Yahoo Finance Green Brick Partners Inc (GRBK) Q1 2024 Earnings Call Transcript Highlights: Record Earnings ...
Diluted Earnings Per Share (EPS): $1.82, a record for any first quarter in company history.
Homebuilding Gross Margin: Reached a new company high of 33.4%.
Book Value Per Share: Grew 27% from a year ago to $29.67 at the end of Q1 2024.
Return on Equity: Attractive at 25.5% for the quarter.
Debt to Total Capital Ratio: Decreased 550 basis points to 18.3%.
Net Debt to Total Capital Ratio: Dropped to 8.2%.
Net Income: Increased 30% to $83 million.
Revenue from Home Closings: $443 million for Q1 2024.
Net New Home Orders: 1,071, the second highest in company history.
Active Selling Communities: Increased 24% year over year to 98.
Backlog Value: Increased 32% year over year to $725 million.
SG&A as Percentage of Revenue: Increased 120 basis points year over year to 11.4%.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Record diluted earnings per share of $1.82 for Q1 2024, the highest for any first quarter in company history.
Achieved a homebuilding gross margin of 33.4%, leading the industry and marking a new company high.
Strong balance sheet with a net debt to total capital ratio of 8.2% and total debt to total capital ratio of 18.3%, one of the lowest among public homebuilding peers.
Increased home deliveries by 8% year-over-year to 821 homes, driven by increased levels of finished and finishing spec home inventory.
Net new home orders were 1,071 for Q1 2024, the second highest in company history, demonstrating strong demand despite higher interest rates.
Negative Points
Average selling price (ASP) declined 8.6% year-over-year to $540,000, influenced by the closing out of infill communities and opening new communities in surrounding infill adjacent areas.
Selling, General and Administrative expenses (SG&A) as a percentage of residential units revenue increased by 120 basis points year-over-year to 11.4%, primarily due to payroll and incentive compensation growth.
Equity income from unconsolidated entities decreased to $2.6 million in Q1 2024, down 38.6% year-over-year, following the sale of the company's interest in Challenger Homes.
Revenue from new home orders was slightly down year-over-year to $613 million due to the lower ASP.
Despite strong sales performance, the quarterly absorption rate moderated from record levels in Q1 of 2023.
Q & A Highlights
Q: Can you discuss the expectations for community count and starts for the rest of the year? A: Rick Costello, CFO, mentioned that while the company has seen a good pace of starts that has grown each quarter, they are not ready to issue specific guidance on community count.
Q: What are the current cycle times, and do you see them improving? A: Jim Brickman, CEO, noted that cycle times might decrease slightly as Trophy, which has shorter cycle times, grows. Jed Dolson, COO, added that Trophy's cycle time in Dallas was under four months in Q1 2024.
Q: Are there any expected changes in SG&A leverage, particularly with the staffing increases for growth? A: Jim Brickman explained that some of the SG&A was impacted by incentives in the quarter. Rick Costello added that as growth in starts translates into revenue growth, SG&A should improve.
Q: What is the outlook for gross margins given the current homebuilding environment? A: Jim Brickman stated that they expect to maintain their margins as incentives have not increased and they have managed to control lot costs effectively through self-development.
Q: How is the sales absorption rate performing, and what are the expectations moving forward? A: Rick Costello expressed satisfaction with the Q1 sales rate, noting that while it was a bit lower due to less finished inventory, the performance was strong compared to peers.
Q: Can you provide insights on cost inflation and land development costs so far this year? A: Rick Costello and Jim Brickman noted that they are not seeing significant increases in land development costs, and they have managed to maintain stable costs for their infill projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
