Green Brick Partners, Inc.

Can we begin? Thank you. I'm going to do the operator's part. We apologize for the delay in commencement. The operator had connection issues. Good afternoon, everyone, and welcome to Greenbrick's partner's earnings call for the first quarter ended March 31, 2021. 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 GreenBrick Partners' website, 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 first quarter investor call presentation. The company reminds you that during this conference call, it will make various forward-looking statements when to the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. including its financial and operational expectations for 2021 and the future and anticipated impact of COVID-19 on our future operations, prospects, and other aspects of our business. Investors are cautioned that such forward-looking statements are based on current expectations and subject to risks and uncertainties and could cause actual results or outcomes to differ materially from those set forth in our forward-looking statements. These risks are set forth in our first quarter earnings press release, which was released yesterday, Tuesday, May 4, 2021, and the risk factors described in our company's most recent annual and quarterly filings with the Securities and Exchange Commission. Greenbrick Partners undertakes no duty to update any forward-looking statements that are made during this call. In addition, our comments will include non-GAAP financial metrics. The reconciliation of these metrics and the other information required by Regulation G regarding these metrics can be found in the earnings release that Greenberg issued yesterday in the presentation available on the company's website. I would now like to turn the conference call over to Greenberg's CEO, Jim Berkman. Go ahead, Jim.

Okay. Hi, everyone. With me is Rick, our CFO, Jed Dolson, our COO. Thanks for joining the call. As the operator mentioned, Rick, a presentation that accompanies this earnings call can be found on our webpage at greenbrickpartners.com. At the top of our webpage, click on Investors and Governance, then click on the option that says Reporting, and scroll down the page until you see the first quarter investor call presentation. I'll give everybody a quick second to do this. I'm happy to report that the tremendous demand that we saw last year accelerated throughout the first quarter of 2021. For years, we have planned diligently to have the best lots in the best housing markets in the nation with a best-in-class operating structure. And last quarter, thanks to that positioning, combined with the strong fundamentals in today's housing market, Greenbrick has achieved its strongest first quarter results in the company's history. By design, we were ready to capitalize on favorable market conditions of positive demographic trends, a persistent deficit in for-sale housing inventories, and sustained low interest rates to continue to accomplish record results. Highlighting that point, net income attributable to Greenbrick over the last 12 months reached $123.7 million, This is a 100% increase over the prior 12-month period. I want to thank all of the GreenBrick team on the hard work involved in doubling an already strong net income. Likewise, our first quarter net orders of 1,082 homes, an ending backlog of 996 million, both represent all-time records for the company, up 28% and 45% over Q4 2020 record levels. To meet the unprecedented demand, Green Brick started a record 2,043 homes in the last six months and ended the quarter with 2,303 homes under construction, a 62% increase from a year ago. We feel confident that our efforts will produce heightened earnings beginning next quarter and each successive quarter for the rest of this year. This rapid uptick in sales and starts has not been at the cost of our land pipeline. We believe that Green Brick's capability to source highly profitable land without straining our balance sheet will continue to propel our operating and financial results well beyond the bar set this quarter. During the quarter, we acquired approximately 5,600 home sites, expanding our total lots owned and controlled by 118% over the past 12 months, and 31% in the past three months alone. This increase was achieved while starting a record number of homes and maintaining a debt to total capital ratio of 26.4%, one of the lowest among public home builders. Our record starts of 1,039 homes this quarter were despite the severe snowstorm in Texas that impacted construction schedules, leading to the deferral of approximately 40 home closings in the second quarter. Please flip to slide four of our presentation. We are a diversified builder with eight brands in four major markets with a wide array of product types and price ranges. We believe the stratification of products will continue to appeal to a broad base of home buyers and expect that our entry level segment will continue to rapidly expand through growth in our trophy signature and CB Jenny brands. As we have discussed in our previous earnings call, Greenbrick operates under a much simpler owner structure than in prior years, where more than two-thirds of our top-line revenues are now generated by wholly-owned builders. The markets where Greenbrick operates benefit from significant economic and demographic trends, which we will explore in detail in the next two slides. Slide 5 quantifies the strong population growth over the past decade seen in Texas, Colorado, Florida, and Georgia per the 2020 census data released last week. Out of the 25 largest states in the United States, these four states showed some of the highest percentage increases from their population 10 years ago. Texas led the nation with its resident population expanding just under 4 million people this decade. Colorado, Florida, and Georgia all showed double-digit growth over the same period, while the population of the U.S. grew only 7.3%. We believe this positive population growth is evidence that our concentration in Sunbelt and Sunbelt-adjacent states is a winning strategy. We expect that in migration to these states from California and the northeastern United States and the strong demographic profiles of the Sunbelt, will continue to generate positive population growth for many more years and will preserve robust housing demand in our future years. On slide six, we highlight the economic strength of our core markets and present the decline in active listings seen in April 21 from the prior year. Like every other economy in the country, The COVID-19 pandemic created a major disruption in commercial activity and led to a significant rise in unemployment early last year. However, as shown on the right side of the graph, Atlanta and Dallas-Fort Worth have remained remarkably resilient. When compared to employment levels as of February 2020, Atlanta and Dallas-Fort Worth are down only 2.5% and 4.1% respectively, which represents the smallest declines out of the 10 largest metro areas in the United States. Looking at the left side of the graph, you can see that Dallas, Fort Worth, and Atlanta had the largest 12-month decline in active listings as of April 30, 2021, of the 10 largest MSAs, with listings down 70% and 63% respectively. This remarkable drop in listings is evidence of the booming demand in our markets and indicative of the pricing power Greenbrick has in 2021 to capitalize on inventory shortages of existing homes. We expect this imbalance between housing demand and supply in our markets to persist through 2022, providing Greenbrick with continued pricing power to offset or even more than offset rising costs. With 87% of our ending active communities in DFW and Atlanta, we believe that Greenbrick is well positioned to succeed in 2021 and beyond. Additionally, we believe the strong bounce back from the high unemployment seen in April 2020 and the rapid uptick in demand is further proof that our focus on business friendly, Pro-growth markets is the correct and best choice that will continue to differentiate us from peers. Jed Dolson, our Chief Operating Officer and Executive Vice President, will now speak in greater detail to our growth drivers and our land position.

Jed? Thanks, Jim. On slide 7, we demonstrate how our investment in land has translated into an increased capacity to generate top-line growth. As you can see from the chart on this slide, a key driver behind our strong financial and operational results has been our ability to convert investments in land to future growth in revenue. During the first quarter, our lots owned and controlled increased by 4,471 to end at 18,939 total lots, an all-time high for the company. This is a 31% increase sequentially from the start of the year. As you review the chart on this slide, you may also notice a significant shift in our controlled lot position. This increase is primarily driven by increase in land under option of over 5,000 lots from Q4 2020 to Q1 2021. More than two thirds of our lots added related to a roughly 1,700 acre master plan community about 35 miles south of downtown Dallas. The land for these lots was placed under contract in Q1 2021 and was acquired in April 2021. Due to its size and required planning, this neighborhood will not start producing revenue until 2024. We expect a significant portion of the infrastructure costs will be funded by municipal development bonds that are non-recourse to Greenbridge. and at a low cost of capital. After including land under option and lots optioned through joint ventures, we expect nearly 86% of our current inventory of lots owned and controlled will be self-developed by the company. We believe this strong emphasis on land development should allow Greenberg's margins and returns to remain competitive with our peers as these self-developed lots avoid expensive premiums charged by third-party land developers. Slide 8 compares our year-over-year growth in GreenBrick's total lots owned and controlled against available data for other public builders. As the chart shows, our 118% growth in total lots significantly outpaces our public peers. Over the past nine months, we have added over 12,000 owned and controlled lots to our land pipeline. Despite the significant ramp up in land acquisition, we actually saw our debt to capital ratio drop 140 basis points over the same period, decreasing from 27.8% on June 30, 2020 to 26.4% on March 31, 2021. We believe our ability to source land while maintaining our low financial leverage will facilitate continued top-line and bottom-line growth for the next several years. Slide 10 highlights our ending units under construction. Our units under construction are up 69% over the past six months. While we have seen growth at virtually all of our brands and price points, Our unit growth was primarily driven by starts in our Trophy brand, which increased its ending units under construction by 236% during the six months ended March 31st, 2021. As we go forward, we expect the continued expansion of the Trophy brand to establish larger communities with higher absorption rates and unit density. In fact, because of our continued expansion of Trophy, our Q1 2021 quarterly sales absorption of 11.3 units per active selling community was the highest in the company's history. Additionally, our pivot to these larger communities focused on entry-level buyers has not been at the cost of increased risk. Our Q1 2021 home closings saw an average FICO score of 754, with 88% of fundings exceeding a FICO score of 700 per data from GreenBrick Mortgage Ventures. The creditworthiness of our average buyer profile is a fundamental strength of many of our A markets where we operate, which we believe will continue to mitigate risk for our business. I will now outline Greenbrook's growth to illustrate where we stand today and where we expect to be in future quarters. Let's start by going back two years to Q1 2018. We grew our lots owned and controlled from about 6,300 total lots as of March 31, 2018 to about 9,200 lots as of June 30, 2019. So over the span of five quarters, we grew lots by 45%. Because of this acquisition and subsequent development activity, we were able to grow our community count by 33%, from 75 selling communities as of June 30, 2019, to 100 communities as of September 30, 2020. Over the last three quarters, we have grown our backlog by 123% to $1 billion. And as I just reviewed with you, our units under construction are up 69% over the past six months. The second quarter will begin the next phase of our growth story as we will increase our closing pace of our homes. And by the way, our most recent growth in total lots with over 12,000 lots added over the past nine months provides Greenbrick excellent visibility to continued and substantial growth and revenues into and beyond 2023. We expect that our average community size will continue to grow at future price points so unit growth should exceed community growth. In summary, we feel we have a very strong land position in some of the best markets in America with strong demand from low-risk buyers, all while maintaining a conservative debt-to-capital ratio. Next, Rick Costello, our CFO, will discuss our fourth quarter results and annual results in more detail.