Century communities reports record third quarter 2019 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, 2019. third quarter 2019 highlights net income increased 59% to a third quarter record $27.0 million, or $0.87 per diluted share net new home contracts increased 35% to a third quarter record 2,046 homes home sales revenues increased to a third quarter record $573.9 million home deliveries grew to a third quarter record 1,891 homes adjusted homebuilding gross margin of 20.6% and homebuilding gross margin of 18.1% homes in backlog of 2,746 with a value of $854.9 million stockholders’ equity grew to a record $951.2 million adjusted ebitda increased to a third quarter record $52.7 million dale francescon, co-chief executive officer, stated, “we experienced improving demand trends throughout the quarter driven by lower interest rates and improved affordability. we capitalized on this constructive environment by producing another strong quarter of earnings while generating a 35% year-over-year increase in net new contracts to a third quarter record 2,046 homes. as we move into the remainder of 2019, we are well positioned for continued success given expectations for interest rates to remain low along with our strong emphasis on delivering homes to the first-time buyer throughout our broad geographical platform.” rob francescon, co-chief executive officer, said, “fundamentals across our diverse national footprint remained encouraging throughout the third quarter as our markets continued to benefit from healthy local economies and positive macroeconomic trends. we experienced considerable operating momentum across all aspects of our business generating third quarter records for revenues, net income, deliveries and net new contracts. we remain focused on deepening our presence in vibrant markets to continue to grow revenue and profitability with an on-going commitment of offering homes at entry-level price points. with our strong local market operations and a robust lot pipeline of new communities, we have the resources in place to continue to grow our business and generate attractive returns on equity into 2020 and beyond.” third quarter 2019 results net income for the third quarter 2019 increased 59% to $27.0 million, or $0.87 per diluted share, compared to $17.0 million or $0.56 per diluted share for the prior year quarter. home sales revenues for the third quarter 2019 increased to $573.9 million, compared to $552.9 million for the prior year quarter. the growth in home sales revenues was primarily attributable to an increase in deliveries to 1,891 homes, compared to 1,746 homes for the prior year quarter. average sales price of home deliveries for the third quarter 2019 was $303,500, compared to $316,700 in the prior year quarter, consistent with the company’s expansion of its offering of lower priced homes. net new home contracts in the third quarter 2019 increased 35% to 2,046 homes, compared to 1,515 homes in the prior year quarter. at the end of the third quarter 2019, the company had 2,746 homes in backlog, with a value of $854.9 million. homebuilding gross margin percentage in the third quarter 2019 was 18.1%, compared to 16.8% in the prior year quarter and 17.2% in the second quarter 2019. adjusted homebuilding gross margin percentage, excluding interest and purchase price accounting, was 20.6% in the third quarter 2019, compared to 21.2% in the prior year quarter and 19.6% in the second quarter 2019. sg&a as a percent of home sales revenues was 12.7%, compared to 12.8% in the prior year quarter, even though the company continued to incur relocation and integration costs related to its wade jurney homes acquisition. financial services generated pre-tax income of $2.2 million in the third quarter 2019, compared to $1.7 million in the prior year quarter. balance sheet and liquidity as of september 30, 2019, the company had total assets of $2.5 billion, including cash of $68.9 million and inventories of $2.1 billion. liabilities totaled $1.5 billion, which included $1.2 billion of long-term debt. as of september 30, 2019, the company had a record $951.2 million of stockholders’ equity, a 13% increase over the prior year quarter, and $361.2 million of available capacity under its credit facility. the company had total liquidity of $430.1 million. full year 2019 outlook david messenger, chief financial officer of the company, commented, “given encouraging buyer activity within our markets and strong execution across our business year-to-date, we are raising our full year outlook for home deliveries to be in the range of 7,700 to 8,100 homes and our home sales revenues to be in the range of $2.4 billion to $2.5 billion.” conference call the company will host a webcast and conference call on tuesday, october 29, 2019 at 5:00 p.m. eastern time, 3:00 p.m. mountain time, to review the company’s third quarter 2019 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 29, 2019, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13695293. a replay of the webcast will be available on the company’s website through november 29, 2019. about century communities century communities, inc. (nyse: ccs) is a top 10 national homebuilder. 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 sells its century communities and wade jurney homes 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 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,” “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 2019. 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, 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, 2019 2018 2019 2018 revenues home sales revenues $ 573,860 $ 552,876 $ 1,705,798 $ 1,469,871 land sales and other revenues 6,083 1,131 8,837 4,304 579,943 554,007 1,714,635 1,474,175 financial services revenue 10,419 7,722 28,734 21,292 total revenues 590,362 561,729 1,743,369 1,495,467 homebuilding cost of revenues cost of home sales revenues (469,834 ) (460,144 ) (1,407,519 ) (1,206,924 ) cost of land sales and other revenues (4,624 ) (1,093 ) (6,115 ) (3,010 ) (474,458 ) (461,237 ) (1,413,634 ) (1,209,934 ) financial services costs (8,174 ) (6,056 ) (22,750 ) (15,836 ) selling, general, and administrative (72,834 ) (70,975 ) (216,987 ) (191,130 ) loss on debt extinguishment — — (10,832 ) — acquisition expense — (58 ) — (395 ) equity in income of unconsolidated subsidiaries — — — 14,849 other income (expense) (56 ) (545 ) (499 ) (553 ) income before income tax expense 34,840 22,858 78,667 92,468 income tax expense (7,816 ) (5,810 ) (19,031 ) (22,207 ) net income $ 27,024 $ 17,048 $ 59,636 $ 70,261 earnings per share: basic $ 0.88 $ 0.56 $ 1.96 $ 2.35 diluted $ 0.87 $ 0.56 $ 1.95 $ 2.33 weighted average common shares outstanding: basic 30,587,487 30,232,376 30,378,860 29,885,858 diluted 30,906,235 30,554,881 30,641,194 30,189,058 century communities, inc. condensed consolidated balance sheets (in thousands, except share amounts) september 30, december 31, 2019 2018 assets (unaudited) cash and cash equivalents $ 38,508 $ 32,902 cash held in escrow 30,362 24,344 accounts receivable 17,929 13,464 inventories 2,093,493 1,848,243 mortgage loans held for sale 95,321 112,394 prepaid expenses and other assets 129,925 140,397 property and equipment, net 35,258 33,258 deferred tax assets, net 14,277 13,763 amortizable intangible assets, net 4,094 5,095 goodwill 30,395 30,395 total assets $ 2,489,562 $ 2,254,255 liabilities and stockholders' equity liabilities: accounts payable $ 78,695 $ 89,907 accrued expenses and other liabilities 206,818 213,157 notes payable 896,272 784,777 revolving line of credit 278,800 202,500 mortgage repurchase facilities 77,798 104,555 total liabilities 1,538,383 1,394,896 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, 31,249,373 and 30,154,791 shares issued and outstanding at september 30, 2019 and december 31, 2018, respectively 312 302 additional paid-in capital 627,211 595,037 retained earnings 323,656 264,020 total stockholders' equity 951,179 859,359 total liabilities and stockholders' equity $ 2,489,562 $ 2,254,255 century communities, inc. homebuilding operational data net new home contracts three months ended september 30, 2019 2018 % change west 235 214 9.8 % mountain 419 308 36.0 % texas 260 150 73.3 % southeast 494 422 17.1 % wade jurney homes 638 421 51.5 % total 2,046 1,515 35.0 % nine months ended september 30, 2019 2018 % change west 767 616 24.5 % mountain 1,290 1,313 (1.8) % texas 733 493 48.7 % southeast 1,250 1,449 (13.7) % wade jurney homes 2,046 565 nm total 6,086 4,436 37.2 % nm – not meaningful home deliveries (dollars in thousands) three months ended september 30, 2019 2018 % change homes average sales price homes average sales price homes average sales price west 228 $ 512.4 193 $ 548.6 18.1 % (6.6) % mountain 390 424.8 377 430.2 3.4 % (1.3) % texas 247 278.4 177 316.7 39.5 % (12.1) % southeast 341 347.8 424 333.2 (19.6) % 4.4 % wade jurney homes 685 151.9 575 152.1 19.1 % (0.1) % total / weighted average 1,891 $ 303.5 1,746 $ 316.7 8.3 % (4.2) % nine months ended september 30, 2019 2018 % change homes average sales price homes average sales price homes average sales price west 683 $ 533.0 606 $ 584.2 12.7 % (8.8) % mountain 1,168 $ 430.3 1,141 $ 425.5 2.4 % 1.1 % texas 626 $ 288.6 491 $ 320.2 27.5 % (9.9) % southeast 1,036 $ 343.5 1,093 $ 329.7 (5.2) % 4.2 % wade jurney homes 2,008 $ 150.7 740 $ 152.3 nm (1.1) % total / weighted average 5,521 $ 309.0 4,071 $ 361.1 35.6 % (14.4) % nm – not meaningful century communities, inc. homebuilding operational data selling communities selling communities at period end as of september 30, increase/(decrease) 2019 2018 amount % change west 21 17 4 23.5 % mountain 46 34 12 35.3 % texas 19 23 (4) (17.4) % southeast 43 51 (8) (15.7) % wade jurney homes n/a n/a n/a n/a total 129 125 4 3.2 % n/a – not applicable backlog (dollars in thousands) as of september 30, 2019 2018 % change homes dollar value average sales price homes dollar value average sales price homes dollar value average sales price west 302 $ 153,626 $ 508.7 280 $ 153,121 $ 546.9 7.9 % 0.3 % (7.0) % mountain 523 230,203 $ 440.2 627 283,534 $ 452.0 (16.6) % (18.8) % (2.6) % texas 288 79,536 $ 276.2 217 75,129 $ 346.2 32.7 % 5.9 % (20.2) % southeast 684 243,712 $ 356.3 736 241,943 $ 328.7 (7.1) % 0.7 % 8.4 % wade jurney homes 949 147,779 $ 155.7 1,128 177,224 $ 157.1 (15.9) % (16.6) % (0.9) % total / weighted average 2,746 $ 854,856 $ 311.3 2,988 $ 930,951 $ 311.5 (8.1) % (8.2) % (0.1) % lot inventory as of september 30, 2019 2018 % change owned controlled total owned controlled total owned controlled total west 3,210 1,920 5,130 3,611 1,908 5,519 (11.1) % 0.6 % (7.0) % mountain 5,011 6,883 11,894 5,426 5,479 10,905 (7.6) % 25.6 % 9.1 % texas 3,589 2,663 6,252 3,883 2,075 5,958 (7.6) % 28.3 % 4.9 % southeast 4,484 2,719 7,203 5,120 4,229 9,349 (12.4) % (35.7) % (23.0) % wade jurney homes 3,454 5,382 8,836 3,088 3,328 6,416 11.9 % 61.7 % 37.7 % total 19,748 19,567 39,315 21,128 17,019 38,147 (6.5) % 15.0 % 3.1 % century communities, inc. reconciliation of non-gaap financial measures (unaudited) adjusted diluted earnings per common share (adjusted diluted eps) is a non-gaap financial measure that we believe is 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 loss from debt extinguishment, the effect of acquisition costs and purchase price accounting for acquired work in process and gain on previously held interest in wjh, llc 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, 2019 2018 2019 2018 numerator net income $ 27,024 $ 17,048 $ 59,636 $ 70,261 less: undistributed earnings allocated to participating securities — — — (58 ) net income allocable to common stockholders $ 27,024 $ 17,048 $ 59,636 $ 70,203 denominator weighted average common shares outstanding - basic 30,587,487 30,232,376 30,378,860 29,885,858 dilutive effect of restricted stock units 318,748 322,505 262,334 303,200 weighted average common shares outstanding - diluted 30,906,235 30,554,881 30,641,194 30,189,058 earnings per share: basic $ 0.88 $ 0.56 $ 1.96 $ 2.35 diluted $ 0.87 $ 0.56 $ 1.95 $ 2.33 adjusted earnings per share numerator income before income tax expense $ 34,840 $ 22,858 $ 78,667 $ 92,468 loss on debt extinguishment — — 10,832 — purchase price accounting for acquired work in process inventory — 11,934 1,724 28,367 gain on previously held interest in wjh — — — (7,219 ) acquisition expense — 58 — 395 adjusted income before income tax expense 34,840 34,850 91,223 114,011 adjusted income tax expense(1) (7,816 ) (8,713 ) (22,069 ) (28,503 ) adjusted net income 27,024 26,137 69,154 85,508 less: adjusted undistributed earnings allocated to participating securities — — — (71 ) adjusted net income allocable to common stockholders $ 27,024 $ 26,137 $ 69,154 $ 85,437 denominator - diluted 30,906,235 30,554,881 30,641,194 30,189,058 adjusted diluted earnings per share $ 0.87 $ 0.86 $ 2.26 $ 2.83 (1) the tax rate used in calculating adjusted net income for the three and nine months ended september 30 2019 and 2018 was the estimated annual rate offset by the benefit associated with federal energy credits related to homes delivered in prior years. century communities, inc. reconciliation of non-gaap financial measures (unaudited) adjusted homebuilding gross margin excluding 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 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, 2019 % 2018 % home sales revenues $ 573,860 100.0 % $ 552,876 100.0 % cost of home sales revenues (469,834) (81.9) % (460,144) (83.2) % gross margin from home sales 104,026 18.1 % 92,732 16.8 % add: interest in cost of home sales revenues 14,258 2.5 % 12,334 2.2 % adjusted homebuilding gross margin excluding interest 118,284 20.6 % 105,066 19.0 % add: purchase price accounting for acquired work in process inventory — — % 11,934 2.2 % adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory $ 118,284 20.6 % $ 117,000 21.2 % nine months ended september 30, 2019 % 2018 % home sales revenues $ 1,705,798 100.0 % $ 1,469,871 100.0 % cost of home sales revenues (1,407,519) (82.5) % (1,206,924) (82.1) % gross margin from home sales 298,279 17.5 % 262,947 17.9 % add: interest in cost of home sales revenues 41,499 2.4 % 33,577 2.3 % adjusted homebuilding gross margin excluding interest 339,778 19.9 % 296,524 20.2 % add: purchase price accounting for acquired work in process inventory 1,724 0.1 % 28,367 1.9 % adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory $ 341,502 20.0 % $ 324,891 22.1 % 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) depreciation and amortization expense, (v) loss on debt extinguishment; and (vi) 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, 2019 2018 % change 2019 2018 % change net income $ 27,024 $ 17,048 58.5 % $ 59,636 $ 70,261 (15.1) % income tax expense 7,816 5,810 34.5 % 19,031 22,207 (14.3) % interest in cost of home sales revenues 14,258 12,334 15.6 % 41,499 33,577 23.6 % interest expense (income) — (205) n/m 15 (579) n/m depreciation and amortization expense 3,597 3,291 9.3 % 9,793 8,803 11.2 % ebitda 52,695 38,278 37.7 % 129,974 134,269 (3.2) % loss on debt extinguishment — — n/m 10,832 — n/m purchase price accounting for acquired work in process inventory — 11,934 (100.0) % 1,724 28,367 (93.9) % purchase price accounting for investment in unconsolidated subsidiaries outside basis — — n/m — 60 n/m acquisition expense — 58 n/m — 395 n/m adjusted ebitda $ 52,695 $ 50,270 4.8 % $ 142,530 $ 163,091 (12.6) % 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 held in escrow and cash and cash equivalents) 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, 2019 2018 total homebuilding debt $ 1,175,072 $ 987,277 total stockholders' equity 951,179 859,359 total capital $ 2,126,251 $ 1,846,636 debt to capital 55.3% 53.5% total homebuilding debt $ 1,175,072 $ 987,277 cash and cash equivalents (38,508) (32,902) cash held in escrow (30,362) (24,344) net homebuilding debt 1,106,202 930,031 total stockholders' equity 951,179 859,359 net capital $ 2,057,381 $ 1,789,390 net homebuilding debt to net capital 53.8% 52.0%
