Green Brick Partners, Inc.: Form 10-Q for the period ended Mar 31, 2026

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, 2025 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2026 and 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, and homebuilding gross margin. Our results for each key financial and operating metric, as compared to the same period in 2025, are provided below:

Our home deliveries were substantially in line in the first quarter of 2026 year over year, while average sales prices decreased primarily as a result of elevated discounts and incentives. Homebuilding gross margins decreased from 32.1% to 28.9% for the three months ended March 31, 2026, primarily due to higher incentives and discounts.

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Residential Units Revenue and New Homes Delivered

The table below represents residential units revenue and new homes delivered for the three months ended March 31, 2026 and 2025 (dollars in thousands):

The $33.7 million or 7.0% decrease in residential units revenue was primarily driven by higher discounts and closing cost incentives offered to buyers who originated their loans with our wholly owned mortgage subsidiary. The 6.9% decrease in the average sales price of homes delivered during the three months ended March 31, 2026 is consistent with the decrease in home closings revenue.

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):

Net new home orders decreased 6.2% over the prior year period while our average active selling communities increased by 1.9%. Revenue from net new home orders declined 16.8% consistent with the 11.3% decline in the average selling price of net new home orders and 6.2% decrease in net new home orders. The absorption rate declined by 4.7% primarily due to persistent headwinds associated with low consumer sentiment and high interest rates.

Backlog units refer to homes under sales contracts that have not yet closed at the end of the respective period, and absorption rate refers to the rate at which net new home orders are contracted per average active selling community during the respective period. Sales contracts may be canceled prior to closing for a number of reasons, including the inability of the homebuyer to obtain suitable mortgage financing. Accordingly, backlog may not be indicative of our future revenue.

Backlog revenue decreased by 34.8% year-over-year, with a 24.9% decrease in backlog units and 13.2% decrease in the average price of backlog units. As of March 31, 2026, backlog revenue increased 9.8% compared to December 31, 2025. Moreover, our spec units under construction as a percentage of total units under construction declined from 73.3% as of December 31, 2025 to 67.3% as of March 31, 2026.

Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 7.7% for the three months ended March 31, 2026, compared to 6.1% for the three months ended March 31, 2025. Our cancellation rate remained in a historically low range under 10.0% since December 31, 2022.

Residential Units Gross Margin

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

For the three months ended March 31, 2026, residential units revenue decreased $33.7 million or 7.0% while cost of residential units decreased by $8.8 million, or 2.7%, compared to the same period in the previous year. Residential units gross margin declined by 310 bps to 29.0% for the three months ended March 31, 2026, from 32.1% for the three months ended March 31, 2025. The decrease in residential units gross margin is attributable to higher incentives and discounts.

Selling, General and Administrative Expenses

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

Selling, general and administrative expenses as a percentage of revenue increased by 0.6% for the three months ended March 31, 2026.

Builder Operations

Selling, general and administrative expenses as a percentage of revenue for builder operations increased from 10.9% in the three months ended March 31, 2025 to 11.8% in the three months ended March 31, 2026 due to an increase in commission and salary expenses as a percentage of revenue. Builder operation expenditures include salary expenses, commissions, corporate allocations, and community costs such as advertising and marketing expense, rent, professional fees, and non-capitalized property taxes.

Corporate, Other and Unallocated

Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment increased approximately $2.2 million due to higher incentive compensation expenses during the three months ended March 31, 2026. Corporate, other and unallocated expenses generally include capitalized overhead adjustments that are not allocated to builder operations segments.

Financial Services

Commencing on January 1, 2026, we began reporting on our Financial Services Operations, which were previously reported within the Corporate segment, as a separate financial services segment. Our Financial Services operations include mortgage banking, title, and insurance agency operations through our wholly owned subsidiaries. The majority of the loans originated by our wholly owned subsidiary, GRBK Mortgage, are sold in the secondary mortgage market within a short period of time after origination, generally within 30 days. We also sell the servicing rights for the loans we originate through fixed price servicing sales contracts to reduce the risks and costs inherent in servicing loans. This strategy results in owning loans and related servicing rights for only a short period of time.

Operating as a captive business model primarily targeted to support our Builder operations, the business levels of our Financial Services operations are highly correlated to homebuilding, as the customers our homes continue to account for substantially all of its business. We believe that our mortgage capture rate, which represents loan originations from our Builder operations as a percentage of total loan opportunities from our Builder operations, excluding cash closings, is an important metric in evaluating the effectiveness of our captive financial services business model. The following tables present selected financial information for our Financial Services operations (in thousands):

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities increased to $1.1 million, for the three months ended March 31, 2026, compared to $0.5 million for the three months ended March 31, 2025. 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 (loss) income, net, was a $0.3 million net loss for the three months ended March 31, 2026, compared to $0.6 million net other income for the three months ended March 31, 2025.

Income Tax Expense

Income tax expense was $18.4 million for the three months ended March 31, 2026 compared to $22.2 million for the three months ended March 31, 2025. The decrease was substantially due to a lower taxable income.

Lots Owned and Under Contract

The following table presents the lots we owned or controlled, including lot option contracts, as of March 31, 2026 and December 31, 2025. Owned lots are those for which we hold title, and have yet to start vertical construction, while lots under contract are those for which we do not hold title, but have the contractual right to acquire.

(1) The Texas market.

(2) The Georgia and Florida markets.

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

(4) As of March 31, 2026 and December 31, 2025, 22.9% and 16.6% of the total lots under contract had refundable deposits.

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

Liquidity and Capital Resources Overview

As of March 31, 2026 and December 31, 2025, we had $144.9 million and $154.6 million of unrestricted cash and cash equivalents, respectively. Our historical cash management strategy includes redeploying net cash from the sale of home inventory to acquire and develop land and lots that represent opportunities to generate desired margins and returns, and using cash to make additional investments in business acquisitions, joint ventures, or other strategic activities such as stock repurchases.

Our principal uses of capital for the three months ended March 31, 2026 were home construction, land purchases, land development, repayments of lines of credit and senior notes, operating expenses, payment of routine liabilities and stock repurchases. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.

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

Our homebuilding 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 11.5% as of March 31, 2026.

Additionally, as of March 31, 2026, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 5.5%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding activities. We target a debt to total capitalization ratio of approximately 20%, 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 SEC. Net debt to total capitalization is calculated as total debt less cash and cash equivalents, divided by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash equivalents. We present this measure because we believe it is useful to management and investors in evaluating the Company’s financing structure. 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 as of March 31, 2026 (dollars in thousands):

(1) Homebuilding capitalization ratio excludes cash and debt related to our wholly owned mortgage company.

Key Sources of Liquidity

Our key sources of liquidity were funds generated by operations and funds provided by borrowings during the three months ended March 31, 2026.

Cash Flows

The following summarizes our primary sources and uses of cash during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:

• Operating activities. Net cash provided by operating activities for the three months ended March 31, 2026 was $56.3 million, compared to $68.7 million during the three months ended March 31, 2025. The net cash inflows for the three months ended March 31, 2026 were primarily driven by cash generated from business operations of $95.4 million and deferral of expense payments through a $11.2 million increase in accrued expenses, offset primarily by a $56.5 million increase in inventory.
• Investing activities. Net cash used in investing activities for the three months ended March 31, 2026 was $4.7 million, compared to $12.0 million for the three months ended March 31, 2025. The cash outflows for the three months ended March 31, 2026 were primarily used for investments in unconsolidated entities.
• Financing activities. Net cash used by financing activities for the three months ended March 31, 2026 was $65.5 million, compared to $81.6 million during the three months ended March 31, 2025. The cash outflows were primarily related to repayments of the 2028 Notes of $25.0 million and net repayments of warehouse lines of credit of $21.5 million.

Debt Instruments

Secured Revolving Credit Facility – As of March 31, 2026 and December 31, 2025, we had no amounts outstanding under our $35.0 million Secured Revolving Credit Facility. On March 31, 2026, the Company terminated its secured revolving credit facility. The termination was voluntary and not due to covenant violations or lender action.

Unsecured Revolving Credit Facility – As of March 31, 2026 and December 31, 2025, we had no amounts outstanding under our Unsecured Revolving Credit Facility. On December 10, 2025, the Company entered into the Thirteenth Amendment to this Unsecured Revolving Credit Facility. The Unsecured Revolving Credit Facility was amended (i) to reduce the SOFR spread and base rate spread, (ii) to allow the Company to request a revolving credit advance using Daily SOFR (as defined in the Unsecured Revolving Credit Facility) and (iii) for other administrative changes. The total commitments remain at $330.0 million. The maturity of all commitments under the facility have been extended to December 14, 2028.

Senior Unsecured Notes - As of March 31, 2026, we had four series of senior unsecured notes outstanding that were each issued pursuant to a note purchase agreement. The aggregate amount of senior unsecured notes outstanding was $237.1 million as of March 31, 2026 compared to $262.0 million as of December 31, 2025, net of issuance costs.

• In August 2019, we issued $75.0 million of senior unsecured notes (the “2026 Notes”). Interest accrues at an annual rate of 4.0% and is payable quarterly. The final principal payment of $50.0 million is due 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 $125.0 million of senior unsecured notes (the “2028 Notes”). Interest accrues at an annual rate of 3.25% and is payable quarterly. The remaining principal on the 2028 Notes is due in increments of $25.0 million annually on February 25 in each of 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.

The senior unsecured notes allow optional prepayment of a “make-whole” premium that fluctuates depending on market interest rates. Interest is payable quarterly in arrears.

Our debt instruments require us to maintain specific financial covenants, each of which we were in compliance with as of March 31, 2026. Specifically, under the most restrictive covenants, we are required to maintain the following:

• a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0. As of March 31, 2026, our interest coverage on a last 12 months’ basis was 32.6 to 1.0;
• a Consolidated Tangible Net Worth of no less than approximately $1,199.0 million. As of March 31, 2026, our Consolidated Tangible Net Worth was $1,915.5 million; and
• a maximum debt to total capitalization rolling average ratio of no more than 40.0%. As of March 31, 2026, we had a rolling average ratio of 13.3%.

Warehouse Facilities

GRBK Mortgage, LLC, a wholly owned subsidiary of the Company, is party to warehouse facilities to fund its origination of mortgage loans (the “Warehouse Facilities”) as follows (in thousands):

The Warehouse Facilities provide for an aggregate uncommitted amount of $140.0 million. The Warehouse Facilities are (i) secured by the underlying mortgage loans and bear interest at a variable rate based on SOFR plus a margin ranging from 1.4% to 2% and (ii) guaranteed by Green Brick. The facilities are subject to annual renewal and contain customary covenants and conditions regarding minimum net worth, leverage, profitability and liquidity. The Company was in compliance with the financial covenants under the Warehouse Facilities as of March 31, 2026.

Under the Warehouse Facilities, banks purchase a participation interest in individual mortgage loans, with GRBK Mortgage providing the remainder of the principal of the mortgage, typically up to 2% depending on the loan product. The mortgage loans, with the servicing rights, are then sold, typically within 14 to 60 days, to a third party investor and the bank is repaid its participation interest plus interest and the remainder is remitted to GRBK Mortgage. If a third party investor has not purchased the mortgage loan within the anticipated timeframes then GRBK Mortgage is required to repurchase the mortgage loan for the full amount of the participation interest plus interest.

As of March 31, 2026, we believe that our cash on hand, capacity available under our lines of credit and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months and fund our operations. For additional information on our lines of credit, senior unsecured notes, and notes payable, refer to Note 5 to the condensed consolidated financial statements located in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Preferred Equity

As of March 31, 2026 and December 31, 2025, was had 2,000,000 Depositary Shares issued and outstanding, each representing 1/1000 of a share of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”). We will pay cumulative cash dividends on our Series A Preferred Stock, when and as declared by the Board, at the rate of 5.75% of the $25,000 liquidation preference per share. Dividends payable quarterly in arrears. During the three months ended March 31, 2026 and 2025, we paid dividends of $0.7 million on our Series A Preferred Stock. On April 20, 2026, the Board declared a quarterly cash dividend of $0.359 per depositary share on our Series A Preferred Stock. The dividend is payable on June 15, 2026 to stockholders of record as of June 1, 2026.

Registration Statements

In September 2023, we filed with the SEC an automatic shelf registration statement on Form S-3 which enables us to issue shares of common stock, preferred stock or debt securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities. Under the rules governing shelf registration statements, we will file a prospectus supplement and advise the SEC of the amount and type of securities each time we issue securities under this registration statement. We have not issued any securities under this registration statement through the date of this filing.

Off-Balance Sheet Arrangements and Contractual Obligations

Land and Lot Option Contracts

In the ordinary course of business, we enter into land purchase contracts to acquire 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. As of March 31, 2026, the Company did not participate in any land banking arrangements.

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

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 seller.

As of March 31, 2026, we had earnest money deposits of $12.6 million at risk associated with contracts to purchase 8,552 lots past feasibility studies with an aggregate purchase price of approximately $358.3 million.

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, interest rates and other market factors. Since it typically takes three 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 typically 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, 2025.

Recent Accounting Pronouncements

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

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 March 31, 2026 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.

Remediation of Previously Disclosed Material Weakness in Internal Control over Financial Reporting

As previously disclosed in our Annual Report on Form 10-K/A filed on May 11, 2026, management identified a material weakness as of December 31, 2025. The material weakness stemmed from our risk assessment process not being sufficiently precise to identify, on a timely basis, that a prior immaterial conclusion related to ASC 606 Revenue from Contracts with Customers (“ASC 606”) had become material as conditions changed. Management determined that a control process was not implemented at a level of precision to ensure that an accounting standard that was not material upon adoption continued to be tested for materiality upon changes in the Company’s business practices.

Remediation of this material weakness was completed as of March 31, 2026 and included implementation of the following enhanced policies and controls:

• Management revised its accounting policy on ASC 606 to provide for explicit consideration of incentives payable to or on behalf of customers and expanded guidance regarding the characterization and treatment of these types of closing cost incentives;
• Management enhanced its quarterly “Accounting Disclosure Checklist” control to add an additional entity-level control that specifically includes a reassessment of previously adopted accounting standards to our financials and

includes a documented quarterly assessment of (a) new accounting guidance and (b) changes in the Company’s business practices and significant transaction types to determine whether previously adopted accounting conclusions remain appropriate;

• Management has implemented communication processes at the corporate level and throughout all the builders to ensure that all individuals in control positions understand the correct interpretation and application of ASC 606 with respect to cost incentives and variable consideration; and
• The Company has appointed new individuals in key roles within the finance and accounting department.

Changes in Internal Control over Financial Reporting

Except for the material weakness and remediation discussed above, during the three months ended March 31, 2026, 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.