Green Brick Partners(GRBK) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2021, total revenues reached a record $452 million, an increase of 78% from Q4 2020, with residential units revenues increasing by 70% year-over-year [9][11] - The company delivered 823 homes in Q4 2021, representing a growth of 41% over Q4 2020 [9] - Full year 2021 total revenues were$ 1.4 billion, a 44% increase from 2020, with diluted EPS of $3.72, growing 66% over 2020 [14][16] - Gross margin for Q4 2021 was 26.2%, up 110 basis points from Q4 2020, while the full year gross margin was 26.4%, up 220 basis points from 2020 [10][15] Business Line Data and Key Metrics Changes - The company’s focus on spec homes led to an increase in spec units under construction from 28% to 39% by the end of 2021 [19] - The average sales price (ASP) for Q4 was$ 509,000, up 21.3% year-over-year, while the full year ASP was $461,000, up 10.1% [21] Market Data and Key Metrics Changes - The company is expanding into the Austin market, purchasing 383 acres for a new community, Trinity Ranch, expected to start construction in early 2023 [30] - Resale inventory levels are at all-time lows, with Austin having only 0.5 months of supply, contributing to strong demand for new homes [35] Company Strategy and Development Direction - The company plans to invest$ 285 million in land development to deliver over 4,700 finished home sites across 43 communities in 2022 [26] - The strategy includes a disciplined approach to capital allocation, focusing on lot growth and expanding into new markets [25] Management's Comments on Operating Environment and Future Outlook - Management believes that the current demand for homes is strong, despite rising interest rates, and anticipates continued price increases due to limited resale inventory [36][58] - The company expects double-digit growth in ASP and community count for 2022, with a focus on maintaining gross margins [46][48] Other Important Information - The company was named to Forbes' 2022 America's Best Small Companies list and Fortune's 2021 fastest-growing companies list [11][17] - The company completed a $50 million offering of Series A preferred shares and a$ 100 million note purchase agreement [12] Q&A Session Summary Question: Guidance for 2022 closings and ASP - Management expects double-digit growth in ASP and community count, with some lumpiness due to product mix [46][48] Question: Sustainability of gross margins - Management does not anticipate a reduction in margins and believes there is potential for improvement [50] Question: Impact of rising interest rates on demand - No increase in incentives has been observed, and demand remains robust despite rising rates [54][56] Question: Community count and absorption rates - Community count is expected to increase in the second half of 2022, with higher absorption rates for Trophy communities [87][88] Question: Cancel rates in Q4 - The increase in cancel rates was a one-quarter aberration, with rates returning to lower levels in early 2022 [76][78] Question: Land sales and margins - Recent land sales had low margins due to an exchange with another builder, but overall land sales are expected to improve [110] Question: Tax rate for 2022 - The tax rate is expected to be closer to 24% for 2022 due to changes in state taxes [106]