Company: SDHC
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001982518-25-000020
Chunk: 60

Company: Smith Douglas Homes Corp.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 1
Chunk 60
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 reduce the amount of overall cash flow that might have otherwise been available to us.

Additionally, in the event we declare any cash dividends, we intend to cause Smith Douglas Holdings LLC to make distributions to us in amounts sufficient to fund such cash dividends declared by us to our stockholders. Deterioration in the financial condition, earnings, or cash flow of Smith Douglas Holdings LLC for any reason could limit or impair their ability to pay such distributions.

If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. To the extent we are unable to make payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement. In addition, if Smith Douglas Holdings LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.

See Part I—Item 1A. Risk Factors—Risks Related to our Organizational Structure of our Annual Report and Certain Relationships and Related Person Transactions of our Proxy Statement.

Cash flows from operating, investing, and financing activities – comparison for the three months ended March 31, 2025 and 2024

The following table summarizes our cash flows for the periods presented (in thousands):

Three months ended March 31,20252024Net cash used in operating activities$(34,905)$(9,273)Net cash used in investing activities(2,106)(430)Net cash provided by financing activities27,29922,704Net (decrease) increase in cash and cash equivalents(9,712)13,001Cash and cash equivalents, beginning of period22,36319,777Cash and cash equivalents, end of period$12,651$32,778

Operating activities

We used $34.9 million and $9.3 million in net cash in operating activities for the three months ended March 31, 2025 and 2024, respectively. Operating cash flows for the three months ended March 31, 2025 benefited from cash generated by net income of $18.7 million, non-cash operating expenses of $3.3 million, and a $2.7 million increase in