In its first earnings report as a public company, Smith Douglas Homes reported annual growth in net new orders, home closings, and revenue in the full 2023 fiscal year.

“We are excited to begin life as a public company after executing our highly successful IPO in January and raising over $125 million primary net proceeds,” vice chairman and CEO Greg Bennett said. “The demand we saw from investors was humbling and clearly reflective of the belief in our strategy and business model.”

The home builder reported net new orders increased 22.8% year over year in 2023 to 2,368 homes while home closings increased 4.4% to 2,297 homes in 2023. Smith Douglas ended the year with 912 homes in backlog representing a sales value of $310.7 million, increases of 18.3% and 20.1%, respectively, compared to 2022. Smith Douglas had a cancellation rate of 10.5% in 2023 compared to 10.9% for 2022.

During the home builder’s first earnings call with investors, Bennett categorized the new home sales environment as good in each of Smith Douglas Homes’ operating markets, driven by strong housing fundamentals and healthy consumer confidence. Bennett said Smith Douglas Homes believes its ability to offer “high quality, differentiated homes” at an affordable price point remains a competitive advantage moving forward.

Smith Douglas reported revenue of $764.6 million in 2023, a 1.2% increase compared to 2022, driven by the 4.4% increase in closings, partially offset by a 3.2% decline in average sales price. The builder reported net income for 2023 of $123.2 million, a 12.3% decline compared to 2022.

Bennett said Smith Douglas has improved its cycle time to between 60 and 65 days outside of its Houston market, which the builder recently entered after acquiring Devon Street Homes in August 2023. Smith Douglas projects the Houston market to be fully integrated with the home builder’s ERP system by midyear.

“We are extremely happy with our 2023 results and look forward to continued growth in 2024 as we focus on our goal of doubling home closings over the next five years,” Bennett said. “We believe we can continue to grow in a profitable manner through organic expansion in our existing markets and through additional M&A activity.”

Executive vice president and chief financial officer Russ Devendorf said the company ended 2023 wth 12,800 total lots controlled, a more than 40% increase compared to 2022. Devendorf said 524 of the company’s controlled lots are owned unstarted, while the remaining 96% were either work-in-process or under option.

“One of the important lessons from the last downturn was that much of the risk and potential for financial ruin in this business stemmed from carrying and developing land. So, we strived to take ownership of our lots in a just-in-time manner,” Bennett said.

Year to date through February 2024, Smith Douglas Homes reported 484 net new orders, up 13.9% compared to the first two months of 2023, and 335 home closings, up 18% from the same period of 2023. The builder ended February with 1,061 homes in backlog, up 16.3% from the same two-month period of 2023.

“We run our company with a long-term focus and not in a manner that prioritizes meeting external quarterly projections. Home building is not a linear business and oftentimes what may benefit a company in the short-term may not be beneficial in the long-term goals of the company,” Bennett said. “We have been and will continue to be focused on creating value for stakeholders over the long term.”

Keep the conversation going—sign up to our newsletter for exclusive content and updates. Sign up for free.