Smith Douglas Homes Corp. Class A

Good morning. I would like to welcome everyone to the Smith Douglas Holmes fourth quarter and full year 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Today, we will be limiting you to one question and one follow-up. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. As a reminder, this call is being recorded. I would now like to turn the call over to Joe Thomas, Senior Vice President of Accounting and Finance. 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 fourth quarter and full year 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 the 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. Posting 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.

Good morning, and thank you for joining us today as we go over our results for the fourth quarter of 2025 and provide an update on our operations here early in 2026. Smith Douglas Homes delivered 780 homes in the fourth quarter, resulting in $260 million in revenue. Home closing gross margin came in at 19.9%, and net income for the quarter was $17 million, or $0.39 per diluted share. For the full year 2025, we delivered 2,908 homes, a record for our company, and produced earnings of $1.19 per diluted share. Despite a difficult demand environment across much of the industry, we were still able to grow deliveries during the year. which we believe reflects the strength of our operating model and the discipline of our teams in the field. Overall, we're pleased with our performance to close out the year as our delivery total and growth margin came in above our previously guided range. We generated 532 net new orders for the fourth quarter, as sales conditions remained choppy to end the year. While maintaining sales pace remains important to us, We chose to remain disciplined in how aggressively we pursued sales during the quarter as the combination of seasonal slowness and aggressive year-end discounting from some competitors created a difficult selling environment. Buyers continued to weigh the benefits of home ownership against their concerns over affordability, which remains a persistent challenge for the buyers despite our leading price points. Financing incentives remained an important tool in alleviating those concerns and solving for monthly payments to fit our buyers' needs. So far this year, we've seen encouraging uptick in traffic and our order activity relative to fourth quarter's levels and continued to actively manage incentives at community level in order to support the sales pace. While we are optimistic that this improvement can carry into the spring selling season, demand continues to remain somewhat inconsistent from week to week. As we wait to see how the remainder of the spring selling season unfolds, we continue to fine-tune our operations in each of our markets through our disciplined approach to our business. Company-wide build times came in at 57 days for the quarter, which includes our Houston division, where we made great strides in implementing our R-team philosophy and aligning the local trades and subcontractors to our streamlined building process. We have significantly improved our cycle times in Houston since entering the market via acquisition in 2023, and Buett has proved that our disciplined approach to home building can be replicated in markets outside of the historical southeastern footprint. Our long-term goal is to continue to grow volume and gain market share via targeted investment through our footprint and opportunistically in new markets as we believe scale is a key driver of success in this business. We know that our path to higher volumes will not be linear, but instead will reflect the natural ebbs and flows of the housing cycle. As we've discussed before, we operate the business with a long-term mindset focused on maintaining pace and positioning the company for growth through the cycle, rather than managing the business around short-term quarterly outcomes. Russ will expand on that philosophy in more detail in his remarks. Spearheading Many of the company's growth initiatives will be Scott Bowles, our new regional president for the southeast. Scott's been with the company since 2017 and most recently served as our Atlanta division president, where he's instrumental in expanding their presence and profitability in this key home building market. We look forward to Scott making a similar impact in his new expanded leadership role. While near-term conditions remain uncertain, the long-term outlook for housing remains compelling as the United States continues to face a structural housing shortage. Our focus remains on building affordable homes in markets experiencing strong population growth and job creation. Our value proposition includes the level of personalization that many builders do not offer at our price point, combined with the build time that few competitors can match. We remain disciplined when it comes to land ownership and leverage and believe that that combination of affordability, operational discipline, and a conservative balance sheet positions us well for long-term success. Our strategy remains straightforward. Maintain discipline through the cycle, protect our production engine, and continue to expand our community base in attractive markets. We believe this approach positions us well continue gaining market share over time. Finally, I'd like to thank all of our team members for their continued hard work and commitment to our company's goals. With that, I'll turn the call over to Russ.