Good afternoon everyone and welcome to Green Brick Partners Earnings Call for the Second Quarter ended June 30, 2016. 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; details for accessing the replay will be made available at the end of the call. A slide show supporting today's presentation is available on Green Brick Partners website, www.greenbrickpartners.com. Go to the Investor Presentations tab and click on presentations and webcast. The company reminds you that during this conference call it will make various forward-looking statements within the meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements with respect to revenue, earnings, performance, strategies, prospects and other aspects of the business of Green Brick Partners are based on current expectations and are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. Please read the cautionary statement regarding forward-looking statements contained in the company's press release which was released on Monday, August 8, and the risks factors described in the company's most recent annual and quarterly filings with the Securities and Exchange Commission, Green Brick Partners undertakes no duty to update any forward-looking statements that are made during the course of this call. Today the company will be referring to adjusted EPS and adjusted homebuilding gross margins which are non-GAAP financial measures. The reconciliation of adjusted EPS to net income attributable to Green Brick and adjusted homebuilding gross margins are contained in the earnings release that Green Brick issued yesterday. I would now like to turn the conference call over to Green Brick's CEO, Jim Brickman. Please go ahead sir.

Hi, everybody. Thank you for joining us today. With me is Rick Costello, our CFO. I will ask everybody to open up the Investor Presentation which we will refer to during the call. Please open to slide three and I’ll give you a second. We are very excited to announce that our second quarter pretax income attributable to Green Brick was $11 million which was up 85% from the same prior period. This is a record since the reverse capitalization in October of 2014. Also during the quarter, we experienced the best home sales revenue in our company’s history, with closings valued at $93.7 million. Year-to-date home closing revenues were up 46% more than in the first half of 2015. Total revenue was $98.9 million for the quarter, up 37% from the same prior period of 2015. And we increased our units and backlog to a record 307 homes. The dollar volume of our backlog at June 30, 2016 now sits at approximately $140.3 million up 59% from year end. Backlog increased strongly due to a 38% increase in net new orders during the first two quarters of 2016 compared to the first half of 2015. And this is after closing of $160 million in homes over two quarters. In other words, both selling and closings had been at pretty strong levels. Many in our industry are rightfully concerned about how rising lot and construction cost might impact future profit margins. Some builders are experiencing significant reductions in margins because they sold their best lots and are now replacing these with less desirable and more expensive lots. Our 2016 adjusted gross margin of 23.7% year-to-date is among the highest in the industry. We believe that we can maintain our superior profit margins relative to our peers in future quarters. Because…

Thank you, Jim. Hello everyone, thank you for joining us today to review our 2016 second quarter and year-to-date financial results. I’m going to start by going through some highlights for the quarter and year-to-date on which I will go into more detail in a moment. Please refer to slide 11. Some key operational metrics for the quarter ended March 30, 2016 versus the same period of 2015 are net orders increased by 41%. Home deliveries increased by 31%. Home sales revenues increased by 55%. The average sales price of homes delivered increased by 19%. The dollar value of units in backlog increased by 37%. The average sales price of units in backlog increased by 11%. In our highlights for year-to-date versus the same period of 2015, net orders increased 38%, home deliveries increased by 22%, home sales revenues year-to-date increased by 46%. The average sales price of home delivered increased by 20% and homes under construction increased by 26%. And now for a little bit more detail. Green Brick delivered 212 homes for the second quarter, a 31% increase over the second quarter of 2015. Year-to-date Green Brick delivered 373 comps, a 22% increase over the first half of 2015. The average sales price of homes delivered was $442,000 for the quarter, an increase of 19% from the second quarter of 2015. Now combining the increases in both quarterly deliveries and average sales price yielded $93.7 million in builder operating revenue an increase of 55% compared to the second quarter of 2015. Year-to-date Green Brick earned $160.4 million in total revenues an increase of 46% over the first half of 2015. For the second quarter, the number of net new home orders was 239 homes an increase of 41% compared to the second quarter of 2015. Year-to-date net new…

Thanks, Rick. I'm very pleased with how Green Brick business has progressed again this quarter, particularly in the record growth in homebuilding revenue and backlog and our best profit since reverse recapitalization in October of 2014. When I started Green Brick's predecessor in 2008, the homebuilding market was in a very different part of the building cycle. The economy was poor. The new home industry was in a downturn. Bank quit lending and builders were struggling to meet their business points. This put pressures on builders that needed to raise capital just to keep their business going. Green Brick partners was formed to provide lots in access to capital to give builders who needed both. Access to capital was a competitive strength during the downturn and end of the recovery period. Today capital is still important particularly on the land development side of our business. But as a homebuilding market has bounced back, so as our competitor's ability to raise capital. From 2008 to today our industry has consolidated. We expect the industry will continue to consolidate and as a result we will have to compete against fewer but larger builders that have decades of experience and access to capital. In order for us to remain competitive and succeed we need to hit on all cylinders and remain focus on every aspect of our business. This is from land acquisition and development, purchasing, construction, sales and marketing and finally customer service. In other words we need to execute through our capabilities and this quarter we have done that. And we hope and expect to continue to do that going forward. We have been asked if and when we plan to buy a builder in other market and when that will take place. The answer is that like every other decision we make we will be judicious and act when it make sense. We have looked at a number of builders in other markets that have been presented to us by three different bankers or brokers over the last year and have not found the fit. We believe they will find a good builder to purchase, but we are going to wait patiently until that time occurs. From an operating standpoint, we believe our inventory of lots and high demand markets are 12% increase in active selling community year to-date and our strong backlog should allow us to continue to grow revenue and profits. We had a really great quarter and have the balance sheet, culture and people in place to get the job done in future quarters. Thank you for your help and support. I will now turn the call back over to the operator for questions.

[Operator Instructions] Your first question is from Mike Dahl from Credit Suisse. Your line is open.

Hi. Thanks for taking my questions. Nice results. Jim, hoping you could give us a little more color on some of the strength in orders this quarter. And so, two-part question, first is could you give us a sense of regional differences between Atlanta and Dallas? And then second is, since you guys build a variety of product types, could you also give us a sense of relative strength across your different product types or buyer segments?

Sure. Thanks Mike. Really both of our markets were very strong in the second quarter. We entered the market with really a lot of home spec inventory that our buyers wanted to buy in Atlanta. We see few differences in the Dallas market. It was probably a little softer at the high price point, but this was more than made up in our Townhouse business in Dallas. In Atlanta, our average selling price was quite high and that was really as a result of Bellmore finally kicking in. And I think the real good news is that Bellmore, we just opened up our 7800 square foot amenity center, the tennis courts are up, the swimming pools were open up and we really think that our sales pay should accelerate at Bellmore and also at our DFO [ph] community in Atlanta which are higher price point communities. So, while some of our peers are heading slowdowns in the over $500,000 price point, we have two unique communities there and we really think it's going to accelerate going forward.

Got it. Thanks for that. And then my question is just around the margins and so, seeing very strong gross margins and at the same time the minority interest line has remained kind of under pressure for suggesting your control, builders are seeing lower profitability. So could you guys just explain that in a little more detail what's causing the deterioration in profitability for the control of builder? And then if there's any directional guidance you can give us on both gross margin and minority interest for either 3Q or the balance of the year? That would be great.

Sure. Rick, why don't you fill that?

Hey, Mike thanks for taking time out at your conference today to do this. By the way really appreciate that. From a sustainability standpoint, it sounds the most critical issue is the long-term view on the gross margin. As I mentioned before we're three quarters in a row. Our margins have been increased. We continue to be able to cycle through our 4500 loss that we own and control. We've already underwritten those deals that on our balance sheet. They've been underwritten at a 21% internal rate of return on leverage at minimum internal rate of return is 21%. So those deals are all part of the equation that have us feeling very good about the sustainability of our long-term margins. The second part of that piece is if there has been margin pressure at a lot of other builders because of the land market. They feel that. But our model is a land heavy model. Land heavy model, those margins that builders would typically suffer under go to our side of the equation. What we're basically doing is here is we're taken a bigger piece of that pie and when we take a bigger piece of the pie, it is somewhat at the expense of our control builders. That said they are making fantastic money for their own account as they grow their gross numbers in their business. So I think -- and also we also have a preferred return and interest rate that we charge our builders as a second tranche of profitability behind that first tranche of land profit. So, it's just an allocation process that's going a little bit more to us. I think you're looking at the builders correctly as we talked over the quarters as their net non-controlling interest as a percentage of the gross revenues is going to be in a range. Right now, they're maybe at the low end of that range and we're fine if they stay there, and they want to push it higher and it will be a good answer for because they were to pushing higher to be controlling hard cost as well as achieving SG&A leverage and lowering their SG&A expenses.

Mike, one other thing as we pretty much cleared out inventory and some $900,000 plus or minus product in Atlanta and our building partner they sat on those homes a lot. So, that raised our average selling price. But it also cost [Indiscernible] because we have a high cost of capital for him and it caused us to increase our interest cost which lowered his minority interest. But he has discovered that really he does not wanted to be building $900,000 specs comes in Atlanta and we are not encouraging to do that for the same reason going forward.

Thanks. That's really helpful.

[Operator Instructions] Your next question is from Will Randall from Citigroup. Your line is open.

Hey, good morning, guys and congrats on the progress. I guess as you kind of think about the second half of 2016 relative to what you experienced in the second half 2015, how do you feel about cycle time issues, and from that perspective imagine the larger proposition of the closings are spec, where do you stand versus last year on this time?

Well, as one of the last step that I threw out there is – hey, Will, this is Rick by the way, and congratulations on the coming addition to your family too. But the stat on the number of homes that we have under construction was up, so I think it was 26% over the same period last year. So we have a lot more under construction now at 660 homes and we also have a record backlog. So, from a visibility standpoint, the second half looks real strong of having both, it already queued up in terms of starts, because essentially if there wasn't started as of June or July you're not going to close it for the second half of the year. So, we're going in the second half of the year with that tremendous amount of build-in plants closing that are going to happen throughout the second half of the year particularly in Q4. Is that helpful?

Definitely. And thanks, Rick. I guess kind of what I was getting was from a cycle time perspective. Now you're sitting with roughly backlog of 300 as you mentioned, you're starts are much higher than that. Do you think you're far enough along in those starts to avoid some of the [Indiscernible] guys not showing up, the framers getting delayed, does it feel little bit different this year and are you facing any sort of call it inflation headwind that are greater than what we saw in the e past?

The labor situation for us has stabilized and we think it’s going to improve just because multifamily has slowed down in Dallas and we think it’s going to continue to slowdown in Dallas and that was particularly in the framing side of the business, but it’s still the challenge, but really our cycle times are decreasing particularly in the Townhome build business for us. One of things we did operationally, that we're continuing to focus on cost and cycle time and operations we hired a Division President of the large public builder that's doing nothing over here but analyzing our operation, cycle times and trying to find pennies and save days right now in all of our construction business and I think we're seeing the early results of that.

Will, one other follow-up on that to is that the concrete issues which you're correct and identifying as one of the issues that playing this last year and this year. It’s still land development issues out there, but again we already started all those houses, so we've gone through the land development component of that. And we've also gone through since they are in construction -- putting the slap in on those homes too. So, until you putting a flat work less of an issue for us as it maybe to some of the other publics.

Got it. Thank you. And just one follow-up. In terms of balance sheet leverage obviously there's not a whole lot starts sitting right around book, but on that past you've discussed which I believe has changed, but some accelerated community count growth meaning changed by, you haven't given explicit guidance. Should we assume that what might be perceived is a lazy balance sheet that capital gets deployed and either growing active communities at a more rapid cliff or you thinking about share purchases as well?

Really right now we want to focus on growing our business, because we think that's the best long-term strategy for our investors. If the stock ever retreated we have the option of utilizing our balance sheet to repurchase shares and we'd always be doing that as an option if particularly if there were -- I'm sorry we didn’t have a share buyback in place when our share price went down so low earlier this year, but right now we are focusing on growing our business and opening more store fronts.

Thanks again guys, and then congrats once again.

There are no further questions at this time. This concludes today’s call. You may now disconnect.