Delaware
|
001-39916
|
85-2983036
|
||
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
14701 Philips Highway,
Suite 300
Jacksonville,
Florida
|
32256
|
|
(Address of principal executive offices)
|
(Zip Code)
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A Common Stock
|
DFH
|
Nasdaq Global Select Market
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
|
Emerging growth company ☐
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
|
Item 9.01 |
Financial Statements and Exhibits.
|
|
• |
The audited combined balance sheets of MHI as of December 31, 2019 and 2020 and the related combined statements of income, cash flows and changes in equity for the years then ended, the notes related thereto, and the report of the
independent auditors related thereto, are filed as Exhibit 99.1 to this Current Report on Form 8-K/A.
|
|
• |
The unaudited combined balance sheet of MHI as of June 30, 2021 and the related unaudited combined statements of income, cash flows and changes in equity for the six month periods ended June 30, 2020 and 2021, and the notes related
thereto, are filed as Exhibit 99.2 to this Current Report on Form 8-K/A.
|
|
• |
The unaudited combined pro forma balance sheet as of June 30, 2021, and the related unaudited pro forma combined statement of income for the six months ended June 30, 2021 and for the year ended December 31, 2020, and the related notes
thereto, of the Company, after giving effect to the MHI Acquisition, are filed as Exhibit 99.3 to this Current Report on Form 8-K/A.
|
|
Number
|
|
Description
|
Consent of Pannell Kerr Forster of Texas, P.C. (filed herewith).
|
|||
The audited combined balance sheets of MHI as of December 31, 2019 and 2020 and the related combined statements of income, cash flows and changes in equity for the years then ended, the notes related thereto
(filed herewith).
|
|||
The unaudited combined balance sheet of MHI as of June 30, 2021 and the related unaudited combined statements of income cash flows and changes in equity for the six month periods ended June 30, 2020 and 2021,
and the notes related thereto (filed herewith).
|
|||
The unaudited pro forma condensed combined balance sheet as of June 30, 2021, and the related unaudited pro forma condensed combined statement of comprehensive income for the six months ended June 30, 2021 and
for the year ended December 31, 2020, and the related notes thereto, of the Company, after giving effect to the MHI Acquisition (filed herewith).
|
|||
104
|
Cover Page Interactive Data File (embedded within the inline XBRL document)
|
DREAM FINDERS HOMES, INC.
|
|||
By: /s/ Robert E. Riva
|
|||
Robert E. Riva
Vice President, General Counsel and Corporate Secretary
|
|||
Date: December 14, 2021
|
Houston Texas
|
|
Date: December 14, 2021
|
Page(s)
|
|
|
|
Independent Auditors’ Report
|
1 |
Combined Balance Sheets
|
2 |
Combined Statements of Income | 3 |
Combined Statements of Changes in Equity | 4 |
Combined Statements of Cash Flows | 5 |
Notes to Combined Financial Statements | 6-19 |
December 31,
|
||||||||
2020
|
2019
|
|||||||
ASSETS
|
||||||||
CASH AND CASH EQUIVALENTS (including restricted cash of $570,847 and $570,494 respectively)
|
$
|
33,318,401
|
$
|
24,449,807
|
||||
NOTES & ADVANCES RECEIVABLE—Affiliates
|
4,293,623
|
9,186,856
|
||||||
ACCOUNTS RECEIVABLE—Other
|
6,977,279
|
4,339,841
|
||||||
PREPAID EXPENSES AND OTHER ASSETS
|
40,839,610
|
38,816,177
|
||||||
RESIDENTIAL HOUSING AND OTHER INVENTORY
|
441,871,751
|
452,563,606
|
||||||
FURNITURE, FIXTURES, AND LEASEHOLD IMPROVEMENTS—Net
|
4,142,039
|
4,256,252
|
||||||
TRADE NAME—Net
|
-
|
1,010,732
|
||||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
2,572,935
|
1,871,537
|
||||||
TOTAL ASSETS
|
$
|
534,015,638
|
$
|
536,494,808
|
||||
LIABILITIES AND EQUITY
|
||||||||
LIABILITIES:
|
||||||||
Trade accounts payable
|
$
|
35,008,118
|
$
|
27,916,270
|
||||
Accrued and other liabilities
|
53,586,192
|
36,291,538
|
||||||
Unsecured debt
|
7,849,000
|
-
|
||||||
Secured debt agreements
|
220,732,776
|
271,882,861
|
||||||
Total liabilities
|
317,176,086
|
336,090,669
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
EQUITY
|
216,839,552
|
200,404,139
|
||||||
Total equity
|
216,839,552
|
200,404,139
|
||||||
TOTAL LIABILITIES AND EQUITY
|
$
|
534,015,638
|
$
|
536,494,808
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
HOME SALES REVENUE
|
$
|
903,784,425
|
$
|
758,230,559
|
||||
COST OF SALES—Homes:
|
||||||||
Direct costs
|
683,119,316
|
585,766,596
|
||||||
Indirect, selling, and closing costs
|
107,659,406
|
89,814,388
|
||||||
Total cost of sales—homes
|
790,778,722
|
675,580,984
|
||||||
GROSS PROFIT FROM HOME SALES
|
113,005,703
|
82,649,575
|
||||||
LAND SALES REVENUE
|
4,800,055
|
3,791,680
|
||||||
COST OF SALES—Land:
|
||||||||
Direct costs
|
3,432,861
|
3,772,394
|
||||||
Indirect, selling, and closing costs
|
126,027
|
199,757
|
||||||
Total cost of sales—land
|
3,558,888
|
3,972,151
|
||||||
GROSS PROFIT (LOSS) FROM LAND SALES
|
1,241,167
|
(180,471
|
)
|
|||||
TOTAL GROSS PROFIT
|
114,246,870
|
82,469,104
|
||||||
OPERATING AND OTHER INCOME (EXPENSES):
|
||||||||
General and administrative
|
(45,677,322
|
)
|
(36,984,906
|
)
|
||||
Marketing
|
(9,034,825
|
)
|
(9,479,305
|
)
|
||||
Interest
|
(2,212,735
|
)
|
(4,863,955
|
)
|
||||
Inventory valuation adjustment
|
(456,044
|
)
|
(589,843
|
)
|
||||
Equity in earnings of unconsolidated entities
|
563,497
|
404,944
|
||||||
Interest income
|
144,217
|
84,371
|
||||||
Other income
|
935,721
|
784,974
|
||||||
Total operating and other expenses, net
|
(55,737,491
|
)
|
(50,643,720
|
)
|
||||
OPERATING INCOME BEFORE INCOME TAXES
|
58,509,379
|
31,825,384
|
||||||
INCOME TAX EXPENSE
|
(1,065,640
|
)
|
(788,721
|
)
|
||||
NET INCOME
|
$
|
57,443,739
|
$
|
31,036,663
|
BALANCE—December 31, 2018
|
$
|
177,103,551
|
||
Cummulative effect of change in accounting principle
|
892,968
|
|||
|
||||
Distributions
|
(8,629,043
|
)
|
||
|
||||
Net income
|
31,036,663
|
|||
BALANCE—December 31, 2019
|
200,404,139
|
|||
Distributions
|
(27,941,706
|
)
|
||
|
||||
Net income
|
20,799,557
|
|||
BALANCE—December 31, 2020
|
$
|
193,261,990
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
57,443,739
|
$
|
31,036,663
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
2,732,159
|
2,030,532
|
||||||
(Gain)/Loss on disposition of model home furniture and fixtures
|
(46,286
|
)
|
(23,418
|
)
|
||||
Net equity in earnings of unconsolidated entities
|
(74,296
|
)
|
(5,918
|
)
|
||||
Inventory valuation adjustment
|
456,044
|
589,843
|
||||||
Amortization of loan acquisition costs
|
1,842,004
|
1,850,824
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Notes and advances receivable, affiliates
|
4,893,233
|
6,140,689
|
||||||
Accounts receivable, other
|
(2,637,438
|
)
|
(325,008
|
)
|
||||
Prepaid expenses and other assets
|
(1,913,225
|
)
|
(1,013,116
|
)
|
||||
Residential housing and other inventory, net
|
10,235,811
|
(20,052,089
|
)
|
|||||
Trade accounts payable
|
7,091,848
|
84,926
|
||||||
Accrued expenses and other liabilities
|
17,294,654
|
4,147,927
|
||||||
Net cash provided by operating activities
|
97,318,247
|
24,461,855
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Additions to model home furniture and fixtures
|
(1,848,216
|
)
|
(1,187,018
|
)
|
||||
Other investing activities, net
|
287,288
|
(382,386
|
)
|
|||||
Contributions to investment in unconsolidated entities
|
(627,102
|
)
|
(1,780,277
|
)
|
||||
Net cash used in investing activities
|
(2,188,030
|
)
|
(3,349,681
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Debt proceeds
|
266,548,851
|
198,786,954
|
||||||
Debt payments
|
(309,849,936
|
)
|
(214,697,946
|
)
|
||||
Debt acquisition costs
|
(1,952,212
|
)
|
(1,689,211
|
)
|
||||
Cash distributions to partners
|
(41,008,326
|
)
|
(8,629,043
|
)
|
||||
Net cash used in financing activities
|
(86,261,623
|
)
|
(26,229,246
|
)
|
||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
8,868,594
|
(5,117,072
|
)
|
|||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of year
|
24,449,807
|
29,566,879
|
||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of year
|
$
|
33,318,401
|
$
|
24,449,807
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for interest—net of amounts capitalized
|
$
|
2,729,720
|
$
|
5,009,343
|
||||
|
||||||||
Cash paid for taxes
|
$
|
797,000
|
$
|
721,840
|
Note 1
|
- Organization and Description of Business
|
Note 2
|
- Capital Structure
|
Note 2
|
- Capital Structure (Continued)
|
Note 3
|
- Summary of Significant Accounting Policies
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2020
|
2019
|
|||||||
Due under developer reimbursement agreements
|
$
|
2,469,838
|
$
|
773,456
|
||||
Vendor rebates receivable
|
2,510,000
|
1,860,027
|
||||||
Other receivables
|
1,997,441
|
1,706,358
|
||||||
Total accounts receivable, other
|
$
|
6,977,279
|
$
|
4,339,841
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2020
|
2019
|
|||||||
Capitalized in inventory—beginning of year
|
$
|
11,529,474
|
$
|
10,690,378
|
||||
Incurred
|
11,885,918
|
17,769,656
|
||||||
Less amounts:
|
||||||||
Included in costs of sales
|
(13,055,720
|
)
|
(12,066,605
|
)
|
||||
Included in operating expenses
|
(2,212,735
|
)
|
(4,863,955
|
)
|
||||
Capitalized in inventory—end of year
|
$
|
8,146,937
|
$
|
11,529,474
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2020
|
2019
|
|||||||
Accrued warranty liability—beginning of year
|
$
|
4,501,195
|
$
|
2,100,000
|
||||
Warranty accrual for current year home sales
|
7,442,196
|
6,030,181
|
||||||
Warranty payments made during the year
|
(4,884,297
|
)
|
(3,628,986
|
)
|
||||
Accrued warranty liability—end of year
|
$
|
7,059,094
|
$
|
4,501,195
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2020
|
2019
|
|||||||
Production home sales
|
$
|
881,018,949
|
$
|
737,433,418
|
||||
BOYL home sales
|
22,765,476
|
20,797,141
|
||||||
Home sales revenue
|
$
|
903,784,425
|
$
|
758,230,559
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
Note 4
|
- Residential Housing and Other Inventory, Net
|
2020
|
2019
|
|||||||
Under contract:
|
||||||||
Homes completed
|
$
|
17,351,826
|
$
|
17,361,365
|
||||
Homes under construction
|
164,092,027
|
87,034,268
|
||||||
Lots owned
|
49,492,445
|
22,357,428
|
||||||
Total inventory under contract
|
230,936,298
|
126,753,061
|
||||||
Speculative units:
|
||||||||
Homes completed
|
9,997,845
|
38,820,120
|
||||||
Homes under construction
|
33,612,822
|
89,962,675
|
||||||
Lots owned
|
113,625,589
|
138,386,221
|
||||||
Total speculative units
|
157,236,256
|
267,169,016
|
||||||
Model homes:
|
||||||||
Completed
|
48,832,862
|
48,571,241
|
||||||
Under construction
|
2,309,474
|
3,363,137
|
||||||
|
||||||||
Total model homes
|
51,142,336
|
51,934,378
|
||||||
Land:
|
||||||||
Unimproved land
|
1,643,199
|
1,568,868
|
||||||
Land under development
|
913,662
|
5,138,283
|
||||||
|
||||||||
Total land
|
2,556,861
|
6,707,151
|
||||||
Total residential housing and other inventory
|
$
|
441,871,751
|
$
|
452,563,606
|
Note 4
|
- Residential Housing and Other Inventory, Net (Continued)
|
Note 5
|
- Accrued Expenses and Other Liabilities
|
2020
|
2019
|
|||||||
Warranty and legal
|
$
|
8,378,938
|
$
|
5,410,914
|
||||
Property taxes
|
4,501,845
|
4,654,059
|
||||||
Salaries, wages, and bonuses—net
|
12,001,178
|
9,010,406
|
||||||
Customer deposits
|
20,818,016
|
10,398,536
|
||||||
Interest
|
571,159
|
1,088,144
|
||||||
Other
|
7,315,056
|
5,729,479
|
||||||
Total accrued and other liabilities
|
$
|
53,586,192
|
$
|
36,291,538
|
Note 6
|
- Debt Agreements
|
2020
|
2019
|
|||||||
Revolving credit
|
$
|
215,732,776
|
$
|
271,882,861
|
||||
Unsecured debt
|
7,849,000
|
-
|
||||||
Working capital ($5,000,000 maximum)
|
5,000,000
|
-
|
||||||
Total outstanding loans
|
$
|
228,581,776
|
$
|
271,882,861
|
||||
Revolving credit:
|
||||||||
Credit line maximum
|
$
|
630,349,000
|
$
|
635,000,000
|
||||
|
||||||||
Committed loans
|
$
|
450,676,339
|
$
|
381,782,376
|
||||
Revolving credit loan availability
|
$
|
278,189,478
|
$
|
290,655,044
|
||||
Outstanding balances:
|
||||||||
Loans
|
(215,732,776
|
)
|
(271,882,861
|
)
|
||||
Letters-of-credit outstanding & limitations
|
(1,836,025
|
)
|
(1,055,951
|
)
|
||||
Revolving credit available borrowing
|
$
|
60,620,677
|
$
|
17,716,232
|
||||
Interest rates as of December 31
|
1.00%–4.50
|
%
|
4.50%–5.27
|
%
|
Note 6
|
- Debt Agreements (Continued)
|
2020
|
2019
|
|||||||
Liquidity test (cash and available borrowing)
|
$
|
20,000,000
|
$
|
15,000,000
|
||||
Interest coverage ratio
|
2.00-2.25 to 1.00
|
2.00-2.25 to 1.00
|
||||||
Leverage ratio
|
2.75-3.50 to 1.00
|
2.75-3.50 to 1.00
|
||||||
Tangible net worth, excluding intercompany
|
$
|
119,000,000
|
$
|
111,687,520
|
||||
Maximum investment in land and lots owned
|
$
|
247,394,706
|
$
|
172,964,349
|
Note 6
|
- Debt Agreements (Continued)
|
Year Ending
December 31,
|
||||
2021
|
$
|
63,465,546
|
||
2022
|
125,184,964
|
|||
2023
|
15,085,254
|
|||
2024
|
4,471,600
|
|||
2025
|
20,374,412
|
|||
Total
|
$
|
228,581,776
|
Note 7
|
- Investment in Unconsolidated Entities
|
2020
|
2019
|
|||||||
Assets
|
$
|
12,644,020
|
$
|
9,696,979
|
||||
Liabilities
|
7,728,800
|
6,038,039
|
||||||
Revenues
|
8,380,969
|
1,308,967
|
||||||
Expenses
|
7,116,080
|
2,355
|
Note 8
|
- Lot Purchase Contracts and Variable Interest Entities
|
Lots
|
Purchase Price
|
Earnest Money
|
||||||||||
Third parties
|
2,212
|
$
|
192,984,238
|
$
|
23,051,956
|
|||||||
Related parties
|
1,225
|
87,884,161
|
10,761,268
|
|||||||||
3,437
|
$
|
280,868,399
|
$
|
33,813,224
|
Lots
|
Purchase Price
|
Earnest Money
|
||||||||||
Third parties
|
2,577
|
$
|
203,618,368
|
$
|
29,254,633
|
|||||||
Related parties
|
957
|
65,385,724
|
7,140,459
|
|||||||||
3,534
|
$
|
269,004,092
|
$
|
36,395,092
|
Note 9
|
- Related Party Transactions
|
Note 10
|
- Commitments and Contingencies
|
Note 10
|
- Commitments and Contingencies (Continued)
|
Year Ending
December 31,
|
||||
2021
|
$
|
1,221,266
|
||
2022
|
366,123
|
|||
2023
|
336,043
|
|||
2024
|
271,538
|
|||
2024
|
265,624
|
|||
Thereafter
|
78,224
|
|||
Total
|
$
|
2,538,818
|
Note 11
|
- Employee Benefit Plan
|
Note 12
|
- Subsequent Events
|
|
Page(s) |
|
|
Independent Accountants’ Review Report
|
1 |
|
|
Combined Balance Sheets | 2 |
|
|
Combined Statements of Income
|
3 |
Combined Statements of Changes in Equity | 4 |
Combined Statements of Cash Flows | 5 |
Notes to Combined Financial Statements | 6-19 |
June 30,
|
||||||||
2021
|
2020
|
|||||||
ASSETS
|
||||||||
CASH AND CASH EQUIVALENTS (including restricted cash of $570,847 and $570,494 respectively)
|
$
|
23,173,973
|
$
|
23,690,385
|
||||
NOTES & ADVANCES RECEIVABLE—Affiliates
|
12,637
|
4,329,866
|
||||||
ACCOUNTS RECEIVABLE—Other
|
6,342,247
|
3,363,813
|
||||||
PREPAID EXPENSES AND OTHER ASSETS
|
45,036,423
|
39,654,756
|
||||||
RESIDENTIAL HOUSING AND OTHER INVENTORY
|
548,011,281
|
457,806,059
|
||||||
FURNITURE, FIXTURES, AND LEASEHOLD IMPROVEMENTS—Net
|
5,391,742
|
5,675,818
|
||||||
TRADE NAME—Net
|
-
|
904,046
|
||||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
3,560,185
|
2,741,233
|
||||||
TOTAL ASSETS
|
$
|
631,528,488
|
$
|
538,165,976
|
||||
LIABILITIES AND EQUITY
|
||||||||
LIABILITIES:
|
||||||||
Trade accounts payable
|
$
|
35,940,702
|
$
|
29,921,345
|
||||
Accrued and other liabilities
|
64,132,384
|
40,709,018
|
||||||
Unsecured debt
|
7,849,000
|
7,849,000
|
||||||
Secured debt agreements
|
296,219,454
|
266,424,623
|
||||||
Total liabilities
|
404,141,540
|
344,903,986
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
EQUITY
|
227,386,948
|
193,261,990
|
||||||
Total equity
|
227,386,948
|
193,261,990
|
||||||
TOTAL LIABILITIES AND EQUITY
|
$
|
631,528,488
|
$
|
538,165,976
|
Six Month Period Ended June30,
|
||||||||
2021
|
2020
|
|||||||
HOME SALES REVENUE
|
$
|
376,182,756
|
$
|
383,116,436
|
||||
COST OF SALES—Homes:
|
||||||||
Direct costs
|
282,489,032
|
292,332,983
|
||||||
Indirect, selling, and closing costs
|
42,883,251
|
44,241,926
|
||||||
Total cost of sales—homes
|
325,372,283
|
336,574,909
|
||||||
GROSS PROFIT FROM HOME SALES
|
50,810,473
|
46,541,527
|
||||||
LAND SALES REVENUE
|
2,768,448
|
110,000
|
||||||
COST OF SALES—Land:
|
||||||||
Direct costs
|
1,263,779
|
81,317
|
||||||
Indirect, selling, and closing costs
|
2,498
|
4,359
|
||||||
|
||||||||
Total cost of sales—land
|
1,266,277
|
85,676
|
||||||
|
||||||||
GROSS PROFIT FROM LAND SALES
|
1,502,171
|
24,324
|
||||||
TOTAL GROSS PROFIT
|
52,312,644
|
46,565,851
|
||||||
OPERATING AND OTHER INCOME (EXPENSES):
|
||||||||
General and administrative
|
(22,679,619
|
)
|
(20,244,050
|
)
|
||||
Marketing
|
(3,519,701
|
)
|
(4,131,154
|
)
|
||||
Interest
|
(532,047
|
)
|
(1,586,666
|
)
|
||||
Equity in earnings of unconsolidated entities
|
192,636
|
157,681
|
||||||
Interest income
|
66,440
|
61,524
|
||||||
Other income
|
724,681
|
411,688
|
||||||
Total operating and other expenses, net
|
(25,747,610
|
)
|
(25,330,977
|
)
|
||||
OPERATING INCOME BEFORE INCOME TAXES
|
26,565,034
|
21,234,874
|
||||||
INCOME TAX EXPENSE
|
(490,436
|
)
|
(435,317
|
)
|
||||
NET INCOME
|
$
|
26,074,598
|
$
|
20,799,557
|
BALANCE—December 31, 2020
|
$
|
216,839,552
|
||
Distributions
|
(15,527,202
|
)
|
||
|
||||
Net income
|
26,074,598
|
|||
BALANCE—June 30, 2021
|
$
|
227,386,948
|
BALANCE—December 31, 2019
|
$
|
200,404,139
|
||
Distributions
|
(27,941,706
|
)
|
||
|
||||
Net income
|
20,799,557
|
|||
BALANCE—June 30, 2020
|
$
|
196,261,990
|
Six Month Period Ended June 30,
|
||||||||
2021
|
2020
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
26,074,598
|
$
|
20,799,557
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
820,485
|
988,195
|
||||||
(Gain)/Loss on disposition of model home furniture and fixtures
|
(72,073
|
)
|
(15,099
|
)
|
||||
Net equity in earnings of unconsolidated entities
|
111,863
|
56,521
|
||||||
Amortization of loan acquisition costs
|
916,363
|
858,765
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Notes and advances receivable, affiliates
|
4,280,985
|
4,856,990
|
||||||
Accounts receivable, other
|
635,032
|
976,027
|
||||||
Prepaid expenses and other assets
|
(4,684,869
|
)
|
(1,262,962
|
)
|
||||
Residential housing and other inventory, net
|
(107,286,141
|
)
|
(6,441,340
|
)
|
||||
Trade accounts payable
|
932,583
|
2,005,075
|
||||||
Accrued expenses and other liabilities
|
10,546,191
|
4,417,480
|
||||||
Net cash provided by (used in) operating activities
|
(67,724,983
|
)
|
27,239,209
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Additions to model home furniture and fixtures
|
(851,501
|
)
|
(1,087,088
|
)
|
||||
Contributions to investment in unconsolidated entities
|
(1,099,113
|
)
|
(926,217
|
)
|
||||
Net cash used in investing activities
|
(1,950,614
|
)
|
(2,013,305
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Debt proceeds
|
180,212,503
|
133,529,620
|
||||||
Debt payments
|
(104,725,825
|
)
|
(131,138,858
|
)
|
||||
Debt acquisition costs
|
(428,307
|
)
|
(434,382
|
)
|
||||
Cash distributions to partners
|
(15,527,202
|
)
|
(27,941,706
|
)
|
||||
Net cash provided by (used in) financing activities
|
59,531,169
|
(25,985,326
|
)
|
|||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(10,144,428
|
)
|
(759,422
|
)
|
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of period
|
33,318,401
|
24,449,807
|
||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period
|
$
|
23,173,973
|
$
|
23,690,385
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for interest—net of amounts capitalized
|
$
|
505,055
|
$
|
877,964
|
||||
|
||||||||
Cash paid for taxes
|
$
|
1,463,366
|
$
|
-
|
Note 1
|
- Organization and Description of Business
|
Note 2
|
- Capital Structure
|
Note 3
|
- Summary of Significant Accounting Policies
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2021
|
2020
|
|||||||
Due under developer reimbursement agreements
|
$
|
2,807,327
|
$
|
1,096,354
|
||||
Vendor rebates receivable
|
2,059,615
|
838,006
|
||||||
Other receivables
|
1,475,305
|
1,429,453
|
||||||
Total accounts receivable, other
|
$
|
6,342,247
|
$
|
3,363,813
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2021
|
2020
|
|||||||
Capitalized in inventory—beginning of period
|
$
|
8,146,925
|
$
|
11,529,473
|
||||
Incurred
|
5,040,652
|
6,734,284
|
||||||
Less amounts:
|
||||||||
Included in costs of sales
|
(4,041,590
|
)
|
(6,086,921
|
)
|
||||
Included in operating expenses
|
(532,047
|
)
|
(1,586,666
|
)
|
||||
Capitalized in inventory—end of period
|
$
|
8,613,940
|
$
|
10,590,170
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2021
|
2020
|
|||||||
Accrued warranty liability—beginning of period
|
$
|
7,059,094
|
$
|
4,501,195
|
||||
Warranty accrual for current year home sales
|
(276,683
|
)
|
2,839,292
|
|||||
Warranty payments made during the period
|
(1,192,354
|
)
|
(2,376,398
|
)
|
||||
Accrued warranty liability—end of period
|
$
|
5,590,057
|
$
|
4,964,089
|
Note 3
|
- Summary of Significant Accounting Policies (Continued)
|
2021
|
2020
|
|||||||
Production home sales
|
$
|
368,122,564
|
$
|
370,613,648
|
||||
BOYL home sales
|
8,060,192
|
12,502,788
|
||||||
Home sales revenue
|
$
|
376,182,756
|
$
|
383,116,436
|
Note 4
|
- Residential Housing and Other Inventory, Net
|
2021
|
2020
|
|||||||
Under contract:
|
||||||||
Homes completed
|
$
|
11,712,223
|
$
|
37,585,985
|
||||
Homes under construction
|
332,215,734
|
135,186,986
|
||||||
Lots owned
|
20,409,328
|
25,904,299
|
||||||
Total inventory under contract
|
364,337,285
|
198,677,270
|
||||||
Speculative units:
|
||||||||
Homes completed
|
1,296,991
|
29,931,829
|
||||||
Homes under construction
|
33,719,660
|
50,289,679
|
||||||
Lots owned
|
97,710,246
|
116,651,592
|
||||||
Total speculative units
|
132,726,897
|
196,873,100
|
||||||
Model homes:
|
||||||||
Completed
|
47,611,692
|
53,226,757
|
||||||
Under construction
|
2,375,427
|
881,002
|
||||||
|
||||||||
Total model homes
|
49,987,119
|
54,107,759
|
||||||
Land:
|
||||||||
Unimproved land
|
-
|
5,156,718
|
||||||
Land under development
|
959,980
|
2,991,212
|
||||||
|
||||||||
Total land
|
959,980
|
8,147,930
|
||||||
Total residential housing and other inventory
|
$
|
548,011,281
|
$
|
457,806,059
|
Note 5
|
- Accrued Expenses and Other Liabilities
|
2021
|
2020
|
|||||||
Warranty and legal
|
$
|
6,177,214
|
$
|
5,665,017
|
||||
Property taxes
|
695,932
|
971,420
|
||||||
Salaries, wages, and bonuses—net
|
11,806,900
|
11,629,096
|
||||||
Customer deposits
|
35,912,448
|
14,412,913
|
||||||
Interest
|
735,694
|
708,702
|
||||||
Other
|
8,804,196
|
7,321,870
|
||||||
Total accrued and other liabilities
|
$
|
64,132,384
|
$
|
40,709,018
|
Note 6
|
- Debt Agreements
|
2021
|
2020
|
|||||||
Revolving credit
|
$
|
291,219,454
|
$
|
261,424,623
|
||||
Unsecured debt
|
7,849,000
|
7,849,000
|
||||||
Working capital ($5,000,000 maximum)
|
5,000,000
|
5,000,000
|
||||||
Total outstanding loans
|
$
|
304,068,454
|
$
|
274,273,623
|
||||
Revolving credit:
|
||||||||
Credit line maximum
|
$
|
676,849,000
|
$
|
655,349,000
|
||||
|
||||||||
Committed loans
|
$
|
675,604,133
|
$
|
407,009,071
|
||||
Revolving credit loan availability
|
$
|
393,332,868
|
$
|
327,313,689
|
||||
Outstanding balances:
|
||||||||
Loans
|
(291,219,454
|
)
|
(261,424,623
|
)
|
||||
Letters-of-credit outstanding & limitations
|
(1,770,794
|
)
|
(1,055,951
|
)
|
||||
Revolving credit available borrowing
|
$
|
100,342,620
|
$
|
64,833,115
|
||||
Interest rates as of June 30
|
1.00%–4.25
|
%
|
1.00%–4.77
|
%
|
Note 6
|
- Debt Agreements (Continued)
|
2021
|
2020
|
|||||||
Liquidity test (cash and available borrowing)
|
$
|
20,000,000
|
$
|
15,000,000
|
||||
Interest coverage ratio
|
2.00-2.25 to 1.00
|
2.00-2.25 to 1.00
|
||||||
Leverage ratio
|
2.75-3.50 to 1.00
|
2.75-3.50 to 1.00
|
||||||
Tangible net worth, excluding intercompany
|
$
|
120,000,000
|
$
|
118,785,596
|
||||
Maximum investment in land and lots owned
|
$
|
264,595,876
|
$
|
171,198,793
|
Note 6
|
- Debt Agreements (Continued)
|
Year Ending
December 31,
|
||||
2021
|
$
|
11,104,478
|
||
2022
|
189,627,791
|
|||
2023
|
60,970,810
|
|||
2024
|
22,746,769
|
|||
2025
|
19,618,606
|
|||
Total
|
$
|
304,068,454
|
Note 7
|
- Investment in Unconsolidated Entities
|
2021
|
2020
|
|||||||
Assets
|
$
|
11,074,831
|
$
|
16,375,047
|
||||
Liabilities
|
4,571,188
|
11,448,134
|
||||||
Revenues
|
9,175,717
|
512,247
|
||||||
Expenses
|
8,854,958
|
3,505
|
Note 8
|
- Lot Purchase Contracts and Variable Interest Entities
|
Lots
|
Purchase Price
|
Earnest Money
|
||||||||||
Third parties
|
3,213
|
$
|
268,151,226
|
$
|
29,402,624
|
|||||||
Related parties
|
1,323
|
102,001,571
|
11,212,575
|
|||||||||
4,536
|
$
|
370,152,797
|
$
|
40,615,199
|
Lots
|
Purchase Price
|
Earnest Money
|
||||||||||
Third parties
|
2,231
|
$
|
209,001,918
|
$
|
27,718,541
|
|||||||
Related parties
|
1,307
|
81,633,928
|
10,376,583
|
|||||||||
3,538
|
$
|
290,635,846
|
$
|
38,095,124
|
Note 9
|
- Related Party Transactions
|
Note 10
|
- Commitments and Contingencies
|
Note 10
|
- Commitments and Contingencies (Continued)
|
Year Ending
December 31,
|
||||
2021
|
$
|
614,281
|
||
2022
|
366,123
|
|||
2023
|
336,043
|
|||
2024
|
271,538
|
|||
2024
|
265,624
|
|||
Thereafter
|
78,224
|
|||
Total
|
$
|
1,931,833
|
Note 11
|
- Employee Benefit Plan
|
Note 12
|
- Subsequent Events
|
|
- |
historical financial statements of the Company and the related notes included in the Company’s Form 10-K that was filed with the SEC on March 30, 2021;
|
|
- |
historical financial statements of the Company as of June 30, 2021 and for the six months ended June 30, 2021 and 2020 and the related notes included in the
Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2021;
|
|
- |
historical financial statements of MHI for the year ended December 31, 2020 and 2019 and the related notes included in MHI’s audited combined financial
statements for the year ended December 31, 2020, included as Exhibit 99.1 to this Current Report on Form 8-K/A; and
|
|
- |
historical financial statements of MHI for the six months ended June 30, 2021 and the related notes included in MHI’s unaudited combined financial statements
for the six months ended June 30, 2021 and 2020, included as Exhibit 99.2 to this Current Report on Form 8-K/A.
|
|
• |
The MHI Acquisition and the application of purchase accounting, including:
|
|
o |
Net tangible assets of MHI, subject to certain assets and liabilities that were on MHI’s balance sheet as of June 30, 2021, but not acquired including net
tangible assets of $118.2 million and liabilities of $313.8. Management estimates MHI’s book value of real estate inventory will be adjusted by a credit of $5.4 million to the June 30, 2021 historical balance. In addition, management
estimates the trade name “Coventry Homes” will be valued at $8.9 million. The amortization of these adjustments was reflected in the unaudited pro forma statements of comprehensive income for the year ended December 31, 2020.
|
|
o |
Management estimated the fair value of MHI’s communities using MHI’s historic gross margin and a market participant’s expectation of selling, general and
administrative expense that would be required to complete construction of the homes was applied. The historical performance of each community, as well as current trends in the market, and the potential economic impact were evaluated for each
of the estimates above.
|
|
o |
Goodwill of $137.4 million, based on an acquisition price of approximately $618.1 million, including (1) a $463 million payment at closing, (2) $64.1 million due
post close, (3) estimated earn out payments with a fair value of $90.9 million, as well as purchase accounting valuation adjustments.
|
|
o |
Income tax adjustments to MHI as if it were a taxable entity as of the beginning of the period assuming the 21% Federal tax rate applicable to C Corporations,
partially offset by a 1.5% 45L New Energy Efficient Home Tax Credit, plus a 5.5% State tax rate.
|
|
o |
A deposit of $10.8 million for the landbank financing facility provided by the former principal of MHI.
|
|
o |
Ownership interests in three joint ventures acquired by DFH from the former principal of MHI.
|
|
o |
A payable of $64.1 million to the seller based on the expected true up of the net asset value as of the acquisition date.
|
|
o |
A $6.8 million preferred dividend associated with the Convertible Preferred Stock (as defined below) issuance.
|
|
• |
The Financing Transactions associated with the MHI Acquisition, including:
|
|
o |
Increase of the Company’s credit facility from $450 million to $817.5 million, utilizing $315.0 in proceeds to finance a portion of the acquisition. The rate
and maturity were unchanged with the terms under the Company’s credit facility.
|
|
o |
Issuance of 150,000 shares of newly-created 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”), for an aggregate purchase price of $150 million. The Company used the net proceeds of $148 million from the sale of the Convertible Preferred Stock to fund a portion of the MHI Acquisition. The dividend rate on this
issuance is 9%.
|
|
o |
Deferred contingent consideration of $90.9 million recorded at fair value.
|
Cash and cash equivalents
|
$
|
-
|
||
Other assets
|
12,079,607
|
|||
Lot deposits
|
51,422,653
|
|||
Construction in process and finished homes
|
424,826,476
|
|||
Company owned land and lots
|
24,055,497
|
|||
Operating lease right-of-use assets
|
1,793,192
|
|||
Equity method investments
|
5,802,559
|
|||
Property and equipment, net
|
3,238,561
|
|||
Intangible assets, net of amortization
|
8,840,000
|
|||
Goodwill
|
137,418,036
|
|||
Accounts payable
|
(35,940,702
|
)
|
||
Accrued expenses
|
(47,356,561
|
)
|
||
Customer Deposits
|
(35,912,448
|
)
|
||
Contingent consideration
|
(90,920,000
|
)
|
||
Operating lease liabilities
|
(1,793,192
|
)
|
|
|
Dream Finders
Homes Inc.
|
|
|
MHI
|
|
Transaction
Accounting Adjustments
|
|
Financing
Adjustments
|
|
DFH Inc.
Pro Forma
|
|||||||||||
Assets
|
||||||||||||||||||||||
Cash and cash equivalents
|
6,154,320
|
23,173,973
|
(23,173,973
|
)
|
(f)
|
6,154,320
|
||||||||||||||||
Restricted cash (VIE amounts of $5,946,424 and $8,793,201)
|
46,936,952
|
|
49,936,952
|
|||||||||||||||||||
Accounts receivable
|
51,021,302
|
6,342,247
|
57,363,549
|
|||||||||||||||||||
Inventories:
|
-
|
|||||||||||||||||||||
Construction in process and finished homes
|
537,758,853
|
428,931,727
|
(4,105,251
|
)
|
(b),(f),(g)
|
962,585,329
|
||||||||||||||||
Joint venture owned land and lots
|
-
|
|||||||||||||||||||||
(VIE amounts of $18,151,982 and $40,900,552)
|
18,152,136
|
18,152,136
|
||||||||||||||||||||
Company owned land and lots
|
75,083,602
|
119,079,554
|
(95,024,057
|
)
|
(f)
|
-
|
99,139,099
|
|||||||||||||||
Lot deposits
|
107,717,122
|
51,422,653
|
(d) (g)
|
-
|
159,139,775
|
|||||||||||||||||
Equity method investments
|
7,453,783
|
3,560,185
|
2,242,374
|
(e)
|
-
|
13,256,342
|
||||||||||||||||
Property and equipment, net
|
4,228,857
|
5,391,742
|
(2,153,181
|
)
|
(g)
|
7,467,418
|
||||||||||||||||
Operating lease right-of-use assets
|
12,788,540
|
1,793,192
|
(b)
|
-
|
14,581,732
|
|||||||||||||||||
Finance lease right-of-use assets
|
256,612
|
256,612
|
||||||||||||||||||||
Intangible assets, net of amortization
|
2,161,250
|
8,840,000
|
(b)
|
-
|
11,001,250
|
|||||||||||||||||
Goodwill
|
30,360,997
|
137,418,036
|
(a)
|
-
|
167,779,033
|
|||||||||||||||||
Deferred tax asset
|
3,312,736
|
3,111,631
|
(h)
|
6,424,367
|
||||||||||||||||||
Other assets (VIE amounts of $2,159,645 and $1,288,359)
|
28,894,891
|
45,049,060
|
(39,311,700
|
)
|
(g)
|
34,632,251
|
||||||||||||||||
Total assets
|
932,281,953
|
631,528,488
|
41,059,724
|
-
|
1,604,870,165
|
|||||||||||||||||
Liabilities
|
-
|
|||||||||||||||||||||
Accounts payable (VIE amounts of $0 and $1,315,582)
|
34,204,013
|
35,940,702
|
70,144,715
|
|||||||||||||||||||
Accrued expenses (VIE amounts of $8,571,439 and $9,977,268)
|
65,908,878
|
64,132,384
|
(10,899,260
|
)
|
(a),(f),(h),(g)
|
-
|
119,142,002
|
|||||||||||||||
Customer deposits
|
93,275,468
|
35,912,448
|
(g)
|
-
|
129,187,916
|
|||||||||||||||||
Construction lines of credit
|
365,000,000
|
304,068,454
|
(304,068,454
|
)
|
(f)
|
321,758,896
|
(a)
|
686,758,896
|
||||||||||||||
Notes payable (VIE amounts of $2,992,531 and $8,821,282)
|
4,048,531
|
4,048,531
|
||||||||||||||||||||
Operating lease liabilities
|
13,064,645
|
1,793,192
|
(b)
|
-
|
14,857,837
|
|||||||||||||||||
Finance lease liabilities
|
267,198
|
267,198
|
||||||||||||||||||||
Contingent consideration
|
27,110,480
|
90,920,000
|
(a)
|
-
|
118,030,480
|
|||||||||||||||||
Total liabilities
|
602,879,213
|
404,141,540
|
(186,342,074
|
)
|
321,758,896
|
1,142,437,575
|
||||||||||||||||
-
|
||||||||||||||||||||||
Mezzanine Equity
|
-
|
|||||||||||||||||||||
Preferred mezzanine equity
|
6,703,460
|
147,995,200
|
(a)
|
154,698,660
|
||||||||||||||||||
Common mezzanine equity
|
-
|
-
|
||||||||||||||||||||
Total mezzanine equity
|
6,703,460
|
-
|
-
|
147,995,200
|
154,698,660
|
|||||||||||||||||
-
|
||||||||||||||||||||||
Members’ Equity
|
-
|
|||||||||||||||||||||
Common members’ equity
|
-
|
227,386,948
|
235,617,148
|
(463,004,096
|
)
|
-
|
||||||||||||||||
Total members’ equity
|
-
|
227,386,948
|
235,617,148
|
(463,004,096
|
)
|
-
|
||||||||||||||||
-
|
||||||||||||||||||||||
Stockholders’ Equity - Dream Finders Homes, Inc.
|
-
|
|||||||||||||||||||||
Class A common stock, $0.01 per share, 289,000,000
|
-
|
|||||||||||||||||||||
authorized, 32,295,329 outstanding
|
322,953
|
-
|
322,953
|
|||||||||||||||||||
Class B common stock, $0.01 per share, 61,000,000
|
-
|
|||||||||||||||||||||
authorized, 60,226,153 outstanding
|
602,262
|
-
|
602,262
|
|||||||||||||||||||
Additional paid-in capital
|
255,289,812
|
-
|
-
|
255,289,812
|
||||||||||||||||||
Retained earnings
|
45,610,738
|
-
|
(8,215,349
|
)
|
(c),(h)
|
(6,750,000
|
)
|
(a)
|
30,645,389
|
|||||||||||||
Non-controlling interests
|
20,873,515
|
20,873,515
|
||||||||||||||||||||
Total stockholders’ and members’ equity
|
329,402,740
|
227,386,948
|
227,401,798
|
(321,758,896
|
)
|
462,432,591
|
||||||||||||||||
Total liabilities, mezzanine equity, members’ equity and stockholders’ equity
|
$
|
932,281,953
|
$
|
631,528,488
|
$
|
41,059,724
|
$
|
0
|
$
|
1,604,870,165
|
(a) |
Reflects the acquisition of MHI and the related financing transactions associated with the acquisition. The anticipated purchase price is $618 million, which includes $148 million
funded by the issuance of Convertible Preferred Stock, $315 million of funding from the Company’s construction facility, $64.1 million of deferred seller payment and $90.9 million of contingent consideration for the former principal of MHI.
The resulting goodwill after allocating the purchase price to the assets and liabilities acquired is $137.4 million. The contingent consideration estimate is based on the current pre-tax estimates provided by MHI. The former owner of MHI is
entitled to receive deferred payments representing 25% of pre-tax earnings for the four-year period following the acquisition date, subject to meeting certain thresholds in each of the annual periods. The gross cash flow estimates were
discounted back to present value using a weighted average cost of capital. The dividend of $6.8 million related to the Convertible Preferred Stock issued was financed by the line of credit increase. In addition, reflects $148 million in net
proceeds from the Company’s issuance of 150,000 shares of Convertible Preferred Stock for $1,000 per share. This issuance has a 9% preferred dividend, is redeemable at the Company’s option beginning in October of 2025, and is convertible to
common stock by the issuer in the event it has not been redeemed beginning in October of 2027.
|
(b) |
Reflects a day one adjustment to the book basis of certain of assets and liabilities held by MHI. Net tangible assets of $118.2 million and net liabilities of $313.8 million were
not acquired as of June 30, 2021. This adjustment also includes a $10.9 million increase in real estate inventory to reflect the estimated the fair value of the acquired homes completed and under construction based on their stage of
construction. In order to estimate the fair value of inventory, MHI’s historic gross margin was used and a market participant’s expectation of selling, general and administrative expense that would be required to complete construction of the
homes was applied. An adjustment to the stage of completion for homes under construction was made, including a deduction in the book value of inventory for MHI’s capitalized indirect costs of $16.2 million. The Company’s accounting policy is
to expense these direct costs as incurred. This entry also includes the establishment of an $8.9 million intangible asset related to the trade name “Coventry Homes” that was included in the acquisition. The trade name will be amortized over a
five year period. The Company recorded $1.7 million in operating leases, into both right of use assets and operating lease liabilities.
|
(c) |
Income tax adjustments to MHI as if it were a taxable entity as of the beginning of the period assuming the 21% Federal tax rate applicable to C Corporations partially offset by a
1.5% 45L New Energy Efficient Home Tax Credit, plus a 5.5% State tax rate.
|
(d) |
Reflects a deposit of $10.8 million by DFH for the land bank financing facility provided by the former principal of MHI.
|
(e) |
Reflects ownership interests in three equity method joint ventures relating to mortgage and title services acquired by DFH from the former principal of MHI.
|
(f) |
The following line items have been adjusted from MHI’s audited financial statements, as certain assets and liabilities within these financial statement line items were not included
in the acquisition transaction. These items include cash and cash equivalents, undeveloped land assets, and debt obligations of MHI.
|
(g) |
The following items include re-classifications between MHI’s financial statement line items in order to comply with DFH’s accounting policies, including reclassifications of (1)
$40.6 million of lot deposits from other assets on MHI’s financial statements to lot deposits on DFH’s financial statements, and (2) $35.9 million of customer deposits from accrued expenses on MHI’s Financial Statements to customer deposits
on DFH’s Financial Statements.
|
(h) |
Reflects the deferred tax asset and liability recorded due to differences arising from the tax and book treatment of Goodwill. These adjustments were booked as if the transaction
had occurred on January 1, 2020.
|
Dream Finders
Homes Inc.
|
MHI
|
Transaction
Accounting Adjustments
|
DFH Inc.
Pro Forma |
||||||||||||||
Revenues
|
$
|
708,836,466
|
$
|
378,951,204
|
$
|
-
|
$
|
1,087,787,670
|
|||||||||
Cost of sales
|
594,626,181
|
326,638,560
|
(11,029,691
|
)
|
(f)
|
910,235,050
|
|||||||||||
Selling, general and administrative expense
|
55,652,375
|
26,132,880
|
11,913,691
|
(b),(f)
|
93,698,946
|
||||||||||||
Income from equity in earnings of unconsolidated entities
|
(2,857,394
|
)
|
(192,636
|
)
|
(2,530,563
|
)
|
(d)
|
(5,580,593
|
)
|
||||||||
Gain on sale of assets
|
(17,483
|
)
|
(17,483
|
)
|
|||||||||||||
Loss of Extinguishment of Debt
|
697,423
|
697,423
|
|||||||||||||||
Other Income
|
-
|
||||||||||||||||
Other
|
(2,150,482
|
)
|
(724,681
|
)
|
(2,875,163
|
)
|
|||||||||||
Paycheck Protection Program forgiveness
|
(7,219,794
|
)
|
-
|
(7,219,794
|
)
|
||||||||||||
Other expense
|
-
|
||||||||||||||||
Other
|
5,337,828
|
-
|
5,337,828
|
||||||||||||||
Contingent consideration revaluation
|
5,159,725
|
-
|
4,249,570
|
(c)
|
9,409,295
|
||||||||||||
Interest expense
|
657,657
|
532,047
|
1,189,704
|
||||||||||||||
Income before taxes
|
58,950,430
|
26,565,034
|
(2,603,007
|
)
|
|
82,912,457
|
|||||||||||
Income tax expense
|
(9,294,799
|
)
|
(490,436
|
)
|
(7,052,899
|
)
|
(a)
|
(16,838,134
|
)
|
||||||||
Net and comprehensive income
|
49,655,631
|
26,074,598
|
(9,655,906
|
)
|
|
66,074,323
|
|||||||||||
Net and comprehensive income attributable to non-controlling interests
|
(4,961,107
|
)
|
-
|
-
|
|
(4,961,107
|
)
|
||||||||||
Net and comprehensive income attributable to Dream Finders Holdings LLC
|
44,694,524
|
26,074,598
|
(9,655,906
|
)
|
|
61,113,216
|
|||||||||||
Earnings per unit
|
|||||||||||||||||
Basic
|
$
|
0.49
|
$
|
0.59
|
|||||||||||||
Diluted
|
$
|
0.49
|
$
|
0.54
|
|||||||||||||
Weighted-average number of units
|
|||||||||||||||||
Basic
|
92,521,482
|
92,521,482
|
|||||||||||||||
Diluted
|
92,641,222
|
100,814,391
|
(a) |
Income tax adjustments to MHI as if it were a taxable entity as of the beginning of the period assuming the 21% Federal tax rate applicable to C Corporations, partially offset by a
1.5% 45L New Energy Efficient Home Tax Credit, plus a 5.5% state tax rate.
|
(b) |
Gives effect to the amortization of intangible asset of $900 thousand related to the trade name “Coventry Homes” included in the acquisition. The trade name is amortized over a five
year period.
|
(c) |
Represents accretion of $4.2 million of contingent consideration during the year, assuming contingent consideration had been applied as of January 1, 2020.
|
(d) |
Represents the $2.5 million of additional income associated with ownership interests in three equity method joint ventures relating to mortgage and title services acquired by DFH
from the former principal of MHI.
|
(e) |
Gives effect of 8.2 million of preferred shares converted into common in the diluted earnings per share calculation using the “If converted” method.
|
(f) |
Reflects re-classifications between MHI’s financial statement line items in order to comply with DFH’s accounting policies, including $11.0 million of indirect costs capitalized, and
subsequently expensed through cost of sales for MHI’s Financial Statements, reclassified from cost of sales to SG&A expense on DFH’s pro forma Financial Statements.
|
Year Ended December 31
2020
|
|||||||||||||||||
Dream Finders
Homes Inc.
|
MHI
|
Transaction
Accounting Adjustments
|
DFH Inc.
Pro Forma
|
||||||||||||||
Revenues
|
$
|
1,133,806,607
|
$
|
908,584,480
|
$
|
-
|
$
|
2,042,391,087
|
|||||||||
Cost of sales
|
962,927,606
|
794,337,610
|
(14,697,238
|
)
|
(e) (f)
|
1,742,567,978
|
|||||||||||
Selling, general and administrative expense
|
90,172,850
|
55,168,191
|
31,356,266
|
(b) (f)
|
176,697,307
|
||||||||||||
Income from equity in earnings of unconsolidated entities
|
(7,991,764
|
)
|
(563,497
|
)
|
(6,803,466
|
)
|
(d)
|
(15,358,727
|
)
|
||||||||
Gain on sale of assets
|
(117,840
|
)
|
(117,840
|
)
|
|||||||||||||
Loss of Extinguishment of Debt
|
-
|
-
|
-
|
||||||||||||||
Other Income
|
|||||||||||||||||
Other
|
(1,630,546
|
)
|
(1,079,938
|
)
|
-
|
(2,710,484
|
)
|
||||||||||
Paycheck Protection Program forgiveness
|
-
|
-
|
-
|
-
|
|||||||||||||
Other expense
|
|||||||||||||||||
Other
|
4,522,100
|
-
|
-
|
4,532,100
|
|||||||||||||
Contingent consideration revaluation
|
539,905
|
-
|
8,196,956
|
(c)
|
8,736,861
|
||||||||||||
Interest expense
|
870,868
|
2,212,735
|
-
|
3,083,603
|
|||||||||||||
Income before taxes
|
84,513,428
|
58,509,379
|
(18,052,518
|
)
|
|
124,970,289
|
|||||||||||
Income tax expense
|
-
|
(1,065,640
|
)
|
(31,936,818
|
)
|
(a)
|
(33,002,458
|
)
|
|||||||||
Net and comprehensive income
|
84,513,428
|
57,443,739
|
(49,989,337
|
)
|
|
91,967,830
|
|||||||||||
Net and comprehensive income attributable to non-controlling interests
|
(5,419,972
|
)
|
-
|
-
|
|
(5,419,972
|
)
|
||||||||||
Net and comprehensive income attributable to Dream Finders Holdings LLC
|
79,093,456
|
57,443,739
|
(49,989,337
|
)
|
|
86,547,858
|
|||||||||||
-
|
|||||||||||||||||
Earnings per unit
|
-
|
-
|
-
|
||||||||||||||
Basic
|
756.86
|
832.11
|
|||||||||||||||
Diluted
|
753.75
|
828.56
|
|||||||||||||||
Weighted-average number of units
|
-
|
||||||||||||||||
Basic
|
99,065
|
99,065
|
|||||||||||||||
Diluted
|
99,647
|
99,647
|
(a) |
Income tax adjustments to MHI as if it were a taxable entity as of the beginning of the period assuming the 21% Federal tax rate applicable to C corporations, partially offset by a 1.5% 45L New Energy Efficient Home Tax Credit, plus a
5.5% State tax rate.
|
(b) |
Gives effect to the amortization of intangible asset of $1.8 million related to the trade name “Coventry Homes” included in the acquisition. The trade name is amortized over a five
year period.
|
(c) |
Represents accretion of contingent consideration of $8.2 million during the year, assuming contingent consideration had been recorded as of January 1, 2020.
|
(d) |
Represents $6.8 million of additional income associated with ownership interests in three equity method joint ventures relating to mortgage and title services acquired by DFH from
the former principal of MHI.
|
(e) |
Gives effect to the results of MHI as of the beginning of the fiscal years presented after adjusting the operating results, reflecting additional amortization of $10.9 million that
would have been recorded assuming the fair value adjustments to the acquired assets had been applied as of January 1, 2020.
|
(f) |
Reflects re-classifications between MHI’s financial statement line items in order to comply with DFH’s accounting policies, including $25.6 million of indirect costs capitalized, and
subsequently expensed through cost of sales for MHI’s Financial Statements, reclassified to SG&A expense on DFH’s pro forma Financial Statements.
|