2021
A N N UA L
R E P O R T
Fo r w a rd Lo o k i n g St a t e m e n t s
This annual report contains “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These statements concern expectations, beliefs, projections,
plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts and typically include the words “anticipate,” “believe,” “consider,”
“estimate,” “expect,” “feel,” “intend,” “plan,” “predict,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements in this press release include statements
regarding (i) our belief that land position and back-log will position us to grow our business and the impact of our land position on our future financial results, (ii) our belief that our debt
infrastructure will allow us to continue reward investors with superior risk-adjusted returns, (iii) our belief that our HOME principles will contribute to our long-term growth and our intent
to continue to hire employees that embrace these characteristics and principles, (iv) our goal to build homes sustainably and responsibly, (v) our strategy for growth, including focusing
on the growth of our Trophy Brand and the diversification of our product offering, and the potential impact on our future results and (vi) our expectations for our new Austin operations.
These forward-looking statements reflect our current views about future events and involve estimates and assumptions which may be affected by risks and uncertainties in our business,
as well as other external factors, which could cause future results to materially differ from those expressed or implied in any forward-looking statement. These risks include, but are not
limited to: (1) general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; (2) changes in macroeconomic conditions, including interest rates and
unemployment rates, that could adversely impact demand for new homes or the ability of potential buyers to qualify; (3) shortages, delays or increased costs of raw materials and increased
demand for materials, or increases in other operating costs, including costs related to labor, real estate taxes and insurance, which in each case exceed our ability to increase prices; (4)
a shortage of labor; (5) an inability to acquire land in our markets at anticipated prices or difficulty in obtaining land-use entitlements, including in our new Austin market; (6) our inability
to successfully execute our strategies, including an inability to grow our operations, including expansion of our Trophy brand in the Dallas-Fort Worth and Austin markets; (7) a failure to
recruit, retain or develop highly skilled and competent employees; (8) government regulation risks; (9) a lack of availability or volatility of mortgage financing or a rise in interest rates; (10)
severe weather events or natural disasters; (11) difficulty in obtaining sufficient capital to fund our growth; (12) our ability to meet our debt service obligations; (13) a decline in the value
of our inventories and resulting write-downs of the carrying value of our real estate assets; (14) changes in accounting standards that adversely affect our reported earnings or financial
condition and (15) our ability to implement our Austin strategy. For a more detailed discussion of these and other risks and uncertainties applicable to Green Brick please see our most
recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Cover image: Trophy Signature Homes | Buffalo Ridge - Waxahachie, Texas | Top image: Trophy Signature Homes | Creekside - Royse City, TX
Ta b l e o f C o n t e n t s
Le t t e r Fro m t h e C EO & C h a i r m a n
Le t t e r Fro m t h e C EO & C h a i r m a n
A b o u t Us
A b o u t Us
O u r C u l t u re & Va l u e s
O u r C u l t u re & Va l u e s
En v i ro n m e n t a l , S o c i a l , & G ove r n a n c e
En v i ro n m e n t a l , S o c i a l , & G ove r n a n c e
F i n a n c i a l H i g h l i g h t s
F i n a n c i a l H i g h l i g h t s
2 4 - Q u a r t e r F i n a n c i a l Su m m a r y
2 4 - Q u a r t e r F i n a n c i a l Su m m a r y
O u r Bra n d s & S e r v i c e s
O u r Bra n d s & S e r v i c e s
L a n d D e ve l o p m e n t
L a n d D e ve l o p m e n t
A p p e n d i x & No n - G A A P Re c o n c i l i a t i o n
A p p e n d i x & No n - G A A P Re c o n c i l i a t i o n
Op e r a t i n g Re s u l t s & Fo r m 1 0 - K
Op e r a t i n g Re s u l t s & Fo r m 1 0 - K
0 40 4
0 50 5
0 60 6
0 70 7
1 41 4
1 81 8
2 22 2
3 73 7
3 83 8
4 04 0
Tro p h y S i g n a t u re Ho m e s | Ed g e s t o n e a t Le g a c y - Fr i s c o , T X
Tro p h y S i g n a t u re Ho m e s | Ed g e s t o n e a t Le g a c y - Fr i s c o , T X
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Sh a re h o l d e r Le t t e r
James Brickman, Co-Founder & CEO and David Einhorn, Co-Founder & Chairman
Another Record Year
2021 was another very successful year. Normally, our business is limited by finding
sufficient demand from qualified purchasers. 2021 marked a year where we were
instead limited by our ability to complete homes. There were widespread shortages
of material and labor. Even so, our builders met the challenges posed and produced
record revenues of $1.4 billion, up 44%, record pretax income attributable to
GRBK of $243 million, up 75%, and record diluted earnings per share of $3.72 - a
significant 66% increase from 2020.
This is the seventh consecutive record-breaking year for Green Brick Partners,
which earned us significant media attention, including a spot in the top 50 of
Forbes’ 2022 America’s Best Small Companies list. We are pleased to report that
our net income return on average shareholder equity was 25.9%.
As we look ahead in to 2022 and beyond, our future continues to look bright. We
entered 2022 with 2,278 homes under construction, up 28% from 2020, and a
year-ending backlog of $870 million, up 27% over 2020. Even more importantly,
we positioned the company for growth over an extended period of time by almost
doubling our position of controlled lots, at what we believe to be advantageous
prices.
Risk and Capital Discipline
In December 2021, we closed a $100 million tranche of 8-year privately placed
unsecured notes in a club deal structured by Prudential Capital at a 3.25% interest
rate bringing our total long-term notes payable to $337.5 million. The institutional
investors who purchased the notes were represented by Prudential Capital, Barings
LLC, Hartford Investment Management Company, Securian Asset Management
Co. Inc., and Voya Investment Management Co. LLC.
By year-end, we also expanded our unsecured bank revolving line of credit facility
to $300 million, adding four new lenders.
Our year ending 27.7% debt to total capital makes us one of the lowest-leveraged
public builders. Best of all, we were able to keep this low leverage despite buying
land that increased our lot position to 28,621 owned and controlled lots, an
increase of 98%. We believe these lots will set the stage for our future growth.
To lower our cost of capital and to fund our expansion into other markets with
permanent long-term capital in advance of rising interest rates, we also issued $50
million of preferred equity that pays a 5.75% dividend.
We believe that securing long-term, low-cost debt and preferred equity in a rising
interest rate environment combined with our industry-leading margins should
enable us to continue to reward investors with superior risk-adjusted returns.
Subsidiary Homebuilder Brands
Our focus is to expand all our brands but scale our business in earnest by growing
Trophy Signature Homes. In 2021, Trophy started 1,281 homes, up 53% from
2020. In February 2022, we announced Trophy’s expansion into the Austin, Texas
market with the acquisition of land that we plan to develop into 850+ homesites.
Construction of the homes is currently slated to start by early 2023.
We continue to support our eight subsidiary brands in five markets through
centralized operating systems that give us a granular view of every home, each
neighborhood, and the broad spectrum of local market conditions. We believe that
each of our homebuilder brands holds a strategic advantage and differentiated
strategy in its local markets which provides us a diversified income stream and wide
product mix.
HOME builds a better company
Though each of our subsidiary builders is locally branded and managed, and unique
in what they do and what they build, all our brands are united by Green Brick
Partners’ common set of values that we call HOME. Honesty, Objectivity, Maturity,
and Efficiency – the driving principles behind everything that we do.
Looking Ahead
We are confident that, despite rising interest rates and ongoing supply chain
challenges, we are staged for a successful 2022 and beyond because we operate
in some of the best markets in the country, have a superior lot position and, most
of all, we have a talented team dedicated to winning day in and day out.
Thank you for being a stakeholder or shareholder. 2021 was a record year - but we
are driven to make 2022 and beyond even better.
JAMES R. BRICKMAN
CEO and Co-Founder
Green Brick Partners
DAVID EINHORN
Chairman and Co-Founder
Green Brick Partners
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A b o u t G re e n Br i c k Pa r t n e r s
About Us
Green Brick Partners, Inc. is Fortune Magazine’s 2021 fastest growing public homebuilder
and land developer in the country. We are publicly-traded on the New York Stock Exchange
under the ticker symbol “GRBK”.
Green Brick encompasses eight homebuilder brands in five major markets across four
states. We are founded on the belief that locally-focused land development is the starting
point for a builders’ profitability, and that both homebuilding and land development are
best executed on a local, decentralized basis using company-wide standardized systems
and controls.
Green Brick Partners is committed to building strong communities designed for an
exceptional quality of life. We believe that a company’s propensity for success is determined
by choosing to do the right thing day after day, for our homebuyers, shareholders, and
employees.
This begins by following our guiding principles, a set of values we call HOME. This acronym,
representing Honesty, Objectivity, Maturity, and Efficiency allows us to build and design
homes with a focus on quality craftsmanship, superior customer service, and an ongoing
commitment to transparency.
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G re e n Br i c k Pa r t n e r s C u l t u re a n d Va l u e s
O u r C u l t u re
We are founded on the belief that locally-focused land development is the starting point
for a builder’s profitability and that both homebuilding and land development are best
executed on a decentralized basis. To truly succeed, a builder/developer needs a track record
of creating award-winning neighborhoods and decades of building superior local, political,
and subcontractor relationships. Green Brick and our group of subsidiary homebuilder
brands have outstanding local relationships in land development and have been recognized
by homebuyers and our industry for our award-winning neighborhoods and homes.
These steps help ensure builder success and increase returns. We seek to differentiate
ourselves with low leverage and a strong capital base which we deploy with discipline.
At the same time, we create value and strengthen our brands through our GRBK-managed
standardized financial and integrated operating system. This system allows comprehensive
visibility that enables our homebuilders to grow their business with access to timely data.
Our subsidiary homebuilders’ management teams have typically worked decades to build
their reputations, establish brand recognition, and cultivate critical realtor and customer
relationships. We work tirelessly to preserve each builder’s unique local branding, and make
every effort to retain key employees.
We make a point not to run our business like many of our public peers, where success
is measured by short-term quarterly GAAP results that can distort the true value and
economic results of the business. We believe this often causes issues including huge
employee turnover at the division level, lower customer satisfaction, and lower realized
returns in the long run. Much of our success can be attributed to this “long view” approach.
O u r Va l u e s
Green Brick Partners is committed to building strong communities designed for an
exceptional quality of life. We believe that a company’s propensity for success is determined
by choosing to do the right thing day after day, for our homebuyers, shareholders, and
employees.
This begins by following our guiding principles, a set of values we call HOME. This acronym,
representing Honesty, Objectivity, Maturity, and Efficiency, allows us to build and design
homes with a focus on quality craftsmanship, superior customer service, and an ongoing
commitment to transparency.
H
O
M
E
Honesty
Objectivity
Maturity
Efficiency
We believe strong businesses are built on
a foundation of honesty, transparency,
and integrity. We strive to treat our
customers, employees, and shareholders
like we would like to be treated. In our
day-to-day operations, this translates
to open-door policies, an emphasis on
relationship building, and continuously
maintaining open lines of communication.
Objectivity drives our business practices,
and our decisions are always made on
the best practices and market-driven
information available. While our leadership
team’s ability to objectively manage in the
best interest of the company is integral,
we believe objectivity and ownership of
one’s work should be stressed at all levels
of our organization.
The emotional intelligence of our staff
is critical to our success. In order to
accomplish our common goals, we must be
solution-driven and view every challenge
as an opportunity. Emotionally intelligent
employees see the bigger picture and
strive each day to work collaboratively
toward a shared story of success.
Efficiency is the end result of competent,
hard-working people who perform with
a competitive spirit to produce rapid
and consistent results. We continually
evaluate our processes and systems to
ensure that we remain the most efficient
in our industry and provide our employees
the resources needed to work smarter.
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En v i ro n m e n t a l , S o c i a l ,
& G ove r n a n c e C o m m i t m e n t s
O u r Pe o p l e F i r s t A p p ro a c h
Attracting, retaining, and building talent is critical in our business. We continue to recruit
talented team members that exhibit superior emotional intelligence. This focus on a staff
that places a strong emphasis on communication and navigates fast-paced environments
empathetically and judiciously enables us to operate effectively and efficiently each day.
We seek to establish a supportive culture that fosters a strong sense of ownership and
a continuous drive to excel. Our goal is to not just empower our team members with the
tools needed to succeed, but to create a community that focuses on taking ownership of
one’s work. Our culture celebrates individual success, primes our employees for growth,
and is critical in maintaining our competitive edge over our peers.
Each December one or two individuals that truly embody Green Brick Partners’ values of
HOME are selected to be recipients of the Brett Winters Award. They are awarded the
Brett Winters trophy and $10,000.
The award honors Brett Winters, a great CFO for CB JENI and Normandy Homes, who
helped grow the brand to one of the largest townhome builders in Dallas-Fort Worth.
Though Brett passed away a few years ago from cancer, he will always be remembered
as an incredible man and dedicated father to his three children. In Q1 2021, CB JENI
and Normandy Homes fully funded a college endowment for Brett’s three children in the
amount of $250,000. We intend to continue this honored tradition and seek to continue
Brett’s legacy of excellence for many years to come.
Sp o t l i g h t : O p e r a t i o n F I N A L LY H O M E
Operation FINALLY HOME provides mortgage-free homes and home modifications to
wounded, ill, and injured military veterans, first responders, and widows of the fallen and
their families in honor of their service and sacrifice to country and community. Operation
FINALLY HOME partners with corporate sponsors, builder associations, builders,
remodelers, developers, individual contributors and volunteers to help these heroes and
their families by addressing one of their most pressing needs – a place to call home.
In 2021, Operation FINALLY HOME teamed with Trophy Signature Homes, Green Brick
Partners, and MA Partners to surprise U.S. Army Specialist John Endsley and his family
with a new mortgage-free home in honor of his sacrifice to his country.
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Su s t a i n a b l e D eve l o p m e n t s
We strive to make the world a better place for not just our homebuyers, but the communities where we live, work, and build. With that in mind,
we understand that this duty is inseparably intertwined with a need to build sustainably and responsibly. Every community we develop and build
in is an opportunity to showcase our efficiency and commitment to reducing our environmental footprint.
Ke y s t o Bu i l d i n g a B e t t e r Ho m e
As one of the fastest growing developers and homebuilders in the country, we take very seriously our responsibility to grow in a sustainable way
that minimizes our impact on the environment. In 2021, we debuted our inaugural environmental impact report and defined our three keys to
building a better home which include:
Responsible Land Development
From site selection to design and development, our land strategy is rooted in responsibility. We conduct rigorous
environmental impact studies and develop each neighborhood with sustainability in mind. This includes implementing
stormwater management measures, earthwork strategies to minimize slope and soil disturbance, and making all efforts to
rehome wildlife and protect the natural landscape.
Sustainable Homeownership
We strive to continuously improve the energy performance of our homes as we believe it is the most significant way we can
contribute to reducing carbon emissions. In 2021, we made significant progress in having many of our homes benchmarked
against the Home Energy Rating System (HERS) Index. We believe doing so will empower our purchasing and construction
teams with the knowledge required to exceed expectations. In 2022, we intend to continue expanding on this commitment
and growing our library of HERS-rated homes.
Waste Reduction Practices
In 2021, we sought to implement strategies that would increase our operational efficiencies and minimize waste and
our impact on the environment. Our teams are consistently challenged to optimize our plan library and identify the most
efficient ways to build our homes. This results in homes that produce less material waste and provide significant cost
savings for our homebuyers.
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Green Brick Partners is
committed to creating value
for our buyers, employees,
and shareholders. We
believe a fundamental
component of creating
value is delivering quality
communities that are built
responsibly with best-
in-class resources. This
means doing things right
from the very beginning
when we select a site for
development, to the day we
proudly hand our buyers the
keys to their new home.
* In select plans and communities.
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En e rg y Fo c u s e d Ho m e s
In addition to constructing homes with best-in-class materials, our homeowners benefit from many energy-conscious features that result in both significant savings and healthier living.
We partner with some of the most reputable manufacturers of cutting-edge, energy-efficient products to give our homebuyers a quality home that will not only stand the test of time,
but deliver significant savings for years to come. Some of our energy-conscious features include:
H i g h Ef f i c i e n c y
Co n s t r u c t i o n
En e rg y Ef f i c i e n t
L i g h t i n g
St re a m l i n e d
Co n s t r u c t i o n
A p p ro a c h
We focus on advanced
construction techniques and
value engineering at scale, often
utilizing pre-fabricated trusses
and pre-cut lumber to lower
construction costs, reduce
build times, and
minimize waste.
Many of our homes feature
fully encapsulated spray foam
insulation, tankless water heaters,
and low flow fixtures. 100% of
our homes across all of our brands
utilize double pane Low-E
insulated windows. Our homes
are air-tight and provide a
cleaner indoor air
environment.
75%
Less energy is used by
LED lights than through
traditional incandescent
lighting.
40%
Spray foam insulation is
critical to create climate
sealed homes and can
reduce a home’s energy
loss by 40%.**
100% of our homes utilize LED
lighting because in addition to
lasting longer and being more
durable, they offer better light
quality than other types of lighting.
LEDs use at least 75% less
energy, and last up to 25
times longer than
incandescent lighting.*
2,000
Gallons of water are saved
over the lifetime of our
energy-star rated
dishwashers***
En e rg y St a r
A p p l i a n c e s
Energy efficient appliances
reduce energy use without
sacrificing performance, and are
included at no additional cost in
many homes. These appliances
conserve water, significantly
reduce greenhouse
gas emissions, and help in
reducing our carbon
footprint.
* https://www.energy.gov/energysaver/energy-saver
** https://www.americanchemistry.com/chemistry-in-america/news-trends/blog-post/2019/why-spray-foam-why-it-makes-sense
***https://www.howards.com/blog/energy-star-appliance-savings/
Na t i o n a l Pa r t n e r s
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S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
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C o r p o r a t e G ove r n a n c e
E S G O ve r s i g h t
Our values of HOME – Honesty, Objectivity, Maturity, and Efficiency – are intimately linked to our
outlook on operating responsibly. We believe that through our values we are able to maintain policies
and procedures that support ethical business practices, sound governance, and adherence to all
regulatory requirements that result in promoting our shareholder, employee, and community interests.
We are committed to operating our Company with integrity and the highest ethical standards and
have implemented comprehensive governance structures and practices that meet or exceed the
requirements of applicable laws, regulations, and rules, including the NYSE’s listing standards.
As part of our corporate commitment to our Environmental, Social and Governance (ESG) initiatives,
our Board of Directors has expanded the scope of oversight on these areas and our Governance and
Sustainability Committee will guide our ESG efforts going forward.
Bu s i n e s s Et h i c s
Ethics is the core of our business. We believe that in order to succeed, we have an obligation to
operate honestly, efficiently, and fairly towards our buyers, shareholders, and team.
Our Code of Business Conduct and Ethics applies to our directors, executive officers, contractors,
and employees to address compliance with applicable laws, conflicts of interest, use and protection
of Company assets, confidentiality, fair dealing, discrimination, harassment, and health and safety.
B o a rd D i ve r s i t y
Green Brick Partners’ board of directors is led by Chairman, David Einhorn. The Governance and
Sustainability Committee of the Board is responsible for reviewing on a regular basis the requisite
skills and characteristics of Board members, as well as the composition of the Board as a whole.
This includes ensuring there are backgrounds that provide a diverse portfolio of experiences, skills,
and knowledge commensurate with the Company’s needs that address the Company’s principles of
diversity, including diversity of gender and ethnicity.
Green Brick’s board committees are comprised of only independent directors that are elected annually.
As a publicly-traded company, we follow a rigorous set of best practices, including conducting
executive sessions of independent directors, outlining our director resignation policy in uncontested
elections, and taking pride in following transparent stock ownership guidelines.
We respect the value that diverse life experiences bring to our team, from part time associates all the
way to our board of directors. Our board is composed 29% of women, and we are proud to boast that
66% of board committees are chaired by women.
S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
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B o a rd o f D i re c t o r s
David Einhorn, Chairman
Mr. Einhorn is the co-founder of Green Brick Partners and has served as Chairman of the Board since 2014. Since July 2004, Mr. Einhorn has served as
Chairman of the Board of Greenlight Capital Re, Ltd. (Nasdaq: GLRE) and has served as President of Greenlight Capital, Inc., since January 1996. Funds
managed by Greenlight are some of our principal stockholders. Mr. Einhorn received a Bachelor of Arts degree in Government from Cornell University.
Harry Brandler
Before retiring, Mr. Brandler served as the Chief Financial Officer of Greenlight Capital, Inc. from December 2001 to January 2019. Prior to joining
Greenlight Capital, Inc., from 2000 to 2001, Mr. Brandler served as Chief Financial Officer of Wheatley Partners, a venture capital firm, where he oversaw
the firm’s back office operations and restructured the firm’s marketing, client relations and technology. From 1996 to 2000, Mr. Brandler served as a
Manager at Goldstein, Golub & Kessler, where he provided audit, tax and consulting services to investment partnerships and other financial organizations
and where he was promoted to Manager in January 1999. Mr. Brandler received a B.S. in Accounting from New York University in 1993. Mr. Brandler was
admitted as a Certified Public Accountant in New York in 1996.
Elizabeth K. Blake
Before retiring, Ms. Blake served as Senior Vice President — Advocacy, Government Affairs & General Counsel of Habitat For Humanity International Inc.
from 2006 to 2014. Ms. Blake served on the Board of Patina Oil & Gas Corporation from 1998 through its sale to Noble Energy in 2005. From March 2003
to 2005, Ms. Blake was the Executive Vice President — Corporate Affairs, General Counsel and Corporate Secretary for US Airways Group, Inc. From April
2002 through December 2002, Ms. Blake served as Senior Vice President and General Counsel of Trizec Properties, Inc., a public real estate investment
trust. Ms. Blake served as Vice President and General Counsel of General Electric Power Systems from 1998 to 2002. From 1996 to 1998, Ms. Blake
served as Vice President and Chief of Staff of Cinergy Corp. Ms. Blake was with the law firm of Frost & Jacobs from 1982 and a partner from 1984 to 1996.
From 1977 to 1982, she was with the law firm of Davis Polk & Wardwell in New York. She is past Chair of the Ohio Board of Regents. Ms. Blake received
a Bachelor of Arts degree with honors from Smith College and her Juris Doctor from Columbia Law School, where she was a Harlan Fiske Stone Scholar.
Richard Press
Before retiring, Mr. Press was a Senior Vice President at Wellington Management from 1994 to 2006, where he started and built the firm’s insurance asset
management practice. Prior to that, Mr. Press was a Senior Vice President of Stein Roe & Farnham from 1982 to 1994 and Scudder Stevens and Clark from
1964 to 1982. Mr. Press sat on various committees of the Controlled Risk Insurance Company of The Harvard Risk Management Foundation from 2006 to
2017. Previously, Mr. Press was Chairman of the Board of Anaesthesia Associates of Massachusetts, and served as a board member and chairman of each
of Transatlantic Holdings (NYSE: TRH) from August 2006 to March 2012 and Pomeroy IT Solutions (NASDAQ: PMRY) from July 2007 to November 2009.
He served as a board member of the Housing Authority Insurance Group from 2008 to 2015. He was a founding member of the Board of Governors and
the Advisory Board of the National Pediatric Multiple Sclerosis Center, Stony Brook University and Medical School, New York (2001 – 2013). He is currently
a director of Millwall Holdings PLC and Millwall Football Club. Mr. Press earned a B.A. from Brown University in 1960; and after serving in the US Army,
he received his M.B.A. from Harvard Business School in 1964.
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Kathleen Olsen
Since 2011, Ms. Olsen has been a private investor. From 1999 through 2011, Ms. Olsen
served as Chief Financial Officer of Eminence Capital, LLC, a long/short global equity
fund. From 1993 to 1999, Ms. Olsen served as audit manager, specializing in investment
partnerships, at Anchin, Block & Anchin LLP, a public accounting firm located in New
York City. Ms. Olsen received a Bachelor of Science degree with honors from the State
University of New York at Albany. Ms. Olsen is a Certified Public Accountant and a member
of the American Institute of Certified Public Accountants and New York State Society of
Certified Public Accountants.
John R. Farris
Since 2007, Mr. Farris has been the President of LandFund Partners, LLC and President
of Commonwealth Economics, LLC. From 2008 to 2012, Mr. Farris served as an adjunct
Professor of Economics and Finance at Centre College in Danville, Kentucky. Prior to forming
LandFund Partners and Commonwealth Economics, LLC, from 2006 to 2007, Mr. Farris
served as Secretary of the Finance and Administration Cabinet for the Commonwealth
of Kentucky. He previously served on the board of directors for Farmers Capital Bank
Corporation from 2010 to 2016. Mr. Farris received a B.S. from Centre College in 1995
and a M.P.A. from Princeton University in 1999.
James R. Brickman
Mr. Brickman is the co-founder of Green Brick Partners and has served as our Chief
Executive Officer since 2014. Previously, Mr. Brickman was the founding manager and
advisor of each of JBGL Capital LP since 2008 and JBGL Builder Finance LLC since 2010
(collectively “JBGL”), and became our Chief Executive Officer following our acquisition of
JBGL in 2014. Prior to forming JBGL, Mr. Brickman was a manager of various joint ventures
and limited partnerships that developed/built low and highrise office buildings, multifamily
and condominium homes, single-family homes, entitled land and supervised a property
management company. He previously also served as Chairman and Chief Executive
Officer of Princeton Homes Ltd. and Princeton Realty Corporation that developed land,
constructed single family custom homes and managed apartments it built. Mr. Brickman
has over 40 years’ experience in nearly all phases of real estate construction, development
and real estate finance property management. He received a B.B.A. and M.B.A. from
Southern Methodist University.
C o m m i t t e e Me m b e r s
All Green Brick Partners committee members are independent directors.
Audit Committee - Kathleen Olsen (Chair), John R. Farris, and Richard Press
Compensation Committee - Richard Press (Chair), Kathleen Olsen, and Elizabeth K. Blake
Governance & Sustainability Committee - Elizabeth K. Blake (Chair), Kathleen Olsen, and John R. Farris
C B J E N I Ho m e s | V i r i d i a n - A r l i n g t o n , T X
C B J E N I Ho m e s | V i r i d i a n - A r l i n g t o n , T X
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“In 2021, we increased our
lots owned and controlled
by 98% year-over-year , far
exceeding any of our peers.
In 2022, excluding capital
invested buying land and
finished lots, we intend to
spend approximately $285
million developing lots,
with the goal of delivering
over 4,700 finished
homesites to our subsidiary
homebuilders across 43
communities throughout
2022.”
- Jim Brickman
CEO and Co-Founder
Green Brick Partners
14
14
Tro p h y S i g n a t u re Ho m e s | Up t o w n C ro s s i n g s - A l l e n , T X
Tro p h y S i g n a t u re Ho m e s | Up t o w n C ro s s i n g s - A l l e n , T X
Ye a r- O ve r-Ye a r F i n a n c i a l H i g h l i g h t s
28,621
26.4%
14,468
24.2%
2020
2021
2020
2021
Lots Owned And Controlled
Homebuilder Gross Margin Percentage
13.0%
7.7%
$460.7
$418.4
2020
2021
2020
2021
Cancellation Rate
Average Sales Price of Homes Delivered
(in thousands)
14
15
Ye a r Af t e r Ye a r o f Re c o rd - Bre a k i n g Pe r fo r m a n c e
$1,402.9
$242.8
$976.0
$138.7
$3.72
$2.24
$791.7
$623.6
$458.3
$391.0
$298.8
$78.4
$68.6
$53.9
$39.0
$24.4
$1.16
$1.02
$0.68
$0.49
$0.38
2015
2016 2017 2018 2019 2020
2021
2015 2016 2017 2018 2019 2020
2021
2015 2016 2017 2018 2019 2020
2021
Total revenue (in millions)
Pre-Tax Income Attributable
To GRBK (in millions)
Diluted Earnings Per Share *
*2017 Diluted EPS has been normalized to adjust for the impact of the Tax Act. See appendix.
16
16
Tro p h y S i g n a t u re Ho m e s | Bu f f a l o R i d g e - Wa x a h a c h i e , T X
Tro p h y S i g n a t u re Ho m e s | Bu f f a l o R i d g e - Wa x a h a c h i e , T X
17
28,621
$16.3
$12.6
$10.4
$9.3
$8.2
$7.9
$7.4
14,468
8,976
8,078
6,219
4,734
5,189
2015 2016 2017 2018 2019 2020
2021
2015 2016 2017 2018 2019 2020
2021
Book Value Per Share
Lots Owned And Controlled
Our strong results this past year
are the culmination of meticulous
planning and hard work by everyone
on our team. Despite our success,
we remain focused on maintaining
a disciplined approach to investing
capital and enhancing the long-
term value of the company for our
shareholders and the communities
in which we operate.
16
Tro p h y S i g n a t u re Ho m e s | Bu f f a l o R i d g e - Wa x a h a c h i e , T X
Tro p h y S i g n a t u re Ho m e s | Bu f f a l o R i d g e - Wa x a h a c h i e , T X
17
17
G re e n Br i c k Pa r t n e r s 2 4 Q u a r t e r F i n a n c i a l S u m m a r y ( 4 )
Summary Consolidated Statement of Income Data for Quarter Ended
December 31, 2021
September 30, 2021
June 30, 2021
March 31, 2021
Total revenues
$452,251
$342,340
$373,806
$234,479
Net income attributable to Green Brick Partners, Inc.
Income tax provision attributable to Green Brick Partners, Inc.
Pre-tax income attributable to Green Brick Partners, Inc.(2)
Diluted EPS
Diluted weighted-average number of shares outstanding
$63,471
$15,510
$78,981
$1.24
51,104
$48,507
$13,896
$62,403
$0.95
51,079
$52,263
$15,693
$67,956
$1.02
51,064
$25,969
$7,500
$33,469
$0.51
50,993
Summary Consolidated Balance Sheet Data as of
December 31, 2021
September 30, 2021
June 30, 2021
March 31, 2021
Inventory
Total assets
Borrowings on lines of credit, net
Senior unsecured notes, net
Notes payable
Term loan facility
Total debt
Total liabilities
Total Green Brick Partners, Inc. stockholders’ equity
Noncontrolling interests
Total equity
Number of shares outstanding
Total invested capital
Pre-tax return on average invested capital (3)
Home Data for Quarter Ended
New homes delivered
Net new home orders
Home Data as of
Backlog, units
Backlog, $ in millions
Units under construction
Active selling communities
Lots owned
Lots controlled
Lots owned and controlled
18
$1,203,743
$1,421,867
$(738)
$335,446
$210
$-
$334,918
$511,306
$874,548
$14,146
$888,694
50,760
$1,170,297
$1,347,316
$122,717
$235,737
$222
$-
$358,676
$546,689
$766,789
$16,432
$783,221
50,760
$1,106,141
$1,287,136
$130,605
$235,624
$233
$-
$366,462
$537,930
$717,389
$14,302
$731,691
50,760
$1,209,466
$1,125,465
$1,083,851
23.5%
20.7%
19.5%
$920,890
$1,079,916
$3,809
$235,561
$119
$-
$239,489
$387,454
$666,131
$10,630
$676,761
50,732
$905,620
17.0%
December 31, 2021
September 30, 2021
June 30, 2021
March 31, 2021
823
476
738
689
757
604
516
1,082
December 31, 2021
September 30, 2021
June 30, 2021
March 31, 2021
1,480
$869.9
2,278
74
20,239
8,382
28,621
1,827
$1,017.2
2,555
80
17,129
7,225
24,354
1,876
$974.3
2,486
87
16,327
5,024
21,351
2,029
$995.7
2,303
90
8,565
10,374
18,939
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
December 31, 2019
September 30, 2019
June 30, 2019
March 31, 2019
$254,100
$275,821
$232,833
$213,267
$230,122
$209,404
$183,506
$168,628
29,310
7,656
36,966
$0.58
50,967
34,819
9,968
44,787
$0.68
50,876
33,647
1,348
34,995
$0.66
50,692
15,917
6,038
21,955
$0.31
50,646
15,920
4,959
20,879
$0.31
50,619
15,671
5,743
21,414
$0.31
50,597
14,460
5,216
19,676
$0.29
50,724
12,605
3,794
16,399
$0.25
50,605
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
December 31, 2019
September 30, 2019
June 30, 2019
March 31, 2019
$844,635
$779,360
$751,121
$770,628
$753,567
$740,799
$719,878
$690,817
988,847
106,687
111,056
2,125
-
219,868
325,895
640,242
9,167
649,409
50,662
860,110
17.1%
944,582
93,489
111,028
2,131
-
206,648
312,059
610,079
8,820
618,899
50,662
816,727
15.7%
910,248
143,875
73,527
4,249
-
221,651
313,818
575,759
8,186
583,945
50,662
797,410
13.0%
975,180
242,758
73,466
-
-
316,224
409,886
542,982
10,900
553,882
50,617
859,206
10.9%
875,539
164,642
73,406
-
-
238,048
325,533
523,168
13,227
536,395
50,488
761,216
11.0%
865,789
164,792
73,358
-
-
238,150
337,087
508,715
7,778
516,493
50,488
746,865
10.6%
832,961
232,657
-
-
-
232,657
321,809
493,470
5,173
498,643
50,696
726,127
10.5%
793,020
206,522
-
-
-
206,522
297,068
480,869
4,788
485,657
50,676
687,391
11.2%
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
December 31, 2019
September 30, 2019
June 30, 2019
March 31, 2019
585
848
622
823
553
582
448
632
514
590
443
436
394
453
368
444
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
December 31, 2019
September 30, 2019
June 30, 2019
March 31, 2019
1,463
$686.9
1,780
103
8,920
5,548
14,468
1,200
$553.1
1,361
100
6,631
5,435
12,066
999
$446.6
1,273
90
5,870
3,306
9,176
970
$427.3
1,418
93
6,109
2,575
8,684
786
$346.8
1,297
95
6,419
2,557
8,976
710
$319.7
1,306
85
6,414
2,855
9,269
717
$331.3
1,214
75
6,127
3,050
9,177
658
$307.5
1,170
79
6,186
2,308
8,494
19
G re e n Br i c k Pa r t n e r s 2 4 Q u a r t e r F i n a n c i a l S u m m a r y ( 4 )
Summary Consolidated Statement of Income Data for Quarter Ended
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
Total revenues
$185,120
$152,052
$157,312
$129,163
Net income attributable to Green Brick Partners, Inc.
Income tax provision attributable to Green Brick Partners, Inc.
Pre-tax income attributable to Green Brick Partners, Inc.(2)
Diluted EPS
Diluted weighted-average number of shares outstanding
13,354
3,754
17,108
$0.26
50,723
12,197
4,746
16,943
$0.24
50,778
14,869
5,149
20,018
$0.29
50,783
11,203
3,335
14,538
$0.22
50,718
Summary Consolidated Balance Sheet Data as of
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
Inventory
Total assets
Borrowings on lines of credit, net
Senior unsecured notes, net
Notes payable
Term loan facility
Total debt
Total liabilities
Total Green Brick Partners, Inc. stockholders’ equity
Noncontrolling interests
Total equity
Number of shares outstanding
Total invested capital
Pre-tax return on average invested capital (3)
Home Data for Quarter Ended
New homes delivered
Net new home orders
Home Data as of
Backlog, units
Backlog, $ in millions
Units under construction
Active selling communities
Lots owned
Lots controlled
Lots owned and controlled
20
$668,961
784,026
200,386
-
-
-
200,386
289,863
468,351
17,281
485,632
50,583
668,737
11.4%
$648,241
771,016
198,965
-
1,045
-
200,010
292,981
455,686
14,508
470,194
50,720
655,696
11.6%
$581,368
705,049
166,395
-
1,205
-
167,600
242,845
443,324
12,208
455,532
50,720
610,924
12.1%
$528,881
641,944
133,752
-
9,914
-
143,666
202,876
428,386
10,682
439,068
50,686
572,052
11.3%
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
382
279
312
297
327
387
267
434
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
582
$264.3
1,127
76
6,235
1,843
8,078
685
$309.0
1,113
75
5,429
2,672
8,101
700
$314.2
988
69
5,248
2,402
7,650
477
$226.5
760
54
4,816
1,502
6,318
December 31, 2017
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
March 31, 2016
$137,424
$114,342
$105,750
$100,734
$122,004
$94,032
$103,394
$71,556
10,805
6,356
17,161
$0.21(1)
50,681
9,280
5,336
14,616
$0.19
49,892
7,689
4,349
12,038
$0.16
49,123
6,197
3,855
10,052
$0.13
49,017
7,676
6,001
13,677
$0.16
48,930
6,243
3,624
9,867
$0.13
48,907
$6,743
4,213
10,956
$0.14
48,894
3,094
1,423
4,517
$0.06
48,814
December 31, 2017
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
March 31, 2016
$496,054
611,003
105,773
-
9,926
-
115,699
177,965
416,347
16,691
433,038
50,599
532,046
10.8%
$478,616
605,510
94,002
-
10,204
-
104,206
167,265
424,214
14,031
438,245
50,585
528,420
10.1%
$434,938
553,616
73,293
-
10,213
-
83,506
142,165
399,944
11,507
411,451
49,108
483,450
9.9%
$406,519
532,681
61,716
-
10,223
-
71,939
126,152
392,096
14,433
406,529
49,070
464,035
9.9%
$410,662
540,196
74,212
-
10,948
-
85,160
138,711
384,572
16,913
401,485
48,956
469,732
8.8%
$418,356
553,399
80,785
-
9,713
-
90,498
164,700
376,592
12,107
388,699
48,937
467,090
7.8%
$384,742
$505,260
$62,874
-
9,000
-
71,874
122,601
370,206
12,453
382,659
48,937
442,080
6.9%
$378,956
504,861
66,833
-
9,988
-
76,821
127,543
362,871
14,447
377,318
48,833
439,692
5.7%
December 31, 2017
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
March 31, 2016
292
265
235
241
237
270
226
287
275
197
196
204
212
239
161
240
December 31, 2017
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
March 31, 2016
310
$151.5
736
55
4,495
1,724
6,219
337
$164.6
715
56
4,624
1,073
5,697
331
$165.2
714
54
4,283
1,111
5,394
298
$145.2
625
52
4,039
917
4,956
237
$108.0
564
50
4,235
954
5,189
315
$138.7
665
49
4,199
870
5,069
307
$140.3
660
48
3,743
744
4,487
280
$129.2
541
44
3,736
936
4,672
21
O u r Bra n d s a n d S e r v i c e s *
The Green Brick Partners Subsidiary Homebuilder Brands
The Green Brick Partners subsidiary homebuilder network is composed of seven consolidated homebuilders
and one homebuilder in which we have a 49.9% ownership interest. Our subsidiary homebuilders are focused
in major markets including Dallas-Fort Worth, Texas, Austin, Texas, and Atlanta, Georgia, as well as in some
of the fastest-growing markets including the Florida Treasure Coast; Colorado Springs, Colorado; and Fort
Collins, Colorado.
2021 vs 2020 Closings Mix by Brand
We believe our stratification of products, as shown below by in our brand mix graphs, will continue to appeal
to a broad base of homebuyers and expect that our entry level segment will continue to rapidly expand
through the growth of our Trophy Signature and CB JENI brands. As we go forward, we expect the continued
expansion of the Trophy brand to establish larger communities with higher absorption rates and unit density.
2020
2021
Tro p h y S i g n a t u re Ho m e s | Pa r k V i s t a - Fr i s c o , T X
Tro p h y S i g n a t u re Ho m e s | Pa r k V i s t a - Fr i s c o , T X
22
22
*Green Brick has a 49.9% ownership interest in Challenger Homes. Revenue and home closings are not included in Green Brick’s
consolidated financial statements. Income from this investment is shown in “Equity in income of unconsolidated entities” in our
Consolidated Statements of Income.
2021 Closings Volume by Brand
Trophy Signature Homes
CB JENI Homes
Normandy Homes
The Providence Group of Georgia
Southgate Homes
Centre Living Homes
GHO Homes
Challenger Homes*
202
158
76
593
501
251
484
Product Mix by Brand
Geographic Diversity
Single Family
Townhomes
Condominiums
Trophy Signature Homes
CB JENI Homes
Normandy Homes
The Providence Group of Georgia
Southgate Homes
Centre Living Homes
GHO Homes
Challenger Homes
1,053
23
Tro p h y S i g n a t u re Ho m e s | Pa r k V i s t a - Fr i s c o , T X
Tro p h y S i g n a t u re Ho m e s | Pa r k V i s t a - Fr i s c o , T X
22
Tro p hy S i g n a t u re Ho m e s
Dallas-Fort Worth, Texas & Austin, Texas
Trophy Signature Homes was founded in 2018 to serve the Dallas-Fort Worth market’s need for high quality, affordable homes with a unique
blend of functionality and design. What sets Trophy Signature Homes apart is their commitment to a truly representative model across all of their
design series. Each model home regardless of community, plan, and price range proudly displays all of the luxurious features that come standard
in each home. The typical upgrades from other homebuilders are included in the price of each Trophy Signature Home, allowing for a streamlined,
no-hassle buying experience.
Early in 2022, we announced that Green Brick will make its debut into the Austin market through Trophy Signature Homes. We purchased 383
acres of land in Elgin, Texas, 25 miles northeast of Downtown Austin, for the development of our first Austin-area community, Trinity Ranch. We
plan to commence home construction early 2023.
$472.3 Million
$300,000 to $930,000
1,053
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
24
Tro p h y S i g n a t u re Ho m e s | L a kePo i n t e - L a vo n , T X
Tro p h y S i g n a t u re Ho m e s | L a kePo i n t e - L a vo n , T X
25
In 2021, we expanded our
entry-level Trophy Signature
Homes brand, with Trophy
representing 36% of our
home closings revenue.
This focus has allowed us
to create positive SG&A
leverage by prioritizing
higher absorption Trophy
communities with a
simplified library of plans
and design packages.
Tro p h y S i g n a t u re Ho m e s | L a kePo i n t e - L a vo n , T X
Tro p h y S i g n a t u re Ho m e s | L a kePo i n t e - L a vo n , T X
25
25
“The buying/design process was
made very easy and seamless.
I loved my design expert. She
helped me create a cohesive
design for my home that matched
my personality. I love the weekly
updates during the building
process and the follow up after
closing. Monica was fabulous! She
answered all of my questions and
I can tell she really cares about
the residents of this community.
I loved the communication and
everything was perfect at the
time I moved in!”
- Brittany, CB JENI Homes
Homeowner
C B J E N I Ho m e s | Ma j e s t i c G a rd e n s - Fr i s c o , T X
C B J E N I Ho m e s | Ma j e s t i c G a rd e n s - Fr i s c o , T X
26
26
C B J E N I Ho m e s
Dallas-Fort Worth, Texas
Since 2009, CB JENI Homes has proudly built new townhomes in premium Dallas-Fort Worth locations for lifestyle-conscious homebuyers. CB
JENI Homes was founded to provide new home options for an underserved portion of the market: those looking to buy moderately-sized homes
(whether first-timers or those moving down) with beautiful architecture, low maintenance and a level of service and professionalism that puts them
at ease. Over the last ten years, the award-winning brand has grown to become DFW’s largest townhome builder, both in locations and units sold.
$205.9 Million
$240,000 to $550,000
593
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
C B J E N I Ho m e s | Ma j e s t i c G a rd e n s - Fr i s c o , T X
C B J E N I Ho m e s | Ma j e s t i c G a rd e n s - Fr i s c o , T X
26
27
No r m a n d y Ho m e s
Dallas-Fort Worth, Texas
Since 2012, Normandy Homes has proudly built timeless, new homes for discerning homebuyers. With a commitment to craftsmanship and service, Normandy presents beautiful homes
anchored in traditional – yet distinctive – design, trusted quality and enduring value. Driven by a rich dedication to its homebuyers, homeowners always come first at Normandy Homes.
Normandy Homes believes in treating each home as if it were their own, engaging the highest standards of discipline, professionalism and quality. This passion — and commitment to
continually improve — has allowed the builder to earn more than 20 homebuilding awards.
$105.9 Million
$430,000 to $880,000
202
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
No r m a n d y Ho m e s | E s s e x Pa r k - C a r ro l l t o n , T X
No r m a n d y Ho m e s | E s s e x Pa r k - C a r ro l l t o n , T X
28
S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
As a trusted local upscale homebuilder, Southgate Homes is known for homes built with distinctive charm and unparalleled attention to detail. Southgate Homes offers generous
standard features and upgrade options to individualize every home. Southgate Homes prides itself on being a hands-on company dedicated to the highest standards of creativity and
attention to detail on every home built. The design, finish out, and construction process ensures a unique home that is stylish, functional, and modern. This commitment to excellence
across all aspects of homebuilding has led Southgate to being recognized as one of the top luxury production home builders in the Dallas-Fort Worth metroplex.
S o u t h g a t e Ho m e s
Dallas-Fort Worth, Texas
$117.6 Million
$590,000 to $1,390,000
158
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
No r m a n d y Ho m e s | E s s e x Pa r k - C a r ro l l t o n , T X
No r m a n d y Ho m e s | E s s e x Pa r k - C a r ro l l t o n , T X
S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
S o u t h g a t e Ho m e s | No r t h w o o d Ma n o r - Fr i s c o , T X
29
T h e P rov i d e n c e G ro u p of G e o rg i a
Atlanta, Georgia
Built on a hometown legacy, The Providence Group is considered to be the leading lifestyle builder in Atlanta, offering a variety of home styles
including single-family homes, townhomes, and mid-rise condominiums.
The Providence Group communities can be found in the most desirable locations in the Atlanta area including Atlanta, Roswell, Alpharetta, Johns
Creek, Milton, Decatur, Woodstock, Canton, and Smyrna. These desirable locations offer home owners the convenience of great access to major
interstates, dining, shopping and recreation. The homebuilder takes pride in designing innovative homes, breathtaking streetscapes, and luxurious
yet functional floorplans that customers love to call home.
$257.2 Million
$360,000 to $1,000,000
501
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
30
T h e Prov i d e n c e G ro u p | B e l l m o o re Pa r k - Jo h n s C re e k , G A
T h e Prov i d e n c e G ro u p | B e l l m o o re Pa r k - Jo h n s C re e k , G A
31
We thought the search for
our first home would be
endless and exhausting, until
we came across The Towns
at East Village... We loved
the idea of maintenance free
living, being under the roof
of good quality materials,
and close proximity to
shops/restaurants. There
was not a home we looked at
that could even compare to
those in this community. We
are happy that we chose The
Providence Group and would
recommend it to all!
- Courtney & Thomas
The Providence Group
Homeowners
T h e Prov i d e n c e G ro u p | B e l l m o o re Pa r k - Jo h n s C re e k , G A
T h e Prov i d e n c e G ro u p | B e l l m o o re Pa r k - Jo h n s C re e k , G A
31
31
“An incredibly skilled builder
in the area that makes quality
homes and supports the local
community. With so many styles
and subdivisions to choose
from, there is something for
everyone.”
- Anna, GHO Homes
Homeowner
32
32
G H O Ho m e s | St o n e y Bro o k Fa r m - Ve ro B e a c h , F L
G H O Ho m e s | St o n e y Bro o k Fa r m - Ve ro B e a c h , F L
G H O Ho m e s
Treasure Coast, Florida
GHO Homes has been building homes for over 25 years, focusing on communities on Florida’s Treasure Coast including Vero Beach, Port. St. Lucie,
Sebastian, and Fort Pierce. In addition to offering single-family and patio homes, GHO Homes also builds their award-winning homes on individual
homesites through their St. Lucie Collection series of homes. All GHO Homes utilize time-tested quality materials and methods, the latest design
features, finishes, and energy efficient components. GHO Homes has continued to raise the bar through the creation of the GHO Tailor-Made
program. This program sets GHO apart from its competitors by allowing homebuyers to customize their homes with numerous plan options, built-
ins, and upgrades that exceed industry standards and result in custom, one-of-a-kind homes at an outstanding value.
$110.6 Million
$240,000 to $1,620,000
251
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
32
33
Ce n t re L i v i n g Ho m e s
Dallas-Fort Worth, Texas
Centre Living Homes is a premier single-family and townhome builder in Dallas-Fort Worth, Texas. From top architects to award-winning designers, Centre Living Homes is composed
of the industry’s best. This ensures that the builder’s floor plans, elevations, and interior finishes are always cutting-edge design.
Their high-density housing developments boast world-class architecture, the latest in smart home technology, and rooftop decks with some of Dallas’ most coveted views of the city. In
2021, Centre Living Homes expanded its product offering to include suburban areas of the DFW metroplex as well including Frisco, Waxahachie, and Heath, Texas.
$36.0 Million
$370,000 to $750,000
76
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
C e n t re L i v i n g Ho m e s | Em o r y Pa r k - Da l l a s , T X
C e n t re L i v i n g Ho m e s | Em o r y Pa r k - Da l l a s , T X
34
C h a l l e n g e r Ho m e s | Bra n d i n g I ro n - C o l o ra d o Sp r i n g s , CO
C h a l l e n g e r Ho m e s | Bra n d i n g I ro n - C o l o ra d o Sp r i n g s , CO
C h a l l e n g e r Ho m e s *
Colorado Springs, Colorado & Fort Collins, Colorado
Thanks to strong core values and an unwavering commitment to its homebuyers, Challenger Homes has grown from just one homesite into one of Colorado Springs and Fort Collins’
most trusted new home builders. Challenger Homes offers buyers elegant floorplans with an emphasis on large open spaces, quality craftsmanship, and energy-efficient solutions. The
builder offers a streamlined design process that allows buyers to customize their homes with a great deal of ease. While some homebuilders view the design process as a way to up-sell
by employing associates on commission, Challenger Homes’ salaried design team are exclusively dedicated to meeting the buyer’s needs on their budget, creating an unparalleled level
of customer service.
$196.0 Million*
$270,000 to $770,000
484 *
2021 Home Closings Revenue
2021 Price Ranges
2021 Closings
*Green Brick has a 49.9% ownership interest in Challenger Homes. Revenue and home closings are not included in Green Brick’s consolidated financial statements. Income from this investment is shown in “Equity in income of
unconsolidated entities” in our Consolidated Statements of Income.
C e n t re L i v i n g Ho m e s | Em o r y Pa r k - Da l l a s , T X
C e n t re L i v i n g Ho m e s | Em o r y Pa r k - Da l l a s , T X
C h a l l e n g e r Ho m e s | Bra n d i n g I ro n - C o l o ra d o Sp r i n g s , CO
C h a l l e n g e r Ho m e s | Bra n d i n g I ro n - C o l o ra d o Sp r i n g s , CO
35
F i n a n c i a l S e r v i c e s *
Green Brick Mortgage
Much like our subsidiary homebuilder brands have a reputation of delivering beautifully
designed homes and unparalleled customer service, Green Brick Mortgage delivers
the same level of excellence by providing our buyers with best-in-class home financing
services and expertise. The company offers the powerful tools, resources, and advice our
buyers need for the best home buying experience possible.
Our homebuyers are currently able to finance their homes through Green Brick Mortgage’s
preferred lender referral program in Dallas-Fort Worth, Texas and Atlanta, Georgia.
BHome Mortgage
Launched in 2020, BHome Mortgage is a full-service mortgage banking company
committed to developing and nurturing relationships with REALTORS®, home builders
and its customers. BHome Mortgage currently services the Dallas-Fort Worth market,
and offers an unmatched level of customer service for each and every homebuyer.
Bhome offers a wide array of mortgage products including conventional, fixed-rate,
ARMs, FHA, VA, Texas Veteran Housing Assistance Program, and first-time homebuyer
programs. The solution center at BHome specializes in assisting buyers with less than
perfect credit, and provides access to sustainable homeownership to buyers that may
have otherwise not qualified.
Green Brick Title
Green Brick Title provides outstanding depth of experience to the residential and
commercial real estate industry in four locations across the country. In addition to
partnering with our subsidiary homebuilder brands to help new homeowners quickly and
efficiently close on their new homes, Green Brick Title works closely with REALTORS®,
banks, land brokers, builders, developers, and mortgage companies.
Green Brick Title’s access to resources beyond those of a traditional title company
enables us to always stay one step ahead of our competition.
*Green Brick Partners retains a 49.99% equity interest in Green Brick Mortgage LLC, a 49%
equity interest in BHome Mortgage LLC, and 100% ownership of Green Brick Title LLC.
36
L a n d Ac q u i s i t i o n a n d D eve l o p m e n t
Our land strategy consists of a hybrid model that focuses on both the most desirable as well as the most affordable
homesites in our markets. In the inventory-constrained suburbs of Dallas-Fort Worth and Atlanta, Green Brick Partners
leverages its strong relationships with land sellers and municipalities to obtain lot positions in the most attractive
locations. Green Brick Partners also utilizes its financial strength to acquire lots in more affordable outskirt communities
to address entry-level buyers seeking to purchase quality homes at value-oriented pricing.
In 2021, we increased our lots owned and controlled by 98% year-over-year, far exceeding any of our peers. In 2022,
excluding capital invested buying land and finished lots, we intend to spend approximately $285 million developing
lots, with the goal of delivering over 4,700 finished homesites to our subsidiary homebuilders across 43 communities
throughout 2022. We believe our willingness to invest heavily in our growth of lot inventory and commit to self-
developing such a large portion of our lots is a key factor in our higher gross margins. However, we also understand
the importance of maintaining lower financial leverage that is appropriate to match our significant investment in dirt.
Based on our strong returns on equity, our lower financial leverage means our results are even more impressive on a
risk-adjusted basis.
Shown on the map below are almost 9,000 lots allocated to Trophy Signature Homes in 2022 for communities that each
exceed 800 homesites. The primary way we mitigate risk in these larger, longer-life communities is by buying land in
submarkets which we believe have long-term growth potential at very affordable prices. Many of these lots also have
special development districts such as Municipal Utility Districts (MUDs) or Public Improvement Districts (PIDs) that can
also fund a sizable portion of our development costs, reducing our cost of capital and development risk even further.
37
A p p e n d i x & No n - G A A P Re c o n c i l i a t i o n
In this report, we utilize certain non-GAAP financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and
similar measures are useful to management and investors in evaluating the Company’s operating performance and financing structure. We also believe these measures facilitate the
comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with Generally
Accepted Accounting Principles (“GAAP”), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a
substitute for, or superior to, financial measures prepared in accordance with GAAP.
(1) As a result of the comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), enacted by the U.S. government on December 22, 2017, the
Company remeasured its deferred tax assets (DTA) which resulted in additional tax expense of $19.0 million during the three months ended December 31, 2017. Due to the effects
of the Tax Act, the net (loss) income attributable to Green Brick for the three months ended December 31, 2017 and for the year ended December 31, 2017 is not comparable to
the other periods presented in this report. Certain annual and quarterly amounts shown in this report have been adjusted to a “Normalized” Non-GAAP amount as shown below.
For the quarter ended 12.31.2017:
Per GAAP
Financials
Adjustment
"Normalized"
Non-GAAP
Amount
Presented
For the year ended 12.31.2017:
Per GAAP
Financials
Adjustment
"Normalized"
Non-GAAP
Amount
Presented
Income Before Taxes
$21,017
$-
$21,017
Income Before Taxes
$64,237
$-
$64,237
Income Tax Expense Attributable to
Noncontrolling Interest
Income Tax Expense Attributable to
Green Brick
(40)
-
(40)
Income Tax Expense Attributable to
Noncontrolling Interest
(135)
-
(135)
(25,356)
19,000
(6,356)
Income Tax Expense Attributable to GRBK
(38,896)
19,000
(19,896)
Income Tax Provision
(25,396)
19,000
(6,396)
Net (loss) income
(4,379)
19,000
14,621
(3,816)
-
(3,816)
Less: net income attributable to
noncontrolling interests
Net (loss) income attributable to
GRBK
Income Tax Provision
(39,031)
19,000
(20,031)
Net (loss) income
25,206
19,000
44,206
Less: net income attributable to
noncontrolling interests
(10,236)
-
(10,236)
(8,195)
19,000
10,805
Net (loss) income attributable to GRBK
14,970
19,000
33,970
Diluted weighted average common
shares outstanding
50,681
50,681
50,681
Diluted weighted average common
shares outstanding
49,683
49,683
49,683
Diluted earnings per share
$(0.16)
$0.37
$0.21
Diluted earnings per share
$0.30
$0.38
$0.68
(2) Pre-tax income attributable to Green Brick Partners, Inc. is a non-GAAP measure reconciled by quarter on pages 16-21 of this report. This measure is calculated by adding Income
tax attributable to Green Brick Partners, Inc. to Net Income attributable to Green Brick Partners, Inc.
(3) Pre-tax return on average invested capital is calculated as the sum of Pre-tax income attributable to Green Brick Partners, Inc. for the last four quarters divided by the average of
the ending invested capital and beginning invested capital for the period included in the calculation.
(4) Certain prior period amounts have been reclassified to conform to the current period presentation; specifically, (i) mechanic’s lien contracts revenue was reclassified from other
income to revenue, (ii) the cost of model home furnishings was reclassified from inventory to fixed assets, (iii) prepaid plans & development costs were reclassified from other assets
to inventory, and (iv) debt balances were presented net of debt issuance costs.
38
39
Tro p h y S i g n a t u re Ho m e s | R i d g e v i e w C ro s s i n g - A l l e n , T X
Tro p h y S i g n a t u re Ho m e s | R i d g e v i e w C ro s s i n g - A l l e n , T X
3939
Op e r a t i n g Re s u l t s a n d Fo r m 1 0 - K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-K
___________________
X
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
Commission file number: 001-33530
Green Brick Partners, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
2805 Dallas Pkwy , Ste 400
20-5952523
(IRS Employer Identification Number)
Plano
,
TX
75093
(469) 573-6755
(Address of principal executive offices, including Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, par value $0.01 per share
GRBK
The New York Stock Exchange
Depositary Shares (each representing a 1/1000th interest in a share
of 5.75% Series A Cumulative Perpetual Preferred Stock, par value
$0.01 per share)
GRBK PRA
The New York Stock Exchange
40
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
X
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
X
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
X
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
X
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
X
Non-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
X
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes No
X
The aggregate market value of voting stock held by non-affiliates of the Registrant was $703,959,338 as of June 30, 2021 (based upon the closing sale price on The Nasdaq Capital Market for such date). For
this purpose, all shares held by directors, executive officers and stockholders beneficially owning ten percent or more of the registrant’s common stock have been treated as held by affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other purposes.
The number of shares of the Registrant’s common stock outstanding as of February 25, 2022 was 50,759,972.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive Proxy Statement for its 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.
41
PART I
ITEM 1. BUSINESS
Green Brick Partners, Inc. and its subsidiaries (“Green Brick”, “the Company”, “we” or “us”) is a diversified
homebuilding and land development company. We acquire and develop land and build homes through
our eight brands of builders in four major markets. Our core markets are in the high growth U.S.
metropolitan areas of Dallas-Forth Worth (“DFW”), Texas and Atlanta, Georgia, as well as the Treasure
Coast, Florida area. We also own a noncontrolling interest in a builder in Colorado Springs, Colorado.
We are engaged in all aspects of the homebuilding process, including land acquisition and development,
entitlements, design, construction, title and mortgage services, marketing and sales and the creation of
brand images at our residential neighborhoods and master planned communities.
We believe we offer higher quality homes with more distinctive designs and floor plans than those
built by our competitors at comparable prices. Many of our communities are located in premium
locations and we seek to enhance homebuyer satisfaction by utilizing high-quality materials, offering
a broad range of customization options and building well-crafted homes. We seek to maximize value
over the long term and operate our business to mitigate risks in the event of a downturn by controlling
costs and quickly reacting to regional and local market trends.
We are a leading lot developer in our markets and believe that our strict operating discipline provides
us with a competitive advantage in seeking to maximize returns while minimizing risk. As of December
31, 2021, we owned or controlled approximately 28,600 home sites in high-growth submarkets
throughout the DFW and Atlanta metropolitan areas and the Treasure Coast, Florida market. We
provide finished lots to our subsidiary builders or option lots from third-party developers for our
builders’ homebuilding operations and provide them with construction funding and strategic planning.
Our builders provide us with their local knowledge and relationships.
We are a Delaware corporation, incorporated in 2006. We commenced operations as a publicly held
homebuilding company in 2014. Our principal executive offices are located at 2805 Dallas Pkwy, Ste
400, Plano, TX 75093.
Business Strategy
We believe we are well-positioned for growth through the disciplined execution of the following
elements of our strategy:
Consistent Land Acquisition Program with Disciplined Underwriting. We believe our ability to identify,
acquire and develop land in desirable locations and on favorable terms is critical to our success. We
evaluate land opportunities based on how we expect such opportunities will contribute to overall
profitability and returns. Through our rigorous national underwriting program, we seek to identify
attractive properties that are typically located in prime neighborhood locations or in preferred growth
corridors. We focus on the development of entitled parcels in communities where we can generally
sell all homes within 24 to 60 months from the start of sales. Notwithstanding, we will also invest in
longer-term land investments if our return criteria is generated.
Focus on Markets with a Favorable Growth Outlook and Strong Demand Fundamentals. We have
chosen to focus our operations to sunbelt and sunbelt adjacent states because we believe that these
markets offer attractive residential real estate investment characteristics, such as growing economies,
improving levels of employment, and population growth relative to national averages, favorable
migration patterns, general housing affordability, and desirable lifestyle and weather characteristics.
42
We currently operate in Texas, Colorado, Florida, and Georgia, which were four of the top seven states
in terms of population growth per the 2020 census data. Each of these states experienced double-
digit growth over the preceding ten years while the population for the US only grew 7.3%.
Strategically Increase Market Positions in our Existing Markets. We believe that there are significant
opportunities to profitably expand in our core markets. As of December 31, 2021, we believe our
extensive land and lot inventory will allow us to maximize our profitability and return on capital. In
Dallas and Atlanta, we seek to acquire land with convenient access to metropolitan areas which
have diverse economic and employment bases and demographics that we believe will support long-
term growth. In the Treasure Coast, we seek land in highly desirable, but limited, coastal regions that
attract relocating homebuyers. We continuously review the allocation of our investments in these
markets taking into account demographic trends and the likely impact on our operating results and will
reallocate our investments when necessary.
Deliver Superior Designs, Broad Product Ranges and Enhanced Homebuying Experience. We partner
our expertise with that of our builders to design attractive neighborhoods and homes to appeal
to a wide variety of potential homebuyers. Our homebuilding projects include townhomes, patio
homes, single family homes, and luxury homes. We believe we can adapt quickly to changing market
conditions and optimize performance and returns while strategically reducing portfolio risk because of
our diversified product strategy. One of our core operating philosophies is to create a culture which
provides a positive, memorable experience for our homebuyers. In consultation with nationally and
locally recognized architecture firms, interior and exterior consultants, and homeowner focus groups,
we research and design a diversified range of products for various levels and price points.
Disciplined Investment Strategy Combined with the Prudent Use of Leverage. We seek to maximize
value over the long-term and operate our business to mitigate risks in the event of a downturn by
controlling costs and focusing on regional and local market trends. We believe that our strict operating
discipline combined with our prudent use of financial leverage to continue to invest in our land
acquisition, development and homebuilding businesses provides us with a competitive advantage in
seeking to maximize returns while minimizing risk. We target a debt to total capitalization ratio of
approximately 30% to 35%, which we expect will continue to provide us with significant additional
growth capital. As of December 31, 2021, our debt to total capitalization ratio was 27.7%.
Targeted Expansion into Adjacent Markets. We currently intend to pursue targeted expansion of
our entry-level builder, Trophy Signature Homes, into markets within our current states. We believe
Trophy’s more affordable product and quicker inventory turns make its platform uniquely scalable to
expand outside of the DFW metroplex. We plan to expand Trophy into markets compatible with our
existing markets that demonstrate strong trends in demographics, employment, and in-migration by
leveraging existing relationships with land developers and homebuilders. In this regard, on February
4, 2022, we announced our expansion into the Austin, TX market. In addition, we have traditionally,
and may in the future, grow through the acquisition of homebuilders in our current markets or other
markets that meet our demographic and economic growth criteria.
Our Builders and Homes
The following table presents general information about each of our builders, including the types of
homes they build and their price ranges as of December 31, 2021. During late 2020 and throughout
2021, as we sought to better match our sales pace with our construction and delivery pace, the
average price of our homes in each of our markets has increased.
Builder
Ownership
Market
Products Offered
Trophy Signature Homes LLC (“Trophy”)
CB JENI Homes DFW LLC (“CB JENI”)
Normandy Homes (“Normandy”)
SGHDAL LLC (“Southgate”)
CLH20 LLC (“Centre Living”)
The Providence Group of Georgia LLC (“TPG”)
GRBK GHO Homes LLC (“GRBK GHO”)
100%
100%
100%
100%
90%
50%
80%
DFW
DFW
DFW
DFW
DFW
Atlanta
Single family
Townhomes
Single family
Luxury homes
Townhomes and
Single Family
Townhomes, Condominiums
and Single Family
Treasure Coast
Patio homes and Single Family
GB Challenger, LLC (“Challenger”)
49.9%
Colorado Springs and Denver
Townhomes and Single Family
Price Range
$300,000 to $930,000
$240,000 to $550,000
$430,000 to $880,000
$590,000 to $1,390,000
$370,000 to $750,000
$360,000 to $1,000,000
$240,000 to $1,620,000
$270,000 to $770,000
Our backlog reflects the number and value of homes for which we have entered into sales contracts
with customers but not yet delivered. With the exception of a normal cancellation rate, we expect all
of the backlog as of December 31, 2021 to be filled during 2022. The following table sets forth the
information about selling communities and backlog of our builders.
Year Ended December 31, 2021
December 31, 2021
December 31, 2020
Builder
Average Selling Communities
Selling Communities
Backlog, Units
Backlog, in thousands
Selling Communities
Backlog, Units
Backlog, in thousands
Trophy
CB JENI (1)
Southgate
Centre Living
TPG
GRBK GHO
Total (2)
(1) Includes Normandy Homes.
24
19
7
5
21
11
87
23
15
4
5
19
8
74
413
283
158
45
352
229
1,480
$246,668
139,531
131,455
24,289
200,405
127,508
$869,856
23
25
12
4
25
14
103
371
470
167
28
213
214
1,463
$151,778
189,807
121,740
13,541
113,657
96,338
$686,861
(2) GB Challenger is not included in the table above as Green Brick does not have a controlling financial
interest in Challenger. Our investment in Challenger is treated as an unconsolidated investment under
the equity method of accounting and is included in investments in unconsolidated entities in our
consolidated balance sheets.
In 2019, in response to our customers expressed desire for an expedited and transparent sales
process, we launched a selection of homes with simplified, all upgrades included options. In 2021,
we continued to expand this selection. Our CB JENI X and Trophy Signature Homes lines have been
at the forefront of creating an honest, easy to follow, sales experience that seeks to offer simplified
solutions with top-of-the-line finishes included regardless of a homebuyer’s price range. We believe
that this streamlined process and focus on operational efficiency has enabled us to react quickly to
the rise of the work from home and remote learning lifestyle of our homebuyers. As a result, we have
launched updated plans with a focus on dedicated learning and office spaces, home integrations with
the newest technology, and the latest in energy-efficient solutions including tankless water heaters,
high-efficiency LED lighting, ENERGY STAR rated appliances, and low flow bathroom fixtures.
We are focused on creating environmentally sustainable products, and our purchasing power enables
us to include green features in our homes. Each new home we build is healthier and more energy
efficient, and has less impact on the environment than prior generations of homes as a result of
features like:
Low-VOC paint that reduces pollution;
WaterSense® faucets that reduce water flow without sacrificing performance;
Low-E windows that reduce infrared and ultraviolet light coming into the home; and
Energy Star® appliances that reduce energy consumption.
Land Policy
Our land inventory strategy strives to provide us with a multi-year supply of lots for each of our brands
for future homebuilding while limiting any excess supply that would otherwise be subject to market
cycle risk. With certain exceptions, we focus on the development of entitled parcels in communities
where we can generally sell all lots and homes within 24 to 60 months from the start of sales. This
focus allows us to limit exposure to land development and land risks while pursuing favorable returns
on our investments. We seek to minimize our exposure to land risk through disciplined management
of entitlements, the use of land and lot options, and other flexible land acquisition arrangements. We
are actively involved in every step of the land entitlement, home design, and construction processes
with our builders.
In response to the significant upward shift in demand in June 2020, our land teams began focusing
on acquiring well located land. As a result, during 2020 and 2021, we grew our lot position 61.2%
and 97.8% annually, respectively, for a total of 28,621 owned and controlled lots as of December
31, 2021. While the additional 14,000-plus lots acquired over the last year did not meaningfully
contribute to our bottom line in 2021, we believe they will position us to deliver future earnings
growth in 2022 and beyond.
43
ownership in Green Brick Title, 49.99% ownership in Green Brick Mortgage, and 49% ownership
in BHome Mortgage. Our financial services help our customers bring their homebuying dreams into
reality by providing mortgage and title services, allowing for a one-stop-shop solution. Through Green
Brick Mortgage and BHome Mortgage, our mortgage services buyers can expect personal attention
from their first meeting through the closing of their new home. As part of the Green Brick Partners
family, Green Brick Title’s unprecedented access to resources beyond those of a traditional title
company enables us to always stay one step ahead of our competition and bring buyers unmatched
customer service.
Raw Materials
Typically, all the raw materials and most of the components used in our business are readily available
in the United States. Most are standard items carried by major suppliers. However, a rapid increase in
the number of homes started during 2021 has caused shortages in the availability of such materials
and in the price of services, thereby leading to delays in the delivery of homes and increased home
construction prices. To mitigate the risk from rising costs, we have delayed contracting for the sales
of our homes in many neighborhoods until after the home has been sheet-rocked. We continue to
monitor the supply markets to achieve the best prices available. See “Risk Factors - Labor and raw
material shortages and price fluctuations could delay or increase the cost of land development and
home construction, which could materially and adversely affect our business.”
Seasonality
The homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital
requirements. We typically experience the highest new home order activity in spring and summer,
although this activity is also highly dependent on the number of active selling communities, timing of
new community openings, and other market factors. Since it typically has taken five to nine months
to construct a new home, we have historically delivered more homes in the second half of the year as
spring and summer home orders are delivered. Because of this seasonality, home starts, construction
costs and related cash outflows have historically been highest in the second and third quarters, and
the majority of cash receipts from home deliveries occur during the third and fourth quarters. We
expect this seasonal pattern to continue over the long-term, although it may be affected by volatility
in the homebuilding industry. Due to the significant increase in home demand and the more limited
supply of both existing homes and speculative home inventory from all builders since the middle of
2020, such seasonal patterns have been far less evident in our business operations.
Competition
Competition in the homebuilding industry is intense, and there are relatively low barriers to entry.
Homebuilders compete for, among other things, homebuyers, desirable land parcels, financing, raw
materials, and skilled labor. Increased competition could hurt our business, as it could prevent us from
acquiring attractive land parcels on which to build homes or make such acquisitions more expensive,
hinder our market share expansion, and lead to pricing pressures on our homes that may adversely
impact our revenues and margins. Our competitors may independently develop land and construct
housing units that are superior or substantially similar to our products. Furthermore, a number of our
primary competitors are significantly larger, have a longer operating history, and may have greater
resources or lower cost of capital; accordingly, they may be able to compete more effectively in one
or more of the markets in which we operate. Many of these competitors also have longstanding
relationships with subcontractors and suppliers in the markets in which we operate. We also compete
for sales with individual resales of existing homes and with available rental housing.
Marketing and Sales Process
We sell our homes primarily from models that we have designed and constructed. We employ new
home consultants who are paid salaries, commissions or both to conduct on-site sales of our homes.
Our in-house sales force typically works from sales offices located in model homes near or in each
community. Sales representatives assist potential buyers by providing them with basic floor plans,
price information, development and construction timetables, tours of model homes, and the selection
of upgrade options. Sales personnel are trained by us and generally have had prior experience selling
new homes in the local market. Our personnel, along with subcontracted marketing and design
consultants, carefully design the exterior and interior of each home to appeal to the lifestyles of
targeted homebuyers. We also sell homes through independent realtors. In addition, we have also
made it possible for potential homebuyers to take virtual tours of model homes.
We offer a preferred lender referral program through our mortgage joint ventures to provide lending
options to homebuyers in need of financing. We also offer homeowners a comprehensive warranty on
each home. Homes are generally covered by an eight to ten-year warranty for structural concerns, one
year for defects and products used and two years for electrical, plumbing, heating, ventilation, and air
conditioning parts and labor.
Our marketing strategy has increasingly involved advertising through digital channels including real
estate listing sites, paid search, display advertising, social media, and e-mail marketing, all of which
drive traffic to our website, www.greenbrickpartners.com. This has allowed us to attract more qualified
and knowledgeable homebuyers and has helped us reduce our selling, general and administrative
expenses as a percentage of home sales revenues. However, we also continue to advertise through
more traditional media on a limited basis, including newspapers, radio advertisements, other local
and regional publications, and on billboards where appropriate. We tailor our marketing strategy and
message based on the community being advertised and the customers being targeted.
Financial Services
In addition to independently branded subsidiary homebuilders, Green Brick Partners retains 100%
Human Capital Resources
Attracting, retaining, and building talent is critical in our business. We continue to recruit talented
team members that exhibit superior emotional intelligence. This focus on a staff that places a strong
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emphasis on communication and navigating a fast-paced environment empathetically and judiciously
enables us to operate effectively and efficiently each day. We seek to establish a supportive culture
that fosters a strong sense of ownership and a continuous drive to excel. Our goal is to not just
empower our team members with the tools needed to succeed but to create a community that focuses
on taking ownership of one’s work. Our culture celebrates individual success, primes our employees
for growth, and is critical in maintaining our competitive edge over our peers.
could become subject to delays or may be precluded entirely from developing communities due to
building moratoriums, “no growth” or “slow growth” initiatives or building permit allocation ordinances,
which could be implemented in the future. In addition, we are subject to various licensing, registration,
and filing requirements in connection with the construction, advertisement, and sale of homes in our
communities. Also, some states are attempting to make homebuilders responsible for violations of
wage and other labor laws by their subcontractors.
At December 31, 2021, we had approximately 540 full-time employees, including approximately 500
who were involved in our homebuilding operations, with locations in Dallas-Ft. Worth, Texas, Atlanta,
Georgia and the Treasure Coast, Florida, and approximately 40 in management and administration.
Our operations are carried out through both local and centralized management. Our centralized
management sets our strategy and leads decisions related to our land acquisition, national purchasing,
marketing analytics, risk management, finance, cash management, capital allocation, human resources
management, and IT support for our builders. Our homebuilder operations consist of our division
employees, led by management with significant homebuilding experience and who possess a depth of
knowledge in their particular markets, and include employees responsible for the design, construction
oversight, marketing, and sales of our homes. We act solely as a general contractor, and all construction
operations are coordinated by our project managers and field superintendents who schedule and
monitor third-party independent subcontractors. Our ability to deliver our homes is dependent on
the availability and quality of the subcontractors, such as electricians, plumbers, drywall installers,
and bricklayers with whom we partner to build our homes. We do not have collective bargaining
agreements relating to any of our employees. We offer our employees a broad range of company-paid
benefits, and we offer our employees a compensation package and benefits, including medical, dental,
life insurance, and other health and welfare plans, that we believe are competitive.
We believe having a diverse and inclusive work environment, where everyone has a sense of
belonging, not only drives engagement but fosters innovation, which is critical to driving growth. Our
management teams are expected to exhibit and promote honest, ethical and respectful conduct in the
workplace. All of our employees must adhere to a code of conduct that sets standards for appropriate
behavior and includes required internal training on preventing, identifying, reporting and stopping any
type of discrimination. Furthermore, our management team supports a culture of developing future
leaders from our existing workforce, enabling us to promote from within for many leadership positions.
We believe this provides long-term focus and continuity to our operations while also providing
opportunities for the growth and advancement of our employees.
We are committed to the health and safety of our employees, trade partners and homebuyers.
Beginning in 2020, as a result of the COVID-19 pandemic, we implemented additional safety
protocols to protect our employees, trade partners and homebuyers, including protocols regarding
social distancing, health checks and working remotely. Our experienced teams adapted quickly to
the changes and have managed our business successfully during this challenging time. We are also
committed to worker safety and regulatory compliance.
Governmental Regulations and Environmental Regulation
Homebuilding Related Regulations. We are subject to various local, state, and federal statutes,
ordinances, rules, and regulations concerning zoning, building design, construction, and similar
matters, including local regulations that impose restrictive zoning and density requirements. In
addition, local and state governments have broad discretion regarding the imposition of development
fees for projects under their jurisdictions. Governing agencies may also require concessions or may
require the developer to commit to provide roads and other offsite infrastructure, the costs of which
can be substantial, and may require them to be in place prior to the commencement of new home
construction. In addition, governing agencies may impose construction moratoriums and therefore we
Environmental Regulations. We are subject to a variety of local, state, and federal statutes, ordinances,
rules and regulations concerning the protection of the environment. The particular environmental
laws that apply to any given homebuilding site vary according to multiple factors, including the site’s
location, its environmental conditions, and the present and former uses of the site as well as of adjoining
properties. In some markets, we are subject to environmentally-sensitive land ordinances that mandate
open space areas with public elements in housing developments, and prevent development on hillsides,
wetlands and other protected areas. We must also comply with open space restrictions, flood plain
restrictions, desert wash area restrictions, native plant regulations, endangered species acts, and view
restrictions. In those cases where an endangered or threatened species is involved, environmental rules
and regulations can result in the restriction or elimination of development in identified environmentally
sensitive areas. From time to time, the United States Environmental Protection Agency and similar
federal or state agencies review homebuilders’ compliance with environmental laws and may levy fines
and penalties for failure to comply strictly with applicable environmental laws or impose additional
requirements for future compliance as a result of past failures. Any such actions taken may increase
our costs. Further, we expect that increasingly stringent requirements will be imposed on homebuilders
and land developers in the future.
Energy and Climate Change Related Regulations. There is constantly a variety of new legislation being
enacted, or considered for enactment at the federal, state and local levels relating to energy and
climate change. Some of this legislation relates to items such as carbon dioxide emissions control and
building codes that impose energy efficiency standards. New building code requirements that impose
stricter energy efficiency standards could significantly increase the cost to construct homes, although
our energy-efficiency technologies and offerings meet, and in many instances exceed, current and
expected energy efficiency thresholds. As climate change concerns continue to grow, legislation and
regulations of this nature are expected to continue and may result in increased costs and longer
approval and development timelines. Similarly, energy and environment-related initiatives affect a wide
variety of companies throughout the United States and the world, and because our operations are
heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, such
initiatives could have an indirect adverse impact on our operations and profitability to the extent the
manufacturers and suppliers of our materials are burdened with expensive carbon dioxide emissions
control and other environmental and energy-related regulations.
Available Information
Our website address is www.greenbrickpartners.com. Our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or
furnished pursuant to Section 13 or 15(d) of the Exchange Act are available free of charge through
our website as soon as reasonably practicable after they are electronically filed with, or furnished to,
the Securities and Exchange Commission (the “SEC”). Our website and the information contained or
incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K.
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ITEM 1A. RISK FACTORS
Set forth below are the risks that we believe are material to our investors. Any
of these risks could significantly and adversely affect our business, financial
condition and results of operations. You should carefully consider the risks
described below, together with the other information included in this Annual
Report on Form 10-K, including the information contained under the caption
“Forward-Looking Statements”.
Risks Related to our Business and Industry
The ongoing COVID-19 pandemic and resulting worldwide economic
conditions are adversely affecting, and will continue to adversely affect, our
business operations, financial condition, results of operations, and cash flows.
The COVID-19 pandemic has negatively impacted the global economy and
disrupted global supply chains. The U.S. continues to experience outbreaks
of very contagious variants that affect public health and economic activities.
While drastic regulatory responses such as quarantines and “shelter-in-
place” orders have been lifted, new information about the emergence of
new variants and the severity of such variants could lead to restrictive public
health measures. Such changes could affect consumer confidence, worsen
economic activities and have a negative impact on our results of operations,
financial conditions and cash flow. We cannot predict how future trends of
COVID-19 transmissions will play out, how they will influence public health
policy and how they will impact the economy as a whole.
The homebuilding industry is cyclical. A severe downturn in the industry could
adversely affect our business, results of operations and stockholders’ equity.
The residential homebuilding industry is cyclical and is highly sensitive
to changes in general economic conditions such as levels of employment,
consumer confidence and income, availability of financing for acquisitions,
construction and permanent mortgages, interest rate levels, inflation and
demand for housing. The U.S. housing market could be negatively impacted
by declining consumer confidence, restrictive mortgage standards and large
supplies of foreclosures, resales and new homes, among other factors.
These conditions, combined with a prolonged economic downturn, high
unemployment levels, increases in the rate of inflation and uncertainty in the
U.S. economy, could contribute to decreased demand for housing, declining
sales prices and increasing pricing pressure. If demand for housing stalls or
declines, we could experience declines in the market value of our inventory
and demand for our lots, homes and construction loans, which could have
a material adverse effect on our business, liquidity, financial condition and
results of operations.
Our operating performance is subject to risks associated with the real estate
industry.
Real estate investments are susceptible to various risks, fluctuations and
cycles in value and demand, many of which are beyond our control. Certain
events may decrease cash available for operations and the value of our real
estate assets. These events include, but are not limited to:
adverse changes in international, national or local economic and demographic
conditions;
adverse changes in financial conditions of buyers and sellers of properties,
particularly residential homes and land suitable for development of residential
homes;
competition from other real estate investors with significant capital, including
other real estate operating companies and developers and institutional
investment funds;
fluctuations in interest rates, which could adversely affect the ability of
homebuyers to obtain financing on favorable terms or their willingness to
obtain financing at all;
unanticipated increases in expenses, including, without limitation, insurance
costs, development costs, real estate assessments and other taxes and costs
of compliance with laws, regulations and governmental policies; and
changes in enforcement of laws, regulations and governmental policies,
including, without limitation, health, safety, environmental, zoning and tax
laws.
Adverse changes in macroeconomic conditions in and around the markets
we operate in, and where prospective purchasers of our homes live, could
reduce the demand and adversely affect our business, results of operations,
and financial condition.
Adverse changes in economic conditions in markets where we conduct our
operations and where prospective purchasers of our homes live have had and
may in the future have a negative impact on our business. Adverse changes
in employment and median income levels, job growth, consumer confidence,
interest rates, perceptions regarding the strength of the housing market, and
population growth, or an oversupply of homes for sale may reduce demand
or depress prices for our homes and cause home buyers to cancel their
agreements to purchase our homes. This, in turn, could adversely affect our
results of operations and financial condition
In addition, periods of economic slowdown or recession, rising interest rates
or declining demand for real estate, or the public perception that any of
these events may occur, could result in a general decline in the purchase of
homes or an increased incidence of home order cancellations. If we cannot
successfully implement our business strategy, our business, liquidity, financial
condition and results of operations will be adversely affected.
Our business and financial results could be adversely affected by significant
inflation or deflation.
Inflation can adversely affect our homebuilding operations by increasing costs
of land, financing, materials, labor and construction. While we attempt to pass
on cost increases to homebuyers by increasing prices, we may not be able to
offset cost increases with higher selling prices in a weak housing market. In
addition, significant inflation is often accompanied by higher interest rates,
which have a negative impact on housing demand. In a highly inflationary
environment, depending on industry and other economic conditions, we may
be precluded from raising home prices enough to keep up with the rate of
inflation, which could reduce our profit margins. Moreover, with inflation, the
costs of capital increase and the purchasing power of our cash resources
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could decline. Current or future efforts by the government to stimulate the
economy may increase the risk of significant inflation and its adverse impact
on our business or financial results.
Alternatively, a significant period of deflation could cause a decrease in
overall spending and borrowing levels. This could lead to a deterioration in
economic conditions, including an increase in the rate of unemployment.
Deflation could cause the value of our inventory to decline or reduce the
value of existing homes below the related mortgage loan balance, which
could potentially increase the supply of existing homes and have a negative
impact on our results of operations.
We depend on the availability and satisfactory performance of subcontractors.
Our business could be negatively affected if our subcontractors are not
available to perform.
We conduct our land development and homebuilding operations primarily
as a general contractor. Our unaffiliated third-party subcontractors perform
virtually all of our land development and constructions. Consequently, the
timing and quality of the development of our land and the construction of
our homes depends on the availability and skill of our subcontractors. There
may not be sufficient availability of and satisfactory performance by these
unaffiliated third-party subcontractors in the markets in which we operate. If
there are inadequate subcontractor resources, our ability to meet customer
demands, both timing and quality, could be adversely affected which could
have a material adverse effect on our reputation, our future growth and our
profitability.
Labor and raw material shortages and price fluctuations could delay or
increase the cost of land development and home construction, which could
materially and adversely affect our business.
The residential construction industry experiences labor and raw material
shortages from time to time, including shortages in qualified tradespeople
and supplies such as insulation, drywall, cement, steel and lumber. These
labor and raw material shortages can be more severe during periods of strong
demand for housing or when a region in which we operate experiences a
natural disaster that has a significant impact on existing residential and
commercial structures. Significant increases in the demand for new homes
result in extended lead times, supply shortages and price increases because
of the heightened demand for the raw materials, products and appliances. For
example, we have recently and may continue to experience price increases,
shortages and significant extensions to our lead time for the delivery of
materials such as lumber, appliances and windows. This has and may continue
to result in longer construction periods, delays in home closings and margin
compression if we are unable to increase our sales prices accordingly.
The cost of labor and raw materials may also be adversely affected during
periods of shortage or high inflation. Shortages and price increases could
cause delays in, and increase our costs of, land development and home
construction, which we may not be able to recover by raising home prices
due to market demand and because the price for each home is typically set
prior to its delivery pursuant to the agreement of sale with the homebuyer.
In addition, the federal government has, at various times during 2019 and
2020, imposed tariffs on a variety of imports from foreign countries and may
impose additional tariffs in the future. Significant tariffs or other restrictions
are placed on raw materials that we use in our homebuilding operation, such
as lumber or steel, could cause the cost of home construction to increase
which we may not be able to recover by raising home prices or which could
slow our absorption due to being constrained by market demand. As a result,
shortages or increased costs of labor and raw materials could have a material
adverse effect on our business, prospects, financial condition and results of
operations.
Failure to recruit, retain and develop highly skilled, competent employees may
have a material adverse effect on our business and results of operations.
Our success depends on the continued performance of key employees,
including management team members at both the corporate and homebuilder
subsidiary levels. Our results of operations could suffer if any of the
management team members decided to cease employment with us. Our
ability to retain our management team or to attract suitable replacements
should any members of its management team leave is dependent on the
competitive nature of the employment market. The loss of services from key
management team members or a limitation in their availability could materially
and adversely impact our business, liquidity, financial condition and results
of operations. Such a loss could also be negatively perceived in the capital
markets. We do not maintain key person insurance in respect of any member
of our named executive officers.
Furthermore, key employees working in the land development, homebuilding
and construction industries are highly sought after. Experienced employees
in the homebuilding, land acquisition, and construction industries are
fundamental to our ability to generate, obtain and manage opportunities.
In particular, local knowledge and relationships are critical to our ability to
source attractive land acquisition opportunities. Failure to attract and retain
such personnel or to ensure that their experience and knowledge is not lost
when they leave the business through retirement, redundancy or otherwise
may adversely affect the standards of our service and may have an adverse
impact on our business, financial conditions and results of operations.
We may be unable to achieve our objectives because of our inability to
execute on our business strategies.
Our business objectives include expanding into new markets and becoming a
more capital and operationally efficient home builder. We cannot guarantee
that our strategies to meet these objectives will be successful or that they
will result in growth, and increased earnings or returns within our desired
time frame. We cannot guarantee that we will achieve positive operational or
financial results in the future, or results that are equal to or better than those
attained in the past. We also cannot provide any assurance that we will be
able to maintain our strategies in the future. Due to unexpectedly favorable
or unfavorable market conditions or other factors, we may determine that we
need to adjust, refine or abandon all or portions of our strategies, and any
related initiatives or actions. We cannot guarantee that any such adjustments
will be successful. The failure of any one or more of our present strategies, or
any related initiatives or actions, or the failure of any adjustments that we may
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pursue or implement, could have an adverse effect on our ability to increase the value and profitability
of our business, our ability to operate our business in the ordinary course, our overall liquidity, and our
consolidated financial statements. The effect in each case could be material.
Our long-term success depends on our ability to acquire undeveloped land, partially finished developed
lots and finished lots suitable for residential homebuilding at reasonable prices, in accordance with our
land investment criteria.
The homebuilding industry is highly competitive for suitable land and the risk inherent in purchasing
and developing land is directly impacted by changes in consumer demand for housing. The availability
of finished and partially finished developed lots and undeveloped land for purchase that meet our
investment criteria depends on a number of factors outside our control, including land availability,
competition with other homebuilders and land buyers, inflation in land prices, zoning, allowable housing
density, the ability to obtain building permits and other regulatory requirements. Should suitable land
or lots become more difficult to locate or obtain, the number of lots we may be able to develop and sell
could decrease, the number of homes we may be able to build and sell could be reduced and the cost
of land could increase substantially, which could adversely impact our results of operations.
As competition for suitable land increases, the cost of acquiring both finished and undeveloped lots
and the cost of developing owned land could rise and the availability of suitable land at acceptable
prices may decline, which could adversely impact our financial results. The availability of suitable land
assets could also affect the success of our land acquisition strategy, which may impact our ability to
increase the number of active selling communities, to grow our revenues and margins and to achieve
or maintain profitability.
Our results of operations could be adversely affected if we are unable to develop communities
successfully or within expected timeframes.
Before a community generates any revenue, time and material expenditures are required to acquire and
prepare land, entitle and finish lots, obtain development approvals, pay taxes and construct significant
portions of project infrastructure, amenities, model homes and sales facilities. It can take several years
from the time that we acquire control of a property to the time that we make our first home sale on the
site. Delays in the development of communities expose us to the risk of changes in market conditions
for homes. A decline in our ability to develop and market our communities successfully and to generate
positive cash flow from these operations in a timely manner could have a material adverse effect on
our business and results of operations and on our ability to service our debt and to meet our working
capital requirements.
Real estate investments are relatively illiquid. As a result, our ability to promptly sell one or more
properties in response to changing economic, financial and investment conditions may be limited,
and we may be forced to hold non-income producing assets for an extended period of time. We
cannot predict whether we will be able to sell any property for the price or on the terms that we set
or whether any price or other terms offered by a prospective purchaser would be acceptable to us.
We also cannot predict the length of time needed to find a willing purchaser and to close the sale of
a property.
We depend on the success of our partially owned controlled builders.
We participate in the homebuilding business, in part, through non-wholly owned subsidiaries, which
we refer to as our “controlled builders.” We exercise control over the operations of each controlled
builder. We have entered into arrangements with these controlled builders in order to take advantage
of their local knowledge and relationships, acquire attractive land positions and brand images, manage
our risk profile and leverage our capital base. Even though the co-investors in our controlled builders
are subject to certain non-competition provisions, the viability of our participation in the homebuilding
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business depends on our ability to maintain good relationships with our controlled builders.
Our controlled builders are focused on maximizing the value of their operations and working with
a partner that can help them be successful. The effectiveness of our management, the value of
our expertise and the rapport we maintain with our controlled builders are important factors for
new builders considering doing business with us and may affect our ability to attract homebuyers,
subcontractors, employees or others upon whom our business, financial condition and results of
operations ultimately depend. Further, our relationships with our controlled builders generate additional
business opportunities that support our growth. If we are unable to maintain good relationships with
our controlled builders, we may be unable to fully take advantage of existing agreements or expand our
relationships with these controlled builders. Additionally, our opportunities for pursuing acquisitions of
additional builders may be adversely impacted.
In Atlanta, we sell lots to our controlled builder for its homebuilding operations and provide it loans to
finance home construction. If our controlled builder fails to successfully execute its business strategies
for any reason, it may be unable to purchase lots from us, repay outstanding construction finance
loans made by us or borrow from us in the future, any of which could negatively impact our business,
financial condition and results of operations.
An integral component of our growth strategy is the use of controlled builders, joint ventures,
partnerships and other strategic investments, and these counterparties’ interests may not be wholly
aligned with ours or those of our investors.
Our controlled builders and the third parties with whom we enter into partnerships, joint ventures
or other strategic investments are separate and distinct entities from us. Consequently, these
counterparties may have different economic, financial and industry positions from us which could
influence their business decisions. These positions may include strategic decision-making which they
believe to be in their best interests, but which may not be aligned with those of our shareholders.
Although we exercise different levels of control over the entities in which we invest or co-invest,
we may not ensure that their decisions are always in alignment with those of our investors because
our rights may be limited contractually or by statute. Disputes between us and these third parties
could result in legal proceedings that would increase our expenses and prevent our officers and/or
directors from focusing on our business. Our business and profitability could be adversely affected if
our counterparties take actions that are not in our best interests.
Our capital resources and liquidity could be adversely affected if we are required to repurchase or sell
a substantial portion of the equity interest in our controlled homebuilding subsidiaries.
The operating agreements governing our partially owned controlled builders contain buy-sell provisions
that may be triggered in certain circumstances. In the event that a buy-sell event occurs, our builder
will have the right to initiate a buy-sell process, which may happen at an inconvenient time for us. In
the event the buy-sell provisions are exercised at a time when we lack sufficient capital to purchase
the remaining equity interest, we may elect to sell our equity interest in the entity. We will no longer
benefit from the future operations of a given entity if we are forced to sell our equity interest. If a
buy-sell provision is exercised and we elect to purchase the interest in an entity that we do not already
own, we may be obligated to expend significant capital in order to complete such acquisition, which
may result in our being unable to pursue other investments or opportunities. If either of these events
occurs, our revenue and net income could decline or we may not have sufficient capital necessary to
implement our growth strategy.
Our geographic concentration could materially and adversely affect us if the homebuilding industry in
our current markets decline.
In the Dallas–Fort Worth metropolitan area, we primarily operate in the counties of Dallas, Collin,
Denton, Ellis, Rockwall, Tarrant, Kaufman, Hunt, and Johnson . In Atlanta, we primarily operate in the
counties of Fulton, Gwinnett, Cobb, Forsyth, Cherokee and Dekalb. In Florida, we primarily operate
in the counties of Indian River and St. Lucie. We may not realize our favorable growth outlook if
housing demand and population growth stagnate or decrease in our core markets. Furthermore, we
may be unable to compete effectively with the resale home market in our core markets. Because
our operations are concentrated in these areas, a prolonged economic downturn in one or more of
these areas could have a material adverse effect on our business, liquidity, financial condition and
results of operations, and a disproportionately greater impact on us than other homebuilders with
more diversified operations. Further, slower rates of population growth or population declines in the
DFW, Atlanta or Treasure Coast markets, especially as compared to the high population growth rates
in prior years, could affect the demand for housing, causing home prices in these markets to decline
and adversely affect our business, financial condition and results of operations.
Our developments are subject to government regulations, which could cause us to incur significant
liabilities or restrict our business activities.
Our developments are subject to numerous local, state, federal and other statutes, ordinances, rules
and regulations concerning zoning, development, building design, construction and similar matters
that impose restrictive zoning and density requirements, which impose limitations on the number and
type of homes that can be built within the boundaries of a particular area. Projects that are not yet
entitled may be subjected to periodic delays, changes in use, less intensive development or elimination
of development in certain specific areas due to government regulations. We may also be subject to
periodic delays or may be precluded entirely from developing in certain communities due to building
moratoriums or “slow-growth” or “no-growth” initiatives that could be implemented in the future.
Local governments also have broad discretion regarding the imposition of development and service
fees for projects in their jurisdiction. Projects for which we have received land use and development
entitlements or approvals may still require a variety of other governmental approvals and permits
during the development process and can also be impacted adversely by unforeseen health, safety and
welfare issues, which can further delay these projects or prevent their development. As a result, lot
and home sales could decline and costs could increase, which could have a material adverse effect on
our current results of operations and our long-term growth prospects.
Changes in global or regional environmental conditions and governmental actions in response to such
changes may adversely affect us by increasing the costs of or restricting our planned or future growth
activities.
There is growing concern from many members of the scientific community and the general public
that an increase in global average temperatures due to emissions of greenhouse gases and other
human activities have caused, or will cause, significant changes in weather patterns and increase the
frequency and severity of natural disasters. Government mandates, standards or regulations intended
to reduce greenhouse gas emissions or projected climate change impacts have resulted, and are
likely to continue to result, in restrictions on land development in certain areas and increased energy,
transportation and raw material costs. Governmental requirements directed at reducing effects on
climate could cause us to incur expenses that we cannot recover or that will require us to increase the
price of homes we sell to the point that it affects demand for those homes.
Our financial condition and results of operations may be adversely affected by a decrease in the value
of our land or homes and the associated carrying costs.
We continuously acquire land for replacement of land inventory and expansion within our current
markets and may in the future acquire land for expansion into new markets. However, the market
value of land, building lots and housing inventories can fluctuate significantly due to changing market
conditions. The measures we employ to manage inventory risk may not be adequate to insulate our
operations from a severe drop in inventory values. If housing demand decreases below what we
anticipated when we acquired our inventory, we may not be able to generate profits consistent with
those we have generated in the past and we may not be able to recover our costs when we sell lots and
homes. When market conditions are such that land values are not appreciating, option arrangements
previously entered into may become less desirable, at which time we may elect to forgo deposits and
pre-acquisition costs and terminate such arrangements. During adverse market conditions, we may
have substantially higher inventory carrying costs, may have to write down our inventory as a result
of impairment and/or may have to sell land or homes at a loss. Any material write-downs of assets, or
sales at a loss, could have a material adverse effect on our financial condition and results of operations.
Demand for our homes and lots is dependent on the cost and availability of mortgage financing.
Our business depends on the ability of our homebuyers, as well as the ability of those who buy homes
from the third-party homebuilding entities to which we sell lots (our “homebuilding customers”),
to obtain financing for the purchase of their homes. Many of these homebuyers must sell their
existing homes in order to buy a home from us or our homebuilding customers. Rising interest rates,
decreased availability of mortgage financing or of certain mortgage programs, higher down payment
requirements or increased monthly mortgage costs may lead to reduced demand for our homes and
lots. Higher interest rates can also hinder our ability to realize our backlog because certain of our
home purchase contracts provide homebuyers with a financing contingency. Financing contingencies
allow homebuyers to cancel their home purchase contracts in the event that they cannot arrange for
adequate financing within a certain time period after the execution of the home purchase contracts.
As a result, rising interest rates can decrease our home sales and mortgage originations. Any of these
factors could have a material adverse effect on our business, liquidity, financial condition and results
of operations.
In addition, the federal government has a significant role in supporting mortgage lending through its
conservatorship of Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan
Mortgage Corporation (“Freddie Mac”), both of which purchase home mortgages and mortgage-
backed securities originated by mortgage lenders, and its insurance of mortgages originated by lenders
through the Federal Housing Administration (the “FHA”) and the Veterans Administration (“VA”). The
availability and affordability of mortgage loans, including consumer interest rates for such loans, could
be adversely affected by a curtailment or cessation of the federal government’s mortgage-related
programs or policies. The FHA may continue to impose stricter loan qualification standards, raise
minimum down payment requirements, impose higher mortgage insurance premiums and other costs
and/or limit the number of mortgages it insures. Due to growing federal budget deficits, the U.S.
Treasury may not be able to continue supporting the mortgage-related activities of Fannie Mae, Freddie
Mac, the FHA and the VA at present levels, or it may revise significantly the federal government’s
participation in and support of the residential mortgage market. Because the availability of Fannie Mae,
Freddie Mac, FHA- and VA-backed mortgage financing is an important factor in marketing and selling
many of our homes, any limitations, restrictions or changes in the availability of such government-
backed financing could reduce our home sales, which could have a material adverse effect on our
business, liquidity, financial condition and results of operations.
Any increase in unemployment or underemployment may lead to an increase in the number of loan
delinquencies and property repossessions, which would have an adverse impact on our business.
People who are unemployed, underemployed, who have left the labor force or are concerned about
the loss of their jobs are less likely to purchase new homes. They may also be forced to sell their
homes as they face difficulties in making required mortgage payments. Therefore, any increase in
unemployment or underemployment may lead to an increase in the number of loan delinquencies
and property repossessions. Such a condition could have an adverse impact on our business both by
reducing demand for our homes, lots and construction loans and by increasing the supply of homes
for sale.
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Increases in the after-tax costs of owning a home could prevent reduce demand for our homes and
lots.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly
referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made major changes to the Internal
Revenue Code that, in part, affect the after-tax cost of owning a home. Specifically, the Tax Act limited
the ability of homebuyers to deduct (i) property taxes, (ii) mortgage interest, and (iii) state and local
income taxes. The annual deduction for real estate taxes and state and local income taxes (or sales
taxes in lieu of income taxes) is now generally limited to $10,000. These changes increased the after-
tax cost of owing a new home for many of our potential homebuyers and the potential homebuyers
of our homebuilding customers.
If the federal government or a state government further changes its income tax laws to further
eliminate or substantially limit these income tax deductions, the after-tax cost of owning a new home
would further increase for many of our potential customers. Proposed legislation that was passed by
the House of Representatives in November 2021 (the “Build Back Better Act”) would generally raise
the deduction limit to $80,000 through 2030, but there can be no assurance that this proposed
legislation will be enacted and, even if enacted, there may be changes with respect thereto (i.e., that
would modify the limit) prior to enactment.
The loss or reduction of these homeowner tax deductions that have historically been available has
reduced and could further reduce the perceived affordability of homeownership, and therefore the
demand for and sales price of new homes, including ours. In addition, increases in property tax rates
or fees on developers by local governmental authorities, as experienced in response to reduced
federal and state funding or to fund local initiatives, such as funding schools or road improvements,
or increases in insurance premiums can adversely affect the ability of potential customers to obtain
financing or their desire to purchase new homes, and can have an adverse impact on our business and
financial results.
Severe weather conditions, natural disasters, acts of war or terrorism could increase our operating
expenses and reduce our revenues and cash flows.
The climates and geology of the states in which we operate present increased risks of severe weather
conditions and natural disasters. The occurrence of severe weather conditions or natural disasters can
delay new home deliveries and lot development, reduce the availability of materials and/or negatively
impact the demand for new homes in affected areas.
Additionally, to the extent that hurricanes, severe storms, earthquakes, tornadoes, droughts, floods,
wildfires or other natural disasters or similar events occur, our homes under construction or our
lots under development could be damaged or destroyed, which may result in losses exceeding our
insurance coverage. Any of these events could increase our operating expenses, impair our cash flows
and reduce our revenues. To the extent that climate change increases the frequency and severity
of weather-related disasters, we may experience increasing negative weather-related impacts to our
operations in the future.
Further, acts of war, any outbreak or escalation of hostilities between the United States and any foreign
power or acts of terrorism may cause disruptions to the U.S. economy or the local economies of the
markets in which we operate, cause shortages of building materials, increase costs associated with
obtaining building materials, result in building code changes that could increase costs of construction,
affect job growth and consumer confidence or cause economic changes that we cannot anticipate, all
of which could reduce demand for our lots, homes and construction loans and adversely impact our
business and results of operations.
High cancellation rates may negatively impact our business.
Our backlog reflects the number and value of homes for which we have entered into non-contingent
sales contracts with homebuyers but not yet delivered. Although these sales contracts require a cash
deposit, a homebuyer may in certain circumstances cancel the contract and receive a complete or
partial refund of the deposit because of contract provisions. If home prices decline, the national or
local homebuilding environment or general economy weakens, our neighboring competitors reduce
their sales prices (or increase their sales incentives), interest rates increase or the availability of
mortgage financing tightens, homebuyers may have an incentive to cancel their contracts with us,
even where they might be entitled to no refund or only a partial refund. Significant cancellations could
have a material adverse effect on our business as a result of lost sales revenue and the accumulation
of unsold housing inventory.
We may not be able to compete effectively against competitors in the homebuilding, land development
and financial services industries.
Competition in the land development and homebuilding industries is intense, and there are relatively
low barriers to entry. Land developers and homebuilders compete for, among other things, homebuyers,
desirable land parcels, financing, raw materials and skilled labor. Increased competition could hurt our
business, as it could prevent us from acquiring attractive land parcels for development and resale or
homebuilding (or make such acquisitions more expensive), hinder our market share expansion and lead
to pricing pressures that adversely impact our margins and revenues. Our business, liquidity, financial
condition and results of operations could be materially and adversely affected if we are unable to
compete successfully. Our competitors may independently develop land and construct housing
units that are superior or substantially similar to our products. Furthermore, a number of our primary
competitors are significantly larger, have a longer operating history and may have greater resources
or lower cost of capital than us. Accordingly, competitors may be able to compete more effectively in
one or more of the markets in which we operate. Many of these competitors also have longstanding
relationships with subcontractors and suppliers in the markets in which we operate. Our homebuilding
business also competes for sales with individual resales of existing homes and with available rental
housing.
Our construction financing business competes with other lenders, including national, regional and
local banks and other financial institutions, some of which have greater access to capital or different
lending criteria and may be able to offer more attractive financing to potential homebuyers.
Our future growth may include additional strategic investments, joint ventures, partnerships and/
or acquisitions of companies that may not be as successful as we anticipate and could disrupt our
ongoing businesses and adversely affect our operations.
Our investments in our homebuilding subsidiaries have contributed to our historical growth and similar
investments may be a component of our growth strategy in the future. We may make additional
strategic investments, enter into new joint venture or partnership arrangements or acquire businesses,
some of which may be significant. These endeavors may involve significant risks and uncertainties,
including distraction of management from current operations, significant start-up costs, insufficient
revenues to offset expenses associated with these new investments and inadequate return of capital on
these investments, any of which may adversely affect our financial condition and results of operations.
Our failure to successfully identify and manage future investments, joint ventures, partnerships or
acquisitions could harm our results of operations.
We are subject to environmental laws and regulations, which may increase our costs, limit the areas in
which we can build homes and develop land and delay completion of our projects.
We are subject to several local, state, federal and other statutes, ordinances, rules and regulations
concerning the environment. The particular environmental laws that apply to any given homebuilding
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or development site vary according to multiple factors, including the site’s location, its environmental
conditions and the present and former uses of the site, as well as adjoining properties. Environmental
laws and conditions may result in delays, may cause us to incur substantial compliance and other costs
and can prohibit or severely restrict homebuilding and land development activity in environmentally
sensitive regions or areas. In addition, when an endangered or threatened species is involved,
environmental rules and regulations can result in the restriction or elimination of development in
identified environmentally sensitive areas. From time to time, the United States Environmental
Protection Agency and similar federal or state agencies review homebuilders’ compliance with
environmental laws and may levy fines and penalties for failure to comply strictly with applicable
environmental laws or impose additional requirements for future compliance as a result of past failures.
Any such actions taken with respect to our business may increase our costs. Environmental regulations
can also have an adverse impact on the availability and price of certain raw materials such as lumber.
Further, we expect that increasingly stringent requirements will be imposed on homebuilders and land
developers in the future.
Under various environmental laws, current or former owners of real estate may be required to
investigate and clean up hazardous or toxic substances and may be held liable to a governmental entity
or to third parties for related damages, including for bodily injury, and for investigation and clean-up
costs incurred by such parties in connection with the contamination.
Negative publicity could adversely affect our reputation and business.
Our success also depends on our reputation and our brand image. Any unfavorable media coverage
related to our industry, brand, personnel or operations may adversely affect our stock price and the
performance of our business, regardless of its accuracy or inaccuracy. Negative publicity spreads quickly
through the use of electronic communication, including social media outlets, websites, “tweets”, and
blogs. Our success in maintaining and expanding our brand image depends on our ability to adapt to
this rapidly changing media environment. Negative publicity or negative commentary from any media
outlets could damage our reputation and reduce the demand for our homes, which would adversely
affect our business.
A major health and safety incident relating to our business could be costly in terms of potential
liabilities and reputational damage.
Building sites are inherently dangerous and operating in the land development and homebuilding
industries poses certain inherent health and safety risks. Our health and safety performance is critical
to the success of our business given regulatory requirements on points. Any failure in health and safety
performance may result in penalties for non-compliance with relevant regulatory requirements, and a
failure that results in a major or significant health and safety incident is likely to be costly in terms of
potential liabilities incurred as a result. Such a failure could generate significant negative publicity and
have a corresponding impact on our reputation, our relationships with relevant regulatory agencies
or governmental authorities and our ability to attract employees, subcontractors and homebuyers,
which in turn could have a material adverse effect on our business, financial condition and results of
operations.
Most of our potential homebuyers engage local real estate agents who are unaffiliated with us in
connection with their search for a new home. If we do not maintain good relations with, and a good
reputation among, these real estate agents, the agents may not encourage potential homebuyers to
consider, or may actively discourage homebuyers from considering, our communities, which could
adversely affect our results of operations.
Information technology failures and data security breaches could harm our business.
We rely on information technology systems and other computer resources to carry out operational
and marketing activities, as well as to maintain our business records. As part of our normal business
activities, we may collect and store certain confidential information, including information about
employees, homebuyers, customers, vendors and suppliers and may share information with vendors
who assist us with certain aspects of our business. Many of these resources are provided to us and/
or maintained on our behalf by third-party service providers pursuant to agreements that specify
certain security and service level standards. Our ability to conduct our business may be impaired if
these resources are compromised, degraded, damaged or fail, whether due to a virus or other harmful
circumstance, intentional penetration or disruption of our information technology resources by a third-
party, natural disaster, hardware or software corruption or failure or error (including a failure of security
controls incorporated into or applied to such hardware or software), telecommunications system
failure, service provider error or failure, intentional or unintentional personnel actions (including the
failure to follow our security protocols) or lost connectivity to networked resources.
There has been an increase in cyber-attacks during the COVID-19 pandemic. Breaches of our data
security systems, including by cyber-attacks, could result in the unintended public disclosure or the
misappropriation of our proprietary information or personal and confidential information, about our
employees, consumers who view our homes, homebuyers or business partners, requiring us to incur
significant expense to address and resolve such issues. The release of confidential information may
also lead to identity theft and related fraud, litigation or other proceedings against us by affected
individuals and/or business partners and/or regulators, and the outcome of such proceedings, which
could include penalties or fines, and any significant disruption of our business could have a material
and adverse effect on our reputation and cause us to lose homebuyers, customers, sales and revenue.
Data protection and privacy laws continue to evolve and become more complex in various U.S. federal
and state jurisdictions. Such regulatory changes, variations in requirement across jurisdictions and
ongoing discussions about a national privacy law could present compliance challenges. The costs of
complying with such changes could adversely affect our business.
We maintain insurance coverage for potential breaches but the costs to remedy a breach may not be
fully covered by our insurance. We provide employee awareness training of cybersecurity threats and
utilize information technology security experts to assist us in our evaluations of the effectiveness of
the security of our information technology systems, and we regularly enhance our security measures
to protect our systems and data. We use various encryption, tokenization and authentication
technologies to mitigate cybersecurity risks and have increased our monitoring capabilities to enhance
early detection and rapid response to potential cyber threats.
Poor relations with the residents of our communities, or with local real estate agents, could negatively
impact our home sales, which could cause our revenues or results of operations to decline.
Residents of communities we develop rely on us to resolve issues or disputes that may arise in
connection with the operation or development of their communities. Efforts made by us to resolve
these issues or disputes could be deemed unsatisfactory by the affected residents and subsequent
actions by these residents could adversely affect sales or our reputation. In addition, we could be
required to make material expenditures related to the settlement of such issues or disputes or to
modify community development plans, which could adversely affect our results of operations.
Product liability claims and litigation and warranty claims that arise in the ordinary course of business
may be costly, which could adversely affect our business.
As a homebuilder, we are subject to construction defect and home warranty claims arising in the
ordinary course of business. These claims are common in the homebuilding industry and can be costly.
In addition, the costs of insuring against construction defect and product liability claims are high. This
coverage may be restricted and become more costly in the future. If the limits or coverages of our
current and former insurance programs prove inadequate, or we are not able to obtain adequate, or
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reasonably priced, insurance against these types of claims in the future, or the amounts currently
provided for future warranty or insurance claims are inadequate, we may experience losses that could
negatively impact our financial results.
Our quarterly results of operations may fluctuate because our business is seasonal in nature.
The homebuilding industry experiences seasonal fluctuations in quarterly results of operations and
capital requirements. We typically experience the highest new home order activity in spring and
summer, although this activity is also highly dependent on the number of active selling communities,
timing of new community openings and other market factors. Since it typically takes five to nine months
to construct a new home, we deliver more homes in the second half of the year as spring and summer
home orders convert to home deliveries. Because of this seasonality, home starts, construction costs
and related cash outflows have historically been highest in the second and third quarters, and the
majority of cash receipts from home deliveries occurs during the second half of the year. We expect
this seasonal pattern to continue over the long-term, although we may also be affected by volatility in
the homebuilding industry.
Additionally, weather-related problems may occur, delaying starts or closings or increasing costs and
reducing profitability. Delays in opening new communities or new sections of existing communities
could have an adverse impact on home sales and revenues. Expenses are not incurred and recognized
evenly throughout the year. Because of these factors, our quarterly results of operations may be
uneven and may be marked by lower revenues and earnings in some quarters compared with others.
Shortages or extreme fluctuation in availability of natural resources and utilities could have an adverse
effect on our operations.
The markets in which we operate may in the future be subject to utility or other resource shortages,
including significant changes to the availability of electricity and water. Shortages of natural resources
in our markets, particularly of water, may make it more difficult for us to obtain regulatory approval
of new developments. We may experience material fluctuations in utility and resource costs across
our markets, and we may incur additional costs and may not be able to complete construction on a
timely basis if such fluctuations arise. Furthermore, these shortages and interest rate fluctuations
may adversely affect the regional economies in which we operate, which may reduce demand for our
homes, lots and construction loans and negatively affect our business and results of operations.
Our business and financial results could be adversely affected by the failure of persons who act on our
behalf to comply with applicable regulations and guidelines.
Although we expect all of our employees, officers and directors to comply at all times with all applicable
laws, rules and regulations, there may be instances in which subcontractors or others through whom
we do business engage in practices that do not comply with applicable regulations or guidelines.
Should we learn of practices relating to homes we build, lots we develop or financing we provide that
do not comply with applicable regulations or guidelines, we would move actively to stop the non-
complying practices as soon as possible and would take disciplinary action with regard to employees
who were aware of the practices and did not take steps to address them, including terminating their
employment when necessary. However, regardless of the steps we take after we learn of practices
that do not comply with applicable regulations or guidelines, we can in some instances be subject to
fines or other governmental penalties, and our reputation can be injured due to the occurrence of
such practices.
or in the future covered by our insurance policies or otherwise be subject to significant deductibles or
limits. Should an uninsured loss or a loss in excess of insured limits occur or be subject to deductibles,
we could sustain financial loss or lose capital invested in the affected property as well as anticipated
future income from that property. In addition, we could be liable to repair damage or meet liabilities
caused by risks that are uninsured or subject to deductibles. We may be liable for any debt or other
financial obligations related to an affected property. Material losses or liabilities in excess of insurance
proceeds may occur in the future.
Products supplied to us and work done by subcontractors can expose us to risks that could adversely
affect our business.
We rely on subcontractors to perform the actual construction of our homes, and, in some cases, to
select and obtain building materials. Despite our detailed specifications and quality control procedures,
subcontractors may use improper construction processes or defective materials in some cases.
Defective products widely used by the homebuilding industry can require extensive repairs to large
numbers of homes. The cost of complying with our warranty obligations may be significant if we are
unable to recover the cost of repairs from subcontractors, materials suppliers and insurers.
Laws and regulations governing the residential mortgage industry could have an adverse effect on our
business and financial results.
In 2018 and 2020, we established joint ventures, Green Brick Mortgage and BHome Mortgage,
respectively, to provide mortgage related services to homebuyers. The residential mortgage lending
industry remains under intense scrutiny and is heavily regulated at the federal, state and local levels.
Although we do not originate mortgages, we are directly or indirectly subject to certain of these
regulations. Changes to existing laws or regulations or adoption of new laws or regulations could
require our joint venture to incur significant compliance costs. A material failure to comply with any of
these laws or regulations could result in the loss or suspension of required licenses or other approvals,
the imposition of monetary penalties, and restitution awards or other relief. Any of these outcomes
could have an adverse effect on our results of operations.
Risks Related to Our Financing and Capital Structure
Changes in the method pursuant to which LIBOR and other benchmark rates are determined could
negatively impact our business and results of operations.
We are responsible for certain floating-obligations, hedging transactions, and floating-rate commercial
loans that determine their payment amount or applicable interest rate by reference to the London
Interbank Offered Rate (“LIBOR”). The United Kingdom Financial Conduct Authority, which regulates
LIBOR, has announced that it will no longer persuade or compel banks to submit rates to calculate
LIBOR after 2021. In March 2021, the ICE Benchmark Administration Limited, which administrates
LIBOR, extended the transition dates of certain LIBOR tenors to June 30, 2023, after which LIBOR
reference rates will no longer be provided. Regardless of this deferral, the administrator of LIBOR has
advised that no new contracts using U.S. Dollar LIBOR should be entered into after December 31,
2021. It is not clear whether banks will continue to voluntarily submit rates to calculate LIBOR, or
whether LIBOR will continue to be published by its administrator based on these submissions, or any
other basis, after December 31, 2021.
We may suffer uninsured losses or suffer material losses in excess of insurance limits.
We could suffer physical damage to property or incur liabilities resulting in losses that may not be fully
recoverable by insurance. In addition, certain types of risks, such as personal injury claims, may be, or
may become in the future, either uninsurable or not economically insurable, or may not be currently
Certain regulators, industry groups and committees such as the Alternative Reference Rates Committee
(ARRC) have, among other things, suggested fallback language for LIBOR-linked financial instruments,
identified recommended alternatives for certain LIBOR rates, such as the Secured Overnight
Financing Rate (SOFR) as an alternative to U.S. Dollar LIBOR, and proposed the implementation
of the recommended alternatives in floating rate instruments. It is currently not clear how these
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recommendations and proposals will be broadly accepted, whether they will continue to evolve, and
how their implementation would affect the markets for floating-rate financial instruments. At this time,
we are not able to predict the impact of these developments, or any discontinuance, modification or
other reforms may have on LIBOR, other benchmarks or floating-rate debt instruments, including our
floating-rate debt. Any such discontinuance, modification, alternative reference rates or other reforms
may materially and negatively affect interest rates on our current indebtedness.
We may be unable to obtain suitable bonding for the development of our housing projects.
We are periodically required to provide bonds to governmental authorities and others to ensure the
completion of our projects. Depending on market conditions, surety providers may be reluctant to
issue new bonds and may request credit enhancements (such as cash deposits or letters of credit) in
order to maintain existing bonds or to issue new bonds. If we are unable to obtain required bonds for
our future projects, or if we are required to provide credit enhancements with respect to our current
or future bonds, our business, liquidity, financial condition and results of operations could be materially
and adversely affected.
A negative change in our credit rating could adversely affect our business.
Our business requires access to capital on favorable terms to service our indebtedness, cover our
operating expenses and fund other liquidity needs. Negative rating actions by credit agencies such as
downgrades increase the cost to access capital and make it difficult for us to meet our liquidity needs.
Any downgrade of our credit rating by any of the principal credit agencies may exacerbate these
difficulties. There are no assurances that we will not experience downgrades in our credit ratings in
the future, whether due to worsening macroeconomic conditions, a downturn in the housing industry,
failure to successfully execute our business strategy, or the adverse impact on our results of operations
or liquidity position of any of the above or otherwise.
Difficulty in obtaining sufficient capital could result in an inability to acquire land for our developments
or increased costs and delays in the completion of development projects.
The homebuilding industry is capital-intensive and requires significant up-front expenditures to acquire
land parcels and begin development. Land acquisition, development and construction activities may
be adversely affected by any shortage or increased cost of financing or the unwillingness of third
parties to engage in partnerships, joint ventures or other alternative arrangements.
In addition to the financing provided by the senior unsecured notes, we currently have access to a
senior secured revolving credit facility and a senior unsecured revolving credit facility. We cannot
ensure that we will be able to extend the maturity of these credit facilities or arrange another facility
on acceptable terms or at all.
Furthermore, in the future, we may seek additional capital in the form of equity or debt financing
from a variety of potential sources, including additional bank financings and/or securities offerings.
The availability of borrowed funds, especially for land acquisition and construction financing, may be
greatly reduced nationally, and the lending community may require increased amounts of equity to be
invested in a project by borrowers in connection with both new loans and the extension of existing
loans. The credit and capital markets are subject to volatility. If we are required to seek additional
financing to fund our operations, volatility in these markets may restrict our flexibility to access such
financing. If we are not successful in obtaining sufficient capital to fund our planned capital and other
expenditures, we may be unable to acquire land for our housing developments and/or to develop
the housing. Any difficulty in obtaining sufficient capital for planned development expenditures could
also cause project delays and any such delay could result in cost increases. Any one or more of the
foregoing events could have a material adverse effect on our business, liquidity, financial condition and
results of operations.
Our debt instruments contain limitations and restrictions that could prevent us from capitalizing on
business opportunities and could adversely affect our growth.
Our revolving credit facilities and the terms of our senior unsecured notes impose certain restrictions
on our and certain of our subsidiaries’ operations and activities and require us to maintain certain
financial covenants. The most significant restrictions relate to debt incurrence (including non-recourse
indebtedness), creation of liens, repayment of certain indebtedness prior to its respective stated
maturity, sales of assets, cash distributions (including paying dividends), capital stock repurchases, and
investments by us and certain of our subsidiaries. These restrictions may prevent us from capitalizing
on business opportunities and could adversely affect our growth.
The restrictions in our debt instruments could prohibit or restrict our and certain of our subsidiaries’
activities, such as undertaking capital raising or restructuring activities or entering into other
transactions. In addition, if we fail to comply with these restrictions, an event of default could occur
and our debt under these debt instruments could become due and payable prior to maturity. Any such
event of default could lead to cross defaults under certain of our other debt or negatively impact other
covenants. In any of these situations, we may be unable to amend the applicable instrument or obtain
a waiver without significant additional cost, or at all. Any such situation could have a material adverse
effect on our liquidity and financial condition.
Risks Related to Ownership of Our Common Stock
The price of our common stock may continue to be volatile.
The trading price of our common stock is highly volatile and could be subject to future fluctuations in
response to a number of factors beyond our control. In recent years the stock market has experienced
significant price and volume fluctuations. These fluctuations may be unrelated to the operating
performance of particular companies. These broad market fluctuations may cause declines in the
market price of our common stock. The price of our common stock could fluctuate based upon factors
that have little or nothing to do with us or our performance, and those fluctuations could materially
reduce our common stock price. If we fail to meet expectations related to future growth, profitability
or other market expectations, our stock price may decline significantly, which could have a material
adverse impact on investor confidence and our stock price.
Future issuances of our common stock or Series A preferred stock could adversely affect the market
for our common and preferred stock or dilute the ownership interest of our shareholders.
We are not restricted from issuing additional shares of our common stock or our Series A preferred
stock, including securities that could be converted into or exchanged for, or that represent the right
to receive, shares of our common or preferred stock. For example, in December 2021, we offered
2,000,000 depositary shares representing shares of our 5.75% cumulative perpetual preferred stock.
If we issue a substantial number of shares of common or Series A preferred stock, or depositary
shares representing interests in our preferred stock, or if the expectation of such issuances is broadly
disseminated in the market, including in connection with any acquisitions, the market price for our
common, preferred or depositary shares could be adversely affected, and our shareholders’ interest
could be diluted. Our decision to issue equity securities will depend on market conditions and other
factors, and we cannot predict or estimate with certainty the amount, timing or nature of potential
future issuances. Accordingly, our shareholders bear the risk that such future equity issuances could
reduce market price and dilute their stock holding with us. We currently have 50,759,972 shares of
common stock and 2,000 shares of series A preferred stock outstanding.
Our common and preferred stock are equity securities and are subordinate to our existing and future
indebtedness and effectively subordinated to all indebtedness and other non-equity claims against
our subsidiaries.
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Shares of our common stock and preferred stock are equity interests and do not constitute indebtedness.
Accordingly, shares of our common stock and depositary shares, which represent a fractional interest
in our Series A preferred stock, will rank junior to all of our existing and future indebtedness (including
indebtedness convertible into our common stock or preferred stock), to the indebtedness and other
liabilities of our existing or future subsidiaries, and to other non-equity claims against us and our assets
available to satisfy claims against us, including in the event of liquidation. Moreover, holders of our
depositary shares and outstanding preferred stock have preferential dividend and liquidation rights
compared to holders of our common stock. We are permitted to incur additional debt. In the event
of a bankruptcy, liquidation, dissolution or winding-up of our affairs, lenders and holders of our debt
securities would receive distributions of our available assets prior to holders of our common stock,
depositary shares and other outstanding preferred stock. Additionally, our right to participate in a
distribution of assets upon any of its subsidiaries’ liquidation or reorganization is subject to prior claims
of that subsidiary’s creditors, including holders of any preferred stock of that subsidiary.
Certain large stockholders own a significant percentage of our shares and exert significant influence
over us. Their interests may not coincide with ours and they may make decisions with which we may
disagree.
Greenlight Capital, Inc. and its affiliates (“Greenlight”) and James R. Brickman own approximately 34%
and 3%, respectively, of our voting power. These large stockholders, acting together, could determine
substantially all matters requiring stockholder approval, including the election of directors and approval
of significant corporate transactions, such as a sale or other change of control transaction. In addition,
this concentration of ownership may delay or prevent a change in control within us and make some
transactions more difficult or impossible without the support of these stockholders. The interests of
these stockholders may not always coincide with our interests or the interests of other stockholders.
Accordingly, these stockholders could cause us to enter into transactions or agreements that you
would not approve or make decisions with which you may disagree.
We do not intend to pay dividends on our common stock for the foreseeable future.
We have not paid any dividends since our inception and do not anticipate paying any cash dividends
on our common stock in the foreseeable future. Any payment of future dividends will be at the
discretion of our Board of Directors (the “Board”) and will depend upon, among other things, our
earnings, financial condition, capital requirements, levels of indebtedness, statutory and contractual
restrictions applying to the payment of dividends or contained in our financing instruments and other
considerations that the Board deems relevant. Investors must rely on sales of their common stock after
price appreciation, which may never occur, as the only way to realize a return on their investment.
Investors seeking cash dividends should not purchase our common stock.
Certain large stockholders’ shares have been and may in the future be sold into the market, which
could cause the market price of our common stock to decrease significantly.
We believe that a significant portion of our common stock beneficially owned by Greenlight and Mr.
Brickman are “restricted securities” within the meaning of the federal securities laws. We entered
into registration rights agreements with each of these parties in 2014 which provide these parties
the right to require us to register the resale of their shares under certain circumstances. In December
2020, 24,118,668 shares held by Greenlight were registered for resale on Form S-3 in accordance
with the registration rights agreement. These shares may be sold in the market at any time, subject to
compliance with securities laws. If these holders sell substantial amounts of these shares, the price of
our common stock could decline. In addition, the sale of these shares could impair our ability to raise
capital through the sale of additional equity securities.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 2. PROPERTIES
We are involved in various claims and litigation arising in the ordinary course of business. We do
not believe that any such claims and litigation will have a material adverse effect upon our results of
operations or financial position.
We lease our principal executive office located at 2805 Dallas Parkway, Suite 400, Plano, Texas,
75093. Our homebuilding and title division offices are located in leased space in the markets where we
conduct business. We believe that such properties are suitable and adequate to meet the needs of our
businesses. Because of the nature of our homebuilding operations, we and our builders hold significant
amounts of property as inventory in connection with our homebuilding business. We discuss these
properties in the discussion of our homebuilding operations in Part I, Item 1 and Part II, Item 7 of this
Annual Report on Form 10-K.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
C e n t re L i v i n g Ho m e s | Bu f f a l o R i d g e - Wa x a h a c h i e , T X
C e n t re L i v i n g Ho m e s | Bu f f a l o R i d g e - Wa x a h a c h i e , T X
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock trades on The New York Stock Exchange Capital Market under the symbol “GRBK”.
Holders of Record
On February 25, 2022, there were 17 stockholders of record of our common stock. We believe the
number of beneficial owners of our common stock is substantially greater than the number of record
holders because a large portion of our outstanding common stock is held of record in broker “street
names” for the benefit of individual investors. As of February 25, 2022, there were 50,759,972
common shares outstanding.
Dividends on Common Shares
We have not paid any dividends since our inception and do not anticipate declaring or paying any cash
dividends on our common stock in the foreseeable future. We currently anticipate that we will retain
all of our available cash for general corporate purposes. Payment of future dividends, if any, will be at
the discretion of our Board and will depend on many factors, including general economic and business
conditions, our strategic plans, our financial results and condition, legal requirements and other factors
as our Board deems relevant.
Common Stock Performance Graph
The following graph compares the five-year cumulative total return on our common stock, assuming
$100 was invested on December 31, 2016, with the cumulative total returns of the Russell 3000
Index and the S&P Homebuilders Select Industry Index for the periods ended December 31.
ITEM 6. RESERVED
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G H O Ho m e s | B e n t P i n e Pre s e r ve - Ve ro B e a c h , F L
G H O Ho m e s | B e n t P i n e Pre s e r ve - Ve ro B e a c h , F L
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the
securities laws. These forward-looking statements are subject to a number of risks and uncertainties,
many of which are beyond our control. All statements other than statements of historical facts included
or incorporated by reference in this Annual Report on Form 10-K, including the statements regarding
our strategy, future operations, financial position, estimated revenues, projected costs, prospects,
plans, and objectives, are forward-looking statements. When used in this Annual Report, the words
“will,” “believe,” “anticipate,” “plan,” “intend,” “estimate,” “expect,” “project,” and similar expressions are
intended to identify forward-looking statements, although not all forward-looking statements contain
these identifying words. Although we believe that our plans, intentions, and expectations reflected
in or suggested by the forward-looking statements we make in this Annual Report on Form 10-K
are reasonable, we cannot assure you that these plans, intentions, or expectations will be achieved.
Forward-looking statements included or incorporated by reference in this Annual Report on Form 10-K
include statements concerning (1) our balance sheet strategy and belief that we have ample liquidity;
(2) our goals and strategies and their anticipated benefits, including expansion into new markets;
(3) the effects of COVID-19 pandemic on the homebuilding industry and our results of operations,
business and liquidity; (4) our intentions and the expected benefits and advantages of our product
and land positioning strategies; (5) our expectations regarding the timing of backlog fulfillment; (6)
expectations regarding our industry and our business in 2021 and beyond; (7) the contribution of
certain market factors to our growth; (8) our land and lot acquisition strategy; (9) the sufficiency of
our capital resources to support our business strategy and to service our debt; (10) the impact of new
accounting standards and changes in accounting estimates; (11) trends and expectations regarding
sales prices, sales orders, cancellations, construction costs, gross margins, land costs and profitability
and future home inventories; (12) our future cash needs; (13) our strategy to utilize leverage to invest
in our business; (14) seasonal factors and the impact of seasonality in future quarters; and (15) our
expectations regarding access to additional growth capital.
These forward-looking statements reflect our current views about future events and are subject to
risks, uncertainties and assumptions. We wish to caution readers that certain important factors may
have affected and could in the future affect our actual results and could cause actual results to differ
significantly from what is anticipated by our forward-looking statements. These risks include, but are
not limited to: (1) continuing impacts from the COVID-19 pandemic, (2) general economic conditions,
seasonality, cyclicality and competition in the homebuilding industry; (3) changes in macroeconomic
conditions, including interest rates and unemployment rates, that could adversely impact demand
for new homes or the ability of our buyers to qualify; (4) shortages, delays or increased costs of
raw materials, especially in light of COVID-19, or increases in the Company’s other operating costs,
including costs related to labor, real estate taxes and insurance, which in each case exceed our ability
to increase prices; (5) a shortage of labor, (6) an inability to acquire land in our markets at anticipated
prices or difficulty in obtaining land-use entitlements; (7) our inability to successfully execute our
strategies, including an inability to expand our Trophy brand; (8) a failure to recruit, retain or develop
highly skilled and competent employees; (9) government regulation risks; (10) a lack of availability
or volatility of mortgage financing or a rise in interest rates; (11) severe weather events or natural
disasters; (12) difficulty in obtaining sufficient capital to fund our growth; (13) our ability to meet our
debt service obligations; (14) a decline in the value of our inventories and resulting write-downs of the
carrying value of our real estate assets; (15) changes in accounting standards that adversely affect our
reported earnings or financial condition.
after the date of those statements or to reflect the occurrence of anticipated or unanticipated events,
except to the extent we are legally required to disclose certain matters in SEC filings or otherwise.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For business overview and developments during the year ended December 31, 2021, refer to Part I,
Item 1 of this Annual Report on Form 10-K.
Overview and Outlook
Our key financial and operating metrics are home deliveries, home closings revenue, average sales
price of homes delivered, and net new home orders, which refers to sales contracts executed reduced
by the number of sales contracts canceled during the relevant period. Our results for each key financial
and operating metric, as compared to the year ended December 31, 2020, are provided below:
Home deliveries
Home closings revenue
Average sales price of homes delivered
Net new home orders
Year Ended
December 31, 2021
Increased by 28.4%
Increased by 41.3%
Increased by 10.1%
Decreased by 1.2%
The United States has been impacted by the coronavirus (“COVID-19”) pandemic. However, throughout
the pandemic, we have continued to build, close and sell homes in our markets. The overwhelming
expansion of our revenues is attributable to the strong performance of our new Trophy brand division,
and the impact of macroeconomic factors such as low interest rates, an influx of millennia first-time
home buyers and demand for suburban homes from apartment dwellers in response to COVID-19.
The significant increase in new home demand has, in turn, led to increased demand for labor and the
raw materials, products and appliances for new homes. Due to the increased demand, we have and
expect to continue to experience increases in cost and decreased availability of skilled labor as well as
increases, shortages and significant extensions to our lead time for the delivery of key materials and
inputs.
2021 Developments
From October 2020 to October 2021, homes in the DFW and Atlanta markets appreciated by 24.6%
and 21.4%, respectively, compared to 18.4% average appreciation for 20 major U.S. metropolitan
areas (Source: S&P Dow Jones Indices & CoreLogic, October 31, 2021). Among the 12 largest
metropolitan areas in the country, the Dallas area ranked third and the Atlanta area ranked seventh
in annual rate of job growth from November 2020 to November 2021 (Source: US Bureau of Labor
Statistics, November 2021). We believe that we operate in two of the most desirable housing markets
in the nation and that increasing demand and supply constraints in our target markets create favorable
conditions for our future growth.
Results of Operations
Please see “Risk Factors” located in Part I, Item 1A in this Annual Report on Form 10-K for a further
discussion of these and other risks and uncertainties which could affect our future results. We
undertake no obligation to revise any forward-looking statements to reflect events or circumstances
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020
Residential Units Revenue and New Homes Delivered
The table below represents residential units revenue and new homes delivered for the years ended
December 31, 2021 and December 31, 2020 (dollars in thousands):
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Home closings revenue
Mechanic’s lien contracts revenue
Residential units revenue
New homes delivered
Years Ended December 31,
2021
2020
Change
%
$
1,305,620 $
923,901 $ 381,719
41.3%
4,067
6,275
(2,208)
(35.2)%
$
1,309,687 $
930,176 $ 379,511
40.8%
2,834
2,208
626
28.4%
Average sales price of homes delivered
$
460.7 $
418.4 $
42.3
10.1%
The $379.5 million increase in residential units revenue was driven by the 10.1% increase in the average sales price of homes delivered
for the year ended December 31, 2021 and the 28.4% increase in the number of homes delivered. The 10.1% increase in the average
sales price of homes delivered for the year ended December 31, 2021 was attributable to overall price increases driven by high demand
and low supply of inventory.
New Home Orders and Backlog
The table below represents new home orders and backlog related to our builder operations segments, excluding mechanic’s liens
contracts (dollars in thousands):
Net new home orders
Cancellation rate
Absorption rate per average active selling community per
quarter
Average active selling communities
Active selling communities at end of period
Backlog
Backlog (units)
Average sales price of backlog
Years Ended December 31,
2021
2020
Change
2,851
7.7%
8.2
87
74
2,885
13.0%
7.5
96
103
(34)
(5.3)%
0.7
(9)
(29)
$869,856
$686,861
$182,995
1,480
$587.7
1,463
$469.5
17
$118.2
%
(1.2)%
(40.8)%
9.3%
(9.4)%
(28.2)%
26.6%
1.2%
25.2%
Net new home orders decreased by 1.2% over the prior year period and our absorption rate per average active selling community
increased 9.3% year over year. The absorption rate per average active selling community per quarter of 8.2 homes during the year
ended December 31, 2021, was a direct result of pro-active metering of home sales by withholding homes from sale and by limiting
sales per community to better align the absorption rate of sales with the ability to deliver new homes. Because of rising input costs and
strong sales demand, we prefer to increase our level of spec inventory than sell as many homes yet to be built. The absorption rate per
average active selling community per quarter of 8.2 homes during the year ended December 31, 2021, exceed the 5.6 net new home
orders during the year ended December 31, 2019 by 46.4%.
Backlog refers to homes under sales contracts that have not yet closed at the end of the relevant period, and absorption rate refers
to the rate at which net new home orders are contracted per average active selling community during the relevant period. Upon a
cancellation, the escrow deposit may be returned to the prospective purchaser. Accordingly, backlog may not be indicative of our future
revenue.
Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was
7.7% for the year ended December 31, 2021, compared to 13.0% for the year ended December 31, 2020. Sales contracts relating
to homes in backlog may be canceled by the prospective purchaser for a number of reasons, such as the prospective purchaser’s
inability to obtain suitable mortgage financing. Upon a cancellation, the escrow deposit may be returned to the prospective purchaser.
Management believes a cancellation rate in the range of 15% to 20% is representative of an industry average cancellation rate. Our
cancellation rate is on the lower end of the industry average, which we believe is due to favorable market conditions through December
31, 2021.
Tro p h y S i g n a t u re Ho m e s | L a ke p o i n t e - L a vo n , T X
Tro p h y S i g n a t u re Ho m e s | L a ke p o i n t e - L a vo n , T X
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The $183.0 million increase in value of backlog was due to the 25.2% increase in the average sales
price of backlog and the 1.2% increase in the number of homes in backlog. The increase of the average
sales price of homes in backlog was the result of price increases driven by the high demand and low
supply of inventory.
Residential Units Gross Margin
The table below represents the components of residential units gross margin (dollars in thousands):
Years Ended December 31,
2021
2020
Home closings revenue
$1,305,620
100.0%
$923,901
100.0%
Cost of homebuilding units
Homebuilding gross margin
961,115
$344,505
73.6%
26.4%
700,771
$223,130
75.8%
24.2%
Mechanic’s lien contracts
revenue
Cost of mechanic’s lien con-
tracts
Mechanic’s lien contracts
gross margin
$4,067
100.0%
$6,275
100.0%
3,249
$818
79.9%
20.1%
5,095
$1,180
81.2%
18.8%
Residential units revenue
$1,309,687
100.0%
$930,176
100.0%
Cost of residential units
964,364
Residential units gross margin
$345,323
73.6%
26.4%
705,866
$224,310
75.9%
24.1%
Selling, General and Administrative Expenses
The table below represents the components of selling, general and administrative expense (dollars in
thousands):
Builder operations
Land development
Corporate, other and unallocated (income)
expense
Total selling, general and administrative
expenses
Years Ended December 31,
As Percentage of
Segment Revenue
2021
2020
2021
2020
$135,464
$108,436
10.1%
11.6%
880
1,411
1.4%
3.3%
(2,075)
2,287
—%
—%
$134,269
$112,134
9.6%
11.5%
The 1.9% decrease of total selling, general and administrative expense as a percentage of revenue was
primarily driven by the leverage of higher revenues without a corresponding increase in the level of
overhead costs.
Builder Operations
Selling, general and administrative expense as a percentage of revenue for builder operations decreased
by 1.5% due to an increase in builder operations revenues without a corresponding increase in the
level of overhead costs. Builder operations expenditures include salary expenses, sales commissions,
and community costs such as advertising and marketing expenses, rent, professional fees, and non-
capitalized property taxes.
Cost of residential units for the year ended December 31, 2021 increased by $258.5 million, or 36.6%,
compared to the year ended December 31, 2020, primarily due to the 28.4% increase in the number
of new homes delivered in addition to increasing levels of cost input prices.
Land Development
The 1.9% decrease in selling, general and administrative expense as a percentage of revenue for land
development was primarily attributable to an increase in land development segment revenues.
Residential units gross margin for the year ended December 31, 2021 increased to 26.4%, compared
to 24.1% for the year ended December 31, 2020, primarily because of overall price increases that
outpaced the levels of cost input price increases.
Land and Lots Revenue
The table below represents lots closed and land and lots revenue (dollars in thousands):
Lots revenue
Land revenue
Land and lots revenue
Lots closed
Average sales price of lots closed
Years Ended December 31,
2021
2020
Change
%
$24,866
68,323
$93,189
323
$77.0
$45,461
$(20,595)
(45.3)%
384
67,939
17,692.4%
$45,845
$47,344
103.3%
375
(52)
$121.2
$(44.2)
(13.9)%
(36.5)%
The 45.3% decrease in lots revenue was driven by the 13.9% decrease in the number of lots closed and
a higher proportion of lots developed for internal use. The average lot price decreased by 36.5% due
to a higher number of entry level lots sold. Land revenue represents land acquired that also included
parcels zoned for retail and multi-family properties, as well as the sale of 50% interest in communities
to other public homebuilders at zero profit where we enter into co-development agreements to split
certain larger lot-count communities.
Corporate, Other and Unallocated
Selling, general and administrative expense for the corporate, other and unallocated non-operating
segment for the year ended December 31, 2021 was income of $2.1 million, compared to expense
of $2.3 million for the year ended December 31, 2020. The change is primarily due to an increase in
capitalized overhead adjustments that are not allocated to builder operations and land development
segments.
Equity in Income of Unconsolidated Entities
Equity in income of unconsolidated entities increased to $19.7 million, or 18.4%, for the year ended
December 31, 2021, compared to $16.7 million for the year ended December 31, 2020, primarily due
to an increase in earnings from GB Challenger. See Note 5 to our consolidated financial statements
included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of Green Brick’s share in
net earnings by unconsolidated entity.
Other Income, Net
Other income, net, increased to $9.5 million for the year ended December 31, 2021, compared to
$4.1 million for the year ended December 31, 2020. The change is primarily due to an increase in title
closing and settlement services of $3.5 million arising from higher volume of closings during the year
ended December 31, 2021 and to $1.5 million of allowances for option deposits and pre-acquisition
costs caused by COVID-19 pandemic considerations recorded during the year ended December 31,
2020.
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Income Tax Expense
Income tax expense increased to $52.6 million for the year ended December 31, 2021 from $25.0
million for the year ended December 31, 2020. The increase was partially due to higher taxable
income. Also, during the year ended December 31, 2020, we recognized favorable federal energy tax
credits from building energy-efficient homes in prior tax years.
Liquidity and Capital Resources Overview
As of December 31, 2021 and December 31, 2020, we had $78.7 million and $19.5 million of
unrestricted cash, respectively. Our historical cash management strategy includes redeploying net cash
from the sale of home inventory to acquire and develop land and lots that represent opportunities to
generate desired margins and using cash to make additional investments in business acquisitions, joint
ventures, or other strategic activities.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
For discussion and analysis of our results of operations for the year ended December 31, 2020 as well
as for comparison to our results of operations for the year ended December 31, 2019, refer to Item 7
of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020.
Lots Owned and Controlled
The following table presents the lots we owned or controlled, including lot option contracts, as of
December 31, 2021 and December 31, 2020. Owned lots are those for which we hold title, while
controlled lots are lots past feasibility studies for which we do not hold title but have the contractual
right to acquire title.
December 31, 2021
December 31, 2020
Lots owned
Central
Southeast
Total lots owned
Lots controlled (1)
Central
Southeast
Total lots controlled
Total lots owned and controlled (1)
Percentage of lots owned
(1) Total lots excludes lots with homes under construction.
17,767
2,472
20,23
7,321
1,061
8,382
28,621
70.7%
6,823
2,097
8,920
4,398
1,150
5,548
14,468
61.7%
Our principal uses of capital for the year ended December 31, 2021 were home construction, land
purchases, land development, operating expenses, and payment of routine liabilities. We used funds
generated by operations and available borrowings to meet our short-term working capital requirements.
We remain focused on generating positive margins in our builder operations segments and acquiring
desirable land positions in order to maintain a strong balance sheet and remain poised for continued
growth.
Cash flows for each of our communities depend on the community’s stage in the development cycle
and can differ substantially from reported earnings. Early stages of development or expansion require
significant cash outlays for land acquisitions, entitlements and other approvals, roads, utilities, general
landscaping and other amenities. These costs are a component of our inventory and are not recognized
in our statement of income until a home closes. In the later stages of community development, cash
inflows may significantly exceed earnings reported for financial statement purposes, as the cash
outflows associated with home construction and land development previously occurred.
Our debt to total capitalization ratio, which is calculated as the sum of borrowings on lines of credit,
the senior unsecured notes and notes payable, net of debt issuance costs, divided by the total
capitalization, which equals the sum of Green Brick Partners, Inc. stockholders’ equity and total debt,
was approximately 27.7% as of December 31, 2021. In addition, as of December 31, 2021, our net
debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 22.7%. It is
our intent to prudently employ leverage to continue to invest in our land acquisition, development and
homebuilding businesses. We target a debt to total capitalization ratio of approximately 30% to 35%,
which we expect will provide us with significant additional growth capital.
The following table presents additional information on the lots we controlled as of December 31,
2021 and December 31, 2020.
Reconciliation of a Non-GAAP Financial Measure
Lots under third party option contracts
Land under option for future acquisition and development
Lots under option through unconsolidated development
joint ventures
Total lots controlled
December 31,
2021
2,740
3,826
December 31,
2020
2,970
740
1,816
8,382
1,838
5,548
The following table presents additional information on the lots we owned as of December 31, 2021
and December 31, 2020.
Total lots owned
Land under option for future acquisition and development
Lots under option through unconsolidated development
joint ventures
Total lots self-developed
Self-developed lots as a percentage of total lots owned and
controlled
60
December 31,
2021
20,239
3,826
December 31,
2020
8,920
740
1,816
25,881
90.4%
1,838
11,498
79.5%
In this Annual Report on Form 10-K, we utilize a financial measure of net debt to total capitalization
ratio that is a non-GAAP financial measure as defined by the Securities and Exchange Commission.
Net debt to total capitalization is calculated as the total debt less cash and cash equivalents, divided
by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash
equivalents. We present this measure because we believe it is useful to management and investors
in evaluating our financing structure. We also believe this measure facilitates the comparison of our
financing structure with other companies in our industry. Because this measure is not calculated in
accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), it may not be comparable
to other similarly titled measures of other companies and should not be considered in isolation or as a
substitute for, or superior to, financial measures prepared in accordance with GAAP.
The closest GAAP financial measure to the net debt to total capitalization ratio is the debt to total
capitalization ratio. The following table represents a reconciliation of the net debt to total capitalization
ratio to the closest GAAP financial measure as of December 31, 2021.
Gross
Cash and cash
equivalents
Net
Total debt, net of debt issuance costs
$334,918
$(78,696)
$256,222
Total Green Brick Partners, Inc.
stockholders’ equity
Total capitalization
874,548
—
874,548
$1,209,466
$(78,696)
$1,130,770
outstanding which were each issued pursuant to a note purchase agreement. The aggregate amount
of senior unsecured notes outstanding was $335.4 million as of December 31, 2021, up from $111.1
million as of December 31, 2020 due to the issuance of the 2028 and 2029 notes as discussed below.
In August 2019, we issued $75 million of senior unsecured notes (the “2026 Notes”). Interest accrues
at an annual rate of 4.0% and is payable quarterly. Principal on the 2026 Notes is required to be paid
in increments of $12.5 million on August 8, 2024 and $12.5 million on August 8, 2025 with a final
principal payment of $50.0 million on August 8, 2026.
Debt to total capitalization ratio
27.7%
Net debt to total capitalization ratio
Key Sources of Liquidity
22.7%
In August 2020, we issued $37.5 million of senior unsecured notes (the “2027 Notes”). Interest
accrues at an annual rate of 3.35% and is payable quarterly. Principal on the 2027 Notes is due on
August 26, 2027.
Our key sources of liquidity were funds generated by operations and provided by lines of credit and
issuance of senior unsecured notes and preferred stock during the year ended December 31, 2021.
Debt Instruments
Borrowings on lines of credit outstanding, net of debt issuance costs, as of December 31, 2021 and
December 31, 2020 consisted of the following (in thousands):
December 31, 2021
December 31, 2020
Secured Revolving Credit Facility
Unsecured Revolving Credit Facility
Debt issuance costs, net of amortization
Total borrowings on lines of credit, net
$
$2,000
—
(2,738)
(738) $
$7,000
101,000
(1,313)
106,687
Secured Revolving Credit Facility – As of December 31, 2021, we had $2.0 million outstanding under
our Secured Revolving Credit Facility, down from $7.0 million as of December 31, 2020. Borrowings
under the Secured Revolving Credit Facility bear interest at a floating rate per annum equal to the rate
announced by Bank of America, N.A. as its “Prime Rate” less 0.25%, subject to a minimum rate. As of
December 31, 2021, the interest rate on outstanding borrowings under the secured revolving credit
facility was 4.00% per annum, which was equal to the minimum rate as of that date. On February
9, 2022, the Company entered into the Eighth Amendment to this credit agreement to extend its
maturity date to May 1, 2025 and to reduce the minimum interest rate from 4.00% to 3.15%. All other
material terms of the credit agreement, as amended, remained unchanged.
Unsecured Revolving Credit Facility – As of December 31, 2021, we had no amounts outstanding
under our Unsecured Revolving Credit facility, down from $101.0 million as of December 31, 2020.
The borrowings on the Unsecured Revolving Credit Facility bear interest at a floating rate equal to
either (a) for base rate advances, the highest of (1) the lender’s base rate, (2) the federal funds rate plus
0.5% and (3) the one-month LIBOR plus 1.0%, in each case plus 1.5%; or (b) in the case of Eurodollar
rate advances, the reserve adjusted LIBOR plus 2.5%. As amended, the aggregate principal amount of
the revolving credit commitments under the Credit Agreement is $300.0 million through December
14, 2024. In addition, the Unsecured Revolving Credit Agreement, as amended, permits us, without
the consent of the other lenders, to request that one or more lenders increase their revolving credit
commitments to provide an aggregate of $325.0 million of revolving credit commitments subject to
compliance with customary conditions set forth in the Credit Agreement including compliance, on a
pro forma basis, with the financial covenants set forth therein.
Senior Unsecured Notes - As of December 31, 2021, we had four series of senior unsecured notes
In February 2021, we issued $125.0 million of senior unsecured notes (the “2028 Notes”). Interest
accrues at an annual rate of 3.25% and is payable quarterly. Principal on the 2028 Notes is due in
increments of $25.0 million annually on February 25 in each of 2024, 2025, 2026, 2027, and 2028.
In December 2021, we issued $100.0 million of senior unsecured notes (the “2029 Notes”). Interest
accrues at an annual rate of 3.25% and is payable quarterly. A required principal prepayment of $30.0
million is due on December 28, 2028. The remaining unpaid principal balance is due on December
28, 2029.
Optional prepayment is allowed with payment of a “make-whole” premium which fluctuates depending
on market interest rates. Interest is payable quarterly in arrears.
Our debt instruments require us to maintain specific financial covenants, each of which we were in
compliance with as of December 31, 2021. Specifically, under the most restrictive covenants, we are
required to maintain (1) a minimum interest coverage (consolidated EBITDA to interest incurred) of no
less than 2.0 to 1.0 and, as of December 31, 2021, our interest coverage on a last 12 months’ basis
was 19.4 to 1.0, (2) a Consolidated Tangible Net Worth of no less than approximately $533.6 million
and, as of December 31, 2021, we had $874.6 million and (3) maximum debt to total capitalization
rolling average ratio of no more than 40.0% and, as of December 31, 2021, we had a rolling average
ratio of 30.7%.
As of December 31, 2021, we believe that our cash on hand, capacity available under our lines of
credit and cash flows from operations for the next twelve months will be sufficient to service our
outstanding debt during the next twelve months. For more detailed information on our lines of credit,
refer to Note 7 to the Consolidated Financial Statements located in Part II, Item 8 of this Annual Report
on Form 10-K.
Preferred Equity Issuances
On December 22, 2021, we issued 2,000,000 Depositary Shares, each representing 1/1000 of a share
of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”) for $50.0
million. We received net proceeds of $47.7 million and incurred stock issuance costs of approximately
$2.3 million that reduced the amount of equity on our consolidated balance sheet.
Holders of Series A Preferred Stock, when and as authorized by our Board, are entitled to cumulative
cash dividends at the rate of 5.75% of the $25,000.00 ($25.00 per Depositary Share) liquidation
preference per year (equivalent to 1,437.50 per share per year or $1.4375 per Depositary Share per
year). Dividends are payable quarterly in arrears, on or about the 15th of March, June, September and
December, beginning on or about March 15, 2022. On and after December 23, 2026, the shares of
Series A Preferred Stock will be redeemable at our option, in whole or in part, at a redemption price
61
equal to $25,000.00 per share of Series A Preferred Stock ($25.00 per Depositary Share), plus an
amount equal to any accrued and unpaid dividends. Furthermore, upon a change of control (as defined
in the Certificate of Designation), we will have a special option to redeem the Series A Preferred Stock
at $25,000.00 per share of Series A Preferred Stock ($25.00 per Depositary Share), plus an amount
per share equal to any accrued and unpaid dividends on such shares. In addition, upon change of
control, the shareholders will have the option to convert their Series A Preferred stock into shares of
Common Stock as specified on the Certificate of Designation. The Series A Preferred Stock ranks, as to
dividend rights and rights upon our liquidation, dissolution or winding up senior to all classes or series
of our common stock. Holders of the Series A Preferred Stock generally have no voting rights, except
for limited voting rights, including if we fail to pay dividends on the Series A Preferred Stock for six or
more quarterly periods (whether or not consecutive).
Registration Statements
Land and Lot Option Contracts
In the ordinary course of business, we enter into land purchase contracts with third-party developers
in order to procure lots for the construction of our homes in the future. We are subject to customary
obligations associated with such contracts. These purchase contracts typically require an earnest
money deposit, and the purchase of properties under these contracts is generally contingent upon
satisfaction of certain requirements, including obtaining applicable property and development
entitlements.
We also utilize option contracts with lot sellers as a method of acquiring lots in staged takedowns,
which are the schedules that dictate when lots must be purchased to help manage the financial and
market risk associated with land holdings, and to reduce the use of funds from our corporate financing
sources. Lot option contracts generally require us to pay a non-refundable deposit for the right to
acquire lots over a specified period of time at pre-determined prices which typically include escalations
in lot prices over time.
In December 2020, we filed with the SEC a shelf registration statement on Form S-3 registering up
to $500 million of securities, including shares of our common stock, preferred stock or debt securities
either separately or represented by warrants, or depositary shares as well as units that include any
of these securities. Under the rules governing shelf registration statements, we will file a prospectus
supplement and advise the SEC of the amount and type of securities each time we issue securities
under this registration statement.
Our utilization of lot option contracts is dependent on, among other things, the availability of land
sellers willing to enter into these arrangements, the availability of capital to finance the development
of optioned lots, general housing market conditions and local market dynamics. Options may be more
difficult to procure from land sellers in strong housing markets and are more prevalent in certain
geographic regions.
Cash Flows
The following summarizes our primary sources and uses of cash for the year ended December 31,
2021 as compared to the year ended December 31, 2020:
Operating activities. Net cash used in operating activities for the year ended December 31, 2021
was $92.4 million, compared to a $35.1 million source of cash from operating activities during the
year ended December 31, 2020. The net cash outflows for the year ended December 31, 2021 were
primarily driven by an increase in inventory of $358.3 million, partially offset by $201.0 million of
cash generated from business operations, the deferral of expense payments through the increase
in accrued expenses and accounts payable of $20.9 million and $21.2 million, respectively, and an
increase in customer builder deposits of $26.5 million.
We generally have the right, at our discretion, to terminate our obligations under both purchase
contracts and option contracts by forfeiting the earnest money deposit with no further financial
responsibility to the land seller. During the three months ended March 31, 2020, management
determined to increase the allowance for certain option contracts due to the impact of the COVID-19
pandemic on the homebuilding industry and projected future demand for homes in certain markets
and/or locations. However, management subsequently reassessed the market situation based on new
information available and reversed such allowances for earnest money deposits and pre-acquisition
costs related to option contracts in the subsequent quarter.
As of December 31, 2021, we had earnest money deposits of $27.3 million at risk associated
with contracts to purchase 6,246 lots past feasibility studies with an aggregate purchase price of
approximately $323.1 million.
Investing activities. Net cash used in investing activities for the year ended December 31, 2021
decreased to $2.0 million compared to $13.3 million for the year ended December 31, 2020. The
decrease in cash outflows was primarily due to a $9.0 million investment in joint venture GBTM
Sendera during the year ended December 31, 2020.
Letters of Credit and Performance Bonds
Refer to Note 17 in the accompanying Notes to the consolidated financial statements included in this
Annual Report on Form 10-K for details of letters of credit and performance bonds outstanding.
Financing activities. Net cash provided by financing activities for the year ended December 31, 2021
was $154.3 million, compared to $25.9 million cash used during the year ended December 31, 2020.
The cash inflows for the year ended December 31, 2021 were primarily from borrowings from senior
unsecured notes of $225.0 million and from net proceeds from the issuance of preferred stock of
$47.7 million, partially offset by the net repayment of lines of credit of $106.0 million.
Guarantee
Refer to Note 5 in the accompanying Notes to the consolidated financial statements included in this
Annual Report on Form 10-K for details of our guarantee in relation to our joint venture with EJB River
Holdings, LLC (“EJB River Holdings”).
For discussion and analysis our cash flows for the year ended December 31, 2020 as well as for
comparison to our cash flows for the year ended December 31, 2019, refer to Item 7 of Part II of our
Annual Report on Form 10-K for the year ended December 31, 2020.
Off-Balance Sheet Arrangements
62
Critical Accounting Policies
The preparation of financial statements in accordance with United States generally accepted
accounting principles (“GAAP”) requires management to use judgment and make estimates that affect
the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues, costs and expenses during the reporting period. Management bases estimates
and judgments on historical experience and on various other factors that we believe to be reasonable
under the circumstances. Actual results may differ from estimates under different assumptions or
conditions. Management believes that the following accounting area is most critical to the portrayal
63
of our financial condition and results of operations and requires the most subjective or complex
judgments.
Impairment of Inventory
We value inventory at cost unless the carrying value is determined to be not recoverable in which
case the affected inventory is written down to fair value. In accordance with Accounting Standards
Codification 360, Property, Plant, and Equipment (“ASC 360”), we evaluate our inventory for indicators
of impairment by individual community and development during each reporting period.
For our builder operations segments, during each reporting period, community gross margins on closed
homes, average margins of homes within backlog, and community outlook factors are reviewed by
management. In the event that this review suggests higher potential for losses at a specific community,
we monitor such communities by adding them to its “watchlist” communities, and, when an impairment
indicator is present, further analysis is performed.
For our land development segment, we perform a quarterly review for indicators of impairment
for each project which involves comparing anticipated lot sale revenues to projected costs (i.e. lot
gross margins). For lots designated for our builders, we review land for indicators of impairment on a
consolidated level, looking at overall projected home gross margins. In determining the allocation of
costs to a particular land parcel, we rely on project budgets which are based on a variety of assumptions,
including assumptions about development schedules and future costs to be incurred. It is common
that actual results differ from budgeted amounts for various reasons, including delays, changes in costs
that have not been committed, unforeseen issues encountered during project development that fall
outside the scope of existing contracts, or items that ultimately cost more or less than the budgeted
amount. We apply procedures to maintain best estimates in our budgets, including assessing and
revising project budgets on a periodic basis, obtaining commitments from subcontractors and vendors
for future costs to be incurred and utilizing the most recent information available to estimate costs.
For each real estate asset that has an indicator of impairment, we analyze whether the estimated
remaining undiscounted future cash flows are more or less than the asset’s carrying value. The
estimated cash flows are determined by projecting the remaining revenue from closings based on the
contractual lot takedowns remaining or historical and projected home sales or delivery absorptions
for homebuilding operations and then comparing such projections to the remaining projected
expenditures for development or home construction. Remaining projected expenditures are based
on the most current pricing/bids received from subcontractors for current phases or homes under
development. For future phases of land development, management uses its judgment to project
potential cost increases. When projecting revenue, management does not assume improvement in
market conditions.
If the estimated undiscounted cash flows are less than the asset’s carrying value, the asset is deemed
impaired and will be written down to fair value less associated costs to sell. These impairment
evaluations require us to make estimates and assumptions regarding future conditions, including
the timing and amounts of development costs and sales prices of real estate assets, to determine if
expected future cash flows will be sufficient to recover the asset’s carrying value.
Fair value is determined based on estimated future cash flows discounted for inherent risks associated
with real estate assets. These discounted cash flows are impacted by expected risk based on estimated
land development activities, construction and delivery timelines, market risk of price erosion,
uncertainty of development or construction cost increases, and other risks specific to the asset or
market conditions where the asset is located when the assessment is made. These factors are specific
to each community and may vary among communities.
When estimating cash flows of a community, management makes various assumptions, including: (i)
expected sales prices and sales incentives to be offered, including the number of homes available,
pricing and incentives being offered by us or other builders, and future sales price adjustments based
on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing
market conditions, competition and historical trends; (iii) costs expended to date and expected to be
incurred including, but not limited to, land and land development costs, home construction costs,
interest costs, indirect construction and overhead costs, and selling and marketing costs; (iv) alternative
product offerings that may be offered that could have an impact on sales pace, sales price and/or
building costs; and (v) alternative uses for the property.
Many assumptions are interdependent and a change in one may require a corresponding change to
other assumptions. For example, increasing or decreasing sales absorption rates has a direct impact
on the estimated per unit sales price of a home, the level of time-sensitive costs (such as indirect
construction, overhead and carrying costs), and selling and marketing costs (such as model home
maintenance costs and advertising costs). Due to uncertainties in the estimation process, the volatility
in demand for new housing and the long life cycle of many communities, actual results could differ
significantly from such estimates.
Refer to Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual
Report on Form 10-K for further description of our significant accounting policies.
Recent Accounting Pronouncements
See Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on
Form 10-K for recent accounting pronouncements.
C B J E N I Ho m e s | Fr i s c o Sp r i n g s - Fr i s c o , T X
C B J E N I Ho m e s | Fr i s c o Sp r i n g s - Fr i s c o , T X
63
63
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our operations are interest rate sensitive. Because overall housing demand is adversely affected by
increases in interest rates, a significant increase in mortgage interest rates may negatively affect the
ability of homebuyers to secure adequate financing. Higher interest rates could adversely affect our
revenues, gross margins and net income.
Our lines of credit have variable interest rates which are subject to minimum interest rates. An increase
in interest rates could cause the cost of those lines to increase. As of December 31, 2021, we did not
have any amounts outstanding on these lines of credit.
For fixed rate debt, such as our senior unsecured notes, changes in interest rates have an impact on
the fair value of the debt instrument, not on our earnings or cash flows.
The following table provides information about our significant instruments that are sensitive to
changes in interest rates, our debt obligations, principal cash flows by maturity, weighted average
interest rates and estimated fair market value of debt for the year ended December 31, 2021 (amounts
in thousands):
Year of Maturity
2024
2025
2026
2027
2028
2029
Total
Fair Value
at December
31, 2021
Liabilities:
Senior
unsecured notes
Fixed rate
$37,500 37,500 75,000 62,500 55,000 70,000 337,500
352,300
Average
interest rate
4.0%
3.6%
3.6%
3.5%
3.3%
3.3%
3.5%
We do not enter into, or intend to enter into, swaps, forward or option contracts on interest rates
or commodities or other types of derivative financial instruments for trading, hedging or speculative
purposes.
Many of the statements contained in this section are forward-looking and should be read in conjunction
with the disclosures under the heading “Forward-Looking Statements.”
64
Tro p h y S i g n a t u re Ho m e s | Ve n t a n a - Fo r t Wo r t h , T X
Tro p h y S i g n a t u re Ho m e s | Ve n t a n a - Fo r t Wo r t h , T X
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Green Brick Partners, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Green Brick Partners, Inc. and its
subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of
income, stockholders’ equity and cash flows for each of the three years in the period ended December
31, 2021, and the related notes to the consolidated financial statements (collectively, the financial
statements). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 2021, in conformity with
accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December
31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated
March 1, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the
financial statements that was communicated or required to be communicated to the audit committee
and that: (i) relate to accounts or disclosures that are material to the financial statements and (ii)
involved our especially challenging, subjective or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of Inventory for Impairment
As described in Notes 1 and 4 to the financial statements, the Company’s inventory, including homes
completed or under construction and land and lots inventory was $1,204 million as of December 31,
2021. The Company performs impairment testing quarterly to determine whether events or changes
in circumstances indicate the carrying amount of its inventory may not be recoverable.
If future results are not consistent with the Company’s assumptions and estimates, including future
events such as deterioration of market conditions or significant changes in the absorption rates,
changes in the assumptions could have a significant impact of the determination of indicators of
potential impairment.
We identified the evaluation of potential indicators of impairment for inventory as a critical audit
matter. This is due to a high degree of auditor judgment that was involved in evaluating management’s
assumptions and judgments regarding whether changes in market conditions at a location in which the
Company operates would indicate a significant decrease in the fair value of the inventory.
Our audit procedures related to the Company’s evaluation of potential indicators of impairment for
inventory include the following primary procedures, among others to address this critical audit matter:
We obtained an understanding of the relevant controls related to the evaluation of inventory for
impairment and tested such controls for design and operating effectiveness, including controls related
to the Company’s process to evaluate potential indicators of impairment.
We performed an independent assessment of the impact of changes in market conditions on inventory
by comparing third party data to the operating performance of the Company’s inventory. We then
compared the results of our assessment to the Company’s analysis.
We tested management’s process for evaluating changes in market conditions and operating
performance to determine if potential indicators of impairment exist, as well as determining the impact
of industry, regulatory, and macroeconomic factors on the significant inputs used to determine the fair
value of its communities, by recalculating certain key inputs utilized and agreeing those key inputs, on
a sample basis, to source documents.
We tested management’s process of identifying potential indicators of impairment by comparing
actual contribution margins on closed homes to management’s target contribution margin to identify
communities averaging below the target and identifying communities with significantly declining
margins and or increasing costs.
/s/ RSM US LLP
We have served as the Company’s auditor since 2016.
PCAOB ID: 49
Dallas, Texas
March 1, 2022
65
GREEN BRICK PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
Cash and cash equivalents
Restricted cash
Receivables
Inventory
Investments in unconsolidated entities
Right-of-use assets - operating leases
Property and equipment, net
Earnest money deposits
Deferred income tax assets, net
Intangible assets, net
Goodwill
Other assets
Total assets
Liabilities:
Accounts payable
Accrued expenses
Customer and builder deposits
Lease liabilities - operating leases
Borrowings on lines of credit, net
Senior unsecured notes, net
Notes payable
Contingent consideration
Total liabilities
Commitments and contingencies
ASSETS
LIABILITIES AND EQUITY
Redeemable noncontrolling interest in equity of consolidated subsidiary
Equity:
Green Brick Partners, Inc. stockholders’ equity
Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 and zero issued and outstanding as of December 31, 2021 and 2020, respectively
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,151,911 and 51,053,858 issued and 50,759,972 and 50,661,919 outstanding as of December
31, 2021 and 2020, respectively
Treasury stock, at cost, 391,939 shares
Additional paid-in capital
Retained earnings
Total Green Brick Partners, Inc. stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements.
66
As of December 31,
2021
2020
$
78,696 $
14,858
6,871
1,203,743
55,616
4,596
2,812
26,008
15,741
537
680
11,709
19,479
14,156
5,224
844,635
46,443
2,538
3,595
22,242
15,376
622
680
13,857
$
1,421,867 $
988,847
$
45,682 $
61,351
64,610
4,745
(738)
335,446
210
—
24,521
40,416
38,131
2,591
106,687
111,056
2,125
368
511,306
325,895
21,867
13,543
47,696
512
—
511
(3,167)
(3,167)
289,641
539,866
874,548
14,146
888,694
293,242
349,656
640,242
9,167
649,409
$
1,421,867 $
988,847
GREEN BRICK PARTNERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Residential units revenue
Land and lots revenue
Total revenues
Cost of residential units
Cost of land and lots
Total cost of revenues
Total gross profit
Selling, general and administrative expenses
Change in fair value of contingent consideration
Equity in income of unconsolidated entities
Other income, net
Income before income taxes
Income tax expense
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to Green Brick Partners, Inc.
Net income attributable to Green Brick Partners, Inc. per common share:
Basic
Diluted
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements.
Years Ended December 31,
2021
2020
2019
$
1,309,687 $
930,176 $
759,830
93,189
1,402,876
964,364
76,453
1,040,817
362,059
45,845
976,021
705,866
35,551
741,417
234,604
(134,269)
(112,134)
—
19,713
9,483
256,986
52,605
204,381
14,171
(368)
16,654
4,057
142,813
25,016
117,797
4,104
31,830
791,660
597,884
24,694
622,578
169,082
(97,775)
(4,906)
9,809
8,119
84,329
20,027
64,302
5,646
$
190,210 $
113,693 $
58,656
$3.75
$3.72
$2.25
$2.24
$1.16
$1.16
50,700
51,060
50,568
50,795
50,530
50,636
67
GREEN BRICK PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share data)
Balance at December 31, 2018
50,719,884
$507 (136,756)
$(981)
$291,299
$177,526
$468,351
$17,281
$485,632
Common Stock
Treasury Stock
Shares
Amount
Shares
Amount
Additional Paid-
in Capital
Retained
Earnings
Total Green Brick Partners,
Inc. Stockholders’ Equity
Non
controlling
Interests
Total Stockholders’
Equity
Share-based compensation
—
—
Issuance of common stock under 2014 Omnibus
Equity Incentive Plan
219,181
3
Withholdings from vesting of restricted stock
awards
(59,116)
(1)
—
—
—
—
—
—
—
—
Amortization of deferred share-based
compensation
Stock repurchases
—
—
—
—
(255,183)
(2,186)
—
Accretion of redeemable noncontrolling interest
—
—
Increase in ownership in Southgate Homes
—
—
Increase in ownership in Centre Living Homes
—
—
Contributions
Distributions
Net income
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
236
1,463
(543)
489
(2,145)
—
—
—
—
—
—
(891)
(264)
—
—
58,656
—
—
236
1,466
(544)
489
(2,186)
(2,145)
(891)
(264)
58,656
—
—
—
—
—
—
236
1,466
(544)
489
(2,186)
(2,145)
891
264
—
—
3,600
(10,993)
2,184
3,600
(10,993)
60,840
Balance at December 31, 2019
50,879,949
$509 (391,939)
$(3,167)
$290,799
$235,027 $
523,168
$13,227
$536,395
Issuance of common stock under 2014 Omnibus
Equity Incentive Plan
249,617
3
Withholdings from vesting of restricted stock
awards
(75,708)
(1)
Amortization of deferred share-based
compensation
Change in fair value of redeemable noncontrolling
interest
Increase in ownership in CB JENI Homes
Contributions
Distributions
Net income
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,597
—
(591)
497
—
—
940
—
—
—
—
—
936
—
—
113,69
—
—
Balance at December 31, 2020
51,053,858
$511 (391,939)
$(3,167)
$293,242
$349,656
1,600
(592)
497
940
—
—
—
—
1,600
(592)
497
940
936
(936)
—
400
(5,251)
1,727
$9,167
400
(5,251)
115,420
$649,409
113,693
$640,242
68
GREEN BRICK PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share data)
Common Stock
Preferred Stock
Treasury Stock
Shares
Amount
Shares
Amount
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
Total Green
Brick
Partners, Inc.
Stockholders’
Equity
Non
controlling
Interests
Total
Stockhold-
ers’ Equity
Balance at December 31, 2020
51,053,858
$511 —
$—
(391,939)
$(3,167)
$293,242 $349,656
$640,242
$9,167
$649,409
Issuance of common stock under 2014 Omnibus
Equity Incentive Plan
139,371
2
—
—
—
—
2,436
—
2,438
—
2,438
Withholdings from vesting of restricted stock awards
(41,318)
(1)
—
—
(833)
—
(834)
Issuance of preferred stock
Amortization of deferred share-based compensation
Change in fair value of redeemable noncontrolling
interest
Distributions
Net income
—
—
—
—
—
—
—
—
—
—
2,000
47,696
—
47,696
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
640
—
640
(5,844)
—
(5,844)
—
—
—
—
—
(6,606)
(6,606)
190,210
190,210
11,585
201,795
—
—
—
(834)
47,696
640
(5,844)
Balance at December 31, 2021
51,151,911
$512 2,000
$47,696
(391,939)
$(3,167)
$289,641 $539,866
$874,548
$14,146
$888,694
The accompanying notes are an integral part of these consolidated financial statements.
69
GREEN BRICK PARTNERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
2021
Years Ended December 31,
2020
2019
$204,381
$117,797
$64,302
Depreciation and amortization expense
Loss on disposal of property and equipment, net
Share-based compensation expense
Change in fair value of contingent consideration
Deferred income taxes, net
Equity in income of unconsolidated entities
Allowances for option deposits and pre-acquisition costs
Distributions of income from unconsolidated entities
Changes in operating assets and liabilities:
(Increase) decrease in receivables
Increase in inventory
(Increase) decrease in earnest money deposits
Decrease (increase) in other assets
Increase (decrease) in accounts payable
Increase (decrease) in accrued expenses
Payment of contingent consideration in excess of acquisition date fair value
Increase (decrease) in customer and builder deposits
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Investments in unconsolidated entities
Purchase of property and equipment, net of disposals
Net cash used in investing activities
Cash flows from financing activities:
Borrowings from lines of credit
Borrowings from senior unsecured notes
Repayments of lines of credit
Proceeds from notes payable
Repayments of notes payable
Payments of debt issuance costs
Payment of contingent consideration
Payments of withholding tax on vesting of restricted stock awards
Stock repurchases
Net proceeds from issuance of preferred stock
Contributions from noncontrolling interests
Distributions to redeemable noncontrolling interest
Distributions to noncontrolling interests
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents and restricted cash
Cash and cash equivalents, beginning of period
Restricted cash, beginning of period
Cash and cash equivalents and restricted cash, beginning of period
Cash and cash equivalents, end of period
Restricted cash, end of period
Cash and cash equivalents and restricted cash, end of period
70
2,744
150
3,078
—
(365)
(19,713)
223
10,548
(1,647)
(358,270)
(3,772)
2,054
21,161
20,935
(368)
26,479
(92,382)
(8)
(2,025)
(2,033)
749,800
225,000
(855,800)
209
(2,124)
(2,901)
—
—
—
(834)
47,696
(106)
(6,606)
154,334
59,919
19,479
14,156
$33,635
78,696
14,858
$93,554
3,666
36
2,097
368
(114)
(16,654)
1,513
10,936
(504)
(90,345)
(9,069)
(3,739)
(5,523)
15,760
(5,267)
14,177
35,135
(10,431)
(2,903)
(13,334)
354,500
37,500
(412,500)
10,714
(8,590)
(527)
(592)
—
—
—
400
(1,505)
(5,251)
(25,851)
(4,050)
33,269
4,416
$37,685
19,479
14,156
$33,635
3,079
10
2,191
4,906
1,237
(9,809)
884
5,084
122
(83,970)
2,107
(2,409)
3,953
(4,384)
(1,332)
(8,024)
(22,053)
(5,300)
(2,579)
(7,879)
224,000
75,000
(260,000)
—
—
(1,974)
(514)
(544)
(2,186)
—
3,600
(527)
(10,993)
25,862
(4,070)
38,315
3,440
$41,755
33,269
4,416
$37,685
GREEN BRICK PARTNERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In
Reclassifications
thousands)
Supplemental disclosure of cash flow information:
Certain prior period amounts have been reclassified to conform to the current period presentation
with no impact to net income in any period.
Cash paid for income taxes, net of refunds
$ 47,288
$ 20,541
$ 14,313
Cash and Cash Equivalents
The accompanying notes are an integral part of these consolidated financial statements.
GREEN BRICK PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company considers all highly liquid investments with original maturities of three months or less at
the time of purchase to be cash equivalents. The cash balances of the Company are held with multiple
financial institutions. At times, cash balances at certain banks and financial institutions may exceed
insurable amounts. The Company believes it mitigates this risk by monitoring the financial stability
of institutions holding material cash balances. The Company has not experienced any losses in such
accounts and believes that the risk of loss is minimal.
The accompanying consolidated financial statements have been prepared in accordance with United
States generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) and applicable regulations of
the Securities and Exchange Commission (“SEC”).
Restricted Cash
Restricted cash primarily relates to cash held in escrow for sales of developed lots to third parties and
customer deposits from homebuyers.
Principles of Consolidation
Receivables
The accompanying consolidated financial statements include the accounts of Green Brick Partners,
Inc., its controlled subsidiaries, and variable interest entities in which Green Brick Partners, Inc. or one
of its controlled subsidiaries is deemed to be the primary beneficiary (together, the “Company”, “we”,
or “Green Brick”).
The Company evaluated
its wholly-owned subsidiaries and controlled builder under ASC
810, Consolidation (“ASC 810”) and concluded that its controlled builder is a variable interest entity
(“VIE”). The Company owns a 50% equity interest and a 51% voting interest in its controlled builder.
In addition, the Company appoints two of the three board managers of its controlled builder and is
able to exercise control over its operations. The Company accounts for its controlled builder under
the variable interest model and is the primary beneficiary of its controlled builder in accordance with
ASC 810.
All intercompany balances and transactions have been eliminated in consolidation.
The Company uses the equity method of accounting for its investments in unconsolidated entities
over which it exercises significant influence but does not have a controlling interest. Under the equity
method, the Company’s share of the unconsolidated entities’ earnings or losses is included in the
consolidated statements of income.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires
management of the Company to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes, including the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenue and expenses during the reporting periods.
Actual results could differ from those estimates.
Receivables consist of amounts collectible from manufacturing rebates earned by our homebuilders
during the normal course of business, amounts collectible from third-party escrow agents related to
closings on land, lots and homes, amounts collectible related to mechanic’s lien contracts, and income
tax receivables. As of December 31, 2021 and 2020, all amounts are considered fully collectible and
no allowance for doubtful accounts is recorded. Any allowance for doubtful accounts is estimated
based on our historical losses, the existing economic conditions, and the financial stability of our
customers. Receivables are written off in the period that they are deemed uncollectible.
Inventory and Cost of Revenues
Inventory consists of undeveloped land, raw land scheduled for development, land in the process of
development, land held for sale, developed lots, homes completed and under construction, and model
homes. Inventory is valued at cost unless the carrying value is determined to be not recoverable
in which case the affected inventory is written down to fair value. Cost includes any related pre-
acquisition costs that are directly identifiable with a specific property so long as those pre-acquisition
costs are anticipated to be recoverable at the sale of the property.
Residential lots held for sale and lots held for development include the initial cost of acquiring the
land as well as certain costs capitalized related to developing the land into individual residential lots
including direct overhead, interest and real estate taxes.
Land development and other project costs, including direct overhead, interest and property taxes
incurred during development and home construction, are capitalized. Land development and other
common costs that benefit an entire community are allocated to individual lots or homes based
on relative sales value. The costs of completed lots are transferred to work in process when home
construction begins. Home construction costs and related carrying charges (principally interest and
real estate taxes) are allocated to the cost of individual homes.
Inventory costs for completed homes are expensed upon closing and delivery of the homes. Changes
to estimated total land development costs subsequent to initial home closings in a community are
71
generally allocated to the unclosed homes and lots in the community on a pro-rata basis. The life
cycle of a community generally ranges from 24 to 72 months, commencing with the acquisition of
land, continuing through the land development phase, construction, and concluding with the sale and
delivery of homes. We recognize costs as incurred on our mechanic’s lien contracts.
Impairment of Inventory
In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), we evaluate our inventory
for indicators of impairment by individual community and development during each reporting period.
For our builder operations segments, during each reporting period, community gross margins on closed
homes, average margins of homes within backlog, and community outlook factors are reviewed by
management. In the event that this review suggests higher potential for losses at a specific community,
the Company monitors such communities by adding them to its “watchlist” communities, and, when an
impairment indicator is present, further analysis is performed.
For our land development segment, we perform a quarterly review for indicators of impairment
for each project which involves comparing anticipated lot sale revenues to projected costs (i.e. lot
gross margins). For lots designated for our builders, we review land for indicators of impairment on a
consolidated level, looking at overall projected home gross margins. In determining the allocation of
costs to a particular land parcel, we rely on project budgets which are based on a variety of assumptions,
including assumptions about development schedules and future costs to be incurred. It is common
that actual results differ from budgeted amounts for various reasons, including delays, changes in costs
that have not been committed, unforeseen issues encountered during project development that fall
outside the scope of existing contracts, or items that ultimately cost more or less than the budgeted
amount. We apply procedures to maintain best estimates in our budgets, including assessing and
revising project budgets on a periodic basis, obtaining commitments from subcontractors and vendors
for future costs to be incurred and utilizing the most recent information available to estimate costs.
Each reporting period, management reviews each real estate asset which has an indicator of impairment
in order to determine whether the estimated remaining undiscounted future cash flows are more or less
than the asset’s carrying value. The estimated cash flows are determined by projecting the remaining
revenue from closings based on the contractual lot takedowns remaining or historical and projected
home sales or delivery absorptions for homebuilding operations and then comparing such projections
to the remaining projected expenditures for development or home construction. Remaining projected
expenditures are based on the most current pricing/bids received from subcontractors for current
phases or homes under development. For future phases of land development, management uses its
judgment to project potential cost increases. In determining the estimated cash flows for land held for
sale, management considers recent comparisons to market comparable transactions, bona fide letters
of intent from outside parties, executed sales contracts, broker quotes, and similar information. When
projecting revenue, management does not assume improvement in market conditions.
If the estimated undiscounted cash flows are more than the asset’s carrying value, no impairment
adjustment is required. However, if the estimated undiscounted cash flows are less than the asset’s
carrying value, the asset is deemed impaired and will be written down to fair value less associated
costs to sell. These impairment evaluations require us to make estimates and assumptions regarding
future conditions, including the timing and amounts of development costs and sales prices of real
estate assets, to determine if expected future cash flows will be sufficient to recover the asset’s
carrying value.
Fair value is determined based on estimated future cash flows discounted for inherent risks associated
with real estate assets. These discounted cash flows are impacted by expected risk based on estimated
land development activities, construction and delivery timelines, market risk of price erosion,
uncertainty of development or construction cost increases, and other risks specific to the asset or
market conditions where the asset is located when the assessment is made. These factors are specific
to each community and may vary among communities.
When estimating cash flows of a community, management makes various assumptions, including: (i)
expected sales prices and sales incentives to be offered, including the number of homes available,
pricing and incentives being offered by us or other builders, and future sales price adjustments based
on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing
market conditions, competition and historical trends; (iii) costs expended to date and expected to be
incurred including, but not limited to, land and land development costs, home construction costs,
interest costs, indirect construction and overhead costs, and selling and marketing costs; (iv) alternative
product offerings that may be offered that could have an impact on sales pace, sales price and/or
building costs; and (v) alternative uses for the property.
Many assumptions are interdependent and a change in one may require a corresponding change to
other assumptions. For example, increasing or decreasing sales absorption rates has a direct impact
on the estimated per unit sales price of a home, the level of time-sensitive costs (such as indirect
construction, overhead and carrying costs), and selling and marketing costs (such as model home
maintenance costs and advertising costs). Due to uncertainties in the estimation process, the volatility
in demand for new housing and the long life cycle of many communities, actual results could differ
significantly from such estimates.
Capitalization of Interest
The Company capitalizes interest costs incurred to inventory during development and other qualifying
activities. Interest capitalized as cost of inventory is charged to cost of revenues as related homes, land
and lots are closed. Interest incurred on undeveloped land is directly expensed and included in interest
expense in our consolidated statements of income.
Investments in Unconsolidated Entities
In accordance with ASC 323, Investments - Equity Method and Joint Ventures (“ASC 323”), the
Company uses the equity method of accounting for its investments in unconsolidated entities over
which it exercises significant influence but does not have a controlling interest. The equity method of
accounting requires the investment to be initially recorded at cost and subsequently adjusted for the
Company’s share of equity in the unconsolidated entity’s earnings or losses. The Company evaluates
the carrying amount of the investments in unconsolidated entities for impairment in accordance with
ASC 323. If the Company determines that a loss in the value of the investment is other than temporary,
the Company writes down the investment to its estimated fair value. Any such losses are recorded to
equity in income of unconsolidated entities in the Company’s consolidated statements of income. Due
to uncertainties in the estimation process and the volatility in demand for new housing, actual results
could differ significantly from such estimates.
The Company has made an election to classify distributions received from unconsolidated entities
using the nature of the distribution approach. Distributions received are classified as cash inflows
from operating activities based on the nature of the activities of the investee that generated the
distribution.
72
Variable Interest Entities
of necessary incremental capital, and other factors.
The Company accounts for variable interest entities (“VIEs”) in accordance with ASC 810. In accordance
with ASC 810, an entity is a VIE when: (a) the equity investment at risk in the entity is not sufficient to
permit the entity to finance its activities without additional subordinated financial support provided by
other parties, including the equity holders; (b) the entity’s equity holders as a group either (i) lack the
direct or indirect ability to make decisions about the entity, (ii) are not obligated to absorb expected
losses of the entity or (iii) do not have the right to receive expected residual returns of the entity;
or (c) the entity’s equity holders have voting rights that are not proportionate to their economic
interests, and the activities of the entity involve or are conducted on behalf of the equity holder
with disproportionately few voting rights. If an entity is deemed to be a VIE pursuant to ASC 810,
the enterprise that has both (i) the power to direct the activities of the VIE that most significantly
impacts the entity’s economic performance and (ii) the obligation to absorb the expected losses of
the entity or right to receive benefits from the entity that could be potentially significant to the VIE
is considered the primary beneficiary and must consolidate the VIE. In accordance with ASC 810,
the Company performs ongoing reassessments of whether it is the primary beneficiary of a VIE. The
financial statements of the VIEs for which the Company is considered to be the primary beneficiary, if
any, are consolidated in the Company’s consolidated financial statements. The noncontrolling interests
attributable to other beneficiaries of the VIEs are included as noncontrolling interests in the Company’s
consolidated financial statements.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed
over the estimated useful lives of the assets using the straight-line method. The estimated useful lives
of assets range from 1 to 15 years. Repairs and maintenance are expensed as incurred.
Under ASC 810, a non-refundable deposit paid to an entity is deemed to be a variable interest that will
absorb some or all of the entity’s expected losses if they occur and, as such, the Company’s land and
lot option contracts are considered variable interests. The Company’s option contract deposits along
with any related pre-acquisition costs represent the Company’s maximum exposure to the land seller
if the Company elects not to purchase the optioned property. Therefore, whenever the Company
enters into an option or purchase contract with an entity and makes a non-refundable deposit, a VIE
assessment is performed. However, the Company generally has little control or power to direct the
activities that most significantly impact the VIE’s economic performance due to the Company’s lack of
an equity interest in them. Additionally, creditors of the VIE typically have no material recourse against
the Company, and the Company does not provide financial or other support to these VIEs other than
as stipulated in the option contracts. In accordance with ASC 810, the Company performs ongoing
reassessments of whether the Company is the primary beneficiary of a VIE.
Intangible Assets
Intangible assets, net consists of the estimated fair value of the acquired trade name, net of amortization.
The trade name has a definite life and is amortized over ten years.
Intangible assets are tested for impairment whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. An impairment loss would be recognized if the carrying
amount of the asset exceeds the estimated undiscounted future cash flows expected to result from
the use of the asset and its eventual disposition. The impairment loss recorded would be the excess of
the asset’s carrying value over its fair value. Fair value would be determined using a discounted cash
flow analysis or other valuation technique.
Impairment of Long-Lived Assets
Goodwill
In accordance with ASC 360, our property and equipment and right-of-use assets related to operating
leases are reviewed for possible impairment if there are indicators that their carrying amounts are not
recoverable. The carrying amount of a long-lived asset is considered not recoverable if it exceeds the
sum of the undiscounted cash flows expected to result from the use and eventual disposition of the
asset. An impairment loss shall be measured as the amount by which the carrying amount of a long-
lived asset exceeds its fair value.
The excess of the purchase price of a business acquisition over the net fair value of assets acquired and
liabilities assumed is capitalized as goodwill in accordance with ASC 805, Business Combinations (“ASC
805”). The allocation to goodwill represents the excess of the purchase price, including contingent
consideration, over the estimated fair value of assets acquired and liabilities assumed. Goodwill results
primarily from operational synergies expected from the business combination.
Earnest Money Deposits
In the ordinary course of business, the Company enters into land and lot option contracts in order
to procure land for the construction of homes in the future. Pursuant to these option contracts, the
Company generally provides a deposit to the seller as consideration for the right to purchase land at
different times in the future, usually at predetermined prices. Such contracts enable the Company
to defer acquiring portions of properties owned by third parties or unconsolidated entities until the
Company has determined whether and when to exercise its option, which reduces the Company’s
financial risk associated with long-term land holdings. Option deposits and pre-acquisition costs (such
as environmental testing, surveys, engineering, and entitlement costs) are capitalized if the costs are
directly identifiable with the land under option and acquisition of the property is probable. Such costs
are reflected in earnest money deposits and are reclassified to inventory upon taking title to the land.
The Company writes off deposits and pre-acquisition costs if it becomes probable that the Company
will not proceed with the project or recover the capitalized costs. Such decisions take into consideration
changes in local market conditions, the timing of required land takedowns, the availability and best use
Goodwill is assessed for impairment at least annually in the fourth quarter, or more frequently if certain
impairment indicators are present. A goodwill impairment loss is recognized for the amount by which
the carrying amount of the reporting unit, including goodwill, exceeds its fair value.
The Company reviews goodwill at the reporting unit level for impairment. The Company first performs
a qualitative assessment to determine whether it is more likely than not that fair value of the reporting
level is less than its carrying amount. Qualitative factors include adverse macroeconomic conditions,
industry and market conditions, overall financial performance, reporting unit specific events and entity
specific events. If, after completing a qualitative assessment, the Company concludes that it is more
likely than not that the fair value of the reporting unit is less than its carrying amount, the Company
must perform a quantitative test to evaluate goodwill for impairment.
For the quantitative impairment test, the Company calculates the fair value of the reporting unit
and compares that amount to the reporting unit’s carrying value. The fair value of the reporting unit
is determined by using generally accepted valuation techniques, including discounted cash flow
models and market multiple analysis. The Company’s valuation methodology for assessing impairment
73
would require management to make judgments and assumptions based on historical experience and
projections of future operating performance. The Company recognizes goodwill impairment, if any, as
the excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of
goodwill allocated to the reporting unit.
development segment. All of our revenue is from contracts with customers.
Contract Liabilities
Warranties
The Company accrues an estimate of its exposure to warranty claims based on both current and
historical home closings data and warranty costs incurred. The Company offers homeowners
a comprehensive third-party warranty on each home. Homes are generally covered by a ten-year
warranty for qualified and defined structural defects, one year for defects and products used, and
two years for electrical, plumbing, heating, ventilation, and air conditioning parts and labor. Warranty
accruals are included within accrued expenses on the consolidated balance sheets. Any legal costs
associated with loss contingencies related to warranties are expensed as incurred.
Debt Issuance Costs
The Company requires homebuyers to submit a deposit for home purchases and requires third-party
buyers to submit a deposit in connection with land sale or lot option contracts. The non-refundable
deposits serve as an incentive for performance under homebuilding and land sale or development
contracts. Cash received as customer deposits, if held in escrow, is reflected as restricted cash and as
customer and builder deposits on the consolidated balance sheets.
Performance Obligations
The Company’s contracts with homebuyers contain a single performance obligation. The performance
obligation is satisfied when homes are completed and control is transferred to the buyer which
occurs when legal title has been transferred to the buyer. The Company does not have any variable
consideration associated with home sales transactions.
Debt issuance costs represent costs incurred related to the senior unsecured notes and revolving
secured and unsecured credit facilities, including amendments thereto, and reduce the carrying amount
of debt on the consolidated balance sheets. These costs are subject to capitalization to inventory over
the term of the related debt facility using the straight-line method, which approximates the effective
interest rate method for our senior unsecured notes and notes payable.
Revenue from mechanic’s lien contracts in which the Company serves as the general contractor for
custom homes where the customer, and not the Company, owns the underlying land and improvements
is recognized based on the input method, where progress toward completion is measured by relating
the actual cost of work performed to date to the estimated total cost of the respective contracts.
Business Combinations
Acquisitions are accounted for in accordance with ASC 805. Following the determination that control
of a business and its inputs, processes and outputs were obtained in exchange for consideration, all
material assets and liabilities of the business, including contingent consideration, are measured and
recognized at fair value as of the date of the acquisition to reflect the purchase price. Depending on
the fair value of net assets acquired, the purchase price allocation may or may not result in goodwill.
Contingent consideration is subsequently remeasured to fair value at each reporting date until the
contingency is resolved, with any change in fair value recognized in the consolidated statements of
income.
Redeemable Noncontrolling Interest in Equity of Consolidated Subsidiary
Redeemable noncontrolling interest in equity of consolidated subsidiary represents equity related to
a put option held by a minority shareholder of a subsidiary. Based on the put option structure, the
minority shareholder’s interest in the controlled subsidiary is classified as a redeemable noncontrolling
interest on the consolidated balance sheets. The accretion of the redeemable noncontrolling interest to
its estimated redemption value is recorded in additional paid-in capital on the consolidated balance
sheets if the estimated redemption value, net of accretion, is greater than the current value of the
noncontrolling interest capital account.
Revenue Recognition
Contracts with Customers
The Company derives revenues from two primary sources: the closing and delivery of homes through
our builder operations segments and the closing of lots and land sold to third parties through our land
74
Lot option contracts contain multiple performance obligations. The performance obligations are
satisfied as lots are closed and legal title has been transferred to the builder. For lot option contracts,
individual performance obligations are accounted for separately. The transaction price is allocated to
the separate performance obligations on a relative stand-alone selling price basis. Certain lot option
contracts require escalations in lot price over the option period. Any escalator is not collectible until the
lot closing occurs. While we recognize lot escalators as variable consideration within the transaction
price, we do not recognize escalator revenue until a builder closes on a lot subject to an escalator as
the escalator relates to general inflation and holding costs.
Occasionally, the Company sells developed and undeveloped land parcels. If the land parcel is
developed prior to the sale of the land, the revenue is recognized at closing since we deliver a single
performance obligation in the form of a developed parcel. We also recognize revenue at closing on
undeveloped land parcel sales as there are no other obligations beyond delivering the undeveloped
land.
Homebuyers are not obligated to pay for a home until the closing and delivery of the home. The selling
price of a home is based on the contract price adjusted for any change orders, which are considered
modifications of the contract price.
Homebuilders are not obligated to pay for developed lots prior to control of the lots and any associated
improvements being transferred to them. The term of our lot option contracts is generally based upon
the number of lots being purchased and an agreed upon lot takedown schedule, which can be in
excess of one year. Lots cannot be taken down until development is substantially complete. There is
no significant financing component related to our third-party lot sales.
The Company does not sell warranties outside of the customary workmanship warranties provided on
homes or developed lots at the time of sale. The warranties offered to homebuyers are short term, with
the exception of ten-year warranties on structural concerns for homes. As these are assurance-type
warranties, there is no separate performance obligation related to warranties provided to homebuyers
or homebuilders.
Significant Judgments and Estimates
There are no significant judgments involved in the recognition of residential units revenue. The
performance obligation of delivering a completed home is satisfied upon the sale closing when title
transfers to the buyer.
There are no significant judgments involved in the recognition of land and lots revenue. The
performance obligation of delivering land and lots is satisfied upon the closing of the sale when title
transfers to the buyer.
Contract Costs
The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if
it expects to recover those costs.
and amortization of debt issuance costs. We capitalize interest costs incurred to inventory during
development and other qualifying activities. Debt issuance costs are capitalized to inventory over
the term of the underlying debt using the straight-line method, which approximates the effective
interest rate method for our senior unsecured notes and notes payable, in accordance with our interest
capitalization policy. All interest costs were capitalized during the years ended December 31, 2021,
2020 and 2019.
Net Income Attributable to Green Brick Partners, Inc. per Common Share
Basic earnings per common share is computed by dividing net income allocated to common
shareholders by the weighted average number of common shares outstanding during each period,
adjusted for non-vested shares of restricted stock awards during each period. Net income allocated
to common shareholders is net income adjusted for preferred stock dividends including dividends
declared and cumulative dividends related to the current dividend period that have not been declared
as of period end. Diluted earnings per share is calculated using the treasury stock method and includes
the effect of all dilutive securities, including stock options and restricted stock awards.
The Company pays sales commissions to employees and/or outside realtors related to individual home
sales which are expensed as incurred at the time of closing. Commissions on the sale of land parcels
are also expensed as incurred upon closing. Sales commissions on the sale of homes are included in
the selling, general, and administrative expenses in the consolidated statements of income.
The Company’s restricted stock awards have the right to receive forfeitable dividends on an equal basis
with common stock and therefore are not considered participating securities that must be included in
the calculation of net income per common share using the two-class method.
The Company also pays builder incentives to employees which are based on the time it takes to
build individual homes, as well as quality inspection completion and customer satisfaction. The builder
incentives do not represent incremental costs that would require capitalization as we would incur
these costs whether or not we sold the home. As such, we recognize builder incentives as expense at
the time they are incurred and paid.
Advertising costs, sales salaries and certain costs associated with model homes, such as signage, do
not qualify for capitalization under ASC 340-40, Other Assets and Deferred Costs - Contracts with
Customers, as they are not incremental costs of obtaining a contract. As such, we expense these
costs to selling, general and administrative expense as incurred. Costs incurred related to model home
furnishings and sales office construction are capitalized and included in property and equipment, net
on the consolidated balance sheets.
Selling, General and Administrative Expense
Selling, general and administrative expense represents salaries, benefits, share-based compensation,
property taxes on finished homes, sales commissions, depreciation, amortization, advertising and
marketing, rent, and other administrative items, and is recorded in the period incurred.
Cost Recognition
Lot acquisition, materials, direct costs, interest and indirect costs related to the acquisition, development,
and construction of lots and homes are capitalized. Direct and indirect costs of developing residential
lots are allocated evenly to all applicable lots. Capitalized costs of residential lots are charged to earnings
when the related revenue is recognized. Non-capitalizable costs in connection with developed lots and
completed homes and other selling and administrative costs are charged to earnings when incurred.
Share-Based Compensation
The Company measures and accounts for share-based awards in accordance with ASC 718,
Compensation - Stock Compensation. The Company expenses share-based payment awards made
to employees and directors, including stock options and restricted stock awards. Share-based
compensation expense associated with stock options and restricted stock awards with vesting
contingent upon the achievement of service conditions is recognized on a straight-line basis, net of
estimated forfeitures, over the requisite service period over which the awards are expected to vest.
The Company estimates the value of stock options with vesting contingent upon the achievement of
service conditions as of the date the award was granted using the Black-Scholes option pricing model.
The Black-Scholes option pricing model requires the use of certain input variables, such as expected
volatility, risk-free interest rate and expected award life.
Advertising Expense
Income Taxes
The Company expenses advertising costs as incurred. Advertising costs are included in selling, general
and administrative expense in the consolidated statements of income. Advertising expense for the
years ended December 31, 2021, 2020 and 2019 totaled $1.3 million, $2.2 million and $2.1 million,
respectively.
Interest Expense
Interest expense consists primarily of interest costs incurred on our debt that are not capitalized,
The Company accounts for income taxes using the asset and liability method, under which deferred
tax assets and liabilities are recognized for the future tax consequences attributable to temporary
differences between financial statement carrying amounts of existing assets and liabilities and their
respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in years in which temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the enactment date.
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The Company regularly reviews historical and anticipated future pre-tax results of operations to
determine whether we will be able to realize the benefit of deferred tax assets. A valuation allowance
is required to reduce the deferred tax asset when it is more-likely-than-not that all or some portion of
the deferred tax asset will not be realized due to the lack of sufficient taxable income. The Company
assesses the recoverability of deferred tax assets and the need for a valuation allowance on an ongoing
basis. In making this assessment, management considers all available positive and negative evidence
and available income tax planning to determine whether it is more-likely-than-not that some portion
or all of the deferred tax assets will be realized in future periods. This assessment requires significant
judgment and estimates involving current and deferred income taxes, tax attributes relating to the
interpretation of various tax laws, historical bases of tax attributes associated with certain assets and
limitations surrounding the realization of deferred tax assets.
We establish accruals for uncertain tax positions that reflect our best estimate of deductions and
credits that may not be sustained on a more-likely-than-not basis. We recognize interest and penalties
related to uncertain tax positions in the income tax expense in the consolidated statements of income.
Accrued interest and penalties, if any, are included within accrued expenses on the consolidated
balance sheets. In accordance with ASC 740, Income Taxes, the Company recognizes the effect of
income tax positions only if those positions have a more-likely-than-not chance of being sustained
by the Company. Recognized income tax positions are measured at the largest amount that is greater
than 50% likely of being realized. Changes in recognition or measurement are reflected in the period
in which the change in judgment occurs.
Fair Value Measurements
The Company has adopted and implemented the provisions of ASC 820-10, Fair Value Measurements,
with respect to fair value measurements of: all elected financial assets and liabilities and any nonfinancial
assets and liabilities that are recognized or disclosed in the consolidated financial statements at fair
value on a recurring basis (at least annually). Under ASC 820-10, fair value is defined as an exit price, or
the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants as of the measurement date. These provisions establish a three-tiered
fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The
three levels of input are defined as follows:
Level 1 —
unadjusted quoted prices for identical assets or liabilities in active markets accessible by
the Company;
Level 2 — inputs that are observable in the marketplace other than those classified as Level 1; and
Level 3 — inputs that are unobservable in the marketplace and significant to the valuation.
Entities are encouraged to maximize the use of observable inputs and minimize the use of unobservable
inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument
will be categorized based upon the lowest level of input that is significant to the fair value calculation.
Our valuation methods may produce a fair value calculation that may not be indicative of net realizable
value or reflective of future fair values. Furthermore, while we believe our valuation methods are
appropriate and consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could result in a different fair
value measurement at the reporting date.
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Transfers between levels of the fair value hierarchy are deemed to have occurred on the date of the
event or change in circumstances that caused the transfer.
Segment Information
In accordance with ASC 280, Segment Reporting (“ASC 280”), an operating segment is defined as a
component of an enterprise for which discrete financial information is available and reviewed regularly
by the chief operating decision maker (“CODM”), or decision-making group, to evaluate performance
and make operating decisions.
A reportable segment is an operating segment, either separately defined or aggregated from several
operating segments based on similar economic and other characteristics, that exceeds certain
quantitative thresholds of ASC 280.
The Company identifies its CODM as three key executives - the Chief Executive Officer, the Chief
Financial Officer, and the Chief Operating Officer. In determining the reportable segments, the CODM
considers similar economic and other characteristics, including geography, class of customers, product
types, and production processes.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying Accounting
for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by eliminating
certain exceptions to the guidance in ASC 740, Income Taxes related to the approach for intraperiod
tax allocation, the methodology for calculating income taxes in an interim period and the recognition
of deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the
accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting
for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for
annual reporting periods, and interim periods therein, beginning after December 15, 2020, with early
adoption permitted. The Company adopted the standard on January 1, 2021. The adoption of ASU
2019-12 had no impact on the Company’s consolidated financial statements.
In June 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-
20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity’s Own Equity.
ASU 2020-06 simplifies the accounting for convertible instruments, reduces complexity for preparers
and practitioners, eliminates certain accounting models, and enhances information transparency by
improving the disclosures for convertible instruments and earnings-per-share. The Company early
adopted the new accounting standard on January 1, 2021 on a modified retrospective basis. The
adoption of this ASU did not have an impact on the Company’s financial position, results of operations,
or cash flows.
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Agreement”) with respect to the equity interest in the joint venture held by the minority partner. The
Put/Call Agreement provides that the 20% ownership interest in GRBK GHO held by the minority
partner would be subject to put and purchase options starting in April 2024. The exercise price would
be based on the financial results of GRBK GHO for the three years prior to exercise of the option. If
the minority partner does not exercise the put option, we have the option, but not the obligation, to
buy the 20% interest in GRBK GHO from our partner.
Based on the nature of the put/call structure, the noncontrolling interest attributable to the 20%
minority interest owned by our Florida-based partner is included as redeemable noncontrolling interest
in equity of consolidated subsidiary in the Company’s consolidated financial statements.
The following table shows the changes in redeemable noncontrolling interest in equity of consolidated
subsidiary during the year ended December 31, 2021 (in thousands):
Redeemable noncontrolling interest, beginning of period
Net income attributable to redeemable noncontrolling interest partner
Distributions of income to redeemable noncontrolling interest partner
Change in fair value of redeemable noncontrolling interest
Years Ended December 31,
2021
2020
$13,543
$13,611
2,586
(106)
5,844
2,377
(1,505)
(940)
Redeemable noncontrolling interest, end of period
$21,867
$13,543
INTANGIBLE ASSETS, GOODWILL, CONTINGENT CONSIDERATION, AND
2.
REDEEMABLE NONCONTROLLING INTEREST
Intangible Assets
On April 26, 2018 (the “Acquisition Date”), following a series of transactions, the Company acquired
substantially all of the assets and assumed certain liabilities of GHO Homes Corporation and its
affiliates (“GHO”) through a newly formed subsidiary, GRBK GHO Homes, LLC (“GRBK GHO”), in
which the Company holds an 80% controlling interest.
Intangible assets related to the acquired trade name were recognized in this business combination.
The amortization of the acquired trade name of $0.1 million for each of the years ended December
31, 2021, 2020, and 2019, respectively, was recorded in selling, general and administrative expense
in the consolidated statements of income. The accumulated amortization of the acquired trade name
was $0.3 million and $0.2 million as of December 31, 2021 and December 31, 2020, respectively.
The estimated amortization expense related to the acquired trade name for each of the next five years
as of December 31, 2021 is as follows (in thousands):
2022
2023
2024
2025
2026
Total
Goodwill
$
85
85
85
85
85
$
425
The Company performed its annual goodwill impairment testing during the fourth quarter of 2021 by
first completing a qualitative assessment in accordance with ASC 350. The Company determined that
it was not more likely than not that the reporting unit’s estimated fair value was less than its carrying
value and, therefore, a quantitative impairment test was unnecessary. The Company did not record any
goodwill impairment during the years ended December 31, 2021, 2020 and 2019.
Contingent Consideration
Under the terms of the purchase agreement, the Company was obligated to pay contingent consideration
to our partner if certain annual performance targets were met over the three-year period following
the Acquisition Date. The performance targets specified in the purchase agreement were met for the
period from January 1, 2019 through December 31, 2019, and the contingent consideration of $5.3
million was earned by the minority partner and paid by the Company in April 2020 in addition to a
$1.5 million distribution of income. The performance targets specified in the purchase agreement
were met for the period from January 1, 2020 through December 31, 2020, and the contingent
consideration of $0.4 million was earned by the minority partner and paid by the Company in April
2021 in addition to a $0.1 million distribution of income. The performance targets were not met for
the period from January 1, 2021 through April 26, 2021. The contingent consideration period expired
April 26, 2021.
Redeemable Noncontrolling Interest in Equity of Consolidated Subsidiary
As part of the GRBK GHO business combination, we entered into a put/call agreement (“Put/Call
S o u t h g a t e Ho m e s | W i n d s o n g R a n c h - Pro s p e r, T X
S o u t h g a t e Ho m e s | W i n d s o n g R a n c h - Pro s p e r, T X
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3. VARIABLE INTEREST ENTITIES
Effective December 31, 2019, we, through our wholly owned subsidiary, CLH20, LLC (“Centre Living”),
acquired the remaining membership and voting interests in our subsidiary, Centre Living Homes, LLC,
and we contributed certain real estate inventory assets to Centre Living.
Subsequently, the prior owner of a portion of the membership and voting interests in Centre Living
Homes, LLC acquired a ten percent membership and voting interest in Centre Living for $3.6 million.
As a result, as of December 31, 2019, Centre Living was an indirect subsidiary in which the Company
owned a ninety percent membership interest and a ninety percent voting interest, was no longer
considered a VIE and was consolidated based on the majority voting interest pursuant to ASC 810.
During the three months ended March 31, 2020, the minority interest owner made a $0.4 million cash
contribution to Centre Living.
On April 29, 2020, through a series of transactions, the Company acquired the remaining membership
and voting interests in our subsidiary, CB JENI Homes DFW LLC (“CB JENI”). As a result, CB JENI
became an indirect wholly owned subsidiary of the Company, was no longer considered a VIE and was
consolidated based on the majority voting interest pursuant to ASC 810.
As both the entity wholly owned by the Company to which CB JENI ownership interests were assigned
and CB JENI were controlled by the Company on April 29, 2020, the acquisition of the remaining
membership interest was accounted for at the carrying amounts on CB JENI’s books, pursuant to
provisions of ASC 805 that govern transactions between entities under common control.
Consolidated VIEs
The Providence Group of Georgia LLC (“TPG”), the controlled builder based in Atlanta, in which the
Company owns a 50% equity interest, is deemed to be a VIE for which the Company is considered
the primary beneficiary. We sell finished lots and option lots from third-party developers to this
controlled builder for their homebuilding operations and provide them with construction financing
and strategic planning. The board of managers of this controlled builder has the power to direct the
activities that significantly impact the controlled builder’s economic performance. Pursuant to the
Company’s agreement with this controlled builder, the Company has the ability to appoint two of the
three members to the controlled builder’s board of managers. A majority of the board of managers
constitutes a quorum to transact business. No action can be approved by the board of managers
without the approval from at least one individual whom the Company has appointed at the controlled
builder.
The Company has the ability to control the activities of the controlled builder that most significantly
impact the controlled builder’s economic performance. Such activities include, but are not limited to,
involvement in the day to day capital and operating decisions, the ability to determine the budget and
plan, the ability to control financing decisions, and the ability to acquire additional land or dispose of
land. In addition, the Company has the right to receive the expected residual returns and obligation
to absorb the expected losses of the controlled builder through the pro rata profits and losses we are
allocated based on our ownership interest. Therefore, the financial statements of the Atlanta-based
controlled builder are consolidated in the Company’s consolidated financial statements following the
variable interest model.
The aggregated carrying amounts of assets and liabilities of TPG following the variable interest model
were $162.0 million and $146.6 million, respectively, as of December 31, 2021 and $131.9 million and
$125.5 million, respectively, as of December 31, 2020. The noncontrolling interest attributable to the
50% minority interest owned by the Atlanta-based controlled builder was included as noncontrolling
interests in the Company’s consolidated financial statements. The creditors of the above controlled
builder have no recourse against the Company.
Unconsolidated VIEs
Please refer to Note 5 for information on the Company’s VIE evaluation of its joint ventures with EJB
River Holdings, LLC and GBTM Sendera, LLC.
Land and lot option purchase contracts
The Company evaluates all option contracts to purchase land and lots to determine whether they
are VIEs and, if so, whether the Company is the primary beneficiary of counterparts of these option
contracts. Although the Company does not have legal title to the optioned land or lots, if the Company
is deemed to be the primary beneficiary of or makes a significant deposit for optioned land or lots, it
may need to consolidate the land or lots under option at the purchase price of the optioned land or
lots.
As of December 31, 2021 and 2020, the Company’s exposure to loss related to its option contracts
with third parties primarily consisted of its non-refundable option deposits. Following VIE evaluation,
it was concluded that the Company was not the primary beneficiary in any of the VIEs related to land
or lot option contracts as of December 31, 2021 and 2020.
No r m a n d y Ho m e s | V i l l a s a t S o u t h g a t e - Fl o w e r Mo u n d , T X
No r m a n d y Ho m e s | V i l l a s a t S o u t h g a t e - Fl o w e r Mo u n d , T X
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Tro p h y S i g n a t u re Ho m e s | C i b o l o H i l l s - Fo r t Wo r t h , T X
Tro p h y S i g n a t u re Ho m e s | C i b o l o H i l l s - Fo r t Wo r t h , T X
4. INVENTORY
A summary of inventory is as follows (in thousands):
December 31,
2021
December 31,
2020
Homes completed or under construction
$
544,258 $
356,706
Land and lots - developed and under development
620,129
482,371
Land held for sale
Total inventory
39,356
5,558
$
1,203,743 $
844,635
A summary of interest costs incurred, capitalized and expensed is as follows (in thousands):
2021
Years Ended December 31,
2019
2020
Interest capitalized at beginning of period $
17,520 $
18,596 $
Interest incurred
13,340
9,823
Interest charged to cost of revenues
(10,910)
(10,899)
Interest capitalized at end of period
$
19,950 $
17,520 $
14,780
12,140
(8,324)
18,596
Capitalized interest as a percentage of
inventory
1.7%
2.1%
As of December 31, 2021, the Company reviewed the performance and outlook for all of its
communities for indicators of potential impairment and performed detailed impairment analysis when
necessary. As of December 31, 2021, the Company performed further impairment analysis of the
selling communities with indicators of impairment with a combined corresponding carrying value of
approximately $0.1 million.
For the year ended December 31, 2021,the Company did not record an impairment adjustment to reduce
the carrying value of impaired communities to fair value. For the years ended December 31, 2020 and
2019, the Company recorded a de minimis impairment adjustment and $0.1 million, respectively, to
reduce the carrying value of impaired communities to fair value. The recorded impairment adjustments
related to real estate inventory in our builder operations segments were included in cost of residential
units in our consolidated statements of income.
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5. INVESTMENTS IN UNCONSOLIDATED ENTITIES
Green Brick Mortgage
A summary of the Company’s investments in unconsolidated entities is as follows (in thousands):
GB Challenger, LLC
GBTM Sendera, LLC
EJB River Holdings, LLC
Green Brick Mortgage, LLC
BHome Mortgage, LLC
December 31,
2021
December 31,
2020
$37,737
$29,488
9,854
6,130
715
1,180
9,846
5,296
1,207
606
Total investment in unconsolidated entities
$55,616
$46,443
Challenger
The Company holds two of the five board of managers (the “Managers”) seats of GB Challenger, LLC
(“Challenger”). Challenger’s six officers, who are employees of the Challenger entities, were designated
by the Managers for the purpose of managing the day to day operations. The Company does not have
a controlling financial interest in Challenger as the Company has less than 50% of the voting interests
in Challenger. The Company’s investment in Challenger is treated as an unconsolidated investment
under the equity method of accounting and is included in investments in unconsolidated entities in
the Company’s consolidated balance sheets.
The Company’s investment in Challenger is carried at cost, as adjusted for the Company’s share of
income or losses and distributions received, as well as for adjustments related to basis differences
between the Company’s cost and the Company’s underlying equity in net assets recorded in
Challenger’s financial statements as of the date of acquisition.
As of December 31, 2021, the carrying value of the investment in Challenger was $37.7 million,
whereas the underlying 49.9% equity in net assets of Challenger was $35.1 million. The $2.6 million
difference represents the premium paid for the Company’s equity interest in excess of Challenger’s
carrying value. This basis difference primarily relates to the estimated fair value of inventory, as well
as the Challenger Homes trade name and capitalized acquisition costs. The amortization of the basis
differences related to inventory is recorded as a reduction of equity in income of unconsolidated
entities as homes are closed on and delivered to homebuyers. The basis difference related to the trade
name is amortized over ten years as a reduction of equity in income of unconsolidated entities.
In June 2018, the Company formed a joint venture with PrimeLending to provide mortgage loan
origination services to our builders. The Company owns a 49% equity interest in Green Brick Mortgage,
LLC (“Green Brick Mortgage”) which initiated mortgage loan origination activities in September 2018.
The Company determined that the investment in Green Brick Mortgage should be treated as an
unconsolidated investment under the equity method of accounting and included in investments in
unconsolidated entities in the Company’s consolidated balance sheets. On September 1, 2020, the
Company increased its ownership interest in GRBK Mortgage, LLC from 49.00% to 49.99%.
EJB River Holdings
In December 2018, EJB River Holdings joint venture was formed by TPG with the purpose to acquire
and develop a tract of land in Gwinnett County, Georgia. In May 2019, East Jones Bridge, LLC (“EJB”)
was admitted as a member of EJB River Holdings, which resulted in TPG and EJB each having a 50%
ownership interest in EJB River Holdings. The Company determined that the investment in EJB River
Holdings should be treated as an unconsolidated investment under the equity method of accounting
and included in investments in unconsolidated entities in the Company’s consolidated balance sheets.
In October 2019, EJB River Holdings issued two loans with the total maximum amount of borrowings
of $21.9 million to finance its land acquisition and development. Subsequently, a wholly owned
subsidiary of the Company provided a limited $2.0 million guarantee in connection with these loans.
The approximate term of the guarantee is 35 months. In the event EJB River Holdings defaults on one
of the loans, the maximum potential amount of future payments that the Company could be required
to make under its limited guarantee is $2.0 million. As of December 31, 2021, the Company has no
current liability related to the guarantee obligation as the payment risk of the guarantee has been
assessed to be very low.
As of December 31, 2021, the carrying amounts of assets and liabilities of EJB River Holdings were
$29.1 million and $16.9 million, respectively. Assets were comprised of real estate inventory and cash,
whereas the liabilities were comprised of loans and interest payable. As of December 31, 2021, the
Company’s maximum exposure to loss as a result of its involvement with EJB River Holdings was $8.1
million, represented by the sum of the Company’s investment in EJB River Holdings of $6.1 million and
the $2.0 million limited guarantee described above.
BHome Mortgage
The Company recognized $14.8 million, $11.9 million, and $8.3 million, related to Challenger in equity
in income of unconsolidated entities during the years ended December 31, 2021, 2020, and 2019,
respectively.
In May 2020, we established a joint venture, BHome Mortgage, LLC (“BHome Mortgage”) with First
Continental Mortgage, Ltd., to provide mortgage related services to homebuyers. The Company owns
49% in BHome Mortgage. In May 2020, BHome Mortgage received initial capital contributions of
approximately $0.5 million from its two members in accordance with their membership interest.
Providence Title
In March 2018, the Company formed a joint venture with a title company in Georgia to provide title
closing and settlement services to our Atlanta-based builder. The Company, through its controlled
builder, The Providence Group of Georgia, L.L.C. (“TPG”), owned a 49% equity interest in Providence
Group Title, LLC (“Providence Title”). The Company’s investment in Providence Title was treated as
an unconsolidated investment under the equity method of accounting and included in investments in
unconsolidated entities in the Company’s consolidated balance sheets. In December 2020, this joint
venture was terminated and the Company incurred a de minimis loss upon dissolution.
The Company determined that the investment in BHome Mortgage should be treated as an
unconsolidated investment under the equity method of accounting and included in investments in
unconsolidated entities in the Company’s consolidated balance sheets.
GBTM Sendera, LLC
In August 2020, GBTM Sendera, LLC joint venture (“GBTM Sendera”) was formed by GRBK Edgewood,
LLC (“GRBK Edgewood”) and TM Sendera, LLC (“TM Sendera”) with the purpose to acquire and develop
a tract of land in Fort Worth,Texas. Each party holds a 50% ownership interest in GBTM Sendera.
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In August 2020, GBTM Sendera received two $9.0 million initial contributions from each of its two
members, GBRK Edgewood and TM Sendera. Per the GBTM Sendera company agreement, GRBK
Edgewood and TM Sendera share equally in the profits and losses of GBTM Sendera, with the
exception of certain customary fees. In September 2020, an additional $0.8 million contribution was
made each by GRBK Edgewood and TM Sendera. GBTM Sendera began land development during
2021 and is expected to complete its first phase of development in the first quarter of 2022.
Following the analysis of the above facts and provisions of the GBTM Sendera company agreement,
the Company has determined that GBTM Sendera is a joint venture to be evaluated under the voting
interest model. Therefore, the investment in GBTM Sendera is treated as an unconsolidated investment
under the equity method of accounting and is included in investments in unconsolidated entities in the
Company’s consolidated balance sheets.
Revenues
Costs and expenses
Net earnings of unconsolidated entities
Company’s share in net earnings of
unconsolidated entities
Years Ended December 31,
2021
2020
$221,190
$181,724
181,429
$39,761
$19,713
145,525
$36,199
$16,654
2019
$166,368
144,097
$22,271
$9,809
A summary of the Company’s share in net earnings (losses) by unconsolidated entity is as follows (in
thousands):
As of December 31, 2021, the carrying amount of GBTM Sendera net assets was $19.7 million. Assets
were comprised of real estate inventory and cash, whereas the liabilities were comprised of accounts
payable and notes payable. As of December 31, 2021, the Company’s maximum exposure to loss
as a result of its involvement with GBTM Sendera was $9.9 million, represented by the Company’s
investment in GBTM Sendera.
A summary of the financial information of the unconsolidated entities that are accounted for by the
equity method, as described above, is as follows (in thousands):
GB Challenger, LLC
Green Brick Mortgage, LLC
BHome Mortgage, LLC
EJB River Holdings, LLC
Providence Group Title, LLC
GBTM Sendera, LLC
Years Ended December 31,
2021
$14,831
2,464
1,585
833
—
—
2020
$11,899
4,727
18
(2)
12
—
Assets:
Cash
Accounts receivable
Bonds and notes receivable
Loans held for sale, at fair value
Inventory
Other assets
Total assets
Liabilities:
Accounts payable
Accrued expenses and other liabilities
Notes payable
Total liabilities
Owners’ equity:
Green Brick
Others
Total owners’ equity
Total liabilities and owners’ equity
December 31,
2021
December 31,
2020
Total net earnings from unconsolidated entities
$19,713
$16,654
During the years ended December 31, 2021, 2020, and 2019, the Company did not identify indicators
of impairment for its investments in unconsolidated entities.
$15,903
4,787
5,772
20,734
166,861
7,220
$221,277
$7,701
13,992
95,816
$117,509
$52,983
50,785
$103,768
$221,277
$12,765
1,815
5,942
14,530
122,819
8,377
$166,248
$7,171
11,148
60,642
$78,961
$43,451
43,836
$87,287
$166,248
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6. PROPERTY AND EQUIPMENT
The following is a summary of property and equipment by major classification and related accumulated
depreciation as of December 31, 2021 and 2020 (in thousands):
Depreciation expense for the years ended December 31, 2021, 2020 and 2019 totaled $2.7 million,
$3.6 million, and $2.9 million, respectively, and is included in selling, general and administrative
expense in our consolidated statements of income.
Model home furnishings and capitalized
sales office costs
Office furniture and equipment
Leasehold improvements
Computers and equipment
Vehicles and field trailers
Less: accumulated depreciation
Total property and equipment, net
December 31, 2021 December 31, 2020
7,140
489
2,060
498
790
10,977
(8,165)
$2,812
7,362
486
1,996
724
561
11,129
(7,534)
$3,595
C e n t re L i v i n g Ho m e s | Em o r y Pa r k - Da l l a s , T X
C e n t re L i v i n g Ho m e s | Em o r y Pa r k - Da l l a s , T X
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7. DEBT
The aggregated annual principal payments under the borrowings on lines of credit and senior unsecured
notes over the next five years as of December 31, 2021 are (in thousands):
2022
2023
2024
2025
2026
Thereafter
Total
Lines of Credit
$2,000
—
37,500
37,500
75,000
187,500
$339,500
Borrowings on lines of credit outstanding, net of debt issuance costs, as of December 31, 2021 and
2020 consist of the following (in thousands):
Secured Revolving Credit Facility
Unsecured Revolving Credit Facility
Debt issuance costs, net of amortization
Total borrowings on lines of credit, net
Secured Revolving Credit Facility
December 31, 2021
December 31, 2020
$2,000
—
(2,738)
$(738)
$7,000
101,000
(1,313)
$106,687
The Company is party to a revolving credit facility (the “Secured Revolving Credit Facility”) with
Inwood National Bank, which provides for an aggregate commitment amount of $35.0 million. On
May 22, 2020, the Company amended the Secured Revolving Credit Facility to reduce the aggregate
commitment amount of $75.0 million to $35.0 million. Amounts outstanding under the Secured
Revolving Credit Facility are secured by mortgages on real property and security interests in certain
personal property (to the extent that such personal property is connected with the use and enjoyment
of the real property) that is owned by certain of the Company’s subsidiaries. The entire unpaid principal
balance and any accrued but unpaid interest is due and payable on the maturity date. As of December
31, 2021, the maturity date of the Secured Revolving Credit Facility is May 1, 2022. On February
9, 2022, the Company entered into the Eighth Amendment to this credit agreement to extend its
maturity date to May 1, 2025 and to reduce the minimum interest rate from 4.00% to 3.15%. All other
material terms of the credit agreement, as amended, remained unchanged.
As of December 31, 2021, letters of credit outstanding totaling $0.2 million reduced the aggregate
maximum commitment amount to $34.8 million.
As of December 31, 2021, outstanding borrowings under the amended Secured Revolving Credit
Facility bear interest payable monthly at a floating rate per annum equal to the rate announced by
Bank of America, N.A., from time to time, as its “Prime Rate” (the “Index”) with such adjustments to the
interest rate being made on the effective date of any change in the Index, less 0.25%. Notwithstanding
the foregoing, the interest may not, at any time, be less than 4% per annum or more than the lesser
amount of 18% and the highest maximum rate allowed by applicable law. As of December 31, 2021,
the interest rate on outstanding borrowings under the Secured Revolving Credit Facility was 4.00%
per annum.
The Secured Revolving Credit Facility is subject to a borrowing base limitation equal to the sum of
50% of the total value of land and 65% of the total value of lots owned by certain of the Company’s
subsidiaries, each as determined by an independent appraiser, with the value of land being restricted
from being more than 65% of the borrowing base. The amended Secured Revolving Credit Facility is
also subject to a non-usage fee equal to 0.25% of the average unfunded amount of the commitment
amount over a trailing 12 month period.
Under the terms of the amended Secured Revolving Credit Facility, the Company is required, among
other things, to maintain minimum multiples of tangible net worth in excess of the outstanding Secured
Revolving Credit Facility balance, minimum interest coverage and maximum leverage. The Company
was in compliance with these financial covenants under the Secured Revolving Credit Facility as of
December 31, 2021.
De minimis fees and other debt issuance costs were incurred during each of the years ended December
31, 2021, 2020 and 2019, associated with the Secured Revolving Credit Facility amendments. These
costs are deferred and reduce the carrying amount of debt in our consolidated balance sheets. The
Company subjects these costs to analysis for capitalization to inventory over the term of the Secured
Revolving Credit Facility using the straight-line method, which approximates the effective interest rate
method for our senior unsecured notes and notes payable.
Unsecured Revolving Credit Facility
The Company is party to a credit agreement, providing for a senior, unsecured revolving credit facility
(the “Unsecured Revolving Credit Facility”). The Unsecured Revolving Credit Facility provides for
maximum aggregate lending commitments of up to $325.0 million of which the Company has secured
outstanding commitments of $300.0 million. On December 10, 2021, the Company amended the
Unsecured Revolving Credit Facility to increase the aggregate commitment amount from $275.0 million
to $300.0 million. As amended, the Unsecured Revolving Credit Facility’s lender group is comprised of
eight banks including Flagstar Bank, Veritex Community Bank, Huntington National Bank, Texas Capital
Bank, Goldman Sachs Bank USA, BancorpSouth Bank, Woodforest National Banks, and MidFirst Bank.
The termination date with respect to commitments under the Unsecured Revolving Credit Facility is
December 14, 2024 for $300.0 million.
The Unsecured Revolving Credit Facility provides for interest rate options on advances at rates equal
to either: (a) in the case of base rate advances, the highest of (1) Citibank’s base rate, (2) the federal
funds rate plus 0.5%, and (3) the one-month LIBOR plus 1.0%, in each case plus 1.5%; or (b) in the case
of Eurodollar rate advances, the reserve adjusted LIBOR plus 2.5%. Interest on amounts borrowed
under the Unsecured Revolving Credit Facility is payable in arrears on a monthly basis. As of December
31, 2021, there were no outstanding borrowings under the Unsecured Revolving Credit Facility.
The Company pays the lenders a commitment fee on the amount of the unused commitments on a
quarterly basis at a rate per annum equal to 0.45%.
Outstanding borrowings under the Unsecured Revolving Credit Facility are subject to, among other
things, a borrowing base. The borrowing base limitation is equal to the sum of: 100% of unrestricted
cash in excess of $15.0 million; 85% of the book value of model homes, construction in progress
homes, completed sold and speculative homes (subject to certain limitations on the age and number
of speculative homes and model homes); 65% of the book value of finished lots and land under
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development; and 50% of the book value of entitled land (subject to certain
limitations on the value of entitled land and land under development as a
percentage of the borrowing base).
Optional prepayment is allowed with payment of a “make-whole” penalty
which fluctuates depending on market interest rates. Interest is payable
quarterly in arrears commencing on November 26, 2020.
Fees and other debt issuance costs of $2.8 million, $0.5 million and $0.3
million were incurred during the years ended December 31, 2021, 2020
and 2019, respectively, associated with the amendments, term extensions
and increases in lenders’ commitments. These costs are deferred and
reduce the carrying amount of debt in our consolidated balance sheets.
The Company capitalizes these costs to inventory over the term of the
Unsecured Revolving Credit Facility using the straight-line method, which
approximates the effective interest rate method for our senior unsecured
notes and notes payable.
Under the terms of the Unsecured Revolving Credit Facility, the Company
is required to maintain compliance with various financial covenants,
including a maximum leverage ratio, a minimum interest coverage ratio,
and a minimum consolidated tangible net worth. The Company was in
compliance with these financial covenants under the Unsecured Revolving
Credit Facility as of December 31, 2021.
Senior Unsecured Notes
On August 8, 2019, the Company entered into a Note Purchase Agreement
with Prudential Private Capital to issue $75.0 million aggregate principal
amount of senior unsecured notes (the “2026 Notes”) due on August
8, 2026 at a fixed rate of 4.00% per annum in a Section 4(a)(2) private
placement transaction. The Company received net proceeds of $73.3
million and incurred debt issuance costs of approximately $1.7 million
that were deferred and reduced the amount of debt on our consolidated
balance sheet. The Company used the net proceeds from the issuance
of the 2026 Notes to repay borrowings under the Company’s existing
revolving credit facilities. Principal on the 2026 Notes is required to be
paid in increments of $12.5 million on August 8, 2024 and $12.5 million
on August 8, 2025. The final principal payment of $50.0 million is due
on August 8, 2026. Optional prepayment is allowed with payment of a
“make-whole” penalty which fluctuates depending on market interest
rates. Interest is payable quarterly in arrears commencing November 8,
2019.
On August 26, 2020, the Company entered into a Note Purchase
Agreement with The Prudential Insurance Company of America and
Prudential Universal Reinsurance Company to issue $37.5 million
aggregate principal amount of senior unsecured notes (the “2027 Notes”)
due on August 26, 2027 at a fixed rate of 3.35% per annum in a Section
4(a)(2) private placement transaction. The Company received net proceeds
of $37.4 million and incurred debt issuance costs of approximately $0.1
million that were deferred and reduced the amount of debt on our
consolidated balance sheet. The Company used the net proceeds from
the issuance of the 2027 Notes to repay borrowings under the Company’s
existing revolving credit facilities and for general corporate purposes.
On February 25, 2021, the Company entered into a Note Purchase
Agreement with several purchasers to issue $125.0 million aggregate
principal amount of senior unsecured notes (the “2028 Notes”) due on
May 25, 2028 at a fixed rate of 3.25% per annum in a Section 4(a)(2)
private placement transaction. The Company received net proceeds
of $124.4 million and incurred debt issuance costs of approximately
$0.6 million that were deferred and reduced the amount of debt on
our consolidated balance sheet. The Company used the net proceeds
from the issuance of the 2028 Notes to repay borrowings under the
Company’s existing revolving credit facilities and for general corporate
purposes. Principal on the 2028 Notes is due in increments of $25.0
million on February 25, 2024; $25.0 million on February 25, 2025; $25.0
million on February 25, 2026; $25.0 million on February 25, 2027 and
$25.0 million on February 25, 2028. Optional prepayment is allowed
with payment of a “make-whole” penalty which fluctuates depending on
market interest rates. Interest is payable quarterly in arrears commencing
on May 25, 2021.
On December 28, 2021, the Company entered into a Note Purchase
Agreement with several purchasers to issue $100.0 million aggregate
principal amount of senior unsecured notes (the “2029 Notes”) due on
December 28, 2029 at a fixed rate of 3.25% per annum in a Section 4(a)
(2) private placement transaction. The Company received net proceeds
of $99.6 million and incurred debt issuance costs of approximately
$0.4 million that were deferred and reduced the amount of debt on our
consolidated balance sheet. The Company used the net proceeds from
the issuance of the 2029 Notes to repay borrowings under the Company’s
existing revolving credit facilities and for general corporate purposes.
Principal on the 2029 Notes of $30.0 million is due on December
28, 2028. The remaining principal amount of $70.0 million is due on
December 29, 2029. Optional prepayment is allowed with payment of
a “make-whole” penalty which fluctuates depending on market interest
rates. Interest is payable quarterly in arrears commencing on March 28,
2022.
Under the terms of the senior unsecured notes, the Company is
required, among other things, to maintain compliance with various
financial covenants, including maximum leverage ratios, a minimum
interest coverage ratio, and a minimum consolidated tangible net worth.
The Company was in compliance with these financial covenants under
the Senior Unsecured Notes as of December 31, 2021. The senior
unsecured notes are guaranteed on an unsecured senior basis by the
Company’s significant subsidiaries and certain other subsidiaries. The
senior unsecured notes will rank equally in right of payment with all of
the Company’s existing and future senior unsecured and unsubordinated
indebtedness.
Tro p h y S i g n a t u re Ho m e s
Tro p h y S i g n a t u re Ho m e s
A p p l e’s C ro s s i n g - Fa i r v i e w, T X
A p p l e’s C ro s s i n g - Fa i r v i e w, T X
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8. STOCKHOLDERS’ EQUITY
Common Stock
Pursuant to the Company’s amended and restated certificate of incorporation (“Certificate of
Incorporation”), the Company is authorized to issue up to 100,000,000 shares of common stock, par
value $0.01 per share. As of December 31, 2021, there were 51,151,911 shares of common stock
issued and 50,759,972 outstanding.
Preferred Stock
Pursuant to the Company’s Certificate of Incorporation, the Company is authorized to issue up to
5,000,000 shares of preferred stock, par value $0.01 per share. The Board of Directors (the “Board”)
has the authority, subject to any limitations imposed by law or NYSE rules, without further action by
the stockholders, to issue such preferred stock in one or more series and to fix the voting powers (if
any), the preferences and relative, participating, optional or other special rights or privileges, if any,
of such series and the qualifications, limitations or restrictions thereof. These rights, preferences and
privileges may include, but are not limited to, dividend rights, conversion rights, voting rights, terms
of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any
series or the designation of that series.
On December 23, 2021, the Company issued 2,000 shares of 5.75% Series A Cumulative Perpetual
Preferred Stock for $50.0 million. The Company will pay cumulative cash dividends on the Series A
Preferred Stock, when and as declared by the Board Of Directors, at the rate of 5.75% of the $25,000
liquidation preference per share. Dividends will be payable quarterly in arrears, beginning on or about
March 15, 2022.
The Company will have the option to redeem the shares, in whole or in part, at a redemption price
equal to $25,000 per share on or after December 23, 2026, which is the fifth anniversary of the date
of issuance of the Series A Preferred Stock, or upon change of control. Unless the Company decides to
exercise the redemption option, upon the occurrence of a change of control, preferred shareholders
will have the right to convert some or all of the Series A Preferred Stock into a number of shares of the
Company’s common stock equal to the lesser of (i) the quotient obtained by dividing (A) the sum of (x)
the liquidation preference to be converted, plus (y) the amount per such share equal to any accrued
and unpaid dividends, by (B) the common stock price, and (ii) 1.7059.
The Company incurred $2.3 million in fees and expenses in connection with this transaction that
reduced the amount of equity on our consolidated balance sheet.
The table below presents a summary of the perpetual preferred stock outstanding at December 31,
2021.
Series
Description
Initial date of issuance
Total Shares Outstanding
Liquidation Preference per
Share (in dollars)
Carrying
Value
Per Annum Dividend
Rate
Redemption Period
Series A(1)
5.75% Cumulative Perpetual
December 2021
2,000
$25
$50,000
5.75%
n/a
(1) Ownership is held in the form of Depositary Shares, each representing a 1/1,000th interest in a
share of preferred stock, paying a quarterly cash dividend, if and when declared.
Share Repurchase Programs
In October 2018, the Company’s Board authorized a share repurchase program for the period
beginning on October 3, 2018 and ending on October 3, 2020 of the Company’s common stock for
an aggregate price not to exceed $30.0 million (the “2018 Share Repurchase Program”). The timing,
volume and nature of share repurchases are at the discretion of management and dependent on
market conditions, corporate and regulatory requirements, available cash and other factors, and may
be suspended or discontinued at any time. Authorized repurchases may be made from time to time
in the open market, through block trades or in privately negotiated transactions. No assurance can be
given that any particular amount of common stock will be repurchased. All or part of the repurchases
may be implemented under a trading plan under Rule 10b5-1 or Rule 10b-18 established by the SEC,
which would allow repurchases under pre-set terms at times when the Company might otherwise be
prevented from doing so under insider trading laws or because of self-imposed blackout periods. This
repurchase program may be modified, extended or terminated by the Board at any time. The Company
intends to finance any repurchases with available cash and proceeds from borrowings under lines of
credit.
On December 31, 2018, the Company’s Board authorized implementation of share repurchases in
accordance with a trading plan under Rule 10b5-1 (the “December 2018 Trading Plan”) within the
2018 Share Repurchase Program. The trading plan was effective from January 2, 2019 until March 30,
2019. In January 2019, the Company repurchased 7,862 shares for approximately $0.1 million under
the December 2018 Trading Plan.
In June 2019, the Company’s Board authorized discrete repurchases under the 2018 Share Repurchase
Program of 39,320 shares for approximately $0.3 million.
On June 27, 2019, the Company’s Board authorized implementation of share repurchases in
accordance with a trading plan under Rule 10b5-1 (the “June 2019 Trading Plan”) within the 2018
Share Repurchase Program. The trading plan was effective from July 1, 2019 until August 5, 2019. In
July 2019, the Company repurchased 144,584 shares for approximately $1.2 million under the June
2019 Trading Plan.
In September 2019, the Company’s Board authorized discrete repurchases under the 2018 Share
Repurchase Program of 63,417 shares for approximately $0.6 million.
The 2018 Share Repurchase Program expired on October 3, 2020.
2021 Share Repurchase Program
On March 1, 2021, the Company’s Board of Directors (the “Board”) authorized a new $50.0 million
stock repurchase program (the “Repurchase Plan”). The Repurchase Plan authorizes the Company to
purchase from time to time on or prior to December 31, 2022, up to $50.0 million of our outstanding
common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange
Act and/or in privately negotiated transactions at management’s discretion based on market and
business conditions, applicable legal requirements and other factors. Shares repurchased will be
retired. The Repurchase Plan may be modified or terminated by our Board at any time in its sole
discretion. No shares were repurchased during the year ended December 31, 2021.
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Employee Stock Awards
On March 1, 2021, the Company’s Board of Directors approved an incentive program for eligible
employees to participate in the Company’s new restricted stock award plan. This plan is being offered
pursuant to the Company’s 2014 Omnibus Equity Incentive Plan. The Company incurred $0.1 million
compensation expense related to these awards during the year ended December 31, 2021.
A summary of share-based awards activity during the years ended December 31, 2021, 2020 and
2019 is as follows:
Number of Shares
(in thousands)
Weighted Average Grant Date
Fair Value per Share
Nonvested, December 31, 2018
Granted
Vested
Forfeited
Nonvested, December 31, 2019
Granted
Vested
Forfeited
Nonvested, December 31, 2020
Granted
Vested
Forfeited
Nonvested, December 31, 2021
34 $
219 $
(194) $
—
$
59 $
250 $
(264) $
—
$
45 $
139 $
(156) $
—
$
28 $
12.00
9.14
9.67
—
9.05
8.63
8.10
12.33
22.10
19.09
23.21
—
—
Stock Options
Stock options granted to date were not granted under the 2014 Equity Plan. The stock options
outstanding as of December 31, 2021 vested and became exercisable in five substantially equal
installments on each of the first five anniversaries of the grant date and expire 10 years after the
date on which they were granted. Compensation expense related to these options was expensed on
a straight-line basis over the 5 years year service period. All of the stock options outstanding as of
December 31, 2021 are vested. We utilized the Black-Scholes option pricing model for estimating the
grant date fair value of the stock options. There were no stock options granted during the years ended
December 31, 2021, 2020 and 2019.
9. SHARE-BASED COMPENSATION
2014 Omnibus Equity Incentive Plan
On October 17, 2014, the Company’s stockholders approved the Green Brick Partners, Inc. 2014
Omnibus Equity Incentive Plan (the “2014 Equity Plan”). The purpose of the 2014 Equity Plan is to
provide a means for the Company to attract and retain key personnel and to provide a means whereby
current and prospective directors, officers, employees, consultants and advisors can acquire and
maintain an equity interest in the Company, or be paid incentive compensation, which may (but need
not) be measured by reference to the value of the Company’s common stock, thereby strengthening
their commitment to the welfare of the Company and aligning their interests with those of the
Company’s stockholders. The 2014 Equity Plan will terminate automatically on the tenth anniversary
of the date it became effective. No awards will be granted under the 2014 Equity Plan after that date,
but awards granted prior to that date may extend beyond that date.
Under the 2014 Equity Plan, awards of stock options, including both incentive stock options and
nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units, other
share-based awards and performance compensation awards, may be granted. The maximum number
of shares of the Company’s common stock that is authorized and reserved for issuance under the
2014 Equity Plan is 2,350,956 shares, subject to adjustment for certain corporate events or changes
in the Company’s capital structure.
In general, the Company’s employees or those reasonably expected to become the Company’s
employees, consultants and directors, are eligible for awards under the 2014 Equity Plan, provided
that incentive stock options may be granted only to employees. The Company has six non-employee
directors and approximately 540 employees (including employees of our builders) who are eligible to
receive awards under the 2014 Equity Plan. Written agreements between the Company and each
participant evidence the terms of each award granted under the 2014 Equity Plan.
If any award under the 2014 Equity Plan expires or otherwise terminates, in whole or in part, without
having been exercised in full, the common stock withheld from issuance under that award will become
available for future issuance under the plan. If shares issued under the 2014 Equity Plan are reacquired
by the Company pursuant to the terms of any forfeiture provision, those shares will become available
for future awards under the plan. Awards that can only be settled in cash will not be treated as shares
of common stock granted for purposes of the 2014 Equity Plan. The maximum amount that can be
paid to any single participant in any one calendar year pursuant to a cash bonus award under the 2014
Equity Plan is $2.0 million. As of December 31, 2021, 1,384,741 shares remain available for future
grant of awards under the 2014 Equity Plan.
Share-Based Award Activity
During the years ended December 31, 2021, 2020 and 2019 the Company granted restricted stock
awards (“RSAs”) under the 2014 Equity Plan to Executive Officers (“EOs”) and non-employee members
of the Board. The RSAs granted to EOs were 100% vested and non-forfeitable on the grant date.
Some members of the Board elected to defer up to 100% of their annual retainer fee in the form
of common stock. The RSAs granted to the Board will become fully vested on the earlier of (i) the
first anniversary of the date of grant of the shares of restricted common stock or (ii) the date of the
Company’s 2022 Annual Meeting of Stockholders. The fair value of the RSAs granted to EOs and non-
employee members of the Board were recorded as share-based compensation expense on the grant
date and over the vesting period, respectively. During the years ended December 31, 2021, 2020
and 2019, the Company withheld 41,318; 75,708, and 59,116; shares, respectively, of common stock
from EOs, at a total cost of $0.8 million, $0.6 million, and $0.5 million, for the respective periods, to
satisfy statutory minimum tax requirements upon grant of the RSAs.
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A summary of stock option activity during the year ended December 31, 2021 is as follows:
Tro p h y S i g n a t u re Ho m e s
Tro p h y S i g n a t u re Ho m e s
Ho l l y h o c k - Fr i s c o , T X
Ho l l y h o c k - Fr i s c o , T X
Number of
Shares
(in
thousands)
Weighted
Average
Exercise
Price per
Share
Weighted
Average
Remaining
Contractual
Term (in years)
Aggregate
Intrinsic
Value
(in
thousands)
Options outstanding, December 31, 2020
500
$7.49
Granted
Exercised
Forfeited
Options outstanding, December 31, 2021
Options exercisable, December 31, 2021
—
—
500
500
—
—
—
$7.49
$7.49
2.82
2.82
$11,420
$11,420
Share-Based Compensation Expense
Share-based compensation expense was $3.1 million, $2.1 million and $2.2 million for the years ended
December 31, 2021, 2020 and 2019, respectively. Recognized tax benefit related to share-based
compensation expense was $0.6 million, $0.4 million and $0.5 million for the years ended December 31,
2021, 2020 and 2019, respectively.
As of December 31, 2021, the estimated total remaining unamortized share-based compensation expense
related to unvested RSAs, net of forfeitures, was $0.3 million which is expected to be recognized over a
weighted-average period of 0.5 years. The total fair value of RSAs vested during the years ended December
31, 2021, 2020 and 2019 was $3.0 million, $2.1 million and $1.9 million, respectively.
As of December 31, 2021, there was no remaining unamortized share-based compensation expense related
to stock options.
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10. REVENUE RECOGNITION
Disaggregation of Revenue
The following reflects the disaggregation of revenue by primary geographic market, type of customer, product type, and timing of revenue recognition (in thousands):
Primary Geographical Market
Central
Southeast
Total revenues
Type of Customer
Homebuyers
Homebuilders and Multi-family Developers
Total revenues
Product Type
Residential units
Land and lots
Total revenues
Timing of Revenue Recognition
Transferred at a point in time
Transferred over time
Total revenues
$
$
$
$
$
$
$
$
2021
2020
2019
Residential units
revenue
Land and lots
revenue
Residential units
revenue
Land and lots
revenue
Residential units
revenue
Land and lots
revenue
Years Ended December 31,
938,052 $
371,635
1,309,687 $
66,613 $
26,576
93,189 $
644,976 $
285,200
930,176 $
43,788 $
2,057
45,845 $
396,900 $
362,930
759,830 $
1,309,687 $
—
$
930,176 $
—
$
759,830 $
—
93,189
—
45,845
—
1,309,687 $
93,189 $
930,176 $
45,845 $
759,830 $
31,080
750
31,830
185
31,645
31,830
1,309,687 $
—
$
930,176 $
—
$
759,830 $
—
—
1,309,687 $
93,189
93,189 $
—
930,176 $
45,845
45,845 $
—
759,830 $
31,830
31,830
1,305,620 $
93,189 $
923,901 $
45,845 $
752,273 $
31,830
4,067
—
6,275
—
7,557
—
1,309,687 $
93,189 $
930,176 $
45,845 $
759,830 $
31,830
Revenue recognized over time represents revenue from mechanic’s lien contracts.
Contract Balances
Opening and closing contract balances included in customer and builder deposits on the consolidated balance sheets are as follows (in thousands):
Customer and builder deposits
$
64,610 $
38,131
December 31, 2021
December 31, 2020
The difference between the opening and closing balances of customer and builder deposits results from the timing difference between the customer’s payment of a deposit and the Company’s performance,
impacted slightly by terminations of contracts.
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The amount of deposits on residential units and land and lots held as of the beginning of the period
and recognized as revenue during the years ended December 31, 2021 and 2020 are as follows (in
thousands):
2021
2020
The aggregate amount of transaction price allocated to the remaining performance obligations on our
land sale and lot option contracts is $8.9 million. The Company will recognize the remaining revenue
when the lots are taken down, or upon closing for the sale of a land parcel, which is expected to occur
as follows (in thousands):
$
$
29,313 $
2,126
31,439 $
14,149
5,929
20,078
2022
2023
Total
$
$
6,095
2,784
8,879
Type of Customer
Homebuyers
Homebuilders and Multi-Family Developers
Total deposits recognized as revenue
Performance Obligations
There was no revenue recognized during the years ended December 31, 2021, 2020 and 2019 from
performance obligations satisfied in prior periods.
Transaction Price Allocated to Remaining Performance Obligations
The timing of lot takedowns is contingent upon a number of factors, including customer needs, the
number of lots being purchased, receipt of acceptance of the plat by the municipality, weather-related
delays, and agreed-upon lot takedown schedules.
Our contracts with homebuyers have a duration of less than one year. As such, the Company uses the
practical expedient as allowed under ASC 606 and has not disclosed the transaction price allocated to
remaining performance obligations as of the end of the reporting period.
T h e Prov i d e n c e G ro u p | B e l l m o o re Pa r k - Jo h n s C re e k , G A
T h e Prov i d e n c e G ro u p | B e l l m o o re Pa r k - Jo h n s C re e k , G A
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11. SEGMENT INFORMATION
The Company has three reportable segments - Builder operations Central, Builder operations
Southeast, and Land development. Builder operations Central represents operations of our builders
in Texas, whereas Builder operations Southeast represents operations of our builders in Georgia and
Florida.
The operations of the Company’s builders were aggregated in these three reportable segments based
on similar economic characteristics, including geography, housing products, class of homebuyer,
regulatory environments, and methods used to construct and sell homes. The Company believes such
presentation is consistent with the objective and basic principles of ASC 280 and provides the most
meaningful information about the types of business activities in which the Company engages and the
economic environments in which it operates.
Corporate operations are reported as a non-operating segment and include activities which support
the Company’s builder operations, land development, title and mortgage operations through
centralization of certain administrative functions, such as finance, treasury, information technology
and human resources, as well as development of strategic initiatives. Unallocated corporate expenses
are reported in the corporate, other and unallocated segment as these activities do not share a majority
of aggregation criteria with either the builder operations or land development segments.
While the operations of Challenger meet the criteria for an operating segment, they do not meet the
quantitative thresholds of ASC 280 to be separately reported and disclosed. As such, Challenger’s
results are included within the corporate, other and unallocated segment.
Green Brick Title, LLC (“Green Brick Title”), Green Brick Mortgage, and BHome Mortgage operations
are not economically similar to either builder operations or land development and do not meet the
quantitative thresholds of ASC 280 to be separately reported and disclosed. As such, these entities’
results are included within the corporate, other and unallocated segment.
Operations of EJB River Holdings and GBTM Sendera do not meet the criteria for an operating
segment, and they do not meet the quantitative thresholds of ASC 280 to be separately reported and
disclosed. As such, these results are included within the corporate, other and unallocated segment.
Years Ended December 31,
2021
2020
2019
(in thousands)
Gross profit:
Builder operations
Central
Southeast
Total builder operations
Land development
Corporate, other and unallocated (2)
$
271,799 $
172,341 $
110,181
381,980
9,385
(29,306)
77,121
249,462
10,877
(25,735)
88,480
92,088
180,568
8,050
(19,536)
169,082
Total gross profit
$
362,059 $
234,604 $
Interest expense: (3)
Builder operations
Central
Southeast
Total builder operations
Corporate, other and unallocated
Total interest expense
$
$
—
$
—
$
24,072
15,719
15,719
(15,719)
—
$
15,635
15,635
15,686
39,758
(15,635)
(39,758)
—
$
—
Income before income taxes:
Builder operations
Central
Southeast
Total builder operations
Land development
Corporate, other and unallocated (4)
$
178,760 $
69,606
248,366
8,767
(147)
99,624 $
41,061
140,685
9,512
(7,384)
Income before income taxes
$
256,986 $
142,813 $
34,801
46,268
81,069
13,469
(10,209)
84,329
Financial information relating to the Company’s reportable segments is as follows. Operational results
of each reportable segment are not necessarily indicative of the results that would have been achieved
had the reportable segment been an independent, stand-alone entity during the periods presented.
(in thousands)
Inventory:
December 31, 2021
December 31, 2020
(in thousands)
Revenues: (1)
Builder operations
Central
Southeast
Total builder operations
Land development
Total revenues
90
Years Ended December 31,
2021
2020
2019
Builder operations
Central
Southeast
Total builder operations
Land development
$645,475
$396,900
Corporate, other and unallocated (5)
Total inventory
$
1,203,743
$
$940,02
398,211
1,338,232
64,644
287,257
932,732
43,289
363,680
760,580
31,080
Goodwill:
Builder operations - Southeast
$
680
$
680
$
460,796
$
258,759
719,555
449,654
34,534
421,477
183,623
605,100
213,555
25,980
844,635
$1,402,876
$976,021
$791,660
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(1) The sum of Builder operations Central and Southeast segments’ revenues does not equal residential
units revenue included in the consolidated statements of income in periods when our builders have
revenues from land or lot closings, which for the years ended December 31, 2021, 2020 and 2019
were $28.5 million, $2.6 million and $0.8 million, respectively.
(2) Corporate, other and unallocated gross loss is comprised of capitalized overhead and capitalized
interest adjustments that are not allocated to builder operations and land development segments.
(3) Interest expense of Builder operations Central and Southeast segments represents an interest
expense charged by Corporate, other and unallocated segment in relation to financing purchases of
land and construction of some of the Company’s Dallas and Atlanta builders. Intercompany interest
revenue of the Corporate, other and unallocated segment is eliminated in consolidation.
(4) Corporate, other and unallocated loss before income taxes includes results from Green Brick Title,
LLC and investments in unconsolidated subsidiaries, in addition to capitalized cost adjustments that
are not allocated to operating segments.
(5) Corporate, other and unallocated inventory consists of capitalized overhead and interest related to
work in process and land under development.
Tro p h y S i g n a t u re Ho m e s | L i g h t Fa r m s - C e l i n a , T X
Tro p h y S i g n a t u re Ho m e s | L i g h t Fa r m s - C e l i n a , T X
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12. INCOME TAXES
On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act,
or the CARES Act, as a response to the economic uncertainty resulting from the COVID-19 pandemic,
which, among other things, included several temporary changes to corporate income tax provisions.
The CARES Act did not have a significant impact on our expense for income taxes for the year ended
December 31, 2020.
Income Tax Expense
The components of current and deferred income tax expense are as follows (in thousands):
from January 1, 2018 to December 31, 2020. In December 2020, Congress approved the Taxpayer
Certainty and Disaster Tax Relief Act of 2020, which extended the federal energy efficient homes tax
credit through December 31, 2021.
Deferred Income Taxes
The primary differences between the financial statement and tax bases of assets and liabilities are as
follows (in thousands):
December 31, 2021 December 31, 2020
Current income tax expense (benefit):
Federal
State
Total current income tax expense
Deferred income tax expense (benefit):
Federal
State
Total deferred income tax expense
Years Ended December 31,
2021
2020
2019
$
47,688 $
20,968 $
15,980
5,282
52,970
4,162
25,130
(604)
239
(365)
(354)
240
(114)
2,810
18,790
774
463
1,237
Total income tax expense
$
52,605 $
25,016 $
20,027
Effective Income Tax Rate Reconciliation
The income tax expense differs from the amount that would be computed by applying the statutory
federal income tax rates of 21% for each of the years ended December 31, 2021, 2020 and 2019,
respectively, to income before income taxes as a result of the following (amounts in thousands):
Deferred tax assets:
Basis in partnerships
Accrued expenses
Inventory
Change in fair value of contingent consideration
Lease liabilities - operating leases
Stock-based compensation
Other
Deferred tax assets, gross
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Right-of-use assets - operating leases
Prepaid insurance
Other
Deferred tax liabilities
Years Ended December 31,
Total deferred income tax assets, net
$
6,867 $
4,404
2,956
1,240
1,078
404
218
8,163
2,979
2,585
1,385
601
392
349
17,167
16,454
—
—
17,167 $
16,454
(1,060) $
(97)
(269)
(1,426) $
15,741 $
(581)
(372)
(125)
(1,078)
15,376
$
$
$
$
2021
2020
2019
Tax on pre-tax book income (before reduction of
noncontrolling interests)
$
Tax effect of non-controlled earnings
State income tax expense, net of federal benefit
Adjustments to deferred tax assets related to
state net operating losses
Change in valuation allowance
53,967 $
29,991 $
17,709
(2,976)
4,425
(862)
3,606
—
—
—
—
(1,252)
2,706
1,063
(1,063)
Uncertain Tax Positions
The Company establishes accruals for uncertain tax positions that reflect management’s best estimate
of deductions and credits that may not be sustained on a more-likely-than-not basis. In accordance
with ASC 740, Income Taxes, the Company recognizes the effect of income tax positions only if those
positions have a more-likely-than-not chance of being sustained by the Company. Recognized income
tax positions are measured at the largest amount that is considered greater than 50% likely of being
realized. Changes in recognition or measurement are reflected in the period in which the change in
judgment occurs. There were no uncertain tax positions as of December 31, 2021.
Tax credits
Other
Total income tax expense
Effective income tax rate
(3,629)
(8,088)
—
818
369
$
52,605 $
25,016 $
20.5%
17.5%
864
20,027
23.7%
The change in the effective tax rate for year ended December 31, 2021 relates primarily to the impact
of projected noncontrolling interest for the year and a tax benefit from the enactment of the Taxpayer
Certainty and Disaster Tax Relief Act of 2019 (“the 2019 Act”). The 2019 Act retroactively reinstated
the federal energy efficient homes tax credit that expired on December 31, 2017 to homes closed
92
There were no expenses for interest and penalties related to uncertain tax positions for the years
ended December 31, 2021, 2020, and 2019. There were no accrued liabilities related to uncertain tax
positions as of December 31, 2021 and 2020, respectively.
Statutes of Limitations
The U.S. federal statute of limitations remains open for our 2018 and subsequent tax years. Due to
the carryover of the federal net operating losses for years 2011 and forward, income tax returns going
back to the 2011 tax year are subject to adjustment.
93
The Colorado and Minnesota statutes of limitations remain open for our 2017 and subsequent tax
years. The Nebraska statute of limitations remains open for our 2018 and subsequent tax years.
The computation of basic and diluted net income attributable to Green Brick Partners, Inc. per common
share is as follows (in thousands, except per share amounts):
The Company’s subsidiaries file returns in Texas, Georgia and Florida and Colorado.
The Texas statute of limitations remains open for the 2017 and subsequent tax years. Any Texas
adjustments relating to returns filed by the subsidiary partnerships would be borne by the subsidiary
partnership entities.
The Georgia statute of limitations remains open for the 2018 and subsequent tax years. Any Georgia
adjustments relating to returns filed by the subsidiary partnerships would be borne by the partner.
The Florida statute of limitations will remain open for the 2018 and subsequent tax years. Any Florida
adjustments relating to returns filed by the subsidiary partnerships would be borne by the partner.
The Company is not presently under examination by the Internal Revenue Service or state tax authority.
13. EMPLOYEE BENEFITS
We have a qualifying 401(k) defined contribution plan that covers all employees of the Company.
Each year, we may make discretionary matching contributions equal to a percentage of the employees’
contributions. The Company contributed $1.0 million, $0.9 million and $0.8 million of matching
contributions to the 401(k) plan during the years ended December 31, 2021, 2020 and 2019.
14. EARNINGS PER COMMON SHARE
The Company’s restricted stock awards have the right to receive forfeitable dividends on an equal
basis with common stock and therefore are not considered participating securities that must be
included in the calculation of net income per share using the two-class method. Basic earnings per
common share is computed by dividing net income allocated to common shareholders by the weighted
average number of common shares outstanding during each period, adjusted for non-vested shares
of restricted stock awards during each period. Net income allocated to common shareholders is net
income adjusted for preferred stock dividends including dividends declared and cumulative dividends
related to the current dividend period that have not been declared as of period end. Diluted earnings
per share is calculated using the treasury stock method and includes the effect of all dilutive securities,
including stock options and restricted stock awards.
Years Ended December 31,
2021
2020
2019
Net income attributable to Green Brick Partners, Inc. $ 190,210 $ 113,693 $
58,656
Cumulative preferred stock dividends
(71)
— —
Net income applicable to common shareholders
190,139
113,693
58,656
Weighted-average number of common shares out-
standing - basic
Basic net income attributable to Green Brick Part-
ners, Inc. per common share
$
50,700
50,568
50,530
3.75 $
2.25
$ 1.16
Weighted-average number of common shares out-
standing - basic
Dilutive effect of stock options and restricted
stock awards
Weighted-average number of common shares
outstanding - diluted
Diluted net income attributable to Green Brick
Partners, Inc. per common share
50,700
50,568
50,530
360
227
106
51,060
50,795
50,636
$
3.72 $
2.24
$ 1.16
The following shares that could potentially dilute earnings per share in the future are not included in
the determination of diluted net income attributable to Green Brick Partners, Inc. per common share
(in thousands):
Antidilutive options to purchase common stock and
restricted stock awards
—
10
14
Years Ended December 31,
2021
2020
2019
C h a l l e n g e r Ho m e s | En c l a ve s a t Mo u n t a i n V i s t a - C o l o ra d o Sp r i n g s , CO
C h a l l e n g e r Ho m e s | En c l a ve s a t Mo u n t a i n V i s t a - C o l o ra d o Sp r i n g s , CO
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15. FAIR VALUE MEASUREMENTS
Corporate Officers
Fair Value of Financial Instruments
The Company’s financial instruments, none of which are held for trading purposes, include cash,
restricted cash, receivables, earnest money deposits, other assets, accounts payable, accrued expenses,
customer and builder deposits, borrowings on lines of credit, senior unsecured notes, notes payable,
and contingent consideration liability.
Per the fair value hierarchy, level 1 financial instruments include: cash, restricted cash, receivables,
earnest money deposits, other assets, accounts payable, accrued expenses, and customer and builder
deposits due to their short-term nature. The Company estimates that, due to the short-term nature
of the underlying financial instruments or the proximity of the underlying transaction to the applicable
reporting date, the fair value of level 1 financial instruments does not differ materially from the
aggregate carrying values recorded in the consolidated financial statements as of December 31, 2021
and 2020.
Trevor Brickman, the son of Green Brick’s Chief Executive Officer, is the President of Centre Living.
Following a series of transactions described in Note 3, effective December 31, 2019, Green Brick’s
ownership interest in Centre Living is 90% and Trevor Brickman’s ownership interest is 10%. Green
Brick has 90% voting control over the operations of Centre Living. As such, 100% of Centre Living’s
operations are included within our consolidated financial statements. During the years ended
December 31, 2021, 2020 and 2019, Trevor Brickman made cash contributions to Centre Living of
$0.0 million, $0.4 million, and $3.6 million, respectively.
GRBK GHO
GRBK GHO leases office space from entities affiliated with the president of GRBK GHO. During the
years ended December 31, 2021, 2020, and 2019, GRBK GHO incurred lease costs of $0.2 million,
$0.1 million, and $0.1 million in each period, under such lease agreements. As of December 31, 2021,
there were no amounts due to the affiliated entities related to such lease agreements.
Level 2 financial instruments include borrowings on lines of credit, senior unsecured notes, and
notes payable. Due to the short-term nature and floating interest rate terms, the carrying amounts
of borrowings on lines of credit are deemed to approximate fair value. The estimated fair value of the
senior unsecured notes as of December 31, 2021 was $352.3 million.
GRBK GHO receives title closing services on the purchase of land and third-party lots from an entity
affiliated with the president of GRBK GHO. During the years ended December 31, 2021, 2020, and
2019, GRBK GHO incurred de minimis fees related to such title closing services. As of December 31,
2021, no amounts were due to the title company affiliate.
The fair value of the contingent consideration liability related to the GRBK GHO business combination
was estimated using an internally developed discounted cash flow analysis. As the measurement of
the contingent consideration was based primarily on significant inputs not observable in the market, it
represents a level 3 measurement.
Key inputs in measuring the fair value of the contingent consideration liability were management’s
projections of GRBK GHO’s net income and debt, and the annual discount rate of 16.5% that reflected
the risk associated with achieving the milestones of the contingent consideration payments.
The reconciliation of the beginning and ending balances for level 3 measurements is as follows (in
thousands):
Carrying Value
Estimated
Fair Value
17. COMMITMENTS AND CONTINGENCIES
Letters of Credit and Performance Bonds
During the ordinary course of business, certain regulatory agencies and municipalities require the
Company to post letters of credit or performance bonds related to development projects. As of
December 31, 2021 and 2020, letters of credit and performance bonds outstanding were $1.7 million
and $9.8 million respectively. The Company does not believe that it is likely that any material claims
will be made under a letter of credit or performance bond in the foreseeable future.
Warranties
Warranty activity, included in accrued expenses in our consolidated balance sheets, consists of the
following (in thousands):
Contingent consideration liability, balance as of December 31, 2020 $
368 $
368
Warranty accrual, beginning of period
Payment of contingent consideration in excess of acquisition date
fair value
(368)
(368)
Warranties issued
Changes in liability for existing warranties
Change in fair value of contingent consideration
—
Contingent consideration liability, balance as of December 31, 2021 $
—
$
—
—
Settlements
Warranty accrual, end of period
December 31,
2021
December 31,
2020
$
$
6,407 $
6,174
(357)
(2,846)
9,378 $
3,840
4,553
(26)
(1,960)
6,407
There were no transfers between the levels of the fair value hierarchy for any of our financial
instruments as of December 31, 2021 when compared to December 31, 2020.
16. RELATED PARTY TRANSACTIONS
Operating Leases
The Company has leases associated with office and design center space in Georgia, Texas, and Florida
that, at the commencement date, have a lease term of more than 12 months and are classified as
operating leases. The exercise of any extension options available in such operating lease contracts is
not reasonably certain.
During 2021, 2020 and 2019, the Company had the following related party transactions through the
normal course of business.
Operating lease cost of $1.4 million, $1.3 million, and $1.3 million for these leases for the years ended
December 31, 2021, 2020, and 2019, respectively, is included in selling, general and administrative
expense in the consolidated statements of income. For each of the years ended December 31, 2021
94
and 2020, cash paid for amounts included in the measurement of operating lease liabilities was $1.3
million, respectively.
18. SUBSEQUENT EVENTS
None.
As of December 31, 2021, the weighted-average remaining lease term and the weighted-average
discount rate used in calculating our lease liabilities were 4.8 years and 4.12%, respectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The future annual undiscounted cash flows in relation to the operating leases and a reconciliation of
such undiscounted cash flows to the operating lease liabilities recognized in the consolidated balance
sheet as of December 31, 2021 are presented below (in thousands):
None.
2022
2023
2024
2025
2026
Thereafter
Total future lease payments
Less: Interest
Present value of lease liabilities
ITEM 9A. CONTROLS AND PROCEDURES
$
$
$
$
$
1,538
1,306
507
517
504
864
5,236
491
4,745
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that information
required to be disclosed in reports filed or submitted under the Exchange Act, as amended, is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the
SEC and, as such, is accumulated and communicated to Green Brick’s management, including our
Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely
decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the
effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange
Act, as of December 31, 2021. Based on our evaluation, the CEO and CFO concluded that our
disclosure controls and procedures were effective as of December 31, 2021.
The Company elected the short-term lease recognition exemption for all leases that, at the
commencement date, have a lease term of 12 months or less and do not include an option to purchase
the underlying asset that the Company is reasonably certain to exercise. For such leases, the Company
does not recognize right-of-use assets or lease liabilities and instead recognizes lease payments in the
consolidated income statements on a straight-line basis. Short-term lease costs of $0.7 million, $0.4
million, and $0.4 million for each of the years ended December 31, 2021, 2020, and 2019, related to
such lease contracts are included in selling, general and administrative expense in the consolidated
statements of income.
Management’s Report on Internal Control over Financial Reporting
Green Brick’s management is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Legal Matters
Lawsuits, claims and proceedings may be instituted or asserted against us in the normal course of
business. The Company is also subject to local, state and federal laws and regulations related to land
development activities, house construction standards, sales practices, title company regulations,
employment practices and environmental protection. As a result, the Company may be subject to
periodic examinations or inquiry by agencies administering these laws and regulations.
The Company records an accrual for legal claims and regulatory matters when they are probable of
occurring and a potential loss is reasonably estimable. The Company accrues for these matters based
on facts and circumstances specific to each matter and revises these estimates when necessary.
In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies,
the Company generally cannot predict their ultimate resolution, related timing or eventual loss. If
evaluations indicate loss contingencies that could be material are not probable, but are reasonably
possible, the Company will disclose their nature with an estimate of the possible range of losses or a
statement that such loss is not reasonably estimable. We believe that the disposition of legal claims
and related contingencies will not have a material adverse effect on our results of operations and
liquidity or on our financial condition.
Under the supervision and with the participation of our management, including the CEO and CFO,
we conducted an evaluation of the effectiveness of our internal control over financial reporting as
of December 31, 2021 based upon Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our
management concluded that our internal control over financial reporting was effective as of December
31, 2021.
RSM US LLP, our independent registered public accounting firm, has audited our consolidated financial
statements included in this report and has issued an attestation report on our internal control over
financial reporting, which is included herein.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2021, there were no changes in our internal controls that
have materially affected or are reasonably likely to have a material effect on our internal control over
financial reporting.
95
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Green Brick Partners, Inc.
Opinion on the Internal Control Over Financial Reporting
We have audited Green Brick Partners, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company and our report
dated March 1, 2022 expressed an unqualified opinion.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ RSM US LLP
Dallas, Texas
March 1, 2022
96
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ITEM 9B. OTHER INFORMATION
The following table summarizes information with respect to the Registrant’s compensation plans under
which the Registrant’s equity securities are authorized for issuance as of December 31, 2021:
On February 9, 2022, the Company entered into the Eighth Amendment to its Credit Agreement with
Inwood National Bank. Pursuant to the Eight Amendment, the Credit Agreement was amended to
extend the maturity date of the Credit Agreement to May 1, 2025 and to reduce the minimum interest
rate from 4.00% to 3.15%. All other material terms of the Credit Agreement, as amended, remained
unchanged.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by Part III, Item 10, is incorporated herein by reference to the proxy statement
for our 2022 annual meeting of shareholders (“Proxy Statement”) to be filed with the SEC no later than
120 days after the end of our fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Equity compensation plans approved
by security holders
Equity Compensation Plan Information
As of December 31, 2021
(in thousands, except exercise price)
Number of
Securities
Weighted
Average
to be Issued
Exercise Price
Upon Exercise
of
Outstanding
Options,
Warrants and
Rights
of Outstanding
Options,
Warrants
and Rights
Number of
Securities
Remaining
Available for
Future Issuance
Under
Equity Com-
pensation Plans
(Excluding
Securities
Reflected in
first column (a))
(a)
(b)
(c)
Information required by Part III, Item 11, is incorporated herein by reference to our Proxy Statement to
be filed with the SEC no later than 120 days after the end of our fiscal year.
Equity compensation plans not
approved by security holders
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Total
—
527,696
—
857,045
2014 Omnibus Equity Incentive Plan
527,696
$
7.49 (1)
857,045
Information required by Part III, Item 12, is incorporated herein by reference to our Proxy Statement to
be filed with the SEC no later than 120 days after the end of our fiscal year.
(1) Does not include 27,696 restricted stock awards as they do not have an exercise price.
T h e Prov i d e n c e G ro u p | Pra t t St a c k s - At l a n t a , G A
T h e Prov i d e n c e G ro u p | Pra t t St a c k s - At l a n t a , G A
97
97
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by Part III, Item 13, is incorporated herein by reference to our Proxy Statement to be filed with the SEC no later than 120 days after the end of our fiscal year.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by Part III, Item 14, is incorporated herein by reference to our Proxy Statement to be filed with the SEC no later than 120 days after the end of our fiscal year.
98
98
T h e Prov i d e n c e G ro u p o f G e o rg i a | Ha r ve s t Pa r k - Su w a n e e , G A
T h e Prov i d e n c e G ro u p o f G e o rg i a | Ha r ve s t Pa r k - Su w a n e e , G A
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements
See Part II, Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedules
Financial statements schedules are omitted because they are not required or applicable or the required information is included in the consolidated financial statements or notes thereto.
(3) Exhibits
The following exhibits are filed with this Annual Report on Form 10-K or are incorporated herein by reference:
Number
Exhibit Description
3.1
3.2
3.3
4.1
4.2
4.3
4.4
10.1
10.2
10.3
Amended and Restated Certificate of Incorporation, (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed October 31, 2014).
Amended and Restated Bylaws of Green Brick Partners, Inc., effective as of January 27, 2022, (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed January 27, 2022).
Certificate of Designation of 5.75% Series A Cumulative Perpetual Preferred Stock of Green Brick Partners, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Current Report
on Form 8-K filed on December 23, 2021.
Specimen Common Stock Certificate, (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed October 31, 2014).
Description of Capital Stock
Deposit Agreement, dated December 23, 2021 among the Company, Continental Stock Transfer & Trust Company, as depositary, and the holders of the depositary receipts issued thereun-
der (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on December 23, 2021).
Form of Depositary Receipt (attached to the Depositary Agreement in Exhibit 4.3)
Amended and Restated Limited Liability Company Operating Agreement of The Providence Group of Georgia, L.L.C., dated as of July 1, 2011 (incorporated by reference to Exhibit 10.20 to
the Company’s Registration Statement on Form S-1 (File No. 333-197446) filed on July 16, 2014).
Second Amended and Restated Company Agreement of CB JENI Homes DFW LLC, dated as of January 1, 2018, (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K
filed March 6, 2020).
Amended and Restated Limited Liability Company Operating Agreement of JBGL A&A, LLC, dated November 15, 2011 (incorporated by reference to Exhibit 10.23 to the Company’s Regis-
tration Statement on Form S-1 (File No. 333-197446) filed on July 16, 2014).
10.4†
Green Brick Partners, Inc. 2014 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed March 31, 2015).
10.5†
10.6†
10.7†
10.8†
Employment Agreement, dated as of July 22, 2019, between the Company and James R. Brickman (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed July 26, 2019).
Green Brick Partners, Inc. Stock Option Agreement, dated as of October 27, 2014, between the Company and James R. Brickman (incorporated by reference to Exhibit 10.16 to the Com-
pany’s Current Report on Form 8-K filed October 31, 2014).
Amended and Restated Employment Agreement, dated as of July 28 2021, between the Company and Richard A. Costello (incorporated by reference to Exhibit 10.7 to the Company’s
Quarterly Report on Form 10-Q filed August 3, 2021).
Employment Agreement, dated as of September 10, 2020, between the Company and Jed Dolson (incorporated by reference to Exhibit 10.8(a) to the Company’s Quarterly Report on Form
10-Q filed October 29, 2020).
98
99
Number
10.10
10.10.1
10.10.2
Exhibit Description
Second Amendment to the Credit Agreement, dated as of December 1, 2016, by and among Green Brick Partners, Inc., the lenders named therein, and Citibank, N.A., as agent (incorporat-
ed by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed December 1, 2016).
Third Amendment to the Credit Agreement, dated as of September 1, 2017, by and among Green Brick Partners, Inc., the lenders named therein, Flagstar Bank, FSB, as successor adminis-
trative agent, and Citibank, N.A., as existing administrative agent (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed September 6, 2017).
Fourth Amendment to the Credit Agreement, dated as of December 1, 2017, by and among Green Brick Partners, Inc., the lenders named therein, and Flagstar Bank, FSB, as agent (incorpo-
rated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed December 4, 2017).
10.10.3
Fifth Amendment to the Credit Agreement, dated as of November 2, 2018, by and among Green Brick Partners, Inc., the lenders named therein, Flagstar Bank, FSB, as administrative agent
(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed November 5, 2018).
10.10.4
Seventh Amendment to the Credit Agreement, dated December 22, 2020, by and among Green Brick Partners, Inc., the lenders named therein, and Flagstar Bank, FSB, as administrative
agent (incorporated by reference to Exhibit 10.43 to the Company’s Current Report on Form 8-K filed December 30, 2020).
10.10.5
Eight Amendment to the Credit Agreement, dated as of July 28, 2021, by and among Green Brick Partners, Inc., the lenders named therein, and Flagstar Bank, FSB, as agent (incorporated
by reference to the Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q filed on August 3,2021).
10.10.6
Ninth Amendment to the Credit Agreement, dated December 10, 2021, by and among Green Brick Partners, Inc., the lenders named therein, and Flagstar Bank, FSB, as administrative agent
(incorporated by reference to the Exhibit 10.43 to the Company’s Current Report on Form 8-K filed on December 14, 2021).
10.36†*
Form of Stock Bonus Award Agreement
10.37†
Form of Other Stock-Based Award Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 3, 2018).
10.38†
Form of Performance Compensation Award Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed April 3, 2018).
10.39
Note Purchase Agreement, dated as of August 8, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 9, 2019).
10.40
Subsidiary Guaranty Agreement, dated as of August 8, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 9, 2019).
Note Purchase Agreement, dated as of August 26, 2020, by and among Green Brick Partners, Inc., Prudential Universal Reinsurance Company and The Prudential Insurance Company of
America (incorporated by reference to Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q filed October 29, 2020).
Guaranty Agreement, dated as of August 26, 2020, by and among certain subsidiaries of Green Brick Partners, Inc. (incorporated by reference to Exhibit 10.42 to the Company’s Quarterly
Report on Form 10-Q filed October 29, 2020).
Registration Rights Agreement, dated as October 27, 2014, by and among the Company and JBGL Exchange (Offshore), LLC, JBGL Willow Crest (Offshore), LLC, JBGL Hawthorne (Off-
shore), LLC, JBGL Inwood (Offshore), LLC, JBGL Chateau (Offshore), LLC, JBGL Castle Pines (Offshore), LLC, JBGL Lakeside (Offshore), LLC, JBGL Mustang (Offshore), LLC, JBGL Kittyhawk
(Offshore), LLC, JBGL Builder Finance (Offshore), LLC, Greenlight Capital Qualified, LP, Greenlight Capital, LP, Greenlight Capital Offshore Partners, Greenlight Reinsurance, Ltd., Greenlight
Capital (Gold), LP, Greenlight Capital Offshore Master (Gold), Ltd., Scott L. Roberts, L. Loraine Brickman Revocable Trust, Roger E. Brickman GST Marital Trust, James R. Brickman, Blake
Brickman, Jennifer Brickman Roberts, Trevor Brickman and Natalie Brickman, (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed October 31,
2014).
Note Purchase Agreement, dated February 25, 2021, by and among Green Brick Partners, Inc. and the several purchasers named therein (incorporated by reference to Exhibit 10.45 to the
Company’s Current Report on Form 8-K filed March 3, 2021).
Guaranty Agreement, dated as of February 25, 2021, by and among certain subsidiaries of Green Brick Partners, Inc. (incorporated by reference to Exhibit 10.46 to the Company’s Current
Report on Form 8-K filed March 3, 2021).
Note Purchase Agreement, dated December 28, 2021, by and among Green Brick Partners, Inc. and the several purchasers named therein. (incorporated by reference to Exhibit 10.49 to
the Company’s Current Report on Form 8-K filed January 3, 2022).
10.41
10.42
10.44
10.45
10.46
10.49
100
Number
Exhibit Description
10.50
Guaranty Agreement, dated as of December 28, 2021, by and among certain subsidiaries of Green Brick Partners, Inc. (incorporated by reference to Exhibit 10.50 to the Company’s Cur-
rent Report on Form 8-K filed January 3, 2022).
21*
List of Subsidiaries of the Company.
23.1*
Consent of RSM US LLP, Independent Registered Public Accounting Firm to the Company.
31.1*
Certification of the Company’s Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2*
Certification of the Company’s Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1*
Certification of the Company’s Chief Executive Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2*
Certification of the Company’s Chief Financial Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
101.INS**
XBRL Instance Document.
101.SCH**
XBRL Taxonomy Extension Schema Document.
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase Document.
104**
Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101).
*
**
†
#
Filed with this Annual Report on Form 10-K.
Submitted electronically herewith.
Management Contract or Compensatory Plan.
The Company hereby undertakes to furnish a copy of any omitted schedule or exhibit to such agreement to the SEC upon request.
ITEM 16. FORM 10-K SUMMARY
None.
101
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized
on March 1, 2022.
SIGNATURES
Green Brick Partners, Inc.
/s/ James R. Brickman
By:
Its:
James R. Brickman
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated
below.
Chief Executive Officer and Director (Principal Executive Officer)
Title
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Director
Director
Chairman of the Board
Director
Director
Director
Signature
/s/ James R. Brickman
James R. Brickman
/s/ Richard A. Costello
Richard A. Costello
/s/ Elizabeth K. Blake
Elizabeth K. Blake
/s/ Harry Brandler
Harry Brandler
/s/ David Einhorn
David Einhorn
/s/ John R. Farris
John R. Farris
/s/ Kathleen Olsen
Kathleen Olsen
/s/ Richard S. Press
Richard S. Press
102
Date
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
Tro p h y S i g n a t u re Ho m e s | Pra i r i e R i d g e - M i d l o t h i a n , T X
Tro p h y S i g n a t u re Ho m e s | Pra i r i e R i d g e - M i d l o t h i a n , T X
C o n t a c t I n fo r m a t i o n
G re e n Br i c k Pa r t n e r s
2805 Dallas Parkway, Suite 400, Plano, TX 75093 | www.greenbrickpartners.com
Au d i t , R S M U S L L P
13155 Noel Road, Suite 2200, Dallas, TX 75240 | www.rsmus.com
Tr a n s fe r A g e n t , Bro a d r i d g e F i n a n c i a l S o l u t i o n s
51 Mercedes Way, Edgewood, NY, 11717 | www.broadridge.com
103
Green Brick Partners | 2805 Dallas Parkway, Suite 400, Plano, TX 75093 | www.greenbrickpartners.com
104