Dream Finders Homes — Third Quarter 2026 Earnings Summary

Financial Performance:

• Homebuilding revenues increased 3% year-over-year to $942 million from $917 million in Q3 2025.
• Total revenues were $996 million compared to $970 million in the prior year quarter.
• Home closings increased 3% to 1,967 units from 1,915 units in Q3 2025.
• Net sales were 1,712 units, down 15% from 2,021 units in Q3 2025; excluding built-for-rent activity, net sales increased 6%.
• Homebuilding gross margin was 14.9%, down from 17.5% in Q3 2025.
• Adjusted homebuilding gross margin (non-GAAP) was 24.1%, down from 26.7% in Q3 2025.
• Pre-tax income was $13 million compared to $61 million in Q3 2025; excluding $23 million in Beazer acquisition costs, pre-tax income was $37 million.
• Net income attributable to DFH was $7 million (less than one cent per basic share) compared to $47 million ($0.47 per basic share) in Q3 2025; excluding acquisition costs, net income was $27 million ($0.22 per basic share).
• Financial services pre-tax income was $8 million compared to $9 million in Q3 2025.
• SG&A expenses increased 32% to $144 million from $110 million in Q3 2025; excluding $23 million in transaction costs, SG&A was $121 million.
• Return on participating equity was 6.6%, down from 22.0% in the prior year period.
• Total liquidity was $521 million as of September 30, 2026.
• Net homebuilding debt to net capitalization was 48.1% as of September 30, 2026, compared to 47.3% as of September 30, 2025.

Guidance and Future Outlook:

• The company maintains full-year 2026 guidance of approximately 9,250 home closings.
• Management expects additional nonrecurring transaction and integration costs in the fourth quarter related to the Beazer acquisition.
• The company anticipates recording deal abandonment charges in the fourth quarter as it optimizes the combined land portfolio.
• Management aims to generate $100 million in cost savings from the Beazer acquisition.
• The company intends to prioritize higher margin opportunities and exercise options to terminate land deals that do not meet return thresholds.

Business Segments and Product Lines:

• Homebuilding: Revenue growth was driven by increased closings and strategic lot sales, partially offset by a lower average selling price (ASP) of homes closed due to geographic and product mix changes.
• Financial Services: Revenues and income before taxes remained consistent with the prior year quarter.
• Backlog: As of September 30, 2026, the backlog consisted of 2,064 homes valued at $1.1 billion, with an ASP of $517,900.
• Regional Backlog: Southeast (895 units, $508,606 ASP), Mid-Atlantic (609 units, $461,614 ASP), and Midwest (560 units, $593,964 ASP).
• Controlled Lot Pipeline: 52,574 units as of September 30, 2026, down from 63,121 units as of December 31, 2025.
• Active Communities: 365 active communities as of September 30, 2026.

Market and Competitive Landscape:

• Buyers faced challenges due to rising mortgage rates affecting affordability and consumer confidence.
• The company is positioning itself as the 6th largest homebuilder in the United States following the Beazer acquisition.
• The acquisition expands the company's footprint into California, Nevada, Indiana, and Delaware, and strengthens presence in the Washington D.C. metropolitan area and shared markets in Texas, Florida, South Carolina, North Carolina, Georgia, and Arizona.

Risks and Challenges:

• Margins remain under pressure due to higher land and financing costs.
• Inventory impairment charges negatively impacted homebuilding gross margin by approximately 70 basis points in Q3 2026.
• Rising mortgage interest rates increased costs associated with forward commitment programs.
• A higher effective tax rate negatively affected net income by approximately $3 million due to nondeductible Beazer transaction costs.
• The cancellation rate was 12.7% in Q3 2026 compared to 12.5% in Q3 2025.

Management Commentary and Tone:

• CEO Patrick Zalupski noted that the team navigated challenging market conditions to set a record third-quarter closing of 1,967 homes.
• Management highlighted that operational and cost reduction improvements are being implemented across 365 communities, with overhead costs trending lower.
• Sequential homebuilding gross margin improved by 70 basis points in the quarter.
• Management emphasized a focus on protecting returns, managing disciplined inventory levels, generating cash, and reducing leverage.
• The tone reflected confidence in the transformational nature of the Beazer acquisition and the potential for significant synergies and earnings growth.

Other Key Points:

• On October 20, 2026, the company completed the acquisition of Beazer Homes USA, Inc. in an all-cash transaction with an enterprise value of approximately $2.2 billion.
• During Q3 2026, the company repurchased 386,103 shares of Class A common stock for $6 million.
• On September 14, 2026, the company redeemed all 150,000 outstanding shares of redeemable preferred stock for $154 million and issued 225,000 shares of new redeemable preferred stock for net proceeds of $217 million.
• Other income included $5 million in gains on equity securities, primarily from unrealized gains on the pre-acquisition investment in Beazer.
• The company recorded $23 million in one-time transaction costs related to the Beazer deal in the third quarter.