Smith Douglas Homes(SDHC) - 2024 Q3 - Quarterly Report

Financial Performance - Home closing revenue for the three months ended September 30, 2024, was $277.835 million, a 40.5$197.638 million in the same period of 2023[40]. - Gross profit from home closings for the same period was $73.695 million, up 29.1$57.090 million year-over-year[40]. - The company reported a net income of $37.824 million for the three months ended September 30, 2024, compared to$33.933 million in the same period of 2023, representing an increase of 11.1%[40]. - Adjusted net income for the nine months ended September 30, 2024, was $11.965 million, compared to$93.500 million in the same period of 2023[40]. - Net income for the nine months ended September 30, 2024, was $83,044,000, compared to$93,500,000 for the same period in 2023, reflecting a decrease of approximately 11%[48]. - Net income for the three months ended September 30, 2024, increased by $3.9 million, or 11$16.6 million increase in home closing gross profit[187]. - Net income attributable to Smith Douglas Homes Corp. for Q3 2024 was $5.3 million, compared to$0 in Q3 2023[170]. Revenue and Sales Metrics - For the three months ended September 30, 2024, the company closed 812 homes, generating $277.8 million in home closing revenue, reflecting increases of 39$277.8 million, a 41% increase from $197.6 million in Q3 2023, driven by a 39$688.0 million, up 26% from $547.3 million in the same period of 2023[171]. Cost and Expenses - Selling, general, and administrative costs for the three months ended September 30, 2024, were$34.137 million, up from $22.952 million in the same period of 2023, indicating a rise of 48.5$10.5 million, or 11%, primarily due to a $28.8 million increase in selling, general, and administrative costs[188]. - Interest expense increased by$0.1 million to $0.6 million for the three months ended September 30, 2024, and by$0.9 million to $1.9 million for the nine months ended September 30, 2024, primarily due to increased unused fees and amortization of deferred financing costs[181][182]. Assets and Inventory - Total assets increased to$460.050 million as of September 30, 2024, from $352.692 million at the end of 2023, reflecting a growth of 30.5$282.013 million as of September 30, 2024, compared to $213.104 million at the end of 2023, marking a 32.4$80.2 million related to land option agreements as of September 30, 2024, up from $57.1 million as of December 31, 2023, reflecting a 40.0$13,655,000, a significant decrease from $54,958,000 in the same period of 2023, indicating a decline of approximately 75$(5,936,000) for the period, compared to $1,512,000 previously[49]. - The company raised approximately$172.8 million in net proceeds from its IPO on January 16, 2024, after deducting underwriting discounts[217]. - The Amended Credit Facility has increased the aggregate principal amount of revolving credit commitments to $250.0 million and extends the maturity date to January 16, 2027[228]. Strategic Initiatives and Market Position - Future growth strategies include securing adequate inventory of lots and navigating potential risks in the housing market, as outlined in the forward-looking statements[32]. - The company operates a land-light business model, primarily targeting first-time and empty-nest homebuyers in several southeastern and southern U.S. markets[54]. - The company plans to utilize IPO proceeds to purchase newly issued LLC Interests for approximately$125.2 million and acquire additional LLC Interests from Continuing Equity Owners for $47.6 million[58]. - The company targets entry-level and empty-nest homebuyers, focusing on price points below FHA guidelines, which positions it well for future demand[159]. Operational Efficiency - The adjusted EBITDA margin for the period is not explicitly stated but is calculated based on the provided financial metrics, indicating a focus on operational efficiency[30]. - Adjusted home closing gross profit increased to$73,636,000 for the three months ended September 30, 2024, compared to $57,637,000 for the same period in 2023, reflecting a 27.7$40,335,000, compared to $35,216,000 for the same period in 2023, reflecting a 14.5% margin[210]. Compliance and Regulatory - The Company is currently evaluating the impact of ASU 2023-09 on its financial statement disclosures, effective for annual periods beginning after January 1, 2025[77]. - The Company was in compliance with all covenants related to the Amended Credit Facility as of September 30, 2024[90].