Green Brick Partners(GRBK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income attributable to Green Brick for Q4 was $78 million, or $1.78 per diluted share, a decrease of 24.5% year-over-year [5][10] - Home closings revenue for Q4 was $550 million, down 1.3% compared to the same period last year [9][10] - Home building gross margin decreased 490 basis points year-over-year to 29.4% [6][10] - For the full year, net income attributable to Green Brick decreased 18% to $313 million, and diluted earnings per share declined 16.3% to $7.07 [11] Business Line Data and Key Metrics Changes - The company delivered 1,038 homes in Q4, a 1.9% increase year-over-year, marking a record for any fourth quarter [5] - Net new home orders during Q4 were 883, slightly up year-over-year but down 1.7% sequentially [11] - Average sales price for homes was $530,000, down 3.1% year-over-year [10][11] Market Data and Key Metrics Changes - Discounts and incentives increased as a percentage of residential unit revenue to 9.2% from 5.2% year-over-year [9][10] - The average FICO score for loans closed by Green Brick Mortgage was 746, with a debt-to-income ratio of 40% [18] Company Strategy and Development Direction - The company is focused on maintaining an investment-grade balance sheet to support expansion in high-volume markets [7] - Green Brick aims to grow its business, particularly through its Trophy brand, with significant opportunities in DFW and Austin [7][8] - The company is strategically positioned to adjust pricing as needed to meet market demand while maintaining sales pace [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing affordability challenges and a weakening job market impacting consumer segments [17] - The company remains optimistic about long-term prospects, citing a strong land position and diverse product offerings [23] - Management noted that while overall market conditions are challenging, they are well-positioned to navigate these challenges [6][8] Other Important Information - The company repurchased 359,000 shares for approximately $23 million in Q4, with a total of 1.4 million shares repurchased for approximately $83 million in 2025 [13] - The net debt to total capital ratio decreased to 8.2%, indicating strong financial health [14] Q&A Session Summary Question: Can you provide insights on gross margin decline drivers? - Management indicated that the decline was primarily driven by higher incentives and discounts across all regions [25] Question: What is the current state of pricing power? - Very few communities were able to raise prices, but there is stronger buyer interest in the spring [66] Question: How is the inventory level compared to competitors? - The company is carrying higher inventory levels, especially on finished specs, and is keeping pace with competitors [42][47] Question: What is the outlook for land acquisition spending in 2026? - While specific spending amounts were not disclosed, management anticipates higher land spend this year [52] Question: How does the company view the spec versus build-to-order strategy? - The company plans to continue increasing spec inventory as it aligns with buyer demand [62]