Smith Douglas Homes (NYSE: SDHC) 2025 earnings drop as margins tighten
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Smith Douglas Homes Corp. reported softer results for Q4 and full year 2025, with profitability pressured despite record activity. Q4 home closing revenue fell 9% to
For 2025, home closings inched up 1% to 2,908, but home closing revenue was essentially flat at
Positive
- Operational expansion: Active community count increased 28% to 100 at year-end 2025, and total controlled lots grew 14% to 22,268, supporting the company’s strategy of disciplined growth and geographic diversification.
- Volume resilience: Full-year 2025 home closings reached 2,908, up 1% year over year, with net new home orders rising 3% to 2,726 despite affordability headwinds and competitive discounting.
Negative
- Margin and earnings compression: Home closing gross margin fell from 26.2% to 21.8% in 2025, with net income declining from $111.8 million to $68.4 million and diluted EPS dropping from $1.81 to $1.19.
- Weaker cash flow and higher leverage: Operating cash flow swung from a $19.1 million inflow in 2024 to a $31.3 million outflow in 2025, while debt-to-book capitalization increased sharply from 0.8% to 9.0%.
Insights
Margins and cash flow weakened even as communities and lots expanded.
Smith Douglas Homes showed stable top-line volume but significant earnings pressure in 2025. Home closing revenue was
Operating leverage worked against the company: pre-tax income declined to
At the same time, the platform is clearly scaling. Active community count rose 28% to 100 and total controlled lots increased 14% to 22,268, while full-year closings reached 2,908. Management highlighted affordability pressures and competitive discounting but noted encouraging early 2026 traffic, suggesting future filings will clarify how effectively new communities convert into profitable, cash-generating growth.
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
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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:
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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).
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Item 2.02. Results of Operations and Financial Condition.
On March 11, 2026 , Smith Douglas Homes Corp. (the “Company”) announced its financial results for the fourth quarter and year ended December 31, 2025. 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 | |||||||
| 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: | SMITH DOUGLAS HOMES CORP. | |||||||
| By: | /s/ Russell Devendorf | |||||||
| Russell Devendorf | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
Exhibit 99.1
Smith Douglas Homes Reports Fourth Quarter and Full Year 2025 Results
ATLANTA, March 11, 2026 (Business Wire) – Smith Douglas Homes Corp. (NYSE: SDHC) (“Smith Douglas” or the “Company”) today announced results for the fourth quarter and year ended December 31, 2025.
Q4 2025 Results as compared to Q4 2024:
•Home closings decreased 7% to 780
•Home closing revenue decreased 9% to $260.4 million
•Home closing gross margin of 19.9% compared to 25.5%
•Net new home orders decreased 7% to 532
•Pre-tax income of $16.9 million compared to $30.0 million
•Earnings of $0.39 per diluted share
Full Year 2025 Results as compared to Full Year 2024:
•Home closings increased 1% to 2,908
•Home closing revenue decreased 0.4% to $971.1 million
•Home closing gross margin of 21.8% compared to 26.2%
•Net new home orders increased 3% to 2,726
•Pre-tax income of $70.9 million compared to $116.9 million
•Earnings of $1.19 per diluted share
•Debt-to-book capitalization increased to 9.0% from 0.8%
•Active community count increased 28% to 100 at year end
•Total controlled lots increased 14% to 22,268
“Smith Douglas Homes closed out 2025 on a strong note, delivering record full-year closings and finishing the fourth quarter with both deliveries and gross margin above our stated guidance range,” said Greg Bennett, Vice Chairman and Chief Executive Officer. “Despite a challenging selling environment marked by affordability pressures and aggressive competitive discounting, our teams remained disciplined in maintaining sales pace and operational efficiency while continuing to position the Company for long-term growth.”
Russ Devendorf, Executive Vice President and Chief Financial Officer added, “Sales conditions remained somewhat inconsistent late in the year as affordability pressures continued to impact demand. That said, we have seen encouraging traffic and order activity in early 2026 as we enter the spring selling season. While week-to-week variability remains, we continue to manage pricing and incentives at the community level to support sales pace and maintain the efficiency of our operating platform.”
Mr. Devendorf continued, “Our strategy remains centered on disciplined growth, affordable home offerings, and thoughtful capital deployment across both existing and new markets. We will continue to evaluate investments opportunistically while maintaining our conservative approach to land and leverage.”
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Conference Call & Webcast Information
Management will host a conference call to discuss the Company’s results at 8:30 a.m. Eastern Time on March 11, 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.
Dial-in Numbers:
Toll Free - North America (+1) 800-715-9871
International: (+1) 646-307-1963
Conference ID: 8459388
Replay Numbers:
Toll Free - North America: (+1) 800-770-2030
Playback Passcode: 8459388
Replay will expire 7 days following the event
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 #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
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 opportunities, financial position, and ability to compete in the market environment. 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, 2024, 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.
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Smith Douglas Homes
Condensed Consolidated Statements of Income
(Unaudited, in thousands, except share and per share amounts)
| Three months ended December 31, | Year ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Home closing revenue | $ | 260,429 | $ | 287,486 | $ | 971,116 | $ | 975,463 | ||||||||||||||||||
| Cost of home closings | 208,697 | 214,157 | 758,945 | 719,921 | ||||||||||||||||||||||
| Home closing gross profit | 51,732 | 73,329 | 212,171 | 255,542 | ||||||||||||||||||||||
| Selling, general and administrative costs | 35,991 | 42,895 | 139,780 | 136,382 | ||||||||||||||||||||||
| Equity in income from unconsolidated entities | (621) | (361) | (2,078) | (1,161) | ||||||||||||||||||||||
| Interest expense | 858 | 586 | 3,194 | 2,489 | ||||||||||||||||||||||
| Other (income) expense, net | (1,415) | 173 | 374 | 938 | ||||||||||||||||||||||
| Income before income taxes | 16,919 | 30,036 | 70,901 | 116,894 | ||||||||||||||||||||||
| (Benefit) provision for income taxes | (130) | 1,251 | 2,492 | 5,065 | ||||||||||||||||||||||
| Net income | 17,049 | 28,785 | 68,409 | 111,829 | ||||||||||||||||||||||
| Net income attributable to non-controlling interests and LLC members prior to IPO | 13,529 | 24,680 | 57,715 | 95,759 | ||||||||||||||||||||||
| Net income attributable to Smith Douglas Homes Corp. | $ | 3,520 | $ | 4,105 | $ | 10,694 | $ | 16,070 | ||||||||||||||||||
| Three months ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | Year ended December 31, 2025 | Period from January 11, 2024 to December 31, 2024 | ||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.39 | $ | 0.46 | $ | 1.19 | $ | 1.82 | |||||||||||||||
| Diluted | $ | 0.39 | $ | 0.46 | $ | 1.19 | $ | 1.81 | |||||||||||||||
| Weighted average shares of common stock outstanding: | |||||||||||||||||||||||
| Basic | 9,017,708 | 8,846,232 | 9,000,606 | 8,846,174 | |||||||||||||||||||
| Diluted | 9,062,751 | 9,120,592 | 9,213,200 | 9,062,368 | |||||||||||||||||||
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Smith Douglas Homes
Condensed Consolidated Balance Sheets
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Unaudited) | |||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 12,741 | $ | 22,363 | |||||||
Real estate inventory | 298,637 | 277,834 | |||||||||
Deposits on real estate under option or contract | 138,763 | 103,026 | |||||||||
Real estate not owned | 28,051 | 5,830 | |||||||||
Property and equipment, net | 9,720 | 3,775 | |||||||||
Goodwill | 25,726 | 25,726 | |||||||||
| Deferred tax asset, net | 9,666 | 10,906 | |||||||||
Other assets | 34,289 | 26,441 | |||||||||
Total assets | $ | 557,593 | $ | 475,901 | |||||||
| Liabilities and Equity | |||||||||||
| Liabilities: | |||||||||||
Accounts payable | $ | 1,938 | $ | 17,234 | |||||||
Customer deposits | 3,108 | 5,301 | |||||||||
Notes payable | 44,075 | 3,060 | |||||||||
Liabilities related to real estate not owned | 28,051 | 5,830 | |||||||||
Accrued expenses and other liabilities | 26,428 | 32,348 | |||||||||
| Tax receivable agreement liability | 9,857 | 10,401 | |||||||||
Total liabilities | 113,457 | 74,174 | |||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Preferred stock, $0.0001 par value – 10,000,000 shares authorized; none issued and outstanding as of December 31, 2024 | — | — | |||||||||
| Class A common stock, $0.0001 par value – 250,000,000 shares authorized; 8,846,154 shares issued and outstanding as of December 31, 2024 | 1 | 1 | |||||||||
| Class B common stock, $0.0001 par value – 100,000,000 shares authorized; 42,435,897 shares issued and outstanding as of December 31, 2024 | 4 | 4 | |||||||||
| Additional paid-in capital | 60,610 | 58,208 | |||||||||
| Retained earnings | 26,113 | 15,419 | |||||||||
| Total stockholders’ equity attributable to Smith Douglas Homes Corp. | 86,728 | 73,632 | |||||||||
| Non-controlling interests attributable to Smith Douglas Holdings LLC | 357,408 | 328,095 | |||||||||
| Total equity | 444,136 | 401,727 | |||||||||
Total liabilities and equity | $ | 557,593 | $ | 475,901 | |||||||
4
Smith Douglas Homes
Summary Cash Flow Information
(Unaudited, dollars in thousands)
| Year ended December 31, | 2025 | 2024 | |||||||||
| Net cash (used in) provided by operating activities | $ | (31,337) | $ | 19,132 | |||||||
| Net cash used in investing activities | (6,634) | (4,706) | |||||||||
| Net cash provided by (used in) financing activities | 28,349 | (11,840) | |||||||||
| Net (decrease) increase in cash and cash equivalents | (9,622) | 2,586 | |||||||||
| Cash and cash equivalents, beginning of period | 22,363 | 19,777 | |||||||||
| Cash and cash equivalents, end of period | $ | 12,741 | $ | 22,363 | |||||||
Smith Douglas Homes
Selected Other Operating Data
(Unaudited, dollars in thousands)
| Three months ended December 31, | Year ended December 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Home closings | 780 | 836 | 2,908 | 2,867 | |||||||||||||||||||
| ASP of homes closed | $ | 334 | $ | 344 | $ | 334 | $ | 340 | |||||||||||||||
| Net new home orders | 532 | 569 | 2,726 | 2,649 | |||||||||||||||||||
| Contract value of net new home orders | $ | 169,138 | $ | 191,140 | $ | 907,095 | $ | 899,586 | |||||||||||||||
| ASP of net new home orders | $ | 318 | $ | 336 | $ | 333 | $ | 340 | |||||||||||||||
Cancellation rate(1) | 16.1% | 14.8% | 11.1% | 12.1% | |||||||||||||||||||
Backlog homes (period end)(2) | 512 | 694 | 512 | 694 | |||||||||||||||||||
| Contract value of backlog homes (period end) | $ | 172,523 | $ | 235,869 | $ | 172,523 | $ | 235,869 | |||||||||||||||
| ASP of backlog homes (period end) | $ | 337 | $ | 340 | $ | 337 | $ | 340 | |||||||||||||||
Active communities (period end)(3) | 100 | 78 | 100 | 78 | |||||||||||||||||||
| Controlled lots (period end): | |||||||||||||||||||||||
| Homes under construction | 908 | 973 | 908 | 973 | |||||||||||||||||||
| Owned lots | 804 | 803 | 804 | 803 | |||||||||||||||||||
| Optioned lots | 20,556 | 17,746 | 20,556 | 17,746 | |||||||||||||||||||
| Total controlled lots | 22,268 | 19,522 | 22,268 | 19,522 | |||||||||||||||||||
(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.
5
Smith Douglas Homes
Selected Financial Information by Segment
(Unaudited, dollars in thousands)
Home Closing Revenue
| Three months ended December 31, | 2025 | 2024 | 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(1) | $ | 164,663 | 480 | $ | 343 | $ | 192,609 | 537 | $ | 359 | (15 | %) | (11 | %) | (4 | %) | ||||||||||||||||||||||||||||||||||||||||
Central(2) | 95,766 | 300 | 319 | 94,877 | 299 | 317 | 1 | % | — | % | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 260,429 | 780 | $ | 334 | $ | 287,486 | 836 | $ | 344 | (9 | %) | (7 | %) | (3 | %) | ||||||||||||||||||||||||||||||||||||||||
(1)The Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions.
(2)The Central segment consists of our Alabama, Houston, and Nashville, and divisions.
| Year ended December 31, | 2025 | 2024 | Year over year 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(1) | $ | 610,773 | 1,772 | $ | 345 | $ | 609,624 | 1,723 | $ | 354 | — | % | 3 | % | (3 | %) | ||||||||||||||||||||||||||||||||||||||||
Central(2) | 360,343 | 1,136 | 317 | 365,839 | 1,144 | 320 | (2 | %) | (1 | %) | (1) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 971,116 | 2,908 | $ | 334 | $ | 975,463 | 2,867 | $ | 340 | — | % | 1 | % | (2 | %) | ||||||||||||||||||||||||||||||||||||||||
(1)The Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions.
(2)The Central segment consists of our Alabama, Houston, and Nashville, and divisions.
Backlog
| As of December 31, | 2025 | 2024 | Year over year 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(1) | 265 | $ | 91,748 | $ | 346 | 410 | $ | 146,436 | $ | 357 | (35) | % | (37) | % | (3 | %) | ||||||||||||||||||||||||||||||||||||||||
Central(2) | 247 | 80,775 | 327 | 284 | 89,433 | 315 | (13) | % | (10) | % | 4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 512 | $ | 172,523 | $ | 337 | 694 | $ | 235,869 | $ | 340 | (26) | % | (27) | % | (1) | % | ||||||||||||||||||||||||||||||||||||||||
(1)The Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions.
(2)The Central segment consists of our Alabama, Houston, and Nashville, and divisions.
Controlled Lots
| As of December 31, | 2025 | 2024 | Year over year change | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Owned(1) | Optioned | Total Controlled | Owned(1) | Optioned | Total Controlled | Owned(1) | Optioned | Total Controlled | ||||||||||||||||||||||||||||||||||||||||||||||||
Southeast(2) | 932 | 13,938 | 14,870 | 881 | 12,210 | 13,091 | 6 | % | 14 | % | 14 | % | ||||||||||||||||||||||||||||||||||||||||||||
Central(3) | 780 | 6,618 | 7,398 | 895 | 5,536 | 6,431 | (13 | %) | 20 | % | 15 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 1,712 | 20,556 | 22,268 | 1,776 | 17,746 | 19,522 | (4 | %) | 16 | % | 14 | % | ||||||||||||||||||||||||||||||||||||||||||||
(1)Includes homes under construction and owned lots.
(2)The Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions.
(3)The Central segment consists of our Alabama, Dallas-Fort Worth, Houston, Nashville, and Alabama Gulf Coast divisions.
6
Net Income
| Three months ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Period over period change | 2025 | 2024 | Year over year change | |||||||||||||||||||||||||||||||||
Southeast(1) | $ | 19,541 | $ | 38,469 | $ | (18,928) | $ | 86,241 | $ | 124,837 | $ | (38,596) | ||||||||||||||||||||||||||
Central(2) | 4,122 | 8,510 | (4,388) | 22,870 | 41,891 | (19,021) | ||||||||||||||||||||||||||||||||
| Segment total | 23,663 | 46,979 | (23,316) | 109,111 | 166,728 | (57,617) | ||||||||||||||||||||||||||||||||
Corporate(3) | (6,614) | (18,194) | 11,580 | (40,702) | (54,899) | 14,197 | ||||||||||||||||||||||||||||||||
| Total | $ | 17,049 | $ | 28,785 | $ | (11,736) | $ | 68,409 | $ | 111,829 | $ | (43,420) | ||||||||||||||||||||||||||
(1)The Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions.
(2)The Central segment consists of our Alabama, Dallas-Fort Worth, Houston, Nashville, and Alabama Gulf Coast divisions.
(3)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.
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.
7
We have reconciled this non-GAAP financial measure with the most directly comparable GAAP financial measure in the following table:
| As of December 31, (in thousands, except percentages) | 2025 | 2024 | |||||||||
| Notes payable | $ | 44,075 | $ | 3,060 | |||||||
| Equity | 444,136 | 401,727 | |||||||||
| Total capitalization | $ | 488,211 | $ | 404,787 | |||||||
| Debt-to-book capitalization | 9.0% | 0.8% | |||||||||
| Notes payable | $ | 44,075 | $ | 3,060 | |||||||
| Less: cash and cash equivalents | 12,741 | 22,363 | |||||||||
| Net debt | 31,334 | (19,303) | |||||||||
| Equity | 444,136 | 401,727 | |||||||||
| Total net capitalization | $ | 475,470 | $ | 382,424 | |||||||
| Net debt-to-net book capitalization | 6.6% | (5.0%) | |||||||||
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 a 24.6% 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:
| Three months ended December 31, | Year ended December 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | 17,049 | $ | 28,785 | $ | 68,409 | $ | 111,829 | |||||||||||||||
| Provision for income taxes | (130) | 1,251 | 2,492 | 5,065 | |||||||||||||||||||
| Income before income taxes | 16,919 | 30,036 | 70,901 | 116,894 | |||||||||||||||||||
Tax-effected adjustments(1) | 4,159 | 7,383 | 17,427 | 28,756 | |||||||||||||||||||
| Adjusted net income | $ | 12,760 | $ | 22,653 | $ | 53,474 | $ | 88,138 | |||||||||||||||
(1)For the years ended December 31, 2025 and 2024, our tax expenses assumes a 24.6% 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).
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FAQ
How did Smith Douglas Homes (SDHC) perform financially in full-year 2025?
Smith Douglas Homes generated home closing revenue of $971.1 million in 2025, essentially flat year over year. However, home closing gross margin declined to 21.8% from 26.2%, driving net income down to $68.4 million compared with $111.8 million in 2024.
What were Smith Douglas Homes’ (SDHC) Q4 2025 results compared to Q4 2024?
In Q4 2025, home closings decreased 7% to 780 and home closing revenue fell 9% to $260.4 million. Home closing gross margin slipped to 19.9% from 25.5%, and pre-tax income declined to $16.9 million from $30.0 million.
How did earnings per share for Smith Douglas Homes (SDHC) change in 2025?
For 2025, Smith Douglas Homes reported diluted earnings per share of $1.19, down from $1.81 for the comparable 2024 period. The decrease reflects lower gross margins and reduced pre-tax income, despite essentially flat home closing revenue and slightly higher closing volumes.
What happened to Smith Douglas Homes’ (SDHC) leverage and cash flow in 2025?
Debt-to-book capitalization rose to 9.0% at December 31, 2025, from 0.8% a year earlier, and net debt-to-net book capitalization reached 6.6%. Net cash used in operating activities was $31.3 million in 2025, versus $19.1 million provided in 2024.
How is Smith Douglas Homes (SDHC) positioned in terms of communities and lots?
By year-end 2025, active community count increased to 100 from 78, a 28% rise. Total controlled lots grew 14% to 22,268, including 20,556 optioned lots. This expanded land and community base supports the company’s focus on disciplined growth and affordable offerings.
What trends did Smith Douglas Homes (SDHC) see in orders, backlog, and pricing?
Full-year 2025 net new home orders increased 3% to 2,726, but year-end backlog homes fell to 512 from 694. Average selling price of homes closed was $334,000, slightly below 2024, reflecting affordability-focused pricing in a competitive, discount-driven environment.
Filing Exhibits & Attachments
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SMITH DOUGLAS HOMES CORP