Company: SDHC
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0001628280-25-049591
Chunk: 137

Company: Smith Douglas Homes Corp.
Filing Date: 2025-11-05
Form: 10-Q
Item: Part I, Item 2
Chunk 137
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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 were no 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.

Provision for income taxes

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 

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4.4%, respectively. Provision for income taxes was $2.6 million and $3.8 million, respectively, for the nine months ended September 30, 2025 and 2024, which reflects an effective tax rate of 4.9% and 4.4%, respectively.

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