Acquisition of Devon Street Homes, L.P. (Tables)

3 Months Ended

Mar. 31, 2024

Acquisition of Devon Street Homes, L.P. [Abstract]

Estimated Fair Value of Each Class of Consideration Transferred or Expected to be Transferred

The following table summarizes the estimated fair value of each class of consideration transferred or expected to be transferred in relation to the Devon Street acquisition as of the Acquisition Date (in thousands):

Cash consideration ⁽¹⁾	$	75,865
Seller note payable		5,000
Contingent consideration ⁽²⁾		3,000
Total estimated consideration to be paid	$	83,865

⁽¹⁾	The cash consideration was funded by $3.9 million of cash on hand and $72.0 million of draws on the Company’s Credit Facility.

⁽²⁾

The contingent consideration represents management’s estimate of the fair value of the future payment to be made to the former owner of Devon Street under the terms of the Gross Margin Earnout feature included in the executed Asset Purchase Agreement for the Devon Street acquisition. Per the terms of the Gross Margin Earnout feature, the seller is entitled to receive a one‑time payment in the first quarter of 2025 based on the newly established Houston division’s gross margin (as defined) for the year ending December 31, 2024. The payout will be determined in accordance with the Gross Margin Calculation Payout Grid and ranges from a minimum of zero to a maximum of $5.0 million.

Allocation of the Preliminary Purchase Price as of the Acquisition

The following table summarizes the allocation of the preliminary purchase price as of the Acquisition Date (in thousands):

Real estate inventory	$	51,723
Deposits on real estate under option or contracts		7,438
Property and equipment, net		69
Goodwill		25,726
Other assets		324
Accounts payable		(857	)
Customer deposits		(181	)
Accrued expenses and other liabilities		(377	)
Fair value of consideration transferred	$	83,865

Unaudited Proforma Consolidated Home Closing Revenue and Net Income

The following presents the Company’s unaudited proforma consolidated home closing revenue and net income for the three months ended March 31, 2023 as if the Devon Street acquisition had occurred on January 1, 2022. This unaudited pro forma consolidated financial information is provided for informational purposes only and is not necessarily indicative of the operating results that would have occurred if the acquisition of Devon Street had been completed on January 1, 2022, nor is it indicative of the Company’s future results. As a result, actual results could differ materially from the unaudited pro forma consolidated financial information presented below.

	Pro Forma for the Three Months Ended March 31, 2023
	(In thousands)
Home closing revenue	$	183,443
Net income	$	29,477