Green Brick Partners, Inc. Reports Record First Quarter Results

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Green Brick Partners reported impressive financial results for Q1 2020, achieving a record basic EPS of $0.32, up 28% from $0.25 in Q1 2019. Total revenue increased by 26.5% to $213.3 million, driven by a significant rise in residential unit revenue, which grew by 18.3% to $191.2 million. New home orders surged by 42.3%, contributing to a record backlog of $427.3 million, representing a 38.9% year-over-year increase. Despite the COVID-19 pandemic's impact on sales, the company emphasized its strong balance sheet with $106 million in cash and $37 million in available credit, allowing for flexibility amid market challenges.

Positive

Record basic EPS of $0.32, up 28% year-over-year.
Total revenue reached $213.3 million, a 26.5% increase from $168.6 million.
Residential unit revenue increased by 18.3% to $191.2 million.
Net new home orders grew by 42.3%, indicating strong market demand.
Record backlog of $427.3 million, up 38.9% compared to last year.
Company has $106 million in cash, providing liquidity.

Negative

Sales traffic slowed due to COVID-19 restrictions.
Expected adverse impact on net new sales in Q2 2020 and beyond.

05/11/2020 - 04:51 PM

RECORD BASIC EPS OF $0.32 PER SHARE, UP 28.0%
HOMEBUILDING GROSS MARGIN OF 23.1%, UP 230 BASIS POINTS
42.3% INCREASE IN NEW HOME ORDERS
RECORD BACKLOG $427.3 MILLION, UP 38.9%
17.7% ENDING COMMUNITY GROWTH YEAR OVER YEAR

PLANO, Texas, May 11, 2020 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its first quarter ended March 31, 2020.

Results for the First Quarter Ended March 31, 2020:

For the quarter ended March 31, 2020, basic net income attributable to Green Brick per common share (“EPS”), backlog, and net new home orders all reflect a record for any quarter, as detailed below.
EPS was $0.32, a 28.0% increase compared to the quarterly earnings of $0.25 for the three months ended March 31, 2019.
As compared to the three months ended March 31, 2019, total revenue was $213.3 million, an increase of 26.5% from $168.6 million; gross profit was $49.0 million, an increase of 38.5% from $35.4 million; and net income attributable to Green Brick was $15.9 million, an increase of 26.3% from $12.6 million.
Residential units revenue was $191.2 million, an increase of 18.3% compared to $161.6 million for the three months ended March 31, 2019. Land and lots revenue was $22.1 million, an increase of 213.6% compared to $7.0 million for the three months ended March 31, 2019.
The dollar value of backlog units as of March 31, 2020 was $427.3 million, an increase of 38.9% compared to $307.5 million as of March 31, 2019.
Average active selling communities increased from 78 communities for the quarter ended March 31, 2019 to 94 communities for the quarter ended March 31, 2020, an increase of 20.5%.
Homes under construction increased to 1,418 as of March 31, 2020, a 21.2% increase compared to 1,170 as of March 31, 2019.

“Due to strong results through mid-March, in our first quarter of 2020, we accomplished our second consecutive record EPS of $0.32 and ended the quarter with an all-time record backlog of $427.3 million, a $120 million increase over the prior year and over $80 million higher than our prior quarter record backlog. At the same time, we saw our net new home orders increase by 42.3% and homebuilding gross margin improve 230 basis points to 23.1%,” said Jim Brickman, CEO of Green Brick Partners, Inc. “The combination of high gross margins, low levels of debt, and low interest rates on our debt gives us a decided advantage if the market becomes more competitive.”

“Because liquidity is crucial in allowing for the flexibility needed to navigate the current market environment, as of quarter-end, Green Brick had $106 million in cash and maintained $37 million in available capacity on our revolving credit facilities,” continued Mr. Brickman. “We continue to make every effort to optimize our cash flow. We expect these efforts will allow us to monetize our balance sheet, adapt to changing market conditions and have cash on hand for opportunities as they arise. Finally, our Company’s predecessor was started at the bottom of the prior recession in 2009. We have a seasoned management team in place that has effectively managed and profited from adverse business conditions. Our goal is to do just that once again.”

Green Brick, like every other company in the United States and the global economy, has been impacted by the coronavirus (“COVID-19”) pandemic and the impact of governmental actions taken to combat the pandemic. Our first focus in addressing the impact of the COVID-19 pandemic has been to implement steps to minimize the risk to our employees, trade partners and customers. While residential homebuilding is considered an essential service in each of the markets in which we operate, we are still taking steps to increase the safety of our employees, trade partners and customers, including closing our sales centers, model homes, and design centers to the general public and shifting to appointment-only interactions with our customers and modifying our construction operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening.

From a business standpoint, we are also taking steps to address the current and anticipated economic impact of the COVID-19 pandemic on our operations and the homebuilding industry as a whole. Although we continue to build, close and sell homes in our markets, traffic in our sales offices and sales have slowed. For example, during the final two weeks of March and the first half of April, the impact of shelter-in-place/stay-at-home restrictions was to reduce our net new home sales and our home sales per community, due to lower gross sales and higher cancellations. The second half of April and the first part of May have shown continued year over year deterioration, but substantial improvement over the prior four weeks. We expect that an adverse impact on net new sales will continue in the second quarter and beyond and, consequently, our closings, and therefore our results of operations, for the balance of 2020 will be more impacted than the first quarter.

To address these challenges we have taken the following steps as we seek to align our cost structure and our capital requirements with our current anticipated level of net sales, builds and closings:

focused on completing and closing the record amount of sold homes in backlog that are under construction;
temporarily limited the construction of unsold, speculative units to the next completion stage of construction;
temporarily limited our purchases of lots and land and development of land to reflect the lower levels of home sales orders that are anticipated for 2020, as compared to expectations prior to the pandemic and limited the number of new communities in which we had planned to open in 2020 based on an evaluation of competition and supply;
decided to not open Trophy Signature Homes in Houston; and
taken steps to reduce our overall headcount and our selling, general and administrative expenses to align with anticipated activity in the upcoming quarters at an annualized estimated savings of $10.4 million.

The length and extent of the impact of the COVID-19 pandemic on the Company’s financial performance, including the ability to execute on our future financial results, will depend on future developments, including the duration and spread of the pandemic and related government restrictions, all of which are uncertain and cannot be predicted.

More disclosures related to the COVID-19 pandemic are available in our Quarterly Report on Form 10-Q for the period ended March 31, 2020 on file with the Securities and Exchange Commission.

Earnings Conference Call:

We will host our earnings conference call to discuss our first quarter ended March 31, 2020 at 12:00 p.m. Eastern Time on Tuesday, May 12, 2020. The call can be accessed by dialing 800-374-0137 for domestic participants or 904-685-8013 for international participants. Participants should reference conference ID code 8896623. A replay of the call will be available from approximately 3:30 p.m. Eastern Time on May 12, 2020 through 11:59 p.m. Eastern Time on May 26, 2020. To access the replay, the domestic dial-in number is 855-859-2056, the international dial-in number is 404-537-3406 and the conference ID code is 8896623.

Reconciliation of 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 the Company’s 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.

Reclassifications:

Beginning in the first quarter of 2020, the Company reclassified the write-offs of option deposits and pre-acquisition costs from selling, general and administrative expenses to other (loss) income, net in the consolidated statements of income in order to be more comparable with its peers. Deposits and pre-acquisition costs written off related to option contracts abandoned totaled $3.4 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively. There was no impact on net income from the reclassification in any period.

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