[Management View]
Green Brick Partners reported a record third quarter with 898 net orders, a 2.4% YoY increase. Homes closed were 953 units, nearly matching the prior year's record. Net income attributable was $78 million, a 13% YoY decrease. The company emphasized pricing flexibility, strategic land acquisition, and expansion of the Trophy brand in Texas.

[Outlook]
Management anticipates significant growth in Houston and Austin markets, with community launches expected to drive sales. Green Brick Mortgage is expanding into new geographies to support future sales. The company maintains a conservative balance sheet with low leverage and ample liquidity to enable selective land investment despite macroeconomic uncertainties.

[Financial Performance]
- Net Orders: 898, up 2.4% YoY
- Homes Closed: 953 units, nearly matching prior year's record
- Net Income: $78 million, down 13% YoY
- Diluted EPS: $1.77, down 11% YoY
- Home Closings Revenue: $499 million, down 4.6% YoY
- Homebuilding Gross Margin: 31.1%, down 160 basis points YoY
- Average Sales Price: $524,000, down 4.2% YoY
- Discounts and Incentives: 8.1% of residential unit revenue, up from 5% YoY
- SG&A as Percentage of Revenue: 11.6%, up 60 basis points YoY
- Backlog Value: $466 million, down 20% YoY
- Backlog Average Sales Price: $690,000, down 4.1% YoY
- Home Starts: 950 new homes, down 10% YoY
- Units Under Construction: 2,200, down 5.5% YoY
- Quick Move-In Sales: Increased proportion contributed to lower backlog value

[Q&A Highlights]
Question 1: 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?
Answer: We don't give guidance on gross margins quarter to quarter. However, our strategic advantages include a long runway of low-priced lots and infill locations, which will help maintain industry-leading margins. Additionally, self-developing 90% of our lots allows us to deploy capital based on market demand rather than contract terms.

Question 2: You mentioned that incentives moderated through the third quarter. Has that continued in October?
Answer: Incentives moderated primarily due to rates coming down over the last couple of months. We are still utilizing rate buy-downs to drive traffic and sales, but we haven't gotten more aggressive in terms of the target rate, which has helped reduce incentives and improve margins.

Question 3: Where are you today in terms of your mortgage rate buy-downs? What's your average rate you guys are offering?
Answer: Just under 5%. With rates coming down, it lessens the cost for us without necessarily buying down rates further.

Question 4: Are incentive levels different between DFW and Atlanta?
Answer: Yes, DFW has more homes produced and sold as spec homes, while Atlanta has higher average price points and more to-be-built homes, leading to higher incentives in Atlanta.

Question 5: Trophy's expansion into Houston will be a key driver for you. How should we size this as we look to 2026?
Answer: Community growth isn't great, but the sales velocity in new communities should be favorable. Austin is expected to double from this year, and Houston will grow meaningfully in 2027.

Question 6: On the mortgage business, do you think this level is sustainable as a go-forward run rate?
Answer: We are happy with the progress and plan to expand into Austin, Atlanta, and Houston. We have the people and systems in place to scale the business.

Question 7: Where are you seeing direct cost savings in labor and land costs?
Answer: Land and lot costs have stabilized or slightly decreased. Lumber prices have fallen every month this year, and labor availability is stable, allowing for price negotiation.

Question 8: The 4% ASP decline in the quarter, how much of that was product mix versus base pricing?
Answer: Less than half of the decline was related to the mix of closings across our builders.

[Sentiment Analysis]
Analysts and management maintained a positive tone, focusing on strategic advantages, operational efficiency, and future growth prospects despite challenging market conditions.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|----------------------------|---------------|---------------|--------------|
| Net Orders | 898 | 877 | +2.4% |
| Homes Closed | 953 | 956 | -0.3% |
| Net Income | $78 million | $89 million | -13% |
| Diluted EPS | $1.77 | $1.99 | -11% |
| Home Closings Revenue | $499 million | $523 million | -4.6% |
| Homebuilding Gross Margin | 31.1% | 32.7% | -160 bps |
| Average Sales Price | $524,000 | $547,000 | -4.2% |
| Discounts and Incentives | 8.1% | 5% | +310 bps |
| SG&A as Percentage of Revenue | 11.6% | 11% | +60 bps |
| Backlog Value | $466 million | $582 million | -20% |
| Backlog Average Sales Price| $690,000 | $720,000 | -4.1% |
| Home Starts | 950 | 1,056 | -10% |
| Units Under Construction | 2,200 | 2,328 | -5.5% |

[Risks and Concerns]
- Affordability challenges and weakening job market impacting consumer segments.
- Increased supply of housing inventory leading to higher discounts and incentives.
- Tariffs and macroeconomic uncertainties potentially affecting costs and margins.

[Final Takeaway]
Green Brick Partners demonstrated resilience in Q3 2025, achieving record net orders and maintaining strong operational efficiency despite market challenges. Strategic expansion in Texas, particularly with the Trophy brand, and the growth of Green Brick Mortgage are expected to drive future sales and profitability. The company's conservative balance sheet and pricing flexibility position it well to navigate uncertainties and capitalize on growth opportunities in key markets.