Dream Finders Announces First Quarter 2025 Results

First Quarter Homebuilding Revenues Increased 18%

Home Closings Up 16%; Homebuilding Gross Margin Up 140 bps to 19.2%

Return on Participating Equity of 28.5%

JACKSONVILLE, Fla.--(BUSINESS WIRE)--May 06, 2025-- 

Dream Finders Homes, Inc. (the "Company", "Dream Finders Homes", "Dream Finders" or "DFH") (NYSE: DFH) announced its financial results for the first quarter ended March 31, 2025.

First Quarter 2025 Highlights (As Compared to First Quarter 2024)

   -- Homebuilding revenues increased 18% to $970 million from $825 million 
 
   -- Home closings increased 16% to 1,925 from 1,655 
 
   -- Net new orders increased 18% to 2,032 from 1,724 
 
   -- Homebuilding gross margin of 19.2% compared to 17.8% 
 
   -- Adjusted homebuilding gross margin (non-GAAP) of 27.8% compared to 26.3% 
 
   -- Pre-tax income remained consistent at $71 million 
 
   -- Net income attributable to DFH of $55 million, or $0.55 per basic share 
      compared to $54 million, or $0.55 per basic share 
 
   -- Financial services pre-tax income increased 29% to $7 million from $5 
      million 
 
   -- Controlled lot pipeline of 60,538 as of March 31, 2025 compared to 54,698 
      as of December 31, 2024 
 
   -- Total liquidity of $677 million as of March 31, 2025, comprised of cash 
      and cash equivalents and availability under the revolving credit facility 
 
   -- Return on participating equity of 28.5% compared to 34.9% 
 
   -- Repurchased 284,564 Class A common shares for $7 million during the three 
      months ended March 31, 2025 

Management Commentary

Patrick Zalupski, Dream Finders Homes Chairman and CEO, said, "During the first quarter of 2025, Dream Finders achieved another quarter of positive results, with homebuilding revenues of $970 million, an 18% increase over the prior year quarter and another first quarter Company record. We also increased home closings and net sales by 16% and 18%, respectively, and improved gross margin by 140 bps compared to the year ago quarter. All-in-all, given the continued challenging environment from a mortgage rate and affordability perspective, I am pleased with the performance of the team and our results.

Adding to the productive quarter, we closed the Liberty Communities and Cherry Creek Mortgage acquisitions during the quarter, and Alliant National Title and Green River Builders subsequent to quarter end, for a total of ten acquisitions in six years. Liberty provides us a great opportunity to expand into the Atlanta market, which is the largest housing market in the Southeast and the only major Southeastern market where DFH was lacking a presence. We decided more is better when it comes to the Atlanta market and yesterday we announced the closing of Green River Builders. This strategic acquisition will help bolster and accelerate our growth in the Atlanta market. We are confident all of these transactions will provide significant growth opportunities in our homebuilding and financial services segments, allowing us to continue to grow our earnings and deliver above-average shareholder returns. We reiterate our 2025 full year guidance of approximately 9,250 expected home closings."

Acquisition of Liberty Communities

On January 23, 2025, the Company acquired the majority of the homebuilding assets of Liberty Communities, LLC ("Liberty Communities"). The acquisition allowed the Company to enter the Atlanta, Georgia market and further expand its operations in Greenville, South Carolina. The operations of Liberty Communities are predominantly included in the Southeast segment as of the date of acquisition.

First Quarter 2025 Results

Homebuilding revenues in the first quarter of 2025 increased 18% to $970 million, compared to $825 million in the first quarter of 2024. Home closings increased 16% to 1,925, compared to 1,655 in the first quarter of 2024. Average sales price ("ASP") of homes closed for the first quarter of 2025 was $498,284, an increase of 1% compared to the prior year quarter ASP of $494,995. The growth in homebuilding revenues was primarily due to the increase in home closings, largely attributable to the Midwest segment, which had an increase of 131 closings compared to the first quarter of 2024, with the highest ASP among the homebuilding segments at $580,221. The Company's latest acquisition, Liberty Communities in January 2025, contributed 107 closings to the first quarter of 2025 with an ASP of $358,314, 90 of which were included in the Southeast segment, which had a total increase in home closings of 109. The increased use of sales incentives during the first quarter of 2025 had a partially offsetting impact on the homebuilding revenue growth.

Homebuilding gross margin percentage in the first quarter of 2025 was 19.2%, an increase of 140 basis points ("bps"), compared to 17.8% in the first quarter of 2024. The increase in homebuilding gross margin percentage for the first quarter of 2025 was mostly the result of changes in product mix and direct cost reductions, partially offset by higher land and financing costs. In addition, amortization of purchase accounting adjustments associated with home closings contributed from the Liberty Communities acquisition negatively impacted the first quarter of 2025 gross margin percentage by approximately 19 bps. Purchase accounting amortization is a temporary cost that will conclude in conjunction with closing the remaining homes in inventory acquired from Liberty Communities.

Adjusted homebuilding gross margin in the first quarter of 2025 was 27.8%, an increase of 150 bps from the first quarter 2024 adjusted homebuilding gross margin of 26.3%. Adjusted homebuilding gross margin is a non-GAAP financial measure. See "Reconciliation of Non-GAAP Financial Measures" below.

Selling, general and administrative expense ("SG&A") in the first quarter of 2025 increased 46% to $117 million, compared to $80 million in the first quarter of 2024. The increase was primarily attributable to the costs of the forward mortgage commitment programs, which allow homebuyers to lock in their mortgage interest rates at the time of sale, as well as higher compensation costs, including a one-time stock acceleration expense of approximately $4 million. SG&A as a percentage of homebuilding revenues in the first quarter of 2025 increased 230 bps to 12.0%, compared to 9.7% in the first quarter of 2024. Although the SG&A percentage of homebuilding revenues increased in the current quarter, this metric should mostly normalize for the year if anticipated quarterly closing volumes materialize.

Consolidated net income attributable to DFH in the first quarter of 2025 was $55 million, or $0.55 per basic share, remaining mostly consistent with $54 million, or $0.55 per basic share in the first quarter of 2024.

Net new orders in the first quarter of 2025 were 2,032, an increase of 18% compared to 1,724 net new orders for the first quarter of 2024. The cancellation rate in the first quarter of 2025 was 11.7%, an improvement of 930 bps compared with the first quarter of 2024 cancellation rate of 21.0%. In the first quarter of 2024, the Company had one built-for-rent contract of 229 units that was terminated based on a strategic decision to convert the controlled lots into future retail sales. Excluding the impact of all built-for-rent activity, net new orders for the first quarter of 2025 increased 10% and the cancellation rate, despite the increase of 190 bps over the prior year quarter, marks one of the lowest in the Company's history. The Company believes the 10% increase in net new orders and low cancellation rate is reflective of its successful sales incentives and availability of quick, move-in-ready homes in its communities.

First Quarter 2025 Backlog

As of March 31, 2025, DFH had a backlog of 2,802 homes, valued at $1.4 billion, compared to the backlog of 2,599 homes, valued at $1.3 billion as of December 31, 2024. As of March 31, 2025, the ASP in backlog was $494,987 compared to $501,910 as of December 31, 2024. As of March 31, 2025, approximately 2,432 of the homes in backlog are expected to be delivered in 2025 and 370 of homes are expected to be delivered in 2026 and beyond.

The following table shows the backlog units and ASP as of March 31, 2025 by homebuilding segment:

 
                    As of March 31, 2025 
                         (unaudited) 
               ------------------------------- 
Backlog:        Units     Average Sales Price 
               --------  --------------------- 
Southeast         1,230     $          429,818 
Mid-Atlantic        718                444,643 
Midwest             854                623,088 
               --------  ----  --------------- 
   Total          2,802     $          494,987 
               ========  ====  =============== 
 

Subsequent Events

Alliant Title

On April 18, 2025, the Company acquired Colorado-based title insurance underwriter, Alliant National Title Insurance Company, Inc. and a related affiliate (collectively, "Alliant National Title" or "Alliant Title"). The operations of Alliant Title will be included in the Financial Services segment as of the date of acquisition.

Green River Builders

On May 2, 2025, the Company acquired the majority of the homebuilding assets of Green River Builders, Inc. ("Green River Builders") allowing us to further expand our operations in the Atlanta, Georgia market. Assets acquired include approximately 140 lots and home sites in different stages of construction. Additionally, the Company expects to control over 520 lots as a result of the transaction. The operations of Green River Builders will be included in the Southeast segment as of the date of acquisition.

Full Year 2025 Outlook

Dream Finders Homes maintains its guidance of approximately 9,250 home closings for the full year 2025, inclusive of those from the Liberty Communities acquisition.

About Dream Finders Homes, Inc.

(MORE TO FOLLOW) Dow Jones Newswires

May 06, 2025 07:00 ET (11:00 GMT)