Smith Douglas Homes Corp., a builder of single-family homes primarily targeting first-time and empty-nest buyers in the southeastern and southern United States, reported significant financial developments in its recent 10-Q filing for the period ending September 30, 2024. The company, which completed its IPO on January 16, 2024, raised gross proceeds of approximately $185.8 million, with net proceeds of about $172.8 million after underwriting discounts.

For the three months ended September 30, 2024, Smith Douglas Homes achieved home closing revenue of $277.8 million, a 41% increase from $197.6 million in the same period of 2023. This growth was driven by a 39% rise in the number of homes closed, totaling 812, and a slight increase in the average selling price. Gross profit for the quarter also rose to $73.7 million, up from $57.1 million, although the gross margin decreased to 26.5% from 28.9% due to rising costs.

In the nine-month period ending September 30, 2024, home closing revenue reached $688.0 million, reflecting a 26% increase from $547.3 million in the prior year. However, net income for this period decreased to $83.0 million from $93.5 million, attributed to increased selling, general, and administrative costs, which rose by 45% to $93.5 million.

The company’s total assets increased to $460.1 million as of September 30, 2024, up from $352.7 million at the end of 2023, with real estate inventory rising significantly to $282.0 million. Total liabilities decreased to $87.7 million, down from $143.8 million, contributing to an increase in stockholders’ equity to $372.4 million.

Strategically, Smith Douglas Homes has adopted a land-light operating model, utilizing lot-option contracts to minimize financial risks associated with land ownership. As of September 30, 2024, the company had $73.9 million in non-refundable cash deposits related to land and lot-option contracts, with a remaining purchase price of approximately $612.8 million.

The company also restructured its credit facilities, replacing a $175.0 million unsecured revolving credit facility with a new $250.0 million Amended Credit Facility, which matures in January 2027. As of the reporting date, there were no outstanding borrowings under this facility.

Overall, while Smith Douglas Homes Corp. experienced robust revenue growth and improved asset position, it faced challenges in net income due to rising operational costs and market conditions. The company continues to focus on strategic growth and operational efficiency in a competitive housing market.