UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

May 14, 2024
Date of Report (Date of earliest event reported)

Smith Douglas Homes Corp.
(Exact name of registrant as specified in its charter)


Delaware
001-41917
93-1969003
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
110 Village Trail, Suite 215
Woodstock, Georgia 30188
(Address of principal executive offices) (Zip Code)
(770) 213-8067
(Registrant’s telephone number, including area code)
 
N/A
  
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol
Name of each exchange on which registered
Class A common stock, $0.0001 par value per share
SDHC
 The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☒
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
 
Item 2.02.
Results of Operations and Financial Condition.
 
On May 14, 2024, Smith Douglas Homes Corp. (the “Company”) announced its financial results for the three months ended March 31, 2024. The full text of the press release issued by the Company in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K (the “Current Report”).

The information contained in Item 2.02 of this Current Report (including Exhibit 99.1 attached hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly provided by specific reference in such a filing.

Item 9.01.
Financial Statements and Exhibits.

(d) Exhibits

The following exhibit relates to Item 2.02 and shall be deemed to be furnished, and not filed:

Exhibit
No.
  
Description
 
Press release dated May 14, 2024
104
  
Cover Page Interactive Data File (embedded within the inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 14, 2024
SMITH DOUGLAS HOMES CORP.
    
 
By:
/s/ Russell Devendorf
   
Russell Devendorf
   
Executive Vice President and Chief Financial Officer


Exhibit 99.1

 

Smith Douglas Homes Reports First Quarter 2024 Results
 
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.

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

2
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.

3
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 expense
    
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
          

4
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).

 
v3.24.1.1.u2
Document and Entity Information
May 14, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date May 14, 2024
Entity File Number 001-41917
Entity Registrant Name Smith Douglas Homes Corp.
Entity Central Index Key 0001982518
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 93-1969003
Entity Address, Address Line One 110 Village Trail, Suite 215
Entity Address, City or Town Woodstock
Entity Address, State or Province GA
Entity Address, Postal Zip Code 30188
City Area Code 770
Local Phone Number 213-8067
Title of 12(b) Security Class A common stock, $0.0001 par value per share
Trading Symbol SDHC
Security Exchange Name NYSE
Entity Emerging Growth Company true
Entity Ex Transition Period true
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
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