Oct 29, 2026 earnings call — Trophy growth and margins amid affordability pressure
Reported home closing revenue of $437 million and homebuilding gross margin of 28% in a market pressured by high mortgage rates.
Revenue $0.4B (est $0.5B) · EPS $1.35 (est $1.44)
Key quotes
"Our homebuilding debt to total capital declined to 13.1% from 15.3% year over year and our net home billing debt to total capital was relatively unchanged. At 9.6%."
"At September 30, we owned 40.9 thousand lots, and controlled another 10.6 thousand lots under contract. Giving us a total pipeline of 51.4 thousand lots."
"Trophy's ability to meet these buyers' needs showed in our results for the first time, Trophy generates 60% of both total company orders and deliveries in the quarter, a testament to Trophy's operating model and leadership team."
Analyst Q&A 5
demand and incentives with rising rates
Q (Rohit Seth · B. Riley): He asked how demand changed through the quarter and how to think about incentives entering the fourth quarter. He also asked if they are still buying rates down to about 5.5%.
A: Management said incentives are tied to mortgage buy downs and will follow interest rates, so they watch the 10-year closely. They noted they have strong gross margins and low debt, which gives them room to increase incentives and remain profitable. They said sales followed seasonal patterns with a sequential increase from July through September and that buy downs are varying around mid-5% to 5.5% in communities.
"I would say that they followed the typical seasonal patterns September was certainly tough, but we saw sequential increase in sales from July through September, so a little encouraged by that." — Jeffery Cox (CFO)
land spending and gross margin drivers
Q (Ryan Gilbert · BTIG): He asked how they are thinking about land spend now—keep investing or pull back—and what drove the other half of the gross margin decline. He also asked about a ballpark for land inflation.
A: They said they are being very cautious on land. Their underwriting now includes modeling 10% elevated incentives, so good land deals are hard to find and low-margin lots are plentiful but not attractive. They said the other half of the gross margin decline is from a shift toward Trophy buyers who are more rate sensitive and from changes in base prices, and they said land inflation is low for them because they do not capitalize much interest and do not land bank.
"In order to have us do a significant land spend our underwriting criteria now has to include you know, 10% elevated incentives into modeling" — James R. Brickman (CEO)
ASP trend and Trophy sales pace
Q (Jay McCanless · Citizens Bank): He asked whether the ASP seen this quarter will repeat in Q4 or move down, and he asked about Trophy's sales absorption pace. He also asked if incentives rose above 10% to keep pace and about Atlanta demand.
A: They said ASP could slightly move down in Q4 but gave no number. Trophy is selling much faster — about 5.2 sales per month versus a company average of 2.8 — and Trophy's pace is roughly 85% higher than other brands. They said incentives had a pickup tied to mortgage-rate moves but buy downs cost a bit less than two weeks earlier, and that Atlanta and the $500k–$800k middle market are soft while under $500k and over $900k are doing well.
"Their pace in Q3 was about 5.2 sales per month." — Jed Dolson (CEO)
Houston results and construction costs
Q (Alex Wiegall · Texas Capital Bank): He asked how Houston is progressing since they opened and whether cycle times can improve further. He also asked if there are opportunities to value engineer homes to cut costs.
A: They said Houston is still a small market for them with one community open and two more next year, selling affordable homes and expected to do well long term. They said they are cautious on land spend in Houston because deals often do not underwrite for expansion. They added that cycle-time improvements have largely bottomed and they are seeing labor constraints and cost pressure, so they do not expect much more improvement or value-engineering gains right now.
"And, we are not gonna see a lot of improvement in either value engineering or the labor side of our business." — James R. Brickman (CEO)
absorption: Trophy vs other buyers
Q (Ryan Gilbert · BTIG): He asked for a year-over-year comparison of absorption between Trophy Signature and other brands, and whether move-up buyers are frozen because of resale issues or incentives. He also asked if Trophy can offer better incentives.
A: They said the decline in Trophy absorption was smaller than the decline in other parts of the business. Year over year Trophy increased its sales pace from 4.7 to 5.2, an 11% increase, and Trophy helped offset declines elsewhere. They said suburban second- and third-time move-up buyers are mostly frozen now, especially the cultural buyer in the $500k–$800k range, while under $500k and over $900k remain stronger.
"If you look year over year, Trophy has actually increased its sales pace." — Jeffery Cox (CFO)