Smith Douglas Homes Corp. (NYSE: SDHC) (“Smith Douglas” or the
“Company”) today announced second quarter results for the three and
six months ended June 30, 2024.
Q2 2024 Results as compared to Q2 2023:
- Net new orders increased 17% to 715
- Home closings increased 17% to 653
- Revenue increased 22% to $220.9 million
- Pre-tax income of $25.9 million
- Earnings of $0.40 per diluted share
- Backlog homes increased 19% to 1,173
- Sales value of backlog homes increased 23% to $404.7
million
- Debt-to-book capitalization of 1.1%
- Active community count increased 70% to 75 at quarter end
- Total controlled lots increased 81% to 15,842
Greg Bennett, Vice Chairman and Chief Executive Officer,
commented, “Despite ongoing affordability challenges for our
homebuyers, we have achieved another robust financial quarter due
to our team’s unwavering commitment to operational excellence,
combined with strong market demand. Our success is highlighted by a
17% year-over-year increase in closings and delivering above
industry average gross margins of 26.7% for the quarter, which
resulted in a pretax income of $25.9 million.”
Russ Devendorf, Executive Vice President and Chief Financial
Officer added, “During the quarter we have continued our prudent
capital deployment in support of growth while maintaining our
disciplined commitment to our land light strategy. We grew our
total controlled lot position by 12% for the quarter, with 96% of
our unstarted controlled lots being controlled via option
agreement. We ended the quarter with over $17 million of cash,
nearly $345 million of stockholder’s equity and zero borrowings
under our credit facility, resulting in a net-debt-to-net book
capitalization of (4.1)%.”
Conference Call & Webcast Information
Management will host a conference call to discuss the Company’s
results at 8:30 a.m. Eastern Time on August 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:
9762287
Replay Numbers: Toll Free - North America: (+1)
800-770-2030 Playback Passcode: 9762287 Replay will expire 7 days
following the event
About Smith Douglas Homes
Headquartered in Woodstock, Georgia, Smith Douglas Homes
completed its initial public offering in January 2024. Since its
inception, Smith Douglas has been entrusted by over 15,000 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, Chattanooga,
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 June 30,
Six months ended June 30,
2024
2023
2024
2023
Home closing revenue
$
220,933
$
181,522
$
410,142
$
349,666
Cost of home closings
161,875
128,824
301,624
248,435
Home closing gross profit
59,058
52,698
108,518
101,231
Selling, general and administrative
costs
31,809
21,928
59,350
41,722
Equity in income from unconsolidated
entities
(220
)
(226
)
(404
)
(436
)
Interest expense
591
301
1,289
546
Other expense (income), net
1,012
(46
)
1,010
(168
)
Income before income taxes
25,866
30,741
47,273
59,567
Provision for income taxes
1,132
—
2,053
—
Net income
24,734
$
30,741
45,220
$
59,567
Net income attributable to non-controlling
interests and LLC members prior to IPO
21,088
38,602
Net income attributable to Smith Douglas
Homes Corp.
$
3,646
$
6,618
Three months ended June 30,
2024
Period from January 11, 2024 to
June 30, 2024
Earnings per share:
Basic
$
0.41
$
0.75
Diluted
$
0.40
$
0.74
Weighted average shares of common stock
outstanding:
Basic
8,846,154
8,846,154
Diluted
51,431,974
51,414,509
Smith Douglas Homes Condensed
Consolidated Balance Sheets
June 30, 2024
December 31, 2023
(unaudited)
Assets
Cash and cash equivalents
$
17,298
$
19,777
Real estate inventory
266,553
213,104
Deposits on real estate under option or
contract
66,253
57,096
Real estate not owned
13,635
16,815
Property and equipment, net
3,351
1,543
Goodwill
25,726
25,726
Deferred tax asset, net
10,934
—
Other assets
25,504
18,631
Total assets
$
429,254
$
352,692
Liabilities and Stockholders’/Members’
Equity
Liabilities:
Accounts payable
$
21,458
$
17,318
Customer deposits
9,543
7,168
Notes payable
3,859
75,627
Liabilities related to real estate not
owned
13,635
16,815
Accrued expenses and other liabilities
25,799
26,861
Tax receivable agreement liability
10,401
—
Total liabilities
84,695
143,789
Commitments and contingencies (Note 9)
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
June 30, 2024
—
—
Class A common stock, $0.0001 par value –
250,000,000 shares authorized; 8,846,154 shares issued and
outstanding as of June 30, 2024
1
—
Class B common stock, $0.0001 par value –
100,000,000 shares authorized; 42,435,897 shares issued and
outstanding as of June 30, 2024
4
—
Additional paid-in capital
55,776
—
Retained earnings
6,321
—
Total stockholders’ equity attributable to
Smith Douglas Homes Corp.
62,102
—
Non-controlling interests attributable to
Smith Douglas Holdings LLC
282,457
—
Total members’/stockholders’ equity
344,559
208,903
Total liabilities and
stockholders’/members’ equity
$
429,254
$
352,692
Smith Douglas Homes Summary
Cash Flow Information (Unaudited, dollars in thousands)
Six months ended June 30,
2024
2023
Net cash (used in) provided by operating
activities
$
(9,234
)
$
35,902
Net cash used in investing activities
(3,153
)
(180
)
Net cash provided by (used in) financing
activities
9,908
(53,931
)
Net decrease in cash and cash
equivalents
(2,479
)
(18,209
)
Cash and cash equivalents, beginning of
period
19,777
29,601
Cash and cash equivalents, end of
period
$
17,298
$
11,392
Smith Douglas Homes Selected
Other Operating Data (Unaudited, dollars in thousands)
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Home closings
653
560
1,219
1,060
ASP of homes closed
$
338
$
324
$
336
$
330
Net new home orders
715
612
1,480
1,276
Contract value of net new home orders
$
243,842
$
206,130
$
503,282
$
421,248
ASP of net new home orders
$
341
$
337
$
340
$
330
Cancellation rate(1)
11.8
%
8.7
%
11.2
%
8.8
%
Backlog homes (period end)(2)
1,173
985
1,173
985
Contract value of backlog homes (period
end)
$
404,750
$
330,258
$
404,750
$
330,258
ASP of backlog homes (period end)
$
345
$
335
$
345
$
335
Active communities (period end)(3)
75
44
75
44
Controlled lots (period end):
Homes under construction
1,088
706
1,088
706
Owned lots
587
405
587
405
Optioned lots
14,167
7,659
14,167
7,659
Total controlled lots
15,842
8,770
15,842
8,770
(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)
Home Closing Revenue
Three months ended June 30,
2024
2023
Period over period
change
Home closing revenue
Home closings
ASP of homes
closed
Home closing revenue
Home closings
ASP of homes
closed
Home closing revenue
Home closings
ASP of homes closed
Alabama
$
43,585
145
$
301
$
18,800
66
$
285
132
%
120
%
6
%
Atlanta
80,220
231
347
94,104
302
312
(15
)%
(24
)%
11
%
Charlotte
15,352
43
357
14,369
40
359
7
%
8
%
(1
)%
Houston
31,248
95
329
—
—
—
100
%
100
%
100
%
Nashville
21,707
58
374
28,019
79
355
(23
)%
(27
)%
6
%
Raleigh
28,821
81
356
26,230
73
359
10
%
11
%
(1
)%
Total
$
220,933
653
$
338
$
181,522
560
$
324
22
%
17
%
4
%
Six months ended June 30,
2024
2023
Period over period
change
Home closing revenue
Home closings
ASP of homes
closed
Home closing revenue
Home closings
ASP of homes
closed
Home closing revenue
Home closings
ASP of
homes closed
Alabama
$
83,240
277
$
301
$
42,867
147
$
292
94
%
88
%
3
%
Atlanta
142,840
414
345
170,278
537
317
(16
)%
(23
)%
9
%
Charlotte
28,816
77
374
26,871
73
368
7
%
5
%
2
%
Houston
55,278
169
327
—
—
—
100
%
100
%
100
%
Nashville
43,737
121
361
51,908
144
360
(16
)%
(16
)%
—
%
Raleigh
56,231
161
349
57,742
159
363
(3
)%
1
%
(4
)%
Total
$
410,142
1,219
$
336
$
349,666
1,060
$
330
17
%
15
%
2
%
Backlog
As of June 30,
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
169
$
50,122
$
297
246
$
73,028
$
297
(31
)%
(31
)%
—
%
Atlanta
492
170,724
347
374
125,606
336
32
%
36
%
3
%
Charlotte
121
49,498
409
70
25,035
358
73
%
98
%
14
%
Houston
200
64,445
322
—
—
—
100
%
100
%
100
%
Nashville
52
20,681
398
129
47,346
367
(60
)%
(56
)%
8
%
Raleigh
139
49,280
355
166
59,243
357
(16
)%
(17
)%
(1
)%
Total
1,173
$
404,750
$
345
985
$
330,258
$
335
19
%
23
%
3
%
Controlled
Lots
As of June 30,
2024
2023
Period over period
change
Owned(1)
Optioned
Total Controlled
Owned(1)
Optioned
Total Controlled
Owned(1)
Optioned
Total Controlled
Alabama
355
1,420
1,775
315
1,483
1,798
13
%
(4
)%
(1
)%
Atlanta
485
7,457
7,942
338
3,384
3,722
43
%
120
%
113
%
Charlotte
144
2,021
2,165
81
1,127
1,208
78
%
79
%
79
%
Houston
384
1,390
1,774
—
—
—
100
%
100
%
100
%
Nashville
93
820
913
207
662
869
(55
)%
24
%
5
%
Raleigh
214
1,059
1,273
170
1,003
1,173
26
%
6
%
9
%
Total
1,675
14,167
15,842
1,111
7,659
8,770
51
%
85
%
81
%
(1)
Includes homes under construction and
owned lots.
Net
Income
Three months ended June
30,
Six months ended June
30,
2024
2023
Period over period
change
2024
2023
Period over period
change
Alabama
$
5,559
$
1,435
$
4,124
$
10,163
$
3,676
$
6,487
Atlanta
18,012
23,379
(5,367
)
32,583
42,928
(10,345
)
Charlotte
2,380
2,380
—
4,004
4,313
(309
)
Houston
3,446
—
3,446
6,812
—
6,812
Nashville
2,789
4,501
(1,712
)
5,102
7,732
(2,630
)
Raleigh
5,207
5,615
(408
)
10,017
12,846
(2,829
)
Segment total
37,393
37,310
83
68,681
71,495
(2,814
)
Corporate(1)
(12,659
)
(6,569
)
(6,090
)
(23,461
)
(11,928
)
(11,533
)
Total
$
24,734
$
30,741
$
(6,007
)
$
45,220
$
59,567
$
(14,347
)
(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’
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)
June 30, 2024
December 31, 2023
Notes payable
$
3,859
$
75,627
Stockholders’/ Members’ equity
344,559
208,903
Total capitalization
$
348,418
$
284,530
Debt-to-book capitalization
1.1
%
26.6
%
Notes payable
$
3,859
$
75,627
Less: cash and cash equivalents
17,298
19,777
Net debt
(13,439
)
55,850
Stockholders’/ Members’ equity
344,559
208,903
Total net capitalization
$
331,120
$
264,753
Net-debt-to-net book
capitalization
(4.1
)%
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 June
30,
Six months ended June
30,
2024
2023
2024
2023
Net income
$
24,734
$
30,741
$
45,220
$
59,567
Provision for income taxes
1,132
—
2,053
—
Income before income taxes
25,866
30,741
47,273
59,567
Tax-effected adjustments(1)
6,467
7,685
11,818
14,892
Adjusted net income
$
19,399
$
23,056
$
35,455
$
44,675
(1)
For the three months ended June 30, 2024
and 2023, 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/20240813429502/en/
Investor Relations Joe Thomas 908-399-5413
investors@smithdouglas.com
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