UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-Q

___________________


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

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


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

For the transition period from to

Commission file number: 001-33530


Green Brick Partners, Inc.

(Exact name of registrant as specified in its charter)


Delaware				20-5952523
(State or other jurisdiction of incorporation)				(IRS Employer Identification Number)
2805 Dallas Pkwy	,	Ste 400
Plano	,	TX	75093	(469)	573-6755
(Address of principal executive offices, including Zip Code)				(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	GRBK	The ~~Nasdaq~~New York Stock ~~Market LLC~~Exchange
Depositary Shares (each representing a 1/1000th interest in a share of 5.75% Series A Cumulative Perpetual Preferred Stock, par value $0.01 per share)	GRBK PRA	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐☑ Accelerated filer ☒☐ Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

The number of shares of the Registrant's common stock outstanding as of ~~July 31, 2021~~April 29, 2022 was ~~50,759,972.~~48,429,623.

TABLE OF CONTENTS


PART I		FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
		Condensed Consolidated Balance Sheets, ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021	1
		Condensed Consolidated Statements of Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	2
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three ~~and six~~ months ended ~~June 30,~~March 31 , 2022 and 2021 ~~and 2020~~	3
		Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	54
		Notes to Condensed Consolidated Financial Statements	76
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 4.	Controls and Procedures	3129
PART II		OTHER INFORMATION
	Item 5.2.	~~Other Information~~Unregistered Sales of Equity Securities and Use of Proceeds	3230
	Item 6.	Exhibits	3230
		Signatures	3331

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data) (Unaudited)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	33,517	$	19,479	Cash and cash equivalents	$	66,083	$	78,696
Restricted cash	Restricted cash	23,598		14,156		Restricted cash	14,152		14,858
Receivables	Receivables	7,007		5,224		Receivables	7,050		6,871
Inventory	Inventory	1,106,141		844,635		Inventory	1,327,509		1,203,743
Investments in unconsolidated entities	Investments in unconsolidated entities	50,342		46,443		Investments in unconsolidated entities	58,127		55,616
Right-of-use assets - operating leases	Right-of-use assets - operating leases	4,528		2,538		Right-of-use assets - operating leases	4,215		4,596
Property and equipment, net	Property and equipment, net	3,712		3,595		Property and equipment, net	2,617		2,812
Earnest money deposits	Earnest money deposits	20,161		22,242		Earnest money deposits	24,744		26,008
Deferred income tax assets, net	Deferred income tax assets, net	15,376		15,376		Deferred income tax assets, net	15,741		15,741
Intangible assets, net	Intangible assets, net	580		622		Intangible assets, net	516		537
Goodwill	Goodwill	680		680		Goodwill	680		680
Other assets	Other assets	21,494		13,857		Other assets	7,223		11,709
Total assets	Total assets	$	1,287,136	$	988,847	Total assets	$	1,528,657	$	1,421,867
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Liabilities:	Liabilities:					Liabilities:
Accounts payable	Accounts payable	$	45,761	$	24,521	Accounts payable	$	56,899	$	45,682
Accrued expenses	Accrued expenses	57,425		40,416		Accrued expenses	89,558		61,351
Customer and builder deposits	Customer and builder deposits	63,700		38,131		Customer and builder deposits	63,618		64,610
Lease liabilities - operating leases	Lease liabilities - operating leases	4,582		2,591		Lease liabilities - operating leases	4,415		4,745
Borrowings on lines of credit, net	Borrowings on lines of credit, net	130,605		106,687		Borrowings on lines of credit, net	19,421		(738)
Senior unsecured notes, net	Senior unsecured notes, net	235,624		111,056		Senior unsecured notes, net	335,538		335,446
Notes payable	Notes payable	233		2,125		Notes payable	14,668		210
Contingent consideration		0		368
Total liabilities	Total liabilities	537,930		325,895		Total liabilities	584,117		511,306
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Redeemable noncontrolling interest in equity of consolidated subsidiary	Redeemable noncontrolling interest in equity of consolidated subsidiary	17,515		13,543		Redeemable noncontrolling interest in equity of consolidated subsidiary	22,179		21,867
Equity:	Equity:					Equity:
Green Brick Partners, Inc. stockholders’ equity	Green Brick Partners, Inc. stockholders’ equity					Green Brick Partners, Inc. stockholders’ equity
Preferred stock, $0.01 par value: 5,000,000 shares authorized; none issued and outstanding		0		0
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,151,911 and 51,053,858 issued and 50,759,972 and 50,661,919 outstanding as of June 30, 2021 and December 31, 2020, respectively		511		511
Treasury stock, at cost, 391,939 shares		(3,167)		(3,167)
Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of March 31, 2022 and December 31 2021, respectively						Preferred stock, $0.01 par value: 5,000,000 shares authorized; 2,000 issued and outstanding as of March 31, 2022 and December 31 2021, respectively	47,696		47,696
Common stock, $0.01 par value: 100,000,000 shares authorized; 51,245,206 and 51,151,911 issued and 49,660,230 and 50,759,972 outstanding as of March 31, 2022 and December 31, 2021, respectively						Common stock, $0.01 par value: 100,000,000 shares authorized; 51,245,206 and 51,151,911 issued and 49,660,230 and 50,759,972 outstanding as of March 31, 2022 and December 31, 2021, respectively	512		512
Treasury stock, at cost, 1,584,976 and 391,939 shares as of March 31, 2022 and December 31, 2021, respectively						Treasury stock, at cost, 1,584,976 and 391,939 shares as of March 31, 2022 and December 31, 2021, respectively	(28,968)		(3,167)
Additional paid-in capital	Additional paid-in capital	292,157		293,242		Additional paid-in capital	292,155		289,641
Retained earnings	Retained earnings	427,888		349,656		Retained earnings	600,788		539,866
Total Green Brick Partners, Inc. stockholders’ equity	Total Green Brick Partners, Inc. stockholders’ equity	717,389		640,242		Total Green Brick Partners, Inc. stockholders’ equity	912,183		874,548
Noncontrolling interests	Noncontrolling interests	14,302		9,167		Noncontrolling interests	10,178		14,146
Total equity	Total equity	731,691		649,409		Total equity	922,361		888,694
Total liabilities and equity	Total liabilities and equity	$	1,287,136	$	988,847	Total liabilities and equity	$	1,528,657	$	1,421,867

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

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Residential units revenue	Residential units revenue	$	333,500	$	228,667	$	550,736	$	419,854	Residential units revenue	$	364,661	$	217,236
Land and lots revenue	Land and lots revenue	40,306		4,166		57,549		26,246		Land and lots revenue	28,955		17,243
Total revenues	Total revenues	373,806		232,833		608,285		446,100		Total revenues	393,616		234,479
Cost of residential units	Cost of residential units	244,165		175,723		406,237		322,910		Cost of residential units	263,430		162,072
Cost of land and lots	Cost of land and lots	28,665		3,215		42,083		20,326		Cost of land and lots	21,830		13,418
Total cost of revenues	Total cost of revenues	272,830		178,938		448,320		343,236		Total cost of revenues	285,260		175,490
Total gross profit	Total gross profit	100,976		53,895		159,965		102,864		Total gross profit	108,356		58,989
Selling, general and administrative expenses	Selling, general and administrative expenses	(33,985)		(25,672)		(63,473)		(52,541)		Selling, general and administrative expenses	(34,265)		(29,488)
Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	4,593		5,174		8,484		7,739		Equity in income of unconsolidated entities	5,687		3,891
Other income, net	Other income, net	2,393		2,788		4,263		879		Other income, net	2,855		1,870
Income before income taxes	Income before income taxes	73,977		36,185		109,239		58,941		Income before income taxes	82,633		35,262
Income tax expense	Income tax expense	15,694		1,348		23,195		7,388		Income tax expense	18,437		7,501
Net income	Net income	58,283		34,837		86,044		51,553		Net income	64,196		27,761
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	6,020		1,190		7,812		1,989		Less: Net income attributable to noncontrolling interests	2,619		1,792
Net income attributable to Green Brick Partners, Inc.	Net income attributable to Green Brick Partners, Inc.	$	52,263	$	33,647	$	78,232	$	49,564	Net income attributable to Green Brick Partners, Inc.	$	61,577	$	25,969

Net income attributable to Green Brick Partners, Inc. per common share:	Net income attributable to Green Brick Partners, Inc. per common share:									Net income attributable to Green Brick Partners, Inc. per common share:
Basic	Basic	$	1.03	$	0.67	$	1.54	$	0.98	Basic	$	1.20	$	0.51
Diluted	Diluted	$	1.02	$	0.66	$	1.53	$	0.98	Diluted	$	1.20	$	0.51
Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:	Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:									Weighted average common shares used in the calculation of net income attributable to Green Brick Partners, Inc. per common share:
Basic	Basic	50,701		50,583		50,667		50,519		Basic	50,586		50,633
Diluted	Diluted	51,064		50,692		51,029		50,669		Diluted	50,924		50,993

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

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

For the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Total Green Brick Partners, Inc. Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity
Shares Amount Shares Amount
Balance at March 31, 2021 51,124,215 $ 511 (391,939) $ (3,167) $ 293,162 $ 375,625 $ 666,131 $ 10,630 $ 676,761
Issuance of common stock under 2014 Omnibus Equity Incentive Plan 27,696 — — — — — — — —
Amortization of deferred share-based compensation — — — — 173 — 173 — 173
Change in fair value of redeemable noncontrolling interest — — — — (1,178) — (1,178) — (1,178)
Distributions — — — — — — — (1,606) (1,606)
Net income — — — — — 52,263 52,263 5,278 57,541
Balance at June 30, 2021 51,151,911 $ 511 (391,939) $ (3,167) $ 292,157 $ 427,888 $ 717,389 $ 14,302 $ 731,691


		Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Green Brick Partners, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity			Common Stock			Preferred Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Green Brick Partners, Inc. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity
		Shares	Amount		Shares	Amount													Shares	Amount		Shares	Amount		Shares	Amount
Balance at March 31, 2020		51,008,861	$	510	(391,939)	$	(3,167)	$	294,695	$	250,944	$	542,982	$	10,900	$	553,882
Balance at December 31, 2021																		Balance at December 31, 2021	51,151,911	$	512	2,000	$	47,696	(391,939)	$	(3,167)	$	289,641	$	539,866	$	874,548	$	14,146	$	888,694
Issuance of common stock under 2014 Omnibus Equity Incentive Plan	Issuance of common stock under 2014 Omnibus Equity Incentive Plan	44,997	1		—	—		—		—		1		—		1		Issuance of common stock under 2014 Omnibus Equity Incentive Plan	139,710	1		—	—		—	—		2,751		—		2,752		—		2,752
Withholdings from vesting of restricted stock awards																		Withholdings from vesting of restricted stock awards	(46,415)	(1)		—	—		—	—		(1,074)		—		(1,075)		—		(1,075)
Dividends																		Dividends	—	—		—	—		—	—		—		(655)		(655)		—		(655)
Stock repurchases																		Stock repurchases	—	—		—	—		(1,193,037)	(25,801)		—		—		(25,801)		—		(25,801)
Amortization of deferred share-based compensation	Amortization of deferred share-based compensation	—	—		—	—		84		—		84		—		84		Amortization of deferred share-based compensation	—	—		—	—		—	—		280		—		280		—		280
Change in fair value of noncontrolling interest		—	—			—		(1,892)		—		(1,892)		—		(1,892)
Increase in ownership in CB JENI Homes		—	—		—	—		—		937		937		(937)		—
Change in fair value of redeemable noncontrolling interest																		Change in fair value of redeemable noncontrolling interest	—	—		—	—		—	—		557		—		557		—		557
Distributions	Distributions	—	—		—	—		—		—		—		(2,281)		(2,281)		Distributions	—	—		—	—		—	—		—		—		—		(5,718)		(5,718)
Net income	Net income	—	—		—	—		—		33,647		33,647		504		34,151		Net income	—	—		—	—		—	—		—		61,577		61,577		1,750		63,327
Balance at June 30, 2020		51,053,858	$	511	(391,939)	$	(3,167)	$	292,887	$	285,528	$	575,759	$	8,186	$	583,945
Balance at March 31, 2022																		Balance at March 31, 2022	51,245,206	$	512	2,000	$	47,696	(1,584,976)	$	(28,968)	$	292,155	$	600,788	$	912,183	$	10,178	$	922,361

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

~~TABLE OF CONTENTS~~

~~GREEN BRICK PARTNERS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~(In thousands, except share data)~~

~~(Unaudited)~~

~~For the six months ended June 30, 2021 and 2020:~~

Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Total Green Brick Partners, Inc. Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity
Shares Amount Shares Amount
Balance at December 31, 2020 51,053,858 $ 511 (391,939) $ (3,167) $ 293,242 $ 349,656 $ 640,242 $ 9,167 $ 649,409
Issuance of common stock under 2014 Omnibus Equity Incentive Plan 139,371 1 — — 2,436 — 2,437 — 2,437
Withholdings from vesting of restricted stock awards (41,318) (1) — — (833) — (834) — (834)
Amortization of deferred share-based compensation — — — — 319 — 319 — 319
Change in fair value of redeemable noncontrolling interest — — — — (3,007) — (3,007) — (3,007)
Distributions — — — — — — — (1,606) (1,606)
Net income — — — — — 78,232 78,232 6,741 84,973
Balance at June 30, 2021 51,151,911 $ 511 (391,939) $ (3,167) $ 292,157 $ 427,888 $ 717,389 $ 14,302 $ 731,691


		Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Green Brick Partners, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity			Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Green Brick Partners, Inc. Stockholders’ Equity		Non controlling Interests		Total Stockholders’ Equity
		Shares	Amount		Shares	Amount													Shares	Amount		Shares	Amount
Balance at December 31, 2019		50,879,949	$	509	(391,939)	$	(3,167)	$	290,799	$	235,027	$	523,168	$	13,227	$	536,395
Balance at December 31, 2020																		Balance at December 31, 2020	51,053,858	$	511	(391,939)	$	(3,167)	$	293,242	$	349,656	$	640,242	$	9,167	$	649,409
Issuance of common stock under 2014 Omnibus Equity Incentive Plan	Issuance of common stock under 2014 Omnibus Equity Incentive Plan	249,617	3		—	—		1,598		—		1,601		—		1,601		Issuance of common stock under 2014 Omnibus Equity Incentive Plan	111,675	1		—	—		2,436		—		2,437		—		2,437
Withholdings from vesting of restricted stock awards	Withholdings from vesting of restricted stock awards	(75,708)	(1)		—	—		(591)		—		(592)		—		(592)		Withholdings from vesting of restricted stock awards	(41,318)	(1)		—	—		(833)		—		(834)		—		(834)
Amortization of deferred share-based compensation	Amortization of deferred share-based compensation	—	—		—	—		218		—		218		—		218		Amortization of deferred share-based compensation	—	—		—	—		146		—		146		—		146
Change in fair value of redeemable noncontrolling interest	Change in fair value of redeemable noncontrolling interest	—	—		—	—		863		—		863		—		863		Change in fair value of redeemable noncontrolling interest	—	—		—	—		(1,829)		—		(1,829)		—		(1,829)
Increase in ownership in CB JENI Homes		—	—		—	—		—		937		937		(937)		—
Contributions		—	—		—	—		—		—		—		400		400
Distributions		—	—		—	—		—		—		—		(5,251)		(5,251)
Net income	Net income	—	—		—	—		—		49,564		49,564		747		50,311		Net income	—	—		—	—		—		25,969		25,969		1,463		27,432
Balance at June 30, 2020		51,053,858	$	511	(391,939)	$	(3,167)	$	292,887	$	285,528	$	575,759	$	8,186	$	583,945
Balance at March 31, 2021																		Balance at March 31, 2021	51,124,215	$	511	(391,939)	$	(3,167)	$	293,162	$	375,625	$	666,131	$	10,630	$	676,761

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

TABLE OF CONTENTS

GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	86,044	$	51,553	Net income	$	64,196	$	27,761
Adjustments to reconcile net income to net cash (used in) provided by operating activities:	Adjustments to reconcile net income to net cash (used in) provided by operating activities:					Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	1,394		1,539		Depreciation and amortization expense	625		841
Loss on disposal of property and equipment, net						Loss on disposal of property and equipment, net	39		10
Share-based compensation expense	Share-based compensation expense	2,756		1,819		Share-based compensation expense	2,923		2,583
Deferred income taxes, net		0		(115)
Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	(8,484)		(7,739)		Equity in income of unconsolidated entities	(5,687)		(3,891)
Allowances for option deposits and pre-acquisition costs	Allowances for option deposits and pre-acquisition costs	43		1,532		Allowances for option deposits and pre-acquisition costs	59		43
Distributions of income from unconsolidated entities	Distributions of income from unconsolidated entities	4,593		3,393		Distributions of income from unconsolidated entities	3,176		1,886
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Increase in receivables	Increase in receivables	(1,783)		(9,767)		Increase in receivables	(179)		(2,337)
(Increase) decrease in inventory		(261,156)		2,798
Increase in inventory						Increase in inventory	(123,429)		(76,034)
Decrease (increase) in earnest money deposits	Decrease (increase) in earnest money deposits	2,078		(6,273)		Decrease (increase) in earnest money deposits	1,265		(1,009)
Increase in other assets		(7,649)		(4,820)
Increase (decrease) in accounts payable		21,240		(1,322)
Decrease (increase) in other assets						Decrease (increase) in other assets	4,476		(106)
Increase in accounts payable						Increase in accounts payable	11,217		14,479
Increase in accrued expenses	Increase in accrued expenses	17,009		14,735		Increase in accrued expenses	28,317		9,819
Payment of contingent consideration in excess of acquisition date fair value		(368)		(5,267)
Increase (decrease) in customer and builder deposits		25,568		(3,061)
Net cash (used in) provided by operating activities		(118,715)		39,005
(Decrease) increase in customer and builder deposits						(Decrease) increase in customer and builder deposits	(992)		17,942
Net cash used in operating activities						Net cash used in operating activities	(13,994)		(8,013)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Investments in unconsolidated entities	Investments in unconsolidated entities	(8)		(490)		Investments in unconsolidated entities	—		(9)
Purchase of property and equipment		(1,467)		(1,180)
Purchase of property and equipment, net of disposals						Purchase of property and equipment, net of disposals	(448)		(740)
Net cash used in investing activities	Net cash used in investing activities	(1,475)		(1,670)		Net cash used in investing activities	(448)		(749)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings from lines of credit	Borrowings from lines of credit	342,000		112,000		Borrowings from lines of credit	112,000		108,000
Borrowings from senior unsecured notes	Borrowings from senior unsecured notes	125,000		0		Borrowings from senior unsecured notes	—		125,000
Repayments of lines of credit	Repayments of lines of credit	(318,000)		(133,000)		Repayments of lines of credit	(92,000)		(211,000)
Proceeds from notes payable	Proceeds from notes payable	127		10,562		Proceeds from notes payable	14,472		—
Repayments of notes payable	Repayments of notes payable	(2,018)		(6,313)		Repayments of notes payable	(14)		(2,006)
Payments of debt issuance costs	Payments of debt issuance costs	(893)		0		Payments of debt issuance costs	(86)		(595)
Payments of withholding tax on vesting of restricted stock awards	Payments of withholding tax on vesting of restricted stock awards	(834)		(592)		Payments of withholding tax on vesting of restricted stock awards	(1,075)		(834)
Contributions from noncontrolling interests		0		400
Distributions to redeemable noncontrolling interest		(106)		(1,505)
Stock repurchases						Stock repurchases	(25,801)		—
Dividends paid						Dividends paid	(655)		—
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(1,606)		(5,251)		Distributions to noncontrolling interests	(5,718)		—
Net cash provided by (used in) financing activities		143,670		(23,699)
Net increase in cash and cash equivalents and restricted cash		23,480		13,636
Net cash provided by financing activities						Net cash provided by financing activities	1,123		18,565
Net (decrease) increase in cash and cash equivalents and restricted cash						Net (decrease) increase in cash and cash equivalents and restricted cash	(13,319)		9,803
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	19,479		33,269		Cash and cash equivalents, beginning of period	78,696		19,479
Restricted cash, beginning of period	Restricted cash, beginning of period	14,156		4,416		Restricted cash, beginning of period	14,858		14,156
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	33,635		37,685		Cash and cash equivalents and restricted cash, beginning of period	93,554		33,635
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	33,517		43,162		Cash and cash equivalents, end of period	66,083		28,688
Restricted cash, end of period	Restricted cash, end of period	23,598		8,159		Restricted cash, end of period	14,152		14,750
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	57,115	$	51,321	Cash and cash equivalents and restricted cash, end of period	$	80,235	$	43,438

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GREEN BRICK PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest $ 0 $ 0
Cash paid for income taxes, net of refunds $ 32,463 $ 13


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

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

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GREEN BRICK PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) and applicable regulations of the Securities and Exchange Commission (“SEC”), but do not include all of the information and footnotes required for complete financial statements. The condensed consolidated balance sheet as of December 31, ~~2020~~2021 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements for the periods presented reflect all adjustments of a normal, recurring nature necessary to fairly state our financial position, results of operations and cash flows. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Operating results for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2021~~2022 or subsequent periods due to seasonal variations and other factors.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Green Brick Partners, Inc., its controlled subsidiaries, and variable interest entities (“VIEs”) in which Green Brick Partners, Inc. or one of its controlled subsidiaries is deemed to be the primary beneficiary (together, the “Company”, “we”, or “Green Brick”).

All intercompany balances and transactions have been eliminated in consolidation.

The Company uses the equity method of accounting for its investments in unconsolidated entities over which it exercises significant influence but does not have a controlling interest. Under the equity method, the Company’s share of the unconsolidated entities’ earnings or losses, if any, is included in the condensed consolidated statements of income.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes, including the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Reclassifications

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

For a complete set of the Company’s significant accounting policies, refer to Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Recent Accounting Pronouncements

~~In December 2019,~~Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) through Accounting Standards Updates (“ASU”) to the FASB ~~issued ASU 2019-12, Income Taxes (Topic 740): Simplifying~~ Accounting ~~for Income Taxes~~Standards Codification (“~~ASU 2019-12”~~ASC”), which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2020, with early adoption permitted.. The Company considers the applicability and impact of all ASUs and has determined that any recently adopted ~~the standard on January 1, 2021. The adoption of ASU 2019-12 had no~~accounting pronouncements did not have a material impact on the ~~Company’s~~Company's condensed consolidated financial statements and all recent accounting pronouncements not yet adopted are not applicable or are not expected to have a material impact on the Company's condensed consolidated financial statements.

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2. INVENTORY

A summary of inventory is as follows (in thousands):


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Homes completed or under construction	Homes completed or under construction	$	535,138	$	356,706	Homes completed or under construction	$	601,504	$	544,258
Land and lots - developed and under development	Land and lots - developed and under development	567,398		482,371		Land and lots - developed and under development	718,411		620,129
Land held for sale	Land held for sale	3,605		5,558		Land held for sale	7,594		39,356
Total inventory	Total inventory	$	1,106,141	$	844,635	Total inventory	$	1,327,509	$	1,203,743

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2021			2020			2021			2020				2022			2021
Interest capitalized at beginning of period	Interest capitalized at beginning of period	$	18,380		$	18,876		$	17,520		$	18,596		Interest capitalized at beginning of period	$	19,950		$	17,520
Interest incurred	Interest incurred	3,250			2,708			6,101			5,667			Interest incurred	3,734			2,851
Interest charged to cost of revenues	Interest charged to cost of revenues	(2,670)			(2,793)			(4,661)			(5,472)			Interest charged to cost of revenues	(2,933)			(1,991)
Interest capitalized at end of period	Interest capitalized at end of period	$	18,960		$	18,791		$	18,960		$	18,791		Interest capitalized at end of period	$	20,751		$	18,380

Capitalized interest as a percentage of inventory	Capitalized interest as a percentage of inventory	1.7		%	2.5		%	1.7		%	2.5		%	Capitalized interest as a percentage of inventory	1.6		%	2.0		%

As of ~~June 30, 2021,~~March 31, 2022, the Company reviewed the performance and outlook for all of its communities for indicators of potential impairment and performed detailed impairment analysis when necessary. As of ~~June 30, 2021,~~March 31, 2022, the Company did not identify any selling communities with indicators of impairment. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, the Company did not record an impairment adjustment ~~to reduce the carrying value of impaired communities to fair value.~~

~~For the three and six months ended June 30, 2020, the Company recorded a $0.0 million and a de minimis impairment adjustment, respectively,~~ to reduce the carrying value of impaired communities to fair value.

3. INVESTMENT IN UNCONSOLIDATED ENTITIES

A summary of the Company’s investments in unconsolidated entities is as follows (in thousands):


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
GB Challenger, LLC	GB Challenger, LLC	$	33,070	$	29,488	GB Challenger, LLC	$	39,532	$	37,737
GBTM Sendera, LLC	GBTM Sendera, LLC	9,854		9,846		GBTM Sendera, LLC	9,854		9,854
EJB River Holdings, LLC	EJB River Holdings, LLC	5,769		5,296		EJB River Holdings, LLC	6,868		6,130
BHome Mortgage, LLC						BHome Mortgage, LLC	1,041		1,180
Green Brick Mortgage, LLC	Green Brick Mortgage, LLC	886		1,207		Green Brick Mortgage, LLC	832		715
BHome Mortgage, LLC		763		606
Total investment in unconsolidated entities	Total investment in unconsolidated entities	$	50,342	$	46,443	Total investment in unconsolidated entities	$	58,127	$	55,616

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A summary of the unaudited condensed financial information of the five unconsolidated entities that are accounted for by the equity method is as follows (in thousands):


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets:	Assets:					Assets:
Cash	Cash	$	14,131	$	12,765	Cash	$	20,218	$	15,903
Accounts receivable	Accounts receivable	2,558		1,815		Accounts receivable	4,609		4,787
Bonds and notes receivable	Bonds and notes receivable	5,942		5,942		Bonds and notes receivable	5,762		5,772
Loans held for sale, at fair value	Loans held for sale, at fair value	35,756		14,530		Loans held for sale, at fair value	18,277		20,734
Inventory	Inventory	150,154		122,819		Inventory	167,999		166,861
Other assets	Other assets	7,775		8,377		Other assets	12,375		7,220
Total assets	Total assets	$	216,316	$	166,248	Total assets	$	229,240	$	221,277
Liabilities:	Liabilities:					Liabilities:
Accounts payable	Accounts payable	$	7,578	$	7,171	Accounts payable	$	12,547	$	7,701
Accrued expenses and other liabilities	Accrued expenses and other liabilities	15,712		11,148		Accrued expenses and other liabilities	15,051		13,992
Notes payable	Notes payable	99,906		60,642		Notes payable	92,617		95,816
Total liabilities	Total liabilities	$	123,196	$	78,961	Total liabilities	$	120,215	$	117,509
Owners’ equity:	Owners’ equity:					Owners’ equity:
Green Brick	Green Brick	$	47,652	$	43,451	Green Brick	$	55,508	$	52,983
Others	Others	45,468		43,836		Others	53,517		50,785
Total owners’ equity	Total owners’ equity	$	93,120	$	87,287	Total owners’ equity	$	109,025	$	103,768
Total liabilities and owners’ equity	Total liabilities and owners’ equity	$	216,316	$	166,248	Total liabilities and owners’ equity	$	229,240	$	221,277


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Revenues	Revenues	$	51,737	$	52,948	$	91,458	$	88,313	Revenues	$	70,636	$	39,721
Costs and expenses	Costs and expenses	42,492		42,337		74,359		72,152		Costs and expenses	59,197		31,951
Net earnings of unconsolidated entities	Net earnings of unconsolidated entities	$	9,245	$	10,611	$	17,099	$	16,161	Net earnings of unconsolidated entities	$	11,439	$	7,770
Company’s share in net earnings of unconsolidated entities	Company’s share in net earnings of unconsolidated entities	$	4,593	$	5,174	$	8,484	$	7,739	Company’s share in net earnings of unconsolidated entities	$	5,687	$	3,891

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
GB Challenger, LLC	GB Challenger, LLC	$	3,225	$	3,805	$	5,975	$	5,566	GB Challenger, LLC	$	4,067	$	2,750
EJB River Holdings, LLC										EJB River Holdings, LLC	738		(1)
BHome Mortgage, LLC										BHome Mortgage, LLC	554		71
Green Brick Mortgage, LLC	Green Brick Mortgage, LLC	545		1,371		1,633		2,160		Green Brick Mortgage, LLC	328		1,088
Providence Group Title, LLC		—		111		—		14
EJB River Holdings, LLC		473		(1)		472		(1)
GBTM Sendera, LLC	GBTM Sendera, LLC	17		—		—		—		GBTM Sendera, LLC	—		(17)
BHome Mortgage, LLC		333		—		404		—
Total net earnings from unconsolidated entities	Total net earnings from unconsolidated entities	$	4,593	$	5,174	$	8,484	$	7,739	Total net earnings from unconsolidated entities	$	5,687	$	3,891

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4. DEBT

Lines of Credit

Borrowings on lines of credit outstanding, net of debt issuance costs, as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consisted of the following (in thousands):


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Secured Revolving Credit Facility	Secured Revolving Credit Facility	$	2,000	$	7,000	Secured Revolving Credit Facility	$	—	$	2,000
Unsecured Revolving Credit Facility	Unsecured Revolving Credit Facility	130,000		101,000		Unsecured Revolving Credit Facility	22,000		—
Debt issuance costs, net of amortization	Debt issuance costs, net of amortization	(1,395)		(1,313)		Debt issuance costs, net of amortization	(2,579)		(2,738)
Total borrowings on lines of credit, net	Total borrowings on lines of credit, net	$	130,605	$	106,687	Total borrowings on lines of credit, net	$	19,421	$	(738)

Secured Revolving Credit Facility

The Company is party to a revolving credit facility (the “Secured Revolving Credit Facility”) with Inwood National Bank, which provides for an aggregate commitment amount of $35.0 million. On ~~May 22, 2020,~~February 9, 2022, the Company ~~amended~~entered into the ~~Secured Revolving Credit Facility~~Eighth Amendment to this credit agreement to extend its maturity from May 1, 2022 to May 1, 2025 and to reduce the ~~aggregate commitment amount of $75.0 million~~minimum interest rate from 4.00% to $35.0 million. Amounts outstanding under the Secured Revolving Credit Facility are secured by mortgages on real property and security interests in certain personal property (to the extent that such personal property is connected with the use and enjoyment3.15%. All other material terms of the ~~real property) that is owned by certain of the Company’s subsidiaries.~~credit agreement, as amended, remained unchanged. The entire unpaid principal balance and any accrued but unpaid interest is due and payable on the maturity date. As of ~~June 30, 2021,~~March 31, 2022, the maturity date of the Secured Revolving Credit Facility is May 1, ~~2022.~~2025.

As of ~~June 30, 2021,~~March 31, 2022, there were no letters of credit outstanding ~~totaling $2.7 million~~ and a net available commitment amount of ~~$32.3~~$35.0 million.

AsThe Company incurred $0.1 million in fees and other debt issuance costs associated with the amendment. These costs were deferred and reduce the carrying amount of ~~June 30, 2021, the interest rate~~debt on ~~outstanding borrowings under the Secured Revolving Credit Facility was 4.00% per annum.~~our condensed consolidated balance sheet.

Unsecured Revolving Credit Facility

The Company is party to a credit agreement, providing for a senior, unsecured revolving credit facility (the “Unsecured Revolving Credit Facility”). The Unsecured Revolving Credit Facility provides for maximum aggregate lending commitments of up to ~~$275.0~~$325.0 million of which the Company has secured outstanding commitments of ~~$265.0~~$300.0 million. ~~Following amendments to~~On December 10, 2021, the Company amended the Unsecured Revolving Credit Facility to ~~replace Credit Suisse AG, Cayman Islands Branch (“Credit Suisse”) with Veritex Community Bank (“Veritex”) as lender,~~increase the aggregate commitment amount from $275.0 million to $300.0 million. The termination date with respect to commitments under the Unsecured Revolving Credit Facility is December 14, ~~2022 for $75.0 million and December 14, 2023 for $190.0 million out of aggregate lending commitments of $265.0 million.~~2024.

Fees and other debt issuance costs of $0.3 million were incurred during the three months ended June 30, 2021, associated with the amendments. These costs are deferred and reduce the carrying amount of debt on our consolidated balance sheet. As of ~~June 30, 2021,~~March 31, 2022, the interest ~~rates~~rate on outstanding borrowings under the Unsecured Revolving Credit Facility ~~ranged from 2.57% to 2.59%~~was 2.85% per annum.

Senior Unsecured Notes

On August 8, 2019, the Company ~~issued~~entered into a Note Purchase Agreement with Prudential Private Capital to issue $75.0 million aggregate principal amount of senior unsecured notes (the “2026 Notes”) due on August 8, 2026 at a fixed rate of 4.00% per annum ~~to Prudential Private Capital~~ in a Section 4(a)(2) private placement ~~transaction and~~transaction. The Company received net proceeds of $73.3 ~~million. A brokerage fee of approximately $1.5~~ million ~~associated with the issuance was paid at closing. The brokerage fee,~~ and ~~other~~incurred debt issuance costs of approximately ~~$0.2~~$1.7 million that were deferred and reduced the amount of debt on our ~~consolidated~~condensed balance sheet. The Company used the net proceeds from the issuance of the 2026 Notes to repay borrowings under the Company’s existing revolving credit facilities.

Principal on the 2026 Notes is required to be paid in increments of $12.5 million on August 8, 2024 and $12.5 million on August 8, 2025. The final principal payment of $50.0 million is due on August 8, 2026. Optional prepayment is allowed with payment of a “make-whole” penalty which fluctuates depending on market interest rates. Interest is payable quarterly in arrears commencing on November 8, 2019.

On August 26, 2020, the Company entered into a Note Purchase Agreement with The Prudential Insurance Company of America and Prudential Universal Reinsurance Company to issue a $37.5 million aggregate principal amount of senior

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unsecured notes (the “2027 Notes”) due on August 26, 2027 at a fixed rate of 3.35% per annum in a Section 4(a)(2) private placement transaction. The Company received net proceeds of $37.4 million and incurred debt issuance costs of approximately $0.1 million that were deferred and reduced the amount of debt on our condensed consolidated balance sheet. The Company used the net proceeds from the issuance of the 2027 Notes to repay borrowings under the Company’s existing revolving credit facilities and for general corporate purposes. Optional prepayment is allowed with payment of a “make-whole” penalty which fluctuates depending on market interest rates. Interest is payable quarterly in arrears commencing on November 26, 2020.

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On February 25, 2021, the Company entered into a Note Purchase Agreement with several purchasers ~~pursuant~~ to ~~which the Company issued~~issue $125.0 million aggregate principal amount of senior unsecured notes (the “2028 Notes”) due on May 25, 2028 at a fixed rate of 3.25% per annum in a Section 4(a)(2) private placement transaction (the “2028 Notes”). Principal on the 2028 Notes is due in increments of $25.0 million on February 25, 2024; $25.0 million on February 25, 2025; $25.0 million on February 25, 2026; $25.0 million on February 25, 2027 and $25.0 million on February 25, 2028. Interest accrues at an annual fixed rate of 3.25% per annum and is payable quarterly in arrears commencing on May 25, 2021.transaction. The Company received net proceeds of $124.4 million and incurred debt issuance costs of approximately $0.6 million that were deferred and reduced the amount of debt on our condensed consolidated balance sheet. The Company used the net proceeds from the issuance of the 2028 Notes to repay borrowings under the Company’s existing revolving credit facilities and for general corporate purposes. Principal on the 2028 Notes is due in increments of $25.0 million on February 25, 2024; $25.0 million on February 25, 2025; $25.0 million on February 25, 2026; $25.0 million on February 25, 2027 and $25.0 million on February 25, 2028. Optional prepayment is allowed with payment of a “make-whole” penalty which fluctuates depending on market interest rates. Interest is payable quarterly in arrears commencing on May 25, 2021.

On December 28, 2021, the Company entered into a Note Purchase Agreement with several purchasers to ~~pay fees~~issue $100.0 million aggregate principal amount of senior unsecured notes (the “2029 Notes”) due on December 28, 2029 at a fixed rate of 3.25% per annum in a Section 4(a)(2) private placement transaction. The Company received net proceeds of $99.6 million and ~~expenses~~ incurred debt issuance costs of approximately $0.4 million that were deferred and reduced the amount of debt on our condensed consolidated balance sheet. The Company used the net proceeds from the issuance of the 2029 Notes to repay borrowings under the Company’s existing revolving credit facilities and for general corporate purposes. Principal on the 2029 Notes of $30.0 million is due on December 28, 2028. The remaining principal amount of $70.0 million is due on December 29, 2029. Optional prepayment is allowed with payment of a “make-whole” penalty which fluctuates depending on market interest rates. Interest is payable quarterly in arrears commencing on March 28, 2022.

Notes payable

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

5. REDEEMABLE NONCONTROLLING INTEREST ~~AND CONTINGENT CONSIDERATION~~

Redeemable Noncontrolling Interest in Equity of Consolidated Subsidiaries

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

The following tables show the changes in redeemable noncontrolling interest in equity of consolidated subsidiary during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):
Three Months Ended June 30,
2021 2020
Redeemable noncontrolling interest, beginning of period $ 15,701 $ 11,412
Net income attributable to redeemable noncontrolling interest partner 742 686
Distributions of income to redeemable noncontrolling interest partner (106) (1,505)
Change in fair value of redeemable noncontrolling interest 1,178 1,892
Redeemable noncontrolling interest, end of period $ 17,515 $ 12,485

Six Months Ended June 30,
2021 2020
Redeemable noncontrolling interest, beginning of period $ 13,543 $ 13,611
Net income attributable to redeemable noncontrolling interest partner 1,071 1,242
Distributions of income to redeemable noncontrolling interest partner (106) (1,505)
Change in fair value of redeemable noncontrolling interest 3,007 (863)
Redeemable noncontrolling interest, end of period $ 17,515 $ 12,485

~~Contingent Consideration~~

Under the terms of the purchase agreement, the Company may be obligated to pay contingent consideration to our partner if certain annual performance targets are met over the three-year period following the Acquisition Date. The performance targets specified in the purchase agreement were met for the period from January 1, 2020 through December 31, 2020, and contingent consideration of $0.4 million was earned by the minority partner and paid by the Company in April 2021 in addition to a $0.1 million distribution of income. The performance targets were not met for the period from January 1, 2021 through April 26, 2021. The contingent consideration period expired April 26, 2021.


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

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6. STOCKHOLDERS’ EQUITY

2021 Share Repurchase Program

On March 1, 2021, the Company’s Board of Directors (the “Board”) authorized a new $50.0 million stock repurchase program (the “Repurchase Plan”). The Repurchase Plan authorizes the Company to purchase from time to time on or prior to December 31, 2022, up to $50.0 million of our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market

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

During the period ended March 31, 2022, the Company completed discrete open market repurchases under the Repurchase Plan of 1,193,037 shares for approximately $25.8 million. As of March 31, 2022, the remaining dollar value of shares that may yet be purchased under the Repurchase Plan was $24.2 million.

2022 Share Repurchase Program

On April 27,2022, the Board approved a new stock repurchase program that authorizes the Company to purchase, from time to time, up to an additional $100.0 million of our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors. Shares repurchased will be retired. The new plan has no time deadline and will continue until otherwise modified or terminated by the Company’s board at any time in its sole discretion.

Preferred Stock

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

Series

Description

Initial date of issuance

Total Shares Outstanding

Liquidation Preference per Share (in dollars)

Carrying Value (in thousands)

Per Annum Dividend Rate

Redemption Period

Series A(1)

5.75% Cumulative Perpetual

December 2021

2,000

50,000

5.75

n/a

(1) Ownership is held in the form of Depositary Shares, each representing a 1/1,000th interest in a share of preferred stock, paying a quarterly cash dividend, if and when declared.

Dividends

According to the terms of the preferred stock offering, the Company will pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by the Board, on a quarterly basis in arrears. On April 27, 2022, the Board declared a quarterly cash dividend of $0.0359 per depositary share on the Company’s preferred stock. The dividend is payable on June 15, 2022 to shareholders of record as of June 1, 2022.

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

7. SHARE-BASED COMPENSATION

Share-Based Award Activity

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, the Company granted stock awards (“SAs”) under its 2014 Omnibus Equity Incentive Plan to executive officers (“EOs”) ~~and restricted stock awards (“RSAs”) to non-employee members of the Board of Directors (“BOD”)~~. The SAs granted to the EOs were 100% vested and non-forfeitable on the grant date. Some members of the BOD also elected to defer up to 100% of their annual retainer fee in the form of RSAs. The RSAs granted to the BOD will become fully vested on the earlier of (i) the first anniversary of the date of grant of the shares of restricted common stock or (ii) the date of the Company’s 2022 Annual Meeting of Stockholders. The fair value of the SAs granted to EOs ~~and RSAs granted to non-employee members of the BOD were~~was recorded as share-based compensation expense on the grant ~~date and over the vesting period, respectively.~~date. The Company withheld ~~41,318~~46,415 shares of common stock from EOs, at a total cost of ~~$0.8~~$1.1 million, to satisfy statutory minimum tax requirements upon grant of the SAs.

2021 Employee Stock Awards

On March 1, 2021, the Company’s Board of Directors approved an incentive program for eligible employees to participate in the Company’s new ~~restricted stock award plan.~~Employee Performance Based Restricted Stock Awards Plan (the “PBRS Award Plan”). This plan is being offered pursuant to the Company’s 2014 Omnibus Equity Incentive Plan. The Company incurred de minimis share-based

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compensation expense and compensation expense related to these awards during the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022 and 2021, respectively.

2022 Employee Stock Awards

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

A summary of share-based awards activity during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 is as follows:


		Number of Shares	Weighted Average Grant Date Fair Value per Share			Number of Shares	Weighted Average Grant Date Fair Value per Share
		(in thousands)				(in thousands)
Nonvested, December 31, 2020		45	$	12.33
Nonvested, December 31, 2021					Nonvested, December 31, 2021	28	$	23.21
Granted	Granted	139	$	22.10	Granted	140	$	22.08
Vested	Vested	(157)	$	19.09	Vested	(126)	$	21.94
Forfeited	Forfeited	0	$	0	Forfeited	—	$	—
Nonvested, June 30, 2021		28	$	23.21
Nonvested, March 31, 2022					Nonvested, March 31, 2022	42	$	23.23

Stock Options

A summary of stock options activity during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 is as follows:


		Number of Shares	Weighted Average Exercise Price per Share				Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value				Number of Shares	Weighted Average Exercise Price per Share			Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
		(in thousands)			(in years)			(in thousands)			(in thousands)					(in years)		(in thousands)
Options outstanding, December 31, 2020		500			$	7.49
Options outstanding, December 31, 2021												Options outstanding, December 31, 2021	500	$	7.49
Granted	Granted	0	0									Granted	0	—
Exercised	Exercised	0	0									Exercised	—	—
Forfeited	Forfeited	0	0									Forfeited	—	—
Options outstanding, June 30, 2021		500	$	7.49			3.33		$	7,625
Options exercisable, June 30, 2021		500	$	7.49			3.33		$	7,625
Options outstanding, March 31, 2022												Options outstanding, March 31, 2022	500	$	7.49		2.58		$	6,135
Options exercisable, March 31, 2022												Options exercisable, March 31, 2022	500	$	7.49		2.58		$	6,135

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Share-Based Compensation Expense

Share-based compensation expense was ~~$0.2~~$2.9 million and ~~$0.1~~$2.6 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Recognized tax benefit related to share-based compensation expense was ~~de minimis~~$0.7 million and $0.6 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020.~~

Share-based compensation expense was $2.8 million and $1.8 million for the six months ended June 30, 2021 and 2020, respectively. Recognized tax benefit related to share-based compensation expense was $0.6 million and $0.4 million for the six months ended June 30, 2021 and 2020, respectively.

As of ~~June 30, 2021,~~March 31, 2022, the estimated total remaining unamortized share-based compensation expense related to unvested ~~RSAs,~~Restricted Stock Awards (“RSAs”), net of forfeitures, was ~~$0.6~~$0.4 million, which is expected to be recognized over a weighted-average period of ~~1.0 year.~~1.5 years.

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8. REVENUE RECOGNITION

Disaggregation of Revenue

The following reflects the disaggregation of revenue by primary geographic market, type of customer, product type, and timing of revenue recognition for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020
Residential units revenue Land and lots revenue Residential units revenue Land and lots revenue
Primary Geographical Market
Central $ 233,592 $ 22,556 $ 151,851 $ 3,926
Southeast 99,908 17,750 76,816 240
Total revenues $ 333,500 $ 40,306 $ 228,667 $ 4,166
Type of Customer
Homebuyers $ 333,500 $ 0 $ 228,667 $ 0
Homebuilders and Multi-family Developers 0 40,306 0 4,166
Total revenues $ 333,500 $ 40,306 $ 228,667 $ 4,166
Product Type
Residential units $ 333,500 $ 0 $ 228,667 $ 0
Land and lots 0 40,306 0 4,166
Total revenues $ 333,500 $ 40,306 $ 228,667 $ 4,166
Timing of Revenue Recognition
Transferred at a point in time $ 332,279 $ 40,306 $ 226,785 $ 4,166
Transferred over time 1,221 0 1,882 0
Total revenues $ 333,500 $ 40,306 $ 228,667 $ 4,166

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		Six Months Ended June 30, 2021				Six Months Ended June 30, 2020					Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
		Residential units revenue		Land and lots revenue		Residential units revenue		Land and lots revenue			Residential units revenue		Land and lots revenue		Residential units revenue		Land and lots revenue
Primary Geographical Market	Primary Geographical Market									Primary Geographical Market
Central	Central	$	390,970	$	30,973	$	275,276	$	26,006	Central	$	261,698	$	28,861	$	157,378	$	8,417
Southeast	Southeast	159,766		26,576		144,578		240		Southeast	102,963		94		59,858		8,826
Total revenues	Total revenues	$	550,736	$	57,549	$	419,854	$	26,246	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243

Type of Customer	Type of Customer									Type of Customer
Homebuyers	Homebuyers	$	550,736	$	0	$	419,854	$	0	Homebuyers	$	364,661	$	—	$	217,236	$	—
Homebuilders and Multi-family Developers	Homebuilders and Multi-family Developers	0		57,549		0		26,246		Homebuilders and Multi-family Developers	—		28,955		—		17,243
Total revenues	Total revenues	$	550,736	$	57,549	$	419,854	$	26,246	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243

Product Type	Product Type									Product Type
Residential units	Residential units	$	550,736	$	0	$	419,854	$	0	Residential units	$	364,661	$	—	$	217,236	$	—
Land and lots	Land and lots	0		57,549		0		26,246		Land and lots	—		28,955		—		17,243
Total revenues	Total revenues	$	550,736	$	57,549	$	419,854	$	26,246	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243

Timing of Revenue Recognition	Timing of Revenue Recognition									Timing of Revenue Recognition
Transferred at a point in time	Transferred at a point in time	$	548,413	$	57,549	$	416,033	$	26,246	Transferred at a point in time	$	363,063	$	28,955	$	216,134	$	17,243
Transferred over time	Transferred over time	2,323		0		3,821		0		Transferred over time	1,598		—		1,102		—
Total revenues	Total revenues	$	550,736	$	57,549	$	419,854	$	26,246	Total revenues	$	364,661	$	28,955	$	217,236	$	17,243

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

Contract Balances

Opening and closing contract balances included in customer and builder deposits on the condensed consolidated balance sheets are as follows (in thousands):
June 30, 2021 December 31, 2020
Customer and builder deposits $ 63,700 $ 38,131


	March 31, 2022		December 31, 2021
Customer and builder deposits	$	63,618	$	64,610

The difference between the opening and closing balances of customer and builder deposits results from the timing difference between the customers’ payments of deposits and the Company’s performance, impacted slightly by terminations of contracts.

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The amount of deposits on residential units and land and lots held as of the beginning of the period and recognized as revenue during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ are as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Type of Customer	Type of Customer									Type of Customer
Homebuyers	Homebuyers	$	13,266	$	7,334	$	15,846	$	11,153	Homebuyers	$	20,795	$	6,616
Homebuilders and Multi-Family Developers	Homebuilders and Multi-Family Developers	304		639		1,309		4,277		Homebuilders and Multi-Family Developers	100		1,109
Total deposits recognized as revenue	Total deposits recognized as revenue	$	13,570	$	7,973	$	17,155	$	15,430	Total deposits recognized as revenue	$	20,895	$	7,725

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Performance Obligations

There was 0no revenue recognized during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ from performance obligations satisfied in prior periods.

Transaction Price Allocated to the Remaining Performance Obligations

The aggregate amount of transaction price allocated to the remaining performance obligations on our land sale and lot option contracts is ~~$13.4~~$24.1 million. The Company will recognize the remaining revenue when the lots are taken down, or upon closing for the sale of a land parcel, which is expected to occur as follows (in thousands):


		Total			Total
Remainder of 2021		$	5,314
2022		6,554
Remainder of 2022				Remainder of 2022	$	17,949
2023	2023	1,513		2023	6,163
2024				2024	—
Total	Total	$	13,381	Total	$	24,112

The timing of lot takedowns is contingent upon a number of factors, including customer needs, the number of lots being purchased, receipt of acceptance of the plat by the municipality, weather-related delays, and agreed-upon lot takedown schedules.

Our contracts with homebuyers have a duration of less than one year. As such, the Company uses the practical expedient as allowed under ASC 606, Revenue from Contracts with Customers, and therefore has not disclosed the transaction price allocated to remaining performance obligations as of the end of the reporting period.

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9. SEGMENT INFORMATION

Financial information relating to the Company’s reportable segments is as follows. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Revenues: (1)	Revenues: (1)									Revenues: (1)
Builder operations	Builder operations									Builder operations
Central	Central	$	234,315	$	152,235	$	392,701	$	275,660	Central	$	261,698	$	158,386
Southeast	Southeast	117,658		77,056		186,342		144,818		Southeast	103,057		68,684
Total builder operations	Total builder operations	351,973		229,291		579,043		420,478		Total builder operations	364,755		227,070
Land development	Land development	21,833		3,542		29,242		25,622		Land development	28,861		7,409
Total revenues	Total revenues	$	373,806	$	232,833	$	608,285	$	446,100	Total revenues	$	393,616	$	234,479

Gross profit:	Gross profit:									Gross profit:
Builder operations	Builder operations									Builder operations
Central	Central	$	68,144	$	38,750	$	112,033	$	69,945	Central	$	84,064	$	43,889
Southeast	Southeast	34,293		20,329		53,342		38,587		Southeast	25,776		19,049
Total builder operations	Total builder operations	102,437		59,079		165,375		108,532		Total builder operations	109,840		62,938
Land development	Land development	5,524		1,177		7,304		6,775		Land development	7,414		1,780
Corporate, other and unallocated (2)	Corporate, other and unallocated (2)	(6,985)		(6,361)		(12,714)		(12,443)		Corporate, other and unallocated (2)	(8,898)		(5,729)
Total gross profit	Total gross profit	$	100,976	$	53,895	$	159,965	$	102,864	Total gross profit	$	108,356	$	58,989

Income before income taxes:	Income before income taxes:									Income before income taxes:
Builder operations	Builder operations									Builder operations
Central	Central	$	44,360	$	25,038	$	69,218	$	37,005	Central	$	59,485	$	24,858
Southeast	Southeast	24,246		12,320		34,409		21,063		Southeast	15,494		10,163
Total builder operations	Total builder operations	68,606		37,358		103,627		58,068		Total builder operations	74,979		35,021
Land development	Land development	5,285		198		7,129		5,737		Land development	7,585		1,844
Corporate, other and unallocated (3)	Corporate, other and unallocated (3)	86		(1,371)		(1,517)		(4,864)		Corporate, other and unallocated (3)	69		(1,603)
Income before income taxes	Income before income taxes	$	73,977	$	36,185	$	109,239	$	58,941	Income before income taxes	$	82,633	$	35,262


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Inventory:	Inventory:					Inventory:
Builder operations	Builder operations					Builder operations
Central	Central	$	490,409	$	421,477	Central	$	489,094	$	460,796
Southeast	Southeast	249,976		183,623		Southeast	283,475		258,759
Total builder operations	Total builder operations	740,385		605,100		Total builder operations	772,569		719,555
Land development	Land development	336,257		213,555		Land development	517,892		449,654
Corporate, other and unallocated (4)	Corporate, other and unallocated (4)	29,499		25,980		Corporate, other and unallocated (4)	37,048		34,534
Total inventory	Total inventory	$	1,106,141	$	844,635	Total inventory	$	1,327,509	$	1,203,743

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

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

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lot closings, which for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 were ~~$18.5~~$0.1 million, ~~and $28.3 million, respectively,~~ compared to ~~$0.6~~$9.8 million for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 2021.

(2)Corporate, other and unallocated gross loss is comprised of capitalized overhead and capitalized interest adjustments that are not allocated to builder operations and land development segments.

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

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

10. INCOME TAXES

The Company’s income tax expense for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 was ~~$15.7~~$18.4 million, ~~and $23.2 million, respectively,~~ compared to ~~$1.3 million and $7.4~~$7.5 million in the ~~prior year periods.~~three months ended March 31, 2021. The effective tax rate was ~~21.2% and 21.2%~~22.3% for the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022, compared to ~~3.7% and 12.5%~~21.3% in the comparable prior year ~~periods.~~period. The change in the effective tax rate for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 relates primarily to the ~~impact of projected noncontrolling interest for~~increase in book income offset by a decrease in the ~~year and a~~ tax credit benefit from the enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (“the 2019 Act”). The 2019 Act retroactively reinstated the federal energy efficient homes tax credit that expired on December 31, 2017 to homes closed from January 1, 2018 to December 31, 2020. In December 2020, Congress approved the Taxpayer Certainty and Disaster Tax Relief Act of 2020, which extended the federal energy efficient homes tax credit through December 31, 2021. As of March 31, 2022, the credit for energy efficient new homes had not been extended past December 31, 2021.

11. EARNINGS PER SHARE

The Company’s RSAs have the right to receive forfeitable dividends on an equal basis with common stock and therefore are not considered participating securities that must be included in the calculation of net income per share using the two-class method.

Basic earnings per common share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during each period, adjusted for ~~nonvested~~non-vested shares of ~~RSAs~~restricted stock awards during each period. Net income applicable to common shareholders is net income adjusted for preferred stock dividends including dividends declared and cumulative dividends related to the current dividend period that have not been declared as of period end. Diluted earnings per share is calculated using the treasury stock method and includes the effect of all dilutive securities, including stock options and ~~RSAs.~~restricted stock awards.

The computation of basic and diluted net income attributable to Green Brick Partners, Inc. per share is as follows (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Net income attributable to Green Brick Partners, Inc. $ 52,263 $ 33,647 $ 78,232 $ 49,564
Weighted-average number of shares outstanding - basic 50,701 50,583 50,667 50,519
Basic net income attributable to Green Brick Partners, Inc. per share $ 1.03 $ 0.67 $ 1.54 $ 0.98
Weighted-average number of shares outstanding - basic 50,701 50,583 50,667 50,519
Dilutive effect of stock options and restricted stock awards 363 109 362 150
Weighted-average number of shares outstanding - diluted 51,064 50,692 51,029 50,669
Diluted net income attributable to Green Brick Partners, Inc. per share $ 1.02 $ 0.66 $ 1.53 $ 0.98


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

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

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

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The following shares which could potentially dilute earnings per share in the future are not included in the determination of diluted net income attributable to Green Brick Partners, Inc. per common share (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Antidilutive options to purchase common stock and restricted stock awards 0 40 0 20


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

12. FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

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

Per the fair value hierarchy, level 1 financial instruments include: cash and cash equivalents, restricted cash, receivables, earnest money deposits, other assets, accounts payable, accrued expenses, and customer and builder deposits due to their short-term nature. The Company estimates that, due to the short-term nature of the underlying financial instruments or the proximity of the underlying transaction to the applicable reporting date, the fair value of level 1 financial instruments does not differ materially from the aggregate carrying values recorded in the condensed consolidated financial statements as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Level 2 financial instruments include borrowings on lines of credit and senior unsecured notes. Due to the short-term nature and floating interest rate terms, the carrying amounts of borrowings on lines of credit are deemed to approximate fair value. The estimated fair value of the senior unsecured notes as of ~~June 30, 2021~~March 31, 2022 was ~~$256.9~~$329.1 million. The carrying value of senior unsecured notes as of ~~June 30, 2021~~March 31, 2022 was ~~$237.5~~$337.5 million.

There were 0no transfers between the levels of the fair value hierarchy for any of our financial instruments during the three ~~and six~~ months ended ~~June 30, 2021.~~

~~Fair Value of Nonfinancial Instruments~~

Nonfinancial assets and liabilities include inventory which is measured at cost unless the carrying value is determined to be not recoverable in which case the affected instrument is written down to fair value. The fair value of inventory is primarily determined by discounting the estimated future cash flow of each community using various unobservable inputs in our impairment analysis. Per the fair value hierarchy, these items are level 3 nonfinancial instruments. For additional information on the Company’s inventory, refer to Note 2.March 31, 2022.

13. RELATED PARTY TRANSACTIONS

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company had the following related party transactions in the normal course of business.

Corporate Officers

Trevor Brickman, the son of Green Brick’s Chief Executive Officer, is the President of CLH20, LLC (“Centre Living”). Green Brick’s ownership interest in Centre Living is 90% and Trevor Brickman’s ownership interest is 10%. Green Brick has 90% voting control over the operations of Centre Living. As such, 100% of Centre Living’s operations are included within our condensed consolidated financial statements.

GRBK GHO

GRBK GHO leases office space from entities affiliated with the president of GRBK GHO. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, GRBK GHO incurred de minimis rent expense under such lease agreements. As of ~~June 30,~~March 31, 2022 and December 31, 2021, there were 0no amounts due to the affiliated entities related to such lease agreements.

GRBK GHO receives title closing services on the purchase of land and third-party lots from an entity affiliated with the president of GRBK GHO. During the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ GRBK GHO incurred de minimis fees related to such title closing services. As of ~~June 30, 2021,~~March 31, 2022, and December 31, ~~2020, 0~~2021, no amounts were due to the title company affiliate.

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14. COMMITMENTS AND CONTINGENCIES

Letters of Credit and Performance Bonds

During the ordinary course of business, certain regulatory agencies and municipalities require the Company to post letters of credit or performance bonds related to development projects. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, letters of credit

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and performance bonds outstanding were ~~$7.0~~$1.5 million and ~~$9.8 million.~~$1.7 million, respectively. The Company does not believe that it is likely that any material claims will be made under a letter of credit or performance bond in the foreseeable future.

Warranties

Warranty accruals are included within accrued expenses on the condensed consolidated balance sheets. Warranty activity during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ consisted of the following (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Warranty accrual, beginning of period	Warranty accrual, beginning of period	$	6,861	$	4,173	$	6,407	$	3,840	Warranty accrual, beginning of period	$	9,378	$	6,407
Warranties issued	Warranties issued	1,662		1,015		2,762		1,855		Warranties issued	1,814		1,100
Changes in liability for existing warranties	Changes in liability for existing warranties	23		(52)		62		(139)		Changes in liability for existing warranties	295		39
Settlements	Settlements	(644)		(285)		(1,329)		(705)		Settlements	(874)		(685)
Warranty accrual, end of period	Warranty accrual, end of period	$	7,902	$	4,851	$	7,902	$	4,851	Warranty accrual, end of period	$	10,613	$	6,861

Operating Leases

The Company has leases associated with office and design center space in Georgia, Texas, and Florida that, at the commencement date, have a lease term of more than 12 months and are classified as operating leases. The exercise of any extension options available in such operating lease contracts is not reasonably certain.

Operating lease cost of $0.4 million ~~and $0.7 million~~ for the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022, and $0.3 ~~million and $0.6~~ million in the prior year ~~periods,~~period, is included in selling, general and administrative expenses in the condensed consolidated statements of income. Cash paid for amounts included in the measurement of operating lease liabilities was ~~$0.3~~$0.4 million and ~~$0.6~~$0.3 million, ~~respectively,~~ for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

As of ~~June 30, 2021,~~March 31, 2022, the weighted-average remaining lease term and the weighted-average discount rate used in calculating our lease liabilities were ~~5.5~~4.7 years and ~~4.2%~~4.1%, respectively.

The future annual undiscounted cash flows in relation to the operating leases and a reconciliation of such undiscounted cash flows to the operating lease liabilities recognized in the condensed consolidated balance sheet as of ~~June 30, 2021~~March 31, 2022 are presented below (in thousands):
Remainder of 2021 $ 625
2022 1,526
2023 1,298
2024 507
2025 517
Thereafter 1,368
Total future lease payments $ 5,841
Less: Interest 1,259
Present value of lease liabilities $ 4,582


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

The Company elected the short-term lease recognition exemption for all leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. For such leases, the Company does not recognize right-of-use assets or lease liabilities and instead recognizes lease payments in the condensed consolidated income statements on a straight-line basis. Short-term lease cost of $0.2 million and ~~$0.3~~$0.2 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, respectively, ~~and $0.1 million and $0.2 million for the comparable prior year periods,~~ is included in selling, general and administrative expenses in the condensed consolidated statements of income.

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Legal Matters

Lawsuits, claims and proceedings may be instituted or asserted against us in the normal course of business. The Company is also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, title company regulations, employment practices and environmental protection. As a result, the Company may be subject to periodic examinations or inquiry by agencies administering these laws and regulations.

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The Company records an accrual for legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. The Company accrues for these matters based on facts and circumstances specific to each matter and revises these estimates when necessary.

In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, the Company generally cannot predict their ultimate resolution, related timing or eventual loss. If evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, the Company will disclose their nature with an estimate of the possible range of losses or a statement that such loss is not reasonably estimable. We believe that the disposition of legal claims and related contingencies will not have a material adverse effect on our results of operations and liquidity or on our financial condition.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts and typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements in this Quarterly Report include statements concerning (1) our balance sheet strategies, operational strength and margin performance; (2) our operational goals and strategies and their anticipated benefits; (3) our expectations that we will continue to experience increases in cost and decreased availability of skilled labor as well as increases, shortages and significant extensions to our lead time for the delivery of key materials and inputs and the financial impact of such factors on our future financial and operational results; (4) expectations regarding our industry and our ~~business in 2021 and beyond; (4)~~business; (5) our land and lot acquisition strategy and its impact on our results; ~~(5)~~(6) the sufficiency of our capital resources to support our business strategy and to service our debt; ~~(6)~~(7) the impact of new accounting standards and changes in accounting estimates; ~~(7) trends~~(8) expectations about the impact of sales metering and increases in spec homes will have on future financial results; (9) expectations ~~regarding~~about backlog and cancellation rates ~~construction costs, land costs, profitability and inventories; (8) our~~on future ~~cash needs; (9)~~financial results; (10) our strategy to utilize leverage to invest in our business; ~~(10)~~(11) seasonal factors and the impact of seasonality in future quarters; ~~and (11)~~(12) our expectations regarding future cash needs and access to additional growth ~~capital.~~

capital; and (13) beliefs regarding the impact of legal claims and related contingencies. These forward-looking statements reflect our current views about future events and involve estimates and assumptions which may be affected by risks and uncertainties in our business, as well as other external factors, which could cause future results to materially differ from those expressed or implied in any forward-looking statement. These risks include, but are not limited to: (1) ~~continuing impacts from the COVID-19 pandemic; (2) general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; (3)~~ changes in macroeconomic conditions, including increasing interest rates and ~~unemployment rates,~~inflation that could adversely impact demand for new homes or the ability of potential buyers to qualify; ~~(4)~~(2) general economic conditions, seasonality, cyclicality and competition in the homebuilding industry; (3) shortages, delays or increased costs of raw materials and increased demand for materials, or increases in other operating costs, including costs related to labor, real estate taxes and insurance, which in each case exceed our ability to increase prices; ~~(5)~~(4) a shortage of labor; ~~(6)~~(5) an inability to acquire land in our current and new markets at anticipated prices or difficulty in obtaining land-use entitlements; ~~(7)~~(6) our inability to successfully execute our ~~strategies; (8)~~strategies, including an inability to grow our operations or expand our Trophy brand; (7) a failure to recruit, retain or develop highly skilled and competent employees; ~~(9)~~(8) government regulation risks; ~~(10)~~(9) a lack of availability or volatility of mortgage financing or a rise in interest rates; ~~(11)~~(10) severe weather events or natural disasters; ~~(12)~~(11) difficulty in obtaining sufficient capital to fund our growth; ~~(13)~~(12) our ability to meet our debt service obligations; ~~(14)~~(13) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; ~~and (15)~~(14) changes in accounting standards that adversely affect our reported earnings or financial condition.

Please see “Risk Factors” located in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation to revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events, except to the extent we are legally required to disclose certain matters in SEC filings or otherwise.

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

The following discussion of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission (“SEC”) on March ~~8, 2020.~~1, 2022. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Overview and Outlook

Our key financial and operating metrics are home deliveries, home closings revenue, average sales price of homes delivered, and net new home orders, which refers to sales contracts executed reduced by the number of sales contracts canceled during the relevant period. Our results for each key financial and operating metric, as compared to the same period in ~~2020,~~2021, are provided below:

Three Months Ended ~~June 30, 2021~~

~~Six Months Ended June 30, 2021~~March 31, 2022

Home deliveries

Increased by ~~36.9%~~

~~Increased by 27.2%~~27.5%

Home closings revenue

Increased by ~~46.5%~~

~~Increased by 31.8%~~68.0%

Average sales price of homes delivered

Increased by ~~7.0%~~

~~Increased by 3.7%~~31.7%

Net new home orders

~~Increased~~Decreased by ~~3.8%~~

~~Increased by 38.9%~~44.5%

~~The United States~~During the first quarter of 2022, the direct impact of the COVID-19 pandemic and the related actions taken by local and federal governmental agencies in the U.S. has ~~been impacted by~~declined.However, we have continued to experience the ~~coronavirus (“COVID-19”)~~significantly higher demand for new homes that arose from the pandemic. ~~However, throughout~~Throughout the pandemic, we have continued to build, close and sell homes in our markets. The overwhelming expansion of our ~~sales activity~~revenues year over year is primarily attributable to the strong performance of our ~~new~~ Trophy brand division, ~~an increase in average selling communities as well as~~ the impact of macroeconomic factors, ~~such as low interest rates,~~and an influx of ~~millennia~~millennial first-time home ~~buyers and demand for suburban homes from apartment dwellers in response to COVID-19. The~~buyers. Unfortunately, the significant increase in new home demand has, in turn, led to increased demand for labor and the raw materials, products and appliances for new homes. Due to the increased demand, ~~for certain materials,~~ we have and ~~may~~expect to continue to experience ~~price~~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 ~~such as lumber, appliances~~ and ~~windows.~~inputs.

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to the Three Months Ended ~~June 30, 2020~~March 31, 2021

Residential Units Revenue and New Homes Delivered

The table below represents residential units revenue and new homes delivered for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (dollars in thousands):


		Three Months Ended June 30,								Three Months Ended March 31,
		2021		2020		Change		%		2022		2021		Change		%
Home closings revenue	Home closings revenue	$	332,279	$	226,785	$	105,494	46.5%	Home closings revenue	$	363,063	$	216,134	$	146,929	68.0%
Mechanic’s lien contracts revenue	Mechanic’s lien contracts revenue	1,221		1,882		(661)		(35.1)%	Mechanic’s lien contracts revenue	1,598		1,102		496		45.0%
Residential units revenue	Residential units revenue	$	333,500	$	228,667	$	104,833	45.8%	Residential units revenue	$	364,661	$	217,236	$	147,425	67.9%
New homes delivered	New homes delivered	757		553		204		36.9%	New homes delivered	658		516		142		27.5%
Average sales price of homes delivered	Average sales price of homes delivered	$	438.9	$	410.1	$	28.8	7.0%	Average sales price of homes delivered	$	551.8	$	418.9	$	132.9	31.7%

The ~~$104.8~~$147.4 million increase in residential units revenue was ~~primarily~~ driven by the ~~36.9%~~31.7% increase in the average sales price of homes delivered and the 27.5% increase in new homes delivered. The increase in new homes delivered ~~which~~ was ~~primarily~~ due to a large backlog of homes entering the quarter and an increased number of units under construction entering the quarter. The ~~7.0%~~31.7% increase in the average sales price of homes delivered for the three months ended ~~June 30, 2021~~March 31, 2022 was attributable to overall price increases driven by high demand and low supply of inventory.

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New Home Orders and Backlog

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


		Three Months Ended June 30,												Three Months Ended March 31,
		2021			2020			Change			%			2022			2021			Change			%
Net new home orders	Net new home orders	604			582			22			3.8	%	Net new home orders	601			1,082			(481)			(44.5)	%
Cancellation rate	Cancellation rate	7.6		%	16.9		%	(9.3)		%	(55.0)	%	Cancellation rate	8.0		%	6.0		%	2.0		%	33.3	%
Absorption rate per average active selling community per quarter	Absorption rate per average active selling community per quarter	6.8			6.3			0.5			7.9	%	Absorption rate per average active selling community per quarter	8.0			11.3			(3.3)			(29.2)	%
Average active selling communities	Average active selling communities	89			92			(3)			(3.3)	%	Average active selling communities	75			96			(21)			(21.9)	%
Active selling communities at end of period	Active selling communities at end of period	87			90			(3)			(3.3)	%	Active selling communities at end of period	76			90			(14)			(15.6)	%
Backlog	Backlog	$	974,349		$	446,573		$	527,776		118.2	%	Backlog	$	866,621		$	995,743		$	(129,122)		(13.0)	%
Backlog (units)	Backlog (units)	1,876			999			877			87.8	%	Backlog (units)	1,423			2,029			(606)			(29.9)	%
Average sales price of backlog	Average sales price of backlog	$	519.4		$	447.0		$	72.4		16.2	%	Average sales price of backlog	$	609.0		$	490.8		$	118.2		24.1	%

Net new home orders ~~increased 3.8%~~decreased 44.5% over the prior year period and our absorption rate ~~per average active selling community increased 7.9%~~decreased 29.2% year over year. The ~~absorption rate per average active selling community per quarter of 6.8 homes during the three months ended June 30, 2021, represented~~decrease in net new home orders was a ~~decrease from 11.3 homes during the three months ended March 31, 2021 as a~~direct result of pro-active metering of home ~~sales. Despite significant price increases taken~~sales by ~~the Company (which averaged~~withholding homes from 9% up to 25% depending on the builder) during the period from November 30, 2020, through April 30, 2021, net new home orders were 209.7% of home deliveries during the first quarter of 2021. Consequently, we determined that price increases were not sufficient to limit demand for net new home orders. As a result, we metered sales during the three months ended June 30, 2021,sale and by limiting sales per community to better align the absorption rate of sales with the ability to deliver new homes. Because of rising input costs and strong sales demand, we prefer to delay sales of homes until later in the construction process and increase our level of spec inventory. We believe this will allow us to better protect and capture margin in inflammatory and low demand market. The absorption rate per average active selling community per quarter of ~~6.8~~8.0 homes during the three months ended ~~June 30, 2021, and 9.1 homes during the six months ended June 30, 2021,~~March 31, 2022, exceed the ~~5.9~~6.7 net new home orders during ~~both~~ the three months ~~and six months ended June 30, 2019,~~March 31, 2020, by ~~15.3% and 54.2%, respectively.~~19.4%.

Backlog refers to homes under sales contracts that have not yet closed at the end of the relevant period, and absorption rate refers to the rate at which net new home orders are contracted per average active selling community during the relevant period. Upon a cancellation, the escrow deposit may be returned to the prospective purchaser. Accordingly, backlog may not be indicative of our future revenue.

~~Our cancellation rate, which refers to sales contracts canceled divided~~Backlog declined by ~~sales contracts executed during the relevant period, was 7.6%~~13.0% for the three months ended June 30, 2021, compared to 16.9% for the three months ended June 30, 2020. The decrease in our cancellation rate is due to macroeconomic factors such as low interest rates, an influx of millennia first-time buyers and demand for suburban homes from apartment dwellers in response to COVID-19. Sales contracts relating to homesquarter with a 29.9% drop in backlog ~~may be canceled~~units, offset by ~~the prospective purchaser for~~ a number of reasons, such as the prospective purchaser’s inability to obtain suitable mortgage financing. Upon a cancellation, the escrow deposit may be returned to the prospective purchaser. Management believes a cancellation rate in the range of 15% to 20% is representative of an industry average cancellation rate.

~~The $527.8 million increase in value of backlog was due to the 87.8% increase in the number of homes in backlog and the 16.2%~~24.1% increase in the average sales price of ~~backlog.~~backlog units. The ~~87.8% increase~~drop in ~~the~~backlog units is a function of both our ability to close an increased number of homes ~~in backlog was due to a 7.9% increase in~~during the ~~absorption rate per average active selling community~~first quarter as well as the ~~record level~~continued metering of ~~backlog entering the quarter.~~homes sales as discussed above. The increase ~~of the~~in average sales price of homes in backlog was the result of price increases driven by the high demand and low supply of inventory. As a result of the metering of sales during the three months ended June 30, 2021, the value of backlog declined from $995.7 million as of March 31, 2021, to $974.3 million as of June 30, 2021, or 2.1%, despite increasing new homes delivered by 47.0% sequentially to 757 units, which is a record for any quarter in the existence of the Company.

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~~Residential Units Gross Margin~~

~~The table below represents the components of residential units gross margin (dollars in thousands):~~
Three Months Ended June 30,
2021 2020
Home closings revenue $ 332,279 100.0 % $ 226,785 100.0 %
Cost of homebuilding units 243,224 73.2 % 174,176 76.8 %
Homebuilding gross margin $ 89,055 26.8 % $ 52,609 23.2 %
Mechanic’s lien contracts revenue $ 1,221 100.0 % $ 1,882 100.0 %
Cost of mechanic’s lien contracts 941 77.1 % 1,547 82.2 %
Mechanic’s lien contracts gross margin $ 280 22.9 % $ 335 17.8 %
Residential units revenue $ 333,500 100.0 % $ 228,667 100.0 %
Cost of residential units 244,165 73.2 % 175,723 76.8 %
Residential units gross margin $ 89,335 26.8 % $ 52,944 23.2 %

Cost of residential units for the three months ended June 30, 2021 increased by $68.4 million, or 38.9%, compared to the three months ended June 30, 2020, primarily due to the 36.9% increase in the number of new homes delivered.

Residential units gross margin for the three months ended June 30, 2021 increased to 26.8%, compared to 23.2% for the three months ended June 30, 2020, primarily because of a decrease in sales incentives offered to customers and overall price increases.

~~Land and Lots Revenue~~

~~The table below represents lots closed and land and lots revenue (dollars in thousands):~~
Three Months Ended June 30,
2021 2020 Change %
Lots revenue $ 4,615 $ 4,166 $ 449 10.8 %
Land revenue 35,691 — 35,691 100%
Land and lots revenue $ 40,306 $ 4,166 $ 36,140 867.5 %
Lots closed 63 26 37 142.3 %
Average sales price of lots closed $ 73.3 $ 160.2 $ (86.9) (54.2) %

Lots revenue increased by 10.8%, primarily driven by a 142.3% increase in the number of lots closed and a higher number of lots developed internally. The average lot price decreased by 54.2% due to a higher number of entry level lots sold. Land revenue represents land acquired that also included parcels zoned for retail and multi family properties.

~~Selling, General and Administrative Expenses~~

~~The table below represents the components of selling, general and administrative expenses (dollars in thousands):~~
Three Months Ended June 30, As Percentage of Segment Revenue
2021 2020 2021 2020
Builder operations $ 34,528 $ 24,585 9.8 % 10.7 %
Land development 206 284 0.9 % 8.0 %
Corporate, other and unallocated (749) 803 — —
Total selling, general and administrative expenses $ 33,985 $ 25,672 9.1 % 11.0 %

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~~The 1.9% decrease of total selling, general and administrative expenses as a percentage of revenue was primarily driven by higher revenues.~~

~~Builder Operations~~

The 0.9% decrease in selling, general and administrative expenses as a percentage of revenue for builder operations was primarily attributable to an increase in builder operations revenues. Builder operations expenditures include salary expenses, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.

~~Land Development~~

~~The 7.1% decrease in selling, general and administrative expenses as a percentage of revenue for land development was primarily attributable to an increase in land development segment revenues.~~

~~Corporate, Other and Unallocated~~

Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment for the three months ended June 30, 2021 was income of $0.7 million, compared to expenses of $0.8 million for the three months ended June 30, 2020.

~~Equity in Income of Unconsolidated Entities~~

Equity in income of unconsolidated entities decreased to $4.6 million, or 11.2%, for the three months ended June 30, 2021, compared to $5.2 million for the three months ended June 30, 2020, primarily due to a decrease in earnings from GB Challenger, LLC and Green Brick Mortgage, LLC. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of Green Brick’s share in net earnings by unconsolidated entity.

~~Other (Loss) Income, Net~~

~~Other income, net, decreased to $2.4 million for the three months ended June 30, 2021, compared to income of $2.8 million for the three months ended June 30, 2020.~~

~~Income Tax Expense~~

Income tax expense was $15.7 million for the three months ended June 30, 2021 compared to a $1.3 million for the three months ended June 30, 2020. The increase was partially due to higher taxable income. Also, during the quarter ended June 30, 2020, the company recognized favorable federal energy tax credits of $6.7 million from building energy-efficient homes in prior tax years.

~~Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020~~

~~Residential Units Revenue and New Homes Delivered~~

~~The table below represents residential units revenue and new homes delivered for the six months ended June 30, 2021 and 2020 (dollars in thousands):~~
Six Months Ended June 30,
2021 2020 Change %
Home closings revenue $ 548,413 $ 416,033 $ 132,380 31.8%
Mechanic’s lien contracts revenue 2,323 3,821 (1,498) (39.2)%
Residential units revenue $ 550,736 $ 419,854 $ 130,882 31.2%
New homes delivered 1,273 1,001 272 27.2%
Average sales price of homes delivered $ 430.8 $ 415.6 $ 15.2 3.7%

The $130.9 million increase in residential units revenue was driven by the 27.2% increase in new homes delivered, which was due to a 40.0% increase in our absorption rate for net new home orders per average active selling community. The 3.7% increase in the average sales price of homes delivered for the six months ended June 30, 2021 was attributable to overall price increases driven by high demand and low supply of inventory.

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~~New Home Orders and Backlog~~

~~The table below represents new home orders and backlog related to our builder operations segments, excluding mechanic’s lien contracts (dollars in thousands):~~
Six Months Ended June 30,
2021 2020 Change %
Net new home orders 1,686 1,214 472 38.9 %
Cancellation rate 6.6 % 16.6 % (10.0) % (60.2) %
Absorption rate per average active selling community per quarter 9.1 6.5 2.6 40.0 %
Average active selling communities 93 93 — — %
Active selling communities at end of period 87 90 (3) (3.3) %

Net new home orders increased 38.9% over the prior year period. The increase reflects the strong performance of our new Trophy brand division as well as the impact of macroeconomic factors such as low interest rates, an influx of millennia first-time buyers and demand for suburban homes from apartment dwellers in response to COVID-19. Our absorption rate per average active selling community increased 40.0% year over year. The absorption rate per average active selling community per quarter of 6.8 homes during the three months ended June 30, 2021, representedAs a ~~decrease from 11.3 homes during the three months ended March 31, 2021 as a~~further result of ~~pro-active~~the continued metering of ~~home sales. Despite significant price increases taken by~~sales, increase of units closed, and decrease in backlog units, we have been able to increase spec units under construction from a low of 28.1% of total units under construction in Q1 2021 to 45.0% of total units as of the ~~Company (which averaged from 9% up~~end of Q1 2022. This level is more in line with our historic range of spec units under construction. We consider this to ~~25% depending on~~be a success as holding back homes for sale and selling them later in the ~~builder) during the period from November 30, 2020, through April 30, 2021, net new home orders were 209.7%~~construction process gives us a better mix of ~~home deliveries during the first quarter~~specs versus pre-sold backlog homes. We believe our higher mix of ~~2021. Consequently, we determined that price increases were not sufficient~~spec homes will lead to ~~limit demand for net new home orders. As a result, we metered sales during the three months ended June 30, 2021, by limiting sales per community to better align the absorption rate~~more efficient operations, higher gross margins, and less risk of sales with the ability to deliver new homes. The absorption rate per average active selling community per quarter of 6.8 homes during the three months ended June 30, 2021, and 9.1 homes during the six months ended June 30, 2021, exceed the 5.9 net new home orders during both the three months and six months ended June 30, 2019, by 15.3% and 54.2%, respectively.unmatched construction costs.

Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was ~~6.6%~~8.0% for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~16.6%~~6.0% for the ~~six~~three months ended ~~June 30, 2020. The decrease in our~~March 31, 2021. Our cancellation rate ~~is due to macroeconomic factors such as~~remained in a historically low ~~interest rates, an influx~~range of ~~millennia first-time buyers~~the last seven quarters between 6.0% and ~~demand for suburban homes from apartment dwellers in response to COVID-19.~~12.3% and below their average of 8.7%. Sales contracts relating to homes in backlog may be canceled by the prospective purchaser for a number of reasons, such as the prospective purchaser’s inability to obtain suitable mortgage financing. Upon a cancellation, the escrow deposit may be returned to the prospective purchaser. Management believes a cancellation rate in the range of 15% to 20% is representative of an industry average cancellation rate.

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Residential Units Gross Margin

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


		Six Months Ended June 30,									Three Months Ended March 31,
		2021				2020					2022				2021
Home closings revenue	Home closings revenue	$	548,413	100.0	%	$	416,033	100.0	%	Home closings revenue	$	363,063	100.0	%	$	216,134	100.0	%
Cost of homebuilding units	Cost of homebuilding units	404,454		73.7	%	319,767		76.9	%	Cost of homebuilding units	262,090		72.2	%	161,230		74.6	%
Homebuilding gross margin	Homebuilding gross margin	$	143,959	26.3	%	$	96,266	23.1	%	Homebuilding gross margin	$	100,973	27.8	%	$	54,904	25.4	%

Mechanic’s lien contracts revenue	Mechanic’s lien contracts revenue	$	2,323	100.0	%	$	3,821	100.0	%	Mechanic’s lien contracts revenue	$	1,598	100.0	%	$	1,102	100.0	%
Cost of mechanic’s lien contracts	Cost of mechanic’s lien contracts	1,783		76.8	%	3,143		82.3	%	Cost of mechanic’s lien contracts	1,340		83.9	%	842		76.4	%
Mechanic’s lien contracts gross margin	Mechanic’s lien contracts gross margin	$	540	23.2	%	$	678	17.7	%	Mechanic’s lien contracts gross margin	$	258	16.1	%	$	260	23.6	%

Residential units revenue	Residential units revenue	$	550,736	100.0	%	$	419,854	100.0	%	Residential units revenue	$	364,661	100.0	%	$	217,236	100.0	%
Cost of residential units	Cost of residential units	406,237		73.8	%	322,910		76.9	%	Cost of residential units	263,430		72.2	%	162,072		74.6	%
Residential units gross margin	Residential units gross margin	$	144,499	26.2	%	$	96,944	23.1	%	Residential units gross margin	$	101,231	27.8	%	$	55,164	25.4	%

Cost of residential units for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 increased by ~~$83.3~~$101.4 million, or ~~25.8%~~62.5%, compared to the ~~six~~three months ended ~~June 30, 2020, primarily~~March 31, 2021, due to the ~~27.2%~~27.5% increase in the number of new homes ~~delivered.~~

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delivered, increasing levels of cost input prices, and more expensive homes delivered in the quarter.

Residential units gross margin for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 increased to ~~26.2%~~27.8%, compared to ~~23.1%~~25.4% for the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, primarily because of a decrease in sales incentives offered to customers and ~~and~~ overall price increases that outpaced the levels of cost input price increases.

Land and Lots Revenue

The table below represents lots closed and land and lots revenue (dollars in thousands):


		Six Months Ended June 30,									Three Months Ended March 31,
		2021		2020		Change		%			2022		2021		Change		%
Lots revenue	Lots revenue	$	13,058	$	26,246	$	(13,188)	(50.2)	%	Lots revenue	$	1,955	$	8,443	$	(6,488)	(76.8)	%
Land revenue	Land revenue	44,491		$	—	44,491		100.0%		Land revenue	27,000		$	8,800	18,200		206.8	%
Land and lots revenue	Land and lots revenue	$	57,549	$	26,246	$	31,303	119.3	%	Land and lots revenue	$	28,955	$	17,243	$	11,712	67.9	%
Lots closed	Lots closed	142		164		(22)		(13.4)	%	Lots closed	33		79		(46)		(58.2)	%
Average sales price of lots closed	Average sales price of lots closed	$	92.0	$	160.0	$	(68.0)	(42.5)	%	Average sales price of lots closed	$	59.2	$	106.9	$	(47.7)	(44.6)	%

Lots revenue decreased by ~~50.2%~~76.8%, driven by a ~~13.4%~~58.2% decrease in the number of lots ~~closed.~~closed and a 44.6% decrease in the average lot price. The number of lots closed decreased as a higher proportion of lots were developed for internal use. The average lot price decreased by ~~42.5%~~44.6% due to a higher number of entry level lots sold. Land revenue represents a residential tract of land acquired last year that ~~also included parcels zoned for retail and multi family properties.~~was sold to another builder.

Selling, General and Administrative Expenses

The table below represents the components of selling, general and administrative expenses (dollars in thousands):


		Six Months Ended June 30,				As Percentage of Segment Revenue					Three Months Ended March 31,				As Percentage of Segment Revenue
		2021		2020		2021		2020			2022		2021		2022		2021
Builder operations	Builder operations	$	62,688	$	50,045	10.8	%	11.9	%	Builder operations	$	35,918	$	28,160	9.8	%	12.4	%
Land development	Land development	245		611		0.8	%	2.4	%	Land development	88		39		0.3	%	0.5	%
Corporate, other and unallocated		540		1,885		—		—
Corporate, other and unallocated (income) expense										Corporate, other and unallocated (income) expense	(1,741)		1,289		—		—
Total selling, general and administrative expenses	Total selling, general and administrative expenses	$	63,473	$	52,541	10.4	%	11.8	%	Total selling, general and administrative expenses	$	34,265	$	29,488	8.7	%	12.6	%

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The ~~1.4%~~3.9% decrease of total selling, general and administrative expenses as a percentage of revenue was primarily driven by anthe leverage of higher revenues without a corresponding increase in ~~revenues.~~the level of overhead costs.

Builder Operations

The ~~1.1%~~2.6% decrease in selling, general and administrative expenses as a percentage of revenue for builder operations was primarily attributable to an increase in builder operations ~~revenues.~~revenues without a corresponding increase in the level of overhead costs. Builder operations expenditures include salary expenses, sales commissions, and community costs, such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.

Land Development

~~The 1.6% decrease in selling,~~Selling, general and administrative expenses as a percentage of revenue for land development ~~was primarily attributable~~decreased by 0.2% for the three months ended March 31, 2022, compared to ~~was primarily attributable to an increase in land development segment revenues.~~the three months ended March 31, 2021.

Corporate, Other and Unallocated

Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was ~~$0.5~~income of $1.7 million, compared to ~~$1.9~~expense of $1.3 million for the ~~six~~three months ended ~~June 30, 2020, the decrease~~March 31, 2021. The change was driven primarily by an increase in capitalized overhead adjustments that are not allocated to builder operations and land development segments.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities increased to ~~$8.5~~$5.7 million, or ~~9.6%~~by 46.2%, for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~$7.7~~$3.9 million for the ~~six~~three months ended ~~June 30, 2020, primarily due to an increase in earnings from GB Challenger,~~

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~~EJB River Holdings, and BHome Mortgage.~~March 31, 2021. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of Green Brick’s share in net earnings by unconsolidated entity.

Other ~~(Loss)~~ Income, Net

Other income, net, increased to ~~$4.3~~$2.9 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to income of ~~$0.9~~$1.9 million for the ~~six~~three months ended ~~June 30, 2020, the~~March 31, 2021. The change ~~is primarily~~was mainly due to ~~$1.5~~a $0.5 million ~~of allowances for option deposits and pre-acquisition costs caused by COVID-19 pandemic considerations recorded during the six months ended June 30, 2020 and an~~ increase in title closing and settlement services ~~of $1.9 million arising from higher volume of closings during the period.~~income.

Income Tax Expense

Income tax expense was ~~$23.2~~$18.4 million for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$7.4~~$7.5 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The increase was ~~partially~~primarily due to higher taxable income. ~~Also,~~In addition, during the ~~quarter~~three months ended ~~June 30, 2020, the company~~March 31, 2021, we recognized favorable federal energy tax credits ~~of $6.7 million~~ from building energy-efficient homes ~~in prior tax years.~~under a federal program that has not been renewed for 2022.

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Lots Owned and Controlled

The following table presents the lots we owned or controlled, including lot option contracts, as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. 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.


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Lots owned (1)	Lots owned (1)					Lots owned (1)
Central	Central	14,115		6,823		Central	19,552		17,767
Southeast	Southeast	2,212		2,097		Southeast	2,417		2,472
Total lots owned	Total lots owned	16,327		8,920		Total lots owned	21,969		20,239
Lots controlled (1)	Lots controlled (1)					Lots controlled (1)
Central	Central	4,126		4,398		Central	3,864		7,321
Southeast	Southeast	898		1,150		Southeast	1,159		1,061
Total lots controlled	Total lots controlled	5,024		5,548		Total lots controlled	5,023		8,382
Total lots owned and controlled (1)	Total lots owned and controlled (1)	21,351		14,468		Total lots owned and controlled (1)	26,992		28,621
Percentage of lots owned	Percentage of lots owned	76.5	%	61.7	%	Percentage of lots owned	81.4	%	70.7	%

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

The following table presents additional information on the lots we controlled as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


		June 30, 2021	December 31, 2020		March 31, 2022	December 31, 2021
Lots under third party option contracts	Lots under third party option contracts	2,574	2,970	Lots under third party option contracts	2,493	2,740
Land under option for future acquisition and development	Land under option for future acquisition and development	606	740	Land under option for future acquisition and development	768	3,826
Lots under option through unconsolidated development joint ventures	Lots under option through unconsolidated development joint ventures	1,844	1,838	Lots under option through unconsolidated development joint ventures	1,762	1,816
Total lots controlled	Total lots controlled	5,024	5,548	Total lots controlled	5,023	8,382

The following table presents additional information on the lots we owned as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.
June 30, 2021 December 31, 2020
Total lots owned 16,327 8,920
Land under option for future acquisition and development 606 740
Lots under option through unconsolidated development joint ventures 1,844 1,838
Total lots self-developed 18,777 11,498
Self-developed lots as a percentage of total lots owned and controlled 87.9 % 79.5 %

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

Liquidity and Capital Resources Overview

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had ~~$33.5~~$66.1 million and ~~$19.5~~$78.7 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 using cash to make additional investments in business acquisitions, joint ventures, or other strategic activities.

Our principal uses of capital for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were home construction, land purchases, land development, repayments of lines of credit, operating expenses, ~~and~~ payment of routine ~~liabilities.~~liabilities and stock repurchases. We used funds generated by operations and available borrowings to meet our short-term working capital ~~requirements.~~requirements and pay our preferred stock dividend. We remain focused on generating positive margins in our builder operations segments and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.

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Cash flows for each of our communities depend on the community’s stage in the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, entitlements and other approvals, roads, utilities, general landscaping and other amenities. These costs are a component of our inventory and are not recognized in our statement of income until a home closes. In the later stages of community development, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflows associated with home construction and land development previously occurred.

Our debt to total capitalization ratio, which is calculated as the sum of borrowings on lines of credit, the senior unsecured notes, and notes payable, net of debt issuance costs ~~(“total debt”),~~ divided by the total capitalization, which equals the sum of Green Brick Partners, Inc. stockholders’ equity and total debt, was approximately ~~33.8%~~28.8% as of ~~June 30, 2021.~~March 31, 2022. In addition, as of ~~June 30, 2021,~~March 31, 2022, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at ~~31.7%~~25.0%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding businesses. We target a debt to total capitalization ratio of approximately 30% to 35%, which we expect will provide us with significant additional growth capital.

Reconciliation of a Non-GAAP Financial Measure

In this Quarterly Report on Form 10-Q, we utilize a financial measure of net debt to total capitalization ratio that is a non-GAAP financial measure as defined by the Securities and Exchange Commission. Net debt to total capitalization is calculated as the total debt less cash and cash equivalents, divided by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash equivalents. We present this measure because we believe it is useful to management and investors in evaluating the Company’s financing structure. We also believe this measure facilitates the comparison of our financing structure with other companies in our industry. Because this measure is not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

The closest GAAP financial measure to the net debt to total capitalization ratio is the debt to total capitalization ratio. The following table represents a reconciliation of the net debt to total capitalization ratio to the closest GAAP financial measure as of ~~June 30, 2021:~~March 31, 2022:


		Gross			Cash and cash equivalents		Net				Gross			Cash and cash equivalents		Net
Total debt, net of debt issuance costs	Total debt, net of debt issuance costs	$	366,462		$	(33,517)	$	332,945		Total debt, net of debt issuance costs	$	369,627		$	(66,083)	$	303,544
Total Green Brick Partners, Inc. stockholders’ equity	Total Green Brick Partners, Inc. stockholders’ equity	717,389			—		717,389			Total Green Brick Partners, Inc. stockholders’ equity	912,183			—		912,183
Total capitalization	Total capitalization	$	1,083,851		$	(33,517)	$	1,050,334		Total capitalization	$	1,281,810		$	(66,083)	$	1,215,727

Debt to total capitalization ratio	Debt to total capitalization ratio	33.8		%						Debt to total capitalization ratio	28.8		%
Net debt to total capitalization ratio	Net debt to total capitalization ratio						31.7		%	Net debt to total capitalization ratio						25.0		%

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Key Sources of Liquidity

The Company’s key sources of liquidity were funds generated by operations and borrowings during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Debt Instruments

Secured Revolving Credit Facility– As of March 31, 2022, we had no amounts outstanding under our Secured Revolving Credit facility, down from $2.0 million as of December 31, 2021. Borrowings on the Secured Revolving Credit facility have a maturity date of May 1, 2025 and 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.

Unsecured Revolving Credit Facility – As of March 31, 2022, our $300.0 million Unsecured Revolving Credit Facility had a $22.0 million balance, an increase from no outstanding amounts as of December 31, 2021. The borrowings on the Unsecured Revolving Credit Facility bear interest at a floating rate equal to either (a) for base rate advances, the highest of (1) the lender’s base rate, (2) the federal funds rate plus 0.5% and (3) the one-month LIBOR plus 1.0%, in each case plus 1.5%; or (b) in the case of Eurodollar rate advances, the reserve adjusted LIBOR plus 2.5%. As of March 31, 2022, the interest rate on outstanding borrowings under the Unsecured Revolving Credit Facility was 2.85% per annum. As amended, the aggregate principal amount of the revolving credit commitments under the Credit Agreement is $300.0 million through December 14, 2024. In addition, the Unsecured Revolving Credit Agreement, as amended, permits us, without the consent of the other lenders, to request that one or

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more lenders increase their revolving credit commitments to provide up to an aggregate of $325.0 million of revolving credit commitments subject to compliance with customary conditions set forth in the Credit Agreement including compliance, on a pro forma basis, with the financial covenants set forth therein.

Senior Unsecured Notes - As of ~~June 30, 2021,~~March 31, 2022, we had ~~three~~four series of senior unsecured notes outstanding which were each issued pursuant to a note purchase agreement. The aggregate amount of senior unsecured notes outstanding was ~~$235.6~~$335.5 million as of ~~June 30, 2021~~March 31, 2022 up from ~~$111.1~~$335.4 million as of December 31, ~~2020 due to the issuance of the 2028 Notes discussed below.~~2021.

•In August 2019, we issued $75 million of senior unsecured notes (the “2026 Notes”). Interest accrues at an annual rate of 4.0% and is payable quarterly. Principal on the 2026 Notes is required to be paid in increments of $12.5 million on August 8, 2024 and $12.5 million on August 8, 2025 with a final principal payment of $50.0 million on August 8, 2026.

•In August 2020, we issued $37.5 million of senior unsecured notes (the “2027 Notes”). Interest accrues at an annual rate of 3.35% and is payable quarterly. Principal on the 2027 Notes is due on August 26, 2027.

•In February 2021, we issued $125 million of senior unsecured notes (the “2028 Notes”). Interest accrues at an annual rate of 3.25% and is payable quarterly. Principal on the 2028 Notes is due in increments of $25.0 million annually on February 25 in each of 2024, 2025, 2026, 2027, and 2028.

•In December 2021, we issued $100.0 million of senior unsecured notes (the “2029 Notes”). Interest accrues at an annual rate of 3.25% and is payable quarterly. A required principal prepayment of $30.0 million is due on December 28, 2028. The remaining unpaid principal balance is due on December 28, 2029.

Optional prepayment is allowed with payment of a “make-whole” premium which fluctuates depending on market interest rates. Interest is payable quarterly in arrears.

The 2028 Notes were issued pursuant to a Note Purchase Agreement to several institutional purchasers. We received net proceeds of $124.4 million and incurred debt issuance costs of approximately $0.6 million that were deferred and reduced the amount of debt on our condensed consolidated balance sheet. We used the net proceeds from the issuance of the 2028 Notes to repay borrowings under our existing secured and unsecured revolving credit facilities and for general corporate purposes.

~~Unsecured Revolving Credit Facility –~~ As of June 30, 2021, our $265.0 million Unsecured Revolving Credit Facility had a $130.0 million balance, up from $101.0 million as of December 31, 2020. The borrowings on the Unsecured Revolving Credit Facility bear interest at a floating rate equal to either (a) for base rate advances, the highest of (1) the lender’s base rate, (2) the federal funds rate plus 0.5% and (3) the one-month LIBOR plus 1.0%, in each case plus 1.5%; or (b) in the case of Eurodollar rate advances, the reserve adjusted LIBOR plus 2.5%. As of June 30, 2021, the interest rates on outstanding borrowings under the Unsecured Revolving Credit Facility ranged from 2.57% to 2.59% per annum. As amended, the aggregate principal amount of the revolving credit commitments under the Credit Agreement is $265.0 million through December 14, 2022 and $190.0 million through December 14, 2023. In addition, the Unsecured Revolving Credit Agreement, as amended, permits us, without the consent of the other lenders, to request that one or more lenders increase their revolving credit commitments to provide an aggregate of $275 million of revolving credit commitments subject to compliance with customary conditions set forth in the Credit Agreement including compliance, on a pro forma basis, with the financial covenants set forth therein.

~~Secured Revolving Credit Facility~~– As of June 30, 2021, we had $2.0 million outstanding under our Secured Revolving Credit facility, down from $7.0 million as of December 31, 2020. Borrowings on the Secured Revolving Credit facility have a maturity date of May 1, 2022 and 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%. Notwithstanding the foregoing, the interest may not, at any time, be less than 4% per annum or more than the lesser amount of 18% and the highest maximum rate allowed by applicable law. As of June 30, 2021, the interest rate on outstanding borrowings under the Secured Revolving Credit Facility was 4.00% per annum.

Our debt instruments require us to maintain specific financial covenants, each of which we were in compliance with as of ~~June 30, 2021.~~March 31, 2022. Specifically, under the most restrictive covenants, we are required to maintain (1) a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0 and, as of ~~June 30, 2021,~~March 31, 2022, our interest coverage on a last 12 months’ basis was ~~19.19~~21.36 to 1.0, (2) a Consolidated Tangible Net Worth of no less than approximately ~~$452.0~~$563.7 million and, as of ~~June 30, 2021,~~March 31, 2022, we had ~~$716.1~~$911.0 million and (3) maximum debt to total capitalization rolling average ratio of no more than 40.0% and, as of ~~June 30, 2021,~~March 31, 2022, we had a rolling average ratio of ~~30.9%~~30.3%.

As of ~~June 30, 2021,~~March 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. For additional information on the Company’s lines of credit and senior unsecured notes, refer to Note 4 to the condensed consolidated financial statements located in Part I, Item 1 of this Quarterly Report on Form 10-Q.

29Preferred Equity Issuances

~~TABLE OF CONTENTS~~On December 22, 2021, we issued 2,000,000 Depositary Shares, each representing 1/1000 of a share of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”) for gross proceeds of $50.0 million. 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 quarter ended March 31, 2022, we paid dividends of $0.7 million on the Series A Preferred Stock. Subsequent to quarter end, our Board declared a dividend of $0.0359 per Series A Depositary Share (for an aggregate of $0.7 million), which will cover the period from, and including, March 15, 2022 through, but not including June 15, 2022 payable on June 15, 2022 to holders of record as of June 1, 2022

Cash Flows

The following summarizes our primary sources and uses of cash ~~for~~during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 as compared to the ~~six~~three months ended ~~June 30, 2020:~~March 31, 2021:

•Operating activities. Net cash used by operating activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was ~~$118.7~~$14.0 million, compared to ~~$39.0~~$8.0 million ~~provided by operating activities~~ during the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The net cash outflows for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were primarily driven by an increase in inventory of ~~$261.2~~$123.4 million, partially offset by ~~$86.3~~$65.3 million of cash generated from business operations and the deferral of expense payments through a ~~$21.2~~$28.3 million increase in ~~accounts payable, and a $25.6 million increase in customer and builder deposits.~~accrued expenses.

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•Investing activities. Net cash used in investing activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 decreased to ~~$1.5~~$0.4 million, compared to ~~$1.7~~$0.7 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.

•Financing activities. Net cash provided by financing activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was ~~$143.7~~$1.1 million, compared to ~~$23.7~~$18.6 million ~~used by financing activities~~ during the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The cash inflows for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were primarily from our ~~senior unsecured notes of $125.0 million and from our~~net borrowings from lines of ~~credit.~~credit of $20.0 million and proceeds from notes payable of $14.5 million, partially offset by stock repurchases of $25.8 million and distributions to noncontrolling interests of $5.7 million

Off-Balance Sheet Arrangements and Contractual Obligations

Land and Lot Option Contracts

In the ordinary course of business, we enter into land purchase contracts with third-party developers in order to procure lots for the construction of our homes in the future. We are subject to customary obligations associated with such contracts. These purchase contracts typically require an earnest money deposit, and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements, including obtaining applicable property and development entitlements.

We also utilize option contracts with lot sellers as a method of acquiring lots in staged takedowns, which are the schedules that dictate when lots must be purchased to help manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Lot option contracts generally require us to pay a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices which typically include escalations in lot prices over time.

Our utilization of lot option contracts is dependent on, among other things, the availability of land sellers willing to enter into these arrangements, the availability of capital to finance the development of optioned lots, general housing market conditions and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

We generally have the right, at our discretion, to terminate our obligations under both purchase contracts and option contracts by forfeiting the earnest money deposit with no further financial responsibility to the land seller. During the three months ended March 31, 2020, management determined to increase the allowance for certain option contracts due to the impact of the COVID-19 pandemic on the homebuilding industry and projected future demand for homes in certain markets and/or locations. However, management subsequently reassessed the market situation based on new information available and reversed such allowances for earnest money deposits and pre-acquisition costs related to option contracts in the subsequent quarter.

As of ~~June 30, 2021,~~March 31, 2022, the Company had earnest money deposits of ~~$24.7~~$26.5 million at risk associated with contracts to purchase ~~3,787~~3,905 lots past feasibility studies with an aggregate purchase price of approximately ~~$270.4~~$264.8 million.

~~Letters of Credit and Performance Bonds~~

Refer to Note 14 in the accompanying Notes to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for details of letters of credit and performance bonds outstanding.

Guarantee

Refer to Note 5 in the Notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for details of our guarantee in relation to our joint venture with EJB River Holdings, ~~LLC joint venture.~~LLC.

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Seasonality

The homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements. We typically experience the highest new home order activity in spring and summer, although this activity is highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since it typically takes five to nine months to construct a new home, we normally deliver more homes in the second half of the year as spring and summer home orders are delivered. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters, and the majority of cash receipts from home deliveries occur during the second half of the year.

Critical Accounting Policies

Our critical accounting policies are described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Recent Accounting Pronouncements

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.

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~~Related Party Transactions~~

~~See Note 13 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of our transactions with related parties.~~

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer ( “CEO”) and principal financial officer (“CFO”), we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~June 30, 2021~~March 31, 2022 in providing reasonable assurance that information required to be disclosed in the reports we file, furnish, submit or otherwise provide to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed in reports filed by us under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, in such a manner as to allow timely decisions regarding the required disclosures.

Changes in Internal Control over Financial Reporting

During the three months ended ~~June 30, 2021,~~March 31, 2022, there were no changes in our internal controls that have materially affected or are reasonably likely to have a material effect on our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM ~~5. OTHER INFORMATION~~2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Item 1.01 Entry into a Material Definitive Agreement~~Purchases of equity securities by the issuer

~~Eighth Amendment to Unsecured Revolving Credit Facility~~The following table provides information about repurchases of our common stock during the three months ended March 31, 2022:

On May 28, 2021, the Company, as borrower, entered into the Eighth Amendment (the “Eighth Amendment”) to the Credit Agreement for the Company’s Unsecured Revolving Credit Facility, with the lenders named therein and Flagstar Bank, FSB, as administrative agent (as previously amended, the “Credit Agreement”).

The Eighth Amendment reflected the substitution of Veritex Community Bank (“Veritex”) as a lender under the Credit Agreement with the assumption of the $30.0 million credit commitment previously held by Credit Suisse AG. The Eighth Amendment also extended the termination date of Veritex’s credit commitment to December 14, 2023. As amended, the aggregate principal amount of the revolving credit commitments under the Credit Agreement is $265.0 million through December 14, 2022 and $190.0 million through December 14, 2023.

All other material terms of the Credit Agreement, as amended, remained unchanged. The description above is qualified in its entirety by the Eighth Amendment, a copy of which is filed as Exhibit 10.47 to this Quarterly Report on Form 10-Q.

~~Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.~~

~~(e)~~

On July 28, 2021, the Company entered into an amended and restated employment agreement with Mr. Costello (the “2021 A&R Employment Agreement”), which modified the change of control provision set forth in Mr. Costello’s employment agreement to provide that such benefits will only be paid to the extent that Mr. Costello is terminated without Cause (other than due to death or disability) or resigns for Good Reason within 24 months following a Change in Control. All other material terms of Mr. Costello’s employment agreement remained the same.


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

ITEM 6. EXHIBITS


Number						Description
10.7*						~~Amended and Restated Employment Agreement, dated as of July 28, 2021, between the Company and Richard A. Costello.~~
10.47*						~~Eighth Amendment to the Credit Agreement, dated as of May 28, 2021, by and among Green Brick Partners, Inc., the lenders named therein, and Flagstar Bank, FSB, as agent.~~
31.1*						Certification of the Company’s Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2*						Certification of the Company’s Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1*						Certification of the Company’s Chief Executive Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2*						Certification of the Company’s Chief Financial Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
101.INS**						XBRL Instance Document. The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**						XBRL Taxonomy Extension Schema Document.
101.CAL**						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**						XBRL Taxonomy Extension Presentation Linkbase Document.
104**						Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101).

* Filed with this Form 10-Q.

** Submitted electronically herewith.

3230

TABLE OF CONTENTS

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


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

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

Date: ~~August~~May 3, ~~2021~~2022

3331


Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest	$	0	$	0
Cash paid for income taxes, net of refunds	$	32,463	$	13


	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Residential units revenue		Land and lots revenue		Residential units revenue		Land and lots revenue
Primary Geographical Market
Central	$	233,592	$	22,556	$	151,851	$	3,926
Southeast	99,908		17,750		76,816		240
Total revenues	$	333,500	$	40,306	$	228,667	$	4,166

Type of Customer
Homebuyers	$	333,500	$	0	$	228,667	$	0
Homebuilders and Multi-family Developers	0		40,306		0		4,166
Total revenues	$	333,500	$	40,306	$	228,667	$	4,166

Product Type
Residential units	$	333,500	$	0	$	228,667	$	0
Land and lots	0		40,306		0		4,166
Total revenues	$	333,500	$	40,306	$	228,667	$	4,166

Timing of Revenue Recognition
Transferred at a point in time	$	332,279	$	40,306	$	226,785	$	4,166
Transferred over time	1,221		0		1,882		0
Total revenues	$	333,500	$	40,306	$	228,667	$	4,166


Remainder of 2021	$	625
2022	1,526
2023	1,298
2024	507
2025	517
Thereafter	1,368
Total future lease payments	$	5,841
Less: Interest	1,259
Present value of lease liabilities	$	4,582