Company: SDHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001982518-25-000064
Chunk: 59

Company: Smith Douglas Homes Corp.
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 1
Chunk 59
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 application of purchase accounting included in cost of sales, if applicable. We define adjusted home closing gross margin as adjusted home closing gross profit as a percentage of home closing revenue. Management believes this information is meaningful because it isolates the impact that capitalized interest has on home closing gross margin. However, because adjusted home closing gross profit and adjusted home closing gross margin information excludes capitalized interest, which has real economic effects and could impact our results of operations, the utility of adjusted home closing gross profit and adjusted home closing gross margin information as a measure of our operating performance may be limited. In addition, other companies may not calculate adjusted home closing gross profit and adjusted home closing margin information in the same manner we do. Accordingly, adjusted home closing gross profit and adjusted home closing gross margin information should be considered only as a supplement to home closing gross profit and home closing gross margin information as a measure of our performance.

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The following table presents a reconciliation of adjusted home closing gross profit and adjusted home closing gross margin to the GAAP financial measure of home closing gross profit and home closing gross margin for each of the periods indicated (amounts in thousands):

Three months ended June 30,Six months ended June 30,2025202420252024Home closing revenue$223,924$220,933$448,646$410,142Cost of home closings171,985161,875343,177301,624Home closing gross profit(1)$51,939$59,058$105,469$108,518Capitalized interest charged to cost of home closings3653335211,054Purchase accounting adjustments included in cost of home closings34(379)(118)(260)Impairment of real estate inventory——642—Adj. home closing gross profit$52,338$59,012$106,514$109,312Home closing gross margin(2)23.2%26.7%23.5%26.5%Adj. home closing gross margin(2)23.4%26.7%23.7%26.7%

(1)Home closing gross profit is home closing revenue less cost of home closings.

(2)Calculated as a percentage of home closing revenue.

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