Company: SDHC
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001982518-25-000020
Chunk: 32

Company: Smith Douglas Homes Corp.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 1
Chunk 32
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2,648 $3,060 The carrying value of the borrowings under the Credit Facility approximates fair value due to variable rate terms that approximate market rates.The carrying value of the seller note payable approximates fair value because the interest rate on the note approximates market rates as of March 31, 2025 and December 31, 2024.

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Note 7 ‑ Warranty reserves:A summary of the activity in the Company’s warranty liability account is as follows (in thousands): Three months ended March 31, 20252024Balance, beginning of period$3,622 $2,839 Additions to reserves from new home closings449 382 Warranty claims(104)(143)Adjustments to pre‑existing reserves(244)(100)Balance, end of period$3,723 $2,978 

Note 8 ‑ Leases:

The Company leases certain office space and equipment for use in its operations. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some leases contain renewal options and, in accordance with ASC Topic 842, Leases, the lease term includes those renewals only to the extent that they are reasonably certain to be exercised.Lease cost included in the accompanying unaudited condensed consolidated statements of income as a component of selling, general and administrative costs is presented in the table below (in thousands). Three months ended March 31, 20252024Operating leases costs$266 $170 Variable lease costs - operating$48 $36 The following table presents additional information about the Company’s leases (dollars in thousands): March 31,2025December 31,2024Right-of-use (ROU) assets$2,983 $3,065 Lease liabilities$3,108 $3,183 ROU assets are included within other assets and lease liabilities are included within accrued expenses and other liabilities in the accompanying unaudited condensed consolidated balance sheets.As of March 31, 2025, the Company had an additional operating lease for division office space that had not yet commenced with undiscounted fixed lease payments of approximately $0.6 million. The operating lease will commence in 2025 with a lease term of approximately 5 years.

Note 9 ‑ Commitments and contingencies:

The Company is subject to certain contingent liabilities resulting from litigation, claims, and other commitments which arise in the ordinary course of business. Management and legal