Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Green Brick Partners 4th Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star, then the number 1 on your telephone keypad. And if you'd like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Jeff Cox. Chief Financial Officer, Jeff, the floor is yours.

Good afternoon, and welcome to GreenBrit Partners earnings call for the fourth quarter ended December 31, 2025. Following today's remarks, we will hold a Q&A 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 a 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 2026 and beyond. In yesterday's press release and FCC 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, February 26, 2026, and the company has no obligation to update any forward-looking statement 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 in the aforementioned presentation. With that, I'll turn the call over to Jim.

Thank you, Jeff. I am pleased to announce our fourth 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 continued to balance price and pay to maximize returns in each of our communities. Net income attributable to Greenbrick for the fourth quarter was $78 million, or $1.78 per diluted share. We delivered 1,038 homes in the quarter, a 1.9% increase year-over-year, and a record for any fourth quarter in company history. We also achieved 883 net orders, also a record for any fourth quarter. As Jed will discuss in more detail, driving our sales value in Q4 required additional price concessions and other incentives, which caused our home-building gross margin to decline 490 basis points year-over-year and 170 basis points sequentially to 29.4%. The decline was due to higher incentives and changes in product mix. Still, our gross margins remain the highest public homebuilders. While the macroeconomic landscape presents headwinds for the entire industry in the short term, We believe the core strengths that have driven Greenbrick'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. In 2026, we believe that our financial services platform will generate more pre-tax income than the interest cost on all of our debt. As Jed will discuss in more detail, we also continue to reduce construction cycle times. We believe we are well-positioned to sustain our return metrics over the long term that rank among the very best in the industry, providing long-term value to our shareholders. We remain focused on growing our business, particularly in our Kofi brand. Kofi's growth in DFW and Austin combined with our first open community in Houston during the spring of 2026 selling season, we believe presents significant opportunities for sustained growth over the next few years. This expansion allows us to continue to serve the critical first-time and move-up buyer segments while further diversifying our revenue base and strengthening our presence in key Texas markets. While the overall market conditions remain challenging due to macroeconomic and political uncertainty, we remain vigilant in monitoring and responding to shifts and buyer preferences. We believe that our experienced team and robust land pipeline and desirable infill and infill at adjacent locations will continue to drive our success in the quarters to come. With that, I'll turn it over to Jeff to provide more detail regarding our financial results.

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 9.2% from 5.2%. Our average sales price of $530,000 was up 1.1% sequentially and down 3.1% year-over-year. Home closings revenue of $550 million declined 1.3% compared to the same period last year, and our home building gross margins decreased 490 basis points year-over-year and 170 basis points sequentially to 29.4%. SG&A as a percentage of residential unit revenue for the fourth quarter was 10.6%, a decrease of 30 basis points year-over-year, driven primarily by lower personnel costs. Excluding SG&A from our wholly owned mortgage and title companies, our home building SG&A for the fourth quarter was 10.1%. Net income attributable to Greenbrick for the fourth quarter decreased 24.5% year-over-year year to $78 million and diluted earnings per share decreased 23% year-over-year to $1.78 per share. For the full year, deliveries increased 4.2% year-over-year to 3,943 homes, a record for any full year in company history. Our average sales price declined 3.1% to $530,000. We generated home closings revenue of $2.1 billion, an increase of 1% from 2024. Home building gross margin for the year decreased 330 basis points to 30.5%. Net income attributable to Greenbrick decreased 18% to $313 million and diluted earnings per per share declined 16.3% to $7.07. Excluding the impact of the sale of Challenger, which occurred in the first quarter last year, the diluted earnings per share declined 14.2%. Net new home orders during the fourth quarter were up slightly year-over-year to 883 and down sequentially only 1.7%. For the full year, net new home orders increased 3.1% year-over-year to 3,795. Average active selling communities of 101 was down 5% year-over-year. Our sales pace for the fourth quarter increased marginally to 2.9 per month compared to 2.8 per month in the previous year. We started 884 new homes, which was down 14% year-over-year and 7% sequentially. Units under construction at the end of the quarter were approximately 2048, down 12.5% year-over-year. We reduced starts in Q4 to better align with our sales pace to focus on balancing margin and pace. 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. Our backlog value at the end of the fourth quarter was $354 million, a decrease of 28.5% year-over-year due primarily to a higher proportion of quick move-in sales, including greater percentage of our sales being generated by Trophy that, as a spec builder, typically has shorter times between contract execution and closing. Backlog AFP decreased 8.2% to 681,000 due to elevated discounts and incentives across all of our brands, in addition to product mix. Trophy, our spec home builder, represented only 14% of our overall backlog value, but they accounted for nearly half of our closing volume. In Q4, we repurchased 359,000 shares of our common stock for approximately $23 million. And for the full year 2025, we repurchased 1.4 million shares for approximately 83 million. In December, the Board of Directors authorized a repurchase of up to 150 million of the company's outstanding common stock. This new authorization provides us with the ability to opportunistically return capital to our shareholders when we believe our stock is undervalued, while continuing to invest in the long-term growth of the business. We recognize the heightened importance of liquidity in the current period of economic uncertainty and market volatility. We believe our investment rate balance sheet and low financial leverage 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 year, our net debt to total capital ratio decreased to 8.2% and our debt debt to total capital ratio decreased to 14.7%, among the best of our small and mid-cap public home building peers. Excluding cash and debt from Greenbrick Mortgage, our home building debt and net home building debt to total capital ratio at the end of the quarter was 12.8% and 6.3%, respectively. During Q4, we renewed our unsecured revolving credit facility, which extended the facility to December 2028 and provided a meaningful reduction in the interest rate. At the end of the quarter, we maintained a robust cash position of $155 million and total liquidity of $520 million. With $365 million undrawn on our home building 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 Jeff.

Thank you, Jeff. We continue to see a challenging sales environment within all our consumer segments, which have been impacted by affordability challenges and a weakening job market. Our team responded well to the challenging market conditions as evidenced by a record fourth quarter sales volume and our low cancellation rate of 7.6% in Q4, which was an improvement termed 7.8% in Q4 2024. We continue to have one of the lowest cancellation rates in the public home building industry and we believe it demonstrates the credit worthiness 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 home buyers with price concessions, interest rate buy-downs, and closing cost incentives. Incentives for net new orders during the fourth quarter increased to 10.2%, an increase of 380 BIPs year-over-year and 130 BIPs sequentially. Rate buy-downs remain the 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 strategically 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 effectively in a volatile market. Greenbrick Mortgage, our wholly-owned mortgage company, closed and funded over 380 loans in the fourth quarter. The average FICO score was 746, and the average debt-to-income ratio was 40%, consistent with previous quarters. Greenbrick Mortgage began serving our Austin community in Q1 of this year. We expect to complete the rollout of Greenbrick Mortgage to all DFW communities by the end of the first quarter of 2026. To Houston, when our first community there opens for sale during the spring 2026 selling season, and to Atlanta by the middle part of this year. As Greenbrick Mortgage continues to expand its service to most of our communities, we anticipate by year-end its capture rate will range from 75% to 85%, typical of capital mortgage companies. We continue to reduce our construction cycle times, which were down 20 days from a year ago, to 130 days. Trophy's average cycle time in DFW was under 90 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. While we believe tariffs will have a minimal impact on earnings next year, we're still assessing the Supreme Court's ruling against the Trump administration's tariffs and the administration's potential response to the ruling. 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 $36 million on land and lot acquisition and excluding cost share reimbursements, $90 million on land development. This brings spend for 2025 to $267 million for land acquisition and $323 million for land development, respectively. Many of our land development projects involve special financing districts that provide reimbursement for public infrastructure costs. As work is completed, we're able to recoup a portion of these costs, which reduces our net development spend. 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. As noted in our earnings release in 10 , we changed the definition of lots controlled to lots under contract, which includes all land or lot parcels that we have, a contractual right to acquire pursuant to a fully executed option contract, or purchase and sale agreement. We previously referred to lots controlled, which included only lots past feasibility studies for which we did not hold title but had contractual rights to acquire. Under the new definition, our total lots owned and under contract at the end of the year increased by 10% year-over-year to approximately 48,800, of which 37,000 lots were owned on our balance sheet and approximately 11,800 lots were under contract. Trophy comprises approximately 70% of our total lots owned and under contract. Excluding approximately 25,000 lots in long-term master plan communities, our lot supply is approximately six years. With that, I'll turn it over to Jim for closing remarks.

Thank you, Jed. Instead, in short, we remain optimistic about our long-term prospects, and we believe we are well-positioned to continue to produce strong results. We believe our strategic land position, high-quality and diverse product offerings that appeal to multiple segments of the homebuyer market, and our investment-grade balance sheet will lay the path to future growth and industry-leading returns for our shareholders. Being consistent matters, we are very pleased that we had no turnover at the divisional president level in 2025. So we entered 2026 with experienced, hardworking managers that have worked for us a very long I also want to thank the entire Green Brick team for their passion and dedication delivering exceptional results in the face of a challenging market. This concludes our prepared remarks, and we will now open the line for questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue, and if you'd like to withdraw that question, again, press star 1. Your first question comes from Rohit Seth with B. Riley's Securities. Please go ahead.

Hey, thanks for taking my question. Jeff, just on Q2, can you – last quarter, you broke out the gross margin decline between buy-downs and mix. Can you give us a sense of the puts and takes on the gross margin and the drivers there?

Yeah, you know, we looked at the mix ratio, and I would say that, well, there's certainly some mix components there. Most of it's really just driven through higher incentives and discounts. We're seeing compression really kind of across the board and in all of our regions. In some cases, we've got a couple of anomalies within some of our smaller builders, but that's mostly due to community mix more so than anything else.

Okay. Where are you guys buying down rates to at this point?

So we're buying – 499 with 321s on our entry level.

Okay. It's about the same where you were in the prior quarter, you said just in the five.

Yeah, this is Jim Brickman. So rates ran down, I guess, just a little bit today. They went sub six for the first time in a long time. And basically every quarter of a point is about in the buy down one point in incentive cost to us. So it'll be interesting to see if rates go down, whether we'll be able to harvest any more margin from having less incentives or not.

Okay. Just on your costs, it looks like sequentially the cost per home went up a few points. You can just give us a sense of that kind of direct costs, land costs.

Chad, why aren't you talking about direct costs? Yeah, we're seeing direct costs continue to go down. We are, as we cycle out of older legacy communities, our new lot prices are higher. Jeff may have a percentage he can share on that, but as far as directs go, they continue to go down.

Yeah, and the lot costs are relatively stable, looking year over year, whether for the full year or quarter over quarter, but maybe $1,000 or $2,000 a lot. No big movement there. The biggest thing that you're seeing, Rohi, is the increase in our selling and closing costs, which still ran through cost of sales at the end of last year. That's really the biggest driver, showing the increase in that number. We've touched on it a little bit in previous calls, but starting later this year, we'll start doing segment reporting as the mortgage company becomes a more material part of our As we do that, those selling and closing costs will become contra revenue as opposed to cost of sales.

Yeah. Let me add to that. We have very low debt, so our debt is capitalized into all of our inventory and our land is very low because our debt is very low. One of the other differentiators for us versus many peers is that because we don't lot bank, our lots are not. increasing in cost based upon the lot banking cost of capital and we think that's going to be an advantage year after year.

Interesting okay and if I could squeeze one in do you mind commenting on how the spring selling season has been going you know on traffic orders any call would be helpful.

Yeah, I can give you a little, you know, talk month to month, anybody that was in Texas in January knows that we had one of the worst weather events really in our history, so it's really hard to bench sales January to February because January we were basically out of business for what, 10 days, Jed? Yeah, 7 to 10 days. You know, which was almost the third of the month. That said, February looks to be off to a good start for us, and we're really quite encouraged.

Sounds great. I'll pass them on.

Your next question comes from the line of Alex Rigel with Texas Capital. Please go ahead. Alex, your line is open.

Thank you very much. Good morning, gentlemen. Can you talk a little bit about your inventory level as well as the broader inventory level across your markets?

Yeah. Yeah, this is Jed. I can answer that, Alex. We are seeing across all of our brands a really a very high desire for finished specs. So we're carrying higher inventory levels, especially on the spec and finished spec side that we did, and that goes all the way from our $250,000 price point to our $1.2 million price point.

And now, this is Jeff. I'll just add on to that that at the end of the year, we were carrying roughly five finished specs per community. Half of those belong to Trophy. But when you look at their sales pace, in particular, based on what Jim just referred to with February sales, it only equates about a month to maybe a one-and-a-half-month supply. Of finished inventory.

And then as it relates to sort of broader inventory in your geographies, across your We think we're keeping pace or maybe, I'd say we're middle of the pack.

There's some of our competitors that are carrying more finished inventory than us. There's some that are carrying a little bit less. But typically, as Jeff mentioned, everybody's carrying at least one month of finished specs on the ground, one month of sales of finished specs.

That's helpful. And then any directional guidance on community account growth in 2026?

Yeah, this is Jeff. You know, we ticked down a little bit this year in 2025 versus where we were in 2024. and we've been aggressively adding to our lot pipeline, as you know. We don't usually give guidance on community count because it can take us somewhere between 18 to 24 months to bring new deals to market, but certainly our goal is to continue to increase our community count by the end of this year.

Yeah, one of the things that's a little difficult for analysts or really investors to get a grip on with Greenbrick is that as Trophy becomes a bigger part of a business, as it does quarter to quarter to quarter, Trophy sales pace is double, at least Southgate's, which is our high-end builder's sales pace. So we really don't need community count to grow to have a significant growth in either top line or unit growth.

Yeah, I would just add that, you know, it's, as Jeff mentioned, it's a little hard to predict what our community account will be at the end of the year, but we can see two to three years out that we will have meaningful acceleration in community account.

Yeah, we have a number of bachelors in communities that will be coming on stream.

And then lastly, it kind of sounded as if your commentary would suggest that your spend on land in 2026 will be down from 2025.

This is Jeff, Alex. We haven't disclosed specific spending amounts for this year yet. We wanted to get through the spring selling season before we gave any kind of guidance on that. But given the increase in lot supply that you've seen over the last couple of years, we do anticipate that land spend will be higher this year, but we're not ready to give a specific number yet.

And Alex, this is Jed. I would mention that we are adding a lot of horizontal development dollars to previous year's land acquisition, you know, with the goal of getting our community count up much higher in the coming years.

Thank you very much.

Thank you.

Your next question comes from the line of Ryan Gilbert with BTIG. Please go ahead.

Hi. Thanks, guys. First question's on deliveries, and I guess the trajectory of deliveries in 2026. I've generally thought about delivery growth kind of tracking growth in starts or homes under construction. And we've seen, you know, certainly outperformance this quarter, but then also the past few quarters as well. I'm just wondering if that relationship between delivery growth and starts, we should think about that reasserting itself in 2026, or if you think, you know, you could still have deliveries outpace starts and homes under construction here.

This is Jeff. I think that you've seen us pull back on starts here, in particular in Q4 as we try to right-size our inventory. And our goal is to make sure that we're starting roughly the same number of homes that we sell each period. But given kind of the prior comment on increasing community counts here towards the end of the year, certainly we would expect to see an increase in starts. We may not necessarily benefit from all the deliveries of those starts, depending on when we get those in the ground this year, but certainly in the future years we're looking to grow community count and closing.

Okay. Got it. And then I wanted to ask about spec strategy as well. It sounds like as trophy signature continues to grow, your spec mix should also continue to increase. We've heard from some of your competitors about shifting back to build-to-order sales. And I'm just wondering how you're thinking about specs versus build-to-order in 2026.

I can't really expand on this, but really, at Trophy, we're seeing really great success in that buyer profile that wants a house. They want the certainty of a mortgage rate. They have an immediate need. We're finding out really a great number of buyers that are out there that want that product at that price and can move in quickly. Jed?

Yeah. I think we as an industry are doing a very good job of putting the product on the ground that the consumer wants with the right packages. And we've seen that even go into our – we've seen the spec desire even go into our $600,000, $700,000, even our million dollar price point. So we are going to continue to put a lot of specs on the ground because that's what we think the buyer is telling us that they desire. On paper, theoretically it sounds great that some of our competitors are wanting to be more build job oriented. We have yet to see that in any of our marketplaces really play out, other than say at the million dollar plus price point.

Let me chime on one other point that I think is important to understand, and that is that, first of all, we never want to give up any incentive that we don't have to give up. But when you're making a 29 or a 30 percent margin, demand is very elastic, meaning that an incentive you can really harvest an incremental amount of buyers out there. So we can pull levers if we ever want to on specs that really they will impact our profitability. But when you're making 29 or 30 percent margins and you take a 2 or 3 percent hit, it's not the same as when you're making a 15 percent margin. We haven't had to do that, but we can view our spec inventory a lot differently than I think some of our low-margin peers do.

Got it. That makes sense. Appreciate it. Thanks, guys.

Your next question comes from the line of Jay McCandworth with Citizens. Please go ahead.

Thanks. Good morning, everyone. Thanks for taking my question. So the first one I had, could you talk about what type of pricing power you had during the quarter and maybe what you've seen into the spring? And what percentage of your communities were you able to raise prices?

Yeah, sure. This is Jed. I can take that. Very few communities have we've been able to raise prices. So the good news is we're seeing that the quantity of buyers are a lot stronger in the spring so far. We have been able to raise prices in some communities, but by and large, we're still as an industry working through inventory. We're still competing with big publics and big privates that are still trying to make their business plan and not shrink units dramatically. So it's still a competitive landscape out there.

Yeah, I think one of the other differentiators in our company, particularly some of our peers, is our quality of our backlog and when we sell a spec, when we sell a home is much better. We only had about a 7% cancellation rate, so people that buy our specs close.

And thank you for the comments on traffic, Jed. Is that both foot traffic, web traffic, all the above, what are you seeing on those?

Yeah, we're seeing it on all the above. So February weather has been good in the regions that we operate in. We're not in the Northeast, so we missed out on that big storm. But, yeah, so February has been off to a record start.

That's great. Thank you. So the second question I had, and thank you for the commentary you gave around build to order, but was just wondering, when you look at new deals that are coming to market and maybe some stuff that's being retraded, are you all seeing some better pricing on land in the markets you all want to acquire land, or how is that trending for New Deal activity from a pricing perspective?

This is Jim. On land that we don't want, or lots that we don't want, we're seeing weak demand and lower prices. On land that produces high margins that we do want, prices have been very sticky. We expect them to remain very sticky because for the very reasons that those type of properties can produce high margins at much lower risk. So it's a tale of two cities right now. The inferior locations, there's lots of trading going on, but we really have no interest in those deals.

Okay. And then just my last question, just asking on incentives, and thank you for the color on backlog where you talked about Trophy only being 14% of the backlog. If you look at that other 86%, I guess what is the incentive load on that now versus maybe where it was a year ago? And essentially what I'm asking is for those higher price maybe to be built, a little more customization homes, are you having to throw in more incentives on those right now or is the all-in incentive load pretty similar to where it was this point last year?

This is Jed, I'll answer that and then Jeff can add some numbers to it. We are having to, on say a million dollar plus build job, we're having to give higher design center monies than we were a year ago. On a $600,000, $700,000 house, we mentioned that we're shifting, the buyers are more interested in the finished specs than the build to orders for those. So, we're having to do, you know, closing cost incentives, rate buy-downs, things we weren't having to do a year ago.

Yeah, this is Jeff. So, I'll just add that, you know, when we looked at incentives on closings during the quarter, you know, we were 9.2% up from 5.2% a year ago. And looking at incentives on new orders during the quarter, they did pick up a little bit to 10.2%, but so far, you know, we've again had a tremendous month of February here. If we can pull back on incentives and maintain momentum, we'll certainly take a look at doing that.

That sounds great. Thanks, Scott. Thank you.

That concludes our question and answer session. I will now turn the conference back over to Jim Bricklin for closing comments.

Thank you for participating in our call today. If anyone has any questions, we're available to enhance what we discussed today and just give us a call. We appreciate your interest in our company.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.