Green Brick Partners, Inc. Reports Third Quarter 2023 Results
Green Brick Partners, Inc. reported strong financial results for Q3 2023. The company achieved a record high homebuilding gross margin of 33.3%, with Q3 diluted EPS of $1.56 and $4.55 year-to-date. New home orders increased by 95.0% for the quarter and 72.7% year-to-date, and backlog grew by 10.4% year-over-year and 68.7% from the end of 2022. The company's debt to total capital ratio was 21.8%, with a net debt to total capital ratio of 9.0%.
Positive
Green Brick Partners, Inc. achieved a record high homebuilding gross margin of 33.3% in Q3 2023.
Q3 diluted EPS was $1.56, and year-to-date diluted EPS was $4.55.
New home orders increased by 95.0% for the quarter and 72.7% year-to-date.
Backlog grew by 10.4% year-over-year and 68.7% from the end of 2022.
The company's debt to total capital ratio was 21.8%, with a net debt to total capital ratio of 9.0%.
10/31/2023 - 04:06 PM
HOMEBUILDING GROSS MARGIN 33.3% , RECORD HIGH IN COMPANY HISTORY Q3 DILUTED EPS OF $1.56 AND $4.55 YEAR-TO-DATE NEW HOME ORDERS UP 95.0% FOR THE QUARTER AND 72.7% YEAR-TO-DATE BACKLOG UP 10.4% YOY AND 68.7% FROM END OF 2022 DEBT TO TOTAL CAPITAL OF 21.8% ; NET DEBT TO TOTAL CAPITAL OF 9.0%
PLANO, Texas, Oct. 31, 2023 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (NYSE: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its third quarter ended September 30, 2023.
“Green Brick produced another outstanding quarter, highlighted by our $1.56 EPS and by gross margins and sales orders far outperforming the market. Benefiting from a more normalized supply chain, lower construction costs, and fewer incentives in our supply-constrained markets, homebuilding gross margin improved 90 bps year-over-year and 200 bps sequentially to 33.3% , the highest among public homebuilders and the best in company history,” said Jim Brickman, CEO and Co-Founder. “Cycle times for homes closed during the third quarter improved another 41 days sequentially, allowing us to close 16% more homes this quarter. Additionally, we ramped up starts by 79% year-over-year to 879 for the quarter, bringing year-to-date starts in line with our delivery pace for the year. We anticipate continuing to start homes at a robust pace to meet demand in our high-performing markets in Texas, Georgia and Florida.”
“In the face of a higher interest rate environment, we continued to lead our public homebuilding peers in year-to-date new order growth. Year-over-year, net new home orders of 788 homes for the third quarter and 2,677 homes year-to-date were up 95% and 73% , respectively. Our quarterly absorption rate remained elevated at 9.2 homes per community, a 74% increase year-over-year. Our cancellation rate dropped 130 bps sequentially to 6.1% , the lowest among our homebuilding peers,” continued Mr. Brickman. “Our industry leading performance was largely due to the lack of existing home supply because existing homeowners are reluctant to sell their homes and forfeit their low interest rate mortgages, as well as a lack of new home competitors in our superior infill and infill-adjacent locations. Thanks to strong demand during the quarter, we were able to grow our backlog by 10.4% year-over-year. Backlog has now increased 69% year-to-date to $623 million .”
Mr. Brickman concluded, “Our focus remains on managing our capital efficiently as we continue sourcing and closing land investments under disciplined underwriting that we believe will be accretive for our growth story. Our balance sheet is stronger than ever. At the end of the quarter, we had $223 million of cash and $360 million in available borrowings in our lines of credit, with a net debt to total capital ratio of 9.0% . Virtually all our outstanding debt was long term and carried a weighted average interest rate of 3.3% .”
Results for the Quarter Ended September 30, 2023 :
(Dollars in thousands, except per share data) Three Months Ended 2023 2022 Change New homes delivered 754 650 16.0 % Total revenues $ 418,978 $ 407,944 2.7 % Total cost of revenues 279,965 274,625 1.9 % Total gross profit $ 139,013 $ 133,319 4.3 % Income before income taxes $ 98,086 $ 97,596 0.5 % Net income attributable to Green Brick Partners, Inc. $ 72,156 $ 73,520 (1.9 )% Diluted net income attributable to Green Brick Partners, Inc. per common share $ 1.56 $ 1.57 (0.6 )% Residential units revenue $ 415,923 $ 396,749 4.8 % Average sales price of homes delivered $ 551.5 $ 607.3 (9.2 )% Homebuilding gross margin percentage 33.3 % 32.4 % 90 bps Backlog $ 622,560 $ 564,026 $ 58,534 Homes under construction 1,934 2,276 (15.0 )%
Results for the Nine Months Ended September 30, 2023 :
(Dollars in thousands, except per share data) Nine Months Ended 2023 2022 Change New homes delivered 2,298 2,189 5.0 % Total revenues $ 1,327,328 $ 1,326,704 0.0 % Total cost of revenues 920,774 916,133 0.5 % Total gross profit $ 406,554 $ 410,571 (1.0 )% Income before income taxes $ 289,470 $ 318,511 (9.1 )% Net income attributable to Green Brick Partners, Inc. $ 211,606 $ 236,353 (10.5 )% Diluted net income attributable to Green Brick Partners, Inc. per common share $ 4.55 $ 4.82 (5.6 )% Residential units revenue $ 1,320,730 $ 1,273,925 3.7 % Average sales price of homes delivered $ 574.1 $ 579.4 (0.9 )% Homebuilding gross margin percentage 30.7 % 31.1 % -40 bps Selling, general and administrative expenses as a percentage of residential units revenue 10.8 % 9.4 % 140 bps
Earnings Conference Call:
We will host our earnings conference call to discuss our third quarter ended September 30, 2023 at 12:00 p.m. Eastern Time on Wednesday, November 1, 2023. 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/264359580
A telephone replay of the call will be available through December 1, 2023. 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 Nine Months Ended 2023 2022 2023 2022 Residential units revenue $ 415,923 $ 396,749 $ 1,320,730 $ 1,273,925 Land and lots revenue 3,055 11,195 6,598 52,779 Total revenues 418,978 407,944 1,327,328 1,326,704 Cost of residential units 277,446 268,536 915,600 879,108 Cost of land and lots 2,519 6,089 5,174 37,025 Total cost of revenues 279,965 274,625 920,774 916,133 Total gross profit 139,013 133,319 406,554 410,571 Selling, general and administrative expenses (46,884 ) (43,251 ) (142,058 ) (119,314 ) Equity in income of unconsolidated entities 1,345 5,697 11,265 19,907 Other income, net 4,612 1,831 13,709 7,347 Income before income taxes 98,086 97,596 289,470 318,511 Income tax expense 20,975 16,963 63,154 65,678 Net income 77,111 80,633 226,316 252,833 Less: Net income attributable to noncontrolling interests 4,955 7,113 14,710 16,480 Net income attributable to Green Brick Partners, Inc. $ 72,156 $ 73,520 $ 211,606 $ 236,353 Net income attributable to Green Brick Partners, Inc. per common share: Basic $ 1.58 $ 1.58 $ 4.60 $ 4.86 Diluted $ 1.56 $ 1.57 $ 4.55 $ 4.82 Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share: Basic 45,320 46,032 45,543 48,205 Diluted 45,792 46,390 45,988 48,544
GREEN BRICK PARTNERS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
September 30, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 223,453 $ 76,588 Restricted cash 22,708 16,682 Receivables 9,955 5,288 Inventory 1,462,264 1,422,680 Investments in unconsolidated entities 80,210 74,224 Right-of-use assets - operating leases 7,877 3,458 Property and equipment, net 5,402 2,919 Earnest money deposits 18,212 23,910 Deferred income tax assets, net 16,448 16,448 Intangible assets, net 388 452 Goodwill 680 680 Other assets 19,049 12,346 Total assets $ 1,866,646 $ 1,655,675 LIABILITIES AND EQUITY Liabilities: Accounts payable $ 56,565 $ 51,804 Accrued expenses 110,909 91,281 Customer and builder deposits 47,239 29,112 Lease liabilities - operating leases 7,923 3,582 Borrowings on lines of credit, net (1,983 ) 17,395 Senior unsecured notes, net 336,112 335,825 Notes payable 12,998 14,622 Total liabilities 569,763 543,621 Commitments and contingencies Redeemable noncontrolling interest in equity of consolidated subsidiary 35,236 29,239 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, 2023 and December 31, 2022, respectively 47,603 47,696 Common stock, $0.01 par value: 100,000,000 shares authorized; 45,378,364 issued and outstanding as of September 30, 2023 and 46,032,930 issued and outstanding as of December 31, 2022, respectively 454 460 Additional paid-in capital 256,759 259,410 Retained earnings 940,400 754,341 Total Green Brick Partners, Inc. stockholders’ equity 1,245,216 1,061,907 Noncontrolling interests 16,431 20,908 Total equity 1,261,647 1,082,815 Total liabilities and equity $ 1,866,646 $ 1,655,675
GREEN BRICK PARTNERS, INC. SUPPLEMENTAL INFORMATION (Unaudited)
Residential Units Revenue and New Homes Delivered Three Months Ended Nine Months Ended 2023 2022 Change % 2023 2022 Change % Home closings revenue $ 415,827 $ 394,731 $ 21,096 5.3 % $ 1,319,393 $ 1,268,329 $ 51,064 4.0 % Mechanic’s lien contracts revenue 96 2,018 (1,922 ) (95.2 )% 1,337 5,596 (4,259 ) (76.1 )% Residential units revenue $ 415,923 $ 396,749 $ 19,174 4.8 % $ 1,320,730 $ 1,273,925 $ 46,805 3.7 % New homes delivered 754 650 104 16.0 % 2,298 2,189 109 5.0 % Average sales price of homes delivered $ 551.5 $ 607.3 $ (55.8 ) (9.2 )% $ 574.1 $ 579.4 $ (5.3 ) (0.9 )%
Land and Lots Revenue (dollars in thousands) Three Months Ended Nine Months Ended 2023 2022 Change % 2023 2022 Change % Lots revenue $ 2,026 $ 3,991 $ (1,965 ) (49.2 )% $ 5,569 $ 18,027 $ (12,458 ) (69.1 )% Land revenue 1,029 7,204 (6,175 ) (85.7 )% 1,029 34,752 (33,723 ) (97.0 )% Land and lots revenue $ 3,055 $ 11,195 $ (8,140 ) (72.7 )% $ 6,598 $ 52,779 $ (46,181 ) (87.5 )% Lots closed 19 57 (38 ) (66.7 )% 55 274 (219 ) (79.9 )% Average sales price of lots closed $ 106.6 $ 70.0 $ 36.6 52.3 % $ 101.3 $ 65.8 $ 35.5 54.0 %
New Home Orders and Backlog (dollars in thousands) Three Months Ended Nine Months Ended 2023 2022 Change % 2023 2022 Change % Net new home orders 788 404 384 95.0 % 2,677 1,550 1,127 72.7 % Revenue from net new home orders $ 452,436 $ 251,276 $ 201,160 80.1 % $ 1,572,859 $ 962,497 $ 610,362 63.4 % Average selling price of net new home orders $ 574.2 $ 622.0 $ (47.8 ) (7.7 )% $ 587.5 $ 621.0 $ (33.5 ) (5.4 )% Cancellation rate 6.1 % 17.6 % (11.5 )% (65.3 )% 6.5 % 11.8 % (5.3 )% (44.9 )% Absorption rate per average active selling community per quarter 9.2 5.3 3.9 73.6 % 10.8 6.8 4.0 58.8 % Average active selling communities 86 76 10 13.2 % 83 76 7 9.2 % Active selling communities at end of period 86 74 12 16.2 % Backlog $ 622,560 $ 564,026 $ 58,534 10.4 % Backlog units 916 841 75 8.9 % Average sales price of backlog $ 679.7 $ 670.7 $ 9.0 1.3 %
GREEN BRICK PARTNERS, INC. SUPPLEMENTAL INFORMATION (Unaudited)
September 30, 2023 December 31, 2022 Central Southeast Total Central Southeast Total Lots owned Finished lots 4,456 1,144 5,600 1,901 998 2,899 Lots in communities under development 7,706 1,253 8,959 10,309 1,698 12,007 Land held for future development(1) 6,600 — 6,600 6,575 — 6,575 Total lots owned 18,762 2,397 21,159 18,785 2,696 21,481 Lots controlled Lots under third party option contracts 1,364 3 1,367 2,212 6 2,218 Land under option for future acquisition and development 1,961 128 2,089 110 18 128 Lots under option through unconsolidated development joint ventures 1,259 345 1,604 1,289 411 1,700 Total lots controlled 4,584 476 5,060 3,611 435 4,046 Total lots owned and controlled (2) 23,346 2,873 26,219 22,396 3,131 25,527 Percentage of lots owned 80.4 % 83.4 % 80.7 % 83.9 % 86.1 % 84.2 %
(1) Land held for future development consists of raw land parcels where development activities have been postponed due to market conditions or other factors. (2) Total lots excludes lots with homes under construction.
The following table presents additional information on the lots we owned as of September 30, 2023 and December 31, 2022.
September 30, 2023 December 31, 2022 Total lots owned 21,159 21,481 Add certain lots included in Total Lots Controlled Land under option for future acquisition and development 2,089 128 Lots under option through unconsolidated development joint ventures 1,604 1,700 Total lots self-developed 24,852 23,309 Self-developed lots as a percentage of total lots owned and controlled 94.8 % 91.3 %
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, 2023 and 2022 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.
(Unaudited, in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Residential units revenue $ 415,923 $ 396,749 $ 1,320,730 $ 1,273,925 Less: Mechanic’s lien contracts revenue (96 ) (2,018 ) (1,337 ) (5,596 ) Home closings revenue $ 415,827 $ 394,731 $ 1,319,393 $ 1,268,329 Homebuilding gross margin $ 138,427 $ 127,861 $ 404,644 $ 393,940 Homebuilding gross margin percentage 33.3 % 32.4 % 30.7 % 31.1 % Homebuilding gross margin 138,427 127,861 404,644 393,940 Add back: Capitalized interest charged to cost of revenues 2,968 3,105 10,456 10,303 Adjusted homebuilding gross margin $ 141,395 $ 130,966 $ 415,100 $ 404,243 Adjusted homebuilding gross margin percentage 34.0 % 33.2 % 31.5 % 31.9 %
Net debt to total capitalization is calculated as the total debt less cash and cash equivalents, divided by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash equivalents. The closest GAAP financial measure to the net debt to total capitalization ratio is the debt to total capitalization ratio. The following table represents a reconciliation of the net debt to total capitalization ratio as of September 30, 2023:
Gross Cash and cash equivalents Net Total debt, net of debt issuance costs $ 347,127 $ (223,453 ) $ 123,674 Total Green Brick Partners, Inc. stockholders’ equity 1,245,216 — 1,245,216 Total capitalization $ 1,592,343 $ (223,453 ) $ 1,368,890 Debt to total capitalization ratio 21.8 % Net debt to total capitalization ratio 9.0 %
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 ability to maintain industry-leading performance and gross margins; (ii) our expectations regarding trends in our markets, such as demand for single-family homes and levels of resale inventory; (iii) our ability to mitigate inventory buildup and manage pace of sales and starts, including maintaining robust level of starts; (iv) our ability to increase our market share; (v) our priorities and strategies for growth, the drivers of that growth, and the impact on our future results, including in the Austin market and expansion of our Trophy brand; (vi) our capital resources and flexibility to capitalize on market opportunities and the impact on our financial and operational performance; (vii) the advantages of our lot and land strategies and locations, including the benefits to our margins and adaptability; (viii) our beliefs that we operate in the most advantageous markets in the U.S. and the resilience of our core markets; (ix) our intention to continue strengthening our financial position and reducing leverage; (x) our beliefs regarding our position and scale, including our ability to manage costs and cycle times; (xi) our expectations regarding returns on capital, including the impact of improvements in cycle times, supply chain and labor availability and (x) our expectations and strategy on land sourcing and its impact on our growth. 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 rate and inflation 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 for homebuyers; (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.
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What was Green Brick Partners, Inc.'s homebuilding gross margin in Q3 2023?
Green Brick Partners, Inc. achieved a record high homebuilding gross margin of 33.3% in Q3 2023.
What were the diluted EPS for Q3 2023 and year-to-date?
The diluted EPS for Q3 2023 was $1.56, and the year-to-date diluted EPS was $4.55.
How much did new home orders increase by for the quarter and year-to-date?
New home orders increased by 95.0% for the quarter and 72.7% year-to-date.
What was the growth in backlog year-over-year and from the end of 2022?
Backlog grew by 10.4% year-over-year and 68.7% from the end of 2022.
What were the debt to total capital ratio and net debt to total capital ratio?
The debt to total capital ratio was 21.8%, and the net debt to total capital ratio was 9.0%.
