EPS OF $0.29 PER SHARE
19.8% INCREASE IN RESIDENTIAL UNITS REVENUE
17.1% INCREASE IN NEW HOME ORDERS
RECORD QUARTERLY BACKLOG AND RESIDENTIAL UNITS REVENUE
EXPECTING 21% COMMUNITY GROWTH

PLANO, Texas, August 8, 2019 — Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its second quarter ended June 30, 2019.

 

Results for the Second Quarter Ended June 30, 2019:

  • Basic net income attributable to Green Brick per common share (“EPS”) for the three months ended June 30, 2019 was $0.29, which equals the record quarterly earnings of $0.29 for the three months ended June 30, 2018. 
  • For the three months ended June 30, 2019, total revenue was $183.5 million, a record for any second quarter and an increase of 16.7%, compared to $157.3 million for the three months ended June 30, 2018; gross profit was $40.3 million, a decrease of 1.9%, compared to $41.1 million for the three months ended June 30, 2018; and net income attributable to Green Brick was $14.5 million, a decrease of 2.8%, compared to $14.9 million for the three months ended June 30, 2018.
  • Residential units revenue for the three months ended June 30, 2019 was $175.1 million, a record for any quarter and an increase of 19.8%, compared to $146.2 million for the three months ended June 30, 2018. Land and lots revenue for the three months ended June 30, 2019 was $8.5 million, a decrease of 24.1%, compared to $11.1 million for the three months ended June 30, 2018. 
  • The dollar value of backlog units as of June 30, 2019 was $331.3 million, a record for any quarter and an increase of 5.4% compared to $314.2 million as of June 30, 2018.
  • Average active selling communities increased from 62 communities as of June 30, 2018 to 77 communities as of June 30, 2019, an increase of 24.2%.
  • Homes under construction increased to 1,214 as of June 30, 2019, a record for any quarter and a 22.9% increase compared to 988 as of June 30, 2018.

 

Results for the Six Months Ended June 30, 2019:

  • Basic net income attributable to Green Brick per common share (“EPS”) for the six months ended June 30, 2019 was $0.53, an increase of 1.9% compared to $0.52 for the six months ended June 30, 2018. 
  • For the six months ended June 30, 2019, total revenue was $352.1 million, an increase of 22.9%, compared to $286.5 million for the six months ended June 30, 2018; gross profit was $75.6 million, an increase of 2.6%, compared to $73.7 million for the six months ended June 30, 2018; and net income attributable to Green Brick was $27.1 million, an increase of 3.8%, compared to $26.1 million for the six months ended June 30, 2018.
  • Residential units revenue for the six months ended June 30, 2019 was $336.6 million, a record for any six-month period and an increase of 25.9%, compared to $267.4 million for the six months ended June 30, 2018. Land and lots revenue for the six months ended June 30, 2019 was $15.5 million, a decrease of 18.6%, compared to $19.0 million for the six months ended June 30, 2018.

 

“Our second quarter performance was highlighted by backlog of $331.3 million and residential units revenue of $175.1 million, which are both records for any quarter of our existence. Our adjusted homebuilding gross margin increased 180 basis points to 23.3% in the second quarter of 2019 from 21.5% in the first quarter of 2019”, said Jim Brickman, CEO of Green Brick Partners, Inc. “We expect earnings growth to inflect positively starting in the third quarter of 2019 on a year over year basis. The Company now controls over 1,600 homesites for Trophy Signature Homes, our entry-level platform; as a result, we expect Trophy to significantly contribute to 2020 earnings”, continued Mr. Brickman. “Further, we believe that we will grow from 76 communities on January 1, 2019 to 92 communities by either the end of this year or the end of the first quarter of 2020, subject to weather. This 21% community growth is being accomplished while maintaining a very conservative balance sheet with net debt to total capital of only 28.7% as of June 30, 2019”.

 

“We are excited to announce that we have established a relationship with one of the largest and most reputable institutions in the world to help fund our future growth. On August 8, 2019, we privately issued $75.0 million of senior unsecured notes due in 2026 to Prudential Private Capital. Our superior credit metrics allowed us to price 7-year notes at a fixed rate at 4.00%. This rate is only slightly higher than the long-term rates paid by the lower-leveraged large-cap builders and lower than comparable long-term rates paid by all small-cap and all mid-cap builders”, said Rick Costello, CFO of Green Brick Partners, Inc.

 

Earnings Conference Call:

We will host our earnings conference call to discuss our second quarter ended June 30, 2019 at 12:00 p.m. Eastern Time on Friday, August 9, 2019. 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 2497668. A replay of the call will be available from approximately 3:30 p.m. Eastern Time on August 9, 2019 through 11:59 p.m. Eastern Time on August 16, 2019. 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 2497668.

 

Reconciliation of 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 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 2019, the Company reclassified its sales commission expenses from cost of residential units to selling, general and administrative expense in the condensed consolidated statements of income in order to be more comparable with a majority of its peers. There was no impact to net income from the reclassification in any period. Following this reclassification, the Company’s adjusted homebuilding gross margin was 23.3% and 22.4% for the three and six months ended June 30, 2019, respectively. Sales commission expenses represented 4.2% and 4.1% of the residential units revenue for the three and six months ended June 30, 2019, respectively.

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Residential units revenue

 

$

175,054

 

 

$

146,180

 

 

$

336,642

 

 

$

267,444

 

Land and lots revenue

 

8,452

 

 

11,132

 

 

15,492

 

 

19,031

 

Total revenues

 

183,506

 

 

157,312

 

 

352,134

 

 

286,475

 

Cost of residential units

 

136,592

 

 

108,165

 

 

264,420

 

 

198,068

 

Cost of land and lots

 

6,633

 

 

8,076

 

 

12,067

 

 

14,702

 

Total cost of revenues

 

143,225

 

 

116,241

 

 

276,487

 

 

212,770

 

Total gross profit

 

40,281

 

 

41,071

 

 

75,647

 

 

73,705

 

Selling, general and administrative expense

 

22,494

 

 

20,018

 

 

46,026

 

 

38,147

 

Change in fair value of contingent consideration

 

(197

)

 

 

 

257

 

 

 

Operating profit

 

17,984

 

 

21,053

 

 

29,364

 

 

35,558

 

Equity in income of unconsolidated entities

 

2,697

 

 

2,279

 

 

4,543

 

 

3,815

 

Other income, net

 

775

 

 

898

 

 

2,868

 

 

1,468

 

Income before income taxes

 

21,456

 

 

24,230

 

 

36,775

 

 

40,841

 

Income tax expense

 

5,332

 

 

5,235

 

 

9,160

 

 

8,607

 

Net income

 

16,124

 

 

18,995

 

 

27,615

 

 

32,234

 

Less: Net income attributable to noncontrolling interests

 

1,664

 

 

4,126

 

 

550

 

 

6,162

 

Net income attributable to Green Brick Partners, Inc.

 

$

14,460

 

 

$

14,869

 

 

$

27,065

 

 

$

26,072

 

 

 

 

 

 

 

 

 

 

Net income attributable to Green Brick Partners, Inc. per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.29

 

 

$

0.29

 

 

$

0.53

 

 

$

0.52

 

Diluted

 

$

0.29

 

 

$

0.29

 

 

$

0.53

 

 

$

0.51

 

Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:

 

 

 

 

 

 

 

 

Basic

 

50,655

 

 

50,664

 

 

50,609

 

 

50,620

 

Diluted

 

50,724

 

 

50,783

 

 

50,665

 

 

50,751

 

 

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

June 30, 2019

 

December 31, 2018

ASSETS

Cash

$

34,383

 

 

$

38,315

 

Restricted cash

4,469

 

 

3,440

 

Receivables

5,009

 

 

4,842

 

Inventory

719,878

 

 

668,961

 

Investment in unconsolidated entities

23,139

 

 

20,269

 

Right-of-use assets – operating leases

3,727

 

 

 

Property and equipment, net

4,261

 

 

4,690

 

Earnest money deposits

12,911

 

 

16,793

 

Deferred income tax assets, net

15,943

 

 

16,499

 

Intangible assets, net

750

 

 

856

 

Goodwill

680

 

 

680

 

Other assets

7,811

 

 

8,681

 

Total assets

$

832,961

 

 

$

784,026

 

LIABILITIES AND EQUITY

Liabilities:

 

 

 

Accounts payable

$

25,422

 

 

$

26,091

 

Accrued expenses

27,783

 

 

29,201

 

Customer and builder deposits

31,578

 

 

31,978

 

Lease liabilities – operating leases

3,751

 

 

 

Borrowings on lines of credit, net

232,657

 

 

200,386

 

Contingent consideration

618

 

 

2,207

 

Total liabilities

321,809

 

 

289,863

 

Commitments and contingencies

 

 

 

Redeemable noncontrolling interest in equity of consolidated subsidiary

12,509

 

 

8,531

 

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; 50,879,949 and 50,719,884 issued and 50,696,011 and 50,583,128 outstanding as of June 30, 2019 and December 31, 2018, respectively

509

 

 

507

 

Treasury stock, at cost, 183,938 and 136,756 shares as of June 30, 2019 and December 31, 2018, respectively

(1,369

)

 

(981

)

Additional paid-in capital

289,739

 

 

291,299

 

Retained earnings

204,591

 

 

177,526

 

Total Green Brick Partners, Inc. stockholders’ equity

493,470

 

 

468,351

 

Noncontrolling interests

5,173

 

 

17,281

 

Total equity

498,643

 

 

485,632

 

Total liabilities and equity

$

832,961

 

 

$

784,026

 

 

GREEN BRICK PARTNERS, INC.

SUPPLEMENTAL INFORMATION

(Unaudited)

 

Residential Units Revenue and New Homes Delivered
(dollars in thousands)

 

Three Months Ended June 30,

 

 

 

Six Months Ended June 30,

 

 

 

 

 

2019

 

2018

 

Change

 

%

 

2019

 

2018

 

Change

 

%

Home closings revenue

 

$

172,490

 

 

$

143,878

 

 

$

28,612

 

 

19.9

%

 

$

331,723

 

 

$

264,244

 

 

$

67,479

 

 

25.5

%

Mechanic’s lien contracts revenue

 

2,564

 

 

2,302

 

 

262

 

 

11.4

%

 

4,919

 

 

3,200

 

 

1,719

 

 

53.7

%

Residential units revenue

 

$

175,054

 

 

$

146,180

 

 

$

28,874

 

 

19.8

%

 

336,642

 

 

267,444

 

 

69,198

 

 

25.9

%

New homes delivered

 

394

 

 

327

 

 

67

 

 

20.5

%

 

762

 

 

594

 

 

168

 

 

28.3

%

Average sales price of homes delivered

 

$

437.8

 

 

$

440.0

 

 

$

(2.2

)

 

(0.5

)%

 

$

435.3

 

 

$

444.9

 

 

$

(9.6

)

 

(2.2

)%

 

Land and Lots Revenue
(dollars in thousands)

 

Three Months Ended June 30,

 

 

 

Six Months Ended June 30,

 

 

 

 

 

2019

 

2018

 

Change

 

%

 

2019

 

2018

 

Change

 

%

Lots revenue

 

$

8,452

 

 

$

8,453

 

 

$

(1

)

 

%

 

$

15,482

 

 

$

15,202

 

 

$

280

 

 

1.8

%

Land revenue

 

 

 

2,679

 

 

(2,679

)

 

(100.0

)%

 

10

 

 

3,829

 

 

(3,819

)

 

(99.7

)%

Land and lots revenue

 

$

8,452

 

 

$

11,132

 

 

$

(2,680

)

 

(24.1

)%

 

15,492

 

 

19,031

 

 

(3,539

)

 

(18.6

)%

Lots closed

 

58

 

 

53

 

 

5

 

 

9.4

%

 

105

 

 

101

 

 

4

 

 

4.0

%

Average sales price of lots closed

 

$

145.7

 

 

$

159.5

 

 

$

(13.8

)

 

(8.6

)%

 

$

147.4

 

 

$

150.5

 

 

$

(3.1

)

 

(2.0

)%

 

New Home Orders and Backlog
(dollars in thousands)

 

Three Months Ended June 30,

 

 

 

Six Months Ended June 30,

 

 

 

 

 

2019

 

2018

 

Change

 

%

 

2019

 

2018

 

Change

 

%

Net new home orders

 

453

 

 

387

 

 

66

 

 

17.1

%

 

898

 

 

821

 

 

77

 

 

9.4

%

Cancellation rate

 

13.7

%

 

12.6

%

 

1.1

%

 

8.7

%

 

14.1

%

 

11.4

%

 

2.7

%

 

23.7

%

Absorption rate per active selling community

 

5.9

 

 

6.2

 

 

(0.3

)

 

(4.8

)%

 

11.8

 

 

13.2

 

 

(1.4

)

 

(10.6

)%

Average active selling communities

 

77

 

 

62

 

 

15

 

 

24.2

%

 

76

 

 

62

 

 

14

 

 

22.6

%

Active selling communities at end of period

 

75

 

 

69

 

 

6

 

 

8.7

%

 

75

 

 

69

 

 

6

 

 

8.7

%

Backlog

 

$

331,259

 

 

$

314,177

 

 

$

17,082

 

 

5.4

%

 

 

 

 

 

 

 

 

Backlog (units)

 

717

 

 

700

 

 

17

 

 

2.4

%

 

 

 

 

 

 

 

 

Average sales price of backlog

 

$

462.0

 

 

$

448.8

 

 

$

13.2

 

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019

 

December 31, 2018

Lots owned

 

 

 

 

Central

 

4,250

 

 

4,447

 

Southeast

 

1,877

 

 

1,788

 

Total lots owned

 

6,127

 

 

6,235

 

Lots controlled

 

 

 

 

Central

 

1,528

 

 

853

 

Southeast

 

1,522

 

 

990

 

Total lots controlled

 

3,050

 

 

1,843

 

Total lots owned and controlled (1)

 

9,177

 

 

8,078

 

Percentage of lots owned

 

66.8

%

 

77.2

%

 

 

  • Total lots excludes lots with homes under construction.

Reconciliation of Non-GAAP Financial Measures

 

The following table represents the non-GAAP measure of adjusted pre-tax income for the three and six months ended June 30, 2019 and 2018, which represents net income attributable to Green Brick for the period, excluding the provision for income taxes attributable to Green Brick and one-time transaction expenses related to a public secondary offering of the Company’s shares in 2018.

 

(Unaudited, in thousands):

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2019

 

2018

 

2019

 

2018

Net income attributable to Green Brick

 

$

14,460

 

 

$

14,869

 

 

$

27,065

 

 

$

26,072

 

Income tax expense attributable to Green Brick

 

5,216

 

 

5,149

 

 

9,010

 

 

8,484

 

Transaction expenses

 

 

 

705

 

 

 

 

827

 

Adjusted pre-tax income attributable to Green Brick

 

$

19,676

 

 

$

20,723

 

 

$

36,075

 

 

$

35,383

 

 

The following table represents the non-GAAP measure of adjusted homebuilding gross margin for the three and six months ended June 30, 2019 and 2018 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.

(Unaudited, in thousands):

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2019

 

2018

 

2019

 

2018

Residential units revenue

 

$

175,054

 

 

$

146,180

 

 

$

336,642

 

 

$

267,444

 

Less: Mechanic’s lien contracts revenue

 

(2,564

)

 

(2,302

)

 

(4,919

)

 

(3,200

)

Home closings revenue

 

$

172,490

 

 

$

143,878

 

 

$

331,723

 

 

$

264,244

 

Homebuilding gross margin

 

$

37,849

 

 

$

37,563

 

 

$

70,999

 

 

$

68,786

 

Add back: Capitalized interest charged to cost of revenues

 

2,333

 

 

852

 

 

3,340

 

 

1,611

 

Adjusted homebuilding gross margin

 

$

40,182

 

 

$

38,415

 

 

$

74,339

 

 

$

70,397

 

Adjusted homebuilding gross margin percentage

 

23.3

%

 

26.7

%

 

22.4

%

 

26.6

%

 

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, 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:

Any statements in this press release about Green Brick’s expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance that are not historical facts are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “will,” “should,” “predicts,” “potential,” “expects,” “future,” “positioned,” “believes,” “projects,” “estimates” and similar expressions, as well as statements in the future tense. These statements are based on assumptions that Green Brick has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances, as of the date of this press release. All such forward-looking statements involve estimates and assumptions that are subject to factors that could cause actual results to differ materially from the results expressed in the statements, and you should not place undue reliance on any such forward-looking statements. Among the factors that could cause actual results to differ materially are the following: general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; the failure to recruit, retain and develop highly skilled and competent employees; management and integration of acquisitions; labor and raw material shortages; an inability to acquire land for reasonable prices; an inability to develop and sell communities; government regulation risks; mortgage financing availability and volatility; severe weather or natural disasters; difficulty in obtaining sufficient capital; poor relations with community residents; and our debt and related service obligations. Additional factors that could cause actual results to differ are discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual and quarterly reports filed with the Securities and Exchange Commission. Green Brick undertakes no obligation to update any forward-looking statement except as required by law.

 

Contact: Richard A. Costello

Chief Financial Officer

(469) 573-6755

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