SDHC Smith Douglas Homes Corp

Smith Douglas Homes Corp. (NYSE: SDHC) (“Smith Douglas” or the “Company”) today announced first quarter results for the three months ended March 31, 2024.

Q1 2024 Results as compared to Q1 2023:

• Net new orders increased 15% to 765
• Home closings increased 13% to 566
• Revenue increased 13% to $189.2 million
• Pre-tax income of $21.4 million
• Earnings of $0.33 per diluted share
• Backlog homes increased 19% to 1,110
• Sales value of backlog homes increased 25% to $381.2 million
• Debt-to-book capitalization of 1.3%
• Active community count increased 49% to 70 at quarter end
• Total controlled lots increased 82% to 14,117

Greg Bennett, Vice Chairman and Chief Executive Officer, commented, “We are pleased by the results this quarter, our first as a public company, during which we completed our IPO in January and concurrently amended and increased the size of our credit facility. We achieved our sales and closings expectations and continue to produce excellent gross margins, coming in at 26.1% for the period.”

Mr. Bennett continued, “During the quarter we also had the opportunity to expand our footprint by contracting for lots in the Central Georgia market in Houston County, which includes Perry and Warner Robbins and the surrounding submarket, as well as in Chattanooga, Tennessee. We intend to leverage our expansive operations in our Atlanta Division as we scale up the R-teams in these markets.”

Russ Devendorf, Executive Vice President and Chief Financial Officer, added, “Having our capital markets transactions behind us, we are in a strong financial position and can now focus on executing our growth strategy. We finished the quarter with almost $33 million of cash, $333 million of stockholders’ equity and zero borrowings under our $250 million unsecured credit facility resulting in a negative net debt position with a net debt-to-net book capitalization of (9.4)%.”

Conference Call & Webcast Information

Management will host a conference call to discuss the Company’s results at 8:30 a.m. Eastern Time on May 14, 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: 4493724

Replay Numbers:

Toll Free - North America: (+1) 800-770-2030 Playback Passcode: 4493724 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 #36 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. 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 Annual Report on Form 10-K for the year ended December 31, 2023, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. 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

Condensed Consolidated Statements of Income

(Unaudited, in thousands, except share and per share amounts)

 

 

Three months ended March 31,

 

 

2024

 

2023

Home closing revenue

 

$

189,209

 

 

$

168,144

 

Cost of home closings

 

 

139,749

 

 

 

119,611

 

Home closing gross profit

 

 

49,460

 

 

 

48,533

 

 

 

 

 

 

 

 

Selling, general and administrative costs

 

 

27,541

 

 

 

19,794

 

Equity in income from unconsolidated entities

 

 

(184

)

 

 

(210

)

Interest expenses

 

 

698

 

 

 

245

 

Other income, net

 

 

(2

)

 

 

(122

)

Income before income taxes

 

 

21,407

 

 

 

28,826

 

Provisions for income taxes

 

 

921

 

 

 

—

 

Net income

 

20,486

 

 

$

28,826

 

Net income attributable to non-controlling interests and LLC members prior to IPO

 

 

17,514

 

 

 

 

Net income attributable to Smith Douglas Homes Corp.

 

$

2,972

 

 

 

 

 

 

 

 

 

 

 

 

 

Period from January 11, 2024 to March 31, 2024

Earnings per share:

 

 

 

 

 

 

Basic

 

$

0.34

 

 

 

 

Diluted

 

$

0.33

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

Basic

 

 

8,846,154

 

 

 

 

Diluted

 

 

51,410,397

 

 

 

 

Smith Douglas Homes

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except share and per share amounts)

 

 

March 31,

2024

December 31, 2023

Assets

 

 

 

 

Cash and cash equivalents

 

$

32,778

 

$

19,777

Real estate inventory

 

 

234,080

 

 

213,104

Deposits on real estate under option or contract

 

 

64,770

 

 

57,096

Real estate not owned

 

 

13,617

 

 

16,815

Property and equipment, net

 

 

1,634

 

 

1,543

Goodwill

 

 

25,726

 

25,726

Deferred tax asset, net

 

 

13,054

 

 

—

Other assets

 

 

15,591

 

 

18,631

Total assets

 

$

401,250

 

$

352,692

Liabilities and Stockholders’/Members’ Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

11,510

 

$

17,318

Customer deposits

 

 

8,989

 

 

7,168

Notes payable

 

 

4,247

 

 

75,627

Liabilities related to real estate not owned

 

 

13,617

 

 

16,815

Accrued expenses and other liabilities

 

 

19,371

 

 

26,861

Tax receivable agreement liability

 

 

10,401

 

 

—

Total liabilities

 

 

68,135

 

 

143,789

Commitments and contingencies (Note 15)

 

 

 

 

 

 

Members’ equity:

 

 

 

 

Class A units

 

 

—

 

 

206,303

Class C units

 

 

—

 

 

2,000

Class D units

 

 

—

 

 

600

Total members’ equity

 

 

—

 

 

208,903

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value – 10,000,000 shares authorized; none issued and outstanding as of March 31, 2024

 

 

—

 

 

—

Class A common stock, $0.0001 par value – 250,000,000 shares authorized; 8,846,154 shares issued and outstanding as of March 31, 2024

 

 

1

 

 

—

Class B common stock, $0.0001 par value – 100,000,000 shares authorized; 42,435,897 shares issued and outstanding as of March 31, 2024

 

 

4

 

 

—

Additional paid-in capital

 

 

56,746

 

 

—

Retained earnings

 

 

2,972

 

 

—

Total stockholders’ equity attributable to Smith Douglas Homes Corp.

 

 

59,723

 

 

—

Non-controlling interests attributable to Smith Douglas Holdings LLC

 

 

273,392

 

 

—

Total members’/stockholders’ equity

 

 

333,115

 

 

208,903

Total liabilities and stockholders’/members’ equity

 

$

401,250

 

$

352,692

 

 

 

 

 

 

 

Smith Douglas Homes

Summary Cash Flow Information

(unaudited, dollars in thousands)

Three months ended March 31,​

​

2024​

​

2023​​

​

​

Amount​

​

Amount​​​​

Cash (used in) provided by operating activities

 

$

(9,273

)

 

$

26,555

 

Cash (used in) provided by investing activities

 

$

(430

)

 

$

38

 

Cash provided by (used in) financing activities

 

$

22,704

 

 

$

(43,800

)

Net increase (decrease) in cash and cash equivalents

 

$

13,001

 

 

$

(17,207

)

Smith Douglas Homes

Selected Other Operating Data

(unaudited, dollars in thousands)

Three months ended March 31,​

​

2024​

 

​2023​

 

​

Period over period change

​

​

Amount​

 

​Amount​

 

​

Amount​

​

Percent

Home closings​

​

566​

 

​

500​

 

​

66​

​

13.2

%

ASP of homes closed​

​

$

334​

 

$​

336​

 

$​

(2​

)

​

(0.6

)%

Net new home orders​

​

765​

 

​

664​

 

​

101​

​

15.2

%

Contract value of net new home orders​

​

$

259,440​

 

$​

​215,118​

 

$​

44,322​

​

20.6

%

ASP of net new home orders​

​

$

339​

 

$​

​324​

 

$​

15​

​

4.6

%

Cancellation rate(1)​

​

10.6​

%

 

​

8.9​

%

 

​

1.7​

%

​

19.1

%

Backlog homes (period end)(2)​

​

1,110​

 

​

934​

 

​

176​

​

18.8

%

Contract value of backlog homes (period end)​

​

$

381,155​

 

$​

305,643​

 

$​

75,512​

​

24.7

%

ASP of backlog homes (period end)​

​

$

343​

 

​$

327​

 

​

16​

​

4.9

%

Active communities (period end)(3)​

​

70​

 

​

47​

 

​

23​

​

48.9

%

Controlled lots:​

​

​

 

​

​

 

​

​

​

Homes under construction​

​

896​

 

​

638​

 

​

258​

​

40.4

%

Owned lots​

​

693​

 

​

370​

 

​

323​

​

87.3

%

Optioned lots​

​

12,528​

 

​

6,734​

 

​

5,794​

​

86.0

%

Total controlled lots​

​

14,117​

 

​

7,742​

 

​

6,375​

​

82.3

%

[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.

Smith Douglas Homes

Selected Financial Information by Segment

(unaudited, dollars in thousands)

Three months ended March 31,

 

2024

 

2023

 

Home

closing

revenue

 

Home

closings

 

ASP of

homes

closed

 

Home

closing

revenue

 

Home

closings

 

ASP of

homes

closed

Alabama

 

$

39,655

 

 

132

 

$

300

 

$

24,067

 

 

81

 

$

297

Atlanta

 

 

62,620

 

 

183

 

 

342

 

 

76,174

 

 

235

 

 

324

Charlotte

 

 

13,464

 

 

34

 

 

396

 

 

12,502

 

 

33

 

 

379

Houston

 

 

24,030

 

 

74

 

 

325

 

 

—

 

 

—

 

 

—

Nashville

 

 

22,030

 

 

63

 

 

349

 

 

23,889

 

 

65

 

 

368

Raleigh

 

 

27,410

 

 

80

 

 

343

 

 

31,512

 

 

86

 

 

366

Total

 

$

189,209

 

 

566

 

$

334

 

$

168,144

 

 

500

 

$

336

As of March 31,

 

2024

 

2023

 

Period over period change

 

 

Backlog

homes

 

Contract

value of

backlog

homes

 

ASP of

backlog

homes

 

Backlog

homes

 

Contract

value of

backlog

homes

 

ASP of

backlog

homes

 

Backlog

homes

 

Contract

value of

backlog

homes

 

ASP of

backlog

homes

Alabama

 

 

172

 

$

52,198

 

$

303

 

 

151

 

$

43,928

 

$

291

 

 

21

 

 

$

8,270

 

 

$

12

 

Atlanta

 

 

434

 

 

151,356

 

 

349

 

 

445

 

 

140,209

 

 

315

 

 

(11

)

 

 

11,147

 

 

 

34

 

Charlotte

 

 

93

 

 

36,143

 

 

389

 

 

79

 

 

28,229

 

 

357

 

 

14

 

 

 

7,914

 

 

 

32

 

Houston

 

 

197

 

 

63,839

 

 

324

 

 

—

 

 

—

 

 

—

 

 

197

 

 

 

63,839

 

 

 

324

 

Nashville

 

 

68

 

 

25,531

 

 

375

 

 

116

 

 

42,110

 

 

363

 

 

(48

)

 

 

(16,579

)

 

 

12

 

Raleigh

 

 

146

 

 

52,088

 

 

357

 

 

143

 

 

51,167

 

 

358

 

 

3

 

 

 

921

 

 

 

(1

)

Total

 

 

1,110

 

$

381,155

 

$

343

 

 

934

 

$

305,643

 

$

327

 

 

176

 

 

$

75,512

 

 

$

16

 

Three months ended March 31,

 

2024

 

2023

 

Period over period change

Net income:

 

 

 

 

 

 

 

 

 

Alabama

 

$

4,604

 

 

$

2,241

 

 

$

2,363

 

Atlanta

 

 

14,571

 

 

 

19,549

 

 

 

(4,978

)

Charlotte

 

 

1,624

 

 

 

1,933

 

 

 

(309

)

Houston

 

 

3,366

 

 

 

—

 

 

 

3,366

 

Nashville

 

 

2,313

 

 

 

3,231

 

 

 

(918

)

Raleigh

 

 

4,810

 

 

 

7,231

 

 

 

(2,421

)

Segment total

 

 

31,288

 

 

 

34,185

 

 

 

(2,897

)

Corporate(1)

 

 

(10,802

)

 

 

(5,359

)

 

 

(5,443

)

Total

 

$

20,486

 

 

$

28,826

 

 

$

(8,340

)

(1)

Corporate primarily includes corporate overhead costs, such as payroll and benefits, business insurance, information technology, office costs, outside professional services and travel costs, and certain other amounts that are not allocated to the reportable segments.

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’/members’ 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:

As of

(in thousands, except percentages)​

​

March 31, 2024​

​

December 31, 2023​​

Notes payable​

​

$

 4,247​

​

 $

75,627​​

Stockholders’/Members’ equity​

​

 

333,115

 

 

 

208,903​​

Total capitalization​

​

$

337,362

 

 

 $

284,530​​

Debt-to-book capitalization​

​

 

1.3

%

 

 

26.6​​

%

Notes payable​

​

$

4,247

 

 

 $

75,627​​

Less: cash and cash equivalents​

​

 

32,778

 

 

 

19,777​​

Net debt​

​

 

(28,531

)

 

 

55,850​​

Stockholders’/Members’ equity​

​

 

333,115

 

 

 

208,903​​

Total net capitalization​

​

$

304,584

 

 

 

264,753​​

Net debt-to-book capitalization

 

 

(9.4

)%

 

 

21.1

%

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 25.0% 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:

Three months ended March 31,

(in thousands, except percentages)

​

​​

2024

​

​2023

Net income

​$

​​20,486

​

$

​28,826

Provision for income taxes

 

921

 

—

Income before income taxes

 

21,407

 

28,826

Tax-effected adjustments(1)

​

​​5,352

​

​7,207

Adjusted net income

​$

​​16,055

​

$

​21,619

(1)

For the year ended December 31, 2023 and 2022, our tax expenses assumes a 25.0% 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/20240513037376/en/

Investor Relations Drew Mackintosh (310) 924-9036 ir@smithdouglas.com