GRBK stock is up 7% in after-hours trading on an excellent quarterly filing that showed beats in earnings and revenue.
Green Brick Partners, Inc. (Nasdaq: GRBK) today reported results for its second quarter ended June 30, 2020.
Results for the Second Quarter Ended June 30, 2020:
For the quarter ended June 30, 2020, basic net income attributable to Green Brick per common share (“EPS”), total revenues, residential units revenue, gross profit, net income attributable to Green Brick, and backlog reflect a record for any quarter, as detailed below.
EPS was $0.67, a 131.0% increase compared to the quarterly earnings of $0.29 for the three months ended June 30, 2019.
As compared to the three months ended June 30, 2019, total revenues were $232.8 million, an increase of 26.9% from $183.5 million; gross profit was $53.9 million, an increase of 33.8% from $40.3 million; and net income attributable to Green Brick was $33.6 million, an increase of 132.7% from $14.5 million.
Residential units revenue was $228.7 million, an increase of 30.6% compared to $175.1 million for the three months ended June 30, 2019. Land and lots revenue was $4.2 million, a decrease of 50.7% compared to $8.5 million for the three months ended June 30, 2019.
The dollar value of backlog units as of June 30, 2020 was $446.6 million, an increase of 34.8% compared to $331.3 million as of June 30, 2019.
Average active selling communities increased from 77 communities for the quarter ended June 30, 2019 to 92 communities for the quarter ended June 30, 2020, an increase of 19.5%.
Homes under construction increased to 1,273 as of June 30, 2020, a 4.9% increase compared to 1,214 as of June 30, 2019.
Results for the Six Months Ended June 30, 2020:
EPS for the six months ended June 30, 2020 was $0.98, an 84.9% increase compared to earnings of $0.53 for the six months ended June 30, 2019.
As compared to the six months ended June 30, 2019, total revenues were $446.1 million, an increase of 26.7% from $352.1 million; gross profit was $102.9 million, an increase of 36.0% from $75.6 million; and net income attributable to Green Brick was $49.6 million, an increase of 83.1% from $27.1 million.
Residential units revenue was $419.9 million, an increase of 24.7% compared to $336.6 million for the six months ended June 30, 2019. Land and lots revenue was $26.2 million, an increase of 69.4% compared to $15.5 million for the six months ended June 30, 2019.
“Despite the challenges of operating during the COVID 19 pandemic, our Q2 2020 results are by far the best in the company’s history and continue to demonstrate the remarkable growth trajectory of the company. With Q2 2020 total revenues, EPS and ending backlog each at all-time records, we could not be more thrilled with our results. The 69% year-over-year growth in pretax-income is impressive and especially noteworthy considering that these results were achieved while reducing our net debt to total capital to 24%,” said Jim Brickman, Chief Executive Officer.
“While the current health crisis continues to loom large across the country, we are cautiously optimistic that the pro-business markets where we operate and the wide range of quality homes offered by our Team Builders will continue to drive future success. This optimism is grounded in the outstanding year-over year sales growth we witnessed in May and June of this year where each month exceeded the same month in the prior year by 52% and 82%, respectively.”
“Our sales growth was largely made possible by the success of Trophy Signature Homes,” said Rick Costello, Chief Financial Officer. “From 18 net sales in Q2 2019 in a single community, Trophy closed 122 units for $43.5 million in revenues and sold 152 units this quarter with just 8 average selling communities and is now a fully established brand in the Dallas-Ft. Worth market. Trophy expects to open 15 new selling communities by the end of 2020 with most of those openings occurring during the third quarter of 2020.”
Green Brick, like every other company in the United States and the global economy, has been impacted by the coronavirus (“COVID-19”) pandemic and the impact of governmental actions taken to combat the pandemic.
While response to the COVID-19 outbreak continues to rapidly evolve, it has led to stay-at-home orders and social distancing guidelines that have seriously disrupted activities in large segments of the economy. Throughout the pandemic, we have continued to build, close and sell homes in our markets. Initially, sales slowed significantly. For example, during the final two weeks of March and through the end of April, the impact of shelter-in-place/stay-at-home restrictions reduced our net new home sales and our home sales per community as compared to the same period in the prior year and materially increased cancellations. As a result, our net sales in April 2020 were down by 43% from April 2019. However, during May and June 2020, our sales increased strongly and, with a cancellation rate more in line with our historical experience, we saw net sales increase by 52% and 82% over May and June 2019, respectively. We believe the recovery and expansion of our sales activity is related to a variety of factors, including historically low mortgage interest rates, the participation in home ownership in increasing amounts by the millennial generation, the desire of renters to leave high density living conditions, and the relative strength of the markets in which we operate.
As we began to see increased market activity commencing in May and accelerating into June, we re-initiated much of the previously planned capital expenditures that we had placed on hold in March based on market uncertainty. Specifically, we restarted construction of unsold units, recommenced purchases of lots and land and resumed development of land to reflect the market activity. As we move into the third quarter, we continue to see growth, as evidenced by July 2020 showing a 29% increase in net sales over July 2019. We have initiated moderate product price increases to offset some cost input increases like lumber and expect to maintain our industry leading high margins. We continue to monitor our fixed costs to position us to be responsive to the changing market conditions and have delivered this growth without returning to prior overhead levels.
The length and extent of the impact of the COVID-19 pandemic on the Company’s financial performance, including the ability to execute on our future financial results, will depend on future developments, including the duration and spread of the pandemic and related government restrictions, all of which are uncertain and cannot be predicted.