Quarterly Basic Earnings Per Share Of $0.69 Vs $0.31, Up 122.6%

PLANO, Texas, October 29, 2020 — Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its third quarter ended September 30, 2020.

“The inflection that started more than a year ago accelerated this quarter. We are seeing unprecedented demand for our homes, as many people adapt to a post-COVID lifestyle. People want to own their own spaces, have a home office and grill for their family and friends in their own backyard. Our neighborhoods offer those homes at reasonable price points in some of the best and most diversified growth markets in the country. We are benefiting from the rapid growth and successful expansion of our Trophy Signature Homes brand in the DFW market,” said Jim Brickman Chief Executive Officer.

 

Results for the Third Quarter Ended September 30, 2020:

For the quarter ended September 30, 2020, basic net income attributable to Green Brick per common share (“EPS”), total revenues, residential units revenue, net income attributable to Green Brick, and backlog reflect a record for any quarter, as detailed below.

(Dollars in thousands, except per share data) Three Months Ended September 30,
  2020   2019   Increase
Net new home orders 823   436   88.8 %
New homes delivered 622   443   40.4 %
           
Total revenues 275,821     209,404     31.7 %
Total cost of revenues 207,935     164,679     26.3 %
Total gross profit $ 67,886     $ 44,725     51.8 %
Net income attributable to Green Brick Partners, Inc. $ 34,819     $ 15,671     122.2 %
Basic net income attributable to Green Brick Partners, Inc. per share $ 0.69     $ 0.31     122.6 %
           
Residential units revenue $ 263,885     $ 199,918     32.0 %
Homebuilding gross margin percentage 24.8 %   21.1 %   370 bps
           
Backlog $ 553,058     $ 319,739     73.0 %
Homes under construction 1,361     1,306     4.2 %
Active selling communities at end of period 100     85     17.6 %
           
Annualized net income attributable to Green Brick Partners, Inc. as a percentage of the average total Green Brick Partners, Inc. stockholders’ equity 23.5 %   12.5 %   1,100 bps

 

Results for the Nine Months Ended September 30, 2020:

Highlights for the nine months ended September 30, 2020 included the following:

  • EPS for the nine months ended September 30, 2020 was $1.67, a 96.5% increase compared to EPS of $0.85 for the nine months ended September 30, 2019.
  • As compared to the nine months ended September 30, 2019, total revenues were $721.9 million, an increase of 28.6% from $561.5 million; gross profit was $170.8 million, an increase of 41.9% from $120.4 million; and net income attributable to Green Brick was $84.4 million, an increase of 97.5% from $42.7 million.
  • Residential units revenue was $683.7 million, an increase of 27.4% compared to $536.6 million for the six months ended September 30, 2019. Land and lots revenue was $38.2 million, an increase of 52.9% compared to $25.0 million for the nine months ended September 30, 2019.

 

Mr. Brickman continued, “Our net new home orders this quarter were up 89% year over year, driven by order growth at every price point from entry level to second-time move-up buyers. With demand for new quality homes at the highest levels in more than a decade, Green Brick has successfully continued to expand its community count, growing 18% from the prior year. At the same time, Green Brick has grown profitability managing both pace and price, as we increased our Q3 2020 sales absorption by 58% and gross margins by 370 basis points year-over-year to 24.8%. We have leveraged our much higher volumes with only moderate growth in operating expenses to drive basic earnings per share up 122.6%over Q3 2019. Our industry-leading growth in profitability and revenues were most recently recognized by Fortune Magazine who awarded Green Brick the 55th place on its 100 Fastest Growing Companies list, a 38 spot jump from the prior year.”

 

“Over the past three months, our company has grown our owned and controlled lots over 31% to an all-time record of 12,066 lots, despite starting over 700 homes over the same time period. Thanks to the hard work of our land team and our strong relationships with land sellers and municipalities in our core markets, Green Brick has been able to quickly and efficiently invest its strong operating cash flow into investments in land to fund our planned future growth.”

 

“It is important to note that our record growth in land and lots was achieved while maintaining a debt to capital ratio of 25.3%, one of the lowest of all public homebuilders,” said Rick Costello, Chief Financial Officer. “The combination of our consistently strong growth and profitability with our conservative balance sheet has been critically important in building our relationship with Prudential Private Capital, resulting in our second issuance of senior notes this August. The $37.5 million of senior unsecured notes issued this quarter are due in 2027 at a fixed rate of 3.35%, a rate comparable with that of long-term rates paid by low-leveraged large-cap peers. The low cost of our debt clearly distinguishes Green Brick from our higher-risk, small-cap peers and will position us for further expansion in our core markets in 2021.”

 

Green Brick, like every other company in the United States and the global economy, has been impacted by the coronavirus (“COVID-19”) pandemic and the impact of governmental actions taken to combat the pandemic. While response to the COVID-19 outbreak continues to rapidly evolve, during March and the second quarter these steps included stay-at-home orders and social distancing guidelines that have seriously disrupted activities in many other segments of the economy. Although we slowed discretionary capital expenditures, including unsold units under construction in March and April, throughout the pandemic, we continued to build, close and sell homes in our markets. As we began to see increased market activity, we restarted construction of unsold units, recommenced purchases of lots and land and resumed development of land to reflect the market activity. While uncertainty caused by COVID-19 dramatically slowed net new home orders in late March and April 2020, during May and June 2020, our sales rebounded. Our rate of sales accelerated in the third quarter with an increase in net sales of 29%, 135% and 124% during July, August, and September 2020, respectively, over the prior monthly periods. We believe the recovery and expansion of our sales activity is related to a variety of factors, including historically low mortgage interest rates, the participation in home ownership in increasing amounts by the millennial generation, the desire of renters to leave high density living conditions, and the relative strength of the markets in which we operate.

 

More disclosures related to the COVID-19 pandemic are available in our Quarterly Report on Form 10-Q for the period ended September 30, 2020 on file with the Securities and Exchange Commission.

Earnings Conference Call:

We will host our earnings conference call to discuss our third quarter ended September 30, 2020 at 12:00 p.m. Eastern Time on Friday, October 30, 2020. The call can be accessed by dialing 800-374-0137 for domestic participants or 904-685-8013 for international participants. Participants should reference conference ID code 3297773. A replay of the call will be available from approximately 3:30 p.m. Eastern Time on October 30, 2020 through 11:59 p.m. Eastern Time on November 13, 2020. To access the replay, the domestic dial-in number is 855-859-2056, the international dial-in number is 404-537-3406 and the conference ID code is 3297773.

 

Non-GAAP Financial Measures and Key Financial Metrics:

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 the Company’s 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.

 

Reclassifications:

Beginning in the first quarter of 2020, the Company reclassified the allowances for option deposits and pre-acquisition costs related to option contracts from selling, general and administrative expenses to other (loss) income, net in the consolidated statements of income to conform to current year presentation. Net allowances for deposits and pre-acquisition costs were de minimis for the three months ended September 30, 2020 and 2019, and were losses of $1.5 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively. There was no impact on net income from the reclassification in any period.

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

  Three Months Ended September 30,   Nine Months Ended September 30,
  2020   2019   2020   2019
Residential units revenue $ 263,885     $ 199,918     $ 683,739     $ 536,560  
Land and lots revenue 11,936     9,486     38,182     24,978  
Total revenues 275,821     209,404     721,921     561,538  
Cost of residential units 198,422     157,243     521,332     421,663  
Cost of land and lots 9,513     7,436     29,839     19,503  
Total cost of revenues 207,935     164,679     551,171     441,166  
Total gross profit 67,886     44,725     170,750     120,372  
Selling, general and administrative expenses (29,177)     (25,061)     (81,718)     (70,584)  
Change in fair value of contingent consideration (210)     (1,492)     (210)     (1,749)  
Equity in income of unconsolidated entities 5,299     3,022     13,038     7,565  
Other income, net 2,125     3,778     3,004     6,143  
Income before income taxes 45,923     24,972     104,864     61,747  
Income tax expense 9,969     5,833     17,357     14,993  
Net income 35,954     19,139     87,507     46,754  
Less: Net income attributable to noncontrolling interests 1,135     3,468     3,124     4,018  
Net income attributable to Green Brick Partners, Inc. $ 34,819     $ 15,671     $ 84,383     $ 42,736  
               
Net income attributable to Green Brick Partners, Inc. per common share:              
Basic $ 0.69     $ 0.31     $ 1.67     $ 0.85  
Diluted $ 0.68     $ 0.31     $ 1.66     $ 0.84  
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:              
Basic 50,617     50,475     50,552     50,564  
Diluted 50,876     50,597     50,739     50,642  

 

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

  September 30, 2020   December 31, 2019
ASSETS
Cash and cash equivalents $ 40,269     $ 33,269  
Restricted cash 10,580     4,416  
Receivables 5,651     4,720  
Inventory 779,360     753,567  
Investments in unconsolidated entities 46,235     30,294  
Right-of-use assets – operating leases 2,800     3,462  
Property and equipment, net 3,620     4,309  
Earnest money deposits 22,263     14,686  
Deferred income tax assets, net 15,377     15,262  
Intangible assets, net 643     707  
Goodwill 680     680  
Other assets 17,104     10,167  
Total assets $ 944,582     $ 875,539  
LIABILITIES AND EQUITY
Liabilities:      
Accounts payable $ 23,127     $ 30,044  
Accrued expenses 49,847     24,656  
Customer and builder deposits 29,339     23,954  
Lease liabilities – operating leases 2,888     3,564  
Borrowings on lines of credit, net 93,489     164,642  
Senior unsecured notes, net 111,028     73,406  
Notes payable 2,131      
Contingent consideration 210     5,267  
Total liabilities 312,059     325,533  
Commitments and contingencies      
Redeemable noncontrolling interest in equity of consolidated subsidiary 13,624     13,611  
Equity:      
Green Brick Partners, Inc. stockholders’ equity      
Preferred stock, $0.01 par value: 5,000,000 shares authorized; none issued and outstanding      
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,053,858 and 50,879,949 issued and 50,661,919 and 50,488,010 outstanding as of September 30, 2020 and December 31, 2019, respectively 511     509  
Treasury stock, at cost, 391,939 and 391,939 shares as of September 30, 2020 and December 31, 2019, respectively (3,167)     (3,167)  
Additional paid-in capital 292,388     290,799  
Retained earnings 320,347     235,027  
Total Green Brick Partners, Inc. stockholders’ equity 610,079     523,168  
Noncontrolling interests 8,820     13,227  
Total equity 618,899     536,395  
Total liabilities and equity $ 944,582     $ 875,539  

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,
2020   2019   Change   %   2020   2019   Change   %
Home closings revenue $ 262,319     $ 197,280     $ 65,039     33.0 %   $ 678,352     $ 529,003     $ 149,349     28.2 %
Mechanic’s lien contracts revenue 1,566     2,638     (1,072)     (40.6) %   5,387     7,557     (2,170)     (28.7) %
Residential units revenue $ 263,885     $ 199,918     $ 63,967     32.0 %   $ 683,739     $ 536,560     $ 147,179     27.4 %
New homes delivered 622     443     179     40.4 %   1,623     1,205     418     34.7 %
Average sales price of homes delivered $ 421.7     $ 445.3     $ (23.6)     (5.3) %   $ 418.0     $ 439.0     $ (21.0)     (4.8) %

 

Land and Lots Revenue
(dollars in thousands)
Three Months Ended September 30,   Nine Months Ended September 30,
2020   2019   Change   %   2020   2019   Change   %
Lots revenue $ 11,936     $ 9,486     $ 2,450     25.8%   $ 37,798     $ 24,968     $ 12,830     51.4 %
Land revenue             —%   384     10     374     3,740.0 %
Land and lots revenue $ 11,936     $ 9,486     $ 2,450     25.8%   $ 38,182     $ 24,978     $ 13,204     52.9 %
Lots closed 138   61   77     126.2%   302     166     136     81.9 %
Average sales price of lots closed $ 86.5     $ 155.5     $ (69.0)     (44.4)%   $ 125.2     $ 150.4     $ (25.2)     (16.8) %

 

New Home Orders and Backlog
(dollars in thousands)
Three Months Ended September 30,   Nine Months Ended September 30,
2020   2019   Change   %   2020   2019   Change   %
Net new home orders 823     436     387     88.8%   2,037     1,334     703     52.7 %
Cancellation rate 11.7 %   12.6 %   (0.9) %   (7.1) %   14.7 %   13.7 %   1.0 %   7.3 %
Absorption rate per average active selling community per quarter 8.7     5.5     3.2     58.2%   6.9     5.5     1.4     25.5 %
Average active selling communities 95     80     15     18.8%   98     81     17     21.0 %
Active selling communities at end of period 100     85     15     17.6%                
Backlog $553,058   $319,739   $233,319   73.0%                
Backlog (units) 1,200   710     490     69.0%                
Average sales price of backlog $ 460.9     $ 450.3     $ 10.6     2.4%                

 

     September 30, 2020   December 31, 2019
Lots owned        
Central   4,564     4,223  
Southeast   2,067     2,196  
Total lots owned   6,631     6,419  
Lots controlled (1)        
Central   4,381     1,410  
Southeast   1,054     1,147  
Total lots controlled   5,435     2,557  
Total lots owned and controlled (1)   12,066     8,976  
Percentage of lots owned   55.0 %   71.5 %

 

 
  • Total lots excludes lots with homes under construction.

GREEN BRICK PARTNERS, INC.

SUPPLEMENTAL INFORMATION

(Unaudited)

 

The following table presents additional information on the lots we controlled as of September 30, 2020 and December 31, 2019.

  September 30, 2020   December 31, 2019
Lots under third party option contracts 2,728     1,574  
Land under option for future acquisition and development 869     431  
Lots under option through unconsolidated development joint ventures 1,838     552  
Total lots controlled 5,435     2,557  

 

Reconciliation of Non-GAAP Financial Measures

 

The following table represents the non-GAAP measure of adjusted homebuilding gross margin for the three and nine months ended September 30, 2020 and 2019 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,
2020   2019   2020   2019
Residential units revenue $ 263,885     $ 199,918     $ 683,739     $ 536,560  
Less: Mechanic’s lien contracts revenue (1,566)     (2,638)     (5,387)     (7,557)  
Home closings revenue $ 262,319     $ 197,280     $ 678,352     $ 529,003  
Homebuilding gross margin $ 65,184     $ 41,704     $ 161,450     $ 112,703  
Homebuilding gross margin percentage 24.8 %   21.1 %   23.8 %   21.3 %
               
Homebuilding gross margin 65,184     41,704     161,450     112,703  
Add back: Capitalized interest charged to cost of revenues 2,914     2,183     7,802     5,553  
Adjusted homebuilding gross margin 68,098     $ 43,887     $ 169,252     $ 118,256  
Adjusted homebuilding gross margin percentage 26.0 %   22.2 %   25.0 %   22.4 %

 

The following table presents the pre-tax income for the three and nine months ended September 30, 2020 and 2019, which represents net income attributable to Green Brick for the period excluding the provision for income taxes attributable to Green Brick, and reconciles these amounts to net income attributable to Green Brick, the most directly comparable GAAP measure.

 

(Unaudited, in thousands): Three Months Ended September 30,   Nine Months Ended September 30,
2020   2019   2020   2019
Net income attributable to Green Brick Partners, Inc. $ 34,819     $ 15,671     $ 84,383     $ 42,736  
Income tax expense attributable to Green Brick Partners, Inc. 9,968     5,743     17,354     14,753  
Pre-tax income attributable to Green Brick Partners, Inc. $ 44,787     $ 21,414     $ 101,737     $ 57,489  

 

About Green Brick Partners, Inc.:

Green Brick Partners, Inc. (Nasdaq: GRBK) is a diversified homebuilding and land development company. Green Brick owns a controlling interest in five homebuilders in Dallas, Texas (CB JENI Homes, Normandy Homes, Southgate Homes, Centre Living Homes, and Trophy Signature Homes), as well as a homebuilder in Atlanta, Georgia (The Providence Group) and 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, Providence Group Title, BHome Mortgage and Green Brick 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’s homebuilding partners and financial services platforms, please visit https://greenbrickpartners.com/team-builders/.

 

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,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements in this press release and the earnings call include statements regarding (i) the Company’s strategy for growth, the drivers of that growth, and the impact on the Company’s results, (ii) the impact of certain market factors on the Company’s performance and growth, and (iii) the effects of the COVID-19 pandemic on the homebuilding industry and the Company’s results of operations, business and liquidity, including the impact on demand for new home sales, supply of unsold units, closings and cancellations. These forward-looking statements involve estimates and assumptions which may be affected by risks and uncertainties in the Company’s 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) adverse impacts from general economic conditions, including as a result of the COVID-19 pandemic and the responsive actions taken by federal, state and local public health and governmental authorities, seasonality, cyclicality and competition in the homebuilding industry; (2) changes in consumer price sensitivity or decreased demand for the Company’s homes or finished lots or increases in cancellations, including as a result of the COVID-19 pandemic; (3) availability and cost of labor; (4) a failure to recruit, retain or develop highly skilled and competent employees; (5) availability and cost of raw materials or other supplies, necessary for our homebuilding activities, and the impact of the COVID-19 pandemic on global supply chains; (6) an inability to acquire land for reasonable prices; (7) an inability to develop or sell communities; (8) government regulation risks; (9) a lack of availability or volatility of mortgage financing; (10) a severe weather event or natural disasters; (11) difficulty in obtaining sufficient capital; (12) poor relations with community residents; and (13) an increase in our debt levels or related service obligations. For a more detailed discussion of these and other risks and uncertainties applicable to the Company please see the Company’s Annual Report on Form 10-K and the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2020 filed with the Securities and Exchange Commission.

 

Contact: Richard A. Costello

Chief Financial Officer

(469) 573-6755

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