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Green Brick Partners, Inc. Reports Record Third Quarter 2021 Results
Source: Nasdaq GlobeNewswire / 02 Nov 2021 15:05:02 America/Chicago
Record Home Closings Revenues of $338.9 Million, Up 28.4%
Income Before Taxes of $65.2 Million, Up 41.9%
Record Backlog of $1,017.2 Million, Up 83.9%
Home Building Gross Margin Up 210 Bps
Record Lots Owned and Controlled Up 101.8%PLANO, Texas, Nov. 02, 2021 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported record results for its third quarter ended September 30, 2021.
“Our third quarter income of $48.5 million was a record for any third quarter,” said Jim Brickman, CEO and Co-Founder. “The average sales price of a home in our backlog is up 20.8% over the prior year and 7.2% over Q2 2021. Despite rising input costs, we believe that our focus on price over pace will continue to sustain our industry-leading margins and strong financial performance.”
“After we saw the huge upward shift in demand in June 2020, our land teams did a fantastic job of quickly pivoting to acquire well located land. As a result, during the last twelve months our lot position grew over 100% to 24,354 owned and controlled lots. With our record $1 billion backlog, leading margins, and superior lot position, Green Brick is extremely well positioned to grow our business in 2022 and beyond. At the end of the third quarter, we now have a record 863 spec homes, up nearly 50% year-over-year, included in our record 2,555 homes under construction. Most of our homes under construction should convert to closings over the next three quarters. The sale and closing of the increased number of spec homes will allow us to capture the most current price increases and to maximize profitability.”
Results for the Quarter Ended September 30, 2021:
For the quarter ended September 30, 2021, our residential units revenue and backlog reflect a record for any quarter since the Company’s inception. Homes under construction and lots owned and controlled also represent a Company record as of the end of any quarter.
(Dollars in thousands, except per share data) Three Months Ended September 30, 2021 2020 Increase New homes delivered 738 622 18.6 % Total revenues $ 342,340 $ 275,821 24.1 % Total cost of revenues 251,004 207,935 20.7 % Total gross profit $ 91,336 $ 67,886 34.5 % Income before income taxes $ 65,158 $ 45,923 41.9 % Net income attributable to Green Brick Partners, Inc. $ 48,507 $ 34,819 39.3 % Diluted net income attributable to Green Brick Partners, Inc. per share $ 0.95 $ 0.68 39.7 % Residential units revenue $ 338,900 $ 263,885 28.4 % Homebuilding gross margin percentage 26.9 % 24.8 % 210 bps Backlog $ 1,017,220 $ 553,058 83.9 % Lots owned and controlled 24,354 12,066 101.8 % Homes under construction 2,555 1,361 87.7 % Green Brick, like every other company in the United States and the global economy, has been impacted by the coronavirus, or COVID-19, pandemic and the impact of governmental actions taken to combat the pandemic. After an initial decline in orders and construction at the onset of the crisis, orders have subsequently achieved all-time highs. The significant increase in new home demand that we have seen and that the industry has experienced since the second half of 2020 has, in turn, led to substantial price increases, but also increased demand for labor and the raw materials, products and appliances for new homes. As a result, we have and expect to continue to experience increases in cost and decreased availability of skilled labor as well as increases, shortages, and significant extensions to our lead time for the delivery of key materials and inputs.
Earnings Conference Call:
We will host our earnings conference call to discuss our third quarter ended September 30, 2021 at 12:00 p.m. Eastern Time on Wednesday, November 3, 2021. The call can be accessed by dialing 877-407-0890 for domestic participants or 201-389-0918 for international participants and should reference meeting number 13724238. Participants may also join the call via webcast at: greenbrickpartners.com/reporting/.A replay of the call will be available from approximately 3:00 p.m. Eastern Time on November 3, 2021 through 11:59 p.m. Eastern Time on December 1, 2021. To access the replay, the domestic dial-in number is 877-660-6853, the international dial-in number is 201-612-7415 and the conference ID code is 13724238.
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 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.
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, 2021 2020 2021 2020 Residential units revenue $ 338,900 $ 263,885 $ 889,636 $ 683,739 Land and lots revenue 3,440 11,936 60,989 38,182 Total revenues 342,340 275,821 950,625 721,921 Cost of residential units 247,899 198,422 654,136 521,332 Cost of land and lots 3,105 9,513 45,188 29,839 Total cost of revenues 251,004 207,935 699,324 551,171 Total gross profit 91,336 67,886 251,301 170,750 Selling, general and administrative expenses (33,709 ) (29,177 ) (97,182 ) (81,718 ) Change in fair value of contingent consideration — (210 ) — (210 ) Equity in income of unconsolidated entities 5,555 5,299 14,039 13,038 Other income, net 1,976 2,125 6,239 3,004 Income before income taxes 65,158 45,923 174,397 104,864 Income tax expense 13,898 9,969 37,093 17,357 Net income 51,260 35,954 137,304 87,507 Less: Net income attributable to noncontrolling interests 2,753 1,135 10,565 3,124 Net income attributable to Green Brick Partners, Inc. $ 48,507 $ 34,819 $ 126,739 $ 84,383 Net income attributable to Green Brick Partners, Inc. per common share: Basic $ 0.96 $ 0.69 $ 2.50 $ 1.67 Diluted $ 0.95 $ 0.68 $ 2.48 $ 1.66 Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share: Basic 50,732 50,617 50,689 50,552 Diluted 51,079 50,876 51,046 50,739 GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)September 30, 2021 December 31, 2020 ASSETS Cash and cash equivalents $ 21,561 $ 19,479 Restricted cash 31,442 14,156 Receivables 7,029 5,224 Inventory 1,170,297 844,635 Investments in unconsolidated entities 52,735 46,443 Right-of-use assets - operating leases 5,023 2,538 Property and equipment, net 3,172 3,595 Earnest money deposits 26,403 22,242 Deferred income tax assets, net 15,376 15,376 Intangible assets, net 558 622 Goodwill 680 680 Other assets 13,040 13,857 Total assets $ 1,347,316 $ 988,847 LIABILITIES AND EQUITY Liabilities: Accounts payable $ 48,314 $ 24,521 Accrued expenses 64,567 40,416 Customer and builder deposits 70,079 38,131 Lease liabilities - operating leases 5,053 2,591 Borrowings on lines of credit, net 122,717 106,687 Senior unsecured notes, net 235,737 111,056 Notes payable 222 2,125 Contingent consideration — 368 Total liabilities 546,689 325,895 Commitments and contingencies Redeemable noncontrolling interest in equity of consolidated subsidiary 17,406 13,543 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; 51,151,911 and 51,053,858 issued and 50,759,972 and 50,661,919 outstanding as of September 30, 2021 and December 31, 2020, respectively 511 511 Treasury stock, at cost, 391,939 shares (3,167 ) (3,167 ) Additional paid-in capital 293,050 293,242 Retained earnings 476,395 349,656 Total Green Brick Partners, Inc. stockholders’ equity 766,789 640,242 Noncontrolling interests 16,432 9,167 Total equity 783,221 649,409 Total liabilities and equity $ 1,347,316 $ 988,847 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 30,2021 2020 Change % 2021 2020 Change % Home closings revenue $ 338,075 $ 262,319 $ 75,756 28.9 % $ 886,488 $ 678,352 $ 208,136 30.7 % Mechanic’s lien contracts revenue 825 1,566 (741 ) (47.3 )% 3,148 5,387 (2,239 ) (41.6 )% Residential units revenue $ 338,900 $ 263,885 $ 75,015 28.4 % $ 889,636 $ 683,739 $ 205,897 30.1 % New homes delivered 738 622 116 18.6 % 2,011 1,623 388 23.9 % Average sales price of homes delivered $ 458.1 $ 421.7 $ 36.4 8.6 % $ 440.8 $ 418.0 $ 22.8 5.5 % Land and Lots Revenue
(dollars in thousands)Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 Change % 2021 2020 Change % Lots revenue $ 2,126 $ 11,936 $ (9,810 ) (82.2 )% $ 15,184 $ 37,798 $ (22,614 ) (59.8 )% Land revenue 1,314 — 1,314 100.0 % 45,805 384 45,421 11,828.4 % Land and lots revenue $ 3,440 $ 11,936 $ (8,496 ) (71.2 )% $ 60,989 $ 38,182 $ 22,807 59.7 % Lots closed 31 138 (107 ) (77.5 )% 173 302 (129 ) (42.7 )% Average sales price of lots closed $ 68.6 $ 86.5 $ (17.9 ) (20.7 )% $ 87.8 $ 125.2 $ (37.4 ) (29.9 )% New Home Orders and Backlog
(dollars in thousands)Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 Change % 2021 2020 Change % Net new home orders 689 823 (134 ) (16.3 )% 2,375 2,037 338 16.6 % Cancellation rate 6.9 % 11.7 % (4.8 )% (41.0 )% 6.7 % 14.7 % (8.0 )% (54.4 )% Absorption rate per average active selling community per quarter 8.2 8.7 (0.5 ) (5.7 )% 8.8 6.9 1.9 27.5 % Average active selling communities 84 95 (11 ) (11.6 )% 90 98 (8 ) (8.2 )% Active selling communities at end of period 80 100 (20 ) (20.0 )% Backlog $ 1,017,220 $ 553,058 $ 464,162 83.9 % Backlog (units) 1,827 1200 627 52.3 % Average sales price of backlog $ 556.8 $ 460.9 $ 95.9 20.8 % September 30, 2021 December 31, 2020 Lots owned (1) Central 14,917 6,823 Southeast 2,212 2,097 Total lots owned 17,129 8,920 Lots controlled (1) Central 6,440 4,398 Southeast 785 1,150 Total lots controlled 7,225 5,548 Total lots owned and controlled (1) 24,354 14,468 Percentage of lots owned 70.3 % 61.7 % (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, 2021 and December 31, 2020.
September 30, 2021 December 31, 2020 Total lots owned 17,129 8,920 Add certain lots included in Total Lots Controlled Land under option for future acquisition and development 2,577 740 Lots under option through unconsolidated development joint ventures 1,903 1,838 Total lots self-developed 21,609 11,498 Self-developed lots as a percentage of total lots owned and controlled 88.7 % 79.5 % 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, 2021 and 2020 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, 2021 2020 2021 2020 Residential units revenue $ 338,900 $ 263,885 $ 889,636 $ 683,739 Less: Mechanic’s lien contracts revenue (825 ) (1,566 ) (3,148 ) (5,387 ) Home closings revenue $ 338,075 $ 262,319 $ 886,488 $ 678,352 Homebuilding gross margin $ 90,875 $ 65,184 $ 234,834 $ 161,450 Homebuilding gross margin percentage 26.9 % 24.8 % 26.5 % 23.8 % Homebuilding gross margin 90,875 65,184 234,834 161,450 Add back: Capitalized interest charged to cost of revenues 2,569 2,914 6,915 7,802 Adjusted homebuilding gross margin $ 93,444 $ 68,098 $ 241,749 $ 169,252 Adjusted homebuilding gross margin percentage 27.6 % 26.0 % 27.3 % 25.0 % The following table presents the pre-tax income for the three and nine months ended September 30, 2021 and 2020, 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, 2021 2020 2021 2020 Net income attributable to Green Brick Partners, Inc. $ 48,507 $ 34,819 $ 126,739 $ 84,383 Income tax expense attributable to Green Brick Partners, Inc. 13,896 9,968 37,089 17,354 Pre-tax income attributable to Green Brick Partners, Inc. $ 62,403 $ 44,787 $ 163,828 $ 101,737 About Green Brick Partners, Inc.
Green Brick Partners, Inc. is a diversified homebuilding and land development company. Green Brick owns five subsidiary homebuilders in Dallas, 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, Green Brick Mortgage, 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 include statements regarding (i) our belief that our land position and back-log will position us to grow our business in 2022 and beyond, (ii) our intent to increase the number of spec homes in our portfolio and the impact of that strategy on our ability to capture the most current price increases and to maximize profitability, (iv) impact of increased demand for labor and the raw materials, products and appliances for new homes on our costs, markets and delivery time of our home, (v) our strategy for growth, the drivers and acceleration of that growth, and the impact on our results over the remainder of 2021 and 2022, and (vi) our ability to capitalize on market opportunities and the impact on our results. 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) continuing impacts from the COVID-19 pandemic; (2) general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; (3) changes in macroeconomic conditions, including interest rates and unemployment rates, that could adversely impact demand for new homes or the ability of potential buyers to qualify; (4) shortages, delays or increased costs of raw materials, especially in light of COVID-19 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; (5) a shortage of labor; (6) an inability to acquire land in our markets at anticipated prices or difficulty in obtaining land-use entitlements; (7) our inability to successfully execute our strategies, including an inability to grow our operations or expand our Trophy brand; (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 or a rise in interest rates; (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: Richard A. Costello
Chief Financial Officer
(469) 573-6755
