Century communities reports record third quarter 2020 results
Greenwood village, colo.--(business wire)--century communities, inc. (nyse: ccs), a leading national homebuilder, today announced financial results for its third quarter ended september 30, 2020. third quarter 2020 highlights compared to third quarter 2019 net income increased 84% to a third quarter record $49.8 million or $1.48 per diluted share home sales revenues increased 32% to a third quarter record $760.2 million home deliveries grew to a third quarter record 2,283 homes or 21% net new home contracts increased 57% to a company record 3,204 homes homes in backlog improved 35% to a company record 3,699 homes with a value of $1.3 billion pre-tax income improved 86% to a company record $64.9 million ebitda increased 65% to a company record $87.0 million net homebuilding debt to net capital improved to 32.9%, a 21% reduction quarter end total liquidity of $955 million dale francescon, co-chief executive officer, stated, “we achieved multiple milestones in the third quarter, including record third quarter home sales revenues and net income along with our highest net new home contracts and pre-tax income in company history. the improvements we experienced in sg&a, leverage, liquidity, cash flows and other financial and operating metrics were created by the many strategic initiatives we previously instituted across our organization to drive execution and efficiency gains. these record results demonstrate the consumer appeal of the homes we offer and the power of our national platform as we successfully capture the strong demand we are witnessing across the entire new home market.” rob francescon, co-chief executive officer, said, “we generated a 57% year-over-year increase in net new contracts to a record 3,204 homes through the balanced contribution from both our century communities and century complete brands. we grew our sequential land supply in every region ending the quarter at nearly 45,000 lots while continuing to emphasize a land-light strategy with our controlled lot mix increasing to 56%. century’s record backlog and lot supply coupled with our extensive footprint across diversified, high-growth markets have us advantageously positioned to generate continued organic growth and create additional, long-term value for our stockholders.” third quarter 2020 results net income for the third quarter 2020 increased 84% to $49.8 million, or $1.48 per diluted share as compared to $27.0 million or $0.87 per diluted share for the prior year quarter. home sales revenues for the third quarter 2020 increased 32% to $760.2 million, compared to $573.9 million for the prior year quarter. the growth in home sales revenues was primarily due to a 21% increase in deliveries to 2,283 homes compared to 1,891 homes for the prior year quarter. average sales price of home deliveries for the third quarter 2020 was $333,000, compared to $303,500 in the prior year quarter, primarily due to a higher proportion of deliveries from our century communities brand and our efforts to increase home prices. across our markets in the third quarter, we were successful in raising prices in order to offset the increased materials costs we experienced. adjusted homebuilding gross margin percentage, excluding interest, was 20.0% in the third quarter of 2020, as compared to 20.6% in the prior year quarter. on a sequential basis, adjusted homebuilding gross margin percentage improved 50 basis points from 19.5% in the previous second quarter. homebuilding gross margin percentage in the third quarter 2020 was 17.5%, as compared to 18.1% in the prior year quarter. sg&a as a percent of home sales revenues improved 140 basis points to 11.3%, compared to 12.7% in the prior year quarter. net new home contracts in the third quarter 2020 increased 57% to 3,204 homes, compared to 2,046 homes in the prior year quarter. at the end of the third quarter 2020, the company had 3,699 homes in backlog, representing $1.3 billion of backlog dollar value. financial services revenues increased to $32.0 million compared to $10.4 million in the prior year quarter, and financial services pretax income increased to $17.5 million from $2.2 million. strengthened balance sheet and liquidity the company ended the quarter with a strong financial position including $1.2 billion of stockholders’ equity, $315 million of cash and $955 million of total liquidity. as of september 30, 2020, net homebuilding debt to net capital decreased to 32.9%, a reduction of 20.9% percentage points from 53.8% in the prior year quarter and a further sequential reduction of 460 basis points from 37.5% at the end of second quarter of 2020. full year 2020 outlook david messenger, chief financial officer of the company, commented, “we are extremely pleased with our third quarter performance which demonstrates the strength of our business model and sustained new home demand across our markets. as a result of these improved results and continued strong market conditions, we are providing full year guidance of deliveries in the range of 9,300 to 9,600 and homes sales revenues in the range of $2.8 billion to $3.0 billion. conference call the company will host a webcast and conference call on wednesday, october 28, 2020 at 5:00 p.m. eastern time, 3:00 p.m. mountain time, to review the company’s third quarter 2020 results, discuss recent events and conduct a question-and-answer period. to participate in the call, please dial 877-451-6152 (domestic) or 201-389-0879 (international). the live webcast will be available at www.centurycommunities.com in the investors section. a replay of the conference call will be available through november 28, 2020, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13710258. a replay of the webcast will be available on the company’s website. about century communities: century communities, inc. (nyse: ccs) is a top 10 national homebuilder. offering new homes under the century communities and century complete brands, century is engaged in all aspects of homebuilding — including the acquisition, entitlement and development of land, along with the construction, innovative marketing and sale of quality homes designed to appeal to a wide range of homebuyers. the colorado-based company operates in 17 states across the u.s., and offers title, insurance and lending services in select markets through its parkway title, ihl insurance agency, and inspire home loan subsidiaries. to learn more about century communities, please visit www.centurycommunities.com. non-gaap financial measures in addition to the company’s operating results presented in accordance with generally accepted accounting principles (gaap), this press release includes the following non-gaap financial measures: adjusted net income, adjusted diluted earnings per common share (adjusted diluted eps), adjusted homebuilding gross margin, adjusted ebitda, and ratio of homebuilding net debt to net capital. these non-gaap financial measures should not be used as a substitute for the company’s operating results presented in accordance with gaap, and an analysis of any non-gaap financial measure should be used in conjunction with results presented in accordance with gaap. please refer to the reconciliation of each of the above referenced non-gaap financial measures following the historical financial information presented in this press release. forward-looking statements this press release contains forward-looking statements within the meaning of section 27a of the securities act of 1933, as amended, and section 21e of the securities exchange act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “estimate,” “plan,” “continue,” “will,” “may,” “potential,” “looking ahead,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. forward-looking statements in this release include the company’s operating and financial guidance for 2020, its intent to take certain actions to successfully navigate through the current covid-19 crisis and the success of these actions on its future operating results. forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. forward-looking statements are based on historical information available at the time the statements are made and are based on management’s reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the company’s control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. the following important factors could cause actual results to differ materially from those expressed in the forward-looking statement: adverse changes in general economic conditions, the potential impact of covid-19 on the company’s business, industry and broader economy, the ability to identify and acquire desirable land, availability of financing, the effect of interest rate and tax changes, reliance on contractors, and the other factors included in the company’s most recent annual report on form 10-k and subsequent quarterly reports on form 10-q. forward-looking statements speak only as of the date on which they are made and the company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. century communities, inc. condensed consolidated statements of operations (unaudited) (in thousands, except share and per share amounts) three months ended september 30, nine months ended september 30, 2020 2019 2020 2019 revenues home sales revenues $ 760,239 $ 573,860 $ 2,080,364 $ 1,705,798 land sales and other revenues 2,105 6,083 25,516 8,837 total homebuilding revenues 762,344 579,943 2,105,880 1,714,635 financial services revenues 32,017 10,419 67,534 28,734 total revenues 794,361 590,362 2,173,414 1,743,369 homebuilding cost of revenues cost of home sales revenues (627,364 ) (469,834 ) (1,718,545 ) (1,407,519 ) cost of land sales and other revenues (2,046 ) (4,624 ) (18,597 ) (6,115 ) total homebuilding cost of revenues (629,410 ) (474,458 ) (1,737,142 ) (1,413,634 ) financial services costs (14,511 ) (8,174 ) (36,841 ) (22,750 ) selling, general, and administrative (85,806 ) (72,834 ) (246,131 ) (216,987 ) loss on debt extinguishment — — — (10,832 ) inventory impairment and other — — (1,691 ) — other income (expense) 251 (56 ) (2,533 ) (499 ) income before income tax expense 64,885 34,840 149,076 78,667 income tax expense (15,121 ) (7,816 ) (34,736 ) (19,031 ) net income $ 49,764 $ 27,024 $ 114,340 $ 59,636 earnings per share: basic $ 1.49 $ 0.88 $ 3.43 $ 1.96 diluted $ 1.48 $ 0.87 $ 3.41 $ 1.95 weighted average common shares outstanding: basic 33,350,633 30,587,487 33,299,768 30,378,860 diluted 33,731,252 30,906,235 33,556,650 30,641,194 century communities, inc. condensed consolidated balance sheets (in thousands, except share amounts) september 30, december 31, 2020 2019 assets (unaudited) (audited) cash and cash equivalents $ 288,341 $ 55,436 cash held in escrow 26,275 35,308 accounts receivable 28,855 27,438 inventories 1,872,337 1,995,549 mortgage loans held for sale 187,494 185,246 prepaid expenses and other assets 113,339 124,008 property and equipment, net 31,550 35,998 deferred tax assets, net 12,775 10,589 goodwill 30,395 30,395 total assets $ 2,591,361 $ 2,499,967 liabilities and stockholders' equity liabilities: accounts payable $ 48,448 $ 84,794 accrued expenses and other liabilities 288,674 213,975 notes payable 895,867 896,704 revolving line of credit — 68,700 mortgage repurchase facilities 173,415 174,095 total liabilities 1,406,404 1,438,268 stockholders' equity: preferred stock, $0.01 par value, 50,000,000 shares authorized, none outstanding — — common stock, $0.01 par value, 100,000,000 shares authorized, 33,350,633 and 33,067,375 shares issued and outstanding at september 30, 2020 and december 31, 2019, respectively 334 331 additional paid-in capital 693,269 684,354 retained earnings 491,354 377,014 total stockholders' equity 1,184,957 1,061,699 total liabilities and stockholders' equity $ 2,591,361 $ 2,499,967 century communities, inc. homebuilding operational data (unaudited) net new home contracts three months ended september 30, 2020 2019 % change west 470 235 100.0 % mountain 653 419 55.8 % texas 411 260 58.1 % southeast 660 494 33.6 % century complete 1,010 638 58.3 % total 3,204 2,046 56.6 % nine months ended september 30, 2020 2019 % change west 1,195 767 55.8 % mountain 1,741 1,290 35.0 % texas 1,135 733 54.8 % southeast 1,742 1,250 39.4 % century complete 2,443 2,046 19.4 % total 8,256 6,086 35.7 % home deliveries (dollars in thousands) three months ended september 30, 2020 2019 % change homes average sales price homes average sales price homes average sales price west 316 $ 596.5 228 $ 512.4 38.6 % 16.4 % mountain 514 $ 429.3 390 $ 424.8 31.8 % 1.1 % texas 307 $ 249.0 247 $ 278.4 24.3 % (10.6) % southeast 421 $ 362.7 341 $ 347.8 23.5 % 4.3 % century complete 725 $ 168.2 685 $ 151.9 5.8 % 10.7 % total / weighted average 2,283 $ 333.0 1,891 $ 303.5 20.7 % 9.7 % nine months ended september 30, 2020 2019 % change homes average sales price homes average sales price homes average sales price west 862 $ 558.2 683 $ 533.0 26.2 % 4.7 % mountain 1,327 $ 415.8 1,168 $ 430.3 13.6 % (3.4) % texas 951 $ 247.3 626 $ 288.6 51.9 % (14.3) % southeast 1,304 $ 351.7 1,036 $ 343.5 25.9 % 2.4 % century complete 2,183 $ 162.0 2,008 $ 150.7 8.7 % 7.5 % total / weighted average 6,627 $ 313.9 5,521 $ 309.0 20.0 % 1.6 % century communities, inc. homebuilding operational data (unaudited) selling communities selling communities at period end as of september 30, increase/(decrease) 2020 2019 amount % change west 18 21 (3) (14.3) % mountain 39 46 (7) (15.2) % texas 18 19 (1) (5.3) % southeast 35 43 (8) (18.6) % century complete n/a n/a n/a n/a total 110 129 (19) (14.7) % n/a – not applicable backlog (dollars in thousands) as of september 30, 2020 2019 % change homes dollar value average sales price homes dollar value average sales price homes dollar value average sales price west 535 $ 291,905 $ 545.6 302 $ 153,626 $ 508.7 77.2 % 90.0 % 7.3 % mountain 787 348,908 $ 443.3 523 230,203 $ 440.2 50.5 % 51.6 % 0.7 % texas 459 141,044 $ 307.3 288 79,536 $ 276.2 59.4 % 77.3 % 11.3 % southeast 951 346,323 $ 364.2 684 243,712 $ 356.3 39.0 % 42.1 % 2.2 % century complete 967 181,269 $ 187.5 949 147,779 $ 155.7 1.9 % 22.7 % 20.4 % total / weighted average 3,699 $ 1,309,449 $ 354.0 2,746 $ 854,856 $ 311.3 34.7 % 53.2 % 13.7 % lot inventory as of september 30, 2020 2019 % change owned controlled total owned controlled total owned controlled total west 3,299 2,287 5,586 3,210 1,920 5,130 2.8 % 19.1 % 8.9 % mountain 6,762 6,295 13,057 5,011 6,883 11,894 34.9 % (8.5) % 9.8 % texas 3,308 4,094 7,402 3,589 2,663 6,252 (7.8) % 53.7 % 18.4 % southeast 3,571 5,046 8,617 4,484 2,719 7,203 (20.4) % 85.6 % 19.6 % century complete 3,027 7,274 10,301 3,454 5,382 8,836 (12.4) % 35.2 % 16.6 % total 19,967 24,996 44,963 19,748 19,567 39,315 1.1 % 27.7 % 14.4 % century communities, inc. reconciliation of non-gaap financial measures (unaudited) adjusted net income and adjusted diluted earnings per common share (adjusted diluted eps) are non-gaap financial measures that we believe are useful to management, investors and other users of the company’s financial information in evaluating its operating results and understanding its operating trends without the effect of certain non-recurring items. the company believes excluding certain non-recurring items provides more comparable assessment of its financial results from period to period. adjusted diluted eps is calculated by excluding the effect of loss on debt extinguishment, inventory impairment, restructuring costs and purchase price accounting for acquired work in process from the calculation of reported eps. adjusted net income and adjusted diluted earnings per common share (in thousands, except share and per share amounts) three months ended nine months ended september 30, september 30, 2020 2019 2020 2019 numerator net income $ 49,764 $ 27,024 $ 114,340 $ 59,636 denominator weighted average common shares outstanding - basic 33,350,633 30,587,487 33,299,768 30,378,860 dilutive effect of restricted stock units 380,619 318,748 256,882 262,334 weighted average common shares outstanding - diluted 33,731,252 30,906,235 33,556,650 30,641,194 earnings per share: basic $ 1.49 $ 0.88 $ 3.43 $ 1.96 diluted $ 1.48 $ 0.87 $ 3.41 $ 1.95 adjusted earnings per share numerator income before income tax expense $ 64,885 $ 34,840 $ 149,076 $ 78,667 inventory impairment and other — — 1,691 — restructuring costs — — 1,584 — loss on debt extinguishment — — — 10,832 purchase price accounting for acquired work in process inventory — — — 1,724 adjusted income before income tax expense 64,885 34,840 152,351 91,223 adjusted income tax expense(1) (15,121 ) (7,816 ) (35,499 ) (22,069 ) adjusted net income 49,764 27,024 116,852 69,154 denominator - diluted 33,731,252 30,906,235 33,556,650 30,641,194 adjusted diluted earnings per share $ 1.48 $ 0.87 $ 3.48 $ 2.26 (1) the tax rate used in calculating adjusted net income for the three and nine months ended september 30, 2020 was 23.3% which is reflective of the company’s gaap tax rate for the applicable period, as adjusted for certain discrete items. for the three and nine months ended september 30, 2019 the tax rate utilized was 22.4% and 24.2%, respectively, representing our gaap tax rate adjusted for certain discrete items. century communities, inc. reconciliation of non-gaap financial measures (unaudited) adjusted homebuilding gross margin excluding impairment, interest and purchase price accounting for acquired work in process inventory is not a measurement of financial performance under united states generally accepted accounting principles; however, the company’s management believes that this information is meaningful as it isolates the impact that inventory impairment, indebtedness and acquisitions have on homebuilding gross margin and permits the company’s stockholders to make better comparisons with the company’s competitors, who adjust gross margins in a similar fashion. this non-gaap financial measure should not be used as a substitute for the company’s operating results. an analysis of any non-gaap financial measure should be used in conjunction with results presented in accordance with gaap. adjusted homebuilding gross margin (in thousands) three months ended september 30, 2020 % 2019 % home sales revenues $ 760,239 100.0 % $ 573,860 100.0 % cost of home sales revenues (627,364 ) (82.5 ) % (469,834 ) (81.9 ) % gross margin from home sales 132,875 17.5 % 104,026 18.1 % add: interest in cost of home sales revenues 19,050 2.5 % 14,258 2.5 % adjusted homebuilding gross margin excluding interest and inventory impairment and other 151,925 20.0 % 118,284 20.6 % add: purchase price accounting for acquired work in process inventory — — % — — % adjusted homebuilding gross margin excluding interest, inventory impairment and other and purchase price accounting for acquired work in process inventory $ 151,925 20.0 % $ 118,284 20.6 % nine months ended september 30, 2020 % 2019 % home sales revenues $ 2,080,364 100.0 % $ 1,705,798 100.0 % cost of home sales revenues (1,718,545 ) (82.6 ) % (1,407,519 ) (82.5 ) % inventory impairment and other (1,691 ) (0.1 ) % — — % gross margin from home sales 360,128 17.3 % 298,279 17.5 % add: inventory impairment and other 1,691 0.1 % — — % add: interest in cost of home sales revenues 51,429 2.5 % 41,499 2.4 % adjusted homebuilding gross margin excluding interest and inventory impairment and other 413,248 19.9 % 339,778 19.9 % add: purchase price accounting for acquired work in process inventory — — % 1,724 0.1 % adjusted homebuilding gross margin excluding interest, inventory impairment and other and purchase price accounting for acquired work in process inventory $ 413,248 19.9 % $ 341,502 20.0 % century communities, inc. reconciliation of non-gaap financial measures (unaudited) adjusted ebitda adjusted ebitda is a non-gaap financial measure we use as a supplemental measure in evaluating operating performance. the company defines adjusted ebitda as consolidated net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense, (iv) loss on debt extinguishment, (v) inventory impairment and other, (vi) depreciation and amortization expense, and (vii) adjustments resulting from the application of purchase accounting for acquired work in process inventory related to business combinations. the company believes adjusted ebitda provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, and items considered to be non-recurring. accordingly, the company’s management believes that this measurement is useful for comparing general operating performance from period to period. adjusted ebitda should be considered in addition to, and not as a substitute for, consolidated net income in accordance with gaap as a measure of performance. the company’s presentation of adjusted ebitda should not be construed as an indication that its future results will be unaffected by unusual or non-recurring items. adjusted ebitda is limited as an analytical tool and should not be considered in isolation or as a substitute for analysis of the company’s results as reported under gaap. (in thousands) three months ended september 30, nine months ended september 30, 2020 2019 % change 2020 2019 % change net income $ 49,764 $ 27,024 84.1 % $ 114,340 $ 59,636 91.7 % income tax expense 15,121 7,816 93.5 % 34,736 19,031 82.5 % interest in cost of home sales revenues 19,050 14,258 33.6 % 51,429 41,499 23.9 % interest expense (income) (182 ) — nm (1,029 ) 15 (6,960.0 ) % depreciation and amortization expense 3,245 3,597 (9.8 ) % 10,088 9,793 3.0 % ebitda 86,998 52,695 65.1 % 209,564 129,974 61.2 % loss on debt extinguishment — — — — 10,832 nm inventory impairment and other — — — 1,691 — nm restructuring costs — — — 1,584 — nm purchase price accounting for acquired work in process inventory — — — — 1,724 nm adjusted ebitda $ 86,998 $ 52,695 65.1 % $ 212,839 $ 142,530 49.3 % nm – not meaningful century communities, inc. reconciliation of non-gaap financial measures (unaudited) ratio of net homebuilding debt to net capital the following table presents the company’s ratio of net homebuilding debt to net capital, which is a non-gaap financial measure. the company calculates this by dividing net homebuilding debt (senior notes payable and revolving line of credit less cash and cash equivalents and cash held in escrow) by net capital (net homebuilding debt plus total stockholders’ equity). the most directly comparable gaap measure is the ratio of debt to capital. the company believes the ratio of net homebuilding debt to net capital is a relevant and useful financial measure to investors in understanding the leverage employed in its operations and as an indicator of the company’s ability to obtain external financing. (in thousands) september 30, december 31, 2020 2019 total homebuilding debt $ 895,867 $ 965,404 total stockholders' equity 1,184,957 1,061,699 total capital $ 2,080,824 $ 2,027,103 homebuilding debt to capital 43.1 % 47.6 % total homebuilding debt $ 895,867 $ 965,404 cash and cash equivalents (288,341 ) (55,436 ) cash held in escrow (26,275 ) (35,308 ) net homebuilding debt 581,251 874,660 total stockholders' equity 1,184,957 1,061,699 net capital $ 1,766,208 $ 1,936,359 net homebuilding debt to net capital 32.9 % 45.2 % category: earnings
