Smith Douglas Homes Corp.

Certain Definitions

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:

•“Average sales price” or “ASP” refers to the average sales price of either our homes closed, our new home orders, or our backlog homes (at period end).

•“Basis Adjustments” refers to an allocable share (and increases thereto) of existing tax basis, in Smith Douglas Holdings LLC’s assets and tax basis adjustments with respect to such assets resulting from (a) Smith Douglas Homes Corp.’s purchase of LLC Interests from Smith Douglas Holdings LLC and each Continuing Equity Owner in connection with the Transactions, (b) any future redemptions or exchanges of LLC Interests from the Continuing Equity Owners, (c) certain distributions (or deemed distributions) by Smith Douglas Holdings LLC, and (d) payments made under the Tax Receivable Agreement.

•“Construction cycle time” refers, unless stated otherwise, to the number of business days between the start of the construction of foundations in a home and quality acceptance.

•“Continuing Equity Owners” refers collectively to the owners of LLC Interests in Smith Douglas Holdings LLC prior to the consummation of the Transactions, who are also holders of LLC Interests and our Class B common stock following consummation of the Transactions, including the Founder Fund and GSB Holdings, who may exchange at each of their respective options, in whole or in part from time to time, their LLC Interests, as applicable, for, at our election (determined solely by our independent directors (within the meaning of the Exchange rules) who are disinterested), cash or newly-issued shares of our Class A common stock as described under Certain Relationships and Related Person Transactions—Smith Douglas LLC Agreement of our Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) on April 23, 2025 (the “Proxy Statement”). In connection with an exchange of LLC Interests, a corresponding number of shares of Class B common stock shall be immediately and automatically transferred to Smith Douglas Homes Corp. for no consideration and canceled.

•“Controlled lots” refers to lots that are either owned or held under an option to be acquired for the relevant time frame set forth in the option contracts.

•“Devon Street Homes” refers to Devon Street Homes, L.P.

•“Devon Street Homes Acquisition” refers to the transaction consummated on July 31, 2023, pursuant to which we acquired substantially all of the assets of Devon Street Homes.

•“Exchange” refers to the New York Stock Exchange.

•“Founder Fund” refers to The Bradbury Family Trust II A U/A/D December 29, 2015, for which our founder and Executive Chairman, Tom Bradbury, is co-trustee.

•“GSB Holdings” refers to GSB Holdings LLC, of which 75% of the member interests are owned by the GSB Family Trust and 25% of the member interests are owned directly by our Chief Executive Officer, President, and Vice Chairman, Greg Bennett, who is the sole manager.

•“GSB Family Trust” refers to the GSB Family Trust u/a dated September 19, 2023, a grantor trust established by our Chief Executive Officer, President, and Vice Chairman, Greg Bennett.

•“IPO” refers to our initial public offering, which we completed on January 16, 2024, and through which we offered 8,846,154 shares of our Class A common stock at a price to the public of $21.00 per share, which includes the exercise in full by the underwriters of their option to purchase an additional 1,153,846 shares of our Class A common stock. The gross proceeds to us from the IPO were $185.8 million, before deducting underwriting discounts.

•“LLC Interests” refers to the membership units of Smith Douglas Holdings LLC, including those that we purchased with the net proceeds from the IPO.

•“Refinancing” refers to (i) concurrently with the consummation of our IPO, the entry by Smith Douglas Holdings LLC and certain of our wholly-owned subsidiaries into an amended and restated revolving credit facility which replaced the $175.0 million unsecured revolving credit facility with Wells Fargo Bank, National Association, as administrative agent for the lenders party thereto (the “Lenders”), and the Lenders, dated as of October 28, 2021, as amended prior to the date of the Refinancing (the “Prior Credit Facility,” as amended and restated, the “Credit Facility”), and (ii) the repayment, using a portion of the net proceeds from the IPO, of the $84.0 million outstanding under our Prior Credit Facility (the “Debt Repayment”).

•“Section 704(c) Allocations” refers to disproportionate allocations (if any) of income and gain from inventory property held by Smith Douglas Holdings LLC as of the date of the IPO under Section 704(c) of the Internal Revenue Code of 1986, as amended (the “Code”), resulting from our acquisition of LLC Interests from Smith Douglas Holdings LLC including in connection with the Transactions.

•“Sunset Date” refers to the date upon which the aggregate number of shares of Class B common stock then outstanding is less than 10% of the aggregate number of shares of Class A common stock and Class B common stock then outstanding.

•“Smith Douglas LLC Agreement” refers, as applicable, to Smith Douglas Holdings LLC’s amended and restated limited liability company agreement, as in effect prior to the IPO, or to the amended and restated limited liability company agreement dated as of January 10, 2024, and as such agreement may thereafter be amended and/or restated.

•“Tax Receivable Agreement” refers to the Tax Receivable Agreement entered into by and among Smith Douglas Homes Corp., Smith Douglas Holdings LLC and the Continuing Equity Owners in connection with the IPO, pursuant to which, among other things, Smith Douglas Homes Corp. is required to pay to each Continuing Equity Owner 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of the tax benefits provided by Basis Adjustments, Section 704(c) Allocations, and certain other tax benefits (such as interest deductions) covered by the Tax Receivable Agreement as described in Certain Relationships and Related Person Transactions—Tax Receivable Agreement of our Proxy Statement.

•“Transactions” refers to the organizational transactions described in Basis of Presentation—The Transactions below and the IPO, and the application of the net proceeds therefrom.

•“We,” “us,” “our,” the “Company,” “Smith Douglas,” and similar references refer: (i) following the consummation of the Transactions, including the IPO, to Smith Douglas Homes Corp., and, unless otherwise stated, all of its direct and indirect subsidiaries, including Smith Douglas Holdings LLC, and (ii) prior to the completion of the Transactions, including the IPO, to Smith Douglas Holdings LLC.

The Transactions

Smith Douglas Homes Corp., a Delaware corporation, was formed on June 20, 2023. Smith Douglas Homes Corp. is a holding company and the sole managing member of Smith Douglas Holdings LLC, and its principal asset consists of LLC Interests. Prior to our IPO and the Transactions, all of our business operations were conducted through Smith Douglas Holdings LLC, and the Continuing Equity Owners were the only members of Smith Douglas Holdings LLC. In connection with the consummation of the IPO, we undertook certain organizational transactions, described further below, to reorganize our corporate structure:

•we amended the Smith Douglas LLC Agreement to, among other things, (i) recapitalize all existing ownership interests in Smith Douglas Holdings LLC into 44,871,794 LLC Interests (before giving effect to the use of proceeds from the IPO, as described below), (ii) appoint Smith Douglas Homes Corp. as the sole managing member of Smith Douglas Holdings LLC upon its acquisition of LLC Interests in connection with the IPO, and (iii) provide certain redemption rights to the Continuing Equity Owners;

•we amended and restated Smith Douglas Homes Corp.’s certificate of incorporation to, among other things, provide (i) for Class A common stock, with each share of our Class A common stock entitling its holder to one vote per share on all matters presented to our stockholders generally; (ii) for Class B common stock, with each share of our Class B common stock entitling its holder to ten votes per share on all matters presented to our stockholders generally prior to the Sunset Date and from and after the occurrence of the Sunset Date each share of our Class B common stock will entitle its holder to one vote per share on all matters presented to our stockholders generally; (iii)

that shares of our Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees; and (iv) for preferred stock, which can be issued by our board of directors in one or more series without stockholder approval;

•we issued 42,435,897 shares of our Class B common stock (after giving effect to the use of net proceeds from our IPO as described below and taking into account the exercise in full of the underwriters’ option to purchase an additional 1,153,846 shares of our Class A common stock in the IPO) to the Continuing Equity Owners at the time of such issuance of Class B common stock, which is equal to the number of LLC Interests held by such Continuing Equity Owners, for nominal consideration;

•we issued 8,846,154 shares of our Class A common stock to the purchasers in the IPO in exchange for gross proceeds of approximately $185.8 million based upon the IPO price of $21.00 per share, before deducting the underwriting discount;

•we used the net proceeds from the IPO (i) to purchase 6,410,257 newly issued LLC Interests for approximately $125.2 million directly from Smith Douglas Holdings LLC at the IPO price less the underwriting discount; and (ii) to purchase 2,435,897 LLC Interests from the Continuing Equity Owners on a pro rata basis for $47.6 million at a price per unit equal to the initial public offering price per share of Class A common stock less the underwriting discount;

•Smith Douglas Holdings LLC used the net proceeds from the sale of LLC Interests to Smith Douglas Homes Corp. (i) to repay approximately $84.0 million of borrowings outstanding under the Prior Credit Facility as part of the Refinancing, (ii) to redeem all outstanding Class C Units and Class D Units of Smith Douglas Holdings LLC at par in aggregate for $2.6 million, (iii) to repay $0.9 million in notes payable to certain related parties, and (iv) for general corporate purposes as described under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources of this Quarterly Report on Form 10-Q, and Certain Relationships and Related Person Transactions—The Transactionsof our Proxy Statement;

•Smith Douglas Homes Corp. entered into (i) the Registration Rights Agreement with certain of the Continuing Equity Owners and (ii) the Tax Receivable Agreement with Smith Douglas Holdings LLC and the Continuing Equity Owners. For a description of the terms of the Registration Rights Agreement and the Tax Receivable Agreement, see Certain Relationships and Related Person Transactions of our Proxy Statement.

Following the Transactions:

•Smith Douglas Homes Corp. is a holding company, and its principal asset consists of LLC Interests it acquired directly from Smith Douglas Holdings LLC and from each Continuing Equity Owner;

•Smith Douglas Homes Corp. is the sole managing member of Smith Douglas Holdings LLC and controls the business and affairs of Smith Douglas Holdings LLC;

•as of October 31, 2025, Smith Douglas Homes Corp. owns, directly or indirectly, 9,017,638 LLC Interests, representing approximately 17.5% of the economic interest in Smith Douglas Holdings LLC;

•as of October 31, 2025, the Continuing Equity Owners own (i) 42,435,897 LLC Interests, representing approximately 82.5% of the economic interest in Smith Douglas Holdings LLC and (ii) 42,435,897 shares of Class B common stock of Smith Douglas Homes Corp.;

•as of October 31, 2025, the purchasers in the IPO own (i) 9,017,638 shares of Class A common stock of Smith Douglas Homes Corp., representing approximately 2.1% of the combined voting power of all of Smith Douglas Homes Corp.’s common stock and approximately 100% of the economic interest in Smith Douglas Homes Corp., and (ii) through Smith Douglas Homes Corp.’s ownership of LLC Interests, indirectly hold approximately 17.5% of the economic interest in Smith Douglas Holdings LLC; and

•our Class A common stock and Class B common stock have what is commonly referred to as a “high/low vote structure,” which means that shares of our Class B common stock initially have ten votes per share and our Class A common stock have one vote per share. Upon the occurrence of the Sunset Date, each share of Class B common stock will then be entitled to one vote per share. This high/low vote structure enables the Continuing Equity Owners to control the outcome of matters submitted to our stockholders for approval, including the election of our directors, as well as the overall management and direction of our company. Furthermore, the Continuing Equity Owners exert a significant degree of influence, or actual control, over matters requiring stockholder approval. We believe that maintaining this control by the Continuing Equity Owners will help enable them to successfully guide the implementation of our growth strategies and strategic vision.

Our corporate structure following the IPO is commonly referred to as an umbrella partnership-C corporation (“Up-C”) structure, which is often used by partnerships and limited liability companies when they undertake an initial public offering of their business. The Up-C structure allows the Continuing Equity Owners to retain their equity ownership in Smith Douglas Holdings LLC and to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “flow-through” entity, for U.S. federal income tax purposes. Investors in and after our IPO, by contrast, hold their equity ownership in Smith Douglas Homes Corp., a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, in the form of shares of Class A common stock. One of the tax benefits to the Continuing Equity Owners associated with this structure is that future taxable income of Smith Douglas Holdings LLC that is allocated to the Continuing Equity Owners will be taxed on a flow-through basis and therefore will not be subject to corporate taxes at the entity level. Additionally, because the Continuing Equity Owners may have their LLC Interests redeemed by Smith Douglas Holdings LLC (or at our option, directly exchanged by Smith Douglas Homes Corp.) for newly issued shares of our Class A common stock on a one-for-one basis (subject to customary adjustments, including for stock splits, stock dividends, and reclassifications) or, at our option, for cash, the Up-C structure also provides the Continuing Equity Owners with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded. In connection with any such redemption or exchange of LLC Interests, a corresponding number of shares of Class B common stock held by the relevant Continuing Equity Owner will automatically be transferred to Smith Douglas Homes Corp. for no consideration and be canceled. The Continuing Equity Owners and Smith Douglas Homes Corp. also each expect to benefit from the Up-C structure as a result of certain cash tax savings arising from redemptions or exchanges of the Continuing Equity Owner’s LLC Interests for Class A common stock or cash, and certain other tax benefits covered by the Tax Receivable Agreement discussed under Certain Relationships and Related Person Transactions—Tax Receivable Agreementof our Proxy Statement. See Part I, Item 1A. Risk Factors—Risks Related to our Organizational Structureof our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 21, 2025 (the“Annual Report”). In general, the Continuing Equity Owners expect to receive payments under the Tax Receivable Agreement of 85% of the amount of certain tax benefits, as described below, and Smith Douglas Homes Corp. expects to benefit in the form of cash tax savings in amounts equal to 15% of certain tax benefits, as described below. Any payments made by us to the Continuing Equity Owners under the Tax Receivable Agreement will reduce cash otherwise arising from such tax savings. We expect such payments will be substantial.

As described under Certain Relationships and Related Person Transactions—Tax Receivable Agreementof our Proxy Statement, prior to the completion of the IPO, we entered into the Tax Receivable Agreement with Smith Douglas Holdings LLC and the Continuing Equity Owners that provides for the payment by Smith Douglas Homes Corp. to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that Smith Douglas Homes Corp. actually realizes (or in some circumstances is deemed to realize) as a result of (i) Basis Adjustments, (ii) Section 704(c) Allocations, and (iii) certain tax benefits (such as interest deductions) arising from payments made under the Tax Receivable Agreement.

Presentation of Financial Information

Smith Douglas Holdings LLC is the accounting predecessor of Smith Douglas Homes Corp. for financial reporting purposes. As a result, the unaudited condensed consolidated financial statements of the combined entity represent a continuation of the financial position and results of operations of Smith Douglas Holdings LLC.

Certain monetary amounts, percentages, and other figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to rounding.

Key Terms and Performance Indicators used in this Quarterly Report on Form 10-Q; Non-GAAP Financial Measures

Throughout this Quarterly Report on Form 10-Q, we use a number of key terms and provide a number of key performance indicators and non-GAAP financial measures used by management. Please see Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics and Non-GAAP Financial Measures for definitions and further information about why and how we calculate key performance indicators and non-GAAP financial measures, including a reconciliation of the following:

•adjusted home closing gross profit, defined as home closing revenue less cost of home closings, excluding capitalized interest charged to cost of home closings, impairment charges and adjustments resulting from the application of purchase accounting included in cost of sales, if applicable;

•adjusted home closing gross margin, defined as adjusted home closing gross profit as a percentage of home closing revenue;

•adjusted net income, defined 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);

•EBITDA, defined 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;

•EBITDA margin, defined as EBITDA as a percentage of home closing revenue;

•adjusted EBITDA, defined 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;

•adjusted EBITDA margin, defined as adjusted EBITDA as a percentage of home closing revenue; and

•net debt-to-net book capitalization, defined as (i) total debt, less cash and cash equivalents, divided by (ii) total debt, less cash and cash equivalents, plus equity.

We use non-GAAP financial measures, such as adjusted home closing gross profit, adjusted home closing gross margin, adjusted net income, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, and net debt-to-net book capitalization, to supplement financial information presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”). We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance, as applicable, as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful information to help them evaluate our operating results and make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this Quarterly Report on Form 10-Q. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics and Non-GAAP Financial Measures.