Company: SDHC
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0001628280-25-049591
Chunk: 102

Company: Smith Douglas Homes Corp.
Filing Date: 2025-11-05
Form: 10-Q
Item: Part I, Item 8
Chunk 102
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 becoming one of the most dominant homebuilders in the Southeastern and Southern United States, we intend to grow operations within our existing footprint and to expand into new markets where we can most effectively implement our business strategy and maximize our profit and returns.

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.

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.

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.

We believe the geographic markets in which we operate demonstrate strong population and employment growth trends