Century Communities, Inc. [CCS] Filings

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

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


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.

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.

Table of Contents

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

Table of Contents

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

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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

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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

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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

‎

Table of Contents

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.

Table of Contents

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):

Century Communities, Inc. [CCS] Filings
10-Q	[2022-04-28]
10-K	[2022-02-03]
10-Q	[2021-10-28]
10-Q	[2021-07-29]
10-Q	[2021-04-29]
10-K	[2021-02-05]
10-Q	[2020-10-29]
10-Q	[2020-07-29]
10-Q	[2020-04-30]
10-K	[2020-02-07]
10-Q	[2019-10-30]
10-Q	[2019-07-31]
10-Q	[2019-05-03]
10-K	[2019-02-13]
10-Q	[2018-11-07]
10-Q	[2018-08-03]
10-Q	[2018-05-09]
10-K	[2018-03-01]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-02-15]
10-Q	[2016-11-02]
10-Q	[2016-08-03]
10-Q	[2016-05-06]
10-K	[2016-02-19]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-03-06]
10-Q	[2014-11-14]
10-Q	[2014-08-13]
S-1	[2014-05-05]