UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-Q

___________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33530


Green Brick Partners, Inc.

(Exact name of registrant as specified in its charter)


Delaware				20-5952523
(State or other jurisdiction of incorporation)				(IRS Employer Identification Number)
2805 Dallas Pkwy	,	Ste 400
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

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. 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)~~.Yes~~. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐☒ 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares of the Registrant's common stock outstanding as of April ~~29, 2022~~28, 2023 was ~~48,429,623.~~45,508,376.

TABLE OF CONTENTS


PART I		FINANCIAL INFORMATION
	Item 1.	~~Condensed Consolidated~~ Financial Statements ~~(Unaudited)~~	1
		Unaudited Condensed Consolidated Balance Sheets, March 31, ~~2022~~2023 and December 31, ~~2021~~2022	1
		Unaudited Condensed Consolidated Statements of Income for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022	2
		Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31 , 2023 and 2022 ~~and 2021~~	3
		Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022	4
		Notes to the Unaudited Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2120
	Item 4.	Controls and Procedures	2927
PART II		OTHER INFORMATION
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3029
	Item 6.	Exhibits	3029
		Signatures	3130

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data) (Unaudited)


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	66,083	$	78,696	Cash and cash equivalents	$	177,271	$	76,588
Restricted cash	Restricted cash	14,152		14,858		Restricted cash	18,416		16,682
Receivables	Receivables	7,050		6,871		Receivables	7,256		5,288
Inventory	Inventory	1,327,509		1,203,743		Inventory	1,373,014		1,422,680
Investments in unconsolidated entities	Investments in unconsolidated entities	58,127		55,616		Investments in unconsolidated entities	77,059		74,224
Right-of-use assets - operating leases	Right-of-use assets - operating leases	4,215		4,596		Right-of-use assets - operating leases	3,076		3,458
Property and equipment, net	Property and equipment, net	2,617		2,812		Property and equipment, net	3,913		2,919
Earnest money deposits	Earnest money deposits	24,744		26,008		Earnest money deposits	19,530		23,910
Deferred income tax assets, net	Deferred income tax assets, net	15,741		15,741		Deferred income tax assets, net	16,448		16,448
Intangible assets, net	Intangible assets, net	516		537		Intangible assets, net	429		452
Goodwill	Goodwill	680		680		Goodwill	680		680
Other assets	Other assets	7,223		11,709		Other assets	9,364		12,346
Total assets	Total assets	$	1,528,657	$	1,421,867	Total assets	$	1,706,456	$	1,655,675
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Liabilities:	Liabilities:					Liabilities:
Accounts payable	Accounts payable	$	56,899	$	45,682	Accounts payable	$	52,862	$	51,804
Accrued expenses	Accrued expenses	89,558		61,351		Accrued expenses	108,492		91,281
Customer and builder deposits	Customer and builder deposits	63,618		64,610		Customer and builder deposits	36,948		29,112
Lease liabilities - operating leases	Lease liabilities - operating leases	4,415		4,745		Lease liabilities - operating leases	3,187		3,582
Borrowings on lines of credit, net	Borrowings on lines of credit, net	19,421		(738)		Borrowings on lines of credit, net	(2,453)		17,395
Senior unsecured notes, net	Senior unsecured notes, net	335,538		335,446		Senior unsecured notes, net	335,920		335,825
Notes payable	Notes payable	14,668		210		Notes payable	14,607		14,622
Total liabilities	Total liabilities	584,117		511,306		Total liabilities	549,563		543,621
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies
Redeemable noncontrolling interest in equity of consolidated subsidiary	Redeemable noncontrolling interest in equity of consolidated subsidiary	22,179		21,867		Redeemable noncontrolling interest in equity of consolidated subsidiary	30,291		29,239
Equity:	Equity:					Equity:
Green Brick Partners, Inc. stockholders’ equity	Green Brick Partners, Inc. stockholders’ equity					Green Brick Partners, Inc. stockholders’ equity
Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of March 31, 2022 and December 31 2021, respectively		47,696		47,696
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,245,206 and 51,151,911 issued and 49,660,230 and 50,759,972 outstanding as of March 31, 2022 and December 31, 2021, respectively		512		512
Treasury stock, at cost, 1,584,976 and 391,939 shares as of March 31, 2022 and December 31, 2021, respectively		(28,968)		(3,167)
Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively						Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	47,696		47,696
Common stock, $0.01 par value: 100,000,000 shares authorized; 46,211,430 issued and 45,743,555 outstanding as of March 31, 2023 and 46,032,930 issued and outstanding as of December 31, 2022, respectively						Common stock, $0.01 par value: 100,000,000 shares authorized; 46,211,430 issued and 45,743,555 outstanding as of March 31, 2023 and 46,032,930 issued and outstanding as of December 31, 2022, respectively	462		460
Treasury stock, at cost: 467,875 shares as of March 31, 2023 and none as of December 31, 2022						Treasury stock, at cost: 467,875 shares as of March 31, 2023 and none as of December 31, 2022	(15,351)		—
Additional paid-in capital	Additional paid-in capital	292,155		289,641		Additional paid-in capital	263,545		259,410
Retained earnings	Retained earnings	600,788		539,866		Retained earnings	817,802		754,341
Total Green Brick Partners, Inc. stockholders’ equity	Total Green Brick Partners, Inc. stockholders’ equity	912,183		874,548		Total Green Brick Partners, Inc. stockholders’ equity	1,114,154		1,061,907
Noncontrolling interests	Noncontrolling interests	10,178		14,146		Noncontrolling interests	12,448		20,908
Total equity	Total equity	922,361		888,694		Total equity	1,126,602		1,082,815
Total liabilities and equity	Total liabilities and equity	$	1,528,657	$	1,421,867	Total liabilities and equity	$	1,706,456	$	1,655,675

The accompanying notes are an integral part of these condensed consolidated financial statements.

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Residential units revenue	Residential units revenue	$	364,661	$	217,236	Residential units revenue	$	450,362	$	364,661
Land and lots revenue	Land and lots revenue	28,955		17,243		Land and lots revenue	1,699		28,955
Total revenues	Total revenues	393,616		234,479		Total revenues	452,061		393,616
Cost of residential units	Cost of residential units	263,430		162,072		Cost of residential units	326,124		263,430
Cost of land and lots	Cost of land and lots	21,830		13,418		Cost of land and lots	1,331		21,830
Total cost of revenues	Total cost of revenues	285,260		175,490		Total cost of revenues	327,455		285,260
Total gross profit	Total gross profit	108,356		58,989		Total gross profit	124,606		108,356
Selling, general and administrative expenses	Selling, general and administrative expenses	(34,265)		(29,488)		Selling, general and administrative expenses	(45,945)		(34,265)
Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	5,687		3,891		Equity in income of unconsolidated entities	4,221		5,687
Other income, net	Other income, net	2,855		1,870		Other income, net	4,290		2,855
Income before income taxes	Income before income taxes	82,633		35,262		Income before income taxes	87,172		82,633
Income tax expense	Income tax expense	18,437		7,501		Income tax expense	19,031		18,437
Net income	Net income	64,196		27,761		Net income	68,141		64,196
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	2,619		1,792		Less: Net income attributable to noncontrolling interests	3,961		2,619
Net income attributable to Green Brick Partners, Inc.	Net income attributable to Green Brick Partners, Inc.	$	61,577	$	25,969	Net income attributable to Green Brick Partners, Inc.	$	64,180	$	61,577

Net income attributable to Green Brick Partners, Inc. per common share:	Net income attributable to Green Brick Partners, Inc. per common share:					Net income attributable to Green Brick Partners, Inc. per common share:
Basic	Basic	$	1.20	$	0.51	Basic	$	1.38	$	1.20
Diluted	Diluted	$	1.20	$	0.51	Diluted	$	1.37	$	1.20
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:	Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:					Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic	Basic	50,586		50,633		Basic	45,945		50,586
Diluted	Diluted	50,924		50,993		Diluted	46,351		50,924

The accompanying notes are an integral part of these condensed consolidated financial statements.

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

For the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Common Stock			Preferred Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Green Brick Partners, Inc. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity			Common Stock				Preferred Stock				Treasury Stock				Additional Paid-in Capital				Retained Earnings		Total GRBK. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity
		Shares	Amount		Shares	Amount		Shares	Amount													Shares	Amount			Shares	Amount			Shares	Amount
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
Balance at December 31, 2022																					Balance at December 31, 2022	46,032,930	$	460		2,000	$	47,696		—	$	—				$	259,410			$	754,341	$	1,061,907	$	20,908	$	1,082,815
Issuance of common stock under 2014 Omnibus Equity Incentive Plan	Issuance of common stock under 2014 Omnibus Equity Incentive Plan	139,710	1		—	—		—	—		2,751		—		2,752		—		2,752		Issuance of common stock under 2014 Omnibus Equity Incentive Plan	238,357	3			—	—			—	—			5,230				—		5,233		—		5,233
Withholdings from vesting of restricted stock awards	Withholdings from vesting of restricted stock awards	(46,415)	(1)		—	—		—	—		(1,074)		—		(1,075)		—		(1,075)		Withholdings from vesting of restricted stock awards	(59,857)	(1)			—	—			—	—			(1,975)				—		(1,976)		—		(1,976)
Amortization of deferred share-based compensation																					Amortization of deferred share-based compensation	—	—			—	—			—	—			567				—		567		—		567
Dividends	Dividends	—	—		—	—		—	—		—		(655)		(655)		—		(655)		Dividends	—	—			—	—			—	—			—				(719)		(719)		—		(719)
Stock repurchases		—	—		—	—		(1,193,037)	(25,801)		—		—		(25,801)		—		(25,801)
Amortization of deferred share-based compensation		—	—		—	—		—	—		280		—		280		—		280
Share repurchases																					Share repurchases	—	—			—	—			(467,875)	(15,351)			—				—		(15,351)		—		(15,351)
Change in fair value of redeemable noncontrolling interest	Change in fair value of redeemable noncontrolling interest	—	—		—	—		—	—		557		—		557		—		557		Change in fair value of redeemable noncontrolling interest	—	—			—	—			—	—			313				—		313		—		313
Distributions	Distributions	—	—		—	—		—	—		—		—		—		(5,718)		(5,718)		Distributions	—	—		—	—	—		—	—	—		—	—		—		—		—		(11,056)		(11,056)
Net income	Net income	—	—		—	—		—	—		—		61,577		61,577		1,750		63,327		Net income	—	—			—	—			—	—			—				64,180		64,180		2,596		66,776
Balance at March 31, 2022		51,245,206	$	512	2,000	$	47,696	(1,584,976)	$	(28,968)	$	292,155	$	600,788	$	912,183	$	10,178	$	922,361
Balance at March 31, 2023																					Balance at March 31, 2023	46,211,430	$	462		2,000	$	47,696		(467,875)	$	(15,351)		$	263,545			$	817,802	$	1,114,154	$	12,448	$	1,126,602


		Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Green Brick Partners, Inc. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity			Common Stock			Preferred Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total GRBK. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity
		Shares	Amount		Shares	Amount													Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2020		51,053,858	$	511	(391,939)	$	(3,167)	$	293,242	$	349,656	$	640,242	$	9,167	$	649,409
Balance at December 31, 2021																		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
Issuance of common stock under 2014 Omnibus Equity Incentive Plan	Issuance of common stock under 2014 Omnibus Equity Incentive Plan	111,675	1		—	—		2,436		—		2,437		—		2,437		Issuance of common stock under 2014 Omnibus Equity Incentive Plan	139,710	1		—	—		—	—		2,751		—		2,752		—		2,752
Withholdings from vesting of restricted stock awards	Withholdings from vesting of restricted stock awards	(41,318)	(1)		—	—		(833)		—		(834)		—		(834)		Withholdings from vesting of restricted stock awards	(46,415)	(1)		—	—		—	—		(1,074)		—		(1,075)		—		(1,075)
Amortization of deferred share-based compensation	Amortization of deferred share-based compensation	—	—		—	—		146		—		146		—		146		Amortization of deferred share-based compensation	—	—		—	—		—	—		280		—		280		—		280
Dividends																		Dividends	—	—		—	—		—	—		—		(655)		(655)		—		(655)
Share repurchases																		Share repurchases	—	—		—	—		(1,193,037)	(25,801)		—		—		(25,801)		—		(25,801)
Change in fair value of redeemable noncontrolling interest	Change in fair value of redeemable noncontrolling interest	—	—		—	—		(1,829)		—		(1,829)		—		(1,829)		Change in fair value of redeemable noncontrolling interest	—	—		—	—		—	—		557		—		557		—		557
Distributions																		Distributions	—	—		—	—		—	—		—		—		—		(5,718)		(5,718)
Net income	Net income	—	—		—	—		—		25,969		25,969		1,463		27,432		Net income	—	—		—	—		—	—		—		61,577		61,577		1,750		63,327
Balance at March 31, 2021		51,124,215	$	511	(391,939)	$	(3,167)	$	293,162	$	375,625	$	666,131	$	10,630	$	676,761
Balance at March 31, 2022																		Balance at March 31, 2022	51,245,206	$	512	2,000	$	47,696	(1,584,976)	$	(28,968)	$	292,155	$	600,788	$	912,183	$	10,178	$	922,361

The accompanying notes are an integral part of these condensed consolidated financial statements.

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

Three Months Ended March 31,
2022 2021
Cash flows from operating activities:
Net income $ 64,196 $ 27,761
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization expense 625 841
Loss on disposal of property and equipment, net 39 10
Share-based compensation expense 2,923 2,583
Equity in income of unconsolidated entities (5,687) (3,891)
Allowances for option deposits and pre-acquisition costs 59 43
Distributions of income from unconsolidated entities 3,176 1,886
Changes in operating assets and liabilities:
Increase in receivables (179) (2,337)
Increase in inventory (123,429) (76,034)
Decrease (increase) in earnest money deposits 1,265 (1,009)
Decrease (increase) in other assets 4,476 (106)
Increase in accounts payable 11,217 14,479
Increase in accrued expenses 28,317 9,819
(Decrease) increase in customer and builder deposits (992) 17,942
Net cash used in operating activities (13,994) (8,013)
Cash flows from investing activities:
Investments in unconsolidated entities — (9)
Purchase of property and equipment, net of disposals (448) (740)
Net cash used in investing activities (448) (749)
Cash flows from financing activities:
Borrowings from lines of credit 112,000 108,000
Borrowings from senior unsecured notes — 125,000
Repayments of lines of credit (92,000) (211,000)
Proceeds from notes payable 14,472 —
Repayments of notes payable (14) (2,006)
Payments of debt issuance costs (86) (595)
Payments of withholding tax on vesting of restricted stock awards (1,075) (834)
Stock repurchases (25,801) —
Dividends paid (655) —
Distributions to noncontrolling interests (5,718) —
Net cash provided by financing activities 1,123 18,565
Net (decrease) increase in cash and cash equivalents and restricted cash (13,319) 9,803
Cash and cash equivalents, beginning of period 78,696 19,479
Restricted cash, beginning of period 14,858 14,156
Cash and cash equivalents and restricted cash, beginning of period 93,554 33,635
Cash and cash equivalents, end of period 66,083 28,688
Restricted cash, end of period 14,152 14,750
Cash and cash equivalents and restricted cash, end of period $ 80,235 $ 43,438


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	68,141	$	64,196
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense	754		625
(Gain) loss on disposal of property and equipment, net	(146)		39
Share-based compensation expense	5,499		2,923
Equity in income of unconsolidated entities	(4,221)		(5,687)
Allowances for option deposits and pre-acquisition costs	10		59
Distributions of income from unconsolidated entities	2,906		3,176
Changes in operating assets and liabilities:
Increase in receivables	(1,968)		(179)
Decrease (increase) in inventory	49,987		(123,429)
Decrease in earnest money deposits	4,380		1,265
Decrease in other assets	2,960		4,476
Increase in accounts payable	1,058		11,217
Increase in accrued expenses	17,512		28,317
Increase (decrease) in customer and builder deposits	7,835		(992)
Net cash provided by (used in) operating activities	154,707		(13,994)
Cash flows from investing activities:
Investments in unconsolidated entities	(1,520)		—
Purchase of property and equipment, net of disposals	(1,581)		(448)
Net cash used in investing activities	(3,101)		(448)
Cash flows from financing activities:
Borrowings from lines of credit	22,000		112,000
Repayments of lines of credit	(42,000)		(92,000)
Proceeds from notes payable	—		14,472
Repayments of notes payable	(16)		(14)
Payments of debt issuance costs	(72)		(86)
Payments of withholding tax on vesting of restricted stock awards	(1,975)		(1,075)
Share repurchases	(15,351)		(25,801)
Dividends paid	(719)		(655)
Distributions to noncontrolling interests	(11,056)		(5,718)
Net cash (used in) provided by financing activities	(49,189)		1,123
Net increase (decrease) in cash and cash equivalents and restricted cash	102,417		(13,319)
Cash and cash equivalents, beginning of period	76,588		78,696
Restricted cash, beginning of period	16,682		14,858
Cash and cash equivalents and restricted cash, beginning of period	93,270		93,554
Cash and cash equivalents, end of period	177,271		66,083
Restricted cash, end of period	18,416		14,152
Cash and cash equivalents and restricted cash, end of period	$	195,687	$	80,235

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands) (Unaudited)


Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds	$	25—	$	—25

The accompanying notes are an integral part of these condensed consolidated financial statements.

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed 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”), but do not include all of the information and footnotes required for complete financial statements. The condensed consolidated balance sheet as of December 31, ~~2021~~2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements for the periods presented reflect all adjustments of a normal, recurring nature necessary to fairly state our financial position, results of operations and cash flows. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Operating results for the three months ended March 31, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2022~~2023 or subsequent periods due to seasonal variations and other factors.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Green Brick Partners (together, the “Company”, “we”, or “Green Brick”), Inc., its controlled subsidiaries, and variable interest entities (“VIEs”) 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”).~~beneficiary.

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, if any, is included in the condensed consolidated statements of income.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions that affect the amounts reported in the condensed 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

~~Reclassifications~~

~~Certain prior period amounts have been reclassified to conform to the current period presentation with no impact to net income in any period.~~

For a complete set of the Company’s significant accounting policies, refer to Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the ~~Financial Accounting Standards Board (“FASB”)~~FASB through Accounting Standards Updates (“ASU”) to the FASB ~~Accounting Standards Codification (“ASC”).~~ASC. The Company considers the applicability and impact of all ASUs and has determined that any recently adopted accounting pronouncements did not have a material impact on the ~~Company's condensed~~Company’s consolidated financial statements and all recent accounting pronouncements not yet adopted are not applicable or are not expected to have a material impact on the ~~Company's condensed~~Company’s consolidated financial statements.

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2. INVENTORY

A summary of our inventory is as follows (in thousands):
March 31, 2022 December 31, 2021
Homes completed or under construction $ 601,504 $ 544,258
Land and lots - developed and under development 718,411 620,129
Land held for sale 7,594 39,356
Total inventory $ 1,327,509 $ 1,203,743


	March 31, 2023		December 31, 2022
Homes completed or under construction	$	525,571	$	603,953
Land and lots - developed and under development	796,826		768,194
Land held for future development(1)	48,453		48,369
Land held for sale	2,164		2,164
Total inventory	$	1,373,014	$	1,422,680

(1)

~~A summary~~Land held for future development consists of ~~interest~~raw land parcels where development activities have been postponed due to market conditions or other factors. All applicable carrying costs, ~~incurred, capitalized and~~including property taxes, are expensed is as ~~follows (in thousands):~~

Three Months Ended March 31,
2022 2021
Interest capitalized at beginning of period $ 19,950 $ 17,520
Interest incurred 3,734 2,851
Interest charged to cost of revenues (2,933) (1,991)
Interest capitalized at end of period $ 20,751 $ 18,380
Capitalized interest as a percentage of inventory 1.6 % 2.0 %
incurred.

As of March 31, ~~2022,~~2023, the Company reviewed the performance and outlook for all of its communities for indicators of potential impairment and performed detailed impairment analysis when ~~necessary.~~such indicators were identified. As of March 31, ~~2022,~~2023, the Company ~~did not identify any~~performed further impairment analysis of one selling ~~communities~~community with indicators of ~~impairment.~~impairment with a combined corresponding carrying value of approximately $26.6 million. For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company did not record an impairment adjustment to reduce the carrying value of ~~impaired~~ communities to fair value.

A summary of interest costs incurred, capitalized, and expensed is as follows (in thousands):


	Three Months Ended March 31,
	2023			2022
Interest capitalized at beginning of period	$	22,752		$	19,950
Interest incurred	3,743			3,734
Interest charged to cost of revenues	(3,648)			(2,933)
Interest capitalized at end of period	$	22,847		$	20,751

Capitalized interest as a percentage of inventory	1.7		%	1.6		%

3. INVESTMENT IN UNCONSOLIDATED ENTITIES

A summary of the Company’s investments in unconsolidated entities is as follows (in thousands):
March 31, 2022 December 31, 2021
GB Challenger, LLC $ 39,532 $ 37,737
GBTM Sendera, LLC 9,854 9,854
EJB River Holdings, LLC 6,868 6,130
BHome Mortgage, LLC 1,041 1,180
Green Brick Mortgage, LLC 832 715
Total investment in unconsolidated entities $ 58,127 $ 55,616


	March 31, 2023		December 31, 2022
GB Challenger, LLC	$	51,043	$	49,897
GBTM Sendera, LLC	15,839		14,319
EJB River Holdings, LLC	9,057		8,554
BHome Mortgage, LLC	1,120		1,147
Green Brick Mortgage, LLC	—		307
Total investment in unconsolidated entities	$	77,059	$	74,224

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A summary of the unaudited condensed financial information of the five unconsolidated entities that are accounted for by the equity method is as follows (in thousands):
March 31, 2022 December 31, 2021
Assets:
Cash $ 20,218 $ 15,903
Accounts receivable 4,609 4,787
Bonds and notes receivable 5,762 5,772
Loans held for sale, at fair value 18,277 20,734
Inventory 167,999 166,861
Other assets 12,375 7,220
Total assets $ 229,240 $ 221,277
Liabilities:
Accounts payable $ 12,547 $ 7,701
Accrued expenses and other liabilities 15,051 13,992
Notes payable 92,617 95,816
Total liabilities $ 120,215 $ 117,509
Owners’ equity:
Green Brick $ 55,508 $ 52,983
Others 53,517 50,785
Total owners’ equity $ 109,025 $ 103,768
Total liabilities and owners’ equity $ 229,240 $ 221,277

Three Months Ended March 31,
2022 2021
Revenues $ 70,636 $ 39,721
Costs and expenses 59,197 31,951
Net earnings of unconsolidated entities $ 11,439 $ 7,770
Company’s share in net earnings of unconsolidated entities $ 5,687 $ 3,891


	March 31, 2023		December 31, 2022
Assets:
Cash	$	12,009	$	15,265
Accounts receivable	5,945		4,972
Bonds and notes receivable	12,341		10,381
Loans held for sale, at fair value	3,155		8,829
Inventory	205,206		195,732
Other assets	10,269		9,352
Total assets	$	248,925	$	244,531
Liabilities:
Accounts payable	$	13,873	$	10,166
Accrued expenses and other liabilities	12,612		12,177
Notes payable	77,060		82,484
Total liabilities	$	103,545	$	104,827
Owners’ equity:
Green Brick	$	73,569	$	70,812
Others	71,811		68,892
Total owners’ equity	$	145,380	$	139,704
Total liabilities and owners’ equity	$	248,925	$	244,531


	Three Months Ended March 31,
	2023		2022
Revenues	$	58,323	$	70,636
Costs and expenses	49,726		59,197
Net earnings of unconsolidated entities	$	8,597	$	11,439
Company’s share in net earnings of unconsolidated entities	$	4,221	$	5,687

A summary of the Company’s share in net earnings ~~(losses)~~ by unconsolidated entity is as ~~follows (in thousands):~~follows:


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
GB Challenger, LLC	GB Challenger, LLC	$	4,067	$	2,750	GB Challenger, LLC	$	3,025	$	4,067
BHome Mortgage, LLC						BHome Mortgage, LLC	693		554
EJB River Holdings, LLC	EJB River Holdings, LLC	738		(1)		EJB River Holdings, LLC	503		738
BHome Mortgage, LLC		554		71
Green Brick Mortgage, LLC	Green Brick Mortgage, LLC	328		1,088		Green Brick Mortgage, LLC	—		328
GBTM Sendera, LLC		—		(17)
Total net earnings from unconsolidated entities	Total net earnings from unconsolidated entities	$	5,687	$	3,891	Total net earnings from unconsolidated entities	$	4,221	$	5,687

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4. ACCRUED EXPENSES

A summary of the Company’s accrued expenses is as follows (in thousands):


	March 31, 2023		December 31, 2022
Real estate development reserve to complete(1)	$	32,554	$	28,793
Warranty reserve	19,532		17,945
Federal income tax payable	19,293		6,334
Accrued compensation	4,970		13,917
Other accrued expenses	32,143		24,292
Total accrued expenses	$	108,492	$	91,281

(1)Our real estate development reserve to complete consists of estimated future costs to complete the development of our communities.

Warranties

Warranty accruals are included within accrued expenses on the condensed consolidated balance sheets. Warranty activity during the three months ended March 31, 2023 and 2022 consisted of the following (in thousands):


	Three Months Ended March 31,
	2023		2022
Warranty accrual, beginning of period	$	17,945	$	9,378
Warranties issued	2,045		1,814
Changes in liability for existing warranties	633		295
Settlements made	(1,091)		(874)
Warranty accrual, end of period	$	19,532	$	10,613

5. DEBT

Lines of Credit

Borrowings on lines of credit outstanding, net of debt issuance costs, as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (in thousands):
March 31, 2022 December 31, 2021
Secured Revolving Credit Facility $ — $ 2,000
Unsecured Revolving Credit Facility 22,000 —
Debt issuance costs, net of amortization (2,579) (2,738)
Total borrowings on lines of credit, net $ 19,421 $ (738)


	March 31, 2023		December 31, 2022
Secured Revolving Credit Facility	$	—	$	—
Unsecured Revolving Credit Facility	—		20,000
Debt issuance costs, net of amortization	(2,453)		(2,605)
Total borrowings on lines of credit, net	$	(2,453)	$	17,395

Secured Revolving Credit Facility

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 February 9, 2022, the Company entered into the Eighth Amendment to this credit agreement to extend its maturity ~~from May 1, 2022~~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. The entire unpaid principal balance and any accrued but unpaid interest is due and payable on the maturity date. ~~As of March 31, 2022, the maturity date of the Secured Revolving Credit Facility is May 1, 2025.~~

As of March 31, ~~2022,~~2023, there were no letters of credit outstanding and a net available commitment amount of $35.0 million.

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The Company incurred $0.1 million in fees and other debt issuance costs associated with the amendment. These costs were deferred and reduce the carrying amount of debt on our condensed consolidated balance sheet.

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”). On December 9, 2022, the Company entered into the Tenth Amendment to this credit agreement which increased the secured outstanding commitments from $300.0 million to $325.0 million and extended the termination date by one year to December 14, 2025. The Tenth Amendment also replaced LIBOR as the benchmark interest rate with the Secure Overnight Financing Rate (“SOFR”).

The Unsecured Revolving Credit Facility ~~provides for maximum aggregate lending commitments of up to $325.0 million of which~~is guaranteed on an unsecured senior basis by 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. The termination date with respect to commitments under the Unsecured Revolving Credit Facility is December 14, 2024.

~~As of March 31, 2022, the interest rate on outstanding borrowings under the Unsecured Revolving Credit Facility was 2.85% per annum.~~Company’s significant subsidiaries and certain other subsidiaries.

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~~Senior unsecured notes, ~~(the “2026 Notes”) due on August 8, 2026 at a fixed rate~~net 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, as of ~~approximately $1.7 million that were deferred~~March 31, 2023 and ~~reduced the amount of debt on our condensed balance sheet. The Company used the net proceeds from the issuance~~December 31, 2022 consisted of the ~~2026~~following (in thousands):


	March 31, 2023		December 31, 2022
4.00% senior unsecured notes due in 2026 (“2026 Notes”)	$	75,000	$	75,000
3.35% senior unsecured notes due in 2027 (“2027 Notes”)	37,500		37,500
3.25% senior unsecured notes due in 2028 (“2028 Notes”)	125,000		125,000
3.25% senior unsecured notes due in 2029 (“2029 Notes”)	100,000		100,000
Debt issuance costs, net of amortization	(1,580)		(1,675)
Total senior unsecured notes, net	$	335,920	$	335,825

The Senior Unsecured Notes ~~to repay borrowings under~~are guaranteed on an unsecured senior basis by the Company’s ~~existing revolving credit facilities.~~ significant subsidiaries and certain other subsidiaries. Optional prepayment of each of the Notes is allowed with a payment of a “make-whole” penalty which fluctuates depending on market interest rates. Interest is payable quarterly in arrears.

2026 Notes

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 on November 8, 2019.~~

~~On August 26, 2020, the Company entered into a Note Purchase Agreement with~~ 2027 Notes

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”)~~2027 Notes is 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 condensed 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. 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, 2020.2027.

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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 condensed 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 condensed 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,~~28, 2029. ~~Optional prepayment is allowed~~

Our debt instruments require us to maintain specific financial covenants, each of which we were in compliance with ~~payment~~as of ~~a “make-whole” penalty which fluctuates depending on market interest rates. Interest is payable quarterly in arrears commencing on~~ March ~~28, 2022.~~31, 2023.

Notes payable

On February 7, 2022, a subsidiary of the Company entered into a Promissory Note agreement with another homebuilder for $28.8 million in connection with the acquisition of a tract of land in Bastrop County, Texas. The Company agreed to pay $14.4 million per the governing Joint Ownership and Development Agreement. The Promissory Note matures on February 7, 2024 and it carries an annual fixed rate of 0.6%.

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6. REDEEMABLE NONCONTROLLING INTEREST

Redeemable Noncontrolling Interest in Equity of Consolidated Subsidiaries

The Company has a noncontrolling interest attributable to the 20% minority interest in GRBK GHO Homes, LLC (“GRBK GHO”) owned by our Florida-based partner that is included as redeemable noncontrolling interest in equity of consolidated subsidiary in the Company’s condensed consolidated financial statements.

On March 23, 2023, the Company and the minority partner amended the operating agreement of GRBK GHO to change the start of the put and purchase options from April 2024 to April 2027. Refer to Note 2 in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for details on the put/call structure of this agreement.

The following ~~tables show~~table shows the changes in redeemable noncontrolling interest in equity of consolidated subsidiary during the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Redeemable noncontrolling interest, beginning of period	Redeemable noncontrolling interest, beginning of period	$	21,867	$	13,543	Redeemable noncontrolling interest, beginning of period	$	29,239	$	21,867
Net income attributable to redeemable noncontrolling interest partner	Net income attributable to redeemable noncontrolling interest partner	869		329		Net income attributable to redeemable noncontrolling interest partner	1,365		869
Change in fair value of redeemable noncontrolling interest	Change in fair value of redeemable noncontrolling interest	(557)		1,829		Change in fair value of redeemable noncontrolling interest	(313)		(557)
Redeemable noncontrolling interest, end of period	Redeemable noncontrolling interest, end of period	$	22,179	$	15,701	Redeemable noncontrolling interest, end of period	$	30,291	$	22,179

6.7. STOCKHOLDERS’ EQUITY

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

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and business conditions, applicable legal requirements and other factors. Shares repurchased can be retired. The Repurchase Plan may be modified or terminated by our Board at any time in its sole discretion.

During the ~~period~~three months ended March 31, 2022, the Company completed discrete open market repurchases under the ~~Repurchase Plan~~stock repurchase program approved in 2021 of 1,193,037 shares for approximately $25.8 million. ~~As of March 31, 2022, the~~There are no amounts remaining ~~dollar value of shares that may yet be purchased~~ under the ~~Repurchase Plan was $24.2 million.~~2021 plan.

2022 Share Repurchase Program

On April ~~27,2022,~~27, 2022, the Board of Directors (the “Board”) approved a new stock repurchase program (the “2022 Repurchase Plan”) that authorizes the Company to purchase, from time to time, up to ~~an additional~~ $100.0 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 ~~new plan~~2022 Repurchase Plan has no time deadline and will continue until otherwise modified or terminated by the ~~Company’s board~~Board at any time in its sole discretion.

2023 Share Repurchase Program

On April 27, 2023, the Board approved a new stock repurchase program (the “2023 Repurchase Plan”) that authorizes the Company to purchase, from time to time, up to an additional $100.0 million of our outstanding common stock, upon completion of our 2022 Repurchase Plan, 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 2023 Repurchase Plan has no time deadline and will continue until otherwise modified or terminated by the Board at any time in its sole discretion.

During the three months ended March 31, 2023, the Company repurchased 467,875 shares for approximately $15.4 million, excluding excise tax. As of March 31, 2023, the remaining dollar value of shares that may be repurchased under the 2022 Repurchase Plan was $33.3 million, excluding excise tax. The repurchased shares will be retired.

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Preferred Stock

The table below presents a summary of the perpetual preferred stock outstanding at March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

Series

Description

Initial date of issuance

Total Shares Outstanding

Liquidation Preference per Share (in dollars)

Carrying Value (in thousands)

Per Annum Dividend Rate

Redemption Period

Series A(1)

5.75% Cumulative Perpetual

December 2021

2,000

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.

Dividends

~~According to the terms~~Dividends paid on our Series A preferred stock were $0.7 million for each of the ~~preferred stock offering, the Company will pay cumulative cash dividends on the Series A Preferred Stock, when~~three months ended March 31, 2023 and ~~as declared by the Board, on a quarterly basis in arrears.~~ 2022, respectively.

On April ~~27, 2022,~~27,2023, the Board declared a quarterly cash dividend of ~~$0.0359~~$0.359 per depositary share on the Company’s preferred stock. The dividend is payable on June 15, ~~2022~~2023 to ~~shareholders~~stockholders of record as of June 1, ~~2022.~~

~~Preferred share dividends paid totaled $0.7 million and $0.0 million for the three months ended March 31, 2022 and 2021, respectively.~~2023.

7.8. SHARE-BASED COMPENSATION

The Company’s stock compensation plan, the 2014 Omnibus Equity Incentive Plan, is administered by the Board and allows for the grant of stock awards (“SAs”), restricted stock awards (“RSAs”), performance restricted stock units (“PRSUs”), and stock options.

Share-Based Award Activity

During the three months ended March 31, ~~2022,~~2023, the Company granted ~~stock awards (“SAs”) under its 2014 Omnibus Equity Incentive Plan~~SAs to executive officers, ~~(“EOs”).~~RSAs to employees and non-employee members of the Board, and PRSUs to employees. The SAs granted to the ~~EOs~~executive officers were 100% vested and non-forfeitable on the grant date. Non-vested stock awards are usually granted with a one-year vesting for non-employee directors, two-year cliff vesting for employee RSAs, and three-year cliff vesting for PRSUs. The fair value of ~~the SAs granted to EOs was~~all share awards were recorded as share-based compensation expense on the grant ~~date.~~date and over the vesting period, respectively. The Company withheld ~~46,415~~59,857 shares of common stock from ~~EOs,~~executive officers at a total cost of ~~$1.1~~$2.0 million, to satisfy statutory minimum tax requirements upon grant of the SAs.

~~2021 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 Employee Performance Based Restricted Stock Awards Plan (the “PBRS Award Plan”). This plan is being offered pursuant to the Company’s 2014 Omnibus Equity Incentive Plan. The Company incurred de minimis share-based

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~~compensation expense and compensation expense related to these awards during the three months ended March 31, 2022 and 2021, respectively.~~

~~2022 Employee Stock Awards~~

On March 1, 2022, the Company’s Board of Directors approved the issuance of restricted stock awards for eligible employees in accordance with the PBRS Award Plan. The Company incurred de minimis compensation expense related to these awards during the three months ended March 31, 2022.

A summary of share-based awards activity during the three months ended March 31, ~~2022~~2023 is as follows:
Number of Shares Weighted Average Grant Date Fair Value per Share
(in thousands)
Nonvested, December 31, 2021 28 $ 23.21
Granted 140 $ 22.08
Vested (126) $ 21.94
Forfeited — $ —
Nonvested, March 31, 2022 42 $ 23.23


	Number of Shares	Weighted Average Grant Date Fair Value per Share
	(in thousands)
Nonvested, December 31, 2022	38	$	23.94
Granted	179	$	33.21
Vested	(123)	$	33.01
Forfeited	—	$	—
Nonvested, March 31, 2023	94	$	29.69

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Stock Options

A summary of stock options activity during the three months ended March 31, ~~2022~~2023 is as follows:
Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value
(in thousands) (in years) (in thousands)
Options outstanding, December 31, 2021 500 $ 7.49
Granted 0 —
Exercised — —
Forfeited — —
Options outstanding, March 31, 2022 500 $ 7.49 2.58 $ 6,135
Options exercisable, March 31, 2022 500 $ 7.49 2.58 $ 6,135


	Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)			(in years)	(in thousands)
Options outstanding, December 31, 2022	500	$	7.49
Granted	—	—
Exercised	—	—
Forfeited	—	—
Options outstanding, March 31, 2023	500	$	7.49	1.58	$	13,785
Options exercisable, March 31, 2023	500	$	7.49	1.58	$	13,785

Share-Based Compensation Expense

Share-based compensation expense was ~~$2.9~~$5.5 million and ~~$2.6~~$2.9 million for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Recognized tax benefit related to share-based compensation expense was $0.7 million and $0.6 million for the three months ended March 31, 2022 and 2021, respectively.~~

As of March 31, ~~2022,~~2023, the estimated total remaining unamortized share-based compensation expense related to unvested ~~Restricted Stock Awards (“RSAs”),~~RSAs, net of forfeitures, was ~~$0.4~~$2.7 million which is expected to be recognized over a weighted-average period of ~~1.5~~2.0 years.

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8.9. 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 for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Three Months Ended March 31, 2022				Three Months Ended March 31, 2021					Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
		Residential units revenue		Land and lots revenue		Residential units revenue		Land and lots revenue			Residential units revenue		Land and lots revenue		Residential units revenue		Land and lots revenue
Primary Geographical Market	Primary Geographical Market									Primary Geographical Market
Central	Central	$	261,698	$	28,861	$	157,378	$	8,417	Central	$	344,464	$	1,699	$	261,698	$	28,861
Southeast	Southeast	102,963		94		59,858		8,826		Southeast	105,898		—		102,963		94
Total revenues	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243	Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Type of Customer	Type of Customer									Type of Customer
Homebuyers	Homebuyers	$	364,661	$	—	$	217,236	$	—	Homebuyers	$	450,362	$	—	$	364,661	$	—
Homebuilders and Multi-family Developers	Homebuilders and Multi-family Developers	—		28,955		—		17,243		Homebuilders and Multi-family Developers	—		1,699		—		28,955
Total revenues	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243	Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Product Type	Product Type									Product Type
Residential units	Residential units	$	364,661	$	—	$	217,236	$	—	Residential units	$	450,362	$	—	$	364,661	$	—
Land and lots	Land and lots	—		28,955		—		17,243		Land and lots	—		1,699		—		28,955
Total revenues	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243	Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Timing of Revenue Recognition	Timing of Revenue Recognition									Timing of Revenue Recognition
Transferred at a point in time	Transferred at a point in time	$	363,063	$	28,955	$	216,134	$	17,243	Transferred at a point in time	$	449,430	$	1,699	$	363,063	$	28,955
Transferred over time	Transferred over time	1,598		—		1,102		—		Transferred over time	932		—		1,598		—
Total revenues	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243	Total revenues	$	450,362	$	1,699	$	364,661	$	28,955

Revenue recognized over time represents revenue from mechanic’s lien contracts.

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Contract Balances

Opening and closing contract balances included in customer and builder deposits on the condensed consolidated balance sheets are as follows (in thousands):
March 31, 2022 December 31, 2021
Customer and builder deposits $ 63,618 $ 64,610


	March 31, 2023		December 31, 2022
Customer and builder deposits	$	36,948	$	29,112

The difference between the opening and closing balances of customer and builder deposits results from the timing difference between the customers’ payments of deposits and the Company’s ~~performance,~~delivery of the home, 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 three months ended March 31, ~~2022~~2023 and ~~2021~~2022 are as follows (in thousands):

Three Months Ended March 31,
2022 2021
Type of Customer
Homebuyers $ 20,795 $ 6,616
Homebuilders and Multi-Family Developers 100 1,109
Total deposits recognized as revenue $ 20,895 $ 7,725

~~Performance Obligations~~

~~There was no revenue recognized during the three months ended March 31, 2022 and 2021 from performance obligations satisfied in prior periods.~~


	Three Months Ended March 31,
	2023		2022
Type of Customer
Homebuyers	$	12,653	$	20,795
Homebuilders and Multi-Family Developers	—		100
Total deposits recognized as revenue	$	12,653	$	20,895

Transaction Price Allocated to the Remaining Performance Obligations

The aggregate amount of transaction price allocated to the remaining performance obligations on our land sale and lot option contracts is ~~$24.1~~$5.3 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):~~
Total
Remainder of 2022 $ 17,949
2023 6,163
2024 —
Total $ 24,112
in the remainder of 2023.

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, Revenue from Contracts with Customers, and therefore has not disclosed the transaction price allocated to remaining performance obligations as of the end of the reporting period.

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9.10. SEGMENT INFORMATION

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.


		Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Revenues: (1)	Revenues: (1)					Revenues: (1)
Builder operations	Builder operations					Builder operations
Central	Central	$	261,698	$	158,386	Central	$	344,464	$	261,698
Southeast	Southeast	103,057		68,684		Southeast	105,898		103,057
Total builder operations	Total builder operations	364,755		227,070		Total builder operations	450,362		364,755
Land development	Land development	28,861		7,409		Land development	1,699		28,861
Total revenues	Total revenues	$	393,616	$	234,479	Total revenues	$	452,061	$	393,616

Gross profit:	Gross profit:					Gross profit:
Builder operations	Builder operations					Builder operations
Central	Central	$	84,064	$	43,889	Central	$	102,405	$	84,064
Southeast	Southeast	25,776		19,049		Southeast	33,329		25,776
Total builder operations	Total builder operations	109,840		62,938		Total builder operations	135,734		109,840
Land development	Land development	7,414		1,780		Land development	688		7,414
Corporate, other and unallocated (2)	Corporate, other and unallocated (2)	(8,898)		(5,729)		Corporate, other and unallocated (2)	(11,816)		(8,898)
Total gross profit	Total gross profit	$	108,356	$	58,989	Total gross profit	$	124,606	$	108,356

Income before income taxes:	Income before income taxes:					Income before income taxes:
Builder operations	Builder operations					Builder operations
Central	Central	$	59,485	$	24,858	Central	$	68,017	$	59,485
Southeast	Southeast	15,494		10,163		Southeast	22,271		15,494
Total builder operations	Total builder operations	74,979		35,021		Total builder operations	90,288		74,979
Land development	Land development	7,585		1,844		Land development	775		7,585
Corporate, other and unallocated (3)	Corporate, other and unallocated (3)	69		(1,603)		Corporate, other and unallocated (3)	(3,891)		69
Income before income taxes	Income before income taxes	$	82,633	$	35,262	Income before income taxes	$	87,172	$	82,633


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Inventory:	Inventory:					Inventory:
Builder operations	Builder operations					Builder operations
Central	Central	$	489,094	$	460,796	Central	$	460,388	$	515,981
Southeast	Southeast	283,475		258,759		Southeast	297,729		293,787
Total builder operations	Total builder operations	772,569		719,555		Total builder operations	758,117		809,768
Land development	Land development	517,892		449,654		Land development	572,985		570,065
Corporate, other and unallocated (4)	Corporate, other and unallocated (4)	37,048		34,534		Corporate, other and unallocated (4)	41,912		42,847
Total inventory	Total inventory	$	1,327,509	$	1,203,743	Total inventory	$	1,373,014	$	1,422,680

Goodwill:	Goodwill:					Goodwill:
Builder operations - Southeast	Builder operations - Southeast	$	680	$	680	Builder operations - Southeast	$	680	$	680

(1)The sum of Builder operations Central and Southeast segments’ revenues does not equal residential units revenue included in the condensed consolidated statements of income in periods when our builders have revenues from land or

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lot ~~closings, which for~~closings. For the three months ended March 31, ~~2022 were $0.1 million,~~2023, Builders did not have revenues from land or lot closings, compared to ~~$9.8~~$0.1 million for the three months ended March 31, ~~2021.~~2022.

(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)Corporate, other and unallocated ~~income (loss)~~loss before income taxes includes results from Green Brick Title, ~~LLC, C Brick~~Ventana Insurance, ~~LLC,~~ and investments in unconsolidated subsidiaries, in addition to capitalized cost adjustments that are not allocated to operating segments.

(4)Corporate, other and unallocated inventory consists of capitalized overhead and interest related to work in process and land under development.

~~10.~~11. INCOME TAXES

The Company’s income tax expense for the three months ended March 31, 2023 and 2022 was $19.0 million and $18.4 million, ~~compared to $7.5 million in the three months ended March 31, 2021.~~respectively. The effective tax rate was ~~22.3%~~21.8% for the three months ended March 31, ~~2022,~~2023, compared to ~~21.3%~~22.3% in the comparable prior year period. The change in the effective tax rate for the three months ended March 31, ~~2022~~2023 relates primarily to the ~~increase in book income offset by a decrease in the tax credit~~ benefit from the ~~enactment~~45L Energy Efficient Home Credit enacted by Congress in August 2022 as part of the Inflation Reduction Act of 2022 (“the 2022 Act”). The 2022 Act extends and modifies the new energy efficient home credit that Congress had enacted through the Taxpayer Certainty and Disaster Tax Relief ~~Act~~Acts of 2019 ~~(“the 2019 Act”). The 2019 Act retroactively reinstated the federal energy efficient homes~~and 2020. This tax credit ~~that~~had expired ~~on December 31, 2017 to homes closed from January 1, 2018 to December 31, 2020. In December 2020, Congress approved~~at the ~~Taxpayer Certainty and Disaster Tax Relief~~end of 2021, but following its enactment in August 2022, the 2022 Act ~~of 2020, which~~ extended the ~~federal energy efficient homes~~ tax credit through ~~December 31, 2021. As of March 31, 2022, the credit for energy efficient new homes had not been extended past December 31, 2021.~~2032.

~~11.~~12. EARNINGS PER SHARE

The Company’s RSAs have the right to receive forfeitable dividends on an equal basis with common stock and our PRSUs do not participate in dividends 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~~stockholders by the weighted average number of common shares outstanding during each period, adjusted for non-vested shares of ~~restricted stock awards~~RSAs and PRSUs during each period. Net income applicable to common ~~shareholders~~stockholders 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 computation of basic and diluted net income attributable to Green Brick Partners, Inc. per share is as follows (in thousands, except per share amounts):


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Net income attributable to Green Brick Partners, Inc.	Net income attributable to Green Brick Partners, Inc.	$	61,577	$	25,969	Net income attributable to Green Brick Partners, Inc.	$	64,180	$	61,577
Preferred stock dividends paid		(599)		—
Cumulative preferred stock dividends	Cumulative preferred stock dividends	(120)		—		Cumulative preferred stock dividends	(719)		(719)
Net income applicable to common shareholders		60,858		25,969
Net income applicable to common stockholders						Net income applicable to common stockholders	$	63,461	$	60,858

Weighted-average number of common shares outstanding - basic	Weighted-average number of common shares outstanding - basic	50,586		50,633		Weighted-average number of common shares outstanding - basic	45,945		50,586
Basic net income attributable to Green Brick Partners, Inc. per common share	Basic net income attributable to Green Brick Partners, Inc. per common share	$	1.20	$	0.51	Basic net income attributable to Green Brick Partners, Inc. per common share	$	1.38	$	1.20

Weighted-average number of common shares outstanding - basic	Weighted-average number of common shares outstanding - basic	50,586		50,633		Weighted-average number of common shares outstanding - basic	45,945		50,586
Dilutive effect of stock options and restricted stock awards	Dilutive effect of stock options and restricted stock awards	338		360		Dilutive effect of stock options and restricted stock awards	406		338
Weighted-average number of common shares outstanding - diluted	Weighted-average number of common shares outstanding - diluted	50,924		50,993		Weighted-average number of common shares outstanding - diluted	46,351		50,924
Diluted net income attributable to Green Brick Partners, Inc. per common share	Diluted net income attributable to Green Brick Partners, Inc. per common share	$	1.20	$	0.51	Diluted net income attributable to Green Brick Partners, Inc. per common share	$	1.37	$	1.20

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The following shares which 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):

Three Months Ended March 31,
2022 2021
Antidilutive options to purchase common stock and restricted stock awards 29 —


	Three Months Ended March 31,
	2023	2022
Antidilutive options to purchase common stock and restricted stock awards	(67)	29

~~12.~~13. FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The Company’s financial instruments, none of which are held for trading purposes, include cash and cash equivalents, restricted cash, receivables, earnest money deposits, other assets, accounts payable, accrued expenses, customer and builder deposits, borrowings on lines of credit, senior unsecured notes, and ~~contingent consideration liability.~~notes payable.

Per the fair value hierarchy, level 1 financial instruments include: cash and cash equivalents, 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 condensed consolidated financial statements as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

Level 2 financial instruments include borrowings on lines of credit, ~~and~~ senior unsecured ~~notes.~~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 March 31, 2023 and December 31, 2022 was ~~$329.1 million.~~$312.1 million and $306.1 million, respectively. The ~~carrying value~~aggregate principal balance of the senior unsecured notes was $337.5 million as of March 31, ~~2022 was $337.5 million.~~2023 and December 31, 2022.

There were no transfers between the levels of the fair value hierarchy for any of our financial instruments during the three months ended March 31, 2023 and 2022.

~~13.~~14. RELATED PARTY TRANSACTIONS

During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company had the following related party transactions in the normal course of business.

Corporate Officers

Trevor Brickman, the son of Green Brick’s Chief Executive Officer, is the President of CLH20, LLC (“Centre Living”). 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 condensed consolidated financial statements.

GRBK GHO

GRBK GHO leases office space from entities affiliated with the president of GRBK GHO. During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, GRBK GHO incurred de minimis and $0.1 million rent expense, respectively, under such lease agreements. As of March 31, ~~2022 and December 31, 2021,~~2023, there were no amounts due to the affiliated entities related to such lease agreements.

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 three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, GRBK GHO incurred de minimis fees related to such title closing services. As of March 31, ~~2022,~~2023, and December 31, ~~2021,~~2022, no amounts were due to the title company affiliate.

~~14.~~15. 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 March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, letters of credit

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and performance bonds outstanding were ~~$1.5~~$3.1 million and ~~$1.7 million, respectively.~~$5.0 million. 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 accruals are included within accrued expenses on the condensed consolidated balance sheets. Warranty activity during the three months ended March 31, 2022 and 2021 consisted of the following (in thousands):
Three Months Ended March 31,
2022 2021
Warranty accrual, beginning of period $ 9,378 $ 6,407
Warranties issued 1,814 1,100
Changes in liability for existing warranties 295 39
Settlements (874) (685)
Warranty accrual, end of period $ 10,613 $ 6,861

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.

Operating lease cost of $0.4 million for each of the three months ended March 31, ~~2022,~~2023 and ~~$0.3 million in the prior year period,~~2022, is included in selling, general and administrative expenses in the condensed consolidated statements of income. Cash paid for amounts included in the measurement of operating lease liabilities was $0.4 million ~~and $0.3 million,~~ for each of the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

As of March 31, ~~2022,~~2023, the weighted-average remaining lease term and the weighted-average discount rate used in calculating our lease liabilities were ~~4.7~~4.4 years and ~~4.1%~~4.0%, respectively.

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 condensed consolidated balance sheet as of March 31, ~~2022~~2023 are presented below (in thousands):


Remainder of 2023	$	1,028
2024	590
2025	566
2026	504
2027	447
Thereafter	380
Total future lease payments	$	3,515
Less: Interest	328
Present value of lease liabilities	$	3,187

Remainder of 2022 $ 1,158
2023 1,306
2024 507
2025 517
2026 504
Thereafter 864
Total future lease payments $ 4,856
Less: Interest 441
Present value of lease liabilities $ 4,415

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 condensed consolidated income statements on a straight-line basis. Short-term lease cost of $0.2 million ~~and $0.2 million~~ for each of the three months ended March 31, ~~2022~~2023 and ~~2021, respectively,~~2022, is included in selling, general and administrative expenses in the condensed consolidated statements of income.

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.

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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.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated

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events or trends and similar expressions concerning matters that are not historical facts and typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements in this Quarterly Report include statements concerning, ~~(1)~~(a) our balance sheet strategies, operational strength and margin performance; ~~(2)~~(b) our operational goals and strategies and their anticipated benefits; (3) our expectations that we will 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 and the financial impact of such factors on our future financial and operational results; (4)(c) expectations regarding our industry and our ~~business; (5)~~business, including management’s beliefs related to industry cancellation rates; (d) our beliefs regarding the advantages of the markets we operate in; (e) our land and lot acquisition strategy and its impact on our results; ~~(6)~~(f) the sufficiency of our capital resources to support our business strategy and to service our debt; ~~(7)~~(g) the impact of new accounting standards and changes in accounting estimates; ~~(8) expectations about the impact of sales metering and increases in spec homes will have on future financial results; (9)~~(h) expectations about backlog and cancellation rates on future financial results; ~~(10)~~(i) our ~~strategy~~strategies to utilize leverage to invest in our business; ~~(11) seasonal factors and the impact of seasonality in future quarters; (12)~~(j) our expectations regarding future cash needs and access to additional growth capital; and ~~(13)~~(k) beliefs regarding the impact of legal claims and related contingencies. 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 increasing interest rates and inflation that could adversely impact demand for new homes or the ability of potential buyers to qualify; ~~(2) general economic conditions, seasonality, cyclicality and competition in the homebuilding industry;~~ (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) significant periods of inflation or deflation; (5) a shortage of qualified labor; ~~(5)~~(6) an inability to acquire land in our ~~current and new~~ markets at anticipated prices or difficulty in obtaining land-use entitlements; ~~(6)~~(7) our inability to successfully execute our strategies, including ~~an inability to grow~~the successful development of our ~~operations or expand~~communities within expected time frames and the growth and expansion of our Trophy ~~brand; (7)~~brand (8) a failure to recruit, retain or develop highly skilled and competent employees; ~~(8)~~(9) the geographic concentration of our operations; (10) government regulation risks; ~~(9) a lack of~~(11) adverse changes in the availability or volatility of mortgage ~~financing or a rise in interest rates; (10)~~financing; (12) severe weather events or natural disasters; ~~(11)~~(13) difficulty in obtaining sufficient capital to fund our growth; ~~(12)~~(14) our ability to meet our debt service obligations; ~~(13)~~(15) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; ~~(14)~~(16) our ability to adequately self-insure; and (17) changes in accounting standards that adversely affect our reported earnings or financial condition.

Please see “Risk Factors” located in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 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 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.

2019

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission (“SEC”) on ~~March 1, 2022.~~February 27, 2023. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

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 same period in ~~2021,~~2022, are provided below:


						Three Months Ended March 31, ~~2022~~2023
Home deliveries						Increased by ~~27.5%~~15.7%
Home closings revenue						Increased by ~~68.0%~~23.8%
Average sales price of homes delivered						Increased by ~~31.7%~~7.0%
Net new home orders						~~Decreased~~Increased by ~~44.5%~~77.5%

~~During~~The strong performance on our key metrics year over year is attributable to the expansion of our revenues through our high-performing Texas builders, growth in the average selling price of homes, our infill and infill-adjacent locations in high growth markets, the increased levels of finished and finishing spec home inventory entering the quarter, and the continued low supply of existing and new home inventory in our markets. The rise in new homes delivered over the prior year period was primarily driven by increased levels of finished and finishing spec home inventory entering the first quarter of ~~2022, the direct impact of the COVID-19 pandemic~~2023, and the ~~related actions taken by local and federal governmental agencies in the U.S. has declined.However, we have continued to experience the significantly higher demand for new homes that arose from the pandemic.Throughout the pandemic, we have continued to build, close and sell homes~~increase in our ~~markets. The overwhelming expansion~~average sales price of ~~our revenues year over year is~~homes delivered was primarily attributable to overall price increases driven by the ~~strong performance~~low supply of our Trophy brand division, the impact of macroeconomic factors, and an influx of millennial first-time home buyers. Unfortunately, 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.inventory.

Three Months Ended March 31, ~~2022~~2023 Compared to the Three Months Ended March 31, ~~2021~~

2022

Residential Units Revenue and New Homes Delivered

The table below represents residential units revenue and new homes delivered for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (dollars in thousands):
Three Months Ended March 31,
2022 2021 Change %
Home closings revenue $ 363,063 $ 216,134 $ 146,929 68.0%
Mechanic’s lien contracts revenue 1,598 1,102 496 45.0%
Residential units revenue $ 364,661 $ 217,236 $ 147,425 67.9%
New homes delivered 658 516 142 27.5%
Average sales price of homes delivered $ 551.8 $ 418.9 $ 132.9 31.7%


	Three Months Ended March 31,
	2023		2022		Change		%
Home closings revenue	$	449,430	$	363,063	$	86,367	23.8	%
Mechanic’s lien contracts revenue	932		1,598		(666)		(41.7)	%
Residential units revenue	$	450,362	$	364,661	$	85,701	23.5	%
New homes delivered	761		658		103		15.7	%
Average sales price of homes delivered	$	590.6	$	551.8	$	38.8	7.0	%

The ~~$147.4~~$85.7 million increase in residential units revenue was primarily driven by the ~~31.7% increase in the average sales price of homes delivered and the 27.5% increase in new homes delivered. The~~15.7% increase in new homes delivered ~~was due to a large backlog of homes entering~~and the ~~quarter and an increased number of units under construction entering the quarter. The 31.7%~~7.0% increase in the average sales price of homes delivered for the three months ended March 31, ~~2022~~2023. The increase in new homes delivered was primarily driven by increased levels of finished and finishing spec home inventory entering the quarter. The 7.0% increase in the average sales price of homes delivered for the three months ended March 31, 2023 was attributable to overall price increases driven by ~~high demand and~~the low supply of inventory.

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New Home Orders and Backlog

The table below represents new home orders and backlog related to our builder operations segments, excluding mechanic’s lien contracts (dollars in thousands):

Three Months Ended March 31,
2022 2021 Change %
Net new home orders 601 1,082 (481) (44.5) %
Cancellation rate 8.0 % 6.0 % 2.0 % 33.3 %
Absorption rate per average active selling community per quarter 8.0 11.3 (3.3) (29.2) %
Average active selling communities 75 96 (21) (21.9) %
Active selling communities at end of period 76 90 (14) (15.6) %
Backlog $ 866,621 $ 995,743 $ (129,122) (13.0) %
Backlog (units) 1,423 2,029 (606) (29.9) %
Average sales price of backlog $ 609.0 $ 490.8 $ 118.2 24.1 %


	Three Months Ended March 31,
	2023			2022			Change			%
Net new home orders	1,067			601			466			77.5	%
Revenue from new net home orders	$	630,928		$	359,829		$	271,099		75.3	%
Average selling price of net new home orders	$	591.3		$	598.7		$	(7.4)		(1.2)	%
Cancellation rate	6.2		%	8.0		%	(1.8)		%	(22.5)	%
Absorption rate per average active selling community per quarter	13.3			8.0			5.3			66.3	%
Average active selling communities	80			75			5			6.7	%
Active selling communities at end of period	79			76			3			3.9	%
Backlog	$	550,593		$	866,621		$	(316,028)		(36.5)	%
Backlog units	843			1,423			(580)			(40.8)	%
Average sales price of backlog	$	653.1		$	609.0		$	44.1		7.2	%

Net new home orders ~~decreased 44.5%~~increased 77.5% over the prior year period and our absorption rate ~~decreased 29.2%~~per average active selling community increased 66.3% year over year. ~~The decrease in~~For the quarter ended March 31, 2023, our net new home orders ~~was a direct result of pro-active metering of home sales by withholding homes from sale~~increased 152.2% sequentially and ~~by limiting sales per community to better align the~~our absorption rate ~~of sales with~~increased 142.8% from the ability to deliver new homes. Because of rising input costs and strong sales demand, we prefer to delay sales of homes until later in the construction process and increase our level of spec inventory. We believe this will allow us to better protect and capture margin in inflammatory and low demand market.quarter ended December 31, 2022. The absorption rate per average active selling community per quarter ~~of 8.0~~was 13.3 homes during the three months ended March 31, ~~2022, exceed~~2023, and represented an all-time high for the ~~6.7~~Company for any quarter. The increase in net new home orders ~~during~~is attributable to the ~~three months March 31, 2020, by 19.4%.~~limited competition in our infill and infill-adjacent community sites, increased levels of finished and finishing spec homes entering the quarter, and the continued low supply of existing and new home inventory in our markets.

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~~customer deposit may be returned to the prospective purchaser. Accordingly, backlog may not be indicative of our future revenue.

Backlog declined by ~~13.0% for the quarter with a 29.9% drop in backlog~~36.5% compared to March 31, 2022, while it increased by 49.2% compared to December 31, 2022. Backlog units declined 40.8%, offset by a ~~24.1%~~7.2% increase in the average sales price of backlog units. ~~The drop in~~As of March 31, 2023, backlog units isincreased 57.0% sequentially, offset by a ~~function of both our ability to close an increased number of homes during~~5.0% decline in the ~~first quarter as well as the continued metering of homes sales as discussed above. The increase in~~ average sales price ~~was attributable~~of backlog units compared to ~~overall price increases driven by high demand and low supply of inventory.~~

December 31, 2022. As a ~~further~~ result, ~~of the continued metering of sales, increase of units closed, and decrease in backlog units, we have been able to increase~~our spec units under construction ~~from~~as a ~~low of 28.1%~~percentage of total units under construction ~~in Q1 2021~~declined from 73.4% as of December 31, 2022 to 59.2% as of March 31, 2023, and compared to 45.0% ~~of total units~~ as of ~~the end of Q1~~March 31, 2022. This level is more in line with our historic range of spec units under construction. We consider this to be a success as holding back homes for sale and selling them later in the construction process gives us a better mix of specs versus pre-sold backlog homes. We believe our higher mix of spec homes will lead to more efficient operations, higher gross margins, and less risk of unmatched construction costs.

Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 6.2% for the three months ended March 31, 2023, compared to 8.0% for the three months ended March 31, 2022, compared to 6.0% for the three months ended March 31, 2021. Our cancellation rate remained in a historically low range of the last seven quarters between 6.0% and 12.3% and below their average of 8.7%.2022. Sales contracts ~~relating to homes in backlog~~ may be canceled by the prospective purchaser for a number of reasons, ~~such as~~including 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.

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Residential Units Gross Margin

The table below represents the components of residential units gross margin (dollars in thousands):


		Three Months Ended March 31,									Three Months Ended March 31,
		2022				2021					2023				2022
Home closings revenue	Home closings revenue	$	363,063	100.0	%	$	216,134	100.0	%	Home closings revenue	$	449,430	100.0	%	$	363,063	100.0	%
Cost of homebuilding units	Cost of homebuilding units	262,090		72.2	%	161,230		74.6	%	Cost of homebuilding units	325,515		72.4	%	262,090		72.2	%
Homebuilding gross margin	Homebuilding gross margin	$	100,973	27.8	%	$	54,904	25.4	%	Homebuilding gross margin	$	123,915	27.6	%	$	100,973	27.8	%

Mechanic’s lien contracts revenue	Mechanic’s lien contracts revenue	$	1,598	100.0	%	$	1,102	100.0	%	Mechanic’s lien contracts revenue	$	932	100.0	%	$	1,598	100.0	%
Cost of mechanic’s lien contracts	Cost of mechanic’s lien contracts	1,340		83.9	%	842		76.4	%	Cost of mechanic’s lien contracts	609		65.3	%	1,340		83.9	%
Mechanic’s lien contracts gross margin	Mechanic’s lien contracts gross margin	$	258	16.1	%	$	260	23.6	%	Mechanic’s lien contracts gross margin	$	323	34.7	%	$	258	16.1	%

Residential units revenue	Residential units revenue	$	364,661	100.0	%	$	217,236	100.0	%	Residential units revenue	$	450,362	100.0	%	$	364,661	100.0	%
Cost of residential units	Cost of residential units	263,430		72.2	%	162,072		74.6	%	Cost of residential units	326,124		72.4	%	263,430		72.2	%
Residential units gross margin	Residential units gross margin	$	101,231	27.8	%	$	55,164	25.4	%	Residential units gross margin	$	124,238	27.6	%	$	101,231	27.8	%

Cost of residential units for the three months ended March 31, ~~2022~~2023 increased by ~~$101.4~~$62.7 million, or ~~62.5%~~23.8%, compared to the three months ended March 31, ~~2021,~~2022, primarily due to the ~~27.5%~~15.7% increase in the number of new homes ~~delivered, increasing levels of cost input prices, and more expensive homes delivered in the quarter.~~delivered.

Residential units gross margin for the three months ended March 31, ~~2022 increased to 27.8%~~2023 was 27.6%, compared to ~~25.4%~~27.8% for the three months ended March 31, ~~2021, primarily because of a decrease in sales incentives offered to customers~~2022, and ~~overall price increases that outpaced~~up sequentially from 26.2% for the ~~levels of cost input price increases.~~three months ended December 31, 2022.

Land and Lots Revenue

The table below represents lots closed and land and lots revenue (dollars in thousands):
Three Months Ended March 31,
2022 2021 Change %
Lots revenue $ 1,955 $ 8,443 $ (6,488) (76.8) %
Land revenue 27,000 $ 8,800 18,200 206.8 %
Land and lots revenue $ 28,955 $ 17,243 $ 11,712 67.9 %
Lots closed 33 79 (46) (58.2) %
Average sales price of lots closed $ 59.2 $ 106.9 $ (47.7) (44.6) %


	Three Months Ended March 31,
	2023		2022		Change		%
Lots revenue	$	1,699	$	1,955	$	(256)	(13.1)	%
Land revenue	—		27,000		(27,000)		(100.0)	%
Land and lots revenue	$	1,699	$	28,955	$	(27,256)	(94.1)	%
Lots closed	18		33		(15)		(45.5)	%
Average sales price of lots closed	$	94.4	$	59.2	$	35.2	59.5	%

Lots revenue decreased by ~~76.8%, driven by a 58.2% decrease in~~$0.3 million compared to the ~~number of lots closed and a 44.6% decrease in~~three months ended March 31, 2022. Land revenue for the average lot price. The number of lots closed decreased as a higher proportion of lots were developed for internal use. The average lot price decreased by 44.6% due to a higher number of entry level lots sold. Land revenuethree months ended March 31, 2022 represents a residential tract of land ~~acquired last year~~ that was sold to another builder.

Selling, General and Administrative Expenses

The table below represents the components of selling, general and administrative expenses (dollars in thousands):
Three Months Ended March 31, As Percentage of Segment Revenue
2022 2021 2022 2021
Builder operations $ 35,918 $ 28,160 9.8 % 12.4 %
Land development 88 39 0.3 % 0.5 %
Corporate, other and unallocated (income) expense (1,741) 1,289 — —
Total selling, general and administrative expenses $ 34,265 $ 29,488 8.7 % 12.6 %


	Three Months Ended March 31,				As Percentage of Segment Revenue
	2023		2022		2023		2022
Builder operations	$	47,243	$	35,918
Corporate, other and unallocated (income) expense	(1,407)		(1,741)
Net Builder operations	45,836		34,177		10.2	%	9.4	%
Land development	109		88		6.4	%	0.3	%
Total selling, general and administrative expenses	$	45,945	$	34,265	10.2	%	8.7	%

Selling, general and administrative expenses as a percentage of revenue increased by 1.5% for the three months ended March 31, 2023 due to the decline in land and lot revenues and an increase in costs for brokerage commissions.

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The 3.9% decrease of total selling, general and administrative expenses 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

~~The 2.6% decrease in selling,~~Selling, general and administrative expenses as a percentage of revenue for builder operations ~~was primarily attributable~~increased from 9.4% in the three months ended March 31, 2022 to 10.2% in the three months ended March 31, 2023 due to an increase in ~~builder operations revenues without a corresponding increase in the level of overhead costs.~~costs for brokerage commissions. 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.

~~Land Development~~

Selling, general and administrative expenses as a percentage of revenue for land development decreased by 0.2% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021.

Corporate, Other and Unallocated

Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment for the three months ended March 31, ~~2022~~2023 was income of ~~$1.7~~$1.4 million, compared to ~~expense~~income of ~~$1.3~~$1.7 million for the three months ended March 31, ~~2021. The change was driven primarily by an increase in~~2022. These expenses generally include 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~~decreased to ~~$5.7~~$4.2 million, or ~~by 46.2%~~25.8%, for the three months ended March 31, ~~2022,~~2023, compared to ~~$3.9~~$5.7 million for the three months ended March 31, ~~2021.~~2022. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of Green Brick’s share in net earnings by unconsolidated entity.

Other Income, Net

Other income, net, increased to $4.3 million for the three months ended March 31, 2023, compared to income of $2.9 million for the three months ended March 31, ~~2022, compared to income of $1.9 million for the three months ended March 31, 2021.~~2022. The change was ~~mainly~~primarily due to ~~a $0.5 million~~an increase in title closing and settlement services, forfeited customer deposits, and other interest income.

Income Tax Expense

Income tax expense was $19.0 million for the three months ended March 31, 2023 compared to a $18.4 million for the three months ended March 31, ~~2022 compared to $7.5 million for the three months ended March 31, 2021.~~2022. The increase was ~~primarily~~substantially due to higher taxable income. In addition, during the three months ended March 31, 2021, we recognized favorable federal energy tax credits from building energy-efficient homes under a federal program that has not been renewed for 2022.

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Lots Owned and Controlled

The following table presents the lots we owned or controlled, including lot option contracts, as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. Owned lots are those for which we hold title, while controlled lots are ~~those~~lots past feasibility studies for which we do not hold title but have the contractual right to acquire ~~title but we do not currently own.~~
March 31, 2022 December 31, 2021
Lots owned (1)
Central 19,552 17,767
Southeast 2,417 2,472
Total lots owned 21,969 20,239
Lots controlled (1)

Central 3,864 7,321
Southeast 1,159 1,061
Total lots controlled 5,023 8,382
Total lots owned and controlled (1)
26,992 28,621
Percentage of lots owned 81.4 % 70.7 %
title.


	March 31, 2023						December 31, 2022
	Central		Southeast		Total		Central		Southeast		Total
Lots owned
Finished lots	2,351		1,190		3,541		1,901		998		2,899
Lots in communities under development	9,674		1,362		11,036		10,309		1,698		12,007
Land held for future development(1)	6,575		—		6,575		6,575		—		6,575
Total lots owned	18,600		2,552		21,152		18,785		2,696		21,481

Lots controlled
Lots under third party option contracts	1,865		3		1,868		2,212		6		2,218
Land under option for future acquisition and development	408		18		426		110		18		128
Lots under option through unconsolidated development joint ventures	1,289		402		1,691		1,289		411		1,700
Total lots controlled	3,562		423		3,985		3,611		435		4,046
Total lots owned and controlled (2)	22,162		2,975		25,137		22,396		3,131		25,527
Percentage of lots owned	83.9	%	85.8	%	84.1	%	83.9	%	86.1	%	84.2	%

(1) Land held for future development consist of raw land parcels where development activities have been postponed due to market conditions or other factors.

~~(1)~~(2) Total lots excludes lots with homes under construction.

~~The following table presents additional information on the lots we controlled as of March 31, 2022 and December 31, 2021.~~
March 31, 2022 December 31, 2021
Lots under third party option contracts 2,493 2,740
Land under option for future acquisition and development 768 3,826
Lots under option through unconsolidated development joint ventures 1,762 1,816
Total lots controlled 5,023 8,382

The following table presents additional information on the lots we owned as of March 31, ~~2022~~2023 and December 31, ~~2021.~~
March 31, 2022 December 31, 2021
Total lots owned 21,969 20,239
Land under option for future acquisition and development 768 3,826
Lots under option through unconsolidated development joint ventures 1,762 1,816
Total lots self-developed 24,499 25,881
Self-developed lots as a percentage of total lots owned and controlled 90.8 % 90.4 %
2022.


	March 31, 2023		December 31, 2022
Total lots owned	21,152		21,481
Land under option for future acquisition and development	426		128
Lots under option through unconsolidated development joint ventures	1,691		1,700
Total lots self-developed	23,269		23,309
Self-developed lots as a percentage of total lots owned and controlled	92.6	%	91.3	%

Liquidity and Capital Resources Overview

~~As of March 31, 2022 and December 31, 2021, we~~We had ~~$66.1~~$177.3 million and ~~$78.7~~$76.6 million of unrestricted cash and cash equivalents as of March 31, 2023 and December 31, 2022, 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.

Our principal uses of capital for the three months ended March 31, ~~2022~~2023 were home construction, ~~land purchases,~~ land development, repayments of lines of credit, operating expenses, payment of routine liabilities and stock repurchases. We used funds generated by operations and available borrowings to meet our short-term working capital ~~requirements and pay our preferred stock dividend.~~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.

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Cash flows for each of our communities depend on the community’s stage in the development ~~cycle and can differ substantially from reported earnings.~~cycle. 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,~~life cycle, cash inflows may significantly exceed

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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 (“total debt”), divided by the total capitalization, which equals the sum of Green Brick Partners, Inc. stockholders’ equity and total debt, was approximately ~~28.8%~~23.8% as of March 31, ~~2022.~~2023. In addition, as of March 31, ~~2022,~~2023, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at ~~25.0%~~13.3%. 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.

Reconciliation of a Non-GAAP Financial Measure

In this Quarterly Report on Form 10-Q, 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.~~SEC. 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 the Company’s 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 March 31, ~~2022:~~2023:

Gross Cash and cash equivalents Net
Total debt, net of debt issuance costs $ 369,627 $ (66,083) $ 303,544
Total Green Brick Partners, Inc. stockholders’ equity 912,183 — 912,183
Total capitalization $ 1,281,810 $ (66,083) $ 1,215,727
Debt to total capitalization ratio 28.8 %
Net debt to total capitalization ratio 25.0 %


	Gross			Cash and cash equivalents		Net
Total debt, net of debt issuance costs	$	348,074		$	(177,271)	$	170,803
Total Green Brick Partners, Inc. stockholders’ equity	1,114,154			—		1,114,154
Total capitalization	$	1,462,228		$	(177,271)	$	1,284,957

Debt to total capitalization ratio	23.8		%
Net debt to total capitalization ratio						13.3		%

Key Sources of Liquidity

~~The Company’s~~Our key sources of liquidity were funds generated by operations and borrowings during the three months ended March 31, ~~2022.~~2023.

Cash Flows

The following summarizes our primary sources and uses of cash during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022:

•Operating activities. Net cash provided by operating activities for the three months ended March 31, 2023 was $154.7 million, compared to $14.0 million used by operating activities during the three months ended March 31, 2022. The net cash inflows for the three months ended March 31, 2023 included $72.9 million cash generated from business operations, a decrease in inventory of $50.0 million, and the deferral of expense payments through a $17.5 million increase in accrued expenses.

•Investing activities. Net cash used in investing activities for the three months ended March 31, 2023 increased to $3.1 million, compared to $0.4 million for the three months ended March 31, 2022. During the three months ended March 31, 2022, cash outflows of $1.5 million were used for investments in unconsolidated entities.

•Financing activities. Net cash used by financing activities for the three months ended March 31, 2023 was $49.2 million, compared to $1.1 million generated by financing activities during the three months ended March 31, 2022. The cash outflows were primarily related to share repurchases of $15.4 million, net repayments of our lines of credit of $20.0 million, and an $11.1 million distribution to our noncontrolling interests.

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Debt Instruments

Secured Revolving Credit Facility – As of March 31, 2023 and December 31, 2022, we had no amounts outstanding under our Secured Revolving Credit ~~facility, down from $2.0 million as of December 31, 2021.~~facility. Borrowings onunder the Secured Revolving Credit ~~facility have a maturity date of May 1, 2025 and~~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. 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 March 31, ~~2022,~~2023, we had no amounts outstanding under our ~~$300.0~~$325.0 million Unsecured Revolving Credit Facility, ~~had a $22.0~~down from $20.0 million ~~balance, an increase from no outstanding amounts~~ as of December 31, ~~2021. The borrowings on~~2022. On December 9, 2022, the ~~Unsecured Revolving Credit Facility bear interest at a floating rate equal~~Company entered into the Tenth Amendment to ~~either (a) for base rate advances,~~this credit agreement which increased the ~~highest of (1)~~secured outstanding commitments from $300.0 million to $325.0 million, replaced 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,~~and extended the ~~reserve adjusted LIBOR plus 2.5%. As of March 31, 2022, the interest rate on outstanding borrowings~~termination date by one year to December 14, 2025. Outstanding advances under the Unsecured Revolving Credit Facility ~~was 2.85% per annum.~~accrue interest at the benchmark rate plus 2.5%. As amended, the aggregate principal amount of the revolving credit commitments under the Credit Agreement is ~~$300.0~~$325.0 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~~2025.

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more lenders increase their revolving credit commitments to provide up to 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 March 31, ~~2022,~~2023, we had four series of senior unsecured notes outstanding which were each issued pursuant to a note purchase agreement. The aggregate amount of senior unsecured notes outstanding was ~~$335.5~~$335.9 million as of March 31, ~~2022 up from $335.4~~2023 compared to $335.8 million as of December 31, ~~2021.~~2022, net of issuance costs.

•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.

•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.

•In February 2021, we issued ~~$125~~$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 March 31, ~~2022.~~2023. Specifically, under the most restrictive covenants, we are required to maintain ~~(1)~~ the following:

•a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to ~~1.0 and, as~~1.0. As of March 31, ~~2022,~~2023, our interest coverage on a last 12 months’ basis was ~~21.36~~24.32 to ~~1.0, (2)~~ 1.0;

•a Consolidated Tangible Net Worth of no less than approximately ~~$563.7 million and, as~~$711.0 million. As of March 31, ~~2022, we had $911.0 million~~2023, our Consolidated Tangible Net Worth was $1,113.0 million; and ~~(3)~~

•a maximum debt to total capitalization rolling average ratio of no more than 40.0% ~~and, as~~. As of March 31, ~~2022,~~2023, we had a rolling average ratio of ~~30.3%~~25.6%.

As of March 31, ~~2022,~~2023, 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.~~months and fund our operations. For additional information on the Company’s lines of credit and senior unsecured notes, refer to Note 45 to the condensed consolidated financial statements located in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Preferred Equity ~~Issuances~~

As of March 31, 2023 and December ~~22, 2021, we issued~~31, 2022, 2,000,000 Depositary Shares were issued and outstanding, each representing 1/1000 of a share of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”) ~~for gross proceeds of $50.0 million.~~. We ~~will~~ pay cumulative cash dividends on ~~the~~our Series A Preferred Stock, when and as declared by the Board, at the rate of 5.75% of the $25,000 liquidation preference per share. Dividends ~~will be~~are payable quarterly in arrears.During the ~~quarter~~three months ended March 31, 2023 and 2022, we paid dividends of $0.7 million on ~~the~~our Series A Preferred Stock. ~~Subsequent to quarter end, our~~On April 27,2023, the Board declared a dividend of $0.0359 per Series A Depositary Share (for an aggregate of $0.7 million), which will cover the period from, and including, March 15, 2022 through, but not including June 15, 2022 payable on June 15, 2022 to holders of record as of June 1, 2022

~~Cash Flows~~

~~The following summarizes our primary sources and uses of cash during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021:~~

•~~Operating activities.~~ Net cash used by operating activities for the three months ended March 31, 2022 was $14.0 million, compared to $8.0 million during the three months ended March 31, 2021. The net cash outflows for the three months ended March 31, 2022 were primarily driven by an increase in inventory of $123.4 million, partially offset by $65.3 million of cash generated from business operations and the deferral of expense payments through a $28.3 million increase in accrued expenses.

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•~~Investing activities.~~ ~~Net~~quarterly cash ~~used in investing activities for the three months ended March 31, 2022 decreased~~dividend of $0.359 per depositary share on our Series A Preferred Stock. The dividend is payable on June 15, 2023 to ~~$0.4 million, compared to $0.7 million for the three months ended March 31, 2021.~~

•~~Financing activities.~~ Net cash provided by financing activities for the three months ended March 31, 2022 was $1.1 million, compared to $18.6 million during the three months ended March 31, 2021. The cash inflows for the three months ended March 31, 2022 were primarily from our net borrowings from linesstockholders of ~~credit~~record as of ~~$20.0 million and proceeds from notes payable of $14.5 million, partially offset by stock repurchases of $25.8 million and distributions to noncontrolling interests of $5.7 million~~June 1, 2023.

Off-Balance Sheet Arrangements and Contractual Obligations

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.

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.

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.

As of March 31, ~~2022, the Company~~2023, we had earnest money deposits of ~~$26.5~~$20.0 million at risk associated with contracts to purchase ~~3,905~~2,864 lots past feasibility studies with an aggregate purchase price of approximately ~~$264.8~~$213.9 million.

Guarantee

Refer to Note 5 in the Notes to the ~~consolidated financial statements~~Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for details of our guarantee in relation to ~~our joint venture with~~ EJB River Holdings, ~~LLC.~~LLC joint venture.

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 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 normally deliver 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 second half of the year.

Critical Accounting Policies

Our critical accounting policies are described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Recent Accounting Pronouncements

See Note 1 in the Notes to ~~our condensed consolidated financial statements~~the Condensed Consolidated Financial Statement included in Part I, Item 1 of this Quarterly Report on Form 10-Q for recent accounting pronouncements.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer ( “CEO”) and principal financial officer (“CFO”), we conducted an evaluation of our disclosure controls and procedures, as such term is

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defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, ~~2022~~2023 in providing reasonable assurance that information required to be disclosed in the reports we file, furnish, submit or otherwise provide to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed in reports filed by us under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, in such a manner as to allow timely decisions regarding the required disclosures.

Changes in Internal Control over Financial Reporting

During the three months ended March 31, ~~2022,~~2023, 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.

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PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of equity securities by the issuer

The following table provides information about repurchases of our common stock during the three months ended March 31, ~~2022:~~2023:

Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs
January 1 - January 31, 2022 — $ — — $ —
February 1 - February 28, 2022 — — — $ —
March 1 - March 31, 2022 1,193,037 21.60 1,193,037 $ 24,199,000
Total 1,193,037 $ 21.60 1,193,037 $ 24,199,000


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs (1)
January 1 - January 31, 2023	—	$	—	—	$	48,683,000
February 1 - February 28, 2023	—	—		—	48,683,000
March 1 - March 31, 2023	467,875	32.81		467,875	33,345,000
Total	467,875	32.81		467,875

(1) On April 27, 2022, the Board authorized a stock repurchase program authorizing us to repurchase, from time to time, up to an additional $100.0 million of our outstanding common stock (the “2022 Repurchase Plan”). As of March 31, 2023 the remaining dollar value of shares that may yet be purchased under the 2022 Repurchase Plan was approximately $33.3 million, excluding excise tax. The 2022 Repurchase Plan has no expiration and will continue until otherwise modified or terminated by the Board at any time in its sole discretion. There were no other repurchase plans announced as of March 31, 2023.

ITEM 6. EXHIBITS


Number						Description
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. The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 Form 10-Q.

** Submitted electronically herewith.

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SIGNATURES

Pursuant to the requirements 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.


GREEN BRICK PARTNERS, INC.
/s/ James R. Brickman
By: James R. Brickman
Its: Chief Executive Officer

/s/ Richard A. Costello
By: Richard A. Costello
Its: Chief Financial Officer

Date: May 3, ~~2022~~2023

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Remainder of 2022	$	1,158
2023	1,306
2024	507
2025	517
2026	504
Thereafter	864
Total future lease payments	$	4,856
Less: Interest	441
Present value of lease liabilities	$	4,415


	March 31, 2022		December 31, 2021
Lots owned (1)
Central	19,552		17,767
Southeast	2,417		2,472
Total lots owned	21,969		20,239
Lots controlled (1)
Central	3,864		7,321
Southeast	1,159		1,061
Total lots controlled	5,023		8,382
Total lots owned and controlled (1)	26,992		28,621
Percentage of lots owned	81.4	%	70.7	%