Earnings per share

3 Months Ended

Mar. 31, 2024

Note 18 - Earnings per share:

Basic earnings per share is computed by dividing net income attributable to Smith Douglas Homes Corp. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share is computed by adjusting the net income available to Smith Douglas Homes Corp. and the weighted average shares outstanding to give effect to potentially dilutive securities. Shares of Class B common stock are not entitled to receive any distributions or dividends and are therefore excluded from this presentation since they are not participating securities.

All earnings prior to January 11, 2024, the date of the IPO, were entirely allocable to the non-controlling interests and, as a result, earnings per share information is not applicable for reporting periods prior to this date. Consequently, only earnings per share for net income for periods subsequent to January 10, 2024 are presented.

Basic and diluted earnings per share of common stock for the period from January 11, 2024 to March 31, 2024 have been computed as follows (in thousands, except share and per share amounts):

	For the period from January 11, 2024 to March 31, 2024
Numerator:
Net income attributable to Smith Douglas Homes Corp, Basic	$	2,972
Add: Net income impact from assumed redemption of all LLC Interests to common stock		18,674
Less: Income tax expense on net income attributable to NCI at 25.0%		(4,661	)
Net income attributable to Smith Douglas Homes Corp., after adjustment for assumed redemption, Diluted	$	16,985

Denominator:
Weighted average shares of common stock outstanding, Basic		8,846,154
Dilutive effects of:
LLC Interests that are exchangeable for common stock		42,435,897
Unvested RSUs		128,346
Weighted average shares of common stock outstanding, Diluted		51,410,397

Basic earnings per share	$	0.34
Diluted earnings per share	$	0.33

Net income attributable to the non-controlling interests added back to net income in the fully dilutive computation has been adjusted for income taxes which would have been expensed had the income been recognized by Smith Douglas Homes Corp., a taxable entity. The weighted average common shares outstanding in the diluted computation per share assumes all outstanding LLC Interests are redeemed and the Company elects to issue Class A shares of common stock upon redemption rather than cash-settle.

For the period from January 11, 2024 to March 31, 2024, the dilutive impact of LLC Interests assumed to be redeemed in exchange for the issuance of Class A common stock was included in the computation of diluted earnings per share under the if-converted method. The dilutive impact of unvested RSUs was included using the treasury stock method.