Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2024 | Aug. 09, 2024 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2024 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Document Transition Report | false | |
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, $0.0001 par value per share | |
Trading Symbol | SDHC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Class A Common Stock [Member] | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 8,846,154 | |
Class B Common Stock [Member] | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 42,435,897 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
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 | 0 |
Other assets | 25,504 | 18,631 |
Total assets | 429,254 | 352,692 |
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 | 0 |
Total liabilities | 84,695 | 143,789 |
Commitments and contingencies (Note 9) | ||
Members' equity: | ||
Members' equity | 0 | 208,903 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value - 10,000,000 shares authorized; none issued and outstanding as of June 30, 2024 | 0 | 0 |
Additional paid-in capital | 55,776 | 0 |
Retained earnings | 6,321 | 0 |
Total stockholders' equity attributable to Smith Douglas Homes Corp. | 62,102 | 0 |
Non-controlling interests attributable to Smith Douglas Holdings LLC | 282,457 | 0 |
Total stockholders' equity | 344,559 | |
Total liabilities and stockholders'/members' equity | 429,254 | 352,692 |
Class A Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock | 1 | 0 |
Class B Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock | 4 | 0 |
Class A Units [Member] | ||
Members' equity: | ||
Members' equity | 0 | 206,303 |
Class C Units [Member] | ||
Members' equity: | ||
Members' equity | 0 | 2,000 |
Class D Units [Member] | ||
Members' equity: | ||
Members' equity | $ 0 | $ 600 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) | Jun. 30, 2024 $ / shares shares |
Liabilities and Stockholders'/Members' Equity | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 |
Preferred stock, shares outstanding (in shares) | 0 |
Class A Common Stock [Member] | |
Liabilities and Stockholders'/Members' Equity | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Common stock, shares authorized (in shares) | 250,000,000 |
Common stock, shares issued (in shares) | 8,846,154 |
Common stock, shares outstanding (in shares) | 8,846,154 |
Class B Common Stock [Member] | |
Liabilities and Stockholders'/Members' Equity | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 |
Common stock, shares issued (in shares) | 42,435,897 |
Common stock, shares outstanding (in shares) | 42,435,897 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Condensed Consolidated Statements of Income [Abstract] | ||||
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 | 0 | 2,053 | 0 |
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 | ||
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.41 | |||
Diluted (in dollars per share) | $ 0.4 | |||
Weighted average shares of common stock outstanding: | ||||
Basic (in shares) | 8,846,154 | |||
Diluted (in shares) | 51,431,974 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders'/Members' Equity - USD ($) $ in Thousands | Common Stock [Member] Class A Common Stock [Member] | Common Stock [Member] Class B Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Stockholders' Equity [Member] | Non-Controlling Interests [Member] | Class A Units [Member] | Class C Units [Member] | Class D Units [Member] | Total | Class A Common Stock [Member] | Class B Common Stock [Member] |
Beginning balance at Dec. 31, 2022 | $ 161,911 | $ 2,000 | $ 600 | $ 164,511 | ||||||||
Beginning balance (in units) at Dec. 31, 2022 | 111,111 | 2,000 | 600 | |||||||||
Increase (Decrease) in Members' Equity [Roll Forward] | ||||||||||||
Distributions | $ (48,078) | $ (40) | $ (54) | (48,172) | ||||||||
Net income | 59,473 | 40 | 54 | 59,567 | ||||||||
Ending balance at Jun. 30, 2023 | $ 173,306 | $ 2,000 | $ 600 | 175,906 | ||||||||
Ending balance (in units) at Jun. 30, 2023 | 111,111 | 2,000 | 600 | |||||||||
Beginning balance at Mar. 31, 2023 | $ 163,422 | $ 2,000 | $ 600 | 166,022 | ||||||||
Beginning balance (in units) at Mar. 31, 2023 | 111,111 | 2,000 | 600 | |||||||||
Increase (Decrease) in Members' Equity [Roll Forward] | ||||||||||||
Distributions | $ (20,810) | $ (20) | $ (27) | (20,857) | ||||||||
Net income | 30,694 | 20 | 27 | 30,741 | ||||||||
Ending balance at Jun. 30, 2023 | $ 173,306 | $ 2,000 | $ 600 | 175,906 | ||||||||
Ending balance (in units) at Jun. 30, 2023 | 111,111 | 2,000 | 600 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Equity, Attributable to Noncontrolling Interest | 0 | |||||||||||
Beginning balance at Dec. 31, 2023 | $ 206,303 | $ 2,000 | $ 600 | 208,903 | ||||||||
Beginning balance (in units) at Dec. 31, 2023 | 111,111 | 2,000 | 600 | |||||||||
Increase (Decrease) in Members' Equity [Roll Forward] | ||||||||||||
Distributions | $ (16,259) | (16,259) | ||||||||||
Net income | 45,220 | |||||||||||
Net loss prior to Reorganization Transactions and IPO | (1,160) | (1,160) | ||||||||||
Reorganization Transactions | $ (188,884) | |||||||||||
Reorganization Transactions (in shares) | (111,111) | |||||||||||
IPO and Related Transactions | $ 1 | $ 0 | $ 52,989 | $ 0 | $ 52,990 | $ 65,333 | $ (2,000) | $ (600) | 115,723 | |||
IPO and Related Transactions (in shares) | 8,846,154 | (2,435,897) | (2,000) | (600) | ||||||||
Ending balance at Jun. 30, 2024 | $ 0 | $ 0 | $ 0 | 0 | ||||||||
Ending balance (in units) at Jun. 30, 2024 | 0 | 0 | 0 | |||||||||
Beginning balance at Dec. 31, 2023 | 0 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Reorganization Transactions | $ 4 | 4 | 188,884 | 4 | ||||||||
Reorganization Transactions (in shares) | 44,871,794 | |||||||||||
Increase in deferred tax asset from IPO and related transactions | 858 | 858 | 858 | |||||||||
Tax distributions | 0 | (297) | (297) | (11,819) | ||||||||
Equity-based compensation | 1,929 | 1,929 | 1,929 | |||||||||
Net income subsequent to Reorganization Transactions and IPO | 6,618 | 6,618 | 39,762 | 46,380 | ||||||||
Ending balance (in shares) at Jun. 30, 2024 | 8,846,154 | 42,435,897 | 8,846,154 | 42,435,897 | ||||||||
Ending balance at Jun. 30, 2024 | $ 1 | $ 4 | 55,776 | 6,321 | 62,102 | 62,102 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Equity, Attributable to Noncontrolling Interest | 273,392 | |||||||||||
Equity, Including Portion Attributable to Noncontrolling Interest | 333,115 | |||||||||||
Beginning balance at Mar. 31, 2024 | $ 0 | $ 0 | $ 0 | |||||||||
Beginning balance (in units) at Mar. 31, 2024 | 0 | 0 | 0 | |||||||||
Increase (Decrease) in Members' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 0 | 3,646 | 3,646 | 21,088 | $ 0 | $ 0 | $ 0 | 24,734 | ||
IPO and Related Transactions | $ 0 | $ 0 | (104) | 0 | (104) | (501) | $ 0 | $ 0 | (605) | |||
IPO and Related Transactions (in shares) | 0 | 0 | 0 | 0 | ||||||||
Ending balance at Jun. 30, 2024 | $ 0 | $ 0 | $ 0 | 0 | ||||||||
Ending balance (in units) at Jun. 30, 2024 | 0 | 0 | 0 | |||||||||
Beginning balance at Mar. 31, 2024 | $ 1 | $ 4 | 56,746 | 2,972 | 59,723 | |||||||
Beginning balance (in shares) at Mar. 31, 2024 | 8,846,154 | 42,435,897 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Increase in deferred tax asset from IPO and related transactions | (1,903) | (1,903) | (1,903) | |||||||||
Tax distributions | 0 | (297) | (297) | (11,522) | (11,819) | |||||||
Equity-based compensation | 1,037 | 1,037 | 1,037 | |||||||||
Ending balance (in shares) at Jun. 30, 2024 | 8,846,154 | 42,435,897 | 8,846,154 | 42,435,897 | ||||||||
Ending balance at Jun. 30, 2024 | $ 1 | $ 4 | $ 55,776 | $ 6,321 | $ 62,102 | 62,102 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Equity, Attributable to Noncontrolling Interest | $ 282,457 | 282,457 | ||||||||||
Equity, Including Portion Attributable to Noncontrolling Interest | $ 344,559 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Cash flows from operating activities: | ||
Net income | $ 45,220 | $ 59,567 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation | 709 | 503 |
Accrued incentive compensation expense | 1,292 | 755 |
Share-based payment expense | 1,929 | 0 |
Amortization of debt issuance costs | 512 | 339 |
Equity in earnings from unconsolidated entities | (404) | (436) |
Distributions of income from unconsolidated entities | 441 | 462 |
Noncash lease expense | 278 | 228 |
Provision for deferred income taxes | 325 | 0 |
Other | 36 | 15 |
Changes in assets and liabilities: | ||
Real estate inventory | (50,269) | (21,310) |
Deposits on real estate under option or contract | (9,157) | (2,725) |
Other assets | (4,619) | 2,704 |
Accounts payable | 4,140 | (247) |
Customer deposits | 2,375 | 22 |
Accrued expenses and other liabilities | (2,042) | (3,975) |
Net cash (used in) provided by operating activities | (9,234) | 35,902 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (2,573) | (486) |
Investments in unconsolidated entities | (600) | 0 |
Distributions of capital from unconsolidated entities | 0 | 286 |
Other | 20 | 20 |
Net cash used in investing activities | (3,153) | (180) |
Cash flows from financing activities: | ||
Issuance of Class A Common stock in IPO, net of underwriting discount | 172,765 | 0 |
Issuance of Class B common stock | 4 | 0 |
Payment of offering costs | (6,869) | 0 |
Redemption of Class C and D units | (2,600) | 0 |
Purchase of LLC interests from Continuing Equity Owners | (47,573) | 0 |
Borrowings under revolving credit facility | 24,000 | 43,000 |
Repayments under revolving credit facility | (95,000) | (48,000) |
Payments on notes payable | (772) | (3) |
Payments on notes payable - related party | (938) | (47) |
Proceeds from sales of real estate not owned | 4,890 | 1,044 |
Payments related to repurchases of real estate not owned | (8,070) | (1,753) |
Distributions | (28,078) | (48,172) |
Payment of debt issuance costs | (1,851) | 0 |
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 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest, net of amounts capitalized | 935 | 289 |
Cash paid for income taxes | 1,800 | 0 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 630 | $ 0 |
Description of business and sum
Description of business and summary of significant accounting policies | 6 Months Ended |
Jun. 30, 2024 | |
Description of business and summary of significant accounting policies [Abstract] | |
Description of business and summary of significant accounting policies | Note 1 - Description of business and summary of significant accounting policies: Nature of business Smith Douglas Homes Corp. (the Company) was incorporated in the state of Delaware on June 20, 2023 (Date of Formation) for the purpose of facilitating an initial public offering (IPO) of its common stock and executing other related transactions in order to carry on the business of Smith Douglas Holdings LLC and its consolidated subsidiaries as a publicly-traded entity. The Company is a builder of single-family homes in communities in certain markets in the southeastern and southern United States. The Company’s homes and communities are primarily targeted to first-time and empty-nest homebuyers. The Company currently operates in metropolitan Atlanta, Birmingham, Charlotte, Huntsville, Nashville, Raleigh and Houston. The Company operates a land-light business model whereby the Company typically purchases finished lots via lot-option contracts from various third-party land developers or land bankers. Additionally, the Company offers title insurance services through an unconsolidated title company. Initial Public Offering and Reorganization Transactions The Company successfully closed an IPO of 8,846,154 shares of Class A common stock at a public offering price of $21.00 per share on January 16, 2024, which included 1,153,846 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. The net proceeds from the IPO aggregated approximately $172.8 million. Shares of Class A common stock began trading on the New York Stock Exchange under the ticker symbol "SDHC" on January 11, 2024. In connection with the IPO, Smith Douglas Holdings LLC amended and restated its existing limited liability company agreement to, among other things, (i) recapitalize all existing ownership interests in Smith Douglas Holdings LLC into 44,871,794 LLC Interests (before giving effect to the use of proceeds from the IPO, as described below), (ii) appoint Smith Douglas Homes Corp. as the sole managing member of Smith Douglas Holdings LLC upon its acquisition of LLC Interests in connection with the IPO, and (iii) provide certain redemption rights to the owners of the LLC Interests in Smith Douglas Holdings LLC, exclusive of the Company (the Continuing Equity Owners). Simultaneously, Smith Douglas Homes Corp. amended and restated its certificate of incorporation to, among other things, provide (i) for Class A common stock, with each share of Class A common stock entitling its holder to one vote per share on all matters presented to the stockholders generally; (ii) for Class B common stock, with each share of Class B common stock entitling its holder to ten votes per share on all matters presented to the stockholders generally, until the aggregate number of shares of Class B common stock then outstanding is less than 10% of the aggregate number of shares of Class A common stock and Class B common stock then outstanding (Sunset Date), and from and after the occurrence of the Sunset Date, each share of Class B common stock will entitle its holder to one vote per share on all matters presented to the stockholders generally; (iii) that shares of Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees; and (iv) for preferred stock, which can be issued by the board of directors in one or more series without stockholder approval. As a result, Smith Douglas Homes Corp. became a holding company and the sole managing member of Smith Douglas Holdings LLC and controls the business and affairs of Smith Douglas Holdings LLC. After giving effect to the use of net proceeds as described below, Smith Douglas Homes Corp. issued 42,435,897 shares of Class B common stock to the Continuing Equity Owners, which is equal to the number of LLC Interests held by such Continuing Equity Owners, for nominal consideration. Subsequent to the IPO, Smith Douglas Homes Corp. used the net proceeds to: (i) purchase 6,410,257 newly issued LLC Interests for approximately $125.2 million directly from Smith Douglas Holdings LLC at a price per unit equal to $21.00 per share (IPO price) of Class A common stock less the underwriting discount; and (ii) purchase 2,435,897 LLC Interests from the Continuing Equity Owners on a pro rata basis for $47.6 million in aggregate at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount. Basis of presentation In accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), since the Continuing Equity Owners continue to hold a controlling interest in Smith Douglas Holdings LLC after the IPO (i.e., there was no change in control of Smith Douglas Holdings LLC), the financial statements of the combined entity represent a continuation of the financial position and results of operations of Smith Douglas Holdings LLC. Accordingly, the historical cost basis of assets, liabilities, and equity of Smith Douglas Holdings LLC are carried over to the unaudited condensed consolidated financial statements of the combined company as a common control transaction. The accompanying unaudited condensed consolidated financial statements for the periods prior to the Reorganization Transactions and IPO have been presented to combine the previously separate entities. These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and the applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. As such, these financial statements do not include all information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations and cash flows as of the dates and for the periods presented. A reclassification to the unaudited condensed consolidated financial statements and notes has been made to the prior year amount to conform to the current year presentation, which is not material. These unaudited interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Historically, the homebuilding industry has experienced seasonal fluctuations; therefore, interim results are not necessarily indicative of results for the full fiscal year. Principles of consolidation and non-controlling interests The accompanying unaudited condensed consolidated financial statements include the accounts of Smith Douglas Homes Corp. and Smith Douglas Holdings LLC and its wholly-owned subsidiaries. Smith Douglas Holdings LLC is considered a variable interest entity and Smith Douglas Homes Corp. is the primary beneficiary and sole managing member of Smith Douglas Holdings LLC and has decision making authority that significantly affects the performance of the entity. Accordingly, the Company consolidates Smith Douglas Holdings LLC and reports non-controlling interests representing the economic interest in Smith Douglas Holdings LLC held by the Continuing Equity Owners. All intercompany balances and transactions have been eliminated in consolidation. Investments in unconsolidated entities in which the Company has less than a controlling financial interest are accounted for using the equity method. The non-controlling interests in the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2024 represent the portion of earnings attributable to the economic interest in Smith Douglas Holdings LLC held by the Continuing Equity Owners. The non-controlling interests in the unaudited condensed consolidated balance sheet as of June 30, 2024 represent the portion of the net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders. As of June 30, 2024, the non-controlling interests were 82.7%. Use of estimates in the preparation of unaudited condensed consolidated financial statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Business combination On July 31, 2023, the Company acquired substantially all of the assets of Devon Street Homes, L.P. (Devon Street) and accounted for the transaction as a business combination in accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations Revenue recognition The Company recognizes revenue when a home closes with a homebuyer, which is the time at which title and possession of the property are transferred to that homebuyer and all cash consideration due from the homebuyer is received. The Company’s performance obligation, to deliver the home, is generally satisfied in less than one year from the original contract date. When the Company executes sales contracts with its homebuyers, or when it requires advance payment from homebuyers for custom changes, upgrades or options related to their homes, the cash deposits received are recorded as contract liabilities until the homes are closed or the contracts are canceled. The Company either retains or refunds to the customer deposits on canceled sales contracts, depending upon the applicable provisions of the contract or other circumstances. As of June 30, 2024 and December 31, 2023, customer deposits totaled $9.5 million and $7.2 million, respectively. Substantially all customer deposits are recognized in revenue within one year of being received from homebuyers. Share-based payments Share-based compensation is accounted for as an expense in accordance with the fair value recognition and measurement provisions of U.S. GAAP which requires compensation cost for the grant-date fair value of equity-based awards to be recognized over the requisite service period. The Company accounts for forfeitures when they occur, and any compensation expense previously recognized on unvested equity-based awards will be reversed when forfeited. The fair value of restricted stock units (RSUs) is based on the fair value of the Class A common stock at the time of grant. Income taxes After consummation of the IPO, Smith Douglas Homes Corp. became subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of Smith Douglas Holdings LLC assessed at the prevailing corporate tax rates. Smith Douglas Holdings LLC operates as a limited liability company and is treated as a partnership for income tax purposes. Accordingly, it incurs no significant liability for federal or state income taxes since the taxable income or loss is passed through to its members. Smith Douglas Holdings LLC incurs liabilities for certain state taxes payable directly by it, which are not significant and for which the expense is included in the provision for income taxes in the accompanying unaudited condensed consolidated statements of income for the three and six months ended June 30, 2024 and in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income for the three and six months ended June 30, 2023. In calculating the provision for interim income taxes, in accordance with ASC Topic 740, Income Taxes For annual periods, income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. As of June 30, 2024 and December 31, 2023, there were no known items which would result in a significant accrual for uncertain tax positions. Tax receivable agreement In connection with the IPO and related transactions, the Company entered into a Tax Receivable Agreement (TRA) with Smith Douglas Holdings LLC and the Continuing Equity Owners that will provide for the payment by Smith Douglas Homes Corp. to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that Smith Douglas Homes Corp. realizes (or in some circumstances is deemed to realize) related to the tax basis adjustments described in Note 12 as such savings are realized. In addition to tax expenses, the Company will also make payments under the TRA, which are expected to be significant. The Company will account for the income tax effects and corresponding TRA’s effects resulting from future taxable purchases or redemptions of LLC Interests of the Continuing Equity Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of the purchase or redemption. Further, the Company will evaluate the likelihood that it will realize the benefit represented by the deferred tax asset and, to the extent that management estimates that it is more likely than not that the Company will not realize the benefit, the Company will reduce the carrying amount of the deferred tax asset with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for obligations under the TRA will be estimated at the time of any purchase or redemption as a reduction to stockholders’ equity, and the effects of changes in any estimates after this date will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. Judgement is required in assessing the future tax consequences of events that have been recognized in the Company’s financial statements. A change in the Company’s assessment of such consequences, such as realization of deferred tax assets, changes in tax laws or interpretations thereof could materially impact results. Recent rules and accounting pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" (ASU 2023-07), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis. ASU 2023-07 is effective for the Company for annual periods beginning after January 1, 2024 and interim periods beginning after January 1, 2025. The Company is currently evaluating the impact ASU 2023-07 will have on its financial statement disclosures. In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (ASU 2023-09), which requires expanded disclosure of the Company’s income rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company for annual periods beginning after January 1, 2025. The Company is currently evaluating the impact ASU 2023-09 will have on its financial statement disclosures. In March 2024, the SEC adopted the final rules that will require certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. The new rules include a requirement to disclose material climate-related risks, descriptions of board oversight and risk management activities, the material impacts of these risks on a registrants' strategy, business model and outlook, and any material climate-related targets or goals, as well as material effects of severe weather events and other natural conditions and greenhouse gas emissions. Prior to the stay in the new rules, they would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosure which would have been effective for annual periods beginning January 1, 2026. The Company is currently evaluating the impact of these rules on its disclosures. |
Real estate inventory and capit
Real estate inventory and capitalized interest | 6 Months Ended |
Jun. 30, 2024 | |
Real estate inventory and capitalized interest [Abstract] | |
Real estate inventory and capitalized interest | Note 2 ‑ Real estate inventory and capitalized interest: A summary of real estate inventory is as follows as of June 30, 2024 and December 31, 2023 (in thousands): June 30, 2024 December 31, 2023 Lots held for construction $ 37,881 $ 32,184 Homes under construction, completed homes and model homes 228,672 180,920 Total real estate inventory $ 266,553 $ 213,104 The Company capitalizes into real estate inventory interest costs incurred on homes under construction during the construction period until substantial completion. The Company does not capitalize interest on homes where construction has been suspended. A summary of capitalized interest is as follows (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Capitalized interest, beginning of period $ 858 $ 805 $ 1,338 $ 1,117 Interest incurred 893 530 1,832 1,066 Interest expensed (591 ) (301 ) (1,289 ) (546 ) Interest charged to cost of home closings (333 ) (352 ) (1,054 ) (955 ) Capitalized interest, end of period $ 827 $ 682 $ 827 $ 682 |
Variable interest entities
Variable interest entities | 6 Months Ended |
Jun. 30, 2024 | |
Variable interest entities [Abstract] | |
Variable interest entities | Note 3 ‑ Variable interest entities: The Company enters into lot option agreements to procure finished lots for the construction of homes in the future. Pursuant to these option agreements, the Company generally provides a deposit to the seller as consideration for the right to purchase lots at different times in the future at predetermined prices. Such contracts enable the Company to defer acquiring portions of properties owned by third parties or unconsolidated entities until the Company has determined whether and when to exercise the option, which may serve to reduce the Company’s financial risks associated with long‑term land holdings. Based on the provisions of the relevant accounting guidance, the Company has concluded that when it enters into an option or purchase agreement to acquire lots from an entity, a variable interest entity (VIE) may be created. The Company evaluates all option and purchase agreements and amendments for land to determine if the related entity is a VIE. As required by ASC Topic 810, Consolidation In all cases, creditors of the entities with which the Company has option agreements have no recourse against the Company and the maximum exposure to loss in option agreements is limited to the Company’s option deposits and any capitalized pre‑acquisition costs. In certain instances where the Company has entered into option agreements to purchase finished lots from a land banker, the Company may also enter into an agreement to complete the development of the lots on behalf of the land banker at a fixed cost. The Company may be at risk for items over budget related to the development of the property under option. Any unpaid amounts under these development agreements are recorded as development reimbursement receivables from land bankers and are included within other assets in the accompanying unaudited condensed consolidated balance sheets. As of June 30, 2024, the Company had deposits of $66.3 million related to land option agreements with an aggregate remaining purchase price of $834.4 million. As of December 31, 2023, the Company had deposits of $57.1 million related to land option agreements with an aggregate remaining purchase price of $652.1 million. For lot option contracts where the lot seller entity is not required to be consolidated under the variable interest model, the Company considers whether such contracts should be accounted for as financing arrangements. Lot option contracts that may be considered financing arrangements include those entered into with third‑party land banks or developers in conjunction with such third parties acquiring a specific land parcel(s) on the Company’s behalf, at the Company’s direction, and those with other landowners where the Company or its designee makes improvements to the optioned land parcel(s) during the applicable option period. For these lot option contracts, the Company records the remaining purchase price of the associated land parcel(s) in inventory in its consolidated balance sheets with a corresponding financing obligation if the Company determines that it is effectively compelled to exercise the option to purchase the land parcel(s). In making this determination with respect to a land option contracts, the Company considers the non‑refundable deposit(s), any capitalized pre‑acquisition costs and additional costs associated with abandoning the contract. As a result of such evaluations of lot option contracts, no lot option contracts were determined to be financing arrangements for which the remaining purchase price should be recorded as a financing obligation in the accompanying unaudited condensed consolidated balance sheets. |
Investments in unconsolidated e
Investments in unconsolidated entities | 6 Months Ended |
Jun. 30, 2024 | |
Investments in unconsolidated entities [Abstract] | |
Investments in unconsolidated entities | Note 4 ‑ Investments in unconsolidated entities: The Company has non‑controlling equity interests in various entities for which the Company applies the equity method of accounting. The Company’s proportionate share of the entities’ income was approximately $0.2 million and $0.4 million during the three and six months ended June 30, 2024, respectively, and approximately $0.2 million and $0.4 million during the three and six months ended June 30, 2023, respectively. The entities distributed approximately $0.2 million and $0.4 million to the Company during the three and six months ended June 30, 2024, respectively, and approximately $0.3 million and $0.7 million to the Company during the three and six months ended June 30, 2023, respectively. The Company contributed approximately $0.6 million to the entities during the three and six months ended June 30, 2024. Investments in unconsolidated entities totaled approximately $0.7 million and $0.1 million as of June 30, 2024 and December 31, 2023, respectively, and are included within other assets in the accompanying unaudited condensed consolidated balance sheets. |
Notes payable
Notes payable | 6 Months Ended |
Jun. 30, 2024 | |
Notes payable [Abstract] | |
Notes payable | Note 5 – Notes payable: As of June 30, 2024, the Company has a $250.0 million unsecured revolving credit facility that was entered into concurrently with the IPO (the Amended Credit Facility), which replaced the previous $175.0 million unsecured revolving credit facility. The Amended Credit Facility matures in January 2027 The borrowings and letters of credit outstanding under the Amended Credit Facility may not exceed the borrowing base as defined in the Amended Credit Facility. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company. Borrowings under the Amended Credit Facility bear interest, at the borrower’s option, at either a base rate or Secured Overnight Financing Rate (which may be a daily simple rate or based on 1-, 3- or 6-month interest periods, in each case at the borrower’s option), plus an applicable margin. The applicable margin ranges from 2.35% to 3.00% based on the Company’s leverage ratio as determined in accordance with a pricing grid defined in the Amended Credit Facility. Interest is payable in arrears on the last business day of each month or at the end of each 1-, 3- or 6-month interest period, as applicable. As of June 30, 2024, the interest rate on outstanding borrowings under the Amended Credit Facility was 7.76%. Borrowings under the previous credit facility bore interest at the Prime Rate, as defined, plus an applicable margin ranging from minus 25 basis points to 20 basis points based on the Company’s leverage ratio as determined in accordance with a pricing grid. As of December 31, 2023, the interest rate on outstanding borrowings was 8.25%. The Amended Credit Facility contains certain financial covenants, including requirements to maintain (i) a minimum tangible net worth equal to the sum of (a) $130.0 million, (b) 32.5% of pre‑tax income earned in any fiscal quarter after June 30, 2023, (c) 75% of the equity proceeds of Smith Douglas Homes Corp. from the IPO and (d) 50% of any new equity proceeds of Smith Douglas Homes Corp. and its subsidiaries after the IPO, (ii) a maximum leverage ratio of 60%, (iii) a minimum ratio of EBITDA to interest incurred of 2.00 to 1.00, and (iv) a minimum liquidity requirement of $15.0 million. The Amended Credit Facility also contains various covenants that, among other restrictions, limit the ability of Smith Douglas Homes LLC and the other borrowers to incur additional debt and to make certain investments and distributions. Additionally, the Amended Credit Facility contains certain covenants that restricts certain activities of Smith Douglas Homes Corp. The Amended Credit Facility also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations. If an event of default occurs and is continuing, the borrowers may be required to immediately repay all amounts outstanding under the Amended Credit Facility. As of June 30, 2024, the Company was in compliance with all covenants related to the Amended Credit Facility. As of June 30, 2024, there were no outstanding borrowings under the Amended Credit Facility. As of December 31, 2023, outstanding borrowings under the previous credit facility totaled $71.0 million. As of June 30, 2024 and December 31, 2023, there were no outstanding letters of credit. Availability as determined in accordance with the Borrowing Base, as defined, totaled approximately $219.8 million as of June 30, 2024. On July 31, 2023, the Company entered into a three-year seller note payable of $5.0 million as part of the consideration for the acquisition of Devon Street which bears interest at 8% per annum. The seller note is payable in quarterly installments of principal and accrued interest beginning September 30, 2023 through maturity on September 30, 2026. The seller is currently employed as the division president of the Houston division. As of June 30, 2024 and December 31, 2023, the balance on the seller note payable was $3.9 million and $4.6 million, respectively, which is included in notes payable in the accompanying unaudited condensed consolidated balance sheets. The Company also has loans payable to banks collateralized by vehicles purchased from the proceeds of the loans with an outstanding balance of $5,000 and $8,000 as of June 30, 2024 and December 31, 2023, respectively, which are included in accrued expenses and other liabilities in the accompanying unaudited condensed consolidated balance sheets. Future maturities of notes payable to third parties, including borrowings under the Amended Credit Facility, are as follows as of June 30, 2024 (in thousands): Year ending December 31, 2024 (1) $ 799 2025 1,696 2026 1,364 $ 3,859 (1) Remaining payments are for the six months ending December 31, 2024. |
Fair value of financial instrum
Fair value of financial instruments | 6 Months Ended |
Jun. 30, 2024 | |
Fair value of financial instruments [Abstract] | |
Fair value of financial instruments | Note 6 ‑ Fair value of financial instruments: ASC Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and disclosing fair value measurements. ASC Topic 820 establishes a three‑level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. • Level 1 ‑ Valuation is based on quoted prices in active markets for identical assets and liabilities; • Level 2 ‑ Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model‑based techniques in which all significant inputs are observable in the market; • Level 3 ‑ Valuation is derived from model‑based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s assessment of the significance of particular inputs to those fair value measurements requires judgment and considers factors specific to each asset or liability. The Company’s financial instruments measured or disclosed at fair value are summarized below. The summary excludes cash and cash equivalents, receivables and accounts payable, all of which had fair values approximating their carrying values due to the liquid nature and short maturities of these instruments. Fair Value (In Thousands) Asset or Liability Fair Value Hierarchy June 30, 2024 December 31, 2023 Measured at fair value on a recurring basis: Contingent consideration Level 3 $ 4,590 $ 3,282 Disclosed at fair value: Borrowings under Credit Facility Level 2 $ — $ 71,000 Seller note payable Level 2 $ 3,859 $ 4,627 The carrying value of the borrowings under the Credit Facility approximates fair value due to variable rate terms that approximate market rates. The carrying value of the seller note payable approximates fair value because the interest rate on the note approximates market rates as of June 30, 2024 and December 31, 2023. The fair value of the contingent consideration related to the Devon Street acquisition as of the acquisition date was estimated using a Monte Carlo simulation to model the likelihood of achieving the agreed‑upon gross margin target based on available information as of the acquisition date. The valuation methodology includes assumptions and judgments regarding the gross margin discount rate, gross margin volatility, drift rate, and cost of debt, which are primarily Level 3 assumptions. The contingent consideration liability is remeasured at fair value on a quarterly basis. As of June 30, 2024 and December 31, 2023, the Company remeasured the fair value of contingent consideration related to the Devon Street acquisition and adjusted the liability to $4.6 million and $3.3 million, respectively, based on actual results achieved, revised gross margin forecasts, and accretion of the liability. The Company recorded contingent consideration adjustments resulting in $1.2 million of expense and $1.3 million of expense for the three and six months ended June 30, 2024, respectively, which is included in other expense (income), net in the accompanying unaudited condensed consolidated statement of income. As of June 30, 2024, there were approximately 8 months remaining under the contingent consideration agreement. |
Warranty reserves
Warranty reserves | 6 Months Ended |
Jun. 30, 2024 | |
Warranty reserves [Abstract] | |
Warranty reserves | Note 7 ‑ Warranty reserves: A summary of the activity in the Company’s warranty liability account is as follows (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Balance, beginning of period $ 2,978 $ 2,257 $ 2,839 $ 2,071 Additions to reserves from new home closings 437 362 819 698 Warranty claims (99 ) (202 ) (242 ) (331 ) Adjustments to pre‑existing reserves (212 ) (34 ) (312 ) (55 ) Balance, end of period $ 3,104 $ 2,383 $ 3,104 $ 2,383 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
Leases | Note 8 ‑ Leases: The Company leases certain office space and equipment for use in its operations. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some leases contain renewal options and, in accordance with ASC Topic 842, Leases, Lease cost included in the accompanying unaudited condensed consolidated statements of income as a component of selling, general and administrative costs is presented in the table below (in thousands). Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Operating leases costs $ 170 $ 143 $ 339 $ 286 Variable lease costs - operating $ 74 $ 48 $ 110 $ 88 The following table presents additional information about the Company’s leases (dollars in thousands): June 30, December 31, 2023 Right-of-use (ROU) assets $ 2,141 $ 1,789 Lease liabilities $ 2,217 $ 1,837 ROU assets are included within other assets and lease liabilities are included within accrued expenses and other liabilities in the accompanying unaudited condensed consolidated balance sheets. As of June 30, 2024, the Company had additional operating leases, primarily for division office space, that had not yet commenced with undiscounted fixed lease payments of approximately $1.1 million. These operating leases will commence in 2024 with lease terms ranging from 2 to 6 years. |
Commitments and contingencies
Commitments and contingencies | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and contingencies [Abstract] | |
Commitments and contingencies | Note 9 ‑ Commitments and contingencies: The Company is subject to certain contingent liabilities resulting from litigation, claims, and other commitments which arise in the ordinary course of business. Management and legal counsel believe that the probable resolution of such contingencies will not materially affect the financial position, results of operations, or cash flows of the Company. In the normal course of business, the Company posts letters of credit and performance and other surety bonds related to certain development obligations with local municipalities, government agencies and developers. As of June 30, 2024 and December 31, 2023, performance and surety bonds totaled $33.0 million and $26.1 million, respectively. As of June 30, 2024 and December 31, 2023, there were no outstanding letters of credit. |
Stockholders'_ Members' equity
Stockholders'/ Members' equity | 6 Months Ended |
Jun. 30, 2024 | |
Stockholders'/ Members' equity [Abstract] | |
Stockholders'/ Members' equity | Note 10 - Stockholders’/ Members’ equity: The following table summarizes the capitalization and voting rights of the Company’s classes of stock as of June 30, 2024: Authorized Issued & Outstanding Votes per share Economic Rights Preferred stock 10,000,000 None Common stock: Class A 250,000,000 8,846,154 1 Yes Class B 100,000,000 42,435,897 10 (1) No (1) Each share of Class B common stock entitles its holders to ten votes per share on all matters presented to the stockholders and on which the holders of the Class B common stock are entitled to vote; provided, that each share of Class B common stock will only be entitled to one vote per share on all matters presented to the stockholders generally upon the Sunset Date. The following table summarizes Class A common stock reserved for issuances as of June 30, 2024: Conversion of LLC Interests held by Continuing Equity Owners 42,435,897 RSUs 2,051,282 Total 44,487,179 The Company’s board of directors is authorized to direct the Company to issue shares of preferred stock in one or more series and the discretion to determine the number and designation of such series and the powers, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Through June 30, 2024, no series of preferred stock have been issued. Holders of shares of Class A common stock are entitled to receive dividends when and if declared by the board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Upon dissolution or liquidation, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A common stock will be entitled to receive pro rata the remaining assets available for distribution. Holders of shares of Class A common stock do not have preemptive, subscription, redemption, or conversion rights. There are no redemption or sinking fund provisions applicable to the Class A common stock. Except in certain limited circumstances, holders of Class B common stock do not have any right to receive dividends or to receive a distribution upon dissolution or liquidation. Additionally, holders of shares of Class B common stock do not have preemptive, subscription or redemption rights. There are no redemption or sinking fund provisions applicable to the Class B common stock. Any amendment of the Company’s amended and restated certificate of incorporation that gives holders of Class B common stock (1) any rights to receive dividends or any other kind of distribution, (2) any right to convert into or be exchanged for shares of Class A common stock, or (3) any other economic rights (except for payments in cash in lieu of receipt of fractional stock) will require, in addition to any stockholder approval required by applicable law, the affirmative vote of holders of a majority of the voting power of the outstan d ing shares of Class A common stock voting separately as a class. The Company must, at all times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock issued by Smith Douglas Homes Corp. and the number of LLC Interests owned by Smith Douglas Homes Corp., and (ii) maintain a one-to-one ratio between the number of shares of Class B common stock owned by the Continuing Equity Owners and the number of LLC Interests owned by them. Shares of Class B common stock will be issued in the future only to the extent necessary to maintain a one-to-one ratio between the number of LLC Interests held by the Continuing Equity Owners and the number of shares of Class B common stock issued to the Continuing Equity Owners. Shares of Class B common stock are transferable only together with an equal number of LLC Interests. Only permitted transferees of LLC Interests held by the Continuing Equity Owners will be permitted transferees of Class B common stock. Shares of Class B common stock automatically transferred to Smith Douglas Homes Corp. upon the redemption or exchange of their LLC Interests pursuant to the terms of the Smith Douglas LLC Agreement will be canceled and may not be reissued. As of June 30, 2024, Smith Douglas Homes Corp. holds a 17.3% economic interest in Smith Douglas Holdings LLC through its ownership of 8,846,154 LLC Interests but consolidates Smith Douglas Holdings LLC as sole managing member. The remaining 42,435,897 LLC Interests representing an 82.7% interest are held by the Continuing Equity Owners and presented in the unaudited condensed consolidated financial statements as non-controlling interests. The LLC Interests held by Continuing Equity Owners include a redemption right which may be settled by the Company, at the Company’s election, through the (1) issuance of a new share of Class A Common Stock for each LLC Interest redeemed or (2) settled by cash proceeds received from a qualifying offering of Class A Common Stock. The LLC Interests are not classified as temporary equity as the cash settlement is limited to the proceeds from a new offering of Class A Common Stock which is equity-classified. Distributions to Members Related to Their Income Tax Liabilities As a limited liability company treated as a partnership for income tax purposes, Smith Douglas Holdings LLC does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. Under the LLC Agreement, Smith Douglas Holdings LLC is required to distribute cash, to the extent that Smith Douglas Holdings LLC has cash available, on a pro rata basis to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to each member’s share of Smith Douglas Holdings LLC taxable earnings. Smith Douglas Holdings LLC makes such tax distributions to its members quarterly, based on an estimated tax rate and projected year-to-date taxable income, with a final accounting once actual taxable income or loss has been determined. Smith Douglas Holdings LLC made tax distributions to the Continuing Equity Owners totaling approximately $11.8 million and $26.3 million for the three and six months ended June 30, 2024, respectively. Redemption of Class C & Class D Units On January 16, 2024, after the IPO, Smith Douglas Holdings LLC redeemed all of its Class C and Class D Units at an aggregate redemption price of $2.6 million. |
Share-based payments
Share-based payments | 6 Months Ended |
Jun. 30, 2024 | |
Share-based payments [Abstract] | |
Share-based payments | Note 11 - Share-based payments: In connection with the IPO, the stockholders approved the 2024 Incentive Award Plan (the 2024 Plan), which became effective on January 10, 2024. The 2024 Plan generally is administered by the board of directors of with respect to awards to non-employee directors and by the compensation committee with respect to other participants and authorizes the Company to grant incentive stock-based awards. Under the 2024 Plan, 2,051,282 shares of Class A common stock were initially reserved for issuance, which shares may be granted pursuant to a variety of equity-based compensation awards, including stock options, stock appreciation rights, RSUs, and other equity-based awards. The number of shares initially reserved for issuance pursuant to awards under the 2024 Plan includes an annual increase on the first day of each calendar year beginning on January 1, 2025 and ending on January 1, 2034, equal to (a) a number of shares of Class A common stock equal to 1% of the aggregate number of shares of Class A and Class B common stock outstanding on the last day of the immediately preceding calendar year or (b) such smaller number of shares of Class A common stock as determined by the board of directors. No more than 10,000,000 shares of Class A common stock may be issued upon the exercise of incentive stock options. As of June 30, 2024, 1,613,310 shares of Class A common stock are available for future grant under the 2024 Plan. In January 2024, the Company granted an aggregate of 440,727 RSUs to certain of the Company’s executives, directors, and employees under the 2024 Plan with an aggregate grant date fair value of $9.3 million. The awards vest in full upon the one-year anniversary of the closing date of the IPO, subject to the employee’s continued employment or the director’s continued service, with the exception of one executive’s award that will vest in six equal installments on each of the first six As of June 30, 2024, all of the RSUs are outstanding and remain unvested. The fair value of the RSUs of $21.00 per unit was based on the fair value of a share of Class A common stock at the time of the IPO. Total compensation expense for RSUs was approximately $1.0 million and $1.9 million for the three and six months ended June 30, 2024, respectively and is included in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income for the three and six months ended June 30, 2024. The unamortized compensation cost related to RSUs of approximately $7.3 million as of June 30, 2024 is expected to be recognized over a weighted-average period of approximately 2.2 years. |
Income taxes and tax receivable
Income taxes and tax receivable agreement | 6 Months Ended |
Jun. 30, 2024 | |
Income taxes and tax receivable agreement [Abstract] | |
Income taxes and tax receivable agreement | Note 12 - Income taxes and tax receivable agreement: Smith Douglas Homes Corp. is taxed as a subchapter C corporation and is subject to federal and state income taxes. Smith Douglas Homes Corp.’s sole material asset is its ownership interest in Smith Douglas Holdings LLC, which is a limited liability company that is taxed as a partnership for U.S. federal and certain state and local income tax purposes. Smith Douglas Holdings LLC’s net taxable income and related tax credits, if any, are passed through to its members and included in the members’ tax returns. The income tax burden on the earnings taxed to the non-controlling interest holders is not reported by the Company in its unaudited condensed consolidated financial statements under U.S. GAAP. The estimated annual effective tax rate for the year ending December 31, 2024 is 20.8%. The difference between the estimated annual effective income tax rate and the U.S. federal statutory rate is primarily attributable to income allocable to non-controlling interests, which is not taxable, Smith Douglas Holdings LLC’s election to be taxed at the entity level, and state income taxes. The Company’s income tax provision was $1.1 million for the three months ended June 30, 2024 and $2.0 million for the period from January 11, 2024 to June 30, 2024. As the IPO occurred during the six months ended June 30, 2024, and the Company had no business transactions or activities prior to the IPO, no amounts related to the provision for income taxes were incurred for the period from January 1, 2024 to January 10, 2024. The Company recorded a deferred tax asset of $10.5 million resulting from the step-up in basis allowed under Section 743(b) and 197 of the Internal Revenue Code related to the purchase of 2,435,897 LLC Interests from the Continuing Equity Owners discussed in Note 1, Description of business and summary of significant accounting policies, which is expected to be amortized over the useful lives of the underlying assets. The Company also recorded a deferred tax asset of $15.1 million resulting from the outside basis difference related to its investment in Smith Douglas Holdings LLC by applying the look-through method to record the Company's proportionate share of inside basis differences within Smith Douglas Holdings LLC. The Company recognizes deferred tax assets to the extent it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. After considering all those factors, management has recorded a valuation allowance of $14.3 million for certain deferred tax assets the Company has determined are not more likely than not to be realized. The initial deferred tax asset of $15.1 million for the investment in Smith Douglas Holdings LLC and the related valuation allowance of $14.3 million were recorded against additional paid-in capital and included within increase in deferred tax asset from IPO and related transactions in the unaudited condensed consolidated statements of stockholders’/members’ equity. As each of the Continuing Equity Owners elects to convert their LLC Interests into Class A common stock, Smith Douglas Homes Corp. will succeed to their aggregate historical tax basis which will create a net tax benefit to the Company. These tax benefits are expected to be amortized over 15.0 years pursuant to Sections 743(b) and 197 of the Code. The Company will only recognize a deferred tax asset for financial reporting purposes when it is more likely than not that the tax benefit will be realized. In connection with the IPO and related transactions, the Company entered into a TRA with Smith Douglas Holdings LLC and the Continuing Equity Owners that will provide for the payment by Smith Douglas Homes Corp. to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that Smith Douglas Homes Corp. realizes (or in some circumstances is deemed to realize) related to the tax basis adjustments as such savings are realized. The purchase of 2,435,897 LLC Interests from the Continuing Equity Owners triggered a tax basis increase subject to the provisions of the TRA. The Company recognized (i) a deferred tax asset in the amount of $10.5 million, (ii) a corresponding estimated liability of $10.4 million to the Continuing Equity Owners representing 85% of the projected tax benefits, and (iii) $0.1 million of additional paid-in capital. |
Transactions with related parti
Transactions with related parties | 6 Months Ended |
Jun. 30, 2024 | |
Transactions with related parties [Abstract] | |
Transactions with related parties | Note 13 ‑ Transactions with related parties: The Company rents office space under a lease with JBB Cherokee Holdings LLC, an entity affiliated by common ownership. Related party lease cost included in the accompanying unaudited condensed consolidated statements of income as a component of selling, general and administrative costs is presented in the table below (in thousands). Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Operating leases costs (related party) $ 87 $ 86 $ 173 $ 173 Variable lease costs – operating (related party) $ 21 $ 20 $ 39 $ 40 Payments under the office lease agreement, along with costs associated with the office space, totaled approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2024, respectively, and approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024, the Company incurred fees of $0.1 million and $0.4 million, respectively, in the aggregate from certain entities affiliated by common ownership for use of facilities related to business development and vendor relations, which is included in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income. During the three and six months ended June 30, 2023, the Company incurred fees of $0.4 million for the use of these facilities. The Company paid fees for use of these facilities of $0.1 million during the three and six months ended June 30, 2024 and $0.4 million during the three and six months ended June 30, 2023. While the Company typically enters into lot option agreements whereby a deposit is provided to the seller, the Company has in the past, in lieu of providing a deposit, invested a minority interest in certain of the land banking entities with which it contracts. During the three and six months ended June 30, 2023, the Company purchased 9 and 35 lots totaling approximately $0.8 million and $3.0 million, respectively, under lot option agreements with unconsolidated land bank entities in which the Company had a non‑controlling ownership interest. There was no such activity during the six months ended June 30, 2024. The Company has identified these entities as VIEs; however, the Company has not been identified as the primary beneficiary of the VIEs and the entities are not consolidated in the accompanying unaudited condensed consolidated financial statements (see Note 3 for information related to VIEs). The Company has entered into lot option transactions with a former member of Smith Douglas Holdings LLC’s Board of Managers. During the three and six months ended June 30, 2023, the Company sold 10 and 15 finished lots at cost for approximately $0.7 million and $1.0 million, respectively, to the then member of Smith Douglas Holdings LLC’s Board of Managers. During the three and six months ended June 30, 2023, the Company purchased 77 and 159 lots totaling $3.7 million and $8.3 million, respectively, related to these lot option agreements. The Company charters aircraft services from companies that are controlled by a related entity of the Company’s managing member. Expenses incurred and paid to these companies under a dry lease agreement for the use of the aircraft for business travel totaled approximately $46,000 and $78,000 for the three and six months ended June 30, 2024, respectively, and approximately $31,000 and $51,000 for the three and six months ended June 30, 2023, respectively, which are included in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income. Historically, since August 2016, one of the former members of Smith Douglas Holdings LLC’s Board of Managers was party to a consulting agreement with Smith Douglas Holdings LLC pursuant to which he provided services to Smith Douglas Holdings LLC in exchange for (i) an annual fee equal to approximately $0.6 million plus (ii) eligibility to earn an annual bonus, subject to the terms and conditions therein. During the three and six months ended June 30, 2023, the then member of Smith Douglas Holdings LLC’s Board of Managers earned fees under the consulting agreement of approximately $0.2 million and $0.3 million, respectively, which are included in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income. The Company had two uncollateralized notes payable bearing interest at 2.12% and 2.56%, respectively, and other payables to certain related parties for the purchase of airplanes totaling approximately $0.9 million as of December 31, 2023, which are included in accrued expenses and other liabilities in the accompanying unaudited condensed consolidated balance sheets. The notes payable were repaid during the six months ended June 30, 2024. The Company has related party receivables totaling approximately $0.1 million as of both June 30, 2024 and December 31, 2023 for various expenses paid by the Company on behalf of the related party, which are included in other assets in the accompanying unaudited condensed consolidated balance sheets. As of December 31, 2023, the Company had a balance due to related parties of $11,000 for various expenses paid by the related parties on behalf of the Company, which is included in accrued expenses and other liabilities in the accompanying 2023 unaudited condensed consolidated balance sheet. There was no such balance outstanding as of June 30, 2024. |
Segment information
Segment information | 6 Months Ended |
Jun. 30, 2024 | |
Segment information [Abstract] | |
Segment information | Note 14 ‑ Segment information: The Company operates one principal homebuilding business that is organized, managed and reported by geographic division. Management of the six geographic divisions report to the Company’s chief operating decision maker (CODM), which consists of the Chief Executive Officer and Chief Financial Officer of the Company. The CODM reviews the results of operations, including, among other things, total revenue and net income to assess profitability and allocate resources. Accordingly, the Company has presented its operations for the following six reportable segments: Alabama, Atlanta, Charlotte, Houston, Nashville, and Raleigh. Each reportable segment follows the accounting policies described in Note 1. The following tables summarize financial information by segment (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Home closing revenue: Alabama $ 43,585 $ 18,800 $ 83,240 $ 42,867 Atlanta 80,220 94,104 142,840 170,278 Charlotte 15,352 14,369 28,816 26,871 Houston 31,248 — 55,278 — Nashville 21,707 28,019 43,737 51,908 Raleigh 28,821 26,230 56,231 57,742 Total $ 220,933 $ 181,522 $ 410,142 $ 349,666 Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net income (loss): Alabama $ 5,559 $ 1,435 $ 10,163 $ 3,676 Atlanta 18,012 23,379 32,583 42,928 Charlotte 2,380 2,380 4,004 4,313 Houston 3,446 — 6,812 — Nashville 2,789 4,501 5,102 7,732 Raleigh 5,207 5,615 10,017 12,846 Segment total 37,393 37,310 68,681 71,495 Corporate (1) (12,659 ) (6,569 ) (23,461 ) (11,928 ) Total $ 24,734 $ 30,741 $ 45,220 $ 59,567 (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. June 30, 2024 December 31, 2023 Assets: Alabama $ 54,090 $ 61,433 Atlanta 126,601 86,647 Charlotte 40,645 32,302 Houston (1) 109,319 93,825 Nashville 23,135 24,818 Raleigh 40,398 28,897 Segment total 394,188 327,922 Corporate (2) 35,066 24,770 Total $ 429,254 $ 352,692 (1) Balance includes goodwill of approximately $25.7 million resulting from the acquisition of Devon Street Homes, L.P. (2) Corporate primarily includes cash and cash equivalents, property and equipment, and other assets that are not allocated to the segments. |
Earnings per share
Earnings per share | 6 Months Ended |
Jun. 30, 2024 | |
Earnings per share [Abstract] | |
Earnings per share | Note 15 - Earnings per share: Basic earnings per share is computed by dividing net income attributable to Smith Douglas Homes Corp. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share is computed by adjusting the net income available to Smith Douglas Homes Corp. and the weighted average shares outstanding to give effect to potentially dilutive securities. Shares of Class B common stock are not entitled to receive any distributions or dividends and are therefore excluded from this presentation since they are not participating securities. All earnings prior to January 11, 2024, the date of the IPO, were entirely allocable to the non-controlling interests and, as a result, earnings per share information is not applicable for reporting periods prior to this date. Consequently, only earnings per share for net income for periods subsequent to January 10, 2024 are presented. Basic and diluted earnings per share of common stock have been computed as follows (in thousands, except share and per share amounts): For the three months ended June 30, 2024 For the period from January 11, 2024 to June 30, 2024 Numerator: Net income attributable to Smith Douglas Homes Corp., Basic $ 3,646 $ 6,618 Add: Net income impact from assumed redemption of all LLC Interests to common stock 21,088 39,762 Less: Income tax expense on net income attributable to NCI at 20.8 (4,384 ) (8,267 ) Net income attributable to Smith Douglas Homes Corp., after adjustment for assumed redemption, Diluted $ 20,350 $ 38,113 Denominator: Weighted average shares of common stock outstanding, Basic 8,846,154 8,846,154 Dilutive effects of: LLC Interests that are exchangeable for common stock 42,435,897 42,435,897 Unvested RSUs 149,923 132,458 Weighted average shares of common stock outstanding, Diluted 51,431,974 51,414,509 Basic earnings per share $ 0.41 $ 0.75 Diluted earnings per share $ 0.40 $ 0.74 Net income attributable to the non-controlling interests added back to net income in the fully dilutive computation has been adjusted for income taxes which would have been expensed had the income been recognized by Smith Douglas Homes Corp., a taxable entity. The weighted average common shares outstanding in the diluted computation per share assumes all outstanding LLC Interests are redeemed and the Company elects to issue Class A shares of common stock upon redemption rather than cash-settle. The dilutive impact of LLC Interests assumed to be redeemed in exchange for the issuance of Class A common stock was included in the computation of diluted earnings per share under the if-converted method. The dilutive impact of unvested RSUs was included using the treasury stock method. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2024 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Description of business and s_2
Description of business and summary of significant accounting policies (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Description of business and summary of significant accounting policies [Abstract] | |
Nature of business | Nature of business Smith Douglas Homes Corp. (the Company) was incorporated in the state of Delaware on June 20, 2023 (Date of Formation) for the purpose of facilitating an initial public offering (IPO) of its common stock and executing other related transactions in order to carry on the business of Smith Douglas Holdings LLC and its consolidated subsidiaries as a publicly-traded entity. The Company is a builder of single-family homes in communities in certain markets in the southeastern and southern United States. The Company’s homes and communities are primarily targeted to first-time and empty-nest homebuyers. The Company currently operates in metropolitan Atlanta, Birmingham, Charlotte, Huntsville, Nashville, Raleigh and Houston. The Company operates a land-light business model whereby the Company typically purchases finished lots via lot-option contracts from various third-party land developers or land bankers. Additionally, the Company offers title insurance services through an unconsolidated title company. |
Initial Public Offering and Reorganization Transactions | Initial Public Offering and Reorganization Transactions The Company successfully closed an IPO of 8,846,154 shares of Class A common stock at a public offering price of $21.00 per share on January 16, 2024, which included 1,153,846 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. The net proceeds from the IPO aggregated approximately $172.8 million. Shares of Class A common stock began trading on the New York Stock Exchange under the ticker symbol "SDHC" on January 11, 2024. In connection with the IPO, Smith Douglas Holdings LLC amended and restated its existing limited liability company agreement to, among other things, (i) recapitalize all existing ownership interests in Smith Douglas Holdings LLC into 44,871,794 LLC Interests (before giving effect to the use of proceeds from the IPO, as described below), (ii) appoint Smith Douglas Homes Corp. as the sole managing member of Smith Douglas Holdings LLC upon its acquisition of LLC Interests in connection with the IPO, and (iii) provide certain redemption rights to the owners of the LLC Interests in Smith Douglas Holdings LLC, exclusive of the Company (the Continuing Equity Owners). Simultaneously, Smith Douglas Homes Corp. amended and restated its certificate of incorporation to, among other things, provide (i) for Class A common stock, with each share of Class A common stock entitling its holder to one vote per share on all matters presented to the stockholders generally; (ii) for Class B common stock, with each share of Class B common stock entitling its holder to ten votes per share on all matters presented to the stockholders generally, until the aggregate number of shares of Class B common stock then outstanding is less than 10% of the aggregate number of shares of Class A common stock and Class B common stock then outstanding (Sunset Date), and from and after the occurrence of the Sunset Date, each share of Class B common stock will entitle its holder to one vote per share on all matters presented to the stockholders generally; (iii) that shares of Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees; and (iv) for preferred stock, which can be issued by the board of directors in one or more series without stockholder approval. As a result, Smith Douglas Homes Corp. became a holding company and the sole managing member of Smith Douglas Holdings LLC and controls the business and affairs of Smith Douglas Holdings LLC. After giving effect to the use of net proceeds as described below, Smith Douglas Homes Corp. issued 42,435,897 shares of Class B common stock to the Continuing Equity Owners, which is equal to the number of LLC Interests held by such Continuing Equity Owners, for nominal consideration. Subsequent to the IPO, Smith Douglas Homes Corp. used the net proceeds to: (i) purchase 6,410,257 newly issued LLC Interests for approximately $125.2 million directly from Smith Douglas Holdings LLC at a price per unit equal to $21.00 per share (IPO price) of Class A common stock less the underwriting discount; and (ii) purchase 2,435,897 LLC Interests from the Continuing Equity Owners on a pro rata basis for $47.6 million in aggregate at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount. |
Basis of presentation | Basis of presentation In accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), since the Continuing Equity Owners continue to hold a controlling interest in Smith Douglas Holdings LLC after the IPO (i.e., there was no change in control of Smith Douglas Holdings LLC), the financial statements of the combined entity represent a continuation of the financial position and results of operations of Smith Douglas Holdings LLC. Accordingly, the historical cost basis of assets, liabilities, and equity of Smith Douglas Holdings LLC are carried over to the unaudited condensed consolidated financial statements of the combined company as a common control transaction. The accompanying unaudited condensed consolidated financial statements for the periods prior to the Reorganization Transactions and IPO have been presented to combine the previously separate entities. These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and the applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. As such, these financial statements do not include all information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations and cash flows as of the dates and for the periods presented. A reclassification to the unaudited condensed consolidated financial statements and notes has been made to the prior year amount to conform to the current year presentation, which is not material. These unaudited interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Historically, the homebuilding industry has experienced seasonal fluctuations; therefore, interim results are not necessarily indicative of results for the full fiscal year. |
Principles of consolidation and non-controlling interests | Principles of consolidation and non-controlling interests The accompanying unaudited condensed consolidated financial statements include the accounts of Smith Douglas Homes Corp. and Smith Douglas Holdings LLC and its wholly-owned subsidiaries. Smith Douglas Holdings LLC is considered a variable interest entity and Smith Douglas Homes Corp. is the primary beneficiary and sole managing member of Smith Douglas Holdings LLC and has decision making authority that significantly affects the performance of the entity. Accordingly, the Company consolidates Smith Douglas Holdings LLC and reports non-controlling interests representing the economic interest in Smith Douglas Holdings LLC held by the Continuing Equity Owners. All intercompany balances and transactions have been eliminated in consolidation. Investments in unconsolidated entities in which the Company has less than a controlling financial interest are accounted for using the equity method. The non-controlling interests in the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2024 represent the portion of earnings attributable to the economic interest in Smith Douglas Holdings LLC held by the Continuing Equity Owners. The non-controlling interests in the unaudited condensed consolidated balance sheet as of June 30, 2024 represent the portion of the net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders. As of June 30, 2024, the non-controlling interests were 82.7%. |
Use of estimates in the preparation of unaudited condensed consolidated financial statements | Use of estimates in the preparation of unaudited condensed consolidated financial statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Business combination | Business combination On July 31, 2023, the Company acquired substantially all of the assets of Devon Street Homes, L.P. (Devon Street) and accounted for the transaction as a business combination in accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations |
Revenue recognition | Revenue recognition The Company recognizes revenue when a home closes with a homebuyer, which is the time at which title and possession of the property are transferred to that homebuyer and all cash consideration due from the homebuyer is received. The Company’s performance obligation, to deliver the home, is generally satisfied in less than one year from the original contract date. When the Company executes sales contracts with its homebuyers, or when it requires advance payment from homebuyers for custom changes, upgrades or options related to their homes, the cash deposits received are recorded as contract liabilities until the homes are closed or the contracts are canceled. The Company either retains or refunds to the customer deposits on canceled sales contracts, depending upon the applicable provisions of the contract or other circumstances. As of June 30, 2024 and December 31, 2023, customer deposits totaled $9.5 million and $7.2 million, respectively. Substantially all customer deposits are recognized in revenue within one year of being received from homebuyers. |
Share-based payments | Share-based payments Share-based compensation is accounted for as an expense in accordance with the fair value recognition and measurement provisions of U.S. GAAP which requires compensation cost for the grant-date fair value of equity-based awards to be recognized over the requisite service period. The Company accounts for forfeitures when they occur, and any compensation expense previously recognized on unvested equity-based awards will be reversed when forfeited. The fair value of restricted stock units (RSUs) is based on the fair value of the Class A common stock at the time of grant. |
Income taxes | Income taxes After consummation of the IPO, Smith Douglas Homes Corp. became subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of Smith Douglas Holdings LLC assessed at the prevailing corporate tax rates. Smith Douglas Holdings LLC operates as a limited liability company and is treated as a partnership for income tax purposes. Accordingly, it incurs no significant liability for federal or state income taxes since the taxable income or loss is passed through to its members. Smith Douglas Holdings LLC incurs liabilities for certain state taxes payable directly by it, which are not significant and for which the expense is included in the provision for income taxes in the accompanying unaudited condensed consolidated statements of income for the three and six months ended June 30, 2024 and in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income for the three and six months ended June 30, 2023. In calculating the provision for interim income taxes, in accordance with ASC Topic 740, Income Taxes For annual periods, income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. As of June 30, 2024 and December 31, 2023, there were no known items which would result in a significant accrual for uncertain tax positions. |
Tax receivable agreement | Tax receivable agreement In connection with the IPO and related transactions, the Company entered into a Tax Receivable Agreement (TRA) with Smith Douglas Holdings LLC and the Continuing Equity Owners that will provide for the payment by Smith Douglas Homes Corp. to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that Smith Douglas Homes Corp. realizes (or in some circumstances is deemed to realize) related to the tax basis adjustments described in Note 12 as such savings are realized. In addition to tax expenses, the Company will also make payments under the TRA, which are expected to be significant. The Company will account for the income tax effects and corresponding TRA’s effects resulting from future taxable purchases or redemptions of LLC Interests of the Continuing Equity Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of the purchase or redemption. Further, the Company will evaluate the likelihood that it will realize the benefit represented by the deferred tax asset and, to the extent that management estimates that it is more likely than not that the Company will not realize the benefit, the Company will reduce the carrying amount of the deferred tax asset with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for obligations under the TRA will be estimated at the time of any purchase or redemption as a reduction to stockholders’ equity, and the effects of changes in any estimates after this date will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. Judgement is required in assessing the future tax consequences of events that have been recognized in the Company’s financial statements. A change in the Company’s assessment of such consequences, such as realization of deferred tax assets, changes in tax laws or interpretations thereof could materially impact results. |
Recent accounting pronouncements | Recent rules and accounting pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" (ASU 2023-07), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis. ASU 2023-07 is effective for the Company for annual periods beginning after January 1, 2024 and interim periods beginning after January 1, 2025. The Company is currently evaluating the impact ASU 2023-07 will have on its financial statement disclosures. In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (ASU 2023-09), which requires expanded disclosure of the Company’s income rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company for annual periods beginning after January 1, 2025. The Company is currently evaluating the impact ASU 2023-09 will have on its financial statement disclosures. In March 2024, the SEC adopted the final rules that will require certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. The new rules include a requirement to disclose material climate-related risks, descriptions of board oversight and risk management activities, the material impacts of these risks on a registrants' strategy, business model and outlook, and any material climate-related targets or goals, as well as material effects of severe weather events and other natural conditions and greenhouse gas emissions. Prior to the stay in the new rules, they would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosure which would have been effective for annual periods beginning January 1, 2026. The Company is currently evaluating the impact of these rules on its disclosures. |
Real estate inventory and cap_2
Real estate inventory and capitalized interest (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Real estate inventory and capitalized interest [Abstract] | |
Real Estate Inventory | A summary of real estate inventory is as follows as of June 30, 2024 and December 31, 2023 (in thousands): June 30, 2024 December 31, 2023 Lots held for construction $ 37,881 $ 32,184 Homes under construction, completed homes and model homes 228,672 180,920 Total real estate inventory $ 266,553 $ 213,104 |
Capitalized Interest | A summary of capitalized interest is as follows (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Capitalized interest, beginning of period $ 858 $ 805 $ 1,338 $ 1,117 Interest incurred 893 530 1,832 1,066 Interest expensed (591 ) (301 ) (1,289 ) (546 ) Interest charged to cost of home closings (333 ) (352 ) (1,054 ) (955 ) Capitalized interest, end of period $ 827 $ 682 $ 827 $ 682 |
Notes payable (Tables)
Notes payable (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Notes payable [Abstract] | |
Future Maturities of Notes Payable to Third Parties | Future maturities of notes payable to third parties, including borrowings under the Amended Credit Facility, are as follows as of June 30, 2024 (in thousands): Year ending December 31, 2024 (1) $ 799 2025 1,696 2026 1,364 $ 3,859 (1) Remaining payments are for the six months ending December 31, 2024. |
Fair value of financial instr_2
Fair value of financial instruments (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Fair value of financial instruments [Abstract] | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | The Company’s financial instruments measured or disclosed at fair value are summarized below. The summary excludes cash and cash equivalents, receivables and accounts payable, all of which had fair values approximating their carrying values due to the liquid nature and short maturities of these instruments. Fair Value (In Thousands) Asset or Liability Fair Value Hierarchy June 30, 2024 December 31, 2023 Measured at fair value on a recurring basis: Contingent consideration Level 3 $ 4,590 $ 3,282 Disclosed at fair value: Borrowings under Credit Facility Level 2 $ — $ 71,000 Seller note payable Level 2 $ 3,859 $ 4,627 |
Warranty reserves (Tables)
Warranty reserves (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Warranty reserves [Abstract] | |
Activity in Warranty Liability Account | A summary of the activity in the Company’s warranty liability account is as follows (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Balance, beginning of period $ 2,978 $ 2,257 $ 2,839 $ 2,071 Additions to reserves from new home closings 437 362 819 698 Warranty claims (99 ) (202 ) (242 ) (331 ) Adjustments to pre‑existing reserves (212 ) (34 ) (312 ) (55 ) Balance, end of period $ 3,104 $ 2,383 $ 3,104 $ 2,383 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
Lease cost | Lease cost included in the accompanying unaudited condensed consolidated statements of income as a component of selling, general and administrative costs is presented in the table below (in thousands). Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Operating leases costs $ 170 $ 143 $ 339 $ 286 Variable lease costs - operating $ 74 $ 48 $ 110 $ 88 |
Additional Information Related to Leases | The following table presents additional information about the Company’s leases (dollars in thousands): June 30, December 31, 2023 Right-of-use (ROU) assets $ 2,141 $ 1,789 Lease liabilities $ 2,217 $ 1,837 |
Stockholders'_ Members' equity
Stockholders'/ Members' equity (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Stockholders'/ Members' equity [Abstract] | |
Summary of Capitalization and Voting Rights | The following table summarizes the capitalization and voting rights of the Company’s classes of stock as of June 30, 2024: Authorized Issued & Outstanding Votes per share Economic Rights Preferred stock 10,000,000 None Common stock: Class A 250,000,000 8,846,154 1 Yes Class B 100,000,000 42,435,897 10 (1) No (1) Each share of Class B common stock entitles its holders to ten votes per share on all matters presented to the stockholders and on which the holders of the Class B common stock are entitled to vote; provided, that each share of Class B common stock will only be entitled to one vote per share on all matters presented to the stockholders generally upon the Sunset Date. |
Class A Common Stock Reserved for Issuance | The following table summarizes Class A common stock reserved for issuances as of June 30, 2024: Conversion of LLC Interests held by Continuing Equity Owners 42,435,897 RSUs 2,051,282 Total 44,487,179 |
Transactions with related par_2
Transactions with related parties (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Transactions with related parties [Abstract] | |
Related Party Lease Cost Included Selling, General and Administrative Costs | Related party lease cost included in the accompanying unaudited condensed consolidated statements of income as a component of selling, general and administrative costs is presented in the table below (in thousands). Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Operating leases costs (related party) $ 87 $ 86 $ 173 $ 173 Variable lease costs – operating (related party) $ 21 $ 20 $ 39 $ 40 |
Segment information (Tables)
Segment information (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Segment information [Abstract] | |
Revenue, Net Income (Loss), Assets by Segments | The following tables summarize financial information by segment (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Home closing revenue: Alabama $ 43,585 $ 18,800 $ 83,240 $ 42,867 Atlanta 80,220 94,104 142,840 170,278 Charlotte 15,352 14,369 28,816 26,871 Houston 31,248 — 55,278 — Nashville 21,707 28,019 43,737 51,908 Raleigh 28,821 26,230 56,231 57,742 Total $ 220,933 $ 181,522 $ 410,142 $ 349,666 Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net income (loss): Alabama $ 5,559 $ 1,435 $ 10,163 $ 3,676 Atlanta 18,012 23,379 32,583 42,928 Charlotte 2,380 2,380 4,004 4,313 Houston 3,446 — 6,812 — Nashville 2,789 4,501 5,102 7,732 Raleigh 5,207 5,615 10,017 12,846 Segment total 37,393 37,310 68,681 71,495 Corporate (1) (12,659 ) (6,569 ) (23,461 ) (11,928 ) Total $ 24,734 $ 30,741 $ 45,220 $ 59,567 (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. June 30, 2024 December 31, 2023 Assets: Alabama $ 54,090 $ 61,433 Atlanta 126,601 86,647 Charlotte 40,645 32,302 Houston (1) 109,319 93,825 Nashville 23,135 24,818 Raleigh 40,398 28,897 Segment total 394,188 327,922 Corporate (2) 35,066 24,770 Total $ 429,254 $ 352,692 (1) Balance includes goodwill of approximately $25.7 million resulting from the acquisition of Devon Street Homes, L.P. (2) Corporate primarily includes cash and cash equivalents, property and equipment, and other assets that are not allocated to the segments. |
Earnings per share (Tables)
Earnings per share (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Earnings per share [Abstract] | |
Basic and Diluted Earnings Per Share | Basic and diluted earnings per share of common stock have been computed as follows (in thousands, except share and per share amounts): For the three months ended June 30, 2024 For the period from January 11, 2024 to June 30, 2024 Numerator: Net income attributable to Smith Douglas Homes Corp., Basic $ 3,646 $ 6,618 Add: Net income impact from assumed redemption of all LLC Interests to common stock 21,088 39,762 Less: Income tax expense on net income attributable to NCI at 20.8 (4,384 ) (8,267 ) Net income attributable to Smith Douglas Homes Corp., after adjustment for assumed redemption, Diluted $ 20,350 $ 38,113 Denominator: Weighted average shares of common stock outstanding, Basic 8,846,154 8,846,154 Dilutive effects of: LLC Interests that are exchangeable for common stock 42,435,897 42,435,897 Unvested RSUs 149,923 132,458 Weighted average shares of common stock outstanding, Diluted 51,431,974 51,414,509 Basic earnings per share $ 0.41 $ 0.75 Diluted earnings per share $ 0.40 $ 0.74 |
Description of business and s_3
Description of business and summary of significant accounting policies, Initial Public Offering and Reorganization Transactions (Details) $ / shares in Units, $ in Millions | 6 Months Ended | ||
Jan. 16, 2024 USD ($) LLCUnit Vote shares $ / shares | Jun. 30, 2024 Vote LLCUnit | ||
Initial Public Offering [Abstract] | |||
Ownership interests recapitalized into LLC interests | LLCUnit | 44,871,794 | ||
Smith Douglas Holdings LLC [Member] | Continuing Equity Owners [Member] | |||
Initial Public Offering [Abstract] | |||
LLC Interests Purchased | LLCUnit | 2,435,897 | ||
Common Class A [Member] | |||
Initial Public Offering [Abstract] | |||
Number of votes per share | Vote | 1 | ||
LLC Interests Purchased | LLCUnit | 6,410,257 | ||
Value of LLC Interests Purchased | $ | $ 125.2 | ||
Common Class A [Member] | Smith Douglas Holdings LLC [Member] | Continuing Equity Owners [Member] | |||
Initial Public Offering [Abstract] | |||
LLC Interests Purchased | shares | 2,435,897 | ||
Value of LLC Interests Purchased | $ | $ 47.6 | ||
Common Class B [Member] | |||
Initial Public Offering [Abstract] | |||
Number of votes per share | Vote | [1] | 10 | |
Maximum number of Class B common stock outstanding compared to total of Class A and Class B common stock outstanding for occurrence of Sunset | 10% | ||
Shares issued (in shares) | shares | 42,435,897 | ||
IPO [Member] | Common Class A [Member] | |||
Initial Public Offering [Abstract] | |||
Number of shares issued (in shares) | shares | 8,846,154 | ||
Net proceeds | $ | $ 172.8 | ||
Number of votes per share | Vote | 1 | ||
Offering price per share (in dollars per share) | $ / shares | $ 21 | ||
IPO [Member] | Common Class B [Member] | |||
Initial Public Offering [Abstract] | |||
Number of votes per share | Vote | 10 | ||
Underwriters' Option [Member] | Common Class A [Member] | |||
Initial Public Offering [Abstract] | |||
Number of shares issued (in shares) | shares | 1,153,846 | ||
[1] Each share of Class B common stock entitles its holders to ten votes per share on all matters presented to the stockholders and on which the holders of the Class B common stock are entitled to vote; provided, that each share of Class B common stock will only be entitled to one vote per share on all matters presented to the stockholders generally upon the Sunset Date. |
Description of business and s_4
Description of business and summary of significant accounting policies, Principles of Consolidation and Non-Controlling Interest (Details) | Jun. 30, 2024 |
Smith Douglas Holdings LLC [Member] | |
Principles of Consolidation and Non-Controlling Interest [Abstract] | |
Ownership percentage of noncontrolling interests | 82.70% |
Description of business and s_5
Description of business and summary of significant accounting policies, Revenue Recognition (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Revenue Recognition [Abstract] | ||
Customer deposits | $ 9,543 | $ 7,168 |
Description of business and s_6
Description of business and summary of significant accounting policies, Income Taxes (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Income Taxes [Abstract] | ||
Uncertain tax positions | $ 0 | $ 0 |
Description of business and s_7
Description of business and summary of significant accounting policies, Tax Receivable Agreement (Details) | Jan. 16, 2024 |
IPO [Member] | Continuing Equity Owners [Member] | |
Tax Receivable Agreement [Abstract] | |
Percentage of payment on tax benefit | 85% |
Real estate inventory and cap_3
Real estate inventory and capitalized interest, Summary of Real Estate Inventory (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Inventory, Real Estate [Abstract] | ||
Lots held for construction | $ 37,881 | $ 32,184 |
Homes under construction, completed homes and model homes | 228,672 | 180,920 |
Total real estate inventory | $ 266,553 | $ 213,104 |
Real estate inventory and cap_4
Real estate inventory and capitalized interest, Summary of Capitalized Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | ||||
Capitalized interest, beginning of period | $ 858 | $ 805 | $ 1,338 | $ 1,117 |
Interest incurred | 893 | 530 | 1,832 | 1,066 |
Interest expensed | (591) | (301) | (1,289) | (546) |
Interest charged to cost of home closings | (333) | (352) | (1,054) | (955) |
Capitalized interest, end of period | $ 827 | $ 682 | $ 827 | $ 682 |
Variable interest entities (Det
Variable interest entities (Details) - Option Contracts [Member] - USD ($) $ in Millions | Jun. 30, 2024 | Dec. 31, 2023 |
Summary of Interests in Land Option Agreements [Abstract] | ||
Deposits | $ 66.3 | $ 57.1 |
Remaining purchase price | $ 834.4 | $ 652.1 |
Investments in unconsolidated_2
Investments in unconsolidated entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Investments in unconsolidated entities [Abstract] | |||||
Equity in income from unconsolidated entities | $ (220) | $ (226) | $ (404) | $ (436) | |
Distributions from unconsolidated entities | 200 | $ 300 | 400 | 700 | |
Contributed from unconsolidated entities | 600 | 600 | $ 0 | ||
Investments in unconsolidated entities | $ 700 | $ 700 | $ 100 |
Notes payable, Summary (Details
Notes payable, Summary (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jan. 16, 2024 | Jun. 30, 2024 | Dec. 31, 2023 | Jul. 31, 2023 | |
Line of Credit Facility [Abstract] | ||||
Notes payable | $ 3,859 | $ 75,627 | ||
Seller Notes Payable [Member] | Devon Street Homes, L.P [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Debt instrument term | 3 years | |||
Debt principal amount | $ 5,000 | |||
Contractual interest rate | 8% | |||
Frequency of debt payment | quarterly | |||
Maturity date | Sep. 30, 2026 | |||
Notes payable | $ 3,900 | $ 4,600 | ||
Revolving Credit Facility [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Credit facility maturing date | Jan. 16, 2027 | |||
Additional extended maturity period | 1 year | |||
Accordion feature | $ 100,000 | |||
Maximum leverage ratio | 60% | |||
Minimum ratio of EBITDA to interest incurred | 200% | |||
Minimum liquidity requirement | $ 15,000 | |||
Interest rate on outstanding borrowings | 7.76% | 8.25% | ||
Credit facility, outstanding, amount | $ 0 | $ 71,000 | ||
Borrowing availability | 219,800 | |||
Revolving Credit Facility [Member] | IPO [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Unsecured revolving credit facility | 250,000 | |||
Revolving Credit Facility [Member] | Minimum Tangible Net Worth [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Base amount in determining minimum tangible net worth | $ 130,000 | |||
Pre tax income percentage | 32.50% | |||
Equity proceeds percentage | 50% | |||
Revolving Credit Facility [Member] | Minimum Tangible Net Worth [Member] | IPO [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Equity proceeds percentage | 75% | |||
Revolving Credit Facility [Member] | Minimum [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Applicable margin rate | 2.35% | |||
Revolving Credit Facility [Member] | Maximum [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Applicable margin rate | 3% | |||
Letter of Credit [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Unsecured revolving credit facility | $ 20,000 | |||
Letters of credit outstanding, amount | 0 | 0 | ||
Collateralized Debt [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Loans payable to banks collateralized | $ 5 | 8 | ||
Previous Credit Facility [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Unsecured revolving credit facility | $ 175,000 | |||
Previous Credit Facility [Member] | Minimum [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Basis spread on variable rate | (0.25%) | |||
Previous Credit Facility [Member] | Maximum [Member] | ||||
Line of Credit Facility [Abstract] | ||||
Basis spread on variable rate | 0.20% |
Notes payable, Future Maturitie
Notes payable, Future Maturities of Notes Payable to Third Parties (Details) - Notes Payable [Member] $ in Thousands | Jun. 30, 2024 USD ($) | |
Future Maturities of Notes Payable to Third Parties [Abstract] | ||
2024 | $ 799 | [1] |
2025 | 1,696 | |
2026 | 1,364 | |
Total | $ 3,859 | |
[1]Remaining payments are for the six months ending December 31, 2024. |
Fair value of financial instr_3
Fair value of financial instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2024 | Dec. 31, 2023 | |
Asset or liability measured at fair value on a recurring basis [Abstract] | |||
Contingent consideration agreement remaining period | 8 months | ||
Other Expense (Income), Net [Member] | |||
Asset or liability measured at fair value on a recurring basis [Abstract] | |||
Change in fair value of contingent consideration | $ 1,200 | $ 1,300 | |
Recurring [Member] | Level 3 [Member] | |||
Asset or liability measured at fair value on a recurring basis [Abstract] | |||
Contingent consideration | 4,590 | 4,590 | $ 3,282 |
Recurring [Member] | Level 2 [Member] | |||
Asset or liability measured at fair value on a recurring basis [Abstract] | |||
Borrowings under Credit Facility | 0 | 0 | 71,000 |
Seller note payable | $ 3,859 | $ 3,859 | $ 4,627 |
Warranty reserves (Details)
Warranty reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Warranty reserves [Abstract] | ||||
Balance, beginning of period | $ 2,978 | $ 2,257 | $ 2,839 | $ 2,071 |
Additions to reserves from new home closings | 437 | 362 | 819 | 698 |
Warranty claims | (99) | (202) | (242) | (331) |
Adjustments to pre-existing reserves | (212) | (34) | (312) | (55) |
Balance, end of period | $ 3,104 | $ 2,383 | $ 3,104 | $ 2,383 |
Leases, Lease Cost (Details)
Leases, Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Lease Cost [Abstract] | ||||
Operating lease costs | $ 170 | $ 143 | $ 339 | $ 286 |
Variable lease costs - operating | $ 74 | $ 48 | $ 110 | $ 88 |
Leases, Additional Information
Leases, Additional Information Related to Lease (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Additional Information [Abstract] | ||
Right-of-use (ROU) assets | $ 2,141 | $ 1,789 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets | Other Assets |
Lease liabilities | $ 2,217 | $ 1,837 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities and Other Liabilities | Accrued Liabilities and Other Liabilities |
Undiscounted fixed lease payments | $ 1,100 | |
Minimum [Member] | ||
Additional Information [Abstract] | ||
Operating lease term | 2 years | |
Maximum [Member] | ||
Additional Information [Abstract] | ||
Operating lease term | 6 years |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
Commitments and contingencies [Abstract] | ||
Performance and surety bonds | $ 33,000,000 | $ 26,100,000 |
Letters of credit | $ 0 | $ 0 |
Stockholders'_ Members' equit_2
Stockholders'/ Members' equity (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 16, 2024 USD ($) | Jun. 30, 2024 USD ($) shares | Jun. 30, 2024 USD ($) Vote shares | ||
Summary of Capitalization and Voting Rights [Abstract] | ||||
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 | ||
Preferred stock, issued (in shares) | 0 | 0 | ||
Preferred stock, outstanding (in shares) | 0 | 0 | ||
Smith Douglas Holdings LLC [Member] | ||||
Summary of Capitalization and Voting Rights [Abstract] | ||||
Percentage of economic interest | 17.30% | 17.30% | ||
Percentage of non-controlling interest | 82.70% | 82.70% | ||
Smith Douglas Holdings LLC [Member] | Continuing Equity Owners [Member] | ||||
Distributions to Members Related to Their Income Tax Liabilities [Abstract] | ||||
Tax distributions | $ | $ 11.8 | $ 26.3 | ||
Capital Unit Class C and D [Member] | ||||
Redemption of Class C & Class D Units [Abstract] | ||||
Aggregate redemption price | $ | $ 2.6 | |||
Class A Common Stock [Member] | ||||
Summary of Capitalization and Voting Rights [Abstract] | ||||
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 | ||
Common stock, issued (in shares) | 8,846,154 | 8,846,154 | ||
Common stock, outstanding (in shares) | 8,846,154 | 8,846,154 | ||
Votes per share | Vote | 1 | |||
Economic rights | Yes | |||
Common Stock Reserved for Future Issuances [Abstract] | ||||
Common stock shares reserved for issuance (in shares) | 44,487,179 | 44,487,179 | ||
Stock exchange ratio | 1 | |||
Class A Common Stock [Member] | RSUs [Member] | ||||
Common Stock Reserved for Future Issuances [Abstract] | ||||
Common stock shares reserved for issuance (in shares) | 2,051,282 | 2,051,282 | ||
Class A Common Stock [Member] | Continuing Equity Owners [Member] | ||||
Common Stock Reserved for Future Issuances [Abstract] | ||||
Common stock shares reserved for issuance (in shares) | 42,435,897 | 42,435,897 | ||
Class A Common Stock [Member] | Smith Douglas Holdings LLC [Member] | Smith Douglas Homes Corp. [Member] | ||||
Summary of Capitalization and Voting Rights [Abstract] | ||||
Common stock, outstanding (in shares) | 8,846,154 | 8,846,154 | ||
Class B Common Stock [Member] | ||||
Summary of Capitalization and Voting Rights [Abstract] | ||||
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 | ||
Common stock, issued (in shares) | 42,435,897 | 42,435,897 | ||
Common stock, outstanding (in shares) | 42,435,897 | 42,435,897 | ||
Votes per share | Vote | [1] | 10 | ||
Economic rights | No | |||
Votes per share upon Sunset date | Vote | 1 | |||
Common Stock Reserved for Future Issuances [Abstract] | ||||
Stock exchange ratio | 1 | |||
Class B Common Stock [Member] | Smith Douglas Holdings LLC [Member] | Continuing Equity Owners [Member] | ||||
Summary of Capitalization and Voting Rights [Abstract] | ||||
Common stock, outstanding (in shares) | 42,435,897 | 42,435,897 | ||
[1] Each share of Class B common stock entitles its holders to ten votes per share on all matters presented to the stockholders and on which the holders of the Class B common stock are entitled to vote; provided, that each share of Class B common stock will only be entitled to one vote per share on all matters presented to the stockholders generally upon the Sunset Date. |
Share-based payments (Details)
Share-based payments (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Jan. 31, 2024 USD ($) Intallment Executive shares | Jun. 30, 2024 USD ($) shares | Jun. 30, 2024 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) | |
Share-based Compensation Description [Abstract] | ||||
Compensation expense | $ | $ 1,929 | $ 0 | ||
Class A Common Stock [Member] | ||||
Share-based Compensation Description [Abstract] | ||||
Common stock shares reserved for issuance (in shares) | 44,487,179 | 44,487,179 | ||
Executive [Member] | ||||
Share-based Compensation Description [Abstract] | ||||
Number of executive with different award vesting term | Executive | 1 | |||
Restricted Stock Units [Member] | ||||
Share-based Compensation Description [Abstract] | ||||
Compensation expense | $ | $ 1,000 | $ 1,900 | ||
Unamortized compensation cost | $ | $ 7,300 | $ 7,300 | ||
Weighted average remaining vesting period over which compensation expense is expected to be recognized | 2 years 2 months 12 days | |||
Restricted Stock Units [Member] | Class A Common Stock [Member] | ||||
Share-based Compensation Description [Abstract] | ||||
Common stock shares reserved for issuance (in shares) | 2,051,282 | 2,051,282 | ||
Fair value of stock (in dollars per share) | $ / shares | $ 21 | |||
2024 Incentive Award Plan [Member] | Class A Common Stock [Member] | ||||
Share-based Compensation Description [Abstract] | ||||
Common stock shares reserved for issuance (in shares) | 2,051,282 | 2,051,282 | ||
Percentage of total shares outstanding subject to annual increase in shares reserved for issuance | 1% | |||
Maximum number of stock that may be issued upon exercise of incentive stock options (in shares) | 10,000,000 | 10,000,000 | ||
Common shares available for future grants (in shares) | 1,613,310 | 1,613,310 | ||
2024 Incentive Award Plan [Member] | Restricted Stock Units [Member] | ||||
Share-based Compensation Description [Abstract] | ||||
Number granted (in shares) | 440,727 | |||
Aggregate grant date fair value | $ | $ 9,300 | |||
Vesting period | 1 year | |||
2024 Incentive Award Plan [Member] | Restricted Stock Units [Member] | Executive [Member] | ||||
Share-based Compensation Description [Abstract] | ||||
Vesting period | 6 years | |||
Number of equal annual installments for vesting | Intallment | 6 |
Income taxes and tax receivab_2
Income taxes and tax receivable agreement (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jan. 16, 2024 | Jan. 10, 2024 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2024 USD ($) LLCUnit Transactions | Jun. 30, 2023 USD ($) | Dec. 31, 2024 | Dec. 31, 2023 USD ($) | |
Income Taxes and Tax Receivable Agreement [Abstract] | |||||||||
Estimated annual effective tax rate | 20.80% | 20.80% | |||||||
Income tax provision | $ 1,132 | $ 0 | $ 2,000 | $ 2,053 | $ 0 | ||||
Deferred tax asset | 10,934 | 10,934 | 10,934 | $ 0 | |||||
Deferred tax asset for investment | 15,100 | 15,100 | 15,100 | ||||||
Valuation allowance on deferred tax assets | 14,300 | 14,300 | $ 14,300 | ||||||
Amortization term of income tax benefits | 15 years | ||||||||
Tax receivable agreement liability | 10,400 | 10,400 | $ 10,400 | ||||||
Deferred tax asset and TRA liability recorded against additional paid-in capital | 100 | 100 | 100 | ||||||
Smith Douglas Holdings LLC [Member] | |||||||||
Income Taxes and Tax Receivable Agreement [Abstract] | |||||||||
Deferred tax asset | $ 10,500 | $ 10,500 | $ 10,500 | ||||||
Smith Douglas Holdings LLC [Member] | Continuing Equity Owners [Member] | |||||||||
Income Taxes and Tax Receivable Agreement [Abstract] | |||||||||
LLC Interests Purchased | LLCUnit | 2,435,897 | ||||||||
IPO [Member] | |||||||||
Income Taxes and Tax Receivable Agreement [Abstract] | |||||||||
Income tax provision | $ 0 | ||||||||
Number of business transactions | Transactions | 0 | ||||||||
IPO [Member] | Smith Douglas Holdings LLC [Member] | Continuing Equity Owners [Member] | |||||||||
Income Taxes and Tax Receivable Agreement [Abstract] | |||||||||
Percentage of projected tax benefits | 85% | ||||||||
Forecast [Member] | |||||||||
Income Taxes and Tax Receivable Agreement [Abstract] | |||||||||
Estimated annual effective tax rate | 20.80% |
Transactions with related par_3
Transactions with related parties, Related Party Lease Cost Included Selling, General and Administrative Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Related Party Lease Cost Included Selling, General and Administrative Costs [Abstract] | ||||
Operating leases costs (related party) | $ 170 | $ 143 | $ 339 | $ 286 |
Variable lease costs - operating (related party) | 74 | 48 | 110 | 88 |
Related Party [Member] | JBB Cherokee Holdings LLC [Member] | Selling, General and Administrative Expenses [Member] | ||||
Related Party Lease Cost Included Selling, General and Administrative Costs [Abstract] | ||||
Operating leases costs (related party) | 87 | 86 | 173 | 173 |
Variable lease costs - operating (related party) | $ 21 | $ 20 | $ 39 | $ 40 |
Transactions with related par_4
Transactions with related parties, Summary of Transaction (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) Lot | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) Lot | Dec. 31, 2023 USD ($) Note | |
Lot Option Agreements [Member] | |||||
Related Party Transaction [Abstract] | |||||
Number of lots purchased | Lot | 9 | 35 | |||
Amount of lots purchased | $ 800 | $ 0 | $ 3,000 | ||
Lot Option Agreements [Member] | Former Member of Board of Manager [Member] | |||||
Related Party Transaction [Abstract] | |||||
Number of lots purchased | Lot | 77 | 159 | |||
Amount of lots purchased | $ 3,700 | $ 8,300 | |||
Number of lots sold | Lot | 10 | 15 | |||
Amount of lots sold | $ 700 | $ 1,000 | |||
Consulting Agreement [Member] | Former Member of Board of Manager [Member] | |||||
Related Party Transaction [Abstract] | |||||
Consulting service | 600 | ||||
Selling, General and Administrative Expenses [Member] | Dry Lease Agreement [Member] | |||||
Related Party Transaction [Abstract] | |||||
Business travel expenses incurred and paid | $ 46 | 31 | 78 | 51 | |
Selling, General and Administrative Expenses [Member] | Consulting Agreement [Member] | Former Member of Board of Manager [Member] | |||||
Related Party Transaction [Abstract] | |||||
Consulting fees earned | 200 | 300 | |||
Related Party [Member] | |||||
Related Party Transaction [Abstract] | |||||
Payments under the office lease agreement | 100 | 100 | 200 | 200 | |
Facilities fee paid | 100 | 400 | 100 | 400 | |
Number of uncollateralized notes payable | Note | 2 | ||||
Related Party [Member] | Uncollateralized Notes Payable 2.12% [Member] | |||||
Related Party Transaction [Abstract] | |||||
Uncollateralized notes payable, interest rate | 2.12% | ||||
Related Party [Member] | Uncollateralized Notes Payable 2.56% [Member] | |||||
Related Party Transaction [Abstract] | |||||
Uncollateralized notes payable, interest rate | 2.56% | ||||
Related Party [Member] | Accrued Expenses and Other Liabilities [Member] | |||||
Related Party Transaction [Abstract] | |||||
Accounts payable | 0 | 0 | $ 11 | ||
Notes and other payables | 900 | ||||
Related Party [Member] | Other Assets [Member] | |||||
Related Party Transaction [Abstract] | |||||
Accounts receivable | 100 | 100 | $ 100 | ||
Related Party [Member] | Selling, General and Administrative Expenses [Member] | |||||
Related Party Transaction [Abstract] | |||||
Facilities fee incurred | $ 100 | $ 400 | $ 400 | $ 400 |
Segment information (Details)
Segment information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) Segment | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) | ||
Segment information [Abstract] | ||||||
Number of reportable segments | Segment | 6 | |||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Home closing revenue | $ 220,933 | $ 181,522 | $ 410,142 | $ 349,666 | ||
Net income (loss) | 24,734 | 30,741 | 45,220 | 59,567 | ||
Assets | 429,254 | 429,254 | $ 352,692 | |||
Goodwill | 25,726 | 25,726 | 25,726 | |||
Devon Street Homes, L.P [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Goodwill | 25,700 | 25,700 | ||||
Corporate [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Net income (loss) | [1] | (12,659) | (6,569) | (23,461) | (11,928) | |
Assets | [2] | 35,066 | 35,066 | 24,770 | ||
Americas [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Net income (loss) | 37,393 | 37,310 | 68,681 | 71,495 | ||
Assets | 394,188 | 394,188 | 327,922 | |||
Alabama [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Home closing revenue | 43,585 | 18,800 | 83,240 | 42,867 | ||
Net income (loss) | 5,559 | 1,435 | 10,163 | 3,676 | ||
Assets | 54,090 | 54,090 | 61,433 | |||
Atlanta [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Home closing revenue | 80,220 | 94,104 | 142,840 | 170,278 | ||
Net income (loss) | 18,012 | 23,379 | 32,583 | 42,928 | ||
Assets | 126,601 | 126,601 | 86,647 | |||
Charlotte [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Home closing revenue | 15,352 | 14,369 | 28,816 | 26,871 | ||
Net income (loss) | 2,380 | 2,380 | 4,004 | 4,313 | ||
Assets | 40,645 | 40,645 | 32,302 | |||
Houston [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Home closing revenue | 31,248 | 0 | 55,278 | 0 | ||
Net income (loss) | 3,446 | 0 | 6,812 | 0 | ||
Assets | [3] | 109,319 | 109,319 | 93,825 | ||
Nashville [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Home closing revenue | 21,707 | 28,019 | 43,737 | 51,908 | ||
Net income (loss) | 2,789 | 4,501 | 5,102 | 7,732 | ||
Assets | 23,135 | 23,135 | 24,818 | |||
Raleigh [Member] | ||||||
Revenue net Income loss, assets for reportable segments [Abstract] | ||||||
Home closing revenue | 28,821 | 26,230 | 56,231 | 57,742 | ||
Net income (loss) | 5,207 | $ 5,615 | 10,017 | $ 12,846 | ||
Assets | $ 40,398 | $ 40,398 | $ 28,897 | |||
[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.[2]Corporate primarily includes cash and cash equivalents, property and equipment, and other assets that are not allocated to the segments.[3]Balance includes goodwill of approximately $25.7 million resulting from the acquisition of Devon Street Homes, L.P. |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2024 | Jun. 30, 2024 | |
Numerator [Abstract] | |||
Net income attributable to Smith Douglas Homes Corp, Basic | $ 3,646 | $ 6,618 | $ 6,618 |
Add: Net income impact from assumed redemption of all LLC Interests to common stock | 21,088 | 39,762 | |
Less: Income tax expense on net income attributable to NCI at 20.8% | (4,384) | (8,267) | |
Net income attributable to Smith Douglas Homes Corp., after adjustment for assumed redemption, Diluted | $ 20,350 | $ 38,113 | |
Denominator [Abstract] | |||
Weighted average shares of common stock outstanding, Basic (in shares) | 8,846,154 | 8,846,154 | |
Dilutive effects of [Abstract] | |||
LLC Interests that are exchangeable for common stock (in shares) | 42,435,897 | 42,435,897 | |
Unvested RSUs (in shares) | 149,923 | 132,458 | |
Weighted average shares of common stock outstanding, Diluted (in shares) | 51,431,974 | 51,414,509 | |
Basic earnings per share (in dollars per share) | $ 0.41 | $ 0.75 | |
Diluted earnings per share (in dollars per share) | $ 0.4 | $ 0.74 | |
Income tax expense attributable to non controlling interest | 20.80% | 20.80% |