8-K
Green Brick Partners, Inc. (GRBK)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
___________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2022
| Green Brick Partners, Inc. |
|---|
_________________________________________________
(Exact name of registrant as specified in its charter)
| Delaware | 001-33530 | 20-5952523 | |||
|---|---|---|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | |||
| 2805 Dallas Pkwy | , | Ste 400 | |||
| Plano | , | TX | 75093 | (469) | 573-6755 |
| (Address of principal executive offices, including Zip Code) | (Registrant’s telephone number, including area code) |
(Former name or former address, if changed since last report) Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | GRBK | The New York Stock Exchange |
| Depositary Shares (each representing a 1/1000th interest in a share of 5.75% Series A Cumulative Perpetual Preferred Stock, par value $0.01 per share) | GRBK PRA | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On May 3, 2022, Green Brick Partners, Inc. (the “Company”) issued a press release announcing its financial and operational results for the first quarter ended March 31, 2022. A copy of the press release is furnished as Exhibit 99 to this report.
Item 7.01 Other Events
The Company announced today that on June 15, 2022, holders of record as of June 1, 2022 (the “Record Date”) of its depositary shares (the “Series A Depositary Shares” (NYSE:GRBK.PA)), each representing a 1/1,000th interest in a share of its 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”) will receive a quarterly dividend in the amount of $359.38 per share of Series A Preferred Stock (equivalent to $0.0359 per Series A Depositary Share), which will cover the period from, and including, March 15, 2022 through, but not including June 15, 2022. The dividend represents dividends at the rate of 5.75% of the $25,000.00 liquidation preference per share (equivalent to $25.00 per depositary share) per year (equivalent to $1,437.50 per share per year or $1.4375 per Series A Depositary Share per year).
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description of Exhibit |
|---|---|
| 99 | Press Release dated May 3, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GREEN BRICK PARTNERS, INC. | |
|---|---|
| By: | /s/ Richard A. Costello |
| Name: | Richard A. Costello |
| Title: | Chief Financial Officer |
Date: May 3, 2022
Document
Exhibit 99
GREEN BRICK PARTNERS, INC. REPORTS RECORD FIRST QUARTER 2022 RESULTS
HOME CLOSINGS REVENUE OF $363.1 MILLION, UP 68.0%
RECORD INCOME BEFORE INCOME TAXES OF $82.6 MILLION, UP 134.3%
HOME BUILDING GROSS MARGIN UP 240 BPS TO 27.8%
LOTS OWNED AND CONTROLLED UP 42.5%
PLANO, Texas, May 3, 2022 — Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported record results for its first quarter ended March 31, 2022.
“Thanks to a great team effort, we achieved an annualized Q1 2022 return on equity of 28.8%, with diluted EPS at $1.20 per share which was up 135% from Q1 2021. Even better, we expect home closings revenue and EPS to accelerate into Q2 2022,” said Jim Brickman, CEO and Co-Founder.
Results for the Quarter Ended March 31, 2022:
| (Dollars in thousands, except per share data) | Three Months Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||||
| New homes delivered | 658 | 516 | 27.5 | % | ||||
| Total revenues | $ | 393,616 | $ | 234,479 | 67.9 | % | ||
| Total cost of revenues | 285,260 | 175,490 | 62.6 | % | ||||
| Total gross profit | $ | 108,356 | $ | 58,989 | 83.7 | % | ||
| Income before income taxes | $ | 82,633 | $ | 35,262 | 134.3 | % | ||
| Net income attributable to Green Brick Partners, Inc. | $ | 61,577 | $ | 25,969 | 137.1 | % | ||
| Diluted net income attributable to Green Brick Partners, Inc. per common share | $ | 1.20 | $ | 0.51 | 135.3 | % | ||
| Residential units revenue | $ | 364,661 | $ | 217,236 | 67.9 | % | ||
| Average sales price of homes delivered | $ | 551.8 | $ | 418.9 | 31.7 | % | ||
| Homebuilding gross margin percentage | 27.8 | % | 25.4 | % | 240 bps | |||
| Selling, general and administrative expenses as a percentage of residential units revenue | 9.4 | % | 13.6 | % | -420 bps | |||
| Backlog | $ | 866,621 | $ | 995,743 | -13.0 | % | ||
| Lots owned and controlled | 26,992 | 18,939 | 42.5 | % | ||||
| Homes under construction | 2,516 | 2,303 | 9.2 | % |
“Our gross margin reached 27.8% this quarter, up 240 basis points from the prior year and up 160 basis points sequentially from the fourth quarter, as Green Brick has achieved pricing power in our dynamic core markets of Dallas-Ft. Worth and Atlanta,” said Rick Costello, CFO. “In order to capitalize on rising prices and demand, we have paced sales with price increases in excess of rising input costs. When we combine this gross margin performance with a 420 basis point improvement in SG&A leverage, our bottom line results are flourishing. We believe our focus on price over pace will sustain our industry-leading margins and strong financial performance through the remainder of 2022.”
Mr. Brickman continued saying, “Seeing a disconnect between managements’ positive view of the business and our strong operating results versus the contrasting sentiment of some investors and analysts, the Company purchased 1.2 million of its shares during the quarter at an average price of $21.63 for a total investment of $25.8 million. In April 2022, the company purchased an additional 1.2 million shares at an average price of $19.72, bringing total shares repurchased to a total of 2.4 million shares which is 4.8% of shares outstanding as of the beginning of the year. These purchases have combined to fully utilize the $50 million amount previously authorized. In our April 27th Board meeting, the board authorized the purchase of up to $100 million of additional shares. Despite repurchasing shares, our debt to total capital was only 28.8% at the end of Q1.”
The new stock repurchase program authorizes the Company to purchase, from time to time, up to $100 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 new plan has no time deadline and will continue until otherwise modified or terminated by the Company’s board at any time in its sole discretion.
Earnings Conference Call:
We will host our earnings conference call to discuss our first quarter ended March 31, 2022 at 12:00 p.m. Eastern Time on Wednesday, May 4, 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 13729082. Participants may also join the call via webcast at:
https://www.webcast-eqs.com/greenbrick20220504/en
The webcast replay will be available from the Company’s website at greenbrickpartners.com/reporting/ through May 31, 2022. A replay of the call will be available from approximately 3:00 p.m. Eastern Time on May 4th, 2021 through 11:59 p.m. Eastern Time on May 31st, 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 13729082.
GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Residential units revenue | $ | 364,661 | $ | 217,236 |
| Land and lots revenue | 28,955 | 17,243 | ||
| Total revenues | 393,616 | 234,479 | ||
| Cost of residential units | 263,430 | 162,072 | ||
| Cost of land and lots | 21,830 | 13,418 | ||
| Total cost of revenues | 285,260 | 175,490 | ||
| Total gross profit | 108,356 | 58,989 | ||
| Selling, general and administrative expenses | (34,265) | (29,488) | ||
| Equity in income of unconsolidated entities | 5,687 | 3,891 | ||
| Other income, net | 2,855 | 1,870 | ||
| Income before income taxes | 82,633 | 35,262 | ||
| Income tax expense | 18,437 | 7,501 | ||
| Net income | 64,196 | 27,761 | ||
| Less: Net income attributable to noncontrolling interests | 2,619 | 1,792 | ||
| Net income attributable to Green Brick Partners, Inc. | $ | 61,577 | $ | 25,969 |
| Net income attributable to Green Brick Partners, Inc. per common share: | ||||
| Basic | $ | 1.20 | $ | 0.51 |
| Diluted | $ | 1.20 | $ | 0.51 |
| Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share: | ||||
| Basic | 50,586 | 50,633 | ||
| Diluted | 50,924 | 50,993 |
GREEN BRICK PARTNERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| March 31, 2022 | December 31, 2021 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 66,083 | $ | 78,696 |
| Restricted cash | 14,152 | 14,858 | ||
| Receivables | 7,050 | 6,871 | ||
| Inventory | 1,327,509 | 1,203,743 | ||
| Investments in unconsolidated entities | 58,127 | 55,616 | ||
| Right-of-use assets - operating leases | 4,215 | 4,596 | ||
| Property and equipment, net | 2,617 | 2,812 | ||
| Earnest money deposits | 24,744 | 26,008 | ||
| Deferred income tax assets, net | 15,741 | 15,741 | ||
| Intangible assets, net | 516 | 537 | ||
| Goodwill | 680 | 680 | ||
| Other assets | 7,223 | 11,709 | ||
| Total assets | $ | 1,528,657 | $ | 1,421,867 |
| LIABILITIES AND EQUITY | ||||
| Liabilities: | ||||
| Accounts payable | $ | 56,899 | $ | 45,682 |
| Accrued expenses | 89,558 | 61,351 | ||
| Customer and builder deposits | 63,618 | 64,610 | ||
| Lease liabilities - operating leases | 4,415 | 4,745 | ||
| Borrowings on lines of credit, net | 19,421 | (738) | ||
| Senior unsecured notes, net | 335,538 | 335,446 | ||
| Notes payable | 14,668 | 210 | ||
| Total liabilities | 584,117 | 511,306 | ||
| Commitments and contingencies | ||||
| Redeemable noncontrolling interest in equity of consolidated subsidiary | 22,179 | 21,867 | ||
| Equity: | ||||
| Green Brick Partners, Inc. stockholders’ equity | ||||
| Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of March 31, 2022 and December 31 2021, respectively | 47,696 | 47,696 | ||
| Common stock, $0.01 par value: 100,000,000 shares authorized; 51,245,206 and 51,151,911 issued and 49,660,230 and 50,759,972 outstanding as of March 31, 2022 and December 31, 2021, respectively | 512 | 512 | ||
| Treasury stock, at cost, 1,584,976 and 391,939 shares as of March 31, 2022 and December 31, 2021, respectively | (28,968) | (3,167) | ||
| Additional paid-in capital | 292,155 | 289,641 | ||
| Retained earnings | 600,788 | 539,866 | ||
| Total Green Brick Partners, Inc. stockholders’ equity | 912,183 | 874,548 | ||
| Noncontrolling interests | 10,178 | 14,146 | ||
| Total equity | 922,361 | 888,694 | ||
| Total liabilities and equity | $ | 1,528,657 | $ | 1,421,867 |
GREEN BRICK PARTNERS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
| Residential Units Revenue and New Homes Delivered<br>(dollars in thousands) | Three Months Ended March 31, | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % | ||||||||||||||||||||||||||
| Home closings revenue | $ | 363,063 | $ | 216,134 | $ | 146,929 | 68.0 | % | |||||||||||||||||||||
| Mechanic’s lien contracts revenue | 1,598 | 1,102 | 496 | 45.0 | % | ||||||||||||||||||||||||
| Residential units revenue | $ | 364,661 | $ | 217,236 | $ | 147,425 | 67.9 | % | |||||||||||||||||||||
| New homes delivered | 658 | 516 | 142 | 27.5 | % | ||||||||||||||||||||||||
| Average sales price of homes delivered | $ | 551.8 | $ | 418.9 | $ | 132.9 | 31.7 | % | Land and Lots Revenue<br>(dollars in thousands) | Three Months Ended March 31, | |||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| 2022 | 2021 | Change | % | ||||||||||||||||||||||||||
| Lots revenue | $ | 1,955 | $ | 8,443 | $ | (6,488) | (76.8) | % | |||||||||||||||||||||
| Land revenue | 27,000 | 8,800 | 18,200 | 206.8 | % | ||||||||||||||||||||||||
| Land and lots revenue | $ | 28,955 | $ | 17,243 | $ | 11,712 | 67.9 | % | |||||||||||||||||||||
| Lots closed | 33 | 79 | (46) | (58.2) | % | ||||||||||||||||||||||||
| Average sales price of lots closed | $ | 59.2 | $ | 106.9 | $ | (47.7) | (44.6) | % | New Home Orders and Backlog<br>(dollars in thousands) | Three Months Ended March 31, | |||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||
| 2022 | 2021 | Change | % | ||||||||||||||||||||||||||
| Net new home orders | 601 | 1,082 | (481) | (44.5) | % | ||||||||||||||||||||||||
| Cancellation rate | 8.0 | % | 6.0 | % | 2.0 | % | 33.3 | % | |||||||||||||||||||||
| Absorption rate per average active selling community per quarter | 8.0 | 11.3 | (3.3) | (29.2) | % | ||||||||||||||||||||||||
| Average active selling communities | 75 | 96 | (21) | (21.9) | % | ||||||||||||||||||||||||
| Active selling communities at end of period | 76 | 90 | (14) | (15.6) | % | ||||||||||||||||||||||||
| Backlog | $ | 866,621 | $ | 995,743 | $ | (129,122) | (13.0) | % | |||||||||||||||||||||
| Backlog (units) | 1,423 | 2,029 | (606) | (29.9) | % | ||||||||||||||||||||||||
| Average sales price of backlog | $ | 609.0 | $ | 490.8 | $ | 118.2 | 24.1 | % | March 31, 2022 | December 31, 2021 | |||||||||||||||||||
| --- | --- | --- | --- | --- | |||||||||||||||||||||||||
| Lots owned (1) | |||||||||||||||||||||||||||||
| Central | 19,552 | 17,767 | |||||||||||||||||||||||||||
| Southeast | 2,417 | 2,472 | |||||||||||||||||||||||||||
| Total lots owned | 21,969 | 20,239 | |||||||||||||||||||||||||||
| Lots controlled (1) | |||||||||||||||||||||||||||||
| Central | 3,864 | 7,321 | |||||||||||||||||||||||||||
| Southeast | 1,159 | 1,061 | |||||||||||||||||||||||||||
| Total lots controlled | 5,023 | 8,382 | |||||||||||||||||||||||||||
| Total lots owned and controlled (1) | 26,992 | 28,621 | |||||||||||||||||||||||||||
| Percentage of lots owned | 81.4 | % | 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 March 31, 2022 and December 31, 2021.
| March 31, 2022 | December 31, 2021 | |||
|---|---|---|---|---|
| Total lots owned | 21,969 | 20,239 | ||
| Add certain lots included in Total Lots Controlled | ||||
| Land under option for future acquisition and development | 768 | 3,826 | ||
| Lots under option through unconsolidated development joint ventures | 1,762 | 1,816 | ||
| Total lots self-developed | 24,499 | 25,881 | ||
| Self-developed lots as a percentage of total lots owned and controlled | 90.8 | % | 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 months ended March 31, 2022 and 2021 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.
| (Unaudited, in thousands): | Three Months Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||||
| Residential units revenue | $ | 364,661 | $ | 217,236 | ||||
| Less: Mechanic’s lien contracts revenue | (1,598) | (1,102) | ||||||
| Home closings revenue | $ | 363,063 | $ | 216,134 | ||||
| Homebuilding gross margin | $ | 100,973 | $ | 54,904 | ||||
| Homebuilding gross margin percentage | 27.8 | % | 25.4 | % | ||||
| Homebuilding gross margin | 100,973 | 54,904 | ||||||
| Add back: Capitalized interest charged to cost of revenues | 2,861 | 1,813 | ||||||
| Adjusted homebuilding gross margin | $ | 103,834 | $ | 56,717 | ||||
| Adjusted homebuilding gross margin percentage | 28.6 | % | 26.2 | % |
The following table presents the pre-tax income for the three months ended March 31, 2022 and 2021, 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 March 31, | |||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Net income attributable to Green Brick Partners, Inc. | $ | 61,577 | $ | 25,969 | ||
| Income tax expense attributable to Green Brick Partners, Inc. | 18,435 | 7,500 | ||||
| Pre-tax income attributable to Green Brick Partners, Inc. | $ | 80,012 | $ | 33,469 |
About Green Brick Partners, Inc.
Green Brick Partners, Inc. is a diversified homebuilding and land development company operating through eight homebuilder brands in major markets in Texas, the Southeast and Colorado. 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 and in our earnings call include statements regarding (i) our expectation that our ability to increase price over pace will sustain our industry-leading margins and strong financial performance through the remainder of 2022; (ii) our belief that our land position and backlog will position us to grow our business in 2022 and beyond, (iii) 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 and inflation 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) changes in macroeconomic conditions, including increasing interest rates and inflation 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 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) a failure to recruit, retain or develop highly skilled and competent employees; (8) government regulation risks; (9) a lack of availability or volatility of mortgage financing or a rise in interest rates; (10) severe weather events or natural disasters; (11) difficulty in obtaining sufficient capital to fund our growth; (12) our ability to meet our debt service obligations; (13) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; (14) 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
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