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Call sheet · Q2'24

Green Brick Partners (GRBK)

Q2'24 earnings call · held August 1, 2024 · compared with the Q1'24 call · management-credibility review
10/12
Disclosure score
3 medium, 3 low flags
Financial quality
Bottom line
The market will focus on record 34.5% margins, but the real story is GRBK has structurally solved the lot cost inflation problem that's crushing land-light peers who face 11% annual increases. With 97% self-development and only 30 bps of annual lot cost creep expected through 2025, they're playing a different game. The binding constraint is now execution at Trophy, which needs to maintain sub-10% cancellations while growing from 810 to potentially 1,500+ closings annually. Management revealed the magic: 'Trophy delivering houses in 3.8 months' means they can adjust to market changes faster than anyone. My view changes if Trophy cancellations break 15% or if lot cost inflation exceeds 150 bps annually.

The 30-second version

  • THE SLEEPER: Land-light peers are paying 11% YoY lot price increases while GRBK expects just 30 bps annual escalation through 2025
  • Record 34.5% gross margins aren't luck, they're the inevitable result of wholesale lot costs in a retail market
  • Trophy's spec model is running at 70-80% same-quarter close rates with sub-10% cancellations, defying entry-level physics

What changed this quarter

MetricQ1'24Q2'24Change
Revenue$443M (flat YoY)$547M (+20.4% YoY)+23% sequential acceleration
EPS$1.82 (+33% YoY)$2.32 (+42.3% YoY)+27% sequential beat
Gross Margin33.4% (+580 bps YoY)34.5% (+320 bps YoY)+110 bps to new record
Net Income Attrib to GRBK$83M (+30% YoY)$109M (+40% YoY)+31% sequential surge
Homes Delivered821 (+8% YoY)987 (+26% YoY)+20% sequential ramp
ASP$540K (-8.6% YoY)$554K (-4.4% YoY)Decline moderating
Net Orders1,071 (2nd highest ever)855 (+4% YoY)-20% sequential decel
Sales Pace/Community11.4 homes/quarter8.5 homes/quarter-25% sequential slowdown
Backlog Value$725M (+32% YoY)$650M (+11% YoY)-10% sequential drop
Active Communities98 (+24% YoY)105 (+22% YoY)+7% sequential growth

Accountability tracked

6 new promises made4 narrative shifts flagged5 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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