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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-36491

Century Communities, Inc.

(Exact name of registrant as specified in its charter)

Delaware

68-0521411

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

8390 East Crescent Parkway, Suite 650
Greenwood Village, CO

80111

(Address of principal executive offices)

(Zip Code)

(Registrant’s telephone number, including area code): (303770-8300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.01 per share

CCS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

x

Accelerated filer

o

Non-accelerated filer

o  

Smaller reporting company

o

Emerging growth company

¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

On April 19, 2024, 31,790,755 shares of common stock, par value $0.01 per share, of the registrant were outstanding.  

CENTURY COMMUNITIES, INC.

FORM 10-Q

For the Three Months Ended March 31, 2024

Index

Page No.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 (audited)

3

Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023

4

Unaudited Condensed Consolidated Statements of Cash Flows for Three Months Ended March 31, 2024 and 2023

5

Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2024 and 2023

6

Notes to the Unaudited Condensed Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3. Quantitative and Qualitative Disclosures About Market Risk

37

Item 4. Controls and Procedures

37

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

37

Item 1A. Risk Factors

37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

38

Item 3. Defaults Upon Senior Securities

38

Item 4. Mine Safety Disclosures

38

Item 5. Other Information

38

Item 6. Exhibits

40

Signatures

41

PART I – FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS.

Century Communities, Inc.

Condensed Consolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

(in thousands, except share and per share amounts)

 

March 31,

December 31,

2024

2023

Assets

(unaudited)

(audited)

Cash and cash equivalents

$

122,840

$

226,150

Cash held in escrow

84,776

101,845

Accounts receivable

65,995

76,213

Inventories

3,107,133

3,016,641

Mortgage loans held for sale

217,702

251,852

Prepaid expenses and other assets

388,801

350,193

Property and equipment, net

74,647

69,075

Deferred tax assets, net

17,601

16,998

Goodwill

32,082

30,395

Total assets

$

4,111,577

$

4,139,362

Liabilities and stockholders' equity

Liabilities:

Accounts payable

$

135,784

$

147,265

Accrued expenses and other liabilities

274,308

303,392

Notes payable

1,069,762

1,062,471

Revolving line of credit

Mortgage repurchase facilities

212,447

239,298

Total liabilities

1,692,301

1,752,426

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, 31,790,585 and 31,774,615 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

318

318

Additional paid-in capital

569,581

592,989

Retained earnings

1,849,377

1,793,629

Total stockholders' equity

2,419,276

2,386,936

Total liabilities and stockholders' equity

$

4,111,577

$

4,139,362

See Notes to Unaudited Condensed Consolidated Financial Statements

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2024 and 2023

(in thousands, except share and per share amounts)

Three Months Ended March 31,

2024

2023

Revenues

Homebuilding revenues

Home sales revenues

$

922,402

$

735,600

Land sales and other revenues

1,216

1,535

Total homebuilding revenues

923,618

737,135

Financial services revenues

24,925

15,855

Total revenues

948,543

752,990

Homebuilding cost of revenues

Cost of home sales revenues

(725,570)

(601,385)

Cost of land sales and other revenues

(37)

Total homebuilding cost of revenues

(725,607)

(601,385)

Financial services costs

(14,877)

(10,781)

Selling, general and administrative

(114,109)

(98,313)

Other income (expense)

(9,630)

1,498

Income before income tax expense

84,320

44,009

Income tax expense

(19,988)

(10,698)

Net income

$

64,332

$

33,311

Earnings per share:

Basic

$

2.02

$

1.04

Diluted

$

2.00

$

1.04

Weighted average common shares outstanding:

Basic

31,808,959

31,914,414

Diluted

32,238,808

32,117,082

See Notes to Unaudited Condensed Consolidated Financial Statements

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2024 and 2023

(in thousands)

Three Months Ended March 31,

2024

2023

Operating activities

Net income

$

64,332

$

33,311

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

5,475

3,292

Stock-based compensation expense

2,796

5,360

Fair value of mortgage loans held for sale and other

(2,443)

205

Impairment on other investment

7,722

Purchase price accounting for acquired work in process inventory

1,581

Abandonment of lot option contracts

762

638

Deferred income taxes

(603)

(83)

Loss on disposition of assets

274

198

Changes in assets and liabilities:

Cash held in escrow

17,069

43,878

Accounts receivable

10,823

10

Inventories

(68,001)

90,152

Mortgage loans held for sale

29,118

48,241

Prepaid expenses and other assets

(7,050)

8,247

Accounts payable

(11,592)

(401)

Accrued expenses and other liabilities

(28,671)

(41,714)

Net cash provided by operating activities

21,592

191,334

Investing activities

Purchases of property and equipment

(5,922)

(4,820)

Expenditures related to development of rental properties

(25,950)

(16,268)

Business combination and other investing activities

(32,716)

152

Net cash used in investing activities

(64,588)

(20,936)

Financing activities

Borrowings under revolving credit facilities

211,000

Payments on revolving credit facilities

(211,000)

Borrowing under construction loan agreements

15,972

7,137

Proceeds from issuance of insurance premium notes and other

11,166

3,032

Principal payments on insurance premium notes and other

(20,245)

(3,364)

Net proceeds (payments) for mortgage repurchase facilities

(26,851)

(47,842)

Withholding of common stock upon vesting of stock-based compensation awards

(10,415)

(9,880)

Repurchases of common stock under stock repurchase program

(16,109)

Dividend payments

(8,264)

(7,365)

Other financing activities

Net cash used in financing activities

(54,746)

(58,282)

Net increase (decrease)

$

(97,742)

$

112,116

Cash and cash equivalents and Restricted cash

Beginning of period

242,003

308,492

End of period

$

144,261

$

420,608

Supplemental cash flow disclosure

Cash paid for income taxes

$

$

Cash and cash equivalents and Restricted cash

Cash and cash equivalents

$

122,840

$

405,722

Restricted cash (Note 5)

21,421

14,886

Cash and cash equivalents and Restricted cash

$

144,261

$

420,608

See Notes to Unaudited Condensed Consolidated Financial Statements

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2024 and 2023

(in thousands)

Common Stock

Shares

Amount

Additional Paid-In Capital

Retained Earnings

Total Stockholders' Equity

Balance at December 31, 2023

31,775

$

318

$

592,989

$

1,793,629

$

2,386,936

Vesting of stock-based compensation awards

323

3

(3)

Withholding of common stock upon vesting of stock-based compensation awards

(120)

(1)

(10,414)

(10,415)

Repurchases of common stock

(187)

(2)

(16,107)

(16,109)

Stock-based compensation expense

2,796

2,796

Cash dividends declared and dividend equivalents

320

(8,584)

(8,264)

Net income

64,332

64,332

Balance at March 31, 2024

31,791

$

318

$

569,581

$

1,849,377

$

2,419,276

Balance at December 31, 2022

31,773

$

318

$

584,803

$

1,565,094

$

2,150,215

Vesting of stock-based compensation awards

412

4

(4)

Withholding of common stock upon vesting of stock-based compensation awards

(159)

(2)

(9,878)

(9,880)

Stock-based compensation expense

5,360

5,360

Cash dividends declared and dividend equivalents

208

(7,573)

(7,365)

Net income

33,311

33,311

Balance at March 31, 2023

32,026

$

320

$

580,489

$

1,590,832

$

2,171,641

See Notes to Unaudited Condensed Consolidated Financial Statements


Century Communities, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2024

1. Basis of Presentation

Century Communities, Inc. (which we refer to as “we,” “CCS,” or the “Company”), together with its subsidiaries, is engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 18 states. In many of our projects, in addition to building homes, we entitle and develop the underlying land. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand has an emphasis on serving the entry-level homebuilding market but offers a wide range of buyer profiles including: entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the ability to personalize their homes through certain option and upgrade opportunities. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and generally provides no option or upgrade opportunities.

Our homebuilding operations are organized into the following five reportable segments: West, Mountain, Texas, Southeast, and Century Complete. Our indirect wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, IHL Home Insurance Agency, LLC, and IHL Escrow Inc., which provide mortgage, title, insurance and escrow services, respectively, primarily to our homebuyers, have been identified as our Financial Services segment. Additionally, our wholly owned subsidiary, Century Living, LLC, is engaged in the development, construction and management of multi-family rental properties, currently all located in Colorado. Century Living, LLC is included in our Corporate segment.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (which we refer to as “GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (which we refer to as the “SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations for the periods presented. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by GAAP and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2023, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on February 5, 2024.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company, as well as all subsidiaries in which we have a controlling interest, and variable interest entities for which the Company is deemed to be the primary beneficiary. We do not have any variable interest entities in which we are deemed the primary beneficiary.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Business Acquisition

On January 22, 2024, we closed on the acquisition of substantially all the assets of Landmark Homes of Tennessee, Inc. (“Landmark”), a homebuilder with operations, including six active communities, in Nashville, Tennessee, for approximately $33.4 million in cash, inclusive of customary holdbacks.

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board (which we refer to as “FASB”) issued Accounting Standards Update (which we refer to as “ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires more disaggregated income tax disclosures, including additional information in the rate reconciliation and additional disclosures about income taxes paid. ASU 2023-09 will become effective for us for the fiscal year ending December 31, 2025. Early adoption is permitted, and guidance should be applied prospectively, with an option to apply guidance retrospectively. We are currently evaluating the impact of the adoption of ASU 2023-09 on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (which we refer to as “CODM”) and included within each reported measure of segment profit or loss. The guidance also expands disclosure requirements for interim periods, as well as requires disclosure of other segment items, including the title and position of the entity’s CODM. ASU 2023-07 will become effective for us for the fiscal year ending December 31, 2024, and for interim periods starting in our first quarter of 2025. Early adoption is permitted, and guidance is required to be applied retrospectively. We are currently evaluating the impact of the adoption of ASU 2023-07 on our consolidated financial statements and related disclosures.

2. Reporting Segments

Our homebuilding operations are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 18 states. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand is managed by geographic location, and each of our four geographic regions offers a wide range of buyer profiles including: entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the ability to personalize their homes through certain option and upgrade selections. Each of our four geographic regions is considered a separate operating segment. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and generally provides no option or upgrade selections. Our Century Complete brand currently has operations in 11 states and it is considered a separate operating segment.

The management of our four Century Communities geographic regions and Century Complete reports to our chief operating decision makers (which we refer to as “CODMs”), the Co-Chief Executive Officers of our Company. The CODMs review the results of our operations, including total revenue and income before income tax expense to determine profitability and to allocate resources. Accordingly, we have presented our homebuilding operations as the following five reportable segments:

 

West (California and Washington)

Mountain (Arizona, Colorado, Nevada, and Utah)

Texas

Southeast (Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee)

Century Complete (Alabama, Arizona, Florida, Georgia, Indiana, Kentucky, Louisiana, Michigan, North Carolina, Ohio, South Carolina)

We have identified our Financial Services operations, which provide mortgage, title, insurance and escrow services to our homebuyers, as a sixth reportable segment. Our Corporate operations are a non-operating segment, as our Corporate operations serve to support our homebuilding, and to a lesser extent our Financial Services operations, through functions, such as our executive, finance, treasury, human resources, accounting and legal departments.

Additionally, our wholly owned subsidiary, Century Living, LLC, is engaged in the development, construction and management of multi-family rental properties, currently all located in Colorado. Century Living, LLC is included in our Corporate segment. 

The following table summarizes total revenue and income (loss) before income tax expense by segment (in thousands):

Three Months Ended March 31,

2024

2023

Revenue:

West

$

172,648

$

129,081

Mountain

254,279

246,275

Texas

131,273

89,532

Southeast

161,658

87,126

Century Complete

203,760

185,121

Financial Services

24,925

15,855

Corporate

Total revenue

$

948,543

$

752,990

Income (loss) before income tax expense:

West

$

26,707

$

7,973

Mountain

27,808

27,808

Texas

13,872

3,673

Southeast

20,796

11,966

Century Complete

21,101

13,950

Financial Services

10,048

5,074

Corporate

(36,012)