GRBK - Earnings call transcript Q3 2017 | Green Brick Partners, Inc.

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Operator

Good afternoon, everyone and welcome to Green Brick Partners’ earnings call for the Third Quarter Ended September 30, 2017.

Following today’s remarks, we will hold a question-and-answer session.

As a reminder, this call is being recorded and will be available for playback. Details for accessing this replay will be made available at the end of the call. A slideshow supporting today’s presentation is available on Green Brick Partners’ website www.greenbrickpartners.com. Presentations the click SEC Investors scroll Reporting the to down filings. to tab on and and Go The company meaning reminds Private it Harbor will you of Securities that during various provisions of statements this Litigation forward-looking Reform within XXXX. United the the of Act Safe make the States conference call, to Partners statements and Investors other business the aspects forward-looking to and are on earnings expectations with risks Brick current based are subject cautioned that performance, revenues, are of of respect such strategies, and uncertainties. Green prospects A factors to cause forward-looking results differ actual materially such number by could of or from outcomes those statements. indicated read recent was statements contained released Annual with the and Please in Exchange the in which November regarding Monday, described release, and Quarterly X filings press cautionary the and on risk Securities statement most the Commission. company’s forward-looking factors company’s the Partners that statements call. Green any duty of are made no Brick update this the course to forward-looking undertakes during to are homebuilding will adjusted adjusted Today, and be financial the non-GAAP referring company EPS which measures. margin, gross The homebuilding gross to reconciliation adjusted contained homebuilding yesterday. margin gross that Brick Brick to in issued net to are Green Green of income earnings margin and release attributable adjusted the EPS I conference to Brick’s call Jim turn to Green would Brickman. over like CEO, now the Please go ahead, sir.

Jim Brickman

call. our of the region Texas our President of joining promotion President being and your for too me Jed the congratulations region. Thanks Dolson, everybody. is Rick Costello, Texas With and Hi, CFO our Jed on

call SEC will be where found then the a scroll webpage to I will As the filings. to our webpage, can Governance, Investors operator mentioned, quarter accompanies the on on do third you Reporting click everyone & call a presentation greenbrickpartners.com. That’s and investor see earnings top click presentation. At that down second give at this. on the of this

Demand our quarterly $XX.X increase QX on Our Through third million Brick backlog revenue as income last Please XXXX. increase of Slide the represents XXXX quarter that is quarter of been extent housing and The an to to over XX% challenge XXXX. a $XXX.X housing basis, of increase an the market stand third such to Green was X. a which XX%. of great Despite grew of XXXX a of cumulative third XX-month homebuilders locations undersupplied still XX%. the afford. at XX% can homes has our remains the in is end for from achieved eliminated. record surplus every year-over-year flip that buyers completely recession, million, quarter revenues million, quarter was been Since the build pre-tax $XXX record on the XX, of the revenues want growth, now strong has they an This strong. for year of September income over

X. of and let’s the Now, of move Two Slide are best markets Atlanta. Dallas core our to markets

the and country. continued rates and markets largest a freight markets job to year, markets significant among Atlanta job last both the post ranked but markets the largest only highest Dallas in have the two in growth XXth During numbers third both second new the be jobs, of nation, job the also growth adding not

relocation many about of level in past We and of have talked below the cash robust corporate calls. our activity

investment faster prime adding is AAA Fortunately, expanding very the lot continues are Frisco Springs Brick that Metroplex is is the despite tell communities a has Green through inventory Dallas starts number and constrained market Brick Brick even supply. area. X,XXX are that levels Dallas you rate located. the most Slide part our this starts owns glance, you Dallas, entered long-term one Slide this Homes. On X now Atlanta, like supply Dallas all you an Green X sixth shows this be the Green about not we Allen. or XX.X see still have investment market Most On Slide in graph locations. to controls Please below the in attributable made where over a in and in lots unconsolidated largest market at rapidly shows new still can as month trend that to Colorado and but Slide quarter Atlanta, in closing below a Colorado locations third expanding, to who in Springs. healthy continues. the double-digit Challenger North, are bill lots to investment growth Slide AAA adjustment activity. the metropolitan shows What peak. Brick’s Slide in X Challenger of and areas still growth how are expanding in Homes peak Homes see nation an housing XX XX, that represents Challenger will in is of in in we X does closings an of are see the Atlanta XX% the at largest almost in the Green a starts. XX.

equity each we investment, excited are this feature our earnings to will annualized operations, Please months new seen spotlight present We we Green where a return Challenger’s first XX%. an different turn after quarter. of we on already Slide to two have of about call, Brick a XX, story where where

and organizationally great Georgia be a how small, private Our of to builder. Alpharetta, is Main example developer East of behave we successful community in a a

strong the community and our presentation of our and House annual into for office fabric XX and modified sales where a growth presents speaks neighborhood. preservation was planning of margins. by complex-like renovation our the we revenue incorporating Here task, rewarded inception Slide strong farmhouse been a Del historic the since we have Manning and graphically sales itself. The product very into with

and to balance scale business. significantly sheet We have operations our the

discuss those our results. XX Costello, Please will detail. CFO in of slide more to Next, third quarter Rick our for some results turn

Rick Costello

Thanks, Thank us XXXX year-to-date review Jim. Hello, joining quarter for and everyone. financial to our third today you results.

capital despite of keeping has public any of one lowest, net the accomplished builder. shown XX, if revenues been debt First, on and Slide as significant not in growth our the ratios to earnings lowest

to compares of average net ratio, net debt XX% X% September builder minus for debt where public cash an debt approximately is was to capital XX. peers. as of Our This

Now, highlights details. am I the then going with to let’s review the and start XX. move Slide into

XX% of first increased QX XX% Home metrics. versus versus of quarter by QX quarter increased orders this year-to-date. the quarters the year new of year-to-date last sales Net three operational XX% the the for quarters ‘XX year-to-date. ‘XX first XX% three for revenues XX% year-to-date. and key and XX% for increased of the for quarter deliveries first by and and For year, by Home some

performance. units and backlog and value similarities by the of lot see pre-tax The dollar and you XX% a quarterly So, can year-to-date up of performance and was XX% increased our between for year-over-year year-to-date. quarter XX% the the income

details. more Now, for some

the of orders an XXX third increase number was the XXXX. homes, net of XX% compared of For home quarter new to third quarter, the

first revenues sales of was of The the home $XXX,XXX average have new XXXX. our $XXX,XXX XXXX. the XXXX, an of X% and Green from of three quarters orders homes homes versus quarter third XXXX. quarters increase Year-to-date quarter than up the homes, over were million, Home Brick revenues grown XX% the XX% XXX first ‘XX. price the Brick delivered for versus grew Green For XX% the year-to-date, sales XXX down first of quarter, sales three of net to XXXX Brick’s over increase quarter to home XXXX. for million And third $XXX.X the over three year-to-date, X% quarter Green up XX% XXX. $XXX.X XX% more for of XXX the by quarters delivered a and delivered

which As are under last Green increased of active homes to typically the townhomes of September XXX X% to XX%. a sold September single-family lower year-over-year of XX, towards the compared priced compared units we Homes homes. the XXXX. selling as total XX mentioned of At construction third as XXX a leaned of quarter, XX of quarter, to more end increase had mix Brick communities, units has

review some these let’s metrics last months Now, key XX basis. on the of

as increase the versus XXX XXXX XXXX, over September have XX%. started XX, homes construction Regarding months, XX of trailing homes we of an

XX XX% closed at new as XXX of XXXX last XXX orders homes, closings, sales, up the end Regarding XX last the from months QX for regarding XX.X% and say homes increased the units decreased QX stand homes, up versus from slightly. QX net for should to XX.X% for months of X/XX/XX. XXXX margin at gross homebuilding adjusted I XXX percentage XXXX, The XX% totaled XXX

our XX, Slide from XX.X% on gross running. margin at XX.X%, previously XX shown months quarters is percentage down is last stood for three As adjusted where slightly which it

cost commissions and from sales of SG&A of who builders recall diverges the of the other include This that commissions. our please standalone item. includes or sales Now, public is the cost majority

the unclosed September value homes from backlog $XXX.X September sold thereby to of approximately XX, to average make had add total prior year. an XX% in period So, with X.X% most to a but about prior a public can our builders. other $XXX,XXX, increase year. of was of At of presented, an them of homes price At XX, XXX in operations sales to increase compared builder XX% approximately any comparable the backlog them and segment million, our reported XXXX, margins the you increase

an was Finally and versus our on share third in quarter perspective, for of quarter up before third total earnings for $X.XX our income back with XX%. the up perhaps the per for adjusted EPS wrap Q&A. improved EPS capital. of to resulting Green Adjusted Clearly, than rate million put the record a things will opening up Year-to-date, prior XX% is up XXXX, to million an the will the is markedly growth increase $XX.X Income far to expanding of as for line. income turn Brick of increase part performance up our third Jim third Green most before $X.XX. to revenue and call importantly taxes XX%. of XXXX year-to-date, who of now was the return XXXX, call in compared XX% up I our quarter XX%. homebuilding share quarter million performance Jim? XXXX is set faster our is attributable To $X.X per to $XX.X revenues for Jim is pre-tax of $X.XX XX% invested taxes, to the Brick bottom

Jim Brickman

Thanks, hard Rick. am Green great product worked this I such produce that really everybody really Brick results. to at quarter as

deals We number a contract. land under of have

of and long deals, grown owned been controlled a fuel homes the for last of months. for that now you number beyond. lots as to from up working these of September XX, and starting operator XXXX without has and Even over XXXX lots, new in help will approximately the the the growth time have Thank lots should in questions. X,XXX Thank call on for you. We X,XXX our despite X,XXX to I your support. And XX turn

Operator

from from Our comes line Ken you. of question the Thank Instructions] first [Operator Ling Citi.

Your open. line is now

Ken Ling

the quarter. congrats Hi, strong on

Jim Brickman

you. Thank

Rick Costello

Ken. Thanks, from hear Good you. to

Ken Ling

the to pretty the Challenger it’s regards Good your been initial strong In out compared couple for start partnership, to this hear it track now, months does how expectations? like a sounds me too. of to of gates,

Jim Brickman

tell or over are and and XXXX and Well, and the we them I we aggressive business our last can are than at really really of going XXXX just week turned as really not projected. out plan it’s than projections a we what we next greater project projections much have in them with this to better met beginning year you their outstanding also. expect week

Ken Ling

to And Thank later looking you take Green on years? the conditions you. XX% what are in additional Brick for, kind Great. of to for

Jim Brickman

merged is confident is results. together. We are our really going condition primary to make sure the great to financial we are want produce culture they Well, that

place great as I people, transaction think great it. expect and team bought to progress and Brian we culture. a be we have when has the he great people, that to are Bahr we that’s honest operators, just intended together going put And the

Ken Ling

on A the into growing count, question forward XQ good. also that year? can next for something quarters, going community two it’s sounds last It we quick double-digits expect and is been

Rick Costello

forward-looking We really projections. don’t our to speak

new order we exceeded that of revenue to You those that selling. in want growth Ken. We trend has growth really kinds actively and increase communities certainly our our that can can continue, net see but and expectations, set that don’t our like year-to-date new hope

Jim Brickman

of bit color. but can you give Ken, little I a

are One aggregating many going have are to more we that are at is going communities of things think I we Green Brick under the see of lot you storefronts small opening, communities. our just more smaller lot a are communities XXX to because and

the margin to differentiates that’s of some change I are good growth, smaller kind earnings. the that builders is we think to accretive highly of you that smaller of – community see of yes, and And many really to because pretty giant smaller aggregating are into would more just think thing I be from So, that. us we communities count your high think direction aggregating communities going

Ken Ling

land of I that congrats Georgia, to development one first change Thank question, all promoted. If Atlanta you. guess and in I anything Jed That’s for area? helpful. could being sneak the Does last for acquisition

Jim Brickman

No, it at all. doesn’t

the we our that it’s and community, process, had we a other know estate one that strategy business Challenger than that reasons a very because has advantage long real made is timing business acquisitions us is find think entitlement roots giants and have local we the is those Our in zoning communities. process just homes, very Homes a operator to local find with we to for lot why different and need partners its of haven’t from important very deep of relationships in the that recently

have relationships trying seek builders Bahr in partners and same Brian So, I other has we that and in those markets. are we Springs. Colorado way that in and operate Jed out our Dallas other building think in to relationship and have those the Atlanta.

Ken Ling

Congrats, luck. you. good and again Thank

Jim Brickman

Thanks.

Rick Costello

Thanks, Ken.

Operator

question Thank Instructions] Capital. you. the Our Basta of AWH coming will next from [Operator line Chase from be

line Your open. now is

Chase Basta

guys. question. morning, Thanks Good for taking my

Jim Brickman

Hi, Chase.

Chase Basta

You mentioned increase XX% the in the quarter. of homes sales backlog in price average this the

Just of – kind mix a in it curious the home to price it issue reflective accelerate, of environment a is is it or this what’s Atlanta? causing is

Jim Brickman

issue. mix It’s definitely a

their significantly are had which ASP You will growth populate they backlog semi builder also where through is than in building we so and really our tend And see the that our a more at our have custom growth. homes business single-family Homes, townhomes. Southgate of here town, amount fantastic to premier is their higher backlog

Chase Basta

Okay, Dallas can comment Atlanta what just you outlook and makes are differences the and seeing of And sense. you on those in kind then in markets? generally and two

Jim Brickman

very Dallas is Well. very Atlanta competitive. market also I the competitive. is think

that two We kind public out see and in starts markets to seek they that are growth. of builder of housing when going are these those obviously big revenue every giant

can competitive, all those from to have held because continuing they our markets as hold we up, gross up, supply can see both are in but margins, have they see we So, – been constraints our haven’t locations AAA locations. them

the cities yes, So, are very competitive. both

competing but We them way. like stay out their market against Lennar try make to and are to we entering not even merging giants of the bigger,

Chase Basta

Okay, appreciate it. Thank you.

Operator

am you. not to questions. over And I Thank at this further showing like I back for any the turn time, call would remarks. closing

Jim Brickman

continue results everyone a for like participation Brick. their their to positive Thank look Green day. would we for thank and Have support, great Well, to from you.

Operator

great in and conference. today’s does and thank This gentlemen, all the disconnect. Ladies for program participating may conclude you you day. Everyone have a

Green Brick Partners (GRBK) 7 Nov 172017 Q3 Earnings call transcript