In This Article:
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Pre-Tax Income: $19.6 million.
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Net Earnings: $0.30 per share.
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Home Closing Revenue: $225 million, a 19% increase over Q1 2024.
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Gross Margin: 23.8%, higher than previous guidance.
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Net New Orders: 768 in Q1.
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Homes Closed: 671, up 19% from 566 in Q1 2024.
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Average Sales Price: Approximately $335,000.
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SGNA: 14.7% of revenue, up from 14.5% last year.
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Net Income: $18.7 million, compared to $20.5 million in the prior year.
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Adjusted Net Income: $14.7 million, compared to $16.1 million in the prior year.
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Cash: $12.7 million at the end of the quarter.
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Debt to Book Capitalization: 9.5%.
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Net Debt to Net Book Capitalization: 6.9%.
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Backlog: 791 homes with an average sales price of $341,000.
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Active Communities: 87 at the end of Q1.
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Smith Douglas Homes Corp (NYSE:SDHC) reported a strong start to the year with pre-tax income of $19.6 million and net earnings of $0.30 per share.
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Home closing revenue increased by 19% to $225 million compared to the first quarter of 2024.
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The company achieved a gross margin of 23.8%, which was higher than the guidance range provided in the previous call.
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SDHC's land strategy, which involves controlling land through option agreements rather than owning it outright, provides flexibility and limits downside risk.
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The company is making significant progress in improving build times, with cycle times averaging 56 days, excluding Houston, and further improvements expected in the Houston division.
Negative Points
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Sales conversions were negatively impacted by affordability concerns and macroeconomic uncertainty.
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Gross margin decreased from 26.1% in the prior year to 23.8% due to higher average lot costs and increased incentives.
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Net income for the quarter decreased to $18.7 million from $20.5 million in the prior year.
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Backlog at the end of the quarter was 791 homes, down from 1,100 homes year over year, reflecting a tougher selling environment.
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Affordability remains a key challenge for buyers, necessitating targeted incentives to support sales, which pressures margins.
Q & A Highlights
Q: How would you characterize the spring season demand and are there specific geographies where demand weakness is more pronounced? A: Demand has been consistent across our footprint, with affordability being a key challenge. We are solving for payments to reach affordability in each market, and demand has been relatively the same across geographies. - Gregory S. Bennett, CEO