Green Brick Partners, Inc. (Nasdaq: GRBK) (“we,” “Green Brick” or the “Company”) today reported record results for its second quarter ended June 30, 2021.

“With our all-time record results achieved this quarter, Green Brick’s annualized Q2 2021 return on equity hit a new high at 30.2%. Thanks to a great team effort, we provided our investors some of the best returns in the industry. Even better, we expect these returns to accelerate,” said Jim Brickman, CEO and Co-Founder. “Our total revenues were $1.1 billion on a trailing twelve months basis. From Q1 to Q2, we increased home building revenues by 54% and our EPS doubled. We continue to be confident that our revenues and earnings will continue to grow sequentially each quarter this year.”

“Our core focus on land development and our dominant presence and reputation in our markets has resulted in a 133% increase in our lots owned and controlled from a year prior. Our superior capacity to source new land has allowed us to grow our units under construction an astounding 95% as compared to June 30, 2020 and provides a ready supply of new housing to meet current demand.”

Results for the Quarter Ended June 30, 2021:

For the quarter ended June 30, 2021, our net new home deliveries, residential units revenue, and net income per share reflect a record for any quarter since the Company’s inception. Homes under construction and lots owned and controlled also represent a Company record as of the end of any quarter.

       
(Dollars in thousands, except per share data) Three Months Ended June 30,    
  2021   2020   Increase
New homes delivered 757     553     36.9 %
           
Total revenues $ 373,806     $ 232,833     60.5 %
Total cost of revenues 272,830     178,938     52.5 %
Total gross profit $ 100,976     $ 53,895     87.4 %
Income before income taxes $ 73,977     $ 36,185     104.4 %
Net income attributable to Green Brick Partners, Inc. $ 52,263     $ 33,647     55.3 %
Diluted net income attributable to Green Brick Partners, Inc. per share $ 1.02     $ 0.66     54.5 %
           
Residential units revenue $ 333,500     $ 228,667     45.8 %
Homebuilding gross margin percentage 26.8 %   23.2 %   360 bps
           
Backlog $ 974,349     $ 446,573     118.2 %
Lots owned and controlled 21,351     9,176     132.7 %
Homes under construction 2,486     1,273     95.3 %
Net income attributable to Green Brick Partners, Inc. as a percentage of the average total Green Brick Partners, Inc. stockholders’ equity 30.2 %   24.1 %   610 bps
               
               

“Our gross margin reached 26.8% this quarter, up 360 basis points from the prior year and up 140 basis points from the first quarter, as Green Brick has achieved pricing power in our 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. We believe this focus on price over pace will sustain our industry-leading margins and strong financial performance through the remainder of 2021.”

Green Brick, like every other company in the United States and the global economy, has been impacted by the coronavirus, or 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. The significant increase in new home demand that we have seen since the second half of 2020 has, in turn, led to increased demand for the raw materials, products and appliances for new homes. Due to the increased demand for certain materials, we have and may continue to experience price increases, shortages and significant extensions to our lead time for the delivery of materials such as lumber, appliances and windows.

Earnings Conference Call:We will host our earnings conference call to discuss our second quarter ended June 30, 2021 at 12:00 p.m. Eastern Time on Wednesday, August 4, 2021. 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 13721299. Participants may also join the call via webcast at: greenbrickpartners.com/reporting/.

The webcast replay will be available from the Company’s website at greenbrickpartners.com/reporting/ through September 30th, 2021. A replay of the call will be available from approximately 3:00 p.m. Eastern Time on August 4th, 2021 through 11:59 p.m. Eastern Time on September 1st, 2021. 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 13721299.

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 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.

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,
  2021   2020   2021   2020
Residential units revenue $ 333,500     $ 228,667     $ 550,736     $ 419,854  
Land and lots revenue 40,306     4,166     57,549     26,246  
Total revenues 373,806     232,833     608,285     446,100  
Cost of residential units 244,165     175,723     406,237     322,910  
Cost of land and lots 28,665     3,215     42,083     20,326  
Total cost of revenues 272,830     178,938     448,320     343,236  
Total gross profit 100,976     53,895     159,965     102,864  
Selling, general and administrative expenses (33,985 )   (25,672 )   (63,473 )   (52,541 )
Equity in income of unconsolidated entities 4,593     5,174     8,484     7,739  
Other income, net 2,393     2,788     4,263     879  
Income before income taxes 73,977     36,185     109,239     58,941  
Income tax expense 15,694     1,348     23,195     7,388  
Net income 58,283     34,837     86,044     51,553  
Less: Net income attributable to noncontrolling interests 6,020     1,190     7,812     1,989  
Net income attributable to Green Brick Partners, Inc. $ 52,263     $ 33,647     $ 78,232     $ 49,564  
               
Net income attributable to Green Brick Partners, Inc. per common share:              
Basic $ 1.03     $ 0.67     $ 1.54     $ 0.98  
Diluted $ 1.02     $ 0.66     $ 1.53     $ 0.98  
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:              
Basic 50,701     50,583     50,667     50,519  
Diluted 51,064     50,692     51,029     50,669  
                       
                       

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

       
  June 30, 2021   December 31, 2020
ASSETS
Cash and cash equivalents $ 33,517     $ 19,479  
Restricted cash 23,598     14,156  
Receivables 7,007     5,224  
Inventory 1,106,141     844,635  
Investments in unconsolidated entities 50,342     46,443  
Right-of-use assets - operating leases 4,528     2,538  
Property and equipment, net 3,712     3,595  
Earnest money deposits 20,161     22,242  
Deferred income tax assets, net 15,376     15,376  
Intangible assets, net 580     622  
Goodwill 680     680  
Other assets 21,494     13,857  
Total assets $ 1,287,136     $ 988,847  
LIABILITIES AND EQUITY
Liabilities:      
Accounts payable $ 45,761     $ 24,521  
Accrued expenses 57,425     40,416  
Customer and builder deposits 63,700     38,131  
Lease liabilities - operating leases 4,582     2,591  
Borrowings on lines of credit, net 130,605     106,687  
Senior unsecured notes, net 235,624     111,056  
Notes payable 233     2,125  
Contingent consideration     368  
Total liabilities 537,930     325,895  
Commitments and contingencies      
Redeemable noncontrolling interest in equity of consolidated subsidiary 17,515     13,543  
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; 51,151,911 and 51,053,858 issued and 50,759,972 and 50,661,919 outstanding as of June 30, 2021 and December 31, 2020, respectively 511     511  
Treasury stock, at cost, 391,939 shares (3,167 )   (3,167 )
Additional paid-in capital 292,157     293,242  
Retained earnings 427,888     349,656  
Total Green Brick Partners, Inc. stockholders’ equity 717,389     640,242  
Noncontrolling interests 14,302     9,167  
Total equity 731,691     649,409  
Total liabilities and equity $ 1,287,136     $ 988,847  
               
               

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,        
2021   2020   Change   %   2021   2020   Change   %
Home closings revenue $ 332,279   $ 226,785   $ 105,494     46.5 %   $ 548,413   $ 416,033   $ 132,380     31.8   %
Mechanic’s lien contracts revenue 1,221   1,882   (661 )   (35.1 )%   2,323   3,821   (1,498 )   (39.2 ) %
Residential units revenue $ 333,500   $ 228,667   $ 104,833     45.8 %   $ 550,736   $ 419,854   $ 130,882     31.2   %
New homes delivered 757   553   204     36.9 %   1,273   1,001   272     27.2   %
Average sales price of homes delivered $ 438.9   $ 410.1   $ 28.8     7.0 %   $ 430.8   $ 415.6   $ 15.2     3.7   %
                                                     

                       
Land and Lots Revenue(dollars in thousands) Three Months Ended June 30,           Six Months Ended June 30,        
2021   2020   Change   %   2021   2020   Change   %
Lots revenue $ 4,615   $ 4,166   $ 449     10.8 %   $ 13,058   $ 26,246   $ (13,188 )   (50.2 ) %
Land revenue 35,691     35,691     100 %   44,491     44,491     100.0 %
Land and lots revenue $ 40,306   $ 4,166   $ 36,140     867.5 %   $ 57,549   $ 26,246   $ 31,303     119.3   %
Lots closed 63   26   37     142.3 %   142   164   (22 )   (13.4 ) %
Average sales price of lots closed $ 73.3   $ 160.2   $ (86.9 )   (54.2 )%   $ 92.0   $ 160.0   $ (68.0 )   (42.5 ) %
                                                     
                                                     

New Home Orders and Backlog(dollars in thousands) Three Months Ended June 30,           Six Months Ended June 30,        
2021   2020   Change   %   2021   2020   Change   %
Net new home orders 604     582     22       3.8 %   1,686     1,214     472       38.9   %
Cancellation rate 7.6 %   16.9 %   (9.3 ) %   (55.0 )%   6.6 %   16.6 %   (10.0 ) %   (60.2 ) %
Absorption rate per average active selling community per quarter 6.8     6.3     0.5       7.9 %   9.1     6.5     2.6       40.0   %
Average active selling communities 89     92     (3 )     (3.3 )%   93     93             %
Active selling communities at end of period 87     90     (3 )     (3.3 )%                
Backlog $ 974,349     $ 446,573     $ 527,776       118.2 %                
Backlog (units) 1,876     999     877       87.8 %                
Average sales price of backlog $ 519.4     $ 447.0     $ 72.4       16.2 %                
                                               

       
   June 30, 2021   December 31, 2020
Lots owned (1)      
Central 14,115     6,823  
Southeast 2,212     2,097  
Total lots owned 16,327     8,920  
Lots controlled (1)      
Central 4,126     4,398  
Southeast 898     1,150  
Total lots controlled 5,024     5,548  
Total lots owned and controlled (1) 21,351     14,468  
Percentage of lots owned 76.5 %   61.7 %

____________________(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 June 30, 2021 and December 31, 2020.

       
  June 30, 2021   December 31, 2020
Total lots owned 16,327      8,920   
Add certain lots included in Total Lots Controlled      
Land under option for future acquisition and development 606      740   
Lots under option through unconsolidated development joint ventures 1,844      1,838   
Total lots self-developed 18,777      11,498   
Self-developed lots as a percentage of total lots owned and controlled 87.9  %   79.5  %
           

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, 2021 and 2020 and reconciles these amounts to homebuilding gross margin, the most directly comparable GAAP measure.

       
(Unaudited, in thousands): Three Months Ended June 30,   Six Months Ended June 30,
2021   2020   2021   2020
Residential units revenue $ 333,500       $ 228,667       $ 550,736       $ 419,854    
Less: Mechanic’s lien contracts revenue (1,221 )     (1,882 )     (2,323 )     (3,821 )  
Home closings revenue $ 332,279       $ 226,785       $ 548,413       $ 416,033    
Homebuilding gross margin $ 89,055       $ 52,609       $ 143,959       $ 96,266    
Homebuilding gross margin percentage 26.8   %   23.2   %   26.3   %   23.1   %
               
Homebuilding gross margin 89,055       52,609       143,959       96,266    
Add back: Capitalized interest charged to cost of revenues 2,533       2,707       4,346       4,888    
Adjusted homebuilding gross margin $ 91,588       $ 55,316       $ 148,305       $ 101,154    
Adjusted homebuilding gross margin percentage 27.6   %   24.4   %   27.0   %   24.3   %
                               

The following table presents the pre-tax income for the three and six months ended June 30, 2021 and 2020, 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 June 30,   Six Months Ended June 30,
2021   2020   2021   2020
Net income attributable to Green Brick Partners, Inc. $ 52,263     $ 33,647     $ 78,232     $ 49,564
Income tax expense attributable to Green Brick Partners, Inc. 15,693     1,348     23,193     7,386
Pre-tax income attributable to Green Brick Partners, Inc. $ 67,956     $ 34,995     $ 101,425     $ 56,950
                             

The following table presents the non-GAAP measure of net income attributable to Green Brick Partners, Inc. for the three months ended June 30, 2021 and 2020, divided by the average total Green Brick Partners, Inc. stockholder’s equity to calculate our return on average equity. We believe this non-GAAP financial measure is relevant in measuring our profitability in relation to stockholder’s equity and should only be used to supplement Green Brick’s GAAP results.

   
 (Unaudited, in thousands): Three Months Ended June 30,
2021   2020
Net income attributable to Green Brick Partners, Inc. $ 52,263     $ 33,647  
Beginning total Green Brick Partners, Inc. stockholders’ equity 666,131     542,982  
Ending total Green Brick Partners, Inc. stockholders’ equity 717,389     575,759  
Average total Green Brick Partners, Inc. stockholders’ equity $ 691,760     559,371  
Net income attributable to Green Brick Partners, Inc. as a percentage of the average total Green Brick Partners, Inc. stockholders’ equity 30.2 %   24.1 %
           

About Green Brick Partners, Inc.

Green Brick Partners, Inc. (Nasdaq: GRBK) is a diversified homebuilding and land development company. Green Brick owns five homebuilders in Dallas, 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 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. Green Brick is engaged in all aspects of the homebuilding process, including land acquisition and development, entitlements, design, construction, marketing, and sales for our residential neighborhoods and master planned communities. For more information about Green Brick Partners Inc.’s homebuilding partners, 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,” “feel,” “intend,” “plan,” “predict,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements in this press release include statements regarding (i) our strategy for growth, the drivers and acceleration of that growth, and the impact on our results over the remainder of 2021, (ii) our margins and performance through 2021 as compared to the industry, (iii) our ability to capitalize on market opportunities and the impact on our results and (iv) our land and lot acquisition strategy and its impact on our ability to meet market demand. 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) 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 potential buyers to qualify; (4) shortages, delays or increased costs of raw materials, especially in light of COVID-19 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; (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 grow our operations or 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 Green Brick please see our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.

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

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