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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): (303) 770-8300
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
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):