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Jax Daily Record Thursday, Nov. 18, 202105:00 AM EST

Dream Finders Homes stock cools off after strong start to begin year

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Dream Finders Homes stock cools off
by: Mark Basch Contributing Writer

Dream Finders Homes Inc. started the year as a red-hot stock, with the price more than doubling after its January initial public offering.

However, the stock has cooled off in recent weeks amid supply chain concerns for homebuilders, and Dream Finders’ third-quarter earnings report didn’t help.

The Jacksonville-based company reported earnings Nov. 10  of 20 cents a share, well below the consensus forecast of 48 cents by analysts surveyed by Zacks Equity Research.

Revenue rose 27.7% to $362.9 million and home closings rose 17% to 316. But Dream Finders reduced its forecast for home closings for the full year.

After acquiring Texas home building company McGuyer Homebuilders Inc. on Oct. 1, Dream Finders was projecting to close on the sale of 5,000 to 6,000 homes this year. It now is projecting 4,900 to 5,300.

“We have successfully delivered our third sequential quarter of year-over-year revenue, gross margin and pre-tax income growth, despite supply chain constraints,” CEO Patrick Zalupski said in a news release.

“We’ve continued to see elevated consumer housing demand and price appreciation; however, industry-wide labor, material and supply chain challenges have impacted sequential gross margins and temporarily drawn out cycle times by a month longer than our historical averages,” he said.

Dream Finders has not been holding quarterly conference calls with analysts to discuss earnings as other public companies typically do.

Dream Finders’ stock jumped from its IPO price of $13 to as high as $36.60 in June, but it fell to a low of $15.25 on Nov. 2 and has continued to trade in the teens.

Wedbush analyst Jay McCanless lowered his price target on the stock from $19 to $16 after the earnings report and maintained his “neutral” rating.

“DFH’s legacy business had a much weaker quarter than we expected due to the supply chain issues affecting the entire industry and due to management’s intentional limits on orders,” McCanless said in a research note.

“DFH indicated in the release that it was limiting orders to manage the construction process but did not detail the extent of those caps across the footprint,” he said.

McCanless said the addition of McGuyer will help the company’s long-term prospects.

“We anticipate the MHI deal should be a growth catalyst in 2022 as MHI brings DFH a large and established presence in the major Texas markets,” he said.

Redwire postpones earnings report

Redwire Corp.’s life as a public company got off to a rocky start as the Jacksonville-based space technology venture postponed its scheduled Nov. 10 earnings report.

Redwire announced the postponement, with no explanation, late Nov. 9 and followed with a Nov. 10 news release saying it was due to an accounting issue.

The company said it had been notified Nov. 5 of “potential accounting issues with a business subunit.” It said because of the timing, it was unable to complete its financial report.

“Redwire remains confident in its business prospects,” it said.

The company did not say which business unit has the accounting issue in question.

Redwire was formed last year with acquisitions of seven space technology companies and became publicly traded in September by merging with a special purpose acquisition company.

It added an eighth merger Nov. 2 by acquiring Techshot Inc., which it described as “a leader in biotechnology in microgravity, bioprinting, and on-orbit manufacturing needed for commercial space-based research and development.”

“The deal strengthens Redwire’s diverse offering and ability to capture emerging space themes, including the rise in small sats, on-orbit manufacturing, and the broader commercialization of space,” Jefferies analyst Greg Konrad said in a Nov. 2 research note.

Konrad, the only Wall Street analyst covering Redwire, maintained a “buy” rating and a $15 price target on the stock before the company’s scheduled earnings report.

Redwire’s stock dropped by $1.92 to $9.99 on Nov. 10 after postponing its earnings release.

Cadre Holdings IPO starts strong

The latest Jacksonville-based company to go public, Cadre Holdings Inc., is off to a strong start after its Nov. 4 IPO.

After selling 6.9 million shares at $13 each, Cadre’s stock rose $2.29 to $15.29 on its first day of trading and reached a high of $22 on Nov. 16.

Cadre also declared its first quarterly dividend of 8 cents a share. The company said in its IPO registration statements that it intended to pay the dividend.

Cadre, which does business mainly under the name Safariland, makes safety and survivability products for the law enforcement, first responder and military markets.

Cadre Chief Executive Warren Kanders still owns 76.6% of the stock after the IPO, according to Cadre’s latest Securities and Exchange Commission filing.

Kanders was CEO of Jacksonville-based Armor Holdings Inc., which was sold to BAE Systems Inc. for $4.5 billion in 2007. Five years after the sale, Kanders led an investor group that bought the law enforcement products business back from BAE for $124 million.

The $13 IPO price valued the company at more than $430 million.

Coach brand helps Tapestry earnings

Increasing sales of Coach brand handbags and other accessories propelled a strong quarter for Tapestry Inc.

Tapestry, which also sells products under the Kate Spade and Stuart Weitzman brands, said sales of $1.48 billion in the first quarter ended Oct. 2 were 9% higher than pre-pandemic levels two years ago, and Coach sales were 15% higher.

New York-based Tapestry handles all of its North American distribution for Coach products from a facility in Jacksonville International Tradeport near Jacksonville International Airport.

Coach’s North American business is the biggest revenue driver of the company, with $682 million in first-quarter sales.

“While supply chain challenges persist due to the global pandemic, we’re remaining agile and taking deliberate actions to meet growing consumer demand,” CEO Joanne Crevoiserat said in a news release.

Adjusted earnings of 82 cents a share were 13 cents higher than the consensus analysts’ forecast, according to Zacks.

Tapestry also increased its revenue forecast for the full fiscal year from $6.4 billion to $6.6 billion and said it now expects earnings of $3.45 to $3.50 a share, up from its previous forecast of $3.30 to $3.35.

Tapestry’s stock rose $3.57 to $46.18 on Nov. 11 after the earnings report, an 8.4% gain that the Wall Street Journal said was its largest daily increase in more than a year.

American Eagle Outfitters buying Quiet Logistics

American Eagle Outfitters Inc. said Nov. 2 it is buying Quiet Logistics Inc. for $350 million in cash.

Quiet Logistics, which operates distribution centers under the name Quiet 3PF, opened a fulfillment center in Jacksonville in September 2020 and has other centers in Boston, Chicago, Los Angeles, Dallas and St. Louis.

The company said in February its facility in Park 295 in Northwest Jacksonville employs 200 people year-round and increases that to 375 to 400 during peak season.

American Eagle said Quiet Logistics will run the business independently as a wholly owned subsidiary of the specialty retailer.

Hazlnut receives $3 million in funding

Jacksonville-based Hazlnut, which provides an online ordering platforms for restaurants, said Nov. 3 it received $3 million in new funding.

The funding round was led by investment firm Atlanta Ventures, along with Jacksonville-based PS27 Ventures’ Rhea Fund.

Hazlnut said it previously received less than $200,000 in seed funding from PS27 in 2018.

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