Smith Douglas Homes Corp. (NYSE: SDHC) (“Smith Douglas” or the
“Company”) today announced results for its year ended December 31,
2023.
2023 Full Year Results as compared to 2022:
- Net new orders increased 22.8% to 2,368
- Backlog homes increased 18.3% to 912
- Sales value of backlog homes increased 20.1% to $310.7
million
- Home closings increased 4.4% to 2,297
- Revenue increased 1.2% to $764.6 million
- Net income of $123.2 million, down 12.3%
- Debt-to-book capitalization of 26.6%
- Net-debt-to-net book capitalization of 21.1%1
The Company had 69 active communities on December 31, 2023,
compared to 53 a year prior. The cancellation rate was 10.5% for
2023 versus 10.9% for 2022.
Greg Bennett, Vice Chairman and Chief Executive Officer,
commented, “We are excited to begin life as a public company after
executing on our highly successful IPO in January and raising over
$125 million in primary net proceeds. The demand we saw from
investors was humbling and clearly reflective of the belief in our
strategy and business model. We are extremely happy with our 2023
results and look forward to continued growth in 2024 as we focus on
our goal of doubling home closings over the next five years.”
Russ Devendorf, Executive Vice President and Chief Financial
Officer added, “Concurrent with the IPO, we closed on our upsized
$250 million unsecured credit facility and used a portion of our
IPO proceeds to pay off all the outstanding debt. These capital
transactions provide us with meaningful liquidity that will enable
us to grow within our existing footprint and look for strategic
opportunities in other markets that align with our strategy.”
________________________ 1 Net-debt-to-net book capitalization
is a Non-GAAP Financial Measure. See “Non-GAAP Financial Measures”
below.
Conference Call & Webcast Information
Management will host a conference call to discuss the Company’s
results at 8:30 a.m. Eastern Time on March 20, 2024. Interested
parties can dial in using the numbers below or access the call via
a webcast link provided in the investor relations section of the
company’s website.
Dial-in Numbers: Toll Free - North America (+1)
800-715-9871 International: (+1) 646-307-1963 Conference ID:
6488452
Replay Numbers: Toll Free - North America: (+1)
800-770-2030 Playback Passcode: 6488452 Replay will expire 7 days
following the event
About Smith Douglas Homes
Headquartered in Atlanta, Georgia, Smith Douglas Homes completed
its initial public offering in January 2024. Since its inception,
Smith Douglas has been entrusted by over 13,000 families to fulfill
their new home dreams. Ranked a top 50 builder nationally for
several years and with 2,297 closings in 2023, Smith Douglas
currently holds the #38 position on the Builder Magazine Top 100
list. The Smith Douglas communities are primarily targeted to
entry-level and empty-nest homebuyers looking to purchase a new
home priced below the Federal Housing Administration loan limit in
the metro areas of Atlanta, Birmingham, Charlotte, Houston,
Huntsville, Nashville, and Raleigh. Smith Douglas offers its
homebuyers a personalized, affordable-luxury buying experience at
attractive prices.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including without limitation statements
regarding the Company’s performance, growth, strategic
opportunities, and financial position, including with respect to
growth in 2024 and the Company’s goal of doubling its home closings
in five years. These statements are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and
other important factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements, including, but not limited to, the
factors discussed under the caption “Risk Factors” in our final
prospectus, filed with the Securities and Exchange Commission on
January 10, 2024 pursuant to Rule 424(b)(4) relating to our
registration statement on Form S‑1 (File No. 333-274379), as
amended, filed in connection with our initial public offering.
These forward-looking statements are based on management’s current
estimates and expectations. While we may elect to update such
forward-looking statements at some point in the future, we disclaim
any obligation to do so, even if subsequent events cause our views
to change.
Smith Douglas Homes
Consolidated Statements of
Income and Other Operating Data
(unaudited)
Year ended December 31,
2023
2022
Year over year change
Amount
Amount
Amount
Percent
Consolidated Statements of Income
Data:
Home closing revenue
$764,631
$755,353
9,278
1.2%
Cost of home closings
548,304
532,599
15,705
2.9%
Home closing gross profit
216,327
222,754
(6,427)
(2.9)%
Selling, general, and administrative
costs
92,442
83,006
9,436
11.4%
Equity in income from unconsolidated
entities
(934)
(1,120)
186
(16.6)%
Interest expense
1,658
997
661
66.3%
Other (income) loss, net
(19)
(573)
554
(96.7)%
Net income
$123,180
$140,444
$(17,264)
(12.3)%
Other operating data
(unaudited):
Home closings
2,297
2,200
97
4.4%
ASP of homes closed
$333
$343
(10)
(2.9)%
Net new home orders
2,368
1,928
440
22.8%
Contract value of net new home orders
$792,224
$667,530
124,694
18.7%
ASP of net new home orders
$335
$346
(11)
(3.2)%
Cancellation rate(1)
10.5%
10.9%
(0.6)
(3.7)%
Backlog homes (period end)(2)
912
771
141
18.3%
Contract value of backlog homes (period
end)
$310,714
$258,718
51,996
20.1%
ASP of backlog homes (period end)
$341
$336
5
1.5%
Active communities (period end)(3)
69
53
16
30.2%
Controlled lots:
Homes under construction
796
623
173
27.8%
Owned lots
524
342
182
53.2%
Optioned lots
11,501
7,848
3,653
46.5%
Total controlled lots
12,821
8,813
4,257
48.3%
[nm* Not meaningful]
1. The cancellation rate is the total
number of cancellations during the period divided by the total
gross new home orders during the period.
2. Backlog homes (period end) is the
number of homes in backlog from the previous period plus the number
of net new home orders generated during the current period minus
the number of homes closed during the current period.
3. A community becomes active once the
model is completed or the community has its first sale. A community
becomes inactive when it has fewer than two homes remaining to
sell.
Non-GAAP Financial Measures
In addition to our results determined in accordance with
generally accepted accounting principles in the U.S. (“GAAP”), this
press release includes net-debt-to-net book capitalization and
adjusted net income.
Net-debt-to-net-book capitalization
Net-debt-to-net book capitalization is a supplemental measure of
our leverage that is not required by, or presented in accordance
with, GAAP and should not be considered as an alternative to
debt-to-book capitalization or any other measure derived in
accordance with GAAP. We caution investors that amounts presented
in accordance with our definition of net-debt-to-net book
capitalization may not be comparable to similar measures disclosed
by our competitors because not all companies and analysts calculate
this non-GAAP financial measure in the same manner. We present this
non-GAAP financial measure because we consider it to be an
important supplemental measure of our leverage and believe it is
frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in our
industry.
We define net-debt-to-net book capitalization as:
- Total debt, less cash and cash equivalents, divided by
- Total debt, less cash and cash equivalents, plus stockholders’
equity.
This non-GAAP financial measure has limitations as an analytical
tool in that it subtracts cash and cash equivalents and therefore
may imply that the Company has less debt than the most comparable
measure determined in accordance with GAAP. Because of this
limitation, this non-GAAP financial measure should be considered
along with other financial measures presented in accordance with
GAAP. The presentation of this non-GAAP financial measure is not
intended to be considered in isolation or as a substitute for, or
superior to, financial information prepared and presented in
accordance with GAAP. We have reconciled this non-GAAP financial
measure with the most directly comparable GAAP financial measure in
the following table:
Year ended December 31,
(in thousands, except
percentages)
2023
2022
Notes payable
$75,627
$15,000
Members’ equity
208,903
164,511
Total capitalization
$284,530
$179,511
Debt-to-book capitalization
26.6%
8.4%
Notes payable
$75,627
$15,000
Less: cash and cash equivalents
19,777
29,601
Net debt
55,850
(14,601)
Members’ equity
208,903
164,511
Total net capitalization
$264,753
149,910
Net debt-to-book capitalization
21.1%
(9.7)%
Adjusted net income
Adjusted net income is not a measure of net income or net income
margin as determined by GAAP. Adjusted net income is a supplemental
non-GAAP financial measure used by management and external users of
our consolidated financial statements, such as industry analysts,
investors, lenders, and rating agencies. We define adjusted net
income as net income adjusted for the tax impact using a 25%
federal and state blended tax rate (assuming 100% public ownership
to adjust for the impact of taxes on earnings attributable to Smith
Douglas Holdings LLC as if Smith Douglas Holdings LLC was a
subchapter C corporation in the periods presented).
Management believes adjusted net income is useful because it
allows management to more effectively evaluate our operating
performance and comparability to industry peers who record income
tax expense on their income before tax as opposed to the income of
Smith Douglas Holdings LLC not being taxed at the entity level and,
therefore, not reflecting a charge against earnings for income tax
expense. Adjusted net income should not be considered as an
alternative to, or more meaningful than, net income or any other
measure as determined in accordance with GAAP. Our computation of
adjusted net income may not be comparable to adjusted net income of
other companies. We present adjusted net income because we believe
it provides useful information regarding our comparability to
peers.
The following table presents a reconciliation of adjusted net
income to the GAAP financial measure of net income for each of the
periods indicated:
Year ended December 31,
(in thousands)
2023
2022
Net income
$123,180
$140,444
Tax-effected adjustments(1)
30,795
35,111
Adjusted net income
$92,385
$105,333
- For the year ended December 31, 2023 and 2022, our tax expenses
assumes a 25% federal and state blended tax rate (assuming 100%
public ownership to adjust for the impact of taxes on earnings
attributable to Smith Douglas Holdings LLC as if Smith Douglas
Holdings LLC was a subchapter C corporation in the periods
presented).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240319398891/en/
Investor Relations Drew Mackintosh (310) 924-9036
ir@smithdouglas.com
Smith Douglas Homes (NYSE:SDHC)
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