Green Brick Partners, Inc. Reports Record First Quarter 2022 Results

Rhea-AI Summary

Green Brick Partners (GRBK) reported impressive first-quarter results for 2022, showcasing a 68% increase in home closings revenue to $363.1 million and a record net income of $61.6 million, marking a 137% rise year-over-year. The company's diluted EPS reached $1.20, a 135% increase from Q1 2021.

Homebuilding gross margin improved by 240 basis points to 27.8%. Despite a 13% decline in backlog, lots owned rose 42.5%, indicating strong market positioning.

Positive

• Home closings revenue increased by 68% to $363.1 million.
• Record net income of $61.6 million, up 137% year-over-year.
• Diluted EPS rose to $1.20, a 135% increase from Q1 2021.
• Homebuilding gross margin climbed to 27.8%, up 240 basis points.
• Lots owned and controlled increased by 42.5%.

Negative

• Backlog decreased by 13% year-over-year.
• Net new home orders fell by 44.5% compared to the previous year.

Home Closings Revenue of $363.1 Million, Up 68.0%
Record Income Before Income Taxes of $82.6 Million, Up 134.3%
Home Building Gross Margin Up 240 Bps to 27.8%
Lots Owned and Controlled Up 42.5%

PLANO, Texas, May 03, 2022 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported record results for its first quarter ended March 31, 2022.

“Thanks to a great team effort, we achieved an annualized Q1 2022 return on equity of 28.8%, with diluted EPS at $1.20 per share which was up 135% from Q1 2021. Even better, we expect home closings revenue and EPS to accelerate into Q2 2022,” said Jim Brickman, CEO and Co-Founder.

Results for the Quarter Ended March 31, 2022:

(Dollars in thousands, except per share data)	Three Months Ended March 31,
	2022				2021				Change
New homes delivered		658				516			27.5	%
Total revenues	$	393,616			$	234,479			67.9	%
Total cost of revenues		285,260				175,490			62.6	%
Total gross profit	$	108,356			$	58,989			83.7	%
Income before income taxes	$	82,633			$	35,262			134.3	%
Net income attributable to Green Brick Partners, Inc.	$	61,577			$	25,969			137.1	%
Diluted net income attributable to Green Brick Partners, Inc. per common share	$	1.20			$	0.51			135.3	%
Residential units revenue	$	364,661			$	217,236			67.9	%
Average sales price of homes delivered	$	551.8			$	418.9			31.7	%
Homebuilding gross margin percentage		27.8	%			25.4	%		240 bps
Selling, general and administrative expenses as a percentage of residential units revenue		9.4	%			13.6	%		-420 bps
Backlog	$	866,621			$	995,743			-13.0	%
Lots owned and controlled		26,992				18,939			42.5	%
Homes under construction		2,516				2,303			9.2	%

“Our gross margin reached 27.8% this quarter, up 240 basis points from the prior year and up 160 basis points sequentially from the fourth quarter, as Green Brick has achieved pricing power in our dynamic core markets of Dallas-Ft. Worth and Atlanta,” said Rick Costello, CFO. “In order to capitalize on rising prices and demand, we have paced sales with price increases in excess of rising input costs. When we combine this gross margin performance with a 420 basis point improvement in SG&A leverage, our bottom line results are flourishing. We believe our focus on price over pace will sustain our industry-leading margins and strong financial performance through the remainder of 2022.”

Mr. Brickman continued saying, “Seeing a disconnect between managements’ positive view of the business and our strong operating results versus the contrasting sentiment of some investors and analysts, the Company purchased 1.2 million of its shares during the quarter at an average price of $21.63 for a total investment of $25.8 million. In April 2022, the company purchased an additional 1.2 million shares at an average price of $19.72, bringing total shares repurchased to a total of 2.4 million shares which is 4.8% of shares outstanding as of the beginning of the year. These purchases have combined to fully utilize the $50 million amount previously authorized. In our April 27^th Board meeting, the board authorized the purchase of up to $100 million of additional shares. Despite repurchasing shares, our debt to total capital was only 28.8% at the end of Q1.”

The new stock repurchase program authorizes the Company to purchase, from time to time, up to $100 million of our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors. Shares repurchased will be retired. The new plan has no time deadline and will continue until otherwise modified or terminated by the Company’s board at any time in its sole discretion.

Earnings Conference Call:
We will host our earnings conference call to discuss our first quarter ended March 31, 2022 at 12:00 p.m. Eastern Time on Wednesday, May 4, 2022. 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 13729082. Participants may also join the call via webcast at:
https://www.webcast-eqs.com/greenbrick20220504/en

The webcast replay will be available from the Company’s website at greenbrickpartners.com/reporting/ through May 31, 2022. A replay of the call will be available from approximately 3:00 p.m. Eastern Time on May 4th, 2021 through 11:59 p.m. Eastern Time on May 31st, 2022. 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 13729082.

GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

		Three Months Ended March 31,
			2022				2021
Residential units revenue		$	364,661			$	217,236
Land and lots revenue			28,955				17,243
Total revenues			393,616				234,479
Cost of residential units			263,430				162,072
Cost of land and lots			21,830				13,418
Total cost of revenues			285,260				175,490
Total gross profit			108,356				58,989
Selling, general and administrative expenses			(34,265	)			(29,488	)
Equity in income of unconsolidated entities			5,687				3,891
Other income, net			2,855				1,870
Income before income taxes			82,633				35,262
Income tax expense			18,437				7,501
Net income			64,196				27,761
Less: Net income attributable to noncontrolling interests			2,619				1,792
Net income attributable to Green Brick Partners, Inc.		$	61,577			$	25,969
Net income attributable to Green Brick Partners, Inc. per common share:
Basic		$	1.20			$	0.51
Diluted		$	1.20			$	0.51
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic			50,586				50,633
Diluted			50,924				50,993

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

	March 31, 2022				December 31, 2021
ASSETS
Cash and cash equivalents	$	66,083			$	78,696
Restricted cash		14,152				14,858
Receivables		7,050				6,871
Inventory		1,327,509				1,203,743
Investments in unconsolidated entities		58,127				55,616
Right-of-use assets - operating leases		4,215				4,596
Property and equipment, net		2,617				2,812
Earnest money deposits		24,744				26,008
Deferred income tax assets, net		15,741				15,741
Intangible assets, net		516				537
Goodwill		680				680
Other assets		7,223				11,709
Total assets	$	1,528,657			$	1,421,867
LIABILITIES AND EQUITY
Liabilities:
Accounts payable	$	56,899			$	45,682
Accrued expenses		89,558				61,351
Customer and builder deposits		63,618				64,610
Lease liabilities - operating leases		4,415				4,745
Borrowings on lines of credit, net		19,421				(738	)
Senior unsecured notes, net		335,538				335,446
Notes payable		14,668				210
Total liabilities		584,117				511,306
Commitments and contingencies
Redeemable noncontrolling interest in equity of consolidated subsidiary		22,179				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 March 31, 2022 and December 31 2021, respectively		47,696				47,696
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,245,206 and 51,151,911 issued and 49,660,230 and 50,759,972 outstanding as of March 31, 2022 and December 31, 2021, respectively		512				512
Treasury stock, at cost, 1,584,976 and 391,939 shares as of March 31, 2022 and December 31, 2021, respectively		(28,968	)			(3,167	)
Additional paid-in capital		292,155				289,641
Retained earnings		600,788				539,866
Total Green Brick Partners, Inc. stockholders’ equity		912,183				874,548
Noncontrolling interests		10,178				14,146
Total equity		922,361				888,694
Total liabilities and equity	$	1,528,657			$	1,421,867

GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)

Residential Units Revenue and New Homes Delivered (dollars in thousands)		Three Months Ended March 31,
		2022			2021			Change			%
Home closings revenue		$	363,063		$	216,134		$	146,929		68.0	%
Mechanic’s lien contracts revenue			1,598			1,102			496		45.0	%
Residential units revenue		$	364,661		$	217,236		$	147,425		67.9	%
New homes delivered			658			516			142		27.5	%
Average sales price of homes delivered		$	551.8		$	418.9		$	132.9		31.7	%

Land and Lots Revenue (dollars in thousands)		Three Months Ended March 31,
		2022			2021			Change				%
Lots revenue		$	1,955		$	8,443		$	(6,488	)		(76.8	)%
Land revenue			27,000			8,800			18,200			206.8	%
Land and lots revenue		$	28,955		$	17,243		$	11,712			67.9	%
Lots closed			33			79			(46	)		(58.2	)%
Average sales price of lots closed		$	59.2		$	106.9		$	(47.7	)		(44.6	)%

New Home Orders and Backlog (dollars in thousands)		Three Months Ended March 31,
			2022				2021			Change				%
Net new home orders			601				1,082				(481	)		(44.5	)%
Cancellation rate			8.0	%			6.0	%			2.0	%		33.3	%
Absorption rate per average active selling community per quarter			8.0				11.3				(3.3	)		(29.2	)%
Average active selling communities			75				96				(21	)		(21.9	)%
Active selling communities at end of period			76				90				(14	)		(15.6	)%
Backlog		$	866,621			$	995,743			$	(129,122	)		(13.0	)%
Backlog (units)			1,423				2,029				(606	)		(29.9	)%
Average sales price of backlog		$	609.0			$	490.8			$	118.2			24.1	%

		March 31, 2022			December 31, 2021
Lots owned (1)
Central		19,552			17,767
Southeast		2,417			2,472
Total lots owned		21,969			20,239
Lots controlled (1)
Central		3,864			7,321
Southeast		1,159			1,061
Total lots controlled		5,023			8,382
Total lots owned and controlled (1)		26,992			28,621
Percentage of lots owned		81.4	%		70.7	%

(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 March 31, 2022 and December 31, 2021.

	March 31, 2022			December 31, 2021
Total lots owned	21,969			20,239
Add certain lots included in Total Lots Controlled
Land under option for future acquisition and development	768			3,826
Lots under option through unconsolidated development joint ventures	1,762			1,816
Total lots self-developed	24,499			25,881
Self-developed lots as a percentage of total lots owned and controlled	90.8	%		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 three months ended March 31, 2022 and 2021 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.

(Unaudited, in thousands):		Three Months Ended March 31,
			2022				2021
Residential units revenue		$	364,661			$	217,236
Less: Mechanic’s lien contracts revenue			(1,598	)			(1,102	)
Home closings revenue		$	363,063			$	216,134
Homebuilding gross margin		$	100,973			$	54,904
Homebuilding gross margin percentage			27.8	%			25.4	%
Homebuilding gross margin			100,973				54,904
Add back: Capitalized interest charged to cost of revenues			2,861				1,813
Adjusted homebuilding gross margin		$	103,834			$	56,717
Adjusted homebuilding gross margin percentage			28.6	%			26.2	%

The following table presents the pre-tax income for the three months ended March 31, 2022 and 2021, 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 March 31,
		2022			2021
Net income attributable to Green Brick Partners, Inc.		$	61,577		$	25,969
Income tax expense attributable to Green Brick Partners, Inc.			18,435			7,500
Pre-tax income attributable to Green Brick Partners, Inc.		$	80,012		$	33,469

About Green Brick Partners, Inc.

Green Brick Partners, Inc. is a diversified homebuilding and land development company operating through eight homebuilder brands in major markets in Texas, the Southeast and Colorado. 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, 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 and in our earnings call include statements regarding (i) our expectation that our ability to increase price over pace will sustain our industry-leading margins and strong financial performance through the remainder of 2022; (ii) our belief that our land position and backlog will position us to grow our business in 2022 and beyond, (iii) 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 and inflation 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 during 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) changes in macroeconomic conditions, including increasing interest rates 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 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) a failure to recruit, retain or develop highly skilled and competent employees; (8) government regulation risks; (9) a lack of availability or volatility of mortgage financing or a rise in interest rates; (10) severe weather events or natural disasters; (11) difficulty in obtaining sufficient capital to fund our growth; (12) our ability to meet our debt service obligations; (13) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; (14) 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

FAQ

What were Green Brick Partners' Q1 2022 earnings?

Green Brick Partners reported Q1 2022 earnings with a net income of $61.6 million, reflecting a 137% increase year-over-year.

How much did Green Brick Partners' home closings revenue increase?

Home closings revenue for Green Brick Partners rose 68% to $363.1 million in Q1 2022.

What is the diluted EPS for Green Brick Partners in Q1 2022?

The diluted EPS for Green Brick Partners in Q1 2022 was $1.20, a 135% increase from the same quarter in 2021.

What is the homebuilding gross margin for Green Brick Partners?

Green Brick Partners achieved a homebuilding gross margin of 27.8% in Q1 2022, up 240 basis points from the prior year.

Did Green Brick Partners repurchase shares in Q1 2022?

Yes, Green Brick Partners repurchased 2.4 million shares totaling approximately $25.8 million during Q1 2022.