The first IPO of 2024 is getting ready for its turn on the dance floor. Smith Douglas Homes Corp. (SDHC proposed), a homebuilder based in the Atlanta suburb of Woodstock, Georgia, intends to price its IPO on Wednesday night, Jan. 10, 2024, to trade Thursday, Jan. 11, on the New York Stock Exchange. The profitable company is offering 7.69 million shares at $18.00 to $21.00 to raise $150 million – at a valuation of $1 billion – if the deal is priced at the $19.50 mid-point.
J.P. Morgan, BofA Securities, RBC Capital Markets, Wells Fargo Securities, Wolfe/ Nomura Alliance and Zelman Partners are the joint book-runners.
The company plans to use some of the IPO proceeds to repay about $71 million of outstanding debt under its existing credit facility as part of a refinancing and to repay $1.2 million in notes payable to related parties, according to the prospectus.
The Georgia homebuilder’s big IPO is the main event in the first full work week of 2024, when only two other small deals are on the IPO Calendar.
Smith Douglas Homes Corp. got the new year’s IPO market started last Wednesday (Jan. 3, 2024) when it set terms for its IPO and launched the deal.
The IPO Pipeline generated plenty of buzz in the first week of 2024 – a week cut short by the New Year’s Day holiday. Six companies filed to go public during that four-day week. The IPO pros estimated their combined IPO proceeds at more than $2.0 billion.
First-Time Buyers & Empty Nesters
Smith Douglas Homes Corp. caters primarily to “entry-level and empty-nest homebuyers,” the company says in the prospectus. The company describes itself as “one of the nation’s fastest-growing private homebuilders by number of closings.”
The homebuilder says that it is “engaged in the design, construction, and sale of single-family homes in some of the highest growth and most desirable markets in the Southeastern United States.”
Smith Douglas Homes Corp., founded in 2008, is based in Woodstock, Georgia, about 30 miles north of Atlanta.
“We have experienced rapid organic growth since our inception in 2008, expanding our geographic presence from our headquarters in Atlanta, a market where we are currently one of the largest homebuilders, to six additional key markets with robust growth outlooks: Raleigh, Charlotte, Birmingham, Houston, Huntsville, and Nashville,” the prospectus says. “We believe there remains significant opportunity to increase market share and meaningfully grow within our existing markets, driving economies of scale and overall platform growth.”
Smith Douglas Homes Corp. says it uses a “land-light” business model that involves buying “finished lots through lot-option contracts from third-party land developers or land bankers,” the prospectus says. The company says that its lot acquisition strategy “reduces our up-front capital requirements and generally provides for ‘just-in-time’ lot delivery, which closely aligns with our pace of home orders and home starts.” This is a key part of the company’s strategy to control expenses, according to the prospectus.
The Georgia homebuilder is profitable, although its financial statements show that growth in both its revenue and its net income have slowed since 2021.
For the 12 months that ended Sept. 30, 2023, Smith Douglas Homes Corp. reported net income of $134.81 million on revenue of $770.1 million.
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