Green Brick Partners, Inc. Reports Fourth Quarter and Full Year 2022 Results

Rhea-AI Summary

Green Brick Partners reported record fourth-quarter home closing revenue of $428.6 million and gross profit of $112.4 million for Q4 2022. The average sales price rose 15.7% to $589,500. Despite a 11.1% drop in net new home orders, sales momentum improved in December, increasing 43% compared to the previous six months. The company also reduced its debt-to-capital ratio to 25.7% and construction costs by an average of $40,000 due to lower lumber prices. Annual revenue grew 25.3% year-over-year to $1.76 billion, with diluted earnings per share increasing by 61.8% to $6.02.

Positive

• Record Q4 home closing revenue of $428.6 million.
• Record gross profit for any Q4 at $112.4 million.
• Annual revenue growth of 25.3% to $1.76 billion.
• Diluted earnings per share rose 61.8% year-over-year to $6.02.
• Debt-to-total capital ratio decreased to 25.7%.
• Average home sales price increased by 15.7% to $589.5K.
• Reduced construction costs averaging $40,000 per home.

Negative

• Net new home orders decreased by 11.1% to 423.
• Diluted earnings per share down 4.8% year-over-year.
• Backlog decreased significantly by 57.6%.

RECORD HOME CLOSINGS REVENUE FOR ANY Q4 OF $428.6 MILLION
RECORD GROSS PROFIT FOR ANY Q4 OF $112.4 MILLION
DEBT TO TOTAL CAPITAL FELL TO 25.7%
AVERAGE PRICE OF Q4 HOMES CLOSED OF $589.5K, UP 15.7%
Q4 GROSS MARGIN, FLAT; ADJUSTED GROSS MARGIN OF 28.3%, UP 130 BPS

PLANO, Texas, Feb. 27, 2023 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (NYSE: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its fourth quarter ended December 31, 2022.

“Our team did a great job closing out the year. For the full year ended December 31, 2022, we delivered 2,916 homes — a record number — generating 25.3% year-over-year growth in total revenue to $1.76 billion. Diluted earnings per share for 2022 increased 61.8% year-over-year to $6.02, with an annual gross margin of 29.8% and return on equity of 31.4%,” said Jim Brickman, CEO and Co-Founder. “While producing these results, we lowered our debt-to-total-capital ratio to 25.7%. We believe that these numbers reflect our superior lot position and operational excellence, as well as validate our ROE-driven approach.”

“For the fourth quarter, we delivered 727 homes and achieved record home closing revenue for any fourth quarter of $429 million. Our total gross profit was $112 million, also highest for any fourth quarter. Diluted earnings per share was $1.18, down 4.8% year-over-year. Net new home orders decreased 11.1% to 423, the smallest decline amongst peers. Importantly, we started to regain sales momentum since November. December sales were up 43% over the average of the prior six months. Our cancellation rate also improved throughout the quarter and was down to 12% in December. We started off 2023 with increased sales momentum particularly with our finished or finishing spec homes. Several communities opened in January and sold particularly well. Our cancellation rate has further improved in 2023, dropping to single digits. We believe our sales success is based in part upon our geographic footprint with supply-constrained locations in Dallas and Atlanta. These markets have some of the strongest demographic tailwinds and job growth in the country”

“We have also reduced construction costs of our homes. Homes started in Dallas during December and later have savings that average approximately $40,000 compared to homes started in the second and third quarter of 2022. The savings vary based on product line and floor plan and primarily resulted from significantly lower lumber prices and reduced labor costs. On average, our cycle time has been reduced by 30 days from peak 2022 levels, and we believe it should continue to improve slightly,” continued Mr. Brickman.

“We will continue to manage sales and pricing on a community-by-community basis as the market normalizes and to regulate our inventory levels to match starts to sales. We expect pent-up demand will enhance our sales if mortgage rates stabilize at less than 6%,” said Mr. Brickman. “Because we expect to have as many as approximately 6,000 finished lots at the end of 2023, with roughly 75% in infill locations, we have the capability to ramp up home construction quickly and increase active selling communities. So, if the pie gets smaller in 2023, we believe that we are well-positioned to take market share from other builders in our markets while maintaining our industry leading gross margins.”

Results for the Quarter Ended December 31, 2022:

For the quarter ended December 31, 2022, our home closings revenue and gross profit reflect records for any fourth quarter since the Company’s inception, as detailed below.

(Dollars in thousands, except per share data)	Three Months Ended December 31,
		2022				2021			Change
New homes delivered		727				823			(11.7)%
Total revenues	$	431,089			$	452,251			(4.7)%
Total cost of revenues		318,635				341,493			(6.7)%
Total gross profit	$	112,454			$	110,758			1.5%
Income before income taxes	$	77,954			$	82,589			(5.6)%
Net income attributable to Green Brick Partners, Inc.	$	55,547			$	63,471			(12.5)%
Diluted net income attributable to Green Brick Partners, Inc. per common share	$	1.18			$	1.24			(4.8)%
Residential units revenue	$	430,026			$	420,051			2.4%
Average sales price of homes delivered	$	589.5			$	509.3			15.7%
Homebuilding gross margin percentage		26.2	%			26.2	%		0 bps
Backlog	$	369,095			$	869,856			$	(500,761)
Homes under construction		1,853				2,278			(18.7)%

Results for the Year Ended December 31, 2022:

For the year ended December 31, 2022, our net income attributable to Green Brick per diluted common share, total revenues, new homes delivered, and homebuilding gross margin percentage reflect a record for any year since the Company’s inception, as detailed below.

(Dollars in thousands, except per share data)	Twelve Months Ended December 31,
		2022				2021			Change
New homes delivered		2,916				2,834			2.9	%
Total revenues	$	1,757,793			$	1,402,876			25.3	%
Total cost of revenues		1,234,768				1,040,817			18.6	%
Total gross profit	$	523,025			$	362,059			44.5	%
Income before income taxes	$	396,465			$	256,986			54.3	%
Net income attributable to Green Brick Partners, Inc.	$	291,900			$	190,210			53.5	%
Diluted net income attributable to Green Brick Partners, Inc. per common share	$	6.02			$	3.72			61.8	%
Residential units revenue	$	1,703,951			$	1,309,687			30.1	%
Average sales price of homes delivered	$	581.9			$	460.7			26.3	%
Homebuilding gross margin percentage		29.8	%			26.4	%		340 bps
Selling, general and administrative expenses as a percentage of residential units revenue		9.6	%			10.3	%		-70 bps

Earnings Conference Call:

We will host our earnings conference call to discuss our fourth quarter ended December 31, 2022 at 12:00 p.m. Eastern Time on Tuesday, February 28, 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/115470786

A telephone replay of the call will be available through March 30, 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 December 31,								Twelve Months Ended December 31,
			2022				2021				2022				2021
Residential units revenue		$	430,026			$	420,051			$	1,703,951			$	1,309,687
Land and lots revenue			1,063				32,200				53,842				93,189
Total revenues			431,089				452,251				1,757,793				1,402,876
Cost of residential units			317,806				310,228				1,196,914				964,364
Cost of land and lots			829				31,265				37,854				76,453
Total cost of revenues			318,635				341,493				1,234,768				1,040,817
Total gross profit			112,454				110,758				523,025				362,059
Selling, general and administrative expenses			(44,629	)			(37,087	)			(163,943	)			(134,269	)
Equity in income of unconsolidated entities			5,719				5,674				25,626				19,713
Other income, net			4,410				3,244				11,757				9,483
Income before income taxes			77,954				82,589				396,465				256,986
Income tax expense			16,790				15,512				82,468				52,605
Net income			61,164				67,077				313,997				204,381
Less: Net income attributable to noncontrolling interests			5,617				3,606				22,097				14,171
Net income attributable to Green Brick Partners, Inc.		$	55,547			$	63,471			$	291,900			$	190,210
Net income attributable to Green Brick Partners, Inc. per common share:
Basic		$	1.19			$	1.25			$	6.07			$	3.75
Diluted		$	1.18			$	1.24			$	6.02			$	3.72
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic			45,994				50,732				47,648				50,700
Diluted			46,332				51,104				47,987				51,060

GREEN BRICK PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

	December 31, 2022			December 31, 2021
ASSETS
Cash and cash equivalents	$	76,588		$	77,166
Restricted cash		16,682			16,388
Receivables		5,288			6,871
Inventory		1,422,680			1,203,743
Investments in unconsolidated entities		74,224			55,616
Right-of-use assets - operating leases		3,458			4,596
Property and equipment, net		2,919			2,812
Earnest money deposits		23,910			26,008
Deferred income tax assets, net		16,448			15,741
Intangible assets, net		452			537
Goodwill		680			680
Other assets		12,346			11,709
Total assets	$	1,655,675		$	1,421,867
LIABILITIES AND EQUITY
Liabilities:
Accounts payable	$	51,804		$	45,682
Accrued expenses		91,281			61,351
Customer and builder deposits		29,112			64,610
Lease liabilities - operating leases		3,582			4,745
Borrowings on lines of credit, net		17,395			(738	)
Senior unsecured notes, net		335,825			335,446
Notes payable		14,622			210
Total liabilities		543,621			511,306
Commitments and contingencies
Redeemable noncontrolling interest in equity of consolidated subsidiary		29,239			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 December 31, 2022 and 2021, respectively		47,696			47,696
Common stock, $0.01 par value: 100,000,000 shares authorized; 46,032,930 issued and outstanding as of December 31, 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 December 31, 2022 and 391,939 shares as of December 31, 2021		—			(3,167	)
Additional paid-in capital		259,410			289,641
Retained earnings		754,341			539,866
Total Green Brick Partners, Inc. stockholders’ equity		1,061,907			874,548
Noncontrolling interests		20,908			14,146
Total equity		1,082,815			888,694
Total liabilities and equity	$	1,655,675		$	1,421,867

GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)

Residential Units Revenue and New Homes Delivered (dollars in thousands)		Three Months Ended December 31,													Twelve Months Ended December 31,
			2022			2021		Change				%				2022			2021		Change			%
Home closings revenue		$	428,582		$	419,132		$	9,450			2.3	%		$	1,696,911		$	1,305,620		$	391,291		30.0	%
Mechanic’s lien contracts revenue			1,444			919			525			57.1	%			7,040			4,067			2,973		73.1	%
Residential units revenue		$	430,026		$	420,051		$	9,975			2.4	%		$	1,703,951		$	1,309,687		$	394,264		30.1	%
New homes delivered			727			823			(96	)		(11.7	)%			2,916			2,834			82		2.9	%
Average sales price of homes delivered		$	589.5		$	509.3		$	80.2			15.7	%		$	581.9		$	460.7		$	121.2		26.3	%

Land and Lots Revenue (dollars in thousands)		Three Months Ended December 31,													Twelve Months Ended December 31,
		2022			2021			Change				%			2022			2021			Change				%
Lots revenue		$	1,063		$	9,682		$	(8,619	)		(89.0	)%		$	19,090		$	24,866		$	(5,776	)		(23.2)        %
Land revenue			—			22,518			(22,518	)		(100.0	)%			34,752			68,323			(33,571	)		(49.1)        %
Land and lots revenue		$	1,063		$	32,200		$	(31,137	)		(96.7	)%		$	53,842		$	93,189		$	(39,347	)		(42.2)        %
Lots closed			14			150			(136	)		(90.7	)%			288			323			(35	)		(10.8)        %
Average sales price of lots closed		$	75.9		$	64.5		$	11.4			17.7	%		$	66.3		$	77.0		$	(10.7	)		(13.9)        %

New Home Orders and Backlog (dollars in thousands)		Three Months Ended December 31,															Twelve Months Ended December 31,
			2022				2021			Change				%				2022				2021			Change				%
Net new home orders			423				476				(53	)		(11.1	)%			1,973				2,851				(878	)		(30.8)        %
Revenue from new net home orders		$	247,818			$	271,768			$	(23,950	)		(8.8	)%		$	1,210,315			$	1,488,613			$	(278,298	)		(18.7	)%
Average selling price of net new home orders		$	585.9			$	570.9			$	15.0			2.6	%		$	613.4			$	522.1			$	91.3			17.5	%
Cancellation rate			20.3	%			12.3	%			8.0	%		65.0	%			13.8	%			7.7	%			6.1	%		79.2	%
Absorption rate per average active selling community per quarter			5.5				6.2				(0.7	)		(11.3	)%			6.5				8.2				(1.7	)		(20.7)        %
Average active selling communities			77				77				—			—	%			76				87				(11	)		(12.6)        %
Active selling communities at end of period			80				74				6			8.1	%
Backlog		$	369,095			$	869,856			$	(500,761	)		(57.6	)%
Backlog units			537				1,480				(943	)		(63.7	)%
Average sales price of backlog		$	687.3			$	587.7			$	99.6			16.9	%

GREEN BRICK PARTNERS, INC.

SUPPLEMENTAL INFORMATION
(Unaudited)

	December 31, 2022									December 31, 2021
	Central			Southeast			Total			Central			Southeast			Total
Lots owned
Finished lots	1,901			998			2,899			1,328			797			2,125
Lots in communities under development	10,309			1,698			12,007			16,439			1,675			18,114
Land held for future development(1)	6,575			—			6,575			—			—			—
Total lots owned	18,785			2,696			21,481			17,767			2,472			20,239
Lots controlled
Lots under third party option contracts	2,212			6			2,218			2,670			70			2,740
Land under option for future acquisition and development	110			18			128			3,318			508			3,826
Lots under option through unconsolidated development joint ventures	1,289			411			1,700			1,333			483			1,816
Total lots controlled	3,611			435			4,046			7,321			1,061			8,382
Total lots owned and controlled(2)	22,396			3,131			25,527			25,088			3,533			28,621
Percentage of lots owned	83.9	%		86.1	%		84.2	%		70.8	%		70.0	%		70.7	%

 

(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 December 31, 2022 and December 31, 2021.

	December 31, 2022			December 31, 2021
Total lots owned	21,481			20,239
Add certain lots included in Total Lots Controlled
Land under option for future acquisition and development	128			3,826
Lots under option through unconsolidated development joint ventures	1,700			1,816
Total lots self-developed	23,309			25,881
Self-developed lots as a percentage of total lots owned and controlled	91.3	%		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 twelve months ended months ended December 31, 2022 and 2021 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.

(Unaudited, in thousands):		Three Months Ended December 31,								Twelve Months Ended December 31,
			2022				2021				2022				2021
Residential units revenue		$	430,026			$	420,051			$	1,703,951			$	1,309,687
Less: Mechanic’s lien contracts revenue			(1,444	)			(919	)			(7,040	)			(4,067	)
Home closings revenue		$	428,582			$	419,132			$	1,696,911			$	1,305,620
Homebuilding gross margin		$	112,189			$	109,671			$	506,129			$	344,505
Homebuilding gross margin percentage			26.2	%			26.2	%			29.8	%			26.4	%
Homebuilding gross margin			112,189				109,671				506,129				344,505
Add back: Capitalized interest charged to cost of revenues			3,141				3,326				13,444				10,241
Add back: Land impairment charge		$	6,020			$	—			$	6,020			$	—
Adjusted homebuilding gross margin		$	121,350			$	112,997			$	525,593			$	354,746
Adjusted homebuilding gross margin percentage			28.3	%			27.0	%			31.0	%			27.2	%

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 demand for new homes and available inventories; (iii) our beliefs regarding the relationship between our financial results and our lot strategy, operations and ROE-driven approach; (iv) our expectations related to reduction of construction costs and average cycle times; (v) our intention to manage sales, pricing and inventory levels for each of our communities; (vi) our priorities and strategies for growth, the drivers of that growth, and its impact on our future results; (vii) our expectation to sustain our industry-leading margins; (viii) our positioning and flexibility to capitalize on market opportunities and grow our market share as well as the impact on our financial and operational performance; (ix) our beliefs that our lot and land positions will support future growth; (x) our beliefs that we operate in the most advantageous markets in the U.S.; (xi) our expectations related to the number and location quality of our finished lots at the end of 2023; (xii) our expectations for future demand, including the impact of lower stabilized mortgage rates; 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 increased interest rates and inflation, that could adversely impact demand for new homes or the ability of potential buyers to qualify for acceptable financing; (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 and available labor; (5) an inability to acquire land in our current and new markets at acceptable prices or difficulty in obtaining land- use entitlements; (6) our inability to successfully execute our strategies, including an inability to grow or expand our operations or expand our Trophy brand; (7) our inability to implement or capitalize on new strategic investments; (8) a failure to recruit, retain or develop highly skilled and competent employees; (9) government regulation risks; (10) adverse changes in 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; and (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

FAQ

What was Green Brick Partners' Q4 revenue for 2022?

Green Brick Partners reported a record Q4 revenue of $428.6 million.

What is the average sales price of homes sold by Green Brick in Q4 2022?

The average sales price of homes closed in Q4 2022 was $589,500.

How much did Green Brick Partners' diluted earnings per share change in 2022?

Diluted earnings per share increased by 61.8% year-over-year to $6.02.

What is the debt-to-total capital ratio for Green Brick Partners?

Green Brick Partners' debt-to-total capital ratio fell to 25.7%.

How many homes did Green Brick deliver in 2022?

Green Brick delivered a record 2,916 homes in 2022.