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Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-29 · 469 added, 382 removed, 404 unchanged (68% of the section changed)

8 unchanged sentences

Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded Crescent Ventures, LLC (Crescent Homes) and Jet HomeLoans, LLC (Jet HomeLoans) from its assessment of internal control over financial reporting as of December 31, 2024, because they were acquired by the Company in 2024.

We have also excluded Crescent Homes and Jet HomeLoans from our audit of internal control over financial reporting.

Crescent Homes and Jet HomeLoans are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 9% and 10% of total assets, respectively and approximately 11% and 1% of total revenues, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

Definition and Limitations of Internal Control over Financial Reporting

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting

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principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Contingent Consideration

As described in Note 1 to the consolidated financial statements, the Company has recorded contingent consideration related to the acquisition of McGuyer Homebuilders, Inc.

Management recorded the fair value of the contingent consideration as a liability on the acquisition date.

The estimated earn-out payments are subsequently remeasured to fair value at each reporting date based on the estimated future earnings of the acquired entity and the reassessment of risk-adjusted discount rates.

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.

As of December 31, 2023, the liability for contingent consideration was $116.8 million.

The principal considerations for our determination that performing procedures relating to the valuation of contingent consideration is a critical audit matter are (i) the significant judgment by management when estimating the fair value of contingent consideration;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected revenue, gross margin and pre-tax income;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Valuation of Contingent Consideration related to the McGuyer Homebuilders, Inc.

As described in Notes 1 and 2, in connection with applicable business combinations, the Company records the fair value of contingent consideration as a liability as of the acquisition date as prescribed by the underlying agreement.

The initial measurement of contingent consideration is based on projected cash flows such as revenues, homebuilding gross margin, overhead expenses and pre-tax income of the acquired business and is discounted to present value using the discounted cash flow method.

The remaining estimated contingent consideration payments are subsequently remeasured to fair value as of each reporting date based on actual pre-tax income results achieved, estimated future earnings of the acquired entities and the re-assessment of risk-adjusted discount rates that reflect current market conditions.

As of December 31, 2024, the Company remeasured the fair value of contingent consideration related to the 2021 acquisition of McGuyer Homebuilders, Inc.

(“MHI”) and adjusted the liability to $68.0 million based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability.

The principal considerations for our determination that performing procedures relating to the valuation of contingent consideration related to the McGuyer Homebuilders, Inc.

acquisition is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the contingent consideration relating to the McGuyer Homebuilders, Inc.

acquisition in connection with the December 31, 2024 remeasurement and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected revenues, homebuilding gross margin, overhead expenses, and pre-tax income.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s remeasurement of the contingent consideration, including controls over the projected revenue, gross margin and pre-tax income applied in the contingent consideration valuation calculation.

These procedures also included, among others, testing management’s process for estimating the fair value of contingent consideration, which included evaluating the appropriateness of the discounted cash flow method, testing the completeness and accuracy of data used in the method, and evaluating the reasonableness of management’s significant assumptions related to projected revenue, gross margin and pre-tax income.

Evaluating the reasonableness of the projected revenue, gross margin and pre-tax income involved considering the past performance of the acquired business, as well as economic and industry forecasts.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the discounted cash flow method.

These procedures included testing the effectiveness of controls relating to management’s valuation of the contingent consideration, including controls over the projected revenues, homebuilding gross margin, overhead expenses and pre-tax income applied in the McGuyer Homebuilders, Inc.

contingent consideration valuation calculation.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of contingent consideration in connection with the December 31, 2024 remeasurement, (ii) evaluating the appropriateness of the discounted cash flow method, (iii) testing the completeness and accuracy of data used in the discounted cash flow method, and (iv) evaluating the reasonableness of management’s significant assumptions related to projected revenues, homebuilding gross margin, overhead expenses, and pre-tax income, which involved considering the past performance of the acquired business, as well as economic and industry forecasts.

/s/ PricewaterhouseCoopers LLP

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We have served as the Company’s auditor since 2019, which includes periods before the Company became subject to SEC reporting requirements.

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DREAM FINDERS HOMES, INC.

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Investments in unconsolidated entities 11,454 15,364

Mortgage loans held for sale 303,393 —

Property and equipment, net 26,317 7,043

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Senior unsecured notes, net 295,049 293,918

Mortgage warehouse facilities 289,617 —

Lease liabilities 18,148 21,114

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Mezzanine Equity

Preferred mezzanine equity 148,500 156,045

Stockholders’ Equity

Class A common stock, $ 0.01 per share, 289,000,000 authorized, 32,882,124 and 32,533,883 outstanding as of December 31, 2023 and December 31, 2022, respectively

Class B common stock, $ 0.01 per share, 61,000,000 authorized, 60,226,153 outstanding

Redeemable preferred stock 148,500 148,500

Redeemable noncontrolling interest 21,451 —

Class A common stock, $ 0.01 per share;

289,000,000 authorized, 36,002,077 and 32,882,124 issued as of December 31, 2024 and 2023, respectively

Class B common stock, $ 0.01 per share;

61,000,000 authorized, 57,726,153 and 60,226,153 issued as of December 31, 2024 and 2023, respectively

Additional paid-in capital 281,559 275,241

Retained earnings 970,253 648,412

Treasury stock, at cost, 291,229 shares and no shares of Class A common stock as of December 31, 2024 and 2023, respectively

Total Dream Finders Homes, Inc.

stockholders’ equity 1,244,922 924,584

Noncontrolling interests 5,487 13,066

Total mezzanine and stockholders’ equity 1,086,150 800,693

Total liabilities, mezzanine equity and stockholders’ equity $ 2,562,439 $ 2,371,137

Total equity 1,250,409 937,650

Total liabilities, mezzanine equity and equity $ 3,328,651 $ 2,562,439

The accompanying notes are an integral part of these consolidated financial statements.

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DREAM FINDERS HOMES, INC.

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Homebuilding $ 4,397,877 $ 3,738,888 $ 3,334,559

Other 9,698 7,776 6,609

Financial services 53,729 9,698 7,776

Total revenues 4,451,606 3,748,586 3,342,335

Homebuilding cost of sales 3,591,483 3,011,813 2,722,139

Financial services expense 31,540 5,727 4,975

Selling, general and administrative expense 395,751 303,068 266,065

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Income before taxes 437,854 404,425 356,156

404,425 356,156 162,049

Income tax expense ( 97,272 ) ( 96,483 ) ( 81,859 )

( 96,483 ) ( 81,859 ) ( 27,455 )

Net and comprehensive income 340,582 307,942 274,297

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The accompanying notes are an integral part of these consolidated financial statements.

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DREAM FINDERS HOMES, INC.

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(In thousands, except share amounts)

Redeemable Preferred

Mezzanine Redeemable

Mezzanine Common Units

Members’ Common Stock -

Class A Common Stock -

Class B Additional Paid-in Capital Retained Earnings Total

Interests Total Equity

Units Amount Units Amount Units Amount Shares Amount Shares Amount

Dream Finders Homes, Inc.

Stockholders' Equity

Common Stock - Class A Common Stock - Class B Additional

Capital Retained

Earnings Treasury Stock

Noncontrolling

Interests Total Equity Redeemable Preferred

Stock Redeemable Noncontrolling Interest

Shares Outstanding Amount Shares Outstanding Amount Shares Amount

Balance as of December 31, 2021 32,295,329 $ 323 60,226,153 $ 602 $ 257,963 $ 118,194 $ — $ 24,081 $ 401,163 157,143 $ 155,220 $ —

Reorganization transactions ( 15,400 ) ( 19,958 ) ( 7,010 ) ( 19,227 ) ( 76,655 ) ( 84,473 ) 21,255,329 213 60,226,153 602 122,843 — — —

Issuance of common stock, net — — — — — — 11,040,000 110 — — 129,887 — — 129,997

Issuance of convertible preferred stock 150,000 148,124 — — — — — — — — — — — 148,124

Stock-based compensation 238,554 2 — — 6,794 — — — 6,796 — — —

Contributions — — — — — — — — — — — — 2,000 2,000

Redemptions ( 26,000 ) ( 25,530 ) — — — — — — — — — — — ( 25,530 )

Distributions — — — — — — — ( 23,095 ) ( 23,095 ) — — —

Preferred stock dividends declared — — — — — ( 13,688 ) — — ( 13,688 ) — — —

Net income and comprehensive income — 563 — ( 91 ) — ( 996 ) — — — — — 121,657 13,461 134,594

Net and comprehensive income — — — — — 261,488 — 11,984 273,472 — 825 —

Balance as of December 31, 2022 32,533,883 $ 325 60,226,153 $ 602 $ 264,757 $ 365,994 $ — $ 12,970 $ 644,648 157,143 $ 156,045 $ —

Stock-based compensation — — — — 14,098 — — — 14,098 — — —

Vesting of stock-based compensation 371,841 4 — — ( 4 ) — — — — — — —

Withholding of common stock for taxes ( 23,600 ) — — — ( 322 ) — — — ( 322 ) — — —

Distributions — — — — — — — ( 11,946 ) ( 11,946 ) — — —

Redemption of Series B preferred units — — — — ( 3,288 ) 343 — — ( 2,945 ) ( 7,143 ) ( 8,132 ) —

Preferred stock dividends declared — — — — — ( 13,238 ) — — ( 13,238 ) — — —

Net income and comprehensive income — 825 — — — — — — — — — 261,488 11,984 274,297

Net and comprehensive income — — — — — 295,313 — 12,042 307,355 — 587 —

Balance as of December 31, 2023 32,882,124 $ 329 60,226,153 $ 602 $ 275,241 $ 648,412 $ — $ 13,066 $ 937,650 150,000 $ 148,500 $ —

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Withholding of common stock for taxes ( 332,716 ) ( 3 ) — — ( 12,461 ) — — — ( 12,464 ) — — —

Class B common stock exchanged for Class A common stock 2,500,000 25 ( 2,500,000 ) ( 25 ) — — — — — — — —

Repurchases of common stock ( 291,229 ) — — — — — ( 7,827 ) — ( 7,827 ) — — —

Distributions — — — — — — — ( 12,820 ) ( 12,820 ) — — —

Redemption of Series B preferred units ( 7,143 ) ( 8,132 ) — — — — — — — — ( 3,288 ) 343 — ( 11,077 )

Preferred stock dividends declared — — — — — ( 13,500 ) — — ( 13,500 ) — — —

Net income and comprehensive income — 587 — — — — — — — — — 295,313 12,042 307,942

Noncontrolling interest issued in business combination — — — — — — — — — 21,451

Net and comprehensive income — — — — — 335,341 — 5,241 340,582 — — —

Balance as of December 31, 2024 35,710,848 $ 360 57,726,153 $ 577 $ 281,559 $ 970,253 $ ( 7,827 ) $ 5,487 $ 1,250,409 150,000 $ 148,500 $ 21,451

The accompanying notes are an integral part of these consolidated financial statements.

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DREAM FINDERS HOMES, INC.

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Net and comprehensive income $ 340,582 $ 307,942 $ 274,297

Adjustments to reconcile net and comprehensive income to net cash provided by/(used in) operating activities

Adjustments to reconcile net and comprehensive income to net cash (used in)/provided by operating activities

Depreciation and amortization 10,227 10,651 11,252

Gain on sale of property and equipment ( 56 ) ( 92 ) ( 87 )

Extinguishment of unamortized debt issuance costs — 283 507

Amortization of lease right-of-use assets 6,988 7,245 5,839

Stock-based compensation 18,788 14,098 6,796

Income from Paycheck Protection Program — — 7,220

Deferred income tax benefit ( 14,124 ) ( 22,345 ) ( 294 )

Return on investments, net of income from unconsolidated entities ( 1,286 ) 1,810 ( 3,918 )

Contingent consideration revaluation 13,939 46,590 11,053

Payments of contingent consideration ( 34,872 ) ( 12,331 ) ( 4,461 )

Changes in Operating Assets and Liabilities

( 2,758 ) ( 1,342 ) 2,001

Changes in operating assets and liabilities, net of effects of acquisition

Accounts receivable ( 2,634 ) 12,616 ( 11,850 )

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Other assets ( 25,603 ) ( 1 ) ( 2,868 )

Mortgage loans held for sale ( 188,662 ) — —

Accounts payable and accrued expenses 41,629 22,750 65,748

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Lease liabilities ( 6,866 ) ( 6,988 ) ( 5,730 )

Net cash provided by/(used in) operating activities 374,234 ( 27,623 ) 64,972

Net cash (used in)/provided by operating activities ( 256,648 ) 374,234 ( 27,623 )

Cash flows from investing activities

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Return of investments from unconsolidated entities 884 230 449

Business combinations, net of cash acquired — ( 280 ) ( 519,465 )

Payments for acquisitions, net of cash acquired ( 178,123 ) — ( 280 )

Deposits on pending acquisitions ( 11,003 ) — —

Net cash used in investing activities ( 221,672 ) ( 4,484 ) ( 5,524 )

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Repayments on construction lines of credit ( 690,384 ) ( 5,845,864 ) ( 10,820,121 )

Proceeds from mortgage warehouse facilities 1,272,536 — —

Repayments on mortgage warehouse facilities ( 1,092,063 ) — —

Payments of debt issuance costs ( 7,343 ) ( 11,385 ) ( 5,539 )

Proceeds from common stock issuance — — 143,630

Proceeds from issuance of convertible preferred stock — — 148,500

Payments of equity issuance costs — — ( 14,009 )

Redemption of Series B preferred units — ( 11,077 ) —

Payments of preferred stock dividends ( 13,500 ) ( 13,238 ) ( 13,688 )

Payments for common stock withheld for taxes ( 12,464 ) ( 322 ) —

Conversion of LLC units

— — ( 123,658 )

Contributions — — 125,658

Distributions ( 11,946 ) ( 23,095 ) ( 46,608 )

Redemptions of preferred units ( 11,077 ) — ( 25,530 )

Repurchases of common stock ( 7,827 ) — —

Distributions to noncontrolling interests ( 12,820 ) ( 11,946 ) ( 23,095 )

Payments of contingent consideration ( 27,832 ) ( 32,592 ) ( 13,679 )

Net cash (used in)/provided by financing activities ( 216,424 ) 146,955 646,020

Net increase in cash, cash equivalents and restricted cash 153,326 113,808 187,949

Net cash provided by/(used in) financing activities 269,689 ( 216,424 ) 146,955

Net decrease in cash, cash equivalents and restricted cash ( 208,631 ) 153,326 113,808

Cash, cash equivalents and restricted cash at beginning of period 548,456 395,130 281,322

395,130 281,322 93,373

Cash, cash equivalents and restricted cash at end of period $ 339,825 $ 548,456 $ 395,130

$ 548,456 $ 395,130 $ 281,322

The accompanying notes are an integral part of these consolidated financial statements.

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DREAM FINDERS HOMES, INC.

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Cash paid for income taxes, net of refunds (1)

$ 127,547 $ 81,320 $ 47,935

Supplemental disclosures of noncash activities:

Noncash investing activities

Noncontrolling interest issued in business combination $ 21,451 $ — $ —

Accrued cash consideration for business combination 22,406 — —

Noncash financing activities

Contingent consideration — — ( 1,841 )

Financed land payments to seller — — 8,916

Total noncash financing activities $ — $ ( 1,841 ) $ 103,489

Total noncash investing and financing activities $ 43,857 $ — $ ( 1,841 )

(1) Includes purchased tax credits of $ 12 million for the year ended December 31, 2024 .

Subsequently, in January 2025, the Company purchased approximately $ 37 million in tax credits related to 2024 income tax expense.

The accompanying notes are an integral part of these consolidated financial statements.

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DREAM FINDERS HOMES, INC.

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Nature of Business

Dream Finders Homes, Inc.

(together with its subsidiaries, “Dream Finders”, the “Company” or “DFH, Inc.”) designs, builds and sells homes in markets throughout the United States.

The Company also offers title insurance and mortgage banking solutions.

The Company was incorporated in the State of Delaware on September 11, 2020.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of DFH, Inc., its wholly owned subsidiaries and its investments that qualify for consolidation treatment (Note 6, Variable Interest Entities ).

The noncontrolling interests represent equity interests held by others in certain of our subsidiaries.

Dream Finders Homes, Inc., a Delaware corporation incorporated in 2020, (together with its subsidiaries, “Dream Finders”, “DFH, Inc.”, or the “Company”) designs, builds and sells homes in markets throughout the United States.

The Company also provides title insurance and mortgage banking s olutions through its wholly owned subsidiaries, Golden Dog Title & Trust (“DF Title”) and Jet HomeLoans, LLC (“Jet HomeLoans”).

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and instructions to Form 10-K and Regulation S-X.

The consolidated financial statements include the accounts of DFH, Inc., its wholly owned subsidiaries and any investments that may qualify for consolidation treatment.

The noncontrolling interests represent equity interests held by others in certain of the Company’s subsidiaries.

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.

There are no other components of comprehensive income not already reflected in net and comprehensive income on the Consolidated Statements of Comprehensive Income.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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.

Actual results could differ materially from those estimates.

The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Reclassifications

Certain reclassifications have been made in the prior period consolidated financial statements to conform to 2024 presentation.

Cash and Cash Equivalents and Concentration Risk

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The Company has entered into insured cash sweep account agreements that protect material deposit balances with certain financial institutions.

In addition, management reviews the financial viability of these financial institutions on a periodic basis and does not anticipate that any potential nonperformance by the financial institutions would have a material impact to the Company’s results of operations or cash flows.

In addition, management reviews the financial viability of these financial institutions on a periodic basis and does not anticipate that any potential nonperformance by the financial institutions would have a material impact on the Company’s results of operations or cash flows.

Restricted Cash

Restricted cash represents funds held in accounts that are restricted for specific purposes, primarily related to escrow monies held in title companies.

Inventories and Cost of Sales

Inventories and Homebuilding Cost of Sales

Inventories inclu de the costs of direct land acquisition, land development, construction, capitalized interest on qualifying assets, lot option fees, real estate taxes and direct overhead costs incurred related to land acquisition and development, home construction, and sales commissions.

Indirect overhead costs are charged to selling, general, and administrative expenses as incurred.

Indirect overhead costs are charged to selling, general, and administrative expense (“SG&A”) on the Consolidated Statements of Comprehensive Income as incurred.

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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.

The costs of residential lots are transferred to construction in process when home construction begins and are expensed on a specific identification basis as homebuilding cost of sales as the homes close.

Homebuilding cost of sales 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, as well as interest and sales commissions.

The costs of residential lots are transferred to construction in process when home construction begins and are either expensed on a specific identification basis when the home is delivered or are expensed over time, depending on the applicable revenue recognition scenario.

Refer to “— Homebuilding Revenue Recognition” for more information.

Inventories are carried at the lower of accumulated cost or net realizable value.

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Recoverability is measured by comparing the expected undiscounted future cash flows of the inventory to its carrying amount.

There were $ 2.0 million and $ 1.8 million in inventory impairment charges recorded for the years ended December 31, 2023 and 2022, respectively, and no impairment charges recorded for the year ended December 31, 2021.

Debt Issuance Costs

Debt issuance costs that are recorded to capitalized interest are amortized to interest expense over the estimated economic life of the underlying debt instrument using the straight-line method, which approximates the effective interest method.

Portions of this amortization are evaluated for capitalization as inventories and subsequently expensed through cost of sales at the home closing.

Inventory impairment charges are included in SG&A on the Consolidated Statements of Comprehensive Income.

There were no impairment charges recorded for the year ended December 31, 2024, and $ 2.0 million and $ 1.8 million in inventory impairment charges recorded for the years ended December 31, 2023 and 2022 , respectively.

Lot deposits represent amounts paid by the Company to secure the ability to acquire finished lots or land for development through an option contract.

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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.

Impairment charges are included in selling, general and administrative expense (“SG&A”) on the Consolidated Statements of Comprehensive Income.

There were $ 3.3 million and $ 3.0 million in impairment charges recorded for the years ended December 31, 2023 and 2022 , respectively, a nd no impairment charges recorded for the year ended December 31, 2021.

Variable Interest Entities and Investments in Unconsolidated Entities

Pursuant to Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities (“VIEs”), m anagement analyzes the Company’s investments first under the variable interest model to determine if they are VIEs and, if so, whether the Company is the primary beneficiary.

Impairment charges are included in SG&A on the Consolidated Statements of Comprehensive Income.

There were impairment charges of $ 1.5 million, $ 3.3 million and $ 3.0 million for lot deposits recorded for the years ended December 31, 2024, 2023 and 2022 , respectively .

Mortgage Loans Held for Sale and Financial Services Revenue Recognition

Mortgage loans held for sale are carried at fair value under the fair value option, with changes in fair value recorded in financial services revenues on the Consolidated Statement of Comprehensive Income.

Management believes that carrying the mortgage loans held for sale at fair value and the derivative instruments used to economically hedge them enhances financial reporting by reducing volatility in reported earnings.

The fair value of mortgage loans held for sale is determined by forward sale commitments with investors that are entered into simultaneously when the loan is locked with the borrower.

Mortgage loans held for sale are generally sold within 30 - 60 days of origination.

Net gains and losses from the sale of mortgage loans held for sale are recognized based upon the difference between the sales proceeds and carrying value of the related loans and are recorded in financial services revenues on the Consolidated Statement of Comprehensive Income.

The Company enters into interest rate lock commitments (“IRLCs”) when originating mortgage loans with customers who have applied for a loan and meet certain credit and underwriting criteria.

The IRLCs, which may either be derivative assets or derivative liabilities based on changes in market and interest rate risk, are carried at fair value within other assets on the Company’s Consolidated Balance Sheets.

Changes in fair value of these instruments, as well as any gains or losses upon settlement, are reflected in financial services revenues on the Consolidated Statement of Comprehensive Income.

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Variable Interest Entities and Investmen ts in Unconsolidated Entities

The Company holds investments in certain limited liability companies and similar entities that conduct land acquisition, land development and/or other homebuilding activities in various markets where its homebuilding operations are located, which are considered variable interests.

Additionally, in the ordinary course of business, the Company enters into option contracts with third-party land bank entities and certain unconsolidated entities for the ability to acquire rights to finished lots for the construction of homes.

Pursuant to ASC Topic 810 and subtopics related to the consolidation of variable interest entities (“VIEs”), m anagement analyzes the Company’s investments in these entities first under the variable interest model to determine if they are VIEs and, if so, whether the Company is the primary beneficiary.

Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion if changes to the Company’s involvement arise.

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If the investment does not qualify as a VIE under the variable interest model, management then evaluates the entity under the voting interest model to assess if consolidation is appropriate.

Refer to Note 6, Variable Interest Entities, for a description of the Company’s interests, including which entities were determined to be VIEs.

Accounting for Unconsolidated VIEs

Investments for which the Company is not identified as the primary beneficiary, but the Company has significant influence are accounted for as equity method investments.

Investments for which the Company does not have significant influence are accounted for at cost under the cost method.

Equity and cost method investments are classified as investments in unconsolidated entities on the Consolidated Balance Sheets.

Investments for which the Company is not identified as the primary beneficiary, but the Company has significant influence, are accounted for under the equity method.

Investments for which the Company does not have significant or any influence are recorded at cost.

Equity method investments and investments recorded at cost are classified as investments in unconsolidated entities on the Consolidated Balance Sheets.

Earnings (losses) from the Company’s investments in unconsolidated entities are reported net on the Consolidated Statements of Comprehensive Income.

For equity method investments, the Company shares in the earnings (losses) of these unconsolidated entities 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 entity.

For distributions received from equity method investments, 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.

When applicable dividends are declared for the cost method investments, we record them as income of unconsolidated entities on the Consolidated Statements of Comprehensive Income.

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.

Leases are included in right-of-use (“ROU”) assets and 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 applies 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.

The Company evaluates its investments in unconsolidated entities for impairment when indicators suggest that the carrying value of the investment is impaired for more than a temporary period.

For distributions received from its investments, the Company has elected to use the cumulative earnings approach for the Consolidated Statements of Cash Flows.

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 represent returns of investments included within investing cash flows.

Wh en applicable dividends are declared for the Company’s investments at cost, the Company records them as income from unconsolidated entities on the Consolidated Statements of Comprehensive Income.

The carrying amounts of the Company’s investments in unconsolidated entities, other than the lot option contracts discussed below, were $ 11.5 million and $ 15.4 million as of December 31, 2024 and 2023, respectively.

The Company’s maximum exposure to loss is limited to its investment in the entities because the Co mpany is not obligated to provide them with any additional capital and does not guarantee any of their debt or other liabilities.

Under the aforementioned lot option contracts, the Company typically makes a specified earnest money deposit in consideration for the right to purchase finished lots in the future, usually at a predetermined price.

The 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 entities.

The Company’s risk of loss related to finished lot option and land bank option deposits and related fees was $ 551.9 million and $ 328.0 million as of December 31, 2024 and 2023, respectivel y.

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Goodwill represents the excess of purchase price over the fair value of the assets acquired less the liabilities assumed in a business combination.

Refer to Note 7, Contingent Consideration, for details on recent acquisitions.

Refer to Note 2, Acquisitions, 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.

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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.

An impairment loss is recorded if this assessment concludes that the fair value of the reporting unit is less than its measurement date carrying value.

The Company completed its most recent goodwill impairment test as of October 1, 2024 and determined that the fair value of each of the reporting units was not less than carrying value.

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Trademarks with finite lives are amortized over no more than five-year periods.

Intangible assets are subject to impairment testing whenever events or conditions suggest that the asset's carrying amount may not be recoverable.

Property and Equipment

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Furniture and fixtures 2 - 7

Office equipment 4

Software 1 - 4

Business Combinations and Contingent Consideration

Business combinations are evaluated and accounted for in accordance with guidance set forth in ASC 805.

Office equipment and software 1 - 4

Aircraft and other vehicles 5

Business Combinations, Contingent Consideration and Redeemable Noncontrolling Interest

Business combinations are evaluated and accounted for in accordance with guidance set forth in ASC Topic 805.

Once a business combination has been identified, all material assets and liabilities of the business are recognized at fair value as of the acquisition date.

Any residual amount remaining of the purchase price in excess of the fair value of the net assets is recognized as goodwill.

In connection with applicable business combinations, the Company records the fair value of contingent consideration as a liability on the acquisition date as prescribed by the underlying agreement.

The initial measurement of contingent consideration is based on projected cash flows such as revenues, gross margin, overhead expenses and pre-tax income of the acquired business and is discounted to present value using the discounted cash flow method.

Subsequently, the future estimated contingent consideration payments are remeasured to fair value at each reporting date based on the estimated future pre-tax income of the acquired entities and the re-assessment of risk-adjusted discount rates that reflect current market conditions.

In connection with applicable business combinations, the Company records the fair value of contingent consideration as a liability as of the acquisition date as prescribed by the underlying agreement.

The adjustments made as a result of the remeasurements at each reporting date are included in contingent consideration revaluation on the Consolidated Statements of Comprehensive Income.

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Contingent consideration payments are included within cash flows from financing on the Consolidated Statements of Cash Flows to the extent these payments do not exceed the initial liability recorded at the acquisition date for each arrangement.

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Maximum potential exposure for the contingent consideration payments is not estimable based on the contractual terms, as the contingent consideration arrangements allow a percentage payout based on a potentially unlimited range of pre-tax net income.

Customer Deposits

Customer deposits are amounts collected from customers in conjunction with the execution of the home sale contract, and are recorded as a liability when cash is received.

Customer deposits are applied against the final settlement due at the home closing.

In the event of contract cancellation, the customer deposit is contractually forfeited and recognized as homebuilding revenue.

Warranty Reserve

For certain business combinations, the agreements may include certain put and call options that, upon the occurrence of certain events, are not solely in the control of the Company.

As a result, a noncontrolling interest is redeemable and reported within mezzanine equity on the Company’s Consolidated Balance Sheets at the greater of the initial carrying amount (its fair value on the acquisition date) adjusted for the noncontrolling interest’s share of net income (loss) or its redemption value.

After achieving the minimum earnings threshold, the amount of net and comprehensive income that is attributable to the redeemable noncontrolling interest will be presented within net and comprehensive income attributable to noncontrolling interests on the Consolidated Statements of Comprehensive Income.

Warranty Reserves

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 quarterly to ensure the reserve’s adequacy.

The Company also provides warranties covering structural systems for eight to ten years from the time of closing.

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.

At the time a home is sold, the Company records an estimate of warranty expense based on historical warranty costs and the most likely current cost of corrective action.

An analysis of the warranty reserve is performed quarterly to ensure adequacy of the reserve.

With the assistance of an actuary, the Company also estimates reserves for the structural warranty based on the number of homes under warranty, historical data and geographic trends.

The warranty reserve is classified on the Consolidated Balance Sheets as an accrued expense.

Revenue Recognition

The Company recognizes revenue in accordance with 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.

Refer to Note 6 , Warranty Reserves for additional information.

Debt Issuance Costs

Debt issuance costs related to our revolving credit facility and senior unsecured notes discussed in Note 3, Debt are recorded to capitalized interest within inventories on the Consolidated Balance Sheets and are subsequently expensed in homebuilding cost of sales as the homes close.

Homebuilding Revenue Recognition

Homebuilding revenues consist primarily of home sales recognized in accordance with ASC Topic 606.

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.

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For the majority of contracts, performance obligations are satisfied and revenue is recognized 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.

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Under home sale contracts, the Company typically receives an initial cash deposit from the homebuyer, known as as customer deposit, 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.

When the cash is received, customer deposits are recorded on the Company’s Consolidated Balance Sheets, representing a contract liability.

Customer deposits are applied against the final settlement due at the home clos ing.

In the event of contract cancellation, the customer deposit is contractually forfeited and recognized as homebuilding revenue.

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 in homebuilding cost of sales 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.

In certain contracts, the customer controls the underlying land upon which the home is constructed.

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Individual customers generally have construction-to-permanent loans that are taken out by the customer.

During the underwriting process for our individual and institutional customers, a draw schedule is agreed upon by the bank, the customer, and the Company.

During the underwriting process for individual 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.

A contract liability would be recorded in cases where funds are received in excess of costs incurred.

As of December 31, 2024 and 2023 , the contract asset related to percentage of completion contracts was $ 5.2 million and $ 13.7 million , respectively, and is included in other assets on the Consolidated Balance Sheets.

As of December 31, 2024 and 2023 , the contract liability related to percentage of completion contracts was $ 0.5 million and $ 1.2 million , respectively, and is included in accrued expenses on the Consolidated Balance Sheets.

Revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled.

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 in land and development 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.

Refer to Note 9, Segment Reporting for a more detailed disaggregation of our revenues by reportable segments.

Refer to Note 9, Segment Reporting for a more detailed disaggregation of revenues by reportable segments.

Stock-Based Compensation

The Company records expense for restricted stock units awarded to employees in return for employee service.

The cost is measured as of the grant-date fair value of the restricted stock units and recognized as stock-based compensation on a straight-line basis over the employee service period, which is normally the vesting period.

We recognize forfeitures of restricted stock units as a reduction to stock-based compensation in the period in which they occur .

The Company records expense for restricted stock granted to employees in return for employee service.

The cost for these awards is measured on the grant date and recognized as stock-based compensation on a straight-line basis over the employee service period, which is normally the vesting period.

Forfeitures of these awards are recognized as a reduction to stock-based compensation in the period in which they occur .

Stock-based compensation is included within SG&A on the Consolidated Statements of Comprehensive Income.

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.

The Company computes deferred income tax 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% likely to be realized is recognized.

Interest and penalties related to unrecognized tax benefits are recorded in income tax expense.

Our proportional share of the Company’s subsidiaries’ provisions are included in our consolidated financial statements.

Refer to Note 8, Income Taxes.

Reclassifications

Certain reclassifications have been made in the 2022 and 2021 consolidated financial statements to conform to the classifications used in 2023.

In making such a determination, the Company considers 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 it’s determined that the deferred tax assets will be realized for which a valuation allowance had been recorded, then the deferred tax asset allowance will be adjusted, which reduces the provision for income taxes.

The Company evaluates 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) it is determined 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% likely to be realized is recognized.

Interest and penalties related to unrecognized tax benefits are recorded in income tax expense on the Consolidated Statements of Comprehensive Income.

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Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) Number 2023-09, “Income Taxes (Topic 740):

In November 2024, the FASB issued ASU Number 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” (“ASU 2024-03”).

ASU 2024-03 requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements.

Annual disclosure requirements under ASU 2024-03 will become effective for the fiscal year ending December 31, 2027, and interim disclosure requirements will become effective beginning in the first quarter of 2028.

The Company is currently evaluating the adoption of ASU 2024-03 on its consolidated financial statements.

In March 2024, the Securities and Exchange Commission (the “SEC”) issued its final rules aimed at standardizing climate-related disclosures.

These rules require the disclosure of material climate-related risks, strategies to mitigate or adapt to these risks, governance practices overseeing such risks and the disclosure of substantial greenhouse gas emissions stemming from operations owned and controlled and/or indirectly influenced through purchased energy consumed in operations.

Furthermore, the final rules require disclosures within financial statement notes concerning the impacts of severe weather events and other natural circumstances, contingent upon specified thresholds of materiality.

Subsequent to the issuance of the final rules, on March 15, 2024, a federal appellate court imposed a temporary stay pending judicial review of these regulations, followed by a voluntary stay by the SEC on April 4, 2024, pending the conclusion of this review process.

The initial annual disclosure requirements may require compliance as early as the year ending December 31, 2025 depending on filing status.

The Company is currently evaluating the impact of these final rules on the consolidated financial statements.

In December 2023, the FASB issued ASU Number 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”).

ASU 2023-09 requires more disaggregated income tax disclosures, including additional information in the rate reconciliation and additional disclosures about income taxes paid.

ASU 2023-09 will become effective for us for the fiscal year ending December 31, 2025.

ASU 2023-09 will become effective for the fiscal year ending December 31, 2025.

Early adoption is permitted, and guidance should be applied prospectively, with an option to apply guidance retrospectively.

We are currently evaluating the impact of the adoption of ASU 2023-09 on our consolidated financial statements.

The Company is currently evaluating the impact of the adoption of ASU 2023-09 and does not expect it to have a material effect on the consolidated financial statements.

In November 2023, the FASB issued ASU Number 2023-07, “Segment Reporting (Topic 280):

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The guidance also expands disclosure requirements for interim periods, as well as requires disclosure of other segment items, including the title and position of the entity’s chief operations decision maker(s).

ASU 2023-07 will become effective for us for the fiscal year ending December 31, 2024, and for interim periods starting in our first quarter of 2025.

Early adoption is permitted, and guidance is required to be applied retrospectively.

We are currently evaluating the impact of the adoption of ASU 2023-07 on our consolidated financial statements.

ASU 2023-07 became effective for the fiscal year ended December 31, 2024, and for interim periods starting in our first quarter of 2025.

The Company adopted the new standard for the annual requirements for the fiscal year ended December 31, 2024 which did not have a material effect on the consolidated financial statements.

Refer to Note 9 , Segment Reporting for the required additional disclosures.

Crescent Homes

On February 1, 2024, the Company acquired certain assets and assumed certain liabilities, comprising the majority of the homebuilding business of Crescent Ventures, LLC (“Crescent Homes” or “Crescent”) through wholly-owned DFH subsidiaries, Dream Finders Holdings, LLC, and DFH Crescent, LLC (“DFH Crescent”).

This acquisition allowed the Company to expand into the markets of Charleston and Greenville, South Carolina, and Nashville, Tennessee.

The cash consideration for the Crescent acquisition was $ 210.4 million.

Payments through December 31, 2024 were made with cash on hand and proceeds from borrowings under the Company’s revolving credit facility.

Additionally, as part of the consideration, the former owner of Crescent Homes received a redeemable noncontrolling interest in DFH Crescent and contractual rights to a portion of its future earnings upon exceeding a minimum earnings threshold.

The purchase agreement includes put and call options relating to the noncontrolling interest that, upon the occurrence of certain events, are not solely in the control of the Company.

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The acquisition was accounted for as a business combination under ASC Topic 805.

In determining the purchase price allocation, the Company evaluated Crescent Homes’ assets acquired and liabilities assumed based on their estimated fair values as of February 1, 2024.

Goodwill was recorded as the residual amount by which the purchase price plus the fair value of the noncontrolling interest 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.

The fair value of the redeemable noncontrolling interest, inclusive of put and call options, was determined using an income-based approach, coupled with Monte Carlo simulations, which were impacted by various inputs including projected future cash flows, discount rates and market volatility.

The consideration for the total purchase price and related purchase price allocation as of December 31, 2024 was as follows (in thousands):

Cash consideration $ 210,449

Fair value of the redeemable noncontrolling interest as of the acquisition date 21,451

Total consideration $ 231,900

As Originally

March 31, 2024 Measurement

Adjustments (1)

Inventories $ 120,682 $ 1,371 $ 122,053

Other assets 1,790 — 1,790

Property and equipment 418 37 455

Accounts payable ( 9,311 ) ( 232 ) ( 9,543 )

Customer deposits ( 8,804 ) — ( 8,804 )

Accrued expenses ( 2,036 ) ( 121 ) ( 2,157 )

Net assets acquired $ 102,739 $ 1,055 $ 103,794

Goodwill 132,861 ( 4,755 ) 128,106

Total purchase price $ 235,600 $ ( 3,700 ) $ 231,900

(1) The above measurement period adjustments were recorded during the three months ended June 30, 2024.

These adjustments were related to and reflect the most current provisional valuation of the post-closing balances of the acquired net assets.

The purchase price was finalized on February 1, 2025.

Jet HomeLoans

On July 1, 2024, the Company acquired the remaining 40 % equity interest in the previously unconsolidated mortgage banking joint venture Jet HomeLoans, which was consolidated as of that date on the Company’s consolidated financial statements.

Cash consideration was $ 9.3 million, subject to customary post-closing adjustments.

The majority of the assets acquired and liabilities assumed on July 1, 2024 included mortgage loans held for sale of $ 114.7 million and mortgage warehouse facilities of $ 109.1 million, which were reported within the Company’s Consolidated Balance Sheets as of that date.

The acquisition was accounted for as an asset acquisition under ASC Topic 805.

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Unaudited Pro Forma Information

The following unaudited pro forma consolidated results of operations are provided for illustrative purposes only and have been presented as if the Crescent and Jet HomeLoans acquisitions had occurred on January 1, 2023 (in thousands):

Unaudited Pro Forma (1)

Total revenues $ 4,502,636 $ 4,119,907

Net and comprehensive income attributable to Dream Finders Homes, Inc.

$ 341,307 $ 350,974

(1) 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.

For the year ended December 31, 2024, Crescent Homes contributed $ 469.7 million in homebuilding revenues and $ 67.2 million in net and comprehensive income, all of which is attributable to the Company.

Crescent Homes operations are included in the Mid-Atlantic segment from the date of acquisition.

Refer to Note 9, Segment Reporting for information.

For the year ended December 31, 2024, Jet HomeLoans contributed $ 34.8 million in financial services revenues and $ 21.7 million in net and comprehensive income.

Following the acquisition on July 1, 2024, Jet HomeLoans’ operations continue to be included within the Financial Services segment.

Refer to Note 9, Segment Reporting for information.

Contingent Consideration from Previous Business Combinations

The earnout period related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC concluded in the third quarter of 2024 and final payment for the contingent consideration agreement was made in the fourth quarter of 2024 resulting in no liability or future obligations relating to this arrangement as of December 31, 2024.

As of December 31, 2023, the Company remeasured the fair value of contingent consideration and adjusted the liability to $ 11.7 million based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability.

The Company recorded contingent consideration adjustments resulting in $ 0.9 million and $ 2.9 million of expense and $ 2.0 million of income for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024 and 2023, the Company remeasured the fair value of contingent consideration related to the 2021 acquisition of McGuyer Homebuilders, Inc.

(“MHI”) and adjusted the liability to $ 68.0 million and $ 105.1 million , respectively, based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability .

The Company recorded contingent consideration adjustments resulting in expense of $ 13.0 million, $ 43.3 million and $ 12.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024, there were 9 months remaining under the contingent consideration agreement.

Refer to Note 10, Fair Value Disclosures for the fair value measurement of contingent consideration.

Senior Unsecured Notes

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The 2028 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of the Company’s subsidiaries.

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The Company received net proceeds from the issuance and sale of the 2028 Notes of $ 293.5 million after unamortized debt issuance costs of $ 6.5 million, which reduce the carrying value of the 2028 Notes reported on the Consolidated Balance Sheets.

The net proceeds from the 2028 Notes were used to repay a portion of the then outstanding balance under the Company’s Credit Agreement.

As of December 31, 2023, unamortized debt issuance costs were $ 6.1 million.

The net proceeds from the 2028 Notes were used to repay a portion of the then outstanding balance under the existing revolving credit facility.

As of December 31, 2024 and 2023, unamortized debt issuance costs were $ 5.0 million and $ 6.1 million, respectively.

The 2028 Notes are redeemable by the Company prior to August 15, 2025 through the payment of the principal amount due, which can be accomplished through the issuance of certain restricted equity offerings for specified portions of principal notes outstanding, plus specified rates and accrued and unpaid interest, and a make-whole premium in the event 100 % of the principal amount is redeemed.

On or after August 15, 2025, the 2028 Notes are redeemable at specified rates equal to 104.1 % of the principal balance, plus accrued and unpaid interest, and periodically decrease to 100 % on August 15, 2027.

On or after August 15, 2025, the 2028 Notes are redeemable at specified rates equal to 104.1 % of the principal balance, plus accrued and unpaid interest, which periodically decrease to 100 % on August 15, 2027.

Upon the occurrence of a Change of Control (as defined in the Indenture), the holders of the 2028 Notes will have the right to require the Company to repurchase all or a portion of the 2028 Notes at a price equal to 101 % of the aggregate principal amount of the 2028 Notes, plus any accrued and unpaid interest.

The Indenture includes customary events of default.

Subject to specified exceptions, the Indenture contains certain restrictive covenants that, among other things, limit our ability to incur or guarantee certain indebtedness, issue certain equity interests or engage in certain capital stock transactions.

Subject to specified exceptions, the Indenture contains certain restrictive covenants that, among other things, limit the Company’s ability to incur or guarantee certain indebtedness, issue certain equity interests or engage in certain capital stock transactions.

In addition, the Indenture contains certain limitations related to mergers, consolidations, and transfers of assets.

Credit Agreement

On July 19, 2023, the Company entered into amendments to its existing credit agreement (as amended, the “Credit Agreement”).

The amendments, among other things, (i) provide for an increase in the aggregate commitments under the revolving credit facility to $ 1.2 billion, subject to a borrowing base;

(ii) extend the maturity date from June 2, 2025 to July 17, 2026 for certain new and existing lenders comprising $ 1.1 billion of the $ 1.2 billion of aggregate commitments under the Credit Agreement;

(iii) authorize the non-extending lenders to extend their maturity dates to July 17, 2026, with the consent of the Company;

(iv) provide the Company with the ability to incur certain additional unsecured debt;

and (v) reference a Secured Overnight Financing Rate (“SOFR”) based rate, as described below.

Certain of our subsidiaries guaranteed the Company’s obligations under the Credit Agreement.

On June 6, 2024, the Company entered into an amendment to its existing revolving credit facility (as amended, the “Credit Agreement”).

The amendment, among other things, (i) provides for an increase in the aggregate commitments under the revolving credit facility to $ 1.4 billion, subject to a borrowing base;

(ii) extends the maturity date from July 17, 2026 to June 4, 2027 for certain new and existing lenders comprising $ 1.3 billion of the $ 1.4 billion of aggregate commitments under the Credit Agreement;

and (iii) provides the Company with the ability to incur certain additional unsecured debt.

Certain of the Company’s subsidiaries guaranteed the Company’s obligations under the Credit Agreement.

The amendments also updated the Company’s minimum tangible net worth covenant, which resulted in an increase to the base component of such covenant from $ 607.0 million to $ 739.0 million.

The Credit Agreement retains an accordion feature that allows the aggregate commitments to increase up to $ 1.6 billion, subject to a borrowing base.

Under the Credit Agreement, the Company has the option to draw “Term SOFR Rate Loans” or “Daily Simple SOFR Rate Loans”.

Term SOFR Rate Loans bear interest based on Term SOFR rates for one, three or six-month interest periods, which include SOFR adjustments of 10 , 15 and 25 basis points for each interest period, respectively.

The Credit Agreement includes an accordion feature that allows the aggregate commitments to increase to up to $ 2.0 billion, subject to a borrowing base.

Under the Credit Agreement, the Company has the ability to draw “Term SOFR Rate Loans” or “Daily Simple SOFR Rate Loans”.

Term SOFR Rate Loans bear interest based on Term SOFR rates for one or three-month interest periods and include a SOFR adjustment of 10 basis points for each interest period.

Daily Simple SOFR Rate Loans bear interest based on Daily Simple SOFR rates and include a SOFR adjustment of 10 basis points.

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As of December 31, 2024 and 2023, the outstanding balance under the Credit Agreement was $ 700.0 million and $ 530.0 million, respectively.

Under the Credit Agreement, the funds available are unsecured and availability under the borrowing base is calculated based on specific advance rates for each of finished lots, construction in process, and finished homes inventory on the Consolidated Balance Sheets, and reduced for any outstanding unsecured indebtedness permitted under the Credit Agreement, including the 2028 Notes.

Under the Credit Agreement, the funds available are unsecured and availability under the borrowing base is calculated based on specific advance rates for finished lots, construction in process homes, and finished homes inventory on the Consolidated Balance Sheets, and reduced for any outstanding unsecured indebtedness permitted under the Credit Agreement, including the 2028 Notes.

The Company had capitalized debt issuance costs related to construction lines of credit, net of amortization, of $ 10.3 million and $ 7.0 million as of December 31, 2024 and 2023, respectively, which were included in other assets on the Consolidated Balance Sheets.

Debt issuance costs that are recorded to capitalized interest are expensed in cost of sales as the homes close.

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The Credit Agreement contains covenants that, among other things, require that we (i) maintain a maximum debt to capitalization ratio, as of the last day of each fiscal quarter, of 60.0 %;

(ii) maintain an interest coverage ratio, as of the last day of each fiscal quarter, of not less than 2.0 to 1.0;

(iii) maintain a liquidity ratio, as of the last day of each fiscal quarter, of not less than 1.0 to 1.0;

(iv) maintain tangible net worth of not less than the sum of (A) $ 739.0 million, (B) 50.0 % of net income earned in each fiscal quarter after March 31, 2024 and (C) 50.0 % of the aggregate increases in shareholders’ equity of the consolidated group after March 31, 2024 by reason of the issuance and sale of equity interests of the members of the consolidated group;

(v) maintain a risk assets ratio (defined as (A) the sum of the GAAP net book value for all finished lots, lots under development and land held for future development or disposition to (B) tangible net worth), as of the last day of each fiscal quarter, of no more than 1.0 to 1.0;

(vi) not allow aggregate investments in unconsolidated affiliates to exceed 15.0 % of tangible net worth, as of the last day of any fiscal quarter;

and (vii) not incur indebtedness other than, among other things, (A) the obligations under the Credit Agreement, (B) non-recourse indebtedness in an amount not to exceed 15.0 % of tangible net worth, as of the last day of each fiscal quarter, (C) operating lease liabilities, finance lease liabilities and purchase money obligations for fixed or capital assets not to exceed $ 5.0 million in the aggregate, (D) indebtedness of financial services subsidiaries and variable interest entities, (E) indebtedness under hedge contracts entered into for purposes other than for speculative purposes, and (F) permitted unsecured indebtedness (including the 2028 Notes).

Mortgage Warehouse Facilities

As a result of the acquisition of Jet HomeLoans discussed in Note 2, Acquisitions, the Company has the following mortgage warehouse lines of credit and repurchase agreements with various financial institutions as of December 31, 2024.

Amounts outstanding under the mortgage warehouse facilities are not guaranteed by DFH, Inc.

or any of its other subsidiaries and the agreements contain various affirmative and negative covenants applicable solely to Jet HomeLoans that are customary for arrangements of this type.

All of the outstanding balances for the borrowings as of December 31, 2024 below were collateralized by the mortgage loans held for sale reported on the Consolidated Balance Sheets (dollars presented in thousands):

Outstanding Balance Facility Amount Interest Rate

Warehouse A $ 51,147 $ 150,000 6.63 %

Warehouse B 62,783 150,000 6.24 %

Warehouse C 125,532 225,000 6.89 %

Warehouse D 50,155 100,000 6.87 %

Total $ 289,617 $ 625,000

(1) As of December 31, 2024, the warehouse facilities had various expiry dates ranging from November 12, 2025 through February 15, 2026.

For Warehouses A, B and C, the facility renewal amounts will be $ 120.0 million, $ 100.0 million and $ 150.0 million, respectively, subject to final negotiations.

The Company was in compliance with all debt covenants as of December 31, 2024 and 2023.

The Company expects to remain in compliance with all debt covenants over the next 12 months.

Inventories consist of owned land and fi nished lots, and construction in process (“CIP”) and finished homes, including capitalized interest costs incurred under our debt obligations discussed in Note 2.

In addition, preconstruction costs related to finished lots or land under development held by third-party land bank partners incurred prior to the Company’s purchase of the land, including lot option fees, property taxes and due diligence costs are capitalized into owned land and lots.

Finished lots are generally purchased just-in-time for construction, whether for speculative (“spec”) or sold homes, and are included within owned land and lots in the table below until construction begins when the finished lot cost is transferred to CIP.

CIP represents homes under construction or completed, including sold, spec and model homes.

Inventories consist of construction in process (“CIP”) and finished homes, including capitalized interest costs incurred under certain of our debt obligations discussed in Note 3, owned land and lots and pre-acquisition land costs .

CIP represents homes under construction or completed, including sold, speculative (“spec”) and model homes.

CIP includes the cost of finished lots and all direct costs incurred to build homes.

The cost of homes is expensed on a specific identification basis when the home is delivered to the customer.

Finished lots are generally purchased just-in-time for construction, whether for spec or sold homes, and are included within owned land and lots until construction begins when the finished lot cost is transferred to CIP.

Costs related to finished lots or land under development held by third-party land bank partners incurred prior to the Company’s purchase of the land, including lot option fees, property taxes and due diligence costs are capitalized into pre-acquisition land costs.

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Inventories consisted of the following as of December 31, 2024 and 2023 (in thousands) :

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Owned land and lots 133,311 110,957

Pre-acquisition land costs 94,568 77,525

Inventories $ 1,715,357 $ 1,440,249

Capitalized interest activity related to our construction lines of credit and senior unsecured notes, net is summarized in the table below for the years ended December 31, 2023 and 2022 (in thousands):

Capitalized interest activity related to the Company’s construction lines of credit and senior unsecured notes, net is summarized in the table below for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Year Ended December 31,

2024 2023 2022

Capitalized interest as of beginning of the period $ 27,311 $ 27,682 $ 16,317

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Furniture and fixtures $ 32,232 $ 22,787

Buildings 401 401

Vehicles 92 64

Aircraft and other vehicles (1)

Office equipment and software 3,373 2,156

Buildings and land 617 617

Total property and equipment 50,297 25,652

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Property and equipment, net $ 26,317 $ 7,043

(1) In September of 2024, the Company purchased an aircraft for corporate use with cash on hand at a purchase price of $ 13.5 million.

Depreciation expense was $ 6.4 million , $ 4.8 million and $ 5.0 million for the years ended December 31, 2024 , 2023 and 2022 , respectively.

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Warranty Reserves

The table below presents the activity related to warranty reserves as of December 31, 2024 and 2023 (in thousands):

Warranty reserves as of beginning of the period

$ 20,620 $ 17,538

Additions to reserve from home closings

Warranty expenditures

( 6,818 ) ( 9,331 )

Adjustments to pre-existing reserves

Warranty reserves as of end of the period

$ 27,638 $ 20,620

Commitments and Contingencies

Legal Proceedings

We are party to legal matters from time to time that typically are derived from the Company’s general business practices, primarily related to the construction of homes.

The Company believes that if a claim has merit, parties other than the Company would be, at least in part, liable for the claim, and the eventual outcome of the claim would not have a material adverse effect upon our consolidated financial statements.

When we believe that a loss is probable and estimable, we record the estimated contingency loss in our Consolidated Statements of Comprehensive Income.

We do not believe that any future outcomes of any claims or lawsuits currently outstanding will have a material adverse effect upon our consolidated financial statements.

The Company has operating leases primarily associated with office space that is used by our divisions, model home sale-leasebacks and a corporate office building sale-leaseback in Jacksonville, Florida.

The Company is party to legal matters from time to time that typically are derived from the Company’s general business practices, primarily related to the construction of homes.

When it is believed that a loss is probable and estimable, the Company records the estimated contingency loss in SG&A on the Consolidated Statements of Comprehensive Income.

The Company does not believe that any future outcomes of any claims or lawsuits currently outstanding will have a material adverse effect upon the consolidated financial statements.

The Company determines if an arrangement is, or contains, a lease at inception.

Leases are recognized when the contract provides the right to use an identified asset for a period of time in exchange for consideration.

Leases are included in right-of-use (“ROU”) assets and lease liabilities in the Consolidated Balance Sheets.

ROU assets represent the right to use an underlying asset for the lease term, while lease liabilities reflect the obligation to make lease payments.

Both are recognized at the commencement date based on the present value of lease payments.

In the absence of an explicit rate, the Company uses its incremental borrowing rate to determine the present value.

Lease expense for operating leases is recognized on a straight-line basis.

The practical expedient is applied to combine lease and non-lease components.

Variable lease costs are expensed as incurred.

Leases with terms of 12 months or less are not recorded on the Consolidated Balance Sheets.

The Company has operating leases primarily associated with office space that is used by its homebuilding divisions, model home sale-leasebacks and a corporate office building sale-leaseback in Jacksonville, Florida.

This corporate office building lease has a remaining lea se term of 10 years with potential renewal options.

There are no significant operating or finance leases that have not yet commenced as of December 31, 2024 .

The following table shows the operating lease costs for the years ended December 31, 2023, 2022 and 2021 (in thousands):

Year Ended December 31,

Lease Cost Classification 2023 2022 2021

Operating lease cost (1)

Selling, general and administrative expense $ 12,378 $ 11,547 $ 6,403

(1) Includes short-term leases and variable lease costs which are immaterial.

Supplemental disclosure of noncash activities related to leases was as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Leased assets obtained in exchange for new operating lease liabilities $ 3,442 $ 10,564 $ 8,149

During the year ended December 31, 2023, there have been no material changes in our lease liabilities for the next five years.

Weighted average remaining lease term

Operating leases 6 years 6 years

Weighted average discount rate

Operating leases 6.3 % 6.3 %

For the years ended December 31, 2024 , 2023 and 2022, o perating lease costs for these leases were $ 14.1 million , $ 12.4 million and $ 11.5 million , respectively, and were recorded within SG&A on the Consolidated Statements of Comprehensive Income.

For the years ended December 31, 2024 , 2023 and 2022, l eased assets obtained in exchange for new operating leases were $ 3.9 million , $ 3.4 million and $ 10.6 million , respectively.

As of December 31, 2024 and 2023 , the weighted average remaining lease term was 6 years for both periods, and the weighted average discount rate was 5.8 % and 6.3 % , respectively.

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The following table shows the maturities of our lease liabilities as of December 31, 2024 (in thousands):

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Present value of lease liabilities $ 18,148

(1) We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Variable Interest Entities

The Company holds investments in certain limited partnerships and similar entities that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located, which are considered variable interests.

The Company’s investments create a variable interest in a VIE, depending on the contractual terms of the arrangement.

Additionally, the Company, in the ordinary course of business, enters into option contracts with third parties and unconsolidated entities for the ability to acquire rights to finished lots for the construction of homes.

Under these contracts, the Company typically makes a specified earnest money deposit in consideration for the right to purchase finished lots in the future, usually at a predetermined price.

The VIEs are funded by initial capital contributions from the Company, as well as its other partners, and generally do not have significant debt.

In some cases, an unrelated third party is the general partner or managing member and, in others, the general partner or managing member is a related party.

The primary risk of loss associated with the Company’s involvement in these VIEs is limited to the Company’s initial capital contributions due to bankruptcy or insolvency of the VIE;

however, management has deemed the likelihood of this as remote.

The maximum exposure to loss related to the VIEs is disclosed below for both consolidated and unconsolidated VIEs, which equals the Company’s capital investment in each entity.

For VIEs that the Company does consolidate, management has the power to direct the activities that most significantly impact the VIEs’ economic performance.

The Company typically serves as the party with homebuilding expertise in the VIE.

The Company does not guarantee the debts of the VIEs, and creditors of the VIEs have no recourse against the Company.

For VIEs that the Company does not consolidate, the Company does not hold the power to direct the activities that most significantly impact the VIEs’ economic performance.

The Company’s maximum exposure to loss is limited to its investment in the entities because the Company is not obligated to provide them any additional capital and does not guarantee any of the unconsolidated VIEs’ debt or other liabilities.

The tables below display the carrying amounts of the assets and liabilities related to the consolidated VIEs, as well as the Company’s investments in unconsolidated VIEs (in thousands):

Consolidated 2023 2022

Assets $ 4,075 $ 13,344

Liabilities 1,766 4,787

Unconsolidated 2023 2022

Jet HomeLoans (1)

$ 9,301 $ 7,102

Other unconsolidated VIEs 6,063 6,906

Total investment in unconsolidated VIEs $ 15,364 $ 14,008

(1) On September 30, 2023, the joint venture was converted into a limited partnership, now known as Jet HomeLoans LP (“Jet HomeLoans”).

Refer to Note 11, Related Party Transactions for more information.

Lot Option Contracts

The Company generally does not engage in the land development business.

Instead, the Company employs an asset-light land financing strategy, providing us optionality to purchase lots on a ‘‘just-in-time’’ basis for construction and affording us flexibility to acquire lots at a rate that matches the expected sales pace in a given community.

The Company primarily employs two variations of our asset-light land financing strategy—finished lot option contracts and land bank option contracts—pursuant to which the Company secures the right to purchase finished lots at predetermined market prices from various land sellers and land bank partners, by paying deposits based on the aggregate purchase price of the finished lots.

These option contracts generally allow us, at our option, to forfeit our right to purchase the lots controlled for any reason, and our sole legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid pursuant to such option contracts and, in the case of land bank option contracts, our loss is limited to the related lot option fees paid to the land bank partner, and for certain land bank option contracts, any potential performance obligations, management of the land development to completion and any cost overruns relative to the project.

None of the creditors of any of the land bank entities with which the Company enters into lot option contracts have recourse to our general credit.

The Company generally does not have any specific performance obligations to purchase any of the lots or guarantee any of the land bankers’ liabilities.

The Company is not involved in the design or creation of the land bank entities from which the Company purchases lots under lot option contracts.

The land bankers’ equity holders have the power to direct 100 % of the operating activities of the land bank entity and the Company has no voting rights.

The sole purpose of the land bank entity’s activities is to generate returns for such entity’s equity holders.

Further, the Company does not share in any of the profit or loss generated by the project’s development.

The profits and losses are passed directly to the land bankers’ equity holders.

The deposit placed by us pursuant to the lot option contracts is deemed to be a variable interest in the respective land bank entities.

Certain of those land bank entities are deemed to be VIEs.

Therefore, the land bank entities with which the Company enters into lot option contracts are evaluated for possible consolidation by the Company.

The Company believes the activities that most significantly impact a land bank entity’s economic performance are the operating activities of the land bank entity.

In the case of development projects, unless and until a land bank entity delivers finished lots for sale, the land bank entity’s equity investors bear the risk of land ownership and do not earn any revenues, except for lot option fees paid by the Company.

The operating development activities are directed by the land bank entity’s equity investors.

Dream Finders possesses no more than limited protective legal rights through the lot option contracts in the specific finished lots that are purchased, and possesses no participative rights in the land bank entities.

Accordingly, the Company does not have the power to direct the activities of a land bank entity that most significantly impact its economic performance.

For the aforementioned reasons, the Company concluded that it is not the primary beneficiary of the land bank entities with which it enters into lot option contracts, and therefore the Company does not consolidate any of these VIEs.

The Company’s risk of loss related to finished lot option and land bank option deposits and related fees was $ 328.0 million and $ 461.6 million as of December 31, 2023 and 2022, respectively .

Contingent Consideration

As of December 31, 2023 and 2022, the Company remeasured the fair value of contingent consideration related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC and adjusted the liability to $ 11.7 million and $ 11.6 million, respectively, based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability .

The Company recorded contingent consideration adjustments resulting in $ 2.9 million of expense , $ 2.0 million of income, and $ 4.6 million of expense for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023 , there were 9 months remaining under the contingent consideration agreement.

As of December 31, 2023 and 2022, the Company remeasured the fair value of contingent consideration related to the September 2021 acquisition of McGuyer Homebuilders, Inc.

(“MHI”) and adjusted the liability to $ 105.1 million and $ 102.1 million , respectively, based on actual results achieved, revised pre-tax income forecasts and revised discount rates as of the balance sheet date and from accretion of the liability .

The Company recorded contingent consideration adjustments resulting in expense of $ 43.3 million, $ 12.4 million, and $ 2.2 million for the year ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023 , there were 21 months remaining under the contingent consideration agreement.

Refer to Note 10, Fair Value Disclosures for the fair value measurement for contingent consideration.

Surety Bonds and Letters of Credit

In the ordinary course of business, we obtain surety bonds and letters of credit to cover our land development performance obligations with local municipalities.

While substantial development and construction work may already be complete concerning the improvements at these sites, the letters of credit and surety bonds are typically not fully released until all development and construction activities have been completed.

As of December 31, 2024 and 2023, we had outstanding surety bonds of $ 298 million and $ 195 million, respectively, and outstanding letters of credit of $ 21 million and $ 1 million, respectively, which are not included within the Company’s Consolidated Balance Sheets.

The Company is a corporation subject to U.S.

10 unchanged sentences

Total income tax expense $ 97,272 $ 96,483 $ 81,859

The following table reconciles the statutory federal income tax rate to the effective income tax rate:

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The following table reconciles the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2024 , 2023 and 2022 :

Year Ended December 31,

6 unchanged sentences

Effective tax rate 22.2 % 23.9 % 23.0 %

The significant components of deferred income tax assets and liabilities as of December 31, 2023 and 2022, consist of the following (in thousands):

The significant components of deferred income tax assets and liabilities presented net within other assets on the Consolidated Balance Sheets as of December 31, 2024 and 2023 , consist of the following (in thousands):

Deferred tax assets:

9 unchanged sentences

Net deferred tax asset $ 29,311 $ 26,869

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, 2023 and 2022, the Company had no valuation allowance recorded against deferred tax assets, no uncertain tax positions that qualify for inclusion in our consolidated financial statements, and we have not recognized or accrued for any interest or penalties.

Management believes that the Company 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, 2024 and 2023, the Company had no valuation allowance recorded against deferred tax assets, no uncertain tax positions that qualify for inclusion in the consolidated financial statements, and has not recognized or accrued for any interest or penalties.

Segment Reporting

The Company primarily operates in the homebuilding business and is organized and reported primarily by region.

During the third quarter of 2023, organization of the homebuilding segments for making operating decisions and assessing performance changed from divisional to regional.

There are now four reportable segments, which are comprised of the following:

• Southeast (Jacksonville, Orlando, and Tampa, Florida;

The Company predominately operates in the homebuilding business and is organized and reported primarily by region.

The Company’s four reportable segments include the Southeast, Mid-Atlantic, Midwest and Financial Services, which are comprised of the following:

• Southeast (Jacksonville, Orlando and Tampa, Florida, the southeast coast of Florida and southwest Florida;

Savannah, Georgia;

1 unchanged sentence

Active Adult and Custom Homes operations in northeast Florida)

• Mid-Atlantic (The Carolinas and DC Metro)

• Midwest ( Austin, Dallas, Houston and San Antonio, Texas and Denver, Colorado )

• Mid-Atlantic (DC Metro;

Nashville, Tennessee;

Charlotte, Fayetteville, Raleigh and Wilmington, North Carolina;

Charleston, Myrtle Beach and Greenville, South Carolina)

• Midwest (Austin, Dallas, Houston and San Antonio, Texas;

Denver, Colorado and Phoenix, Arizona)

• Financial Services (primarily Jet HomeLoans and Golden Dog Title and Trust)

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The corporate component, which is not considered an operating segment, is reported separately as “Corporate”.

In accordance with ASC 280, 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 (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company’s CODM primarily evaluate performance based on the number of homes closed, average sales price and financial results.

Segment profitability is primarily measured by income before taxes.

The following tables summarize revenues and net and comprehensive income by segment for the years ended December 31, 2023, 2022 and 2021 as well as total assets and goodwill by segment as of December 31, 2023 and 2022 (in thousands):

Year Ended December 31,

In accordance with ASC Topic 280, 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, which include the Chief Executive Officer and the National President (“CODM”), in deciding how to allocate resources and in assessing performance.

The Company’s CODM primarily evaluate performance of the homebuilding segments based on the number of homes sold and closed, average sales price, and gross margin.

For the Financial Services segment, mortgage banking is assessed based on funded loan volume and profitability, as well as capture rate.

Segment profitability, a component of performance, is primarily measured by income before taxes.

The CODM compares actual segment income before taxes to historical results and projections to assess segment profitability.

As part of the Company’s budgeting and forecasting process, the CODM uses forecasted income before taxes to allocate resources during the annual budget process, and then on a recurring basis during their review of budget to actual amounts.

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The following table summarizes revenues, significant expenses and income before taxes by segment for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Southeast Mid-Atlantic

Midwest Financial Services Corporate (1)

Reconciling Items (2)

Total revenues $ 1,386,875 $ 1,163,000 $ 1,848,002 $ 81,073 $ — $ ( 27,344 ) $ 4,451,606

Homebuilding cost of sales 1,122,074 935,372 1,534,037 — — — 3,591,483

Financial services expense (3)

— — — 45,839 — ( 14,299 ) 31,540

Southeast $ 1,521,414 $ 1,237,389 $ 914,765

Mid-Atlantic 633,131 566,632 464,070

Midwest 1,584,343 1,530,538 538,466

Financial Services 48,878 34,175 34,665

Total segment revenues 3,787,766 3,368,734 1,951,966

Reconciling items from equity method investments ( 39,180 ) ( 26,399 ) ( 28,056 )

Consolidated revenues $ 3,748,586 $ 3,342,335 $ 1,923,910

Year Ended December 31,

Selling, general and administrative expense 122,849 96,362 143,754 — 32,786 — 395,751

Contingent consideration revaluation — 825 10,172 — 2,942 — 13,939

Other segment items (4)

487 374 ( 2,737 ) ( 1,943 ) ( 7,315 ) ( 7,827 ) ( 18,961 )

Income before taxes $ 141,465 $ 130,067 $ 162,776 $ 37,177 $ ( 28,413 ) $ ( 5,218 ) $ 437,854

Southeast $ 183,537 $ 165,367 $ 103,136

Mid-Atlantic 54,646 40,028 25,277

Midwest 168,115 164,377 35,585

Financial Services 28,915 21,219 11,782

Corporate (1)

Total revenues $ 1,521,414 $ 633,131 $ 1,584,343 $ 48,878 $ — $ ( 39,180 ) $ 3,748,586

Homebuilding cost of sales 1,234,014 519,574 1,258,225 — — — 3,011,813

Financial services expense (3)

— — — 24,794 — ( 19,067 ) 5,727

Total segment income before taxes 413,879 362,020 168,670

Reconciling items from equity method investments ( 9,454 ) ( 5,864 ) ( 6,621 )

Consolidated income before taxes $ 404,425 $ 356,156 $ 162,049

December 31, December 31,

Selling, general and administrative expense 102,666 55,673 125,429 — 19,300 — 303,068

Contingent consideration revaluation 432 2,720 34,135 — 9,303 — 46,590

Other segment items (4)

765 518 ( 1,561 ) ( 5,111 ) ( 6,989 ) ( 10,659 ) ( 23,037 )

Income before taxes $ 183,537 $ 54,646 $ 168,115 $ 29,195 $ ( 21,614 ) $ ( 9,454 ) $ 404,425

Total revenues $ 1,237,389 $ 566,632 $ 1,530,538 $ 34,175 $ — $ ( 26,399 ) $ 3,342,335

Homebuilding cost of sales 997,402 486,579 1,238,158 — — — 2,722,139

Financial services expense (3)

— — — 19,827 — ( 14,852 ) 4,975

Selling, general and administrative expense 73,753 42,113 123,638 — 26,561 — 266,065

Contingent consideration revaluation 746 ( 1,806 ) 11,019 — 1,094 — 11,053

Other segment items (4)

121 ( 282 ) ( 6,654 ) ( 6,871 ) 1,316 ( 5,683 ) ( 18,053 )

Income before taxes $ 165,367 $ 40,028 $ 164,377 $ 21,219 $ ( 28,971 ) $ ( 5,864 ) $ 356,156

(1) Corporate includes operations of the corporate component, including certain contingent consideration, that the Company does not charge to the segments.

(2) As of result of the Jet HomeLoans acquisition on July 1, 2024, represents reconciling items related to Jet HomeLoans prior to its consolidation.

Refer to Note 2, Acquisitions for more information.

(3) Financial services expense primarily consists of salaries, commissions, and benefits.

(4) Other segment items primarily consist of income from unconsolidated entities.

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The following table summarizes total assets and goodwill by segment as of December 31, 2024, and 2023 (in thousands):

As of December 31, As of December 31,

2024 2023 2024 2023

Southeast $ 807,154 $ 781,162 $ 14,003 $ 14,003

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287,727 407,932 — —

Total segments 2,716,335 2,459,970 172,207 172,207

Reconciling items from equity method investments (2)

— ( 153,896 ) — —

Consolidated $ 3,328,651 $ 2,562,439 $ 300,313 $ 172,207

(1) Corporate includes operations of the corporate component, and corporate assets such as cash and cash equivalents, cash held in trust, prepaid insurance, operating and financing leases, as well as property and equipment, net.

(1) Corporate assets are comprised of, but are not limited to, operating and restricted cash, deferred tax assets, and prepaids and other assets not directly attributable to a reportable segment.

(2) As a result of the Jet HomeLoans acquisition on July 1, 2024, represents reconciling items related to Jet HomeLoans prior to its consolidation.

Refer to Note 2, Acquisitions for more information.

Fair Value Disclosures

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Level 3 inputs are unobservable and significant to the fair value.

The following table presents a summary of the change in fair value measurement of contingent consideration, which is based on Level 3 inputs and is the only asset or liability measured at fair value on a recurring basis (in thousands):

The Company applies the fair value hierarchy to certain assets and liabilities remeasured or disclosed at fair value on a recurring basis, including mortgage loans held for sale, derivative assets and liabilities, senior unsecured notes, net and contingent consideration liabilities related to the acquisition of businesses.

The fair value of mortgage loans held for sale are based on either investor commitments or quoted secondary-market prices.

Derivative assets and liabilities are associated with IRLCs, whose fair values are derived from forward sale commitment prices, as well as certain unobservable inputs such as estimated costs to originate the loans and the probability that the mortgage loan will fund within the terms of the IRLC (the “pull-through rate”).

Mortgage loans in process for IRLCs totaled approximately $ 24.1 million as of December 31, 2024 and carried a weighted average interest rate of approximately 6.2 %.

The esti mated fair value of the 2028 Notes is based on recent trades or quoted market prices for debt of similar terms, including maturity, to achieve comparable yields.

Refer to Note 2, Acquisitions for discussion of contingent consideration remeasurement.

The fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, customer deposits and mortgage warehouse facilities, approximate their carrying amounts due to the short-term nature of these instruments.

The fair value of the construction lines of credit approximates their carrying amounts since they are subject to short-term floating interest rates that reflect current market rates.

Fair value measurements may also be utilized on a nonrecurring basis, such as for the accounting for acquisitions or the impairment of long-lived assets and inventory .

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The following table outlines the carrying value and fair value of certain of the Company’s financial instruments (in thousands) as of December 31, 2024 and 2023:

As of December 31,

Hierarchy Carrying

Value Carrying

Mortgage loans held for sale Level 2 $ 303,393 $ 303,393 $ — $ —

IRLCs Level 3 487 487 — —

Senior unsecured notes, net Level 2 295,049 312,876 293,918 318,240

Contingent consideration Level 3 68,030 68,030 116,795 116,795

The following table presents a summary of the changes in fair value measurement of contingent consideration (in thousands):

Beginning balance, December 31, 2023 $ 116,795

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Ending balance, December 31, 2024 $ 68,030

Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets and inventory.

The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, notes payable and customer deposits, approximate their carrying amounts due to the short-term nature of these instruments.

The fair value of the construction lines of credit approximate their carrying amounts since they are subject to short-term floating interest rates that reflect current market rates.

The senior unsecured notes are Level 2 financial instruments.

The estimated fair value of the 2028 Notes as of December 31, 2023 is $ 318.2 million, based on recent trades or quoted market prices for debt of similar terms, including maturity, to achieve comparable yields.

Related Party Transactions

The Company enters into or participates in related party transactions.

The majority of these transactions are entered into to secure finished lots for the construction of new homes.

DF Capital Management, LLC Funds

The Company generally enters into related party transactions to secure finished lots for the construction of new homes.

DF Capital Funds

DF Capital Management, LLC (“DF Capital”) organizes real estate investment funds to acquire land and develop and sell finished lots.

DF Capital is the investment manager of the funds.

The Company owns a 49 % membership interest in DF Capital.

DF Capital is controlled by unaffiliated parties.

DF Residential I, LP (“Fund I”), the first of such investment vehicles was fully committed in 2019 with total capital commitments of $ 36.7 million.

Dream Finders Homes LLC and DFH Investors LLC, collectively, invested $ 1.4 million or 3.8 % of the total committed capital of Fund I.

Fund I is nearing its final stage in which residual earnings are distributed.

DF Residential II, LP (“Fund II”) was organized in 2021.

DF Management GP II, LLC, serves as the general partner of Fund II (the “General Partner”).

The Company indirectly owns 72.0 % of the membership interests in the General Partner and receives 72.0 % of the economic interests.

The General Partner is controlled by unaffiliated parties.

Fund II was fully committed as of January 2022 with total capital commitments of $ 322.1 million.

The Company invested $ 3.0 million or 0.9 % of the total committed capital of Fund II.

Certain directors, executive officers and members of management invested as limited partners in Fund II in an aggregate amount of $ 33.9 million or 10.5 % of the total committed capital.

In addition, Rockpoint Group, LLC, an affiliate of a former director of the Company invested $ 100.0 million in Fund II.

On March 11, 2021, the Company entered into land bank financing arrangements and a Memorandum of Right of First Offer with Fund II, under which Fund II has an exclusive right of first offer on any land bank financing projects that meet its investment criteria and are undertaken by the Company during Fund II’s investment period.

DF Capital raised additional commitments from limited partners through deals other than Fund I and Fund II, which provided land bank financing for specific projects.

One of the Company’s officers invested $ 0.2 million in one of these funds managed by DF Capital as a limited partner in 2019.

The Company continues to purchase lots controlled by these funds.

As of December 31, 2023 and 2022 , the Company had $ 48.5 million and $ 58.6 million , respectively, in outstanding lot deposits primarily related to Fund II and other land bank transaction deals in relation to DF Capital projects, controlling approximately 4,028 lots.

The Company owns a 49.0 % membership interest in DF Capital and periodically enters into land bank arrangements with DF Capital.

DF Capital and its funds are controlled by unaffiliated parties and the Company is not the primary beneficiary of DF Capital and its funds.

The Company holds limited partnership interests in certain of the funds as well as indirect ownership through membership interests in the general partners of the respective funds.

From time to time, executive officers and directors may invest as limited partners in the funds as well.

Amounts due to and from the funds are based on the timing and amount of capital calls as well as distributions of capital and earnings, all of which, as applicable, are made on a periodic basis over several years consistent with the typical lifecycle of any land bank financing project.

DF Residential II, LP (DF Capital’s “Fund II”) has an exclusive right of first offer on any land bank financing projects that meet its investment criteria and are undertaken by the Company during Fund II’s investment period.

The Company, its executive officers and certain directors have investments in Fund II.

As of December 31, 2024 and 2023, the Company had $ 37.0 million and $ 48.5 million, respectively, in outstanding lot deposits related to Fund II, controlling 3,271 lots and 4,028 lots, respectively.

On July 30, 2024, DF Capital initiated its first close on DF Residential III, LP (“Fund III”), which included $ 54.5 million in investments from the Company’s executive officers and a director.

The Company’s investment in Fund III will be determined as part of the final closing.

As of December 31, 2024, the Company had $ 47.0 million in outstanding lot deposits related to Fund III, controlling 3,417 lots.

Aircraft Agreement

In November 2023, the Company entered into an aircraft dry lease agreement with a company owned by Patrick Zalupski, DFH’s President, Chief Executive Officer, and Chairman of the Board (the “Aircraft Agreement”).

The Aircraft Agreement provides the Company access to an airplane owned by Mr.

Zalupski on a non-exclusive basis at a fixed monthly rate for an annually set number of hours.

The Aircraft Agreement has an eight-year term, which is automatically extended for up to two successive one-year periods unless terminated by either party.

The Company and Mr.

Zalupski have separately contracted with a non-affiliated aviation management entity to provide aircraft-related services.

The Company incurred $ 1.3 million in expense related to the use of the airplane during the year ended December 31, 2023, inclusive of one-time set-up and other costs incurred prior to the commencement of the Aircraft Agreement, included in selling, general and administrative expense on the Consolidated Statement of Comprehensive Income .

Transactions with Rockpoint Group, LLC and affiliates

From time to time, the Company enters into land bank option contracts with Rockpoint Group, LLC (“Rockpoint”) or its affiliates in connection with the Company’s acquisition and development of land.

Rockpoint or its affiliate provides the funding for the land acquisition and the Company secures the right to purchase finished lots at market prices by paying deposits based on the aggregate purchase price of the finished lots and any related fees, similar to land bank option contracts with third-party land bankers.

Walton III is the founding principal and chief executive officer of Rockpoint.

Walton served as a member of the Board through May 21, 2023.

During the year ended December 31, 2023 , no transactions were entered into between Rockpoint and the Company.

Jet HomeLoans LP, formerly Jet HomeLoans LLC

Jet HomeLoans performs mortgage origination activities for the Company, including underwriting and originating home mortgages for Company customers and non-Company customers.

On September 30, 2023, the Company entered into a limited partnership agreement with the partners of Jet HomeLoans LLC to convert the venture into Jet HomeLoans LP.

As part of the limited partnership agreement, the Company’s ownership percentage changed from 49.9 % to 60.0 %, but the Company is not the primary beneficiary.

The change in ownership was effectuated through a distribution to the partners in exchange for the additional 10.1 % ownership.

Jet HomeLoans is accounted for under the equity method and is a related party of the Company.

Jet HomeLoans is included within the Financial Services segment (Note 9, Segment Reporting).

Mezzanine and Stockholders’ Equity

Beginning in November 2023, the Company leases an airplane from a company owned by Patrick Zalupski, DFH Inc.’s President, Chief Executive Officer and Chairman of the Board.

The airplane is leased on a non-exclusive basis at a fixed monthly rate, plus allocable variable costs for usage.

The Company incurred $ 4.8 million and $ 1.3 million in expenses related to the use of the airplane during the years ended December 31, 2024 and 2023, respectively, included in SG&A on the Consolidated Statement of Comprehensive Income.

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Series B Preferred Units

On August 31, 2023, the Company redeemed all of its previously 7,143 outstanding Series B preferred units .

On August 31, 2023, the Company redeemed the 7,143 previously outstanding Series B preferred units.

The Company made an aggregate cash payment to the Series B holders of $ 11.1 million, which included $ 7.1 million in principal plus cumulative undistributed earnings, less a negotiated discount on that date.

Following the redemption, no Series B preferred units remain outstanding.

The difference between the carrying amount and the cash redemption was reclassified to retained earnings as it reflects a return from the Series B unit holders and resulted in a one-time, non-cash increase to net income available to common stockholders of $ 0.3 million utilized in the computations of basic and diluted earnings per share for the year ended December 31, 2023.

Share Buyback Program

In June 2023, the Company’s Board of Directors (the “Board”) approved a share buyback program under which the Company can repurchase up to $ 25.0 million of its Class A common stock through June 30, 2026 in open market purchases, privately negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

The actual timing, number and value of shares repurchased under the share buyback program will depend on a number of factors, including constraints specified in relation to price, general business and market conditions, and alternative investment opportunities.

The actual timing, number and value of shares repurchased under the share buyback program will depend on a number of factors, including constraints specified in any Rule 10b5-1 trading plans, price, general business and market conditions, and alternative investment opportunities.

The share buyback program does not obligate the Company to acquire any specific number of shares in any period and may be expanded, extended, modified or discontinued at any time.

As of February 29, 2024, we have not executed any repurchases under our share buyback program.

Series A Convertible Preferred Stock

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 $ 150.0 million.

The Company used the proceeds from the sale of the convertible preferred stock to fund a portion of the MHI acquisition (Note 7, Contingent Consideration ).

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:

• Cumulative Dividends:

The convertible preferred stock accumulates cumulative dividends at a rate per annum equal to 9 % payable quarterly in arrears.

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 ( 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, 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 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 of the Company, 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 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 only with 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.

Pursuant to the terms of the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained, 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 stoc k issuable upon conversion of such shares equal to 19.99 % of the outstanding shares of Class A common stock for resale, which registration statement was filed and declared effective during March 2022.

The Company accounts for share repurchases of Class A common stock as treasury stock.

Treasury stock is recorded as a reduction of stockholders’ equity based on the amount paid to repurchase shares, including associated costs.

Treasury stock is not considered outstanding.

As of December 31, 2024, approximately $ 17.2 million in shares remain available for purchase under the share buyback program.

During the year ended December 31, 2024, under the share buyback program, the Company repurchased 291,229 shares of Class A common stock for an aggregate purchase price of $ 7.8 million.

There were no shares repurchases during the year ended December 31, 2023.

Redeemable Preferred Stock

On September 29, 2021, the Company filed a Certificate of Designations with the State of Delaware establishing 150,000 shares of Series A redeemable preferred stock with an initial liquidation preference of $ 1,000 per share and a par value $ 0.01 per share (the “redeemable preferred stock”) and sold 150,000 shares of redeemable preferred stock for an aggregate purchase price of $ 150.0 million.

The redeemable preferred stock is non-voting and accumulates cumulative dividends at a rate per annum equal to 9 % payable quarterly in arrears.

Upon a liquidation, dissolution or winding up of the Company, each share of redeemable 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.

The redeemable preferred stock is perpetual with call and conversion rights.

The Company can call the outstanding redeemable 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, plus accrued but unpaid dividends, if any.

Subsequent to the fifth anniversary of its issuance, a Purchaser can convert the redeemable preferred stock into Class A common stock of the Company.

The conversion price will be based on the average closing price of Class A common stock for the 90 trading days immediately preceding the conversion date, less 20 % of the average and subject to a floor conversion price.

The redeemable preferred stock will be redeemed, contingent upon and concurrently with the consummation of a change of control of the Company.

Shares of redeemable 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 redeemable preferred stock, a premium equal to the dividends that would have accumulated on such share of redeemable preferred stock from and after the change of control redemption date and through the fourth anniversary of the issuance of the redeemable preferred stock.

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Stock-Based Compensation

1 unchanged sentence

The Company grants restricted stock to certain executives, directors and members of management, primarily as incentive awards.

These stock grants typically vest over a period of three to five years of continuous service, commencing on the date of the grant and vesting ratably, in approximately one-third or one-fifth increments, at the end of each year of the term.

These stock grants typically vest over a period of one to five years of continuous service, commencing on the date of the grant and vesting ratably in approximately one, one-third or one-fifth increments at the end of each year of the term.

The fair value of these grants is derived by using the closing stock price on the date of the grant.

1 unchanged sentence

As of December 31, 2024 and 2023 , the total unrecognized stock-based compensation under the 2021 Plan was $ 33.3 million and $ 20.3 million , respectively.

The unrecognized stock-based compensation will be recognized over a weighted-average period of two years .

The unrecognized stock-based compensation will be recognized over a weighted-average period o f 2 years.

The Company’s restricted stock units as of December 31, 2024 and changes during the year then ended are presented below (in thousands, except share amounts):

1 unchanged sentence

Balance as of December 31, 2021 721,598 $ 23.13

892,556 $ 20.29

Granted 486,264 17.07

2 unchanged sentences

Balance as of December 31, 2022 892,556 $ 20.29

2,359,250 $ 14.21

Granted 1,874,176 12.59

Forfeited ( 59,958 ) 13.50

Vested ( 347,524 ) $ 21.22

Balance as of December 31, 2023 2,359,250 $ 14.21

Granted 878,634 38.65

Forfeited ( 91,786 ) 24.11

Vested ( 952,669 ) 15.80

Balance as of December 31, 2024 2,193,429 $ 22.89

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Earnings Per Share

6 unchanged sentences

13,500 13,482 14,513

Loss prior to reorganization attributable to DFH LLC members — — 1,244

Net and comprehensive income available to common stockholders (1)

4 unchanged sentences

Weighted-average number of shares outstanding - diluted 100,297,139 106,027,548 106,691,248

(1) Includes a one-time increase of $ 0.3 million to the numerator of the computations of basic and diluted EPS for the year ended December 31, 2023 for the excess of the carrying amount over the redemption amount of the Series B preferred units.

Refer to Note 12, Mezzanine and Stockholders’ Equity.

(2) For the diluted EPS calculation, $ 13.2 million, $ 13.7 million and $ 3.5 million in preferred dividends associated with convertible preferred stock that are assumed to be converted have been added back to the numerator for the years ended December 31, 2023, 2022 and 2021, respectively.

(3) Since the conversion price of the Company’s convertible preferred stock is based on an average of the closing price of Class A common stock for the 90 trading days immediately preceding the end of the current period, changes in the price of the Class A common stock may significantly affect the number of additional assumed common shares outstanding under the if-converted method for diluted EPS, even when the number of convertible preferred stock shares outstanding is unchanged.

(1) For the diluted earnings per share calculation, $ 13.5 million, $ 13.2 million and $ 13.7 million in preferred dividends associated with redeemable preferred stock that are assumed to be converted have been added back to the numerator for the years ended December 31, 2024, 2023 and 2022, respectively.

(2) Since the conversion price of the Company’s redeemable preferred stock is based on an average of the closing price of Class A common stock for the 90 trading days immediately preceding the end of the current period, changes in the price of the Class A common stock may significantly affect the number of additional assumed common shares outstanding under the if-converted method for diluted EPS, while the number of redeemable preferred stock shares outstanding is unchanged.

Stock-based compensation awards are excluded from the calculation of diluted EPS in the event they are antidilutive.

There were 0.6 million, 0.8 million, and 0.2 million of common stock equivalent shares excluded from the diluted earnings per share calculation during the years ended December 31, 2023, 2022 and 2021, respectively, related to unvested restricted stock that were antidilutive.

There were 0.4 million, 0.6 million and 0.8 million common stock equivalent shares considered antidilutive that were excluded from the diluted earnings per share calculation for the years ended December 31, 2024, 2023 and 2022, respectively.

Subsequent Events

Crescent Homes Acquisition

On February 1, 2024, the Company completed the acquisition of certain assets and assumed certain liabilities, comprising of the majority of the homebuilding business of Crescent Ventures, LLC (“Crescent Homes”) through DFH subsidiaries, Dream Finders Holdings LLC, and DFH Crescent, LLC (“DFH Crescent”), a newly formed entity for purposes of consummating this transaction.

This acquisition allows us to expand into the markets of Charleston and Greenville, South Carolina, and Nashville, Tennessee.

The consideration given for the Crescent Homes acquisition was cash in the amount of $ 185 million, subject to customary post-closing adjustments based on the closing date net asset value of the purchased assets and assumed liabilities.

As part of the transaction, the former owner of Crescent Homes received a 10 % non-controlling ownership in DFH Crescent and contractual rights to a portion of its future earnings according to the terms of the agreement.

Liberty Communities Acquisition

On January 23, 2025, DFH acquired the majority of the homebuilding assets of privately held homebuilder, Liberty Communities, LLC (“Liberty Communities” or “Liberty”) through DFH subsidiaries, Dream Finders Holdings LLC, and DFH Liberty (“DFH Liberty”), a newly formed entity for purposes of consummating this transaction.

The consideration given for the Liberty Communities acquisition was cash in the amount of $ 112 million, subject to customary post-closing adjustments, of which $ 8 million was paid as of December 31, 2024.

DFH funded the transaction with cash on hand and borrowings under its existing senior unsecured revolving credit facility, and simultaneously paid off Liberty’s vertical lines of credit associated with the assets acquired.

As part of the transaction, the former owner of Liberty Communities received a redeemable noncontrolling interest in DFH Liberty and contractual rights to a portion of its future earnings according to the terms of the agreement.

The Company has not yet completed its evaluation and determination of consideration paid and certain assets and liabilities acquired in accordance with ASC 805.

The operations of Liberty Communities, which are located in Atlanta, Georgia and Greenville, South Carolina, will be included in our Southeast segment as of the date of acquisition.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data