Smith Douglas Homes Reports 27.6% Revenue Growth in First Year Post-IPO

Smith Douglas Homes Corp. reported significant financial growth in its first fiscal year following its initial public offering (IPO) on January 16, 2024. The company achieved home closing revenue of $975.5 million for the year ended December 31, 2024, marking a 27.6% increase from $764.6 million in 2023. This growth was driven by a 24.8% rise in home closings, totaling 2,867 homes, and a 2.1% increase in the average sales price (ASP) of homes closed, which reached approximately $340,000. However, the company's net income decreased by 9.2% to $111.8 million, primarily due to a substantial rise in selling, general, and administrative costs, which increased by 47.5% to $136.4 million.

The company’s operational strategy, characterized by a land-light business model, has allowed it to maintain a competitive edge in the homebuilding market. As of December 31, 2024, Smith Douglas controlled 19,522 lots, a 52.3% increase from the previous year, with 17,746 of these lots optioned through contracts. The company’s focus on entry-level and empty-nest homebuyers has positioned it well in high-growth markets across the Southeastern and Southern United States, including Atlanta, Houston, and Nashville. The acquisition of Devon Street Homes in July 2023 has further expanded its footprint, particularly in the Houston market.

Despite the positive revenue growth, the company faced challenges, including a cancellation rate of 12.1%, up from 10.5% in 2023, indicating potential volatility in demand. The backlog of homes at the end of 2024 was 694, down 23.9% from the previous year, reflecting a decrease in contract value of backlog homes. The company attributed these fluctuations to rising interest rates and economic uncertainties affecting consumer purchasing power.

Looking ahead, Smith Douglas Homes Corp. remains optimistic about long-term demand for housing, driven by favorable demographic trends and a continued focus on affordable luxury. The company plans to leverage its efficient construction processes and strong relationships with local developers to expand its market presence. However, it acknowledges potential risks, including rising inflation, interest rates, and supply chain challenges, which could impact future performance. The company’s management is committed to addressing these challenges while pursuing growth opportunities in existing and new markets.