GRBK - Earnings call transcript Q1 2019 | Green Brick Partners, Inc.

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Operator

Good afternoon, everyone, and welcome to Green Brick Partners Earnings Call for the First Quarter Ended March 31, 2019.

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. A slideshow supporting today's presentation is available on Green Brick Partners website, www.greenbrickpartners.com. Go to Investors & Governance, then click on the option that says Reporting, and then scroll down the page until you see the First Quarter Investor Call Presentation. States that statements conference the within provisions the you make it Safe reminds Reform of forward-looking Litigation various the United Company during XXXX. call, this will Harbor Act The of Securities Private meaning of such aspects subject Investors other on respect to prospects the current are to based business uncertainties. of expectations statements revenues, are forward-looking with are performance, risks earnings, and cautioned strategies, Partners and that of and Green Brick to could differ such factors actual cause indicated or outcomes from few by materially A forward-looking results those statements. press and statements recent Please most which read Exchange Commission. regarding May factors statement on the risk Xnd, Securities Company's the annual released cautionary and contained described forward-looking in and in the quarterly the Company's filings was Thursday, the release, with update this statements duty Partners are that no during Green Brick call. undertakes any forward-looking to made capital, pre-tax Today, attributable of homebuilding pre-tax referring non-GAAP income income as percentage margin, financial on which homebuilding to are gross Green invested net the be percentage of Company as a equity and revenues, EBITDA, measures. will a adjusted income return to Brick average homebuilding of Green gross Brick yesterday. to margin are homebuilding adjusted contained release in issued reconciliation The that gross the earnings margin turn CEO, call the like to Green over Brick's now would I Jim to Brickman. conference Please go ahead, sir.

Jim Brickman

everybody our joining With me and thank is I the Jed Hi, Region; everybody. President call Rick CFO; for our CAO. the to want Texas Costello, today. of Dolson, Summer our Loveland,

Company's scroll the call to we Call I'll the presentation. this competitive $XX.X record am & At open quarter the XX.X% down give first Investors record our the page, be As was click a click then closings, to everybody Green Brick, business market the attributable remain, web presentation the earnings in which that on demonstrated page, home track the of homebuilding then model can of Reporting, see a and Investor please our second pre-tax sheets Governance, million until that Presentation. our best XX.X% the accompanies in pleased increase that at First Though on the I top quarter to through operator net revenues, going pressures most a its found webpage had Quarter greenbrickpartners.com. with mentioned, up option says the XXXX, first on you one income history industry. in maintaining solid market. we’re moderate, on all, the income balance strength, and Best growth while we the of in are achieve year-over-year. and tougher

brand, Signature expect to best to Two is half homebuilder newest and of second our are our and Dallas Trophy we XXXX. the Atlanta. continued momentum Homes, of Please into core country in , the of off Finally, great flip markets markets the start a five. slide

the affordable submarkets. Real of quality of most have most they months, terms job last the one On desirable the variety seven quality areas, sixth in part Slide can and six, market generating Homes number Dallas Atlanta proximity life. grades published Burns for you the about of the our see as two A of XX market operates schools, by Springs, submarkets Estate market. a markets designated slide of we based nation, existence in housing has metropolitan adding subjective such largest through starts. jobs, factors new of Challenger where F and our demonstrates fourth the largest A-rated of markets, affiliate maps what Colorado During the markets and in Atlanta Dallas of Atlanta infrastructure to the XX,XXX be of in continues largest continued on mean Dallas of growth. John be to Consulting is

Green the locations dots. those and Brick We maps communities green overlaid have of taken our with

prior primarily lots controls Atlanta, in tell still in lots graphs are of owns see, how Dallas A A supply or What the Green the very preponderance X,XXX are. the can desirable best do our are A you X,XXX constraint prime and locations. the most almost in over not Brick lots locations in you communities is submarkets. As most Metroplex

look and a are resulting correlation think and and currently in lots land investment the takes the supply at between Some our a under supply. of story well growth growth lots, that eight markets total bodes the can meaning two-year annual direct that our related the owned chart, closer revenue growth Slide in Company have at see our these We controlled land with development. you annual and and revenues. A lots future. look for under of

the we owned lots efforts. our XX%. by XX% diversification highlights Slide significant our have with and Over grown XX further and controlled by total revenues total last months, our XX

Jed. team want entire to great the Green Sorry, hard Brick their work results. for and I thank

Jed Next, growth the of discuss will Region efforts. President and diversification Dolson, Texas drivers

ahead, Sorry, Go here. Jed, day for interrupting the your Jed. sun in

Jed Dolson

two-year Drivers. Take Growth revenues basis, Thanks, on labeled Green chart impressive over it's a XXXX, period. backlog at growth growth grew million our from XX% as public that a the XX-month one space. XXXX is last future. to our year-over-year Jim. more the Brick X, QX On setup of the XXXX. Even XX% XX, to is the QX March home $XXX slide for truly in homebuilder the of stories shows The look closing in best

by started. of the of months, also X,XXX XX% number our XX XX versus average number units and with increase owned increased by ended by XXXX, the we grew increased communities months lots XXXX, ended XX XX, March controlled months selling XX, and to March the XX%. units During the started XX% we our last Through an

starting In quarter fact, through XXX XXXX over QX from QX XXXX. have units per averaged we

units had year-over-year from X,XXX of end XX, XXXX. of of As construction, XX% the XXXX, under an we March increase

thanks the we dynamic has growth. our communities, townhome inventory Brick offerings. significantly construction backlog, product under years our focus we In the of further acquisition lot units development. of of to the So, slide starts, the planning, the Green construction land to diversification and XX, highlight increased On on XXXX, sustain level and

this last us our higher grown even while has the months. last period, this townhome maintain rate over offering XX affordability In to of XX% quality the is which in our months, high product. helped fact, Over XX% than a single-family growth robust XX revenues we've

last the of last significant price further risen diversification has in years, quarters. Over Slide of average we've GHO With X.X% revenues already two only is XX XX and consolidated specifically efforts. age-targeted over in After purchase our four segment. GHO highlights months, entered by total. our the Florida sales our Homes homebuilding XXXX, XX% the

half During XXXX, price move-up affordable our we first see Signature level first points from price time Trophy will and the closings entry Homes, offering second of points.

our Texas, states of XX% and growth from XX Homes we in in of quarters, new Georgia the range GHO three in XX% Over growth with last XX% demonstrates four in of revenues Slide acquisition grew Florida. that our all and distinct now into buyer stable which our consumer grown and segments, segment. address have concentrating QX strong on homes buyer revenue provided by earnings diversified home growth five revenues XXXX. any We mix experienced not one

growing prices offerings consumer of Green and XX% our growth segments desirable XX eight. you in remember, back additional to top consistently ranging over part But consumer communities sales, from last homebuyers. a and A diversify the long-term XX%. to three or what reliance please are Most group Our saw locations. slide months of are located types on Brick's submarket segments saw single to strategy limit The on include risk of without product move different

Next, quarter in detail. Rick our our Costello, results first discuss more will CFO,

Rick Costello

Thanks, Jed. quarter you our today financial all thank us XXXX results. And review for to joining first

First, I'm the into let's review where and details. the XX slide highlights start with to going then move

up quarter. are comparisons, of versus The increased XX% sales dollar backlog and some ‘XX QX here deliveries year-over-year Home XX% for homes under increased value QX ‘XX some indicated, up for XX% by XX%. the those Net the with revenues Jed orders by as new of quarter. X.X% units increased For XX% operational are started by metrics. key home year-over-year. construction up by with Year-over-year, in

up XX.X% and Our portion pretax net XX.X% was same our the the income quarter quarter XXXX. income of for quarter the of over for was

details. Now, more some for

XXXX. of XXXX. in quarter, Brick delivered, the the QX homes million million only over total of QX XX% by surpassed quarter, last closed an The new compared quarter, number grew Homebuilding year. than quarter net more a revenues XXXX. of from XX% ‘XX. to an the was the to XXX of of the was the revenues Similarly, QX increase sales was $XXX.X for By of ‘XX the were the for of $XXX,XXX way, home of price first first homes XXX, orders it down quarter X% quarter quarter, of Green for XXXX. the over of first For ASP average QX first increase XX% of X.X% or about $XXX.X

are product Q other March at mix in ASP of decline than units our this points segment Homes unclosed because whose total the the sales price GHO a XXXX, of homes had of addition most builders. is a builder year. $XXX,XXX, the of value March of backlog homes of and for million, approximately Now, operations compared an XX, lower XXX price At XX, our with XX, but of from increase prior the those was XX% approximately increase At of an in of average XXXX. March backlog homes X.X% sold to $XXX.X closed

metrics review key our introduce XX a of growth basis. Let's on some last and months

XX% backlog for , Again, XX% of of Regarding X,XXX end at months last the X,XXX sales, new the XX our at orders from net QX homes stand up ‘XX. up year-over-year. is

year-over-year a an of XXXX, Brick increase Green of selling communities, XX%. XX average For QX had of

of lots XX, up in months. despite XX as the an the under starting about of this lots you, last X,XXX units, versus was increase referred and Homes XX, as XX% to under inventory, increased controlled March from XXXX, March from increase for to to the period XX, of almost homes as Regarding XXXX. March we XX% XX, started March homes of in X,XXX XX%. X,XXX X,XXX lots, And an number XXX owned has just grown X,XXX ago as of as construction last of compared accomplished XXXX. homes lots months, X,XXX to And XX year the units of

XX.X% gross of XXXX During XX.X% for for from margin QX quarter to our homebuilding QX, first of the declined XXXX.

of of we peers. in XXXX. net of in amounts affect sales to does period. but please QX also from First, that SG&A more commission be revenue not our expenses cost X.X% comparable Sales income the restated have to this was any note our readily majority were units expense expense reclassified year residential of with commission Prior

XXXX it's decline percentage builder corresponding approximately QX of XXXX, to to From is declined the which allocated customers income critical QX incentives our Second, pace. promote to during This QX is to to X.X%, gross our XXXX sales in by of decline. primarily to decrease is in margin interest the non-controlling attributable increased non-controlling half of our margin understand where gross partners.

our capital our of to in decline income our on one by by of their half compression the When was of builders, the shares Green so profits lot high impacts is XX%, interest to margin the allocated incentivize earns typically each established model builder. in builders to profitability waterfall of is last that Brick only margin incurred business Partners. rate house which of sharing Our there Green decline margin Brick any after of builder the and return extent

with Our business as working, is strong demonstrated the model results.

Now, left slide the operating on which critical margins as move peers. pretax expenses. demonstrates begins of measured performance our as against building to performance. well takes into measures XX, with Pretax our consideration income two income The as chart

mid-cap measure pretax share, of pretax peers, XX our performance, months. invested return XX and or even than far us small-cap and net income on our Again, heads the This EPS for shoulders on revenues puts Brick’s as QX of important XX.X% our stands QX capital. bottom of see, line last percentage our total middle at pretax as Brick's for over months peers. XXXX income and above XX.X% Green Green return ROIC based can is for increase comfortably mid-cap adjusted $X.XX you and on above per of was small-cap is of the a XX%, income The course the As higher pretax peers. income. ‘XX. reflected Most stands an margin

small-cap let's with stands at equity But rest the for our months And consider on return story. equity the ended is the our for rates one net XX builder. on in slide XX of of as debt-to-capital and XXXX, slide shown line of has the return been okay? line, peers, any XX, on mid-cap income net accomplished, March lowest which XX.X% XX, in keeping public despite Our

grow rapidly, lines able through financial our credit. interest low been rate to have leverage while revolving We increasing of

those look to XXXX, net-debt-to-capital XX%. more XX, that closely we gradual to an increase March ratio where leveraged that to minus of But, average cash, As peer net of have point where is debt other has have continued debt XX.X%. at the average builders increased Note of peers small-cap the left chart the are the to mid-cap ratios of the ranges seven chart. The The slide the shows XX%. side net-debt-to-capital builders XX% of and builders. or all that XX% an on wrong from side for seven

So, but of they are the than similar as Green that’s the with call up to our more I'll XX% return return over over wrap a on to Brick. call who opening back equity accomplishing things part to on Jim, turn to now our leverage Q&A. financial Jim? prior will equity

Jim Brickman

Rick. Okay. income is summary, a great managing the and our most In history. pace of net accelerating. Thanks, team price best neighborhood in count to really backlog job peers, our versus Unlike did a our first generate quarter

And while quarter first now XX growth. XXXX; our all grow seeing by also being Rick should just the homes sheet. benefits communities in showed our XX% history. balance builders. either are we the system of conservative communities most of is growth the you, very and weather, We improve decent operating very Assuming that’s accomplished, construction for Operationally, house XX we as year XXXX margins maintaining X, utilized significant this our January by have standardized under the the to end the community from of or on

is and now business our to mortgage scaled with risk. rapidly business little expanding title and Our are profitability

for call level Green Homes part and great should a we work homebuilding Signature thank again hard replicate operator. story team time now entry markets. results. is Brick to in to to first builder expect the entire other off the I’ll back and their start be Trophy significant of want growth turn a great earnings I our that to the Our move-up/value

Operator

Thank you.

the comes Please begin Your now Morgan. will first from Instructions] go We question-and-answer [Operator JP session. question Rehaut Michael ahead. with

is open. Your line

Maggie Wellborn

actually for on Mike. is This Hey. Maggie

pushing First of bit trended just about you you idea question, you thinking second incentives I Could quarter. give incentive talk maybe in levels an over more a how about were quarter? the was hoping the you’re month-by-month, little and us that the how those could

Jim Brickman

seeing Yes, is builders, most and In sure. to figure chime is much Like team else we way incentives. art in increased trying versus science anyone Jim, out match price. and over. can to me. April, the This the best from The this pace with bear cost Again, as management third today is -- quarter’s earliest on actually side. in we we’re in mind, increased see side and these the things on demand and we’re the home starting the quarter construction a quarter. interest closing But fourth savings the sell that to of the probably

on So, this is statements year. the on a lagging indicator that we’ll probably until not see financial impact in later

Rick Costello

Our half absorption versus absorption January saw And like first starting the up in February. rates XXXX it in on we But, QX, absorption really our much call, real pace we said wasn’t strong. the resembled picked absorption last that that of like XXXX. probably accelerated was our

lot a So, like more XXXX.

Jim Brickman

you're open communities. up then period, and new that when in that we we to more every community think as we sales always time slower in grow I start as thing the other experiences communities, and a builder probably it's real

a rate peers bench most many you little so relative to goes probably of bit, because we're down the Our new opening against. us absorption communities

Maggie Wellborn

Okay.

the So, first -- rest margins slightly continue and looking into incentive levels quarter the think the elevated in that year, do these did kind your the pressure quarter? second of will you they like continue to and of

Jed Dolson

No. This is Jed.

part most regardless across what spec seeing for of geography. we're the less from builder the packages every So, industry,

units but our communities. out; top-line are putting competitors we're less more units less few So, or by growing putting out a

on for So, a incentives. -- think we we’ve least bottom we actually the at hit see while

Rick Costello

community construction starts and happening trades the something there lot not to of there are competitors also of houses are strong product. builders product a the really and is because smaller, the out slower there -- growth, that's for smaller less the having else, with And Maggie, the level run

to why one some we're of the to costs in of simply less release the footage that's So, build. on has labor total because down and costs construction bring square able those force

Operator

Bank, please Deutsche Tim Daley ahead. from go

Your open. line is

Tim Daley

modestly guess, income income and growth guidance my pre-tax appreciate account for year-over-year. first expectations, or net community be so as well the up So, is, the to strong I the question

of if if there’s help Is operating curious, you the of and if expectations takes going of the understand puts us obviously, underpinning kind be given provide? you mean guys the could as margins color That'd restatement to kind low-single-digits, of of kind in that mid-single-digits probably modest. in could you these margins, commissions, gross you parts could just some moving more a other margin. movement and bit be But SG&A any operating by and as on helpful. what just more very So, and the kind provide terms well, of

Jim Brickman

your question is are answer too can your modest. of that first we I modest -- Tim, that to part describe and

really want So, can't you Jed, get part to questions. into or these we field the that. Rick of might second

Jed Dolson

do I you huge the when impact. of the math expense moving SG&A, think, commission see, doesn't that you'll the a to down have

Our and all a all expectation, it's range X.X%. we some growth top-line forward separate our XXXX knew consistent through we numbers. regions. of of within great from going commission were our I were the more This way fully as to knew coming all expense And in margin through anywhere been X% is into have now, because lot we and to around X.X% at probably have -- think move it's GHO we from we

in line pace at we on probably from that XXX very going to be as backlog put standpoint top a over from don't we have quarter. our has really But, been consistent pumped just start now. perspective a QX a much towards skewed we're new many so I our QX QX heavily backlog. and homes think, that that more Last year, QX had based into of

metric a you'll line So, top I forward standpoint. good from see a think, that measure going be

Tim Daley

the absorption. guess, of then, impact and I on about very product the just thinking And That's mix kind helpful.

group there than forward into lapse, mix with homebuilding so with Trophy Obviously, Signature really be kind absorption head of that thinking we in half. bit were of the far that as ease in comp coming us quarter. pace, other great. and the just down comps bit you Obviously, XQ this about shifts of up is absorptions year? against directional a sort year. was we a help So, obviously last rest back a this But average any tough But, be obviously, would could if should the getting in the more GHO

Jim Brickman

Jim, is continues. year. we this We’ve in seen hope little month this up a mean, April, absorption, pick this it I

you looking are that Green already sheet community peers at returns in more If -- we're that -- is our that's stable versus not XXXX. think, there growth, relevant now. when in much on our communities, in thing, new until our investment or balance are I community cases is investment Brick growth comp right significant the starting, our enough balance growth these money or later -- that year really on having negative these just into is this all any some sheet

to our really think time to prove XXXX. are looking think in frontload in But, anticipate financial lagging to we how communities if these these So, be have investments metrics these investors will you pleased and the you communities great really in peers. relative very results, we

Tim Daley

And could then, kind good. more ask right, one just All of here. if I

any you And update? provide maybe very of as guys Signature a type, How on days new about announcement Signature, model But the were understand pace just kind that? up kind then, news getting kind many any if targeting product saw incremental So, out well, those Trophy help of so the new there XX% to or ago, us couple are year-over-year, just start you that. of could impressive. this you new congratulations could of of markets of Trophy opened

Jed Dolson

the yet Communities in Very communities Signature Trophy this going those -- is Trophy were Jed. that not open. is were because of just

two of we communities at just the Trophy As selling today, is of that started right first in month. this

the growth was of divisions. our other growth most through So, organic

Jim Brickman

we what -- are X,XXX option Yes. community Trophy. I We’ve Jed, Trophy about investment owned and of have, lots, the which owned. many is in a growing yes, study what kind talking of case count. just do made a was

metrics return accretive is to returns we going seen start haven't we to Green XXXX We good very stride. these of that Trophy communities when that, in yet Brick any be our made for and hitting current all on think full business

Operator

Citi, with go ahead. Schrier Scott please

open. is Your line

Scott Schrier

little your the of trended your this year-on-year some we've out wanted am basis to certain brands. on ask markets. to ‘XX inventory you incentives. more impacted versus if the bit about a by potentially that higher and And curious, I Can talk specs that a due could region they to extent break business? see on XQ in you some I heard speak might how have

Jim Brickman

But, been the Dallas, Yes, margin XXXX, we bit, held choices, townhouses thing B Where compression sized where our pretty month Dallas. smaller in as peers was of A have quarter as have and not a decent saw It most were really, want. were continues just We having some we’re now. thing a was into moving have in XXXX. found in business in May. doing you -- the We we guess where is our and that. the compression in it that's its the we probably building maybe some they options should in and to homes That's just And consumer -- never I of selling homes footprint in locations, of people than They was sales townhouse, see of Scott. that We specs really aggressive Atlanta, little business we think in that's the that a hope leveled Atlanta. having and good got didn't twofold. more great location in second we saw third is here. wanted, granularish not more the townhome you fourth got margin which own. we a a pushed into that have in saw spec much you And had but neighborhood

Scott Schrier

deliveries. of more growth, for Should expect been have to they up turned or ROE associated then, They've them. given picked higher we asset products more I'm recently your home go with the assuming on they've be as forward. a so, we And attach as that a tailwind -- of percentage

Jim Brickman

more Well, that. confusing bit a interesting. little It's it's than really

For in was much example, mid-rise Atlanta. a Atlanta. right opened slower And townhomes. our just and outside heart a we one Pratt I communities the turnover called of even in Atlanta It's community. that's It's of last is Stacks week, sheet-rocked fast community haven't infill just That up turn four-storey community. that a is units. not unique downtown a But,

We But have XX homes presold to is a longer of XX going under longer we've the them. good construction and thing, and that's margins but cycle again, about product, are cycle demand great. be a it looks like

Scott Schrier

And then, one more.

talk could the your you to timing leverage of progression If bit goal little number. and about maybe the raise a XX% toward

Jim Brickman

can about you talk Jed, little. that a

think Trophy to component I going is that. a big be of

Jed Dolson

we year, out XXX don't by revenue next at break I probably XX closings from expect year Trophy We Yes. least. to -- could XX, builder. But this go to growth

XX beginning So, the whereas was active you how count raising of year. communities zero be our do selling, modestly of putting Trophy. means do can more communities and we'll of that out that growth we’re they capital of And community Probably kind out. six Trophy of start closing within figure the like we'll in QX, much the selling map have debt be we’ll to houses. as days by that when And

the ground. in a by lot we -- of that the whip time means lot we actually that inventory, selling, start So, a have of

once investment, substantial open. start be So, pop it’ll a seeing communities those you

Operator

Instructions] comes Please Carl from with Reichardt question [Operator next go Your BTIG. ahead.

Your open. line is

Carl Reichardt

and over pretty by next is community to back if count, QX, load end three in of the XX plans of count? the Rick, or even or or quarters end community course the year or year-end or on above to the the sort there ask progression wanted getting front is a the four Jim of for that I

Rick Costello

to from It's vagaries as it's the quarter-to-quarter. development of rare of time have fairly land complete go we But again, because even, on weather.

four could But, that relatively or that over longer, that stretch affect based next what and out it is. whether could it plans are. quarters, flow the our even, be a three what builders’ happens So, on should bit little quarters

Jim Brickman

in this it to them some have but -- we'd of to worst us into goal that QX after thought back was year push our of XX give we history, experiencing open of into rains some Carl, the better slack XXXX. all Atlanta

Carl Reichardt

then, turn, maybe for Trophy second. Signature you're an or it's model a There a a looking opportunity back spec, to go And more quick fast to bit customers. And first to time about customize. of of at different couple a let's think barebones, small little ways houses, built-to-order, is

couple are is there you a that -- go of bucket How buyer? where to get at that time different does fit of customer. in ways you of So, to terms that thinking first sort in trophy how

Jed Dolson

side this familiar Meritage Meritage's version going am year by as I the former. is a least It's two We in of to be if more product. Carl, Jed. be you're with at will sure three LiVE.NOW with side by builder end Live.NOW. communities not our of

Rick Costello

in often we've move XXXX And buyer first a away which already from XX up operation. Trophy the available to Carl, those are the that we that first different sale so location offered the not see to -- a of lots little closing their a a it where other not been days in And up already in And locations lot go time could of on house. story? thing buyer. bit until XX but will is that's of active, community home the be ready a story inventory days It's product to which made be count time you're to for made a we’re growth of and the lot a going you'll lot of gear the find lot able because inventory, lots,

here basically, are it is, options it's your already So, included.

excellent our strategy. value -- be it in the proposition. that's even an And So, buyer, should first should time it move-up

Carl Reichardt

more targeting the squeeze it one of side. looking sort can I the at general if Again, that in then, just a is who product in on And to, sort townhome you're customer in of the the sort buyer between for townhome move-up and and type downsizes Dallas think in entry customer you first product or time about Atlanta? how level target do your of or

Jim Brickman

down neighborhoods the the buyer affluent that of where of also are barbell our location have very partly locations in kind broad the divorcees we because are A districts, Well, located -- because we’re it's have are are school top and millennial seeking because move and out But finding you'll buyer; we other an markets, in buyer. buyers a a that A really typically school.

it's So, homebuyer. unbelievably Trophy a our type more diverse type so much buyer, than

Operator

ahead. please with Dezellem Bill Tieton go Capital,

Your line is open.

Bill Dezellem

couple a questions. had I of

one in you discuss that's prices. answer that mix if and relative I and there? if that But, is the lot largely decreasing, that Would would And increasing there's price first to you anything experiencing please. The decline the that know your prices lot mentioned adding home interesting prices you are relates of home related the GHO. the you kind to incorporate -- of increase

Jed Dolson

some as of seeing So, slight But Alpharetta price we and in of Dallas, just increase mentioned, supply most of sub-markets like part, like a be these some Dallas, have for the very infill we because be Atlanta the lot may prices real think market stabilized. in or lot limited in demand downtown and there. lot Jim to

Bill Dezellem

are equal apologies question. all up lot would margins? other be But, squeeze prices and that -- the that for that are if And, ignorance home to on that in things flat as a this would being understand fair prices it be

Jim Brickman

their builders construction place redesigning that their really It the is that lower maintain is except product are thing deamenitizing taking you product and haven't to that and would be, and to considered, one margin. costs reengineering

Jed Dolson

land that other the buy typically dynamic And is lots. the finished dirt and that into we develop you the have

us. lot builders’ So, a the price lots from our is for sales of

that lot of regard, getting profit. XXX% we're in So, the

to it's increase, from a existing inventory, delivered not being such with dynamic of homes as our XX% a is XX% there you think. would So, --

Bill Dezellem

whether the you reasons rate discuss And think and how that, it's ticked and the the the a worry are implications you it are about quarter. just not, behind please? or in then, lastly, that up sensing Would And cancellation to that?

Jim Brickman

Jim, very cancellation First our is this of around all, XX%. are rates low,

doesn't thought us when can home. that can offered competitor under that was market additional So, Any a was make that tickup to nervous. you a more occur and if got competitors competitive a you incentives, because customer contract the lose buying

responsible might So uptick, cancellation it's the still of very low rates. that we be for had but some

Jed Dolson

rate cancellation last in but of was a it And from the been Yes. have may XX%. to up XX% year-over-year QX XX%, year,

dropped So actually significantly. ,it's down

had perhaps a customers, up more have with and couldn't And they now, lot reversed actually they gone come qualify. sales office in all whereas the thus than rates QX. if price that You’ve down rate came of But, discovery and means our that and going can have they a rates in had sudden discovery substantially. afford of on

Bill Dezellem

Thank said a secondarily, you. normal follow-up if more really this I the environment’s And cancellation as that good you one? quite ignorance, that cancellation And to then, it that is one would less consider XX% there What is rate, tied point then, quarter. just seasonality a again. maybe to of a incentives that a declining? from appealing lead rate you that And were competitors little recognize would

there But, seasonality any helped. there? normal may have that So is

Jed Dolson

of we're would We Jed. so is would probably cancellation a below delivery. average in peers. from of uptick our It potential time not. I contract rate, say interest This -- tied to to would peer's I'd is seasonality, our XX% be say time more rates

Jim Brickman

be next may just probably the the cancellation quarters, some there taking two down in road, And because buyers. gets not place that will as first rates, all. just if are at going, natural increases Trophy But be those it time occurs in

Operator

Thank you.

call. you reached now today's conclude the does our have this And question-and-answer now Thank session. And you participation. may disconnect. We for conference your end of

Green Brick Partners (GRBK) 3 May 192019 Q1 Earnings call transcript