Green Brick Partners(GRBK) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for Q1 2025 indicate increased revenues and strong operating cash flow, despite a decline in net income Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased, primarily due to real estate inventory, while total liabilities decreased and total equity grew Balance Sheet Summary (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $103.0 | $141.5 | | Total real estate inventory | $1,986.5 | $1,937.7 | | Total assets | $2,273.3 | $2,250.0 | | Liabilities & Equity | | | | Borrowings on lines of credit, net | $(1.6) | $22.6 | | Senior unsecured notes, net | $274.2 | $299.1 | | Total liabilities | $515.3 | $551.8 | | Total equity | $1,713.4 | $1,653.5 | Condensed Consolidated Statements of Income For Q1 2025, total revenues increased, but higher costs led to a smaller gross profit increase and a decline in net income and diluted EPS Income Statement Summary (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $497.6 | $447.3 | | Total gross profit | $155.8 | $148.3 | | Income before income taxes | $106.1 | $115.6 | | Net income attributable to Green Brick Partners, Inc. | $75.1 | $83.3 | | Diluted EPS | $1.67 | $1.82 | Condensed Consolidated Statements of Cash Flows Net cash from operations significantly improved in Q1 2025, while cash was used in investing and financing activities for debt repayments and stock repurchases Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $68.7 | $1.0 | | Net cash (used in) provided by investing activities | $(12.0) | $61.3 | | Net cash used in financing activities | $(81.6) | $(51.3) | | Net (decrease) increase in cash | $(24.8) | $11.0 | Notes to the Unaudited Condensed Consolidated Financial Statements The notes provide details on accounting policies, real estate inventory, debt, stock repurchases, revenue disaggregation by market, and segment performance - Real estate inventory increased to $1.99 billion as of March 31, 2025, with the majority in land and lots under development ($1.28 billion)[27][28] - On February 17, 2025, the Board authorized a new $100.0 million stock repurchase program During Q1 2025, the company repurchased 282,821 shares for approximately $16.7 million[51] - Revenue is primarily generated from the Central geographical market, which accounted for $361.6 million in residential units revenue in Q1 2025, compared to $133.7 million from the Southeast market[60] - The Builder Operations segment generated $495.3 million in revenue and $165.6 million in gross profit, significantly outweighing the Land Development segment's $2.3 million in revenue and $1.1 million in gross profit for Q1 2025[67] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q1 2025 operating results to strategic locations and reduced cycle times, despite a decline in homebuilding gross margin percentage Results of Operations Residential units revenue increased in Q1 2025 due to higher deliveries, but gross margin declined, while SG&A expenses improved as a percentage of revenue Key Operating Metrics (Q1 2025 vs Q1 2024, in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Home closings revenue | $495,317 | $443,094 | +11.8% | | New homes delivered | 910 | 821 | +10.8% | | Net new home orders (units) | 1,106 | 1,071 | +3.3% | | Backlog revenue | $594,171 | $725,489 | -18.1% | | Residential units gross margin % | 31.2% | 33.4% | -2.2 p.p. | - The decrease in residential units gross margin was attributed to a combination of product mix and a focus on higher incentives and discounts to combat high interest rates[103][104] - SG&A as a percentage of builder operations revenue decreased to 11.1% from 11.4% YoY due to better leveraging of overhead costs on higher revenues[106][107] Lots Owned and Controlled As of March 31, 2025, the company increased its total owned and controlled lots, with the vast majority being owned and self-developed, reflecting its land strategy Lot Position Summary | Lot Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total lots owned | 34,720 | 32,716 | | Total lots controlled | 5,805 | 5,115 | | Total lots owned and controlled | 40,525 | 37,831 | Liquidity and Capital Resources The company maintained a strong liquidity position with low debt-to-total capitalization ratios, utilizing cash from operations and borrowings to fund debt repayments and operations - The company's debt to total capitalization ratio was 14.5% as of March 31, 2025, with a non-GAAP net debt to total capitalization ratio of 9.8%[121][138] - In Q1 2025, cash used in financing activities totaled $81.6 million, primarily for repayments of senior unsecured notes ($25.0 million), net repayments of lines of credit ($24.4 million), and common stock repurchases ($16.9 million)[126] - The company was in compliance with all debt covenants as of March 31, 2025, including maintaining a minimum interest coverage ratio, a minimum tangible net worth, and a maximum debt to capitalization ratio[129][131] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[146] - No changes in internal controls that have materially affected or are reasonably likely to materially affect internal control over financial reporting occurred during the three months ended March 31, 2025[147] PART II OTHER INFORMATION Risk Factors The company highlights material changes to risk factors, including potential cost increases from tariffs and reduced home demand due to changes in mortgage financing requirements - The company faces risks from tariffs on imported goods and potential new duties on Canadian softwood lumber, which could increase home production costs and adversely impact margins[148] - Changes to mortgage financing, such as updated residency requirements for FHA/VA loans that exclude non-permanent residents, could reduce the pool of eligible homebuyers and negatively affect sales[149] Unregistered Sales of Equity Securities and Use of Proceeds The Board authorized a new stock repurchase program, under which the company repurchased shares in Q1 2025, with a significant amount remaining for future repurchases Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid | Value of Shares Remaining for Repurchase (in millions) | | :--- | :--- | :--- | :--- | | March 1 - March 31, 2025 | 282,821 | $59.23 | $83.3 | Other Information The company disclosed compensation updates, including a new Long-Term Incentive Plan, amendments to the Annual Incentive Plan, and increased compensation for the Interim CFO - A new Long-Term Incentive Plan (LTIP) was adopted on March 1, 2025, for executive officers, tying compensation to Total Shareholder Return (TSR) and Return on Assets (ROA) over a three-year period[152] - The Annual Incentive Plan (AIP) was amended on February 12, 2025, to remove EPS Performance as a metric[153] - Effective March 17, 2025, Interim CFO Jeffery Cox's base salary was increased to $500,000, and he became eligible for AIP and LTIP awards[154][155] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files Signatures The report is duly signed by the Chief Executive Officer and Interim Chief Financial Officer on behalf of Green Brick Partners, Inc