Green Brick Partners, Inc.
For the period ended Mar 31, 2025. Filed Apr 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 30, 2025
GRBK$64.82-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001373670-24-000084
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0001373670-25-000050
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 92 current paragraphs.
44 unchanged; 34 reworded; 14 added; 25 removed; 11 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
The $52.0 million or 11.7% increase in residential units revenue was primarily driven by a 10.8% increase in new homes delivered for the three months ended March 31, 2025. The increase in new homes delivered was primarily driven by increased levels of finished and finishing spec home inventory entering the quarter coupled with a 10.6% increase in average active selling communities. The average sales price of homes delivered for the three months ended March 31, 2025 increased to $544.3 compared to $539.7 in the previous year primarily due to product mix.
Current report
Backlog revenue decreased by 18.1% year-over-year. As of March 31, 2025, backlog revenue increased 19.8% compared to December 31, 2024 and our spec units under construction as a percentage of total units under construction decreased from 75.6% as of December 31, 2024 to 64.1% as of March 31, 2025, due to the record closings in the first quarter.
Current report
Lots Revenue
Current report
The table below represents lots revenue and lots closed (dollars in thousands):
Current report
Selling, general and administrative expenses as a percentage of revenue decreased by 0.3% for the three months ended March 31, 2025.
Current report
Income tax expense was $22.2 million for the three months ended March 31, 2025 compared to $24.8 million for the three months ended March 31, 2024. The decrease was substantially due to a higher taxable income from the sale of our investment in GB Challenger during the three months ended March 31, 2024.
Current report
Unsecured Revolving Credit Facility –As of March 31, 2025, we had no amounts outstanding under our Unsecured Revolving Credit Facility and $25.0 million outstanding as of December 31, 2024. On December 13, 2024, the Company entered into the Twelfth Amendment (the “Twelfth Amendment”) to this credit agreement which adopted a leverage-based pricing grid for a reduction in both interest rate and non-use fee and other administrative changes. The Twelfth Amendment removed one lender with a $25 million prior commitment and added $30 million in new commitments, thereby increasing total commitments to $330 million. The maturity of all commitments under the Unsecured Revolving Credit Facility were extended to December 14, 2027.
Current report
Warehouse Facilities
Current report
GRBK Mortgage, a wholly owned subsidiary of the Company, is party to warehouse facilities to fund its origination of mortgage loans as follows (in thousands):
Current report
During the year ended December 31, 2024, GRBK Mortgage entered into two uncommitted warehouse facility agreements (the “Warehouse Facilities”) to finance its origination of mortgage loans. The Warehouse Facilities provide for an aggregate uncommitted amount of $80.0 million. The Warehouse Facilities are (i) secured by the underlying mortgage loans and bear interest at a variable rate based on SOFR plus a margin ranging from 1.75% to 2% and (ii) guaranteed by Green Brick. The facilities are subject to annual renewal and contain customary covenants and conditions regarding minimum net worth, leverage, profitability and liquidity. The Company was in compliance with the financial covenants under the Warehouse Facilities as of March 31, 2025.
Current report
Under the warehouse facilities, the banks purchase a participation interest in individual mortgage loans, with GRBK Mortgage providing the remainder of the principal of the mortgage, typically up to 2% depending on the loan product. The mortgage loans, with the servicing rights, are then sold, typically within 30 to 75 days, to a third party investor and the bank is repaid its participation interest plus interest and the remainder is remitted to GRBK Mortgage. If a third party investor has not purchased the mortgage loan within the anticipated timeframes then GRBK Mortgage is required to repurchase the mortgage loan for the full amount of the participation interest plus interest.
Current report
De minimis fees or other debt issuance costs were incurred during the three months ended March 31, 2025 associated with the Warehouse Facilities.
Current report
Registration Statements
Current report
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. 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. We have not issued any securities under this registration statement through the date of this filing.
Removed paragraphs (25)
Previous report
The 25.7% increase in residential units revenue was primarily driven by the 26.8% increase in new homes delivered partially offset by a 0.8% decrease in average sales price of new homes delivered for the three months ended September 30, 2024. 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.
Previous report
Net new home orders increased 11.3% over the prior year period and our average active selling communities increased 22.1% due to the continued opening of new communities. As a result, our absorption rate per average active selling community decreased 8.7% year over year, which was primarily due to the impact of what we believe is buyer expectations for the expected drop in short-term rates to result in lower mortgage rates. Revenue from net new home orders was substantially in line with the prior year period.
Previous report
Backlog revenue decreased by 6.5% due to a 11.7% decrease in backlog units offset by a 5.8% increase in the average sales price of backlog units.
Previous report
Other income, net, was $4.2 million for the three months ended September 30, 2024, compared to $4.6 million for the three months ended September 30, 2023.
Previous report
Income tax expense was $23.1 million for the three months ended September 30, 2024 compared to $21.0 million for the three months ended September 30, 2023. The increase was substantially due to higher taxable income partially offset by a lower effective tax rate, lower state tax rates, and a discrete tax benefit for equity compensation deductions. See Note 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion on the Company’s income tax expense for the three months ended September 30, 2024.
Previous report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Previous report
The $192.6 million increase in residential units revenue was driven by the 20.3% increase in new homes delivered partially offset by a 4.7% decrease in the average sales price of homes delivered for the nine months ended September 30, 2024. The increase in new homes delivered was primarily driven by an increase in active selling communities and home starts and an improvement in cycle times. The 4.7% decrease in the average sales price of homes delivered for the nine months ended September 30, 2024 was a result of closing out infill communities and opening new communities in surrounding infill-adjacent areas.
Previous report
New Home Orders
Previous report
Residential Units Gross Margin
Previous report
Residential units revenue increased $192.6 million or 14.6% during the nine months ended September 30, 2024 due to the increase in home deliveries of 20.3%, partially offset by lower average sales prices. Cost of residential units as a percent of residential units revenue was 66.4% for the nine months ended September 30, 2024 compared to 69.3% for the nine months ended September 30, 2023 due to a combination of lower direct construction costs and lower lot costs associated with the higher mix of deliveries from infill-adjacent communities.
Previous report
Residential units gross margin for the nine months ended September 30, 2024 increased 290 bps to 33.6%, from 30.7% for the nine months ended September 30, 2023. The increase in residential units gross margin is attributable to product mix and limited competition in our infill and infill-adjacent community sites.
Previous report
Land and Lots Revenue
Previous report
The table below represents lots closed and land and lots revenue (dollars in thousands):
Previous report
Selling, General and Administrative Expenses
Previous report
Selling, general and administrative expenses as a percentage of revenue was 10.8% for the nine months ended September 30, 2024, which is substantially in line with 10.7% for the nine months ended September 30, 2023.
Previous report
Builder Operations
Previous report
Corporate, Other and Unallocated
Previous report
Equity in income of unconsolidated entities decreased to $4.8 million, or 57.7%, for the nine months ended September 30, 2024, compared to $11.3 million for the nine months ended September 30, 2023. The decrease is mainly due to the sale of our ownership interest in Challenger during the three months ended March 31, 2024, wherein, we recognized only one month of net earnings from this investment compared to nine months in the prior year. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of Green Brick’s share in net earnings by unconsolidated entity.
Previous report
Other Income, Net
Previous report
Income Tax Expense
Previous report
Income tax expense was $71.8 million for the nine months ended September 30, 2024 compared to $63.2 million for the nine months ended September 30, 2023. The increase was substantially due to higher taxable income partially offset by a lower effective tax rate, lower state tax rates, and a discrete tax benefit for equity compensation deductions. See Note 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion on the Company’s income tax expense for the nine months ended September 30, 2024.
Previous report
Effective February 1, 2024, we sold our ownership interest in GB Challenger, LLC (“Challenger”) to the entity that already held the controlling interest in Challenger for approximately $64.0 million in cash. We have been using and intend to continue to use the proceeds from the transaction for investment in and expansion of opportunities with those builders in which we hold a controlling or one-hundred percent (100%) ownership interest, particularly including the growth and expansion of our Trophy Signature Homes brand into the Austin and Houston markets and other potential new markets.
Previous report
Unsecured Revolving Credit Facility –As of September 30, 2024 and December 31, 2023, we had no amounts outstanding under our Unsecured Revolving Credit Facility. Outstanding advances under the Unsecured Revolving Credit Facility accrue interest at the benchmark rate plus 2.5%. As amended, $300.0 million of the commitments under the credit facility mature on December 14, 2026, with the remaining $25.0 million of the commitments expiring December 14, 2025.
Previous report
Guarantees
Previous report
In certain of our unconsolidated joint ventures, the joint ventures enter into loan agreements, whereby we or one of our subsidiaries will provide the joint venture lenders with customary completion guarantees subject to usual non-recourse terms.
Reworded paragraphs (34)
Previous wording
Our strong operating results continued to be driven by our superior infill and infill-adjacent locations in high-growth markets, reduced cycle times, and the strong demand for new homes in our markets. Our average active selling communities increased 22.1% for the quarter while the average sales price of homes delivered decreased 0.8%. We maintained a strong homebuilding gross margin of 32.7%.
Current wording
During the first quarter of 2025, our steady operating results continued to be driven by our superior infill and infill-adjacent locations in high-growth markets, our reduced cycle times, and strong demand for our new homes. Our average active selling communities increased 10.6% while the average sales price of homes delivered increased marginally year over year.
Previous wording
Net new home orders increased 4.7% over the prior year period while our average active selling communities increased 20.5%. As a result, our absorption rate per average active selling community decreased 13.9% year over year, which was primarily due to the impact of increased mortgage rates, the metering of sales in certain infill communities, what we believe is the return of pre-pandemic seasonality that began in the second quarter, and buyer expectations for the expected drop in short-term rates to result in lower mortgage rates. The 2.1% decrease in revenue from net new home orders is primarily attributable to a higher mix of sales from newer, infill adjacent communities at lower average selling prices and fewer sales from closed-out, infill communities where we typically face more limited competition and have higher sales prices .
Current wording
Net new home orders increased 3.3% year over year and 26.0% sequentially from Q4 2024, and our average active selling communities increased by 10.6% due to the opening of new communities. As a result, our absorption rate per average active selling community decreased 7.0% year over year, which was attributable to the impact of high mortgage rates. The 3.2% decrease in revenue from net new home orders is primarily attributable to a higher mix of sales from newer, in-fill adjacent communities and fewer sales from closed-out, infill communities and an increase in sales incentives and discounts compared to the prior year.
Previous wording
Backlog revenue refers to homes under sales contracts that have not yet closed at the end of the respective period, and absorption rate refers to the rate at which net new home orders are contracted per average active selling community during the respective period. Sales contracts may be canceled prior to closing for a number of reasons, including the inability of the homebuyer to obtain suitable mortgage financing. Accordingly, backlog may not be indicative of our future revenue.
Current wording
Backlog units refer to homes under sales contracts that have not yet closed at the end of the respective period, and absorption rate refers to the rate at which net new home orders are contracted per average active selling community during the respective period. Sales contracts may be canceled prior to closing for a number of reasons, including the inability of the homebuyer to obtain suitable mortgage financing. Accordingly, backlog may not be indicative of our future revenue.
Previous wording
Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 8.5% for the three months ended September 30, 2024, compared to 6.1% for the three months ended September 30, 2023. Our cancellation rate remained in a historically low range under 10.0% since December 31, 2022.
Current wording
Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 6.1% for the three months ended March 31, 2025, compared to 4.1% for the three months ended March 31, 2024. Our cancellation rate remained in a historically low range under 10.0% since December 31, 2022.
Previous wording
Residential units revenue increased by $106.9 million or 25.7% for the three months ended September 30, 2024, mainly due to a an increase in homes delivered of 26.8% and partially offset by a decrease in the average sales price of homes delivered. Cost of residential units as a percent of residential units revenue for the three months ended September 30, 2024 was relatively unchanged at 67.3% compared to 66.7% in the same period in the previous year.
Current wording
Residential units revenue increased by $52.0 million or 11.7% for the three months ended March 31, 2025 mainly due to a 10.8% increase in homes delivered. Cost of residential units as a percent of residential units revenue for the three months ended March 31, 2025 increased to 68.8%, compared to 66.6% in the previous year due to a combination of product mix and a focus on higher incentives and discounts to combat high interest rates.
Previous wording
Residential units gross margin for the three months ended September 30, 2024 decreased 60 bps to 32.7%, from 33.3% for the three months ended September 30, 2023. The decrease in residential units gross margin is attributable to product mix and higher incentives.
Current wording
Residential units gross margin for the three months ended March 31, 2025 was 31.2%, compared to 33.4% for the three months ended March 31, 2024. The decrease in residential units gross margin is attributable to higher labor, material, and selling costs.
Previous wording
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. Land revenue represents sales of two tracts of commercial land during the nine months ended September 30, 2024.
Current wording
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. Lots revenue decreased by $1.8 million or 43.2% during the three months ended March 31, 2025, driven by a 61.9% decrease in the number of lots closed partially offset by a 49.3% increase in the average lot price.
Previous wording
Selling, general and administrative expenses as a percentage of revenue for builder operations decreased by 0.2% for the three months ended September 30, 2024 due to an increase in builder operations revenues with better leveraging of our overhead costs. Builder operations expenditures include salary expenses, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.
Current wording
Selling, general and administrative expenses as a percentage of revenue for builder operations decreased from 11.4% in the three months ended March 31, 2024 to 11.1% in the three months ended March 31, 2025 due to an increase in builder operations revenues and better leveraging of overhead costs. Builder operations expenditures include salary expenses, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.
Previous wording
Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment for the three months ended September 30, 2024 were $2.3 million, compared to $0.1 million for the three months ended September 30, 2023. Corporate, other and unallocated expenses generally include capitalized overhead adjustments that are not allocated to builder operations segments.
Current wording
Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment were $1.3 million, for each of three months ended March 31, 2025 and 2024. Corporate, other and unallocated expenses generally include capitalized overhead adjustments that are not allocated to builder operations segments.
Previous wording
Equity in income of unconsolidated entities decreased to $1.0 million, for the three months ended September 30, 2024, compared to $1.3 million for the three months ended September 30, 2023. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of Green Brick’s share in net earnings by unconsolidated entity.
Current wording
Equity in income of unconsolidated entities decreased to $0.5 million, or 81.8%, for the three months ended March 31, 2025, compared to $2.6 million for the three months ended March 31, 2024. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of Green Brick’s share in net earnings by unconsolidated entity.
Previous wording
Other income, net, increased to $25.4 million for the nine months ended September 30, 2024, compared to $13.7 million for the nine months ended September 30, 2023. The increase was primarily due to a $10.7 million gain in the sale of our investment in Challenger.
Current wording
Other income, net, decreased to $4.8 million for the three months ended March 31, 2025, compared to $15.4 million for the three months ended March 31, 2024. The decrease was primarily due to a $10.7 million gain in the sale of our investment in GB Challenger during the three months ended March 31, 2024.
Previous wording
The following table presents the lots we owned or controlled, including lot option contracts, as of September 30, 2024 and December 31, 2023. Owned lots are those for which we hold title, while controlled lots are those for which we have the contractual right to acquire title but we do not currently own.
Current wording
The following table presents the lots we owned or controlled, including lot option contracts, as of March 31, 2025 and December 31, 2024. 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.
Previous wording
The following table presents additional information on the lots we controlled as of September 30, 2024 and December 31, 2023:
Current wording
The following table presents additional information on the lots we owned as of March 31, 2025 and December 31, 2024.
Previous wording
(1) Total lots owned includes finished lot purchases, which were less than 1.8% of total lots self-developed as of September 30, 2024.
Current wording
(1) Total lots owned includes finished lot purchases, which were less than 1.1% of total lots self-developed as of March 31, 2025.
Previous wording
As of September 30, 2024 and December 31, 2023, we had $80.1 million and $179.8 million of unrestricted cash and cash equivalents, respectively. Our historical cash management strategy includes redeploying net cash from the sale of home inventory to acquire and develop land and lots that represent opportunities to generate desired margins and returns, and using cash to make additional investments in business acquisitions, joint ventures, share repurchases, or other strategic activities.
Current wording
As of March 31, 2025 and December 31, 2024, we had $103.0 million and $141.5 million of unrestricted cash and cash equivalents, respectively. Our historical cash management strategy includes redeploying net cash from the sale of home inventory to acquire and develop land and lots that represent opportunities to generate desired margins and returns, and using cash to make additional investments in business acquisitions, joint ventures, share repurchases or other strategic activities.
Previous wording
Our principal uses of capital for the nine months ended September 30, 2024 were home construction, land purchases, land development, repayments of debt, operating expenses, share repurchases, and payment of routine liabilities. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.
Current wording
Our principal uses of capital for the three months ended March 31, 2025 were home construction, land purchases, land development, repayments of debt, operating expenses, share repurchases, and payment of routine liabilities. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.
Previous wording
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 16.4% as of September 30, 2024.
Current wording
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 14.5% as of March 31, 2025.
Previous wording
Additionally, as of September 30, 2024, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 12.5%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding activities.
Current wording
Additionally, as of March 31, 2025, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 9.8%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding activities. We target a debt to total capitalization ratio of up to approximately 20%, which we expect will provide us with significant additional growth capital.
Previous wording
The Company’s key sources of liquidity were funds generated by operations and borrowings during the nine months ended September 30, 2024.
Current wording
Our key sources of liquidity were funds generated by operations and provided by borrowings during the three months ended March 31, 2025.
Previous wording
The following summarizes our primary sources and uses of cash during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023:
Current wording
The following summarizes our primary sources and uses of cash during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024:
Previous wording
•Operating activities. Net cash used for operating activities for the nine months ended September 30, 2024 was $3.0 million, compared to $232.7 million provided by operating activities during the nine months ended September 30, 2023. The net cash outflows for the nine months ended September 30, 2024 were primarily driven by an increase in inventory of $383.9 million, partially offset by $300.7 million of cash generated from business operations and the deferral of expense payments through a $82.5 million increase in accrued expenses and accounts payable.
Current wording
•Operating activities. Net cash provided by operating activities for the three months ended March 31, 2025 was $68.7 million, compared to $1.0 million during the three months ended March 31, 2024. The net cash inflows for the three months ended March 31, 2025 were primarily driven by cash generated from business operations of $93.2 million and a decrease in other assets of $13.3 million, offset primarily by a $48.5 million increase in inventory.
Previous wording
•Investing activities. Net cash provided by investing activities for the nine months ended September 30, 2024 was $34.6 million, compared to net cash used of $10.0 million during the nine months ended September 30, 2023. The cash inflows for the nine months ended September 30, 2024 were primarily from proceeds of $64.0 million from the sale of our interest in Challenger in February 2024, partially offset by $25.8 million used in other investments in unconsolidated entities.
Current wording
•Investing activities. Net cash used for investing activities for the three months ended March 31, 2025 was $12.0 million, compared to net cash provided by investing activities of $61.3 million for the three months ended March 31, 2024. The cash outflows for the three months ended March 31, 2025, were primarily used for investments in unconsolidated entities of $11.2 million.
Previous wording
•Financing activities. Net cash used in financing activities for the nine months ended September 30, 2024 was $126.4 million, compared to net cash used of $69.8 million during the nine months ended September 30, 2023. The cash outflows were primarily related to share repurchases of $48.0 million, repayments of our senior unsecured notes of $37.5 million and notes payable of $13.0 million.
Current wording
•Financing activities. Net cash used by financing activities for the three months ended March 31, 2025 was $81.6 million, compared to $51.3 million during the three months ended March 31, 2024. The cash outflows were primarily related to repayments of senior unsecured notes of $25.0 million, net repayments of our lines of credit of $24.4 million and repurchases of common stock of $16.9 million.
Previous wording
Secured Revolving Credit Facility – As of September 30, 2024 and December 31, 2023, we had no amounts outstanding under our $35.0 million Secured Revolving Credit Facility. Borrowings under the Secured Revolving Credit Facility bear interest at a floating rate per annum equal to the rate announced by Bank of America, N.A. as its “Prime Rate” less 0.25%, subject to a minimum rate. As amended, this credit agreement matures on May 1, 2025 and carries a minimum interest rate of 3.15%.
Current wording
Secured Revolving Credit Facility – As of March 31, 2025 and December 31, 2024, we had no amounts outstanding under our Secured Revolving Credit Facility. Borrowings under the Secured Revolving Credit Facility bear interest at a floating rate per annum equal to the rate announced by Bank of America, N.A. as its “Prime Rate” less 0.25%, subject to a minimum rate. As amended, this credit agreement matures on May 1, 2025 and carries a minimum interest rate of 3.15%.
Previous wording
Senior Unsecured Notes -As of September 30, 2024, we had four series of senior unsecured notes outstanding which were each issued pursuant to a note purchase agreement. The aggregate principal amount of senior unsecured notes outstanding was $299.0 million as of September 30, 2024 compared to $336.2 million as of December 31, 2023, net of issuance costs.
Current wording
Senior Unsecured Notes -As of March 31, 2025, we had four series of senior unsecured notes outstanding that were each issued pursuant to a note purchase agreement. The aggregate amount of senior unsecured notes outstanding was $274.2 million as of March 31, 2025 compared to $299.1 million as of December 31, 2024, net of issuance costs.
Previous wording
•In August 2019, we issued $75.0 million of senior unsecured notes (the “2026 Notes”) of which $62.5 million is outstanding as of September 30, 2024. Interest accrues at an annual rate of 4.0% and is payable quarterly. Principal on the 2026 Notes of $12.5 million is due on August 8, 2025 and the remaining principal amount of $50.0 million is due on August 8, 2026.
Current wording
•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. 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.
Previous wording
•In February 2021, we issued $125.0 million of senior unsecured notes (the “2028 Notes”) of which $100.0 million is outstanding as of September 30, 2024. Interest accrues at an annual rate of 3.25% and is payable quarterly. Principal on the 2028 Notes is due in increments of $25.0 million annually on February 25 in each of 2025, 2026, 2027, and 2028.
Current wording
•In February 2021, we issued $125.0 million of senior unsecured notes (the “2028 Notes”) of which $75.0 million is outstanding as of March 31, 2025. Interest accrues at an annual rate of 3.25% and is payable quarterly. Principal on the 2028 Notes is due in increments of $25.0 million annually on February 25 in each of 2026, 2027, and 2028.
Previous wording
•a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0. As of September 30, 2024, our interest coverage on a last 12 months’ basis was 33.16 to 1.0;
Current wording
•a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0. As of March 31, 2025, our interest coverage on a last 12 months’ basis was 33.96 to 1.0;
Previous wording
•a Consolidated Tangible Net Worth of no less than approximately $960.0 million. As of September 30, 2024, our Consolidated Tangible Net Worth was $1,519.8 million; and
Current wording
•a Consolidated Tangible Net Worth of no less than approximately $1,049.5 million. As of March 31, 2025, our Consolidated Tangible Net Worth was $1,690.0 million; and
Previous wording
•a maximum debt to total capitalization rolling average ratio of no more than 40.0%. As of September 30, 2024, we had a rolling average ratio of 17.3%.
Current wording
•a maximum debt to total capitalization rolling average ratio of no more than 40.0%. As of March 31, 2025, we had a rolling average ratio of 16.4%.
Previous wording
As of September 30, 2024 and December 31, 2023, 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”). We will 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 will be payable quarterly in arrears. During the nine months ended September 30, 2024, we paid dividends of $2.2 million on the Series A Preferred Stock. On October 25, 2024, the Board declared a quarterly cash dividend of $0.359 per depositary share on the Series A Preferred Stock. The dividend is payable on December 13, 2024 to stockholders of record as of December 1, 2024.
Current wording
As of March 31, 2025 and December 31, 2024, was 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”). We will pay cumulative cash dividends on our Series A Preferred Stock, when and as declared by the Board, at the rate of 5.75% of the $25,000 liquidation preference per share. Dividends payable quarterly in arrears. During the three months ended March 31, 2025 and 2024, we paid dividends of $0.7 million on our Series A Preferred Stock. On April 24, 2025, the Board declared a quarterly cash dividend of $0.359 per depositary share on our Series A Preferred Stock. The dividend is payable on June 13, 2025 to stockholders of record as of June 1, 2025.
Previous wording
We also utilize option contracts with lot sellers as a method of acquiring lots in staged takedowns, which are the schedules that dictate when lots must be purchased to help manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Lot option contracts generally require us to pay a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices that typically include escalations in lot prices over time.
Current wording
To a much lesser extent due to limited availability in our market of true lot developers, we also utilize option contracts with lot sellers as a method of acquiring lots in staged takedowns, which are the schedules that dictate when lots must be purchased to help manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Lot option contracts generally require us to pay a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices that typically include escalations in lot prices over time.
Previous wording
As of September 30, 2024, the Company had earnest money deposits of $10.2 million at risk associated with contracts to purchase raw land and finished lots representing 3,380 total lots past feasibility studies with an aggregate purchase price of approximately $166.4 million.
Current wording
As of March 31, 2025, we had earnest money deposits of $12.9 million at risk associated with contracts to purchase 3,665 lots past feasibility studies with an aggregate purchase price of approximately $171.0 million.
Previous wording
See Note 1 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for recent accounting pronouncements.
Current wording
See Note 1 in the Notes to the Condensed Consolidated Financial Statement included in Part I, Item 1 of this Quarterly Report on Form 10-Q for recent accounting pronouncements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Selling, general and administrative expenses as a percentage of revenue decreased by 0.2% for the three months ended September 30, 2024 due to an increase in builder operations revenues with better leveraging of overhead costs.
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Residential Units Revenue and New Homes Delivered
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The table below represents residential units revenue and new homes delivered for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
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The table below represents new home orders and backlog related to our builder operations segments, excluding mechanic’s lien contracts (dollars in thousands):
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Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 7.1% for the nine months ended September 30, 2024, compared to 6.5% for the nine months ended September 30, 2023. Our cancellation rate remained in a historically low range under 10.0% since December 31, 2022.
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The table below represents the components of residential units gross margin (dollars in thousands):
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The table below represents the components of selling, general and administrative expenses (dollars in thousands):
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Selling, general and administrative expenses as a percentage of revenue for builder operations increased from 10.7% to 10.9% mainly due to an increase in salary expenses. Builder operations expenditures include salary expenses, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.
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Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment for the nine months ended September 30, 2024 were $6.0 million and de minimis for the nine months ended September 30, 2023. The increase was driven by incentive compensation and salary expenses during the nine months ended September 30, 2024. Corporate, other and unallocated expenses generally include capitalized overhead adjustments that are not allocated to builder operations segments.
Previous report — wording carried elsewhere
Equity in Income of Unconsolidated Entities