DFH 8-K
Dream Finders Homes, Inc. (DFH)
8-K
2026-02-23
For: 2026-02-23
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 23, 2026
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (904 ) 644-7670
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 23, 2026, Dream Finders Homes, Inc. (the “Company”) issued a press release announcing its financial results for the three months and fiscal year ended December 31, 2025. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference into this Item 2.02.
The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Number | Description | |||||||
Earnings Press Release dated February 23, 2026 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DREAM FINDERS HOMES, INC. | ||||||||
Date: | By: | /s/ Robert E. Riva | ||||||
| Robert E. Riva | ||||||||
| Vice President, General Counsel and Corporate Secretary | ||||||||
Exhibit 99.1
Dream Finders Announces Fourth Quarter and Full Year 2025 Results
Record Home Closings of 8,608 for Full Year
Record Net Sales of 7,747, Up 15% for Full Year
Fourth Quarter Net Sales of 1,756, Up 9%
Jacksonville, FL. — February 23, 2026 — Dream Finders Homes, Inc. (the “Company”, “Dream Finders Homes”, “Dream Finders” or “DFH”) (NYSE: DFH) announced its financial results for the fourth quarter and full year ended December 31, 2025.
Fourth Quarter 2025 Highlights (As Compared to Fourth Quarter 2024)
•Homebuilding revenues of $1.2 billion compared to $1.5 billion
•Home closings of 2,536 compared to 3,008
•Net sales increased 9% to 1,756 from 1,611
•Homebuilding gross margin of 16.7% compared to 17.7%
•Adjusted homebuilding gross margin (non-GAAP) of 25.7% compared to 26.9%
•Pre-tax income of $78 million compared to $169 million
•Net income attributable to DFH of $59 million, or $0.60 per basic share compared to $129 million, or $1.35 per basic share
•Financial services pre-tax income of $8 million compared to $11 million
Full Year 2025 Highlights (As Compared to Full Year 2024)
•Homebuilding revenues of $4.1 billion compared to $4.4 billion
•Home closings of 8,608 compared to 8,583
•Net sales increased 15% to 7,747 from 6,727
•Homebuilding gross margin of 17.4% compared to 18.3%
•Adjusted homebuilding gross margin (non-GAAP) of 26.5% compared to 27.0%
•Pre-tax income of $284 million compared to $438 million
•Net income attributable to DFH of $217 million, or $2.19 per basic share, compared to $335 million, or $3.44 per basic share
•Financial services pre-tax income increased 12% to $35 million from $31 million
•Controlled lot pipeline of 63,121 as of December 31, 2025 compared to 54,698 as of December 31, 2024
•Issuance of $300 million in aggregate principal amount of 6.875% senior unsecured notes used to repay a portion of the then outstanding balance under the revolving credit facility
•Total liquidity of $899 million as of December 31, 2025, comprised of cash and cash equivalents and availability under the revolving credit facility
•Return on participating equity of 15.3% compared to 29.7%
•Repurchased 1,832,865 Class A common shares for $41.8 million during the year ended December 31, 2025
Management Commentary
Patrick Zalupski, Dream Finders Homes Chairman and CEO, said, “We pride ourselves on always being honest with our analysis of the business and the environment and clearly 2025 was a challenging year for the industry. We expect this difficult backdrop to continue for the homebuilding industry, but as we have stated previously, the best operators find a way to navigate any environment and there will always be winners and losers. Consistent with previous guidance, DFH will find a way to scale our business and I’m proud of the team’s ability to set annual Company records in both closings and net sales.
Dream Finders finished the year with a positive fourth quarter, generating homebuilding revenues of $1.2 billion and delivering 2,536 closings, which allowed us to accomplish a Company record annual closings number of 8,608 homes. Our commitment to providing affordable homes was evident in our annual results. We spent over $100 million in mortgage buy-down programs, and provided homebuyers tailored sales incentives. These strategies proved effective as we increased net sales by 9% and 15% for the fourth quarter and full year, respectively, in a challenging macro-economic environment that significantly impacted consumer confidence. We maintain our Company goal of delivering the highest possible value to our home buyers and will continue to work hard to address affordability challenges that face the industry and our customers.
In Q4 2025, we entered into a strategic partnership to acquire the Sawgrass Marriott Golf Resort & Spa in Ponte Vedra Beach, Florida, a 66-acre parcel adjacent to the renowned PLAYERS Stadium Course at TPC Sawgrass. This partnership provides opportunities to expand our lot pipeline and supports our future growth and profitability. This strategic venture will also benefit the local community by boosting tourism, creating jobs, and fostering a vibrant environment, positioning the Sawgrass Marriott as an important part of our future. We are very excited to own a meaningful portion of the partnership’s economics and believe this irreplaceable asset was acquired at an attractive price that will yield very successful long-term results for our shareholders.
The ongoing complexity and difficulty of the housing sector persisted through 2025, yet our results demonstrate the strength and resiliency of our business, as well as the perseverance of our team in a challenging environment. I applaud the team for their effective execution amid choppy conditions and for their ongoing pursuit of new opportunities to drive value. As we look to 2026, we remain focused on further scaling our business and delivering long-term returns to our shareholders. We initiate our 2026 full year guidance of approximately 9,250 expected home closings.”
Homebuilding
Fourth Quarter 2025 Results
Homebuilding revenues in the fourth quarter of 2025 were $1.2 billion, a decrease of 24% when compared to the fourth quarter of 2024. The decrease in revenues was driven by lower home closings and average selling prices (“ASP”). Declines in ASP across all segments were attributable to the continued use of sales incentives during the fourth quarter of 2025, as well as changes in our geographic product mix. The January 2025 Liberty Communities acquisition contributed 273 home closings with an ASP of $315,784 to the fourth quarter.
Homebuilding gross margin percentage in the fourth quarter of 2025 was 16.7%, compared to 17.7% in the fourth quarter of 2024. The decrease in homebuilding gross margin percentage was primarily the result of higher sales incentives and land costs, as well as changes in product mix.
Adjusted homebuilding gross margin in the fourth quarter of 2025 was 25.7%, compared to 26.9% in the fourth quarter 2024. Adjusted homebuilding gross margin is a non-GAAP financial measure. See “Reconciliation of Non-GAAP Financial Measures” below.
Selling, general and administrative expense (“SG&A”) in the fourth quarter of 2025 increased 7% to $124 million, compared to $116 million in the fourth quarter of 2024. The increase in SG&A was primarily due to higher use of forward mortgage commitment programs, as well as expenses related to our increased community count, partially offset by lower compensation costs. SG&A as a percentage of homebuilding revenues in the fourth quarter of 2025 increased 310 bps to 10.7%, compared to 7.6% in the fourth quarter of 2024 due to absorption.
Consolidated net income attributable to DFH in the fourth quarter of 2025 was $59 million, or $0.60 per basic share, compared to $129 million, or $1.35 per basic share in the fourth quarter of 2024.
Net sales in the fourth quarter of 2025 were 1,756, an increase of 9% compared to 1,611 net sales for the fourth quarter of 2024. The cancellation rate in the fourth quarter of 2025 was 15.9%, an improvement of 290 bps compared with the fourth quarter of 2024 cancellation rate of 18.8%. The improvement in our metrics this quarter demonstrates our effective use of sales incentives and availability of high-quality, affordable homes within our markets.
Fourth Quarter 2025 Backlog
As of December 31, 2025, DFH had a backlog of 1,839 homes, valued at $0.8 billion, compared to the backlog of 2,619 homes, valued at $1.2 billion as of September 30, 2025. As of December 31, 2025, the ASP in backlog was $446,597 compared to $447,133 as of September 30, 2025. As of December 31, 2025, approximately 1,767 of the homes in backlog are expected to be delivered in 2026 and 72 homes are expected to be delivered in 2027 and beyond.
The following table shows the backlog units and ASP as of December 31, 2025 by homebuilding segment:
| As of December 31, 2025 (Unaudited) | |||||||||||
| Backlog: | Units | Average Sales Price | |||||||||
| Southeast | 833 | $ | 412,422 | ||||||||
| Mid-Atlantic | 631 | 367,559 | |||||||||
| Midwest | 375 | 655,505 | |||||||||
| Total | 1,839 | $ | 446,597 | ||||||||
Financial Services
Financial services revenues increased by $28 million, or 109%, for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024, mostly due to the April 2025 acquisition of Alliant Title. Income before taxes decreased by $3 million, or 30%, during the fourth quarter of 2025 as compared to the same period in 2024, primarily due to a lower volume of home closings during the fourth quarter.
Financial services revenues and income before taxes increased by $126 million, or 242%, and $4 million, or 12%, respectively, for the year ended December 31, 2025 as compared to the year ended December 31, 2024, mostly due to the April 2025 acquisition of Alliant Title and the consolidation of Jet HomeLoans beginning July 1, 2024.
Full Year 2026 Outlook
Dream Finders Homes expects approximately 9,250 home closings for the full year 2026.
About Dream Finders Homes
Dream Finders Homes (NYSE: DFH), headquartered in Jacksonville, Florida, was recognized as the 2025 National Builder of the Year by Builder magazine. Dream Finders Homes builds single-family homes throughout the Southeast, Mid-Atlantic and Midwest, including Florida, Texas, Tennessee, North Carolina, South Carolina, Georgia, Colorado, Arizona, and the Washington, D.C. metropolitan area, which comprises Washington D.C., Northern Virginia and Maryland. As the Official Home Builder of the PGA TOUR and the Jacksonville Jaguars, Dream Finders Homes is deeply committed to excellence beyond homebuilding and into the communities it serves. Through its wholly owned subsidiaries, DFH also provides mortgage financing as well as title agency and underwriting services to homebuyers. Dream Finders Homes achieves its growth and returns by maintaining an asset-light homebuilding model. For more information, please visit www.dreamfindershomes.com.
Forward-Looking Statements
This press release includes forward-looking statements regarding future events which include, but are not limited to, projected 2026 home closings and market conditions, possible or assumed future results of operations, and statements regarding the Company’s strategies and expectations as they relate to market opportunities and growth. All forward-looking statements are based on Dream Finders Homes’ beliefs as well as assumptions made by and information currently available to Dream Finders Homes. These statements reflect Dream Finders Homes’ current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in Dream Finders Homes’ Annual Report on Form 10-K for the year ended December 31, 2025 and other filings with the U.S. Securities and Exchange Commission. Dream Finders Homes undertakes no obligation to update or revise any forward-looking statement, except as may be required by applicable law.
Dream Finders Homes, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
| December 31, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 234,766 | $ | 274,384 | |||||||
| Restricted cash | 49,624 | 65,441 | |||||||||
| Accounts receivable | 39,120 | 34,126 | |||||||||
| Inventories | 2,025,662 | 1,715,357 | |||||||||
| Lot deposits | 545,253 | 458,303 | |||||||||
| Mortgage loans held for sale | 205,089 | 303,393 | |||||||||
| Other assets | 223,999 | 165,880 | |||||||||
| Investments in unconsolidated entities | 26,610 | 11,454 | |||||||||
| Goodwill | 377,361 | 300,313 | |||||||||
| Total assets | $ | 3,727,484 | $ | 3,328,651 | |||||||
| Liabilities | |||||||||||
| Accounts payable | $ | 126,130 | $ | 147,143 | |||||||
| Accrued liabilities | 321,457 | 281,465 | |||||||||
| Customer deposits | 69,593 | 125,601 | |||||||||
| Revolving credit facility and other borrowings | 822,296 | 701,386 | |||||||||
| Senior unsecured notes, net | 591,060 | 295,049 | |||||||||
| Mortgage warehouse facilities | 192,837 | 289,617 | |||||||||
| Contingent consideration | — | 68,030 | |||||||||
| Total liabilities | 2,123,373 | 1,908,291 | |||||||||
| Mezzanine Equity | |||||||||||
| Redeemable preferred stock | 148,500 | 148,500 | |||||||||
| Redeemable noncontrolling interests | 29,539 | 21,451 | |||||||||
| Equity | |||||||||||
Class A common stock, $0.01 per share; 289,000,000 authorized, 36,667,477 and 36,002,077 issued as of December 31, 2025 and 2024, respectively | 367 | 360 | |||||||||
Class B common stock, $0.01 per share; 61,000,000 authorized, 57,726,153 issued as of December 31, 2025 and 2024 | 577 | 577 | |||||||||
Accumulated other comprehensive income | 613 | — | |||||||||
| Additional paid-in capital | 298,594 | 281,559 | |||||||||
| Retained earnings | 1,173,950 | 970,253 | |||||||||
Treasury stock, at cost, 2,124,094 and 291,229 shares of Class A common stock as of December 31, 2025 and 2024 respectively | (49,526) | (7,827) | |||||||||
| Total Dream Finders Homes, Inc. stockholders’ equity | 1,424,575 | 1,244,922 | |||||||||
| Noncontrolling interests | 1,497 | 5,487 | |||||||||
| Total equity | 1,426,072 | 1,250,409 | |||||||||
| Total liabilities, mezzanine equity and equity | $ | 3,727,484 | $ | 3,328,651 | |||||||
Dream Finders Homes, Inc.
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
| Three Months Ended December 31, (Unaudited) | Year Ended December 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Homebuilding | $ | 1,158,988 | $ | 1,534,163 | $ | 4,145,347 | $ | 4,397,877 | |||||||||||||||
| Financial services | 53,680 | 25,717 | 177,501 | 51,975 | |||||||||||||||||||
| Total revenues | 1,212,668 | 1,559,880 | 4,322,848 | 4,449,852 | |||||||||||||||||||
| Homebuilding cost of sales | 966,012 | 1,262,896 | 3,423,354 | 3,591,483 | |||||||||||||||||||
| Financial services expense | 46,722 | 14,778 | 144,727 | 30,437 | |||||||||||||||||||
| Selling, general and administrative expense | 124,311 | 116,442 | 485,213 | 395,100 | |||||||||||||||||||
| Income from unconsolidated entities | (323) | (266) | (417) | (10,567) | |||||||||||||||||||
| Contingent consideration revaluation | — | 146 | (9,820) | 13,939 | |||||||||||||||||||
| Other income, net | (2,177) | (2,714) | (4,311) | (8,394) | |||||||||||||||||||
| Income before taxes | 78,123 | 168,598 | 284,102 | 437,854 | |||||||||||||||||||
| Income tax expense | (19,324) | (38,106) | (66,698) | (97,272) | |||||||||||||||||||
| Net income | 58,799 | 130,492 | 217,404 | 340,582 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | (82) | (1,239) | (207) | (5,241) | |||||||||||||||||||
| Net income attributable to Dream Finders Homes, Inc. | $ | 58,717 | $ | 129,253 | $ | 217,197 | $ | 335,341 | |||||||||||||||
| Earnings per share | |||||||||||||||||||||||
| Basic | $ | 0.60 | $ | 1.35 | $ | 2.19 | $ | 3.44 | |||||||||||||||
| Diluted | $ | 0.58 | $ | 1.29 | $ | 2.14 | $ | 3.34 | |||||||||||||||
| Weighted-average number of shares | |||||||||||||||||||||||
| Basic | 92,611,003 | 93,455,979 | 93,106,397 | 93,507,905 | |||||||||||||||||||
| Diluted | 101,293,173 | 100,391,557 | 101,296,630 | 100,297,139 | |||||||||||||||||||
Dream Finders Homes, Inc.
Other Financial and Operating Data
| Three Months Ended December 31, (Unaudited) | Year Ended December 31, (Unaudited) | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Other Financial and Operating Data: | ||||||||||||||||||||||||||
| Home closings | 2,536 | 3,008 | 8,608 | 8,583 | ||||||||||||||||||||||
Average sales price of homes closed(1) | $ | 460,442 | $ | 507,477 | $ | 477,917 | $ | 509,249 | ||||||||||||||||||
Net sales | 1,756 | 1,611 | 7,747 | 6,727 | ||||||||||||||||||||||
| Cancellation rate | 15.9 | % | 18.8 | % | 13.5 | % | 16.6 | % | ||||||||||||||||||
Homebuilding gross margin (in thousands)(2) | $ | 192,976 | $ | 271,267 | $ | 721,993 | $ | 806,394 | ||||||||||||||||||
Homebuilding gross margin %(3) | 16.7 | % | 17.7 | % | 17.4 | % | 18.3 | % | ||||||||||||||||||
Adjusted homebuilding gross margin (in thousands)(4) | $ | 298,361 | $ | 412,118 | $ | 1,098,694 | $ | 1,186,019 | ||||||||||||||||||
Adjusted homebuilding gross margin %(3)(4) | 25.7 | % | 26.9 | % | 26.5 | % | 27.0 | % | ||||||||||||||||||
Selling, general and administrative expense %(3) | 10.7 | % | 7.6 | % | 11.7 | % | 9.0 | % | ||||||||||||||||||
Active communities as of period end(5) | 313 | 242 | ||||||||||||||||||||||||
Backlog as of period end - units | 1,839 | 2,599 | ||||||||||||||||||||||||
Backlog as of period end - value (in thousands) | $ | 821,292 | $ | 1,304,463 | ||||||||||||||||||||||
Net homebuilding debt to net capitalization(4) | 41.8 | % | 33.7 | % | ||||||||||||||||||||||
Return on participating equity(6) | 15.3 | % | 29.7 | % | ||||||||||||||||||||||
(1)Average sales price of homes closed is calculated based on homebuilding revenues, adjusted for the impact of percentage of completion revenues, and excluding deposit forfeitures and land sales, over homes closed.
(2)Homebuilding gross margin is homebuilding revenues less homebuilding cost of sales.
(3)Calculated as a percentage of homebuilding revenues.
(4)Adjusted homebuilding gross margin and net homebuilding debt to net capitalization are non-GAAP financial measures. For definitions of these non-GAAP financial measures and reconciliations to our most directly comparable financial measures calculated and presented in accordance with GAAP, see “Reconciliation of Non-GAAP Financial Measures” below.
(5)A community becomes active once the model is completed or the community has its fifth net sale. A community becomes inactive when it has fewer than five homesites remaining to sell.
(6)Return on participating equity is calculated as net income attributable to DFH, less redeemable preferred stock distributions, divided by average beginning and ending total Dream Finders Homes, Inc. stockholders’ equity (“participating equity”) for the trailing twelve months.
| Three Months Ended December 31, (Unaudited) | Year Ended December 31, (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Home Closings: | Units | Average Sales Price | Units | Average Sales Price | Units | Average Sales Price | Units | Average Sales Price | |||||||||||||||||||||||||||||||||||||||
| Southeast | 888 | $ | 457,634 | 1,000 | $ | 468,595 | 3,126 | $ | 447,667 | 2,838 | $ | 484,345 | |||||||||||||||||||||||||||||||||||
| Mid-Atlantic | 772 | 397,382 | 890 | 457,164 | 2,463 | 426,375 | 2,594 | 446,667 | |||||||||||||||||||||||||||||||||||||||
| Midwest | 876 | 518,862 | 1,118 | 582,309 | 3,019 | 551,290 | 3,151 | 583,198 | |||||||||||||||||||||||||||||||||||||||
| Total | 2,536 | $ | 460,442 | 3,008 | $ | 507,477 | 8,608 | $ | 477,917 | 8,583 | $ | 509,249 | |||||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures
Management utilizes specific non-GAAP financial measures as supplementary tools to evaluate operating performance. These include adjusted homebuilding gross margin and net homebuilding debt to net capitalization. Other companies may not calculate non-GAAP financial measures in the same manner that we do. Accordingly, these non-GAAP financial measures should be considered only as a supplement to relevant GAAP information, as reconciled for each measure below. In the future, we may incorporate additional adjustments to these non-GAAP financial measures as we find them relevant and beneficial for both management and investors.
Adjusted Homebuilding Gross Margin
The following table presents a reconciliation of adjusted homebuilding gross margin to the GAAP financial measure of homebuilding gross margin for each of the periods indicated (in thousands, except percentages):
| Three Months Ended December 31, (Unaudited) | Year Ended December 31, (Unaudited) | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Homebuilding gross margin(1) | $ | 192,976 | $ | 271,267 | $ | 721,993 | $ | 806,394 | |||||||||||||||
Interest expense in homebuilding cost of sales(2) | 55,666 | 73,102 | 196,728 | 187,324 | |||||||||||||||||||
Amortization in homebuilding cost of sales(3) | (1,354) | (827) | 305 | 5,087 | |||||||||||||||||||
| Commission expense | 51,073 | 68,576 | 179,668 | 187,214 | |||||||||||||||||||
| Adjusted homebuilding gross margin | $ | 298,361 | $ | 412,118 | $ | 1,098,694 | $ | 1,186,019 | |||||||||||||||
Homebuilding gross margin %(4) | 16.7 | % | 17.7 | % | 17.4 | % | 18.3 | % | |||||||||||||||
Adjusted homebuilding gross margin %(4) | 25.7 | % | 26.9 | % | 26.5 | % | 27.0 | % | |||||||||||||||
(1)Homebuilding gross margin is homebuilding revenues less homebuilding cost of sales.
(2)Includes interest charged to homebuilding cost of sales related to our senior unsecured notes, net, and revolving credit facility (“homebuilding debt”), as well as lot option fees.
(3)Represents amortization of purchase accounting adjustments from our acquisitions.
(4)Calculated as a percentage of homebuilding revenues.
We define adjusted homebuilding gross margin as homebuilding gross margin excluding the effects of capitalized interest, lot option fees, amortization included in homebuilding cost of sales (adjustments resulting from the application of purchase accounting in connection with acquisitions) and commission expense. Our management believes this information is meaningful as it isolates the impact that these excluded items have on homebuilding gross margin. We include internal and external commission expense in homebuilding cost of sales, not selling, general and administrative expense, and therefore commission expense is taken into account in homebuilding gross margin.
As a result, in order to provide a meaningful comparison to the public company homebuilders that include commission expense below the homebuilding gross margin line in selling, general and administrative expense, we have excluded commission expense from adjusted homebuilding gross margin. However, because adjusted homebuilding gross margin information excludes capitalized interest, lot option fees, purchase accounting amortization and commission expense, which have real economic effects and could impact our results of operations, the utility of adjusted homebuilding gross margin information as a measure of our operating performance may be limited.
Net Homebuilding Debt to Net Capitalization
The following table presents a reconciliation of net homebuilding debt to net capitalization to the GAAP financial measure of total debt to total capitalization for each of the periods indicated (in thousands, except percentages):
| As of December 31, (Unaudited) | |||||||||||
| 2025 | 2024 | ||||||||||
| Total debt | $ | 1,606,193 | $ | 1,286,052 | |||||||
| Total mezzanine equity | 178,039 | 169,951 | |||||||||
| Total equity | 1,426,072 | 1,250,409 | |||||||||
| Total capitalization | $ | 3,210,304 | $ | 2,706,412 | |||||||
| Total debt to total capitalization | 50.0 | % | 47.5 | % | |||||||
| Total debt | $ | 1,606,193 | $ | 1,286,052 | |||||||
Less: Mortgage warehouse facilities and other secured borrowings | 217,133 | 289,617 | |||||||||
| Less: Cash and cash equivalents | 234,766 | 274,384 | |||||||||
| Net homebuilding debt | $ | 1,154,294 | $ | 722,051 | |||||||
| Total mezzanine equity | 178,039 | 169,951 | |||||||||
| Total equity | 1,426,072 | 1,250,409 | |||||||||
| Net capitalization | $ | 2,758,405 | $ | 2,142,411 | |||||||
| Net homebuilding debt to net capitalization | 41.8 | % | 33.7 | % | |||||||
Net homebuilding debt to net capitalization is a non-GAAP financial measure calculated as homebuilding debt, less cash and cash equivalents (“net homebuilding debt”), divided by the sum of net homebuilding debt, total mezzanine equity and total equity (“net capitalization”). Net homebuilding debt excludes borrowings under our mortgage warehouse facilities, as well as any other non-homebuilding borrowings the Company may incur from time to time. Management believes the ratio of net homebuilding debt to net capitalization is meaningful as it is used to assess the performance of our homebuilding segments and is a relevant measure of our overall leverage.
Contacts:
Investor Contact: [email protected]
Media Contact: [email protected]