GRBK - Green Brick Partners Inc. Reports Second Quarter Results and Closes $75 Million of 4.00% Senior Notes
EPS OF $0.29 PER SHARE
19.8% INCREASE IN RESIDENTIAL UNITS REVENUE
17.1% INCREASE IN NEW HOME ORDERS
RECORD QUARTERLY BACKLOG AND RESIDENTIAL UNITS REVENUE
EXPECTING 21% COMMUNITY GROWTH
PLANO, Texas, Aug. 08, 2019 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported results for its second quarter ended June 30, 2019.
Results for the Second Quarter Ended June 30, 2019:
- Basic net income attributable to Green Brick per common share (“EPS”) for the three months ended June 30, 2019 was $0.29, which equals the record quarterly earnings of $0.29 for the three months ended June 30, 2018.
- For the three months ended June 30, 2019, total revenue was $183.5 million, a record for any second quarter and an increase of 16.7%, compared to $157.3 million for the three months ended June 30, 2018; gross profit was $40.3 million, a decrease of 1.9%, compared to $41.1 million for the three months ended June 30, 2018; and net income attributable to Green Brick was $14.5 million, a decrease of 2.8%, compared to $14.9 million for the three months ended June 30, 2018.
- Residential units revenue for the three months ended June 30, 2019 was $175.1 million, a record for any quarter and an increase of 19.8%, compared to $146.2 million for the three months ended June 30, 2018. Land and lots revenue for the three months ended June 30, 2019 was $8.5 million, a decrease of 24.1%, compared to $11.1 million for the three months ended June 30, 2018.
- The dollar value of backlog units as of June 30, 2019 was $331.3 million, a record for any quarter and an increase of 5.4% compared to $314.2 million as of June 30, 2018.
- Average active selling communities increased from 62 communities as of June 30, 2018 to 77 communities as of June 30, 2019, an increase of 24.2%.
- Homes under construction increased to 1,214 as of June 30, 2019, a record for any quarter and a 22.9% increase compared to 988 as of June 30, 2018.
Results for the Six Months Ended June 30, 2019:
- Basic net income attributable to Green Brick per common share (“EPS”) for the six months ended June 30, 2019 was $0.53, an increase of 1.9% compared to $0.52 for the six months ended June 30, 2018.
- For the six months ended June 30, 2019, total revenue was $352.1 million, an increase of 22.9%, compared to $286.5 million for the six months ended June 30, 2018; gross profit was $75.6 million, an increase of 2.6%, compared to $73.7 million for the six months ended June 30, 2018; and net income attributable to Green Brick was $27.1 million, an increase of 3.8%, compared to $26.1 million for the six months ended June 30, 2018.
- Residential units revenue for the six months ended June 30, 2019 was $336.6 million, a record for any six-month period and an increase of 25.9%, compared to $267.4 million for the six months ended June 30, 2018. Land and lots revenue for the six months ended June 30, 2019 was $15.5 million, a decrease of 18.6%, compared to $19.0 million for the six months ended June 30, 2018.
“Our second quarter performance was highlighted by backlog of $331.3 million and residential units revenue of $175.1 million, which are both records for any quarter of our existence. Our adjusted homebuilding gross margin increased 180 basis points to 23.3% in the second quarter of 2019 from 21.5% in the first quarter of 2019”, said Jim Brickman, CEO of Green Brick Partners, Inc. “We expect earnings growth to inflect positively starting in the third quarter of 2019 on a year over year basis. The Company now controls over 1,600 homesites for Trophy Signature Homes, our entry-level platform; as a result, we expect Trophy to significantly contribute to 2020 earnings”, continued Mr. Brickman. “Further, we believe that we will grow from 76 communities on January 1, 2019 to 92 communities by either the end of this year or the end of the first quarter of 2020, subject to weather. This 21% community growth is being accomplished while maintaining a very conservative balance sheet with net debt to total capital of only 28.7% as of June 30, 2019”.
“We are excited to announce that we have established a relationship with one of the largest and most reputable institutions in the world to help fund our future growth. On August 8, 2019, we privately issued $75.0 million of senior unsecured notes due in 2026 to Prudential Private Capital. Our superior credit metrics allowed us to price 7-year notes at a fixed rate at 4.00%. This rate is only slightly higher than the long-term rates paid by the lower-leveraged large-cap builders and lower than comparable long-term rates paid by all small-cap and all mid-cap builders”, said Rick Costello, CFO of Green Brick Partners, Inc.
Earnings Conference Call:
We will host our earnings conference call to discuss our second quarter ended June 30, 2019 at 12:00 p.m. Eastern Time on Friday, August 9, 2019. 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 2497668. A replay of the call will be available from approximately 3:30 p.m. Eastern Time on August 9, 2019 through 11:59 p.m. Eastern Time on August 16, 2019. 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 2497668.
Reconciliation of 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 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 2019, the Company reclassified its sales commission expenses from cost of residential units to selling, general and administrative expense in the condensed consolidated statements of income in order to be more comparable with a majority of its peers. There was no impact to net income from the reclassification in any period. Following this reclassification, the Company’s adjusted homebuilding gross margin was 23.3% and 22.4% for the three and six months ended June 30, 2019, respectively. Sales commission expenses represented 4.2% and 4.1% of the residential units revenue for the three and six months ended June 30, 2019, respectively.
GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| Residential units revenue |
| $ |
| 175,054 |
| $ |
| 146,180 |
| $ |
| 336,642 |
| $ |
| 267,444 |
| Land and lots revenue |
| 8,452 |
| 11,132 |
| 15,492 |
| 19,031 |
| Total revenues |
| 183,506 |
| 157,312 |
| 352,134 |
| 286,475 |
| Cost of residential units |
| 136,592 |
| 108,165 |
| 264,420 |
| 198,068 |
| Cost of land and lots |
| 6,633 |
| 8,076 |
| 12,067 |
| 14,702 |
| Total cost of revenues |
| 143,225 |
| 116,241 |
| 276,487 |
| 212,770 |
| Total gross profit |
| 40,281 |
| 41,071 |
| 75,647 |
| 73,705 |
| Selling, general and administrative expense |
| 22,494 |
| 20,018 |
| 46,026 |
| 38,147 |
| Change in fair value of contingent consideration |
| (197 |
| ) |
| — |
| 257 |
| — |
| Operating profit |
| 17,984 |
| 21,053 |
| 29,364 |
| 35,558 |
| Equity in income of unconsolidated entities |
| 2,697 |
| 2,279 |
| 4,543 |
| 3,815 |
| Other income, net |
| 775 |
| 898 |
| 2,868 |
| 1,468 |
| Income before income taxes |
| 21,456 |
| 24,230 |
| 36,775 |
| 40,841 |
| Income tax expense |
| 5,332 |
| 5,235 |
| 9,160 |
| 8,607 |
| Net income |
| 16,124 |
| 18,995 |
| 27,615 |
| 32,234 |
| Less: Net income attributable to noncontrolling interests |
| 1,664 |
| 4,126 |
| 550 |
| 6,162 |
| Net income attributable to Green Brick Partners, Inc. |
| $ |
| 14,460 |
| $ |
| 14,869 |
| $ |
| 27,065 |
| $ |
| 26,072 |
| Net income attributable to Green Brick Partners, Inc. per common share: |
| Basic |
| $ |
| 0.29 |
| $ |
| 0.29 |
| $ |
| 0.53 |
| $ |
| 0.52 |
| Diluted |
| $ |
| 0.29 |
| $ |
| 0.29 |
| $ |
| 0.53 |
| $ |
| 0.51 |
| Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share: |
| Basic |
| 50,655 |
| 50,664 |
| 50,609 |
| 50,620 |
| Diluted |
| 50,724 |
| 50,783 |
| 50,665 |
| 50,751 |
GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| June 30, 2019 |
| December 31, 2018 |
| ASSETS |
| Cash |
| $ |
| 34,383 |
| $ |
| 38,315 |
| Restricted cash |
| 4,469 |
| 3,440 |
| Receivables |
| 5,009 |
| 4,842 |
| Inventory |
| 719,878 |
| 668,961 |
| Investment in unconsolidated entities |
| 23,139 |
| 20,269 |
| Right-of-use assets - operating leases |
| 3,727 |
| — |
| Property and equipment, net |
| 4,261 |
| 4,690 |
| Earnest money deposits |
| 12,911 |
| 16,793 |
| Deferred income tax assets, net |
| 15,943 |
| 16,499 |
| Intangible assets, net |
| 750 |
| 856 |
| Goodwill |
| 680 |
| 680 |
| Other assets |
| 7,811 |
| 8,681 |
| Total assets |
| $ |
| 832,961 |
| $ |
| 784,026 |
| LIABILITIES AND EQUITY |
| Liabilities: |
| Accounts payable |
| $ |
| 25,422 |
| $ |
| 26,091 |
| Accrued expenses |
| 27,783 |
| 29,201 |
| Customer and builder deposits |
| 31,578 |
| 31,978 |
| Lease liabilities - operating leases |
| 3,751 |
| — |
| Borrowings on lines of credit, net |
| 232,657 |
| 200,386 |
| Contingent consideration |
| 618 |
| 2,207 |
| Total liabilities |
| 321,809 |
| 289,863 |
| Commitments and contingencies |
| Redeemable noncontrolling interest in equity of consolidated subsidiary |
| 12,509 |
| 8,531 |
| 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; 50,879,949 and 50,719,884 issued and 50,696,011 and 50,583,128 outstanding as of June 30, 2019 and December 31, 2018, respectively |
| 509 |
| 507 |
| Treasury stock, at cost, 183,938 and 136,756 shares as of June 30, 2019 and December 31, 2018, respectively |
| (1,369 |
| ) |
| (981 |
| ) |
| Additional paid-in capital |
| 289,739 |
| 291,299 |
| Retained earnings |
| 204,591 |
| 177,526 |
| Total Green Brick Partners, Inc. stockholders’ equity |
| 493,470 |
| 468,351 |
| Noncontrolling interests |
| 5,173 |
| 17,281 |
| Total equity |
| 498,643 |
| 485,632 |
| Total liabilities and equity |
| $ |
| 832,961 |
| $ |
| 784,026 |
GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
| Residential Units Revenue and New Homes Delivered (dollars in thousands) |
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| 2019 |
| 2018 |
| Change |
| % |
| 2019 |
| 2018 |
| Change |
| % |
| Home closings revenue |
| $ |
| 172,490 |
| $ |
| 143,878 |
| $ |
| 28,612 |
| 19.9 |
| % |
| $ |
| 331,723 |
| $ |
| 264,244 |
| $ |
| 67,479 |
| 25.5 |
| % |
| Mechanic’s lien contracts revenue |
| 2,564 |
| 2,302 |
| 262 |
| 11.4 |
| % |
| 4,919 |
| 3,200 |
| 1,719 |
| 53.7 |
| % |
| Residential units revenue |
| $ |
| 175,054 |
| $ |
| 146,180 |
| $ |
| 28,874 |
| 19.8 |
| % |
| 336,642 |
| 267,444 |
| 69,198 |
| 25.9 |
| % |
| New homes delivered |
| 394 |
| 327 |
| 67 |
| 20.5 |
| % |
| 762 |
| 594 |
| 168 |
| 28.3 |
| % |
| Average sales price of homes delivered |
| $ |
| 437.8 |
| $ |
| 440.0 |
| $ |
| (2.2 |
| ) |
| (0.5 |
| )% |
| $ |
| 435.3 |
| $ |
| 444.9 |
| $ |
| (9.6 |
| ) |
| (2.2 |
| )% |
| Land and Lots Revenue (dollars in thousands) |
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| 2019 |
| 2018 |
| Change |
| % |
| 2019 |
| 2018 |
| Change |
| % |
| Lots revenue |
| $ |
| 8,452 |
| $ |
| 8,453 |
| $ |
| (1 |
| ) |
| — |
| % |
| $ |
| 15,482 |
| $ |
| 15,202 |
| $ |
| 280 |
| 1.8 |
| % |
| Land revenue |
| — |
| 2,679 |
| (2,679 |
| ) |
| (100.0 |
| )% |
| 10 |
| 3,829 |
| (3,819 |
| ) |
| (99.7 |
| )% |
| Land and lots revenue |
| $ |
| 8,452 |
| $ |
| 11,132 |
| $ |
| (2,680 |
| ) |
| (24.1 |
| )% |
| 15,492 |
| 19,031 |
| (3,539 |
| ) |
| (18.6 |
| )% |
| Lots closed |
| 58 |
| 53 |
| 5 |
| 9.4 |
| % |
| 105 |
| 101 |
| 4 |
| 4.0 |
| % |
| Average sales price of lots closed |
| $ |
| 145.7 |
| $ |
| 159.5 |
| $ |
| (13.8 |
| ) |
| (8.6 |
| )% |
| $ |
| 147.4 |
| $ |
| 150.5 |
| $ |
| (3.1 |
| ) |
| (2.0 |
| )% |
| New Home Orders and Backlog (dollars in thousands) |
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| 2019 |
| 2018 |
| Change |
| % |
| 2019 |
| 2018 |
| Change |
| % |
| Net new home orders |
| 453 |
| 387 |
| 66 |
| 17.1 |
| % |
| 898 |
| 821 |
| 77 |
| 9.4 |
| % |
| Cancellation rate |
| 13.7 |
| % |
| 12.6 |
| % |
| 1.1 |
| % |
| 8.7 |
| % |
| 14.1 |
| % |
| 11.4 |
| % |
| 2.7 |
| % |
| 23.7 |
| % |
| Absorption rate per active selling community |
| 5.9 |
| 6.2 |
| (0.3 |
| ) |
| (4.8 |
| )% |
| 11.8 |
| 13.2 |
| (1.4 |
| ) |
| (10.6 |
| )% |
| Average active selling communities |
| 77 |
| 62 |
| 15 |
| 24.2 |
| % |
| 76 |
| 62 |
| 14 |
| 22.6 |
| % |
| Active selling communities at end of period |
| 75 |
| 69 |
| 6 |
| 8.7 |
| % |
| 75 |
| 69 |
| 6 |
| 8.7 |
| % |
| Backlog |
| $ |
| 331,259 |
| $ |
| 314,177 |
| $ |
| 17,082 |
| 5.4 |
| % |
| Backlog (units) |
| 717 |
| 700 |
| 17 |
| 2.4 |
| % |
| Average sales price of backlog |
| $ |
| 462.0 |
| $ |
| 448.8 |
| $ |
| 13.2 |
| 2.9 |
| % |
| June 30, 2019 |
| December 31, 2018 |
| Lots owned |
| Central |
| 4,250 |
| 4,447 |
| Southeast |
| 1,877 |
| 1,788 |
| Total lots owned |
| 6,127 |
| 6,235 |
| Lots controlled |
| Central |
| 1,528 |
| 853 |
| Southeast |
| 1,522 |
| 990 |
| Total lots controlled |
| 3,050 |
| 1,843 |
| Total lots owned and controlled (1) |
| 9,177 |
| 8,078 |
| Percentage of lots owned |
| 66.8 |
| % |
| 77.2 |
| % |
________________________
(1) Total lots excludes lots with homes under construction.
Reconciliation of Non-GAAP Financial Measures
The following table represents the non-GAAP measure of adjusted pre-tax income for the three and six months ended June 30, 2019 and 2018, which represents net income attributable to Green Brick for the period, excluding the provision for income taxes attributable to Green Brick and one-time transaction expenses related to a public secondary offering of the Company’s shares in 2018.
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| (Unaudited, in thousands): |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| Net income attributable to Green Brick |
| $ |
| 14,460 |
| $ |
| 14,869 |
| $ |
| 27,065 |
| $ |
| 26,072 |
| Income tax expense attributable to Green Brick |
| 5,216 |
| 5,149 |
| 9,010 |
| 8,484 |
| Transaction expenses |
| — |
| 705 |
| — |
| 827 |
| Adjusted pre-tax income attributable to Green Brick |
| $ |
| 19,676 |
| $ |
| 20,723 |
| $ |
| 36,075 |
| $ |
| 35,383 |
The following table represents the non-GAAP measure of adjusted homebuilding gross margin for the three and six months ended June 30, 2019 and 2018 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| (Unaudited, in thousands): |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| Residential units revenue |
| $ |
| 175,054 |
| $ |
| 146,180 |
| $ |
| 336,642 |
| $ |
| 267,444 |
| Less: Mechanic’s lien contracts revenue |
| (2,564 |
| ) |
| (2,302 |
| ) |
| (4,919 |
| ) |
| (3,200 |
| ) |
| Home closings revenue |
| $ |
| 172,490 |
| $ |
| 143,878 |
| $ |
| 331,723 |
| $ |
| 264,244 |
| Homebuilding gross margin |
| $ |
| 37,849 |
| $ |
| 37,563 |
| $ |
| 70,999 |
| $ |
| 68,786 |
| Add back: Capitalized interest charged to cost of revenues |
| 2,333 |
| 852 |
| 3,340 |
| 1,611 |
| Adjusted homebuilding gross margin |
| $ |
| 40,182 |
| $ |
| 38,415 |
| $ |
| 74,339 |
| $ |
| 70,397 |
| Adjusted homebuilding gross margin percentage |
| 23.3 |
| % |
| 26.7 |
| % |
| 22.4 |
| % |
| 26.6 |
| % |
About Green Brick Partners, Inc.:
Green Brick Partners, Inc. (Nasdaq: GRBK) is a diversified homebuilding and land development company. Green Brick owns a controlling interest in five homebuilders in Dallas, Texas (CB JENI Homes, Normandy Homes, Southgate Homes, Centre Living Homes, and Trophy Signature Homes), as well as a homebuilder in Atlanta, Georgia (The Providence Group) and 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, Providence Group Title, and Green Brick 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’s homebuilding partners and financial services platforms, please visit https://greenbrickpartners.com/team-builders/.
Forward-Looking and Cautionary Statements:
Any statements in this press release about Green Brick’s expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance that are not historical facts are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “will,” “should,” “predicts,” “potential,” “expects,” “future,” “positioned,” “believes,” “projects,” “estimates” and similar expressions, as well as statements in the future tense. These statements are based on assumptions that Green Brick has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances, as of the date of this press release. All such forward-looking statements involve estimates and assumptions that are subject to factors that could cause actual results to differ materially from the results expressed in the statements, and you should not place undue reliance on any such forward-looking statements. Among the factors that could cause actual results to differ materially are the following: general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; the failure to recruit, retain and develop highly skilled and competent employees; management and integration of acquisitions; labor and raw material shortages; an inability to acquire land for reasonable prices; an inability to develop and sell communities; government regulation risks; mortgage financing availability and volatility; severe weather or natural disasters; difficulty in obtaining sufficient capital; poor relations with community residents; and our debt and related service obligations. Additional factors that could cause actual results to differ are discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual and quarterly reports filed with the Securities and Exchange Commission. Green Brick undertakes no obligation to update any forward-looking statement except as required by law.
Contact: Richard A. Costello
Chief Financial Officer
(469) 573-6755
A PDF is available at http://ml.globenewswire.com/Resource/Download/0dec9ac4-2cfe-4c75-bfbf-5c4a9c74e8be