IPO and Capital Structure - Smith Douglas Homes Corp. issued 8,846,154 shares of Class A common stock in the IPO, generating gross proceeds of approximately $185.8 million at an IPO price of $21.00 per share[16]. - The company used net proceeds of approximately $125.2 million to purchase 6,410,257 newly issued LLC Interests from Smith Douglas Holdings LLC and $47.6 million to purchase 2,435,897 LLC Interests from Continuing Equity Owners[16]. - Smith Douglas Holdings LLC repaid approximately $84.0 million of borrowings under the Prior Credit Facility and redeemed Class C and Class D Units for $2.6 million using proceeds from the sale of LLC Interests[16]. - Continuing Equity Owners hold approximately 82.7% of the economic interest in Smith Douglas Holdings LLC, while Smith Douglas Homes Corp. holds approximately 17.3%[19]. - The Class B common stock has ten votes per share, allowing Continuing Equity Owners to maintain control over significant corporate decisions until the Sunset Date[19]. - The Tax Receivable Agreement provides for the payment of 85% of tax benefits realized by Smith Douglas Homes Corp. to the Continuing Equity Owners[501]. Financial Performance - Home closing revenue for 2024 reached $975,463, an increase of 27.6% compared to $764,631 in 2023[460]. - The cost of home closings increased to $719,921 in 2024, up from $548,304 in 2023, reflecting a rise of 31.2%[460]. - Home closing gross profit for 2024 was $255,542, compared to $216,327 in 2023, marking a gross margin improvement[460]. - Net income attributable to Smith Douglas Homes Corp. for 2024 was $16,070, with a net income of $111,829 overall, down from $123,180 in 2023[460]. - The company reported a net income of $111,829,000 for the year ended December 31, 2024, compared to $123,180,000 in 2023, reflecting a decrease of approximately 9.2%[464]. - Cash flows from operating activities decreased to $19,132,000 in 2024 from $76,257,000 in 2023, indicating a significant decline of approximately 74.9%[464]. - The total stockholders' equity increased to $401,727,000 as of December 31, 2024, up from $208,903,000 in 2023, representing a growth of approximately 92.3%[462]. - The total segment profit for the Company in 2024 was $166.728 million, compared to $149.425 million in 2023, reflecting an increase of about 11.6%[583]. Assets and Inventory - Total assets increased to $475,901 in 2024, up from $352,692 in 2023, representing a growth of 35%[459]. - Real estate inventory rose to $277,834 in 2024, compared to $213,104 in 2023, indicating a 30.4% increase[459]. - Total real estate inventory rose to $277.8 million in 2024, up from $213.1 million in 2023, representing a 30.34% increase[507]. - The company reported outstanding borrowings under its Amended Credit Facility totaling $44.0 million as of March 14, 2025[446]. Costs and Expenses - Selling, general and administrative costs for 2024 were $136,382, significantly higher than $92,442 in 2023, reflecting a 47.5% increase[460]. - Advertising expenses increased to approximately $6.8 million in 2024 from $4.8 million in 2023, reflecting a growth of 41.67%[503]. - The Company recognized $3.0 million of deferred compensation expense related to incentive compensation agreements in 2024, compared to $2.3 million in 2023[533]. - Warranty reserves increased to $3.6 million in 2024, up from $2.8 million in 2023, with additions from new home closings amounting to $1.95 million[532]. Business Model and Strategy - The company operates in multiple markets including Atlanta, Birmingham, and Houston, targeting first-time and empty-nest homebuyers[468]. - Smith Douglas Homes Corp. has adopted a land-light business model, primarily purchasing finished lots via lot-option contracts[468]. Tax and Deferred Assets - The Company recognized a deferred tax asset of $10.5 million related to the purchase of LLC Interests, with a corresponding estimated liability of $10.4 million to the Continuing Equity Owners[566]. - As of December 31, 2024, the net deferred tax asset was $10.9 million after accounting for a valuation allowance of $15.2 million[561]. - The estimated impact of the exchange of all Continuing Equity Owners' LLC Interests was an additional deferred tax asset of approximately $328.2 million[567]. Future Outlook - The company anticipates future growth and capital expenditures, with forward-looking statements subject to risks and uncertainties that may impact actual results[27]. - The Company is currently evaluating the impact of ASU 2023-09 on its financial statement disclosures, which will require expanded income tax disclosures starting in 2025[505].
Smith Douglas Homes(SDHC) - 2024 Q4 - Annual Report