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Green Brick Partners, Inc. Reports Third Quarter 2022 Results
Source: Nasdaq GlobeNewswire / 02 Nov 2022 16:05:02 America/New_York
Diluted EPS of $1.57, Up 65.3%
Net Income Attributable to Green Brick Partners of $73.5 Million, Up 51.6%
Record Home Building Gross Margin Up 550 BPS to 32.4%
Total Revenues of $407.9 Million, Up 19.2%PLANO, Texas, Nov. 02, 2022 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (NYSE: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its third quarter ended September 30, 2022.
“Green Brick delivered third quarter results that were a record for any third quarter with EPS of $1.57, total revenues of $407.9 million, residential units revenue of $396.7 million, and net income attributable to Green Brick of $73.5 million. We also reported a homebuilding gross margin of 32.4% which is a record for any quarter, and we believe this may be the highest among public builders,” said Jim Brickman, CEO and Co-Founder. “These results reflect our continued focus on operational efficiency as we meet a more challenging market going forward.”
“Most of our land and lots are in DFW and Atlanta, two of the best larger markets in the country. Our basis is generally lower than our peers, based on our conservative underwriting and our self-developing most of our lots,” continued Mr. Brickman. “Most of our communities are in more supply-constrained infill and other desirable locations. These are all critical factors for our industry leading 32.4% gross margins. Therefore, it should not be surprising that we currently have no communities on a watch list, meaning we have no indicators of impairment as of September 30, 2022. ”
“Our strong balance sheet with a 28.0% debt-to-total capital ratio and record gross margins gives Green Brick more flexibility than most peers to effectively manage pace versus price decisions going forward. We view the current challenges as a potential opportunity to increase market share,” said Mr. Brickman. “Depending on market conditions, as many peers pull back, we expect to have the opportunity to increase our count of ending active selling communities from September 30, 2022 by 20% to 30% over the next four to five quarters. These new communities with a favorable land/lot basis provide the optionality of pricing aggressively without the overhang of protecting backlog. We believe these new communities will generate favorable sales per community at more traditional gross margins.”
Results for the Quarter Ended September 30, 2022:
(Dollars in thousands, except per share data) Three Months Ended September 30, 2022 2021 Change New homes delivered 650 738 (11.9 )% Total revenues $ 407,944 $ 342,340 19.2 % Total cost of revenues 274,625 251,004 9.4 % Total gross profit $ 133,319 $ 91,336 46.0 % Income before income taxes $ 97,596 $ 65,158 49.8 % Net income attributable to Green Brick Partners, Inc. $ 73,520 $ 48,507 51.6 % Diluted net income attributable to Green Brick Partners, Inc. per common share $ 1.57 $ 0.95 65.3 % Residential units revenue $ 396,749 $ 338,900 17.1 % Average sales price of homes delivered $ 607.3 $ 458.1 32.6 % Homebuilding gross margin percentage 32.4 % 26.9 % 550 bps Backlog $ 564,026 $ 1,017,220 $ (453,194 ) Homes under construction 2,276 2,555 (10.9 )% Results for the Nine Months Ended September 30, 2022:
For the nine months ended September 30, 2022, our net income attributable to Green Brick per diluted common share reflects a record through the first three quarters of any year since the Company’s inception, as detailed below.
(Dollars in thousands, except per share data) Nine Months Ended September 30, 2022 2021 Change New homes delivered 2,189 2,011 8.9 % Total revenues $ 1,326,704 $ 950,625 39.6 % Total cost of revenues 916,133 699,324 31.0 % Total gross profit $ 410,571 $ 251,301 63.4 % Income before income taxes $ 318,511 $ 174,397 82.6 % Net income attributable to Green Brick Partners, Inc. $ 236,353 $ 126,739 86.5 % Diluted net income attributable to Green Brick Partners, Inc. per common share $ 4.82 $ 2.48 94.4 % Residential units revenue $ 1,273,925 $ 889,636 43.2 % Average sales price of homes delivered $ 579.4 $ 440.8 31.4 % Homebuilding gross margin percentage 31.1 % 26.5 % 460 bps Selling, general and administrative expenses as a percentage of residential units revenue 9.4 % 10.9 % -150 bps Earnings Conference Call:
We will host our earnings conference call to discuss our third quarter ended September 30, 2022 at 12:00 p.m. Eastern Time on Thursday, November 3rd, 2022. The call can be accessed by dialing 1-888-660-6353 for domestic participants or 1-929-203-2106 for international participants and should reference meeting number 3162560. Participants may also join the call via webcast at: https://events.q4inc.com/attendee/570044635
A telephone replay of the call will be available through December 3rd, 2022. To access the telephone replay, the domestic dial-in number is 1-800-770-2030, the international dial-in number is 1-647-362-9199 and the access code is 3162560, or by using the link at investors.greenbrickpartners.com.
GREEN BRICK PARTNERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Residential units revenue $ 396,749 $ 338,900 $ 1,273,925 $ 889,636 Land and lots revenue 11,195 3,440 52,779 60,989 Total revenues 407,944 342,340 1,326,704 950,625 Cost of residential units 268,536 247,899 879,108 654,136 Cost of land and lots 6,089 3,105 37,025 45,188 Total cost of revenues 274,625 251,004 916,133 699,324 Total gross profit 133,319 91,336 410,571 251,301 Selling, general and administrative expenses (43,251 ) (33,709 ) (119,314 ) (97,182 ) Equity in income of unconsolidated entities 5,697 5,555 19,907 14,039 Other income, net 1,831 1,976 7,347 6,239 Income before income taxes 97,596 65,158 318,511 174,397 Income tax expense 16,963 13,898 65,678 37,093 Net income 80,633 51,260 252,833 137,304 Less: Net income attributable to noncontrolling interests 7,113 2,753 16,480 10,565 Net income attributable to Green Brick Partners, Inc. $ 73,520 $ 48,507 $ 236,353 $ 126,739 Net income attributable to Green Brick Partners, Inc. per common share: Basic $ 1.58 $ 0.96 $ 4.86 $ 2.50 Diluted $ 1.57 $ 0.95 $ 4.82 $ 2.48 Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share: Basic 46,032 50,732 48,205 50,689 Diluted 46,390 51,079 48,544 51,046 GREEN BRICK PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)September 30, 2022 December 31, 2021 ASSETS Cash and cash equivalents $ 48,203 $ 77,166 Restricted cash 18,739 16,388 Receivables 7,239 6,871 Inventory 1,453,056 1,203,743 Investments in unconsolidated entities 69,250 55,616 Right-of-use assets - operating leases 3,800 4,596 Property and equipment, net 2,894 2,812 Earnest money deposits 25,203 26,008 Deferred income tax assets, net 15,741 15,741 Intangible assets, net 473 537 Goodwill 680 680 Other assets 12,457 11,709 Total assets $ 1,657,735 $ 1,421,867 LIABILITIES AND EQUITY Liabilities: Accounts payable $ 60,984 $ 45,682 Accrued expenses 99,425 61,351 Customer and builder deposits 43,622 64,610 Lease liabilities - operating leases 3,972 4,745 Borrowings on lines of credit, net 42,902 (738 ) Senior unsecured notes, net 335,729 335,446 Notes payable 14,638 210 Total liabilities 601,272 511,306 Commitments and contingencies Redeemable noncontrolling interest in equity of consolidated subsidiary 25,660 21,867 Equity: Green Brick Partners, Inc. stockholders’ equity Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 47,696 47,696 Common stock, $0.01 par value: 100,000,000 shares authorized; 46,037,649 issued and outstanding as of September 30, 2022 and 51,151,911 and 50,759,972 issued and outstanding as of December 31, 2021, respectively 460 512 Treasury stock, at cost: none as of September 30, 2022 and 391,939 shares as of December 31, 2021 — (3,167 ) Additional paid-in capital 261,570 289,641 Retained earnings 699,514 539,866 Total Green Brick Partners, Inc. stockholders’ equity 1,009,240 874,548 Noncontrolling interests 21,563 14,146 Total equity 1,030,803 888,694 Total liabilities and equity $ 1,657,735 $ 1,421,867 GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)Residential Units Revenue and New Homes Delivered
(dollars in thousands)Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change % 2022 2021 Change % Home closings revenue $ 394,731 $ 338,075 $ 56,656 16.8 % $ 1,268,329 $ 886,488 $ 381,841 43.1 % Mechanic’s lien contracts revenue 2,018 825 1,193 144.6 % 5,596 3,148 2,448 77.8 % Residential units revenue $ 396,749 $ 338,900 $ 57,849 17.1 % $ 1,273,925 $ 889,636 $ 384,289 43.2 % New homes delivered 650 738 (88 ) (11.9 )% 2,189 2,011 178 8.9 % Average sales price of homes delivered $ 607.3 $ 458.1 $ 149.2 32.6 % $ 579.4 $ 440.8 $ 138.6 31.4 % Land and Lots Revenue
(dollars in thousands)Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change % 2022 2021 Change % Lots revenue $ 3,991 $ 2,126 $ 1,865 87.7 % $ 18,027 $ 15,184 $ 2,843 18.7 % Land revenue 7,204 1,314 5,890 448.2 % 34,752 45,805 (11,053 ) (24.1 )% Land and lots revenue $ 11,195 $ 3,440 $ 7,755 225.4 % $ 52,779 $ 60,989 $ (8,210 ) (13.5 )% Lots closed 57 31 26 83.9 % 274 173 101 58.4 % Average sales price of lots closed $ 70.0 $ 68.6 $ 1.4 2.0 % $ 65.8 $ 87.8 $ (22.0 ) (25.1 )% New Home Orders and Backlog
(dollars in thousands)Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change % 2022 2021 Change % Net new home orders 404 689 (285 ) (41.4 )% 1,550 2,375 (825 ) (34.7 )% Revenue from new net home orders $ 251,276 $ 380,945 $ (129,669 ) (34.0 )% $ 962,497 $ 1,216,845 $ (254,348 ) (20.9 )% Average selling price of net new home orders $ 622.0 $ 552.9 $ 69.1 12.5 % $ 621.0 $ 512.4 $ 108.6 21.2 % Cancellation rate 17.6 % 6.9 % 10.7 % 155.1 % 11.8 % 6.7 % 5.1 % 76.1 % Absorption rate per average active selling community per quarter 5.3 8.2 (2.9 ) (35.4 )% 6.8 8.8 (2.0 ) (22.7 )% Average active selling communities 76 84 (8 ) (9.5 )% 76 90 (14 ) (15.6 )% Active selling communities at end of period 74 80 (6 ) (7.5 )% Backlog $ 564,026 $ 1,017,220 $ (453,194 ) (44.6 )% Backlog (units) 841 1,827 (986 ) (54.0 )% Average sales price of backlog $ 670.7 $ 556.8 $ 113.9 20.5 % September 30, 2022 December 31, 2021 Lots owned (1) Central 18,998 17,767 Southeast 2,583 2,472 Total lots owned 21,581 20,239 Lots controlled (1) Central 3,691 7,321 Southeast 618 1,061 Total lots controlled 4,309 8,382 Total lots owned and controlled (1) 25,890 28,621 Percentage of lots owned 83.4 % 70.7 % ———————————————————
(1) Excludes lots with homes under construction.
GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)The following table presents additional information on the lots we owned as of September 30, 2022 and December 31, 2021.
September 30, 2022 December 31, 2021 Total lots owned 21,581 20,239 Add certain lots included in Total Lots Controlled Land under option for future acquisition and development 307 3,826 Lots under option through unconsolidated development joint ventures 1,718 1,816 Total lots self-developed 23,606 25,881 Self-developed lots as a percentage of total lots owned and controlled 91.2 % 90.4 % Non-GAAP Financial Measures
In this press release, we utilize certain financial measures that are non-GAAP financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and similar measures are useful to management and investors in evaluating our operating performance and financing structure. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
The following table represents the non-GAAP measure of adjusted homebuilding gross margin for the three and nine months ended September 30, 2022 and 2021 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.
(Unaudited, in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Residential units revenue $ 396,749 $ 338,900 $ 1,273,925 $ 889,636 Less: Mechanic’s lien contracts revenue (2,018 ) (825 ) (5,596 ) (3,148 ) Home closings revenue $ 394,731 $ 338,075 $ 1,268,329 $ 886,488 Homebuilding gross margin $ 127,861 $ 90,875 $ 393,940 $ 234,834 Homebuilding gross margin percentage 32.4 % 26.9 % 31.1 % 26.5 % Homebuilding gross margin 127,861 90,875 393,940 234,834 Add back: Capitalized interest charged to cost of revenues 3,105 2,569 10,303 6,915 Adjusted homebuilding gross margin $ 130,966 $ 93,444 $ 404,243 $ 241,749 Adjusted homebuilding gross margin percentage 33.2 % 27.6 % 31.9 % 27.3 % About Green Brick Partners, Inc.
Green Brick Partners, Inc. is a diversified homebuilding and land development company that operates in Texas, Georgia, and Florida and has a non-controlling interest in a Colorado homebuilder. Green Brick owns five subsidiary homebuilders in Texas (CB JENI Homes, Normandy Homes, Southgate Homes, Trophy Signature Homes, and a 90% interest in Centre Living Homes), as well as a controlling interest in a homebuilder in Atlanta, Georgia (The Providence Group) and an 80% interest in a homebuilder in Port St. Lucie, Florida (GHO Homes). Green Brick also owns a noncontrolling interest in Challenger Homes in Colorado Springs, Colorado, and retains interests in related financial services platforms, including Green Brick Title and BHome Mortgage. The Company is engaged in all aspects of the homebuilding process, including land acquisition and development, entitlements, design, construction, marketing, and sales for its residential neighborhoods and master-planned communities. For more information about Green Brick Partners Inc.’s subsidiary homebuilders, please visit greenbrickpartners.com/homebuilders.
Forward-Looking and Cautionary Statements:
This press release and our earnings call contain “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts and typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “feel,” “intend,” “plan,” “predict,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements in this press release and in our earnings call include statements regarding (i) our position to adapt and succeed in a rapidly changing environment, including our focus on operational efficiency; (ii) our expectations regarding trends in our markets, including future increases in inventory and the peaking of construction costs; (iii) the ability to mitigate future inventory buildup, including reductions in single-family starts; (iv) expected closings of our current backlog, and our ability to manage such closings; (v) our priorities and strategies for growth, the drivers of that growth, and the impact on our future results; (vi) our expectation to sustain our industry-leading margins and debt-to-total capital ratios, as well as the expected impacts of incentives on our margins; (vii) our flexibility to capitalize on market opportunities and grow our market share as well as the impact on our financial and operational performance; (viii) our beliefs that our lot and land positions will support future growth and provide us with advantages on margins and adaptability; (ix) our beliefs that we operate in the most advantageous markets in the U.S. and the resilience of our markets in both stronger and weaker economies; (x) our expectations related to starts in the fourth quarter and into 2023; (xi) our expectations for lot completions and opportunities to increase active selling communities during the remainder of 2022 and into 2023; (xii) our beliefs regarding our position to manage costs, prices and cycle times; and (xiii) our expectation to continue to provide favorable returns on equity to our shareholders. These forward-looking statements reflect our current views about future events and involve estimates and assumptions which may be affected by risks and uncertainties in our business, as well as other external factors, which could cause future results to materially differ from those expressed or implied in any forward-looking statement. These risks include, but are not limited to: (1) changes in macroeconomic conditions, including increasing interest rates, inflation, and the COVID-19 pandemic that could adversely impact demand for new homes or the ability of potential buyers to qualify; (2) general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; (3) shortages, delays or increased costs of raw materials and increased demand for materials, or increases in other operating costs, including costs related to labor, real estate taxes and insurance, which in each case exceed our ability to increase prices; (4) a shortage of qualified labor; (5) an inability to acquire land in our current and new markets at anticipated prices or difficulty in obtaining land- use entitlements; (6) our inability to successfully execute our strategies, including an inability to grow our operations or expand our Trophy brand; (7) our inability to implement new strategic investments; (8) a failure to recruit, retain or develop highly skilled and competent employees; (9) government regulation risks; (10) a lack of availability or volatility of mortgage financing; (11) severe weather events or natural disasters; (12) difficulty in obtaining sufficient capital to fund our growth; (13) our ability to meet our debt service obligations; (14) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; (15) changes in accounting standards that adversely affect our reported earnings or financial condition. For a more detailed discussion of these and other risks and uncertainties applicable to Green Brick please see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Contact:
Benting Hu
Vice President of Finance
(469) 808-1014
IR@greenbrickpartners.com
