Green Brick Partners, Inc. Reports Record First Quarter 2024 Results

Rhea-AI Summary

Green Brick Partners, Inc. reported record first quarter 2024 results with diluted EPS of $1.82, up 32.8%, a record homebuilding gross margin of 33.4%, net new home orders of 1,071, backlog of $725 million, and debt to total capital of 18.3%. The company saw strong sales performance with a decrease in cancellation rates and overall average incentive rates, leading to a sequential increase in net new home orders.

Positive

• Record diluted EPS of $1.82, up 32.8% year-over-year.

• Record homebuilding gross margin of 33.4%, the highest among public homebuilding peers.

• Net new home orders of 1,071, just shy of the Covid-fueled 1,082 orders in Q1 2021.

• Backlog of $725 million, up 31.8% year-over-year.

• Decreased debt-to-total-capital ratio to 18.3% and net debt to total capital of 8.2%.

Negative

• Average sales price of homes delivered decreased by 8.6% year-over-year.

• Total revenues decreased by 1.0% year-over-year.

• Cost of revenues decreased by 8.7% year-over-year.

Insights

Financial Analyst

Green Brick Partners, Inc.'s report flaunts a diluted EPS (Earnings Per Share) of $1.82, which is a substantial 32.8% increase from the previous year, signifying robust profit growth. The homebuilding gross margin has expanded dramatically to 33.4%, surpassing industry peers by a considerable margin. This indicates a highly effective cost control and pricing strategy, likely attributed to their infill location advantage and self-development approach. The maintained flat year-on-year net new home orders in the face of rising interest rates suggest resilience in demand, while the sequential growth points to strong quarter-over-quarter market dynamics. The company's debt-to-total capital ratio is impressive at 18.3%, with an even more conservative net-debt-to-total capital ratio of 8.2%, reflecting a sound financial structure that could withstand market fluctuations. However, the slight dip in total revenues and the decrease in average sales price of homes delivered may need monitoring to assess whether they are signs of pricing pressures or market softening. Overall, the company's operational efficiencies and financial health are commendable, but investors should be mindful of broader market conditions that could impact future performance.

Market Research Analyst

The increase in backlog to $725 million by 31.8% year-over-year is noteworthy. This provides visibility into future revenues and suggests a strong order book. Moreover, the strategic growth in ending community count by 24.1% could potentially expand market share and revenue base in the burgeoning real estate market. However, the current market may be susceptible to macroeconomic factors such as interest rate hikes, which have historically cooled down the housing demand. Therefore, while current performance is strong, Green Brick Partners will have to navigate a potentially volatile housing market. Additionally, the reduction in average incentive rates and the lowest company history cancellation rate reflect positively on customer commitment and product desirability, which are important indicators of brand strength and competitive positioning.

Real Estate Industry Expert

The boost in homebuilding gross margin and the control of construction costs are indicative of an effective operational strategy and could be reflective of Green Brick Partners' strong positioning in prime locations. The company's success in self-developing a significant portion of their lots, as evidenced by 96.2% of their total lots being self-developed, speaks to their ability to control inventory costs and scale efficiently. This self-development strategy likely contributes to the company’s strong gross margin performance. However, the decrease in average sales price and total revenue, albeit slight, should be seen in the context of broader real estate trends, such as the potential softening of housing prices or shifts in consumer preferences towards more affordable housing options. Green Brick's ability to maintain sales volumes in such an environment may be a test of their market agility and product offering appeal.

DILUTED EPS OF $1.82, A RECORD FOR ANY FIRST QUARTER, UP 32.8%

RECORD HOMEBUILDING GROSS MARGIN OF 33.4%, UP 580 BASIS POINTS

NET NEW HOME ORDERS OF 1,071, FLAT YOY AND UP 58% SEQUENTIALLY

BACKLOG OF $725 MILLION, UP 31.8% YOY

DEBT TO TOTAL CAPITAL OF 18.3%; NET DEBT TO TOTAL CAPITAL OF 8.2%

PLANO, Texas--(BUSINESS WIRE)-- Green Brick Partners, Inc. (NYSE: GRBK) (“we,” “Green Brick” or the “Company”) today reported record results for its first quarter ended March 31, 2024.

“Green Brick kicked off 2024 with excellent first quarter results highlighted by diluted earnings per share of $1.82, a record for any first quarter and an increase of 32.8% year-over-year. I am extremely proud of our teams being able to deliver consistently outstanding performance and results. During the first quarter, we delivered 821 homes, generating $443.1 million in home closings revenue,” said Jim Brickman, CEO and Co-Founder. “Our advantages in infill and infill-adjacent locations and self-development strategy produced a record homebuilding gross margin of 33.4%, which was the highest amongst our public homebuilding peers. More importantly, our accomplishments were achieved with a balance sheet that is stronger than ever. With record earnings and strong operating cash flows, we continued to invest in future growth while we decreased our debt-to-total-capital ratio by 550 basis points year-over-year to 18.3% at the end of the quarter and lowered our net-debt-to-total-capital ratio to 8.2%.”

“We achieved the second highest quarterly sales orders in company history at 1,071 net orders, just shy of the Covid-fueled 1,082 orders in the first quarter of 2021. Our absorption rate per average active selling community remained robust at 11.4 per quarter, or 3.8 per month, despite higher interest rates. Moreover, our net new home orders increased nearly 58% sequentially from the fourth quarter of 2023 due to strong demand within our markets. We were also able to reduce overall average incentive rates from 5.6% of sales price in 4Q23 to 3.8% in March 2024. Our cancellation rate dropped to 4.1%, the lowest of other public homebuilders in the quarter and the lowest in company history. Based on our strong sales performance, our backlog grew 30.7% sequentially to $725 million. Notably, our ending community count grew 24.1% year-over-year to 98. Additionally, we continued to grow starts as we started 997 homes in 1Q24, averaging over 940 starts during the last three quarters. With a mean companywide cycle time of 5.5 months for homes completed in the quarter, we improved our operations in terms of both scale and efficiency,” concluded Mr. Brickman.

Results for the Quarter Ended March 31, 2024:

(Dollars in thousands, except per share data)	Three Months Ended March 31,
	2024				2023				%
New homes delivered		821				761			7.9	%
Total revenues	$	447,338			$	452,061			(1.0	)%
Total cost of revenues		299,081				327,455			(8.7	)%
Total gross profit	$	148,257			$	124,606			19.0	%
Income before income taxes	$	115,633			$	87,172			32.6	%
Net income attributable to Green Brick Partners, Inc.	$	83,301			$	64,180			29.8	%
Diluted net income attributable to Green Brick Partners, Inc. per common share	$	1.82			$	1.37			32.8	%
Residential units revenue	$	443,284			$	450,362			(1.6	)%
Average sales price of homes delivered	$	539.7			$	590.6			(8.6	)%
Homebuilding gross margin percentage		33.4	%			27.6	%		580 bps
Backlog	$	725,489			$	550,593			31.8	%
Homes under construction		2,233				1,759			26.9	%

Earnings Conference Call:

We will host our earnings conference call to discuss our first quarter ended March 31, 2024 at 12:00 p.m. Eastern Time on Thursday, May 2, 2024. 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/341898024

A telephone replay of the call will be available through June 1, 2024. To access the telephone replay, the domestic dial-in number is 1-800-770-2030, the international dial-in number is 1-609-800-9909 and the access code is 3162560, or by using the link at investors.greenbrickpartners.com.

GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
		Three Months Ended March 31,
		2024				2023
Residential units revenue		$	443,284			$	450,362
Land and lots revenue			4,054				1,699
Total revenues			447,338				452,061
Cost of residential units			295,313				326,124
Cost of land and lots			3,768				1,331
Total cost of revenues			299,081				327,455
Total gross profit			148,257				124,606
Selling, general and administrative expenses			(50,570	)			(45,945	)
Equity in income of unconsolidated entities			2,592				4,221
Other income, net			15,354				4,290
Income before income taxes			115,633				87,172
Income tax expense			24,842				19,031
Net income			90,791				68,141
Less: Net income attributable to noncontrolling interests			7,490				3,961
Net income attributable to Green Brick Partners, Inc.		$	83,301			$	64,180
Net income attributable to Green Brick Partners, Inc. per common share:
Basic		$	1.84			$	1.38
Diluted		$	1.82			$	1.37
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic			44,942				45,945
Diluted			45,430				46,351

GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
	March 31, 2024				December 31, 2023
ASSETS
Cash and cash equivalents	$	185,897			$	179,756
Restricted cash		24,611				19,703
Receivables		8,630				10,632
Inventory		1,655,494				1,533,223
Investments in unconsolidated entities		34,701				84,654
Right-of-use assets - operating leases		6,997				7,255
Property and equipment, net		6,826				7,054
Earnest money deposits		16,464				16,619
Deferred income tax assets, net		15,306				15,306
Intangible assets, net		345				367
Goodwill		680				680
Other assets		20,623				27,583
Total assets	$	1,976,574			$	1,902,832
LIABILITIES AND EQUITY
Liabilities:
Accounts payable	$	53,330			$	54,321
Accrued expenses		114,218				96,457
Customer and builder deposits		54,120				43,148
Lease liabilities - operating leases		7,873				7,898
Borrowings on lines of credit, net		(2,260	)			(2,328	)
Senior unsecured notes, net		311,303				336,207
Notes payable		113				12,981
Total liabilities		538,697				548,684
Commitments and contingencies
Redeemable noncontrolling interest in equity of consolidated subsidiary		38,186				36,135
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, 2024 and December 31, 2023, respectively		47,603				47,603
Common stock, $0.01 par value: 100,000,000 shares authorized; 45,096,392 issued and 45,025,151 outstanding as of March 31, 2024 and 45,005,175 issued and outstanding as of December 31, 2023, respectively		451				450
Treasury stock, at cost: 71,241 shares as of March 31, 2024 and none as of December 31, 2023		(3,758	)			—
Additional paid-in capital		259,412				255,614
Retained earnings		1,079,619				997,037
Total Green Brick Partners, Inc. stockholders’ equity		1,383,327				1,300,704
Noncontrolling interests		16,364				17,309
Total equity		1,399,691				1,318,013
Total liabilities and equity	$	1,976,574			$	1,902,832

GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
Residential Units Revenue and New Homes Delivered (dollars in thousands)		Three Months Ended March 31,
		2024			2023			Change				%
Home closings revenue		$	443,094		$	449,430		$	(6,336	)		(1.4	)%
Mechanic’s lien contracts revenue			190			932			(742	)		(79.6	)%
Residential units revenue		$	443,284		$	450,362		$	(7,078	)		(1.6	)%
New homes delivered			821			761			60			7.9	%
Average sales price of homes delivered		$	539.7		$	590.6		$	(50.9	)		(8.6	)%

Land and Lots Revenue (dollars in thousands)		Three Months Ended March 31,
		2024			2023			Change				%
Lots revenue		$	4,054		$	1,699		$	2,355			138.6	%
Lots closed			63			18			45			250.0	%
Average sales price of lots closed		$	64.3		$	94.4		$	(30.1	)		(31.9	)%

New Home Orders and Backlog (dollars in thousands)		Three Months Ended March 31,
		2024				2023				Change				%
Net new home orders			1,071				1,067				4			0.4	%
Revenue from net new home orders		$	613,384			$	630,928			$	(17,544	)		(2.8	)%
Average selling price of net new home orders		$	572.7			$	591.3			$	(18.6	)		(3.1	)%
Cancellation rate			4.1	%			6.2	%			(2.1	)%		(33.9	)%
Absorption rate per average active selling community per quarter			11.4				13.3				(1.9	)		(14.3	)%
Average active selling communities			94				80				14			17.5	%
Active selling communities at end of period			98				79				19			24.1	%
Backlog		$	725,489			$	550,593			$	174,896			31.8	%
Backlog units			1,020				843				177			21.0	%
Average sales price of backlog		$	711.3			$	653.1			$	58.2			8.9	%

GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
	March 31, 2024									December 31, 2023
	Central			Southeast			Total			Central			Southeast			Total
Lots owned
Finished lots	3,408			952			4,360			4,014			964			4,978
Lots in communities under development	17,192			1,252			18,444			9,122			1,335			10,457
Land held for future development(1)	3,800			—			3,800			8,366			—			8,366
Total lots owned	24,400			2,204			26,604			21,502			2,299			23,801
Lots controlled
Lots under third party option contracts	1,183			—			1,183			1,169			—			1,169
Land under option for future acquisition and development	110			430			540			1,710			460			2,170
Lots under option through unconsolidated development joint ventures	2,157			302			2,459			1,210			331			1,541
Total lots controlled	3,450			732			4,182			4,089			791			4,880
Total lots owned and controlled (2)	27,850			2,936			30,786			25,591			3,090			28,681
Percentage of lots owned	87.6	%		75.1	%		86.4	%		84.0	%		74.4	%		83.0	%

___________________
(1)	Land held for future development consist 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 March 31, 2024 and December 31, 2023.

	March 31, 2024			December 31, 2023
Total lots owned(1)	26,604			23,801
Add certain lots included in Total Lots Controlled
Land under option for future acquisition and development	540			2,170
Lots under option through unconsolidated development joint ventures	2,459			1,541
Total lots self-developed	29,603			27,512
Self-developed lots as a percentage of total lots owned and controlled(1)	96.2	%		95.9	%

___________________
(1)		Total lots owned includes finished lot purchases, which were less than 2.4% of total lots self-developed as of December 31, 2023.

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, 2024 and 2023 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.

(Unaudited, in thousands):		Three Months Ended March 31,
		2024				2023
Residential units revenue		$	443,284			$	450,362
Less: Mechanic’s lien contracts revenue			(190	)			(932	)
Home closings revenue		$	443,094			$	449,430
Homebuilding gross margin		$	147,917			$	123,915
Homebuilding gross margin percentage			33.4	%			27.6	%
Homebuilding gross margin			147,917				123,915
Add back: Capitalized interest charged to cost of revenues			2,684				3,626
Adjusted homebuilding gross margin		$	150,601			$	127,541
Adjusted homebuilding gross margin percentage			34.0	%			28.4	%

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 March 31, 2024.

	Gross				Less: Cash and cash equivalents				Net
Total debt, net of debt issuance costs	$	309,156			$	(185,897	)		$	123,259
Total Green Brick Partners, Inc. stockholders’ equity		1,383,327				—				1,383,327
Total capitalization	$	1,692,483			$	(185,897	)		$	1,506,586
Debt to total capitalization ratio		18.3	%
Net debt to total capitalization ratio										8.2	%

About Green Brick Partners, Inc.

Green Brick Partners, Inc (NYSE: GRBK), the third largest homebuilder in Dallas-Fort Worth, is a diversified homebuilding and land development company that operates in Texas, Georgia, and Florida. 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 retains interests in related financial services platforms, including Green Brick Title and BHome Mortgage. Green Brick 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/brands-services/.

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. Specifically, these statements reflect our beliefs and expectations regarding (i) our strategic advantages, including our focus on infill and infill-adjacent locations, and the impact on our future results; (ii) our positioning to capture future demand and succeed in the current environment, including our ability to maintain industry-leading performance and margins; (iii) our ability to successfully implement our growth strategy, including our expectations for expansion and growth of our Trophy brand within DFW and into Austin and Houston, and ancillary business opportunities, (iv) our expectations regarding trends in our markets, such as demographic trends and demand for single-family homes; (v) our strategies to maintain the strength of our balance sheet and financial flexibility, and our positioning in the industry; (vi) the advantages of our lot and land strategies and locations, including the benefits to our returns, margins and ability to scale; (vii) our expectations for our investments in land, lots and development in 2024, and the impact on our growth; (viii) our expected lot deliveries in 2024; (ix) the demand for home ownership in the markets in which we operate and our ability to capitalize on such demand, and (x) our ability to deliver efficient and cost-effective growth, including our ability to manage costs and cycle times. 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; (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 in the industries or markets we operate in; (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, and (15) changes in accounting standards that adversely affect our reported earnings or financial condition. Green Brick assumes no obligation to update any forward-looking statements, which speak only as of the date they are made. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240501871930/en/

Benting Hu

Vice President of Finance

469-573-6755

IR@greenbrickpartners.com

Source: Green Brick Partners, Inc.

FAQ

What was Green Brick Partners, Inc.'s diluted EPS for the first quarter of 2024?

Green Brick Partners, Inc.'s diluted EPS for the first quarter of 2024 was $1.82, a record for any first quarter and up 32.8% year-over-year.

How did Green Brick Partners, Inc.'s net new home orders perform in the first quarter of 2024?

Green Brick Partners, Inc. had net new home orders of 1,071 in the first quarter of 2024, flat year-over-year and up 58% sequentially.

What was the backlog amount for Green Brick Partners, Inc. in the first quarter of 2024?

Green Brick Partners, Inc.'s backlog was $725 million in the first quarter of 2024, showing a 31.8% year-over-year increase.

How did Green Brick Partners, Inc.'s debt to total capital ratio change in the first quarter of 2024?

Green Brick Partners, Inc.'s debt to total capital ratio decreased to 18.3% in the first quarter of 2024.