Smith Douglas Homes Corp. Class A

Good morning and welcome to the Smith Douglas Holmes Third Quarter 2025 Earnings Call and Webcast. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. To ask a question at this time, you will need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Joe Thomas, Senior Vice President, Accounting and Finance. Thank you. Please go ahead, sir.

Good morning and welcome to the earnings conference call for Smith Douglas Homes. We issued a press release this morning outlining our results for the third quarter of 2025, which we will discuss on today's call and which can be found on our website at investors.smithdouglas.com or by selecting the investor relations link at the bottom of our homepage. Please note this call will be simultaneously webcast on the investor relations section of our website. Before this call begins, I would like to remind everyone that certain statements made on this call, which are not historical facts, including statements concerning future financial and operating goals and performance, are forward-looking statements. Actual results could differ materially from such statements due to known and unknown risks, uncertainties, and other important factors as detailed in the company's SEC filings. Except as required by law, the company undertakes no duty to update these forward-looking statements. Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be found in our press release located on our website and our SEC filings. Hosting the call this morning are Greg Bennett, the company's CEO and Vice Chairman, and Russ Devendorf, our Executive Vice President and CFO. I'd now like to turn the call over to Greg.

Thanks, Joe, and good morning to everyone on the call today. In the third quarter of 2025, Smith Douglas Homes continues to execute on its long-term strategic plan of being the builder of choice for homebuyers in key markets throughout the South. Our operating philosophy is straightforward but hard to replicate thanks to our operating discipline and culture. We focus on providing our customers with quality homes at affordable price while maintaining tight cost controls and leading cycle times. We also avoid much of the risk associated with home building by controlling most of our lots and land through option agreements and by sustaining a strong balance sheet. These are key elements of Smith Douglas' strategy, and we believe they lead to superior shareholder returns over the long term. For the third quarter of 2025, we generated pre-tax income of $17.2 million and earnings of $0.24 per share. Home sales revenue came in at $262 million on home closings of 788 and an average selling price of $333,000. Gross margins on homes closed averaged 21% for the quarter. These results were largely in line with our previous guidance and demonstrates our ability to accurately forecast and execute on our stated objectives. Net orders for the quarter increased 15% year over year to 690 homes on a sales base of 2.4 homes per community per month. Despite some tailwinds with mortgage rates trending down in the quarter overall, demand stayed soft, which we believe is an indication that the buyer's psyche and consumer confidence are the main headwinds facing our industry. Financing incentives remain an important sales tool in getting buyers to move forward and purchase. and we expect this to continue into the fourth quarter. We continue to emphasize our approach of pace over price, as we believe our operations run more efficiently at or near full capacity. We made further progress establishing a foothold in our new markets in the third quarter. We began vertical construction on homes in Greenville Market, started generating interest lists for our communities in Dallas Market, and expect Gulf Coast Market to be up and running in the middle of next year. These markets fit nicely into our business model and will be key contributors to our volume goals in the coming years. Cycle times in the third quarter were consistent with the second quarter of 54 days, excluding our Houston division. The efficiency of our operations is a key differentiator for our company, and it is a discipline we practice every day. It is a system senior management has developed and refined over decades in the home building business and one that requires the coordination of our employees, suppliers, and trade partners. Overall, I am pleased with how our company has performed in the third quarter and believe we've made further progress towards becoming a large-scale builder in the southeast and southern United States. Our balance sheet is in great shape. and we have several new communities slated to open in the coming months. This should give our sales efforts a boost as we head into our spring selling season. Finally, I would like to thank our team members for their continued hard work. Home building is a very competitive business, particularly in uncertain times like the ones we're in today, and you've shown a willingness to go the extra mile for our home buyers and our company's success. I truly appreciate all that you've done to make Smith & Douglas a leading builder. With that, I'd like to turn the call over to Russ, who will provide more detail on our results for this quarter and give an update on our outlook for fourth quarter.