Green Brick Partners, Inc. Reports Record Fourth Quarter 2021 Results

Rhea-AI Summary

Green Brick Partners reported record financial results for Q4 2021, with total revenues of $452.3 million, reflecting a 78% increase year-over-year. The company achieved an income before taxes of $82.6 million, up 117.6%, and a full-year income before taxes of $257 million, marking a 79.9% rise. They enhanced their operational efficiency, as indicated by a 350 bps improvement in SG&A expenses to 8.8%. Notably, lots owned and controlled surged 97.8%, supporting future growth and stability.

Positive

• Q4 2021 total revenues reached $452.3 million, up 78% YoY.
• Income before taxes rose to $82.6 million, an increase of 117.6%.
• Full-year income before taxes totaled $257 million, marking a 79.9% growth.
• SG&A expenses decreased to 8.8%, improved by 350 bps.
• Lots owned and controlled increased by 97.8%, indicating strong future growth potential.

Negative

• Net new home orders fell by 43.9% in Q4 2021.
• Cancellation rates increased to 12.3%, up from 8.6% in the previous year.
• Average active selling communities decreased by 24.5% compared to Q4 2020.

Q4 Record Residential Units Revenue Of $420.1 Million, Up 70.4%
Q4 Income Before Taxes Of $82.6 Million, Up 117.6%
Full Year Income Before Taxes of $257.0 Million, Up 79.9%
Q4 SG&A Expense 8.8%, Improved 350 Bps
Record Lots Owned and Controlled Up, 97.8%

PLANO, Texas, March 01, 2022 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (NYSE: GRBK) (“we,” “Green Brick” or the “Company”) today reported record results for its fourth quarter ended December 31, 2021.

“Our fourth quarter year-over-year total revenue growth of 78% reflected not just a record quarter for closings, but also a continuation of our dynamic growth which has now seen us grow total revenue by a compounded annual growth rate of 33% over the last two years and 29% over the past 6 years,” said Jim Brickman, CEO and Co-Founder. “During 2021, we continued to invest in our future growth by almost doubling our number of lots owned and controlled. Most recently, this includes our announcement of our expansion into Austin, TX, the 6th largest home starts market in the country. Our investment in lot growth in 2021 was accomplished with low financial leverage and high returns on equity. We have maintained our low debt to capital ratio at 27.7%. And our net income return on average equity was 31.9% for the fourth quarter annualized and 25.9% for the year.”

Results for the Year Ended December 31, 2021:

For the year ended December 31, 2021, our net income attributable to Green Brick per common share (“EPS”), total revenues, residential units revenue, and net income attributable to Green Brick reflect a record for any twelve-month period since the Company’s inception. Lots owned and control also represent a Company record as of the end of any reporting period.

(Dollars in thousands, except per share data)	Twelve Months Ended December 31,
		2021				2020			Change
New homes delivered		2,834				2,208			28.4	%
Total revenues	$	1,402,876			$	976,021			43.7	%
Total cost of revenues		1,040,817				741,417			40.4	%
Total gross profit	$	362,059			$	234,604			54.3	%
Income before income taxes	$	256,986			$	142,813			79.9	%
Net income attributable to Green Brick Partners, Inc.	$	190,210			$	113,693			67.3	%
Diluted net income attributable to Green Brick Partners, Inc. per common share	$	3.72			$	2.24			66.1	%
Residential units revenue	$	1,309,687			$	930,176			40.8	%
Average sales price of homes delivered	$	460.7			$	418.4			10.1	%
Homebuilding gross margin percentage		26.4	%			24.2	%		220 bps
Selling, general and administrative expenses as a percentage of residential units revenue		10.3	%			12.1	%		-180 bps
Backlog	$	869,856			$	686,861			26.6	%
Lots owned and controlled		28,621				14,468			97.8	%
Homes under construction		2,278				1,780			28.0	%

Results for the Quarter Ended December 31, 2021:

For the quarter ended December 31, 2021, our net income attributable to Green Brick per common share (“EPS”), total revenues, residential units revenue, and net income attributable to Green Brick reflect a record for any quarter since the Company’s inception, as detailed below.

(Dollars in thousands, except per share data)	Three Months Ended December 31,
		2021				2020			Change
New homes delivered		823				585			40.7	%
Total revenues	$	452,251			$	254,100			78.0	%
Total cost of revenues		341,493				190,246			79.5	%
Total gross profit	$	110,758			$	63,854			73.5	%
Income before income taxes	$	82,589			$	37,949			117.6	%
Net income attributable to Green Brick Partners, Inc.	$	63,471			$	29,310			116.6	%
Diluted net income attributable to Green Brick Partners, Inc. per common share	$	1.24			$	0.58			113.8	%
Residential units revenue	$	420,051			$	246,437			70.4	%
Average sales price of homes delivered	$	509.3			$	419.7			21.3	%
Homebuilding gross margin percentage		26.2	%			25.1	%		110 bps
Selling, general and administrative expenses as a percentage of residential units revenue		8.8	%			12.3	%		- 350 bps

“By metering sales, we have kept our pipeline of backlog revenues filled while successfully increasing spec inventory. From a low of 28% spec units under construction at the end of the first quarter of 2021, we have increased that percentage to 39%. We believe that increasing our spec levels will lead to more efficient operations, higher margins and returns, and less risk of construction costs,” said Rick Costello, CFO. “Our presence in high job growth markets coupled with credit worthy buyers who can afford larger homes and bigger mortgages allow us to continue to raise prices with new releases of lots. So, selling some houses 2 to 4 months before completion will get a better margin than selling all the houses 7 to 12 months ahead of completion. Our return to a higher level of spec units under construction should position us to continue capturing increased sales prices. Managing this type of flow is a corporate strength and making decisions like this contribute to our superior gross margins and return on capital.”

Green Brick, like every other company in the United States and the global economy, has been impacted by the coronavirus, or COVID-19, pandemic and the impact of governmental actions taken to combat the pandemic. After an initial decline in orders and construction at the onset of the crisis, orders have subsequently achieved all-time highs. The significant increase in new home demand that we have seen and that the industry has experienced since the second half of 2020 has, in turn, led to substantial price increases, but also increased demand for labor and the raw materials, products and appliances for new homes. As a result, we have and expect to continue to experience increases in cost and decreased availability of skilled labor as well as increases, shortages, and significant extensions to our lead time for the delivery of key materials and inputs.

Earnings Conference Call:

We will host our earnings conference call to discuss our fourth quarter ended December 31, 2021 at 12:00 p.m. Eastern Time on Wednesday, March 2, 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 13726490. Participants may also join the call via webcast at: https://www.webcast-eqs.com/greenbrickpartners20220302/en

A replay of the call will be available from approximately 3:00 p.m. Eastern Time on March 2, 2022 through 11:59 p.m. Eastern Time on March 30, 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 13726490.

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 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.

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,
			2021				2020				2021				2020
Residential units revenue		$	420,051			$	246,437			$	1,309,687			$	930,176
Land and lots revenue			32,200				7,663				93,189				45,845
Total revenues			452,251				254,100				1,402,876				976,021
Cost of residential units			310,228				184,534				964,364				705,866
Cost of land and lots			31,265				5,712				76,453				35,551
Total cost of revenues			341,493				190,246				1,040,817				741,417
Total gross profit			110,758				63,854				362,059				234,604
Selling, general and administrative expenses			(37,087	)			(30,416	)			(134,269	)			(112,134	)
Change in fair value of contingent consideration			—				(158	)			—				(368	)
Equity in income of unconsolidated entities			5,674				3,616				19,713				16,654
Other income, net			3,244				1,053				9,483				4,057
Income before income taxes			82,589				37,949				256,986				142,813
Income tax expense			15,512				7,659				52,605				25,016
Net income			67,077				30,290				204,381				117,797
Less: Net income attributable to noncontrolling interests			3,606				980				14,171				4,104
Net income attributable to Green Brick Partners, Inc.		$	63,471			$	29,310			$	190,210			$	113,693
Net income attributable to Green Brick Partners, Inc. per common share:
Basic		$	1.25			$	0.58			$	3.75			$	2.25
Diluted		$	1.24			$	0.58			$	3.72			$	2.24
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic			50,732				50,617				50,700				50,568
Diluted			51,104				50,967				51,060				50,795

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

	December 31, 2021				December 31, 2020
ASSETS
Cash and cash equivalents	$	78,696			$	19,479
Restricted cash		14,858				14,156
Receivables		6,871				5,224
Inventory		1,203,743				844,635
Investments in unconsolidated entities		55,616				46,443
Right-of-use assets - operating leases		4,596				2,538
Property and equipment, net		2,812				3,595
Earnest money deposits		26,008				22,242
Deferred income tax assets, net		15,741				15,376
Intangible assets, net		537				622
Goodwill		680				680
Other assets		11,709				13,857
Total assets	$	1,421,867			$	988,847
LIABILITIES AND EQUITY
Liabilities:
Accounts payable	$	45,682			$	24,521
Accrued expenses		61,351				40,416
Customer and builder deposits		64,610				38,131
Lease liabilities - operating leases		4,745				2,591
Borrowings on lines of credit, net		(738	)			106,687
Senior unsecured notes, net		335,446				111,056
Notes payable		210				2,125
Contingent consideration		—				368
Total liabilities		511,306				325,895
Commitments and contingencies
Redeemable noncontrolling interest in equity of consolidated subsidiary		21,867				13,543
Equity:
Green Brick Partners, Inc. stockholders’ equity
Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 and zero issued and outstanding as of December 31, 2021 and 2020, respectively		47,696				—
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,151,911 and 51,053,858 issued and 50,759,972 and 50,661,919 outstanding as of December 31, 2021 and 2020, respectively		512				511
Treasury stock, at cost, 391,939 shares		(3,167	)			(3,167	)
Additional paid-in capital		289,641				293,242
Retained earnings		539,866				349,656
Total Green Brick Partners, Inc. stockholders’ equity		874,548				640,242
Noncontrolling interests		14,146				9,167
Total equity		888,694				649,409
Total liabilities and equity	$	1,421,867			$	988,847

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,
			2021			2020		Change			%				2021			2020		Change				%
Home closings revenue		$	419,132		$	245,549		$	173,583		70.7	%		$	1,305,620		$	923,901		$	381,719			41.3	%
Mechanic’s lien contracts revenue			919			888			31		3.5	%			4,067			6,275			(2,208	)		(35.2	)%
Residential units revenue		$	420,051		$	246,437		$	173,614		70.4	%		$	1,309,687		$	930,176		$	379,511			40.8	%
New homes delivered			823			585			238		40.7	%			2,834			2,208			626			28.4	%
Average sales price of homes delivered		$	509.3		$	419.7		$	89.6		21.3	%		$	460.7		$	418.4		$	42.3			10.1	%

Land and Lots Revenue (dollars in thousands)		Three Months Ended December 31,													Twelve Months Ended December 31,
			2021			2020		Change				%				2021			2020		Change				%
Lots revenue		$	9,682		$	7,663		$	2,019			26.3	%		$	24,866		$	45,461		$	(20,595	)		(45.3	)%
Land revenue			22,518			—			22,518			100.0	%			68,323			384			67,939			17,692.4	%
Land and lots revenue		$	32,200		$	7,663		$	24,537			320.2	%		$	93,189		$	45,845		$	47,344			103.3	%
Lots closed			150			73			77			105.5	%			323			375			(52	)		(13.9	)%
Average sales price of lots closed		$	64.5		$	105.0		$	(40.5	)		(38.6	)%		$	77.0		$	121.2		$	(44.2	)		(36.5	)%

New Home Orders and Backlog (dollars in thousands)		Three Months Ended December 31,															Twelve Months Ended December 31,
			2021				2020			Change				%			2021			2020			Change			%
Net new home orders			476				848				(372	)		(43.9	)%		2,851			2,885			(34	)		(1.2	)%
Cancellation rate			12.3	%			8.6	%			3.7	%		43.0	%		7.7	%		13.0	%		(5.3	)%		(40.8	)%
Absorption rate per average active selling community per quarter			6.2				8.3				(2.1	)		(25.3	)%		8.2			7.5			0.7			9.3	%
Average active selling communities			77				102				(25	)		(24.5	)%		87			96			(9	)		(9.4	)%
Active selling communities at end of period			74				103				(29	)		(28.2	)%
Backlog		$	869,856			$	686,861			$	182,995			26.6	%
Backlog (units)			1,480				1,463				17			1.2	%
Average sales price of backlog		$	587.7			$	469.5			$	118.2			25.2	%

		December 31, 2021			December 31, 2020
Lots owned (1)
Central		17,767			6,823
Southeast		2,472			2,097
Total lots owned		20,239			8,920
Lots controlled (1)
Central		7,321			4,398
Southeast		1,061			1,150
Total lots controlled		8,382			5,548
Total lots owned and controlled (1)		28,621			14,468
Percentage of lots owned		70.7	%		61.7	%

(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 December 31, 2021 and December 31, 2020.

	December 31, 2021			December 31, 2020
Total lots owned	20,239			8,920
Add certain lots included in Total Lots Controlled
Land under option for future acquisition and development	3,826			740
Lots under option through unconsolidated development joint ventures	1,816			1,838
Total lots self-developed	25,881			11,498
Self-developed lots as a percentage of total lots owned and controlled	90.4	%		79.5	%

Reconciliation of Non-GAAP Financial Measures

The following table represents the non-GAAP measure of adjusted homebuilding gross margin for the three and twelve months ended December 31, 2021 and 2020 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,
			2021				2020				2021				2020
Residential units revenue		$	420,051			$	246,437			$	1,309,687			$	930,176
Less: Mechanic’s lien contracts revenue			(919	)			(888	)			(4,067	)			(6,275	)
Home closings revenue		$	419,132			$	245,549			$	1,305,620			$	923,901
Homebuilding gross margin		$	109,671			$	61,680			$	344,505			$	223,130
Homebuilding gross margin percentage			26.2	%			25.1	%			26.4	%			24.2	%
Homebuilding gross margin			109,671				61,680				344,505				223,130
Add back: Capitalized interest charged to cost of revenues			3,326				2,380				10,241				10,182
Adjusted homebuilding gross margin		$	112,997			$	64,060			$	354,746			$	233,312
Adjusted homebuilding gross margin percentage			27.0	%			26.1	%			27.2	%			25.3	%

The following table presents the pre-tax income for the three and twelve months ended December 31, 2021 and 2020, 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 December 31,						Twelve Months Ended December 31,
			2021			2020			2021			2020
Net income attributable to Green Brick Partners, Inc.		$	63,471		$	29,310		$	190,210		$	113,693
Income tax expense attributable to Green Brick Partners, Inc.			15,510			7,656			52,599			25,010
Pre-tax income attributable to Green Brick Partners, Inc.		$	78,981		$	36,966		$	242,809		$	138,703

About Green Brick Partners, Inc.

Green Brick Partners, Inc. is a diversified homebuilding and land development company operating through eight homebuilder brands in five major markets. 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 include statements regarding (i) our belief that our land position and back-log will position us to grow our business in 2022 and beyond, (ii) 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 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) continuing impacts from the COVID-19 pandemic; (2) general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; (3) changes in macroeconomic conditions, including interest rates and unemployment rates, that could adversely impact demand for new homes or the ability of potential buyers to qualify; (4) shortages, delays or increased costs of raw materials, especially in light of COVID-19 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; (5) a shortage of labor; (6) an inability to acquire land in our markets at anticipated prices or difficulty in obtaining land-use entitlements; (7) our inability to successfully execute our strategies, including an inability to grow our operations or expand our Trophy brand; (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 or a rise in interest rates; (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.

Contact: Richard A. Costello
Chief Financial Officer
(469) 573-6755

FAQ

What were Green Brick Partners' Q4 2021 revenues?

Green Brick Partners reported Q4 2021 revenues of $452.3 million, a 78% increase from the previous year.

What is the income before taxes for Green Brick in Q4 2021?

The income before taxes for Green Brick in Q4 2021 was $82.6 million, up 117.6% from Q4 2020.

How did the lots owned and controlled change for Green Brick?

The lots owned and controlled by Green Brick Partners increased by 97.8% as of December 31, 2021.

What was the percentage decrease in new home orders for Green Brick in Q4 2021?

New home orders for Green Brick Partners decreased by 43.9% in Q4 2021 compared to the previous year.

What was the SG&A expense ratio for Green Brick in Q4 2021?

Green Brick's SG&A expenses were reported at 8.8% of residential units revenue in Q4 2021, showing an improvement of 350 bps.