Green Brick Partners, Inc. · NYSE:GRBK
Green Brick Partners — Investor Presentation (August 2018)
33 slides from Green Brick Partners's investor presentation, Aug 29, 2018
Slide 1: Investor Presentation August 2018
Exhibit 99.1 INVESTOR PRESENTATION AUGUST 2018
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 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 at KPMG • Received M.B.A. degree from Kellog
Slide 4: Company Overview
COMPANY OVERVIEW 4
Slide 5: GRBK: A True Growth Story
GRBK: A TRUE GROWTH STORY • We are a high growth, diversified homebuilding and land development company that operates in several of the nation’s most attractive markets, including core operations in Dallas and Atlanta and recent expansion into Colorado and Florida • Currently focused on high growth
Slide 6: Our Company at a Glance
OUR COMPANY AT A GLANCE 2017 Total Homes Closed: 1,642(1) 2017 Total Homebuilding Revenue: $652mm(1) Unconsolidated Builder Partners (1) Includes homes closed and homebuilding revenue of Challenger Homes and GHO Homes. Challenger Homes is an unconsolidated entity and GHO Homes was acquired during Q2
Slide 7: Corporate Structure
CORPORATE STRUCTURE • Control positions in five separate homebuilders and 49.9% position with a pathway to control in one homebuilder • Acquire and develop land and provide land and construction financing to our Dallas and Atlanta Team BuildersTM • Participate in the profits of all of our Team Build
Slide 8: Progression of Our Business Model
PROGRESSION OF OUR BUSINESS MODEL Nimble and responsive to shifts in the homebuilding landscape, we continue to evaluate opportunities to grow our platform and deliver industry leading growth and attractive risk-adjusted returns Foundation of Business Model Levers for Additional Growth • Formed in 2
Slide 9: Recent Strategic Initiatives
RECENT STRATEGIC INITIATIVES Acquisitions of dominant local builders and strategic activity complement continued organic growth in our core operations Challenger Acquisition GHO Acquisition Mortgage JV • Acquired a 49.9% stake in the • Acquired an 80% stake in April 2018 • Announced a 49%/51% mortga
Slide 10: Slide 10
Slide 11: Investment Highlights
INVESTMENT HIGHLIGHTS 10
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: Industry-Leading Margins
INDUSTRY-LEADING MARGINS LTM Pretax Margin%(1) (LTM – Q2 2018) Median: 8.7% Source: Citi Research data for comparative companies is reported as of August 21, 2018. (1) Non-GAAP financial measure. See appendix reconciliation. (*) Source: Company filings. 13
Slide 15: Attractive Returns
ATTRACTIVE RETURNS Return on Invested Capital%(1) (LTM – Q2 2018 – Q1 for peers) Median: 11.7% Source: Citi Research data for comparative companies is reported as of June 29, 2018. (1) Non-GAAP financial measure. See appendix reconciliation. 14
Slide 16: Rapid Growth Trajectory
RAPID GROWTH TRAJECTORY 2018 Builder Magazine Fastest Growing Public Builders(1) 2018 Builder Magazine Fastest Growing “Next 100”(2) % Change in Closings % Change in Closings Rank Builder (2015 v. 2017) Rank Builder (2015 v. 2017) 1 Century Communities 78.3% 1 102.5% 2 LGI Homes 71.7% 2 Fieldstone H
Slide 17: Financial Highlights - 2018
FINANCIAL HIGHLIGHTS - 2018 Unaudited 2017 vs 2018 Year-to-Date Q2 2018 Q2 2017 YTD 2018 YTD 2017 Q2 Increase Increase Home Closings - Units 327 237 38% 594 463 28% Net New Orders 387 270 43% 821 557 47% Homebuilding Revenues ($'s in thousands) $143,878 $100,345 43% $264,244 $193,742 36% 3rd Party L
Slide 18: Operational Highlights
OPERATIONAL HIGHLIGHTS LTM Adjusted Gross Margin(1) LTM GRBK Pre-Tax Income to Homebuilding Revenues(1) (1) Non-GAAP financial measure. See appendix reconciliation. 17
Slide 19: Balance Sheet Strength
BALANCE SHEET STRENGTH GRBK produces superior results despite having one of the lowest debt-to-capital ratios amongst public builders. We have the capital to continue growing profitably. • GRBK Net Debt to Capital(1) is 22.7% as of June 30, 2018 versus an average 38% for covered public builders • GR
Slide 20: Market Update: Top Job Growth Markets
MARKET UPDATE National Economic Overview – Top Job Growth Markets Ranked by Change in Employment – May 2018 Source: Metrostudy – MetroUSA. 19
Slide 21: Market Update: Annual Starts by Market
MARKET UPDATE We are 2% to 3% of the starts in two of the largest housing markets, giving us significant opportunity for growth National Housing Market – Annual Starts by Market – May 2018 GRBK has also entered the Colorado Springs market through our investment in Challenger Homes. Source: Metrostud
Slide 22: Market Update: Dallas Market
MARKET UPDATE Dallas market continues 7-year expansion but is still well below the 2006 peak of more than 50,000 starts Dallas/Fort Worth Market - SFD-TH Starts and Closings Source: Metrostudy – MetroUSA. 21
Slide 23: Market Update: Atlanta Market
MARKET UPDATE The Atlanta market also continues to expand but is still well below prior peak Atlanta Region 16 Year History – Annual Construction Starts and Closings g 2Q062Q06 Peaked Peaked 60,000 55,000 50,000 45,000 Units 40,000 35,000 25,303 30,000 +10.1% 25,000 20,000 15,000 10,000 23,816 +10.3
Slide 24: Our Markets Have Significant Growth and Limited Supply
OUR MARKETS HAVE SIGNIFICANT GROWTH AND EXHIBIT LIMITED SUPPLY Resale Months Supply in Major U.S. Cities(1) 8.5 6.2 6.0 5.5 5.0 4.8 4.8 4.3 3.7 3.5 3.5 3.2 3.2 3.1 3.0 2.8 2.5 2.3 2.3 2.2 2.1 2.1 2.1 2.1 2.0 1.8 1.7 1.6 1.5 1.0 0.8 0.8 Source: Metrostudy – MetroUSA. (1) Metrostudy – MetroUSA (Atlant
Slide 25: Land Is Well-Positioned in Attractive Submarkets
LAND IS WELL-POSITIONED IN ATTRACTIVE SUBMARKETS Atlanta Metro Area Dallas Metro Area Submarket Submarket Grades Grades A A B B C C D D E E GRBK GRBK Locations Locations Source: John Burns Real Estate Consulting (Regional Analysis and Forecast Published May 2018). 24 Note: GRBK Locations are approxi
Slide 26: Award-Winning Homes & Communities
AWARD-WINNING HOMES & COMMUNITIES Bellmoore Park Village at Twin Creeks Mustang Park Johns Creek, GA Allen, TX Carrollton, TX • 2016 Atlanta Home Builders Association • 2016 Dallas Builders Association McSAM • 2015 Dallas Builders Association McSAM Master Planned Community of the Year Award for Best
Slide 27: Award-Winning Homes & Communities (cont'd)
AWARD-WINNING HOMES & COMMUNITIES (cont’d) The Montgomery at 5T Ranch Seville Plan at Village at The Matthews Model Home at Argyle, TX Twin Creeks Bellmoore Park Allen, TX Johns Creek, GA • 2018 Dallas Builders Association McSAM Award for Home of the Year • 2016 Dallas Builders Association • 2017 At
Slide 28: Appendix
APPENDIX 27
Slide 29: Financial Highlights
FINANCIAL HIGHLIGHTS Year over Year(1) 2016 2017 Increase Net New Home Orders 880 1,063 21% Sale of Residential Units 844 990 17% Home Sales Revenues $365.2 $435.6 19% Selling Communities at End of Period 50 55 10% Homes Under Construction 564 736 30% Homes Started 902 1162 29% Dollar Value of Backl
Slide 30: Non GAAP Reconciliation: Pre-Tax Income Percentage
NON GAAP RECONCILIATION GRBK Pre-Tax Income as a Percentage of Homebuilding Revenues 12 Months 12 Months 12 Months 12 Months 12 Months Ended Ended Ended Ended Ended (Unaudited, in thousands) Jun 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 LTM net income attributable to Green Brick $
Slide 31: Non GAAP Reconciliation: Return on Invested Capital
NON GAAP RECONCILIATION Return on Invested Capital 12 Months Ended (Unaudited, in thousands) June 30, 2018 Income before taxes $79,150 Add back: Capitalized interest charged to cost of sales $3,594 Earnings Before Interest and Taxes $82,744 Divided by: Borrowings on lines of credit $167,500 Notes pa
Slide 32: Non GAAP Reconciliation: Adjusted Homebuilding Gross Margin
NON GAAP RECONCILIATION Adjusted Homebuilding Gross Margin Reconciliation 12 Months 12 Months 12 Months 12 Months 12 Months Ended Ended Ended Ended Ended (Unaudited, in thousands) June 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sale of Residential Units $398,546 $419,156 $435,644 $
Slide 33: Contact Information
2805 North Dallas Parkway, Suite 400 Plano, TX 75093 www.greenbrickpartners.com 32
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