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 [10] - Home closings revenue for Q4 was $550 million, declining 1.3% compared to the same period last year [9] - Home building gross margin decreased 490 basis points year-over-year to 29.4% [5][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 [4] - 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] 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] - 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 aims to maintain an investment-grade balance sheet to support expansion in high-volume markets [7] - Focus on growing the Trophy brand, with significant opportunities in DFW, Austin, and Houston [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] - Despite macroeconomic headwinds, the company believes its core strengths will enable it to navigate challenges effectively [6] - Management remains optimistic about long-term prospects, citing a strong land position and diverse product offerings [24] 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 company maintained a robust cash position of $155 million and total liquidity of $520 million at the end of the quarter [16] 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 [26] Question: What is the current state of inventory levels? - The company reported carrying higher inventory levels, especially on finished specs, with roughly five finished specs per community [43][44] Question: How is the spring selling season progressing? - Management noted that February showed strong sales momentum following a challenging January due to severe weather [40] Question: What is the pricing power in the current market? - Very few communities were able to raise prices, and the company is still working through inventory while competing with other builders [67][68] Question: How are land prices trending? - Prices for desirable land remain sticky, while weaker demand has led to lower prices for less desirable lots [71]