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CST: 22/08/2019 00:09:52   

Green Brick Partners, Inc. Reports Second Quarter Results and Closes $75 Million of 4.00% Senior Notes

13 Days ago

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

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