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Thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Green Brick Partners, Inc. Third Quarter 2020 Earnings Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Jeff Cox, Chief Financial Officer. You may begin.

Good afternoon. And welcome to Green Brick Partners' earnings call for the third quarter ended September 30, 2025. Following today's remarks, we will hold a question-and-answer session. As a reminder, this call is being recorded and will be available for playback. In addition, a presentation will accompany today's webcast, which is available on the company's Investor Relations website at investors.greenbrickpartners.com. On the call today is Jim Brickman, Co-Founder and Chief Executive Officer; Jed Dolson, President and Chief Operating Officer; and myself, Jeff Cox, Chief Financial Officer. Some of the information discussed on this call is forward-looking, including a discussion of 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. The company's statements are as of today, October 30, 2025, 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 the aforementioned presentation. With that, I'll turn the call over to Jim.

Thank you, Jeff. First, I want to formally recognize Jeff's promotion to Chief Financial Officer, effective earlier this month. Jeff joined the company in June 2023 as Senior Vice President of Finance with over 2 decades of homebuilding experience, and he has been instrumental in helping us establish our wholly owned mortgage company, along with refining our financial systems and processes. I am excited to have Jeff join the senior leadership team and add his talent to Green Brick's deep under 50-year-old talent bench. With that, I am pleased to announce our third quarter results particularly given that we achieved these results against the backdrop of ongoing and persistent affordability challenges faced by many consumers in this housing market. Our performance remained resilient despite eroding consumer confidence and an increasing supply of housing inventory. Our builders adapted quickly to a volatile housing market as we continue to balance price and pace to maximize returns in each of our communities. We achieved 898 net orders, representing a 2.4% increase year-over-year, which is a record for any third quarter. We also closed 953 homes in the quarter, just 3 shied of beating our record third quarter 2024 results. Net income attributable to Green Brick for the third quarter was $78 million or $1.77 per diluted share. As Jed will discuss in more detail shortly, driving our sales volume, required price concessions and other incentives as we address the affordability challenges faced by home buyers in our markets. As expected, these dynamics put downward pressure on our homebuilding gross margins, which declined 160 basis points year-over-year and 70 basis points sequentially to 31.1%. Our results also reflect a $4.8 million warranty adjustment, which improved our gross margins by 90 basis points. Our gross margins remain the highest in the public home building industry and marked the tenth consecutive quarter in which our gross margins exceeded 30%. While the 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 continue to navigate any challenges with confidence and flexibility. As always, we will focus on maintaining operational excellence centered on our disciplined approach to land acquisition and development to position us for future growth. We are laser-focused on maintaining an investment-grade balance sheet to support our targeted expansion in high-volume markets. As Jed will discuss in more detail momentarily, we also continue to concentrate on reducing construction costs and cycle times. We believe we are well positioned to sustain our return metrics that rank among the very best in the homebuilding industry and create long-term shareholder value. We remain focused on growing our business, particularly our Trophy brand. Trophy's growth in DFW in Austin, combined with our planned entering into Houston by the 2026 spring selling season presents significant opportunities for sustained growth over the next few years. This expansion, we believe, allows us to continue serving the critical first time and move up buyer segments, while further diversifying our revenue base and strengthening our presence in key Texas markets. With our highly diversified brand portfolio, we believe we are well positioned to capitalize on demand from all homebuyer segments. While the overall market conditions remain challenging due to a macroeconomic and political uncertainty, we remain vigilant in monitoring and responding to shifts and buyer preferences. We believe that our experienced team and a robust land pipeline and desirable infill and infill adjacent locations will drive continued success in the quarters to come. With that, I'll now turn it over to Jeff to provide more detail about our financial results. Jeff?

Thank you, Jim. Given the challenging economic conditions and increased supply of housing inventory in our markets, discounts and incentives increased year-over-year as a percentage of residential unit revenue to 8.1% from 5%. Our average sales price of $524,000 was flat sequentially and down 4.2% year-over-year. Home closings revenue of $499 million declined 4.6% compared to the third quarter last year, and our homebuilding gross margins decreased 160 basis points year-over-year and 70 basis points sequentially to 31.1%. As Jim mentioned earlier, we reduced our warranty reserve by $4.8 million during the quarter, which improved our gross margins by 90 basis points for the quarter and 30 basis points year-to-date. This adjustment was based on an analysis of our warranty reserve accruals compared to actual warranty spend, which was less than previously anticipated. This adjustment reflects continued improvements in our construction quality and the strength and stability of our trade partners. SG&A as a percentage of residential unit revenue for the third quarter was 11.6%, an increase of 60 basis points year-over-year, driven primarily by higher personnel costs and investments in our IT platforms to enhance operational efficiencies. Net income attributable to Green Brick for the third quarter decreased 13% year-over-year to $78 million and diluted earnings per share decreased 11% year-over-year to $1.77 per share. Year-to-date, deliveries increased 5.1% year-over-year to 2,905 homes, and our average sales price declined 3% to $531,000. As a result, we generated home closings revenue of $1.54 billion, an increase of 2% year-to-date from the same period in 2024. Homebuilding gross margin decreased 270 basis points to 30.9%. Year-to-date net income attributable to Green Brick decreased 15% to $235 million and diluted earnings per share declined 13.6% to $5.29. As a reminder, we sold our 49.9% interest in Challenger Homes in the first quarter of last year, which had the impact of adding $0.21 to our 2024 diluted earnings per share. Net new home orders during the third quarter were up 2.4% year-over-year to 898 and down sequentially only 1%. Year-to-date, net new home orders increased 4% year-over-year to 2,912. Average active selling communities of 103 remained relatively unchanged year-over-year. Our sales pace for the third quarter increased marginally to 2.9 per month compared to 2.8 per month in the previous year. We started 950 new homes, which was approximately the same as the prior quarter and down 10% year-over-year. Units under construction at the end of the quarter were approximately 2,200 down 5.5% year-over-year. We will continue to monitor market conditions and seasonal trends and align our starts with our sales pace to appropriately manage our investment in spec inventory. Due to a higher proportion of quick move-in sales, coupled with a 9-day improvement in our average construction cycle time, our backlog value at the end of the third quarter was $466 million, a decrease of 20% year-over-year. Backlog average sales price decreased 4.1% to $690,000 due primarily to higher discounts and incentives. Trophy, our spec home builder represented only 14% of our overall backlog value, down slightly from the previous quarter, but they accounted for nearly half of our closing volume. We recognize the heightened importance of liquidity in the current period of economic uncertainty and market volatility. Our investment-grade balance sheet and low financial leverage, we believe, provide us with flexibility to navigate and adapt to evolving market conditions, ensuring we have capital available for strategic opportunities as they arise. At the end of the third quarter, our net debt to total capital ratio was 9.8% and our debt to total capital ratio was 15.8%, among the best of our small and mid-cap public homebuilding peers. Excluding cash and debt from Green Brick Mortgage, our homebuilding debt and net debt to capital ratio at the end of the quarter was 15.3% and 9.5%, respectively. At the end of the quarter, we maintained a robust cash position of $142 million and total liquidity of $457 million, with $315 million undrawn on our homebuilding credit facilities we believe we are well positioned to weather the challenging market conditions to opportunistically deploy capital to maximize shareholder returns and to accelerate growth as the housing market improves. With that, I'll now turn it over to Jed.

Thank you, Jeff. We continue to see a challenging sales environment within all consumer segments, which have been impacted by affordability challenges and a weakening job market. While we were encouraged to see mortgage rates decline approximately 60 bps during the quarter, demand remained steady during each of the months during the quarter, even as interest rates remained above 6% throughout the quarter. Our team responded well to the evolving market conditions as evidenced by our record third quarter sales volume and our low cancellation rate of 6.7% in Q3, which was an improvement from 9.9% in Q2 and 8.5% in Q3 of 2024. We continue to have one of the lowest cancellation rates in the public homebuilding industry, and we believe it demonstrates the creditworthiness of our buyers, quality of our product and desirability of our communities. We continue to address the affordability challenges faced by consumers by providing our homebuyers with price concessions, interest rate buydowns and closing cost incentives. Incentives for net new orders during the third quarter were higher by 280 bps year-over-year and 100 bps sequentially, increasing to 8.9%. Incentives moderated during the quarter from a peak in July as the average 30-year mortgage rate declined during the quarter reducing the cost of interest rate buydowns. Rate buydowns remained a necessary tool to drive traffic and sales, especially with our quick move-in homes. With our superior infill and infill adjacent communities and industry-leading gross margins, we believe we are well positioned to adjust pricing as needed to meet market demand and maintain our sales pace. While we recognize the importance of preserving our margins, we also recognize that our industry-leading margins provide us with significant pricing flexibility to compete efficiently in a volatile market. Green Brick Mortgage, our wholly owned mortgage company closed and funded over 350 loans in the third quarter compared to 140 loans in Q2, the average FICO score was 740, and the average debt-to-income ratio was 40%, consistent with the previous quarter. We are excited about the future prospects of Green Brick Mortgage as we are preparing to expand into Austin, Atlanta and Houston later this year and early next year. Green Brick Mortgage continued to increase its capture rate while providing top-tier service to our homebuyers. Operationally, we continue to make meaningful strides in reducing our direct construction costs and enhancing our operational efficiency. The cost for labor and materials for homes closed this quarter was down approximately $2,250 per home compared to the same period last year. We also continued to reduce our construction cycle times, which were down 9 days from a year ago. Trophy's average cycle time in DFW was under 100 days, the lowest in their history. Labor availability remains relatively stable across all of our markets. We recognize the concerns surrounding tariffs and continue to work closely with our vendors and suppliers to mitigate any potential impact. We believe tariffs will have a minimal impact on our earnings next year, although we acknowledge the lack of certainty with respect to final tariff timing, scope or percentages makes it impossible to analyze potential tariff impact with precision. As we navigate through various macro challenges, we are carefully recalibrating our capital allocation plan to align both our long-term growth objectives and respond to changing market conditions. During the quarter, we spent $121 million on land and lot acquisition, excluding cost share reimbursements and $73 million on land development. This brings the year-to-date spend to $231 million for land acquisition and $233 million for land development, respectively. Many of our land development projects involve special financing districts that provide for reimbursement of public infrastructure costs. As work is completed, we're able to recoup a portion of these costs, which reduced our net land development spend. We continue to project approximately $300 million in land development spending for the full year of 2025, which will be partially offset by these reimbursements. We believe our superior land position provides a competitive advantage that will be the foundation for strong growth in subsequent years. Given the strength of our existing land and lot pipeline we remain patient and selective with future land opportunities without compromising the ability to grow our business in the near and intermediate term. At the end of the third quarter, our total lots owned and controlled increased by 11% year-over-year to approximately 41,200 lots, of which over 36,000 lots were owned on our balance sheet and approximately 4,500 were controlled lots. Trophy comprises approximately 70% of our total lots owned and controlled. Excluding approximately 25,000 lots in long-term master plan communities our lot supply is approximately 5 years. Finally, we are on schedule to open our first community in Houston. The construction of our first model home began in October and we anticipate opening for sales in time for the spring selling season. We're excited about expanding Trophy's footprint in one of the largest homebuilding markets in the U.S. With that, I'll turn it over to Jim for closing remarks.

Thank you, Jed. In short, we remain optimistic about our long-term prospects and believe we are well positioned to continue producing strong results. We believe our strategic land position, high-quality and diverse product offerings that appeal to multiple segments of the homebuyer market and strong balance sheet will lay the path to future growth and industry-leading returns for our shareholders. I also want to thank the entire Green Brick team for their passion and dedication to delivering exceptional results in the face of a challenging market. This concludes our prepared remarks, and we will now open the line for questions.

[Operator Instructions] Your first question comes from the line of Alex Rygiel with Texas Capital.

Nice quarter. Incentives were up in the third quarter for your new orders. Can you talk a little bit about directionally how we should think about gross margins in the fourth quarter versus the third quarter?

Yes, we can all handle that a little bit. Thanks for your question. This is Jim Brickman. We don't give guidance on gross margins quarter-to-quarter. But I think your question does give me a really good opportunity to talk about Green Brick's strategic advantages as we look at our business not only next quarter but many quarters going forward. And I think there are really 2 components to that. First, we have a very long runway of low-priced lots and infill and infill adjacent locations. And no matter what's happening, we believe that our lot price advantage in these lots is going to give us industry-leading margins compared to peers. So that's the first point. And it's really interesting what's happening from my second point is that because we self-develop 90% of our lots, we can deploy capital based upon market demand rather than a land bankers or a land developers contract terms. And we think that will help us maintain margins in our communities where we're not faced with having to produce excess inventory.

That's helpful. And then you mentioned that incentives moderated through the third quarter. Has that continued in October?

Yes. This is Jeff Alex. Those incentives moderating during the quarter are really primarily a function of the rates coming down over the last couple of months. We're still utilizing the rate buydowns as an effective tool to drive traffic and get sales. We haven't really gotten a lot more aggressive in terms of the target rate that we've been advertising which has really helped us be able to reduce our incentives and improve margins at this point.

Jed can chime in, Alex. We haven't seen the market get a lot better or a lot worse. It's pretty much pretty steady.

Your next question comes from the line of Rohit Seth with B. Riley Securities.

Just on the incentives, where are you today in terms of your mortgage rate buydown? What's your average rise rate you guys are offering?

Right, just under 5%, buydown targeted rate.

Okay. And it sounds like with the rates coming down a little bit, it just lessens cost for your -- for you guys, you're not necessarily buying down rates further. Is that correct? From where we were, say...

We think we had buy down to 4%, we haven't chased them down that low to generate the sales that we just reported.

And our incentive levels -- is there much difference between DFW and Atlanta?

I'd say DFW, there's the ability to produce more homes because it's not as...

Yes, there's a difference because our average price point in Atlanta is $300,000 or $400,000 greater. So it's a very different buyer.

I would just add on to that as well. We do a lot of spec sales here, primarily with Trophy. So they don't have a big backlog of homes that they're necessarily trying to protect. Atlanta, they do a lot of to-be-built there. So I think we're seeing some higher incentives there, generally speaking, relative to our Texas markets.

Understood. Okay. And then it seems like Trophy, the expansion into Houston will be a key driver for you. I guess from my seat, looking at the community count, I'm not sure how to size this as we look to 2026. So if you any help there?

Well, community count is tough for any analyst right now to look at with us because the new communities we're adding are high-velocity lower-priced communities. So -- and that's many of the communities we're adding this year. So community growth isn't that great, but the sales velocity that's coming on the new communities that we're adding should be favorable.

Yes. I would just say that we expect Austin to be -- to basically double from where it was this year and then Houston will really be -- we'll get sub-100 closings next year, and that will grow meaningfully the year after that in 2027.

Okay. Fantastic. And then on the mortgage business, there's pretty nice uptick sequentially. You're growing the business obviously. I mean, do you think this level is sustainable as a go-forward run rate for you guys? Where you're at today or?

This is Jeff. Yes, we've been really happy with the progress that the mortgage company has made so far. We're trying to take a measured approach in how we roll this out to our Texas builders and communities. But the goal, as Jed mentioned earlier, is to really have that rolled out to the balance of Texas by the end of this year, targeting Houston and Atlanta at least by the first part of next year. We've got people and systems in place to be able to really leverage and scale that business at this point. And so we're excited about where we think we can take this.

Yes. I think the other thing we do from this financial perspective is that next year, we'll be breaking out financial services separately. And by doing that, we'll be pulling SG&A or G&A out of our line, putting it in financial services line that will slightly help our SG&A.

And then I guess last one is maybe you could just comment on the cost buckets, where -- are you seeing any direct cost savings in your labor, your land costs?

Yes. This is Jed. I'll take that. We're definitely seeing land and lots either stabilize or slightly come down in price. Lumber continues to be a year-long low every new month that occurs. So that has just fallen every single month this year. Labor is readily available. When we talk to our subs a lot of them are running at 65% to 70% capacity. So they've been able to negotiate reductions with their staff. So, yes, everything on the vertical side is coming down.

All right, fantastic. I guess I do have a last one, just a 4% ASP decline in the quarter. How much of that was just product mix, plant size and Trophy share versus maybe base pricing?

Yes. Trophy share didn't really change year-over-year, but there was some mix that was impacting the average sales price of the 4.3% decline in ASP, I calculate roughly little less than half of that was related to just the mix of closings across our builders.

There are no further questions at this time. I would now like to turn the call back over to Jim Brickman for closing remarks.

Well, we're always available if anybody who wants to visit with any of the speakers, Jeff, myself or Jed. So send us an e-mail, give us a call, and we'll be happy to do add more color to anything we talked about today. Thank you.