Dream Finders Homes, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Dream Finders Homes, Inc. and Subsidiaries Index Report of Independent Registered Public Accounting Firm ( PCAOB ID: 238 ) 57 Consolidated Balance Sheets 59 Consolidated Statements of Comprehensive Income 60 Consolidated Statements of Equity 61 Consolidated Statements of Cash Flows 62 Notes to Consolidated Financial Statements 64 - 85 56 Table Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Dream Finders Homes, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Dream Finders Homes, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. 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 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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 57 Table Contents 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. 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 related to the McGuyer Homebuilders, Inc. Acquisition 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 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 Jacksonville, Florida February 25, 2025 We have served as the Company’s auditor since 2019, which includes periods before the Company became subject to SEC reporting requirements. 58 Table Contents DREAM FINDERS HOMES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share and share amounts) December 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 274,384 $ 494,145 Restricted cash 65,441 54,311 Accounts receivable 34,126 30,874 Inventories 1,715,357 1,440,249 Lot deposits 458,303 247,207 Other assets 122,391 80,759 Investments in unconsolidated entities 11,454 15,364 Mortgage loans held for sale 303,393 — Property and equipment, net 26,317 7,043 Right-of-use assets 17,172 20,280 Goodwill 300,313 172,207 Total assets $ 3,328,651 $ 2,562,439 Liabilities Accounts payable $ 147,143 $ 134,115 Accrued expenses 263,317 207,389 Customer deposits 125,601 172,574 Construction lines of credit 701,386 530,384 Senior unsecured notes, net 295,049 293,918 Mortgage warehouse facilities 289,617 — Lease liabilities 18,148 21,114 Contingent consideration 68,030 116,795 Total liabilities 1,908,291 1,476,289 Commitments and contingencies (Note 7) Mezzanine Equity Redeemable preferred stock 148,500 148,500 Redeemable noncontrolling interest 21,451 — Equity 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 360 329 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 577 602 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 ( 7,827 ) — Total Dream Finders Homes, Inc. stockholders’ equity 1,244,922 924,584 Noncontrolling interests 5,487 13,066 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. 59 Table Contents DREAM FINDERS HOMES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands, except per share and share amounts) Year Ended December 31, 2024 2023 2022 Revenues: Homebuilding $ 4,397,877 $ 3,738,888 $ 3,334,559 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 Income from unconsolidated entities ( 10,567 ) ( 18,075 ) ( 16,122 ) Contingent consideration revaluation 13,939 46,590 11,053 Other income, net ( 8,394 ) ( 4,962 ) ( 1,931 ) Income before taxes 437,854 404,425 356,156 Income tax expense ( 97,272 ) ( 96,483 ) ( 81,859 ) Net and comprehensive income 340,582 307,942 274,297 Net and comprehensive income attributable to noncontrolling interests ( 5,241 ) ( 12,042 ) ( 11,984 ) Net and comprehensive income attributable to Dream Finders Homes, Inc. $ 335,341 $ 295,900 $ 262,313 Earnings per share Basic $ 3.44 $ 3.03 $ 2.67 Diluted $ 3.34 $ 2.79 $ 2.45 Weighted-average number of shares Basic 93,507,905 93,066,564 92,745,781 Diluted 100,297,139 106,027,548 106,691,248 The accompanying notes are an integral part of these consolidated financial statements. 60 Table Contents DREAM FINDERS HOMES, INC. CONSOLIDATED STATEMENTS OF EQUITY (In thousands, except share amounts) Dream Finders Homes, Inc. Stockholders' Equity Common Stock - Class A Common Stock - Class B Additional Paid-in 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 $ — Stock-based compensation 238,554 2 — — 6,794 — — — 6,796 — — — Distributions — — — — — — — ( 23,095 ) ( 23,095 ) — — — Preferred stock dividends declared — — — — — ( 13,688 ) — — ( 13,688 ) — — — 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 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 $ — Stock-based compensation — — — — 18,788 — — — 18,788 — — — Vesting of stock-based compensation 952,669 9 — — ( 9 ) — — — — — — — 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 ) — — — Preferred stock dividends declared — — — — — ( 13,500 ) — — ( 13,500 ) — — — 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. 61 Table Contents DREAM FINDERS HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities Net and comprehensive income $ 340,582 $ 307,942 $ 274,297 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 Amortization of lease right-of-use assets 6,988 7,245 5,839 Stock-based compensation 18,788 14,098 6,796 Deferred income tax benefit ( 14,124 ) ( 22,345 ) ( 294 ) Contingent consideration revaluation 13,939 46,590 11,053 Payments of contingent consideration ( 34,872 ) ( 12,331 ) ( 4,461 ) Other, net ( 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 ) Inventories ( 148,019 ) ( 61,623 ) ( 311,523 ) Lot deposits ( 209,486 ) 30,051 ( 35,852 ) 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 Customer deposits ( 55,777 ) 26,921 ( 32,031 ) Lease liabilities ( 6,866 ) ( 6,988 ) ( 5,730 ) Net cash (used in)/provided by operating activities ( 256,648 ) 374,234 ( 27,623 ) Cash flows from investing activities Purchase of property and equipment ( 25,345 ) ( 4,781 ) ( 5,545 ) Proceeds from disposal of property and equipment 32 367 152 Investments in unconsolidated entities ( 8,117 ) ( 300 ) ( 300 ) Return of investments from unconsolidated entities 884 230 449 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 ) Cash flows from financing activities Proceeds from senior unsecured notes — 300,000 — Proceeds from construction lines of credit 861,386 5,410,000 11,023,077 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 ) 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 ) — 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 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 Cash, cash equivalents and restricted cash at end of period $ 339,825 $ 548,456 $ 395,130 The accompanying notes are an integral part of these consolidated financial statements. 62 Table Contents DREAM FINDERS HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In thousands) Year Ended December 31, 2024 2023 2022 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 274,384 $ 494,145 $ 364,531 Restricted cash 65,441 54,311 30,599 Total cash, cash equivalents and restricted cash $ 339,825 $ 548,456 $ 395,130 Supplemental disclosures of cash payments: Cash paid for interest $ 199,183 $ 80,111 $ 105,224 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 ) 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. 63 Table Contents DREAM FINDERS HOMES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of Business and Significant Accounting Policies Nature of Business 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 the Consolidated Statements of Comprehensive Income. Use of 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 Cash and cash equivalents consist of highly liquid instruments, with original maturities of three months or less. Cash and cash equivalents include cash proceeds from home closings in-transit from or held by third-party title company escrow accounts for the benefit of the Company, typically for less than five days. At various times throughout the year, the Company may have cash deposited with financial institutions that exceed the federally insured deposit amount. 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 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 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 expense (“SG&A”) on the Consolidated Statements of Comprehensive Income as incurred. 64 Table Contents 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. 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. The Company reviews the performance and outlook of its inventories for indicators of potential impairment at the community level on a quarterly basis. In addition to considering market and economic conditions, the Company assesses current sales absorption levels and recent profitability. The Company looks for instances where sales prices for homes in backlog or potential sales prices for future sold homes (expected undiscounted future cash flows) would be at a level at which the carrying value of the home may not be recoverable. Recoverability is measured by comparing the expected undiscounted future cash flows of the inventory to its carrying amount. 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 Lot deposits represent amounts paid by the Company to secure the ability to acquire finished lots or land for development through an option contract. The contracts provide for a due diligence period, during which the deposit is refundable. After this period, the deposit may be partially or completely forfeited should the Company decide not to proceed. The Company reviews lot deposits for impairment on a quarterly basis and will record an impairment charge if it believes it will forfeit its deposit on an individual or portfolio of lots. 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. 65 Table Contents 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. To make this determination, management considers factors such as whether the Company could direct finance, determine or limit the scope of the entity, sell or transfer property, direct development or direct other operating decisions. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that most significantly impact the VIE’s performance, and (2) the obligation to absorb losses and rights to receive the returns from the VIE that would be potentially significant to the VIE. Management consolidates the entity if the Company is the primary beneficiary or if a standalone primary beneficiary does not exist and the Company and its related parties collectively meet the definition of a primary beneficiary. If the 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. 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. 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. 66 Table Contents Goodwill 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 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. This test assesses qualitative factors to determine if it is more likely than not that the fair value of the reporting units is less than their carrying value. These qualitative factors include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall performance of the reporting unit and other entity and reporting unit specific events. If the qualitative assessment indicates a stable fair value, no further testing is required. However, if the qualitative assessment indicates that the fair value of a reporting unit has declined past its carrying value, the Company will then calculate the fair value of the reporting unit based on discounted future cash flows. An impairment loss is recorded if this assessment concludes that the fair value of the reporting unit is less than its 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. No goodwill impairment was recognized during the years ended December 31, 2024, 2023 or 2022 . Intangible Assets The Company has intangible assets that consist of trade names that are recorded in connection with acquisitions at their fair value based on the results of valuation analyses. Trademarks acquired in business combinations are generally valued using the relief-from-royalty method, which is a Level 3-type measurement. 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 Property and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred and betterments are capitalized. When items of property and equipment are sold or otherwise disposed, the asset and related accumulated depreciation accounts are eliminated and any gain or loss is included in operations. Depreciation expense is included within SG&A on the Consolidated Statements of Comprehensive Income. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets as follows: Asset Class Useful Life Years Furniture and fixtures 2 - 7 Office equipment and software 1 - 4 Aircraft and other vehicles 5 Buildings 39 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 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. 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. 67 Table Contents 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. Payments exceeding the initial contingent consideration liability estimated at acquisition are classified as cash used in operating activities. 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. 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. 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. Refer to Note 6 , Warranty Reserves for additional information. 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. 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. The Company generally determines the selling price per home based on the expected cost-plus margin. The Company has performed an assessment and its contracts do not contain significant financing terms. A large portion of the Company’s contracts with customers and the related performance obligations have an original expected duration of one year or less. 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. 68 Table Contents 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. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts based on the percentage of completion of the project, determined by the number of days of construction completed compared to the total estimated number of days to construct the home. Typically, the Company has two types of percentage of completion contracts. The first type is with individual customers for which the Company acts as a general contractor on land owned by the homebuyer. The second is with institutional buyers for which the Company acts as a general contractor on land owned by the institution. Individual customers generally have construction-to-permanent loans that are taken out by the customer. During the underwriting process for 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 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. 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 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. Income Taxes 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. 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, 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. 69 Table Contents Recent Accounting Pronouncements 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 the fiscal year ending December 31, 2025. Early adoption is permitted, and guidance should be applied prospectively, with an option to apply guidance retrospectively. 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): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker(s) that are included within each reported measure of segment profit or loss. 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 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. 2. Acquisitions 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. 70 Table Contents 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 Reported on March 31, 2024 Measurement Period Adjustments (1) Acquired Value 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. 71 Table Contents 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): Year Ended December 31, Unaudited Pro Forma (1) 2024 2023 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. 3. Debt Senior Unsecured Notes On August 22, 2023, the Company issued $ 300.0 million in aggregate principal amount of 8.25 % senior unsecured notes due August 15, 2028 (the “2028 Notes”), which were issued pursuant to an indenture (the “Indenture”). Interest on the 2028 Notes is payable in arrears semiannually on each February 15 and August 15, beginning February 15, 2024. The 2028 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of the Company’s subsidiaries. 72 Table Contents 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 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, 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 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 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 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. Interest under Term SOFR Rate Loans and Daily Simple SOFR Rate Loans also include an “applicable rate margin” determined based on the Company’s net debt to capitalization ratio, equivalent to credit spreads of 2.00 % to 2.95 %. 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 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. 73 Table Contents 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): Facility (1) 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. 4. Inventories 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. 74 Table Contents Inventories consisted of the following as of December 31, 2024 and 2023 (in thousands) : As of December 31, 2024 2023 Construction in process and finished homes $ 1,487,478 $ 1,251,767 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 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 Interest incurred 104,447 77,278 52,972 Interest expensed — ( 1 ) ( 32 ) Interest charged to homebuilding cost of sales ( 94,035 ) ( 77,648 ) ( 41,575 ) Capitalized interest as of end of the period $ 37,723 $ 27,311 $ 27,682 5. Property and Equipment Property and equipment, net consisted of the following as of December 31, 2024 and 2023 (in thousands): As of December 31, 2024 2023 Furniture and fixtures $ 32,232 $ 22,787 Aircraft and other vehicles (1) 14,075 92 Office equipment and software 3,373 2,156 Buildings and land 617 617 Total property and equipment 50,297 25,652 Less: Accumulated depreciation ( 23,980 ) ( 18,609 ) 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. 75 Table Contents 6. Warranty Reserves The table below presents the activity related to warranty reserves as of December 31, 2024 and 2023 (in thousands): As of December 31, 2024 2023 Warranty reserves as of beginning of the period $ 20,620 $ 17,538 Additions to reserve from home closings 10,486 9,244 Warranty expenditures ( 6,818 ) ( 9,331 ) Adjustments to pre-existing reserves 3,350 3,169 Warranty reserves as of end of the period $ 27,638 $ 20,620 7. Commitments and Contingencies Legal Proceedings 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. 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 the consolidated financial statements. 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. Leases 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 . 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. 76 Table Contents The following table shows the maturities of our lease liabilities as of December 31, 2024 (in thousands): Maturity of Lease Liabilities Operating Leases 2025 $ 6,209 2026 4,356 2027 2,432 2028 1,939 2029 1,556 Thereafter 4,670 Total lease payments 21,162 Less: Interest 3,014 Present value of lease liabilities $ 18,148 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. 8. Income Taxes The Company is a corporation subject to U.S. federal income taxes, in addition to state and local income taxes. Income tax expense for the years ended December 31, 2024 , 2023 and 2022 , consists of the following (in thousands): Year Ended December 31, 2024 2023 2022 Current: Federal $ 32,870 $ 101,093 $ 66,473 State 18,236 17,734 15,680 Total current 51,106 118,827 82,153 Deferred: Federal 47,283 ( 19,471 ) 5 State ( 1,117 ) ( 2,873 ) ( 299 ) Total deferred 46,166 ( 22,344 ) ( 294 ) Total income tax expense $ 97,272 $ 96,483 $ 81,859 77 Table Contents 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, 2024 2023 2022 Income taxes at federal statutory rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal tax 3.1 2.8 3.5 Federal tax credits ( 2.9 ) ( 0.6 ) ( 3.9 ) Non-deductible executive compensation 1.1 1.0 1.3 Other ( 0.1 ) ( 0.3 ) 1.1 Effective tax rate 22.2 % 23.9 % 23.0 % 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): As of December 31, 2024 2023 Deferred tax assets: Contingent consideration $ 18,793 $ 14,876 Incentive compensation plans 10,335 9,232 Lease liabilities 4,311 4,951 Other 11,679 9,705 Total deferred tax asset 45,118 38,764 Deferred tax liabilities: Right-of-use assets ( 3,945 ) ( 4,789 ) Other ( 11,862 ) ( 7,106 ) Total deferred tax liabilities ( 15,807 ) ( 11,895 ) Net deferred tax asset $ 29,311 $ 26,869 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. 9. Segment Reporting 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; Hilton Head and Bluffton, South Carolina; Active Adult and Custom Homes operations in northeast Florida) • 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) 78 Table Contents The corporate component, which is not considered an operating segment, is reported separately as “Corporate”. 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. 79 Table Contents 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) Consolidated 2024 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 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 2023 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 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 2022 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. 80 Table Contents The following table summarizes total assets and goodwill by segment as of December 31, 2024, and 2023 (in thousands): Assets: Goodwill: As of December 31, As of December 31, 2024 2023 2024 2023 Southeast $ 807,154 $ 781,162 $ 14,003 $ 14,003 Mid-Atlantic 776,308 404,657 144,959 16,853 Midwest 1,069,978 915,199 141,071 141,071 Financial Services 387,484 207,385 280 280 Corporate (1) 287,727 407,932 — — Reconciling items from equity method investments (2) — ( 153,896 ) — — Consolidated $ 3,328,651 $ 2,562,439 $ 300,313 $ 172,207 (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. 10. Fair Value Disclosures Fair value represents the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values are determined using a fair value hierarchy based on the inputs used to measure fair value. Level 1 inputs are unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable and significant to the fair value. The 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 . 81 Table Contents 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, 2024 2023 Hierarchy Carrying Value Fair Value Carrying Value Fair Value 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 Fair value adjustments related to prior year acquisitions 13,939 Contingent consideration payments ( 62,704 ) Ending balance, December 31, 2024 $ 68,030 11. Related Party Transactions 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 49.0 % 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 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. 82 Table Contents 12. Equity 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. 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 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. 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. 83 Table Contents 13. Stock-Based Compensation The Company is authorized to grant up to an aggregate of 9.1 million of Class A common stock under the 2021 Equity Incentive Plan (the “2021 Plan”), which is administered by the Compensation Committee of the Board of Directors. 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 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. Expense, net of forfeitures related to stock-based compensation under the 2021 Plan was $ 18.8 million, $ 14.1 million and $ 6.8 million for the years ended December 31, 2024 , 2023 and 2022, respectively. 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 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): Shares Weighted Average Grant Date Fair Value Balance as of December 31, 2021 721,598 $ 23.13 Granted 486,264 17.07 Forfeited ( 76,752 ) 17.73 Vested ( 238,554 ) 23.13 Balance as of December 31, 2022 892,556 $ 20.29 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 84 Table Contents 14. Earnings Per Share The following weighted-average shares and share equivalents were used to calculate basic and diluted earnings per share (“EPS”) for the years ended December 31, 2024 , 2023 and 2022 (in thousands, except share amounts): Year Ended December 31, 2024 2023 2022 Numerator Net and comprehensive income attributable to Dream Finders Homes, Inc. $ 335,341 $ 295,900 $ 262,313 Less: Preferred dividends, net 13,500 13,482 14,513 Net and comprehensive income available to common stockholders (1) $ 321,841 $ 282,418 $ 247,800 Denominator Weighted-average number of common shares outstanding - basic 93,507,905 93,066,564 92,745,781 Add: Common stock equivalent shares (2) 6,789,234 12,960,984 13,945,467 Weighted-average number of shares outstanding - diluted 100,297,139 106,027,548 106,691,248 (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 0.4 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. 15. Subsequent Events 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. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 85 Table Contents