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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Q & A
Executive
James R. Brickman

started the business, our goal was to compete against the giants, and really we're seeing such progress right now. I think our goal is to beat them next spring. So it would be really interesting to see how that unfolds.

Analyst
Maggie

Okay, thank you.

Executive
Jed Dolson

Yes, Maggie. We started at -- September 30th, we had seven active selling communities that were Trophy. At the end of the year, we think we'll have nine. Rick mentioned that, we think our community count will be 92. So Trophy will be approximately 10% of that, and we see that trending upward significantly next year.

Executive
James R. Brickman

10 units.

Analyst
Maggie

Okay. Thank you.

Operator
Operator

[Operator Instructions] Your next question comes from the line of Ryan Gilbert from BTIG. Your line is open.

Analyst
Ryan Gilbert

Hey, thanks guys. Just another one on Trophy Signature. What was the contribution from the new Trophy openings to your overall order growth in the quarter?

Executive
James R. Brickman

Yes. We don't give detailed disclosure on that. I would tell you that it was modest that our -- because overall, every single one of our team builders experienced monthly absorption growth on a year-over-year basis. Providence Group and CB JENI were great contributors. Trophy is doing a great job because of those seven communities. They only have two model homes open, but -- and they are above average for Green Brick. But it really was broadly experienced by our builders.

Executive
Jed Dolson

What's happening is, Trophy has about 30 employees right now. It's growing rapidly. So we are making an investment that we see really great benefit in 2020 and going forward, but it's not contributing to earnings right now.

Analyst
Ryan Gilbert

Got it. And then it sounds like the community count openings for Trophy are going to increase in 2020. Is that predominantly in Dallas and are there other markets that you're operating in, where you think it makes sense to expand this type of product offering.

Executive
James R. Brickman

We are looking at two other markets right now.

Analyst
Ryan Gilbert

Okay, got it. And then just on backlog conversion, really strong improvement in the quarter. Is that -- do you think that's kind of -- that 60% is kind of a new run rate or returning to a new run rate or was there just some inventory cleanup that led to that improvement in backlog conversion?

Executive
James R. Brickman

Well, Ryan, we really don't look at it in terms of a conversion rate, I mean, if the conversion rate has a calculation after everything is done. But if you look at the run rate that we were experiencing around 400 more or less units for five quarters in a row. And specifically, if you look back at Q4 of last year and Q1 of this -- our average was like 403 starts in each quarter. What happened this quarter with 443 closings is, we just sold more houses. So we had standing inventory that we will reduce on a quarter-over-quarter basis as our builders were getting rid of some of that overhang of inventory.

Analyst
Ryan Gilbert

Okay, got it. And then just one