[8-K] Smith Douglas Homes Corp. Reports Material Event
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Smith Douglas Homes Corp. reported softer profitability for the first quarter of 2026 while demand indicators improved. Home closing revenue fell 8% to $206.4 million on a 7% decline in home closings to 624, and home closing gross margin compressed to 19.6% from 23.8%.
Net income dropped to $4.1 million from $18.7 million, with earnings of $0.06 per diluted share versus $0.30 a year earlier, reflecting higher selling, general and administrative costs and lower gross profit. Cash from operating activities was modestly positive at $0.3 million versus a significant outflow in the prior year.
Order trends were stronger: net new home orders rose 28% to 981, backlog homes increased 10% to 869, and active community count grew 24% to 108. Total controlled lots increased 14% to 23,314. The company repurchased 449,604 Class A shares for $5.7 million. Debt-to-book capitalization was 13.6%, and net debt-to-net book capitalization was 8.5% as of March 31, 2026.
Positive
- None.
Negative
- None.
Insights
Profitability weakened sharply, but orders, communities and lot position expanded.
Smith Douglas Homes saw Q1 2026 home closing revenue decline to $206.4 million with gross margin at 19.6%, down from 23.8%. Net income fell to $4.1 million and diluted EPS to $0.06, driven by lower gross profit and higher SG&A.
Despite weaker closings, demand indicators improved. Net new home orders increased 28% to 981, backlog homes rose 10% to 869, and the active community count expanded 24% to 108. Total controlled lots grew 14% to 23,314, suggesting continued geographic and community growth.
Leverage metrics remained moderate, with debt-to-book capitalization at 13.6% and net debt-to-net book capitalization at 8.5% as of March 31, 2026. The company also repurchased 449,604 Class A shares for $5.7 million. Future filings may clarify how the stronger order book converts into revenue and margins over coming quarters.
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, and exhibit attachments filed with this report.
Key Figures
Home closing revenue: $206.4 million
Net income: $4.1 million
Diluted EPS: $0.06 per share
+5 more
8 metrics
Home closing revenue
$206.4 million
Three months ended March 31, 2026; down 8% vs. 2025
Net income
$4.1 million
Three months ended March 31, 2026; vs. $18.7 million in 2025
Diluted EPS
$0.06 per share
Three months ended March 31, 2026; vs. $0.30 in 2025
Net new home orders
981 orders
Three months ended March 31, 2026; up 28% vs. 2025
Backlog homes
869 homes
Period-end March 31, 2026; up 10% year over year
Debt-to-book capitalization
13.6%
As of March 31, 2026; based on notes payable and equity
Net debt-to-net book capitalization
8.5%
As of March 31, 2026; after subtracting cash from debt
Net cash from operating activities
$0.3 million
Three months ended March 31, 2026; vs. -$34.9 million in 2025
Key Terms
net new home orders, backlog homes, net debt-to-net book capitalization, adjusted net income, +2 more
6 terms
net new home orders financial
"Net new home orders increased 28% to 981"
backlog homes financial
"Backlog homes increased 10% to 869"
net debt-to-net book capitalization financial
"Net debt-to-net book capitalization | 8.5% | | 6.6%"
adjusted net income financial
"We define adjusted net income as net income adjusted for the tax impact"
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.
cancellation rate financial
"Cancellation rate (1) | 9.3% | | 8.1%"
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.
tax receivable agreement liability financial
"Tax receivable agreement liability | 9,382 | | | 9,857"
A tax receivable agreement liability is the recorded future obligation a company expects to pay under an agreement that shares tax savings generated after a corporate transaction. Think of it like promising to split a refund with a former owner: the company recognizes a future bill on its books that reduces cash available to shareholders and can affect valuation and debt capacity. Investors watch it because it represents a real, sometimes sizable, cash outflow tied to tax benefits realized over time.
Earnings Snapshot
Home closing revenue: $206.4 million
Q1 2026
Home closing revenue
$206.4 million
-8% YoY
Net income
$4.1 million
down from $18.7 million
Diluted EPS
$0.06
down from $0.30
Net new home orders
981
+28% YoY
Backlog homes
869
+10% YoY
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 April 29, 2026, Smith Douglas Homes Corp. (the “Company”) announced its financial results for the three months ended March 31, 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 April 29, 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: April 29, 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 First Quarter 2026 Results
ATLANTA, April 29, 2026 (Business Wire) – Smith Douglas Homes Corp. (NYSE: SDHC) (“Smith Douglas” or the “Company”) today announced first quarter results for the three months ended March 31, 2026.
Q1 2026 Results as compared to Q1 2025:
•Home closings decreased 7% to 624
•Home closing revenue decreased 8% to $206.4 million
•Home closing gross margin of 19.6% compared to 23.8%
•Net new home orders increased 28% to 981
•Backlog homes increased 10% to 869
•Pretax income of $4.3 million compared to $19.6 million
•Earnings of $0.06 per diluted share compared to $0.30
•Debt-to-book capitalization of 13.6% compared to 9.0% at December 31, 2025
•Active community count increased 24% to 108 at quarter end
•Total controlled lots increased 14% to 23,314
•Repurchased 449,604 shares of Class A common stock for $5.7 million
“Smith Douglas Homes delivered a solid start to 2026, with first quarter deliveries at the high end of our guidance range and home closing gross margin exceeding expectations,” said Greg Bennett, Chief Executive Officer and Vice Chairman of Smith Douglas Homes. “While demand conditions remained uneven early in the quarter, we saw steady improvement in our sales pace as the quarter progressed, reflecting the underlying resilience of demand for attainable housing in our markets.”
Mr. Bennett continued, “Our strategy remains centered on operational discipline and maintaining a steady cadence of home starts that supports quick inventory turns. With company-wide build times averaging approximately 57 business days, we believe our efficient production model continues to be a meaningful competitive advantage, allowing us to respond quickly to shifting market conditions while delivering value to our customers.”
Russ Devendorf, Executive Vice President and Chief Financial Officer, added, “During the quarter we generated 981 net new orders and experienced sequential improvement in sales pace each month, culminating in a pace of four homes per community in March. Financing incentives remain an important tool in helping buyers manage monthly affordability, and we were encouraged by the positive demand response to modest pricing adjustments.”
Mr. Devendorf continued, “Our long-term strategy remains focused on disciplined growth, maintaining a land-light balance sheet, and expanding our footprint across high-growth Southern markets. As we continue to scale operations in markets such as Dallas, Chattanooga and the Alabama Gulf Coast, we believe our combination of attainable pricing, customization and operational efficiency positions us well to drive market share gains over time.”
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 April 29, 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 pre-register for the call:
https://events.q4inc.com/analyst/807396100?pwd=T0pURcqS
To join with dial-in:
Local: (+1) 585-542-9983
Toll Free: (+1) 833-461-5787
Conference ID: 807396100
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 as a top 50 builder nationally for several years and with 2,908 closings in 2025, Smith Douglas currently holds the #32 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 March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Home closing revenue | $ | 206,444 | $ | 224,722 | ||||||||||
| Cost of home closings | 165,993 | 171,192 | ||||||||||||
| Home closing gross profit | 40,451 | 53,530 | ||||||||||||
| Selling, general, and administrative costs | 35,912 | 32,999 | ||||||||||||
| Equity in income from unconsolidated entities | (527) | (219) | ||||||||||||
| Interest expense | 848 | 666 | ||||||||||||
| Other (income) expense, net | (97) | 517 | ||||||||||||
| Income before income taxes | 4,315 | 19,567 | ||||||||||||
| Provision for income taxes | 253 | 857 | ||||||||||||
| Net income | 4,062 | 18,710 | ||||||||||||
| Net income attributable to non-controlling interests | 3,497 | 16,027 | ||||||||||||
| Net income attributable to Smith Douglas Homes Corp. | $ | 565 | $ | 2,683 | ||||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 0.06 | $ | 0.30 | ||||||||||
| Diluted | $ | 0.06 | $ | 0.30 | ||||||||||
| Weighted average shares of common stock outstanding: | ||||||||||||||
| Basic | 9,052,830 | 8,966,734 | ||||||||||||
| Diluted | 9,052,830 | 9,133,263 | ||||||||||||
4
Smith Douglas Homes
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 27,986 | $ | 12,741 | |||||||
| Real estate inventory | 314,724 | 298,637 | |||||||||
| Deposits on real estate under option or contract | 141,931 | 138,763 | |||||||||
| Real estate not owned | 32,988 | 28,051 | |||||||||
| Property and equipment, net | 9,403 | 9,720 | |||||||||
| Goodwill | 25,726 | 25,726 | |||||||||
| Deferred tax asset, net | 9,636 | 9,666 | |||||||||
| Other assets | 37,793 | 34,289 | |||||||||
| Total assets | $ | 600,187 | $ | 557,593 | |||||||
| Liabilities and Equity | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable | $ | 23,264 | $ | 1,938 | |||||||
| Customer deposits | 5,067 | 3,108 | |||||||||
| Notes payable | 68,502 | 44,075 | |||||||||
| Liabilities related to real estate not owned | 32,988 | 28,051 | |||||||||
| Accrued expenses and other liabilities | 25,093 | 26,428 | |||||||||
| Tax receivable agreement liability | 9,382 | 9,857 | |||||||||
| Total liabilities | 164,296 | 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 March 31, 2026 and December 31, 2025 | — | — | |||||||||
| Class A common stock, $0.0001 par value – 250,000,000 shares authorized; 9,105,215 and 8,991,378 shares issued, 8,655,611 and 8,991,378 shares outstanding as of March 31, 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 March 31, 2026 and December 31, 2025 | 4 | 4 | |||||||||
| Additional paid-in capital | 61,076 | 60,610 | |||||||||
| Retained earnings | 26,678 | 26,113 | |||||||||
| Treasury stock, at cost | (5,701) | — | |||||||||
| Total stockholders’ equity attributable to Smith Douglas Homes Corp. | 82,058 | 86,728 | |||||||||
| Non-controlling interests attributable to Smith Douglas Holdings LLC | 353,833 | 357,408 | |||||||||
| Total equity | 435,891 | 444,136 | |||||||||
| Total liabilities and equity | $ | 600,187 | $ | 557,593 | |||||||
5
Smith Douglas Homes
Summary Cash Flow Information
(Unaudited, dollars in thousands)
| Three months ended March 31, | 2026 | 2025 | |||||||||
| Net cash provided by (used in) operating activities | $ | 338 | $ | (34,905) | |||||||
| Net cash used in investing activities | (565) | (2,106) | |||||||||
| Net cash provided by financing activities | 15,472 | 27,299 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 15,245 | (9,712) | |||||||||
| Cash and cash equivalents, beginning of period | 12,741 | 22,363 | |||||||||
| Cash and cash equivalents, end of period | $ | 27,986 | $ | 12,651 | |||||||
Smith Douglas Homes
Selected Other Operating Data
(Unaudited, dollars in thousands)
| Three months ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Home closings | 624 | 671 | ||||||||||||
| ASP of homes closed | $ | 331 | $ | 335 | ||||||||||
| Net new home orders | 981 | 768 | ||||||||||||
| Contract value of net new home orders | $ | 323,693 | $ | 258,718 | ||||||||||
| ASP of net new home orders | $ | 330 | $ | 337 | ||||||||||
Cancellation rate(1) | 9.3% | 8.1% | ||||||||||||
Backlog homes (period end)(2) | 869 | 791 | ||||||||||||
| Contract value of backlog homes (period end) | $ | 288,527 | $ | 270,082 | ||||||||||
| ASP of backlog homes (period end) | $ | 332 | $ | 341 | ||||||||||
Active communities (period end)(3) | 108 | 87 | ||||||||||||
| Controlled lots (period end): | ||||||||||||||
| Homes under construction | 1,035 | 995 | ||||||||||||
| Owned lots | 750 | 888 | ||||||||||||
| Optioned lots | 21,529 | 18,559 | ||||||||||||
| Total controlled lots | 23,314 | 20,442 | ||||||||||||
(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 March 31, | 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 | $ | 121,078 | 358 | $ | 338 | $ | 138,218 | 392 | $ | 353 | (12) | % | (9) | % | (4) | % | ||||||||||||||||||||||||||||||||||||||||
| Central | 85,366 | 266 | 321 | 86,504 | 279 | 310 | (1) | % | (5) | % | 4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 206,444 | 624 | $ | 331 | $ | 224,722 | 671 | $ | 335 | (8) | % | (7) | % | (1) | % | ||||||||||||||||||||||||||||||||||||||||
Backlog
| As of March 31, | 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 | 486 | $ | 166,242 | $ | 342 | 486 | $ | 169,968 | $ | 350 | — | % | (2) | % | (2) | % | ||||||||||||||||||||||||||||||||||||||||
| Central | 383 | 122,285 | 319 | 305 | 100,114 | 328 | 26 | % | 22 | % | (3) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 869 | $ | 288,527 | $ | 332 | 791 | $ | 270,082 | $ | 341 | 10 | % | 7 | % | (3) | % | ||||||||||||||||||||||||||||||||||||||||
Controlled Lots
| As of March 31, | 2026 | 2025 | Period over period change | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Owned(1) | Optioned | Total Controlled | Owned(1) | Optioned | Total Controlled | Owned(1) | Optioned | Total Controlled | ||||||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 1,011 | 13,539 | 14,550 | 948 | 12,980 | 13,928 | 7 | % | 4 | % | 4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Central | 774 | 7,990 | 8,764 | 935 | 5,579 | 6,514 | (17) | % | 43 | % | 35 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 1,785 | 21,529 | 23,314 | 1,883 | 18,559 | 20,442 | (5) | % | 16 | % | 14 | % | ||||||||||||||||||||||||||||||||||||||||||||
(1)Includes homes under construction and owned lots.
Net Income
| Three months ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Period over period change | |||||||||||||||||||||
| Southeast | $ | 12,480 | $ | 23,855 | $ | (11,375) | |||||||||||||||||
| Central | 5,435 | 7,010 | (1,575) | ||||||||||||||||||||
| Segment total | 17,915 | 30,865 | (12,950) | ||||||||||||||||||||
Other(1) | (13,853) | (12,155) | (1,698) | ||||||||||||||||||||
| Total | $ | 4,062 | $ | 18,710 | $ | (14,648) | |||||||||||||||||
(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.
7
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:
| As of (in thousands, except percentages) | March 31, 2026 | December 31, 2025 | |||||||||
| Notes payable | $ | 68,502 | $ | 44,075 | |||||||
| Equity | 435,891 | 444,136 | |||||||||
| Total capitalization | $ | 504,393 | $ | 488,211 | |||||||
| Debt-to-book capitalization | 13.6% | 9.0% | |||||||||
| Notes payable | $ | 68,502 | $ | 44,075 | |||||||
| Less: cash and cash equivalents | 27,986 | 12,741 | |||||||||
| Net debt | 40,516 | 31,334 | |||||||||
| Equity | 435,891 | 444,136 | |||||||||
| Total net capitalization | $ | 476,407 | $ | 475,470 | |||||||
| Net debt-to-net book capitalization | 8.5% | 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.
8
The following table presents a reconciliation of adjusted net income to the GAAP financial measure of net income for each of the periods indicated:
| Three months ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net income | $ | 4,062 | $ | 18,710 | ||||||||||
| Provision for income taxes | 253 | 857 | ||||||||||||
| Income before income taxes | 4,315 | 19,567 | ||||||||||||
Tax-effected adjustments(1) | 1,146 | 4,872 | ||||||||||||
| Adjusted net income | $ | 3,169 | $ | 14,695 | ||||||||||
(1)For the three months ended March 31, 2026 and 2025, our tax expenses assume a 26.6% and 24.9% 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