GlobeNewswire Inc | Aug 4, 2020 04:05PM EDT

August 04, 2020

RECORD BASIC EPS OF $0.67 PER SHARE, UP 131.0%RECORD HOME DELIVERIES, UP 40.4%HOMEBUILDING GROSS MARGIN OF 23.2%, UP 130 BASIS POINTS28.5% INCREASE IN NEW HOME ORDERSRECORD BACKLOG $446.6 MILLION, UP 34.8%20.0% ENDING COMMUNITY GROWTH YEAR OVER YEAR

PLANO, Texas, Aug. 04, 2020 (GLOBE NEWSWIRE) -- Green Brick Partners, Inc. (Nasdaq: GRBK) (we, Green Brick or the Company) today reported results for its second quarter ended June 30, 2020.

Results for the Second Quarter Ended June 30, 2020:

-- For the quarter ended June 30, 2020, basic net income attributable to Green Brick per common share (EPS), total revenues, residential units revenue, gross profit, net income attributable to Green Brick, and backlog reflect a record for any quarter, as detailed below. -- EPS was $0.67, a 131.0% increase compared to the quarterly earnings of $0.29 for the three months ended June30, 2019. -- As compared to the three months ended June30, 2019, total revenues were $232.8 million, an increase of 26.9% from $183.5 million; gross profit was $53.9 million, an increase of 33.8% from $40.3 million; and net income attributable to Green Brick was $33.6 million, an increase of 132.7% from $14.5 million. -- Residential units revenue was $228.7 million, an increase of 30.6% compared to $175.1 million for the three months ended June30, 2019. Land and lots revenue was $4.2 million, a decrease of 50.7% compared to $8.5 million for the three months ended June30, 2019. -- The dollar value of backlog units as of June 30, 2020 was $446.6 million, an increase of 34.8% compared to $331.3 million as of June30, 2019. -- Average active selling communities increased from 77 communities for the quarter ended June30, 2019 to 92 communities for the quarter ended June 30, 2020, an increase of 19.5%. -- Homes under construction increased to 1,273 as of June 30, 2020, a 4.9% increase compared to 1,214 as of June30, 2019.

Results for the Six Months Ended June 30, 2020:

-- EPS for the six months ended June 30, 2020 was $0.98, an 84.9% increase compared to earnings of $0.53 for the six months ended June30, 2019. -- As compared to the six months ended June30, 2019, total revenues were $446.1 million, an increase of 26.7% from $352.1 million; gross profit was $102.9 million, an increase of 36.0% from $75.6 million; and net income attributable to Green Brick was $49.6 million, an increase of 83.1% from $27.1 million. -- Residential units revenue was $419.9 million, an increase of 24.7% compared to $336.6 million for the six months ended June30, 2019. Land and lots revenue was $26.2 million, an increase of 69.4% compared to $15.5 million for the six months ended June30, 2019.

Despite the challenges of operating during the COVID 19 pandemic, our Q2 2020 results are by far the best in the companys history and continue to demonstrate the remarkable growth trajectory of the company. With Q2 2020 total revenues, EPS and ending backlog each at all-time records, we could not be more thrilled with our results. The 69% year-over-year growth in pretax-income is impressive and especially noteworthy considering that these results were achieved while reducing our net debt to total capital to 24%, said Jim Brickman, Chief Executive Officer.

While the current health crisis continues to loom large across the country, we are cautiously optimistic that the pro-business markets where we operate and the wide range of quality homes offered by our Team Builders will continue to drive future success. This optimism is grounded in the outstanding year-over year sales growth we witnessed in May and June of this year where each month exceeded the same month in the prior year by 52% and 82%, respectively.

Our sales growth was largely made possible by the success of Trophy Signature Homes, said Rick Costello, Chief Financial Officer. From 18 net sales in Q2 2019 in a single community, Trophy closed 122 units for $43.5 million in revenues and sold 152 units this quarter with just 8 average selling communities and is now a fully established brand in the Dallas-Ft. Worth market. Trophy expects to open 15 new selling communities by the end of 2020 with most of those openings occurring during the third quarter of 2020.

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.

While response to the COVID-19 outbreak continues to rapidly evolve, it has led to stay-at-home orders and social distancing guidelines that have seriously disrupted activities in large segments of the economy. Throughout the pandemic, we have continued to build, close and sell homes in our markets. Initially, sales slowed significantly. For example, during the final two weeks of March and through the end of April, the impact of shelter-in-place/stay-at-home restrictions reduced our net new home sales and our home sales per community as compared to the same period in the prior year and materially increased cancellations. As a result, our net sales in April 2020 were down by 43% from April 2019. However, during May and June 2020, our sales increased strongly and, with a cancellation rate more in line with our historical experience, we saw net sales increase by 52% and 82% over May and June 2019, respectively. We believe the recovery and expansion of our sales activity is related to a variety of factors, including 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.

As we began to see increased market activity commencing in May and accelerating into June, we re-initiated much of the previously planned capital expenditures that we had placed on hold in March based on market uncertainty. Specifically, we restarted construction of unsold units, recommenced purchases of lots and land and resumed development of land to reflect the market activity. As we move into the third quarter, we continue to see growth, as evidenced by July 2020 showing a 29% increase in net sales over July 2019. We have initiated moderate product price increases to offset some cost input increases like lumber and expect to maintain our industry leading high margins. We continue to monitor our fixed costs to position us to be responsive to the changing market conditions and have delivered this growth without returning to prior overhead levels.

The length and extent of the impact of the COVID-19 pandemic on the Companys financial performance, including the ability to execute on our future financial results, will depend on future developments, including the duration and spread of the pandemic and related government restrictions, all of which are uncertain and cannot be predicted.

More disclosures related to the COVID-19 pandemic are available in our Quarterly Report on Form 10-Q for the period ended June 30, 2020 on file with the Securities and Exchange Commission.

Earnings Conference Call:

We will host our earnings conference call to discuss our second quarter ended June 30, 2020 at 12:00 p.m. Eastern Time on Wednesday, August5, 2020. 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 1198789. A replay of the call will be available from approximately 3:30 p.m. Eastern Time on August5, 2020 through 11:59 p.m. Eastern Time on August19, 2020. 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 1198789.

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 Companys 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 2020, the Company reclassified the allowances for option deposits and pre-acquisition costs related to option contracts from selling, general and administrative expenses to other (loss) income, net in the consolidated statements of income to conform to current year presentation. Net allowances for deposits and pre-acquisition costs totaled a gain of $1.9 million and a loss of $1.5 million for the three and six months ended June 30, 2020, respectively, compared to losses of $0.0 million and $0.5 million in the prior year periods. There was no impact on net income from the reclassification in any period.

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

Three Months Ended June Six Months Ended June 30, 30, 2020 2019 2020 2019Residential units revenue $ 228,667 $ 175,054 $ 419,854 $ 336,642 Land and lots revenue 4,166 8,452 26,246 15,492 Total revenues 232,833 183,506 446,100 352,134 Cost of residential units 175,723 136,592 322,910 264,420 Cost of land and lots 3,215 6,633 20,326 12,067 Total cost of revenues 178,938 143,225 343,236 276,487 Total gross profit 53,895 40,281 102,864 75,647 Selling, general and (25,672 ) (22,457 ) (52,541 ) (45,523 )administrative expensesChange in fair value of ? 197 ? (257 )contingent considerationEquity in income of 5,174 2,697 7,739 4,543 unconsolidated entitiesOther income, net 2,788 738 879 2,365 Income before income 36,185 21,456 58,941 36,775 taxesIncome tax expense 1,348 5,332 7,388 9,160 Net income 34,837 16,124 51,553 27,615 Less: Net incomeattributable to 1,190 1,664 1,989 550 noncontrolling interestsNet income attributableto Green Brick Partners, $ 33,647 $ 14,460 $ 49,564 $ 27,065 Inc. Net income attributableto Green Brick Partners, Inc. per common share:Basic $ 0.67 $ 0.29 $ 0.98 $ 0.53 Diluted $ 0.66 $ 0.29 $ 0.98 $ 0.53 Weighted average commonshares used in thecalculation of net income attributable to GreenBrick Partners, Inc. percommon share:Basic 50,583 50,655 50,519 50,609 Diluted 50,692 50,724 50,669 50,665

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

June 30, December 2020 31, 2019ASSETSCash and cash equivalents $ 43,162 $ 33,269 Restricted cash 8,159 4,416 Receivables 14,487 4,720 Inventory 751,121 753,567 Investments in unconsolidated entities 35,130 30,294 Right-of-use assets - operating leases 3,073 3,462 Property and equipment, net 3,994 4,309 Earnest money deposits 19,427 14,686 Deferred income tax assets, net 15,377 15,262 Intangible assets, net 665 707 Goodwill 680 680 Other assets 14,973 10,167 Total assets $ 910,248 $ 875,539 LIABILITIES AND EQUITYLiabilities: Accounts payable $ 28,722 $ 30,044 Accrued expenses 39,391 24,656 Customer and builder deposits 20,893 23,954 Lease liabilities - operating leases 3,161 3,564 Borrowings on lines of credit, net 143,875 164,642 Senior unsecured notes, net 73,527 73,406 Notes payable 4,249 ? Contingent consideration ? 5,267 Total liabilities 313,818 325,533 Commitments and contingencies Redeemable noncontrolling interest in equity of 12,485 13,611 consolidated subsidiaryEquity: Green Brick Partners, Inc. stockholders? equity Preferred stock, $0.01 par value: 5,000,000 shares ? ? authorized; none issued and outstandingCommon stock, $0.01 par value: 100,000,000 sharesauthorized; 51,053,858 and 50,879,949 issued and 511 509 50,661,919 and 50,488,010 outstanding as of June 30,2020 and December 31, 2019, respectivelyTreasury stock, at cost, 391,939 and 391,939 sharesas of June 30, 2020 and December 31, 2019, (3,167 ) (3,167 )respectivelyAdditional paid-in capital 292,887 290,799 Retained earnings 285,528 235,027 Total Green Brick Partners, Inc. stockholders? equity 575,759 523,168 Noncontrolling interests 8,186 13,227 Total equity 583,945 536,395 Total liabilities and equity $ 910,248 $ 875,539

GREEN BRICK PARTNERS, INC.SUPPLEMENTAL INFORMATION(Unaudited)

ResidentialUnits Three Months Ended June 30, Six Months Ended June 30,Revenue andNew HomesDelivered(dollars in 2020 2019 Change % 2020 2019 Change %thousands)

Homeclosings $ 226,785 $ 172,490 $ 54,295 31.5 % $ 416,033 $ 331,723 $ 84,310 25.4 %revenueMechanic?slien 1,882 2,564 (682 ) (26.6 ) 3,821 4,919 (1,098 ) (22.3 )contracts % %revenueResidentialunits $ 228,667 $ 175,054 $ 53,613 30.6 % $ 419,854 $ 336,642 $ 83,212 24.7 %revenueNew homes 553 394 159 40.4 % 1,001 762 239 31.4 %deliveredAveragesales price $ 410.1 $ 437.8 $ (27.7 ) (6.3 ) $ 415.6 $ 435.3 $ (19.7 ) (4.5 )of homes % %delivered

Land andLots Three Months Ended June 30, Six Months Ended June 30,Revenue(dollarsin 2020 2019 Change % 2020 2019 Change %thousands)Lots $ 3,782 $ 8,452 $ (4,670 ) (55.3 ) $ 25,862 $ 15,482 $ 10,380 67.0 %revenue %Land 384 ? 384 100 % 384 10 374 3,740.0 %revenueLand and )lots $ 4,166 $ 8,452 $ (4,286 ) (50.7 % $ 26,246 $ 15,492 $ 10,754 69.4 %revenueLots 26 58 (32 ) (55.2 ) 164 105 59 56.2 %closed %Averagesales )price of $ 145.5 $ 145.7 $ (0.2 ) (0.1 % $ 157.7 $ 147.4 $ 10.3 7.0 %lotsclosed

New HomeOrders and Three Months Ended June 30, Six Months Ended June 30,Backlog(dollars inthousands) 2020 2019 Change % 2020 2019 Change %

Net new home 582 453 129 28.5 % 1,214 898 316 35.2 %ordersCancellation 16.7 % 13.7 % 3.0 % 21.9 % 16.6 % 14.1 % 2.5 % 17.7 %rateAbsorptionrate peraverageactive 6.3 5.9 0.4 6.8 % 6.5 5.9 0.6 10.2 %sellingcommunityper quarterAverageactive 92 77 15 19.5 % 93 76 17 22.4 %sellingcommunitiesActivesellingcommunities 90 75 15 20.0 % at end ofperiodBacklog $ 446,573 $ 331,259 $ 115,314 34.8 % Backlog 999 717 282 39.3 % (units)Average )sales price $ 447.0 $ 462.0 $ (15.0 ) (3.2 % of backlog

June 30, 2020 December 31, 2019Lots owned Central 3,683 4,223 Southeast 2,187 2,196 Total lots owned 5,870 6,419 Lots controlled Central 2,332 1,410 Southeast 974 1,147 Total lots controlled 3,306 2,557 Total lots owned and controlled ^(1) 9,176 8,976 Percentage of lots owned 64.0 % 71.5 %



(1) Total lots excludes lots with homes under construction.

GREEN BRICK PARTNERS, INC.SUPPLEMENTAL INFORMATION(Unaudited)

Reconciliation of Non-GAAP Financial Measures

The following table represents the non-GAAP measure of adjusted homebuilding gross margin for the three and six months ended June 30, 2020 and 2019 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.

(Unaudited, in Three Months Ended June Six Months Ended June 30,thousands): 30, 2020 2019 2020 2019Residential units revenue $ 228,667 $ 175,054 $ 419,854 $ 336,642 Less: Mechanic?s lien (1,882 ) (2,564 ) (3,821 ) (4,919 )contracts revenueHome closings revenue $ 226,785 $ 172,490 $ 416,033 $ 331,723 Homebuilding gross margin $ 52,609 $ 37,849 $ 96,266 $ 70,999 Homebuilding gross margin 23.2 % 21.9 % 23.1 % 21.4 %percentage Homebuilding gross margin 52,609 37,849 96,266 70,999 Add back: Capitalizedinterest charged to cost 2,707 2,333 4,888 3,340 of revenuesAdjusted homebuilding 55,316 $ 40,182 $ 101,154 $ 74,339 gross marginAdjusted homebuilding 24.4 % 23.3 % 24.3 % 22.4 %gross margin percentage

The following table presents the pre-tax income for the three and six months ended June 30, 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.

(Unaudited, in Three Months Ended June Six Months Ended June 30,thousands): 30, 2020 2019 2020 2019Net incomeattributable to Green $ 33,647 $ 14,460 $ 49,564 $ 27,065 Brick Partners, Inc.Income tax expenseattributable to Green 1,398 5,216 7,386 9,010 Brick Partners, Inc.Pre-tax incomeattributable to Green $ 35,045 $ 19,676 $ 56,950 $ 36,075 Brick Partners, Inc.

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 Bricks homebuilding partners and financial services platforms, please visit https://greenbrickpartners.com/team-builders/.

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 Companys strategy for growth, the drivers of that growth, and the impact on the Companys results, (ii) the Companys liquidity and balance sheet strategy to adapt to changing market conditions, (iii) the effects of the COVID-19 pandemic on the homebuilding industry and the Companys results of operations, business and liquidity, including the impact on demand for new home sales, closings and cancellations, and the availability of human resources, and the steps the Company is taking to mitigate risk in response to the impact of the pandemic. and (iv) the number of new selling communities expected to open in 2020 and the timing of those openings. These forward-looking statements involve estimates and assumptions which may be affected by risks and uncertainties in the Companys 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) adverse impacts from general economic conditions, including as a result of the COVID-19 pandemic and the responsive actions taken by federal, state and local public health and governmental authorities, seasonality, cyclicality and competition in the homebuilding industry; (2) decreased demand for the Companys homes or finished lots or increases in cancellations, including as a result of the COVID-19 pandemic; (3) a failure to recruit, retain or develop highly skilled and competent employees; (4) unsuccessful integration or management of acquisitions; (5) shortages of labor or raw materials or other supplies, including availability and cost of supply necessary for our homebuilding activities, and the impact of the COVID-19 pandemic on global supply chains; (6) an inability to acquire land for reasonable prices; (7) an inability to develop or sell communities; (8) government regulation risks; (9) a lack of availability or volatility of mortgage financing; (10) a severe weather event or natural disasters; (11) difficulty in obtaining sufficient capital; (12) poor relations with community residents; and (13) an increase in our debt levels or related service obligations. For a more detailed discussion of these and other risks and uncertainties applicable to the Company please see the Companys Annual Report on Form 10-K and the Companys Quarterly Report on Form 10-Q for the period ended June 30, 2020 filed with the Securities and Exchange Commission.

Contact: Richard A. CostelloChief Financial Officer(469) 573-6755