Green Brick Partners, Inc. · NYSE:GRBK
Green Brick Partners — Investor Presentation (August 2019)
32 slides from Green Brick Partners's investor presentation, August 2019
Slide 1: Summer Investor Presentation August 2019
Trophy Signature Homes | Hollyhock, Frisco, TX Move-Up Series SUMMER INVESTOR PRESENTATION AUGUST 2019
Slide 2: Forward Looking Statements
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 a
Slide 3: Management Presenters
MANAGEMENT PRESENTERS Rick Costello Jed Dolson Chief Financial Officer President of Texas Region • Over 26 years of financial and operating experience in all aspects of • Over 15 years of land development and property acquisition real estate management • Head of GRBK land acquisitions since 2010 • P
Slide 4: Company Overview
COMPANY OVERVIEW BUILDING COMMUNITIES | DEVELOPING DREAMS 4
Slide 5: Sustained Growth Through Prudent Land Development
SUSTAINED GROWTH THROUGH PRUDENT LAND DEVELOPMENT We have the strong balance sheet and operational excellence for continued growth LTM Total Revenue and End of Period Lot Supply for Green Brick Partners* June 2019 800,000 10000 9000 700,000 8000 600,000 7000 500,000 6,127 6000 Dollars ($) Lots 400,0
Slide 6: Company at a Glance
COMPANY AT A GLANCE 2018 Total Homes Closed: 1,902(1) 2018 Total Home Closings Revenue: $751mm(1) Unconsolidated Builder Partners (2) (1) Includes homes closed and home closings revenue of Challenger Homes and GHO Homes for all of 2018. Challenger Homes is an unconsolidated entity and GHO Homes was
Slide 7: Nationally Ranked in Excellence
NATIONALLY RANKED IN EXCELLENCE 2019 ”A” RANKING IN 2019 PUBLIC BUILDER REPORT CARD Grade Builder Total Revenue (in millions) Capitalization A+ NVR $7,163.7 Large Cap A D.R. Horton $16,254.3 Large Cap A Green Brick Partners $623.6 Small Cap A Lennar Corp. $20,571.6 Large Cap A Pulte Group $10,188.3
Slide 8: Green Brick Is a Diversified Builder with 8 Brands in 4 Major Markets
GREEN BRICK IS A DIVERSIFIED BUILDER WITH 8 BRANDS IN 4 MAJOR MARKETS Team Builders Market Products Offered Price Range Structure Townhomes $320k - $880k Atlanta, GA Single Family Consolidated(1) $340k - $840k Condominiums Financial Services / Dallas, TX Townhomes $240k - $430k Consolidated(1) Singl
Slide 9: Green Brick Recent News
GREEN BRICK RECENT NEWS Recent Developments and Press Releases • April 2019 • Trophy Signature Homes celebrates grand opening of first model home located in Hollyhock community of Frisco, TX (see cover photo). $610.0 • GHO Homes announces four new communities representing a total of 66 future homesi
Slide 10: Green Brick Privately Closes $75 Million 4.00% Senior Notes
GREEN BRICK PRIVATELY CLOSES $75 MILLION 4.00% SENIOR NOTES Notes will fund future growth at long-term rates significantly lower than peers • On August 8, 2019, we closed a $75.0 million private placement of senior unsecured notes due in 2026 with Prudential Private Capital, one of the world’s large
Slide 11: Investment Highlights
INVESTMENT HIGHLIGHTS BUILDING COMMUNITIES | DEVELOPING DREAMS 11
Slide 12: Keys to Our Success
KEYS TO OUR SUCCESS Seasoned management team with track record of execution across cycles Differentiated business model drives industry-leading profitability and attractive returns Industry-leading growth profile and established track record of market share gains High quality land positions in leadi
Slide 13: Seasoned and Aligned Management Team
SEASONED AND ALIGNED MANAGEMENT TEAM • Our management team is comprised of building and finance veterans with decades of experience in our markets • Significant expertise in capital allocation, land acquisition, entitlement, development, construction, marketing, and home sales • Strong institutional
Slide 14: Pre-Tax Results Exceed Peer Small-Cap and Mid-Cap Builders
PRE-TAX RESULTS EXCEED PEER SMALL-CAP AND MID-CAP BUILDERS Green Brick achieves a return on invested capital that exceeds our peers Green Brick KPI's vs Peer Median by Market Capitalization, Last Twelve Months 1 2 15.0% GRBK Median Small Cap Median Mid Cap 12.3% 11.2% 10.0% 10.5% 10.2% 9.2% 8.3% 7.6
Slide 15: Balance Sheet Strength
BALANCE SHEET STRENGTH Unlike most peers, our conservative financial leverage allows us to continue high margin growth. • GRBK Net Debt* to Capital is 28.7% as of June 30, 2019 versus an average 44.2% for covered public builders (Peer data as of 6.30.19) Net Debt* to Total Capital Q2 2019 70.0% 60.9
Slide 16: Drivers for Increase in Return on Equity
DRIVERS FOR INCREASE IN RETURN ON EQUITY With significant growth drivers in place, Green Brick can enhance future returns on equity through: • Modest increase in debt to capital up to 35%. Consolidated debt is priced significantly less than small-cap peers and mid-cap peers. • Scale our SG&A leverag
Slide 17: Growth Drivers
GROWTH DRIVERS Green Brick continues to demonstrate industry-leading growth with industry-low financial leverage Total Revenue ($ in Millions) Backlog ($ in Millions) Lots Owned and Controlled $800 $350 10000 $700 $300 $331.3 9,177 $600 $689.3 8000 $250 $500 6000 $200 $400 $150 4000 $300 $200 $100 +
Slide 18: Green Brick Is a Diversified Builder
GREEN BRICK IS A DIVERSIFIED BUILDER Rapidly expanding into entry-level and first-time move-up homes with over 1,600 newly acquired homesites for Trophy Signature Homes Home Closings Revenue Growth Revenue in Millions, ASP in Thousands Townhomes, Condominium, Single-Family Total and Attached Homes $
Slide 19: Homebuyer Customer Diversification in Texas, Georgia, & Florida Markets
HOMEBUYER CUSTOMER DIVERSIFICATION IN TEXAS, GEORGIA, & FLORIDA MARKETS We also manage risk by diversifying our homebuyer customer mix Homebuyer Customer Mix LTM GRBK Homebuilding Revenues by Product Type LTM 6.30.17 Homebuilding Revenues LTM 6.30.18 Homebuilding Revenues LTM 6.30.19 Homebuilding Re
Slide 20: Financial Highlights
FINANCIAL HIGHLIGHTS (Unaudited) Qtr over Qtr 2019 2018 Yr over Yr (Dollars in Millions, Except EPS) Q2 2019 Q2 2018 Notes Change YTD YTD Change New Homes Delivered 394 327 20.5% 762 594 28.3% Net New Home Orders 453 387 17.1% 898 821 9.3% Residential Units Revenue $175.1 $146.2 19.8% $336.6 $267.4
Slide 21: Market Update
MARKET UPDATE BUILDING COMMUNITIES | DEVELOPING DREAMS 21
Slide 22: Market Update: National Economic Overview
MARKET UPDATE National Economic Overview Top Job Growth Markets Ranked by Change in Employment, TTM May 2019 Rank MSA Employment Growth Growth % 1 New York-Newark-Jersey City, NY-NJ-PA 9,982,400 114,000 1.2% 2 Dallas-Fort Worth-Arlington, TX 3,780,000 107,000 2.9% 3 Houston-The Woodlands-Sugar Land,
Slide 23: Market Update: National Housing Market
MARKET UPDATE We are 2% to 5% of the starts in three of the largest housing markets in the U.S., giving us significant opportunity for growth National Housing Market Annual Starts by Market – May 2019 35,000 30,000 33,104 29,222 25,000 27,670 24,133 24,590 20,000 19,498 15,000 16,404 17,290 14,703 1
Slide 24: Land Position
LAND POSITION Land is well positioned in attractive submarkets Atlanta Metro Area Dallas Metro Area Submarket Grades GRBK Locations Most desirable Desirable area Median desirability More affordable Most affordable Land position highlights 75 35* 92 Active communities Communities Projected active com
Slide 25: Award-Winning Communities
AWARD-WINNING COMMUNITIES Bellmoore Park Village at Twin Creeks Mustang Park Johns Creek, GA Allen, TX Carrollton, TX • 2016 Atlanta Home Builders Association • 2019 Dallas Builders Association McSAM • 2015 Dallas Builders Association McSAM Master Planned Community of the Year Award for Builder Neig
Slide 26: Award-Winning Homes
AWARD-WINNING HOMES The Montgomery at 5T Ranch The Matthews at Bellmoore Park Seville Plan at Village at Twin Creeks Argyle, TX Johns Creek, GA Allen, TX • 2018 Dallas Builders Association McSAM • 2017 Atlanta Home Builders Association • 2016 Dallas Builders Association McSAM Award for Home of the Y
Slide 27: Appendix
APPENDIX BUILDING COMMUNITIES | DEVELOPING DREAMS 27
Slide 28: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Adjusted Homebuilding Gross Margin Reconciliation 3 Months 3 Months 3 Months 6 Months 6 Months 12 Months 12 Months 12 Months (Unaudited, in Thousands) Ended Ended Ended Ended Ended Ended Ended Ended Mar 31, 2019 Jun 30, 2019 June 30, 2018 Jun 30, 2019 June 30, 2018 Jun 30, 20
Slide 29: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Adjusted GRBK Pre-tax Income as a Percentage of Total Revenues and GRBK Pre-tax Income Return on Average Invested Capital 3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 12 Months Ended (Unaudited, in Thousands) Jun 30, 2019 Jun 30, 2018 Jun 30, 2019 June 30, 2018
Slide 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION EBITDA 3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended (Unaudited, in Thousands) Jun 30, 2019 Jun 30, 2018 Jun 30, 2019 June 30, 2018 Adjusted Pre-tax Income Attributable to Green Brick $19,676 $20,723 $36,075 $35,383 Add Back: Capitalized Interest Charged to Cost
Slide 31: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Net Income Return on Average Equity 3 Months 3 Months 6 Months 6 Months 12 Months (Unaudited, in Thousands) Ended Ended Ended Ended Ended Jun 30, 2019 Jun 30, 2018 Jun 30, 2019 June 30, 2018 Jun 30, 2019 Net Income Attributable to Green Brick $14,460 $14,869 $27,065 $26,072 $
Slide 32: Summer Investor Presentation August 2019
The Providence Group of Georgia| East of Main, Alpharetta, GA Award-Winning Luxury Single-Family and Townhomes SUMMER INVESTOR PRESENTATION AUGUST 2019 32 2805 Dallas Parkway, Suite 400 Plano, Texas 75093 | www.greenbrickpartners.com
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