Dream Finders Homes(US:DFH)2025-10-30 18:07Homebuilding Performance - Homebuilding revenues for Q3 2025 were $916.7 million, a decrease of $69.6 million or 7% compared to Q3 2024 [127]. - The average sales price (ASP) of homes closed decreased by 8% to $476,962 in Q3 2025 from $518,553 in Q3 2024 [131]. - Home closings increased by 1% to 1,915 in Q3 2025 compared to 1,889 in Q3 2024 [127]. - Homebuilding revenues for the nine months ended September 30, 2025, were $2,986.4 million, an increase of $122.6 million, or 4%, from $2,863.7 million for the same period in 2024 [141]. - Home closings increased by 497 homes, or 9%, totaling 6,072 for the nine months ended September 30, 2025, compared to 5,575 in 2024 [141]. - The average sales price (ASP) of homes closed decreased by $24,988, or 5%, to $485,216 for the nine months ended September 30, 2025 [141]. - The cancellation rate improved to 12.5% in Q3 2025 from 13.8% in Q3 2024, a reduction of 1.3% [127]. - The cancellation rate improved to 12.7% for the nine months ended September 30, 2025, down from 15.8% in 2024, representing a decrease of 3.1 percentage points [141]. Financial Performance - Net income attributable to Dream Finders Homes, Inc. for the nine months ended September 30, 2025, was $158.5 million, down from $206.1 million in the same period of 2024, representing a decline of 23% [123]. - The EBITDA margin for Q3 2025 was 11.0%, down from 13.2% in Q3 2024 [123]. - Selling, general and administrative expenses (SG&A) increased by $79.4 million, or 29%, to $357.3 million, representing 12.0% of homebuilding revenues for the nine months ended September 30, 2025 [149]. - Homebuilding gross margin percentage decreased to 17.7% for the nine months ended September 30, 2025, down 1.0 percentage points from 18.7% in 2024 [141]. Segment Performance - The Southeast segment reported homebuilding revenues of $317 million, an increase of 8% from $293 million in Q3 2024, driven by a 20% increase in home closings [134]. - The Mid-Atlantic segment experienced a 15% decline in homebuilding revenues to $242 million, attributed to a 9% decrease in ASP and lower home closings [135]. - The Midwest segment homebuilding revenues increased by $48 million, or 4%, to $1,239 million for the nine months ended September 30, 2025 [148]. - The Southeast segment homebuilding revenues increased by $78 million, or 9%, to $992 million for the nine months ended September 30, 2025 [146]. Backlog and Inventory - Backlog units as of September 30, 2025, decreased by 34% to 2,619 from 3,996 units in 2024 [130]. - The backlog of sold homes decreased to 2,619 homes valued at approximately $1.2 billion, down 34% in volume and 42% in value from 3,996 homes valued at approximately $2.0 billion as of September 30, 2024 [169]. - The backlog for the Southeast segment as of September 30, 2025, was 1,143 homes, a decrease of 502 from 1,645 homes as of September 30, 2024 [170]. - The Midwest segment backlog fell to 578 homes, a decrease of 664 from 1,242 homes as of September 30, 2024, primarily due to higher closings relative to net sales [172]. Cash and Liquidity - The company's cash and cash equivalents increased to $251.0 million as of September 30, 2025, compared to $204.9 million in 2024 [123]. - As of September 30, 2025, the company's cash and total liquidity were $624.7 million, down from $816.0 million as of December 31, 2024, reflecting a decrease of approximately 23.5% [199]. - The company reported net cash used in operating activities of $244.2 million for the nine months ended September 30, 2025, a significant improvement compared to $563.1 million for the same period in 2024, representing a reduction of 56.6% [205]. - Net cash provided by financing activities was $396.5 million for the nine months ended September 30, 2025, down from $445.0 million for the same period in 2024, a decrease of approximately 10.9% [207]. Debt and Financing - The net homebuilding debt to net capitalization ratio was 47.3% as of September 30, 2025, compared to 45.6% in 2024 [191]. - Total debt increased to $1,766,134 million as of September 30, 2025, from $1,456,088 million in 2024 [191]. - The company issued $300 million in senior unsecured notes with a 6.875% interest rate, due September 15, 2030, to repay a portion of the outstanding balance under the Credit Agreement [202]. - The company amended its Credit Agreement to increase aggregate commitments to $1.5 billion and extended the maturity date to August 21, 2028 [201]. Mortgage and Financial Services - Mortgage revenues for the three months ended September 30, 2025, were $16,306, a 1% increase from $16,079 in 2024 [176]. - Total financial services revenues surged to $53,133, marking a 163% increase from $20,168 in the same period of 2024 [176]. - Mortgage revenues increased by $32,770 million, or 204%, for the nine months ended September 30, 2025, compared to the same period in 2024 [177]. - Title and other services revenues rose by $64,793 million, or 637%, for the nine months ended September 30, 2025, compared to the same period in 2024 [177]. - Total financial services revenues reached $123,821 million, a 372% increase for the nine months ended September 30, 2025, compared to the same period in 2024 [177]. - The number of mortgage loans originated increased by 644, or 20%, totaling 3,926 loans for the nine months ended September 30, 2025 [177]. - The capture rate for mortgage originations improved to 78.3%, up 5% from 73.6% in the previous year [177]. - The acquisition of Alliant Title in April 2025 contributed $32 million to the increase in title and other services revenues for the three months ended September 30, 2025 [178]. Lot Deposits and Land Bank - Lot deposits for finished lot option and land bank option contracts increased to $551 million as of September 30, 2025, up from $458 million as of December 31, 2024 [154]. - As of September 30, 2025, the total controlled lots increased to 64,341, a rise of 18% from 54,698 as of December 31, 2024 [156]. - The number of active communities rose to 283, reflecting an increase of 48 communities or 20% compared to 235 active communities as of September 30, 2024 [158]. - The company plans to allocate additional liquidity to land bank deposits to mitigate risks associated with holding undeveloped land [198]. Interest Rate Risk - Jet HomeLoans is exposed to interest rate risk related to its lending activities, underwriting and originating mortgage loans sold through forward mortgage commitments [228]. - The loan portfolio of Jet HomeLoans is held for sale and is subject to forward sale commitments, with interest rate lock commitments used to hedge mortgage-related interest rate exposure [228].