Green Brick Partners(US:GRBK)2022-05-04 20:24Financial Data and Key Metrics Changes - The company reported a 68% year-over-year increase in total revenues to $394 million and a 135% year-over-year increase in EPS [7][10] - Gross margins reached 27.8%, the highest since Q1 2015, with a year-over-year increase of 240 basis points [14][15] - Annualized return on equity (ROE) was 28.8%, up from 25.9% in 2021 [16] Business Line Data and Key Metrics Changes - Residential units revenue also increased by 68% year-over-year to $365 million, driven by higher closing volume and average selling prices (ASPs) [10] - The company delivered 658 homes, a 27.5% increase compared to the previous year [10] - ASPs increased by 32% year-over-year to $552,000 [10] Market Data and Key Metrics Changes - The backlog of homes at the end of March was 1,423, with an ASP of $609,000, up 24% year-over-year [11] - The company noted strong demand in its markets, particularly in infill locations, which accounted for over 80% of closing revenues [33] Company Strategy and Development Direction - The company is focusing on disciplined capital allocation, investing in lot growth, and expanding into new markets while maintaining a 20% internal rate of return [21][22] - The company plans to start home construction in Austin in early 2023, reflecting its strategy to enter high-growth markets [21] - The management emphasized a focus on price over pace to sustain gross margins [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that while higher mortgage rates may impact demand, demographic shifts and low existing housing inventory will sustain a healthy housing market [29][30] - The company believes that the shortage of both resale and new single-family homes will likely persist, providing a favorable environment for growth [35] - Management expressed confidence in the company's ability to enhance shareholder value despite market challenges [20][35] Other Important Information - The company completed a $50 million stock repurchase program, representing 4.8% of outstanding shares, and plans to continue buybacks with an additional $100 million authorized [26][27] - The company welcomed a new Independent Director to its Board, enhancing its governance [36] Q&A Session Summary Question: Supply chain outlook - Management indicated that the supply chain situation remains stable, with improvements in tracking shipments, but challenges persist due to international shipping issues [42][43] Question: Trophy brand performance - Trophy performed exceptionally well in A and B market locations, with strong sales metrics compared to other brands [47] Question: Rate locks and buyer activity - Approximately 40% of buyers have rate locks, and the company is monitoring this closely [72] Question: Pricing power in a rising rate environment - Management believes pricing power remains strong in upper infill locations, while being more moderate in perimeter locations [106] Question: Built time and supply chain issues - Built times are elongated due to ongoing supply chain challenges, particularly in labor [108]