GRBK - Earnings call transcript Q3 2020 | 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, 2020.

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 at www.greenbrickpartners.com. Go to Investors and Governance, then click on the option that says reporting, and then scroll down the page until you see the Third Quarter Investor Call Presentation. States that statements conference the its within provisions the you make it Safe financial reminds Reform of forward-looking Litigation for various the United the and Company operational during XXXX, XXXX call, this will Harbor Act expectations The of Securities and including future. Private meaning of impact our are that to such comments revenues, operations, including strategies, performance, limited other cautioned the forward-looking to, to aspects on based are uncertainties. Investors business Brick but to current related of prospects and anticipated of subject the earnings, and and expectations future Partners, statements, with COVID-XX on not of risks respect are Green in cause outcomes in was results Commission. or which and could XXth, from released Securities to on factors with Thursday, those most Exchange and Company's actual quarterly described press set factors our filings the risk the October release, materially Those annual forth recent XXXX the differ expected, are and no any Partners' Brick during forward-looking to call. made are undertakes the Green that statements duty update

available Brick would the issued Green conference go sir. the Bricks' earnings comments our metrics of the addition, Please and metrics ahead presentation by yesterday will like CEO, and website. information reconciliation Green in that I to to Company's on financial now metrics, required over these found the the G be turn other regarding include Jim can Regulation these the non-GAAP release In Brickman.

James Brickman

I hope joining our Costello, for Hi call COO. Thank Rick Dolson, our With call. everybody. you, Jed is the you and operator. this finds well. CFO; me Thanks

inflection greenbrickpartners.com. page, then quarter says Reporting, The the that on everybody quarter. to a accelerated a the and second on scroll until found can call accompanies that of Investors and do second the page this. mentioned, started option year down on ago web that As more this click this I'll see the presentation top presentation. investor the give our the at than webpage you then the call be At click Governance earnings operator

as many are a and own post-COVID in We their family People lifestyle. home seeing want have spaces, unprecedented a backyard. their for own to adapt friends for and grill people homes, their our to office demand own

these reasonable diversified neighborhoods markets country. some in of and Our at points best price homes the in growth offer most the

benefiting are our market. expansion We DFW brand Signature the rapid growth from and of successful in Trophy Homes

net were quarter our for successfully absorption driven homes buyers. increased count, basis home orders With Brick points up from has was year-over-year year-over-year, in continued move-up at XXXX quality Our expand from we more the second-time the pace growing prior new time, highest this at and price Green a XX% gross managing entry growth new XX.X%. by QX demand by XX% XXXX. price, order and to year. to as Brick the XX% to its and sequentially every point This XX% home has community At profitability by grown decade, Green from sales margins level than same QX XXX levels

to expenses higher share We of only quarterly EPS earnings drive moderate to XXXX. XXX% QX basic a operating leveraged up growth our much record with in a over have volumes per $X.XX

with decreasing strong lots record of our in flow quarter, ratio growth this quarter. to and which our growth. Over our homes to Thanks note the during land our strong all-time land sellers the Brick by and from set important core Green started record points markets, fund and relationships during achieved future its and in and This which of in builders. note hard of controlled senior cash into the strong actually while growth relationship efficiently one all an lots able has work months, The starts of XX.X%. in of our that our senior XXX Slide building critically XXX we has expansion in owned unsecured balance XX,XXX million has small-cap August. the up XX% the our X.XX%, consistently our due of public Brick grown long-term XXXX. XXXX Please The third our X been Green this to over net and issuance to of our our company past peers. It allow This was invest lowest three land municipalities to land presentation. QX is paid record team debt-to-capital in core also with over a planned second quickly our basis rates peers flip investments to is operating was of combination with from XXXX conservative in low-leveraged Capital, Private $XX.X cost clearly a rate been at important is will low our and of and to a Prudential with believe sheet large-cap our distinguishes by of fixed issued markets further profitability of mid-cap debt resulting notes rate comparable our for lots, in

our four are to CB We wide of with expand and brands. this through and diversified entry-level We believe builder product brands array markets stratification eight expect rapidly and that JENI Signature our products segment continue base will will of Trophy homebuyers, growth a with appeal types major a to of in in to a continue broad ranges. price

past. Green As simpler in discussed now call, than the QX in a structure XXXX owner our earnings under Brick operates seen much we

Driven through every our months XXth XX, the Homes, Brick fastest respond year Green companies. XXX of Green CB to and X% demand Living, place. Brick’s Brick ownership increased there's arise. compared Green our of well Slide highlight Fortune recognition Signature the adapt XXXX, XX, Atlanta. months were they booming tremendous For to significant economy quickly and growth total commercial our Trophy country, a of Centre as brands, ended and Like And the we over increased COVID-XX earlier our in control generated expansion only Worth XX% year. for activity September the Normandy led on new the to nine this X, revenues in Dallas-Fort acknowledgement the Magazine’s rise has to of an Southgate, created the to other This nine wholly-owned resilience in as subsidiaries excellent to Green XXXX. homes Brick’s ending unemployment Slide by for of disruption growing challenges as major allowed shows announces new JENI, rapidly story. pandemic On key X spots XX in second and in consecutive jumping markets the September

the of markets metropolitan the on and out lowest the areas with United quarter XX – graph However, on page, States. ended the second shown second in our out the largest and unemployment the rates Atlanta of DFW as this lowest

in fully metropolitan in Additionally, submarket rate XX% the new from had the With and the lowest that markets capture Green Brick markets continue is bounce in ending increase Atlanta, QX robust prepared correct is positive Green markets QX differentiate us nation. proof subdivisions to more Dallas-Plano back XXXX. what our and to shifts diversified XXXX homeownership. of economically on We operate, from we a and we active and year-over-year the believe pro-growth focus are the as unemployment to is these peers. sales communities further homebuyers the business-friendly, is in where by Irving our believe that XX year-over-year we in capitalize to Brick poised selling to growth core of best that long-term superior Thanks believe its these the from demonstrated in April, of will the low choice DFW XX% markets on strong seen

the risen, national Slide X, participation the seen XXXX. since August, in rates has homeownership As Fed rate reducing interest on began

demand decreased basis dedicated energy under we XX from clear work the efficient, now homes with sits to in not shift increased As and With place XX.X% of September increased rate trend toward QX a XX, in only to rates from been basis quarter for XX, of XXX at decade, appreciation low home XX% ownership there XXXX quarter home this fresh spaces, taking homeownership. rates indicating of interest XX.X%. saw larger XXXX, above over is rate homeownership homeownership this an and Sustained positive seen to buyers points the foreseeable the for from continue. expect future the national a the expected remain Strikingly, seen points fully secular XXXX. have and XX.X% third looking

the segment, and ownership homeownership consecutive rate two the since increases for exceeded fastest will time age believe the overall quarter quarters first XX% this growing has represent we group in This XXXX. drive represents homeownership. Millennials further to currently continue

mid-XXXXs, higher Green the now XXX new that in the a homebuilding feel rate, ownership and minimum, peak Chief basis younger secular in normal. will this Jed XX Jed? true this While at growing especially housing, under Operating fully this points buyers available Brick is we to our believe drivers With land be the speak represents detail to and address prepared growth related change market. homebuyers, supply Vice the Executive marketplace homeownership Partners in President a considered trend of still and its the be will position. we that should constrained below our to Dolson, this Officer of greater shift by

Jed Dolson

Take future XXXX XX-month XXXX titled growth a that two-year at Brick Thanks which look of over growth. drivers, grown still a Jim. Slide On of pathway demonstrate period. X to basis, long QX revenues last from towards total a XX% has have that Green QX

the of Green improvements September Brick positioned backlog is grew These million capitalize our on buyers. new capturing Additionally, is that new booming demand of the of $XXX as waves to XX% and homes already to XX, indicate XXXX.

selling increased XX and months, number of grew our lots by communities the During controlled and also by XX%. average these XX% we last owned

growth X,XXX opened of relationship and quarter, lots On we of X, this controlled With owned the we confident growth over alone, owned dramatic lots total Green XXX XXXX fact, our new while necessary quarter record our selling and are revenues. communities. topline Brick and controlled spec and lots Slide have in levels added Homes inventory Signature Trophy we significant last between established hit and In owned to and the sold the in in inventory our controlled total that of units XX to and starts lots beyond.

made from this correlated see investment the can been a to on each we growth revenue. you has As future land highly chart in and slide,

ending Slide XXXX. For land company. XXXX. significant already we our XXXX the believe into XX massive XX continue which in sequential XX.X% months September further well and XXXX, quarter, lots ending growth for lots maintain we at and investment, have XX, the total With XX last QX September our XX% our to grown months resulted growth XX, details in the revenues land this investment can over

in Slide will three As lots Signature long-term seen location continued Texas the builders, spread this past unleveraged already market wave dependable the picking regular gross for to of our Homes our investments When growth one months. communities. our brands across communities Trophy DFW new in a a Trophy of two-thirds turn roughly to our the and that new for as rent These minimum was XX% this JENI across and diligent brand target details land a XX source metroplex. slide margins. growth term in new expand over properties XX be our internal industry-leading under represent drives details, significant of we're CB

you past thrilled year and see Trophy’s, more slide, on buyers. map performance, double move and our able communities Trophy community As active have this were been see to the than from selling to both can entry-level up we over

published the Real With footprint to Burns entire believe Trophy continue total come. expand exceed DFW Estate of we to in Consulting most dots. will expected Brick years areas, northern our the green strategic annual is advantage the variety being of we positioning life, lot and Please as the differentiating Atlanta, subjective its from overlaid submarkets DFW be preponderance development for metroplex both a A on be being our communities metropolitan believe to move XX,XXX, jobs The for they housing XX. we the shortages of our our Atlanta affordable in This location, that has our months. of for will locations the market rated builders superior strengthened most and we current peers. in to Based quality starts Dallas the Slide F most market of submarkets other John activity key Green will supply factors, maps the the proximity have which Dallas across of suburbs of us, of location. In communities existence we expect designated desirable believe have positioning such and land grades on environment, on slow results by of desirable. coming our for through infrastructure in where further schools, a as in an can with

more XX, XXX Our grew geared communities we continue community of QX XXXX as communities, from to September as XXXX time open buyer. count toward XX% to first active the

of QX on a focus FICO increased we mortgage risk. this of score creditworthiness at a mitigate believe with home unconsolidated of However, of been buyer XX% average Green exceeding of operate, which on risk an A fundings the The venture, fundamental score with FICO cost saw Based strength our not XXXX is Bricks our profile closings of affordability average will for XXX, we our increased of markets business. the to continue our many XXX. where has

Costello, CFO Rick our discuss more quarter results Next and third will our in detail. annual

Richard Costello

Thanks Jed, QX compares margins QX for thank XX, data. you, Slide please, with joining financial and available review to which pure to our XXXX results. today everybody Flip XXXX us year-to-date our gross

XXXX. results the among was our underwriting quarter-to-quarter for as XXXX At years the margin accounted are and the in beyond. winning we've shown XX, two homebuyer XXX of our demonstrates gross XXXX. we was our margin here. our and reported that performance year-to-date prudent two QX very not sales QX and XX.X% in growth two XXXX, manage were Our year-to-date planning new for and that now price margins which this remainder XX grown but about in segments, pace address mentioned company clearly September and earnings ago, over point ended experience and XXX reported Jed Fast-forward our best points And chart on XXXX markets. provided revenues for the left significant superior concentrating well-prepared segments our up during We to strategy that our that and of margins stable in of XXXX, This is three the basis gross visually over industry. growth six customer QX years alone up our Slide demonstrates believe This conservative distinct of year-over-year that has in XX, revenue nine quarters is revenue land points and for for health any the earlier segment. basis net by one is evidence months with line strong through experienced individually revenues. demonstrates this growth orders all September volume the XX% in XXXX

quarter-over-quarter of profitable and brand growth entry-level our up the terrific Trophy JENI down entry-level homes breaks move family in XXXX follows; up orders were oriented and second in our homes order new brand continued suburbs value to our time QX brand. to Likewise, our move net and of net market the XXX% Trophy’s Our North Dallas. first and sales profitable in in orders up that's strong and of single Southgate XX% time expansion, CB Thanks XXX% and up as due QX net to single-family performance new XX% the desirable townhome highly expansion versus in townhomes of our were reception year-over-year Signature highly respectively DFW XXXX. growth homes

seen continued as centers as improved lockdown of restrictions out from Florida. for we have lifted XX% at homebuyers up as sales to for in Our as urban large demand migrate and Northeast, were targeted have age in South the Florida GHO segment year-over-year, well homes product

XXXX. were earlier. home intentional over urban is XXX% as millennials away dense for by as move demand sales apartment growth up Finally, living, in of This spaces more mentioned as XXXX larger the a QX well Jim from living driven QX urban

Please improvement. move to is related every highlights. great to to seeing point So recap, XX our financial price Slide

function community, in versus rate XXXX was here's XX% increase as operational of net average orders some a QX of in increase the selling XX% by Net new the For and orders be absorption communities. QX this metrics. of of per as key increase well quarter, a for XXXX XX% year-to-date comparisons, increased and a

by average nine by XX% residential September in XX, months increased the order increase XX% absorption. driven improvement for growth our communities XX% XXXX, the ended For a a is XX% in selling up XX% revenues and with quarter. deliveries Home

closed. residential in XX% by homes due year-to-date, For revenues to increase a XX% improved

our delivered Homes, the Townhome the X.X% contribution of sales declined homes sales Homes are periods declines the to Trophy versus comparable X.X% quarter CB ASP company. These attributable division that price revenues. JENI the total sales average in are sell below increasing at these for average XXXX. Both to builders Signature price for Our of of in average homes and year-to-date the price by and

will improve we XX%. this under and preserve up X% earlier, emphasized on As our months with believe XX improved share. to basis, serve last Year-over-year homes homes by affordability are started up market construction a

record, XX% XX% dollar homes continuing did the QX was units higher levels. expect quarter, which and we another year-over-year pace. to XXX starts backlog by this an at accelerated sales expand While of sequentially, The start in over to increased value into in QX we with even

We expect and year. in drive community next growth backlog closing expanded our to growth year-to-date count

As quarter-over-quarter. gross I XXX QX gross and XXXX QX highlighted earlier, sequentially. up margins was From up was points were XXX adjusted of up to adjusted margins basis over a homebuilding gross points exactly points XXX year, this homebuilding basis margins basis QX

the months homebuilding margins points For and consolidated XX, XXXX basis adjusted XXX year-to-date XXX September respectively. were and points margin homebuilding ended our gross nine basis up

XX.X% Turning from XXXX. SG&A months Brick revenues, experienced percentage Year-to-date, of XXXX. to QX XX, the total operating XXX in a in XX.X% XXXX as basis ended for from a basis a nine our expense QX similar in SG&A September XX.X% of Green point leverage, XXX in expense XXXX dropped improvement XX.X% dropped ratio as to points quarterly from the

reduction as from closings levels we and place the record strong of reduced quarter. increased in the XX% in volumes despite of good sales April is have benefited and this headcount which A addition by both effective we XX% portion only growth of the the reduction employee those at revenue year-to-date XX%, start also from end we headcount, In we still X, and quarter. XX% enacted in that large implemented first in and to respectively, quarter overhead methodically

over Our demonstrates quarter of represents year-over-year. coverage and flow not XX.X, capacity interest QX it's clearly XXXX coverage represents needs. well XX.X, of of improvement XX.X Year-to-date, typo, positive interest growth our XXX% generate our for XXX% XXXX, cash that's a a above third our to

increase we year-to-date last – all than same is off basic let new for quarter, period of over EPS our As XX% QX on our $X.XX XXXX set release, period Likewise, the XXX% QX of a a an our year-to-date time which record earnings basis, higher EPS XXXX. basic is year. $X.XX the of

Our our from turn increase book return QX points. XX.X% XX. to grew Slide to an Combined Please adjusted during low income are returns final basis which QX metric net annualized in XXXX Slide XXXX our on on average equity, is XX an of XX.X% with remarkable. debt our leverage, risk X,XXX

compared and net earnings Here measures. risk operating both metric at our team against reflected on with we is and of than residential our is strong in fourth we peers. XX, units the With ranks Jim as on where uniquely adjusted you this levels are drove This And can first further year-to-date peers a growth have price lower which dynamic which in which financial strong. JENI demonstrated financial in how this on that rather we XX.Xx sales focused maintain are EBITDA, combined XX.X% returns you mentioned versus builders can our as affordable increasing the growth, gross growth high leverage on In among conservative during quarter, be both flows. and which included that And we offerings in show of Also margins product, indicates deck. our the low is average small leverage, interest reliance organic our primarily our returns growth this our our our performance provided lower data to here, coverage excellent CB to reduction revenue quarter, again slide diversification and bring of again earlier, that We've debt-to-capital, already our the lower price our our see and previous was Trophy seen brand. mid-cap by is showing Signature quarter. of overall five our discussed organic That slide, ranks rate growth remarkable revenues growth is driven peers. expected leverage great today. column, very cash function to industry-leading rate growth

I XX, average which builder's focuses you to Jim difference on while slide, at call, as QX the look the achieve decreasing at record I'm able just return and points capital return, rates. sequentially. pre-tax our leverage debt-to-capital XXX stressed XXX included XXXX, by discussed. last our each of leverage, we going invested points which in tax lower a And have measure is we’ve to and start year-over-year setting on to were The for Finally, basis disregarding basis Slide results also

will our slide. once this on during as which the rate the quarter, of positions risk, now Our fixed return shown the believe Prudential things in over debt-to-capital chart, the with X.XX%. Private industry, profitability at and interest positive will ratio we mentioned call lowest to opening continue unsecured wrap gross relative of prior is company the industry-leading Jim Q&A. grow will part notes due of thrilled back lowest, in scale the XXXX for on and the call it previous million our who through margins which $XX.X as costs QX on Brick our with issued and remarks, senior again, Jim's in remains limiting are equity one a opening to We continues while for of a are partnership XXXX. up Green generating XX.X% quarter up expand turn be as Also this to tailwind to I Jim? lower to of this XXXX Capital

James Brickman

strategy would more we confident home company. Green Rick. into co-founded Partners years land-focused a successful to than and course a this company Thanks, Okay. be winning public had Brick XX a I ago, but When no build revenue, conservative that local was building I

risk I'm adjusted with continue have year, come. for believe to can we to we our Brick’s superior the and date, success I years at elated return achieved accomplishments Looking to Green improve this upon

we entitled great going XX.X% can and land a acquire clearly owned heavily in one growth proven relies have we on Our this in quarter, I continued sequential forward. meet positions. capacity that and our believe challenge controlled With lots to growth

for the as fact, lots. future and at continue are to able best to sit I growth, strong land In cash pivot core despite to deep large quickly levels of redeploy sellers in balances invest the future and Brick Green the by encouraged operate, where our Brick fact many am Green been With our peers growth that competition of connected municipalities, for end quarter, capital the and historic well of can our operators that the on has local significant I in profitability. roots we believe land to and markets lay the groundwork and our

team Our for of across not work you success without effort, I possible States. have like I this thank the your our and quarter each hard would back United questions. will to to going operator been employees and our the continue great of to the team the would call am you. now strong. has results turn for very our achieve investors confident for I'll out October Thank dedicated started forward. builders Indeed, already

Operator

you. The Michael [Operator JPMorgan. questions. Thank first question for open floor comes the Our Instructions] line Rehaut of of from is now

Margaret Wellborn

on Maggie on Hi. quarter. This is Mike. for Congrats the

James Brickman

Maggie. Thanks

Margaret Wellborn

there? first in exit Have maybe into you could if kick seen October. start seasonality comment I My an that October, out idea strengths how so in the of versus trended orders continuing is far to you on us September. was wondering of rate about coming last give question have any

James Brickman

was periods, right growth same Jim. continue prior quarter, over in huge The saw seen we've really the we of into type October. third This that is which

in So we demand. seen have deceleration not any

Richard Costello

Yes. net haven't Maggie, point, finished the sales month. at but month the we we're quite for data XXX yet, the

the handled. an up. basis, so year-over-year percent We a month, of expect going than to be to something be It's the by higher we're end on XX that

very strong. obviously it's So

Margaret Wellborn

Thank the And increases industry. I we've across the could Obviously, second, been Great. that wondering now. talk about right price hearing if you're about you you. was backdrop pricing seeing

finally, increased than So increases? your are of during lumber those you such recently? could input terms in quarter? if talk prices us of thinking an timing and give of communities maybe of the you increases or how costs the offsetting as you raised And so, if And more about magnitude across those offsetting idea

James Brickman

we're talk and why strategy? lumber to about seeing because starting talk Jed, you pricing finally about decelerate don't that

Jed Dolson

Yes. be also prices We're were Maggie, so since down our very we've mentioned. price input smaller materials price go September. Jim the than been seeing increases they August. the for October increases as in But steadily seeing raising for we're

is we're the seeing direction, a which finally margin lumber from helpful gross other So go standpoint.

James Brickman

try XX% price goal continue price that still is maintain really where the to our And pretty to XX%, to Maggie, good. been looking us, confident effective that's and for can strategy. we're maintain pace margins. versus That's we

lower that option little add not we are we're communities, we – but are As the margins bit seeing than they seeing margin we're the on land, where own market declines.

Margaret Wellborn

guys. Thanks it. Got

Richard Costello

Thanks Maggie.

Operator

Ryan comes Gilbert next question BTIG. Our line of the of from

Ryan Gilbert

Hey, morning, thanks. Good guys.

at in count we – now should versus And I guess community based should out XX%. into continued me Signature the mix seven a I'm from ago. First like question looking for ramp XX on nice seems XXXX lockdown how to Trophy just Signature, XXXX growth. communities going – on that expect that wondering look of year really going your it's what from communities around at XX Trophy where

James Brickman

Jed, is at really Trophy handle grow very a continuing that. can to fast pace.

a But I future. four having tell you I communities their pre-selling and everything two that right an the can drive homes we negative is days takes now are Tuesday. have days model. without me sites think on plan those not really the even I about visited only two Trophy and that going on see thing just it that full to are they're and driving we're exciting the for just opening because

more where Trophy fits kind Jed, in about little a why of you talk to So bit don't our…

Jed Dolson

Yes. Sure.

communities. a have lot new of mentioned, delivered Jim As we

reported Really exceed ground we've excited phases we these XXX think the cases, about lots. very have lot long lots. I communities XX put many just we're In on stores. of is good news Trophy the very for a open runways of that

our without sales So we per in first to communities to month as doing. of a the able ration or previously for we've don't our think time be been out XX sell we cap sales having to more these – or while, we're going

increases big I be we said, should So over communities these more will see with further community Trophy year. Like expect where than double. very we next count absorption

James Brickman

I that hyper-technical margins, rates call inflators on properties. assumptions and not buying these it's we're internal to want this now, important Jim. lot But some the other putting I is big analyst This for these when looking at we're about your thing have that right gross think they're to when in don't return of get or analysis. we know type of

we're forward of attractive terms that if we the keep in price. So very having, lots going tailwinds getting those should be

Ryan Gilbert

Got can it. product? differential up you and more absorption Trophy traditional And Signature between move share the brands your

Jed Dolson

It can price what seeing up $XXX,XXX Trophy multiple brands. sell varies to Xx really to the point price but we're at lower our points, because compared house, other by that

James Brickman

really or the few sales accelerated pace price next the wouldn't we was sales, three could so phase a or Trophy, actually in didn't in so had next off neighborhoods. cut and had be because over have were down but managing what we for of in And two lots We municipality sales the ready, same development slowed that we to that that. neighborhoods quickly sales, actually more do

Ryan Gilbert

the other for any land then level builders are Okay. as and entry of you or noticing Trophy, is you availability competition land buy go how for communities? Got And for it. out

Jed Dolson

a proven has performing markets. Yes. Brick Green of in core record track our

and we're seeing our us. And selecting are oftentimes record of sellers looking but at track so increased competition, closing

James Brickman

he's now. right still it is transaction and year, you that close large if where a it's lot seller to tell working had that sell let give a gains. to closed that wouldn't tell in came a us his study And on you going more very a he this and I is fairly working I case can't we this we're land you Well, that property to going concerned event capital pay But on it. because and we're doesn't me

So react he of this before and came And time. dealt not something and that can He you December? get close that to optimistic that's public guys can And rather timetable. could that done a typically get he's we're very in us builder this kind that large to for we said, long knows a us, closed. with property

Ryan Gilbert

version I is of how extending they're on to industry, times me expected strong we're has the just sense. substantial fourth just been. demand production makes has for That decline, given are seeing cycle it. capacity a of pretty Got – which to backlog quarter for question kind is Okay. suppose been builders throughout guiding Last lot be the

thinking quarter, just into XXX Green homes you Brick’s XQ think modeling about maybe quarter? those third should in extending get all Or – the the or started fourth cycle thinking fourth So in of you you XXXX? the quarter, about times just purposes, delivered are for XXXX we, you XQ do can

James Brickman

higher a at because business question that really are. to start answer still level where we our me with were started and Let

giants in Pulte’s, I are the entitlement, think advantage strategic Lennar’s, our of these And is really that the from and to the operations learned the development manufacturing our continue side process business. from great of their business, land improve we've learning land frankly, side guys. and we the our

so improving, cycle started but higher are times And our they point. a at

extending aren't – cycle much I overall, times our so really think Jed, we're And they? are pretty

Jed Dolson

gone trust a factory week. is biggest Whac-A-Mole. – We're next, The seeing how be from basis. a We a like on get going working the issues. is can't biggest we've vendors brands our but of they to of needing even material comes of game at windows is and at schedule, bit weekly to a an our Trophy one so can we're flow predict as anything suppliers We through little can't much work and these get that all we're exactly thing

QX. more in starting feel So about we good even than XXX homes

Ryan Gilbert

it. Got Okay.

James Brickman

tell it's be can third just significantly get – can't to building I for going going you to exceed some we’re where reason something, cities the quarter starts. permits, Well shutdown you unless

Ryan Gilbert

Okay. you. Great. Thank

Operator

of comes Hecht next Securities. of Aaron line Our JMP question the from

Aaron Hecht

on ability quarter. subcontractor are there you constraints side, guys. is any push wondering not the seeing order growth? that your that limit issue? just may Hey to an I'm Great the Or

Jed Dolson

It’s issue. Jed. is an This

We are the biggest – in is Brick Green builder fifth the fifth DFW.

vendors. where units we're important DFW we to our a getting – So in the of lot have our our revenue, we're very ability. and important We're

what to is haven't production priority getting That I compared I been going be, able relatively one. a tell production good The smaller we're will solve. earlier, it's be said, problem builders. to to problem is we that but can't news found mentioned so haven't next like some And quickly we top you there week's being Whac-A-Mole.

James Brickman

the really starts And decelerating. shifting than is are big The market, other a is is single-family. apartment in that that to more And that's was XX,XXX. helping thing DFW of us starts labor that decelerate component pool a

Richard Costello

for call been market they market top have to XX% there is This Homes, the is you look Thanks at which Also, XX% Aaron. share joining consistently share. Hey, Rick. if and your questions. Florida a GHO our builder

of of closings and Homes Brian with we a so lot Colorado in And subcontractor Challenger there top a got always also focus Springs community. starts, three lot So they the attention terms well there. from in sales as Bahr and get the amongst is attention of

James Brickman

small bought example, the and among closely dip Springs, in three Two three Denver are Yes. building dip market. every eight in builders, Colorado or who told in XX years their very toe the to markets for subcontractor or really want guys seems very held their Springs. Colorado from But a that labor toe public builders

Aaron Hecht

your sounded it. openings which all the continue like be to have to I being expect any managing but could availability. highlighted community or some the And like growth growth sounded going great. pace pace a see year, you're community bit or there. to is you it volatility wondering consistent you're manage there based if Got in of brought think kind of volatility you if lot kind it next to on, that started we little And you your said less on so And – lots the going count, then that

Jed Dolson

be Well, a take we not runway. Jed. this long with We lots can X,XXX on community unfortunately can't, every is

a is A communities it or are So XXX of really balance. lot less. our lots

based starts I ration capabilities we're the lots have able we start XX XX do to we a communities that. to month, And several to every those as to vendor going in our need be runway do what long well communities, we external to internal is on the flagship do have where So capabilities, homes news big as our it are. month. good But where

Aaron Hecht

your If pace that XXXX, now a to be lots, on XXXX, it's you there brought you obviously are specific lot to a there holes are you've any on? lot to you that and is position going you at the focused guys Maybe really backfill? of look based look are that have guys on seeing today, timeframe but

James Brickman

into cash talk We're can positions. cash about flow the flow. reinvesting land heavily Rick Well, our

right We up tee be right have into a conservative balance going to really are sheet. making Those starting are we now. And now XXXX we're that XXXX and early just ball and XXXX revenues. for to investments

Aaron Hecht

seeing, the one participating to start markets have considerably you in thinking growth Right. grow markets currently? to you're new given have for And you runway do within last that me, do or some about enough you're the

James Brickman

which is we're the starts. market, it's Dallas, Well, only of North house largest XX,XXX in

give there's X,XXX you here, building of runway a to over So lot benchmark, here. so houses Horton's a

when about Horton, a they're Atlanta The big, think saying was builder here. neck big. similar. market big I is X,XXX, fight of I behind but still The kind way is

I starts there. think Horton's X,XXX

and but looking going time, there's that So of in start of a back mid-XXXX. if both I made runway think lot we a sense, we're find market we could at those markets, to the in same thought

Aaron Hecht

Fantastic Thanks it. Got it. results. Appreciate guys.

Jed Dolson

Aaron. Thanks

Operator

of Our B.Riley. of comes the next line Alex question Rygiel from

Alex Rygiel

Really you. quarter nice gentlemen. Thank

James Brickman

very in report so. you thank to much call for Hey, coverage. doing excellent appreciate and for Alex. and the to just welcome you your that We initiating wanted Alex, I

So welcome.

Alex Rygiel

XXX increase next from Thank should quarter. Couple With of in The price about we Trophy, here. average quarters? the average part you, to a quick team price the modeling contribution and think few questions. over excited selling closings the of an selling in be how directionally, was about

James Brickman

we I future let's of going pretty where for the is think have we think QX say. foreseeable to representative in XXXX, what be going through we're

Alex Rygiel

of you the on is margin? a that Perfect. sort new about mix that longer pressure over of guess, bit as and strategy, And there's been quarters, a I also, bit little can shift owned the create last could of upon talk helpful. it a of That of expand little couple also term a kind versus controlled, your

Richard Costello

a not shift. the It's that really really It's numbers. within something lies

in and other the controlled. We We noted, it's I a know where couple buckets. the have – of disclose we think owned lots

any we terms Within venture of consolidate category, the owned joint any of our controlled assets venture in joint of lots or our controlled. don't and lots

in Atlanta is for we controlled, Taylor which DFW, included new Jones Bridge So Morrison that in have East or lots Sendera, venture lots we developing are ourselves. are that the there are joint lots a in but with

we bucket there's a the So just because lots don't those represent controlled bucket of lots are in And show on. change consolidate controlled we hard another in that are that then okay. They philosophy. deals don't them,

going blanks, that in might've them in them, October, from has once And we Our those closed are ended. actually acquisition. lots We control, forward inspection move to but count to are October. moving those in We are those owned. on develop. period controlled We're say we close they with

So back, really of when we're this you over to add XX% QX. as XX%

to a isn't is disclose not for great really there account, lots. get It actually a that lots So shift. that question to us continue own we getting allowed option our

James Brickman

what one add to was me saying. just Let Rick thing

high think in has gross by approach our very we're that produced I proven now, think that land and land buying to I disciplined we've margins.

that Earnest the more any putting we are the if carry lot you of land XX% on price, For buy, in analysts up forward discipline you're money, to on the sometimes call, obstacle we going which And lots still if margins, we're some option gross markets. gross not not land to heavy, peers underwriting than margins are XX% to we're the in being going those have semi our deals lots. option greater

Alex Rygiel

of question, Can last in you your upon importance sales. company? your about and of And a as that a investing it have helpful. a Very as public little the lot to topic bit relates peers lot touch to been talking it virtual

Jed Dolson

websites, We buyers. Jed. good the virtual very tours for is this Yes, good we very feel have like

low would buyers without setting percentage. houses be actually a in still foot but some relatively the that the sold neighborhood, have We

their For people, investment. biggest home is most the

So walk the I want the to prior house touch think most neighborhood they for and buying. people to

Alex Rygiel

you Thank very much.

James Brickman

Alex. Thanks

Operator

Barron Our Research. from Housing line the next Alex of question of comes

Alex Barron

understand wanted to ago? Thanks you a would mix gentlemen. bit that many a homes. guys better afternoon, does know Good questions. what you I percentage and how my don't orders or How either consider? little or the morning. how affordable Good Yes, of measure year I entry level the for the taking versus compare of

James Brickman

second. on getting data. a Rick is the Hold

Richard Costello

homes and XXXX single-family of entry-level were my up QX XXX% townhomes in Net XXXX. versus was orders of part Yes. It QX script.

a from So pie. expanding a obviously basis, relative piece the of much it's

Slide chart other buyers, XX. And chart pie entry-level. a we You at reflect shows literally – this the on could entry-level are see our participation actual that of is our where point closings the which in XX%

a of a lot happening growth time, So piece QX, to opened the of dynamic pie. communities that basis most next that's year-over-year fact, that entry-level. them points year on this at Trophy of the a with – And be bigger are kind of the in in to with going it's

Alex Barron

Got it.

James Brickman

Yes.

the mortgages anticipate financial the ability conforming to The are create didn't better. and entry-level seeing in three were ago I But lower mortgages Trophy platform. that other income than platforms and for much services these profitable benefit own our on more the the only our impact, other price years When that because platforms. capture is the have that these We that of in platforms originating higher. rate those these and just we know is houses XX% positive didn't started really we're we

Alex Barron

margins in price to trying quarter into the entry-level of sense next go how a margin get or the And just now I'm power does for the business. next at move-up Okay. to outlook year? versus your right look where

Richard Costello

I'd similar. very it's say

Alex Barron

seems And I And like in one down, it guess, Central are to I was up a I do, could revenues if one. trying the on based your are last whereas Southeast your regions. of breakdown ask significantly. Okay. filings the geographic

that? what's rationale the So for

James Brickman

and returns capital is The is and market, much capital DFW in into easier reallocating higher We're allocation. these scale. on making we're rationale to capital Trophy

platform doing, Our builder an really they than better if in anybody but they're why excited into we home infill development. it you Dallas that's under we do in that do at deal great is best scale. complicated And have business, Providence Bridge, But call very but nice it XXX because Group harder in Trophy to expanded We're Atlanta take a I'll what about were infill the infill. Jones more East look great, is builder. is this and Atlanta, that it here. returns, the they

Alex Barron

it. Got

you thank job. Well, and great Okay.

James Brickman

asking being and for you Thank call questions. Yes. the on

Operator

Our of next Tieton Dezellem Bill of the line question from Capital. comes

William Dezellem

couple A questions. Thank you. of

the in the XXXX. up the second is First of in of think price that sales all, backlog your for was To me I given first Trophy. growth average surprising quarter time since

just in are one. number this? talk what you of general? two, then would implications the So that Number And about

Jed Dolson

Jed. is This

– So our previously we're as segments. across very we've of all demand strong seeing we're seeing discussed,

office. are has our foot seeing line average lot from home square a with be X,XXX foot We're out now luxury that that officing a want example, price home of of just For a home XXX,XXX. Southgate people of move a homes sales under square in to X,XXX

So little a that's bit it. of

The value other mini part oriented. that fours, is Trophy are sixes is homes even several the also and fives selling in

that competition And $XXX,XXX a much we product our the a with value So competitor higher maybe maybe to but at higher, at compared people XXX. priced were several those XXX perceiving have of communities.

seeing – mentioned, But that's market a all bit are demand it. little as I across So strong of segments. we're we also

past for in line month or a Dallas has the consistently XX sold luxury houses six five months. Our

William Dezellem

implications you. Thank Is the where for pricing I next a bit could correlation what ended since of springboard that? any really can things that am now take backlog – reading to that from there rebound too further, up year step QX that that XXXX then. your a have or being And and being into up of started a and taking we much

Richard Costello

But think they're townhome not point. about You're are $XXX,XXX low of building our a JENI growth to see in reading And homes. into you you at $XXX,XXX of lot dynamic our is price instance, Homes, backlog jobs going to tremendous backlog. going Bill. builder, to all at CB selling of build where it, the brands Southgate a It for with Homes, too much you're really putting have homes when and it,

closings with So and is for. particular movement to or ASP it the revenues of any just It's in great backlog in of really sales movement our for have we that not – XXXX period. have a in lot time a accounted reflective knowing enter

William Dezellem

Thanks. Great.

but orders. your a starts up me would between starts a big home to new and up be big quarter, Let normally – XX% the gap number, your XX%, it's really were still up in orders switch

You've you how do gap? to talked about increasing your starts. I guess that ask, close still, I'm going

James Brickman

can now. right we’re starting homes many as Well we as

Jed Dolson

homes. And are gap. and homes many We're of closing also sold spec not our starts the Bill

mentioned tried, in we that sell cases we the If chance even from been could a many want really XX% ourselves orders. house – today sales You But higher. growth have had started months to give now. didn't to limited in and three to we

homes to all the we've next been start trying So the that days. to XX within selling, XX we're

William Dezellem

on Fantastic, just build congratulations quarter. out a and

James Brickman

you. Thank

Operator

David David from Hicks of Company. Hicks comes Our the next question line of

David Hicks

market the availability the the congratulations I'm I've success. your last and have enjoying years. land Good such and future, you morning, watching establishing what over guys Texas XX in importance a North been the curious tremendous of you lot for your as and for reputation Understanding from really times team that good has areas land have we're the that ability can into to were municipalities but in a been [down turn selling, the to in. you seems and your it the zone] commercially work previously seen residential land reputation you given

Jed Dolson

Thanks, David. This is Jed.

on that I wave. the think of we're early cusp

Most seen haven't those or COVID under convert seeing I busy we to both a projects And easier the Dallas perimeter. that more of to XXX of in seeing We and and the we're the to municipality done. really go get commercial Whereas, – facing projects be are the bit a very zoning areas markets, we're work we're things residential. work so perimeter and lots XXX infill less challenges that than units. units, environment, municipalities less XXX if think the out Atlanta working eager in we longer municipalities oftentimes seeing than XX to little our to it's They're our are now. to take right too all

David Hicks

becoming developers able can't skis perhaps handle perhaps less things, Number lot buy some positions and you their just you're at over from or lot lots in and two. a that have seeing available Are well-capitalized builders gotten go to discount? so

Jed Dolson

No.

is in now. – it running Dallas, considered supply XX-month right example, lot at months is We're XX For Dallas equilibrium.

more than a war discount. So of bidding it's a

James Brickman

on demand. that's trailing And

Jed Dolson

Yes.

Jim that's mentioned, As on trailing demand.

David Hicks

great quarter you. Thank Very guys. And good. again,

James Brickman

you. Thank

Jed Dolson

you. Thank

Operator

[Operator I'm call. final this that, questions will that time. Instructions] today's showing there no conference at are we With conclude

wonderful disconnect now your and day. may a You have lines

Green Brick Partners (GRBK) 30 Oct 202020 Q3 Earnings call transcript