ATLANTA, May 14, 2024--(BUSINESS WIRE)--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).