Press release·10/31/2024 01:22:04

Green Brick Partners, Inc. Delivers Strong Q3 2024 Results

Green Brick Partners, Inc., a leading homebuilder and land developer, reported impressive financial results for the third quarter of 2024, showcasing its operational strength and strategic execution. The company’s performance was driven by its focus on high-growth markets, efficient construction processes, and disciplined capital allocation.

Residential Units Revenue and New Homes Delivered Green Brick’s residential units revenue increased by 25.7% year-over-year to $522.9 million in Q3 2024, primarily due to a 26.8% increase in new homes delivered. The average sales price of homes delivered, however, decreased by 0.8% to $546.9.

For the first nine months of 2024, residential units revenue grew by 14.6% to $1.51 billion, with a 20.3% increase in new homes delivered partially offset by a 4.7% decrease in average sales price.

The strong growth in new home deliveries was attributed to the company’s strategic focus on infill and infill-adjacent locations, which have limited competition, as well as its ability to reduce cycle times and capitalize on the continued demand for new homes in its markets.

New Home Orders and Backlog Net new home orders increased by 11.3% in Q3 2024 compared to the prior year period, driven by a 22.1% increase in average active selling communities. However, the absorption rate per average active selling community decreased by 8.7% due to the impact of buyer expectations for lower mortgage rates in the near future.

For the first nine months of 2024, net new home orders grew by 4.7%, while the average active selling communities increased by 20.5%. The absorption rate per average active selling community declined by 13.9% during this period, primarily due to the rise in mortgage rates, the metering of sales in certain infill communities, and the return of pre-pandemic seasonality.

Backlog revenue decreased by 6.5% at the end of Q3 2024 compared to the prior year period, reflecting an 11.7% decrease in backlog units partially offset by a 5.8% increase in the average sales price of backlog units.

Residential Units Gross Margin Residential units gross margin decreased by 60 basis points to 32.7% in Q3 2024, primarily due to product mix and higher incentives. However, for the first nine months of 2024, residential units gross margin increased by 290 basis points to 33.6%, driven by the company’s focus on infill and infill-adjacent communities, which face limited competition and have higher margins.

Selling, General and Administrative Expenses Selling, general and administrative (SG&A) expenses as a percentage of revenue decreased by 0.2% in Q3 2024 to 11.0%, reflecting better leveraging of overhead costs. For the first nine months of 2024, SG&A expenses as a percentage of revenue remained relatively stable at 10.8%.

Equity in Income of Unconsolidated Entities and Other Income Equity in income of unconsolidated entities decreased by 57.7% to $4.8 million for the first nine months of 2024, primarily due to the sale of the company’s ownership interest in Challenger during the first quarter.

Other income, net, increased to $25.4 million for the first nine months of 2024, up from $13.7 million in the same period of the prior year, mainly due to a $10.7 million gain on the sale of the Challenger investment.

Income Tax Expense Income tax expense increased to $71.8 million for the first nine months of 2024, up from $63.2 million in the same period of the prior year. This increase was primarily due to higher taxable income, partially offset by a lower effective tax rate, lower state tax rates, and a discrete tax benefit for equity compensation deductions.

Lots Owned and Controlled As of September 30, 2024, Green Brick owned or controlled a total of 37,052 lots, a significant increase from 28,681 lots as of December 31, 2023. The company’s self-developed lots, which include finished lots, lots in communities under development, and land under option for future acquisition and development, represented 97.7% of the total lots owned and controlled.

Liquidity and Capital Resources Green Brick maintained a strong balance sheet, with $80.1 million in unrestricted cash and cash equivalents as of September 30, 2024. The company’s debt to total capitalization ratio was 16.4%, and its net debt to total capitalization ratio, a non-GAAP measure, was 12.5%.

The company’s key sources of liquidity were funds generated by operations and borrowings. During the first nine months of 2024, net cash used for operating activities was $3.0 million, compared to $232.7 million provided by operating activities in the same period of the prior year. This was primarily driven by an increase in inventory, partially offset by cash generated from business operations and the deferral of expense payments.

Net cash provided by investing activities was $34.6 million, mainly due to the $64.0 million in proceeds from the sale of the company’s interest in Challenger. Net cash used in financing activities was $126.4 million, primarily related to share repurchases and debt repayments.

Outlook and Strategic Initiatives Green Brick’s strong operational performance and disciplined capital management position the company for continued growth and success. The company’s focus on high-growth, infill and infill-adjacent markets, coupled with its efficient construction processes and strategic land acquisition and development strategies, have been key drivers of its performance.

Looking ahead, the company plans to continue investing in the growth and expansion of its Trophy Signature Homes brand, particularly in the Austin and Houston markets, as well as exploring potential new markets for expansion. The company also intends to prudently employ leverage to support its land acquisition, development, and homebuilding activities.

Overall, Green Brick’s Q3 2024 results demonstrate the company’s ability to navigate the evolving market conditions and deliver strong financial and operational performance. The company’s strategic focus, disciplined execution, and commitment to shareholder value creation position it well for the future.