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Green Brick Partners, Inc. (GRBK)·Q4 2024 Earnings Summary

Executive Summary

  • Record quarter: revenue $567.3M and diluted EPS $2.31, up 26.0% and 46.2% YoY; homebuilding gross margin 34.3% (+290 bps YoY) aided by a $13.2M warranty reserve reversal (~230 bps) .
  • Demand resilient: net new home orders rose 29.3% YoY to 878; average incentives increased to 6.4% amid higher mortgage rates; cancellation rate remained low at 7.8% .
  • Backlog softened: backlog revenue fell 10.7% YoY to $495.9M; backlog units declined 13.2% YoY to 668, reflecting Trophy’s spec-heavy model and faster cycle times .
  • Capital allocation catalysts: Board increased share repurchase authorization to $100M; 2025 land development spend planned at ~$300M (+46% YoY); Trophy to open first Houston community in fall 2025 .
  • Balance sheet strength: debt to total capital 17.2% and net debt to total capital 10.7% at year-end; 93% of debt is fixed at 3.3% .

What Went Well and What Went Wrong

What Went Well

  • Record profitability and margins: “Diluted EPS increased 46% YoY to $2.31… homebuilding gross margin 34.3%” with adjusted margin 32.7% after removing the warranty impact .
  • Operational execution: 1,019 homes closed (+23.5% YoY); Trophy drove scale with 54% of net new orders and continued rapid cycle times (3.4 months in Dallas) .
  • Strategic positioning: “We entered 2025 with total lots owned and controlled up 31.9% YoY… 106 active selling communities” and >80% revenues from infill/infill-adjacent submarkets .

What Went Wrong

  • Incentives pressure: average incentives rose to 6.4% vs 5.9% in Q3 due to elevated mortgage rates, modestly offsetting margin gains from the warranty adjustment .
  • Backlog decline: backlog revenue fell 10.7% YoY to $495.9M; backlog units down 13.2% YoY to 668, partly reflecting spec orientation and faster turn of inventory .
  • ASP mix effects: average selling price on net new orders decreased 4.4% YoY to $536.3K as Trophy’s entry-level mix grew; closing ASP was flat but near lower end of prior expectations .

Financial Results

MetricQ4 2023 (oldest)Q3 2024Q4 2024 (newest)
Total Revenues ($USD Millions)$450.4 $523.7 $567.3
Diluted EPS ($)$1.58 $1.98 $2.31
Net Income Attributable ($USD Millions)$73.0 $89.1 $103.8
New Homes Delivered (units)825 956 1,019
Residential Units Revenue ($USD Millions)$448.5 $522.9 $556.9
ASP of Homes Delivered ($USD Thousands)$543.5 $546.9 $546.5
Homebuilding Gross Margin %31.4% 32.7% 34.3%
SG&A % of Residential Units Revenue11.4% 11.0% 10.9%

Segment and revenue mix:

Revenue ComponentQ4 2023 (oldest)Q3 2024Q4 2024 (newest)
Residential Units Revenue ($USD Millions)$448.5 $522.9 $556.9
Land and Lots Revenue ($USD Millions)$1.9 $0.8 $10.5
Total Revenues ($USD Millions)$450.4 $523.7 $567.3

KPIs:

KPIQ4 2023 (oldest)Q3 2024Q4 2024 (newest)
Net New Home Orders (units)679 877 878
ASP of Net New Orders ($USD Thousands)$561.2 $518.1 $536.3
Cancellation Rate (%)7.2% 8.5% 7.8%
Absorption per Avg Active Community (quarter)7.6 8.4 8.3
Avg Active Selling Communities (count)89 105 106
Backlog Revenue ($USD Millions)$555.2 $581.8 $495.9
Backlog Units (units)770 809 668

Margin disclosure:

Margin MeasureQ4 2023 (oldest)Q3 2024Q4 2024 (newest)
Homebuilding Gross Margin % (GAAP)31.4% 32.7% 34.3%
Adjusted Homebuilding Gross Margin % (Non-GAAP)32.1% 33.5% 32.7%
Warranty Reserve Adjustment (Q4’24 impact)——$13.178M; ~230 bps

Balance sheet and leverage:

MetricFY 2023 (oldest)Q3 2024FY 2024 (newest)
Debt / Total Capital (%)—16.4% 17.2%
Net Debt / Total Capital (%)—12.5% 10.7%
Cash and Cash Equivalents ($USD Millions)$179.8 $80.1 $141.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Land Development SpendFY 2025N/A (no prior numeric guidance)~$300M planned (+46% YoY) Raised vs FY 2024 actual spend (directional)
Share Repurchase AuthorizationOngoingPrior authorization below $100MIncreased to $100M Raised
Trophy Houston Market Entry2H 2025N/AFirst phase lots summer; open for sales fall 2025 New initiative
Mortgage Business StructureQ1 2025JV (ceased accepting new apps in Q4)Wholly-owned mortgage subsidiary with anticipated Q1’25 closings Transition/new

Note: No explicit numerical guidance on revenue, EPS, margins, OpEx, OI&E, or tax rate was provided in Q4 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Land strategy & self-developmentEmphasized land-heavy, self-develop to avoid retail lot costs; ROE 28% annualized H1 Continued focus; lot costs expected minimal increases vs land-light peers Own ~86% of land; self-develop >95% of lots; total lots owned/controlled 37.8K Strengthening
Incentives & mortgage ratesIncentives ~4.5% in Q2; flexible buy-downs Incentives averaged 5.9%; seasonality and rates impacted demand Incentives averaged 6.4%; January–February saw incentives tick down as rates fell Mixed; normalizing as rates ease
Trophy Signature Homes expansionTrophy ~45% closings H1; pipeline >23.5K sites Trophy share of orders 52%; Austin presence growing Trophy 54% of net orders; Houston sales to start fall 2025 Expanding
Cycle times & operationsCycle times improved to 5.4 months; Trophy ~3.8 months Further improvement; 5.1 months; Trophy 3.6 months 5.3 months overall; Trophy 3.4 months in Dallas Improving
Backlog & spec mixBacklog up 11% YoY (Q2 end); spec ~65% of units under construction Backlog down 6.5% YoY; Trophy low share of backlog (<15%) Backlog down 10.7% YoY; Trophy <14% of backlog revenue Declining backlog; faster turns
Capital allocationOn track for ~$700M land/lot spend in 2024; buybacks $38M in Q2 Buybacks continued; cash $80M; undrawn $360M LOC 2025 development spend +46% to ~$300M; buyback authorization to $100M More aggressive development; enhanced buybacks

Management Commentary

  • “During the fourth quarter, we closed a record 1,019 homes… diluted EPS was $2.31… homebuilding gross margins again led our industry.” — Jim Brickman, CEO .
  • “We own 86% of our land on our balance sheet, and we self-develop over 95% of our lots… key drivers of our industry-leading gross margins and returns.” — Jim Brickman .
  • “We reduced our estimated warranty reserve… positive impact of $13.2M or 230 bps to quarterly homebuilding gross margin… partially offset by slightly higher incentives.” — Rick Costello, CFO .
  • “We plan to increase our spend on land development by 46% to approximately $300 million [in 2025].” — Jed Dolson, President & COO .
  • “Trophy… is expected to open for sales in its inaugural Houston community this fall.” — Jed Dolson .

Q&A Highlights

  • Early Q1 demand and incentives: Management noted a similar start to last year; February rate declines reduced incentive costs; AAA infill locations require low incentives vs outer rings .
  • Development spend cadence: The ~46% increase reflects prior land purchases (2023–2024) coming to fruition; community count growth will follow with a lag, not linear .
  • SG&A leverage: Expect modest improvement over time with Trophy’s efficiency; SG&A includes land development overhead not comparable to land-light peers; mortgage subsidiary to add revenue over time .
  • Mix and Trophy volumes: 2025 volumes at Trophy projected similar to 2024; delivery cycles 2–3 quarters after starts; plan to sustain ~1,000 starts per quarter .
  • Margin resiliency under stress: Management highlighted capacity to absorb margin hits given 34%+ margins; preference to avoid selling to BTR and maintain community quality .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to access limits; therefore, estimate comparisons are not included. Values would have been retrieved from S&P Global had data been available.

Key Takeaways for Investors

  • Quality of earnings: Strong EPS ($2.31) and margin (34.3%) with a one-time warranty reserve benefit; adjusted margin 32.7% shows underlying strength .
  • Demand intact with disciplined incentives: Orders +29.3% YoY; incentives elevated but flexible and trending down as rates ease; cancellations remain among the lowest in peers .
  • Faster turns, lower backlog: Spec-heavy model and shorter cycles drive cash conversion even as backlog declines; Trophy’s low backlog share aligns with rapid spec sales .
  • Capital deployment accelerates: 2025 development spend +46% to ~$300M supports community and lot growth trajectory; enhanced buyback authorization ($100M) is a near-term support for shares .
  • Balance sheet advantage: Low leverage (17.2% debt/cap; 10.7% net debt/cap) and predominantly fixed-rate debt (~3.3%) provide flexibility through rate cycles .
  • Geographic growth: Trophy’s Houston launch in fall 2025 adds a top U.S. market to the footprint; Austin expansion ongoing, reinforcing the affordable/new-home thesis .
  • Watch the mix and incentives: Trophy mix lowers ASP and can pressure margins during rate spikes; margin strength and operational efficiency offer buffer, but monitor incentive trends and spec pacing .