Green Brick Partners, Inc. (NYSE:GRBK) Q1 2024 Earnings Call Transcript

Richard Costello: Alex, one of the best stats that I can give you in that regard, it’s actually twofold. One, return on assets, return on equity. Our return on assets in Q1 was the highest amongst all of our peers. We don’t publish it, but it was right at 17% on an annualized basis. Our return on equity in Q1 on average equity was 25.5%. So if it’s going to show up, it’s going to show up in those returns. I think a lot of the folks who are land-light, a lot of them, at least in the small and mid-cap builder range, are highly leveraged. So they’re really trying to juice those equity returns, but it’s not working. Well, they have to be land-light. I mean, it’s a positive feedback loop that’s being created. Frankly, in our two largest markets, Dallas by far and Atlanta, we are one of the largest lot developers. There aren’t lot developers to develop all these lots for land-light guys in Atlanta or Dallas. That’s why you don’t see NBR being a dominant builder in Atlanta.

Unidentified Analyst: Got it. If I could ask another question, what is the average size of your communities and also, do you only self-develop for yourself to keep all the lots or do you sell to other builders as well?

James Brickman: Most of the time we develop just for us. We have a large deal that we’re looking at closing in about three weeks that we have builders calling us like crazy, will you sell us lots? And I think what we’re trying to decide right now is only would we consider selling lots in this 1200 home neighborhood is if what they can in return give us lots in some other neighborhoods where we have more storefronts so we can increase our sales and revenues. So that’s a fluid conversation. I doubt whether we’re going to get the benefit of the bargain and we’ll probably self-develop and be the only builder in those communities.

Unidentified Analyst: I appreciate the answer. I’ll get back in the queue. Thank you.

James Brickman: Thanks, Alex.

Operator: At this time, there are no further audio questions. This does conclude today’s call. Thank you for joining. You may now disconnect.