Green Brick Partners, Inc. [GRBK] Filings

10-Q 1 grbk-20230331.htm 10-Q grbk-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-Q

___________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33530


Green Brick Partners, Inc.

(Exact name of registrant as specified in its charter)


Delaware				20-5952523
(State or other jurisdiction of incorporation)				(IRS Employer Identification Number)
2805 Dallas Pkwy	,	Ste 400
Plano	,	TX	75093	(469)	573-6755
(Address of principal executive offices, including Zip Code)				(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	GRBK	The New York Stock Exchange
Depositary Shares (each representing a 1/1000th interest in a share of 5.75% Series A Cumulative Perpetual Preferred Stock, par value $0.01 per share)	GRBK PRA	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares of the Registrant's common stock outstanding as of April 28, 2023 was 45,508,376.

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PART I		FINANCIAL INFORMATION
	Item 1.	Financial Statements	1
		Unaudited Condensed Consolidated Balance Sheets, March 31, 2023 and December 31, 2022	1
		Unaudited Condensed Consolidated Statements of Income for the three months ended March 31, 2023 and 2022	2
		Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31 2023 and 2022	3
		Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	4
		Notes to the Unaudited Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 4.	Controls and Procedures	27
PART II		OTHER INFORMATION
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 6.	Exhibits	29
		Signatures	30

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data) (Unaudited)


	March 31, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	177,271	$	76,588
Restricted cash	18,416		16,682
Receivables	7,256		5,288
Inventory	1,373,014		1,422,680
Investments in unconsolidated entities	77,059		74,224
Right-of-use assets - operating leases	3,076		3,458
Property and equipment, net	3,913		2,919
Earnest money deposits	19,530		23,910
Deferred income tax assets, net	16,448		16,448
Intangible assets, net	429		452
Goodwill	680		680
Other assets	9,364		12,346
Total assets	$	1,706,456	$	1,655,675
LIABILITIES AND EQUITY
Liabilities:
Accounts payable	$	52,862	$	51,804
Accrued expenses	108,492		91,281
Customer and builder deposits	36,948		29,112
Lease liabilities - operating leases	3,187		3,582
Borrowings on lines of credit, net	(2,453)		17,395
Senior unsecured notes, net	335,920		335,825
Notes payable	14,607		14,622
Total liabilities	549,563		543,621
Commitments and contingencies
Redeemable noncontrolling interest in equity of consolidated subsidiary	30,291		29,239
Equity:
Green Brick Partners, Inc. stockholders’ equity
Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	47,696		47,696
Common stock, $0.01 par value: 100,000,000 shares authorized; 46,211,430 issued and 45,743,555 outstanding as of March 31, 2023 and 46,032,930 issued and outstanding as of December 31, 2022, respectively	462		460
Treasury stock, at cost: 467,875 shares as of March 31, 2023 and none as of December 31, 2022	(15,351)		—
Additional paid-in capital	263,545		259,410
Retained earnings	817,802		754,341
Total Green Brick Partners, Inc. stockholders’ equity	1,114,154		1,061,907
Noncontrolling interests	12,448		20,908
Total equity	1,126,602		1,082,815
Total liabilities and equity	$	1,706,456	$	1,655,675

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Residential units revenue	$	450,362	$	364,661
Land and lots revenue	1,699		28,955
Total revenues	452,061		393,616
Cost of residential units	326,124		263,430
Cost of land and lots	1,331		21,830
Total cost of revenues	327,455		285,260
Total gross profit	124,606		108,356
Selling, general and administrative expenses	(45,945)		(34,265)
Equity in income of unconsolidated entities	4,221		5,687
Other income, net	4,290		2,855
Income before income taxes	87,172		82,633
Income tax expense	19,031		18,437
Net income	68,141		64,196
Less: Net income attributable to noncontrolling interests	3,961		2,619
Net income attributable to Green Brick Partners, Inc.	$	64,180	$	61,577

Net income attributable to Green Brick Partners, Inc. per common share:
Basic	$	1.38	$	1.20
Diluted	$	1.37	$	1.20
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic	45,945		50,586
Diluted	46,351		50,924

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

For the three months ended March 31, 2023 and 2022:


	Common Stock				Preferred Stock				Treasury Stock				Additional Paid-in Capital			Retained Earnings		Total GRBK. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity
	Shares	Amount			Shares	Amount			Shares	Amount
Balance at December 31, 2022	46,032,930	$	460		2,000	$	47,696		—	$	—		$	259,410		$	754,341	$	1,061,907	$	20,908	$	1,082,815
Issuance of common stock under 2014 Omnibus Equity Incentive Plan	238,357	3			—	—			—	—			5,230			—		5,233		—		5,233
Withholdings from vesting of restricted stock awards	(59,857)	(1)			—	—			—	—			(1,975)			—		(1,976)		—		(1,976)
Amortization of deferred share-based compensation	—	—			—	—			—	—			567			—		567		—		567
Dividends	—	—			—	—			—	—			—			(719)		(719)		—		(719)
Share repurchases	—	—			—	—			(467,875)	(15,351)			—			—		(15,351)		—		(15,351)
Change in fair value of redeemable noncontrolling interest	—	—			—	—			—	—			313			—		313		—		313
Distributions	—	—		—	—	—		—	—	—		—	—		—	—		—		(11,056)		(11,056)
Net income	—	—			—	—			—	—			—			64,180		64,180		2,596		66,776
Balance at March 31, 2023	46,211,430	$	462		2,000	$	47,696		(467,875)	$	(15,351)		$	263,545		$	817,802	$	1,114,154	$	12,448	$	1,126,602


	Common Stock			Preferred Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total GRBK. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2021	51,151,911	$	512	2,000	$	47,696	(391,939)	$	(3,167)	$	289,641	$	539,866	$	874,548	$	14,146	$	888,694
Issuance of common stock under 2014 Omnibus Equity Incentive Plan	139,710	1		—	—		—	—		2,751		—		2,752		—		2,752
Withholdings from vesting of restricted stock awards	(46,415)	(1)		—	—		—	—		(1,074)		—		(1,075)		—		(1,075)
Amortization of deferred share-based compensation	—	—		—	—		—	—		280		—		280		—		280
Dividends	—	—		—	—		—	—		—		(655)		(655)		—		(655)
Share repurchases	—	—		—	—		(1,193,037)	(25,801)		—		—		(25,801)		—		(25,801)
Change in fair value of redeemable noncontrolling interest	—	—		—	—		—	—		557		—		557		—		557
Distributions	—	—		—	—		—	—		—		—		—		(5,718)		(5,718)
Net income	—	—		—	—		—	—		—		61,577		61,577		1,750		63,327
Balance at March 31, 2022	51,245,206	$	512	2,000	$	47,696	(1,584,976)	$	(28,968)	$	292,155	$	600,788	$	912,183	$	10,178	$	922,361

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	68,141	$	64,196
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense	754		625
(Gain) loss on disposal of property and equipment, net	(146)		39
Share-based compensation expense	5,499		2,923
Equity in income of unconsolidated entities	(4,221)		(5,687)
Allowances for option deposits and pre-acquisition costs	10		59
Distributions of income from unconsolidated entities	2,906		3,176
Changes in operating assets and liabilities:
Increase in receivables	(1,968)		(179)
Decrease (increase) in inventory	49,987		(123,429)
Decrease in earnest money deposits	4,380		1,265
Decrease in other assets	2,960		4,476
Increase in accounts payable	1,058		11,217
Increase in accrued expenses	17,512		28,317
Increase (decrease) in customer and builder deposits	7,835		(992)
Net cash provided by (used in) operating activities	154,707		(13,994)
Cash flows from investing activities:
Investments in unconsolidated entities	(1,520)		—
Purchase of property and equipment, net of disposals	(1,581)		(448)
Net cash used in investing activities	(3,101)		(448)
Cash flows from financing activities:
Borrowings from lines of credit	22,000		112,000
Repayments of lines of credit	(42,000)		(92,000)
Proceeds from notes payable	—		14,472
Repayments of notes payable	(16)		(14)
Payments of debt issuance costs	(72)		(86)
Payments of withholding tax on vesting of restricted stock awards	(1,975)		(1,075)
Share repurchases	(15,351)		(25,801)
Dividends paid	(719)		(655)
Distributions to noncontrolling interests	(11,056)		(5,718)
Net cash (used in) provided by financing activities	(49,189)		1,123
Net increase (decrease) in cash and cash equivalents and restricted cash	102,417		(13,319)
Cash and cash equivalents, beginning of period	76,588		78,696
Restricted cash, beginning of period	16,682		14,858
Cash and cash equivalents and restricted cash, beginning of period	93,270		93,554
Cash and cash equivalents, end of period	177,271		66,083
Restricted cash, end of period	18,416		14,152
Cash and cash equivalents and restricted cash, end of period	$	195,687	$	80,235

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GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands) (Unaudited)


Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds	$	—	$	25

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GREEN BRICK PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) and applicable regulations of the Securities and Exchange Commission (“SEC”), but do not include all of the information and footnotes required for complete financial statements. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements for the periods presented reflect all adjustments of a normal, recurring nature necessary to fairly state our financial position, results of operations and cash flows. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023 or subsequent periods due to seasonal variations and other factors.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Green Brick Partners (together, the “Company”, “we”, or “Green Brick”), Inc., its controlled subsidiaries, and variable interest entities (“VIEs”) in which Green Brick Partners, Inc. or one of its controlled subsidiaries is deemed to be the primary beneficiary.

All intercompany balances and transactions have been eliminated in consolidation.

The Company uses the equity method of accounting for its investments in unconsolidated entities over which it exercises significant influence but does not have a controlling interest. Under the equity method, the Company’s share of the unconsolidated entities’ earnings or losses, if any, is included in the condensed consolidated statements of income.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes, including the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

For a complete set of the Company’s significant accounting policies, refer to Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the FASB through Accounting Standards Updates (“ASU”) to the FASB ASC. The Company considers the applicability and impact of all ASUs and has determined that any recently adopted accounting pronouncements did not have a material impact on the Company’s consolidated financial statements and all recent accounting pronouncements not yet adopted are not applicable or are not expected to have a material impact on the Company’s consolidated financial statements.

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2. INVENTORY

A summary of our inventory is as follows (in thousands):


	March 31, 2023		December 31, 2022
Homes completed or under construction	$	525,571	$	603,953
Land and lots - developed and under development	796,826		768,194
Land held for future development(1)	48,453		48,369
Land held for sale	2,164		2,164
Total inventory	$	1,373,014	$	1,422,680

(1)Land held for future development consists of raw land parcels where development activities have been postponed due to market conditions or other factors. All applicable carrying costs, including property taxes, are expensed as incurred.

As of March 31, 2023, the Company reviewed the performance and outlook for all of its communities for indicators of potential impairment and performed detailed impairment analysis when such indicators were identified. As of March 31, 2023, the Company performed further impairment analysis of one selling community with indicators of impairment with a combined corresponding carrying value of approximately $26.6 million. For the three months ended March 31, 2023 and 2022, the Company did not record an impairment adjustment to reduce the carrying value of communities to fair value.

A summary of interest costs incurred, capitalized, and expensed is as follows (in thousands):


	Three Months Ended March 31,
	2023			2022
Interest capitalized at beginning of period	$	22,752		$	19,950
Interest incurred	3,743			3,734
Interest charged to cost of revenues	(3,648)			(2,933)
Interest capitalized at end of period	$	22,847		$	20,751

Capitalized interest as a percentage of inventory	1.7		%	1.6		%

3. INVESTMENT IN UNCONSOLIDATED ENTITIES

A summary of the Company’s investments in unconsolidated entities is as follows (in thousands):


	March 31, 2023		December 31, 2022
GB Challenger, LLC	$	51,043	$	49,897
GBTM Sendera, LLC	15,839		14,319
EJB River Holdings, LLC	9,057		8,554
BHome Mortgage, LLC	1,120		1,147
Green Brick Mortgage, LLC	—		307
Total investment in unconsolidated entities	$	77,059	$	74,224

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A summary of the unaudited condensed financial information of the five unconsolidated entities that are accounted for by the equity method is as follows (in thousands):


	March 31, 2023		December 31, 2022
Assets:
Cash	$	12,009	$	15,265
Accounts receivable	5,945		4,972
Bonds and notes receivable	12,341		10,381
Loans held for sale, at fair value	3,155		8,829
Inventory	205,206		195,732
Other assets	10,269		9,352
Total assets	$	248,925	$	244,531
Liabilities:
Accounts payable	$	13,873	$	10,166
Accrued expenses and other liabilities	12,612		12,177
Notes payable	77,060		82,484
Total liabilities	$	103,545	$	104,827
Owners’ equity:
Green Brick	$	73,569	$	70,812
Others	71,811		68,892
Total owners’ equity	$	145,380	$	139,704
Total liabilities and owners’ equity	$	248,925	$	244,531


	Three Months Ended March 31,
	2023		2022
Revenues	$	58,323	$	70,636
Costs and expenses	49,726		59,197
Net earnings of unconsolidated entities	$	8,597	$	11,439
Company’s share in net earnings of unconsolidated entities	$	4,221	$	5,687

A summary of the Company’s share in net earnings by unconsolidated entity is as follows:


	Three Months Ended March 31,
	2023		2022
GB Challenger, LLC	$	3,025	$	4,067
BHome Mortgage, LLC	693		554
EJB River Holdings, LLC	503		738
Green Brick Mortgage, LLC	—		328
Total net earnings from unconsolidated entities	$	4,221	$	5,687

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4. ACCRUED EXPENSES

A summary of the Company’s accrued expenses is as follows (in thousands):


	March 31, 2023		December 31, 2022
Real estate development reserve to complete(1)	$	32,554	$	28,793
Warranty reserve	19,532		17,945
Federal income tax payable	19,293		6,334
Accrued compensation	4,970		13,917
Other accrued expenses	32,143		24,292
Total accrued expenses	$	108,492	$	91,281

(1)Our real estate development reserve to complete consists of estimated future costs to complete the development of our communities.

Warranties

Warranty accruals are included within accrued expenses on the condensed consolidated balance sheets. Warranty activity during the three months ended March 31, 2023 and 2022 consisted of the following (in thousands):


	Three Months Ended March 31,
	2023		2022
Warranty accrual, beginning of period	$	17,945	$	9,378
Warranties issued	2,045		1,814
Changes in liability for existing warranties	633		295
Settlements made	(1,091)		(874)
Warranty accrual, end of period	$	19,532	$	10,613

5. DEBT

Lines of Credit

Borrowings on lines of credit outstanding, net of debt issuance costs, as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Secured Revolving Credit Facility	$	—	$	—
Unsecured Revolving Credit Facility	—		20,000
Debt issuance costs, net of amortization	(2,453)		(2,605)
Total borrowings on lines of credit, net	$	(2,453)	$	17,395

Secured Revolving Credit Facility

The Company is party to a revolving credit facility (the “Secured Revolving Credit Facility”) with Inwood National Bank, which provides for an aggregate commitment amount of $35.0 million. On February 9, 2022, the Company entered into the Eighth Amendment to this credit agreement to extend its maturity date to May 1, 2025 and to reduce the minimum interest rate from 4.00% to 3.15%. All other material terms of the credit agreement, as amended, remained unchanged. The entire unpaid principal balance and any accrued but unpaid interest is due and payable on the maturity date.

As of March 31, 2023, there were no letters of credit outstanding and a net available commitment amount of $35.0 million.

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Unsecured Revolving Credit Facility

The Company is party to a credit agreement, providing for a senior, unsecured revolving credit facility (the “Unsecured Revolving Credit Facility”). On December 9, 2022, the Company entered into the Tenth Amendment to this credit agreement which increased the secured outstanding commitments from $300.0 million to $325.0 million and extended the termination date by one year to December 14, 2025. The Tenth Amendment also replaced LIBOR as the benchmark interest rate with the Secure Overnight Financing Rate (“SOFR”).

The Unsecured Revolving Credit Facility is guaranteed on an unsecured senior basis by the Company’s significant subsidiaries and certain other subsidiaries.

Senior Unsecured Notes

Senior unsecured notes, net of debt issuance costs, as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
4.00% senior unsecured notes due in 2026 (“2026 Notes”)	$	75,000	$	75,000
3.35% senior unsecured notes due in 2027 (“2027 Notes”)	37,500		37,500
3.25% senior unsecured notes due in 2028 (“2028 Notes”)	125,000		125,000
3.25% senior unsecured notes due in 2029 (“2029 Notes”)	100,000		100,000
Debt issuance costs, net of amortization	(1,580)		(1,675)
Total senior unsecured notes, net	$	335,920	$	335,825

The Senior Unsecured Notes are guaranteed on an unsecured senior basis by the Company’s significant subsidiaries and certain other subsidiaries. Optional prepayment of each of the Notes is allowed with a payment of a “make-whole” penalty which fluctuates depending on market interest rates. Interest is payable quarterly in arrears.

2026 Notes

Principal on the 2026 Notes is required to be paid in increments of $12.5 million on August 8, 2024 and $12.5 million on August 8, 2025. The final principal payment of $50.0 million is due on August 8, 2026.

2027 Notes

The aggregate principal amount of senior unsecured notes 2027 Notes is due on August 26, 2027.

2028 Notes

Principal on the 2028 Notes is due in increments of $25.0 million on February 25, 2024; $25.0 million on February 25, 2025; $25.0 million on February 25, 2026; $25.0 million on February 25, 2027 and $25.0 million on February 25, 2028.

2029 Notes

Principal on the 2029 Notes of $30.0 million is due on December 28, 2028. The remaining principal amount of $70.0 million is due on December 28, 2029.

Our debt instruments require us to maintain specific financial covenants, each of which we were in compliance with as of March 31, 2023.

Notes payable

On February 7, 2022, a subsidiary of the Company entered into a Promissory Note agreement with another homebuilder for $28.8 million in connection with the acquisition of a tract of land in Bastrop County, Texas. The Company agreed to pay $14.4 million per the governing Joint Ownership and Development Agreement. The Promissory Note matures on February 7, 2024 and carries an annual fixed rate of 0.6%.

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6. REDEEMABLE NONCONTROLLING INTEREST

Redeemable Noncontrolling Interest in Equity of Consolidated Subsidiaries

The Company has a noncontrolling interest attributable to the 20% minority interest in GRBK GHO Homes, LLC (“GRBK GHO”) owned by our Florida-based partner that is included as redeemable noncontrolling interest in equity of consolidated subsidiary in the Company’s condensed consolidated financial statements.

On March 23, 2023, the Company and the minority partner amended the operating agreement of GRBK GHO to change the start of the put and purchase options from April 2024 to April 2027. Refer to Note 2 in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for details on the put/call structure of this agreement.

The following table shows the changes in redeemable noncontrolling interest in equity of consolidated subsidiary during the three months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,
	2023		2022
Redeemable noncontrolling interest, beginning of period	$	29,239	$	21,867
Net income attributable to redeemable noncontrolling interest partner	1,365		869
Change in fair value of redeemable noncontrolling interest	(313)		(557)
Redeemable noncontrolling interest, end of period	$	30,291	$	22,179

7. STOCKHOLDERS’ EQUITY

2021 Share Repurchase Program

During the three months ended March 31, 2022, the Company completed discrete open market repurchases under the stock repurchase program approved in 2021 of 1,193,037 shares for approximately $25.8 million. There are no amounts remaining under the 2021 plan.

2022 Share Repurchase Program

On April 27, 2022, the Board of Directors (the “Board”) approved a new stock repurchase program (the “2022 Repurchase Plan”) that authorizes the Company to purchase, from time to time, up to $100.0 million of our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors. The 2022 Repurchase Plan has no time deadline and will continue until otherwise modified or terminated by the Board at any time in its sole discretion.

2023 Share Repurchase Program

On April 27, 2023, the Board approved a new stock repurchase program (the “2023 Repurchase Plan”) that authorizes the Company to purchase, from time to time, up to an additional $100.0 million of our outstanding common stock, upon completion of our 2022 Repurchase Plan, through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors. Shares repurchased will be retired. The 2023 Repurchase Plan has no time deadline and will continue until otherwise modified or terminated by the Board at any time in its sole discretion.

During the three months ended March 31, 2023, the Company repurchased 467,875 shares for approximately $15.4 million, excluding excise tax. As of March 31, 2023, the remaining dollar value of shares that may be repurchased under the 2022 Repurchase Plan was $33.3 million, excluding excise tax. The repurchased shares will be retired.

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Preferred Stock

The table below presents a summary of the perpetual preferred stock outstanding at March 31, 2023 and December 31, 2022.

Series

Description

Initial date of issuance

Total Shares Outstanding

Liquidation Preference per Share (in dollars)

Carrying Value (in thousands)

Per Annum Dividend Rate

Redemption Period

Series A(1)

5.75% Cumulative Perpetual

December 2021

2,000

50,000

5.75

n/a

(1) Ownership is held in the form of Depositary Shares, each representing a 1/1,000th interest in a share of preferred stock, paying a quarterly cash dividend, if and when declared.

Dividends

Dividends paid on our Series A preferred stock were $0.7 million for each of the three months ended March 31, 2023 and 2022, respectively.

On April 27,2023, the Board declared a quarterly cash dividend of $0.359 per depositary share on the Company’s preferred stock. The dividend is payable on June 15, 2023 to stockholders of record as of June 1, 2023.

8. SHARE-BASED COMPENSATION

The Company’s stock compensation plan, the 2014 Omnibus Equity Incentive Plan, is administered by the Board and allows for the grant of stock awards (“SAs”), restricted stock awards (“RSAs”), performance restricted stock units (“PRSUs”), and stock options.

Share-Based Award Activity

During the three months ended March 31, 2023, the Company granted SAs to executive officers, RSAs to employees and non-employee members of the Board, and PRSUs to employees. The SAs granted to the executive officers were 100% vested and non-forfeitable on the grant date. Non-vested stock awards are usually granted with a one-year vesting for non-employee directors, two-year cliff vesting for employee RSAs, and three-year cliff vesting for PRSUs. The fair value of all share awards were recorded as share-based compensation expense on the grant date and over the vesting period, respectively. The Company withheld 59,857 shares of common stock from executive officers at a total cost of $2.0 million, to satisfy statutory minimum tax requirements upon grant of the SAs.

A summary of share-based awards activity during the three months ended March 31, 2023 is as follows:


	Number of Shares	Weighted Average Grant Date Fair Value per Share
	(in thousands)
Nonvested, December 31, 2022	38	$	23.94
Granted	179	$	33.21
Vested	(123)	$	33.01
Forfeited	—	$	—
Nonvested, March 31, 2023	94	$	29.69

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Stock Options

A summary of stock options activity during the three months ended March 31, 2023 is as follows:


	Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)			(in years)	(in thousands)
Options outstanding, December 31, 2022	500	$	7.49
Granted	—	—
Exercised	—	—
Forfeited	—	—
Options outstanding, March 31, 2023	500	$	7.49	1.58	$	13,785
Options exercisable, March 31, 2023	500	$	7.49	1.58	$	13,785

Share-Based Compensation Expense

Share-based compensation expense was $5.5 million and $2.9 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the estimated total remaining unamortized share-based compensation expense related to unvested RSAs, net of forfeitures, was $2.7 million which is expected to be recognized over a weighted-average period of 2.0 years.

9. REVENUE RECOGNITION

Disaggregation of Revenue

The following reflects the disaggregation of revenue by primary geographic market, type of customer, product type, and timing of revenue recognition for the three months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
	Residential units revenue		Land and lots revenue		Residential units revenue		Land and lots revenue
Primary Geographical Market
Central	$	344,464	$	1,699	$	261,698	$	28,861
Southeast	105,898		—		102,963		94
Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Type of Customer
Homebuyers	$	450,362	$	—	$	364,661	$	—
Homebuilders and Multi-family Developers	—		1,699		—		28,955
Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Product Type
Residential units	$	450,362	$	—	$	364,661	$	—
Land and lots	—		1,699		—		28,955
Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Timing of Revenue Recognition
Transferred at a point in time	$	449,430	$	1,699	$	363,063	$	28,955
Transferred over time	932		—		1,598		—
Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Revenue recognized over time represents revenue from mechanic’s lien contracts.

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Contract Balances

Opening and closing contract balances included in customer and builder deposits on the condensed consolidated balance sheets are as follows (in thousands):


	March 31, 2023		December 31, 2022
Customer and builder deposits	$	36,948	$	29,112

The difference between the opening and closing balances of customer and builder deposits results from the timing difference between the customers’ payments of deposits and the Company’s delivery of the home, impacted slightly by terminations of contracts.

The amount of deposits on residential units and land and lots held as of the beginning of the period and recognized as revenue during the three months ended March 31, 2023 and 2022 are as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Type of Customer
Homebuyers	$	12,653	$	20,795
Homebuilders and Multi-Family Developers	—		100
Total deposits recognized as revenue	$	12,653	$	20,895

Transaction Price Allocated to the Remaining Performance Obligations

The aggregate amount of transaction price allocated to the remaining performance obligations on our land sale and lot option contracts is $5.3 million. The Company will recognize the remaining revenue when the lots are taken down, or upon closing for the sale of a land parcel, which is expected to occur in the remainder of 2023.

The timing of lot takedowns is contingent upon a number of factors, including customer needs, the number of lots being purchased, receipt of acceptance of the plat by the municipality, weather-related delays, and agreed-upon lot takedown schedules.

Our contracts with homebuyers have a duration of less than one year. As such, the Company uses the practical expedient as allowed under ASC 606, Revenue from Contracts with Customers, and therefore has not disclosed the transaction price allocated to remaining performance obligations as of the end of the reporting period.

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10. SEGMENT INFORMATION

Financial information relating to the Company’s reportable segments is as follows. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.


	Three Months Ended March 31,
(in thousands)	2023		2022
Revenues: (1)
Builder operations
Central	$	344,464	$	261,698
Southeast	105,898		103,057
Total builder operations	450,362		364,755
Land development	1,699		28,861
Total revenues	$	452,061	$	393,616

Gross profit:
Builder operations
Central	$	102,405	$	84,064
Southeast	33,329		25,776
Total builder operations	135,734		109,840
Land development	688		7,414
Corporate, other and unallocated (2)	(11,816)		(8,898)
Total gross profit	$	124,606	$	108,356

Income before income taxes:
Builder operations
Central	$	68,017	$	59,485
Southeast	22,271		15,494
Total builder operations	90,288		74,979
Land development	775		7,585
Corporate, other and unallocated (3)	(3,891)		69
Income before income taxes	$	87,172	$	82,633


	March 31, 2023		December 31, 2022
Inventory:
Builder operations
Central	$	460,388	$	515,981
Southeast	297,729		293,787
Total builder operations	758,117		809,768
Land development	572,985		570,065
Corporate, other and unallocated (4)	41,912		42,847
Total inventory	$	1,373,014	$	1,422,680

Goodwill:
Builder operations - Southeast	$	680	$	680

(1)The sum of Builder operations Central and Southeast segments’ revenues does not equal residential units revenue included in the condensed consolidated statements of income in periods when our builders have revenues from land or

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lot closings. For the three months ended March 31, 2023, Builders did not have revenues from land or lot closings, compared to $0.1 million for the three months ended March 31, 2022.

(2)Corporate, other and unallocated gross loss is comprised of capitalized overhead and capitalized interest adjustments that are not allocated to builder operations and land development segments.

(3)Corporate, other and unallocated loss before income taxes includes results from Green Brick Title, Ventana Insurance, and investments in unconsolidated subsidiaries, in addition to capitalized cost adjustments that are not allocated to operating segments.

(4)Corporate, other and unallocated inventory consists of capitalized overhead and interest related to work in process and land under development.

11. INCOME TAXES

The Company’s income tax expense for the three months ended March 31, 2023 and 2022 was $19.0 million and $18.4 million, respectively. The effective tax rate was 21.8% for the three months ended March 31, 2023, compared to 22.3% in the comparable prior year period. The change in the effective tax rate for the three months ended March 31, 2023 relates primarily to the benefit from the 45L Energy Efficient Home Credit enacted by Congress in August 2022 as part of the Inflation Reduction Act of 2022 (“the 2022 Act”). The 2022 Act extends and modifies the new energy efficient home credit that Congress had enacted through the Taxpayer Certainty and Disaster Tax Relief Acts of 2019 and 2020. This tax credit had expired at the end of 2021, but following its enactment in August 2022, the 2022 Act extended the tax credit through 2032.

12. EARNINGS PER SHARE

The Company’s RSAs have the right to receive forfeitable dividends on an equal basis with common stock and our PRSUs do not participate in dividends with common stock and therefore are not considered participating securities that must be included in the calculation of net income per share using the two-class method.

Basic earnings per common share is computed by dividing net income allocated to common stockholders by the weighted average number of common shares outstanding during each period, adjusted for non-vested shares of RSAs and PRSUs during each period. Net income applicable to common stockholders is net income adjusted for preferred stock dividends including dividends declared and cumulative dividends related to the current dividend period that have not been declared as of period end. Diluted earnings per share is calculated using the treasury stock method and includes the effect of all dilutive securities, including stock options and restricted stock awards.

The computation of basic and diluted net income attributable to Green Brick Partners, Inc. per share is as follows (in thousands, except per share amounts):


	Three Months Ended March 31,
	2023		2022
Net income attributable to Green Brick Partners, Inc.	$	64,180	$	61,577
Cumulative preferred stock dividends	(719)		(719)
Net income applicable to common stockholders	$	63,461	$	60,858

Weighted-average number of common shares outstanding - basic	45,945		50,586
Basic net income attributable to Green Brick Partners, Inc. per common share	$	1.38	$	1.20

Weighted-average number of common shares outstanding - basic	45,945		50,586
Dilutive effect of stock options and restricted stock awards	406		338
Weighted-average number of common shares outstanding - diluted	46,351		50,924
Diluted net income attributable to Green Brick Partners, Inc. per common share	$	1.37	$	1.20

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The following shares which could potentially dilute earnings per share in the future are not included in the determination of diluted net income attributable to Green Brick Partners, Inc. per common share (in thousands):


	Three Months Ended March 31,
	2023	2022
Antidilutive options to purchase common stock and restricted stock awards	(67)	29

13. FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The Company’s financial instruments, none of which are held for trading purposes, include cash and cash equivalents, restricted cash, receivables, earnest money deposits, other assets, accounts payable, accrued expenses, customer and builder deposits, borrowings on lines of credit, senior unsecured notes, and notes payable.

Per the fair value hierarchy, level 1 financial instruments include: cash and cash equivalents, restricted cash, receivables, earnest money deposits, other assets, accounts payable, accrued expenses, and customer and builder deposits due to their short-term nature. The Company estimates that, due to the short-term nature of the underlying financial instruments or the proximity of the underlying transaction to the applicable reporting date, the fair value of level 1 financial instruments does not differ materially from the aggregate carrying values recorded in the condensed consolidated financial statements as of March 31, 2023 and December 31, 2022.

Level 2 financial instruments include borrowings on lines of credit, senior unsecured notes, and notes payable. Due to the short-term nature and floating interest rate terms, the carrying amounts of borrowings on lines of credit are deemed to approximate fair value. The estimated fair value of the senior unsecured notes as of March 31, 2023 and December 31, 2022 was $312.1 million and $306.1 million, respectively. The aggregate principal balance of the senior unsecured notes was $337.5 million as of March 31, 2023 and December 31, 2022.

There were no transfers between the levels of the fair value hierarchy for any of our financial instruments during the three months ended March 31, 2023 and 2022.

14. RELATED PARTY TRANSACTIONS

During the three months ended March 31, 2023 and 2022, the Company had the following related party transactions in the normal course of business.

Corporate Officers

Trevor Brickman, the son of Green Brick’s Chief Executive Officer, is the President of CLH20, LLC (“Centre Living”). Green Brick’s ownership interest in Centre Living is 90% and Trevor Brickman’s ownership interest is 10%. Green Brick has 90% voting control over the operations of Centre Living. As such, 100% of Centre Living’s operations are included within our condensed consolidated financial statements.

GRBK GHO

GRBK GHO leases office space from entities affiliated with the president of GRBK GHO. During the three months ended March 31, 2023 and 2022, GRBK GHO incurred de minimis and $0.1 million rent expense, respectively, under such lease agreements. As of March 31, 2023, there were no amounts due to the affiliated entities related to such lease agreements.

GRBK GHO receives title closing services on the purchase of land and third-party lots from an entity affiliated with the president of GRBK GHO. During the three months ended March 31, 2023 and 2022, GRBK GHO incurred de minimis fees related to such title closing services. As of March 31, 2023, and December 31, 2022, no amounts were due to the title company affiliate.

15. COMMITMENTS AND CONTINGENCIES

Letters of Credit and Performance Bonds

During the ordinary course of business, certain regulatory agencies and municipalities require the Company to post letters of credit or performance bonds related to development projects. As of March 31, 2023 and December 31, 2022, letters of credit

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and performance bonds outstanding were $3.1 million and $5.0 million. The Company does not believe that it is likely that any material claims will be made under a letter of credit or performance bond in the foreseeable future.

Operating Leases

The Company has leases associated with office and design center space in Georgia, Texas, and Florida that, at the commencement date, have a lease term of more than 12 months and are classified as operating leases. The exercise of any extension options available in such operating lease contracts is not reasonably certain.

Operating lease cost of $0.4 million for each of the three months ended March 31, 2023 and 2022, is included in selling, general and administrative expenses in the condensed consolidated statements of income. Cash paid for amounts included in the measurement of operating lease liabilities was $0.4 million for each of the three months ended March 31, 2023 and 2022.

As of March 31, 2023, the weighted-average remaining lease term and the weighted-average discount rate used in calculating our lease liabilities were 4.4 years and 4.0%, respectively.

The future annual undiscounted cash flows in relation to the operating leases and a reconciliation of such undiscounted cash flows to the operating lease liabilities recognized in the condensed consolidated balance sheet as of March 31, 2023 are presented below (in thousands):


Remainder of 2023	$	1,028
2024	590
2025	566
2026

Green Brick Partners, Inc. [GRBK] Filings
10-Q	[2023-05-03]
10-K	[2023-02-27]
10-Q	[2022-11-02]
10-Q	[2022-08-03]
10-Q	[2022-05-03]
10-K	[2022-03-01]
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-05-04]
10-K	[2021-03-08]
10-Q	[2020-10-29]
10-Q	[2020-08-04]
10-Q	[2020-05-11]
10-K	[2020-03-06]
10-Q	[2019-11-08]
10-Q	[2019-08-08]
10-Q	[2019-05-06]
10-K	[2019-03-08]
10-Q	[2018-11-05]
10-Q	[2018-08-06]
10-Q	[2018-05-07]
10-K	[2018-03-12]
10-Q	[2017-11-06]
10-Q	[2017-08-07]
10-Q	[2017-05-08]
10-K	[2017-03-13]
10-Q	[2016-11-07]
10-Q	[2016-08-08]
10-Q	[2016-05-09]
10-K	[2016-03-30]
10-Q	[2015-11-12]
10-Q	[2015-08-12]
10-Q	[2015-05-13]
10-K	[2015-03-31]
10-Q	[2014-10-22]
10-Q	[2014-07-29]
S-1	[2014-07-16]
10-Q	[2014-05-08]
10-K	[2014-03-26]
10-Q	[2013-11-12]
10-Q	[2013-08-13]
10-Q	[2013-05-14]
10-K	[2013-04-01]
10-Q	[2012-11-14]
10-Q	[2012-08-10]
10-Q	[2012-05-11]
10-K	[2012-03-16]