GRBK - Earnings call transcript Q4 2024 | Green Brick Partners, Inc.

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Operator

Thank you for standing by. My name is Janine, and I will be your lead operator for today. At this time, I would like to welcome everyone to the Green Brick Partners, Inc. Fourth Quarter 2024 Earnings Call. [Operator Instructions].

the to turn Financial Costello, now Officer. will call Rick over Chief I ahead. please Sir, go

Richard Costello

and afternoon, for Full XX, Quarter Call Green the and XXXX. December ended Good Year to Fourth welcome Brick Partners' Earnings

hold will we remarks, today's a session. Q&A Following

recorded As available will website. for is company's be the and a on call reminder, this being playback

website accompany presentation In and also investors.greenbrickpartners.com. addition, will a available at is webcast today's on the company's

myself, Executive Rick today is Chief Operating Jim Officer; Chief Jed call and Chief Dolson, the On Officer; Officer. Co-Founder and Costello, Financial and President Brickman,

to to has and other and Some that SEC can call make. company's The of include in release comments the also In the is no detailed its XXXX, company forward-looking, information presentation as differ are it these the in and available February expectations statements results XX, yesterday website. be that discussed statements company the filings, on including from today, this and the the the metrics. of for risks may its company's the operational obligation release cause Regulation on and material any beyond. earnings G expectations. These and XXXX of company yesterday's press may financial required reconciliation by company's metrics financial update non-GAAP found forward-looking issued The information the future

With over that, call I'll the Jim. Jim? to turn

James Brickman

Rick. you, Thank

Green anniversary record to tenth report results and celebrate full we quarter pleased fourth extremely are We a Brick's public XXXX as as company. year

Year-over-year while generated fourth which sales record the again communities the from quarter million closing by to revenue XX%. closed once selling the $XXX adjacent and in increased During infill orders home fourth of XX% XX% we X,XXX XX% grew submarkets. infill homes grew average a net and quarter, over year-over-year were

best history. $X.XX, rate year fourth fourth the company's the environment. to in quarter attributable as history we XX% to the million in milestones year-over-year EPS grew achieved despite during XX% income to Green mortgage XXXX records $XXX challenging both for and several Brick diluted quarter was increased Net company any a

annual XX%. $X.XX last diluted record EPS by year's the Our beat of EPS

XXXX, growth and Since achieve Brick expansion. to able been Green substantial has

adjusted Here in peers. XXXX, XXXX our home Home in that for $X.XX performance XXXX, achievements. generating recorded EPS is to the homebuilding after-tax grew of to reversal almost reserve $X.XX impact closing growth public after units in the excluding X,XXX of exceeded gross rate improved in XXXX our Full in to annual highest XX% to improvement some diluted level margin with Diluted margins resulting in closings the we XXXX a XX%. a sixfold from XX.X% XXXX, in $X compounded year revenues XXX that time. among that are of from homebuilding EPS gross $X.XX in first a representing from both XX.X% warranty of a QX, billion grew $X.XX

the third We first Trophy is own sixth and housing in the the largest largest on Homes, homebuilder XXXX, Signature nation's home are which in closed in now on annual starts. market largest its XXXX DFW. started the in builder based its DFW

land the at at the XXXX. and X,XXX level lowest capital end approximately over XX,XXX end total land of while XXXX. of significantly to the increasing of eightfold have year-end lots XXXX, lot we almost Furthermore, debt achieved ratio end from expansion to Total was our This grown has low a since which maintaining was of lots strengthened XXXX inventory position. the at XX.X%

exceptional our and and team. of the reflect balance of quality sheet, achievements of These business strength dedication the our services product the our model and

their to Their XXX to in like I gratitude express a approximately from our and crucial XXX commitment in for workforce XXXX. role XXXX success has Our contributions. employees significantly has invaluable my would expanded sincere in played

and housing fundamentals specific have for to provided our tailwinds have Brick Green key success several there performance. that favorable driven factors industry, we believe While exceptional the are general

Land has cornerstone and always been the advantages. biggest of our our one business of strategic

believe land industry. years, one and several of have last in we our best positions the we lot assembled the Over

the any real asset, with As estate location most. matters

Our footprints Atlanta, markets. some fastest-growing both and in residential robust in are from benefit concentrated Dallas-Fort the notably healthy Worth of job country, markets trends and the which demographic

primarily limited supply where Additionally, adjacent competition and on desirable. more homes we submarkets are infill are is more constrained, focused infill is more and

of planned builders. which our industry-leading light gross operating margins often our is able model, costs Brick master drivers markets effectively the our The we significant and associated XX% over Secondly, develop and subsidiary our our By and land sheet, we create lines, and key large ability retail balance scarcity delivery opportunities control been to self-develop lots. avoiding XX% our with communities land the land in have of time returns. Green which our of own of with residential on prices development developers we for lot are on to land, and

we Since start XXXX, only of in exception the XX% have X homebuilding gross of generated quarters. the margins with excess of

equity Return return XX.X% over assets the on on equity assets and last X on return in and on XXXX respectively. averaged and year was full XX.X%, years return Our was XX.X% XX.X%.

more the be our aspire our in We been community just of Lastly, to homebuilder have our expense returns at superior than not another submarkets. achieved quality.

better development community amenities, to capital area design, significant appreciation. aesthetic contribute allocate value emphasizing common and than other landscaping, that superior long-term enhanced We features

builders a market building industry have of Over and the and and and establishing a governments, navigating awards competitive the developer. strong municipalities fosters prestigious and as proven local the complexities builder earned reliable sellers, numerous If preferred Brick our reputation in Green reputation entitlement won in products. the This has partner trust invaluable land superior land development process. years, among the the of

long-term we second the our housing enter optimistic the challenges demand mortgage we As elevated by despite current about decade, posed remain rates.

million demand. the units, million prime existing market while Furthermore, millennials significant X by will at of inventory fuel that to levels remain remains years entry housing home expect X the into to the Gen lows. historic their undersupplied and buying We market Z an estimated home continue

our this our positioned well land are potential of options further cater segment particularly the Trophy housing homebuyer We more superior positions, leveraging largest and brand to capitalize through market. specializes demand, the affordable that to that incremental on

over Rick, that, turn provide detail results. who I'll will now regarding to it more With our financial Rick?

Richard Costello

company Thank Brick's XXXX XQ highest you, increased of Trophy closings at total the Home was the XX% Closing for fourth of company to X,XXX $XXX,XXX history year-over-year. in a essentially revenue in versus million, driven as 'XX. closings ASP quarter of Jim. were closings QX record. flat units, revenues Green $XXX up QX by Record XX% XX.X% volume in represented year-over-year

reflected below Trophy buyer move-up as average first-time sales perimeter the and an first-time in ASP company more Trophy inventory locations. buyer sells

gross strong quarter basis year-over-year. fourth a We margins during points continue of XXX to XX.X%, generate

the of positive periods This quarter, we gross spend, our legislative $XX.X to warranty reduction risk our structural This various reflects of adjustment to our our During which previously to and analysis actual subcontractors. anticipated. than a our estimated fourth less was adjustment program or insurance compared based warranty enhancements our also margin. reserve to exposures our impact with XXX including points to reductions basis quarterly warranty compliance reduced in was warranty reserve resulted accruals, due factors, changes million a which due in homebuilding of on

spend peers remain versus end of warranty based warranty on our adjustments, the these after high estimated reserves actual at our levels. reserves Even

XX The earnings to per positive the rates. QX year-over-year Green grew attributable the higher points increased XX.X%. to any offset Net XX% due for revenue and warranty share the quarter records quarter year-over-year for of income per to of Both XX% partially incentives $X.XX to million to basis quarter. impact diluted fourth mortgage slightly a as share. Brick adjustment fourth $XXX company for by percentage was improved elevated in unit SG&A residential

billion, For we delivered a full closing than representing the the revenues Generating which and more company of X,XXX growth homes, record of was year-over-year. for XXXX. home year, XX.X% XX.X% units $X.XX

Homebuilding and one basis in per home $X.XX to XX.X% a XX.X% Net full among the of to Brick company public grew income the million, new history. rates homebuilders. margin XXX, highest record. during to the growth for fourth the increased Green Net which $XXX gross to share, diluted attributable of XXXX quarter also XX.X% year-over-year EPS to orders XXX highest year-over-year points increased grew was year, XX.X%

full the an sales new X,XXX our net home totaled XXXX, of For year increase year-over-year. X.X%

fourth Trophy builds of spec XX.X% to Backlog decreased of to end year-over-year of the of percentage to the quarter needs the to than backlog million. buyers. Trophy XX%, increase continue revenue represent revenue at it overall at percentage has continued homes the its $XXX a low meet less as

remained delivered ASP backlog result, average on a price As of higher sales than homes. our $XXX,XXX

fourth the communities, active which selling Our at quarter to were per the X.X% trophy of homes communities. of year-over-year X.X up active count 'XX. pace XX% selling XXXX over Sales for community increased XX% which QX was community, was average end XXX

X.X%, low previous with cancellation Our lowest units XX% increased than to under in rate at XXXX X,XXX homes. among public the one at homes construction started XX% remained homebuilding starts peers. year-end the total more X,XXX We XXXX. year Total of for fourth in quarter the

At our homebuilding total XX.X% our net was the was end XXXX. debt to mid-cap capital among to debt of XX.X%, of the the ratio peers. points year-end leverage fourth was year-over-year the total quarter, lowest public and which our since basis down only ratios to XXX lowest This was total level and capital ratio small

debt outstanding fixed of December rate of is As our with X.X%. of an rate XXXX, XX, interest XX%

that, With over to I'll Jed. turn now it Jed?

Jed Dolson

Rick. you, Thank

any X.X% XX% rates. to of in with December. aggressive both the in quarter orders averaged December from a softening in November fourth increased in up net quarter more impact for of fourth X.X%, XXX, new seasonality the and the incentives quarter, company to and the responded October year-over-year history. but previous rising demand Our in We incentives fourth due was Overall, decelerated mortgage robust, Demand quarter. to record for

X.X% of pronounced quarter, strong rate move-up incentive Homes, most fourth exhibit new persistent communities. to During increase contributing mortgage targets on The effect cater rate reflecting slightly Trophy average. in volume. the The cancellation the well, rates home which a housing Normandy continued for its necessitating rising and Trophy end primarily company buyers orders only the higher entry-level an net more the for levels market programs than to continued first-time lock-in of DFW to existing perform submarkets. by from impact mortgage incentives XX% infill Trophy, the decreased homebuyers Southgate buy-down in which move-up in was market lower performance, experienced and and sequentially

Austin price market Similar trends a the buyers. with and orders home Atlanta modest healthy currently strong were sells homes incentive in increases. where observed Trophy entry-level remained to

pace, spec As season, diligently incentive enter levels selling and inventory sales our are we the we monitoring starts. spring

with will industry-leading needed. as to us our margins home adjust greater provide gross believe incentives and flexibility prices We

joint mortgage an prior buyers' which new score Our our fourth a venture, healthy. fourth remained closed financial of quarter Applicants that the average during at the of in ceased debt-to-income profiles ratio FICO quarter. and accepting using applications XX% XXX

through a first wholly-owned the New anticipated of closings in XXXX mortgage financial subsidiary with resilience. new demonstrate applications comparable quarter

allocation. capital to Turning

full In year million land spend on development Our on spent $XXX million was $XXX land increase plan over spend we lots to million. on to with our acquisition $XXX approximately by finished Atlanta over XX% development. XXXX,

Florida. position. XX% As land we and a XX% basis. earlier, by total with strong X% lots a net Jim year mentioned lots gross in on new end added controlled those Georgia of increased we of and in in over On lots a owned X% Texas, at have XX,XXX approximately the XX,XXX with basis, entered XXXX to the Year-over-year,

Trophy, our XX% owns total primary of engine lots. growth approximately

pipeline lots approximately the on Excluding long-term XX over XX,XXX start supply and X years months. current of based communities, last lot communities provides non-master our our in pace

and self-developed. be Additionally, controlled our are over expected of lots to current owned inventory XX% of

we're At lots, existing the we infill lot approximately the have infill opportunistic acquisitions end and of X,XXX market taking the remained within are more areas. had land current on adjacent land With land approach competitive land position, of a finished where XX% which prices year, and over our sticky.

objective with We will value. our the allocation strategy maximizing capital shareholder of evaluate to continue

shares. to $XXX the Board recently our plan buy of repurchase common back to new million with up a Commensurate authorized share strategy,

is Furthermore, We geographic brand. currently market. the Trophy XXXX, In progress closed Trophy and continue to this its substantial the Houston anticipate inaugural market, fall. lots for XXX we through also in Austin. X the over Trophy community expand newest are in open this our Houston. selling have active to homes first of making communities footprint We We in summer, our sales in phase expected completing

brand's in about largest are We of the the one United markets excited expanding homebuilding the presence States. in Trophy

X.X bargaining of are pleased the trades we our still some cycle in quarter the times shorter cycle the costs X Lastly, power and housing averaged we certain and With about seeing stable, Not year. many only completed are only fourth declining time than in in X.X the with weeks Trophy of markets. construction on labor approximately was in Dallas on for stores our materials homes months but overall at construction the beginning progress markets, months. side. and

to With over that, I'll Jim it remarks. for turn closing

James Brickman

you, Thank Jed.

conclude me despite that I'm that resulted in saying environment team's affordability operating rate year of has an Let by hard record-breaking proud this work incredibly own elevated challenges for many our buyers. in that creates mortgage

in success strong company foundation public growth. a future us past a the Our decade as for with provides

Thank continue team and to our invest will We continued exceptional to for business our deliver value shareholders. in support. to you your

we open remarks, prepared for and our now the line concludes questions. This

Operator

session. Instructions]. begin the now Thank Ladies you. will gentlemen, and question-and-answer we [Operator

Carl of the Sir, from please Our line question go ahead. comes BTIG. from

Carl Reichardt

I to sales curious, seasonal, We January have been morning of first talk am of peer some had having February to Rick, about of incentives or little through that a how incentives. worked all, particularly related talked beginning in Jed come builders on a spec. a that to some bit you. in, trends this or and Nice to Jim perspective, you

seeing guys far shape you order-wise so are quarter? in first how up things So the

Jed Dolson

Mortgage I'd Carl, February. similar sure. on so year the a front off start Yes, rates last say far. to we're sales in dropped have very from

to much So yes, not rate costing fairly have the down incentives buy last ticked because seeing year. But it's down a spring actually as similar we're currently. to

Carl Reichardt

helpful. Okay. that. That's I appreciate

James Brickman

our circle AAA inner of do markets, are low. still a all the around very locations, incentives of you circle If

XX% market If you B+ And or XX%. X%. circle, be move a or into be X%, you go into next there C a the B it could if location, could

Carl Reichardt

Yes.

that. wanted to then spend. ask appreciate about I And development Okay. little a I bit the

same is XX% assume big of assume XX% you lots, that's increase that's number -- I not a So the cost lots, inflation. really for and I more but XX% not

a XXXX. some count but a guys, growth? see So of is could big for it's to to late 'XX. bit. in little you community process mean of which we'll increase substantial be this sort that and just really a It's lead lot break down deliveries Does don't indicate substantial certainly it of know or seem you, could that $XXX late million sort year, increase the coming in going does and that if I growth to Or in you number for into this year

James Brickman

a at really That's a a the it good question, revenues lot to difficult investors Carl. I how highest level, time have think a And long from understanding contracting takes lot. from getting

that? dollars right to is land, in all the our lot so contract So unfortunately, to a analyst, and doesn't grow. our development. lot land things prior spending to lumpy, that's high when It's color a spend create you X of we revenues to takes investments coming fruition our years it linear getting about land there. progression of from how for it a reason is want do add in We're And now. in from and Jed, land an business

Jed Dolson

a up. in 'XX, in That putting 'XX this little in land year Carl, will, some lot community that you're count future, right to in bit year. seeing dollars of land development go very start and the on We -- bought next that we flow will and at Yes. near point the a

James Brickman

But it's lagging a investment.

Operator

[Operator Instructions].

the comes question from of line Carl. Our

Carl Reichardt

wasn't expecting No, that. I

here. more one do I'll Okay.

X So the on -- more. or maybe

lot. or into SG&A grew not might XXXX you On count there. as to get guys a the I'm the store bit begin to you Knowing leverage side, better that curious little whether a think

You're of year. still revenue to some leverage this able get

thinking much are you into leverage into 'XX probably I is about -- there. you So getting the guess, might to about Rick, 'XX moving That's for headcount how how headcount? about are and How ask. anticipate you person and talked you thinking

Richard Costello

Yes. certainly, with time. improvement. different It's from over they going that efficient One as that this which at a we continue our mode means kind of We're grow, standpoint see high-growth situations. we're right a such not personnel as total the trophy X a will of in percentage is a in time, at predominance numbers that tale probably an there's of of operation more to

kind when it's in just a those closings and houses There's to But Jim delayed story related be Jed happen. land increase will and that describing. of going to the of were impact

come increase could unanswerable rates little to bit we see modest continue lower interest really, can on side create a is have that rate down, incentives. or the And is of move more there. more to So Trophy, we have incentives which the a interest rate-sensitive buyer, being higher the have to

will in margin, be no So there idea. an offset

James Brickman

about in Carl things on that building thing that other never are we're costs -- the developing out of in really the XX% lot that at Carl, have calls we're of those really we of you one the And when is to a look close talked SG&A. we added right prior now. lots pointed

compare XX.X% you having SG&A. when So us, we're still

Some a of includes development our SG&A other are not land they bite. some those that costs are capitalized. go particularly big But as land having companies group

Richard Costello

the impact financial have revenues. we're of services look range if in services financial title mortgage is nascent other of probably at one And the stages on side, company. the both Carl, just mortgage and opening companies, X% here with peers who But up on our average full about is the of you

but an into XXXX, going some we're it there. something impact get that really as from going is that of not so positive source revenue particularly part forward. you'll we to the additional that And That's see SG&A, move wasn't

Carl Reichardt

that you half for half 'XX Would Trophy split stay likely year. a a course split between Green throughout you Houston project know idea that of And let's sort to today? as mix the is sort X assume here on. and incentives similar are be and the on the of mix core similar of similar of just coming Brick 'XX sort I is then between because of And Trophy, Okay. XX-XX

Jed Dolson

Yes, this to at we're compared projecting last similar year. volumes year Trophy

Operator

[Operator joining our no That this call. Instructions] for There are time. conference you questions concludes at today. Thank

now may disconnect. You

Green Brick Partners (GRBK) 27 Feb 252024 Q4 Earnings call transcript