Transactions with related parties

6 Months Ended

Jun. 30, 2024

Transactions with related parties [Abstract]

Transactions with related parties

Note 13 ‑ Transactions with related parties:

The Company rents office space under a lease with JBB Cherokee Holdings LLC, an entity affiliated by common ownership. Related party lease cost included in the accompanying unaudited condensed consolidated statements of income as a component of selling, general and administrative costs is presented in the table below (in thousands).

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Operating leases costs (related party)	$	87	$	86	$	173	$	173
Variable lease costs – operating (related party)	$	21	$	20	$	39	$	40

Payments under the office lease agreement, along with costs associated with the office space, totaled approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2024, respectively, and approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2023, respectively.

During the three and six months ended June 30, 2024, the Company incurred fees of $0.1 million and $0.4 million, respectively, in the aggregate from certain entities affiliated by common ownership for use of facilities related to business development and vendor relations, which is included in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income. During the three and six months ended June 30, 2023, the Company incurred fees of $0.4 million for the use of these facilities. The Company paid fees for use of these facilities of $0.1 million during the three and six months ended June 30, 2024 and $0.4 million during the three and six months ended June 30, 2023.

While the Company typically enters into lot option agreements whereby a deposit is provided to the seller, the Company has in the past, in lieu of providing a deposit, invested a minority interest in certain of the land banking entities with which it contracts. During the three and six months ended June 30, 2023, the Company purchased 9 and 35 lots totaling approximately $0.8 million and $3.0 million, respectively, under lot option agreements with unconsolidated land bank entities in which the Company had a non‑controlling ownership interest. There was no such activity during the six months ended June 30, 2024. The Company has identified these entities as VIEs; however, the Company has not been identified as the primary beneficiary of the VIEs and the entities are not consolidated in the accompanying unaudited condensed consolidated financial statements (see Note 3 for information related to VIEs).

The Company has entered into lot option transactions with a former member of Smith Douglas Holdings LLC’s Board of Managers. During the three and six months ended June 30, 2023, the Company sold 10 and 15 finished lots at cost for approximately $0.7 million and $1.0 million, respectively, to the then member of Smith Douglas Holdings LLC’s Board of Managers. During the three and six months ended June 30, 2023, the Company purchased 77 and 159 lots totaling $3.7 million and $8.3 million, respectively, related to these lot option agreements.

The Company charters aircraft services from companies that are controlled by a related entity of the Company’s managing member. Expenses incurred and paid to these companies under a dry lease agreement for the use of the aircraft for business travel totaled approximately $46,000 and $78,000 for the three and six months ended June 30, 2024, respectively, and approximately $31,000 and $51,000 for the three and six months ended June 30, 2023, respectively, which are included in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income.

Historically, since August 2016, one of the former members of Smith Douglas Holdings LLC’s Board of Managers was party to a consulting agreement with Smith Douglas Holdings LLC pursuant to which he provided services to Smith Douglas Holdings LLC in exchange for (i) an annual fee equal to approximately $0.6 million plus (ii) eligibility to earn an annual bonus, subject to the terms and conditions therein. During the three and six months ended June 30, 2023, the then member of Smith Douglas Holdings LLC’s Board of Managers earned fees under the consulting agreement of approximately $0.2 million and $0.3 million, respectively, which are included in selling, general and administrative costs in the accompanying unaudited condensed consolidated statements of income.

The Company had two uncollateralized notes payable bearing interest at 2.12% and 2.56%, respectively, and other payables to certain related parties for the purchase of airplanes totaling approximately $0.9 million as of December 31, 2023, which are included in accrued expenses and other liabilities in the accompanying unaudited condensed consolidated balance sheets. The notes payable were repaid during the six months ended June 30, 2024.

The Company has related party receivables totaling approximately $0.1 million as of both June 30, 2024 and December 31, 2023 for various expenses paid by the Company on behalf of the related party, which are included in other assets in the accompanying unaudited condensed consolidated balance sheets.

As of December 31, 2023, the Company had a balance due to related parties of $11,000 for various expenses paid by the related parties on behalf of the Company, which is included in accrued expenses and other liabilities in the accompanying 2023 unaudited condensed consolidated balance sheet. There was no such balance outstanding as of June 30, 2024.