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Green Brick Partners, Inc. Reports Fourth Quarter 2020 Results

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QUARTERLY BASIC EARNINGS PER SHARE OF $0.58 VS $0.32, UP 81.3%

FISCAL YEAR 2020 ANNUAL RESULTS REACH ALL-TIME RECORD

PLANO, Texas, March 08, 2021 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (NASDAQ:GRBK) ("we," "Green Brick" or the "Company") today reported results for its fourth quarter and year ended December 31, 2020, which were in line with the preliminary results announced on January 22, 2021.

"Green Brick's robust growth and financial success reached new highs this year," said Jim Brickman, Chief Executive Officer. "The Company achieved a record diluted EPS of $2.24, up 93% year over year, representing a 34% compounded annual growth rate from our FY 2015 results. Demand for our homes has been tremendous at all price points and continues to climb with net new orders in January and February 2021 up 80% year over year, well above the 63% year over year increase seen in the last half of 2020."

"Thanks to our significant investment in land and lots this past year, our lots owned and controlled reached a record 14,468 lots, up 58% from just six months ago. This growth was accomplished despite a record 1,004 construction starts in the fourth quarter of 2020, a 99% increase over the fourth quarter of 2019. With both our construction and lot inventories entering 2021 at record levels, we fully expect to build upon our tremendous progress over this past year and continue our rapid growth trajectory into 2021."

Results for the Year Ended December 31, 2020:

For the twelve months ended December 31, 2020, basic net income attributable to Green Brick per common share ("EPS"), total revenues, residential units revenue, net income attributable to Green Brick, and backlog reflect a record for any twelve-month period since the Company's inception, as detailed below.

(Dollars in thousands, except per share data) Twelve Months Ended December 31,
  2020   2019   Increase
Net new home orders 2,885     1,923     50.0 %
New homes delivered 2,208     1,719     28.4 %
           
Total revenues $ 976,021     $ 791,660     23.3 %
Total cost of revenues 741,417     622,578     19.1 %
Total gross profit $ 234,604     $ 169,082     38.8 %
Net income attributable to Green Brick Partners, Inc. $ 113,693     $ 58,656     93.8 %
Basic net income attributable to Green Brick Partners, Inc. per share $ 2.25     $ 1.16     94.0 %
           
Residential units revenue $ 930,176     $ 759,830     22.4 %
Homebuilding gross margin percentage 24.2 %   21.4 %   280 bps  
                     
Backlog $ 686,861     $ 346,828     98.0 %
Lots owned and controlled 14,468     8,976     61.2 %
Homes under construction 1,780     1,297     37.2 %
Average active selling communities 96     86     11.6 %
Net income attributable to Green Brick Partners, Inc. as a percentage of the average total Green Brick Partners, Inc. stockholders' equity 19.5 %   11.8 %   770 bps  

Results for the Fourth Quarter Ended December 31, 2020:

Highlights for the three months ended December 31, 2020 included the following:

  • EPS for the three months ended December 31, 2020 was $0.58, a 81.3% increase compared to EPS of $0.32 for the three months ended December 31, 2019.
  • Net income attributable to Green Brick was $29.3 million, an increase of 84.1% from $15.9 million.
  • As compared to the three months ended December 31, 2019, total revenues were $254.1 million, an increase of 10.4% from $230.1 million; and gross profit was $63.9 million, an increase of 31.1% from $48.7 million.
  • Residential units revenue was $246.4 million, an increase of 10.4% compared to $223.3 million for the three months ended December 31, 2019. Land and lots revenue was $7.7 million, an increase of 11.8% compared to $6.9 million for the three months ended December 31, 2019.

"The strong operating results and financial success this year would not have been possible without access to reliable and cost-effective capital," said Rick Costello, Chief Financial Officer. "I am pleased to announce Green Brick has issued an additional $125 million in senior unsecured notes as of February 25, 2021. These notes will be due in 2028 at a fixed rate of 3.25%. With this expansion of our working capital, Green Brick has clearly demonstrated its capacity to grow its business with low-cost debt which is priced comparably to that of our low-leveraged large-cap peers, all while maintaining one of the lowest debt to capital ratios in the industry at 25.6%."

Mr. Costello continued, "During the fourth quarter of 2020 and continuing into March 2021, we have raised home prices more aggressively to further increase margins and attempt to slow down our sales pace. The Company intends for this increase in pricing to lead to lower new order levels, but higher profits, prospectively."

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. After an initial decline in orders and construction at the onset of the crisis, orders have subsequently achieved all-time highs due to historically low mortgage interest rates, the participation in home ownership in increasing amounts by the millennial generation, the desire of renters to leave high density living conditions, and the relative strength of the markets in which we operate. It has been difficult to keep up with demand. As construction follows orders, we expect closings to grow substantially beginning in the second quarter of 2021.

More disclosures related to the COVID-19 pandemic can be found in our Annual Report on Form 10-K for the year ended December 31, 2020 that will be filed with the Securities and Exchange Commission.

Share Repurchase Program

The Company also announced that the Board of Directors has authorized a new $50 million stock repurchase plan. This plan authorizes the Company to purchase, from time to time, until March 1, 2023, up to $50 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 plan may be modified or terminated by the Company's Board of Directors at any time in its sole discretion.

Earnings Conference Call:

We will host our earnings conference call to discuss our fourth quarter ended December 31, 2020 at 12:00 p.m. Eastern Time on Tuesday, March 9, 2021. 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 5479336. A replay of the call will be available from approximately 2:45 p.m. Eastern Time on March 9, 2021 through 11:59 p.m. Eastern Time on March 23, 2021. 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 5479336.

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:

Certain prior period amounts have been reclassified to conform to the current period presentation with no impact to net income in any period.

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

  (Unaudited)        
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
Residential units revenue $ 246,437     $ 223,270     $ 930,176     $ 759,830  
Land and lots revenue 7,663     6,852     45,845     31,830  
Total revenues 254,100     230,122     976,021     791,660  
Cost of residential units 184,534     176,221     705,866     597,884  
Cost of land and lots 5,712     5,191     35,551     24,694  
Total cost of revenues 190,246     181,412     741,417     622,578  
Total gross profit 63,854     48,710     234,604     169,082  
Selling, general and administrative expenses (30,416 )   (27,191 )   (112,134 )   (97,775 )
Change in fair value of contingent consideration (158 )   (3,157 )   (368 )   (4,906 )
Equity in income of unconsolidated entities 3,616     2,244     16,654     9,809  
Other income, net 1,053     1,976     4,057     8,119  
Income before income taxes 37,949     22,582     142,813     84,329  
Income tax expense 7,659     5,034     25,016     20,027  
Net income 30,290     17,548     117,797     64,302  
Less: Net income attributable to noncontrolling interests 980     1,628     4,104     5,646  
Net income attributable to Green Brick Partners, Inc. $ 29,310     $ 15,920     $ 113,693     $ 58,656  
               
Net income attributable to Green Brick Partners, Inc. per common share:              
Basic $ 0.58     $ 0.32     $ 2.25     $ 1.16  
Diluted $ 0.58     $ 0.31     $ 2.24     $ 1.16  
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:              
Basic 50,617     50,429     50,568     50,530  
Diluted 50,967     50,619     50,795     50,636  

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

  December 31, 2020   December 31, 2019
 
ASSETS
Cash and cash equivalents $ 19,479     $ 33,269  
Restricted cash 14,156     4,416  
Receivables 5,224     4,720  
Inventory 844,635     753,567  
Investments in unconsolidated entities 46,443     30,294  
Right-of-use assets - operating leases 2,538     3,462  
Property and equipment, net 3,595     4,309  
Earnest money deposits 22,242     14,686  
Deferred income tax assets, net 15,376     15,262  
Intangible assets, net 622     707  
Goodwill 680     680  
Other assets 13,857     10,167  
Total assets $ 988,847     $ 875,539  
 
LIABILITIES AND EQUITY
Liabilities:      
Accounts payable $ 24,521     $ 30,044  
Accrued expenses 40,416     24,656  
Customer and builder deposits 38,131     23,954  
Lease liabilities - operating leases 2,591     3,564  
Borrowings on lines of credit, net 106,687     164,642  
Senior unsecured notes, net 111,056     73,406  
Notes payable 2,125      
Contingent consideration 368     5,267  
Total liabilities 325,895     325,533  
Commitments and contingencies      
Redeemable noncontrolling interest in equity of consolidated subsidiary 13,543     13,611  
Equity:      
Green Brick Partners, Inc. stockholders' equity      
Preferred stock, $0.01 par value: 5,000,000 shares authorized; none issued and outstanding      
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,053,858 and 50,879,949 issued and 50,661,919 and 50,488,010 outstanding as of December 31, 2020 and December 31, 2019, respectively 511     509  
Treasury stock, at cost, 391,939 shares (3,167 )   (3,167 )
Additional paid-in capital 293,242     290,799  
Retained earnings 349,656     235,027  
Total Green Brick Partners, Inc. stockholders' equity 640,242     523,168  
Noncontrolling interests 9,167     13,227  
Total equity 649,409     536,395  
Total liabilities and equity $ 988,847     $ 875,539  
               

GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)

Residential Units Revenue and New Homes Delivered
Three Months Ended December 31,   Twelve Months Ended December 31,
(dollars in thousands) 2020   2019   Change   %   2020   2019   Change   %
Home closings revenue $ 245,549     $ 223,270     $ 22,279     10.0   %   $ 923,901     $ 752,273     $ 171,628     22.8   %
Mechanic's lien contracts revenue 888         888     100   %   6,275     7,557     (1,282 )   (17.0 ) %
Residential units revenue $ 246,437     $ 223,270     $ 23,167     10.4   %   $ 930,176     $ 759,830     $ 170,346     22.4   %
New homes delivered 585     514     71     13.8   %   2,208     1,719     489     28.4   %
Average sales price of homes delivered $ 419.7     $ 434.4     $ (14.7 )   (3.4 ) %   $ 418.4     $ 437.6     $ (19.2 )   (4.4 ) %


Land and Lots Revenue
Three Months Ended December 31,   Twelve Months Ended December 31,
(dollars in thousands) 2020   2019   Change   %   2020   2019   Change   %
Lots revenue $ 7,663     $ 6,852     $ 811     11.8 %   $ 45,461     $ 31,820     $ 13,641     42.9   %
Land revenue             %   384     10     374     3,740.0   %
Land and lots revenue $ 7,663     $ 6,852     $ 811     11.8 %   $ 45,845     $ 31,830     $ 14,015     44.0   %
Lots closed 73     45     28     62.2 %   375     211     164     77.7   %
Average sales price of lots closed $ 105.0     $ 152.3     $ (47.3 )   (31.1 )%   $ 121.2     $ 150.8     $ (29.6 )   (19.6 ) %


New Home Orders and Backlog
Three Months Ended December 31,   Twelve Months Ended December 31,
(dollars in thousands)   2020     2019   Change   %   2020   2019   Change   %
Net new home orders   848       590       258       43.7   %   2,885     1,923     962     50.0 %
Cancellation rate   8.6 %     10.6 %     (2.0 ) %   (18.9 ) %   13.0 %   12.9 %   0.1 %   0.8 %
Absorption rate per average active selling community per quarter   8.3       6.6       1.7       25.8   %   7.5     5.6     1.9     33.9 %
Average active selling communities   102       90       12       13.3   %   96     86     10     11.6 %
Active selling communities at end of period   103       95       8       8.4   %                
Backlog $ 686,861     $ 346,828     $ 340,033       98.0   %                
Backlog (units)   1,463       786       677       86.1   %                
Average sales price of backlog $ 469.5     $ 441.3     $ 28.2       6.4   %                


     December 31, 2020   December 31, 2019
Lots owned        
Central   6,823     4,223  
Southeast   2,097     2,196  
Total lots owned   8,920     6,419  
Lots controlled (1)        
Central   4,398     1,410  
Southeast   1,150     1,147  
Total lots controlled   5,548     2,557  
Total lots owned and controlled (1)   14,468     8,976  
Percentage of lots owned   61.7 %   71.5 %


 

(1)   Total lots 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, 2020 and 2019.

  December 31, 2020   December 31, 2019
Total lots owned 8,920     6,419  
Add certain lots included in Total Lots Controlled      
Land under option for future acquisition and development 740     431  
Lots under option through unconsolidated development joint ventures 1,838     552  
Total lots self-developed 11,498     7,402  
Self-developed lots as a percentage of total lots owned and controlled 79.5 %   82.5 %

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, 2020 and 2019 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.

  Three Months Ended December 31,   Twelve Months Ended December 31,
(Unaudited, in thousands): 2020   2019   2020   2019
Residential units revenue $ 246,437       $ 223,270     $ 930,176       $ 759,830    
Less: Mechanic's lien contracts revenue (888 )         (6,275 )     (7,557 )  
Home closings revenue $ 245,549       $ 223,270     $ 923,901       $ 752,273    
Homebuilding gross margin $ 61,680       $ 48,249     $ 223,130       $ 160,952    
Homebuilding gross margin percentage 25.1   %   21.6 %   24.2   %   21.4   %
               
Homebuilding gross margin 61,680       48,249     223,130       160,952    
Add back: Capitalized interest charged to cost of revenues 2,380       2,333     10,182       7,886    
Adjusted homebuilding gross margin 64,060       $ 50,582     $ 233,312       $ 168,838    
Adjusted homebuilding gross margin percentage 26.1   %   22.7 %   25.3   %   22.4   %

The following table presents the pre-tax income for the three and twelve months ended December 31, 2020 and 2019, 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.

  Three Months Ended December 31,   Twelve Months Ended December 31,
(Unaudited, in thousands): 2020   2019   2020   2019
Net income attributable to Green Brick Partners, Inc. $ 29,310     $ 15,920     $ 113,693     $ 58,656  
Income tax expense attributable to Green Brick Partners, Inc. 7,656     4,959     25,010     19,712  
Pre-tax income attributable to Green Brick Partners, Inc. $ 36,966     $ 20,879     $ 138,703     $ 78,368  
                               

The following table presents the non-GAAP measure of net income attributable to Green Brick Partners, Inc. for the twelve months ended December 31, 2020 and 2019, divided by the average total Green Brick Partners, Inc. stockholder's equity to calculate the Company's return on average equity. The Company believes this non-GAAP financial measure is relevant in measuring the Company's profitability in relation to stockholder's equity and should only be used to supplement the Company's GAAP results.

    Twelve Months Ended December 31,
(Unaudited, in thousands):   2020   2019
Net income attributable to Green Brick Partners, Inc.   $ 113,693     $ 58,656  
Beginning total Green Brick Partners, Inc. stockholders' equity   523,168     468,351  
Ending total Green Brick Partners, Inc. stockholders' equity   640,242     $ 523,168  
Average total Green Brick Partners, Inc. stockholders' equity   $ 581,705     $ 495,760  
Net income attributable to Green Brick Partners, Inc. as a percentage of the average total Green Brick Partners, Inc. stockholders' equity   19.5 %   11.8 %

About Green Brick Partners, Inc.

Green Brick Partners, Inc. (NASDAQ:GRBK) is a diversified homebuilding and land development company. Green Brick owns four homebuilders in Dallas, Texas (CB JENI Homes, Normandy Homes, Southgate Homes, and Trophy Signature Homes), as well as a controlling interest in homebuilders in Atlanta, Georgia (The Providence Group), Port St. Lucie, Florida (GHO Homes), and Dallas, Texas (Centre Living 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.

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," "forecast," "intend," "objective," "plan," "predict," "projection," "seek," "strategy," "target," "will" or other words of similar meaning. Forward-looking statements in this press release and the earnings call include statements regarding (i) the Company's strategy for growth, the drivers of that growth, and the impact on the Company's results, (ii) the Company's growth in closings, and the timing and significance of that growth. These forward-looking statements involve estimates and assumptions which may be affected by risks and uncertainties in the Company's 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 our buyers to qualify; (4) shortages, delays or increased costs of raw materials, especially in light of COVID-19, or increases in the Company's 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 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 the Company please see the Company's 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


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