Green Brick Partners, Inc. · NYSE:GRBK
Green Brick Partners — Q3 2018 Earnings Presentation
24 slides from Green Brick Partners's earnings presentation, Nov 5, 2018
Slide 1: Green Brick Partners Q3 2018 Investor Call Presentation
Exhibit 99.2 GREEN BRICK PARTNERS Q3 2018 INVESTOR CALL PRESENTATION November 5, 2018 1
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 Jim Brickman Rick Costello Chief Executive Officer Chief Financial Officer • Over 40 years in real estate development and • Over 26 years of financial and operating experience in homebuilding. all aspects of real estate management. • Co-founded JBGL with Greenlight Capital in 2
Slide 4: Market Update: National Economic Overview
MARKET UPDATE National Economic Overview Top Job Growth Markets Ranked by Change in Employment – August 2018 Source: Metrostudy - MetroUSA 4
Slide 5: Market Update: 2% to 3% of starts in two largest housing markets
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 – August 2018 GRBK has also entered the Colorado Springs market through our investment in Challenger Homes. Source: Metrostu
Slide 6: Market Update: Dallas market continues 7-year expansion
MARKET UPDATE Dallas market continues 7-year expansion but is still well below the 2006 peak of more than 50,000 starts (not shown) Dallas/Fort Worth Market SFD-TH – Starts and closings Source: Metrostudy - MetroUSA 6
Slide 7: Market Update: Over 5,000 lots in Dallas
MARKET UPDATE GRBK has over 5,000 lots in Dallas where the market continues its 7-year trend of constrained supply Dallas/Fort Worth Market Lot Inventory Source: Metrostudy - MetroUSA 7
Slide 8: Market Update: Atlanta market continues to expand
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 2Q06 Peaked 25,587 +8.7% 24,348 +12% Source: Metrostudy - MetroUSA 8
Slide 9: Limited Supply
LIMITED SUPPLY Our markets exhibit limited supply Resale Months Supply in Major U.S. Cities(1) Source: Metrostudy – MetroUSA 9 (1) Metrostudy – MetroUSA (Atlanta Housing Market Third Quarter 2018 published November 2, 2018)
Slide 10: Land Position
LAND POSITION 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) 10 Note: GRBK Location
Slide 11: Corporate Structure
CORPORATE STRUCTURE • Control positions in six 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 Builde
Slide 12: Builder Spotlight: Trophy Signature Homes
BUILDER SPOTLIGHT Green Brick introduces Trophy Signature Homes, our first entry into lower price point housing. • Launched Trophy Signature Homes October 2018. • Wholly-owned by Green Brick Partners. • Under the direction of Stewart Parker, President of Trophy Signature Homes. • Purchased or option
Slide 13: Builder Markets: $254k and under
BUILDER MARKETS Trophy Signature Homes will target the $254k and under market • First time buyer segment at $254K and below experiences relatively flat start pace. • Demand remains high, but supply is difficult to replenish given increasing development and construction costs. • Supply of vacant lots
Slide 14: Builder Markets: $255-305k and $305-350k
BUILDER MARKETS Trophy Signature Homes will also target $255-305k & $305-350k markets • The two quintiles spanning $255K to$350K account for 88% of the increase in starts in DFW during the last year (+2,889 starts this year vs. year prior). • Builders producing strong 34.6 closings per year, per mod
Slide 15: GRBK: A True Growth Story
GRBK: A TRUE GROWTH STORY We have the strong balance sheet and operational excellence for continued growth Annual Revenue Growth for Green Brick Partners and Predecessor 15
Slide 16: Balance Sheet Strength
BALANCE SHEET STRENGTH GRBK produces superior results despite having one of the lowest debt-to-capital ratios amongst public builders. We have the capital to continue growing profitably. • GRBK Net Debt to Capital(1) is 26.9% as of September 30, 2018 versus an average 38% for covered public builders
Slide 17: Financial Highlights
FINANCIAL HIGHLIGHTS Unaudited Q3 2017 Q3 2018 17 vs 18 Increase YTD 2017 YTD 2018 YTD Increase Home Closings - Units 235 312 32.8% 698 905 29.7% Net New Orders 241 297 23.2% 798 1,118 40.1% Homebuilding Revenues ($'s in thousands) $108,437 $137,399 26.7% $302,179 $401,643 32.9% 3rd Party Lot Closin
Slide 18: Operational Highlights
OPERATIONAL HIGHLIGHTS LTM Adjusted Gross Margins LTM GRBK Pre-Tax Income to Homebuilding Revenues 18
Slide 19: Industry-Leading Margins
INDUSTRY-LEADING MARGINS LTM Pretax Margin%* (LTM – Q3 2018 for GRBK / FYE 18 Estimates for Peers) Median: 8.7% Source: Citi Research data for comparative companies is reported as of August 24, 2018 *Source: Company Data 19
Slide 20: Appendix
APPENDIX 20
Slide 21: 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) Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Sale of Residential Units $419,156 $435,644 $462,613 $5
Slide 22: Non-GAAP Reconciliation: GRBK Pre-tax Income
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) Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 LTM net income attributable to Green Brick $
Slide 23: Non-GAAP Reconciliation: Return on Invested Capital
NON-GAAP RECONCILIATION Return on Invested Capital 3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended (Unaudited, in thousands) Sep 30, 2017 Sep 30, 2018 Sep 30, 2017 Sep 30, 2018 GRBK Pre-tax Income $14,616 $16,943 $36,705 $52,326 Add back: Capitalized interest charged to cost of sales $71
Slide 24: 2805 Dallas Parkway, Suite Plano, TX 75093 www.greenbrickpartners.com 24
2805 Dallas Parkway, Suite 400 Plano, TX 75093 www.greenbrickpartners.com 24