Good afternoon, everyone, and welcome to Green Brick Partners Earnings Call for the Second Quarter Ended June 30, 2019. 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. A slideshow supporting today's presentation is available on the Green Brick Partners website, www.greenbrickpartners.com. Go to Investors & Governance, then click on the option that says Reporting, and then scroll down the page until you see the Second Quarter Investor Call Presentation. 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 revenues, 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 few 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 Thursday, August 8, and the risk 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 this call. Today, the Company will be referring to pre-tax income attributable to Green Brick as a percentage of total revenues, pre-tax income as a percentage of average invested capital, EBITDA, net income return on average equity and adjusted homebuilding gross margin, which are non-GAAP financial measures. The reconciliation of adjusted homebuilding gross margin to homebuilding gross margin and the reconciliation of net income attributable to Green Brick to adjusted pre-tax income attributable to Green Brick are both 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. With me is Rick Costello, our CFO and Jed Dolson, the President of our Texas Region. Thank you for joining our call. As the operator mentioned, the presentation that accompanies this call can be found on our webpage at greenbrickpartners.com. At the top of our webpage click on investors and governance, then click on the option that says reporting and then scroll down the page and you'll see the second quarter investor call presentation. I'll give everybody a few seconds to get this done. Starting off the call, we had a great second quarter with record tying earnings of $0.29, record residential unit revenue of $175 million and a record backlog of $331 million. Our adjusted home building gross margin increased 180 basis points to 23.3% in the second quarter of 2019 from 21.5% in the first quarter of 2019. We expect earnings growth to inflect positively starting in the third quarter of 2019 on a year-over-year basis. Due to great progress with our Trophy Signatures Home brand, we expect this entry level platform for which the company now controls over 1,600 home sites to significantly contribute to 2020 earnings and beyond. Further, we continue to expect that we will grow from 76 communities on January 1, 2019 to 92 communities by either the end of this year or the first quarter of 2020 depending on weather. This 21% community growth is being accomplished while maintaining a very conservative balance sheet with net debt to total capital of only 28.7% as of June 30, 2019. Please move 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 continued to be two of the largest markets in terms of generating job growth. On…

Thanks Jim. Green Brick is truly one of the best growth stories in the public homebuilder space. Take a look at Slide 9 titled Growth Drivers. The chart shows the growth in the last 12-month total revenues from Q2 of 2017 to Q2 of 2019 is 63% over that two-year period, but even more impressive is our setup for the future. Over the last two years, our backlog grew 101% to $331 million as of June 30, 2019 which was both a doubling of our 2017 backlog and a record for any quarter in our existence. During these last 24 months, we also increased our lots owned and controlled by 70%. We grew the total number of selling communities by 67%. Now let's focus on just the 12 months ending June 30, 2019. We increased our number of units started by 36% versus the 12 months ended June 30, 2018, with an increase to 1,682 units started. In fact, we have an average starting of over 420 units per quarter from Q3 of 2018 through Q2 of 2019. As of June 30, 2019, we have 1,214 units under -- sorry. So Green Brick has the backlog, the construction starts, the level of units under construction and a lot inventory to sustain further dynamic growth. On Slide 10, we highlight the diversification of our product offerings. From 2018 we significantly increased our focus on townhome communities, thanks to years of planning, land acquisition and development. In fact, we've grown our townhome revenues 53% over the last 24 months. A robust single-family growth of 66% in the 24 months from June 30, 2017 to June 30, 2019 is highlighted by GHO's revenues in the last 12 months of a $100 million at a lower ASP with the more affordable age targeted product. Over this period this has helped us maintain affordability while offering a high-quality product. Over the last two years, our average sales price has risen by only 2.8% in total. Slide 11 visually demonstrates that our range of homes and diversified homebuyer mix have grown our revenues and provided stable earnings by not concentrated on any one homebuyer segment. We now have five distinct consumer segments which all experienced strong revenue growth into Q2 of 2019. You can easily see in the pie chart on the right side of the page. The more even the sizes of the various target segments versus last year at this time. Our 26% year-over-year growth has been an important balancing and diversification of our target consumer mix. And please remember, what you saw back on Slide 8, most of our communities are located in desirable A-submarkets. The additional move to include different consumer segments and product types are part of Green Brick's longer-term strategy to diversify our offerings and limit risk without reliance on constantly growing sales prices or a single group of homebuyers. Next Rick Costello, our CFO will discuss our second quarter results in more detail.

Thanks Jed. First everybody, I was notified that there was an issue with our website. If you hit refresh on our website and go to the Investors and Governance page and Reporting you will see the second quarter investor call presentation about half way down the page under SEC filings and reports. I'll give you folks a minute to do that if you’re relying on our website. Thank you for joining us today to review our 2019 second quarter financial results. Before moving to the financial results, let's first review Slide 13 about our closing yesterday of long-term debt. We're really excited to announce that we've established a relationship with one of the largest and most reputable institutions in the world to help fund our future growth. On August 8, yesterday, we issued $75 million of senior unsecured notes with Prudential Private Capital in a private placement. Our superior credit metrics allowed us to price seven-year notes at a fixed rate of 4.00%. This rate is only slightly higher than long-term rates paid by the lower leverage large cap builders like [NVR VR Horton] and more attractive than the long-term rates paid by all small cap and all mid cap builders. And as you can see in the table provided, our small cap peers have incurred at high cost to stack maturities on a longer term basis than provided in revolving credit lines. So instead of paying higher rates, we have reduced our cost of borrowing and therefore our overall cost to capital, pretty exciting stuff. I'm now going to move it to the financial highlights. So please move to Slide 14. For Q2 of 2019 versus Q2 of 2018 and for year-to-date comparisons, here are some of the high-level key operational metrics. Net new orders increased by 17% for…

Okay, thanks Rick. Well, we had a great quarter, our team builders did a wonderful job of managing pace versus price to generate the best second quarter of net income and the largest backlog in Green Brick's history. Unlike most peers, I'm able to tell its accelerating. We will grow from 76 communities at January 01, 2019 to 92 communities by the end of the year or the first quarter of 2020. And this 21% community growth is being accomplished as Rick just discussed while maintaining a very conservative balance sheet or a net debt to capital is only 28.7%. One other metric Rick didn’t mention is that we also don’t do any off balance sheet land banking which many peers do that's kind of disguised leverage. As we discussed, our superior equipment brings a largest of entire growth with a new 4%, $75 million senior term loan with credential. This low cost of capital is a huge advantage over our peers. We now also have the most homes under construction at our history. Operationally, we are seeing house margins improved and the benefits of our standardization in operating systems utilize by all of our builders. Our business has now scaled to where our title and mortgage business are rapidly expanding with great profitability and little risk. Our entry level first time move of value builder Trophy Signature Homes is off to a great start and should be a significant part of our earnings growth story that we expect to replicate in other markets. I want to thank the entire Green Brick team for their hard work and great results. I'll now turn the call back to the operator. Operator?

[Operator Instructions] Your first question comes from the line of Michael Rehaut with JPMorgan. Your line is open.

Hi, this is Maggie on for Mike. The first question I have is on your community account guidance that you reiterated the expectation to get to 92 by the end of the year, the end of the first quarter of next year. I think last quarter you have said that you expected that growth to happen kind of to be nearly but we actually saw community account sit down a little bit this recent quarters. So, are you expecting more of a jump in the third quarter or are you expecting it to be kind of a consistent piece of growth across the next two or three quarters?

This is Jim Brickman, Jed can chime in. We expected we hope will be linear because it's difficult opening and closing communities unless you try to approach in a linear manner but one of the challenges that we get into right now was acceptance of community cities are very demanding and understaffed. So, our plan is to make it as linear as possible. We hope the cities cooperate with us as well as the weather. You have anything to add to that, Jed?

No. it will be linear.

Okay.

Okay. And second, on the incentives, you said they were so offset as up year-on-year but that they were down sequentially. So, I was wondering if you could quantify that for us. And then, also have the homes that were ordered when incentives were at their highest last quarter too. Have those already hit your P&L or should we expect those to continue flowing through in the third quarter?

But talking about margins, we think that we don’t provide whether its $10,000, $15,000 or $20,000 whatever the number is in incentives but you can see it reflected in the gross margins. We have seen gross margin improvement, we see inventory clearing in our markets pretty significantly, we're very encouraged by that. We think our concessions we can see trending down now for the first time and we're very encouraged about not having margin degradation and really improvement throughout the rest of the year.

Okay, thank you.

[Operator Instructions] Your next question comes from the line of Carl Reichardt with BTIG. Your line is open.

Thanks. Good morning, guys or afternoon or whatever it is. In the queue you talked about the gross margin change from last year being a function of both the incentives, the sales incentives but also higher material cost. And obviously, lumbers been coming in. Can you just talk a little bit about that impact and you didn’t note labor as an issue. So, I'm just trying to get a little more color on the year-over-year change in margins.

Well, we've had obviously lumbers been a tailwind for margins for our builders and it varies market by market. In Dallas, we are seeing benefits pretty well across the board in all of our purchasing it has been interesting to borrow, I don’t care whether sheet-rocked type created or anything else. We are not seeing price pressure and we've been able to lower unit costs pretty well across the board. In Atlanta, it's been a little bit more difficult but in Dallas we're seeing a lot of improvement in our unit costs, pretty much across the board whether it's concrete, plumbing. And the additional tailwind we're experiencing over prior periods is rebates through our national purchasing program that's helping our lower cost significantly as well as value engineering decisions we've made.

Hey Carl, this is Rick. Thanks for joining the call and then also thanks for that heads up on our website too, we appreciate that.

Hey, Rick.

One of the things that's active let's say over the last year as we've been pretty consistent in terms of having our like lot of the 1200 homes under construction. And on the started homes, the cost as the units were started had contracts in place and had purchase orders in place. But our builders are experiencing a substantial ability to lower those costs on a perspective basis which is being reflected in an improved margins and last Jim said our visibility into the future.

Rick, is your expectation but I guess I that I can ask about this quarter too. Incentives are coming on, has pricing power returned in any kind of a meaningful way if you look across your community paying a plea, do you see the ability of raise basis?

I think, Carl this is Jed. I think based on pricing has increased in a little but we're getting more bang for the buck by decreasing incentives. And currently, the other thing that we did is we were putting things in homes that we have now not included in the base price because we were getting paid for at this increasing margins.

Okay alright, that makes sense, thanks Jim. And one more, if you answered this store count question. Just on the new private placement the debt deal going to pay down the secured credit line. Is that are you intending them not to use that secured credit line on a go-forward basis and this is a replacement for that or will that capacity still exist for you?

Yes, it's actually, Carl, it's paying down pretty much across the line prorate. All of our revolvers both the secured and unsecured, we still -- the pay down is essentially going to convert into the ability to continue to borrow up on our revolvers to fund growth.

Sorry to interrupt you, Rick. Here's a probably a very simple way for analyst and investors today could look at how we're going to fund our growth with really attractively price capital. We had approximately $240 million of debt out, at the end of second quarter I think was actually $234 million but let's say its $240 million. With the Prudential line, we have $365 million of capacity and all of our facilities are unsecured and other facilities. So, there is about a $125 million of available capacity that we haven’t drawn down in. we want to maintain our business at about a 33% debt to total capital which implies that where there is about $250 million of retained earnings that we can fund using this low cost of capital over the next few years. And we think that's really a great growth story, it's something most peers can't do and we're really excited about.

Thanks Jim, I appreciate that. Thank you, guys.

There are no further questions in the queue at this time. This completes today's conference call. You may now disconnect.