10-Q 1 ccs-20220331x10q.htm 10-Q ccs-20220331x10q
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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, 2022

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 22, 2022, 32,924,190 shares of common stock, par value $0.01 per share, were outstanding.  

CENTURY COMMUNITIES, INC.

FORM 10-Q

For the Three Months Ended March 31, 2022

Index

Page No.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021 (audited)

3

Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021

4

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

5

Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2022 and 2021

6

Notes to the Unaudited Condensed Consolidated Financial Statements

7

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

16

Item 3. Quantitative and Qualitative Disclosures About Market Risk

36

Item 4. Controls and Procedures

36

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

37

Item 3. Defaults Upon Senior Securities

37

Item 4. Mine Safety Disclosures

37

Item 5. Other Information

37

Item 6. Exhibits

38

Signatures

39

PART I – FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS.

Century Communities, Inc.

Condensed Consolidated Balance Sheets

As of March 31, 2022 and December 31, 2021

(in thousands, except share and per share amounts)

 

March 31,

December 31,

2022

2021

Assets

(unaudited)

(audited)

Cash and cash equivalents

$

209,046

$

316,310

Cash held in escrow

45,212

52,297

Accounts receivable

46,038

41,932

Inventories

2,680,195

2,456,614

Mortgage loans held for sale

198,985

353,063

Prepaid expenses and other assets

236,567

200,087

Property and equipment, net

27,791

24,939

Deferred tax assets, net

21,272

21,239

Goodwill

30,395

30,395

Total assets

$

3,495,501

$

3,496,876

Liabilities and stockholders' equity

Liabilities:

Accounts payable

$

91,520

$

84,679

Accrued expenses and other liabilities

370,130

316,877

Notes payable

1,010,961

998,936

Revolving line of credit

Mortgage repurchase facilities

193,028

331,876

Total liabilities

1,665,639

1,732,368

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, 33,038,361 and 33,760,940 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

330

338

Additional paid-in capital

627,447

697,845

Retained earnings

1,202,085

1,066,325

Total stockholders' equity

1,829,862

1,764,508

Total liabilities and stockholders' equity

$

3,495,501

$

3,496,876

See Notes to Unaudited Condensed Consolidated Financial Statements

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2022 and 2021

(in thousands, except share and per share amounts)

Three Months Ended March 31,

2022

2021

Revenues

Homebuilding revenues

Home sales revenues

$

988,415

$

959,279

Land sales and other revenues

1,630

15,670

Total homebuilding revenues

990,045

974,949

Financial services revenues

26,305

33,620

Total revenues

1,016,350

1,008,569

Homebuilding cost of revenues

Cost of home sales revenues

(709,073)

(756,507)

Cost of land sales and other revenues

(846)

(10,020)

Total homebuilding cost of revenues

(709,919)

(766,527)

Financial services costs

(15,154)

(18,301)

Selling, general and administrative

(101,639)

(92,151)

Other income (expense)

(862)

(541)

Income before income tax expense

188,776

131,049

Income tax expense

(46,280)

(29,397)

Net income

$

142,496

$

101,652

Earnings per share:

Basic

$

4.25

$

3.03

Diluted

$

4.20

$

3.00

Weighted average common shares outstanding:

Basic

33,530,610

33,563,903

Diluted

33,942,234

33,884,275

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, 2022 and 2021

(in thousands)

Three Months Ended March 31,

2022

2021

Operating activities

Net income

$

142,496

$

101,652

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

Depreciation and amortization

2,606

2,806

Stock-based compensation expense

4,064

3,019

Fair value of mortgage loans held for sale and other

4,443

(15)

Deferred income taxes

(33)

(2,763)

Loss on disposition of assets

384

329

Changes in assets and liabilities:

Cash held in escrow

7,085

(31,071)

Accounts receivable

3,669

(3,075)

Inventories

(193,451)

63,586

Mortgage loans held for sale

144,361

(25,662)

Prepaid expenses and other assets

(28,084)

(14,900)

Accounts payable

8,720

(23,533)

Accrued expenses and other liabilities

13,173

25,747

Net cash provided by operating activities

109,433

96,120

Investing activities

Purchases of property and equipment

(5,841)

(2,913)

Other investing activities

750

27

Net cash used in investing activities

(5,091)

(2,886)

Financing activities

Borrowings under revolving credit facilities

141,500

Payments on revolving credit facilities

(141,500)

Proceeds from issuance of insurance premium notes and other

16,863

4,124

Principal payments on insurance premium notes and other

(5,235)

(1,602)

Net (payments) proceeds for mortgage repurchase facilities

(138,848)

26,000

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

(12,138)

(12,177)

Repurchases of common stock under stock repurchase program

(62,377)

Dividend payments

(6,657)

Other

(34)

(30)

Net cash (used in) provided by financing activities

(208,426)

16,315

Net (decrease) increase

$

(104,084)

$

109,549

Cash and cash equivalents and Restricted cash

Beginning of period

322,241

398,081

End of period

$

218,157

$

507,630

Supplemental cash flow disclosure

Cash (refunds) paid for income taxes

$

(893)

$

10

Cash and cash equivalents and Restricted cash

Cash and cash equivalents

$

209,046

$

502,906

Restricted cash (Note 5)

9,111

4,724

Cash and cash equivalents and Restricted cash

$

218,157

$

507,630

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, 2022 and 2021

(in thousands)

Common Stock

Shares

Amount

Additional Paid-In Capital

Retained Earnings

Total Stockholders' Equity

Balance at December 31, 2021

33,761

$

338

$

697,845

$

1,066,325

$

1,764,508

Vesting of stock-based compensation awards

480

5

(5)

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

(190)

(3)

(12,135)

(12,138)

Repurchases of common stock

(1,013)

(10)

(62,367)

(62,377)

Stock-based compensation expense

4,064

4,064

Cash dividends declared and dividend equivalents

79

(6,736)

(6,657)

Other

(34)

(34)

Net income

142,496

142,496

Balance at March 31, 2022

33,038

$

330

$

627,447

$

1,202,085

$

1,829,862

Balance at December 31, 2020

33,351

$

334

$

697,200

$

583,171

$

1,280,705

Vesting of stock-based compensation awards

601

6

(6)

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

(244)

(3)

(12,174)

(12,177)

Stock-based compensation expense

3,019

3,019

Other

(30)

(30)

Net income

101,652

101,652

Balance at March 31, 2021

33,708

$

337

$

688,009

$

684,823

$

1,373,169

See Notes to Unaudited Condensed Consolidated Financial Statements


Century Communities, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2022

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 17 states. In many of our projects, in addition to building homes, we are responsible for the entitlement and development of the underlying land. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand targets 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. We now have six states where both Century brands have a presence, and we believe there are more opportunities for increased penetration within our over 45 high-growth markets to enable both brands to benefit from increased scale and enhanced operational efficiencies.

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, and IHL Home Insurance Agency, LLC, which provide mortgage, title, and insurance services, respectively, primarily to our homebuyers, have been identified as our Financial Services 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, 2021, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 that was filed with the SEC on February 3, 2022.

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. All intercompany accounts and transactions have been eliminated.

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.

 

2. Reporting Segments

Our homebuilding operations are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 17 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 is managed separately from our four geographic regions. Accordingly, 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 (Florida, Georgia, North Carolina, South Carolina, and Tennessee)

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

We have identified our Financial Services operations, which provide mortgage, title, and insurance services to our homebuyers, as a sixth reportable segment. Our Corporate operations are a non-operating segment, as they 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. 

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

 

Three Months Ended March 31,

2022

2021

Revenue:

West

$

262,710

$

185,826

Mountain

281,360

305,313

Texas

124,577

87,735

Southeast

149,600

220,406

Century Complete

171,798

175,669

Financial Services

26,305

33,620

Corporate

Total revenue

$

1,016,350

$

1,008,569

Income (loss) before income tax expense:

West

$

71,242

$

27,461

Mountain

56,999

51,980

Texas

20,570

8,531

Southeast

30,865

23,440

Century Complete

24,692

21,730

Financial Services

11,151

15,319

Corporate

(26,743)

(17,412)

Total income before income tax expense

$

188,776

$

131,049

The following table summarizes total assets by segment (in thousands):