10q10k10q10k.net

What changed in Green Brick Partners, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Green Brick Partners, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+195 added−195 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-27)

Top changes in Green Brick Partners, Inc.'s 2023 10-K

195 paragraphs added · 195 removed · 175 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

49 edited+2 added−2 removed34 unchanged
Biggest changeYear Ended December 31, 2022 December 31, 2022 December 31, 2021 Builder Average Selling Communities Selling Communities Backlog, Units Backlog, in thousands Selling Communities Backlog, Units Backlog, in thousands Trophy 25 28 143 $ 78,840 23 413 $ 246,668 CB JENI (1) 15 16 121 72,395 15 283 139,531 Southgate 4 4 38 44,045 4 158 131,455 Centre Living 4 3 22 12,352 5 45 24,289 TPG 19 20 111 77,431 19 352 200,405 GRBK GHO 9 9 102 84,032 8 229 127,508 Total (2) 76 80 537 $ 369,095 74 1,480 $ 869,856 (1) Includes Normandy Homes.
Biggest changeYear Ended December 31, 2023 December 31, 2023 December 31, 2022 Builder Average Selling Communities Selling Communities Backlog, Units Backlog, in thousands Selling Communities Backlog, Units Backlog, in thousands Trophy 28 30 124 $ 56,929 28 143 $ 78,840 CB JENI (1) 17 20 264 169,773 16 121 72,395 Southgate 3 4 70 77,529 4 38 44,045 Centre Living 4 5 61 32,587 3 22 12,352 TPG 21 20 142 112,675 20 111 77,431 GRBK GHO 12 12 109 105,707 9 102 84,032 Total (2) 85 91 770 $ 555,200 80 537 $ 369,095 (1) Includes Normandy Homes.
We partner our expertise with that of our builders to design attractive neighborhoods and homes to appeal to a wide variety of potential homebuyers. Our homebuilding projects include townhomes, patio homes, single family homes, and luxury homes.
We partner our expertise with that of our builders to design attractive neighborhoods and homes to appeal to a wide variety of potential homebuyers. Our homebuilding projects include single family homes, townhomes, luxury homes, and patio homes.
This focus on a staff that places a strong emphasis on communication and navigating a fast-paced environment empathetically and judiciously enables us to operate effectively and efficiently each day. We seek to establish a supportive culture that fosters a strong sense of ownership and a continuous drive to excel.
This focus on a staff that places a strong emphasis on communication and navigating a fast-paced environment empathetically, strategically, and judiciously enables us to operate effectively and efficiently each day. We seek to establish a supportive culture that fosters a strong sense of ownership and a continuous drive to excel.
We believe that our strict operating discipline combined with our prudent use of financial leverage to continue to invest in our land acquisition, development and homebuilding businesses provides us with a competitive advantage in seeking to maximize returns while minimizing risk.
We believe our strict operating discipline combined with our prudent use of financial leverage to continue to invest in our land acquisition, development and homebuilding businesses provides us with a competitive advantage in seeking to maximize returns while minimizing risk.
In addition, governing agencies may impose construction moratoriums which could subject us to delays or may preclude us entirely from developing communities due to building moratoriums, “no growth” or “slow growth” initiatives or building permit allocation ordinances, which could be implemented in the future.
In addition, governing agencies may impose construction moratoriums that could subject us to delays or may preclude us entirely from developing communities due to building moratoriums, “no growth” or “slow growth” initiatives or building permit allocation ordinances, which could be implemented in the future.
We offer a preferred lender referral program through our mortgage joint venture to provide lending options to homebuyers in need of financing. We also offer homeowners a comprehensive warranty on each home.
We offer a preferred lender referral program, including through our mortgage joint venture, to provide lending options to homebuyers in need of financing. We also offer homeowners a comprehensive warranty on each home.
As part of the Green Brick Partners family, Green Brick Title’s unprecedented access to resources beyond those of a traditional title company enables us to always stay one step ahead of our competition and bring buyers unmatched customer service. 4 TABLE OF CONTENTS Raw Materials Typically, all the raw materials and most of the components used in our business are readily available in the United States.
As part of the Green Brick Partners family, Green Brick Title’s access to resources beyond those of a traditional title company enables us to stay one step ahead of our competition and bring buyers unmatched customer service. 4 TABLE OF CONTENTS Raw Materials Typically, all the raw materials and most of the components used in our business are readily available in the United States.
Through our rigorous national underwriting program, we seek to identify attractive properties that are typically located in prime neighborhood locations or in preferred growth corridors. We focus on the development of entitled parcels in communities where we can generally sell all homes within 24 to 60 months from the start of sales.
Through our rigorous national underwriting program, we seek to identify attractive properties that are typically located in prime neighborhood locations or in preferred growth corridors. We focus on the development of entitled parcels in communities where we can generally sell all homes within 24 to 72 months from the start of sales.
We have chosen to focus our operations to sunbelt and sunbelt adjacent states because we believe that these markets offer attractive residential real estate investment characteristics, such as growing economies, improving levels of employment, and population growth relative to national averages, favorable migration patterns, general housing affordability, and desirable lifestyle and weather characteristics.
We have chosen to focus our operations on sunbelt and sunbelt-adjacent states because we believe these markets offer attractive residential real estate investment characteristics, such as growing economies, improving levels of employment, population growth relative to national averages, favorable migration patterns, general housing affordability, and desirable lifestyle and weather characteristics.
In some markets, we are subject to environmentally-sensitive land ordinances that mandate open space areas with public elements in housing developments, and prevent development on hillsides, wetlands and other protected areas. We must also comply with open space restrictions, flood plain restrictions, desert wash area restrictions, native plant regulations, endangered species acts, and view restrictions.
In some markets, we are subject to environmentally-focused land ordinances that mandate open space areas with public elements in housing developments, and prevent development on hillsides, wetlands and other protected areas. We must also comply with open space restrictions, flood plain restrictions, desert wash area restrictions, native plant regulations, endangered species acts, and view restrictions.
Sales personnel are trained by us and generally have had prior experience selling new homes in the local market. Our personnel, along with subcontracted marketing and design consultants, carefully design the exterior and interior of each home to appeal to the lifestyles of targeted homebuyers. We also sell homes through independent realtors.
Community sales managers are trained by us and generally have had prior experience selling new homes in the local market. Our personnel, along with subcontracted marketing and design consultants, carefully design the exterior and interior of each home to appeal to the lifestyles of targeted homebuyers. We also sell homes through independent realtors.
Some of this legislation relates to items such as carbon dioxide emissions control and building codes that impose energy efficiency standards. New building code requirements that impose stricter energy efficiency standards could significantly increase the cost to construct homes, although our energy-efficiency technologies and offerings meet, and in many instances exceed, current and expected energy efficiency thresholds.
Some of this legislation relates to items such as carbon dioxide emissions and building codes that impose energy efficiency standards. New building code requirements that impose stricter energy efficiency standards could significantly increase the cost to construct homes, although our energy-efficiency technologies and offerings meet, and in many instances exceed, current energy efficiency thresholds.
With certain exceptions, we focus on the development of entitled parcels in communities where we can generally sell all lots and homes within 24 to 60 months from the start of sales. This focus allows us to limit exposure to land development and land risks while pursuing favorable returns on our investments.
With certain exceptions, we focus on the development of entitled parcels in communities where we can generally sell all lots and homes within 24 to 72 months from the start of sales. This focus allows us to limit exposure to land development and land risks while pursuing favorable returns on our investments.
With the exception of a normal cancellation rate, we expect all of the backlog as of December 31, 2022 to be delivered during 2023. The following table sets forth the information about selling communities and backlog of our builders.
With the exception of a normal cancellation rate, we expect all of the backlog as of December 31, 2023 to be delivered during 2024. The following table sets forth the information about selling communities and backlog of our builders.
Since it typically has taken five to nine months to construct a new home, we have historically delivered more homes in the second half of the year as spring and summer home orders are delivered.
Since it typically has taken four to nine months to construct a new home, we have historically delivered more homes in the second half of the year as spring and summer home orders are delivered.
This has allowed us to attract more qualified and knowledgeable homebuyers and has helped us reduce our selling, general and administrative expenses as a percentage of home sales revenues. However, we also continue to advertise through more traditional media on a limited basis, including newspapers, radio advertisements, other local and regional publications, and on billboards where appropriate.
This has allowed us to attract more qualified and knowledgeable homebuyers and has helped us reduce our selling, general and administrative expenses as a percentage of home sales revenues.We also advertise through more traditional media on a limited basis, including newspapers, radio, other local and regional publications, and billboards where appropriate.
Our core markets are in the high growth U.S. metropolitan areas of Dallas-Fort Worth (“DFW”) and Austin, Texas, Atlanta, Georgia, as well as the Treasure Coast, Florida area and Colorado Springs, Colorado.
Our core markets are in the high growth U.S. metropolitan areas of Dallas-Fort Worth (“DFW”) and Austin, Texas, and Atlanta, Georgia, as well as the Treasure Coast, Florida area.
We offer our employees a compensation package with a broad range of company-paid benefits, including medical, dental, life insurance, and other health and welfare plans, that we believe are competitive. 5 TABLE OF CONTENTS We believe having a diverse and inclusive work environment, where everyone has a sense of belonging, not only drives engagement but fosters innovation, which is critical to driving growth.
We offer our employees a compensation package with a broad range of company-paid benefits, including medical, dental, life insurance, a 401(k) plan, and other health and welfare plans we believe are competitive. 5 TABLE OF CONTENTS We believe having a diverse and inclusive work environment, where everyone has a sense of belonging, not only drives engagement but fosters innovation, which is critical to driving growth.
Similarly, energy and environment-related initiatives affect a wide variety of companies throughout the United States and the world, and because our operations are heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, such initiatives could have an indirect adverse impact on our operations and profitability to the extent the manufacturers and suppliers of our materials are burdened with expensive carbon dioxide emissions control and other environmental and energy-related regulations.
Similarly, energy and environment-related initiatives affect a wide variety of companies throughout the United States and the world, and because our operations are heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, such initiatives could have an indirect adverse impact on our operations and profitability to the extent the manufacturers and suppliers of our materials are burdened with expensive carbon dioxide emissions controls and reporting requirements and other environmental and energy-related regulations.
Our in-house sales force typically works from sales offices located in model homes in or near each community. Sales representatives assist potential buyers by providing them with basic floor plans, price information, development and construction timetables, virtual and in-person tours of model homes, and upgrade options.
Our in-house sales force typically works from sales offices located in model homes in or near each community. Community sales managers assist potential buyers by providing them with floor plans, price information, development and construction timetables, virtual and in-person tours of model homes, and upgrade options.
In consultation with nationally and locally recognized architecture firms, interior and exterior consultants, and homeowner focus groups, we research and design a diversified range of products for various levels and price points. • Disciplined Investment Strategy Combined with the Prudent Use of Leverage.
In consultation with 1 TABLE OF CONTENTS nationally and locally recognized architecture firms, interior and exterior consultants, and homeowner focus groups, we research and design a diversified range of products for various levels and price points. • Disciplined Investment Strategy Combined with the Prudent Use of Leverage.
Many of these competitors also have longstanding relationships with subcontractors and suppliers in the markets in which we operate. We also compete for sales with individual resales of existing homes and with available rental housing. Human Capital Resources Attracting, retaining, and building talent is critical in our business. We continue to recruit talented team members that exhibit superior emotional intelligence.
Many of these competitors also have longstanding relationships with subcontractors, suppliers, and developers in the markets in which we operate. We also compete for sales with existing home resales and with available rental housing. Human Capital Resources Attracting, retaining, and building talent is critical in our business. We continue to recruit talented team members that exhibit superior emotional intelligence.
Our Builders and Homes The following table presents general information about each of our builders, including the types of homes they build and their price ranges as of December 31, 2022.
Our Builders and Homes The following table presents general information about each of our builders, including the types of homes they build and their price ranges as of December 31, 2023.
Land Policy Our land inventory strategy strives to provide us with a multi-year supply of lots for each of our brands for future homebuilding while limiting excess supply that would be subject to market cycle risk.
Land Policy Our land inventory strategy provides us with a multi-year supply of lots for each of our brands for future homebuilding while limiting excess supply that would be subject to market cycle risk.
ITEM 1. BUSINESS Green Brick Partners, Inc. and its subsidiaries (“Green Brick”, “the Company”, “we” or “us”) is a diversified homebuilding and land development company. We acquire and develop land and build homes through our eight brands of builders in five major markets.
ITEM 1. BUSINESS Green Brick Partners, Inc. and its subsidiaries (“Green Brick”, “the Company”, “we” or “us”) is a diversified homebuilding and land development company. We acquire and develop land and build homes through our seven brands of builders in four major markets.
We plan to expand Trophy into markets compatible with our existing markets that demonstrate strong trends in demographics, employment, and in-migration by leveraging existing relationships with land developers and homebuilders. In this regard, in February 2022, we began our expansion into the Austin, TX market.
We plan to expand Trophy into markets compatible with our existing markets that demonstrate strong trends in demographics, employment, and in-migration by leveraging existing relationships with land developers and homebuilders. In this regard, in 2023 we continued our expansion into the Austin, TX market, which began in 2022.
We are a leading lot developer in our markets and believe that our strict operating discipline provides us with a competitive advantage in seeking to maximize returns while minimizing risk. As of December 31, 2022, we owned or controlled approximately 25,500 home sites in high-growth submarkets throughout the DFW, Austin, and Atlanta metropolitan areas and the Treasure Coast, Florida market.
We are a leading lot developer in our markets and believe that our strict operating discipline provides us with a competitive advantage in seeking to maximize returns while minimizing risk. As of December 31, 2023, we owned or controlled approximately 28,700 home sites in high-growth submarkets throughout the DFW, Austin, and Atlanta metropolitan areas and the Treasure Coast, Florida market.
At December 31, 2022, we had approximately 550 full-time employees, including approximately 500 who were involved in our homebuilding operations, with locations in Dallas-Ft. Worth and Austin, Texas, Atlanta, Georgia and the Treasure Coast, Florida, and approximately 50 in management and administration. Our operations are carried out through both local and centralized management.
At December 31, 2023, we had approximately 600 full-time employees, including approximately 550 who were involved in our homebuilding operations, with locations in Dallas-Ft. Worth and Austin, Texas, Atlanta, Georgia, and Treasure Coast, Florida, and approximately 50 in management and administration. Our operations are carried out through both local and centralized management.
We believe we can adapt quickly to changing market conditions and optimize performance and returns while strategically reducing portfolio risk because of our diversified product strategy. One of our core operating philosophies 1 TABLE OF CONTENTS is to create a culture which provides a positive, memorable experience for our homebuyers.
We believe we can adapt quickly to changing market conditions and optimize performance and returns while strategically reducing portfolio risk because of our diversified product strategy. One of our core operating philosophies is to create a culture that provides a positive, memorable experience for our homebuyers.
We believe we offer higher quality homes with more distinctive designs and floor plans than those built by our competitors at comparable prices. Many of our communities are located in premium locations and we seek to enhance homebuyer satisfaction by utilizing high-quality materials, offering a broad range of customization options and building well-crafted homes.
We believe we offer higher quality homes with more distinctive designs and floor plans than those built by our competitors at comparable prices. Many of our communities are located in premium locations and we seek to enhance homebuyer satisfaction by utilizing high-quality materials, and building well-crafted homes.
Due to the significant increase in home demand and the more limited supply of both existing homes and speculative home inventory from all builders for the past two years, such seasonal patterns have been far less evident in our business operations. Competition Competition in the homebuilding industry is intense, and there are relatively low barriers to entry.
Due to the significant increase in home demand and the more limited supply of both existing homes and speculative home inventory from all builders in recent years, such seasonal patterns have been less pronounced in our business operations. Competition Competition in the homebuilding industry is intense and there are relatively low barriers to entry.
Our land teams focus on acquiring well located land that will position us to deliver future earnings growth in 2023 and beyond. As of December 31, 2022, we had 25,527 lots owned and controlled.
Our land teams focus on acquiring well located land that will position us to deliver future earnings growth in 2024 and beyond. As of December 31, 2023, we had 28,681 lots owned and controlled.
We target a debt to total capitalization ratio of approximately 30% to 35%, which we expect will continue to provide us with significant additional growth capital. As of December 31, 2022, our debt to total capitalization ratio was 25.7%. • Targeted Expansion into Adjacent Markets.
We target a debt to total capitalization ratio of approximately 30%, which we expect will continue to provide us with significant additional growth capital. As of December 31, 2023, our debt to total capitalization ratio was 21.1%. • Targeted Expansion into Adjacent Markets.
We continue to monitor the supply markets to achieve the best prices available. See “Risk Factors - Labor and raw material shortages and price fluctuations could delay or increase the cost of land development and home construction, which could materially and adversely affect our business.” Seasonality The homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements.
See “Risk Factors - Labor and raw material shortages and price fluctuations could delay or increase the cost of land development and home construction, which could materially and adversely affect our business.” Seasonality The homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements.
Our principal executive offices are located at 2805 Dallas Pkwy, Ste 400, Plano, TX 75093. Business Strategy We believe we are well-positioned for growth through the disciplined execution of the following elements of our strategy: • Consistent Land Acquisition Program with Disciplined Underwriting.
Our principal executive offices are located at 5501 Headquarters Drive, Ste 300W, Plano, TX 75024. Business Strategy We believe we are well-positioned for growth through the disciplined execution of the following elements of our strategy: • Consistent Land Acquisition Program with Disciplined Underwriting.
Our financial services help our customers bring their homebuying dreams into reality by providing mortgage and title services, allowing for a one-stop-shop solution. Through BHome Mortgage, our mortgage services buyers can expect personal attention from their first meeting through the closing of their new home.
Our financial service platforms help our customers bring their homebuying dreams into reality by providing mortgage and title services, allowing for a one-stop-shop solution. Through BHome Mortgage, we endeavor to have our buyers receive personal attention from their first meeting through the closing of their new home regarding their financing options.
When excluding land held for future development, as of December 31, 2022, we had 18,952 lots owned and controlled. 3 TABLE OF CONTENTS Marketing and Sales Process We sell our homes primarily from models that we have designed and constructed. We employ new home consultants who are paid salaries, commissions or both to conduct on-site sales of our homes.
When excluding land held for future development, as of December 31, 2023, we had 20,315 lots owned and controlled. 3 TABLE OF CONTENTS Marketing and Sales Process We sell our homes primarily from models we have designed and constructed. We employ community sales managers who are paid primarily via commissions to conduct on-site sales of our homes.
Homes are generally covered by an eight to ten-year warranty for structural concerns, one year for defects and products used, and two years for electrical, plumbing, heating, ventilation, and air conditioning parts and labor.
Homes are generally covered by a six to ten-year warranty for structural concerns, one year for workmanship issues and products used, and two years for electrical, plumbing, heating, ventilation, and air conditioning systems.
Builder Ownership Market Products Offered Price Range Trophy Signature Homes LLC (“Trophy”) 100% DFW and Austin Single family $270,000 to $1,080,000 CB JENI Homes DFW LLC (“CB JENI”) 100% DFW Townhomes $270,000 to $630,000 Normandy Homes (“Normandy”) 100% DFW Single family $450,000 to $1,150,000 SGHDAL LLC (“Southgate”) 100% DFW Luxury homes $760,000 to $1,570,000 CLH20 LLC (“Centre Living”) 90% DFW Townhomes and Single Family $380,000 to $930,000 The Providence Group of Georgia LLC (“TPG”) 50% Atlanta Townhomes, Condominiums and Single Family $360,000 to $1,200,000 GRBK GHO Homes LLC (“GRBK GHO”) 80% Treasure Coast Patio homes and Single Family $340,000 to $2,290,000 GB Challenger, LLC (“Challenger”) 49.9% Colorado Springs and Denver Townhomes and Single Family $330,000 to $820,000 2 TABLE OF CONTENTS Our backlog reflects the number and value of homes for which we have entered into sales contracts with customers but not yet delivered.
Builder* Ownership Market Products Offered Price Range Trophy Signature Homes LLC (“Trophy”) 100% DFW and Austin Single family $260,000 to $1,100,000 CB JENI Homes DFW LLC (“CB JENI”) 100% DFW Townhomes $270,000 to $640,000 Normandy Homes (“Normandy”) 100% DFW Single family $460,000 to $910,000 SGHDAL LLC (“Southgate”) 100% DFW Luxury homes $790,000 to $1,880,000 CLH20 LLC (“Centre Living”) 90% DFW Townhomes and Single Family $340,000 to $710,000 The Providence Group of Georgia LLC (“TPG”) 50% Atlanta Townhomes, Condominiums and Single Family $390,000 to $1,260,000 GRBK GHO Homes LLC (“GRBK GHO”) 80% Treasure Coast Patio homes and Single Family $370,000 to $2,100,000 * The Company sold its 49.9% ownership interest in GB Challenger, LLC (“Challenger”) effective February 1, 2024. 2 TABLE OF CONTENTS Our backlog reflects the number and value of homes for which we have entered into sales contracts with customers but we have not yet delivered the home.
We are engaged in all aspects of the homebuilding process, including land acquisition and development, entitlements, design, construction, title and mortgage services, marketing and sales and the creation of brand images at our residential neighborhoods and master planned communities.
We are engaged in all aspects of the homebuilding process, including land acquisition and development, entitlements, design, construction, title and mortgage services, marketing and sales and the creation of brand images at our residential neighborhoods and master planned communities. We previously owned a noncontrolling interest in a builder in Colorado Springs, Colorado, which was sold on February 1, 2024.
Our Trophy Signature Homes and CB JENI X lines have been at the forefront of creating an honest, easy to follow, sales experience that seeks to offer simplified solutions with top-of-the-line finishes regardless of a homebuyer’s price range.
In response to our customers’ expressed desire for an expedited and transparent sales process, we offer a selection of homes with simplified, all-upgrades-included options. Our Trophy Signature Homes and CB JENI X lines have been at the forefront of creating a straightforward sales experience that offers simplified solutions with top-of-the-line finishes regardless of a homebuyer’s price range.
We act solely as a general contractor, and all construction operations are coordinated by our project managers and field superintendents who schedule and monitor third-party independent subcontractors. Our ability to deliver our homes is dependent on the availability and quality of the subcontractors, such as electricians, plumbers, drywall installers, and bricklayers with whom we partner to build our homes.
We act solely as a general contractor, and all construction operations are coordinated by our project managers and field superintendents who schedule and monitor the progress of third-party independent subcontractors.
Most are standard items carried by major suppliers. However, the rapid increase in the number of homes started during 2021 through the first half of 2022 caused shortages in the availability of such materials and in the price of services, thereby leading to delays in the delivery of homes and increased home construction prices.
Most are standard items carried by major suppliers. However, a rapid increase in the number of homes started could cause shortages in the availability of such materials or in the price of services, thereby leading to delays in the delivery of homes. We continue to monitor the supply markets to achieve the best prices available.
(2) GB Challenger is not included in the table above as Green Brick does not have a controlling financial interest in Challenger. Our investment in Challenger is treated as an unconsolidated investment under the equity method of accounting and is included in investments in unconsolidated entities in our consolidated balance sheets.
(2) GB Challenger is not included in the table above as Green Brick does not have a controlling financial interest in Challenger.
Our marketing strategy has increasingly involved advertising through digital channels including real estate listing sites, paid search, display advertising, social media, and e-mail marketing, all of which drive traffic to our builders’ websites.
Our marketing strategies utilize traditional and digital channels, which include third-party real estate listing sites, billboards, USPS mailers, ads in publications, paid search ads, remarketing, display ads, social media posts, and e-mail and text campaigns, all of which drive traffic to our builders’ websites.
In DFW, Austin, and Atlanta, we seek to acquire land with convenient access to metropolitan areas which have diverse economic and employment bases and demographics that we believe will support long-term growth. In the Treasure Coast, we seek land in highly desirable, but limited, coastal regions that attract relocating homebuyers.
As of December 31, 2023, we believe our extensive land and lot inventory will allow us to maximize our profitability and return on capital. In DFW, Austin, and Atlanta, we seek to acquire land with convenient access to metropolitan areas which have diverse economic and employment bases and demographics that we believe will support long-term growth.
We believe that this streamlined process and focus on operational efficiency has enabled us to react quickly to the rise of the work from home lifestyle of our homebuyers.
We believe this streamlined process and focus on operational efficiency has enabled us to adapt to changes in our homebuyers’ lifestyles.
We currently generate income from home sales in Texas, Colorado, Florida, and Georgia. Each of these states experienced double-digit growth between 2010 and 2020 while the population of the US only grew 7.3%. In 2022, Texas, Florida and Georgia were ranked first, second and fourth, respectively in terms of population growth according to the U.S.
We currently generate income from home sales in Texas, Florida, and Georgia. In 2023, Texas, Florida and Georgia were ranked first, second and fourth, respectively, in terms of population growth according to the U.S. Census Bureau. • Strategically Increase Market Positions in our Existing Markets. We believe there are significant opportunities to profitably expand in our core markets.
We do not have collective bargaining agreements relating to any of our employees.
Our ability to deliver our homes is dependent on the availability and quality of the subcontractors, such as electricians, plumbers, drywall installers, and bricklayers with whom we partner to build our homes. We do not have collective bargaining agreements relating to any of our employees.
Removed
Census Bureau. • Strategically Increase Market Positions in our Existing Markets. We believe that there are significant opportunities to profitably expand in our core markets. As of December 31, 2022, we believe our extensive land and lot inventory will allow us to maximize our profitability and return on capital.
Added
In the Treasure Coast market, we seek land in highly desirable, but limited, coastal regions that attract relocating homebuyers.
Removed
In response to our customers expressed desire for an expedited and transparent sales process, we offer a selection of homes with simplified, all upgrades included options.
Added
Prior to the sale of our interest in Challenger on February1, 2024, our investment in Challenger was treated as an unconsolidated investment under the equity method of accounting and was included in investments in unconsolidated entities in our consolidated balance sheets.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

44 edited+3 added−2 removed164 unchanged
Biggest changeFor example, we have previously, and may in the future experience price increases, shortages and extensions to our lead time for the delivery of materials such as lumber, appliances and windows. This has and may continue to result in longer construction periods, delays in home closings and margin compression if we are unable to increase our sales prices accordingly.
Biggest changeThis has and may continue to result in longer construction periods, delays in home closings and margin compression if we are unable to increase our sales prices accordingly. The cost of labor and raw materials may also be adversely affected during periods of shortage or high inflation.
The effect in each case could be material. Our long-term success depends on our ability to acquire undeveloped land, partially finished developed lots and finished lots suitable for residential homebuilding at reasonable prices, in accordance with our land investment criteria.
The effect in each case could be material. Our long-term success depends on our ability to acquire undeveloped land, partially finished developed lots and finished lots suitable for residential homebuilding at reasonable prices and in accordance with our land investment criteria.
The availability of suitable land assets could also affect the success of our land acquisition strategy, which may impact our ability to increase the number of active selling communities, to grow our revenues and margins and to achieve or maintain profitability.
The availability of suitable land assets could also affect the success of our land acquisition strategy, which may impact our ability to maintain or increase the number of active selling communities, grow our revenues and margins, and to achieve or maintain profitability.
Should we learn of practices relating to homes we build that do not comply with applicable regulations or guidelines, lots we develop or financing we provide, we would move actively to stop the non-complying practices as soon as possible and would take disciplinary action with regard to employees who were aware of the practices and did not take steps to address them, including terminating their employment when necessary.
Should we learn of practices that do not comply with applicable regulations or guidelines relating to homes we build, lots we develop or financing we provide, we would move actively to stop the non-complying practices as soon as possible and would take disciplinary action with regard to employees who were aware of the practices and did not take steps to address them, including terminating their employment when necessary.
Additionally, we are subject to laws and regulations related to workers’ health and safety, and there are efforts to subject homebuilders like us to other labor related laws or rules, some of which may make us responsible for things done by our subcontractors over which we have little or no control. 15 TABLE OF CONTENTS Our business and financial results could be adversely affected by the failure of persons who act on our behalf to comply with applicable regulations and guidelines.
Additionally, we are subject to laws and regulations related to workers’ health and safety, and there are efforts to subject homebuilders to other labor related laws or rules, some of which may make us responsible for things done by our subcontractors over which we have little or no control. 15 TABLE OF CONTENTS Our business and financial results could be adversely affected by the failure of persons who act on our behalf to comply with applicable regulations and guidelines.
Our results of operations could be adversely affected if we are unable to develop communities successfully or within expected timeframes. Before a community generates any revenue, time and material expenditures are required to acquire and prepare land, entitle and finish lots, obtain development approvals, pay taxes and construct significant portions of project infrastructure, amenities, model homes and sales facilities.
Our results of operations could be adversely affected if we are unable to develop communities successfully or within expected timeframes. Before a community generates any revenue, time and material expenditures are required to acquire and develop land, entitle and finish lots, obtain development approvals, pay taxes and construct significant portions of project infrastructure, amenities, model homes and sales facilities.
Many of these homebuyers must sell their existing homes in order to buy a home from us or our homebuilding customers. Rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements or increased monthly mortgage costs may lead to reduced demand for our homes and lots.
Many of these homebuyers must sell their existing homes in order to buy a home from us or our homebuilding customers. Increased interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements or increased monthly mortgage costs may lead to reduced demand for our homes and lots.
If a buy-sell provision is exercised and we elect to purchase the interest in an entity that we do not already own, we may be obligated to expend significant capital in order to complete such acquisition, which may result in our being unable to pursue other investments or opportunities.
If a buy-sell provision is exercised and we elect to purchase the interest in an entity that we do not already own, we may be obligated to expend significant capital in order to complete and integrate such an acquisition, which may result in our being unable to pursue other investments or opportunities.
Data protection and privacy laws continue to evolve and become more complex in various U.S. federal and state jurisdictions. Such regulatory changes, variations in requirements across jurisdictions and ongoing discussions about a national privacy law could present compliance challenges. The costs of complying with such changes could adversely affect our business.
Data protection and privacy laws continue to evolve and become more complex in various U.S. federal and state jurisdictions. Such regulatory changes, variations in requirements across jurisdictions and ongoing discussions about a national privacy laws could present compliance challenges. The costs of complying with such changes could adversely affect our business.
Additionally, to the extent that hurricanes, severe storms, earthquakes, tornadoes, droughts, floods, wildfires or other natural disasters or similar events occur, our homes under construction or our lots under development could be damaged or destroyed, which may result in losses exceeding our insurance coverage.
Additionally, to the extent that hurricanes, severe storms, earthquakes, tornadoes, droughts, floods, hail, wildfires or other natural disasters or similar events occur, our homes under construction or our lots under development could be damaged or destroyed, which may result in losses exceeding our insurance coverage.
Our business requires access to capital on favorable terms to service our indebtedness, cover our operating expenses and fund other liquidity needs. Negative rating actions by credit agencies such as downgrades increase the cost to access capital and make it difficult for us to meet our liquidity needs.
Our business requires access to capital on favorable terms to service our indebtedness, cover our operating expenses and fund other liquidity needs. Negative rating actions by credit agencies such as downgrades increase the cost to access capital and can make it difficult for us to meet our liquidity needs.
In a highly inflationary environment, depending on industry and other economic conditions, we may be precluded from raising home prices enough to keep up with the rate of inflation or may have to discount prices which could reduce our profit margins. Moreover, with inflation, the costs of capital increase and the purchasing power of our cash resources could decline.
In a highly inflationary environment, depending on industry and other economic conditions, we may be precluded from raising home prices enough to keep up with the rate of inflation or may have to discount prices that could reduce our profit margins. Moreover, with inflation, the costs of capital increase and the purchasing power of our cash resources could decline.
Our ability to conduct our business may be impaired if these resources are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third-party, natural disaster, hardware or software corruption or failure or error (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols) or lost connectivity to networked resources.
Our ability to conduct our business may be impaired if these resources are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third-party, social engineering attempts, natural disaster, hardware or software corruption or failure or error (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols) or lost connectivity to networked resources.
In addition, we could be liable to repair damage or meet liabilities caused by risks that are uninsured or subject to deductibles. We may be liable for any debt or other financial obligations related to an affected property. Material losses or liabilities in excess of insurance proceeds may occur in the future.
In addition, we could be liable to repair damage or address liabilities caused by risks that are uninsured or subject to deductibles. We may be liable for any debt or other financial obligations related to an affected property. Material losses or liabilities in excess of insurance proceeds may occur in the future.
Negative publicity spreads quickly through the use of electronic communication, including social media outlets, websites, “tweets”, blogs and other digital platforms. Our success in maintaining and expanding our brand image depends on our ability to adapt to this rapidly changing media environment.
Negative publicity spreads quickly through the use of electronic communications, including social media outlets, websites, “tweets”, blogs and other digital platforms. Our success in maintaining and expanding our brand image depends on our ability to adapt to this rapidly changing media environment.
Many of these competitors also have longstanding relationships with subcontractors and suppliers in the markets in which we operate. Our homebuilding business also competes for sales with individual resales of existing homes and with available rental housing.
Many of these competitors also have longstanding relationships with subcontractors, suppliers, and developers in the markets in which we operate. Our homebuilding business also competes for sales with resales of existing homes and with available rental housing.
As a result, rising interest rates can decrease our home sales and mortgage originations. Any of these factors could have a material adverse effect on our business, liquidity, financial condition and results of operations.
As a result, higher interest rates can decrease our home sales and mortgage originations. Any of these factors could have a material adverse effect on our business, liquidity, financial condition and results of operations.
The current and continued economic conditions of high inflation and rising interest rates, especially increases in mortgage rates, could lead to a decrease in demand for new homes. Current or future efforts by the government to stimulate the economy may increase the risk of significant inflation and its adverse impact on our business or financial results.
The current and continued economic conditions of high inflation and high interest rates, especially increased mortgage rates, could lead to a decrease in demand for new homes. Current or future efforts by the government to stimulate the economy may increase the risk of significant inflation and its adverse impact on our business or financial results.
Since it typically takes five to nine months to construct a new home, we deliver more homes in the second half of the year as spring and summer home orders convert to home deliveries.
Since it typically takes four to nine months to construct a new home, we deliver more homes in the second half of the year as spring and summer home orders convert to home deliveries.
Projects that are not yet entitled may be subjected to periodic delays, changes in use, less intensive development or elimination of development in certain specific areas due to government regulations.
Projects that are not yet entitled may be subjected to periodic delays, changes in use, less robust development or elimination of development in certain specific areas due to government regulations.
The effectiveness of our management, the value of our expertise and the rapport we maintain with our controlled builders are important factors for new builders considering doing business with us and may affect our ability to attract homebuyers, subcontractors, employees or others upon whom our business and results of operations ultimately depend.
The effectiveness of our management, the value of our expertise and the rapport we maintain with our controlled builders are important factors for prospective new builders that may be considering doing business with us and may affect our ability to attract homebuyers, subcontractors, employees or others upon whom our business and results of operations ultimately depend.
However, the market value of land, building lots and housing inventories can fluctuate significantly due to changing market conditions. The measures we employ to manage inventory risk may not be adequate to insulate our operations from a severe drop in inventory values.
However, the market value of land, building lots and housing inventories can fluctuate significantly due to changing market conditions. The measures we employ to manage inventory risk may not be 10 TABLE OF CONTENTS adequate to insulate our operations from a severe drop in inventory values.
We have entered into arrangements 11 TABLE OF CONTENTS with these controlled builders in order to take advantage of their local knowledge and relationships, acquire attractive land positions and brand images, manage our risk profile and leverage our capital base.
We have entered into arrangements with these controlled builders in order to take advantage of their local knowledge and relationships, acquire attractive land positions and brand images, manage our risk profile and leverage our capital base.
In Austin, we primarily operate in the counties of Bastrop and Travis. In Atlanta, we primarily operate in the counties of Fulton, Gwinnett, Cobb, Forsyth, Cherokee and Dekalb. In Florida, we primarily operate in the counties of Indian River and St. Lucie.
In Austin, we primarily operate in the counties of Bastrop and Travis. In Atlanta, we primarily operate in the counties of Fulton, Gwinnett, Forsyth, and Cherokee. In Florida, we primarily operate in the counties of Indian River and St. Lucie.
If housing demand decreases below what we 10 TABLE OF CONTENTS anticipated when we acquired our inventory, we may not be able to generate profits consistent with those we have generated in the past and we may not be able to recover our costs when we sell lots and homes.
If housing demand decreases below what we anticipated when we acquired our inventory, we may not be able to generate profits consistent with those we have generated in the past and we may not be able to recover our costs when we sell lots and homes.
Their interests may not coincide with ours and they may make decisions with which we may disagree. Greenlight Capital, Inc. and its affiliates (“Greenlight”) and James R. Brickman own approximately 37.2% and 3.4%, respectively, of our voting power.
Their interests may not coincide with ours and they may make decisions with which we may disagree. Greenlight Capital, Inc. and its affiliates (“Greenlight”) and James R. Brickman own approximately 25.2% and 3.6%, respectively, of our voting power.
Failure to attract and retain such personnel or to ensure that their experience and knowledge is not lost when they leave the business through retirement, redundancy or otherwise may adversely affect the standards of our service and may have an adverse impact on our business, financial conditions and results of operations.
Failure to attract and retain such personnel or to ensure that their experience and knowledge is retained by the company when they leave the business through retirement, redundancy or otherwise may adversely affect the standards of our service and may have an adverse impact on our business, financial conditions and results of operations.
Our investments in our homebuilding subsidiaries have contributed to our historical growth and similar investments may be a component of our growth strategy in the future. We may make additional strategic investments, enter into new joint venture or partnership arrangements or acquire businesses, some of which may be significant.
Our investments in our homebuilding subsidiaries have contributed to our historical growth and similar investments may be a component of our growth strategy in the future. We may make additional strategic investments, enter into new joint ventures or partnership arrangements or acquire businesses, or initiate new, related business opportunities, some of which may be significant.
Although these sales contracts require a cash deposit, a homebuyer may in certain circumstances cancel the contract and receive a complete or partial refund of the deposit as a result of state or local laws and our contract provisions.
Although these sales contracts require a cash deposit, a homebuyer may in certain circumstances cancel the contract and receive a complete or partial refund of the deposit in certain circumstances, including due to state or local laws and our contract provisions.
Building sites are inherently dangerous and operating in the land development and homebuilding industries poses certain inherent health and safety risks. Our health and safety performance is critical to the success of our business given regulatory requirements on points.
Building sites are inherently dangerous and operating in the land development and homebuilding industries poses certain inherent health and safety risks. Our health and safety performance is critical to the success of our business.
Further, acts of war, any outbreak or escalation of hostilities between the United States and any foreign power or acts of terrorism may cause disruptions to the U.S. economy or the local economies of the markets in which we operate, cause shortages of building materials, increase costs associated with obtaining building materials, result in building code changes that could increase costs of construction, affect job growth and consumer confidence or cause economic changes that we cannot anticipate, all of which could reduce demand for our lots, homes and construction loans and adversely impact our business and results of operations. 12 TABLE OF CONTENTS We may not be able to compete effectively against competitors in the homebuilding, land development and financial services industries.
Further, acts of war, any outbreak or escalation of hostilities between the United States and any foreign power or acts of terrorism may cause disruptions to the U.S. economy or the local economies of the markets in which we operate, cause shortages of building materials, increase costs associated with obtaining building materials, affect job growth and consumer 12 TABLE OF CONTENTS confidence or cause economic changes that we cannot anticipate, all of which could reduce demand for our lots, homes and construction loans and adversely impact our business and results of operations.
As of December 31, 2022, we had 46,032,930 shares of common stock and 2,000 shares of Series A preferred stock outstanding. Our common and preferred stock are equity securities and are subordinate to our existing and future indebtedness and effectively subordinated to all indebtedness and other non-equity claims against our subsidiaries.
As of December 31, 2023, we had 45,005,175 shares of common stock and 2,000 shares of Series A preferred stock outstanding. Our common and preferred stock are equity securities and are subordinate to our existing and future indebtedness and effectively subordinated to all indebtedness and other non-equity claims against our subsidiaries.
These claims are common in the homebuilding industry and can be costly and once claims are asserted, it can be difficult to determine the extent to which the assertion will expand geographically. In addition, the costs of insuring against construction defect and product liability claims are high. This coverage may be restricted and become more costly in the future.
These claims are common in the homebuilding industry and can be costly and once claims are asserted, it can be difficult to determine the extent to which the assertion will expand in number or geographically. In addition, the costs of insuring against construction defect and product liability claims are high.
Competition in the land development and homebuilding industries in our markets is intense, and there are relatively low barriers to entry. Land developers and homebuilders compete for, among other things, homebuyers, desirable land parcels, financing, raw materials and skilled labor.
We may not be able to compete effectively against competitors in the homebuilding, land development and financial services industries. Competition in the land development and homebuilding industries in our markets is intense, and there are relatively low barriers to entry. Land developers and homebuilders compete for, among other things, homebuyers, desirable land parcels, financing, raw materials and skilled labor.
For example, in December 2021, we offered 2,000,000 depositary shares representing shares of our 5.75% cumulative perpetual preferred stock.
For example, in December 2021, we offered 2,000,000 depositary shares each representing a 1/1000th interest in our 5.75% cumulative perpetual preferred stock.
This, in turn, could adversely affect our results of operations and financial condition. In addition, periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in the purchase of homes or an increased incidence of home order cancellations.
In addition, periods of economic slowdown or recession, rising or high interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in the purchases of homes or an increased incidence of home order cancellations.
If the federal government or a state government further changes its income tax laws to further eliminate or substantially limit these income tax deductions, the after-tax cost of owning a new home would further increase for many of our potential customers.
If the federal government or a state government further changes its income tax laws to further eliminate or substantially limit these income tax deductions, the after-tax cost of owning a new home would further increase for many of our potential customers. At the same time, favorable tax law changes will not necessarily increase demand or allow for higher selling prices.
Our results of operations could be adversely impacted by negative events at, or performance of, our partially owned controlled builders. We participate in the homebuilding business, in part, through non-wholly owned subsidiaries, which we refer to as our “controlled builders.” We exercise control over the operations of each controlled builder.
We participate in the homebuilding business, in part, through non-wholly owned subsidiaries, which we refer to as our “controlled builders.” We exercise control over the operations of each controlled builder.
Risks Related to Our Financing and Capital Structure We may be unable to obtain suitable bonding for the development of our housing projects We are periodically required to provide bonds to governmental authorities and others to ensure the completion of our projects and these bonds are generally not released until all development and construction activities to which they relate are completed.
We are periodically required to provide bonds to governmental authorities and others to ensure the completion of our projects and these bonds are generally not released until all development and construction activities to which they relate are completed.
Significant increases in the demand for new homes result in extended lead times, supply shortages and price increases because of the heightened demand for the raw materials, products and appliances.
Significant increases in the demand for new homes result in extended lead times, supply shortages and price increases because of the heightened demand for raw materials, products and appliances. For example, we have previously, and may in the future experience price increases, shortages and extensions to our lead time for the delivery of materials such as lumber, appliances and windows.
In addition, the sale of these shares could impair our ability to raise capital through the sale of additional equity securities. As of December 31, 2022, 16,600,508 shares were held by Greenlight. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If these holders sell substantial amounts of these shares, the price of our common stock could decline. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional equity securities. As of January 2, 2024, 11,336,493 shares were held by Greenlight. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Therefore, any increase in unemployment or underemployment may lead to an increase in the number of loan delinquencies and property repossessions. Such a condition could have an adverse impact on our business both by reducing demand for our homes, lots and construction loans and by increasing the supply of homes for sale.
Such a condition could have an adverse impact on our business both by reducing demand for our homes, lots and construction loans and by increasing the supply of homes for sale. 11 TABLE OF CONTENTS Our results of operations could be adversely impacted by negative events at, or performance of, our partially owned controlled builders.
In December 2020, 24,118,668 shares held by Greenlight were registered for resale on Form S-3 in accordance with the registration rights agreement. These shares may be sold in the market at any time, subject to compliance with securities laws. If these holders sell substantial amounts of these shares, the price of our common stock could decline.
In accordance with the registration rights agreement, the shares of common stock beneficially owned by Greenlight may be resold under the Company’s shelf registration statement on Form S-3, which became effective automatically upon filing on September 6, 2023. These shares may be sold in the market at any time, subject to compliance with securities laws.
Any of these outcomes could have an adverse effect on our results of operations.
Any of these outcomes could have an adverse effect on our results of operations. Risks Related to Our Financing and Capital Structure We may be unable to obtain suitable bonding for the development of our housing projects.
Removed
The cost of labor and raw materials may also be adversely affected during periods of shortage or high inflation.
Added
This, in turn, could adversely affect our results of operations and financial condition.
Removed
Our construction financing business competes with other lenders, including national, regional and local banks and other financial institutions, some of which have greater access to capital or different lending criteria and may be able to offer more attractive financing to potential homebuyers.
Added
Therefore, any increase in unemployment or underemployment may lead to an increase in the number of loan delinquencies and property repossessions.
Added
This coverage may be restricted and become more costly in the future.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES We lease our principal executive office located at 2805 Dallas Parkway, Suite 400, Plano, Texas, 75093. Our homebuilding and title division offices are located in leased space in the markets where we conduct business. We believe that such properties are suitable and adequate to meet the needs of our businesses.
Biggest changeITEM 2. PROPERTIES We lease our principal executive office located at 5501 Headquarters Drive, Suite 300W, Plano, Texas, 75024. Our homebuilding and title division offices are located in leased space in the markets where we conduct business. We believe that such properties are suitable and adequate to meet the needs of our businesses.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+3 added−1 removed1 unchanged
Biggest changeDividends on Common Shares We have not paid any dividends since our inception and do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. We currently anticipate that we will retain our available cash for general corporate purposes.
Biggest changeDividends on Common Shares We have not paid any dividends on our common stock since our inception and do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The New York Stock Exchange under the ticker symbol “GRBK”. Holders of Record On February 22, 2023, there were 59 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The New York Stock Exchange under the ticker symbol “GRBK”. Holders of Record On February 23, 2024, there were 67 stockholders of record of our common stock.
We believe the number of beneficial owners of our common stock is substantially greater than the number of record holders because a large portion of our outstanding common stock is held of record in broker “street names” for the benefit of individual investors. As of February 22, 2023, there were 46,032,886 common shares outstanding.
We believe the number of beneficial owners of our common stock is substantially greater than the number of record holders because a large portion of our outstanding common stock is held of record in broker “street names” for the benefit of individual investors. As of February 23, 2024, there were 44,971,005 common shares outstanding.
Removed
Common Stock Performance Graph The following graph compares the yearly dollar change in the cumulative total shareholder return on the Company’s common stock against the cumulative total shareholder return of the Russell 3000 Index and the S&P Homebuilders Select Industry Index for the five year period that commenced December 31, 2017 and ended December 31, 2022.
Added
Common Stock Performance Graph The following graph compares the yearly dollar change in the cumulative total shareholder return on the Company’s common stock against the cumulative total shareholder return of the Russell 3000 Index and the S&P Homebuilders Select Industry Index for the five-year period that commenced December 31, 2018 and ended December 31, 2023. 21 TABLE OF CONTENTS Issuer Purchases of Equity Securities The following table provides information about repurchases of our common stock during the three months ended December 31, 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 (1) October 1 - October 31, 2023 — $ — — $ 121,000,000 November 1 - November 30, 2023 299,174 46.50 299,174 107,097,000 December 1 - December 31, 2023 74,797 49.44 74,797 103,401,000 Total 373,971 47.09 373,971 (1) On April 27, 2022, the Board authorized a $100.0 million stock repurchase program (the “2022 Repurchase Plan”).
Added
Repurchases through December 31, 2023 were executed pursuant to the 2022 Repurchase Plan. 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.
Added
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. As of December 31, 2023, the remaining dollar value of shares that may yet be purchased was approximately $3.4 million under the 2022 Repurchase Plan and $100.0 million under the 2023 Repurchase Plan.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

4 edited+0 added−0 removed5 unchanged
Biggest changeForward-looking statements included or incorporated by reference in this Annual Report on Form 10-K include statements concerning (1) our balance sheet strategy and belief that we have ample liquidity; (2) our goals and strategies and their anticipated benefits, including expansion into new markets; (3) our intentions and the expected benefits and advantages of our product and land positioning strategies; (4) our expectations regarding future finished lots, the quality of those lots and the timing of backlog fulfillment; (5) expectations regarding our industry and our business in 2023 and beyond; (6) the contribution of certain market factors to our growth; (7) our land and lot acquisition strategy; (8) the sufficiency of our capital resources to support our business strategy and to service our debt; (9) the impact of new accounting standards and changes in accounting estimates; (10) trends and expectations regarding sales prices, sales orders, sales pace, cancellations, construction costs, gross margins, land costs and profitability and future home inventories; (11) our future cash needs; (12) our strategy to utilize leverage to invest in our business; (13) seasonal factors and the impact of seasonality in future quarters; (14) our expectations regarding access to additional growth capital; (15) our expectations regarding future land revenue recognition; (16) our ability to adapt to changing market conditions and (17) the disposition of legal claims and related contingencies.
Biggest changeForward-looking statements included or incorporated by reference in this Annual Report on Form 10-K include statements concerning (1) our balance sheet strategy and belief that we have ample liquidity; (2) our goals and strategies and their anticipated benefits, including expansion into new markets or new related businesses; (3) our intentions and the expected benefits and advantages of our product and land positioning strategies; (4) our expectations regarding future finished lots, the quality of those lots and the timing of backlog fulfillment; (5) expectations regarding our industry and our business in 2024 and beyond; (6) the contribution of certain market factors to our growth; (7) our land and lot acquisition strategy; (8) the sufficiency of our capital resources to support our business strategy and to service our debt; (9) the impact of new accounting standards and changes in accounting estimates; (10) trends and expectations regarding sales prices, sales orders, sales pace, cancellations, construction costs, gross margins, land costs and profitability and future home inventories; (11) our future cash needs; (12) our strategy to utilize leverage to invest in our business; (13) seasonal factors and the impact of seasonality in future quarters; (14) our expectations regarding access to additional growth capital; (15) our expectations regarding future land revenue recognition; (16) our ability to adapt to changing market conditions; and (17) our expectations regarding the sale of our ownership in Challenger; and (18) the disposition of legal claims and related contingencies.
These risks include, but are not limited to: (1) general economic conditions in our markets, seasonality, cyclicality and competition in the homebuilding industry; (2) changes in macroeconomic conditions, including interest and unemployment rates, that could adversely impact demand for new homes or the ability of our buyers to qualify; (3) shortages, delays or increased costs of raw 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 labor, (6) an inability to acquire land in our markets at anticipated prices or difficulty in obtaining land-use entitlements; (7) our inability to successfully execute our strategies, including the successful development of our communities within expected timeframes and the growth and expansion of our Trophy brand; (8) a failure to recruit, retain or develop highly skilled and competent employees; (9) the geographic concentration of our operations; (10) government regulation risks; (11) adverse changes in the availability or volatility of mortgage financing; (12) severe weather events or natural disasters; (13) difficulty in obtaining sufficient capital to fund our growth; (14) our ability to meet our debt service obligations; (15) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; (16) our ability to adequately self-insure and (17) changes in accounting standards that adversely affect our reported earnings or financial condition.
These risks include, but are not limited to: (1) general economic conditions in our markets, seasonality, cyclicality and competition in the homebuilding industry; (2) changes in macroeconomic conditions, including interest and unemployment rates, that could adversely impact demand for new homes or the ability of our buyers to qualify; (3) shortages, delays or increased costs or performance issues of raw 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 labor, (6) an inability to acquire land in our markets at anticipated prices or difficulty in obtaining land-use entitlements; (7) our inability to successfully execute our strategies, including the successful development of our communities within expected timeframes and the growth and expansion of our Trophy brand; (8) a failure to recruit, retain or develop highly skilled and competent employees; (9) the geographic concentration of our operations; (10) government regulation risks; (11) adverse changes in the availability or volatility of mortgage financing; (12) severe weather events or natural disasters; (13) difficulty in obtaining sufficient capital to fund our growth; (14) our ability to meet our debt service obligations; (15) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; (16) our ability to adequately self-insure; and (17) changes in accounting standards that adversely affect our reported earnings or financial condition.
ITEM 6. RESERVED 19 TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control.
ITEM 6. RESERVED 22 TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control.
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. 20 TABLE OF CONTENTS
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. 23 TABLE OF CONTENTS

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+11 added−15 removed26 unchanged
Biggest changeThe increase in average sales price was attributable to overall price increases driven by high demand and low supply of inventory. 22 TABLE OF CONTENTS Residential Units Gross Margin The table below represents the components of residential units gross margin (dollars in thousands): Years Ended December 31, 2022 2021 Home closings revenue $ 1,696,911 100.0 % $ 1,305,620 100.0 % Cost of homebuilding units 1,190,782 70.2 % 961,115 73.6 % Homebuilding gross margin $ 506,129 29.8 % $ 344,505 26.4 % Mechanic’s lien contracts revenue $ 7,040 100.0 % $ 4,067 100.0 % Cost of mechanic’s lien contracts 6,132 87.1 % 3,249 79.9 % Mechanic’s lien contracts gross margin $ 908 12.9 % $ 818 20.1 % Residential units revenue $ 1,703,951 100.0 % $ 1,309,687 100.0 % Cost of residential units 1,196,914 70.2 % 964,364 73.6 % Residential units gross margin $ 507,037 29.8 % $ 345,323 26.4 % Cost of residential units for the year ended December 31, 2022 increased by $232.6 million, or 24.1%, compared to the year ended December 31, 2021, primarily driven by the increasing levels of input prices and more expensive homes delivered during the period.
Biggest changeResidential Units Gross Margin The table below represents the components of residential units gross margin (dollars in thousands): Years Ended December 31, 2023 2022 Home closings revenue $ 1,767,788 100.0 % $ 1,696,911 100.0 % Cost of homebuilding units 1,222,134 69.1 % 1,190,782 70.2 % Homebuilding gross margin $ 545,654 30.9 % $ 506,129 29.8 % Mechanic’s lien contracts revenue $ 1,467 100.0 % $ 7,040 100.0 % Cost of mechanic’s lien contracts 945 64.4 % 6,132 87.1 % Mechanic’s lien contracts gross margin $ 522 35.6 % $ 908 12.9 % Residential units revenue $ 1,769,255 100.0 % $ 1,703,951 100.0 % Cost of residential units 1,223,079 69.1 % 1,196,914 70.2 % Residential units gross margin $ 546,176 30.9 % $ 507,037 29.8 % 25 TABLE OF CONTENTS Residential units revenue increased by $65.3 million or 3.8% during the year ended December 31, 2023 due to the increase in home deliveries partially offset by a reduction in average sales price.
Critical Accounting Policies The preparation of financial statements in accordance with GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the reporting period.
Critical Accounting Policies and Estimates The preparation of financial statements in accordance with GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the reporting period.
For our land development segment, we perform a quarterly review for indicators of impairment for each project which involves comparing anticipated lot sale revenues to projected costs (i.e. lot gross margins). For lots designated for our builders, we review land for indicators of impairment on a consolidated level for each community, looking at overall projected home contribution margins.
For our land development segment, we perform a quarterly review for indicators of impairment for each project which involves comparing anticipated lot sale revenues to projected costs (i.e. lot gross margins). For lots designated for our builders, we review land for indicators of impairment on a consolidated level, looking at overall projected home contribution margins.
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 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 returns, and using cash to make additional investments in business acquisitions, joint ventures, or other strategic activities.
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”).
Principal on the 2026 Notes is required to be paid in increments of $12.5 million on each of August 8, 2024 and 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”).
Our debt instruments require us to maintain specific financial covenants, each of which we were in compliance with as of December 31, 2022. Specifically, under the most restrictive covenants, we are required to maintain the following: • a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0.
Our debt instruments require us to maintain specific financial covenants, each of which we were in compliance with as of December 31, 2023. Specifically, under the most restrictive covenants, we are required to maintain the following: • a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0.
Net debt to total capitalization is calculated as the total debt less cash and cash equivalents, divided by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash equivalents. We present this measure because we believe it is useful to management and investors in evaluating our financing structure.
Net debt to total capitalization is calculated as 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.
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.
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 that fluctuates depending on market interest rates. Interest is payable quarterly in arrears.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For business overview and developments during the year ended December 31, 2022, refer to Part I, Item 1 of this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For business overview and developments during the year ended December 31, 2023, refer to Part I, Item 1 of this Annual Report on Form 10-K.
Preferred Equity As of December 31, 2022 and December 31, 2021 we had issued and outstanding 2,000,000 Depositary Shares, each representing 1/1000 of a share of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”).
Preferred Equity As of December 31, 2023 and December 31, 2022 we had 2,000,000 Depositary Shares 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”).
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.
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 that typically include escalations in lot prices over time.
For discussion and analysis our cash flows for the year ended December 31, 2021 as well as for comparison to our cash flows for the year ended December 31, 2020, refer to Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021.
For discussion and analysis our cash flows for the year ended December 31, 2022 as well as for comparison to our cash flows for the year ended December 31, 2021, refer to Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2022.
It is common that actual results differ from budgeted amounts for various reasons, including delays, changes in costs that have not been committed, unforeseen issues encountered during project development that fall outside the scope of existing contracts, or items that ultimately cost more or less than the budgeted amount.
It is common that actual 31 TABLE OF CONTENTS results differ from budgeted amounts for various reasons, including delays, changes in costs that have not been committed, unforeseen issues encountered during project development that fall outside the scope of existing contracts, or items that ultimately cost more or less than the budgeted amount.
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.
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, as a substitute for, or superior to, financial measures prepared in accordance with GAAP. 28 TABLE OF CONTENTS The closest GAAP financial measure to the net debt to total capitalization ratio is the debt to total capitalization ratio.
These purchase contracts typically require an earnest money deposit, and the purchase of properties under these contracts is generally contingent upon satisfying certain requirements, including obtaining applicable property and development entitlements.
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 believe that we operate in two of the most desirable housing markets in the nation and that increasing demand and supply constraints in our target markets create favorable conditions for our future growth.
We believe we operate in two of the most desirable housing markets in the nation and that increasing demand and supply levels in our target markets create favorable conditions for our future growth.
Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions. 28 TABLE OF CONTENTS 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.
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 seller.
Our utilization of lot option contracts is dependent on, among other things, our supply of internally developed lots, 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.
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.
In the later stages of community development, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflows associated with home construction and land development have previously occurred.
In the later stages of community life cycle, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflows associated with home construction and land development previously occurred.
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 25 TABLE OF CONTENTS component of our inventory and are not recognized in our statement of income until a home closes.
Early stages of development or expansion require significant cash outlays for land acquisitions, entitlements and other approvals, roads, utilities, general landscaping and other amenities, and home construction. These costs are a component of our inventory and are not recognized in our statement of income until a home closes.
Off-Balance Sheet Arrangements Land and Lot Option Contracts In the ordinary course of business, we enter into land purchase contracts with third-party developers to procure lots for the construction of our homes in the future. We are subject to customary obligations associated with such contracts.
Off-Balance Sheet Arrangements Land and Lot Option Contracts In the ordinary course of business, we enter into land purchase contracts in order to procure lots for the construction of our homes in the future. We are subject to customary obligations associated with such contracts.
In determining the allocation of costs to a particular land parcel, we rely on project budgets which are based on a variety of assumptions, such as development schedules and future costs to be incurred.
In determining the allocation of costs to a particular land parcel, we rely on project budgets which are based on a variety of assumptions, including assumptions about development schedules and future costs to be incurred.
As of December 31, 2022, we had a rolling average ratio of 27.1%. As of December 31, 2022, 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 and fund our operations.
As of December 31, 2023, we had a rolling average ratio of 21.9%. As of December 31, 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 and fund our operations.
(2) Total lots excludes lots with homes under construction. The following table presents additional information on the lots we owned as of December 31, 2022 and December 31, 2021.
(2) Total lots excludes lots with homes under construction. 27 TABLE OF CONTENTS The following table presents additional information on the lots we owned as of December 31, 2023 and December 31, 2022.
For the year ended December 31, 2022, our principal uses of capital were home construction, land purchases, land development, 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.
Our principal uses of capital for the year ended December 31, 2023 were home construction, land purchases, land development, repayments of lines of credit, operating expenses, payment of routine liabilities and stock repurchases. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements.
Corporate, Other and Unallocated Selling, general and administrative expense for the corporate, other and unallocated non-operating segment for the year ended December 31, 2022 was income of $3.5 million, compared to income of $2.1 million for the year ended December 31, 2021.
Corporate, Other and Unallocated Selling, general and administrative expense for the corporate, other and unallocated non-operating segment for the year ended December 31, 2023 was income of $0.3 million, compared to income of $3.5 million for the year ended December 31, 2022.
The aggregate amount of senior unsecured notes outstanding was $335.8 million as of December 31, 2022, up from $335.4 million as of December 31, 2021, respectively, 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.
The aggregate amount of senior unsecured notes outstanding was $336.2 million as of December 31, 2023, compared to $335.8 million as of December 31, 2022, respectively, net of issuance costs. • In August 2019, we issued $75.0 million of senior unsecured notes (the “2026 Notes”). Interest accrues at an annual rate of 4.0% and is payable quarterly.
Debt Instruments Borrowings on lines of credit outstanding, net of debt issuance costs, as of December 31, 2022 and December 31, 2021 consisted of the following (in thousands): December 31, 2022 December 31, 2021 Secured Revolving Credit Facility $ — $ 2,000 Unsecured Revolving Credit Facility 20,000 — Debt issuance costs, net of amortization (2,605) (2,738) Total borrowings on lines of credit, net $ 17,395 $ (738) Secured Revolving Credit Facility – As of December 31, 2022, we had no outstanding amounts under our Secured Revolving Credit Facility, compared to $2.0 million as of December 31, 2021.
Debt Instruments Borrowings on lines of credit outstanding, net of debt issuance costs, as of December 31, 2023 and December 31, 2022 consisted of the following (in thousands): December 31, 2023 December 31, 2022 Secured Revolving Credit Facility $ — $ — Unsecured Revolving Credit Facility — 20,000 Debt issuance costs, net of amortization (2,328) (2,605) Total borrowings on lines of credit, net $ (2,328) $ 17,395 Secured Revolving Credit Facility – As of December 31, 2023 and 2022, we had no outstanding amounts under our Secured Revolving Credit Facility.
Our debt to total capitalization ratio, which is calculated as the sum of borrowings on lines of credit, the senior unsecured notes and notes payable, net of debt issuance costs, divided by the total capitalization, which equals the sum of Green Brick Partners, Inc. stockholders’ equity and total debt, was approximately 25.7% as of December 31, 2022.
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 21.1% as of December 31, 2023.
Additionally, as of December 31, 2022, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 21.5%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding businesses.
Additionally, as of December 31, 2023, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 11.4%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding activities.
In determining the estimated cash flows for land held for sale, management considers recent comparisons to market comparable transactions, bona fide letters of intent from outside parties, executed sales contracts, broker quotes, and similar information.
In determining the estimated cash flows for land held for sale, management considers recent comparisons to market comparable transactions, bona fide letters of intent from outside parties, executed sales contracts, broker quotes, and similar information. When projecting revenue, management does not assume improvement in market conditions.
All other material terms of the credit agreement, as amended, remained unchanged. 26 TABLE OF CONTENTS Unsecured Revolving Credit Facility – As of December 31, 2022, we had $20.0 million outstanding under our Unsecured Revolving Credit facility. We had no outstanding amounts as of December 31, 2021.
All other material terms of the credit agreement, as amended, remained unchanged. 29 TABLE OF CONTENTS Unsecured Revolving Credit Facility – As of December 31, 2023, we had no amounts outstanding under our Unsecured Revolving Credit facility compared to $20 million as of December 31, 2022.
We remain focused on generating positive margins in our builder operations segments and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth. Cash flows for each of our communities depend on the community’s stage in the development cycle and can differ substantially from reported earnings.
We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth. Cash flows for each of our communities depend on the community’s stage in the development cycle.
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 customer deposit may be returned to the prospective purchaser.
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.
As of December 31, 2022, our interest coverage on a last 12 months’ basis was 24.1 to 1.0; • a Consolidated Tangible Net Worth of no less than approximately $678.8 million. As of December 31, 2022, our Consolidated Tangible Net Worth was $1,060.6 million; and • a maximum debt to total capitalization rolling average ratio of no more than 40.0%.
As of December 31, 2023, our interest coverage on a last 12 months’ basis was 26.4 to 1.0; • a Consolidated Tangible Net Worth of no less than approximately $820.8 million. As of December 31, 2023, our Consolidated Tangible Net Worth was $1,298.9 million; and • a maximum debt to total capitalization rolling average ratio of no more than 40.0%.
The change is primarily due to an increase in capitalized overhead adjustments that are not allocated to builder operations and land development segments.
The change was driven primarily by an increase in capitalized overhead adjustments that are not allocated to our builder operations and land development segments.
We pay cumulative cash dividends on the 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 are payable quarterly in arrears. During the year ended December 31, 2022, we paid dividends of $2.8 million on the Series A Preferred Stock.
We pay cumulative cash dividends on the 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 are payable quarterly in arrears.
Net cash used in financing activities for the year ended December 31, 2022 was $84.5 million, compared to a $154.3 million source of cash during the year ended December 31, 2021.
Net cash used in financing activities for the year ended December 31, 2023 was $93.8 million, compared to a $84.5 million during the year ended December 31, 2022.
The net cash inflows for the year ended December 31, 2022 were primarily generated from business operations of $314.0 million, partially offset by an increase in inventory of $217.6 million. • Investing activities.
The net cash inflows for the year ended December 31, 2023 were primarily generated from business operations of $306.7 million, partially offset by an increase in inventory of $109.2 million. • Investing activities.
Under the rules governing shelf registration statements, we will file a prospectus supplement and advise the SEC of the amount and type of securities each time we issue securities under this registration statement.
Under the rules governing shelf registration statements, we will file a prospectus supplement and advise the SEC of the amount and type of securities each time we issue securities under this 30 TABLE OF CONTENTS registration statement. The Company has not issued any securities under this registration statement through the date of this filing.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 For discussion and analysis of our results of operations for the year ended December 31, 2021 as well as for comparison to our results of operations for the year ended December 31, 2020, refer to Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021. 24 TABLE OF CONTENTS Lots Owned and Controlled The following table presents the lots we owned or controlled, including lot option contracts, as of December 31, 2022 and December 31, 2021.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 For discussion and analysis of our results of operations for the year ended December 31, 2022 as well as for comparison to our results of operations for the year ended December 31, 2021, refer to Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2022.
Accordingly, backlog may not be indicative of our future revenue. Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 13.8% for the year ended December 31, 2022, compared to 7.7% for the year ended December 31, 2021.
Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 6.6% for the year ended December 31, 2023, compared to 13.8% for the year ended December 31, 2022.
Equity in Income of Unconsolidated Entities Equity in income of unconsolidated entities increased to $25.6 million, or 30.0%, for the year ended December 31, 2022, compared to $19.7 million for the year ended December 31, 2021, primarily due to an increase in earnings from GB Challenger.
Equity in Income of Unconsolidated Entities Equity in income of unconsolidated entities decreased to $16.7 million, or 34.7%, for the year ended December 31, 2023, compared to $25.6 million for the year ended December 31, 2022, primarily due to a decrease in earnings from GB Challenger.
For each real estate asset that has an indicator of impairment, we analyze whether the estimated remaining undiscounted future cash flows are more or less than the asset’s carrying value.
Each reporting period, management reviews each real estate asset with an indicator of impairment to determine whether the estimated remaining undiscounted future cash flows are more or less than the asset’s carrying value.
See Note 5 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of Green Brick’s share in net earnings by unconsolidated entity.
See Note 5 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of Green Brick’s share in net earnings by unconsolidated entity. 26 TABLE OF CONTENTS Other Income, Net Other income, net, increased to $19.4 million for the year ended December 31, 2023, compared to $11.8 million for the year ended December 31, 2022.
Cash Flows The following summarizes our primary sources and uses of cash for the year ended December 31, 2022 as compared to the year ended December 31, 2021: • Operating activities.
Cash Flows The following summarizes our primary sources and uses of cash for the year ended December 31, 2023 as compared to the year ended December 31, 2022: • Operating activities. Net cash provided by operating activities for the year ended December 31, 2023 was $213.3 million, compared to $90.7 million during the year ended December 31, 2022.
As of December 31, 2022, we had earnest money deposits of $24.6 million at risk associated with contracts to purchase 2,923 lots past feasibility studies with an aggregate purchase price of approximately $219.8 million.
As of December 31, 2023, we had earnest money deposits of $13.4 million at risk associated with contracts to purchase 3,757 lots past feasibility studies with an aggregate purchase price of approximately $177.0 million.
Among the 12 largest metropolitan areas in the country, the Dallas and Atlanta areas ranked third and sixth, respectively, in annual rate of job growth from November 2021 to November 2022 (Source: US Bureau of Labor Statistics, November 2022).
These homebuilders had an average sales price below the Company average. 2023 Developments Among the 12 largest metropolitan areas in the country, the Dallas and Atlanta areas ranked first and seventh, respectively, in annual rate of job growth from November 2022 to November 2023 (Source: US Bureau of Labor Statistics, November 2023).
Owned lots are those for which we hold title, while controlled lots are lots past feasibility studies for which we do not hold title but have the contractual right to acquire title.
Lots Owned and Controlled The following table presents the lots we owned or controlled, including lot option contracts, as of December 31, 2023 and December 31, 2022. Owned lots are those for which we hold title, while controlled lots are lots past feasibility studies for which we do not hold title, but have the contractual right to acquire title.
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 Annual Report on Form 10-K, we utilize a financial measure of net debt to total capitalization ratio that is a non-GAAP financial measure as defined by the SEC.
Reconciliation of a Non-GAAP Financial Measure In this Annual Report on Form 10-K, we utilize a financial measure of net debt to total capitalization ratio that is a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”).
December 31, 2022 December 31, 2021 Central Southeast Total Central Southeast Total Lots owned Finished lots 1,901 998 2,899 1,328 797 2,125 Lots in communities under development 10,309 1,698 12,007 16,439 1,675 18,114 Land held for future development (1) 6,575 — 6,575 — — — Total lots owned 18,785 2,696 21,481 17,767 2,472 20,239 Lots controlled Lots under third party option contracts 2,212 6 2,218 2,670 70 2,740 Land under option for future acquisition and development 110 18 128 3,318 508 3,826 Lots under option through unconsolidated development joint ventures 1,289 411 1,700 1,333 483 1,816 Total lots controlled 3,611 435 4,046 7,321 1,061 8,382 Total lots owned and controlled (2) 22,396 3,131 25,527 25,088 3,533 28,621 Percentage of lots owned 83.9 % 86.1 % 84.2 % 70.8 % 70.0 % 70.7 % (1) Land held for future development consist of raw land parcels where development activities have been postponed due to market conditions or other factors.
December 31, 2023 December 31, 2022 Central Southeast Total Central Southeast Total Lots owned Finished lots 4,014 964 4,978 1,901 998 2,899 Lots in communities under development 9,122 1,335 10,457 10,309 1,698 12,007 Land held for future development (1) 8,366 — 8,366 6,575 — 6,575 Total lots owned 21,502 2,299 23,801 18,785 2,696 21,481 Lots controlled Lots under option contracts 1,169 — 1,169 2,212 6 2,218 Land under option for future development 1,710 460 2,170 110 18 128 Lots under option through unconsolidated development joint ventures 1,210 331 1,541 1,289 411 1,700 Total lots controlled 4,089 791 4,880 3,611 435 4,046 Total lots owned and controlled (2) 25,591 3,090 28,681 22,396 3,131 25,527 Percentage of lots owned 84.0 % 74.4 % 83.0 % 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.
The dividend is payable on March 15, 2023 to stockholders of record as of March 1, 2023. 27 TABLE OF CONTENTS Registration Statements In December 2020, we filed with the SEC a shelf registration statement on Form S-3 registering up to $500 million of securities, including shares of common stock, preferred stock or debt securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities.
Registration Statements In September 2023, we filed with the SEC an automatic shelf registration statement on Form S-3 which enables us to issue shares of common stock, preferred stock or debt securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities.
Selling, General and Administrative Expenses The table below represents the components of selling, general and administrative expense (dollars in thousands): Years Ended December 31, As Percentage of Segment Revenue 2022 2021 2022 2021 Builder operations $ 166,816 $ 135,464 9.7 % 10.1 % Land development 621 880 1.3 % 1.4 % Corporate, other and unallocated (income) expense (3,494) (2,075) — % — % Total selling, general and administrative expenses $ 163,943 $ 134,269 9.3 % 9.6 % Total selling, general and administrative expense as a percentage of revenue modestly improved to 9.3% from 9.6% for the year ended December 31, 2022 compared to the year ended December 31, 2021. 23 TABLE OF CONTENTS Builder Operations The decrease in selling, general and administrative expense as a percentage of revenue for builder operations from 10.1% to 9.7% was primarily attributable to an increase in builder operations revenues without a corresponding increase in the level of overhead costs.
Selling, General and Administrative Expenses The table below represents the components of selling, general and administrative expense (dollars in thousands): Years Ended December 31, As Percentage of Segment Revenue 2023 2022 2023 2022 Builder operations $ 192,827 $ 166,816 Corporate, other and unallocated (income) expense (254) (3,494) Net builder operations 192,573 163,322 10.9 % 9.5 % Land development 404 621 5.1 % 1.3 % Total selling, general and administrative expenses $ 192,977 $ 163,943 10.9 % 9.3 % Selling, general and administrative expense as a percentage of revenue increased by 1.6% for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in brokerage commissions.
Results of Operations Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Residential Units Revenue and New Homes Delivered The table below represents residential units revenue and new homes delivered for the years ended December 31, 2022 and December 31, 2021 (dollars in thousands): Years Ended December 31, 2022 2021 Change % Home closings revenue $ 1,696,911 $ 1,305,620 $ 391,291 30.0 % Mechanic’s lien contracts revenue 7,040 4,067 2,973 73.1 % Residential units revenue $ 1,703,951 $ 1,309,687 $ 394,264 30.1 % New homes delivered 2,916 2,834 82 2.9 % Average sales price of homes delivered $ 581.9 $ 460.7 $ 121.2 26.3 % The $394.3 million increase in residential units revenue was driven by the 26.3% increase in the average sales price of homes delivered for the year ended December 31, 2022 and the 2.9% increase in the number of homes delivered.
Results of Operations Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Residential Units Revenue and New Homes Delivered The table below represents residential units revenue and new homes delivered for the years ended December 31, 2023 and December 31, 2022 (dollars in thousands): Years Ended December 31, 2023 2022 Change % Home closings revenue $ 1,767,788 $ 1,696,911 $ 70,877 4.2 % Mechanic’s lien contracts revenue 1,467 7,040 (5,573) (79.2) % Residential units revenue $ 1,769,255 $ 1,703,951 $ 65,304 3.8 % New homes delivered 3,123 2,916 207 7.1 % Average sales price of homes delivered $ 566.1 $ 581.9 $ (15.8) (2.7) % The $65.3 million increase in residential units revenue was driven by the 7.1% increase in the number of homes delivered partially offset by a 2.7% decrease in average sales price of new homes delivered.
Net cash used in investing activities for the year ended December 31, 2022 increased to $6.5 million compared to $2.0 million for the year ended December 31, 2021. The increase in cash outflows was primarily due to a $3.6 million capital contribution to our joint venture GBTM Sendera, LLC during the year ended December 31, 2022. • Financing activities.
Net cash used in investing activities for the year ended December 31, 2023 increased to $13.3 million compared to $6.5 million for the year ended December 31, 2022. The increase in cash outflows was primarily due to the purchase of property and equipment, net of disposals of $7.8 million during the year ended December 31, 2023. • Financing activities.
Builder overhead expenditures include salaries, 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 expense as a percentage of revenue for land development remained relatively flat for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Builder Operations Selling, general and administrative expenses as a percentage of revenue for builder operations increased from 9.5% to 10.9% due to an increase in brokerage commissions. Builder operations expenditures include salaries, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.
New Home Orders and Backlog The table below represents new home orders and backlog related to our builder operations segments, excluding mechanic’s liens contracts (dollars in thousands): Years Ended December 31, 2022 2021 Change % Net new home orders 1,973 2,851 (878) (30.8) % Revenue from new net home orders $ 1,210,315 $ 1,488,613 $ (278,298) (18.7) % Average selling price of net new home orders $ 613.4 $ 522.1 $ 91.3 17.5 % Cancellation rate 13.8 % 7.7 % 6.1 % 79.2 % Absorption rate per average active selling community per quarter 6.5 8.2 (1.7) (20.7) % Average active selling communities 76 87 (11) (12.6) % Active selling communities at end of period 80 74 6 8.1 % Backlog $ 369,095 $ 869,856 $ (500,761) (57.6) % Backlog units 537 1,480 (943) (63.7) % Average sales price of backlog $ 687.3 $ 587.7 $ 99.6 16.9 % Net new home orders decreased by 30.8% over the prior year period and our absorption rate per average active selling community decreased 20.7% year over year.
These homebuilders had an average sales price below the Company average due to a mix of product type and selling more inventory in perimeter locations. 24 TABLE OF CONTENTS New Home Orders and Backlog The table below represents new home orders and backlog related to our builder operations segments, excluding mechanic’s liens contracts (dollars in thousands): Years Ended December 31, 2023 2022 Change % Net new home orders 3,356 1,973 1,383 70.1 % Revenue from net new home orders $ 1,953,903 $ 1,210,315 $ 743,588 61.4 % Average selling price of net new home orders $ 582.2 $ 613.4 $ (31.2) (5.1) % Cancellation rate 6.6 % 13.8 % (7.2) % (52.2) % Absorption rate per average active selling community per quarter 9.9 6.5 3.4 52.3 % Average active selling communities 85 76 9 11.8 % Active selling communities at end of period 91 80 11 13.8 % Backlog $ 555,200 $ 369,095 $ 186,105 50.4 % Backlog units 770 537 233 43.4 % Average sales price of backlog $ 721.0 $ 687.3 $ 33.7 4.9 % Net new home orders increased by 70.1% over the prior year, and our absorption rate per average active selling community increased 52.3% year over year.
As the series A Preferred Stock was issued in December 2021, no dividend payments were made during the year ended December 31, 2021. On February 14, 2023, the Board declared a quarterly cash dividend of $0.359 per depositary share on the Series A Preferred Stock.
During the year ended December 31, 2023 and December 31, 2022, we paid dividends of $2.9 million and $2.8 million, respectively, on the Series A Preferred Stock. As the series A Preferred Stock was issued in December 2021, no dividend payments were made during the year ended December 31, 2021.
Residential units gross margin for the year ended December 31, 2022 increased to 29.8%, compared to 26.4% for the year ended December 31, 2021, primarily due to overall price increases that outpaced the levels of cost increases.
Cost of residential units for the year ended December 31, 2023 increased by $26.2 million, or 2.2%, compared to the year ended December 31, 2022 due to the increase in units delivered. The residential units gross margin percentage for the year ended December 31, 2023 increased to 30.9%, compared to 29.8% for the year ended December 31, 2022.
Gross Cash and cash equivalents Net Total debt, net of debt issuance costs $ 367,842 $ (76,588) $ 291,254 Total Green Brick Partners, Inc. stockholders’ equity 1,061,907 — 1,061,907 Total capitalization $ 1,429,749 $ (76,588) $ 1,353,161 Debt to total capitalization ratio 25.7 % — — Net debt to total capitalization ratio — — 21.5 % Key Sources of Liquidity Our key sources of liquidity were funds generated by operations and provided by borrowings during the year ended December 31, 2022.
The following table represents a reconciliation of the net debt to total capitalization ratio as of December 31, 2023 (dollars in thousands): Gross Cash and cash equivalents Net Total debt, net of debt issuance costs $ 346,860 $ (179,756) $ 167,104 Total Green Brick Partners, Inc. stockholders’ equity 1,300,704 — 1,300,704 Total capitalization $ 1,647,564 $ (179,756) $ 1,467,808 Debt to total capitalization ratio 21.1 % — — Net debt to total capitalization ratio — — 11.4 % Key Sources of Liquidity Our key sources of liquidity were funds generated by operations and provided by borrowings during the year ended December 31, 2023.
Our results for each key financial and operating metric, as compared to the year ended December 31, 2021, are provided below: Year Ended December 31, 2022 Home deliveries Increased by 2.9% Home closings revenue Increased by 30.0% Average sales price of homes delivered Increased by 26.3% Net new home orders Decreased by 30.8% The expansion of our revenues year over year is primarily attributable to the strong performance of our Trophy division, growth in the average selling price of homes, the impact of macroeconomic factors, and an influx of millennial first-time home buyers during the first half of the year.
Our results for each key financial and operating metric, as compared to the year ended December 31, 2022, are provided below: Year Ended December 31, 2023 Home deliveries Increased by 7.1% Home closings revenue Increased by 4.2% Average sales price of homes delivered Decreased by 2.7% Net new home orders Increased by 70.1% The strong performance on most of our key metrics year over year is attributable to our superior infill and infill-adjacent locations in high-growth markets, our reduced cycle times, the continued low supply of existing and new home inventory in our markets, and increased revenue by our Texas builders.
December 31, 2022 December 31, 2021 Total lots owned 21,481 20,239 Land under option for future acquisition and development 128 3,826 Lots under option through unconsolidated development joint ventures 1,700 1,816 Total lots self-developed 23,309 25,881 Self-developed lots as a percentage of total lots owned and controlled 91.3 % 90.4 % Liquidity and Capital Resources Overview We had $76.6 million and $77.2 million of unrestricted cash as of December 31, 2022 and December 31, 2021, respectively.
December 31, 2023 December 31, 2022 Total lots owned (1) 23,801 21,481 Land under option for future acquisition and development 2,170 128 Lots under option through unconsolidated development joint ventures 1,541 1,700 Total lots self-developed 27,512 23,309 Self-developed lots as a percentage of total lots owned and controlled (1) 95.9 % 91.3 % (1) Total lots owned includes finished lot purchases, which were less than 3.2% of total lots self-developed as of December 31, 2023.
Senior Unsecured Notes - As of December 31, 2022, we had four series of senior unsecured notes outstanding which were each issued pursuant to a note purchase agreement.
The Eleventh Amendment also extends the maturity of $300.0 million of the commitments under the credit facility through December 14, 2026, with the remaining $25.0 million commitment expiring December 14, 2025. Senior Unsecured Notes - As of December 31, 2023, we had four series of senior unsecured notes outstanding which were each issued pursuant to a note purchase agreement.
When projecting revenue, management does not assume improvement in market conditions. 29 TABLE OF CONTENTS If the estimated undiscounted cash flows are less than the asset’s carrying value, the asset is deemed impaired and written down to fair value.
If the estimated undiscounted cash flows are more than the asset’s carrying value, no impairment adjustment is required. However, if the estimated undiscounted cash flows are less than the asset’s carrying value, the asset is deemed impaired and will be written down to fair value.
Income Tax Expense Income tax expense increased to $82.5 million for the year ended December 31, 2022 from $52.6 million for the year ended December 31, 2021.
The change was primarily due to an increase in interest income. Income Tax Expense Income tax expense increased to $84.6 million for the year ended December 31, 2023 from $82.5 million for the year ended December 31, 2022. The increase was primarily due to a reduction in Section 45L tax credits and increased state tax expense.
The cash outflows for the year ended December 31, 2022 were primarily for share repurchases of $101.5 million, partially offset by net borrowings from lines of credit of $18.0 million.
The cash outflows for the year ended December 31, 2023 were primarily for share repurchases of $45.8 million, net repayments on our lines of credit of $20.0 million and distributions to noncontrolling interests of $19.1 million.
The average lot price decreased by 13.9% due to a higher number of entry level lots sold. Land revenue represents sales of tracts of land during the years ended December 31, 2022 and 2021; such sales are opportunistic but are not generally in the ordinary course of business.
Lots revenue decreased by 61.1% during the year ended December 31, 2023, driven by a 74.7% decrease in the number of lots closed partially offset by a 53.4% increase in the average lot price. Land revenue represents sales of tracts of land during the year ended December 31, 2022 and 2023.
Land and Lots Revenue The table below represents lots closed and land and lots revenue (dollars in thousands): Years Ended December 31, 2022 2021 Change % Lots revenue $ 19,090 $ 24,866 $ (5,776) (23.2) % Land revenue 34,752 68,323 (33,571) (49.1) % Land and lots revenue $ 53,842 $ 93,189 $ (39,347) (42.2) % Lots closed 288 323 (35) (10.8) % Average sales price of lots closed $ 66.3 $ 77.0 $ (10.7) (13.9) % The 23.2% decrease in lots revenue was driven by the 10.8% decrease in the number of lots closed from a higher proportion of lots developed for internal use.
Land and Lots Revenue The table below represents lots closed and land and lots revenue (dollars in thousands): Years Ended December 31, 2023 2022 Change % Lots revenue $ 7,426 $ 19,090 $ (11,664) (61.1) % Land revenue 1,029 34,752 (33,723) (97.0) % Land and lots revenue $ 8,455 $ 53,842 $ (45,387) (84.3) % Lots closed 73 288 (215) (74.7) % Average sales price of lots closed $ 101.7 $ 66.3 $ 35.4 53.4 % From time to time, we will opportunistically sell finished lots to other homebuilders when we determine that we have excess capacity in specific neighborhoods or submarkets.
Guarantee Refer to Note 5 in the accompanying Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for details of our guarantee in relation to our joint venture with EJB River Holdings, LLC (“EJB River Holdings”).
See Note 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion on the Company’s income tax expense for the year ended December 31, 2023.
Removed
The significant increase in new home construction in our markets has, in turn, led to increased demand for labor and the raw materials, products and appliances for new homes.
Added
The decrease in the average sales price of homes delivered is attributable to an increase in the percentage of home deliveries by Trophy Signature Homes, Centre Living Homes, and CB JENI Homes over last year.
Removed
Due to the increased demand, we have experienced 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.
Added
The increase in new homes delivered is attributable to the limited competition in our infill and infill-adjacent community sites, our reduced cycle times, and the continued low supply of existing and new home inventory in our markets.
Removed
Additionally, the recent rapid rise in interest rates as well as the inflationary impact on buying power has impacted the ability of some buyers to qualify for mortgages in spite of unsatisfied demand for homes and the continued undersupply of existing and new home inventory. 2022 Developments From October 2021 to October 2022, homes in the DFW and Atlanta markets appreciated by 13.5% and 14.9%, respectively, compared to 8.6% average appreciation for 20 major U.S. metropolitan areas (Source: S&P Dow Jones Indices & CoreLogic, October 31, 2022).
Added
The decrease in the average sales price of homes delivered is attributable to an increase in the percentage of home deliveries by Trophy Signature Homes, Centre Living Homes, and CB JENI Homes over last year.
Removed
The increase 21 TABLE OF CONTENTS in the average sales price of homes delivered for the year ended December 31, 2022 was attributable to overall price increases driven by high demand and low supply of inventory.
Added
The increase in net new home orders is attributable to the increase in our active selling communities, the limited competition in our infill and infill-adjacent community sites, improved homebuyer sentiment, and the continued low supply of existing and new home inventory in our markets.
Removed
The lower levels of buyer traffic to many of our communities reduced the level of new home orders; we believe that the traffic decline starting in the second quarter was attributable to the recent rapid rise in interest rates as buyers reevaluated their buying capacity as well as the inflationary impact on consumer buying power and consumer confidence.
Added
There are instances in which sales contracts are canceled after execution, such as when the homebuyer cancels because of the inability to obtain suitable mortgage financing within a contractually specified time period. Accordingly, backlog may not be indicative of our future revenue.
Removed
Despite the lower sales pace, our decline in new order revenues was smaller than the decline in orders at 18.7% as our average sales price on new orders rose by 17.5%.

… 15 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−0 removed0 unchanged
Biggest changeFor fixed rate debt, such as our senior unsecured notes, changes in interest rates have an impact on the fair value of the debt instrument, not on our earnings or cash flows. The following table provides information about our significant fixed rate instruments that are sensitive to changes in interest rates.
Biggest changeAs of December 31, 2023, we had no amounts outstanding under our revolving credit facilities. For fixed rate debt, such as our senior unsecured notes, changes in interest rates have an impact on the fair value of the debt instrument, not on our earnings or cash flows.
Many of the statements contained in this section are forward-looking and should be read in conjunction with the disclosures under the heading “Forward-Looking Statements.” 31 TABLE OF CONTENTS
Many of the statements contained in this section are forward-looking and should be read in conjunction with the disclosures under the heading “Forward-Looking Statements.” 33 TABLE OF CONTENTS
Our debt obligations, annual maturity amounts, weighted average interest rates, and estimated fair market value of our senior unsecured notes for the year ended December 31, 2022 are summarized below (amounts in thousands): 30 TABLE OF CONTENTS Years ended December 31, 2023 2024 2025 2026 2027 2028 2029 Total Fair Value at December 31, 2022 Liabilities: Senior unsecured notes Principal repayments $ — 37,500 37,500 75,000 62,500 55,000 70,000 337,500 306,129 Weighted Average interest rate 3.43 % 3.43 % 3.42 % 3.37 % 3.27 % 3.25 % 3.25 % 3.38 % We do not enter into, or intend to enter into, swaps, forward or option contracts on interest rates or commodities or other types of derivative financial instruments for trading, hedging or speculative purposes.
Our debt obligations, annual maturity amounts, weighted average interest rates, and estimated fair market value of our senior unsecured notes for the year ended December 31, 2023 are summarized below (amounts in thousands): Years ended December 31, 2024 2025 2026 2027 2028 2029 Total Fair Value at December 31, 2023 Liabilities: Senior unsecured notes Principal repayments 37,500 37,500 75,000 62,500 55,000 70,000 337,500 $ 322,481 Weighted Average interest rate 3.43 % 3.42 % 3.37 % 3.27 % 3.25 % 3.25 % 3.37 % We do not enter into, or intend to enter into, swaps, forward or option contracts on interest rates or commodities or other types of derivative financial instruments for trading, hedging or speculative purposes.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our operations are interest rate sensitive. Because overall housing demand is adversely affected by increases in interest rates, a significant increase in mortgage interest rates may negatively affect the ability of homebuyers to secure adequate financing. Higher interest rates could adversely affect our revenues, gross margins and net income.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our operations are interest rate sensitive. Because overall housing demand is adversely affected by increases in interest rates, a significant increase in mortgage interest rates may negatively affect the ability of homebuyers to secure adequate financing.
Our lines of credit have variable interest rates which are subject to minimum interest rates. An increase in interest rates could cause the cost of those lines to increase. As of December 31, 2022, we had $20.0 million outstanding on these lines of credit.
Higher interest rates could adversely affect our revenues, gross margins and net income. 32 TABLE OF CONTENTS Our lines of credit have variable interest rates which are subject to minimum interest rates. An increase in interest rates could cause the cost of those lines to increase.
Added
The following table provides information about our significant fixed rate instruments that are sensitive to changes in interest rates.

Other GRBK 10-K year-over-year comparisons