Green Brick Partners, Inc. (NASDAQ:GRBK) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 12:00 pm ET

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Green Brick Partners, Inc. (NASDAQ:GRBK) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
James R. Brickman

13% during the third quarter of 2019, we increased our quarterly sales absorption pace per community by 34% year-over-year.

We continue to believe that our selling community count will grow about 21% this year compared to January 1st, 2019. Our first time move-up and entry level builder, Trophy Signature Homes, is off to a wonderful start. As a result, we are staged for continued earnings growth in 2020. I want to remind investors that earnings are not created equally. Our earnings growth is possible despite having one of the least leveraged balance sheets in the industry, where we enjoy not only lower levels of debt, but our debt is at a lower cost than almost every small and mid-cap peer. This evidenced by the $75 million 4.00% seven-year unsecured notes that closed in the third quarter with Prudential Private Capital. Our interest coverage is over eight times our interest incurred, which is nearly double that of the next small-cap builder and about five times that of the typical small-cap peer.

Please flip to Slide 5. Two of the best markets in the country are core markets of Dallas and Atlanta. During the last 12 months, Dallas and Atlanta continues to be two of the largest markets in terms of generating job growth.

On Slide 6, you can see that Dallas continues to be the Number 1 new housing market in the nation, adding about 33,600 starts. Atlanta is the fifth largest market and our Challenger Homes affiliate in Colorado Springs is part of the sixth largest market. We are 2% to 5% of the starts in three of the largest markets in the United States, giving us significant opportunity for growth.

Slide 7 demonstrates what we mean by A-rated submarkets. John Burns Real Estate Consulting has published maps of our Dallas and Atlanta metropolitan areas, where they have designated grades of sub-markets of most desirable an A markets, through most affordable an F markets, based on a variety of subjective factors such as quality of schools, proximity of jobs and the existence of infrastructure and quality of life.

We have taken those maps and then overlaid the locations of our Green Brick communities with green dots. As you can see, the preponderance of our communities are in the very best A, our most desirable rated sub-markets. the prior graphs do not tell you is how supply constrained lots in these most prime A locations still are. Green Brick owns or controls over 5,700 lots in the Dallas metroplex and over 2,400 lots in Atlanta, primarily in A locations. Over 1,600 of the lots are for Trophy Signature Homes, our new builder entry-level and first-time move up homebuilder. At the bottom of Slide 7, you will see that we have 36 communities under development. As I've mentioned in the last two quarters, we will continue to expect that we will grow community count by 21% to 92 communities by the end of this year or the first quarter of 2020.

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