Green Brick Partners, Inc.

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 Incorporated third quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Rick Costello, Chief Financial Officer. Please go ahead.

Good afternoon and welcome to GreenBrick Partners' earnings call for the third quarter ended September 30th, 2023. Following today's remarks, we will hold a Q&A answer. As a reminder, this call is being recorded and will be available for playback. In addition, a presentation will accompany today's webcast. And it's also available on the company's website at investors.greenbrickpartners.com. Joining us on the call today is Jim Berkman, co-founder and chief executive officer, Jed Dolson, president and chief operating officer, and Rick Costello, chief financial officer. Some of the information discussed on this call is forward-looking, including the company's financial and operational expectations for 2023 and beyond. In yesterday's press release and SEC filings, the company detailed material risks that may cause its future results to differ from its expectations. The company's statements are as of today, November 1st, 2023, and the company has no obligation to update any forward-looking statements it may make. The comments also include non-GAAP financial metrics. The reconciliation of these metrics and the other information required by Regulation G can be found in the earnings release that the company issued yesterday and in the presentation available on the company's website. With that, I'll turn the call over to Jim Burtman. Jim?

Thank you. Before we start, I would like to congratulate Jed Dolson on his promotion to President and Chief Operating Officer of Green Break. Jed has been an integral part of our leadership team for almost 14 years and has consistently demonstrated exceptional leadership, and a deep commitment to the company's mission and values. Jed has and will continue to play a critical role in driving the company's success. Now, moving on to our performance, I am extremely pleased to report another exceptional quarter for Greenbrick's financial and operating performance. Led by our industry-leading percentage increase of net new sale orders, and record gross margins, we continued to defy the pressure on housing affordability and sales velocity created by the elevated level of mortgage rates during 3Q. Our performance continued to lead the homebuilding industry, highlighted by homebuilding gross margins of 33.3%, which were both a record high for GreenBrick and the best among public homebuilding peers as shown on slide 4. Strong orders and improved cycle times that are 120 days shorter than peak cycle times in 2022 boosted our home revenue deliveries in 3Q by 16% year-over-year to 754 closed homes. As a result, home building revenue increased 5.3% to $116 million. We continue to generate over 80% of our revenues from infill and infill adjacent communities. Net income for the third quarter was $72 million, or $1.56 per diluted share, which resulted in a return on average book equity of 25.3% year to date. We believe our exceptional results stem from our superior locations, our self-development land strategy, operational and process improvements, and most importantly, the hard work, dedication, and operational excellence of our team. Net new orders remained robust during the third quarter, increasing 95% year-over-year to 788 homes. Year-to-date, our net new orders grew 73% year-over-year, the best rate of increase among public home building peers as shown on slide five. Our cancellation rate decreased 130 basis points sequentially to 6.1%, which was the second lowest cancellation rate in company history and the lowest cancellation rate among peers. CHED will provide more color on our sales environment shortly. According to the National Association of Realtors, with higher interest rates and an already constrained supply of homes, National affordability fell over the summer to the lowest level since 1985. As shown on slide six, existing home inventory has dropped to near historical lows, with most of our markets having three or fewer months of supply. Existing homeowners continue to stay put rather than lose their low rate mortgages, and this is particularly true in infill locations. As shown on slide seven, over 60% of outstanding mortgages have an interest rate below 4%, and more than 80% have an interest rate below 5%. GreenBrick has been able to maintain a strong sales pace because a significant portion of our homes are in desirable infill locations, with fewer selling owners selling existing homes and less competition from other builders. Demand has continued to grow, as 3 million additional millennial and Gen Z potential homebuyers have begun to enter the market and are expected to continue to impact demand over the next decade as shown on slide eight. Most importantly, Dallas and Atlanta, our two largest markets, are attracting more of this demographic compared to the U.S. average, largely due to growing employment and relative affordability. We expect this will continue to create opportunity for Greenbrick to offer new home construction in desirable locations and to gain market share in the face of lower available inventory. According to John Burns, new homes are 30% of total home sales in Dallas for the trailing 12 months through August. This compares to 18% for the top 32 markets in the U.S. and 10 to 15% historically. To position us to capture this long-term demand, we continue to prioritize our search for prime land opportunities. As the availability and cost of capital reaches an unsustainable level for many small builders and developers, we have begun to observe more pockets of opportunity. While overall land prices remain sticky, we believe our strong balance sheet and industry-leading gross margins will continue to provide us with opportunities. We expect that our close-knit relationships with local landowners and our entitlement and development expertise will allow us to source and act quickly on deals that are strategically aligned with our business. For one example, our recent acquisition of 78 home sites in Vero Beach for our subsidiary builder, GHO Homes, represents the last remaining new home opportunities in a longstanding desirable high-end master plan community. Due to low existing home inventory and limited competition from other new home builders, we expect to generate attractive returns and gross margins in this community. In the face of uncertainty and rates, we remain resilient and adaptable. We pride ourselves on our ability to navigate the present turbulent environment while maintaining focus on our long-term objectives. I do believe we're in a different dynamic than we were in a year ago. Despite higher mortgage rates, buyers have been adjusting to the more challenging rate environment as we have seen more than twice as many cash deals year over year, but consistently strong FICO scores. FICO scores average 748 on our Q3 closings. We have reduced the use of mortgage rate buy downs since the beginning of 2023, but it is still available in our toolkit as required. And because of our industry-leading gross margins, we will have more flexibility in adjusting home prices as needed. Our team will continue to monitor and evaluate each community and optimize pricing and sales pace. With our operational efficiency and strong understanding of our local markets, we have the ability to modify square footage, floor plans, and options to help address affordability issues and buyers' needs. With that, I'll now turn it over to Rick to provide more detail regarding our financial results. Rick?