Green Brick Partners, Inc. Reports Third Quarter 2022 Results
Green Brick Partners reported strong Q3 2022 results, with a diluted EPS of $1.57, up 65.3%, and a net income of $73.5 million, reflecting a 51.6% increase year-over-year. Total revenues reached $407.9 million, a 19.2% rise, driven by residential units revenue of $396.7 million, up 17.1%. The company's homebuilding gross margin improved by 550 bps to 32.4%, the highest among public builders. Despite challenges, the strong balance sheet enables potential market share growth as peers reduce activity.
- Diluted EPS of $1.57, up 65.3% year-over-year.
- Net income of $73.5 million, a 51.6% increase, showcasing strong profitability.
- Total revenues of $407.9 million, up 19.2%, driven by residential units revenue of $396.7 million.
- Record homebuilding gross margin of 32.4%, an increase of 550 bps, potentially the highest among public builders.
- Strong balance sheet with a 28.0% debt-to-total capital ratio, providing flexibility to manage pricing.
- Potential to increase active selling communities by 20% to 30% over the next four to five quarters.
- New homes delivered fell by 11.9% to 650 units, indicating a decrease in production.
- Backlog decreased by 44.6% to $564.0 million, raising concerns about future sales.
- Net new home orders dropped 41.4% to 404, impacting future revenue prospects.
- Cancellation rate increased by 155.1%, suggesting buyer hesitance in a challenging market.
Diluted EPS of
Net Income Attributable to Green Brick Partners of
Record Home Building Gross Margin Up 550 BPS to
Total Revenues of
PLANO, Texas, Nov. 02, 2022 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (NYSE: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its third quarter ended September 30, 2022.
“Green Brick delivered third quarter results that were a record for any third quarter with EPS of
“Most of our land and lots are in DFW and Atlanta, two of the best larger markets in the country. Our basis is generally lower than our peers, based on our conservative underwriting and our self-developing most of our lots,” continued Mr. Brickman. “Most of our communities are in more supply-constrained infill and other desirable locations. These are all critical factors for our industry leading
“Our strong balance sheet with a
Results for the Quarter Ended September 30, 2022:
| (Dollars in thousands, except per share data) | Three Months Ended September 30, | ||||||||||
| 2022 | 2021 | Change | |||||||||
| New homes delivered | 650 | 738 | (11.9 | )% | |||||||
| Total revenues | $ | 407,944 | $ | 342,340 | 19.2 | % | |||||
| Total cost of revenues | 274,625 | 251,004 | 9.4 | % | |||||||
| Total gross profit | $ | 133,319 | $ | 91,336 | 46.0 | % | |||||
| Income before income taxes | $ | 97,596 | $ | 65,158 | 49.8 | % | |||||
| Net income attributable to Green Brick Partners, Inc. | $ | 73,520 | $ | 48,507 | 51.6 | % | |||||
| Diluted net income attributable to Green Brick Partners, Inc. per common share | $ | 1.57 | $ | 0.95 | 65.3 | % | |||||
| Residential units revenue | $ | 396,749 | $ | 338,900 | 17.1 | % | |||||
| Average sales price of homes delivered | $ | 607.3 | $ | 458.1 | 32.6 | % | |||||
| Homebuilding gross margin percentage | 32.4 | % | 26.9 | % | 550 bps | ||||||
| Backlog | $ | 564,026 | $ | 1,017,220 | $ | (453,194 | ) | ||||
| Homes under construction | 2,276 | 2,555 | (10.9 | )% | |||||||
Results for the Nine Months Ended September 30, 2022:
For the nine months ended September 30, 2022, our net income attributable to Green Brick per diluted common share reflects a record through the first three quarters of any year since the Company’s inception, as detailed below.
| (Dollars in thousands, except per share data) | Nine Months Ended September 30, | |||||||||
| 2022 | 2021 | Change | ||||||||
| New homes delivered | 2,189 | 2,011 | 8.9 | % | ||||||
| Total revenues | $ | 1,326,704 | $ | 950,625 | 39.6 | % | ||||
| Total cost of revenues | 916,133 | 699,324 | 31.0 | % | ||||||
| Total gross profit | $ | 410,571 | $ | 251,301 | 63.4 | % | ||||
| Income before income taxes | $ | 318,511 | $ | 174,397 | 82.6 | % | ||||
| Net income attributable to Green Brick Partners, Inc. | $ | 236,353 | $ | 126,739 | 86.5 | % | ||||
| Diluted net income attributable to Green Brick Partners, Inc. per common share | $ | 4.82 | $ | 2.48 | 94.4 | % | ||||
| Residential units revenue | $ | 1,273,925 | $ | 889,636 | 43.2 | % | ||||
| Average sales price of homes delivered | $ | 579.4 | $ | 440.8 | 31.4 | % | ||||
| Homebuilding gross margin percentage | 31.1 | % | 26.5 | % | 460 bps | |||||
| Selling, general and administrative expenses as a percentage of residential units revenue | 9.4 | % | 10.9 | % | -150 bps | |||||
Earnings Conference Call:
We will host our earnings conference call to discuss our third quarter ended September 30, 2022 at 12:00 p.m. Eastern Time on Thursday, November 3rd, 2022. 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/570044635
A telephone replay of the call will be available through December 3rd, 2022. 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Residential units revenue | $ | 396,749 | $ | 338,900 | $ | 1,273,925 | $ | 889,636 | ||||||||
| Land and lots revenue | 11,195 | 3,440 | 52,779 | 60,989 | ||||||||||||
| Total revenues | 407,944 | 342,340 | 1,326,704 | 950,625 | ||||||||||||
| Cost of residential units | 268,536 | 247,899 | 879,108 | 654,136 | ||||||||||||
| Cost of land and lots | 6,089 | 3,105 | 37,025 | 45,188 | ||||||||||||
| Total cost of revenues | 274,625 | 251,004 | 916,133 | 699,324 | ||||||||||||
| Total gross profit | 133,319 | 91,336 | 410,571 | 251,301 | ||||||||||||
| Selling, general and administrative expenses | (43,251 | ) | (33,709 | ) | (119,314 | ) | (97,182 | ) | ||||||||
| Equity in income of unconsolidated entities | 5,697 | 5,555 | 19,907 | 14,039 | ||||||||||||
| Other income, net | 1,831 | 1,976 | 7,347 | 6,239 | ||||||||||||
| Income before income taxes | 97,596 | 65,158 | 318,511 | 174,397 | ||||||||||||
| Income tax expense | 16,963 | 13,898 | 65,678 | 37,093 | ||||||||||||
| Net income | 80,633 | 51,260 | 252,833 | 137,304 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | 7,113 | 2,753 | 16,480 | 10,565 | ||||||||||||
| Net income attributable to Green Brick Partners, Inc. | $ | 73,520 | $ | 48,507 | $ | 236,353 | $ | 126,739 | ||||||||
| Net income attributable to Green Brick Partners, Inc. per common share: | ||||||||||||||||
| Basic | $ | 1.58 | $ | 0.96 | $ | 4.86 | $ | 2.50 | ||||||||
| Diluted | $ | 1.57 | $ | 0.95 | $ | 4.82 | $ | 2.48 | ||||||||
| Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share: | ||||||||||||||||
| Basic | 46,032 | 50,732 | 48,205 | 50,689 | ||||||||||||
| Diluted | 46,390 | 51,079 | 48,544 | 51,046 | ||||||||||||
GREEN BRICK PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| September 30, 2022 | December 31, 2021 | |||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 48,203 | $ | 77,166 | ||
| Restricted cash | 18,739 | 16,388 | ||||
| Receivables | 7,239 | 6,871 | ||||
| Inventory | 1,453,056 | 1,203,743 | ||||
| Investments in unconsolidated entities | 69,250 | 55,616 | ||||
| Right-of-use assets - operating leases | 3,800 | 4,596 | ||||
| Property and equipment, net | 2,894 | 2,812 | ||||
| Earnest money deposits | 25,203 | 26,008 | ||||
| Deferred income tax assets, net | 15,741 | 15,741 | ||||
| Intangible assets, net | 473 | 537 | ||||
| Goodwill | 680 | 680 | ||||
| Other assets | 12,457 | 11,709 | ||||
| Total assets | $ | 1,657,735 | $ | 1,421,867 | ||
| LIABILITIES AND EQUITY | ||||||
| Liabilities: | ||||||
| Accounts payable | $ | 60,984 | $ | 45,682 | ||
| Accrued expenses | 99,425 | 61,351 | ||||
| Customer and builder deposits | 43,622 | 64,610 | ||||
| Lease liabilities - operating leases | 3,972 | 4,745 | ||||
| Borrowings on lines of credit, net | 42,902 | (738 | ) | |||
| Senior unsecured notes, net | 335,729 | 335,446 | ||||
| Notes payable | 14,638 | 210 | ||||
| Total liabilities | 601,272 | 511,306 | ||||
| Commitments and contingencies | ||||||
| Redeemable noncontrolling interest in equity of consolidated subsidiary | 25,660 | 21,867 | ||||
| Equity: | ||||||
| Green Brick Partners, Inc. stockholders’ equity | ||||||
| Preferred stock, | 47,696 | 47,696 | ||||
| Common stock, | 460 | 512 | ||||
| Treasury stock, at cost: none as of September 30, 2022 and 391,939 shares as of December 31, 2021 | — | (3,167 | ) | |||
| Additional paid-in capital | 261,570 | 289,641 | ||||
| Retained earnings | 699,514 | 539,866 | ||||
| Total Green Brick Partners, Inc. stockholders’ equity | 1,009,240 | 874,548 | ||||
| Noncontrolling interests | 21,563 | 14,146 | ||||
| Total equity | 1,030,803 | 888,694 | ||||
| Total liabilities and equity | $ | 1,657,735 | $ | 1,421,867 | ||
GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
| Residential Units Revenue and New Homes Delivered (dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2022 | 2021 | Change | % | 2022 | 2021 | Change | % | ||||||||||||||||||
| Home closings revenue | $ | 394,731 | $ | 338,075 | $ | 56,656 | 16.8 | % | $ | 1,268,329 | $ | 886,488 | $ | 381,841 | 43.1 | % | |||||||||
| Mechanic’s lien contracts revenue | 2,018 | 825 | 1,193 | 144.6 | % | 5,596 | 3,148 | 2,448 | 77.8 | % | |||||||||||||||
| Residential units revenue | $ | 396,749 | $ | 338,900 | $ | 57,849 | 17.1 | % | $ | 1,273,925 | $ | 889,636 | $ | 384,289 | 43.2 | % | |||||||||
| New homes delivered | 650 | 738 | (88 | ) | (11.9 | )% | 2,189 | 2,011 | 178 | 8.9 | % | ||||||||||||||
| Average sales price of homes delivered | $ | 607.3 | $ | 458.1 | $ | 149.2 | 32.6 | % | $ | 579.4 | $ | 440.8 | $ | 138.6 | 31.4 | % | |||||||||
| Land and Lots Revenue (dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2022 | 2021 | Change | % | 2022 | 2021 | Change | % | ||||||||||||||||||
| Lots revenue | $ | 3,991 | $ | 2,126 | $ | 1,865 | 87.7 | % | $ | 18,027 | $ | 15,184 | $ | 2,843 | 18.7 | % | |||||||||
| Land revenue | 7,204 | 1,314 | 5,890 | 448.2 | % | 34,752 | 45,805 | (11,053 | ) | (24.1 | )% | ||||||||||||||
| Land and lots revenue | $ | 11,195 | $ | 3,440 | $ | 7,755 | 225.4 | % | $ | 52,779 | $ | 60,989 | $ | (8,210 | ) | (13.5 | )% | ||||||||
| Lots closed | 57 | 31 | 26 | 83.9 | % | 274 | 173 | 101 | 58.4 | % | |||||||||||||||
| Average sales price of lots closed | $ | 70.0 | $ | 68.6 | $ | 1.4 | 2.0 | % | $ | 65.8 | $ | 87.8 | $ | (22.0 | ) | (25.1 | )% | ||||||||
| New Home Orders and Backlog (dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2022 | 2021 | Change | % | 2022 | 2021 | Change | % | |||||||||||||||||||||||
| Net new home orders | 404 | 689 | (285 | ) | (41.4 | )% | 1,550 | 2,375 | (825 | ) | (34.7 | )% | ||||||||||||||||||
| Revenue from new net home orders | $ | 251,276 | $ | 380,945 | $ | (129,669 | ) | (34.0 | )% | $ | 962,497 | $ | 1,216,845 | $ | (254,348 | ) | (20.9 | )% | ||||||||||||
| Average selling price of net new home orders | $ | 622.0 | $ | 552.9 | $ | 69.1 | 12.5 | % | $ | 621.0 | $ | 512.4 | $ | 108.6 | 21.2 | % | ||||||||||||||
| Cancellation rate | 17.6 | % | 6.9 | % | 10.7 | % | 155.1 | % | 11.8 | % | 6.7 | % | 5.1 | % | 76.1 | % | ||||||||||||||
| Absorption rate per average active selling community per quarter | 5.3 | 8.2 | (2.9 | ) | (35.4 | )% | 6.8 | 8.8 | (2.0 | ) | (22.7 | )% | ||||||||||||||||||
| Average active selling communities | 76 | 84 | (8 | ) | (9.5 | )% | 76 | 90 | (14 | ) | (15.6 | )% | ||||||||||||||||||
| Active selling communities at end of period | 74 | 80 | (6 | ) | (7.5 | )% | ||||||||||||||||||||||||
| Backlog | $ | 564,026 | $ | 1,017,220 | $ | (453,194 | ) | (44.6 | )% | |||||||||||||||||||||
| Backlog (units) | 841 | 1,827 | (986 | ) | (54.0 | )% | ||||||||||||||||||||||||
| Average sales price of backlog | $ | 670.7 | $ | 556.8 | $ | 113.9 | 20.5 | % | ||||||||||||||||||||||
| September 30, 2022 | December 31, 2021 | |||||
| Lots owned (1) | ||||||
| Central | 18,998 | 17,767 | ||||
| Southeast | 2,583 | 2,472 | ||||
| Total lots owned | 21,581 | 20,239 | ||||
| Lots controlled (1) | ||||||
| Central | 3,691 | 7,321 | ||||
| Southeast | 618 | 1,061 | ||||
| Total lots controlled | 4,309 | 8,382 | ||||
| Total lots owned and controlled (1) | 25,890 | 28,621 | ||||
| Percentage of lots owned | 83.4 | % | 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 September 30, 2022 and December 31, 2021.
| September 30, 2022 | December 31, 2021 | ||||
| Total lots owned | 21,581 | 20,239 | |||
| Add certain lots included in Total Lots Controlled | |||||
| Land under option for future acquisition and development | 307 | 3,826 | |||
| Lots under option through unconsolidated development joint ventures | 1,718 | 1,816 | |||
| Total lots self-developed | 23,606 | 25,881 | |||
| Self-developed lots as a percentage of total lots owned and controlled | 91.2 | % | 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 and nine months ended September 30, 2022 and 2021 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.
| (Unaudited, in thousands): | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Residential units revenue | $ | 396,749 | $ | 338,900 | $ | 1,273,925 | $ | 889,636 | ||||||||
| Less: Mechanic’s lien contracts revenue | (2,018 | ) | (825 | ) | (5,596 | ) | (3,148 | ) | ||||||||
| Home closings revenue | $ | 394,731 | $ | 338,075 | $ | 1,268,329 | $ | 886,488 | ||||||||
| Homebuilding gross margin | $ | 127,861 | $ | 90,875 | $ | 393,940 | $ | 234,834 | ||||||||
| Homebuilding gross margin percentage | 32.4 | % | 26.9 | % | 31.1 | % | 26.5 | % | ||||||||
| Homebuilding gross margin | 127,861 | 90,875 | 393,940 | 234,834 | ||||||||||||
| Add back: Capitalized interest charged to cost of revenues | 3,105 | 2,569 | 10,303 | 6,915 | ||||||||||||
| Adjusted homebuilding gross margin | $ | 130,966 | $ | 93,444 | $ | 404,243 | $ | 241,749 | ||||||||
| Adjusted homebuilding gross margin percentage | 33.2 | % | 27.6 | % | 31.9 | % | 27.3 | % | ||||||||
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
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 future increases in inventory and the peaking of construction costs; (iii) the ability to mitigate future inventory buildup, including reductions in single-family starts; (iv) expected closings of our current backlog, and our ability to manage such closings; (v) our priorities and strategies for growth, the drivers of that growth, and the impact on our future results; (vi) our expectation to sustain our industry-leading margins and debt-to-total capital ratios, as well as the expected impacts of incentives on our margins; (vii) our flexibility to capitalize on market opportunities and grow our market share as well as the impact on our financial and operational performance; (viii) our beliefs that our lot and land positions will support future growth and provide us with advantages on margins and adaptability; (ix) our beliefs that we operate in the most advantageous markets in the U.S. and the resilience of our markets in both stronger and weaker economies; (x) our expectations related to starts in the fourth quarter and into 2023; (xi) our expectations for lot completions and opportunities to increase active selling communities during the remainder of 2022 and into 2023; (xii) our beliefs regarding our position to manage costs, prices and cycle times; 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 increasing interest rates, inflation, and the COVID-19 pandemic 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; (10) a lack of 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; (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
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