Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 GREEN BRICK PARTNERS, INC. EARNINGS RELEASE 9.30.2017 - Green Brick Partners, Inc. | exhibit991grbkearningsrele.htm |
| 8-K - FORM 8-K 9.30.2017 - Green Brick Partners, Inc. | a9302017grbkform8-k.htm |
1
GREEN BRICK PARTNERS
Q3 2017 INVESTOR CALL PRESENTATION
NOVEMBER 6, 2017
Exhibit 99.2
2
FORWARD LOOKING STATEMENTS
This presentation and the oral statements made by representatives of the Company during the course of this presentation 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,” “could,” “would,”
“predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “outlook,” “strategy,” “positioned,” “intends,” “plans,” “believes,” “projects,” “estimates”
and similar expressions, as well as statements in the future tense. Although the Company believes that the assumptions underlying these statements are
reasonable, individuals considering such statements for any purpose are cautioned that such forward‐looking statements are inherently uncertain and necessarily
involve risks that may affect the Company’s business prospects and performance, causing actual results to differ from those discussed during the presentation, and
any such difference may be material. Factors that could cause actual results to differ from those anticipated are discussed in the Company’s annual and quarterly
reports filed with the SEC.
Any forward‐looking statements made are subject to risks and uncertainties, many of which are beyond management’s control. These risks include the risks
described in the Company’s filings with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the
Company’s actual results and plans could differ materially from those expressed in any forward‐looking statements.
Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward‐looking statements. These forward‐looking statements are
made only as of the date hereof. The Company undertakes no obligation to publicly update any forward‐looking statements, whether as a result of new information
or future events.
The Company presents Basic Adjusted EPS and Diluted Adjusted EPS and Basic and Diluted Adjusted weighted‐average number of shares outstanding, Income
before taxes attributable to GRBK, Adjusted Homebuilding Gross Margin and EBIT. The Company believes these and similar measures are useful to management
and investors in evaluating its operating performance and financing structure. The Company also believes these measures facilitate the comparison of their
operating performance and financing structure with other companies in the industry. Because these measures are not calculated in accordance with 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.
3
MANAGEMENT PRESENTERS
Jim Brickman
Chief Executive Officer
• Over 39 years in real estate development and homebuilding.
• Co-founded JBGL with Greenlight Capital in 2008. JBGL was merged into Green Brick in 2014.
• Previously served as Chairman and CEO of Princeton Homes and Princeton Realty Corp.
Rick Costello
Chief Financial Officer
• Over 25 years of financial and operating experience in all aspects of real estate management.
• Previously served as CFO and COO of GL Homes, as AVP of finance of Paragon Group and as an auditor for KPMG.
Jed Dolson
President of Texas Region
• Over 14 years of land development and property acquisition.
• Head of GRBK land acquisitions since 2010.
• Masters Degree in Engineering, Stanford University, and Registered Engineer, State of Texas.
4
MARKET UPDATE
The housing market is being under supplied
• Demand is there; the new challenge is building new homes that buyers want in locations they can afford.
5
MARKET UPDATE
National Economic Overview
Top Job Growth Markets Ranked by Change in Employment – August 2017
Housing starts are highly correlated to jobs and we build in two of the highest job growth markets
Source: Metrostudy - MetroUSA
6
MARKET UPDATE
National Economic Overview
Top Metrostudy CBSAs – Ranked by Annual Starts
We are less than 2.0% of the starts in two of the largest housing markets, giving us significant opportunity for growth
Source: Metrostudy - MetroUSA
GRBK has also entered
the Colorado Springs
market (see #6) through
our investment in
Challenger Homes
7
MARKET UPDATE
Dallas/Fort Worth Market
SFD-TH – Starts and closings
Dallas market continues 6-year expansion but is still well below prior peak
Source: Metrostudy - MetroUSA
31,911
30,496
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 3Q17
A
n
n
u
a
l
S
t
a
r
t
s
&
C
l
o
s
i
n
g
s
Annual Starts
Annual Closings
8
MARKET UPDATE
Dallas/Fort Worth Market
Lot Inventory
GRBK has almost 4,100 lots in Dallas where the market continues its 7-year trend of constrained supply
Source: Metrostudy - MetroUSA
49,677
18.7
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 3Q17
M
onths of Supply
L
o
t
s
/
S
t
a
r
t
s
Vacant Developed Lots
Annual Starts
VDL Months of Supply
9
MARKET UPDATE
The Atlanta market also continues to expand but is still well below prior peak
Source: Metrostudy - MetroUSA
23,484
+10%
21,745
+10%
72% of activity is in North Atlanta
where GRBK builds.
Atlanta Region 16-Year Historic
Annual Construction Starts and Closings
2Q06 Peaked
10
GREEN BRICK AT A GLANCE
• Uniquely structured residential land
development and homebuilding company
• We build and deliver homes through our
controlled builders in which we own a 50%
controlling interest as well as our investment
in unconsolidated builder partners
• We sell lots and provide lot acquisition and
vertical construction financing to our
controlled builders
• Currently focused on the high growth
metropolitan areas of Dallas, Atlanta and
Colorado Springs
• Attractive land position of approximately 5,700
well-located residential lots as of September 30,
2017
• Over 81% of our residential lots are owned
• Virtually all of our owned lots are owned at
corporate level vs. at the controlled builder
level
Products offered
Townhomes, single family
Single family
Luxury homes
Townhomes,
contractor on luxury homes
Townhomes, single family, luxury
homes
Dallas
CB JENI
Normandy Homes
Southgate Homes
Centre Living Homes
Atlanta
The Providence Group
Controlled Builders
Products offered
Townhomes, single family
Colorado
Challenger Homes
Unconsolidated Builder Partners
11
INTRODUCTION TO CHALLENGER HOMES
• On August 15, 2017, GRBK acquired a 49.9% ownership
of Challenger Homes, effective August 1, 2017
• With this investment in an unconsolidated subsidiary,
Green Brick has expanded into Colorado Springs and
the Pikes Peak Region:
• In January 2017, Forbes declared the region one
of the “10 Hottest Real Estate Markets to Watch”
• In February 2017, Colorado Springs nabbed the
No. 2 spot in U.S. News and World Report’s
ranking of the “Most Desirable Places to Live” in
2017
• In the 2 months ending Sep 30, 2017, Challenger
generated $22.0 million in revenues and $1.9 income
before taxes; GRBK’s share of pre-tax income is 49.9%
• Challenger Homes owns more than 1,800 home sites
and controls more than 4,000 lots
12
CORPORATE STRUCTURE
• We are a uniquely structured company that combines residential land development and homebuilding
with strong sponsor ownership and controlling interests in our aligned homebuilders.
50%50%50%50%
100%
49.99%
13
QUARTERLY SPOTLIGHT
East of Main in Alpharetta, GA – Blending Historic Preservation with the Needs of Modern Buyers
• East of Main in Alpharetta, GA showcases why The
Providence Group is the premier Atlanta builder developing
high barrier-to-entry in-fill complex neighborhoods with a mix
of townhomes and single-family homes.
• In addition to constructing
unique and great looking
homes, the Providence Group
worked to painstakingly restore
the historic Ben Manning
House, a nearly century old
farm house that currently
serves as the marketing center.
14
GRBK: A TRUE GROWTH STORY
We have the strong balance sheet and operational excellence for continued growth
Company records;
2017 is Last Twelve
Months as of 9.30.17
15
BALANCE SHEET STRENGTH
GRBK has one of the lowest debt-to-capital ratios amongst public builders
Citi Research data for
comparative companies is
reported as of November 3,
2017; “Net Debt” equals
Total Debt minus Cash
Net Debt to Total Capital Q3 2017
• GRBK net debt to capital is about 17% versus an average 40% for covered public builders
• GRBK’s eventual target is approximately 35%
16
FINANCIAL HIGHLIGHTS
Quarter over Quarter Year over Year Last 12 Months
Q3 2016 Q3 2017 Increase YTD 2016 YTD 2017 Increase 9/30/16 9/30/17 Increase
Net New Home Orders 204 241 18% 683 798 17% 835 995 19%
Home Closings - Units 196 235 20% 569 698 23% 763 973 28%
Home Closing Revenues $87.8 $108.4 23% $248.2 $302.2 22% $323.3 $419.2 30%
Ending Active Selling Communities 49 56 14%
Homes Under Construction 665 715 8%
Homes Started 886 1023 15%
Adjusted Homebuilding Gross Margin 22.7% 22.4% 22.3% 22.2% 22.0% 23.0%
Dollar Value of Backlog $138.7 $164.6 19%
Pre-Tax Income - GRBK $9.9 $14.6 48% $25.3 $36.7 45%
EBIT - GRBK $10.4 $15.3 47% $27.6 $39.2 42%
EBIT - GRBK as % of Home Revenues 11.9% 14.1% 11.1% 13.0%
Total Lots Owned & Controlled 5,069 5,697 12%
17
OPERATIONAL HIGHLIGHTS
LTM Adjusted Gross Margins LTM Home Building Revenues (in millions)
18
KEY TAKEAWAYS
• Significant growth opportunities exist in Dallas, Atlanta and Colorado Springs ̶ three of the most attractive
homebuilder markets in the U .S.
• We have the four pillars to support significant growth: lot position, balance sheet, management team, and
builders.
• Proven success in executing our growth strategy with our controlled and aligned builders.
• Our operating model and low leverage results in superior risk adjusted returns.
19
NON-GAAP RECONCILIATION
Adjusted EPS Reconciliation
(Unaudited, in thousands, except per share amounts)
Three Months Ended
Sept 30, 2017
Nine Months Ended
Sept 30, 2017
Basic adjusted EPS
Net income attributable to Green Brick – basic $9,280 $23,165
Income tax provision attributable to Green Brick $5,336 $13,540
Pre-tax income $14,616 $36,705
Adjusted weighted-average number of shares outstanding – basic 49,808 49,274
Basic adjusted EPS $0.29 $0.74
Diluted adjusted EPS
Net income attributable to Green Brick – diluted $9,280 $23,165
Income tax provision attributable to Green Brick $5,336 $13,540
Pre-tax income $14,616 $36,705
Adjusted weighted-average number of shares outstanding – diluted 49,883 49,344
Diluted adjusted EPS $0.29 $0.74
20
NON-GAAP RECONCILIATION
Adjusted Homebuilding Gross Margin Reconciliation
(Unaudited, in thousands)
12 Months
Ended
Sep 30, 2016
12 Months
Ended
Dec 31, 2016
12 Months
Ended
Mar 31, 2017
12 Months
Ended
June 30, 2017
12 Months
Ended
Sept 30, 2017
Sale of Residential Units $323,259 $365,164 $391,933 $398,546 $419,156
Homebuilding gross margin $67,684 $81,710 $87,922 $89,429 $93,637
Add back: Capitalized Interest charged to cost
of sales $3,483 $2,814 $2,441 $2,492 $2,639
Adjusted homebuilding gross margin $71,167 $84,524 $90,363 $91,921 $96,276
Adjusted gross margin percentage 22.0% 23.1% 23.1% 23.1% 23.0%
(Unaudited, in thousands)
3 Months
Ended
Sep 30, 2016
9 Months
Ended
Sep 30, 2016
3 Months
Ended
Sep 30, 2017
9 Months
Ended
Sep 30, 2017
Sale of Residential Units $87,827 $248,187 $108,437 $302,179
Homebuilding gross margin $19,477 $53,186 $23,685 $65,113
Add back: Capitalized Interest charged to cost
of sales $426 $2,051 $573 $1,876
Adjusted homebuilding gross margin $19,903 $55,237 $24,258 $66,989
Adjusted gross margin percentage 22.7% 22.3% 22.4% 22.2%
21
NON-GAAP RECONCILIATION
EBIT Reconciliation
(Unaudited, in thousands)
3 Months
Ended
Sep 30, 2016
9 Months
Ended
Sep 30, 2016
3 Months
Ended
Sep 30, 2017
9 Months
Ended
Sep 30, 2017
Sale of Residential Units $87,827 $248,187 $108,437 $302,179
Net income attributable to Green Brick – basic $6,243 $16,080 $9,280 $23,165
Add back: Income tax provision attributable to Green Brick $3,624 $9,260 $5,336 $13,540
Add back: Capitalized Interest charged to cost of sales $546 $2,247 $716 $2,486
EBIT – GRBK $10,413 $27,587 $15,332 $39,191
EBIT – GRBK as a percentage of Home Sale Revenues 11.9% 11.1% 14.1% 13.0%
22
2805 North Dallas Parkway, Suite 400
Plano, TX 75093
www.greenbrickpartners.com