Attached files
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| EX-99.1 - EXHIBIT 99.1 GREEN BRICK PARTNERS, INC. EARNINGS RELEASE 12.31.2017 - Green Brick Partners, Inc. | ex991grbkearningsrelease12.htm |
| 8-K - FORM 8-K 12.31.2017 - Green Brick Partners, Inc. | a12312017earningsgrbkform8.htm |
1
GREEN BRICK PARTNERS
Q4 2017 INVESTOR CALL PRESENTATION
MARCH 12, 2018
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, Diluted Adjusted EPS, Basic and Diluted Adjusted weighted-average number of shares outstanding, GRBK
Pre-tax Income and Adjusted Homebuilding Gross Margin. 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 40 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 26 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 15 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 – December 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
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 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
33,243
31,708
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
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 4,600 lots in Dallas where the market continues its 7-year trend of constrained supply
Source: Metrostudy - MetroUSA
50,344
18.2
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
4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
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
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
U
n
i
t
s
Quarter
Atlanta Region 16 Year History
Annual Construction Starts and Closings
Annual Starts Annual Closings
2Q06 Peaked
72% of activity is in North Atlanta
where GRBK builds.
24,325
+12%
22,182
+9%
Atlanta Regi 16 Year History
Annual Construction Starts and Closings
2Q06 Peaked
10
GREEN BRICK AT A GLANCE
• We are a diversified homebuilding and land
development 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 6,200
well-located residential lots as of December 31,
2017
• Over 72% 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
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
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 5 months ending Dec 31, 2017, Challenger
generated $59.0 million in revenues and $5.5 million in
income before taxes; GRBK’s share of pre-tax income
is 49.9%
12
CORPORATE STRUCTURE
• We are a diversified homebuilding and land development company with strong sponsor ownership and
controlling interests in our aligned homebuilders.
50%50%50%50% 49.99%
100%
13
QUARTERLY SPOTLIGHT
Heritage Creekside, Plano, TX – Modern Townhomes in the Heart of a Connected Community
• Heritage Creekside is a neighborhood made up of creek side urban
apartments, lofts, townhomes and single-family homes all within
walking distance from a mix of shops, restaurants, hotels, offices and
newly restored creek bed. The community serves as a model for eco-
sensitive neighborhood development in the region, celebrating nature
as a fundamental community value.
• Heritage Creekside is now in Phase 1 of development and Phase 2 of
planning. CB JENI Homes is the sole developer of townhomes in the
community.
• Heritage Creekside Townhomes
are all two-stories and range from
1,825 - 2,049 square feet with
prices starting in the $310,000’s.
14
GRBK: A TRUE GROWTH STORY
We have the strong balance sheet and operational excellence for continued growth
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 Q4 2017
• GRBK net debt to capital is about 16% versus an average 40% for covered public builders
• GRBK’s eventual target is approximately 35%
16
FINANCIAL HIGHLIGHTS
Quarter over Quarter Year over Year
Q4 2016 Q4 2017 Increase 2016 2017 Increase
Net New Home Orders 197 265 35% 880 1,063 21%
Home Closings - Units 275 292 6% 844 990 17%
Home Closing Revenues $117.0 $133.5 14% $365.2 $435.6 19%
Ending Active Selling Communities 50 55 10%
Homes Under Construction 564 736 30%
Homes Started 902 1162 29%
Dollar Value of Backlog $108.0 $151.5 40%
Pre-Tax Income - GRBK $13.7 $17.2 26% $39.0 $53.9 38%
Pre-Tax Income - GRBK as % of Home Revenues 11.7% 12.9% 10.7% 12.4%
Total Lots Owned & Controlled 5,189 6,219 20%
17
OPERATIONAL HIGHLIGHTS
LTM Adjusted Gross Margins LTM GRBK Pre-Tax Income to Homebuilding Revenues
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
GRBK Pre-tax Income as a Percentage of Homebuilding Revenues
(Unaudited, in thousands)
12 Months
Ended
Dec 31, 2016
12 Months
Ended
Mar 31, 2017
12 Months
Ended
June 30, 2017
12 Months
Ended
Sep 30, 2017
12 Months
Ended
Dec 31, 2017
LTM Net income attributable to Green Brick $23,756 $26,859 $27,805 $30,842 $14,970
LTM Income tax provision attributable to Green Brick $15,261 $17,693 $17,829 $19,541 $38,896
LTM GRBK Pre-tax income $39,017 $44,552 $45,634 $50,383 $53,866
LTM Sale of Residential Units $365,164 $391,933 $398,546 $419,156 $435,644
LTM GRBK Pre-tax income as a % of
Homebuilding Revenues 10.7% 11.4% 11.5% 12.0% 12.4%
(Unaudited, in thousands)
3 Months
Ended
Dec 31, 2016
Year
Ended
Dec 31, 2016
3 Months
Ended
Dec 31, 2017
Year
Ended
Dec 31, 2017
Net income attributable to Green Brick $7,676 $23,756 ($8,196) $14,970
Income tax provision attributable to Green Brick $6,001 $15,261 $25,356 $38,896
GRBK Pre-tax income $13,677 $39,017 $17,160 $53,866
Sale of Residential Units $116,977 $365,164 $133,465 $435,644
GRBK Pre-tax income as a % of
Homebuilding Revenues 11.7% 10.7% 12.9% 12.4%
20
NON-GAAP RECONCILIATION
Adjusted Homebuilding Gross Margin Reconciliation
(Unaudited, in thousands)
12 Months
Ended
Dec 31, 2016
12 Months
Ended
Mar 31, 2017
12 Months
Ended
June 30, 2017
12 Months
Ended
Sep 30, 2017
12 Months
Ended
Dec 31, 2017
Sale of Residential Units $365,164 $391,933 $398,546 $419,156 $435,644
Homebuilding gross margin $81,710 $87,922 $89,429 $93,637 $93,579
Add back: Capitalized Interest charged to cost of
sales $2,814 $2,441 $2,492 $2,639 $2,630
Adjusted homebuilding gross margin $84,524 $90,363 $91,921 $96,276 $96,209
Adjusted gross margin percentage 23.1% 23.1% 23.1% 23.0% 22.1%
21
2805 North Dallas Parkway, Suite 400
Plano, TX 75093
www.greenbrickpartners.com