Green Brick Partners(GRBK) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved an annualized return on equity of 30.2%, a record high, with total revenues reaching $1.1 billion on a trailing 12-month basis [7][34] - Homebuilding revenues increased by 54% from Q1 to Q2, and earnings per share (EPS) doubled [7] - Gross margin reached 26.8%, up 360 basis points year-over-year and 140 basis points from Q1 [9][31] Business Line Data and Key Metrics Changes - Lots owned and controlled increased by 133% year-over-year, totaling 21,351 lots, marking a 48% increase since the start of the year [8][16] - Units under construction rose by 95% compared to June 30, 2020, with a 40% increase over the past six months [18] - The Trophy brand saw a 315% increase in units under construction over the past 12 months, contributing significantly to overall growth [18] Market Data and Key Metrics Changes - The Dallas-Fort Worth and Atlanta markets experienced a 59% and 53% decline in active home listings, respectively, indicating strong housing demand [14] - Population growth in Texas, Colorado, Florida, and Georgia has been robust, supporting housing demand in these markets [12] Company Strategy and Development Direction - The company focuses on land development and has limited available homes for sale to maintain pricing power, which is expected to sustain margins [10] - The strategy includes expanding the entry-level segment through the Trophy Signature and CB JENI brands, which are expected to grow rapidly [11][36] - The company plans to continue its conservative approach to land acquisitions while maintaining a low debt-to-capital ratio [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue and earnings growth, citing strong demand and a favorable economic environment in core markets [7][15] - The company anticipates that the imbalance between housing demand and supply will persist, providing ongoing pricing power [14] Other Important Information - The company has a strong emphasis on self-developing lots to avoid high premiums from third-party developers, which is expected to enhance margins [16] - The company plans to provide more insights into its growth strategy and operational initiatives during an upcoming Investor Day [10][41] Q&A Session Summary Question: How does the company view sales for the remainder of the year? - Management indicated that they are experiencing normalized starts and are intentionally delaying sales to capture higher margins due to strong demand [45][46] Question: What price increases were implemented during the quarter? - The company raised prices by 3% to 5% per community per month and noted a significant drop in lumber costs, which should enhance margins [49][50] Question: Can you discuss the decline in new home orders from Q1 to Q2? - Management explained that the decline was intentional, as they chose to limit sales to maximize margins in a rising price environment [62][63]