GRBK - Earnings call 3 2023 | Green Brick Partners, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Green Brick Partners, Inc.

Third Quarter 2023 Earnings Call. [Operator Instructions] I would now like to turn the call over to Rick Costello, Chief Financial Officer. ahead. go Please

Richard Costello

welcome the and Brick Earnings Partners' Good Quarter to ended for Third September Call afternoon, Green XX, XXXX.

we Following remarks, will Q&A a today's answer. hold

As and being playback. a call available be for recorded reminder, this will is

addition, available the also In and at on presentation today's company's will webcast a is investors.greenbrickpartners.com. website accompany

Chief today Jim President Officer; Operating and Co-Founder on Financial Chief and Costello, Officer. us Joining is Executive the Chief and call Brickman, Officer; Dolson, Rick Jed

company's found call to The has of company's other obligation financial required release operational The financial G Jim? non-GAAP results may November the any expectations. website. With company and company's its the it to yesterday on that the XXXX, information that turn call forward-looking, Some future Jim the beyond. and and press cause metrics that, be the differ statements risks may today, the and over the update X, and also Regulation this for yesterday's is statements no and presentation information on Brickman. the the filings, XXXX in detailed are make. The expectations include material from comments available the of company company forward-looking in to reconciliation its including discussed In SEC by earnings issued these I'll release of metrics. can as

James Brickman

Thank you.

been to continue a role company's Before almost a we and Jed the mission has the start, and XX value. play part success. leadership and integral deep leadership demonstrated Chief critical will President commitment and has years Dolson to driving promotion Officer I congratulate and consistently exceptional in has Operating company's Green his to to team would Jed an like of on of Brick. Jed for our

during sales our affordability on to and the margins, performance. new created pleased and to I increase on and financial the by by quarter exceptional rates report to pressure of record housing for defy moving elevated velocity of we Led our net operating continued Green orders percentage gross XQ. level Brick's extremely industry-leading another am mortgage sales Now performance.

cycle lead to a homebuilding continued high and of best shown days as peak Slide in by revenue are deliveries X. Strong performance times homebuilding bolstered shorter XQ both that peers Brick closed year-over-year than improved for are our cycle XXXX to the XXX XX.X%, homebuilding homes. Green the and among orders in highlighted record times by XX% on industry, public XXX margins Our gross which home

X.X% to As a $XXX increased result, homebuilding revenue million.

and million orders the as and continue believe of and hard to homes. We of new among operational team. Net robust dedication Slide operational and quarter best our Year-to-date, from the was during importantly, quarter over $XX a new work, to public remained per of equity diluted return shown net locations, adjacent process share, most resulted of which increase the grew XX% self-development third our rate XX% XX% the year-over-year XXX orders revenues on superior our or infill income Net year-over-year, our results third homebuilding stem year-to-date. infill strategy, from land peers average our generate X. XX.X% improvements, excellence $X.XX for We increasing communities. exceptional book on our in

constrained the Realtors, our color lowest the higher on decreased level homes, with to an sales rates of the history summer the more to national affordability environment to of since provide was supply rate company sequentially fell already interest which shortly. According cancellation will cancellation and the XXXX. lowest Jed over points National rate second Association Our lowest peers. in basis rate X.X%, among and XXX cancellation

locations. of is X of supply. put lose mortgages. low-rate fewer As this shown in to rather months X, home our continue historical or on homeowners lows than markets dropped infill most Slide And having Existing has stay the near existing to inventory particularly with true

been our relative on million homes and to Atlanta, largest shown homes expected have of continued of shown this owners X%. demand other demographic and growing desirable rate maintain a significant an locations are are Brick grow employment additional and X, compared to decade, in mortgages attracting rate homebuyers interest markets, pace as and the builders. Dallas selling due more below from largely than to portion infill selling has with because has U.S. strong market to more as Gen Slide impact Demand on to below potential XX% X. Most XX% the X less importantly, Z over our millennial fewer continue begun X Green an next outstanding enter X%, have over affordability. able and and interest are competition of to a average, As have Slide sales existing to

August. expect of of We gain total to Brick sales continue to create this land will in XX% home opportunity According homes search XX top the through to share for compares the to available This we historically. To the for to offer face capture continue lower Green in XX% us home construction and Dallas months in the position demand, new desirable for to and John opportunities. new XX% markets XX% in trailing this prime to long-term Burns, XX U.S. are for to market our locations inventory. prioritize

of and small unsustainable have opportunity. availability of and pockets many an level to we for observe begun more builders the cost As developers, reaches capital

While believe to balance we continue prices remain us opportunities. gross provide and strong sheet our industry-leading overall will sticky, with land margins

with to and close-knit us our development aligned our our will quickly We that expertise expect landowners on that allow and strategically and entitlement act deals are source business. local relationships with

from for twice represents homesites last in a home in plan new opportunities acquisition recent low our remaining the long-standing, master builder, our and high-end community. Due desirable, subsidiary competition homebuilders, and pride different turbulent rates, to this been were example, scores. Homes, we year [indiscernible] GHO maintaining on we have adjusting buyers in X environment as rates, but QX of returns XX remain while face we're limited do to uncertainty many present challenging to Beach focus the FICO more dynamic deals Vero our For expect seen of closings. margins and on XXX in We FICO as the resilient inventory than than cash home objectives. I rate attractive navigate a have averaged higher year-over-year, In long-term community. to scores strong mortgage ago. the ability our existing more generate our environment we on adaptable. a in Despite consistently we ourselves believe gross in

XXXX, as home the needed. mortgage we flexibility more gross but as will use buydowns beginning required. We margins, available of is our And have in it since our industry-leading reduced tool of have the an still because of rate prices in adjusting toolkit

evaluate modify continue and optimize pricing to have to to now and over turn Rick options understanding footage, will plans each and efficiency community affordability local regarding detail to provide needs. With and ability monitor it to more that, I'll strong operational our Rick? our and pace. With financial help sales address the floor square we team of buyers' markets, our Our and issues results.

Richard Costello

Thank has $XXX,XXX. X% X Slide units This Home the closed mix their within decline footage of $XXX regard, you, for the they year-over-year transitioned XXX both X.X% increase in as ASP expensive in by Jim. In the revenue in to square Homes most prime locations. was from by predominantly Trophy. homes that offering a close The to Signature Trophy delivered. is a third homes partially shifted closing our increase Trophy to product to grew of smaller Please turn offset percentage in million their houses quarter well closings XX% in by home ASP as presentation. decline our out by driven year-over-year to as and change most driven a

by not ASP. was margin Our homebuilding a gross affected lower

industry primarily it increase homebuilding level have of the points XQ a XX.X%, quarter, highest to and among consistently to X. SG&A, for record brokerage than due On of an was was basis Homebuilding XX.X% XX gross quarter. unit Slide basis in been climbed historic of XX as higher margins contrary, commissions our residential the on points record quarter previous to QX each of norms has in percentage have in since year-over-year high reached for This deals. third co-broker returned shown third as the set during the revenue up XQ 'XX 'XX. that the a

For to credits. to share, the diluted respectively, million in for income increased connection down due were $XX per stricter earnings per tax to a share with the Net timing slightly Brick million. Green to eligibility attributable $X.XX $XX and and home income rate efficiency X.X% quarter, and energy pretax higher XXL

qualification We expect credits the compared fewer for this tax to homes requirements. due to year XXXX in change be to eligible

homes we capture building STAR-certified future available tax ENERGY to ability more to increase However, are credits. our

as growth share peers on our we per the value $XX.XX up face in continue of was quarter, year-over-year. the lead book the XX% end homebuilding of X. Slide public at new higher year-to-date mortgage order rates, In to Our shown

units. community. million. Active XX% During a XXX per new home rate communities homes $XXX from to Revenue home active to XX% new up to XX% XX the was year-over-year orders X.X third quarterly orders net year-over-year to in of quarter, increase XX% end leading absorption increased year-over-year to our QX the increased at selling average selling

rate in the history. this quality to strong among and of We decline, rate locations, in our lowest third and Our a X,XXX third the second our experienced dropping the XXX we quarter peers. cancellation was for markets. cancellation growth quarter is lowest XX, demand to homebuilding basis continued core believe And sequentially Slide shown company on X.X%, as points basis the in-migration points also year-over-year public function demographic

are in quarter by level. infill existing of locations. Fueled Our lot year-over-year end increase XX% X.X% mortgages. year low the of supply and Backlog backlog to There million. areas to competitors of been value for homeowners increased these development our and closer $XXX finished home from entitlement has desirable Backlog forfeit total as the to we those also the processes costs gradually interest competition due XX% our the to complicated last infill higher existing from to increased $XXX,XXX. desired increased communities required more limited new slightly build demand, third to now end availability, have at fewer and ASP strong able home their the lack and reluctant land adjacent face rate are

a XXXX. homes in sold Now of end on earlier lower points quarter, of as our This are homes. Spec delivery of of the backlog spec our with a from builder, unlike number end ASP is not percentage larger same portion comfortable at at compared sold. a construction, who the third as construction, XX% of stages portion in were under smaller at finishing construction. the to units XX% quarter ASP decline quick greater that homes, did overall sold of they Trophy, under which closed builders, of Trophy backlog a units our during a other more buyers value closed was home down now represents price as the at total homes decline

over of meet demand X,XXX indicating the XX% by delivery mortgage started since anticipate XXX in our of those roughly for continued per in starts backdrop high-performing to starts strong at up ramped markets with of line last is averaging pace we in and of movements our we to XX level X,XXX starts now X and starts pace year. Subject the of year-over-year XXX start Georgia Texas, a Year-to-date QX, rates, against during the quarter. the robust of occurred the quarters, homes Additionally, the continuing demand. through This year in September have for to accelerated to the Florida. starts beginning quarter homes the total pace

rate rate Finally, with the third XXX% of ever. of end X.X%. an than our stronger is pay fixed debt At our sheet quarter, average the was of balance

We hand to million deploy end that on third opportunistically. cash ready have quarter is $XXX the at the of of

We ample flexibility. and of on providing drawn $XXX of credit, lines also amounts no liquidity have million

and to basis of as year X/XX/XX XXX XXX points basis sequentially XX.X%. ratio decreased debt-to-total-capital points from Our last

Our X,XXX net-debt-to-total-capital of basis quarter's X.X% and ratio was end, year from the points last from down points last as XXX basis quarter.

while to the now opportunities. With Jed? we our continue of improve growth evaluate will that, to it turn strength over I'll sheet Jed. balance We carefully

Jed Dolson

This sales continued up outweigh orders you, year-over-year Thank surprise demand orders were during XX% to higher. are Net not seasonal higher trends adjacent rates, in supply Rick. and XX% net infill third in stronger typical Despite as us year-to-date locations. now across and infill to were the was orders quarter. mortgage a QX our brands than our

during increased While is rates third robust, more mortgage quarter. demand affordability became as challenging the

result, up September a orders incentives on to new As picked X.X%. in

sales in from at For previous incentives X.X% the averaged up of price, quarter, quarter. X.X% the

most perimeter the require incentives. Our neighborhoods

managing carefully on community-by-community a sales are basis. We our pace

offering In in home. purchase purchase, and selective cause and affordability While and a to where limited sales a cost they increased much they credits affect restored can create year-over-year rate impact concerns buyer incentives a psychology plus remain afford may rate decisions buydowns on X% home that buyers' orders October, closing on an strong mortgage whether how can neighborhoods. and purchase we to and/or negative house

carefully to continue on for to to We providing the market as and broadening our type affordable pricing provide, as buyers. to of as monitor our well drive options floor intelligence our plans will decisions options what our to adjust of market more and when potential buyers build base use needed prudent, exactly

As us be homes industry-leading to pricing Jim more in margins down. mentioned market our the our should if earlier, afford gross slows aggressive

uncertainty days Our With in stable. average. This days availability the another total XXX supply which overall months, also improvement of to turn investment. is to by during and XX heightened from to times the market, for homes is remains months decreased allowing thereby sequentially frequently increasing in year, chain inventory times rates. a return cycle X.X on more approximately peak This Trophy materials, more cycle to of to XXXX. in critical X.X declined to improvements facing inventory of the Trophy on our effective on homebuyers third than is closed labor our allowing bring quarter more Trophy cycle time

largest DFW with in efficiencies along performance. We homebuilder improve our scale cycle to will continue the to time operational us as better allow expect our third our

believe capital Our our focus efficiently sourcing, opportunities that land under we underwriting managing developing our will new growth remains on we closing and for story. disciplined accretive be continue as

adjacent year expect performance, shown infill acquisition opportunities. side, exceptional land of locations have XX. Based gross continue On finished XX% of infill margin on we XX the our lots of end the as have more margin land approximately Slides and in as X,XXX been lots development allocating and and those XX, operating to to on the with resources toward we

supply-constrained quarter is will Austin. quarter, new we Austin, end Downtown popular Valley, closed in The Austin. near Austin Future acquisition July. submarkets. I hold XX,XXX we Ranch, sale share transaction conveniently quick Austin, solid that positions on Braker residents With to a ample owned grow the third also the an are second opened across like deals. market well land on update positioned employment community the end like was in the and we the and notable During plant infill semiconductor land our access our markets high-quality over hubs provide opportunistic pipeline, several and our October, land for at in activities. At Trinity and to adjacent community, UT Samsung, enjoy of located with would controlled. lots first our in infill of to recreation One

opening. amount We XX The around are Ranch we interest homes Ranch Austin of the months. at Trinity X the is traffic At sold on very and since area in encouraged first for to Homes Trinity new to remarks. of creating closing had excellent by it ASP expand The of continues the the I'll a end October, population $XXX,XXX. Trophy in resilient growth and new excited experience job life, to footprint Jim Signature turn driven of market over that, families. We're of an value-rich quality through homes. With by influx our homes the

James Brickman

today, our express to as Jed. is believe people. to We I To only appreciation our company Thank want that conclude my employees. a as extraordinary call you, its

contributions. a homes Brick's to building to executing strategic sheet. has balance success long-term that promotion have in housing. congratulate led margins and are him Jed's capitalizing maintaining and has pride mission well-earned his on committed also embodies worked our on gross achieve ourselves for disciplined time our and performance goals vision Jed strong share, tirelessly industry-leading our while leadership for We and and to and We Green proud to demand a the and to his team and company's operations at to again. I market growth. We approach industry-leading like again expanding thank would and the strategic exceptional remain

are for prepared We to create participation our continue equipped well for value again shareholders. Thank and your to support. our you concludes once remarks. This

will for We line open questions. the now

Operator

[Operator Instructions] from with line the of Your question McCanless first comes Jay Wedbush.

James McCanless

you Trophy any Signature, maybe question first now brand the running price that ago? could X about or the on a versus shift been for quarter us had I in where they give ASPs color where So had, are talking

Jed Dolson

a -- X from, say, seen we $XXX,XXX the is down $XXX,XXX to dip we've approximately past This Jed. quarters. over Yes. Jay,

James McCanless

think that's brand? the that of forward the going do to going And be with kind you rate run

Jed Dolson

Probably. mix figure now. hard It's to out right

that $XXX,XXX. averaging homes is I mentioned just build down think about we smaller Austin We there.

the the homes, consumers below towards So are down it gravitating smaller if could possibly go $XXX,XXX.

James McCanless

go is And then same with the you that trend the as we still smaller to other question had those homes, percentage? Or I to smaller how footprints? the are margin gross talking going

Jed Dolson

Yes. Great square consistent question. We're Trophy margin across seeing footage. at

James Brickman

little of Jim. is bit this Jay, add to color that. a To

think percentage capital see down. Trophy much to margins. of I go to able at is we're our greater that that revenue, Trophy because going are our But As we're to be a the to still return be maintain slightly going to going optimistic inventory on same turn you margins continues on faster, lower

the to come that think sales to slightly time. faster be we but to pace, slightly So margins, going the our lower of lower just are brands, it's rest economics similar going cycle

Operator

the comes BTIG. question from Reichardt Carl next Your with line of

Carl Reichardt

Jim, Jed. and of some now. opportunity seeing land you Congratulations, about talked pockets

One peers had a yesterday who deal on your they on can't from put they're or builder them deals, hook, see developers, a a of small thought said lot that or for walking balance are to builders sheet builder a small starting whatever.

to make that suddenly weren't there it's attractive opportunities them they're and underwriting those available up? show kind else you Can to they're related So of more of traditional Is about margin this more you're deals Trophy, to seeing What If to? there? made like before? seeing the talk opportunities. they you're has some the kinds is related what something And changed price, out business? not

James Brickman

very of not development now acquisition what's That's a get option developer. in to loan on. a capital Well, optimistic at demand. It's going very seeing but we're the demand lots cashed why pretty future for think process developers difficult about really we We're I where housing, going were still is bank have a strong this we out for availability. actually main to an is And driver right some phases.

And there phases of took been options were them favorable know, at that had wanted these company you about been million we building -- are opportunities. We helped by to great our in really a really cash. in basically think badly, those that for As sales, to weeks, situation with we cashing cash lots we $XXX X sitting on we've and buying neighborhoods, with economics or X X -- and there's future more we on we great, -- we seized year, opportunities. we've be X that think years going developers because

And to X a or One or now buy have we commercial a for if so work that out. them. larger it either we residual finance components family working lot land. don't really a are opportunities buying those of that we if we right multifamily value We competition even put in value, a basically, buying X properties the won't. of or of are -- the don't transactions parcels in that townhouse to a the might risk And where Those have single in to they lot of will we're other difficult minimis the de deals on now. very those component large small at is builders parcels and don't have right the component piece very have maybe of small them

of environment and of seeing end we're the the cost first capital of constrained lending of So higher kind yes, capital. the because just markets opportunities the of

Carl Reichardt

end the a That's of move-up talk you the performing, answer. some what the on business other the seeing Trophy, are sort those of And a higher it's communities there segments how the builders and are performing, about how are business customers Can we comprehensive about obviously, a talked that addressed the you and of the very that then your and public what don't seeing. doing? of second customers lot lot

Jed Dolson

second infill is I'll up. even very in strong third move Carl. Jed. demand time for Yes, This seeing and the take that, We're locations the

and complex. lower seeing build easy -- so price seeing points strong not we're continued homes, at very the entry-level So houses are less Trophy Those as incentives we're to those demand. more they're far as

happy we're homes those with selling that at pace we're the So sales today.

Richard Costello

Rick. as like real And did probably strong cash is our Carl, before deals our is X% recognizing, twice -- interestingly many are CD. this getting a Interestingly, still we hey, as this are we're there. XX-year seeing as deposits buyers And

assets So capability or they in there -- have cash. the already selling of

Operator

next with B. Alex Your of comes Riley from line the question Securities. Rygiel

Alexander Rygiel

quick quarter, questions Nice of couple gentlemen. here. A

the can new First, about talk you community quarters? a bit sort of the little next for net X planned openings

Richard Costello

range year, obviously. with plenty on percentages we're any end the disclosing including not going We're of the at lots ground have kind of community of the to in X,XXX But communities, growth. finished new start opportunities new of

Jed Dolson

long lots. sales just be had. like gap like add on homes up lots -- limitations land an is previously of like standpoint, about the so the the get fact We at. build just matter about and/or X,XXX a the we're environment. we're have that like would not not We time we these and really The basis From We we it much. excited we operational we're development worry I to feel to the just excited ground out to against situations locations, and will in takes really today's love bumping

Alexander Rygiel

home Is target assume? absorption were, a X.X then community. higher now? Starts your Is number a or outpaced orders home safe And per that I X new new sort of think, or starts bit. to a

Richard Costello

If that the top in are wonderful. we've great. year, That's for X.X, would the entire it but the the right like side year. we on now entire that -- X works of it Actually neighborhood, neighborhood for is more been we're be

James Brickman

make we Trophy at neighborhood. opening sales more a points, a Jed? obviously, we're month, in price per thrilled sales did were We Austin, we there. and expands grand XX this just expecting What lower had As lot

Jed Dolson

We did.

James Brickman

month. sales price expect point, we $XXX,XXX a neighborhood. But in per don't as next promise. hope that I expands more lot do we Trophy I So the

Operator

Barron question next Your Alex Instructions] the from of [Operator Housing Research line comes with Center.

Alex Barrón

quarter. the Good job and morning, great on gentlemen

know But in I couple on much how your And this minutes. already. was out curious to how of of obviously, you had of high I don't foresee just margins? asked margins, kind into step new I guys the those or year a in being so? is somebody do here. next embedded the incentives way a Sorry, those if for sustainable

James Brickman

Well, locations, minimis. the in Incentives locations. Alex. AAA it our in Georgia Providence builds were margins particularly a there The partly, de In C we location infill totally Group in like only answered for Trophy, Pulte competitive we're the what guys? where large what be Horton going to other other with Jed, down incentives our going builders. be public you're street are to and seeing with from totally and

Jed Dolson

could range X%. up they Yes, to

Richard Costello

And by X.X% the very on during to really, Alex, from We it's basis. much X.X% to from incentives blended community a going vary went total QX. to quarter QX

interest higher. going bit rates a high, if to be going to remain little So they're are

So depend your is it rates. what really forecast will for interest on

Alex Barrón

Got those have I of if average down, any household average Jim, income? that putting wondering down for guys in What's the your you things? average of terms consumer. was payment types it. What's average of their kind they're FICO, statistics -- what's their

James Brickman

does XXX. perimeter, was payments as goes that a over FICO And location, varies builder, out down AAA goes move are as average the into payment. as the up down. move Well, $XXX,XXX. it our in Down Obviously, GHO, with the you Florida it you

in When cancellation to experience more I digit. they're as probably X will Our a XX% still infill to typical And you rate. was C location, go locations, XX% a single cancellation think, result. we the rate, the

Alex Barrón

incomes household you about seeing? What that are guys

Jed Dolson

to I hate community. that number by an They really exact within on so Trophy range It's that. community give just even widely

Alex Barrón

there's get get this for is looking wide perception trying I'm what that to to like home, trying hard people X% so the that qualify. to just guess what I'm at that's obviously, But are at. at depends what is people I

James Brickman

we're still the location, that most question? tells If joint incomes, pay. the but our answers can the C on room us there's of buyer venture Well, wiggle mortgage in pushing your

Jed Dolson

income the low far Yes. household seeing it's add ratios the locations I uncommon debt-to-income month. we're the Yes, XXs. would for -- locations, not $XX,XXX perimeter in those for to and perimeter $X,XXX in a that in average

James Brickman

communicate think thing touch that Alex, enough analysts to investors. we other let X on and I don't me

Our the smallest Trophy the we earnest at payment Jed, what's money down or brand, deposit get Trophy?

Jed Dolson

$X,XXX. Typically Yes,

James Brickman

Okay.

it's house a $X,XXX earnest for because their another in rate say, a shop. give us peers look much Many when a with when reason $XXX our of is take Trophy. money expect actually That's our let's basically people to cancellation accepting and lower a not option We they're you close. we're contracts earnest at So It's $X,XXX credit buyers. to deposit. so free why money repair a backlog, they buy

Jed Dolson

And we're brand, seeing seeing finished buy the Trophy they buyers most days. close transact, where especially homes and XX with contract them can within we're

James Brickman

trying I'm are all created what not backlogs equally. to say So is

higher backlog. a have quality We

Alex Barrón

more, standard buydown? could ask down guys it. buy Got And the standard if I commitments X are rates you the using -- forward just or lower to points rate

Jed Dolson

for tells -- rate We're close rates but the underneath quarter, market was we're our JV rate what pay us closing we and We're using for our about period. incentive average that was XXX for that during down mortgage -- forward commitments, using time typical day costs. some -- using pay this package, our bps consumer is -- it partially mortgage partially to that

to So using of buy rate. that the some down they're incentive

Operator

all this at today's This you are there time, call. Thank concludes joining. questions. Ladies Instructions] gentlemen, further for and no [Operator

You may now disconnect.

Green Brick Partners (GRBK) 1 Nov 232023 Q3 Earnings call transcript