Green Brick Partners, Inc. Q3 FY2024 earnings call

• Milestones: 10th anniversary as public company; revenue grew from $246M in 2014 to expected $2B in 2024; CAGR in pretax income from 2015 to last 12 months ending 9/30/2024 is 34%.
• Q3 Results: Closed 956 new homes, home closings revenue up 26% Y/Y to $523M; homebuilding gross margin 32.7% in Q3, YTD gross margin 33.6%; net income up 23.5%, EPS up 26.9%.
• Land Strategy: Differentiated by strategically acquiring and self-developing land, low net debt to total capital ratio (12.5%) and total debt to total capital ratio (16.4%) with low cost of debt; YTD land spend $514M, net lots owned/controlled up 41% to over 37,000 lots.
• Market Conditions: Existing home inventory low; many mortgages have low interest rates; affordability challenges; millennials/Gen Z entering prime home buying years; housing shortage.
• Trophy Brand: 52% of new home orders in Q3, 46% of closings YTD; competitively priced, faster cycle times (Trophy cycle time in Dallas was 3.6 months in Q3).

In the third quarter of 2024, Green Brick Partners completed its best third quarter in company history. Home closings revenue grew 26% year-over-year to $523 million, with 956 new home closings. Homebuilding gross margins were 32.7% in Q3, down 60 basis points year-over-year, but year-to-date homebuilding gross margin was 33.6%, up 290 basis points. Net income attributable to Green Brick in Q3 grew 23.5% to $89 million, and earnings per share increased 26.9% to $1.98. Year-to-date diluted EPS was $6.12, up 34.5%. Home closings revenue for the third quarter contributed a significant portion of the company's overall revenue, with over 80% generated from infill and infill adjacent submarkets.

• Q4 ASP expected to be in the range of $540,000 to $560,000 subject to product mix and business conditions.
• Continue to grow land pipeline, with target of $700M land acquisition and development spend in 2024, expecting more in 2025.
• Community count growth tied to start pace, with an average of over 1,000 starts in recent quarters.

• Material risks from SEC filings that may cause future results to differ from expectations, including factors like land market competitiveness, interest rate fluctuations, and affordability challenges.

Q: Talk about community count growth and SG&A leverage A: Community count growth is tied to start pace; SG&A leverage is likely to remain pretty much constant with top-line growth Q: How has October trended with rates up, start pace, and OCF A: Business is good; start pace around 1,000 homes quarterly; OCF affected by land deals and tax payments Q: Base pricing vs incentives, new markets A: Incentive driven; focus on markets like Dallas, Atlanta, and entering Austin with strategic land acquisitions