Smith Douglas Homes Corp.

Previous wording

In the second quarter of 2025, we continued to see softening in the market as mortgage interest rates remain elevated and potential homebuyers raised concerns about affordability and macroeconomic uncertainty. In response, we have used financing incentives, such as closing cost credits and mortgage rate buydowns, to address these concerns. We achieved 669 homes closed for a total of $223.9 million in home closing revenue for the three months ended June 30, 2025, which reflects an increase of 2% in the number of homes closed and 1% in home closing revenue over the same period of the prior year. Our net new home orders increased 3% and contract value of net new home orders increased 1% period over period.

Current wording

In the third quarter of 2025, we continued to see softening in the market as mortgage interest rates remain elevated and potential homebuyers raised concerns about affordability and macroeconomic uncertainty. In response, we have used financing incentives, such as closing cost credits and mortgage rate buydowns, to address these concerns. We achieved 788 homes closed for a total of $262.0 million in home closing revenue for the three months ended September 30, 2025, which reflects a decrease of 3% in the number of homes closed and 6% in home closing revenue over the same period of the prior year. Our net new home orders increased 15% and contract value of net new home orders increased 13% period over period.

Previous wording

We construct most of our homes on a pre-sold basis, where our homebuyers choose their homes based on a select number of value-engineered floor plans and are offered flexibility on the selection of home options. Our SMART Builder enterprise resource planning system and efficient construction process, which we call Rteam, allows us to provide this optionality for homebuyers based on just-in-time modifications. As a result of our differentiated value proposition and efficient construction cycle times, we believe we typically achieve a high level of homebuyer satisfaction and experience low cancellation rates, which were 10% and 12% for the three months ended June 30, 2025 and 2024, respectively.

Current wording

We seek to construct most of our homes on a pre-sold basis, where our homebuyers choose their homes based on a select number of value-engineered floor plans and are offered flexibility on the selection of home options. Our SMART Builder enterprise resource planning system and efficient construction process, which we call Rteam, allows us to provide this optionality for homebuyers based on just-in-time modifications. As a result of our differentiated value proposition and efficient construction cycle times, we believe we typically achieve a high level of homebuyer satisfaction and experience low cancellation rates, which were 11% for both the three months ended September 30, 2025 and 2024, respectively.

Previous wording

At the core of our land-light operating strategy lies the principle and discipline of primarily acquiring finished lots from a diverse pool of third-party land developers or land bankers through the effective utilization of lot-option contracts. Our lot acquisition strategy reduces our upfront capital requirements and generally seeks to provide for “just-in-time” lot delivery, better aligning our pace of home orders and home starts. While using land bankers and third-party developers comes at an additional cost, we believe our lot acquisition strategy reduces our operational and financial risk relative to other homebuilders that own a higher percentage of their land supply. As of June 30, 2025, we had 834 owned unstarted lots in real estate inventory on our balance sheet, which represented only 3.4% of our total controlled lot supply.

Current wording

At the core of our land-light operating strategy lies the principle and discipline of primarily acquiring finished lots from a diverse pool of third-party land developers or land bankers through the effective utilization of lot-option contracts. Our lot acquisition strategy reduces our upfront capital requirements and generally seeks to provide for “just-in-time” lot delivery, better aligning our pace of home orders and home starts. While using land bankers and third-party developers comes at an additional cost, we believe our lot acquisition strategy reduces our operational and financial risk relative to other homebuilders that own a higher percentage of their land supply. As of September 30, 2025, we had 641 owned unstarted lots in real estate inventory on our balance sheet, which represented only 2.6% of our total controlled lot supply.

Previous wording

We believe the geographic markets in which we operate demonstrate strong population and employment growth trends, favorable migration patterns, and desirable lifestyle and weather conditions. Our operations are currently organized into eight geographical divisions which comprise two reportable segments. Our Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions. Our Central segment consists of our Alabama, Houston, and Nashville divisions. We think there is significant opportunity to expand our presence in each of our respective markets.

Current wording

We believe the geographic markets in which we operate demonstrate strong population and employment growth trends, favorable migration patterns, and desirable lifestyle and weather conditions. Our operations are currently organized into ten geographical divisions which comprise two reportable segments. Our Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions. Our Central segment consists of our Alabama, Dallas-Fort Worth, Alabama Gulf Coast, Houston, and Nashville divisions. We think there is significant opportunity to expand our presence in each of our respective markets.

Previous wording

Our operations are currently organized into eight geographical divisions which comprise two reportable segments. Our Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions. Our Central segment consists of our Alabama, Houston, and Nashville divisions.

Current wording

Our operations are currently organized into ten geographical divisions which comprise two reportable segments. Our Southeast segment consists of our Atlanta, Central Georgia, Charlotte, Greenville, and Raleigh divisions. Our Central segment consists of our Alabama, Dallas-Fort Worth, Alabama Gulf Coast, Houston, and Nashville divisions.

Previous wording

Comparison of three and six months ended June 30, 2025 and 2024

Current wording

Comparison of three and nine months ended September 30, 2025 and 2024

Previous wording

(1)Earnings per share for the six months ended June 30, 2024 is calculated for the period from January 11, 2024, the date of the IPO, to June 30, 2024.

Current wording

(1)Earnings per share for the nine months ended September 30, 2024 is calculated for the period from January 11, 2024, the date of the IPO, to September 30, 2024.

Previous wording

Home closing revenue for the three months ended June 30, 2025, was $223.9 million, an increase of $3.0 million, or 1%, from $220.9 million for the three months ended June 30, 2024. Home closing revenue for the six months ended June 30, 2025, was $448.6 million, an increase of $38.5 million, or 9%, from $410.1 million for the six months ended June 30, 2024. The increase in revenue for both periods is primarily attributable to increases in the number of homes closed, which increased by 2% and 10% for the three and six months ended June 30, 2025, respectively, while ASP of homes closed remained relatively consistent in each period. The growth in the number of homes closed for the current year periods as compared to the three and six months ended June 30, 2024 were primarily due to increases of 15% and 23%, respectively, in our Southeast segment, partially offset by decreases of 12% and 5%, respectively, in our Central segment.

Current wording

Home closing revenue for the three months ended September 30, 2025, was $262.0 million, a decrease of $15.8 million, or 6%, from $277.8 million for the three months ended September 30, 2024. Home closing revenue for the nine months ended September 30, 2025, was $710.7 million, an increase of $22.7 million, or 3%, from $688.0 million for the nine months ended September 30, 2024. The change in revenue for both periods is primarily attributable to changes in the number of homes closed, which decreased by 3% and increased by 5% for the three and nine months ended September 30, 2025, respectively, while ASP of homes closed decreased by 3% and 1% for the three and nine months ended September 30, 2025, respectively. The reduction in the number of homes closed for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 were primarily due to decreases of 8% in our Southeast segment, partially offset by increases of 6% in our Central segment. The growth in the number of homes closed for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 were primarily due to increases of 9% in our Southeast segment, partially offset by decreases of 1% in our Central segment.

Previous wording

Cost of home closings for the three months ended June 30, 2025, was$172.0 million, an increase of$10.1 million, or 6%, from$161.9 million for the three months ended June 30, 2024, which was primarily driven by a 2% increase in home closings and a 4% increase in the average cost of home closings. Cost of home closings for the six months ended June 30, 2025, was $343.2 million, an increase of $41.6 million, or 14%, from $301.6 million for the six months ended June 30, 2024, which was primarily driven by a 10% increase in home closings and a 4% increase in the average cost of home closings.

Current wording

Cost of home closings for the three months ended September 30, 2025, was$207.1 million, an increase of$2.9 million, or 1%, from$204.1 million for the three months ended September 30, 2024, which was primarily driven by a 5% increase in the average cost of home closings, partially offset by a 3% decrease in home closings. Cost of home closings for the nine months ended September 30, 2025, was $550.2 million, an increase of $44.5 million, or 9%, from $505.8 million for the nine months ended September 30, 2024, which was primarily driven by a 5% increase in home closings and a 4% increase in the average cost of home closings.

Previous wording

Home closing gross profit for the three months ended June 30, 2025 was$51.9 million, a decrease of$7.1 million, or 12%, from$59.1 million for the three months ended June 30, 2024. Home closing gross margin, expressed as a percentage and calculated as home closing gross profit divided by home closing revenue, was 23.2% in the three months ended June 30, 2025 compared to 26.7% in the same period in 2024. Home closing gross profit for thesix months ended June 30, 2025 was$105.5 million, adecrease of$3.0 million, or 3%, from$108.5 million for thesix months ended June 30, 2024. Home closing gross margin, expressed as a percentage and calculated as home closing gross profit divided by home closing revenue, was 23.5% in thesix months ended June 30, 2025 compared to 26.5% in the same period in 2024.

Current wording

Home closing gross profit for the three months ended September 30, 2025 was$55.0 million, a decrease of$18.7 million, or 25%, from$73.7 million for the three months ended September 30, 2024. Home closing gross margin, expressed as a percentage and calculated as home closing gross profit divided by home closing revenue, was 21.0% in the three months ended September 30, 2025 compared to 26.5% in the same period in 2024. Home closing gross profit for the nine months ended September 30, 2025 was$160.4 million, adecrease of$21.8 million, or 12%, from$182.2 million for thenine months ended September 30, 2024. Home closing gross margin, expressed as a percentage and calculated as home closing gross profit divided by home closing revenue, was 22.6% in thenine months ended September 30, 2025 compared to 26.5% in the same period in 2024.

Previous wording

The decrease in home closing gross margin for each of the three and six months ended June 30, 2025 compared to the same periods of the prior year was for each period primarily driven by a 4% increase in the average cost of home closings while the ASP of homes closed remained constant.

Current wording

The decrease in home closing gross margin for each of the three and nine months ended September 30, 2025 compared to the same periods of the prior year was for each period primarily driven by increases of 5% and 4%, respectively, in the average cost of home closings and decreases of 3% and 1%, respectively, in the ASP of homes closed.

Previous wording

Selling, general, and administrative costs for the three months ended June 30, 2025 were$34.7 million, anincrease of$2.9 million, or 9%, from$31.8 million for the three months ended June 30, 2024. Selling, general, and administrative costs for thesix months ended June 30, 2025 were$67.7 million, anincrease of$8.4 million, or 14%, from$59.4 million for thesix months ended June 30, 2024.

Current wording

Selling, general, and administrative costs for the three months ended September 30, 2025 were$36.1 million, anincrease of$2.0 million, or 6%, from$34.1 million for the three months ended September 30, 2024. Selling, general, and administrative costs for thenine months ended September 30, 2025 were$103.8 million, anincrease of$10.3 million, or 11%, from$93.5 million for thenine months ended September 30, 2024.

Previous wording

Equity in income from unconsolidated entities consists primarily of our portion of income from our interest in the title company in which we hold a 49% interest and which operates in certain of our markets to provide title insurance to our homebuyers and our portion of income from our interest in thecompany engaged in providing mortgage broker services to our homebuyers. For each of the three and six months ended June 30, 2025, equity in income from unconsolidated entities increased $0.4 million from the three and six months ended June 30, 2024, in each case primarily due to higher title insurance revenue generated by the title company.

Current wording

Equity in income from unconsolidated entities consists primarily of our portion of income from our interest in the title company in which we hold a 49% interest and which operates in certain of our markets to provide title insurance to our homebuyers and our portion of income from our interest in thecompany engaged in providing mortgage broker services to our homebuyers. For the three and nine months ended September 30, 2025, equity in income from unconsolidated entities increased $0.2 million and $0.7 million, respectively, from the three and nine months ended September 30, 2024, in each case primarily due to higher title insurance revenue generated by the title company.

Previous wording

Interest expense is comprised of interest incurred, but not capitalized on our Prior Credit Facility, Amended Credit Facility, other borrowings, and amortization of debt issuance costs. For the three and six months ended June 30, 2025, interest expense increased $0.2 million and $0.1 million, respectively, from the three and six months ended June 30, 2024, in each case primarily due to higher outstanding borrowings on our Amended Credit Facility.

Current wording

Interest expense is comprised of interest incurred, but not capitalized on our Prior Credit Facility, Amended Credit Facility, other borrowings, and amortization of debt issuance costs. For the three and nine months ended September 30, 2025, interest expense increased $0.3 million and $0.4 million, respectively, from the three and nine months ended September 30, 2024, in each case primarily due to higher outstanding borrowings on our Amended Credit Facility.

Previous wording

Other (income) expense, net primarily consists of interest income, credit card rebates, insurance settlements, changes in fair value of contingent consideration related to the Devon Street Homes Acquisition, and other miscellaneous income and expenses. For the three and six months ended June 30, 2025, other (income) expense, net reflected a positive impact of $1.1 million and $0.6 million, respectively, from the three and six months ended June 30, 2024, primarily due to remeasurement of contingent liability charges of $1.2 million and $1.3 million during the three and six months ended June 30, 2024, respectively, which did not recur in 2025.

Current wording

Other expense (income), net primarily consists of interest income, credit card rebates, insurance settlements, changes in fair value of contingent consideration related to the Devon Street Homes Acquisition, and other miscellaneous income and expenses. For the three months ended September 30, 2025, other expense (income), net reflected a negative impact of $1.6 million from the three months ended September 30, 2024, which was primarily due to a $1.6 million lot option contract abandonment charge for the three months ended September 30, 2025, while there wereno such charges in the same period of the prior year. For the nine months ended September 30, 2025, other expense (income), net reflected a negative impact of $1.0 million from the nine months ended September 30, 2024, which was primarily due to the $2.3 million lot option contract abandonment charge during the nine months ended September 30, 2025, which did not occur in 2024, offset by a positive impact due to remeasurement of contingent liability charges of $1.3 million during the nine months ended September 30, 2024, which did not recur in 2025.

Previous wording

After consummation of the IPO, Smith Douglas Homes Corp. became subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of Smith Douglas Holdings LLC assessed at the prevailing corporate tax rates. Smith Douglas Holdings LLC operates as a limited liability company and is treated as a partnership for income tax purposes. Accordingly, it incurs no significant liability for federal or state income taxes, since the taxable income or loss is passed through to its members. Provision for income taxes was$0.7 million and $1.1 million, respectively, for thethree months ended June 30, 2025 and 2024, which reflects an effective tax rate of 4.3% and 4.4%, respectively. Provision for income taxes was $1.6 million and $2.1 million, respectively, for the six months ended June 30, 2025 and 2024, which reflects an effective tax rate of 4.4% and 4.3%, respectively.

Current wording

After consummation of the IPO, Smith Douglas Homes Corp. became subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of Smith Douglas Holdings LLC assessed at the prevailing corporate tax rates. Smith Douglas Holdings LLC operates as a limited liability company and is treated as a partnership for income tax purposes. Accordingly, it incurs no significant liability for federal or state income taxes, since the taxable income or loss is passed through to its members. Provision for income taxes was $1.0 million and $1.8 million, respectively, for the three months ended September 30, 2025 and 2024, which reflects an effective tax rate of 5.9% and

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act was enacted in the U.S. While we are assessing its impact, we do not currently believe that it will have a material impact on our income tax expense. See Note 1—Description of the business and summary of significant accounting policies to our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act was enacted in the U.S. The Company has assessed the legislation and determined that it does not have a material impact on the Company's income tax expense for thethree and nine months ended September 30, 2025 nor does it materially impact the Company's effective income tax rate for 2025. See Note 1—Description of the business and summary of significant accounting policies to our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Net income for the three and six months ended June 30, 2025 decreased by $8.3 million, or 34% and $10.1 million, or 22%, respectively, from the same periods of the prior year. The decrease was primarily due to decreases of $7.1 million and $3.0 million in home closing gross profit, respectively, and increases of $2.9 million and $8.4 million in selling, general and administrative costs, respectively, offset by a positive change in other (income) expense, net of $1.1 million and $0.6 million, respectively.

Current wording

Net income for the three and nine months ended September 30, 2025 decreased by $21.6 million, or 57%, and $31.7 million, or 38%, respectively, from the same periods of the prior year. The decrease was primarily due to decreases of $18.7 million and $21.8 million in home closing gross profit, respectively, and increases of $2.0 million and $10.3 million in selling, general and administrative costs, respectively, offset by a positive change in other expense (income), net of $1.6 million and $1.0 million, respectively.

Previous wording

Southeast: The$3.6 million decrease in net income for thethree months ended June 30, 2025 compared to the same period in the prior year was primarily due to a$0.9 million decrease in home closing gross profit and a $2.6 million increase in selling, general and administrative costs. The decrease in net income for thesix months ended June 30, 2025 compared to the same period in the prior year was primarily due to a$5.1 million increase in home closing gross profit which was more than offset by a $5.9 million increase in selling, general and administrative costs.

Current wording

Southeast: The$18.9 million decrease in net income for thethree months ended September 30, 2025 compared to the same period in the prior year was primarily due to a$16.2 million decrease in home closing gross profit and a $2.7 million increase in selling, general and administrative costs. The decrease in net income for thenine months ended September 30, 2025 compared to the same period in the prior year was primarily due to a$11.1 million decrease in home closing gross profit and a $8.6 million increase in selling, general and administrative costs.

Previous wording

Central: The$7.0 million and$10.3 million decreases in net income for thethree and six months ended June 30, 2025 compared to the same periods in the prior year was primarily due to decreases in home closing gross profit of $6.2 million and $8.2 million, respectively, and increases in selling, general, and administrative costs of $0.7 million and $1.2 million, respectively.

Current wording

Central: The$4.4 million and$14.6 million decreases in net income for thethree and nine months ended September 30, 2025 compared to the same periods in the prior year was primarily due to decreases in home closing gross profit of $2.5 million and $10.7 million, respectively, and increases in selling, general, and administrative costs of $1.6 million and $2.8 million, respectively.

Previous wording

Our adjusted home closing gross profit and adjusted home closing gross margin decreased from both the three and six months ended June 30, 2024 to the same periods in 2025. The decreases in adjusted home closing gross profit and adjusted home closing gross margin were primarily due to increases in the average cost of home closings of 4% in both periods.

Current wording

Our adjusted home closing gross profit and adjusted home closing gross margin decreased from both the three and nine months ended September 30, 2024 to the same periods in 2025. The decreases in adjusted home closing gross profit and adjusted home closing gross margin were primarily due to increases in the average cost of home closings of 5% and 4%, respectively, for the three and nine months ended September 30, 2025.

Previous wording

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 24.9% 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).

Current wording

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).

Previous wording

(1)For the three and six months ended June 30, 2025 and 2024, our tax expenses assumes a 24.9% and 25.0% 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).

Current wording

(1)For the three and nine months ended September 30, 2025 and 2024, our tax expenses assume a 24.6% and 24.5% 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).

Previous wording

EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are not measures of net income or net income margin as determined by GAAP. EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies. We define EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, and (v) depreciation. We define EBITDA margin as EBITDA as a percentage of home closing revenue. We define adjusted EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, (v) depreciation, (vi) share-based payment expense, (vii) adjustments resulting from the application of purchase accounting included in cost of sales, (viii) adjustments resulting from the application of purchase accounting included inother (income) expense, net, and (ix) real estate inventory impairment and lot option contract abandonment charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of home closing revenue.

Current wording

EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are not measures of net income or net income margin as determined by GAAP. EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies. We define EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, and (v) depreciation. We define EBITDA margin as EBITDA as a percentage of home closing revenue. We define adjusted EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, (v) depreciation, (vi) share-based payment expense, (vii) adjustments resulting from the application of purchase accounting included in cost of sales, (viii) adjustments resulting from the application of purchase accounting included inother expense (income), net, and (ix) real estate inventory impairment and lot option contract abandonment charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of home closing revenue.

Previous wording

Our EBITDA and EBITDA margin decreased from the three and six months ended June 30, 2024 to the same periods in 2025, primarily as a result of decreases in net income of $8.3 million and $10.1 million, respectively. Our adjusted EBITDA and adjusted EBITDA margin decreased from the three and six months ended June 30, 2024 to the same periods in 2025, primarily as a result of remeasurement of contingent consideration liability [related to the Devon Street Homes Acquisition] during the three and six months ended June 30, 2024 which did not recur in 2025.

Current wording

Our EBITDA and EBITDA margin decreased from the three and nine months ended September 30, 2024 to the same periods in 2025, primarily as a result of decreases in net income of $21.6 million and $31.7 million, respectively. Our adjusted EBITDA and adjusted EBITDA margin decreased from the three and nine months ended September 30, 2024 to the same periods in 2025, primarily as a result of decreases in net income of $21.6 million and $31.7 million, respectively, real estate inventory impairment and lot option contract abandonment charges during the three and nine months ended September 30, 2025, which did not occur in 2024, and remeasurement of contingent consideration liability related to the Devon Street Homes Acquisition during the three and nine months ended September 30, 2024 which did not recur in 2025.

Previous wording

As of June 30, 2025, we had$16.8 million of cash and cash equivalents. We believe existing cash and cash equivalents, availability under our Amended Credit Facility, and positive cash flows from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We have historically generated cash and fund our operations primarily from cash flows from operating activities as well as availability under our credit facilities and other borrowings. We exercise strict controls and have a prudent strategy for our cash management, including those related to cash outlays for lot acquisitions and deposits on lot-option contracts. We require multiple party account control and authorization for payments. We competitively bid each phase of the development and construction process and closely manage production schedules and payments. Land acquisitions are reviewed and analyzed by our senior management team and ultimately approved by our Chief Executive Officer and Chief Financial Officer. Additionally, our land-light business model reduces our upfront capital requirements and generally provides for “just-in-time” lot delivery, which better aligns our pace of home orders and home starts. Our principal uses of cash include deposits on lot-option contracts, acquisition of finished lots, home construction, operating expenses, and the payment of interest and routine liabilities.

Current wording

As of September 30, 2025, we had$14.8 million of cash and cash equivalents. We believe existing cash and cash equivalents, availability under our Amended Credit Facility, and positive cash flows from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We have historically generated cash and fund our operations primarily from cash flows from operating activities as well as availability under our credit facilities and other borrowings. We exercise strict controls and have a prudent strategy for our cash management, including those related to cash outlays for lot acquisitions and deposits on lot-option contracts. We require multiple party account control and authorization for payments. We competitively bid each phase of the development and construction process and closely manage production schedules and payments. Land acquisitions are reviewed and analyzed by our senior management team and ultimately approved by our Chief Executive Officer and Chief Financial Officer. Additionally, our land-light business model reduces our upfront capital requirements and generally provides for “just-in-time” lot delivery, which better aligns our pace of home orders and home starts. Our principal uses of cash include deposits on lot-option contracts, acquisition of finished lots, home construction, operating expenses, and the payment of interest and routine liabilities.

Previous wording

As of June 30, 2025, there were $68.9 million of outstanding borrowings under the Amended Credit Facility. As of August 1, 2025, there were $66.9 million of outstanding borrowings under the Amended Credit Facility. As of June 30, 2025 and August 1, 2025, there wereno outstanding letters of credit.

Current wording

As of September 30, 2025, there were $49.0 million of outstanding borrowings under the Amended Credit Facility. As of October 31, 2025, there were $67.0 million of outstanding borrowings under the Amended Credit Facility. As of September 30, 2025 and October 31, 2025, there were no outstanding letters of credit.

Previous wording

If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. To the extent we are unable to make payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid. However, nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement. In addition, if Smith Douglas

Current wording

If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. To the extent we are unable to make payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid. However, nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement. In addition, if Smith Douglas Holdings LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.

Previous wording

Cash flows from operating, investing, and financing activities – comparison for the six months ended June 30, 2025 and 2024

Current wording

Cash flows from operating, investing, and financing activities – comparison for the nine months ended September 30, 2025 and 2024

Previous wording

We used$63.8 million and $9.2 million in net cash in operating activities for thesix months ended June 30, 2025 and 2024, respectively. Operating cash flows for thesix months ended June 30, 2025 benefited from cash generated by net income of$35.1 million and non-cash operating expenses of $5.4 million, which were more than offset by a$64.0 million increase in real estate inventory,$30.1 million increase in deposits on real estate under option or contract, and a $10.3 million decrease in accrued expenses and other liabilities. Operating cash flows for thesix months ended June 30, 2024 benefited from cash generated by net income of$45.2 million and non-cash operating expenses of $5.1 million, which were more than offset by a$50.3 million increase in real estate inventory and a$9.2 million increase indeposits on real estate under option or contract.

Current wording

We used$41.1 million and generated$13.7 million in net cash in operating activities for thenine months ended September 30, 2025 and 2024, respectively. Operating cash flows for thenine months ended September 30, 2025 benefited from cash generated by net income of$51.4 million and non-cash operating expenses of $9.5 million, which were more than offset by a$61.0 million increase in real estate inventory,$34.4 million increase in deposits on real estate under option or contract, and a $7.5 million decrease in accrued expenses and other liabilities. Operating cash flows for thenine months ended September 30, 2024 benefited from cash generated by net income of$83.0 million, non-cash operating expenses of $7.9 million, and a $6.2 million increase in accounts payable, which were partially offset by a$61.5 million increase in real estate inventory and a$23.1 million increase indeposits on real estate under option or contract.

Previous wording

We used$4.2 million and$3.2 million in net cash in investing activities for thesix months ended June 30, 2025 and 2024, respectively. The net cash used in investing activities during thesix months ended June 30, 2025 was primarily due to$3.2 million inpurchases of property and equipment and$1.1 million ininvestments in unconsolidated entities. The net cash used in investing activities during thesix months ended June 30, 2024 was primarily due to$2.6 million inpurchases of property and equipment and$0.6 million ininvestments in unconsolidated entities.

Current wording

We used$5.6 million and$3.8 million in net cash in investing activities for thenine months ended September 30, 2025 and 2024, respectively. The net cash used in investing activities during thenine months ended September 30, 2025 was primarily due to$4.5 million inpurchases of property and equipment and$1.1 million ininvestments in unconsolidated entities. The net cash used in investing activities during thenine months ended September 30, 2024 was primarily due to$3.2 million inpurchases of property and equipment and$0.6 million ininvestments in unconsolidated entities.

Previous wording

We generated$62.5 million and$9.9 million in net cash from financing activities for thesix months ended June 30, 2025 and 2024, respectively. The net cash provided by financing activities during thesix months ended June 30, 2025 was primarily due to$68.9 million in net borrowings under the Amended Credit Facility and $27.1 million in proceeds from sale of real estate not owned, partially offset by $23.6 million in tax distributions, $6.8 million in payments related to repurchases of real estate not owned, and $2.2 million of debt issuance costs. The net cash provided by financing activities during thesix months ended June 30, 2024 was primarily due to$115.7 million in net proceeds from the IPO and Reorganization Transactions, partially offset by $71.0 million in net repayments under the Prior Credit Facility and $28.1 million in distributions.

Current wording

We generated$39.1 million and used$5.9 million in net cash from financing activities for thenine months ended September 30, 2025 and 2024, respectively. The net cash provided by financing activities during thenine months ended September 30, 2025 was primarily due to$49.0 million in net borrowings under the Amended Credit Facility and $36.7 million in proceeds from sale of real estate not owned, partially offset by $28.0 million in tax distributions, $13.7 million in payments related to repurchases of real estate not owned, and $2.2 million of debt issuance costs. The net cash used in financing activities during thenine months ended September 30, 2024 was primarily due to$115.7 million in net proceeds from the IPO and Reorganization Transactions, which were more than offset by $71.0 million in net repayments under the Prior Credit Facility, $39.3 million in distributions, and 12.3 million in payments related to repurchases of real estate not owned.

Previous wording

While using land bankers and third-party developers as part of our land-light operating strategy comes at an additional cost, we believe our lot acquisition strategy reduces our operating and financial risk relative to other homebuilders that own and develop a higher percentage of their land supply. As of June 30, 2025, we had 834 owned unstarted lots in real estate inventory on our balance sheet which represented only 3.4% of our total controlled lot supply.

Current wording

While using land bankers and third-party developers as part of our land-light operating strategy comes at an additional cost, we believe our lot acquisition strategy reduces our operating and financial risk relative to other homebuilders that own and develop a higher percentage of their land supply. As of September 30, 2025, we had 641 owned unstarted lots in real estate inventory on our balance sheet which represented only 2.6% of our total controlled lot supply.

Previous wording

As of June 30, 2025, we had $127.0 million of non-refundable cash deposits under land and lot-option contracts pertaining to 16,177 lots with a remaining aggregate purchase price of approximately $1,085.0 million.

Current wording

As of September 30, 2025, we had $132.7 million of non-refundable cash deposits under land and lot-option contracts pertaining to 15,530 lots with a remaining aggregate purchase price of approximately $1,100.5 million.

Previous wording

From time to time, we may enter into surety bond and letter of credit arrangements with local municipalities, government agencies and developers. These arrangements relate to certain performance or maintenance-related obligations. As of June 30, 2025, there were no outstanding letters of credit. Surety bonds do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. These bonds, which totaled $42.8 million and $32.1 million as of June 30, 2025 and December 31, 2024, respectively, are typically outstanding over a period of approximately one to five years depending on the pace of development. If banks were to decline to issue letters of credit or surety companies were to decline to issue surety bonds, our ability to operate could be restricted and could have an adverse effect on our business and results of operations.

Current wording

From time to time, we may enter into surety bond and letter of credit arrangements with local municipalities, government agencies and developers. These arrangements relate to certain performance or maintenance-related obligations. As of September 30, 2025, there were no outstanding letters of credit. Surety bonds do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. These bonds, which totaled $44.1 million and $32.1 million as of September 30, 2025 and December 31, 2024, respectively, are typically outstanding over a period of approximately one to five years depending on the pace of development. If banks were to decline to issue letters of credit or surety companies were to decline to issue surety bonds, our ability to operate could be restricted and could have an adverse effect on our business and results of operations.