstanding Series C Preferred Units for $26,000,000, including $500,000 of discounted costs, plus accrued unpaid preferred distributions of $200,000.
Following the Corporate Reorganization, the Company owns all of the voting membership interest of DFH LLC.
Redeemable Series B Preferred Units of DFH LLC
As of December 31, 2021 and 2020, the Company had 7,143 and 7,143, respectively, of Redeemable Series B Preferred Units (“Series B
Preferred Units”) issued and outstanding with a carrying value of $7,095,178 and $6,333,036, respectively. In the event of a liquidation, dissolution or winding up of DFH LLC, the Series B Preferred Units have a liquidation preference of $1,000 per unit and are senior to common units. The Series B Preferred Units have an 8% annual cumulative preferred distribution on the
liquidation preference that is payable if and when distributions are declared. The Series B Preferred units do not participate in discretionary distributions, and each unit has the right to one vote on any matter presented for a vote of the members of DFH LLC. As of December 31, 2021 and 2020, these units have an aggregate unpaid amount of
cumulative preferred distributions of $2,864,834 and $2,102,692,
respectively, which is $401.07 and $294.37, respectively, per unit.
The Series B Preferred Units can be redeemed at
DFH LLC’s option for $1,000 per unit
plus any accrued and unpaid preferred distributions per unit at any time prior to December 31, 2022. The units may also be redeemed at the option of the holder upon a sale of DFH LLC for $1,000 per unit plus any accrued and unpaid preferred distributions. As the units are not currently
probable of becoming redeemable outside the Company’s control, no accretion has been recorded.
Series A Convertible
Preferred Stock of the Company
On September 29, 2021, the Company filed a
Certificate of Designations with the State of Delaware establishing 150,000 shares of Series A Convertible Preferred Stock with an
initial liquidation preference of $1,000 per share and a par value $0.01 per share (the “Convertible Preferred Stock”) and sold 150,000 shares of
Convertible Preferred Stock for an aggregate purchase price of $150,000,000. The Company used the proceeds from the sale of the
Convertible Preferred Stock to fund a portion of the MHI acquisition (See Note 2).
Pursuant to the Certificate of Designations, the
Convertible Preferred Stock ranks senior to the Company’s Class A and B common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Upon a liquidation, dissolution or winding up of the Company, each share of
Convertible Preferred Stock will be entitled to receive the initial liquidation preference of $1,000 per share, subject to adjustment, plus
all accrued and unpaid dividends thereon. In addition, the Convertible Preferred Stock has the following terms:
Pursuant to the terms of
the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained as contemplated by Nasdaq listing rules, no shares of Class A common stock will be issued or delivered upon conversion of any Convertible Preferred
Stock to the extent that such issuance would (i) result in the holder beneficially owning in excess of 19.99% of the outstanding Class A
common stock as of the date of the Certificate of Designations or (ii) exceed 19.99% of the outstanding shares of Class A and Class B
common stock combined as of the date of the Certificate of Designations.
In addition, in
connection with the sale of the Convertible Preferred Stock, on September 29, 2021, the Company and the Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company
granted the Purchasers certain registration rights. Under the Registration Rights Agreement, the Company is required to register the Convertible Preferred Stock owned by the Purchasers and the shares of Class A common stock issuable upon conversion
of such shares equal to 19.99% of the outstanding shares of Class A common stock for resale within the earlier of (i) three business days after the filing of the Company’s Form 10-K for the fiscal year ended December 31, 2021 and (ii) six months after September 29, 2021. If the Company fails to comply with its registration requirements under the Registration Rights Agreement, the
Purchasers, in addition to any regular dividends, will be entitled to an additional 2% per annum dividend for an additional quarter
period on the Convertible Preferred Stock if the breach is cured within 30 days and for each additional 30 day period in which the Company fails to cure such breach, each Purchaser will be entitled to an additional 2% per annum for an additional quarter period until cured. In addition, the Purchaser has rights to demand the registration of the Convertible Preferred Stock and the shares
of Class A common stock in certain instances.
|
Equity-Based Compensation |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation |
Dream Finders Homes, Inc.
On January 20, 2021, the Board of Directors approved and adopted the
DFH, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan is administered by the Compensation Committee of the Board of Directors, and authorizes the Company to grant incentive stock-based awards. The Company granted 759,709 restricted stock grants to certain executives and directors, which had a weighted-average grant date fair value of $23.15 per share, in conjunction with the adoption of the 2021 Plan. These stock grants vest over a period of three years of continuous service, commencing on the date of the grant and vesting ratably in
increments at the end of each year of a three-year term. The fair value of these grants was derived by using the closing stock price on the date of the grant. Expense related to equity-based compensation
under the 2021 Plan was $5,233,676 and $0
for the year ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the total unrecognized compensation expense under the 2021 Plan was $16,690,354 and $0, respectively. The unrecognized compensation expense will be recognized over a
weighted-average period of 2.0 years.The Company’s restricted
stock awards as of December 31, 2021 and changes during the year then ended are presented below:
Dream Finders
Holdings LLC
As of December 31, 2020, the Company had 3,532 non-vested, non-voting units issued to employees, valued at $4,741,657, which converted into shares of the Company’s Class A common stock on January 21, 2021. As a result, the Company expensed the remaining unrecognized stock compensation expense associated with these units in the amount of $1,240,309 for the year ended December 31, 2021. Expense related to equity-based compensation for these units was $697,054 for the year ended December 31, 2020. There were no outstanding non-vested, non-voting units at December 31, 2021. |
Variable Interest Entities and Investments in Other Entities |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities and Investments in Other Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities and Investments in Other 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 an unconsolidated variable interest entity (“VIE”), Jet LLC, where the primary activities include underwriting, originating and selling home mortgages. The aforementioned investments together
with Jet LLC, comprise the Company’s VIEs. The VIEs are funded by initial capital contributions from the Company, as well as its other partners and generally do not have significant debt. 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.
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. Management
analyzed 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 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 joint venture 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.
The assets of a VIE can only be used to satisfy the obligations of that specific VIE, even for assets that are included within the Consolidated Balance Sheets. The Company
and its partners do not have an obligation to make capital contributions to the VIEs and there are no liquidity arrangements or other agreements that could require the Company to provide financial support to the VIEs. Furthermore, the creditors of
the VIEs have no recourse to the Company’s general credit.
Consolidated VIEs
For VIEs that the Company does consolidate, management has the power to direct the activities that most significantly impact the VIE’s 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. There were no new consolidated VIEs during the years ended December 31, 2021, 2020 or 2019.
The table below displays the carrying amounts of the assets and liabilities related to the consolidated VIEs:
Unconsolidated VIEs
For VIEs that the Company does not consolidate, the power to direct the activities that most significantly impact the VIE’s economic performance is held by a third party.
These entities are accounted for as equity method investments and, other than Jet Home Loans, are not individually significant. The amount of retained earnings that represents undistributed earnings of 50-percent-or-less-owned entities accounted for
by the equity method was $9,972,266 and $2,966,644
as of December 31, 2021 and 2020, respectively. There were no significant entities that were deconsolidated during the years ended December 31, 2021 or 2020. The Company’s maximum exposure to loss is limited to its investment in the entities because
the Company is not obligated to provide any additional capital to or guarantee any of the unconsolidated VIEs’ debt.
The table below shows the Company’s investment in the unconsolidated VIEs:
Lot Option Contracts
The Company generally does not engage in the land development business. Instead, we employ 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. 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 market prices from various land sellers and land bank partners, by paying deposits based on the aggregate purchase price of the finished lots (typically 10% or less in the case of finished lot option contracts and 15%
or less in the case of land bank option contracts). 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, any related fees paid to the land bank partner.
None of the creditors of any of the land bank entities with which we enter into lot option contracts have recourse to our general credit. We generally do 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. We are not involved in the design or creation of the land bank entities from which we purchase 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. We have 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, we do 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 banker’s 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 we enter into lot option contracts are evaluated for possible consolidation by the Company. We believe 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. The operating development activities are managed by the land bank entity’s equity investors.
We possess no more than limited protective legal rights through the lot option contracts in the specific finished lots that we are purchasing, and we possess no participative rights in the land bank entities. Accordingly, we do 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 total risk of loss related to finished lot option and land bank option contracts was $274,868,933
and $70,130,710 as of December 31, 2021 and 2020, respectively.
|
Asset Purchase of Joint Venture Interests |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 | |||
Asset Purchase of Joint Venture Interests [Abstract] | |||
Asset Purchase of Joint Venture Interests |
In
December 2018, the Company purchased the membership interests of its joint venture partner in PSJ JV Owner LLC, HM7 JV Owner LLC and ANT JV Owner LLC. After the transaction, the Company owned 100% of these companies, and received all income, expenses and margin. Since all of the identified assets in these companies were their land assets and no systems, people or
processes were acquired, the transactions were accounted for as an asset purchase. The combined purchase price of these entities was $27,532,174,
net of the Company’s outstanding equity investment in joint ventures, which was paid to the former owner in January 2019. As such, for the year ended December 31, 2019, there is a cash outflow from operating activities of $27,532,174 included within the accounts payable and accrued expenses line item in the Consolidated Statements of Cash Flows.
|
Segment Reporting |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting |
The Company operates in the homebuilding business and is organized and reported by division. There are twelve operating segments and eight reportable segments: (i) Jacksonville,
(ii) Colorado, (iii) Orlando, (iv) Washington DC (“DC Metro”), (v) the Carolinas, (vi) Texas, (vii) Jet Home Loans LLC (“Jet”), the Company’s mortgage operations, and (viii) Other. The Company includes Century Homes operations acquired within the
Orlando segment and the MHI operations comprises the Texas segment. The revenues of each remaining operating segment are not material and are therefore combined into an “Other” category for the purposes of segment reporting. The corporate component
of the Company’s operations, which is not considered an operating segment, is also included in the “Other” category.
In accordance with ASC Topic 280, Segment Reporting, operating segments are defined as components of an enterprise for which separate financial information is available
that is evaluated regularly by the chief operating decision-makers (“CODMs”) in deciding how to allocate resources and in assessing performance. The Company’s CODM primarily evaluates performance based on the number of homes closed, average sales
price and financial results. Segment profitability is primarily measured by income before taxes.
The Company’s homebuilding operations employ an asset-light business model with a focus on the design, construction and sale of single-family entry-level and first-time
move-up homes.
On October 1, 2020, an unrelated party, FBC Mortgage, Inc., an Orlando-based mortgage lender, purchased Prime Lending Corp.’s membership interest in Jet for book value.
The Company’s mortgage operations are conducted through Jet, which is a licensed home mortgage broker that underwrites, originates and sells mortgages to FBC Mortgage LLC. The Company owns 49.9% of Jet, and FBC Mortgage, LLC owns the remaining 50.1%. Jet is accounted
for as an equity method investment.
Summarized financial information relating to the Company’s reportable segments is shown in the following tables. Operational results of each reportable segment are not
necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.
The following tables summarize home sale revenues and net and comprehensive income by segment for the years ended December 31, 2021, 2020 and 2019
as well as total assets and goodwill by segment as of December 31, 2021 and 2020:
|
Income Taxes |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
As a result of the IPO and the Corporate Reorganization completed in January 2021, we own all of the Common Units of DFH LLC, which is treated as a
partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, DFH LLC is generally not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by DFH LLC
is passed through to and included in the taxable income or loss of its member, Dream Finders Homes, Inc., in accordance with the terms of the Operating Agreement. The Company is a corporation subject to U.S. federal income taxes, in addition to
state and local income taxes, based on our share of DFH LLC’s pass-through taxable income. As of the 2021 tax year, the Company will file a consolidated U.S. federal corporate income tax return, as well as state and local tax returns in all
jurisdictions where it maintains operations. As the Company became subject to tax as a corporation in 2021, no provision for federal or state income taxes was made prior to 2021 and therefore, there are no comparative balances relating to
corporate income taxes for the 2020 or 2019 periods herein.
Income tax expense for the year ended December 31, 2021 consists of the following:
The following table reconciles the statutory federal income tax rate to the effective income tax rate:
The significant components of deferred income tax assets and liabilities as of December 31, 2021 consist of the following:
Deferred tax assets arise principally as a result of various accruals required for financial reporting purposes which are not
currently deductible for tax return purposes. Management believes that we will have sufficient future taxable income to make it more likely than not that the net deferred tax assets will be realized. As of December 31, 2021, the Company had no valuation allowance recorded against deferred tax assets. the Company did not exist at such time and DFH LLC was treated as a partnership
generally not subject to U.S. federal and most applicable state and local income taxes.
As of December 31, 2021and 2020, we have no uncertain tax positions that qualify for inclusion in our consolidated financial statements.
|
Fair Value Disclosures |
12 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||
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 using. 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:
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 and construction lines of credit, approximate their carrying amounts due to the short-term nature of these instruments.
|
Related Party Transactions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 | |||
Related Party Transactions [Abstract] | |||
Related Party Transactions |
During the years ended December 31, 2021, 2020 and 2019, the Company entered into or participated in related party transactions. The majority of these transactions were
entered into to secure finished lots for homebuilding. In addition, the Company has built and sold homes for employees and members of their immediate families.
Consolidated Joint Ventures
The Company has entered into joint venture arrangements to acquire land, finished lots and build homes. Certain members of the Company, directors and members of
management, have invested in these joint ventures and some are limited partners in these joint ventures DFH Investors LLC (which owned 15,400
Series A Preferred Units, representing 11.65% of the membership interest in DFH LLC, prior to the Corporate Reorganization) is the
managing member of certain of these joint ventures. The joint ventures are consolidated for accounting purposes. Details of each are included in Note 1.
DF Residential I, LP
DF Residential I, LP (Fund I) is a real estate investment vehicle, organized for the purpose of acquiring and developing finished lots. 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 Capital Management, LLC (“DF Capital”) is the investment manager in Fund I. The Company owns a 49% membership interest in DF Capital. DF Capital is controlled by unaffiliated parties. Certain directors and executive officers have made investments in Fund I as limited partners. In addition, certain members of
management have made investments in Fund I. The total committed capital in Fund I was $36,706,163 as of December 31, 2021 and 2020.
Collectively, the Company’s directors, executive officers and members of management have invested $8,725,000 or 23.77% of the total committed capital of Fund I as of December 31, 2021 and 2020.
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 25.81% membership interest. Certain members of DFH Investors LLC, including one of the Company’s directors, have a 65.33% membership interest. Collectively, Dream Finders Homes LLC and DFH Investors LLC have invested $1,400,000 in Fund I as of December 31, 2021 and 2020. This investment represents 3.81%
of the total committed Capital in Fund I of $36,706,163.
DF Residential II, LP
DF Residential II, LP, a Delaware limited partnership (“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 $322,090,000 and was fully committed as of January 2022. DF Capital is the investment manager of Fund II.
The Company indirectly owns 72% of the membership interests in the General Partner and receives 72% of the economic interests. The General Partner is controlled by unaffiliated parties. The
Company’s investment commitment in Fund II is $3,000,000 or 0.9% of the total expected capital commitment of Fund II of $322,090,000.
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 up to $20,000,000 that meet its investment criteria and are undertaken by the Company during Fund II’s
investment period.
Certain directors, executive officers and other officers have made investment commitments as
limited partners in Fund II in an aggregate amount $33,900,000 and $0, or 10.5% and 0.0%, as of December 31, 2021 and 2020, respectively, of the total expected capital commitment of Fund II.
Land Bank Transactions with DF Capital
After Fund I was fully committed, DF Capital provided land bank financing in a total of seven further projects and subsequently raised additional commitments from limited partners in Fund I as well as other parties. One of the Company’s officers, invested $180,000 in one of these funds managed by DF Capital as a limited partner in 2019. As of December 31, 2021, funds managed by DF Capital (other than Fund I
and Fund II) controlled an additional 347 lots as a result of these transactions outside of Fund I and Fund II. As of December 31, 2020,
funds managed by DF Capital (other than Fund I and Fund II) controlled an additional 595 lots as a result of these transactions outside of
Fund I and Fund II. During the years ended December 31, 2021 and 2020, the Company purchased 248 and 140 of these lots and the outstanding lot deposit balance in relation to these projects was $3,676,096 and $6,200,000, respectively. In addition, the Company
paid lot option fees related to these transactions of $293,812, $974,250 and $106,394 for the years ended December 31, 2021, 2020
and 2019, respectively.
Land Bank Transactions with LB Parker Owners, LLC
On August 10, 2021, the Company entered into a land banking transaction with LB Parker Owners, LLC, a Delaware limited liability company, which is beneficially owned by Rockpoint Group,
LLC (“Rockpoint”) in connection with the Company’s acquisition and development of certain residential real property located in Parker, Colorado known as “Looking Glass” pursuant to which LB Parker Owners, LLC provided $3,300,000 for the acquisition of the real property. William H. Walton III is the founding
principal of Rockpoint and also a member of the Company’s Board of Directors, its Audit Committee and its Compensation Committee.
Jet Home Loans
Jet performs mortgage origination activities for the Company. Jet underwrites and originates home mortgages for Company customers and non-Company
customers. The Company owns 49.9% of Jet, but is not the primary beneficiary. Jet is accounted for under the equity method and is a
related party of the Company, accounted for in its own segment (see Note 13).
|
Earnings per Share |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share |
The following weighted-average shares and share equivalents were used to calculate basic and diluted earnings per share for the year ended December 31,
2021:
The Corporate Reorganization created the current
capital structure of DFH, Inc. Therefore, the net income per share for DFH, Inc. is not shown for the fiscal years ended December 31, 2020 or 2019. In addition, the basic and diluted net income per share only includes earnings subsequent to
January 21, 2021, the date of the Corporate Reorganization.
Basic
net income per share is calculated by dividing net income attributable to DFH, Inc. for the period subsequent to the Corporate Reorganization, by the weighted-average number of shares of Class A common stock and Class B common stock outstanding for
the period. The total outstanding shares of common stock are made up of Class A common stock and Class B common stock, which participate equally in their ratable ownership share of the Company. Diluted net income per share has been calculated in a
manner consistent with that of basic net income per share while giving effect to shares of potentially dilutive restricted stock grants outstanding during the period and the convertible preferred stock.
There
were no anti-dilutive shares for the year ended December 31, 2021.
|
Subsequent Events |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 | |||
Subsequent Events [Abstract] | |||
Subsequent Events |
The Company has evaluated subsequent events through March 16, 2022, the date the financial statements were issued, and
no matters were identified requiring recognition or disclosure in the financial statements, except for events described below.
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 $12,000,000
subject to the execution of a mutually acceptable settlement agreement, which will include a denial of any admission of liability on behalf of DFH. DFH’s insurance carrier agreed to pay the policy limit of $4,000,000 toward the settlement. The settlement payment shall be due no later than May 1, 2022. DFH will seek contribution toward the settlement amount from subcontractors and
other vendors who performed work on the project.
On January 31, 2021, the Company, through its subsidiaries Dream Finders Holdings LLC, a
Florida limited liability company, and DFH Coventry, LLC, a Florida limited liability company, made a cash payment of $35 million for
the assets, rights and properties, and certain liabilities of MHI Models, Ltd., a Texas limited partnership. The post-close consideration payment completed the asset purchase transaction in relation to the MHI acquisition. Transaction costs were
not material and were expensed as incurred.
On February 15, 2022, Rockpoint, whose founding principal, William H. Walton III,
is on the DFH Board of Directors, its Audit Committee and its Compensation Committee, committed $100,000,000 to Fund II. On the same
date, DFH also entered into a Memorandum of Right of First Offer with Rockpoint, under which Rockpoint has an exclusive right of first offer on certain land bank financing projects that meet certain criteria and are undertaken by the Company during
Fund II’s investment period.
|
Nature of Business and Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business and Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business |
Nature of Business
Dream Finders Homes, Inc. (the “Company” or “DFH, Inc.”) was incorporated in the State of Delaware on September 11, 2020. The Company was formed for the purpose of
completing an initial public offering (“IPO”) of its common stock and related transactions in order to carry on the business of Dream Finders Holdings LLC, a Florida limited liability company (“DFH LLC”), as a publicly-traded entity. Pursuant to a
corporate reorganization and completion of its Initial Public Offering (“IPO”) on January 25, 2021, the Company became a holding company for DFH LLC and its subsidiaries.
In connection with the IPO and pursuant to the terms of the Agreement and Plan of Merger by and among DFH, Inc., DFH LLC and DFH Merger Sub LLC, a Delaware limited liability company and direct, wholly owned subsidiary of DFH, Inc., DFH Merger Sub LLC merged with and into DFH LLC with DFH LLC as the surviving entity (the “Merger”). As a result of the Merger, all of the outstanding non-voting common units and Series A Preferred Units of DFH LLC converted into 21,255,329 shares of Class A common stock of DFH, Inc., all of the outstanding common units of DFH LLC converted into 60,226,152 shares of Class B common stock of DFH, Inc. and all of the outstanding Series B Preferred Units and Series C Preferred Units of DFH LLC remained outstanding. We refer to this and certain other related events and transactions, as the “Corporate Reorganization”. The Company successfully completed its IPO of 11,040,000 shares of Class A common stock (which included full exercise of the over-allotment option) at an IPO price of $13.00 per share. Shares of the Company’s Class A common stock began trading on the NASDAQ Global Select Market under the ticker symbol “DFH” on January 21, 2021, and the IPO closed on January 25, 2021. The Company is the sole manager of DFH LLC and owns 100% of the voting membership interest in DFH LLC. The following is a description of the significant accounting policies and practices, which conform to accounting principles generally accepted in the United States of America (U.S. GAAP). |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation |
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of DFH, its wholly owned subsidiaries and its investments that qualify for consolidation treatment
(see Note 11). As a result of the reorganization transactions in connection with the IPO, for accounting purposes, our historical results included herein present the combined assets, liabilities and results of operations of Dream Finders Homes, Inc.
since the date of its formation and Dream Finders Holdings LLC, a Florida limited liability company (“DFH LLC”) and its direct and indirect subsidiaries prior to the IPO. 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 Consolidated Statements of Comprehensive Income.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates |
Use of Estimates
The preparation of financial statements in conformity with U.S. 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. Significant estimates include the
valuation and impairment of goodwill, impairment of inventories and business combination estimates. Actual results could differ materially from those estimates.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents |
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments, with original maturities of three months or less. Cash and cash equivalents includes
cash proceeds from home closings in-transit from or held by third-party escrow agents for the Company’s benefit, typically for less than five days, which are considered deposits in-transit. At various times throughout the year, the Company may have
cash deposited with financial institutions that exceed the federally insured deposit amount. Management reviews the financial viability of these financial institutions on a periodic basis and does not anticipate nonperformance by the financial
institutions. The Company had $372,726 and $9,676,416
of cash and cash equivalents in interest bearing money market accounts at December 31, 2021 and 2020, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash |
Restricted Cash
Restricted cash represents funds held in accounts that are restricted for specific purposes. Restricted cash at December 31, 2021, includes $48,597,903 of escrow monies held in the title company, and $5,496,935
of funds related to specific future projects. Restricted cash at December 31, 2020, includes $39,837,702 of escrow monies held in the title
company, and $9,877,851 of funds related to specific future projects.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition |
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from
Contracts with Customers (“ASC 606”), which requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. We recognize revenue by following the five-step model: (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv)
allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied.
The Company’s revenues consist primarily of home sales in the United States, which is its principal market. Home sale transactions are made pursuant to contracts under which the Company typically has a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. The Company generally determines the selling price per home based on the expected cost-plus margin. The Company has performed an assessment and its contracts do not contain significant financing terms. Performance obligations are satisfied at the point in time when control of the asset is transferred to the customer, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under home sale contracts, the Company typically receives an initial cash deposit from the homebuyer at the time the sales contract is executed and receives the remaining consideration to which the Company is entitled, through an escrow agent, at closing. In certain contracts, the customer controls the underlying land upon which the home is constructed. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts based on the percentage of completion of the project. Typically, the Company has two types of percentage of completion contracts. The first type is with individual customers for which the Company acts as a general contractor on land owned by the homebuyer. The second is with institutional buyers for which the Company acts as a general contractor on land owned by the institution. Individual customers generally have construction-to-permanent loans that are taken out by the customer. During the underwriting process for our individual customers and institutional customers a draw schedule is agreed upon by the bank, the customer and the Company. Funds are disbursed for labor and materials that have been completed or installed. These both result in a contract asset as work is being completed prior to receiving funds. A contract liability would be recorded in cases where we have received funds in excess of costs incurred. At December 31, 2021 and 2020, the contract asset related to percentage of completion contracts was $21,030,708 and $6,259,567, respectively, and included in other assets on the Consolidated Balance Sheets. At December 31, 2021 and 2020, the contract liability related to percentage of completion contracts was $3,906,312 and $0, respectively, included in accrued expenses on the Consolidated Balance Sheets. Sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. The cost of sales incentives
in the form of free or discounted products or services provided to homebuyers, including option upgrades, are reflected as construction and land costs because such incentives are identified in home sale contracts with homebuyers as an intrinsic part
of the Company’s single performance obligation to deliver and transfer title to the home for the transaction price stated in the contracts.
Revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled.
A large portion of the Company’s contracts with customers and the related performance obligations have an original expected duration of one year or
less.
Refer to Note 13 for a more detailed disaggregation of our revenues by reportable segments.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expense |
Other Income and Expense
Other income includes income related to the forgiveness of the Paycheck Protection Program (“PPP”) grant, proceeds from sale of non-core assets and
interest income and management fees we earn for managing certain joint ventures. In general, we earn
to percent of the sales price of homes built by us on behalf of the joint ventures. Other expense consists primarily of expenses related to the sale of
non-core assets and contingent consideration valuation changes associated with earn out agreements with former owners of acquired entities. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
Inventories
Inventories include the costs of direct land acquisition, land development, construction, capitalized interest, real estate taxes and direct overhead
costs incurred related to land acquisition and development and home construction. Indirect overhead costs are charged to selling, general, and administrative expenses (SG&A) as incurred.
Land and development costs are typically allocated to individual residential lots on a pro rata basis based on the number of lots in the development,
and the costs of residential lots are transferred to construction work in progress when home construction begins. Sold units are expensed on a specific identification basis as cost of contract revenues earned. Cost of contract revenues earned for
homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs allocated to each residential lot.
Inventories are carried at the lower of accumulated cost or net realizable value. 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. No impairments were recognized during the years ended December 31, 2021, 2020 or 2019.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred and betterments
are capitalized. When items of property and equipment are sold or otherwise disposed, the asset and related accumulated depreciation accounts are eliminated and any gain or loss is included in operations.
Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Lived Assets |
Long-Lived Assets
The Company evaluates the carrying value of its long-lived assets for impairment whenever events or changes in circumstances indicate an impairment
may exist. Recoverability is measured by the expected undiscounted future cash flows of the assets compared to the carrying amount of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the
excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals,
and, if appropriate, current estimated net sales proceeds from pending offers. There were no triggering events or impairments recorded
during the years ended December 31, 2021, 2020 or 2019.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangibles Asset, Net of Amortization |
Intangibles Asset, Net of Amortization
The Company has intangible assets that consist of tradenames that are recorded in connection with acquisitions at their fair value based on the
results of valuation analyses. Trademarks acquired in business combinations are generally valued using the relief-from-royalty method, which are Level 3-type measurements. Trademarks with finite lives are amortized over five-year periods.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
Goodwill
Goodwill represents the excess of purchase price over the fair value of the assets acquired and the liabilities assumed in a business combination. See
Note 2 for details on recent acquisitions. The Company tests for impairment at least annually as of October 1, but the Company tests for impairment more frequently if a triggering event occurs. This test assesses qualitative factors to determine if
it is more likely than not that the fair value of the reporting units is less than their carrying value. These qualitative factors include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall
performance of the reporting unit and other entity and reporting unit specific events. If the qualitative assessment indicates a stable fair value, no further testing is required. However, if the qualitative assessment indicates that the fair value
of a reporting unit has declined past its carrying value, the Company will then calculate the fair value of the reporting unit based on discounted future cash flows. An impairment loss is recorded if this assessment concludes that the fair value of
the reporting unit is less than its current carrying value. The Company completed its most recent goodwill impairment test on October 1, 2021, and determined that the fair value of all the reporting units was not less than carrying value. No impairment was recognized during the years ended December 31, 2021, 2020 or 2019. In addition, the Company has not recognized any impairment
relating to triggering events that would cause additional impairment testing over goodwill.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
Leases
The Company determines if an arrangement is, or contains, a lease at inception. We recognize leases when the contract provides us the right to use an
identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Consolidated Balance Sheets. Finance leases are included in
finance lease ROU assets and finance lease liabilities in the Consolidated Balance Sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to
make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an explicit rate,
management uses the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. An explicit rate is used when readily determinable. The ROU assets also include
any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a
straight-line basis over the lease term. The Company elected the practical expedient to combine lease and nonlease components when accounting for the ROU assets and liabilities for all asset classes. Variable lease costs are expensed as incurred.
Leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lot Deposits |
Lot Deposits
Lot deposits represent amounts paid by the Company to secure the ability to acquire land for development or home sites through a contract. The Company
enters into contracts with different land sellers to ensure it has property on which to build future homes over a
to four-year timeline. The contracts provide for a due diligence period during which the deposit is refundable, after which time the deposit may be partially
or completely forfeited should the Company decide not to proceed. 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 no deposit forfeitures or impairments recorded as of December 31, 2021, 2020 and 2019, and the Company does not
expect any over the next twelve months. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Reserve |
Warranty Reserve
The Company provides a limited warranty for its homes for a period of one year. The Company’s standard warranty requires the Company or its subcontractors to repair or replace defective construction during such warranty period at no cost to the homebuyer. At the time a home is sold,
the Company records an estimate of warranty expense based on historical warranty costs. An analysis of the warranty reserve is performed periodically to ensure the reserve’s adequacy. The warranty reserve is classified on the Consolidated Balance
Sheets as an accrued expense.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contingent Consideration |
Contingent Consideration
In connection with the H&H Constructors of Fayetteville (“H&H”) acquisition in October 2020 (Note 2), the Company recorded contingent
consideration based on estimated pre-tax net income of the acquired entity for the fourth quarter of 2020, fiscal years 2021, 2022, 2023 and the first quarter of 2024. In connection with the McGuyer Homebuilders, Inc. (“MHI”) acquisition in October
2021 (Note 2), the Company recorded contingent consideration based on estimated pre-tax net income of the acquired entity for the fourth quarter of 2021, fiscal years 2022, 2023, 2024 and the first three quarters of 2025. The measurement of
contingent consideration was based on projected cash flows such as revenues, gross margin, overhead expenses and pre-tax income and discounted to present value using the discounted cash flow method. The Company recorded the fair value of the
contingent consideration as a liability on the respective acquisition dates. The estimated earn-out 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. The contingent consideration for each acquisition is scheduled to be paid out in April of each year subsequent to the anniversary of the respective acquisition closing date.
At December 31, 2021 and 2020, the Company remeasured contingent consideration related to the 2019 acquisition of Village Park Homes, LLC (“VPH”) and
adjusted the liability to $7,580,126 and $6,847,524,
respectively, based on revised pre-tax income forecasts as of the balance sheet date. The Company recorded contingent consideration adjustments resulting in $732,602
of expense, $1,378,686 of expense, and $3,944,030
of income for the years ended December 31, 2021, 2020 and 2019, respectively. These adjustments are included in Other expense – Contingent consideration valuation on the Consolidated Statements of Comprehensive Income.
At December 31, 2021 and 2020, the Company remeasured contingent consideration related to the acquisition of H&H and adjusted the liability to $19,739,135 and $16,310,000, respectively, based on revised pre-tax income forecasts as of the balance sheet date. The Company recorded contingent consideration adjustments resulting in $4,635,904 of expense and $0 of expense for the years ended December 31, 2021 and 2020, respectively. These adjustments are included in Other expense – Contingent consideration valuation on the Consolidated Statements of Comprehensive Income. The Company measured contingent consideration related to the acquisition of MHI on October 1, 2021, and recorded a liability in the opening balance sheet of $94,572,694. At December 31, 2021, the Company remeasured contingent consideration related to the acquisition and adjusted the liability to $96,737,018, based on revised pre-tax income forecasts as of the balance sheet date. For the year ended December 31, 2021, the Company recorded Other expense - Contingent consideration valuation for MHI of $2,164,324. Total contingent consideration on the Consolidated Balance Sheets is $124,056,279. The Company’s contingent consideration related to acquisition earn-out payments is based on a percentage of pre-tax net and comprehensive income achieved by the acquired entity and is discounted to present value using risk-adjusted discount rates that reflect current market conditions. The payment of the H&H and MHI earn-out is subject to minimal earnings thresholds, which must be met by H&H and MHI, respectively, before an earn-out payment occurs. 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 income. In April 2021, the Company paid $1,206,769 in contingent consideration to H&H. There were no other payments of contingent consideration for the years ended December 31, 2021, 2020 and 2019. See Note 15 — Fair Value Disclosures for additional discussion on fair value measurement inputs related to contingent consideration. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer Deposits |
Customer Deposits
Customer deposits are amounts collected from customers in conjunction with the execution of the home sale contract. Customer deposits are applied
against the final settlement due at the home closing. In the event of contract default or termination, the customer deposit generally is forfeited and recognized as revenue.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Issuance Costs and Debt Discounts |
Debt Issuance Costs and Debt Discounts
Debt issuance costs and debt discounts are amortized to interest expense using the effective interest method over the estimated economic life of the
underlying debt instrument. Portions of this amortization are evaluated for capitalization as inventories and subsequently expensed through cost of sales at the home closing.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities |
Variable Interest Entities
The Company participates in joint ventures that conduct land acquisition, land development and/or other homebuilding activities in various markets
where the Company’s homebuilding operations are located. The Company’s investments in these joint ventures may 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 contracts with third parties and unconsolidated entities for the ability to acquire rights to land for the construction of homes. Under these contracts, the Company typically makes a specified
earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. Consideration paid for these contracts is recorded as lot deposits on the Consolidated Balance Sheets.
Pursuant to Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities, the Company analyzes its joint ventures under the variable interest model to determine if such are required to be consolidated in the Company’s consolidated financial statements. The accounting standard requires a VIE to be consolidated by a company if that company is determined to be the primary
beneficiary. 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 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. See Note 11 for a description of the Company’s joint ventures, including those that were determined to be VIEs, and the related accounting treatment.
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 continually. To make this determination, management considers factors such as whether the
Company should direct finance, determine or limit the scope of the entity, sell or transfer property, direct development or direct other operating decisions.
Joint ventures for which the Company is not identified as the primary beneficiary are accounted for as equity method investments. The Company and its
unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to each party’s respective equity interests. The obligations to make capital
contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents. Partners in these unconsolidated joint ventures are unrelated homebuilders, land developers or other real estate
entities.
For distributions received from these unconsolidated joint ventures, the Company has elected to use the cumulative earnings approach for the
Consolidated Statements of Cash Flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that
amount are treated as returns of investment within investing cash flows.
The Company typically has obtained options to acquire portions of the land held by the unconsolidated joint ventures in which the Company currently
participates. When an unconsolidated joint venture sells land to the Company, the Company defers recognition of its share of such unconsolidated joint venture’s earnings (losses) until the Company recognizes revenues on the corresponding home sale.
At that time, the Company accounts for the earnings (losses) as a reduction (increase) to the cost of purchasing the land from the unconsolidated joint venture.
The Company shares in the earnings (losses) of these unconsolidated joint ventures generally in accordance with its respective equity interests. In
some instances, the Company recognizes earnings (losses) that differ from its equity interest in the unconsolidated joint venture. This typically arises from the Company’s deferral of the unconsolidated joint venture’s earnings (losses) from land
sales to the Company.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Controlling Interests |
Non-Controlling Interests
The equity interests held by others in DFH Leyden LLC, DFH Amelia LLC, DFH Clover LLC, DFH Leyden II LLC, DFH MOF Eagle Landing LLC, DCE DFH JV LLC,
DFH Capitol LLC, DFC Mandarin Estates LLC, DFC East Village LLC, DFC Wilford LLC, DFC Amelia Phase III LLC, DFC Sterling Ranch LLC, DFC Grand Landings LLC and FMR IP, LLC. have been reflected as non-controlling interests in the Consolidated Balance
Sheets. Income attributable to these non-controlling interests are presented in the Consolidated Statements of Comprehensive Income as net income attributable to non-controlling interests.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Income Taxes
We are a corporation subject to income taxes in the United States. Our proportional share of the Company’s subsidiaries’ provisions are included in
our consolidated financial statements. Our deferred income tax assets and liabilities are computed for differences between the asset and liability method and financial statement amounts that will result in taxable or deductible amounts in the future.
We compute deferred balances based on enacted tax laws and applicable rates for the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized for deferred tax assets if it is more likely than not that
some portion or all of the net deferred tax assets will not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future
taxable income, tax-planning strategies and results of recent operations. If we determine we would be able to realize our deferred tax assets for which a valuation allowance had been recorded, then we would adjust the deferred tax asset valuation
allowance, which would reduce our provision for income taxes. We evaluate the tax positions taken on income tax returns that remain open and positions expected to be taken on the current year tax returns to identify uncertain tax positions.
Unrecognized tax benefits on uncertain tax positions are recorded on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the
position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is more than 50 percent likely to be realized is recognized. Interest and penalties related to unrecognized tax
benefits are recorded in income tax benefit. See Note 14. Income Taxes.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising |
Advertising
The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2021, 2020 and 2019 was $7,098,015, $6,247,583 and $5,291,652, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation |
Equity-Based Compensation
Certain individuals on our executive-level management team are eligible for equity-based compensation, which is awarded according to the terms of
individual contracts with those managers. The Company records compensation cost for units awarded to employees in return for employee service. The cost is measured at the grant-date fair value of the award and
recognized as compensation expense over the employee service period, which is normally the vesting period. The Company estimates that there are no forfeitures. In the event of forfeitures, the compensation expense recognized would be adjusted.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Accounting Principle - Cash and cash equivalents |
Change in Accounting Principle – Cash and cash equivalents
On December 31, 2021, the Company elected to change its accounting policy for presentation of cash proceeds from home closings that are in-transit from or held within title company escrow
accounts for the benefit of the Company. Under the new principle, cash proceeds in-transit from or held by third-party escrow agents for its benefit, typically for less than five days, are included in cash and cash equivalents, whereas
previously, they were considered accounts receivable and included in other assets. This reclassification for cash proceeds from home closings in-transit from or held in escrow represents a change in accounting principle which the Company believes
to be preferable because it is a more accurate reflection of its liquidity at period end and the predominant method used in our industry. This change in accounting principle has been applied retrospectively, and the Consolidated Balance Sheets as
well as Consolidated Statements of Cash Flows reflect the effect of this accounting principle change in all years presented. This reclassification had no impact on the Consolidated Statements of Comprehensive Income or Consolidated Statements of
Mezzanine Equity, Members’ Equity and Stockholders’ Equity. The following financial statement line items for fiscal years 2019, 2020 and 2021 were affected by the change in accounting principle:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Certain Reclassifications |
Certain Reclassifications
Certain reclassifications have been made in the 2019 and 2020 Consolidated Financial Statements to conform to the classifications used in 2021.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements |
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides practical expedients and exceptions for applying GAAP
when modifying contracts and hedging relationships that use LIBOR as a reference rate. In addition, these amendments are not applicable to contract modifications made and hedging relationship entered into or evaluated after December 31, 2022. We do
not anticipate a material increase in interest rates from our creditors as a result of the shift away from LIBOR as a reference rate, and we are currently evaluating the impact of the shift and this guidance on our financial statements and
disclosures.
|
Nature of Business and Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business and Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Useful Lives of Assets |
Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Accounting Principle - Cash and Cash Equivalents | The following financial statement line items for fiscal years 2019, 2020 and 2021 were affected by the change in accounting principle:
|
Business Acquisitions (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Information |
The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes
only and have been presented as if the H&H, Century Homes and MHI acquisitions had occurred on January 1, 2020. This unaudited pro forma information should not be relied upon as being indicative of the historical results that would have been
obtained if the acquisition had occurred on that date, nor of the results that may be obtained in the future.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
H&H Constructors of Fayetteville, LLC ("H&H'') [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Final Purchase Price Allocation |
The final purchase price allocation is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Century Homes Florida, Limited Liability Company [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Final Purchase Price Allocation |
The purchase price allocation as of December 31, 2021 is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MHI Acquisition [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Final Purchase Price Allocation |
The total purchase price is as follows:
The purchase price allocation as of
December 31, 2021, is as follows:
|
Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
Property and equipment consisted of the following as of December 31, 2021 and 2020:
|
Notes Payable (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable |
Notes payable consisted of the following as of December 31, 2021 and 2020:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Maturities of Notes Payable |
Contractual maturities of notes payable as of December 31, 2021, are as follows:
|
Inventories (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories Owned by Company as a Percentage of Total Inventories |
As mentioned in Note 11, the Company consolidated several joint ventures that own land and finished lots. The Company owns a
percentage of these joint ventures, but does not own the underlying assets. The table below shows the Company’s owned real estate inventory and real estate inventory owned by the joint ventures:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Inventory |
Interest is capitalized and included within each inventory category above. Capitalized interest activity is summarized in the table below for the
years ended December 31, 2021 and 2020:
|
Warranty Reserves (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Activity Related to Warranty Reserves |
The table below presents the activity related to warranty reserves, which are included in accrued expenses in the accompanying Consolidated Balance Sheets:
|
Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of Lease Liabilities |
The following table shows the maturities of our lease liabilities as of December 31, 2021:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Lease Term and Discount Rate |
During the year ended December 31, 2021, there have been no material changes in our lease liabilities for the next five years.
|
Equity-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Awards |
The Company’s restricted
stock awards as of December 31, 2021 and changes during the year then ended are presented below:
|
Variable Interest Entities and Investments in Other Entities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities and Investments in Other Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Carrying Amounts of Assets and Liabilities Related to Consolidated VIEs |
The table below displays the carrying amounts of the assets and liabilities related to the consolidated VIEs:
|
||||||||||||||||||||||||||||||||||||||||
Investment in Unconsolidated VIEs |
The table below shows the Company’s investment in the unconsolidated VIEs:
|
Segment Reporting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segments |
The following tables summarize home sale revenues and net and comprehensive income by segment for the years ended December 31, 2021, 2020 and 2019
as well as total assets and goodwill by segment as of December 31, 2021 and 2020:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense |
Income tax expense for the year ended December 31, 2021 consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate |
The following table reconciles the statutory federal income tax rate to the effective income tax rate:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Deferred Income Tax Assets and Liabilities |
The significant components of deferred income tax assets and liabilities as of December 31, 2021 consist of the following:
|
Fair Value Disclosures (Tables) |
12 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Measurement of Contingent Consideration |
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:
|
Earnings per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Shares and Share Equivalents Used to Calculate Basic and Diluted Earnings per Share |
The following weighted-average shares and share equivalents were used to calculate basic and diluted earnings per share for the year ended December 31,
2021:
|
Nature of Business and Significant Accounting Policies, Nature of Business (Details) - $ / shares |
11 Months Ended | |
---|---|---|
Jan. 25, 2021 |
Dec. 31, 2021 |
|
Class A Common Stock [Member] | ||
Nature of Business [Abstract] | ||
Stock issued in offering (in shares) | 11,040,000 | |
Common Class B [Member] | ||
Nature of Business [Abstract] | ||
Units converted to common stock (in shares) | 60,226,152 | |
Stock issued in offering (in shares) | 0 | |
IPO [Member] | ||
Nature of Business [Abstract] | ||
Ownership percentage | 100.00% | |
IPO [Member] | Class A Common Stock [Member] | ||
Nature of Business [Abstract] | ||
Units converted to common stock (in shares) | 21,255,329 | |
Stock issued in offering (in shares) | 11,040,000 | |
Share price (in dollars per share) | $ 13.00 | |
IPO [Member] | Common Class B [Member] | ||
Nature of Business [Abstract] | ||
Units converted to common stock (in shares) | 60,226,153 |
Nature of Business and Significant Accounting Policies, Cash and Cash Equivalents (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Cash and cash equivalents in interest bearing money market accounts | $ 372,726 | $ 9,676,416 |
Nature of Business and Significant Accounting Policies, Restricted Cash (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Restricted Cash [Abstract] | |||
Restricted cash | $ 54,094,838 | $ 49,715,553 | $ 24,721,169 |
Escrow Monies Funds [Member] | |||
Restricted Cash [Abstract] | |||
Restricted cash | 48,597,903 | 39,837,702 | |
Specific Future Projects Funds [Member] | |||
Restricted Cash [Abstract] | |||
Restricted cash | $ 5,496,935 | $ 9,877,851 |
Nature of Business and Significant Accounting Policies, Revenue Recognition (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Revenue Recognition | ||
Contract Assets | $ 21,030,708 | $ 6,259,567 |
Contract Liabilities | $ 3,906,312 | $ 0 |
Nature of Business and Significant Accounting Policies, Other Income and Expense (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Maximum [Member] | |
Other Income and Expense [Abstract] | |
Interest income and management fees earned as percentage of sales price | 6.00% |
Minimum [Member] | |
Other Income and Expense [Abstract] | |
Interest income and management fees earned as percentage of sales price | 4.00% |
Nature of Business and Significant Accounting Policies, Inventories (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Inventories [Abstract] | |||
Impairments recognized | $ 0 | $ 0 | $ 0 |
Nature of Business and Significant Accounting Policies, Estimated Useful Lives of Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful lives of assets | 2 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful lives of assets | 7 years |
Office Equipment [Member] | |
Property and Equipment [Abstract] | |
Estimated useful lives of assets | 4 years |
Software [Member] | Minimum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful lives of assets | 1 year |
Software [Member] | Maximum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful lives of assets | 4 years |
Vehicles [Member] | |
Property and Equipment [Abstract] | |
Estimated useful lives of assets | 5 years |
Buildings [Member] | |
Property and Equipment [Abstract] | |
Estimated useful lives of assets | 39 years |
Nature of Business and Significant Accounting Policies, Long-Lived Assets (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Long-Lived Assets [Abstract] | |||
Impairments recognized | $ 0 | $ 0 | $ 0 |
Nature of Business and Significant Accounting Policies, Intangibles Asset Net of Amortization (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Trademarks [Member] | |
Intangibles Asset Net of Amortization [Abstract] | |
Finite lives amortized | 5 years |
Nature of Business and Significant Accounting Policies, Goodwill (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Goodwill, Impaired [Abstract] | |||
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Nature of Business and Significant Accounting Policies, Lot Deposits (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Lot Deposits [Abstract] | ||
Deposit forfeitures or impairments | $ 0 | $ 0 |
Minimum [Member] | ||
Lot Deposits [Abstract] | ||
Future homes building timeline | 2 years | |
Maximum [Member] | ||
Lot Deposits [Abstract] | ||
Future homes building timeline | 4 years |
Nature of Business and Significant Accounting Policies, Warranty Reserve (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Warranty Reserve [Abstract] | |
Warranty period on homes | 1 year |
Nature of Business and Significant Accounting Policies, Contingent Consideration (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Oct. 01, 2021 |
|
Contingent Consideration [Abstract] | ||||
Contingent consideration | $ 124,056,279 | $ 23,157,524 | ||
Payments of contingent consideration | 1,206,769 | 0 | $ 0 | |
VPH [Member] | ||||
Contingent Consideration [Abstract] | ||||
Contingent consideration | 7,580,126 | 6,847,524 | ||
H&H [Member] | ||||
Contingent Consideration [Abstract] | ||||
Contingent consideration | 19,739,135 | 16,310,000 | ||
MHI Acquisition [Member] | ||||
Contingent Consideration [Abstract] | ||||
Contingent consideration | 96,737,018 | $ 94,572,694 | ||
Other Expense [Member] | VPH [Member] | ||||
Contingent Consideration [Abstract] | ||||
Contingent consideration adjustments, expense (income) | 732,602 | 1,378,686 | $ (3,944,030) | |
Other Expense [Member] | H&H [Member] | ||||
Contingent Consideration [Abstract] | ||||
Contingent consideration adjustments, expense (income) | 4,635,904 | $ 0 | ||
Other Expense [Member] | MHI Acquisition [Member] | ||||
Contingent Consideration [Abstract] | ||||
Contingent consideration adjustments, expense (income) | $ 2,164,324 |
Nature of Business and Significant Accounting Policies, Advertising (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Advertising [Abstract] | |||
Advertising expense | $ 7,098,015 | $ 6,247,583 | $ 5,291,652 |
Nature of Business and Significant Accounting Policies, Change in Accounting Principle - Cash and Cash Equivalents (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Change in Accounting Principle [Abstract] | |||
Cash and cash equivalents | $ 227,227,020 | $ 43,657,779 | $ 50,597,392 |
Accounts receivable | 33,482,341 | 16,765,719 | |
Other assets | 35,027,755 | ||
Net cash provided by operating activities | 65,108,989 | 96,911,384 | 30,428,749 |
As Previously Reported [Member] | |||
Change in Accounting Principle [Abstract] | |||
Cash and cash equivalents | 190,277,511 | 35,495,595 | |
Accounts receivable | 70,431,850 | ||
Other assets | 43,189,939 | ||
Net cash provided by operating activities | 36,321,664 | 95,339,347 | 23,838,602 |
Effect of Change [Member] | |||
Change in Accounting Principle [Abstract] | |||
Cash and cash equivalents | 36,949,509 | 8,162,184 | |
Accounts receivable | (36,949,509) | ||
Other assets | (8,162,184) | ||
Net cash provided by operating activities | $ 28,787,325 | $ 1,572,037 | $ 6,590,147 |
Business Acquisitions, H&H (Details) - USD ($) |
Oct. 05, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
||
---|---|---|---|---|---|
Purchase Price Allocation [Abstract] | |||||
Goodwill | $ 171,927,291 | $ 28,566,232 | |||
H&H Constructors of Fayetteville, LLC ("H&H'') [Member] | |||||
Business Acquisition [Abstract] | |||||
Percentage of membership interest | 100.00% | ||||
Net of purchase price reduction related to customary closing adjustments | $ 1,710,275 | ||||
Bridge loan amount | $ 20,000,000 | ||||
Annual interest rate | 14.00% | ||||
Cash paid for business acquisition | $ 9,496,723 | ||||
Maturity date | May 01, 2021 | ||||
Contingent consideration | $ 16,310,000 | ||||
Purchase Price Allocation [Abstract] | |||||
Cash acquired | 10,956,359 | ||||
Other assets | 8,936,049 | ||||
Tradename | 2,660,000 | ||||
Goodwill | 16,853,014 | ||||
Inventories | 142,640,763 | ||||
Construction lines of credit | (116,894,907) | ||||
Other liabilities | (21,054,830) | ||||
Total purchase price | 44,096,448 | ||||
H&H Constructors of Fayetteville, LLC ("H&H'') [Member] | As Originally Reported [Member] | |||||
Purchase Price Allocation [Abstract] | |||||
Cash acquired | 10,956,359 | ||||
Other assets | 8,255,301 | ||||
Tradename | 2,660,000 | ||||
Goodwill | 16,357,450 | ||||
Inventories | 143,817,075 | ||||
Construction lines of credit | (116,894,907) | ||||
Other liabilities | (21,054,830) | ||||
Total purchase price | 44,096,448 | ||||
H&H Constructors of Fayetteville, LLC ("H&H'') [Member] | Measurement Period Adjustments [Member] | |||||
Purchase Price Allocation [Abstract] | |||||
Other assets | [1] | 680,748 | |||
Goodwill | [1] | 495,564 | |||
Inventories | [1] | (1,176,312) | |||
Total purchase price | [1] | $ 0 | |||
|
Business Acquisitions, Century Homes (Details) - USD ($) |
Dec. 31, 2021 |
Jan. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Purchase Price Allocation [Abstract] | |||
Goodwill | $ 171,927,291 | $ 28,566,232 | |
Century Homes Florida, Limited Liability Company [Member] | |||
Business Acquisition [Abstract] | |||
Identifiable intangible assets | $ 0 | ||
Purchase Price Allocation [Abstract] | |||
Cash acquired | 3,993,396 | ||
Other assets | 754,879 | ||
Goodwill | 1,794,765 | ||
Inventories | 34,324,050 | ||
Property and equipment, net | 548,552 | ||
Liabilities | (5,831,266) | ||
Total purchase price | $ 35,584,376 |
Business Acquisitions, MHI (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 03, 2021
USD ($)
Period
|
Oct. 01, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
Purchase Price Allocation [Abstract] | ||||
Goodwill | $ 171,927,291 | $ 28,566,232 | ||
MHI Acquisition [Member] | ||||
Business Acquisition [Abstract] | ||||
Cash consideration | 488,177,838 | |||
Contingent consideration based on future earnings | 94,572,694 | |||
Cash paid for business acquisition | $ 471,000,000 | |||
Purchase price | $ 463,004,096 | |||
Percentage of deposit on separate land bank facility | 10.00% | |||
Net of purchase price reduction related to customary closing adjustments | $ 25,173,742 | |||
Minimum pre-tax income thresholds and overhead expenses | $ 94,472,694 | |||
Business acquisition, cash on hand | $ 20,000,000 | |||
Purchase Price Allocation [Abstract] | ||||
Cash acquired | 296,740 | |||
Other assets | 14,722,191 | |||
Lot deposits | 40,451,993 | |||
Inventories | 473,037,286 | |||
Equity method investments | 6,192,088 | |||
Intangible assets, net of amortization | 8,840,000 | |||
Goodwill | 141,070,730 | |||
Property and equipment, net | 3,163,143 | |||
Operating lease right-of-use assets | 1,507,792 | |||
Accounts payable | (41,466,363) | |||
Accrued expenses | (25,801,750) | |||
Customer deposits | (37,755,526) | |||
Operating lease liabilities | (1,507,792) | |||
Total purchase price | 582,750,532 | |||
Unaudited Pro Forma [Abstract] | ||||
Total revenue | 2,432,947,396 | 2,291,993,087 | ||
Net and comprehensive income attributable to Dream Finders Homes, Inc. | $ 151,161,683 | $ 128,102,223 | ||
MHI Acquisition [Member] | Revolving Credit Facility [Member] | ||||
Business Acquisition [Abstract] | ||||
Lines of credit | $ 300,000,000 | |||
MHI Acquisition [Member] | Maximum [Member] | ||||
Business Acquisition [Abstract] | ||||
Additional consideration on pre-tax net income, percentage | 25.00% | |||
Periods of pre-tax net income | Period | 5 | |||
Period for closing pre-tax income thresholds and certain overhead expenses | 48 months |
Property and Equipment (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Property and Equipment [Abstract] | |||
Property and equipment, gross | $ 22,778,047 | $ 17,347,091 | |
Less: Accumulated depreciation | (15,989,042) | (13,038,020) | |
Property and equipment, net | 6,789,005 | 4,309,071 | |
Depreciation expense | 3,720,011 | 3,851,876 | $ 3,035,451 |
Furniture and Fixtures [Member] | |||
Property and Equipment [Abstract] | |||
Property and equipment, gross | 17,755,490 | 13,705,844 | |
Buildings [Member] | |||
Property and Equipment [Abstract] | |||
Property and equipment, gross | 401,290 | 0 | |
Land [Member] | |||
Property and Equipment [Abstract] | |||
Property and equipment, gross | 215,962 | 0 | |
Vehicles [Member] | |||
Property and Equipment [Abstract] | |||
Property and equipment, gross | 21,093 | 21,093 | |
Office Equipment and Software [Member] | |||
Property and Equipment [Abstract] | |||
Property and equipment, gross | $ 4,384,212 | $ 3,620,154 |
Construction Lines of Credit (Details) |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Jan. 25, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
CreditFacility
|
Dec. 31, 2019
USD ($)
|
Sep. 29, 2021
USD ($)
Lender
|
Sep. 08, 2021
USD ($)
Lender
|
|
Construction Line of Credit [Abstract] | ||||||
Number of line of credit facilities available | CreditFacility | 34 | |||||
Line of credit maximum borrowing base | $ 762,979,000 | |||||
Line of credit aggregate outstanding balance | $ 760,000,000 | 289,878,716 | ||||
Maturity date | Jan. 25, 2024 | |||||
Effective interest rate | 3.75% | |||||
Debt issuance costs capitalized | $ 7,505,214 | 2,249,683 | ||||
Debt issuance costs amortized | 1,959,943 | $ 2,090,711 | $ 2,318,286 | |||
Debt issuance costs unamortized | 506,466 | |||||
Minimum [Member] | ||||||
Construction Line of Credit [Abstract] | ||||||
Effective interest rate | 3.81% | |||||
Maximum [Member] | ||||||
Construction Line of Credit [Abstract] | ||||||
Effective interest rate | 10.33% | |||||
Line of Credit and Notes Payable [Member] | ||||||
Construction Line of Credit [Abstract] | ||||||
Debt issuance costs, net of amortization | $ 5,545,271 | $ 506,466 | ||||
Bank of America, N.A. and Other Lenders [Member] | ||||||
Construction Line of Credit [Abstract] | ||||||
Line of credit maximum borrowing base | $ 817,500,000 | $ 1,050,000,000 | ||||
Line of credit current borrowing base | 742,500,000 | |||||
Number of lenders | Lender | 1 | |||||
Bank of America, N.A. and Other Lenders [Member] | Amendment [Member] | ||||||
Construction Line of Credit [Abstract] | ||||||
Line of credit maximum borrowing base | 300,000,000 | |||||
Line of credit current borrowing base | $ 292,500,000 | |||||
Number of lenders | Lender | 3 | |||||
Bank of America, N.A. and Other Lenders [Member] | Unsecured Syndicated Credit Facility [Member] | IPO [Member] | ||||||
Construction Line of Credit [Abstract] | ||||||
Line of credit current borrowing base | $ 450,000,000 | |||||
Repayment of debt | 340,000,000 | |||||
Boston Omaha Corporation, LLC [Member] | Bridge Loan [Member] | ||||||
Construction Line of Credit [Abstract] | ||||||
Repayment of debt | $ 20,000,000 |
Notes Payable, Details of Note Payable (Details) - USD ($) |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Oct. 05, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|||
Debt Instruments [Abstract] | ||||||
Notes payable | $ 3,291,389 | $ 29,653,282 | ||||
Repayments of notes payable | $ 25,679,162 | 13,180,967 | $ 11,454,898 | |||
H&H Constructors of Fayetteville, LLC ("H&H'') [Member] | ||||||
Debt Instruments [Abstract] | ||||||
Maturity date | May 01, 2021 | |||||
Interest rate | 14.00% | |||||
Repayments of notes payable | 20,000,000 | |||||
May 1, 2021 [Member] | ||||||
Debt Instruments [Abstract] | ||||||
Maturity date | May 01, 2021 | |||||
Payment Terms | Interest is payable monthly at 14.00% | |||||
Interest rate | 14.00% | |||||
Periodic interest payable | monthly | |||||
Notes payable | $ 0 | $ 20,000,000 | ||||
Effective rate | 0.00% | 14.00% | ||||
February 28, 2022 [Member] | ||||||
Debt Instruments [Abstract] | ||||||
Maturity date | Feb. 28, 2022 | |||||
Payment Terms | Non-interest bearing | |||||
Notes payable | [1] | $ 1,312,000 | $ 832,000 | |||
Effective rate | [1] | 0.00% | 0.00% | |||
April 1, 2022 Notes [Member] | ||||||
Debt Instruments [Abstract] | ||||||
Maturity date | [1] | Apr. 01, 2022 | ||||
Payment Terms | Interest is payable monthly at 12.5% | |||||
Interest rate | [1] | 12.50% | ||||
Periodic interest payable | [1] | monthly | ||||
Notes payable | [1] | $ 0 | $ 1,735,161 | |||
Effective rate | [1] | 0.00% | 12.50% | |||
July 31, 2022 Notes [Member] | ||||||
Debt Instruments [Abstract] | ||||||
Maturity date | [1] | Jul. 31, 2022 | ||||
Payment Terms | Interest is payable monthly at 9.25% | |||||
Interest rate | [1] | 9.25% | ||||
Periodic interest payable | [1] | monthly | ||||
Notes payable | [1] | $ 1,979,389 | $ 3,984,174 | |||
Effective rate | [1] | 9.25% | 9.25% | |||
March 25, 2023 Notes [Member] | ||||||
Debt Instruments [Abstract] | ||||||
Maturity date | [1] | Mar. 25, 2023 | ||||
Payment Terms | Interest is payable monthly at 5.00% | |||||
Interest rate | [1] | 5.00% | ||||
Periodic interest payable | [1] | monthly | ||||
Notes payable | [1] | $ 0 | $ 3,101,947 | |||
Effective rate | [1] | 0.00% | 5.00% | |||
|
Notes Payable, Maturities of Notes Payable (Details) - Notes Payable [Member] |
Dec. 31, 2021
USD ($)
|
---|---|
Maturities of Notes Payable [Abstract] | |
2022 | $ 3,291,389 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
Thereafter | 0 |
Total | $ 3,291,389 |
Inventories (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Inventory, Net [Abstract] | ||
Construction in process and finished homes | $ 961,778,789 | $ 396,630,945 |
Finished lots and land | 83,197,267 | 46,839,616 |
Inventories owned by the Company | 1,044,976,056 | 443,470,561 |
Inventories owned by consolidated joint ventures | 21,685,688 | 40,900,552 |
Total inventories | $ 1,066,661,744 | $ 484,371,113 |
Inventories owned by the Company as a Percentage of Total Inventories [Abstract] | ||
Construction in process and finished homes | 90.00% | 82.00% |
Finished lots and land | 8.00% | 10.00% |
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | ||
Capitalized interest at the beginning of the period | $ 21,091,297 | $ 25,335,924 |
Interest incurred | 45,354,727 | 28,670,194 |
Interest expensed | (672,172) | (870,868) |
Interest charged to cost of contract revenues earned | (32,507,799) | (32,043,953) |
Capitalized interest at the end of the period | $ 33,266,053 | $ 21,091,297 |
Warranty Reserves (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Warranty reserves at the beginning of the year | $ 3,530,461 | $ 1,652,634 |
Additions to reserves for new home deliveries | 4,818,481 | 3,686,123 |
Payments for warranty costs | 3,178,619 | 1,808,296 |
Warranty reserves at the end of the period | $ 5,170,323 | $ 3,530,461 |
Commitments and Contingencies, Summary (Details) |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 27, 2019
USD ($)
Home
Lease
|
Nov. 18, 2019
USD ($)
|
May 30, 2019
USD ($)
Lease
Home
|
Apr. 30, 2020
USD ($)
|
Dec. 31, 2021
USD ($)
Home
|
Dec. 31, 2020
USD ($)
|
|
Commitments and Contingencies [Abstract] | ||||||
Number of homes impacted by harmful and odorous flak jacket coating | Home | 38 | |||||
Litigation Settlement [Abstract] | ||||||
Gain recognized on damages awarded | $ 0 | |||||
Proceeds from PPP | $ 7,219,794 | |||||
Leases [Abstract] | ||||||
Finance lease assets, accumulated amortization | $ 333,407 | $ 919,552 | ||||
Model Home [Member] | ||||||
Sale-Leaseback Transactions [Abstract] | ||||||
Number of completed homes sold | Home | 20 | 11 | ||||
Sale leaseback amount | $ 9,240,680 | $ 4,417,674 | ||||
Number of individual lease agreements | Lease | 17 | 11 | ||||
Recorded gain related to transaction | $ 1,928,671 | $ 321,128 | ||||
Corporate Office Building [Member] | ||||||
Leases [Abstract] | ||||||
Remaining lease term | 12 years | |||||
DFH LLC [Member] | ||||||
Litigation Settlement [Abstract] | ||||||
Damages awarded, value | $ 3,000,000 | |||||
DFH Mandarin, LLC [Member] | ||||||
Litigation Settlement [Abstract] | ||||||
Damages awarded, value | $ 11,650,000 |
Commitments and Contingencies, Lease Cost (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|||
Finance lease cost [Abstract] | |||||
Amortization of right of use assets | $ 126,568 | $ 158,358 | $ 366,241 | ||
Total finance lease cost | 177,408 | 187,715 | 444,481 | ||
Net lease cost | 6,579,891 | 6,119,491 | 4,134,646 | ||
Selling, General and Administrative Expenses [Member] | |||||
Lease Cost [Abstract] | |||||
Operating lease cost | [1] | 6,402,483 | 5,931,776 | 3,690,165 | |
Finance lease cost [Abstract] | |||||
Amortization of right of use assets | 158,358 | 158,359 | 366,241 | ||
Interest Expense [Member] | |||||
Finance lease cost [Abstract] | |||||
Interest on lease liabilities | $ 19,050 | $ 29,356 | $ 78,240 | ||
|
Commitments and Contingencies, Maturities of Lease Liabilities (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|||
---|---|---|---|---|---|
Operating Leases [Abstract] | |||||
2022 | [1] | $ 4,271,598 | |||
2023 | [1] | 3,679,385 | |||
2024 | [1] | 3,049,009 | |||
2025 | [1] | 2,853,355 | |||
2026 | [1] | 2,617,537 | |||
Thereafter | [1] | 8,648,723 | |||
Total lease payments | [1] | 25,119,607 | |||
Less: Interest | [1] | 5,293,374 | |||
Present value of lease liabilities | 19,826,233 | [1] | $ 14,410,560 | ||
Finance Leases [Abstract] | |||||
2022 | [1] | 111,880 | |||
2023 | [1] | 35,310 | |||
2024 | [1] | 0 | |||
2025 | [1] | 0 | |||
2026 | [1] | 0 | |||
Thereafter | [1] | 0 | |||
Total lease payments | [1] | 147,190 | |||
Less: Interest | [1] | 7,609 | |||
Present value of lease liabilities | 139,581 | [1] | $ 345,062 | ||
Total [Abstract] | |||||
2022 | [1] | 4,383,478 | |||
2023 | [1] | 3,714,695 | |||
2024 | [1] | 3,049,009 | |||
2025 | [1] | 2,853,355 | |||
2026 | [1] | 2,617,537 | |||
Thereafter | [1] | 8,648,723 | |||
Total lease payments | [1] | $ 25,266,797 | |||
|
Commitments and Contingencies, Weighted Average Lease Term and Discount Rate (Details) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Weighted Average Remaining Lease Term [Abstract] | ||
Operating leases | 8 years | 10 years |
Financing leases | 2 years | 2 years |
Weighted Average Discount Rate [Abstract] | ||
Operating leases | 5.60% | 6.50% |
Financing leases | 7.50% | 6.80% |
Mezzanine Equity, Members' Equity and Stockholders' Equity, Redeemable Preferred Units and Common Units (Details) |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jan. 27, 2021
USD ($)
|
Jan. 25, 2021
$ / shares
shares
|
Apr. 30, 2020
USD ($)
shares
|
Dec. 31, 2021
USD ($)
Vote
$ / shares
shares
|
Dec. 31, 2020
USD ($)
$ / shares
shares
|
|
IPO [Member] | |||||
Stockholders' Equity [Abstract] | |||||
Common stock shares authorized (in shares) | 350,000,000 | ||||
Common stock par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Class A Common Stock [Member] | |||||
Stockholders' Equity [Abstract] | |||||
Common stock shares authorized (in shares) | 289,000,000 | ||||
Common stock par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Class A Common Stock [Member] | IPO [Member] | |||||
Stockholders' Equity [Abstract] | |||||
Common stock shares authorized (in shares) | 289,000,000 | ||||
Common stock par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Units converted to common stock (in shares) | 21,255,329 | ||||
Class B Common Stock [Member] | |||||
Stockholders' Equity [Abstract] | |||||
Common stock shares authorized (in shares) | 61,000,000 | ||||
Common stock par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Units converted to common stock (in shares) | 60,226,152 | ||||
Class B Common Stock [Member] | IPO [Member] | |||||
Stockholders' Equity [Abstract] | |||||
Common stock shares authorized (in shares) | 61,000,000 | ||||
Common stock par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Units converted to common stock (in shares) | 60,226,153 | ||||
Redeemable Series B Preferred Units [Member] | |||||
Mezzanine Equity [Abstract] | |||||
Temporary equity, shares issued (in shares) | 7,143 | 7,143 | |||
Temporary equity, shares outstanding (in shares) | 7,143 | 7,143 | |||
Temporary equity units issued and outstanding, carrying value | $ | $ 7,095,178 | $ 6,333,036 | |||
Temporary equity, liquidation preference value per unit (in dollars per share) | $ / shares | $ 1,000 | ||||
Liquidation preference, annual cumulative preference distribution percentage | 8.00% | ||||
Voting rights per each unit | Vote | 1 | ||||
Cumulative preferred distributions, unpaid amount | $ | $ 2,864,834 | $ 2,102,692 | |||
Cumulative preferred distributions, per unit (in dollars per share) | $ / shares | $ 401.07 | $ 294.37 | |||
Redemption price per unit (in dollars per share) | $ / shares | $ 1,000 | ||||
Cumulative preferred distributions in arrears | $ | $ 0 | ||||
Redeemable Convertible Series C Preferred Units [Member] | |||||
Mezzanine Equity [Abstract] | |||||
Cumulative preferred distributions, unpaid amount | $ | $ 200,000 | $ 62,500 | |||
Preferred stock redemption (in shares) | 1,000 | ||||
Preferred stock redemption value | $ | 26,000,000 | $ 1,000,000 | |||
Preferred stock discount cost | $ | $ 500,000 |
Mezzanine Equity, Members' Equity and Stockholders' Equity, Series A Convertible Preferred Stock (Details) |
12 Months Ended | |||
---|---|---|---|---|
Sep. 29, 2021
USD ($)
BusinessDay
$ / shares
shares
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Convertible Preferred Stock [Abstract] | ||||
Proceeds from issuance of convertible preferred stock, net | $ | $ 148,500,000 | $ 0 | $ 0 | |
Series A Convertible Preferred Stock [Member] | ||||
Convertible Preferred Stock [Abstract] | ||||
Temporary equity, shares issued (in shares) | shares | 150,000 | |||
Temporary equity, liquidation preference value per unit (in dollars per share) | $ 1,000 | |||
Liquidation preference par value (in dollars per share) | $ 0.01 | |||
Proceeds from issuance of convertible preferred stock, net | $ | $ 150,000,000 | |||
Cumulative dividend rate | 9.00% | |||
Period of waiting for conversion after issuance | 5 years | |||
Percentage of liquidation preference in year four to call outstanding stock | 102.00% | |||
Percentage of liquidation preference in year five to call outstanding stock | 101.00% | |||
Trailing period | 90 days | |||
Percentage of average closing price | 20.00% | |||
Floor conversion price (in dollars per share) | $ 4.00 | |||
Percentage of conversion discount after increase | 25.00% | |||
Ownership percentage | 19.99% | |||
Number of business days in consideration for issuance of shares | BusinessDay | 3 | |||
Number of months in consideration after specified period | 6 months | |||
Additional dividends percentage | 2.00% | |||
Breach period | 30 days |
Equity-Based Compensation (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Equity-Based Compensation [Abstract] | |||
Equity-based compensation expense | $ 5,233,676 | $ 946,609 | $ 895,000 |
Dream Finders Holdings LLC [Member] | |||
Equity-Based Compensation [Abstract] | |||
Equity-based compensation expense | 1,240,309 | 697,054 | |
2021 Plan [Member] | |||
Equity-Based Compensation [Abstract] | |||
Equity-based compensation expense | 5,233,676 | 0 | |
Unrecognized compensation expense | $ 16,690,354 | $ 0 | |
Weighted-average period | 2 years | ||
Restricted Stock [Member] | |||
Number of Shares [Roll Forward] | |||
Outstanding at beginning of period (in shares) | 0 | ||
Granted (in shares) | 762,945 | ||
Forfeited (in shares) | (41,347) | ||
Vested (in shares) | 0 | ||
Outstanding at end of period (in shares) | 721,598 | 0 | |
Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding at beginning of period | $ 0 | ||
Granted | 17,647,585 | ||
Forfeited | (957,231) | ||
Vested | 0 | ||
Outstanding at end of period | $ 16,690,354 | $ 0 | |
Restricted Stock [Member] | 2021 Plan [Member] | |||
Equity-Based Compensation [Abstract] | |||
Vesting period | 3 years | ||
Restricted Stock [Member] | 2021 Plan [Member] | Certain Executives and Directors [Member] | |||
Equity-Based Compensation [Abstract] | |||
Weighted-average grant date fair value (in dollars per share) | $ 23.15 | ||
Number of Shares [Roll Forward] | |||
Granted (in shares) | 759,709 | ||
Restricted Stock [Member] | 2021 Plan [Member] | First Increment at Year End [Member] | |||
Equity-Based Compensation [Abstract] | |||
Vesting ratably increments at end of each year | 33.00% | ||
Non-vested, Non-voting Common Units [Member] | Employees [Member] | Dream Finders Holdings LLC [Member] | |||
Weighted Average Grant Date Fair Value [Abstract] | |||
Number of non-vesting, non-voting units (in shares) | 0 | 3,532 | |
Non-vesting, non-voting units, value | $ 4,741,657 |
Variable Interest Entities and Investments in Other Entities (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021
USD ($)
Variation
Entity
Vote
|
Dec. 31, 2020
USD ($)
Entity
|
Dec. 31, 2019
Entity
|
|
Consolidated [Abstract] | |||
Assets | $ 1,894,247,623 | $ 733,680,241 | |
Liabilities | 1,337,864,345 | 521,657,027 | |
Investment in Unconsolidated VIEs [Abstract] | |||
Investment in unconsolidated VIE's | $ 15,967,376 | 4,545,349 | |
Lot Option Contracts [Abstract] | |||
Number of variations of asset-light land financing strategy | Variation | 2 | ||
Percentage of deposit payments on the aggregate purchase price of finished lot option contracts | 10.00% | ||
Percentage of deposit payments on the aggregate purchase price of land bank option contracts | 15.00% | ||
Land bankers equity holders power to direct , Percentage of operating activities of land bank entity | 100.00% | ||
Number of voting rights of land bank entities | Vote | 0 | ||
Total risk of loss related to finished lot option and land bank option contracts | $ 274,868,933 | 70,130,710 | |
Jet Home Loans [Member] | |||
Investment in Unconsolidated VIEs [Abstract] | |||
Investment in unconsolidated VIE's | $ 6,133,399 | $ 3,872,089 | |
Consolidated VIEs [Member] | |||
Variable Interest Entity or Potential VIE, Information Unavailability, Disclosures [Abstract] | |||
Number of variable interest entities | Entity | 0 | 0 | 0 |
Consolidated [Abstract] | |||
Assets | $ 30,830,222 | $ 50,982,111 | |
Liabilities | 10,203,170 | 20,114,132 | |
Other Unconsolidated VIEs [Member] | |||
Investment in Unconsolidated VIEs [Abstract] | |||
Investment in unconsolidated VIE's | 9,833,977 | 673,260 | |
Retained earnings that represents undistributed earnings | $ 9,972,266 | $ 2,966,644 |
Asset Purchase of Joint Venture Interests (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Asset Purchase of Joint Venture Interests [Abstract] | ||
Ownership percentage | 100.00% | |
Combined purchase price of joint venture | $ 27,532,174 | |
Payments to acquire interest in joint venture | $ 27,532,174 |
Segment Reporting (Details) |
1 Months Ended | 11 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jan. 20, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
Segment
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|||
Segment Reporting [Abstract] | |||||||
Number of operating segments | Segment | 12 | ||||||
Number of reportable segments | Segment | 8 | ||||||
Revenues [Abstract] | |||||||
Consolidated revenues | $ 1,923,909,806 | $ 1,133,806,607 | $ 744,292,323 | ||||
Net Income [Abstract] | |||||||
Net income | $ (1,033,742) | $ 135,627,559 | 134,593,818 | 84,513,427 | 44,897,784 | ||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 134,593,818 | 84,513,427 | 44,897,784 | ||||
Assets [Abstract] | |||||||
Assets | 1,894,247,623 | 1,894,247,623 | 733,680,241 | ||||
Goodwill [Abstract] | |||||||
Goodwill | $ 171,927,291 | $ 171,927,291 | 28,566,232 | ||||
FBC Mortgage, LLC [Member] | |||||||
Segment Reporting [Abstract] | |||||||
Remaining ownership percentage | 50.10% | 50.10% | |||||
Jet Home Loans [Member] | |||||||
Segment Reporting [Abstract] | |||||||
Percentage of ownership interest | 49.90% | 49.90% | |||||
Operating Segments [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | $ 1,951,965,589 | 1,162,435,561 | 763,224,323 | ||||
Net Income [Abstract] | |||||||
Net income | 141,214,686 | 92,443,103 | 47,195,844 | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 141,214,686 | 92,443,103 | 47,195,844 | ||||
Assets [Abstract] | |||||||
Assets | $ 1,965,045,402 | 1,965,045,402 | 768,504,944 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 171,927,291 | 171,927,291 | 28,566,232 | ||||
Operating Segments [Member] | Jacksonville [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | 452,890,488 | 430,810,955 | 333,687,948 | ||||
Net Income [Abstract] | |||||||
Net income | 55,577,768 | 41,380,258 | 26,358,703 | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 55,577,768 | 41,380,258 | 26,358,703 | ||||
Assets [Abstract] | |||||||
Assets | 207,501,540 | 207,501,540 | 162,668,740 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 0 | 0 | 0 | ||||
Operating Segments [Member] | Colorado [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | 114,259,610 | 122,274,508 | 115,835,632 | ||||
Net Income [Abstract] | |||||||
Net income | 3,970,961 | 14,051,978 | 10,424,803 | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 3,970,961 | 14,051,978 | 10,424,803 | ||||
Assets [Abstract] | |||||||
Assets | 116,121,155 | 116,121,155 | 51,605,969 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 0 | 0 | 0 | ||||
Operating Segments [Member] | Orlando [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | 244,142,831 | 124,768,549 | 109,710,225 | ||||
Net Income [Abstract] | |||||||
Net income | 15,936,707 | 10,679,556 | 3,732,935 | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 15,936,707 | 10,679,556 | 3,732,935 | ||||
Assets [Abstract] | |||||||
Assets | 131,882,130 | 131,882,130 | 77,299,028 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 1,794,765 | 1,794,765 | 0 | ||||
Operating Segments [Member] | DC Metro [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | 93,593,242 | 126,240,188 | 39,043,345 | ||||
Net Income [Abstract] | |||||||
Net income | 5,545,937 | 5,142,556 | (2,709,651) | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 5,545,937 | 5,142,556 | (2,709,651) | ||||
Assets [Abstract] | |||||||
Assets | 62,050,969 | 62,050,969 | 41,327,694 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 0 | 0 | 0 | ||||
Operating Segments [Member] | The Carolinas [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | 370,477,256 | 89,324,360 | 0 | ||||
Net Income [Abstract] | |||||||
Net income | 14,623,398 | 6,033,844 | 0 | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 14,623,398 | 6,033,844 | 0 | ||||
Assets [Abstract] | |||||||
Assets | 247,250,074 | 247,250,074 | 177,599,834 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 16,853,013 | 16,853,013 | 16,357,450 | ||||
Operating Segments [Member] | Texas [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | 361,138,232 | 0 | 0 | ||||
Net Income [Abstract] | |||||||
Net income | 21,797,018 | 0 | 0 | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 21,797,018 | 0 | 0 | ||||
Assets [Abstract] | |||||||
Assets | 743,306,444 | 743,306,444 | 0 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 141,070,731 | 141,070,731 | 0 | ||||
Operating Segments [Member] | Jet Home Loans [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | 28,055,783 | 28,628,954 | 18,932,000 | ||||
Net Income [Abstract] | |||||||
Net income | 10,630,401 | 15,921,440 | 4,506,242 | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | 10,630,401 | 15,921,440 | 4,506,242 | ||||
Assets [Abstract] | |||||||
Assets | 77,073,645 | 77,073,645 | 38,696,793 | ||||
Goodwill [Abstract] | |||||||
Goodwill | 0 | 0 | 0 | ||||
Operating Segments [Member] | Other [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | [1] | 287,408,147 | 240,388,047 | 146,015,173 | |||
Net Income [Abstract] | |||||||
Net income | [1] | 13,132,496 | (766,529) | 4,882,812 | |||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | [1] | 13,132,496 | (766,529) | 4,882,812 | |||
Assets [Abstract] | |||||||
Assets | [1] | 379,859,445 | 379,859,445 | 219,306,886 | |||
Goodwill [Abstract] | |||||||
Goodwill | [1] | 12,208,782 | 12,208,782 | 12,208,782 | |||
Reconciling Items from Equity Method Investments [Member] | |||||||
Revenues [Abstract] | |||||||
Consolidated revenues | (28,055,783) | (28,628,954) | (18,932,000) | ||||
Net Income [Abstract] | |||||||
Net income | (6,620,868) | (7,929,676) | (2,298,060) | ||||
Comprehensive Income [Abstract] | |||||||
Comprehensive income | (6,620,868) | (7,929,676) | $ (2,298,060) | ||||
Assets [Abstract] | |||||||
Assets | (70,797,779) | (70,797,779) | (34,824,703) | ||||
Goodwill [Abstract] | |||||||
Goodwill | $ 0 | $ 0 | $ 0 | ||||
|
Income Taxes (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Current expense [Abstract] | |||
Federal | $ 26,336,096 | ||
State | 5,087,506 | ||
Total current expense | 31,423,602 | ||
Deferred expense [Abstract] | |||
Federal | (3,304,766) | ||
State | (664,194) | ||
Total deferred (benefit) | (3,968,960) | ||
Total income tax expense | $ 27,454,642 | $ 0 | $ 0 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Income taxes at federal statutory rate | 21.00% | ||
State and local income taxes, net of federal tax | 2.40% | ||
Federal tax credits | (5.90%) | ||
Non-deductible executive compensation | 0.80% | ||
Other | 0.20% | ||
Effective rate | 18.50% | ||
Deferred tax assets [Abstract] | |||
Property and equipment, net | $ 238,283 | ||
Intangible assets | 262,177 | ||
Contingent consideration valuation | 1,804,773 | ||
Stock options | 1,265,160 | ||
Warranty reserve | 1,249,846 | ||
Deferred tax assets | 4,820,239 | ||
Deferred tax liabilities [Abstract] | |||
Property and equipment, net | (588,719) | ||
Deferred tax liabilities | (588,719) | ||
Net deferred income tax asset | 4,231,520 | ||
Deferred tax assets, valuation allowance | 0 | ||
Uncertain tax positions | $ 0 | $ 0 |
Fair Value Disclosures (Details) - Level 3 [Member] |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |
Beginning balance | $ 23,157,524 |
Contingent consideration adjustments related to prior year acquisitions | 4,161,737 |
Contingent consideration increase related to current year acquisition | 96,737,018 |
Ending balance | $ 124,056,279 |
Related Party Transactions (Details) |
12 Months Ended | ||||
---|---|---|---|---|---|
Feb. 15, 2022
USD ($)
|
Aug. 10, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
Lot
Project
JointVenture
shares
|
Dec. 31, 2020
USD ($)
Lot
|
Dec. 31, 2019
USD ($)
|
|
DFH Investors LLC [Member] | Series A Preferred Units [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Number of preferred shares owned (in shares) | shares | 15,400 | ||||
Percentage of ownership interest | 11.65% | ||||
Dream Finders Homes LLC and DFH Investors LLC [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Percentage of ownership interest | 65.33% | ||||
Total committed capital | $ 1,400,000 | $ 1,400,000 | |||
Fund I [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Number of joint ventures entered | JointVenture | 6 | ||||
Number of land bank projects | Project | 10 | ||||
Total committed capital | $ 36,706,163 | 36,706,163 | |||
Percentage of total committed capital invested | 3.81% | ||||
Fund I [Member] | Directors Executive Officers and Management [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Total committed capital | $ 8,725,000 | $ 8,725,000 | |||
Percentage of total committed capital invested | 23.77% | 23.77% | |||
Fund II [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Percentage of ownership interest | 72.00% | ||||
Total committed capital | $ 3,000,000 | ||||
Percentage of total committed capital invested | 0.90% | ||||
Fund II [Member] | Directors Executive Officers and Management [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Total committed capital | $ 33,900,000 | $ 0 | |||
Percentage of total committed capital invested | 10.50% | 0.00% | |||
Fund II [Member] | Maximum [Member] | Memorandum of Right of First Offer [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Total committed capital | $ 20,000,000 | ||||
DF Management GP II, LLC [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Percentage of ownership interest | 25.81% | ||||
DF Management GP II, LLC [Member] | Minimum [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Total committed capital | $ 322,090,000 | ||||
DF Capital [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Percentage of ownership interest | 49.00% | ||||
Number of land bank projects | Project | 7 | ||||
Amount invested in funds | $ 180,000 | ||||
Number of additional lots controlled | Lot | 347 | 595 | |||
Number of lots purchased in transaction | Lot | 248 | 140 | |||
Outstanding lot deposit balance | $ 3,676,096 | $ 6,200,000 | |||
Lot option fees paid related to transactions | $ 293,812 | $ 974,250 | $ 106,394 | ||
LB Parker Owners, LLC [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Land banking transaction, acquisition of real property | $ 3,300,000 | ||||
Rockpoint Group LLC [Member] | Subsequent Event [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Total committed capital | $ 100,000,000 | ||||
Jet Home Loans [Member] | |||||
Consolidated Joint Ventures [Abstract] | |||||
Percentage of ownership interest | 49.90% |
Earnings per Share (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Numerator [Abstract] | |||
Net and comprehensive income attributable to Dream Finders Homes, Inc. | $ 121,132,501 | $ 79,093,455 | $ 39,191,266 |
Less: Preferred dividends | 4,844,913 | ||
Add: Loss prior to reorganization attributable to DFH LLC members | (1,244,083) | ||
Net and comprehensive income available to common stockholders | $ 117,531,671 | ||
Weighted-average number of common shares outstanding - basic (in shares) | 92,521,482 | 0 | 0 |
Add: Common stock equivalent shares (in shares) | 2,792,111 | ||
Weighted-average number of shares outstanding - diluted (in shares) | 95,313,593 | 0 | 0 |
Anti-dilutive shares (in shares) | 0 |
Subsequent Events (Details) - USD ($) |
Mar. 02, 2022 |
Feb. 15, 2022 |
Jan. 31, 2021 |
---|---|---|---|
Century Homes Florida Acquisition [Member] | |||
Subsequent Events [Abstract] | |||
Cash paid for business acquisition | $ 35,000,000 | ||
Subsequent Event [Member] | |||
Subsequent Events [Abstract] | |||
Settlement amount during arbitration proceedings | $ 12,000,000 | ||
Settlement amount agreed to pay the policy limit | $ 4,000,000 | ||
Subsequent Event [Member] | Rockpoint Group LLC [Member] | |||
Subsequent Events [Abstract] | |||
Total committed capital | $ 100,000,000 |
+1EF+^K
M9[#.<49AT]OS=Z%347&1X:B042M)="(;)+1NB]5.BQ7T-+I!=5.?0 I!#[?\U%_FJW;UYM6A^3HY=+ROK_OAU.E.Y7TWV>R[!^37]N#_NO'EVC>S
M9G]LMIOUJJW7DU];_X_O_>UQTGR8_*7^XX_5WO.3FW]]WK3_^='_9O>^/AS_
M]_R+R6K?E6GN?O_4;-?]/TPGO_TZG_SI?WYX==UZ([M+7=^=#7K[8! ?,>B7
M>EW[=\#[;3UYYQ^5^G#PAOVVW[3'Z].E>F;]\\&>_P 9#V_1[](6/7]MBC9IDT3TI2HPR/#09"\/',"D96_-00=)4,; 05$
M]H!4M\/EKHML35*"T ,"$<@K!Y*QK'L<6+!?K7H Z55W, @X4SA44W>K-?AG
M!,7.Z*:OAC=Z1\**ER^#PO"$XD#HB/ZB[2(N-)\14 L^;0Y$COPB5@@X"+5C IYS4LER0C<#18!\BO55W!
MFZ174.'01D4#)_' ?3MRK7/UW?QREE[.+FCX[Z[3B\N+]&QZD:#8>(*<6$4
M'\ >:^)P($:#F&X^H7SV.J,%RS9C8]8Y-C0F6K4I\MS6D!-;@MWV'L8#G8T[
M0Z0<71,(($!89P/%=170+U%F487I6'0V*&O\ITAQ. L*&F\E3/8&'X,T]8RC
MOCN[2L^O+]/KTSGNGM _+!HYTL&!B =7.;*JU>E753Y%J5Q:; \
LFLQ;<25;[[:UY!]W0+RV _Q&2,-!A)P*IGC"!2[+DXLP? "+L$.:"122
M16$/IDHBYNS0-$%KISQ$$KA<8 4 I0E>#YJ#+-R%K@@D9_KL4Q^9S?F0R(/$
M#(8NC+$T9) X>\<)J3K+P)LA$@P(0 L*H1I@@R2,&U*C60#; ')<+^ U;ZN@
M?86K+4NDUAL8J0$Q0H8Y$]08L@8H#R(N^ .L*0YQ.GF*N@KF+(LV7'$7'"RP
M(,AX@]<2MFC?FR5'F#B",&>G'P15@TMJ=8'R$(A8KU:-686! &G>'5GLQ/,@
M1%BS(OMZHMZ1)\H.("WD)?LL\D <2J]