Company: SDHC
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001982518-25-000020
Chunk: 120

Company: Smith Douglas Homes Corp.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 2
Chunk 120
---
 of $5.5 million, or 20%, from $27.5 million for the three months ended March 31, 2024.

The increase for the three months ended March 31, 2025 compared to the same periods of the prior year was primarily due to an increase in sales commissions and advertising costs associated with our increase in homes closed and related home closing revenue and increased payroll and performance-based bonus compensation expenses on higher employee headcount.

Equity in income from unconsolidated entities

Equity in income from unconsolidated entities consists of our portion of income from our interest in the title company in which we hold a 49% interest and which operates in certain of our markets to provide title insurance to our homebuyers and our portion of income from our interest in the company engaged in providing mortgage broker services to our homebuyers. For the three months ended March 31, 2025, equity in income from unconsolidated entities increased 

33

slightly from the three months ended March 31, 2024, due to slightly higher title insurance revenue generated by the title company.

Interest expense

Interest expense is comprised of interest incurred, but not capitalized on our Prior Credit Facility, Amended Credit Facility, other borrowings, and amortization of debt issuance costs. Our interest expense remained constant at $0.7 million for both of the three months ended March 31, 2025 and March 31, 2024. 

Other expense (income), net

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 March 31, 2025, other expense (income), net decreased by $0.5 million from $2,000 to $0.5 million, which was primarily driven by a $0.7 million lot option contract abandonment charge during the three months ended March 31, 2025, while there were no such charges in the same period of the prior year, as well as an increase in interest income on our cash and cash equivalents.

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