Q1 2025 Green Brick Partners Inc Earnings Call
Speaker Change: [music].
Operator: Thank you for standing by.
Thank you for standing by my name is John and I will be your conference operator today at this time I would like to welcome you to the Green brick partners incorporated first quarter 2035 earnings call I will now turn the call over to Jeff got interim Chief Financial Officer. Please go ahead.
John: My name is John and I will be your conference operator today.
Operator: At this time, I would like to welcome you to the Green Brick Partners Incorporated first quarter 2025 earnings call.
Jeff Cox: I will now turn the call over to Jeff Cox, Interim Chief Financial Officer. Please go ahead. Good afternoon and welcome to Green Brick Partners earnings call for the first quarter ended March 31st, 2025. Following today's remarks, we will hold a Q&A session. As a reminder, this call is being recorded and will be available for playback.
Speaker Change: Good afternoon, and welcome to Green brick partners earnings call for the first quarter ended March 31 2025.
Speaker Change: Following today's remarks, we will hold a Q&A session. As a reminder, this call is being recorded and will be available for playback. In addition, our presentation will accompany today's webcast and is also available on the company's website at investors stock Green brick partners Dot com.
Operator: In addition, a presentation will accompany today's webcast and is also available on the company's website at investors.greenbrickpartners.com.
Jeff Cox: On the call today is Jim Brickman, co-founder and chief executive officer, Jed Dolson, president and chief operating officer, and myself, Jeff Cox, interim chief financial officer. Some of the information discussed on this call is forward-looking, including the company's financial and operational expectations for 2025 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.
Jeff Cox: On the call today is Jim Brickman, co founder and Chief Executive Officer, Jed Dolson, President and Chief operating Officer, and myself, Jeff Cox interim Chief Financial Officer.
Jeff Cox: Some of the information discussed on this call is forward looking including the company's financial and operational expectations for 2025 and beyond.
Jeff Cox: In yesterday's press release, and SEC filings the company detailed material risks that may cause future results to differ from its expectations.
Jeff Cox: The company's statements are as of today, May 1st, 2025, and the company has no obligation to update any forward-looking statement it may make. The comments also include non-GAAP financial metrics.
Jeff Cox: The company's statements are as of today May one 2025, and the company has no obligation to update any forward looking statements. It may make.
Jeff Cox: The comments also include non-GAAP financial metrics, a 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, which is available on the Companys website with that I'll turn the call over to Jim Jim.
Jeff Cox: 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, which is available on the company's website.
Jeff Cox: With that, I'll turn the call over to Jim. Thank you, Jeff.
Jim Brickman: In addition to reporting some of our record first quarter results, I would like to congratulate Jeff Cox on his new role as Interim Chief Financial Officer. Jeff joined Green Brick back in 2023, and since that time, he has been busy learning our culture, business, and improving the collaboration among our accounting, finance, and IT departments. Jeff has already proven to be an invaluable asset, bringing over two decades of extensive finance and accounting expertise within the home building industry. including his tenures at Richmond American Homes and Lenara, which provides a strong foundation for his leadership during the transition.
Jim: Thank you Jeff.
Speaker Change: In addition to reporting some of our record first quarter results I would like to congratulate Jeff Pax in his new role as interim Chief Financial Officer, Jeff joined Green brick back in 2023 and since that time. He has been busy learning our culture business and improving the collaboration among our accounting.
Speaker Change: Since the 19th departments, Jeff has already proven to be an invaluable asset bringing over two decades of extensive finance and accounting expertise within the homebuilding industry, including his tenures at Richmond American homes, Ashland, now, which provides a strong foundation for his leadership.
Speaker Change: During the transition.
Jim Brickman: Furthermore, I am delighted to congratulate Bobby Samuel on his promotion to Executive Vice President of LAMP. Since joining Green Brick in 2018, Bobby has been instrumental in shaping our strategic land and lot positions and strategy that I will talk a bit more about later. As land is the primary driver of our profitability and industry-leading margin. Bobby and his team are a critical component of our company's tremendous growth over the last several years.
Speaker Change: Furthermore, I am delighted to congratulate Bob Samuel on his promotion to executive Vice President of land.
Speaker Change: Since joining green brick in 2018 obvious been instrumental in shaping our strategic land and lot positions and strategy that I will talk a bit more about later.
Speaker Change: The land is the primary driver of our profitability and industry, leading margins Bobby and his team are a critical component of our company's tremendous growth over the last several years.
Jim Brickman: We are excited to see both Jeff and Bobby embrace their new roles and contribute their considerable talents to the future success of Green Brick. Moving to our results, despite consistent affordability challenges, we started 2025 with strong results, thanks to our strategic focus on infill and infill adjacent locations, coupled with our self-development strategy and total avoidance of the high cost of capital associated with land banks. In the first quarter, we closed 910 homes and grew home closings revenues by 11.8% year-over-year to $495 million, a record for any first quarter. Our home building gross margin, the 31.2%, continued to lead the home building industry.
Speaker Change: We are excited to see both Jeff and Bobby embraced our new roles and contribute their considerable talents to the future success of green brick.
Speaker Change: Moving to our results despite consistent affordability challenges, we started 2025 with strong results thanks to our strategic focus.
Intel and Intel adjacent locations, coupled with our self development strategy.
Speaker Change: Total avoidance of the high cost of capital associated with land banking.
Speaker Change: In the first quarter, we closed 910 homes and group home closings revenues by 11, 8% year over year to 495 million a record for any first quarter.
Speaker Change: Our homebuilding gross margin of 31, 2% continued to lead the homebuilding industry.
Jim Brickman: Net income attributable to Green Brick during the first quarter was $75 million and diluted EPS was $1.67 a share. Our book value grew 25% year over year to $37.09. Net new home orders of 1,106 broke our previous record by 2.2 percent.
Speaker Change: Net income attributable to green brick during the first quarter was 75 million and diluted EPS was $1 67 a share.
Speaker Change: Our book value grew 25% year over year to $37 nine per share net new home orders of 1106 broke our previous record by two 2%.
Jim Brickman: Our exceptional team played a crucial role in our strong results in a challenging environment, and I would like to personally thank each of our associates for their hard work. We recognize that economic uncertainty is impacting the market from various fronts. Persistently high interest rates, tariffs, and trade wars, government workforce reductions, funding cuts, immigration restrictions, and the sharp decline in stock prices have eroded consumer confidence. While the shifting macroeconomic landscape presents headwinds for the entire industry, we believe the core strengths that have driven Green Brick's success over the past decade will enable us to navigate any challenges with greater confidence and flexibility.
Speaker Change: Our exceptional team played a crucial role in our strong results in a challenging environment and I would like to personally thank each of our associates for their hard work.
Speaker Change: We recognize that economic uncertainty is impacting the market from various fronts for us.
Speaker Change: <unk> high interest rates tariffs and trade wars government workforce reductions funding cut immigration restrictions and the sharp decline in stock prices have eroded consumer confidence.
Speaker Change: While the shifting macroeconomic landscape presents headwinds for the entire industry. We believe the core strengths that have driven green brick success over the past decade will enable us to navigate any challenges with greater confidence and flexibility.
Jim Brickman: The essence of our business has been, and will always be, land, which is the starting point of every builder's profitability. We understand that land has risks and we mitigate those risks by having decades of experience in our markets, using conservative underwriting, having an investment rate low leverage balance. Our approach to land has allowed us to produce home building gross margins in excess of 30% even with these economic headwinds. During the first quarter, approximately 80% of home closings revenue was once again generated from infill and infill adjacent submarkets. We believe our superior land and lot positions in stronger markets like DFW will continue to provide a significant advantage in navigating market turbulence.
Speaker Change: Essence of our business has been and will always be land, which is the starting point of every builders profitability.
Speaker Change: We understand that land has risks and we mitigate those risks by having decades of experience in our markets using conservative underwriting getting an investment grade low leverage balance sheet. Our approach to land has allowed us to produce homebuilding gross margins in excess of 30% even with these economic headwinds.
Speaker Change: During the first quarter approximately 80% of home closings revenue was once again generated from infill and until adjacent Submarkets.
Speaker Change: We believe our superior land and lot positions in stronger markets like DFW will continue to provide a significant advantage in navigating market turbulence.
Jim Brickman: Finished lot costs, another headwind that the industry is facing as it grows more committed to the land life model, will have much less impact on Green Brick because we own 86% of our land and self-develop nearly all of our lot. This strategic approach of avoiding retail land prices and the future compounding impact associated with land banking allows us to more effectively and efficiently control our lot costs, development, and delivery timelines during uncertain periods. We are under no pressure to purchase lots if the market slows to meet the contractual takedown requirements associated with land banking. The upfront capital, entitlement expertise, dedication, and effort required to self-develop large, highly amenitized, long-term master plan communities are significant, which is a deterrent for many large public home builders.
Speaker Change: Finished lot costs and never headwind that the industry is facing as it grows more committed to the land light model.
Speaker Change: We'll have much less impact on green brick because we own 86% of our land and self developed nearly all of our laws.
Speaker Change: This strategic approach of avoiding retail land prices in the future compounding impact associated with land banking allows us to more effectively and efficiently control our lost cost development and delivery timelines during uncertain periods. We are under no pressure to purchase lots if the market is slow.
Speaker Change: To meet the contractual takedown requirements associated with land banking.
Speaker Change: The upfront capital entitlement expertise dedication and effort required to self developed large highly and monetize long term master planned communities are significant which is a deterrent for menu large public homebuilders power.
Jim Brickman: However, being able to undertake and successfully and cost-effectively complete these complicated projects is a differentiator that we believe is one of our core strengths, both in the short-term volatile conditions and in the longer-term. We believe our large master plan communities will continue to deliver impressive financial performance and returns to our shareholders, while also providing outstanding value to homebuyers. We believe that investing significantly in desirable locations, premium amenities, and other high-quality enhancements will create an attractive living environment that appeals to prospective homeowners and provides value to existing homeowners over the longer term. This strategy has cultivated a strong reputation for us within our local market.
Speaker Change: However, being able to undertake and successfully and cost effectively complete. These complicated projects is a differentiator that we believe is one of our core strengths. Both in the short term volatile conditions and in the longer term.
Speaker Change: We believe our large master planned communities will continue to deliver impressive financial performance and returns to our shareholders. While also providing outstanding value to homebuyers we.
Speaker Change: We believe that investing significantly in desirable locations premium amenities and other high quality enhancements will create an attractive living environment did appeal to prospective homeowners and provides value to existing homeowners over the longer term.
Speaker Change: This strategy has cultivated a strong reputation for us within our local markets, we rarely bid for land deals, which often leads to overpaying for land.
Jim Brickman: We rarely bid for land deals, which often leads to overpaying for land. We particularly avoid the highly competitive bidding process for deals with shorter durations of two to three years sought by land banks. Land sellers desire to work with us because they recognize we are not just another home builder. Our willingness to acquire raw land with various entitlement complexities is proven out with our strong long-term relationships with land sellers, ensuring value for our neighborhood. We believe we are viewed as a reliable partner who possesses the balance sheet to close deals quickly, who has the expertise to navigate municipal and local government processes efficiently, and who build a superior product at compelling value.
Speaker Change: We are particularly avoid the highly competitive bidding process for deals with shorter durations of two to three years sort by land bankers.
Speaker Change: Land sellers desire to work with us because they recognize we are not just another homebuilder, our willingness to acquire raw land with various entitlement complexities is proven out with our strong long term relationships with land sellers.
Speaker Change: During value for our neighborhoods. We believe we are viewed as a reliable partner who possesses the balance sheet to close deals quickly who has the expertise to navigate municipal and local government processes efficiently and who build a superior product at compelling values.
Jim Brickman: We recognize the importance of maintaining affordability in our neighborhood. However, we are committed to avoiding a race to the bottom. To succeed in the long run, our goal is to develop neighborhoods of lasting value. Periods of disruption and market transition can lead to new opportunities. We have the capital and flexibility to grow and be opportunistic when the right opportunities present themselves. At the end of the first quarter, our total debt-to-capital ratio stood at only 14.5 percent and net debt-to-total capital of 9.8 percent. Our total deployable capital is currently over $430 million. We will continue to focus on strategically growing our land pipeline by acquiring only high-quality assets in desirable locations, regardless of the economic cycle.
Speaker Change: We recognize the importance of maintaining affordability in our neighborhoods. However, we are committed to avoiding a race to the bottom.
Speaker Change: To succeed in the long run our goal is to develop neighbourhoods of lasting value.
Speaker Change: Periods of disruption and market transition can lead to new opportunities, we have the capital and flexibility to grow and be opportunistic when the right opportunities present themselves.
Speaker Change: At the end of the first quarter, our total debt to capital ratio stood at only 14, 5% and net debt to total capital of nine 8%.
Speaker Change: Our total deployable capital is currently over $430 million.
Speaker Change: We will continue to focus on strategically growing our land pipeline by acquiring only high quality assets and desirable locations, regardless of the economic cycle.
Jim Brickman: In Q1 2025, the board authorized $100 million in share buyback. and we repurchased $38.3 million of our stocks through April. We will continue to evaluate our capital allocation to maximize shareholder value.
Speaker Change: In Q1 2025, the board authorized $100 million in share buybacks, and we repurchased $38 3 million of our stock through April.
Speaker Change: We will continue to evaluate our capital allocation to maximize shareholder value.
Jim Brickman: Finally, while we acknowledge short-term necroeconomic headwinds, We are still optimistic about our markets and industry over the long term. We believe that household formation among Millennials and Gen Z will continue to drive demand while the housing market remains undersupplied by an estimated 4 to 7 million units. We remain focused on growing our business, especially our trophy brand. With our highly diversified brands, we are well positioned to capitalize on the demand from all segments of prospective homebuyers.
Speaker Change: Finally, while we acknowledged short term macroeconomic headwinds, we are still optimistic about our markets and the industry over the long term.
Speaker Change: We believe that household formation, among millennials and Gen Z will continue to drive demand while the housing market remains under supplied by an estimated $4 7 million units.
Speaker Change: We remained focused on growing our business, especially our trophy brand with a highly diversified brands, we are well positioned to capitalize on the demand from all segments of prospective homebuyers.
Jeff Cox: With that, I'll turn it over to Jeff to provide more detail about our financial results. Jeff?
Speaker Change: With that I'll now turn it over to Jeff to provide more detail about our financial results.
Speaker Change: Jeff.
Jeff Cox: Thank you, Jim. I'm incredibly honored for the opportunity to serve as interim CFO of Green Brick, and I'm excited to bring my dedication and experience to help drive growth and success for our stakeholders. Moving on to the financial results, home closings revenue for the first quarter increased 11.8% year over year to $495 million, a record for any first quarter in company history. The record revenues were predominantly driven by a 10.8% increase in home closings to 910 units. The increase in home closings was attributable to, one, a 10.6% year-over-year increase in average active selling communities, two, increased levels of finished and finishing spec home inventory entering the quarter, and lastly, continued healthy demand for our homes.
Jeff: Thank you Jim.
Speaker Change: Incredibly honored for the opportunity to serve as interim CFO of green brick and I'm excited to bring my dedication and experience to help drive growth and success for our stakeholders.
Speaker Change: Onto the financial results home closings revenue for the first quarter increased 11, 8% year over year to $495 million.
Speaker Change: A record for any first quarter in company history.
Speaker Change: The record revenues were predominantly driven by a 10, 8% increase in home closings to 910 units.
Speaker Change: The increase in home closings was attributable to one a 10, 6% year over year increase in average active selling communities.
Speaker Change: Two increased levels of finished and finishing spec home inventory entering the quarter and lastly continued healthy demand for our homes.
Jeff Cox: Clothing ASP increased by 1% year over year to $544,000. Trophy, our primary growth engine, represented 54% of total deliveries and 40% of total home closings revenue in the first quarter of 2025. During the first quarter, home building gross margin was down 220 basis points year-over-year to 31.2%. The decline was primarily due to higher incentives as a result of elevated mortgage rates and economic uncertainties. But it is still the highest home building gross margin amongst our public home building peers. SG&A, as a percentage of residential unit revenue for the first quarter, decreased 30 basis points year-over-year to 11.1%.
Speaker Change: <unk> ASP increased by 1% year over year to $544000.
Speaker Change: Our primary growth engine represented 54% of total deliveries and 40% of total home closings revenue in the first quarter of 2025.
Speaker Change: During the first quarter homebuilding gross margin was down 220 basis points year over year to 31, 2%.
Speaker Change: Klein was primarily due to higher incentives as a result of elevated mortgage rates and economic uncertainties, but it is still the highest homebuilding gross margin amongst our public homebuilding peers.
Speaker Change: <unk> as a percentage of residential unit revenue for the first quarter decreased 30 basis points year over year to 11, 1%.
Jeff Cox: We will continue to focus on optimizing SG&A to maintain an efficient overhead as market conditions shift.
Speaker Change: We will continue to focus on optimizing SG&A to maintain an efficient overhead as market conditions shift.
Jeff Cox: As a reminder, we sold our 49.9% interest in Challenger Homes in Q1 of last year. Challenger Homes contributed $9.5 million, or approximately $0.21 per share, in Q1 of 2024. As a result, net income attributable to Green Brick decreased year-over-year 9.9% to $75 million and diluted earnings per share for the first quarter was down 8.2% to $1.67 per share. It is important for our investors to know that excluding the impact from Challenger Homes, the looted earnings per share in Q1 of 2025, would have increased 3.7% year over year. Net new home orders during the first quarter grew 3.3% year-over-year to 1,106, a new company record.
Speaker Change: As a reminder, we sold our 49, 9% interest in challenger homes in Q1 of last year.
Speaker Change: Under homes contributed $9 5 million or approximately <unk> 21 per share in Q1 of 2024.
Speaker Change: As a result, net income attributable to green brick decreased year over year, nine 9% to $75 million and diluted earnings per share for the first quarter was down eight 2% to $1 57 per share.
Speaker Change: It is important for our investors to know that excluding the impact from challenger homes diluted earnings per share in Q1 of 2025 would have increased three 7% year over year.
Speaker Change: Net new home orders during the first quarter grew three 3% year over year to 1106, a new company record.
Jeff Cox: The average sales price for new orders decreased 6.3% to $537,000 as Trophy, who primarily caters to first-time and first-time move-up buyers, represented a larger share of units, increasing from 44% in the first quarter of 2024 to 50% in the first quarter of this year. As a result, revenues from new home orders decreased 3.2% year-over-year to $594 million. Even with strong home closings during the first quarter, our ending backlog value increased 29% sequentially to $594 million due to healthy new orders. Trophy, primarily a spec home builder, continued to represent a low percentage of overall backlog revenue at approximately 14%.
Speaker Change: The average sales price for new orders decreased six 3% to $537000 as trophy, who primarily caters to first time and first time move up buyers represented a larger share of units increasing from 44% in the first quarter of 2024% to 50% in the first quarter of this year.
Speaker Change: As a result revenues from new home orders decreased three 2% year over year to $594 million.
Speaker Change: Even with strong home closings during the first quarter, our ending backlog value increased 29% sequentially to $594 million due to healthy new orders.
Speaker Change: Trophy, primarily affect homebuilder continued to represent a low percentage of overall backlog revenue at approximately 14%.
Jeff Cox: As a result, backlog ASP was $688,000 as opposed to our closed homes' average sales price of $544,000, up 90 basis points year-over-year. We adjusted our starts down to 865 during the first quarter as we are carefully monitoring inventory levels and market conditions. Total homes under construction increased 2.8% to 2,296. Spec homes under construction as a percentage of total homes under construction decreased sequentially from 76% at the end of 2024 to 64% at the end of the first quarter, 2025, due to strong demand for quick move-in homes in a high interest rate environment, coupled with fewer spec starts.
Speaker Change: As a result backlog ASP was 688000 as opposed to our closed homes average sales price of $544000 up 90 basis points year over year.
Speaker Change: We adjusted our starts down to 865 during the first quarter as we are carefully monitoring inventory levels and market conditions.
Speaker Change: Total homes under construction increased two 8% to 2296.
Speaker Change: Spec homes under construction as a percentage of total homes under construction decreased sequentially from 76% at the end of 2024% to 64% at the end of the first quarter 2025 due to strong demand for quick move in homes and a high interest rate environment, coupled with fewer spec starts.
Jeff Cox: We will continue to focus on balancing our starts to match our sales pace, and with our self-development focus, we are able to adjust our development timelines to more efficiently manage our capital. Our ending community count increased 5% year-over-year to 103, 35 of which were trophy communities. Our sales page for the first quarter was 10.6 homes per average active selling community or 3.5 per month. And our cancellation rate remained low at 6.1% during the quarter, which was once again the lowest among public home building peers.
Speaker Change: We will continue to focus on balancing our starts to match our sales pace and with our self development focus we were able to adjust our development timelines to more efficiently manage our capital.
Speaker Change: Our ending community count increased 5% year over year to 103, 35 of which were trophy communities.
Speaker Change: Our sales pace in the first quarter was $10 six homes per average active selling community or three five per month and our cancellation rate remained low at six 1% during the quarter, which was once again the lowest among public homebuilding peers.
Jeff Cox: We recognize the heightened importance of liquidity in the current period of economic uncertainty and market volatility. At the end of the first quarter, our net debt to total capital ratio was 9.8%, and our total debt to total capital ratio was only 14.5%, which was down 380 basis points year-over-year to the lowest year-end level since 2015. This was also among the best of our public home building pairs. 100% of our debt at the end of Q1 2025 was at a fixed rate averaging 3.4% per annum. Our investment-grade balance sheets and low financial leverage provide us with flexibility to navigate and adapt to evolving market conditions, ensuring we have capital available for strategic opportunities as they arise.
Speaker Change: We recognize the heightened importance of liquidity in the current period of economic uncertainty and market volatility at.
Speaker Change: At the end of the first quarter, our net debt to total capital ratio was nine 8% and our total debt to total capital ratio was only 14, 5%, which was down 380 basis points year over year to the lowest year end level since 2015.
Speaker Change: This was also among the best of our public homebuilding peers.
Speaker Change: 100% of our debt at the end of Q1 2025 was at a fixed rate averaging three 4% per annum.
Speaker Change: Our investment grade balance sheets, and low financial leverage provide us with flexibility to navigate and adapt to evolving market conditions is hearing we have capital available for strategic opportunities as they arise with that I'll now turn it over to Jed Jed.
Jed Dolson: With that, I'll now turn it over to Jed. Thank you, Jeff.
Jed: Thank you, Jeff first I would like to address the recent developments related to tariffs and the immigration policies externally, we are actively engaging with our suppliers and vendors to assess the magnitude of potential disruptions to our supply chain while.
Jed Dolson: First, I would like to address the recent developments related to tariffs and immigration policy. Externally, we are actively engaging with our suppliers and vendors to assess the magnitude of potential disruptions to our supply chain. While the precise impact of tariffs remains fluid, we believe our relationships with major national suppliers position us well to navigate these headwinds. Furthermore, as the third largest builder in Dallas-Fort Worth and one of the top ten builders in Atlanta, our scale provides additional leverage with local vendors. On the labor side, we continue to see healthy labor supply and availability. Our build times for homes that completed construction in the first quarter averaged 5.2 months, consistent with the last quarter, but down year-over-year from 5.5 months.
Jed: While the precise impact of tariffs remains fluid, we believe our relationships with major national suppliers position us well to navigate these headwinds.
Jed: Furthermore, as the third largest builder in Dallas Fort worth and one of the top 10 builders in Atlanta, our scale provides additional leverage with local vendors on the labor side, we continue to see healthy labor supply and availability our build times for homes that completed construction on the first.
Jed: Quarter averaged five two months consistent with the last quarter, but down year over year from five five months.
Jed Dolson: Internally, we are rigorously reviewing all cost line items to identify opportunities for reduction and efficiency improvement. Importantly, our home building gross margins remained above 30% during the first quarter, providing us with greater flexibility to absorb potential tariff increases compared to many of our peers. Despite a more challenging housing and overall economic environment, we experienced a healthy spring selling season with typical seasonality, which aligned with our first quarter expectations. We are pleased with our net new orders for the first quarter, which increased 3.3% year over year and 26% sequentially to 1,106, a company record. Orders in January accelerated by over 30 percent from December and further accelerated in February.
Jed: Internally, we are rigorously reviewing all cost line items to identify opportunities for reduction and efficiency improvements.
Jed: Importantly, our homebuilding gross margins remained above 30% during the first quarter, providing us with greater flexibility to absorb potential tariff increases compared to many of our peers.
Jed: Despite a more challenging housing and overall economic environment, we experienced a healthy spring selling season, with typical seasonality, which aligned with our first quarter expectations.
Jed: We are pleased with our net new orders for the first quarter, which increased three 3% year over year and 26% sequentially.
Speaker Change: Two 1106, a company record.
Speaker Change: Orders in January accelerated by over 30% from December and further accelerated in February <unk>.
Jed Dolson: Demand in March remained consistent compared to February.
Speaker Change: Demand in March remained consistent compared to February.
Jed Dolson: As Jim discussed earlier, while we are not immune to the impacts from the elevated mortgage rates or economic uncertainties, our concentration of infill and infill-adjacent locations continues to provide a significant advantage during the spring selling For more information visit www.FEMA.gov Overall incentives for new orders increased only 30 bps sequentially from 6.4% of average sales price in Q4 of 24 to 6.7% in the first quarter of 2025. Moreover, incentive levels declined steadily each month during the quarter, ending at 6.3% in March. During the first quarter, Trophy's net new orders grew 15% year-over-year and contributed 50% of net new orders by volume.
Speaker Change: As Jim discussed earlier.
Speaker Change: While we are not immune to the impacts from the elevated mortgage rates or economic uncertainties, our concentration of infill and infill adjacent locations continues to provide a significant advantage during the spring selling season.
Speaker Change: Overall incentives for new orders increased only 30 bps sequentially from six 4% of average sales price in Q4 of 24 to $6 seven in the first quarter of 2025. Moreover, incentive levels declined steadily each month during the quarter ending at $6.
Speaker Change: 3% and March.
Speaker Change: During the first quarter trophies net new orders grew 15% year over year and contributed 50% of net new orders by volume trophies cancellation rate for the quarter was six 5% compared to the company averaged six 1%.
Jed Dolson: Trophy's cancellation rate for the quarter was 6.5% compared to the company average 6.1%. Trophy, which primarily targets entry-level and first-time move-up homebuyers, has homebuyers who experience higher affordability pressures in this elevated interest rate environment. Trophy responded by offering rate-buy-down programs and incentives toward closing costs to further assist our homebuyers in addressing these affordability challenges.
Speaker Change: Trophy, which primarily targets entry level and first time move up homebuyers as homebuyers, who experienced higher affordability pressures and this elevated interest rate environment.
Speaker Change: Trophy responded by offering rate buy down programs and incentives toward closing costs to further assist our homebuyers and addressing these affordability challenges.
Jed Dolson: Our other brands in the Dallas-Fort Worth market continue to perform as expected. Incentive levels for Southgate, our luxury brand in Dallas-Fort Worth, continued to decrease sequentially, reflecting both limited supply of new homes at higher price points and a shortage of resale homes due to the persistent mortgage rate lock-in effect, as existing homeowners did not want to place their home on the market and relinquish their mortgage rates below 4%. Our Atlanta market remained healthy with only a modest rise in incentives while our Florida and Austin markets continued to present more affordability challenges. Nonetheless, we started seeing some green shoots evidenced by stable prices and increased volume sequentially.
Speaker Change: Our other brands in the Dallas Fort worth market continued to perform as expected incentive levels first off date, our luxury brand in Dallas Fort worth continued to decrease sequentially, reflecting both limited supply of new homes at higher price points and a shortage of resale homes due to the persistent mortgage.
Speaker Change: Rate lock in effect as existing homeowners did not want to place their home on the market and relinquished their existing mortgage rates below 4%.
Speaker Change: Our Atlanta market remains healthy with only a modest horizon incentives, while our Florida and Austin markets continue to present more affordability challenges. Nonetheless, we started seeing some green shoots evidenced by stable prices and increased volume sequentially.
Jed Dolson: We will continue to adjust incentives to achieve our desired absorptions while maintaining inventory on a community-by-community basis. Our buyers' financial profiles remain consistent. Homebuyers who utilized our wholly-owned mortgage company, Green Brick Mortgage, had an average FICO score of 741 and a debt-to-income ratio of 40% for homes that closed in the first quarter. We have been methodically rolling out our new mortgage company, which just started taking applications in December of 2024, to communities in Dallas-Fort Worth. Green Brick Mortgage has already had a strong start to the year, closing over 100 loans during the first quarter. Along with its continued rollout in DFW, plans are underway to expand its services to our other operating markets.
Speaker Change: We will continue to adjust incentives to achieve our desired absorptions, while maintain in inventory on a community by community basis.
Speaker Change: Our buyers financial profiles remained consistent homebuyers, who utilized our wholly owned mortgage company Greenberg mortgage had an average FICO score of 741 and a debt to income ratio of 40% for homes that closed in the first quarter, we have been.
Speaker Change: <unk> is rolling out our new mortgage company, which just started taking applications in December of 2024 <unk>.
Speaker Change: Two communities in Dallas Fort worth remembering.
Speaker Change: Greenberg mortgage has already had a strong start to the year closing over 100 loans during the first quarter.
Speaker Change: Along with its continued rollout in DFW plans are underway to expand the services to our other operating markets. We anticipate grinberg mortgage will begin contributing meaningful net income in the later half of the year as we scale up its operation.
Jed Dolson: We anticipate Green Brick Mortgage will begin contributing meaningful net income in the later half of the year as we scale up its operations.
Jed Dolson: Turning to capital allocation, during the first quarter we invested $52 million in land acquisition and finished lots and $62 million in land development. As previously guided, we still plan to invest approximately $300 million in land development during the year. With a healthy land pipeline, sticky land prices, and economic uncertainties, we will take an opportunistic approach on future land acquisitions. We will continue to weigh land opportunities against share buybacks to maximize shareholder value. We ended the quarter with over 40,500 lots owned and controlled, an increase of 32 percent year over year. Approximately 85.7 percent of those lots are owned, and we plan to self-develop about 98 percent of those lots.
Speaker Change: Turning to capital allocation during the first quarter, we invested $52 million in land acquisition and finished lots and $62 million and land development as previously guided we still plan to invest approximately $300 million and land development during the year.
Speaker Change: With a healthy land pipeline sticky land prices and economic uncertainties, we will take an opportunistic approach on future land acquisitions, we will continue to weigh land opportunities against share buybacks to maximize shareholder value.
Speaker Change: We ended the quarter with over 4500 lots owned and controlled an increase of 32% year over year approximately 85, 7% of those lots are owned and we plan to self develop about 98% of those logs the geographic footprint of our lot pipeline remain consistent.
Jed Dolson: The geographic footprint of our lot pipeline remained consistent with approximately 92 percent in Texas, 5 percent in Georgia, and 3 percent in Florida. Trophy comprised approximately 70% of lots owned and controlled, excluding 24,000 lots in long-term communities. Our current pipeline provides approximately 5 years of lot supply based on our start space over the last 12 months.
Speaker Change: With approximately 92% in Texas, 5% in Georgia, and 3% on Florida.
Speaker Change: <unk> comprised approximately 70% of lots owned and controlled excluding 24000 lots in long term communities. Our current pipeline provides approximately five years of lot supply based on our starts pace over the last 12 months.
Jed Dolson: Lastly, we're excited about expanding our Trophy brand in Houston, the largest home building market in the United States. We expect to deliver the first phase of finished lots in June this year, and Trophy is expected to open its first community this fall.
Speaker Change: Lastly, we're excited about our expanding our trophy brand in Houston, the largest homebuilding market in the United States, We expect to deliver the first phase of finished lots in June this year.
Speaker Change: <unk> is expected to open its first community this fall with that I'll turn it over to Jim for closing remarks.
Jim Brickman: With that, I'll turn it over to Jim for closing remarks. Thank you, Jed. While the current economic landscape presents some headwinds and uncertainties, We remain confident in the long-term fundamental strengths of the housing market, as well as our ability to outperform our peers.
Jim: Thank you Jed.
Jim: While the current economic landscape presents some headwinds and uncertainties, we remain confident in the long term fundamental strength of the housing market as well as our ability to outperform our peers.
Jim Brickman: We will continue to closely monitor market conditions, adapt our strategies as needed, and remain focused on delivering sustainable value to our shareholders over the longer term.
Jim: We will continue to closely monitor market conditions adapt our strategies as needed and remain focus on delivering sustainable value to our shareholders over the longer term.
Jim Brickman: This concludes our prepared remarks.
Jim: This concludes our prepared remarks, we will now open the line for questions.
Operator: We will now open the line for questions. Thank you.
Operator: Ladies and gentlemen, we will now begin the Q&A session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again.
Speaker Change: Thank you ladies and gentlemen, we will now begin the Q&A session. If you have dialed in we would like to ask a question. Please press star followed by the number one on your telephone keypad. If you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question and are listening the allowance speaker al Dor device. Please pick up your handset and ensure that your phone.
Operator: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Thank you.
Speaker Change: It is not on mute when asking your question. Thank you. Your first question comes from the line of Cai pardon Reichardt from BTG. Please go ahead.
Carl Reichardt: Your first question comes from the line of Carl Reichardt from BTIG.
Carl Reichardt: Please go ahead. Thanks. Hi, guys. Nice to talk to you. Thanks for taking my questions. Could you talk about what you've seen so far in April, Jim? Obviously, given the tariffs at the very beginning of the month, I'm curious if there's been a significant change.
Thanks, Hi, guys nice to talk to you. Thanks for taking my question.
Speaker Change: Could you talk about what you've seen so far in April Jim obviously, given the tariffs at the very beginning of the month I'm curious if theres been a significant change and then what are you running sales incentives on trophy signature or did during the first quarter versus the other product lines.
Jim Brickman: And then, Jed, what are you running sales incentives on Trophy Signature or did during the first quarter versus the other product lines? Well, this is Jim. We haven't seen a lot of impact from tariffs yet. Obviously, that's a wild card in the industry. We've done various forecasts and estimates that think it could be a percent. more or less in the future. But obviously, we all wake up every day to a new set of rules, and we don't know what those rules are. So that's a wildcard.
Jim: Well this is Jim.
Speaker Change: We haven't seen a lot of impact from tariffs yet.
Speaker Change: Obviously, that's a wildcard in the industry, we've done various forecasts and estimates of things can be a percent.
Speaker Change: More or less in the future, but obviously, we all wake up every day to a new set of rules and we don't know what those rules are so that's a wildcard.
Jed Dolson: Jed, do you have anything you want to add to that? No. Carl, in regard to your question on incentives, Trophy's incentives are very in line with our overall company incentives.
Jeff Cox: Jeff do you have anything do you want to add to that.
Speaker Change: No.
Speaker Change: Carl in regards to your question on incentives trophies incentives are very in line with our overall company incentives.
Speaker Change: Okay, great. Thanks.
Jim Brickman: Carl, I can add a little color to that because it's very interesting. We're seeing basically in all of our businesses that every, if you draw a circle in what's the AAA, Double A, going to a B market, to a C market, kind of every step that you move away from that circle, incentives go up significantly. And so, in a trophy neighborhood that is a more perimeter neighborhood, those incentives may be a little bit greater than a trophy neighborhood that's closer in. For some of our builders that are like TPG in Atlanta, that it's all AAA location infill, their incentives have been lower.
Speaker Change: Carl I can add a little color to that concerning Jerry <unk> Jim.
Speaker Change: We're seeing basically in all of our businesses that every.
Speaker Change: If you draw a circle.
Speaker Change: And what's the AAA.
Speaker Change: <unk> going to be market to see market kind of every step that you move away from that circle incentives go up significantly.
Speaker Change: And so in a trophy neighborhood is a more perimeter neighborhood those incentives, maybe a little bit greater than a trophy neighborhood that's closer in.
And.
Speaker Change: For some of our builders that are like TPG in Atlanta that is all AAA location infill their incentives have been lower.
Speaker Change: Okay, great. Thanks, Jim and then.
Speaker Change: Im interested if given your presence in Dallas, if you are starting to see any cracks I guess or improvement in the land market itself in terms of maybe dropped deals by other builders or potentially some sellers are planned to are far from getting there to market may be starting to think about dropping.
Speaker Change: Pricing has there been any clues there.
Speaker Change: This year based on anything Thats changing.
Jim Brickman: Yes there has, and that's following just what I said. Some deals that builders have walked lot option contracts and very perimeter deals. They dropped him for a reason and in a C-location, really those lots are very difficult to move in this kind of market right now because The incentives are so great in those markets, and the public builders, a lot of them, don't need the lots to start with. And, you know, if a public builder can't make money in a... With all of its efficiencies in a sea location, those lots are really hard to move.
Speaker Change: Yes, there has and it's kind of.
Speaker Change: That's following just what I said.
Speaker Change: Some deals that builders have walk lot option contracts and very perimeter deals.
Speaker Change: He dropped them for a reason and.
Speaker Change: And a.
Speaker Change: C minus location.
Speaker Change: Really those lots are very difficult to move in this kind of market right now because.
Speaker Change: The incentives are so great in those markets and the public builders have lot of don't need lots to start with.
Speaker Change: If the public builder can't make money in.
Speaker Change: With all of its efficiencies and a C location those lots of really hard to move.
Jim Brickman: Somebody walks them, and we get offered them all the time. We just have no interest in buying them.
Speaker Change: Somebody walks in and we get offered them all the time, we just have no interest in buying them.
Jed Dolson: Yeah, Carl, I would just add, you know, speaking generally on the Texas market, we get a lot of bill for rent broken deals come across our desk every day. We just did a contract for one that's finished lots that, you know, would not have worked if we had to self-develop it, but it worked since the lots were finished. And it was a bulk buy. So, at some point, you know, the... either bill for rent is going to start working again financially or the sellers are going to have to drop their price because it doesn't work right.
Yes, Carl I would just add speaking generally on the Texas market, we get a lot of build for rent broken deals come across our desk everyday.
Speaker Change: We just did contract for one of its finished loss.
Speaker Change: It.
Speaker Change: Wouldn't out of work, we had to self develop workflow for lots were finished.
Speaker Change: And it was a bulk buy.
Speaker Change: So at some point.
Speaker Change: Neither overrun is going to start working again financially are these sellers are going to have dropped.
Speaker Change: Drop their price because it doesn't work right now.
Carl Reichardt: All right, great.
Speaker Change: Alright, great. Thank you Jed and then I'm also just curious if I can sneak one more about buybacks and you sort of hit what we expected it to buyback wise this quarter, but you bought back more than April Jim How do you think about that as a use of capital obviously youre going to be youre, keeping your your investment in land.
Carl Reichardt: Thank you, Jed. And then I'm also just curious if I can take one more in about buybacks, and you sort of hit what we expected you to do buyback-wise this quarter, but you bought back more in April. Jim, how do you think about that as a use of capital? Obviously, you're going to be – you're keeping your investment in land, that percentage growth, that spend is the same as what you said last quarter. But slowing starts, but continuing to sell houses, maybe cash flow improves this year. So can you maybe walk me through a little bit about how you decide the incremental dollar of additional cash capital you generate from the business when it goes and why it goes into the stock as opposed to somewhere else?
Speaker Change: That percentage growth that spend is the same.
Speaker Change: But you said quarter, but slowing starts but selling continuing to sell houses maybe cash flow improves. This year. So can you maybe walk me through a little bit about how you see incremental growth.
Speaker Change: Additionally, cash capital you generate from the business when it goes in why it goes into the stock as opposed to somewhere else. Thank you.
Jim Brickman: Thank you. Sure, that's a good question, and let me just say off the bat, the stock repurchases for us can be a little bit lumpier than for some peers, and the reason that takes place is We have a very large deal. We've been working on it for a very long time. It's very complicated. Frankly, it's not the kind of thing that our peers would look at, which is why we like to look at it. too complicated to really go into on this phone call, but it's a $40 million land acquisition. So the timing of that may impact.
Speaker Change: Sure.
Speaker Change: That's a good question and let me just say off the bat the stock repurchases for us can be a little bit lumpier than for some peers and the reason that takes place is.
Speaker Change: We have a very large deal we've been working on for a very long time, it's very complicated frankly, it's not the kind of thing that our peers would look at which is why we like to look at it.
Speaker Change: It was.
Speaker Change: Too complicated to really go into on this phone call, but it's a $40 million land acquisition. So.
Speaker Change: The timing of that May impact <unk>.
Jim Brickman: stock purchases whenever this land deal closes. And I think it will, but it may not. So that would detract from our ability to buy stock if it closed next quarter. But we may be back in the market pretty strongly in the third quarter. So it's not like some builders that are kind of leveling out their stock purchases. Ours will probably be a little more lumpy, just because we are going after larger master planned communities that peers aren't going after, which we think is an advantage. And it requires chunks of capital being deployed.
Speaker Change: <unk> purchases whenever this land deal closes and I think it will but it may not.
Speaker Change: So that would detract from our ability to buy stock if it closed next quarter, but we may be back in the market pretty strongly in the third quarter. So it's not like some builders that are kind of leveling out their stock purchases will probably be a little more lumpy just because we are going after the larger.
Speaker Change: Master planned communities that peers arent going after which we think is an advantage and it requires chunks of capital being deployed.
Carl Reichardt: All right, great. Thank you, Jim. I appreciate the time. Thanks, Jed.
Speaker Change: Alright, great. Thank you Tim I appreciate the time thanks Jed.
Operator: Once again, if you are dialed in and would like to ask a question, that is to press star 1 on your telephone keypad. Thank you. It seems that we have no further questions for today. This concludes the question and answer session in today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Once again, if you are dialed in and it looks like to ask a question that is suppressed star one on your telephone keypad. Thank you.
Speaker Change: And it seems that we have no further questions for today. This concludes the question and answer session in today's conference call. Thank you for your participation you may now disconnect.
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