Smith Douglas Homes — Third Quarter 2026 Earnings Summary

Financial Performance:

• Home closing revenue increased 0.2% year-over-year to $262.5 million for the three months ended September 30, 2026, compared to $262.0 million in the prior year period.
• Home closing gross margin decreased to 16.3% in Q3 2026 from 21.0% in Q3 2025.
• Pretax income declined to $3.3 million in Q3 2026 from $17.2 million in Q3 2025.
• Earnings per diluted share were $0.07 in Q3 2026, down from $0.24 in Q3 2025.
• Net income attributable to Smith Douglas Homes Corp. was $0.577 million for Q3 2026 compared to $2.126 million in Q3 2025.
• Debt-to-book capitalization increased to 18.8% as of September 30, 2026, from 9.0% as of December 31, 2025.
• Net cash used in operating activities was $28.5 million for the nine months ended September 30, 2026, compared to $41.1 million in the prior year period.
• Cash and cash equivalents decreased to $5.9 million as of September 30, 2026, from $12.7 million as of December 31, 2025.
• Notes payable increased to $101.4 million as of September 30, 2026, from $44.1 million as of December 31, 2025.
• Real estate inventory increased to $386.5 million as of September 30, 2026, from $298.6 million as of December 31, 2025.

Guidance and Future Outlook:

• Management expects market conditions to remain challenging in the near term due to higher mortgage rates and affordability pressures.
• The company remains confident in long-term demand for affordable housing.
• Priorities include running an efficient homebuilding operation, preserving financial strength, and managing inventory.
• The company aims to position itself to emerge from the current challenging period in a strong competitive position.

Business Segments and Product Lines:

• Home closings increased 5% to 831 units in Q3 2026 from 788 units in Q3 2025.
• Net new home orders increased 13% to 777 in Q3 2026 from 690 in Q3 2025.
• Backlog homes increased 25% to 947 at quarter end from 760 in the prior year period.
• Active community count increased 15% to 113 at quarter end.
• Total controlled lots increased 2% to 24,724 at quarter end.
• Southeast segment home closing revenue was $163.2 million (down 2% YoY) with 505 closings.
• Central segment home closing revenue was $99.3 million (up 4% YoY) with 326 closings.
• Southeast backlog homes increased 45% to 622, while Central backlog homes decreased 2% to 325.
• Southeast controlled lots increased 17% to 15,756, while Central controlled lots increased 8% to 8,968.
• Average selling price (ASP) of homes closed was $316 in Q3 2026, down from $333 in Q3 2025.
• Cancellation rate was 11.3% in Q3 2026 compared to 11.2% in Q3 2025.

Market and Competitive Landscape:

• The company targets entry-level and empty-nest homebuyers purchasing homes priced below the Federal Housing Administration loan limit.
• Smith Douglas is ranked #33 on the Builder Magazine Top 100 list.
• The company completed its initial public offering in January 2024 and has served over 20,000 families since inception.
• Operating markets include Atlanta, Birmingham, Central Georgia, Charlotte, Chattanooga, Dallas-Fort Worth, Greenville, Houston, Huntsville, Nashville, Raleigh, and the Alabama Gulf Coast.

Risks and Challenges:

• Higher mortgage rates and affordability pressures are weighing on buyer demand and profitability.
• The housing market environment is described as increasingly challenging.
• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations, including factors detailed in the company's Form 10-K.

Management Commentary and Tone:

• CEO Greg Bennett stated the company continued to execute with discipline despite challenging conditions, focusing on cost management, efficient building, and steady absorption.
• CFO Russ Devendorf highlighted a disciplined approach to capital allocation and land investment, citing a land-light operating model and conservative balance sheet as sources of flexibility.
• Management emphasized preserving liquidity and generating attractive returns on invested capital while navigating weaker demand.

Other Key Points:

• The company repurchased 28,370 shares of Class A common stock for $0.3 million during the quarter.
• The company hosts a conference call and webcast on November 4, 2026, at 8:30 a.m. Eastern Time.
• Non-GAAP measures presented include net debt-to-net book capitalization (17.9% as of September 30, 2026) and adjusted net income ($2.4 million for Q3 2026).
• The company operates primarily in the Southeast and Central reporting segments.