Smith Douglas Homes Q3 profit falls to $3.03M
Orders and backlog homes increased year over year, while home-closing gross margin and diluted earnings per share were lower.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
8-K
Rhea-AI Filing Summary
Smith Douglas Homes Corp. reported third-quarter 2026 home-closing revenue of $262.5 million, up 0.2% year over year, on 831 closings, up 5%. Gross margin was 16.3%, versus 21.0%; pretax income was $3.3 million versus $17.2 million, and diluted earnings per share were $0.07 versus $0.24. Net income was $3.031 million, compared with $16.215 million.
Net new home orders increased 13% to 777 and period-end backlog homes increased 25% to 947. Active communities numbered 113 and controlled lots totaled 24,724 at quarter end. Smith Douglas repurchased 28,370 Class A shares for $0.3 million. Chief Executive Officer and Vice Chairman Greg Bennett said higher mortgage rates and affordability pressures weighed on buyer demand and profitability.
For the first nine months, home-closing revenue was $741.979 million versus $710.687 million, while net income was $8.861 million versus $51.360 million. At September 30, 2026, notes payable were $101.420 million and debt-to-book capitalization was 18.8%, compared with 9.0% at December 31, 2025. Management expects market conditions to remain challenging in the near term.
1 point · 0 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month operating cash used narrowed to $28.486 million from $41.094 million.
Negative
- Moderate pointThird-quarter net income was $3.031 million, compared with $16.215 million.
Filing Explained
Some third-quarter consolidated net income was attributable to Smith Douglas Homes Corp.
This Form 8-K furnishes the company’s third-quarter results; at
For the third quarter, consolidated net income was
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Home-closing revenue: $262.5 million
Home-closing gross margin: 16.3%
Net income: $3.031 million
+5 more
8 metrics
Home-closing revenue
$262.5 million
Third quarter 2026; up 0.2% year over year
Home-closing gross margin
16.3%
Third quarter 2026; compared with 21.0% in third quarter 2025
Net income
$3.031 million
Third quarter 2026; compared with $16.215 million in third quarter 2025
Diluted earnings per share
$0.07 per share
Third quarter 2026; compared with $0.24 in third quarter 2025
Net new home orders
777 homes
Third quarter 2026; increased 13% from 690 in third quarter 2025
Backlog homes
947 homes
At September 30, 2026; increased 25% from 760 at September 30, 2025
Net cash used in operating activities
$28.486 million
Nine months ended September 30, 2026; compared with $41.094 million in 2025
Debt-to-book capitalization
18.8%
At September 30, 2026; compared with 9.0% at December 31, 2025
Key Terms
Cancellation rate, Backlog homes, Debt-to-book capitalization, Adjusted net income, +1 more
5 terms
Cancellation rate financial
"The cancellation rate is the total number of cancellations"
The cancellation rate is the share of orders, bookings, subscriptions or appointments that are cancelled before they are completed, expressed as a percentage of total commitments. Investors care because a rising cancellation rate is like many diners calling off reservations: it can signal weaker demand, lower predictable revenue, higher costs to replace lost business, and risks to future growth and cash flow forecasts.
Backlog homes financial
"Backlog homes (period end)"
Debt-to-book capitalization financial
"Debt-to-book capitalization of 18.8%"
Debt-to-book capitalization is a leverage ratio that compares a company’s total debt to its total capital measured at book value (debt plus shareholders’ equity recorded on the balance sheet). It shows what share of the company’s funding comes from borrowed money rather than owners’ stake, using accounting values instead of current market prices. Investors use it like checking how much of a house is financed by a mortgage versus the owner’s down payment to gauge financial risk and resilience to interest or earnings shocks.
Adjusted net income financial
"Adjusted net income is a supplemental non-GAAP financial measure"
Adjusted net income is a company's reported profit after removing unusual, one-time, or non-operational items so the number reflects the business’s regular earning power. Investors use it like a cleaned-up scorecard — similar to judging a player’s season performance without a few fluke games — to compare companies or assess trends without being misled by rare gains or losses that won’t affect future cash flow.
Net debt-to-net book capitalization financial
"Net debt-to-net book capitalization is a supplemental measure of our leverage"
Earnings Snapshot
Home-closing revenue: $262.5 million
Three months ended September 30, 2026
Home-closing revenue
$262.5 million
Up 0.2% year over year
Home-closing gross margin
16.3%
Compared with 21.0% in third quarter 2025
Pretax income
$3.3 million
Compared with $17.2 million in third quarter 2025
Net income
$3.031 million
Compared with $16.215 million in third quarter 2025
Diluted earnings per share
$0.07 per share
Compared with $0.24 in third quarter 2025
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was SDHC's cancellation rate in Q3 2026?
SDHC reported an 11.3% cancellation rate for the three months ended September 30, 2026, compared with 11.2% in 2025. For the nine months, the rate was 11.1%, compared with 9.7% in 2025; the rate is cancellations divided by gross new home orders.
How did SDHC's cash flows compare for the first nine months of 2026?
For the nine months ended September 30, 2026, net cash used in operating activities was $28.486 million, compared with $41.094 million in 2025. Net cash used in investing activities was $0.903 million, and net cash provided by financing activities was $22.570 million.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________
FORM 8-K
_______________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
_______________________________________________________________
(Exact name of registrant as specified in its charter)
_______________________________________________________________
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices) (Zip Code) | ||
( (Registrant’s telephone number, including area code) | ||
N/A (Former name or former address, if changed since last report) | ||
_______________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | |||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Item 2.02. Results of Operations and Financial Condition.
On November 4, 2026, Smith Douglas Homes Corp. (the “Company”) announced its financial results for the three and nine months ended September 30, 2026. The full text of the press release issued by the Company in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K (the “Current Report”).
The information contained in Item 2.02 of this Current Report (including Exhibit 99.1 attached hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly provided by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits
The following exhibit relates to Item 2.02 and shall be deemed to be furnished, and not filed:
Exhibit No. | Description | |||||||
99.1 | Press release dated November 4, 2026 | |||||||
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 4, 2026 | SMITH DOUGLAS HOMES CORP. | |||||||
| By: | /s/ Russell Devendorf | |||||||
| Russell Devendorf | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
Exhibit 99.1
Smith Douglas Homes Reports Third Quarter 2026 Results
ATLANTA, November 4, 2026 (Business Wire) – Smith Douglas Homes Corp. (NYSE: SDHC) (“Smith Douglas” or the “Company”) today announced third quarter results for the three and nine months ended September 30, 2026.
Q3 2026 Results as compared to Q3 2025:
•Home closings increased 5% to 831
•Home closing revenue increased 0.2% to $262.5 million
•Home closing gross margin of 16.3% compared to 21.0%
•Net new home orders increased 13% to 777
•Backlog homes increased 25% to 947
•Pretax income of $3.3 million compared to $17.2 million
•Earnings of $0.07 per diluted share compared to $0.24
•Debt-to-book capitalization of 18.8% compared to 9.0% at December 31, 2025
•Active community count increased 15% to 113 at quarter end
•Total controlled lots increased 2% to 24,724
•Repurchased 28,370 shares of Class A common stock for $0.3 million
“We continued to execute with discipline during the third quarter despite increasingly challenging housing market conditions,” said Greg Bennett, Chief Executive Officer and Vice Chairman of Smith Douglas Homes. “Higher mortgage rates and affordability pressures have weighed on buyer demand and profitability, but our teams remain focused on things we can control with respect to managing costs, building efficiently, and maintaining a steady absorption pace. We believe our differentiated operating model and commitment to providing affordable, quality homes position us well to navigate the current environment.”
Mr. Bennett continued, “While we expect market conditions to remain challenging in the near term, we remain confident in the long-term demand for affordable housing. Our priorities continue to be running an efficient homebuilding operation and preserving our financial strength while remaining prepared to take advantage of opportunities as conditions improve.”
“Our disciplined approach to capital allocation and land investment remains particularly important in today’s operating environment,” said Russ Devendorf, Executive Vice President and Chief Financial Officer. “Our land-light operating model, efficient construction cycle times, and conservative balance sheet provide us with the flexibility to manage through periods of weaker demand without compromising our long-term objectives. We remain focused on preserving liquidity, managing inventory, and generating attractive returns on invested capital, while positioning Smith Douglas to emerge from this challenging period in a strong competitive position.”
1
Conference Call & Webcast Information
Management will host a conference call to discuss the Company’s results at 8:30 a.m. Eastern Time on November 4, 2026. Interested parties can dial in using the numbers below or access the call via a webcast link provided in the investor relations section of the Company’s website.
To join with dial-in:
Local: (+1) 585-542-9983
Toll Free: (+1) 833-461-5787
Conference ID: 245281666
A replay of the call will be available on the Company’s website shortly after the call concludes.
About Smith Douglas Homes
Headquartered in Woodstock, Georgia, Smith Douglas Homes completed its initial public offering in January 2024. Since its inception, Smith Douglas has been entrusted by over 20,000 families to fulfill their new home dreams. Ranked a top 50 builder nationally for several years and with 2,908 closings in 2025, Smith Douglas currently holds the #33 position on the Builder Magazine Top 100 list. The Smith Douglas communities are primarily targeted to entry-level and empty-nest homebuyers looking to purchase a new home priced below the Federal Housing Administration loan limit in the metro areas of Atlanta, Birmingham, Central Georgia, Charlotte, Chattanooga, Dallas-Fort Worth, Greenville, Houston, Huntsville, Nashville, Raleigh, and the Alabama Gulf Coast. Smith Douglas offers its homebuyers a personalized, affordable buying experience at attractive prices, delivering exceptional value and quality.
Investor Relations
Joe Thomas
investors@smithdouglas.com
2
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the Company’s performance, growth, strategic plans and opportunities, financial position, ability to navigate the changing homebuilding landscape in the macroeconomic environment, and the timing of any of the foregoing. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. These forward-looking statements are based on management’s current estimates and expectations. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.
3
Smith Douglas Homes
Condensed Consolidated Statements of Income
(Unaudited, in thousands, except share and per share amounts)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Home closing revenue | $ | 262,509 | $ | 262,041 | $ | 741,979 | $ | 710,687 | ||||||||||||||||||
| Cost of home closings | 219,791 | 207,071 | 610,889 | 550,248 | ||||||||||||||||||||||
| Home closing gross profit | 42,718 | 54,970 | 131,090 | 160,439 | ||||||||||||||||||||||
| Selling, general and administrative costs | 40,380 | 36,088 | 118,206 | 103,789 | ||||||||||||||||||||||
| Equity in income from unconsolidated entities | (791) | (640) | (2,104) | (1,457) | ||||||||||||||||||||||
| Interest expense | 66 | 898 | 1,554 | 2,336 | ||||||||||||||||||||||
| Other (income) expense, net | (247) | 1,388 | 3,941 | 1,789 | ||||||||||||||||||||||
| Income before income taxes | 3,310 | 17,236 | 9,493 | 53,982 | ||||||||||||||||||||||
| Provision for income taxes | 279 | 1,021 | 632 | 2,622 | ||||||||||||||||||||||
| Net income | 3,031 | 16,215 | 8,861 | 51,360 | ||||||||||||||||||||||
| Net income attributable to non-controlling interests | 2,454 | 14,089 | 7,473 | 44,186 | ||||||||||||||||||||||
| Net income attributable to Smith Douglas Homes Corp. | $ | 577 | $ | 2,126 | $ | 1,388 | $ | 7,174 | ||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Earnings per share: | ||||||||||||||||||||||||||
| Basic | $ | 0.07 | $ | 0.24 | $ | 0.16 | $ | 0.80 | ||||||||||||||||||
| Diluted | $ | 0.07 | $ | 0.24 | $ | 0.16 | $ | 0.78 | ||||||||||||||||||
| Weighted average shares of common stock outstanding: | ||||||||||||||||||||||||||
| Basic | 8,387,619 | 9,017,398 | 8,593,432 | 8,994,810 | ||||||||||||||||||||||
| Diluted | 8,387,619 | 9,056,364 | 8,593,432 | 9,192,482 | ||||||||||||||||||||||
4
Smith Douglas Homes
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
| September 30, 2026 | December 31, 2025 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 5,922 | $ | 12,741 | ||||||||||
| Real estate inventory | 386,530 | 298,637 | ||||||||||||
| Deposits on real estate under option or contract | 140,591 | 138,763 | ||||||||||||
| Real estate not owned | 14,535 | 28,051 | ||||||||||||
| Property and equipment, net | 8,724 | 9,720 | ||||||||||||
| Goodwill | 25,726 | 25,726 | ||||||||||||
| Deferred tax asset, net | 9,687 | 9,666 | ||||||||||||
| Other assets | 42,129 | 34,289 | ||||||||||||
| Total assets | $ | 633,844 | $ | 557,593 | ||||||||||
| Liabilities and Equity | ||||||||||||||
| Liabilities: | ||||||||||||||
| Accounts payable | $ | 37,880 | $ | 1,938 | ||||||||||
| Customer deposits | 7,534 | 3,108 | ||||||||||||
| Notes payable | 101,420 | 44,075 | ||||||||||||
| Liabilities related to real estate not owned | 14,535 | 28,051 | ||||||||||||
| Accrued expenses and other liabilities | 26,362 | 26,428 | ||||||||||||
| Tax receivable agreement liability | 9,382 | 9,857 | ||||||||||||
| Total liabilities | 197,113 | 113,457 | ||||||||||||
| Commitments and contingencies (Note 9) | ||||||||||||||
| Equity: | ||||||||||||||
Preferred stock, $0.0001 par value – 10,000,000 shares authorized; none issued and outstanding as of September 30, 2026 and December 31, 2025 | — | — | ||||||||||||
Class A common stock, $0.0001 par value – 250,000,000 shares authorized; 9,109,212 and 9,017,708 shares issued; 8,364,617 and 9,017,708 shares outstanding as of September 30, 2026 and December 31, 2025, respectively | 1 | 1 | ||||||||||||
Class B common stock, $0.0001 par value – 100,000,000 shares authorized; 42,435,897 shares issued and outstanding as of September 30, 2026 and December 31, 2025 | 4 | 4 | ||||||||||||
| Additional paid-in capital | 63,616 | 60,610 | ||||||||||||
| Retained earnings | 27,501 | 26,113 | ||||||||||||
| Treasury stock, at cost | (9,815) | — | ||||||||||||
| Total stockholders’ equity attributable to Smith Douglas Homes Corp. | 81,307 | 86,728 | ||||||||||||
| Non-controlling interests attributable to Smith Douglas Holdings LLC | 355,424 | 357,408 | ||||||||||||
| Total equity | 436,731 | 444,136 | ||||||||||||
| Total liabilities and equity | $ | 633,844 | $ | 557,593 | ||||||||||
5
Smith Douglas Homes
Summary Cash Flow Information
(Unaudited, dollars in thousands)
| Nine months ended September 30, | 2026 | 2025 | ||||||||||||
| Net cash used in operating activities | $ | (28,486) | $ | (41,094) | ||||||||||
| Net cash used in investing activities | (903) | (5,573) | ||||||||||||
| Net cash provided by financing activities | 22,570 | 39,079 | ||||||||||||
| Net decrease in cash and cash equivalents | (6,819) | (7,588) | ||||||||||||
| Cash and cash equivalents, beginning of period | 12,741 | 22,363 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 5,922 | $ | 14,775 | ||||||||||
Smith Douglas Homes
Selected Other Operating Data
(Unaudited, dollars in thousands)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Home closings | 831 | 788 | 2,294 | 2,128 | ||||||||||||||||||||||
| ASP of homes closed | $ | 316 | $ | 333 | $ | 323 | $ | 334 | ||||||||||||||||||
| Net new home orders | 777 | 690 | 2,728 | 2,194 | ||||||||||||||||||||||
| Contract value of net new home orders | $ | 246,096 | $ | 231,818 | $ | 881,401 | $ | 737,957 | ||||||||||||||||||
| ASP of net new home orders | $ | 317 | $ | 336 | $ | 323 | $ | 336 | ||||||||||||||||||
Cancellation rate(1) | 11.3% | 11.2% | 11.1% | 9.7% | ||||||||||||||||||||||
Backlog homes (period end)(2) | 947 | 760 | 947 | 760 | ||||||||||||||||||||||
| Contract value of backlog homes (period end) | $ | 305,266 | $ | 258,732 | $ | 305,266 | $ | 258,732 | ||||||||||||||||||
| ASP of backlog homes (period end) | $ | 322 | $ | 340 | $ | 322 | $ | 340 | ||||||||||||||||||
Active communities (period end)(3) | 113 | 98 | 113 | 98 | ||||||||||||||||||||||
| Controlled lots (period end): | ||||||||||||||||||||||||||
| Homes under construction | 1,514 | 1,098 | 1,514 | 1,098 | ||||||||||||||||||||||
| Owned lots | 517 | 641 | 517 | 641 | ||||||||||||||||||||||
| Optioned lots | 22,693 | 22,561 | 22,693 | 22,561 | ||||||||||||||||||||||
| Total controlled lots | 24,724 | 24,300 | 24,724 | 24,300 | ||||||||||||||||||||||
(1)The cancellation rate is the total number of cancellations during the period divided by the total gross new home orders during the period.
(2)Backlog homes (period end) is the number of homes in backlog from the previous period plus the number of net new home orders generated during the current period minus the number of homes closed during the current period.
(3)A community becomes active once the model is completed or the community has its first sale. A community becomes inactive when it has fewer than two homes remaining to sell.
6
Smith Douglas Homes
Selected Financial Information by Segment
(Unaudited, dollars in thousands)
Home Closing Revenue
| Three months ended September 30, | 2026 | 2025 | Period over period change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Home closing revenue | Home closings | ASP of homes closed | Home closing revenue | Home closings | ASP of homes closed | Home closing revenue | Home closings | ASP of homes closed | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Southeast | $ | 163,178 | 505 | $ | 323 | $ | 166,625 | 493 | $ | 338 | (2) | % | 2 | % | (4) | % | |||||||||||||||||||||||||||||||||||||||||||
| Central | 99,331 | 326 | 305 | 95,416 | 295 | 323 | 4 | % | 11 | % | (6) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 262,509 | 831 | $ | 316 | $ | 262,041 | 788 | $ | 333 | — | % | 5 | % | (5) | % | |||||||||||||||||||||||||||||||||||||||||||
| Nine months ended September 30, | 2026 | 2025 | Period over period change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Home closing revenue | Home closings | ASP of homes closed | Home closing revenue | Home closings | ASP of homes closed | Home closing revenue | Home closings | ASP of homes closed | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Southeast | $ | 453,251 | 1,372 | $ | 330 | $ | 446,110 | 1,292 | $ | 345 | 2 | % | 6 | % | (4) | % | |||||||||||||||||||||||||||||||||||||||||||
| Central | 288,728 | 922 | 313 | 264,577 | 836 | 316 | 9 | % | 10 | % | (1) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 741,979 | 2,294 | $ | 323 | $ | 710,687 | 2,128 | $ | 334 | 4 | % | 8 | % | (3) | % | |||||||||||||||||||||||||||||||||||||||||||
Backlog
| As of September 30, | 2026 | 2025 | Period over period change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Backlog homes | Contract value of backlog homes | ASP of backlog homes | Backlog homes | Contract value of backlog homes | ASP of backlog homes | Backlog homes | Contract value of backlog homes | ASP of backlog homes | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 622 | $ | 201,644 | $ | 324 | 430 | $ | 151,463 | $ | 352 | 45 | % | 33 | % | (8) | % | |||||||||||||||||||||||||||||||||||||||||||
| Central | 325 | 103,622 | 319 | 330 | 107,269 | 325 | (2) | % | (3) | % | (2) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | 947 | $ | 305,266 | $ | 322 | 760 | $ | 258,732 | $ | 340 | 25 | % | 18 | % | (5) | % | |||||||||||||||||||||||||||||||||||||||||||
Controlled Lots
| As of September 30, | 2026 | 2025 | Period over period change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Owned(1) | Optioned | Total Controlled | Owned(1) | Optioned | Total Controlled | Owned(1) | Optioned | Total Controlled | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 1,124 | 14,632 | 15,756 | 961 | 15,039 | 16,000 | 17 | % | (3) | % | (2) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Central | 907 | 8,061 | 8,968 | 778 | 7,522 | 8,300 | 17 | % | 7 | % | 8 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | 2,031 | 22,693 | 24,724 | 1,739 | 22,561 | 24,300 | 17 | % | 1 | % | 2 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(1)Includes homes under construction and owned lots.
7
Net Income
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Period over period change | 2026 | 2025 | Period over period change | |||||||||||||||||||||||||||||||||
| Southeast | $ | 12,073 | $ | 20,854 | $ | (8,781) | $ | 35,127 | $ | 66,700 | $ | (31,573) | ||||||||||||||||||||||||||
| Central | 3,083 | 5,393 | (2,310) | 14,384 | 18,748 | (4,364) | ||||||||||||||||||||||||||||||||
| Segment total | 15,156 | 26,247 | (11,091) | 49,511 | 85,448 | (35,937) | ||||||||||||||||||||||||||||||||
Other(1) | (12,125) | (10,032) | (2,093) | (40,650) | (34,088) | (6,562) | ||||||||||||||||||||||||||||||||
| Total | $ | 3,031 | $ | 16,215 | $ | (13,184) | $ | 8,861 | $ | 51,360 | $ | (42,499) | ||||||||||||||||||||||||||
(1)Other primarily includes homebuilding operations in non-reportable segments, corporate overhead costs, such as payroll and benefits, business insurance, information technology, office costs, outside professional services and travel costs, and certain other amounts that are not allocated to the reportable segments.
Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in the U.S. (“GAAP”), this press release includes net debt-to-net book capitalization and adjusted net income.
Net debt-to-net book capitalization
Net debt-to-net book capitalization is a supplemental measure of our leverage that is not required by, or presented in accordance with, GAAP and should not be considered as an alternative to debt-to-book capitalization or any other measure derived in accordance with GAAP. We caution investors that amounts presented in accordance with our definition of net debt-to-net book capitalization may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate this non-GAAP financial measure in the same manner. We present this non-GAAP financial measure because we consider it to be an important supplemental measure of our leverage and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry.
We define net debt-to-net book capitalization as:
•Total debt, less cash and cash equivalents, divided by
•Total debt, less cash and cash equivalents, plus equity.
This non-GAAP financial measure has limitations as an analytical tool in that it subtracts cash and cash equivalents and therefore may imply that the Company has less debt than the most comparable measure determined in accordance with GAAP. Because of this limitation, this non-GAAP financial measure should be considered along with other financial measures presented in accordance with GAAP. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. We have reconciled this non-GAAP financial measure with the most directly comparable GAAP financial measure in the following table:
8
| As of (in thousands, except percentages) | September 30, 2026 | December 31, 2025 | ||||||||||||
| Notes payable | $ | 101,420 | $ | 44,075 | ||||||||||
| Equity | 436,731 | 444,136 | ||||||||||||
| Total capitalization | $ | 538,151 | $ | 488,211 | ||||||||||
| Debt-to-book capitalization | 18.8% | 9.0% | ||||||||||||
| Notes payable | $ | 101,420 | $ | 44,075 | ||||||||||
| Less: cash and cash equivalents | 5,922 | 12,741 | ||||||||||||
| Net debt | 95,498 | 31,334 | ||||||||||||
| Equity | 436,731 | 444,136 | ||||||||||||
| Total net capitalization | $ | 532,229 | $ | 475,470 | ||||||||||
| Net debt-to-net book capitalization | 17.9% | 6.6% | ||||||||||||
Adjusted net income
Adjusted net income is not a measure of net income or net income margin as determined by GAAP. Adjusted net income is a supplemental non-GAAP financial measure used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies. We define adjusted net income as net income adjusted for the tax impact using an applicable federal and state blended tax rate (assuming 100% public ownership to adjust for the impact of taxes on earnings attributable to Smith Douglas Holdings LLC as if Smith Douglas Holdings LLC was a subchapter C corporation in the periods presented).
Management believes adjusted net income is useful because it allows management to more effectively evaluate our operating performance and comparability to industry peers who record income tax expense on their income before tax as opposed to the income of Smith Douglas Holdings LLC not being taxed at the entity level and, therefore, not reflecting a charge against earnings for income tax expense. Adjusted net income should not be considered as an alternative to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. Our computation of adjusted net income may not be comparable to adjusted net income of other companies. We present adjusted net income because we believe it provides useful information regarding our comparability to peers.
The following table presents a reconciliation of adjusted net income to the GAAP financial measure of net income for each of the periods indicated (in thousands):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net income | $ | 3,031 | $ | 16,215 | $ | 8,861 | $ | 51,360 | ||||||||||||||||||
| Provision for income taxes | 279 | 1,021 | 632 | 2,622 | ||||||||||||||||||||||
| Income before income taxes | 3,310 | 17,236 | 9,493 | 53,982 | ||||||||||||||||||||||
Tax-effected adjustments(1) | 901 | 4,240 | 2,583 | 13,280 | ||||||||||||||||||||||
| Adjusted net income | $ | 2,409 | $ | 12,996 | $ | 6,910 | $ | 40,702 | ||||||||||||||||||
(1)For the three and nine months ended September 30, 2026 and 2025, our tax expenses assume a 27.2% and 24.6% federal and state blended tax rate, respectively, (assuming 100% public ownership to adjust for the impact of taxes on earnings attributable to Smith Douglas Holdings LLC as if Smith Douglas Holdings LLC was a subchapter C corporation in the periods presented).
9