
Delaware		68-0521411
(State ofor other jurisdiction of ‎incorporation or organization)		(I.R.S. Employer ~~identification~~‎Identification No.)

8390 East Crescent Parkway, Suite 650 ‎Greenwood Village, ~~Colorado~~CO		80111
(Address of principal executive offices)		(Zip ~~code)~~Code)

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



Large accelerated filer	☐x	Accelerated filer	☒o
Non-accelerated filer	o	Smaller reporting company	o
~~Non-accelerated filer~~	~~☐ (Do not check if a smaller reporting company)~~	~~Smaller reporting company~~	☐
		Emerging growth company	☒¨

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Century Communities, Inc.

~~Unaudited~~ Condensed Consolidated Balance Sheets

As of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~2020

~~(in thousands, except share amounts)~~

September 30,

December 31,

2017

2016
Assets

Cash and cash equivalents

$
58,522

$
29,450
Cash held in escrow

42,262

20,044
Accounts receivable

20,810

5,729
Inventories

1,352,989

857,885
Mortgage loans held for sale

30,071

—
Prepaid expenses and other assets

62,362

40,457
Property and equipment, net

13,658

11,412
Investment in unconsolidated subsidiaries

20,677

18,275
Deferred tax asset, net

6,403

—
Amortizable intangible assets, net

1,889

2,911
Goodwill

21,365

21,365
Total assets

$
1,631,008

$
1,007,528
Liabilities and stockholders' equity

Liabilities:

Accounts payable

$
16,810

$
15,708
Accrued expenses and other liabilities

157,705

62,314
Deferred tax liability, net

—

1,782
Senior notes payable

776,016

259,088
Revolving line of credit

—

195,000
Mortgage repurchase facility

27,465

—
Total liabilities

977,996

533,892
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, 27,259,199 and 21,620,544 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively

273

216
Additional paid-in capital

501,786

355,567
Retained earnings

150,953

117,853
Total stockholders' equity

653,012

473,636
Total liabilities and stockholders' equity

$
1,631,008

$
1,007,528

~~See Notes to Unaudited Condensed Consolidated Financial Statements~~

~~Table of Contents~~

~~Century Communities, Inc.~~

~~Unaudited Condensed Consolidated Statements of Operations~~

~~For the Three and Nine Months Ended September 30, 2017and 2016~~

(in thousands, except share and per share amounts)



	June 30,		December 31,
	2021		2020
Assets	(unaudited)		(audited)
Cash and cash equivalents	$	419,416	$	394,001
Cash held in escrow		37,640		23,149
Accounts receivable		30,286		21,781
Inventories		1,948,769		1,929,664
Mortgage loans held for sale		235,712		282,639
Prepaid expenses and other assets		147,284		122,630
Property and equipment, net		26,359		28,384
Deferred tax assets, net		18,392		12,450
Goodwill		30,395		30,395
Total assets	$	2,894,253	$	2,845,093
Liabilities and stockholders' equity
Liabilities:
Accounts payable	$	80,609	$	107,712
Accrued expenses and other liabilities		263,956		302,751
Notes payable		901,254		894,875
Revolving line of credit		—		—
Mortgage repurchase facilities		159,776		259,050
Total liabilities		1,405,595		1,564,388
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, NaN outstanding		—		—
Common stock, $0.01 par value, 100,000,000 shares authorized, 33,760,940 and 33,350,633 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		338		334
Additional paid-in capital		690,707		697,200
Retained earnings		797,613		583,171
Total stockholders' equity		1,488,658		1,280,705
Total liabilities and stockholders' equity	$	2,894,253	$	2,845,093

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016
Revenues

Homebuilding revenues

Home sales revenues

$
374,935

$
248,075

$
888,942

$
686,335
Land sales and other revenues

1,826

5,338

6,216

10,816

376,761

253,413

895,158

697,151
Financial services revenue

2,955

—

4,697

—
Total revenues

379,716

253,413

899,855

697,151
Homebuilding Cost of Revenues

Cost of home sales revenues

(311,365)

(197,650)

(727,577)

(549,886)
Cost of land sales and other revenues

(2,104)

(5,420)

(4,994)

(9,433)

(313,469)

(203,070)

(732,571)

(559,319)
Financial services costs

(2,450)

—

(4,648)

—
Selling, general, and administrative

(46,165)

(30,944)

(113,597)

(87,512)
Acquisition expense

(7,205)

(53)

(8,645)

(466)
Equity in income of unconsolidated subsidiaries

3,716

—

7,648

—
Other income

1,013

385

2,274

1,403
Income before income tax expense

15,156

19,731

50,316

51,257
Income tax expense

(5,686)

(6,389)

(17,216)

(16,790)
Net income

$
9,470

$
13,342

$
33,100

$
34,467

Earnings per share:

Basic

$
0.37

$
0.63

$
1.42

$
1.63
Diluted

$
0.37

$
0.63

$
1.41

$
1.62
Weighted average common shares outstanding:

Basic

25,445,552

20,673,521

23,038,390

20,643,682
Diluted

25,726,137

20,822,066

23,275,320

20,731,930

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of ~~Cash Flows~~Operations

For the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020

(in thousands,) except share and per share amounts)



	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues
Homebuilding revenues
Home sales revenues	$	1,004,789	$	747,415	$	1,964,068	$	1,320,125
Land sales and other revenues		8,258		3,307		23,928		23,411
Total homebuilding revenues		1,013,047		750,722		1,987,996		1,343,536
Financial services revenues		29,865		25,722		63,485		35,517
Total revenues		1,042,912		776,444		2,051,481		1,379,053
Homebuilding cost of revenues
Cost of home sales revenues		(764,668)		(620,655)		(1,521,175)		(1,091,181)
Cost of land sales and other revenues		(7,000)		(2,384)		(17,020)		(16,551)
Total homebuilding cost of revenues		(771,668)		(623,039)		(1,538,195)		(1,107,732)
Financial services costs		(18,168)		(12,744)		(36,469)		(22,330)
Selling, general and administrative		(99,656)		(86,706)		(191,807)		(160,325)
Inventory impairment and other		(41)		(910)		(41)		(1,691)
Other income (expense)		(1,245)		(2,942)		(1,786)		(2,784)
Income before income tax expense		152,134		50,103		283,183		84,191
Income tax expense		(34,224)		(11,653)		(63,621)		(19,615)
Net income	$	117,910	$	38,450	$	219,562	$	64,576

Earnings per share:
Basic	$	3.49	$	1.15	$	6.52	$	1.94
Diluted	$	3.47	$	1.15	$	6.47	$	1.93
Weighted average common shares outstanding:
Basic		33,738,586		33,340,184		33,651,727		33,274,056
Diluted		33,956,638		33,461,694		33,920,939		33,469,069

Nine Months Ended September 30,

2017

2016
Operating activities

Net income

$
33,100

$
34,467
Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

5,073

4,215
Stock-based compensation expense

6,521

5,058
Deferred income taxes

(2,766)

(3,807)
Distribution of income from unconsolidated subsidiaries

5,246

—
Equity in income of unconsolidated subsidiaries

(7,648)

—
(Gain) loss on disposition of assets

202

(468)
Changes in assets and liabilities:

Cash held in escrow

(22,218)

(15,932)
Accounts receivable

(7,493)

389
Inventories

(95,065)

(85,560)
Prepaid expenses and other assets

(16,637)

(11,189)
Accounts payable

(8,026)

7,172
Accrued expenses and other liabilities

9,027

4,255
Mortgage loans held for sale

(30,071)

—
Net cash used in operating activities

(130,755)

(61,400)
Investing activities

Purchases of property and equipment

(5,867)

(6,375)
Business combination net of acquired cash

(77,457)

—
Proceeds from sale of assets

52

1,302
Proceeds from sale of South Carolina operations

17,074

—
Proceeds from secured note receivable

76

73
Net cash used in investing activities

(66,122)

(5,000)
Financing activities

Borrowings under revolving credit facilities

75,000

145,000
Payments on revolving credit facilities

(270,000)

(90,000)
Proceeds from issuance of senior notes

523,000

—
Proceeds from issuance of insurance premium notes

—

11,612
Principal payments on notes payable

(4,735)

(7,582)
Repayment of debt assumed in business combination

(151,919)

—
Debt issuance costs

(3,731)

(1,156)
Net proceeds from mortgage credit facility

27,465

—
Net proceeds from issuances of common stock

35,010

—
Repurchases of common stock upon vesting of restricted stock awards

(4,141)

(1,014)
Repurchases of common stock under our stock repurchase program

—

(2,393)
Net cash provided by financing activities

225,949

54,467
Net decrease in cash and cash equivalents

$
29,072

$
(11,933)
Cash and cash equivalents

Beginning of period

29,450

29,287
End of period

$
58,522

$
17,354
Supplemental cash flow disclosure

Cash paid for income taxes

$
21,657

$
20,557

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2021 and 2020

(in thousands)


	Six Months Ended June 30,
	2021		2020
Operating activities
Net income	$	219,562	$	64,576
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,655		6,842
Stock-based compensation expense		7,212		8,588
Fair value of mortgage loans held for sale and other		3,359		(6,175)
Inventory impairment and other		41		1,691
Deferred income taxes		(5,942)		(1,322)
Loss on disposition of assets		804		914
Changes in assets and liabilities:
Cash held in escrow		(14,491)		(11,311)
Accounts receivable		(8,505)		4,592
Inventories		(56,779)		138,049
Mortgage loans held for sale		42,659		(30,990)
Prepaid expenses and other assets		(25,694)		13,229
Accounts payable		(27,103)		(35,158)
Accrued expenses and other liabilities		2,643		20,259
Net cash provided by operating activities		143,421		173,784
Investing activities
Purchases of property and equipment		(4,405)		(4,913)
Other investing activities		54		62
Net cash used in investing activities		(4,351)		(4,851)
Financing activities
Borrowings under revolving credit facilities		—		678,000
Payments on revolving credit facilities		—		(746,700)
Proceeds from issuance of insurance premium notes and other		9,477		4,542
Principal payments on insurance notes payable		(3,854)		(4,220)
Net proceeds (payments) on mortgage repurchase facilities		(99,274)		23,374
Withholding of common stock upon vesting of restricted stock units		(13,726)		(5,145)
Dividend payments		(5,065)		—
Other		(34)		(345)
Net cash used in financing activities		(112,476)		(50,494)
Net increase	$	26,594	$	118,439
Cash and cash equivalents and Restricted cash
Beginning of period		398,081		58,521
End of period	$	424,675	$	176,960
Supplemental cash flow disclosure
Cash paid for income taxes	$	78,909	$	410
Cash and cash equivalents and Restricted cash
Cash and cash equivalents	$	419,416	$	173,521
Restricted cash (Note 5)		5,259		3,439
Cash and cash equivalents and Restricted cash	$	424,675	$	176,960

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

~~September~~

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Six Months Ended June 30, ~~2017~~2021 and 2020

(in thousands)

For the Three Months Ended June 30, 2021 and 2020


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Total Stockholders' Equity
Balance at March 31, 2021	33,708	$	337	$	688,009	$	684,823	$	1,373,169
Vesting of restricted stock units	74		1		(1)		—		—
Withholding of common stock upon vesting of restricted stock units	(21)		—		(1,549)		—		(1,549)
Stock-based compensation expense	—		—		4,193		—		4,193
Cash dividends declared	—		—		55		(5,120)		(5,065)
Net income	—		—		—		117,910		117,910
Balance at June 30, 2021	33,761	$	338	$	690,707	$	797,613	$	1,488,658


Balance at March 31, 2020	33,319	$	333	$	681,060	$	403,140	$	1,084,533
Vesting of restricted stock units	42		1		(1)		—		—
Withholding of common stock upon vesting of restricted stock units	(10)		—		(168)		—		(168)
Stock-based compensation expense	—		—		6,903		—		6,903
Other	—		—		(230)		—		(230)
Net income	—		—		—		38,450		38,450
Balance at June 30, 2020	33,351	$	334	$	687,564	$	441,590	$	1,129,488

For the Six Months Ended June 30, 2021 and 2020


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2020	33,351	$	334	$	697,200	$	583,171	$	1,280,705
Vesting of restricted stock units	675		7		(7)		—		—
Withholding of common stock upon vesting of restricted stock units	(265)		(3)		(13,723)		—		(13,726)
Stock-based compensation expense	—		—		7,212		—		7,212
Cash dividends declared	—		—		55		(5,120)		(5,065)
Other	—		—		(30)		—		(30)
Net income	—		—		—		219,562		219,562
Balance at June 30, 2021	33,761	$	338	$	690,707	$	797,613	$	1,488,658


Balance at December 31, 2019	33,067	$	331	$	684,354	$	377,014	$	1,061,699
Vesting of restricted stock units	454		5		(5)		—		—
Withholding of common stock upon vesting of restricted stock units	(170)		(2)		(5,143)		—		(5,145)
Stock-based compensation expense	—		—		8,588		—		8,588
Other	—		—		(230)		—		(230)
Net income	—		—		—		64,576		64,576
Balance at June 30, 2020	33,351	$	334	$	687,564	$	441,590	$	1,129,488

See Notes to Unaudited Condensed Consolidated Financial Statements

‎

Century Communities, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2021

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 ~~metropolitan areas in the States of California, Colorado, Georgia, Nevada, North Carolina, South Carolina, Tennessee, Texas, Utah, and Washington.~~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. Our homebuilding operations are organized into the following ~~four~~5 reportable ~~segments based on the geographic regions in which we operate:~~segments: West, Mountain, Texas, Southeast, and ~~Southeast.~~Century Complete. Additionally, our indirect wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, and ~~Parkway Title,~~IHL Home Insurance Agency, LLC, which provide mortgage, title, and ~~title~~insurance services, respectively, primarily to our ~~home buyers, respectively,~~homebuyers, have been identified as our Financial Services ~~operating~~ segment.

~~On August 4, 2017, we acquired UCP, Inc. (which we refer to as “UCP”).~~ UCP is a homebuilder and land developer with expertise in residential land acquisition, development and entitlement, as well as home design, construction and sales, with operations in the States of California, Washington, North Carolina, South Carolina and Tennessee. The merger was unanimously approved by the board of directors of both the Company and UCP and was also approved by UCP stockholders on August 1, 2017. In connection with the merger, each share of UCP Class A common stock outstanding immediately prior to the closing was converted into $5.32 in cash and 0.2309 of a newly issued share of our common stock. Approximately 4.2 million shares of our common stock were issued in connection with the merger and $97.7 million was paid in cash. Our operating results presented herein include the operations of UCP from the period beginning on August 4, 2017 through September 30, 2017.

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”) ~~for interim financial statements~~ 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 ~~its~~our financial position and results of ~~operations.~~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, ~~2016,~~2020, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2020 that was filed with the SEC on February ~~15, 2017.~~5, 2021.

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 currently do not have any variable interest entities in which we are deemed the primary beneficiary. All intercompany accounts and transactions have been eliminated.

~~Mortgage Loans Held for Sale~~

We use best efforts commitments with various investors to mitigate the risk associated with mortgage loans held for sale. Best efforts commitments which fix the forward sales price that will be realized in the secondary market are used to eliminate our interest rate and price risks. These best effort commitments are considered derivative instruments under ASC 815, “Derivatives and Hedging,” however, we do not have any derivative instruments designated as hedging instruments as of September 30, 2017. Substantially all of the loans originated by us and their related servicing rights are sold in the secondary mortgage market within a short period of time after origination, generally within 30 days. In accordance with ASC 825, “Financial Instruments” we use the fair value option to record residential mortgage loans available-for-sale at the price they are committed to be sold under the best efforts commitments.

Expected gains and losses from the sale of our loans held for sale are included in the measurement of written loan commitments that are accounted for at fair value through Financial Services revenues at the time of commitment. As of September 30, 2017, mortgage loans available-for-sale had an aggregate fair value of $30.1 million and an aggregate outstanding principal balance of $28.7 million. The net gain resulting from changes in fair value of the best efforts commitments and mortgage loans held in inventory totaled $0.8 million and $1.4 million for the three and nine months ended September 30, 2017, respectively. Realized net gains from the sale of mortgages during the three and nine months ended September 30, 2017 were $0.5 million and $0.6 million, respectively, and have been included in Financial Services revenues.

~~Table of Contents~~

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.

~~Reclassification~~

Certain items on the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2016 have been reclassified to conform to our current presentation. We have included “Golf course and other revenue” with “Land sales and other revenues”; we have included “Cost of golf course and other revenue” with “Cost of land sales and other revenues”; and we have combined “Interest income,” “Interest expense,” and “Gain on disposition of assets” into “Other income (expense)” in our current presentation. We have also adjusted prior period segment information to conform to the current period presentation, see detail in “2. Reporting Segments.”

Recently ~~Issued~~Adopted Accounting Standards

Income Taxes

In ~~August~~ ~~2015,~~December 2019, the Financial Accounting Standards Board ~~(which we refer to as “FASB”~~(“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU ~~2015-14, “Revenue from Contracts with Customers (Topic 606)~~2019-12”).~~” ASU 2015-14 defers~~ The standard simplifies the ~~effective date~~accounting for income taxes, eliminates certain exceptions, and clarifies certain aspects of ~~ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” and will be effective for the Company beginning~~ASC 740 to promote consistency among reporting entities. We adopted this standard on January 1, ~~2018, including interim reporting periods within that period. Early adoption is permitted as of annual reporting periods beginning after December 15, 2016. We plan to adopt ASU 2015-14~~2021 with no material effect on ~~January 1, 2018 under~~ the ~~modified retrospective approach.~~ ~~We are currently evaluating the potential impact of adopting this guidance on our~~condensed consolidated financial statements and ~~disclosures, and have been involved in industry specific discussions on the treatment of certain items.~~ We have evaluated our home sales contracts in each of our regions and have determined that there will not be a material impact on the amount or timing in recording home sales revenues as a result of adopting ASU 2015-14. We are continuing to evaluate the accounting treatment of other aspects of our business that may be affected by our adoption of ASU 2015-14.related disclosures.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. ASU 2016-02 is effective for the Company beginning January 1, 2019 and interim periods within the annual periods. We are currently evaluating the impact ASU 2016-02 will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for the Company beginning January 1, 2017 and interim periods within the annual periods. We have adopted this standard and as a result have realized excess tax benefits of $1.1 million, which is included as a reduction to “Income tax expense” in our Condensed Consolidated Statements of Operations. Our calculation of earnings per share was also modified to reflect a change to exclude excess tax benefits from assumed proceeds in our computation of diluted shares outstanding under the treasury method. We have elected to continue to estimate forfeitures in recognizing the expense for our equity awards. Employee taxes paid by withholding shares on vesting of stock compensation are classified as a financing activity in our Condensed Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 consists of eight provisions that provide guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. We do not believe that ASU 2016-15 will have a material effect on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value. It eliminates Step 2 of the current two-step goodwill impairment test. ASU 2017-04 is effective for annual reporting periods in fiscal years beginning after December 15, 2019 and early adoption is permitted. We elected to early adopt ASU 2017-04 for the reporting period beginning January 1, 2017. Our adoption of ASU 2017-04 has not had a material effect on our condensed consolidated financial statements.

2. Reporting Segments

Our homebuilding operations are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in ~~10 states, which are aggreated into four regions, each of which~~17 states. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand is managed by ~~one~~geographic location, and each of our ~~regional presidents.~~4 geographic regions 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 selections. Each of our ~~homebuilding divisions~~four geographic regions is considered ana separate operating ~~segment, but has been aggregated into reportable segments defined by our~~segment. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the

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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.

~~regional structure as each region has similar economic characteristics~~The management of our four Century Communities geographic regions and ~~housing products. After our acquisition of UCP, Inc. management was reorganized to report to regional managers, who in turn report directly~~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 ~~at the regional level.~~and to allocate resources. Accordingly, we have ~~broken~~presented our homebuilding operations ~~into~~as the following 5 reportable ~~segments based on the geographic markets in which we operate:~~segments:

~~West (Southern California, Central Valley, Bay Area and Washington)~~

~~Mountain (Colorado, Nevada and Utah)~~

~~Texas (Houston, San Antonio and Austin)~~

~~Southeast (Georgia, North Carolina and Tennessee)~~

West (California and Washington)

Mountain (Arizona, Colorado, Nevada, and Utah)

Texas

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

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

We have also identified our Financial Services operations, which provide mortgage, title, and ~~title~~insurance services to our homebuyers, as a ~~fifth~~sixth reportable segment. Our Corporate operations are a ~~nonoperating~~non-operating segment, as ~~it serves~~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 ~~accounting~~legal departments. ~~We have adjusted prior period segment information to conform to the current period presentation.~~

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

‎

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016
Revenue:

West
$
73,684

$
—

$
73,684

$
—
Mountain

157,224

141,043

443,526

353,649
Texas

36,757

30,036

111,997

106,179
Southeast

109,096

82,334

265,951

237,323
Financial Services

2,955

—

4,697

—
Corporate

—

—

—

—
Total revenue
$
379,716

$
253,413

$
899,855

$
697,151

Income (loss) before income tax expense:

West
$
5,259

$
—

$
5,259

$
—
Mountain

19,101

18,995

56,137

47,234
Texas

2,166

(288)

6,407

2,138
Southeast

6,001

7,848

16,609

21,827
Financial Services

505

—

(192)

—
Corporate

(17,876)

(6,824)

(33,904)

(19,942)
Total income before income tax expense
$
15,156

$
19,731

$
50,316

$
51,257

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	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue:
West	$	237,367	$	166,125	$	423,193	$	298,012
Mountain		295,001		177,569		600,314		348,721
Texas		132,789		98,678		220,524		158,842
Southeast		168,519		174,626		388,925		306,128
Century Complete		179,371		133,724		355,040		231,833
Financial Services		29,865		25,722		63,485		35,517
Corporate		—		—		—		—
Total revenue	$	1,042,912	$	776,444	$	2,051,481	$	1,379,053

Income (loss) before income tax expense:
West	$	40,903	$	13,747	$	68,364	$	29,089
Mountain		55,814		20,616		107,794		39,094
Texas		19,139		9,610		27,670		15,108
Southeast		26,096		12,020		49,536		20,329
Century Complete		23,089		8,548		44,819		9,333
Financial Services		11,697		12,978		27,016		13,187
Corporate		(24,604)		(27,416)		(42,016)		(41,949)
Total income before income tax expense	$	152,134	$	50,103	$	283,183	$	84,191

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



	September 30,		December 31,		June 30,		December 31,
	2017		2016		2021		2020
West	$	302,816	$	—	$	611,192	$	536,907
Mountain		571,124		541,657		803,816		778,198
Texas		186,840		138,392		238,221		207,746
Southeast		394,918		262,448		279,101		329,930
Century Complete						284,838		218,604
Financial Services		38,010		—		333,109		421,153
Corporate		137,300		65,031		343,976		352,555
Total assets	$	1,631,008	$	1,007,528	$	2,894,253	$	2,845,093


~~UCP Shares (including noncontrolling interest) as of August 4, 2017~~		~~18,085~~
~~Cash paid per share~~	$	~~5.32~~
~~Cash consideration~~	$	~~96,213~~
~~UCP Shares (including noncontrolling interest) as of August 4, 2017~~		~~18,085~~
~~Exchange ratio~~		~~0.2309~~
~~Number of CCS shares issued~~		~~4,176~~
~~Closing price of Century Communities Stock on August 4, 2017~~	$	~~25.80~~
~~Consideration attributable to common stock~~	$	~~107,737~~
~~Cash paid for fractional shares~~	$	~~1,508~~
~~Total replacement award value~~	$	~~1,149~~
~~Total consideration in cash and equity~~	$	~~206,607~~


~~Cash and cash equivalents~~	$	~~20,264~~
~~Accounts receivable~~		~~7,671~~
~~Inventories~~		~~400,011~~
~~Prepaid expenses and other assets~~		~~6,988~~
~~Property and equipment, net~~		~~717~~
~~Deferred tax asset, net~~		~~5,419~~
~~Total assets~~	$	~~441,070~~

~~Accounts payable~~	$	~~10,712~~
~~Accrued expenses and other liabilities~~		~~70,832~~
~~Notes payable and revolving loan agreement~~		~~152,919~~
~~Total liabilities~~		~~234,463~~
~~Purchase price/Net equity~~	$	~~206,607~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016
Revenues
$
416,223

$
347,153

$
1,142,371

$
941,953

Income before tax expense
$
24,604

$
22,303

$
69,950

$
55,052
Tax expense

(10,731)

(6,270)

(23,878)

(16,476)
Net income
$
13,873

$
16,033

$
46,072

$
38,576
Less: Undistributed earnings allocated to participating securities

(72)

(242)

(352)

(734)
Numerator for basic and diluted pro forma EPS
$
13,801

$
15,791

$
45,720

$
37,842

Pro forma weighted average shares-basic

27,034,192

24,849,375

26,342,362

24,819,536
Pro forma weighted average shares-diluted

27,314,776

24,997,920

26,579,292

24,907,783

Pro forma basic EPS
$
0.51

$
0.64

$
1.74

$
1.52
Pro forma diluted EPS
$
0.51

$
0.63

$
1.72

$
1.52

substantially all of the loans it originates either as loans with servicing rights released, or with servicing rights retained, in the secondary mortgage market within a short period of time after origination, generally within 30 days. Inspire primarily finances these loans using its mortgage repurchase facilities. Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $148.7 million and $172.3 million at June 30, 2021 and December 31, 2020, respectively, and carried a weighted average interest rate of approximately 3.2% and 2.8%, respectively. As of June 30, 2021 and December 31, 2020, Inspire had mortgage loans held for sale with an aggregate fair value of $235.7 million and $282.6 million, respectively, and an aggregate outstanding principal balance of $226.9 million and $269.6 million, respectively. Our net gains on the sale of mortgage loans were $23.9 million and $16.1 million for the three months ended June 30, 2021 and 2020, respectively, and were $46.8 million and $27.6 million for the six months ended June 30, 2021 and 2020, respectively, and are included in the financial services revenue on the condensed consolidated statements of operations. Interest rate risks related to these obligations are typically mitigated by the preselling of loans to investors or through our program to economically hedge interest rates.

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7. Warranties

~~8. Warranties~~

Estimated future direct warranty costs are accrued and charged to cost of home sales revenues in the period when the related home sales revenues are recognized. Amounts accrued, which are included in accrued expenses and other liabilities on the condensed consolidated balance sheets, are based upon historical experience rates. We subsequently assess the adequacy of our warranty accrual on a quarterly basis through ~~an internal~~a model that incorporates historical payment trends and adjust the amounts recorded, if necessary. Based on ~~favorable~~ warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by ~~$0.9~~$0.4 million and ~~$1.2~~$0.2 million during the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2021 and 2020, respectively, ~~which is~~and we reduced our warranty reserve by $2.2 million and $1.3 million during the six months ended June 30, 2021 and 2020, respectively. These adjustments are included ~~as a reduction to~~in cost of ~~homes~~home sales revenues on our condensed consolidated ~~statement~~statements of operations.

~~The following table summarizes the changes~~ Changes in our warranty accrual for the three and six months ended June 30, 2021 and 2020 are detailed in the table below (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Beginning balance	$	13,480	$	9,727	$	13,824	$	9,731
Warranty expense provisions		2,382		2,274		4,680		4,051
Payments		(1,605)		(612)		(2,444)		(1,301)
Warranty adjustment		(395)		(168)		(2,198)		(1,260)
Ending balance	$	13,862	$	11,221	$	13,862	$	11,221

8. Debt

Our outstanding debt obligations included the following as of June 30, 2021 and December 31, 2020 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016
Beginning balance

$
3,057

$
2,754

$
2,479

$
2,622
Warranty reserve assumed in business combination

6,202

—

6,202

—
Warranty expense provisions

1,245

686

2,827

2,078
Payments

(710)

(554)

(1,458)

(1,194)
Warranty adjustment

(944)

(291)

(1,200)

(911)
Ending balance

$
8,850

$
2,595

$
8,850

$
2,595


	June 30,		December 31,
	2021		2020
6.750% senior notes, due May 2027⁽¹⁾	$	495,176	$	494,768
5.875% senior notes, due July 2025⁽¹⁾		397,170		396,821
Other financing obligations		8,908		3,286
Notes payable		901,254		894,875
Revolving line of credit		—		—
Mortgage repurchase facilities		159,776		259,050
Total debt	$	1,061,030	$	1,153,925

⁽¹⁾The carrying value of senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest expense over the respective terms of the senior notes.

~~9. Notes Payable and~~

Revolving Line of Credit

~~6.875% senior notes~~

~~In May 2014,~~On June 5, 2018, we ~~completed a private offering~~entered into an Amended and Restated Credit Agreement with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, the lenders party thereto and certain of ~~$200.0 million in aggregate principal amount of senior unsecured notes due 2022~~our subsidiaries (which we refer to as the ~~“Initial Senior Notes”) in reliance on Rule 144A~~“Amended and ~~Regulation S under the Securities Act of 1933, as amended (which we refer to as the “Securities Act”~~Restated Credit Agreement”). The Initial Senior Notes were issued under the Indenture, dated as of May 5, 2014, among the Company, our subsidiary guarantors party thereto, and U.S Bank National Association, as trustee (which we refer to as the “May 2014 Indenture,” as it may be supplemented or amended from time to time). The Initial Senior Notes were issued at, which provided us with a price equal to 99.239% of their principal amount, and we received net proceeds of approximately $193.3 million. In February 2015, we completed an offer to exchange $200.0 million in aggregate principal amount of our 6.875% senior notes due 2022, which are registered under the Securities Act (which we refer to as the “Initial Exchange Notes”), for all of the Initial Senior Notes. The terms of the Initial Exchange Notes are identical in all material respects to the Initial Senior Notes, except that the Initial Exchange Notes are registered under the Securities Act and the transfer restrictions, registration rights, and additional interest provisions that were applicable to the Initial Senior Notes do not apply to the Initial Exchange Notes.

In April 2015, we completed a private offering of an additional $60 million in aggregate principal amount of our 6.875% senior notes due 2022 (which we refer to as the “April 2015 Senior Notes”) in reliance on Rule 144A and Regulation S under the Securities Act. The April 2015 Senior Notes were issued at a price equal to 98.26% of their principal amount, and we received net proceeds of approximately $58.5 million. The April 2015 Senior Notes were additional notes issued under the May 2014 Indenture pursuant to which the Initial Exchange Notes were issued. In October 2015, we completed an offer to exchange $60.0 million in aggregate principal amount of our 6.875% senior notes due 2022, which are registered under the Securities Act (which we refer to as the “October 2015 Exchange Notes”), for all of the April 2015 Senior Notes. The terms of the October 2015 Exchange Notes are identical in all material respects to the April 2015 Senior Notes, except that the October 2015 Exchange Notes are registered under the Securities Act and the transfer restrictions, registration rights, and additional interest provisions that were applicable to the April 2015 Senior Notes do not apply to the October 2015 Exchange Notes.

In January 2017, we completed a private offering of an additional $125 million in aggregate principal amount of our 6.875% senior notes due 2022 (which we refer to as the “January 2017 Senior Notes”) in reliance on Rule 144A and Regulation S under the Securities Act. The January 2017 Senior Notes were issued at a price equal to 102.00% of their principal amount, and we received net proceeds of approximately $125.4 million. The January 2017 Senior Notes were additional notes issued under the May 2014 Indenture pursuant to which the Initial Exchange Notes and the October 2015 Exchange Notes were issued. In April 2017, we completed an offer to exchange $125.0 million in aggregate principal amount of our 6.875% senior notes due 2022, which are registered under the Securities Act (which we refer to as the “April 2017 Exchange Notes”), for all of the January 2017 Senior Notes. The terms of the April 2017 Exchange Notes are identical in all material respects to the January 2017 Senior Notes, except that the April 2017 Exchange Notes are registered under the Securities Act and the transfer restrictions, registration rights, and additional interest provisions that were applicable to the January 2017 Senior Notes do not apply to the April 2017 Exchange Notes.

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The Initial Exchange Notes, October 2015 Exchange Notes, and April 2017 Exchange Notes (which we refer to collectively, as the “Existing 6.875% Notes”) will be treated as a single series of notes under the May 2014 Indenture, and will vote as a single class of notes for all matters submitted to a vote of holders under the May 2014 Indenture.

The Existing 6.875% Notes are unsecured senior obligations which are guaranteed on an unsecured senior basis by certain of our current and future subsidiaries. The Existing 6.875% Notes contain certain restrictive covenants on issuing future secured debt and other transactions. The aggregate principal balance of the Existing 6.875% Notes is due May 2022, with interest only payments due semi-annually in May and November of each year.

~~As of September 30, 2017, the aggregate amount outstanding on the Existing 6.875% Notes was $378.9 million.~~

~~5.875% senior notes~~

In May 2017, we completed a private offering of $400 million in aggregate principal amount of our 5.875% Senior Notes due 2025 (which we refer to as the “May 2017 Senior Notes”) in reliance on Rule 144A and Regulation S under the Securities Act. The May 2017 Senior Notes were issued under the Indenture, dated as of May 12, 2017, among the Company, our subsidiary guarantors party thereto, and U.S Bank National Association, as trustee (which we refer to as the “May 2017 Indenture,” as it may be supplemented or amended from time to time). The May 2017 Senior Notes were issued at a price equal to 100.00% of their principal amount, and we received net proceeds of approximately $395.5 million.

~~As of September 30, 2017, we had $394.9 million outstanding on the May 2017 Senior Notes.~~

~~Other financing obligations~~

As of September 30, 2017, we had four insurance premium notes with an outstanding balance totaling $2.3 million. Two of these notes mature in December 2017 and the other two mature in February 2018. These insurance premium notes bear interest at a rate of 3.88%, 3.98%, 6.23%, and 6.23%, respectively. During the nine months ended September 30, 2017, we repaid one insurance premium note with an outstanding balance of $0.1 million. As of December 31, 2016, we had an aggregate of $6.0 million of outstanding insurance premium notes.

~~Revolving~~revolving line of credit of up to $640.0 million, and unless terminated earlier, was scheduled to mature on April 30, 2023.

On ~~October~~May 21, ~~2014,~~2021, we entered into a ~~credit agreement~~Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, and the lenders ~~from time to time~~ party ~~thereto (which, as modified as described below, we refer to as the “Credit Agreement”).~~thereto. The Second A&R Credit Agreement, ~~provided~~which amended and restated the Amended and Restated Credit Agreement, provides us with a senior unsecured revolving line of credit (the “Credit Facility”) of up to ~~$120~~$800 million, ~~(which, as modified as described below, we refer to as the “Revolving~~and unless terminated earlier, will mature on April 30, 2026. The Credit ~~Facility”).~~

Facility includes a $250.0 million sublimit for standby letters of credit. Under the terms of the Second A&R Credit Agreement, ~~we were~~the Company is entitled to request an increase in the size of the ~~Revolving~~ Credit Facility by an amount not exceeding ~~$80~~$200 million. If the existing lenders elect not to provide the full amount of a requested increase, we may invite one or more other lender(s) to become a party to the Credit Agreement, subject to the approval of the Administrative Agent and L/C Issuer. The Credit Agreement includes a letter of credit sublimit of $20 million. TheOur obligations under the ~~Revolving~~Second A&R Credit ~~Facility were~~Agreement are guaranteed by certain of our subsidiaries.

On July 31, 2015, we entered into a First Modification Agreement with Texas Capital Bank, National Association, as Administrative Agent, the lenders party thereto, and our subsidiary guarantors party thereto, which modified the Credit Agreement. The First Modification Agreement, among other things, (i) increased the Revolving Credit Facility from $120 million to $200 million, (ii) extended the maturity date of the Revolving Credit Facility from October 21, 2017 to October 21, 2018, (iii) admitted Bank of America, N.A. as a new lender under the Revolving Credit Facility, and ( iv) increased the amount of the increase in the size of the Revolving Credit Facility that we had the option to request, from time to time, from an amount not exceeding $80 million to an amount not exceeding $100 million, subject to the terms and conditions of the First Modification Agreement and the Credit Agreement.

On December 22, 2015, we entered into a Second Modification Agreement with Texas Capital Bank, National Association, as Administrative Agent, the lenders party thereto, and our subsidiary guarantors party thereto, which further modified the Credit Agreement. The Second Modification Agreement, among other things, (i) increased the Revolving Credit Facility from $200 million to $300 million, and (ii) admitted Compass Bank, an Alabama Banking Corporation, and U.S. Bank National Association as new lenders under the Revolving Credit Facility.

On August 19, 2016, we entered into a Third Modification Agreement with Texas Capital Bank, National Association, as Administrative Agent, the lenders party thereto, and our subsidiary guarantors party thereto, which further modified the Credit Agreement. The Third Modification Agreement, among other things, (i) increased the Revolving Credit Facility from $300 million to $380 million through our exercise of $80 million of the accordion feature of the Credit Agreement, (ii) admitted Citibank, N.A. and Flagstar Bank, FSB as new

~~Table of Contents~~

lenders under the Revolving Credit Facility, (iii) increased certain lenders’ respective commitments to the Revolving Credit Facility, and (iv) extended the term of the Revolving Credit Facility by one year to mature on October 21, 2019.

On February 24, 2017, we entered into a Commitment Increase Agreement with Texas Capital Bank, National Association, as Administrative Agent, Flagstar Bank, FSB (which we refer to as “Flagstar”), and our subsidiary guarantors party thereto. The Commitment Increase Agreement supplements the Credit Agreement, and (i) increased the Revolving Credit Facility from $380 million to $400 million through our exercise of the remaining $20 million of the accordion feature of the Credit Agreement, and (ii) increased Flagstar’s commitment to the Credit Facility.

Unless terminated earlier, the principal amount under the Revolving Credit Facility, together with all accrued unpaid interest and other amounts owing thereunder, if any, will be payable in full on October 21, 2019, the maturity date of the Revolving Credit Facility. Borrowings under the Revolving Credit Facility bear interest at a floating rate equal to the London Interbank Offered Rate plus an applicable margin between 2.75% and 3.25% per annum, or, in the Administrative Agent’s discretion, a base rate plus an applicable margin between 1.75% and 2.25% per annum. The “applicable margins” described above are determined by a schedule based on our leverage ratio, as defined in the Credit Agreement. The Credit Agreement also provides for fronting fees and letter of credit fees payable to the L/C Issuer and commitment fees payable to the Administrative Agent equal to 0.20% of the unused portion of the Revolving Credit Facility.

~~The~~A&R Credit Agreement contains customary affirmative and negative covenants (including limitations on our ability to grant liens, incur additional debt, pay dividends, redeem our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions), as well as customary events of default. ~~The~~Borrowings under the Second A&R Credit Agreement ~~also requires us~~bear interest at a floating rate equal to ~~maintain (i)~~the adjusted Eurodollar Rate plus an applicable margin between 2.05% and 2.65% per annum, and if made available in the Administrative Agent’s discretion, a ~~leverage ratio~~base rate plus an applicable margin between 1.05% and 1.65% per annum.

As of ~~not more than 1.75 to 1.0 as of~~June 30, 2021 and December 31, 2020, 0 amounts were outstanding under the last day of any fiscal quarter, based upon our and our subsidiaries’ (on a consolidated basis) ratio of debt to tangible net worth, (ii) an interest coverage ratio of not less than 1.50 to 1.0 for any four fiscal quarter period, based upon our and our subsidiaries’ (on a consolidated basis) ratio of EBITDA to cash interest expense, (iii) a consolidated tangible net worth of not less than the sum of $250 million, plus 50% of the net proceeds of any issuances of equity interests by us and the guarantors of the Revolving Credit Facility, ~~plus 50% of the amount of our~~ and our subsidiaries’ consolidated net income, (iv) liquidity of not less than $25 million, and (v) a risk asset ratio of not more than 1.25 to 1.0, based upon the ratio of the book value of all risk assets owned by us and our subsidiaries to our tangible net worth. As of September 30, 2017, we were in compliance with all ~~covenants under the Credit Agreement.~~covenants.

Mortgage Repurchase ~~Facility~~Facilities – Financial Services

On ~~April 10, 2017,~~May 4, 2018, September 14, 2018, and August 1, 2019, Inspire ~~Home Loans Inc. (which we refer to as “Inspire”), an indirect wholly-owned subsidiary of the Company,~~ entered into ~~a Master Repurchase Agreement~~mortgage warehouse facilities, with Comerica Bank, J.P. Morgan, and Wells Fargo, respectively. The mortgage warehouse lines of credit (which we refer to as the ~~“Master Repurchase Agreement”~~“repurchase facilities”) ~~with Branch Banking and Trust Company, as the buyer thereunder (which we refer to as the “Buyer”). The Master Repurchase Agreement provides~~, which were increased in 2020, provide Inspire with ~~a revolving mortgage loan~~uncommitted repurchase ~~facility~~facilities of up to ~~$25~~$350 million ~~(which we refer to~~ as ~~the “Repurchase Facility”). The primary purpose~~ of the Repurchase Facility is to provide financing and liquidity to Inspire by facilitating purchase transactions in which Inspire transfers eligible loans to the Buyer, and the Buyer transfers funds, subject to a simultaneous agreementJune 30, 2021, secured by the ~~Seller to repurchase from the Buyer such eligible~~mortgage loans (i) upon written notice to the Buyer by Inspire, (ii) on a prescribed date in the future, (iii) upon the occurrence of prescribed events, or (iv) on the Termination Date (as defined below). The purchase transactions are based on and subject to the terms and conditions set forth in the Master Repurchase Agreement. The maximum aggregate amount of the Buyer’s commitment to fund purchase transactions under the Repurchase Facility is $25 million (which we refer to as the “Commitment”), subject to certain sublimits. The Repurchase Facility and the Buyer’s Commitment thereunder expires on the earlier of (i) April 9, 2018, and (ii) the date when the Buyer’s Commitment is terminated pursuant to the Master Repurchase Agreement or by operation of law (which we refer to as the “Termination Date”).

Amounts outstanding under the ~~Repurchase Facility and Second Repurchase Facility~~repurchase facilities are not guaranteed by us or any of our ~~subsidiaries. Each of~~subsidiaries and the ~~Master Repurchase Agreement and Second Master Repurchase Agreement contains~~agreements contain various affirmative and negative covenants applicable to Inspire that are customary for arrangements of this type. As of ~~September~~June 30, ~~2017,~~2021 and December 31, 2020, we had $159.8 million and $259.1 million outstanding under these repurchase facilities, respectively, and were in compliance with all covenants ~~under each~~thereunder.

During the three months ended June 30, 2021 and 2020, we incurred interest expense on the repurchase facilities of $0.6 million and $0.5 million, respectively, which are included in financial services costs on our condensed consolidated statements of operations. During the ~~Repurchase Facility~~six months ended June 30, 2021 and ~~Second Repurchase Facility.~~2020, we incurred interest expense on the repurchase facilities of $1.4 million and $1.3 million, respectively.

As of September 30, 2017, there was an aggregate $27.5 million outstanding under both the Master Repurchase Agreement and Second Master Repurchase Agreement, and such outstanding amount was collateralized by the mortgage loans held for sale.

9. Interest

~~Table of Contents~~

~~10. Interest~~

Interest is capitalized to inventories while the related communities are being actively developed and until homes are completed. As our qualifying assets exceeded our outstanding debt during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, we capitalized all interest costs incurred during these periods, except for interest incurred on ~~capital leases of equipment related to~~ our ~~golf course operations.~~mortgage repurchase facilities.

Our interest costs are as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2021		2020		2021		2020
Interest capitalized beginning of period	$	35,668		26,577	$	28,935		21,533	$	57,509	$	70,837	$	60,838	$	67,069
Interest capitalized during period		13,338		6,743		31,902		19,772		15,058		18,168		30,106		35,621
Less: capitalized interest in cost of sales		(8,794)		(5,192)		(20,625)		(13,177)		(18,406)		(18,694)		(36,783)		(32,379)
Interest capitalized end of period	$	40,212		28,128	$	40,212		28,128	$	54,161	$	70,311	$	54,161	$	70,311

Level 2 —– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at the measurement date.

Mortgage loans held for sale – Fair value is based on quoted market prices for committed mortgage loans.

Derivative assets and liabilities – Derivative assets and liabilities are related to our financial services segment and fair value is based on market prices for similar instruments.

Level 3 —– Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at the measurement date.

Mortgage servicing rights - The fair value of the mortgage servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates.

Mortgage loans held for investment – The fair value of mortgage loans held for investment is calculated based on Level 3 analysis which incorporates information including the value of underlying collateral, from markets where there is little observable trading activity.

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020, respectively:


			June 30,		December 31,
	Balance Sheet Classification	Hierarchy	2021		2020

Mortgage loans held for sale	Mortgage loans held for sale	Level 2	$	235,712	$	282,639
Mortgage loans held for investment	Prepaid expenses and other assets	Level 3	$	10,823	$	8,727
Derivative assets	Prepaid expenses and other assets	Level 2	$	5,545	$	7,755
Mortgage servicing rights ⁽¹⁾	Prepaid expenses and other assets	Level 3	$	10,298	$	4,115
Derivative liabilities	Accrued expenses and other liabilities	Level 2	$	758	$	3,807

~~Table~~(1)The unobservable inputs used in the valuation of ~~Contents~~the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates, which were 9.0%, 9.8%, and 0.3%, respectively as of June 30, 2021, and 10.4%, 9.8%, and 0.6%, respectively, as of December 31, 2020. The high and low end of the range of unobservable inputs used in the valuation did not result in a significant change to the fair value measurement.

For the financial assets and liabilities that the Company does not reflect at fair value, the following present both their respective carrying ~~values~~value and ~~estimated~~ fair ~~values~~value at June 30, 2021 and December 31, 2020, respectively.



		June 30, 2021				December 31, 2020

	Hierarchy	Carrying		Fair Value		Carrying		Fair Value
Cash and cash equivalents	Level 1	$	419,416	$	419,416	$	394,001	$	394,001
Secured notes receivable ⁽¹⁾	Level 2	$	2,380	$	2,380	$	2,434	$	2,448
5.875% senior notes ⁽²⁾⁽³⁾	Level 2	$	397,170	$	412,500	$	396,821	$	417,500
6.750% senior notes ⁽²⁾⁽³⁾	Level 2	$	495,176	$	530,000	$	494,768	$	533,750
Revolving line of credit⁽⁴⁾	Level 2	$	—	$	—	$	—	$	—
Other financing obligations⁽⁴⁾⁽⁵⁾	Level 3	$	8,908	$	8,908	$	3,286	$	3,286
Mortgage repurchase facilities⁽⁴⁾	Level 2	$	159,776	$	159,776	$	259,050	$	259,050

(1)During the second quarter of ~~financial instruments (in thousands):~~

September 30, 2017

December 31, 2016

Hierarchy

Carrying

Fair Value

Carrying

Fair Value
Secured notes receivable(1)

Level 2

$
2,772

$
2,766

$
2,850

$
2,828
Mortgage loans held for sale(2)

Level 2

$
30,071

$
30,071

$
—

$
—

6.875% senior notes(3)

Level 2

$
378,901

$
398,512

$
253,089

$
260,090
5.875 % senior notes (3)

Level 2

$
394,851

$
395,850

$
—

$
—
Revolving line of credit(4)

Level 2

$
—

$
—

$
195,000

$
195,000
Insurance premium notes(4)

Level 2

$
2,264

$
2,264

$
5,999

$
5,999
Mortgage repurchase facilities(4)

Level 2

$
27,465

$
27,465

$
—

$
—

⁽¹⁾

~~Estimated fair value of the secured notes received was based on cash flow models discounted at market interest rates that considered the underlying risks of the note.~~

⁽²⁾

~~The mortgage loans held for sale are carried at fair value as of September 30, 2017, which was based on quoted market prices for those committed mortgage loans.~~

⁽³⁾

~~Estimated fair value of the senior notes as of September 30, 2017 and December 31, 2016 incorporated recent trading activity in inactive markets.~~

⁽⁴⁾

2021, the maturity of the secured note receivable was extended by two months to July of 2021, and the secured note receivable was paid in full in July 2021. Carrying amount ~~approximates fair value due to short-term nature and interest rate terms.~~

~~The carrying amount of cash and cash equivalents~~ approximates fair ~~value.~~ value due to short-term nature.

(2)Estimated fair value of the senior notes is based on recent trading activity in inactive markets.

(3)Carrying amounts include any associated unamortized deferred financing costs, premiums and discounts. As of June 30, 2021, these amounts totaled $4.8 million and $2.8 million for the 6.750% senior notes and 5.875% senior notes, respectively. As of December 31, 2020, these amounts totaled $5.2 million and $3.2 million for the 6.750% senior notes and 5.875% senior notes, respectively.

(4)Carrying amount approximates fair value due to short-term nature and interest rate terms.

(5)Insurance premium notes included in other financing obligations bore interest rates ranging from 3.200% 3.240% during the periods ended June 30, 2021 and December 31, 2020.

Non-financial assets and liabilities include items such as inventory and ~~long-lived assets~~property and equipment that are measured at fair value when acquired and ~~resulting from impairment,~~as a result of impairments, if deemed necessary.

~~13. Stock-Based Compensation~~

Nominal impairment charges were recorded in the three and six months ended June 30, 2021. During the three and six months ended ~~September~~June 30, ~~2017,~~2020, we recognized impairment charges of $0.9 million and $1.7 million, respectively. The estimated fair value of the communities were determined through a discounted cash flow approach utilizing Level 3 inputs. Changes in our cash flow projections in future periods related to these communities may change our conclusions on the recoverability of inventory in the future.

12. Stock-Based Compensation

During the six months ended June 30, 2021, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million shares of ~~restricted~~common stock, ~~units~~respectively, with a ~~weighted average~~ grant date fair value of ~~$20.36 per share, which~~$53.43, that primarily vest over a ~~two or five~~three year period from the grant date. These awards were issued in connection with our acquisition of UCP Inc., to UCP employees as replacement awards for the restricted stock units they held with UCP prior to the acquisition. period. During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, we also granted ~~0.5~~performance share units (which we refer to as “PSUs”) covering up to 0.2 million shares of ~~restricted~~common stock, ~~units~~assuming maximum level of performance, with a ~~weighted average~~ grant date fair value of ~~$21.64~~$58.28 per ~~share, which~~share.

Granted PSUs are subject to both service and performance vesting conditions. The quantity of shares that will ultimately vest ~~over~~for the PSUs ranges from 0% to 250% of a ~~one to five~~targeted number of shares for each participant and will be determined based on an achievement of a three year ~~period from~~pre-tax income performance goal. Approximately 0.8 million shares will vest if the ~~grant date.~~ defined maximum performance targets are met, and 0 shares will vest if the defined minimum performance targets are not met.

A summary of our outstanding ~~awards~~RSUs and PSUs, assuming current estimated level of ~~restricted common stock and restricted stock units~~performance achievement, are as follows (in thousands, except years):

As of September 30, 2017

Restricted Stock Awards

Restricted Stock Units

Total
Unvested awards/units

139

732

871
Unrecognized compensation cost

$
909

$
9,323

$
10,232
Period to recognize compensation cost

0.4 years

2.1 years

1.9 years (average)


	As of June 30, 2021
Unvested units		1,123
Unrecognized compensation cost	$	24,071
Weighted-average period to recognize compensation cost		2.0 years

During the three months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, we recognized stock-based compensation expense of ~~$2.6~~$4.2 million and ~~$1.6~~$6.9 million, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, we recognized stock-based compensation expense of ~~$6.5~~$7.2 million and ~~$5.1~~$8.6 million, respectively. Stock-based compensation expense is included in selling, general, and administrative expense on our condensed consolidated statements of operations.

During the three months ended June 30, 2020, we updated our recognition of stock-based compensation expense associated with previously granted PSU awards to reflect probable financial results as they relate to the performance goals of the awards. Accordingly, our estimate of the number of shares which will ultimately vest under our PSU awards increased by 0.2 million, and we recorded a cumulative catch-up adjustment to increase stock-based compensation expense of $2.9 million ($2.2 million net of tax), or $0.07 per share (basic and diluted) for the three months ended June 30, 2020.

13. Stockholders’ Equity

Our authorized capital stock consists of 100.0 million shares of common stock, par value $0.01 per share, and 50.0 million shares of preferred stock, par value $0.01 per share. As of ~~September~~June 30, ~~2017~~2021, and December 31, ~~2016,~~2020 there were ~~27.3~~33.8 million and ~~21.6~~33.4 million shares of common stock issued and outstanding, respectively, ~~inclusive of the restricted common stock issued.~~

~~We issued 29.2 thousand~~ and ~~0.2 million~~0 shares of ~~common~~preferred stock related to the vesting of restricted stock awards during the three and nine months ended September 30, 2017, respectively, under our First Amended & Restated 2013 Long-Term Incentive Plan. At our 2017 annual meeting of stockholders held onoutstanding.

On May 10, 2017, our stockholders approved the adoption of the Century Communities, Inc. 2017 Omnibus Incentive Plan (which we refer to as our “2017 Incentive Plan”), which replaced our First Amended & Restated 2013 Long-Term Incentive Plan. We had reserved a total of 1.8 million shares of our common stock for issuance under our First Amended & Restated 2013 Long-Term Incentive Plan, of which approximately 0.6 million shares rolled over into the 2017 Incentive Plan when

~~Table of Contents~~

it became effective. AsOn May 8, 2019, our stockholders approved the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan (which we refer to as our “Amended 2017 Incentive Plan”), which increased the number of ~~September 30, 2017, approximately 1.2 million~~ shares ~~remain available~~of our common stock authorized for issuance under the 2017 Incentive ~~Plan.~~Plan by an additional 1.631 million shares. We ~~also~~ issued ~~4.2~~0.7 million and 0.5 million shares of ~~our~~ common stock ~~in connection with our acquisition~~related to the vesting of ~~UCP Inc., as discussed in Note 3.~~RSUs during the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, approximately 0.7 million shares of common stock remained available for issuance under the Amended 2017 Incentive Plan.

On November ~~7, 2016,~~27, 2019, we entered into a Distribution Agreement with J.P. Morgan Securities LLC, BofA Securities, Inc., Citigroup Global Markets Inc., and Fifth Third Securities, Inc. (which we refer to as the “Distribution Agreement”) ~~with J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Citigroup Global Markets Inc. (which~~, as sales agents pursuant to which we ~~refer to collectively as the “Sales Agents”), relating to our common stock. Under the Distribution Agreement, we are authorized to~~may offer and sell shares of our common stock having an aggregate offering price of up to ~~$50.0~~$100.0 million from time to time through any of ~~our Sales Agents~~the sales agents party thereto in ~~“at~~“at-the-market” offerings, in accordance with the ~~market” offerings. On August 9, 2017, we entered into a second~~terms and conditions set forth in the Distribution Agreement. This Distribution Agreement, ~~(which we refer to as the “Second Distribution Agreement”) with the Sales Agents, pursuant to~~ which ~~we may offer~~superseded and ~~sell from time to time up to~~replaced a prior similar distribution agreement, had all $100.0 million ~~in “at the market” offerings. During the three and nine months ended September~~available for sale as of June 30, ~~2017, we sold and issued an aggregate of 0.4 million and 1.4 million~~2021. We did 0t sell or issue any shares of our common stock during the three and six months ended June 30, 2021 and 2020, respectively. The Distribution Agreement will remain in full force and effect until terminated by either party pursuant to the terms of the agreement or such date that the maximum offering amount has been sold in accordance with the terms of the agreement. Sales cannot be made under the Distribution Agreement unless and ~~Second Distribution Agreement, respectively,~~until we file a prospectus supplement to our recently filed shelf registration statement that was filed on July 1, 2021, which ~~provided net proceeds~~prospectus supplement we intend to file in the near future.

On November 6, 2018, we authorized a stock repurchase program, under which we may repurchase up to 4,500,000 shares of ~~$10.0~~our outstanding common stock. During the three and six months ended June 30, 2021 and 2020, we did not repurchase any shares of common stock. The maximum number of shares available to be purchased under the stock repurchase program as of June 30, 2021 was 3,812,939 shares.

On May 19, 2021, our Board of Directors announced the approval of the initiation of a quarterly cash dividend. Additionally, on May 19, 2021, our Board of Directors declared our first quarterly cash dividend of $0.15 per share and totaling $5.1 million, ~~and $34.6 million, respectively, and, in connection with such sales,~~which was paid ~~total commissions and fees~~on June 16, 2021 to ~~the Sales Agents~~stockholders of ~~$0.2 million and $0.7 million, respectively.~~record of our common stock as of June 2, 2021.

~~15.~~14. Earnings Per Share

We use the two-class method of calculating earnings per share (which we refer to as “EPS”) as our non-vested restricted stock awards have non-forfeitable rights to dividends and, accordingly, represent a participating security. The two-class method is an earnings allocation method under which EPS is calculated for each class of common stock and participating security considering both dividends declared (or accumulated) and participation rights in undistributed earnings as if all such earnings had been distributed during the period.

We use the treasury stock method to calculate ~~the dilutive effect of~~earnings per share as our ~~restricted stock units as the restricted stock units~~currently issued non-vested RSUs and PSUs do not have participating rights.

The following table sets forth the computation of basic and diluted EPS for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (in thousands, except share and per share information):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2021		2020		2021		2020
Numerator
Net income	$	9,470	$	13,342	$	33,100	$	34,467	$	117,910	$	38,450	$	219,562	$	64,576
Less: Undistributed earnings allocated to participating securities		(52)		(241)		(289)		(785)
Net income allocable to common stockholders	$	9,418	$	13,101	$	32,811	$	33,682
Denominator
Weighted average common shares outstanding - basic		25,445,552		20,673,521		23,038,390		20,643,682		33,738,586		33,340,184		33,651,727		33,274,056
Dilutive effect of restricted stock units		280,585		148,545		236,930		88,248		218,052		121,510		269,212		195,013
Weighted average common shares outstanding - diluted		25,726,137		20,822,066		23,275,320		20,731,930		33,956,638		33,461,694		33,920,939		33,469,069
Earnings per share:
Basic	$	0.37	$	0.63	$	1.42	$	1.63	$	3.49	$	1.15	$	6.52	$	1.94
Diluted	$	0.37	$	0.63	$	1.41	$	1.62	$	3.47	$	1.15	$	6.47	$	1.93

17Under various insurance policies, we have the ability to recoup costs in excess of applicable self-insured retentions. Estimates of such amounts are recorded in other assets on our condensed consolidated balance sheet when recovery is probable.

Supplemental Condensed Consolidated Balance Sheet

As of September 30, 2017 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Assets

Cash and cash equivalents

$
35,881

$
16,278

$
6,363

$
—

$
58,522
Cash held in escrow

—

41,740

522

—

42,262
Accounts receivable

11,306

9,312

192

—

20,810
Investment in consolidated subsidiaries

1,382,958

—

—

(1,382,958)

—
Inventories

—

1,352,989

—

—

1,352,989
Mortgage loans held for sale

—

—

30,071

—

30,071
Prepaid expenses and other assets

2,859

59,129

374

—

62,362
Deferred tax asset, net

6,403

—

—

—

6,403
Property and equipment, net

2,409

10,760

489

—

13,658
Investment in unconsolidated subsidiaries

20,677

—

—

20,677
Amortizable intangible assets, net

—

1,889

—

—

1,889
Goodwill

—

21,365

—

—

21,365
Total assets

$
1,462,493

$
1,513,462

$
38,011

$
(1,382,958)

$
1,631,008
Liabilities and stockholders’ equity

Liabilities:

Accounts payable

$
(17)

$
16,707

$
120

$
—

$
16,810
Accrued expenses and other liabilities

35,746

121,251

708

—

157,705
Notes payable

773,752

2,264

—

—

776,016
Revolving line of credit

—

—

—

—

—
Mortgage repurchase facility

—

—

27,465

—

27,465
Total liabilities

809,481

140,222

28,293

—

977,996
Stockholders’ equity:

653,012

1,373,240

9,718

(1,382,958)

653,012
Total liabilities and stockholders’ equity

$
1,462,493

$
1,513,462

$
38,011

$
(1,382,958)

$
1,631,008

Supplemental Condensed Consolidated Balance Sheet

As of December 31, 2016 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Assets

Cash and cash equivalents

$
14,637

$
8,646

$
6,167

$
—

$
29,450
Cash held in escrow

—

20,044

—

—

20,044
Accounts receivable

2,980

2,749

—

—

5,729
Investment in consolidated subsidiaries

884,665

—

—

(884,665)

—
Inventories

—

857,885

—

—

857,885
Prepaid expenses and other assets

14,628

25,662

167

—

40,457
Property and equipment, net

1,166

10,224

22

—

11,412
Investment in unconsolidated subsidiaries

18,275

—

18,275
Amortizable intangible assets, net

—

2,911

—

—

2,911
Goodwill

—

21,365

—

—

21,365
Total assets

$
936,351

$
949,486

$
6,356

$
(884,665)

$
1,007,528
Liabilities and stockholders’ equity

Liabilities:

Accounts payable

$
257

$
15,575

$
(124)

$
—

$
15,708
Accrued expenses and other liabilities

12,587

49,697

30

—

62,314
Deferred tax liability

1,782

—

—

—

1,782
Senior and other notes payable

253,089

5,999

—

—

259,088
Revolving line of credit

195,000

—

—

—

195,000
Total liabilities

462,715

71,271

(94)

—

533,892
Stockholders’ equity:

473,636

878,215

6,450

(884,665)

473,636
Total liabilities and stockholders’ equity

$
936,351

$
949,486

$
6,356

$
(884,665)

$
1,007,528

Supplemental Condensed Consolidated Statement of Operations

For the Three Months Ended September 30, 2017 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Revenues

Homebuilding revenues

Home sales revenues

$
—

$
374,935

$
—

$
—

$
374,935
Land sales and other revenues

—

1,826

—

—

1,826

—

376,761

—

—

376,761
Financial services revenue

—

—

2,955

—

2,955
Total revenues

—

376,761

2,955

—

379,716
Homebuilding cost of revenues

Cost of homes sales revenues

—

(311,365)

—

—

(311,365)
Cost of land sales and other revenues

—

(2,104)

—

—

(2,104)

—

(313,469)

—

—

(313,469)
Financial services costs

—

—

(2,450)

—

(2,450)
Selling, general and administrative

(13,342)

(32,823)

—

—

(46,165)
Acquisition expense

(7,205)

—

—

—

(7,205)
Equity in earnings from consolidated subsidiaries

20,470

—

—

(20,470)

—
Equity in income of unconsolidated subsidiaries

3,716

—

—

—

3,716
Other income (expense)

495

518

—

—

1,013
Income before income tax expense

4,134

30,987

505

(20,470)

15,156
Income tax expense

5,336

(10,845)

(177)

��
—

(5,686)
Net income

$
9,470

$
20,142

$
328

$
(20,470)

$
9,470

Supplemental Condensed Consolidated Statement of Operations

For the Three Months Ended September 30, 2016 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Revenues

Homebuilding revenues

Home sales revenues

$
—

$
248,075

$
—

$
—

$
248,075
Land sales and other revenues

—

5,338

—

—

5,338

—

253,413

—

—

253,413
Financial services revenue

—

—

—

—

—
Total revenues

—

253,413

—

—

253,413
Homebuilding cost of revenues

Cost of homes sales revenues

—

(197,650)

—

—

(197,650)
Cost of land sales and other revenues

—

(5,420)

—

—

(5,420)

—

(203,070)

—

—

(203,070)
Financial services costs

—

—

—

—

—
Selling, general and administrative

(6,846)

(24,098)

—

—

(30,944)
Acquisition expense

(53)

—

—

—

(53)
Equity in earnings from consolidated subsidiaries

17,303

—

—

(17,303)

—
Other income (expense)

10

375

—

—

385
Income before income tax expense

10,414

26,620

—

(17,303)

19,731
Income tax expense

2,928

(9,317)

—

—

(6,389)
Net income

$
13,342

$
17,303

$
—

$
(17,303)

$
13,342

Supplemental Condensed Consolidated Statement of Operations

For the Nine Months Ended September 30, 2017 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Revenues

Homebuilding revenues

Home sales revenues

$
—

$
888,942

$
—

$
—

$
888,942
Land sales and other revenues

—

6,216

—

—

6,216

—

895,158

—

—

895,158
Financial services revenue

—

—

4,697

—

4,697
Total revenues

—

895,158

4,697

—

899,855
Homebuilding cost of revenues

Cost of homes sales revenues

—

(727,577)

—

—

(727,577)
Cost of land sales and other revenues

—

(4,994)

—

—

(4,994)

—

(732,571)

—

—

(732,571)
Financial services costs

—

—

(4,648)

—

(4,648)
Selling, general and administrative

(30,876)

(82,721)

—

—

(113,597)
Acquisition expense

(8,645)

—

—

—

(8,645)
Equity in earnings from consolidated subsidiaries

52,869

—

—

(52,869)

—
Equity in income of unconsolidated subsidiaries

7,648

—

—

—

7,648
Other income (expense)

852

1,386

36

—

2,274
Income before income tax expense

21,848

81,252

85

(52,869)

50,316
Income tax expense

11,252

(28,438)

(30)

—

(17,216)
Net income

$
33,100

$
52,814

$
55

$
(52,869)

$
33,100

Supplemental Condensed Consolidated Statement of Operations

For the Nine Months Ended September 30, 2016 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Revenues

Homebuilding revenues

Home sales revenues

$
—

$
686,335

$
—

$
—

$
686,335
Land sales and other revenues

—

10,816

—

—

10,816

—

697,151

—

—

697,151
Financial services revenue

—

—

—

—

—
Total revenues

—

697,151

—

—

697,151
Homebuilding cost of revenues

Cost of homes sales revenues

—

(549,886)

—

—

(549,886)
Cost of land sales and other revenues

—

(9,433)

—

—

(9,433)

—

(559,319)

—

—

(559,319)
Financial services costs

—

—

—

—

—
Selling, general and administrative

(18,323)

(69,189)

—

—

(87,512)
Equity in earnings from consolidated subsidiaries

45,514

—

—

(45,514)

—
Acquisition expense

(466)

—

—

—

(466)
Other income (expense)

24

1,379

—

—

1,403
Income before income tax expense

26,749

70,022

—

(45,514)

51,257
Income tax expense

7,718

(24,508)

—

—

(16,790)
Net income

$
34,467

$
45,514

$
—

$
(45,514)

$
34,467

Supplemental Condensed Consolidated Statement of Cash Flows

For the Nine Months Ended September 30, 2017 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Net cash provided by/(used in) operating activities

$
(8,164)

$
(92,577)

$
(30,014)

$
—

$
(130,755)
Net cash used in investing activities

$
(434,617)

$
(63,905)

$
(467)

$
432,867

$
(66,122)
Financing activities

Borrowings under revolving credit facilities

$
75,000

$
—

$
—

$
—

$
75,000
Payments on revolving credit facilities

(270,000)

—

—

—

(270,000)
Proceeds from issuance of senior notes

523,000

—

—

—

523,000
Repyment of debt assumed in business combination

—

(151,919)

—

—

(151,919)
Principal payments on notes payable

—

(4,735)

—

—

(4,735)
Debt issuance costs

(3,731)

—

—

—

(3,731)
Repurchases of common stock upon vesting of restricted stock awards

(4,141)

—

—

—

(4,141)
Payments from (and advances to) parent/subsidiary

108,887

320,768

3,212

(432,867)

—
Net proceeds from mortgage credit facility

—

—

27,465

—

27,465
Net proceeds from issuances of common stock

35,010

—

—

—

35,010
Net cash provided by financing activities

$
464,025

$
164,114

$
30,677

$
(432,867)

$
225,949
Net decrease in cash and cash equivalents

$
21,244

$
7,632

$
196

$
—

$
29,072
Cash and cash equivalents

Beginning of period

$
14,637

$
8,646

$
6,167

$
—

$
29,450
End of period

$
35,881

$
16,278

$
6,363

$
—

$
58,522

Supplemental Condensed Consolidated Statement of Cash Flows

For the Nine Months Ended September 30, 2016 (in thousands)

Guarantor

Non Guarantor

Elimination

Consolidated

CCS

Subsidiaries

Subsidiaries

Entries

CCS
Net cash provided by/(used in) operating activities

$
(17,969)

$
(43,431)

$
—

$
—

$
(61,400)
Net cash used in investing activities

$
(42,791)

$
(4,685)

$
—

$
42,476

$
(5,000)
Financing activities

Borrowings under revolving credit facilities

$
145,000

$
—

$
—

$
—

$
145,000
Payments on revolving credit facilities

(90,000)

—

—

—

(90,000)
Proceeds from insurance notes payable

—

11,612

—

—

11,612
Principal payments on notes payable

—

(7,582)

—

—

(7,582)
Debt issuance costs

(1,156)

—

—

—

(1,156)
Repurchases of common stock under our stock repurchase program

(2,393)

—

—

—

(2,393)
Repurchases of common stock upon vesting of restricted stock awards

(1,014)

—

—

—

(1,014)
Payments from (and advances to) parent/subsidiary

—

42,476

—

(42,476)

—
Net cash provided by financing activities

$
50,437

$
46,506

$
—

$
(42,476)

$
54,467
Net decrease in cash and cash equivalents

$
(10,323)

$
(1,610)

$
—

$
—

$
(11,933)
Cash and cash equivalents

Beginning of period

$
22,002

$
7,285

$
—

$

$
29,287
End of period

$
11,679

$
5,675

$
—

$
—

$
17,354


~~Inventories~~	$	~~57,277~~
~~Prepaid expenses and other assets~~		~~1,050~~
~~Property and equipment, net~~		~~142~~
~~Total assets~~	$	~~58,469~~

~~Accounts payable~~	$	~~4,716~~
~~Accrued expenses and other liabilities~~		~~2,253~~
~~Total liabilities~~		~~6,969~~
~~Purchase price/Net equity~~	$	~~51,500~~

significantly from those expressed in any forward-looking statement. Statements regarding the following subjects, among others, may be ~~forward-looking:~~

~~economic changes either nationally or in the markets in which we operate, including declines in employment, volatility of mortgage interest rates and inflation;~~

~~a downturn in the homebuilding industry, including a decline in real estate values or market conditions resulting in impairment of our assets;~~

~~changes in assumptions used to make industry forecasts;~~

~~continued volatility and uncertainty in the credit markets and broader financial markets;~~

~~our future operating results and financial condition;~~

~~our business operations;~~

~~changes in our business and investment strategy;~~

~~availability of land to acquire, and our ability to acquire such land on favorable terms or at all;~~

~~availability, terms and deployment of capital;~~

~~availability of mortgage financing or an increase in the number of foreclosures in the market;~~

~~shortages of or increased prices for labor, land or raw materials used in housing construction;~~

~~delays in land development or home construction resulting from adverse weather conditions or other events outside our control;~~

~~impact of construction defect, product liability, and/or home warranty claims, including the adequacy of accruals and the applicability and sufficiency of our insurance coverage;~~

~~changes in, or the failure or inability to comply with, governmental laws and regulations;~~

~~the timing of receipt of regulatory approvals and the opening of projects;~~

~~the degree and nature of our competition;~~

~~our leverage and debt service obligations;~~

~~our ability to successfully integrate the acquired businesses and realize projected cost savings and other benefits from our merger transaction with UCP, Inc.;~~

~~availability of qualified personnel and our ability to retain our key personnel; and~~

~~changes in GAAP.~~

forward-looking and subject to risks and uncertainties including among others:

~~The forward-looking~~the impact of the COVID-19 pandemic on our business operations, operating results and financial condition, as well as the general economy and housing market in particular;

economic changes, either nationally or in the markets in which we operate, including declines in employment, volatility of mortgage interest rates and inflation;

shortages of or increased prices for labor, land or raw materials, including lumber, used in housing construction;

a downturn in the homebuilding industry, including a reduction in demand or a decline in real estate values or market conditions resulting in an adverse impact on our business, operating results and financial conditions, including an impairment of our assets;

changes in assumptions used to make industry forecasts, population growth rates, or trends affecting housing demand or prices;

continued volatility and uncertainty in the credit markets and broader financial markets;

our future operating results and financial condition;

our business operations;

changes in our business and investment strategy;

availability and price of land to acquire, and our ability to acquire such land on favorable terms or at all;

availability, terms and deployment of capital;

availability or cost of mortgage financing or an increase in the number of foreclosures in the market;

delays in land development or home construction resulting from adverse weather conditions or other events outside our control;

impact of construction defect, product liability, and/or home warranty claims, including the adequacy of accruals and the applicability and sufficiency of our insurance coverage;

changes in, or the failure or inability to comply with, governmental laws and regulations;

the timing of receipt of regulatory approvals and the opening of projects;

the impact and cost of compliance with evolving environmental, health and safety and other laws and regulations and third-party challenges to required permits and other approvals and potential legal liability in connection therewith;

the degree and nature of our competition;

our leverage, debt service obligations and exposure to changes in interest rates;

our ability to continue to fund and succeed in our mortgage lending business and the additional risks involved in that business;

availability of qualified personnel and contractors and our ability to retain key personnel and contractor relationships;

taxation and tax policy changes, tax rate changes, new tax laws, new or revised tax law interpretations or guidance; and

changes in United States generally accepted accounting principles (which we refer to as “GAAP”).

Forward-looking statements are based on our beliefs, assumptions and expectations of future events, taking into account all information currently available to us. Forward-looking statements are not guarantees of future events or of our performance. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these events and factors are described above and in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Part ~~II,~~I, Item 1A. Risk Factors” in ~~this~~our Annual Report on Form ~~10-Q,~~10-K, and other risks and uncertainties detailed in this report, including “Part II, Item 1A. Risk Factors”, and our other reports and filings with the SEC. If a change occurs, our business, financial condition, liquidity, cash flows and results of operations may vary materially from those expressed in or implied by our forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Therefore, you should not rely on these forward-looking statements as of any date subsequent to the date of this Form 10-Q.

As used in this Form 10-Q, references to “we,” “us,” ~~“our”~~“our,” “Century” or the “Company” refer to Century Communities, Inc., a Delaware corporation, and, unless the context otherwise requires, its subsidiaries and affiliates.

~~Table~~The following discussion and analysis of ~~Contents~~our financial condition and results of operations is intended to help the reader understand our Company, business, operations and present business environment and is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. We use certain non-GAAP financial measures that we believe are important for purposes of comparison to prior periods. This information is also used by our management to measure the profitability of our ongoing operations and analyze our business performance and trends. Some of the numbers included herein have been rounded for the convenience of presentation.

Overview

~~Overview~~

~~We are~~Century is engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in ~~metropolitan areas in California, Colorado, Georgia, Nevada, North Carolina, South Carolina, Tennessee, Texas, Utah, and Washington.~~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. Our homebuilding operations are organized into the following ~~four~~five reportable ~~segments based on the geographic regions in which we operate:~~segments: West, Mountain, Texas, Southeast, and ~~the Southeast.~~Century Complete. Additionally, our indirect wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, and ~~Parkway Title,~~IHL Home Insurance Agency, LLC, which provide mortgage, title, and ~~title~~insurance services, respectively, primarily to our ~~home buyers, respectively,~~homebuyers have been identified as our Financial Services segment.

While we offer homes that appeal to a broad range of entry-level, move-up, and lifestyle homebuyers, our offerings are heavily weighted towards providing affordable housing options in each of our homebuyer segments. Additionally, we prefer building move-in-ready homes over built-to-order homes, which we believe allows for a faster construction process, advantageous pricing with subcontractors, and shortened time period from home sale to home delivery, thus allowing us to more appropriately price the homes and deploy our capital.

Impact of COVID-19 Pandemic

The outbreak of the novel coronavirus, (COVID-19), which was declared a pandemic by the World Health Organization on March 11, 2020, created significant volatility, disruption, and uncertainty across the nation and abroad.

The homebuilding industry started to experience slowing sales trends in mid-March through April of 2020 at the outset of the widespread uncertainty concerning the pandemic. However, home sales sharply rebounded in May and June of 2020, aided by historically low interest rates, lack of supply, and renewed desire from customers to move out of urban areas and/or apartments and into new homes in suburban areas, which desire was likely accelerated by the COVID-19 pandemic. These positive trends and market dynamics continued throughout the remainder of 2020 and throughout the first half of 2021.

While these positive trends and market dynamics continued throughout the first half of 2021, we recognize that long term macro-economic effects of the pandemic that could ultimately impact the homebuilding industry have yet to be known. There is still uncertainty regarding the extent and duration of the COVID-19 pandemic and future increases in COVID-19 positive cases could result in altering of the “re-opening” plans of numerous state and local municipalities, which may include government restrictions, such as “stay-at-home” or “shelter-in-place” directives, quarantines, travel advisories and social distancing measures. Despite overall strong demand and sales of our homes during the first and second quarters of 2021, continued future demand is uncertain as economic conditions are uncertain, in particular with respect to unemployment levels, and the extent to which and how long COVID-19 and related government directives, actions, and economic relief efforts will impact the U.S. economy, unemployment levels, financial markets, credit and mortgage markets, consumer confidence, interest rates, availability of mortgage loans to homebuyers, and other factors, including those described elsewhere in this report. A decrease in demand for our homes would adversely affect our operating ~~segment.~~

~~On August 4, 2017, we acquired UCP, Inc.~~ ~~UCP is a homebuilder and land developer with expertise~~results in ~~residential land acquisition, development and entitlement,~~future periods, as well as ~~home design, construction~~have a direct effect on the origination volume of and ~~sales, with operations~~revenues from our Financial Services segment. In addition, because the full magnitude and duration of the COVID-19 pandemic is uncertain and difficult to predict, changes in our cash flow projections may change our conclusions on the recoverability of inventories in the ~~States of California, Washington, North Carolina, South Carolina and Tennessee.~~ ~~The merger was unanimously approved~~future.

Driven by the ~~board~~continued strong demand for our homes throughout the first and second quarters of ~~directors~~2021, we ended the second quarter of ~~both~~2021 with no amounts outstanding under our revolving line of credit, $419.4 million of cash and cash equivalents, $37.6 million of cash held in escrow, and a net homebuilding debt to net capital ratio of 23.0%. Additionally, we increased our land acquisition and development activities during the ~~Company~~first six months of 2021 to bolster our lot pipeline and ~~UCP,~~support future community growth, which resulted in 65,610 lots owned and ~~was~~controlled at June 30, 2021, a 88.4% increase as compared to June 30, 2020 and a 31.3% increase as compared to December 31, 2020. Although the trajectory and strength of our markets have continued to remain strong and allowed us to pass on increased costs through price increases and increase our margins, we continued to experience materials and labor supply cost pressures during the first six months of 2021 that could negatively impact our margins in future periods. While the impact of the COVID-19 pandemic will continue to evolve and at any given time recovery could be slowed or reversed by a number of factors, we believe we are well positioned from a cash and liquidity standpoint not only to operate in an uncertain environment, but also ~~approved by UCP stockholders on August 1, 2017. In connection~~to continue to grow with the ~~merger, each share~~market and pursue other ways to properly deploy capital to enhance returns, which may include taking advantage of UCP Class A common stock outstanding immediately prior to the closing was converted into $5.32 in cash and 0.2309 of a newly issued share of our common stock. Approximately 4.2 million shares of our common stock were issued in connection with the merger and $97.7 million was paid in cash. Outstanding UCP restricted stock units were also converted into an aggregate of 0.2 million of Century Communities restricted stock units pursuant to the merger. We determined that the total fair value of these awards was $6.2 million, of which $1.1 million was attributable to services performed by UCP employees prior to the merger and,debt refinancing and/or strategic opportunities as such, was included as consideration. Because the closing of the merger occurred during the quarter ended September 30, 2017, the discussion included under “Results of Operations” below includes results of UCP only for the period from August 4, 2017 through September 30, 2017. ~~We have adjusted prior period consolidated and segment information, where applicable, to conform to the current period presentation.~~they arise.

Results of Operations

During the three and six months ended ~~September~~June 30, ~~2017,~~2021, we delivered ~~968~~2,771 and 5,568 homes, respectively, with an average sales price of ~~$387.3 thousand.~~$362.6 thousand and $352.7 thousand, respectively. These deliveries represent increases of 11.7% and 28.2%, respectively, as compared to the three and six months ended June 30, 2020 and represent a 20.3% and 16.1% increase in average sales price as compared to the three and six months ended June 30, 2020. During the ~~same period,~~three and six months ended June 30, 2021, we generated approximately ~~$374.9 million~~$1.0 billion and $2.0 billion in home sales revenues, respectively, approximately ~~$15.2~~$152.1 million and $283.2 million in income before income tax expense, respectively, and approximately ~~$9.5~~$117.9 million and $219.6 million in net ~~income.~~income, respectively, in each case representing substantial increases over the prior year periods.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, our new home contracts, net of cancelations, totaled ~~914~~3,120 and ~~2,892,~~6,575, respectively, a ~~45.5%~~17.1% and ~~26.2%~~30.1% increase over the same respective periods in ~~2016, respectively.~~2020. As of ~~September~~June 30, ~~2017,~~2021, we had a backlog of ~~1,664 sold but unclosed~~4,446 homes, a ~~67.7%~~60.0% increase as compared to ~~September~~June 30, ~~2016,~~2020, representing approximately ~~$689.3~~$1,762.5 million in sales value, an ~~81.0%~~83.1% increase as compared to ~~September~~June 30, ~~2016.~~ 2020.
‎

Table of Contents

The following table summarizes our results of ~~operation~~operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~ 2020.


(in thousands, except per share amounts)	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Consolidated Statements of Operations:
Revenue
Home sales revenues	$	1,004,789		$	747,415		$	1,964,068		$	1,320,125
Land sales and other revenues		8,258			3,307			23,928			23,411
		1,013,047			750,722			1,987,996			1,343,536
Financial services revenues		29,865			25,722			63,485			35,517
Total revenues		1,042,912			776,444			2,051,481			1,379,053
Homebuilding cost of revenues
Cost of home sales revenues		(764,668)			(620,655)			(1,521,175)			(1,091,181)
Cost of land sales and other revenues		(7,000)			(2,384)			(17,020)			(16,551)
		(771,668)			(623,039)			(1,538,195)			(1,107,732)
Financial services costs		(18,168)			(12,744)			(36,469)			(22,330)
Selling, general, and administrative		(99,656)			(86,706)			(191,807)			(160,325)
Inventory impairment and other		(41)			(910)			(41)			(1,691)
Other income (expense)		(1,245)			(2,942)			(1,786)			(2,784)
Income before income tax expense		152,134			50,103			283,183			84,191
Income tax expense		(34,224)			(11,653)			(63,621)			(19,615)
Net income	$	117,910		$	38,450		$	219,562		$	64,576
Earnings per share:
Basic	$	3.49		$	1.15		$	6.52		$	1.94
Diluted	$	3.47		$	1.15		$	6.47		$	1.93
Adjusted diluted earnings per share⁽¹⁾	$	3.47		$	1.21		$	6.47		$	2.00
Other Operating Information (dollars in thousands):
Number of homes delivered		2,771			2,480			5,568			4,344
Average sales price of homes delivered	$	362.6		$	301.4		$	352.7		$	303.9
Homebuilding gross margin percentage⁽²⁾		23.9	%		16.9	%		22.5	%		17.2	%
Adjusted homebuilding gross margin excluding interest and inventory impairment and other ⁽¹⁾		25.7	%		19.5	%		24.4	%		19.8	%
Backlog at end of period, number of homes		4,446			2,778			4,446			2,778
Backlog at end of period, aggregate sales value	$	1,762,465		$	962,751		$	1,762,465		$	962,751
Average sales price of homes in backlog	$	396.4		$	346.6		$	396.4		$	346.6
Net new home contracts		3,120			2,664			6,575			5,052
Selling communities at period end⁽³⁾		184			223			184			223
Average selling communities⁽³⁾		179			231			187			226
Total owned and controlled lot inventory		65,610			34,832			65,610			34,832
Adjusted EBITDA⁽¹⁾	$	173,258		$	74,034		$	325,379		$	125,840
Adjusted income before income tax expense⁽¹⁾	$	152,175		$	52,597		$	283,224		$	87,466
Adjusted net income⁽¹⁾	$	117,987		$	40,343		$	219,594		$	67,088
Net homebuilding debt to net capital ⁽¹⁾		23.0	%		37.5	%		23.0	%		37.5	%

⁽¹⁾This is a non-GAAP financial measure and should not be used as a substitute for the Company’s operating results prepared in accordance with GAAP. See the reconciliations to the most comparable GAAP measure and other information under “Non-GAAP Financial Measures.” An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

(unaudited)

Consolidated Statements of Operations:

Revenue

Home sales revenues

$
374,935

$
248,075

$
888,942

$
686,335

Land sales revenues

1,826

5,338

6,216

10,816

376,761

253,413

895,158

697,151

Financial services revenue

2,955

—

4,697

—

Total revenues

379,716

253,413

899,855

697,151

Homebuilding cost of revenues

Cost of home sales revenues

(311,365)

(197,650)

(727,577)

(549,886)

Cost of land sales and other revenues

(2,104)

(5,420)

(4,994)

(9,433)

(313,469)

(203,070)

(732,571)

(559,319)

Financial services costs

(2,450)

—

(4,648)

—

Selling, general, and administrative

(46,165)

(30,944)

(113,597)

(87,512)

Acquisition expense

(7,205)

(53)

(8,645)

(466)

Equity in income of unconsolidated subsidiaries

3,716

—

7,648

—

Other income (expense)

1,013

385

2,274

1,403

Income before income tax expense

15,156

19,731

50,316

51,257

Income tax expense

(5,686)

(6,389)

(17,216)

(16,790)

Net income

$
9,470

$
13,342

$
33,100

$
34,467

Earnings per share:

Basic

$
0.37

$
0.63

$
1.42

$
1.63

Diluted

$
0.37

$
0.63

$
1.41

$
1.62

Adjusted diluted earnings per share(1)

$
0.73

$
0.63

$
1.87

$
1.65

Other Operating Information (dollars in thousands):

Number of homes delivered

968

706

2,329

2,013

Average sales price of homes delivered

$
387.3

$
351.4

$
381.7

$
341.0

Homebuilding gross margin percentage

17.0
%

20.3
%

18.2
%

19.9
%
Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory (1)

21.0
%

22.5
%

21.2
%

21.8
%
Cancellation rate

24
%

22
%

19
%

19
%
Backlog at end of period, number of homes

1,664

992

1,664

992

Backlog at end of period, aggregate sales value

$
689,338

$
380,926

$
689,338

$
380,926

Average sales price of homes in backlog

$
414.3

$
384.0

$
414.3

$
384.0

Net new home contracts

914

628

2,892

2,291

Selling communities at period end

107

87

107

87

Average selling communities

102

90

92

91

Total owned and controlled lot inventory

31,996

17,203

31,996

17,203

Adjusted EBITDA(1)

$
32,451

$
26,441

$
83,233

$
68,971

Net debt to net capital(1)

51.8
%

47.6
%

51.8
%

47.6
%

~~(1)~~ ~~Non-GAAP~~⁽²⁾Homebuilding gross margin percentage is inclusive of a $0.9 million and $1.7 million inventory impairment for the three and six months ended June 30, 2020, respectively, which is included within inventory impairment and other on our condensed consolidated financial ~~measure.~~statements. We recognized nominal inventory impairment for the three and six months ended June 30, 2021.

⁽³⁾ The selling communities as of June 30, 2020 has been adjusted from prior year presentations to reflect 101 selling communities in our Century Complete segment, which business was acquired in 2018, and for which the number of selling communities was previously not disclosed.

‎

Texas

During the three and six months ended June 30, 2021, our Texas segment generated income before income tax expense of $19.1 million and ~~$56.1~~$27.7 million, respectively, ~~as compared to $19.0~~a 99.2% and 83.1% increase, respectively, over the respective prior year period. These increases were driven by increases in home sales revenue of $32.1 million and ~~$47.2~~$59.7 million, ~~for~~respectively, and increases of 490 basis points and 315 basis points, respectively, in the ~~same periods~~percentage of income before income tax expense to home sales revenues, as a result of (1) increased revenues on a partially fixed cost base and (2) increased gross margins on home sales. The increases in ~~2016, respectively. This~~revenue during the three and six months ended June 30, 2021 were generated by both increases in the number of homes delivered of 19.3% and 25.0%, respectively, as well as increases of 11.2% and 10.1%, respectively, in the average sales price per home. During the three and six months ended June 30, 2021, the increases in the number of homes delivered were driven by increases in our monthly absorption rate of 53.2% and 91.2%, respectively, and increases in the average sales price were driven by both the mix of deliveries within individual communities, as well as increased pricing power as a result of strong market dynamics.

Southeast

During the three months ended June 30, 2021, our Southeast segment generated income before income tax expense of $26.1 million, a 117.1% increase ~~is related~~over the prior year period, driven by an increase of 860 basis points in the percentage of income before income tax expense to home sales revenues. Home sales revenues decreased during the three months ended June 30, 2021, generated by a decrease in the number of homes delivered of 16.7%, partially offset by an increase of 15.9% in the average sales price per home. During the three months ended June 30, 2021, the decrease in the number of homes delivered was driven by a decrease in our monthly absorption rate of 6.4%. The increase in the average sales price was driven by both the mix of deliveries within individual communities, as well as increased pricing power as a result of strong market dynamics. During the six months ended June 30, 2021, our Southeast segment generated income before income tax expense of $49.5 million, a 143.7% increase, respectively, over the prior year period. The increase was driven by the increase in home sales revenue of $82.6 million, and an increase of 610 basis points in the percentage of income before income tax expense to home sales revenues, as a result of increased revenues on a partially fixed cost base. The increase in revenue during the six months ended June 30, 2021 was generated by both an increase in the number of homes delivered ~~and~~of 12.9% as well as an increase of 12.5% in the average ~~selling~~sales price ~~of those homes during~~per home. During the ~~periods, year over year.~~

~~Texas~~

~~In our Texas segment, for the three and nine~~six months ended ~~September~~June 30, ~~2017, our income before income tax increased by $2.5 million and $4.3 million, respectively, to $2.2 million and $6.4 million, respectively, as compared to $(0.3) million and $2.1 million, for~~2021, the ~~same periods in 2016, respectively. This increase is related to an~~ increase in the number of homes delivered was driven by an increase in our monthly absorption rate of 28.9% and anthe increase in the average ~~selling~~sales price was driven by both the mix of ~~those homes during the periods, year over year.~~ deliveries within individual communities between years, as well as increased pricing power as a result of strong market dynamics.

~~Southeast~~Century Complete

~~In our Southeast segment, for~~

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, our Century Complete segment generated income before income tax ~~decreased by $1.8~~expense of $23.1 million and ~~$5.2~~$44.8 million, respectively, ~~to $6.0~~a 170.1% and 380.2% increase, respectively, over the respective prior year period. These increases were driven by increases in home sales revenue of $45.6 million and ~~$16.6~~$123.1 million, respectively, and increases of 649 basis points and 860 basis points, respectively, in the percentage of income before income tax expense to home sales revenues, as ~~compared to $7.8 million~~a result of increased revenues on a partially fixed cost base. The increases in revenue during the three and ~~$21.8 million, for~~six months ended June 30, 2021 were generated by both increases in the ~~same periods in 2016, respectively. The~~ number of homes delivered ~~home~~of 4.1% and 21.1%, respectively, as well as increases of 28.9% and 26.4%, respectively, in the average sales ~~revenue~~price per home. During the three and ~~average selling price all increased~~six months ended June 30, 2021, the increases in the number of homes delivered were driven by increases in our ~~Southeast~~monthly absorption rate of 50.0% and 178.6%, respectively, and increases in the average sales price were driven by both the mix of deliveries within markets between years, as well as increased pricing power as a result of strong market dynamics.

Financial Services

Our Financial Services segment ~~year over year. However, as we have recently started operations in North Carolina and Tennessee,~~originates mortgages for primarily our ~~selling,~~

~~Table of Contents~~

~~general and administrative expenses have increased in those states when operations commenced,~~homebuyers, and as such, ~~we have net loss in those states driving~~performance typically correlates to the number of homes delivered. During the three months ended June 30, 2021, income before income tax ~~to decrease year over year~~expense for ~~our Southeast segment.~~

~~Financial Services~~

~~Our indirect wholly-owned subsidiaries, Inspire Home Loans Inc. and Parkway Title, LLC, which provide mortgage and title services to our home buyers, respectively, have been identified as~~ our Financial Services ~~operating segment. We began providing~~segment decreased $1.3 million to $11.7 million compared to the same period in 2020. This decrease was primarily the result of a $3.0 million favorable fair value adjustment on mortgage ~~services to our customers~~loans held for sale during the second quarter of ~~2017. Substantially all of the loans we originate are sold~~2020, and was partially offset by a 59.5% increase in the ~~secondary market within~~number of loans sold during the three months ended June 30, 2021 as compared to the same period in 2020. During the six months ended June 30, 2021, income before income tax expense for our Financial Services segment increased $13.8 million to $27.0 million compared to the same period in 2020. The increase was primarily the result of a ~~short~~$28.0 million overall increase in financial services revenue during the six months ended June 30, 2021 compared to the same period in 2020. The increase in financial services

revenue was directly attributable to an 84.3% increase in the number of loans sold during the six months ended June 30, 2021 as compared to the same period in 2020.

The following table presents selected operational data for our Financial Services segment in relation to our loan origination ~~generally within 30 days.~~ activities (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Total originations:
Number of loans		2,138			1,724			4,439			2,657
Principal	$	661,853		$	493,534		$	1,374,144		$	765,326
Capture rate of Century homebuyers		74	%		59	%		75	%		56	%
Century		78	%		70	%		81	%		68	%
Century Complete		66	%		34	%		62	%		31	%
Average FICO score		737			735			737			735

Loans sold to third parties:
Number of loans sold		2,326			1,458			4,605			2,499
Principal	$	725,393		$	419,557		$	1,406,550		$	729,027

Corporate

During the three and ~~nine~~six months ended ~~September~~June 30, 2017, we originated and closed 157 loans and 228 loans, respectively, with total principal of $51.0 million and $73.7 million, respectively. As of September 30, 2017, we have 43 loans in backlog with total principal of $13.6 million.

~~Corporate~~

~~During the three and nine months ended September 30, 2017,~~2021, our Corporate segment generated losses of ~~$17.9~~$24.6 million and ~~$33.9~~$42.0 million, respectively, as compared to losses of ~~$6.8~~$27.4 million and ~~$19.9~~$41.9 million, respectively, for the same periods in ~~2016, respectively.~~2020. The decrease in loss for the three-month comparison is primarily due to the cumulative catch-up adjustment to stock-based compensation expense of $2.9 million that occurred in the prior year period. The increase in ~~expenses during~~loss for the ~~three months ended September 30, 2017 was~~six-month comparison is primarily attributed to higher compensation costs, including estimated bonuses, during the following: (1) an increase in acquisition expenses of $7.2 million, and (2) an increase of $4.9 million in our compensation related expenses, including non-cash expenses for share based payments and an increase in the number of employees after our acquisition of UCP, Inc.,six months ended June 30, 2021, partially offset by net decreases in other selling and general administrative expenses and an increase in equity in income from unconsolidated subsidiaries. The increase in expenses during the nine months ended September 30, 2017 was primarily attributedincreased stock-based compensation expense due to the following: (1) an increase in acquisition expenses of $8.2 million, (2) an increase of $8.0 million in our compensation related expenses, including non-cash expenses for share based payments and an increasecumulative catch-up adjustment that occurred in the number of employees after our acquisition of UCP, Inc., (3) an increase of $2.1 million in information technology related expenses, and (4) an increase of $0.9 million in legal costs, partially offset by an increase in equity in income from unconsolidated subsidiaries. prior year period.

Homebuilding Gross Margin

(dollars in thousands)

Homebuilding gross margin represents home sales revenues less cost of home sales revenues. Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, ~~decreased~~increased during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 to ~~17.0%~~23.9% and ~~18.2%~~22.5%, respectively, as compared to ~~20.3%~~16.9% and ~~19.9%~~17.2%, respectively, for the same periods in ~~2016, respectively. The decrease is~~2020. This increase was primarily driven by ~~higher interest expense~~the positive homebuilding sales environment across our markets, which resulted in ~~cost~~our ability to increase sales price in excess of ~~sales as a result of higher average debt balances outstanding~~an increase in ~~2017 as compared to 2016,~~our labor and ~~as a result of the increased~~direct costs ~~recognized for home sales related to purchase accounting.~~ period over period.

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In the following table, we calculate our homebuilding gross margin, ~~adjusting for~~as adjusted to exclude inventory impairment and other and interest in cost of home sales revenues.


	Three Months Ended June 30,

	2021		%		2020		%

Home sales revenues	$	1,004,789	100.0	%	$	747,415	100.0	%
Cost of home sales revenues		(764,668)	(76.1)	%		(620,655)	(83.0)	%
Inventory impairment and other		(41)	(0.0)	%		(910)	(0.1)	%
Gross margin from home sales		240,080	23.9	%		125,850	16.9	%
Add: Inventory impairment and other		41	0.0	%		910	0.1	%
Add: Interest in cost of home sales revenues		18,406	1.8	%		18,694	2.5	%
Adjusted homebuilding gross margin excluding interest and inventory impairment and other	$	258,527	25.7	%	$	145,454	19.5	%


	Six Months Ended June 30,

	2021		%		2020		%

Home sales revenues	$	1,964,068	100.0	%	$	1,320,125	100.0	%
Cost of home sales revenues		(1,521,175)	(77.5)	%		(1,091,181)	(82.7)	%
Inventory impairment and other		(41)	(0.0)	%		(1,691)	(0.1)	%
Gross margin from home sales		442,852	22.5	%		227,253	17.2	%
Add: Inventory impairment and other		41	0.0	%		1,691	0.1	%
Add: Interest in cost of home sales revenues		36,783	1.9	%		32,379	2.5	%
Adjusted homebuilding gross margin excluding interest and inventory impairment and other	$	479,676	24.4	%	$	261,323	19.8	%

⁽¹⁾This non-GAAP financial measure should not be used as a substitute for the Company’s operating results in accordance with GAAP. See the reconciliations to the most comparable GAAP measure and ~~purchase price accounting for acquired work~~other information under “—Non-GAAP Financial Measures.” An analysis of any non-GAAP financial measure should be used in ~~process inventory.~~conjunction with results presented in accordance with GAAP.

Three Months Ended September 30,

2017

%

2016

%

Home sales revenues

$
374,935

100.0
%

$
248,075

100.0
%
Cost of home sales revenues

(311,365)

(83.0)
%

(197,650)

(79.7)
%
Gross margin from home sales

63,570

17.0
%

50,425

20.3
%
Add: Interest in cost of home sales revenues

8,794

2.3
%

5,192

2.1
%
Adjusted homebuilding gross margin excluding interest

72,364

19.3
%

55,617

22.4
%
Add: Purchase price accounting for acquired work in process inventory(1)

6,214

1.7
%

100

0.0
%
Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory

$
78,578

21.0
%

$
55,717

22.5
%

Nine Months Ended September 30,

2017

%

2016

%

Home sales revenues

$
888,942

100.0
%

$
686,335

100.0
%
Cost of home sales revenues

(727,577)

(81.8)
%

(549,886)

(80.1)
%
Gross margin from home sales

161,365

18.2
%

136,449

19.9
%
Add: Interest in cost of home sales revenues

20,625

2.3
%

13,177

1.9
%
Adjusted homebuilding gross margin excluding interest

181,990

20.5
%

149,626

21.8
%
Add: Purchase price accounting for acquired work in process inventory(1)

6,331

0.7
%

318

0.0
%
Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory

$
188,321

21.2
%

$
149,944

21.8
%

~~(1)Non-GAAP financial measure.~~

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, excluding inventory impairment and other, and interest in cost of home sales revenues, ~~and purchase price accounting for acquired work in process inventory,~~ our adjusted homebuilding gross margin percentage was ~~21.0%~~25.7% and ~~21.2%~~24.4%, respectively, as compared to ~~22.5%~~19.5% and ~~21.8%~~19.8%, respectively, for the same periods in ~~2016, respectively.~~2020. We believe the above information is meaningful as it isolates the impact that inventory impairment, indebtedness and acquisitions (if applicable) have on our homebuilding gross margin and allows for comparability of our homebuilding gross margins to previous periods and our competitors.

‎

Selling, General and Administrative Expense


(dollars in thousands)
	Three Months Ended September 30,						Increase				Three Months Ended June 30,						Increase
	2017			2016			Amount		%		2021			2020			Amount		%
Selling, general and administrative	$	(46,165)		$	(30,944)		$	(15,221)	49.2	%	$	99,656		$	86,706		$	12,950	14.9	%
As a percentage of homes sales revenue		(12.3)	%		(12.5)	%
As a percentage of home sales revenue												9.9	%		11.6	%

	Nine Months Ended September 30,						Increase				Six Months Ended June 30,						Increase
	2017			2016			Amount		%		2021			2020			Amount		%
Selling, general and administrative	$	(113,597)		$	(87,512)		$	(26,085)	29.8	%	$	191,807		$	160,325		$	31,482	19.6	%
As a percentage of homes sales revenue		(12.8)	%		(12.8)	%
As a percentage of home sales revenue												9.8	%		12.1	%

Segment Assets

(dollars in thousands)


	September 30,		December 31,			Increase (Decrease)			June 30,		December 31,			Increase (Decrease)
	2017		2016			Amount	Change		2021		2020			Amount	Change
West	$	302,816	$	—	$	302,816	NM		$	611,192	$	536,907	$	74,285	13.8	%
Mountain		571,124		541,657		29,467	5.4	%		803,816		778,198		25,618	3.3	%
Texas		186,840		138,392		48,448	35.0	%		238,221		207,746		30,475	14.7	%
Southeast		394,918		262,448		132,470	50.5	%		279,101		329,930		(50,829)	(15.4)	%
Century Complete										284,838		218,604		66,234	30.3	%
Financial Services		38,010		—		38,010	NM			333,109		421,153		(88,044)	(20.9)	%
Corporate		137,300		65,031		72,269	111.1	%		343,976		352,555		(8,579)	(2.4)	%
Total assets	$	1,631,008	$	1,007,528	$	623,480	61.9	%	$	2,894,253	$	2,845,093	$	49,160	1.7	%

Three Months Ended

Nine Months Ended

Net new home contracts

September 30,

Increase

September 30,

Increase

2017

2016

Amount

% Change

2017

2016

Amount

% Change
West

114

—

114

NM

114

—

114

NM

Mountain

373

266

107

40.2
%

1,290

984

306

31.1
%
Texas

133

81

52

64.2
%

360

271

89

32.8
%
Southeast

294

281

13

4.6
%

1,128

1,036

92

8.9
%
Total

914

628

286

45.5
%

2,892

2,291

601

26.2
%

decrease in selling communities at period end as ~~well as overall positive market conditions in~~compared to the ~~markets in which we operate.~~end of the prior year period.

Our overall monthly “absorption rate” (the rate at which home orders are contracted, net of cancelations) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016~~2021 by segment are included in the table below:


	Three Months Ended September 30,		Increase			Three Months Ended June 30,		Increase (Decrease)
	2017	2016	Amount	% Change		2021	2020	Amount	% Change
West	5.2	-	5.2	NM		9.7	5.6	4.1	73.2	%
Mountain	3.8	2.3	1.5	65.2	%	7.6	4.2	3.4	81.0	%
Texas	1.8	1.1	0.7	63.6	%	9.5	6.2	3.3	53.2	%
Southeast	2.6	3.2	(0.6)	(18.8)	%	4.4	4.7	(0.3)	(6.4)	%
Century Complete						4.2	2.8	1.4	50.0	%
Total	3.2	2.3	0.9	39.1	%	5.7	4.0	1.7	42.5	%

	Nine Months Ended September 30,		Increase			Six Months Ended June 30,		Increase (Decrease)
	2017	2016	Amount	% Change		2021	2020	Amount	% Change
West	5.2	-	5.2	NM		8.7	5.3	3.4	64.2	%
Mountain	4.3	4.1	0.2	4.9	%	9.7	4.8	4.9	102.1	%
Texas	1.8	1.7	0.1	5.9	%	10.9	5.7	5.2	91.2	%
Southeast	3.6	3.9	(0.3)	(7.7)	%	5.8	4.5	1.3	28.9	%
Century Complete						3.9	1.4	2.5	178.6	%
Total	3.5	3.6	(0.1)	(2.8)	%	6.0	2.0	4.0	200.0	%

Selling communities at period end

As of September 30,

Increase/(Decrease)

2017

2016

Amount

% Change

West

10

—

10

NM

Mountain

33

35

(2)

(5.7)
%
Texas

24

23

1

4.3
%
Southeast

40

29

11

37.9
%
Total

107

87

20

23.0
%

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Backlog

(dollars in thousands)



	As of June 30,
	2021					2020					% Change

	Homes	Dollar Value		Average Sales Price		Homes	Dollar Value		Average Sales Price		Homes		Dollar Value		Average Sales Price

West	673	$	440,008	$	653.8	381	$	203,395	$	533.8	76.6	%	116.3	%	22.5	%
Mountain	1,057		544,365		515.0	648		281,999		435.2	63.1	%	93.0	%	18.3	%
Texas	497		182,080		366.4	355		95,193		268.1	40.0	%	91.3	%	36.7	%
Southeast	568		230,558		405.9	712		262,096		368.1	(20.2)	%	(12.0)	%	10.3	%
Century Complete	1,651		365,454		221.4	682		120,068		176.1	142.1	%	204.4	%	25.7	%
Total / Weighted Average	4,446	$	1,762,465	$	396.4	2,778	$	962,751	$	346.6	60.0	%	83.1	%	14.4	%

As of September 30,
Backlog

2017

2016

% Change

Homes

Dollar Value

Average Sales Price

Homes

Dollar Value

Average Sales Price

Homes

Dollar Value

Average Sales Price

West

290

$
161,013

$
555.2

—

$
—

$
—

NM

NM

NM

Mountain

573

247,876

432.6

421

183,605

436.1

36.1
%

35.0
%

(0.8)
%
Texas

245

101,125

412.8

159

74,098

466.0

54.1
%

36.5
%

(11.4)
%
Southeast

556

179,324

322.5

412

123,224

299.1

35.0
%

45.5
%

7.8
%
Total / Weighted Average

1,664

$
689,338

$
414.3

992

$
380,927

$
384.0

67.7
%

81.0
%

7.9
%

~~NM – Not Meaningful~~

Backlog reflects the number of homes, net of actual cancellations experienced during the period, for which we have entered into a sales contract with a customer but for which we have not yet delivered the home. At ~~September~~June 30, ~~2017,~~2021, we had ~~1,664~~4,446 homes in backlog with a total value of ~~$689.4~~$1,762.5 million, which represents an increase of ~~67.7%~~60.0% and ~~81.0%~~83.1%, respectively, as compared to ~~September~~June 30, ~~2016.~~2020. The increase in backlog ~~and backlog~~dollar value is primarily attributable to ~~our acquisition of UCP, Inc. as well as~~ the increase in ~~the demand for new homes~~backlog units and a 14.4% increase in the ~~communities in which we have historically operated. The increase in~~ average sales price of homes in ~~backlog is driven~~backlog.

Supplemental Guarantor Information

Our 5.875% senior notes due 2025 and 6.750% senior notes due 2027 (which we collectively refer to as our “Senior Notes”) are our unsecured senior obligations and are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by ~~increases in most~~substantially all of our ~~markets~~direct and indirect wholly-owned operating subsidiaries (which we refer to collectively as “Guarantors”). Our subsidiaries associated with our financial services operations (referred to as “Non-Guarantors”) do not guarantee the Senior Notes. The guarantees are senior unsecured obligations of the Guarantors that rank equal with all existing and future senior debt of the Guarantors and senior to all subordinated debt of the Guarantors. The guarantees are effectively subordinated to any secured debt of the Guarantors. As of June 30, 2021, Century Communities, Inc. had outstanding $900.0 million in total principal amount of Senior Notes.

Each of the indentures governing our Senior Notes provides that the guarantees of a Guarantor will be automatically and unconditionally released and discharged: (1) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the equity interests of such Guarantor after which the applicable Guarantor is no longer a “Restricted Subsidiary” (as defined in the respective indentures), which sale, transfer, exchange or other disposition does not constitute an “Asset Sale” (as defined in the respective indentures) or is made in compliance with applicable provisions of the applicable indenture; (2) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the assets of such Guarantor, which sale, transfer, exchange or other disposition does not constitute an Asset Sale or is made in compliance with applicable provisions of the applicable indenture; provided, that after such sale, transfer, exchange or other disposition, such Guarantor is an “Immaterial Subsidiary” (as defined in the respective indentures); (3) unless a default has occurred and is continuing, upon the release or discharge of such Guarantor from its guarantee of any indebtedness for borrowed money of the Company and the Guarantors so long as such Guarantor would not then otherwise be required to provide a guarantee pursuant to the applicable indenture; provided that if such Guarantor has incurred any indebtedness in reliance on its status as a ~~result~~Guarantor in compliance with applicable provisions of ~~pricing strength~~the applicable Indenture, such Guarantor’s obligations under such indebtedness, as the case may be, so incurred are satisfied in full and discharged or are otherwise permitted to be incurred by a Restricted Subsidiary (other than a Guarantor) in compliance with applicable provisions of the applicable Indenture; (4) upon the designation of such Guarantor as an “Unrestricted Subsidiary” (as defined in the respective Indentures), in accordance with the applicable indenture; (5) if the Company exercises its legal defeasance option or covenant defeasance option under the applicable indenture or if the obligations of the Company and the Guarantors are discharged in compliance with applicable provisions of the applicable indenture, upon such exercise or discharge; or (6) in connection with the dissolution of such Guarantor under applicable law in accordance with the applicable indenture.

If a guarantor were to become a debtor in a case under the US Bankruptcy Code, a court may decline to enforce its guarantee of the Senior Notes. This may occur when, among other factors, it is found that the guarantor originally received less than fair consideration for the guarantee and the guarantor would be rendered insolvent by enforcement of the guarantee. On the basis of historical financial information, operating history and other factors, we believe that each of the guarantors, after giving effect to the issuance of its guarantee of the Senior Notes when the guarantee was issued, was not insolvent and did not and has not incurred debts beyond its ability to pay

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such debts as they mature. The Company cannot predict, however, what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.

As the guarantees were made in connection with exchange offers effected in February 2015, October 2015 and April 2017 and the issuance of the 5.875% senior notes due 2025 and of the 6.750% senior notes due 2027, the Guarantors’ condensed financial information is presented as if the guarantees existed during the periods presented. If any Guarantors are released from the guarantees in future periods, the changes are reflected prospectively. We have determined that separate, full financial statements of the Guarantors would not be material to ~~positive market trends~~investors, and accordingly, supplemental financial information is presented below.

On March 2, 2020, the SEC adopted amendments to Rules 3-10 and 3-16 of Regulation S-X, under Rule Release No. 33-10762, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities (“Rule 33-10762”), that reduce and simplify the financial disclosure requirements applicable to registered debt offerings for guarantors and issuers of guaranteed securities (which we previously included within the notes to our consolidated financial statements in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q). The amendments under Rule 33-10762 were effective January 4, 2021, but voluntary compliance was permitted in advance of the effective date. We adopted the new disclosure requirements permitted under Rule 33-10762, beginning with the three and six month period ended June 30, 2020.

The following summarized financial information is presented for Century Communities, Inc. and the Guarantor Subsidiaries on a combined basis after eliminating intercompany transactions and balances among Century Communities, Inc. and the Guarantor Subsidiaries, as well as ~~product mix towards higher priced communities.~~ their investment in, and equity in earnings from Non-Guarantor Subsidiaries.

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~~Supplemental Pro Forma Information~~

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~~To aid readers with 2017 over 2016 comparability for the entire merged business, we are also including limited supplemental pro forma information below.~~

Century Communities, Inc. and Guarantor Subsidiaries

Three Months Ended September 30,
(dollars in thousands)

2017

2016

Pro Forma Home sales revenues

Pro Forma Net new home contracts

Pro Forma Deliveries

Pro Forma Average sales price

Pro Forma Home sales revenues

Pro Forma Net new home contracts

Pro Forma Deliveries

Pro Forma Average sales price
West

$
106,547

150

201

$
530.1

$
79,500

161

155

$
512.9
Mountain

156,482

373

375

$
417.3

140,356

266

344

$
408.0
Texas

35,772

133

90

$
397.5

25,385

81

64

$
396.6
Southeast

115,596

309

370

$
312.4

92,674

367

342

$
271.0
Total

$
414,397

965

1,036

$
400.0

$
337,915

875

905
-
$
373.4

Nine Months Ended September 30,

2017

2016

Pro Forma Home sales revenues

Pro Forma Net new home contracts

Pro Forma Deliveries

Pro Forma Average sales price

Pro Forma Home sales revenues

Pro Forma Net new home contracts

Pro Forma Deliveries

Pro Forma Average sales price
West

$
279,315

587

560

$
498.8

$
204,273

502

413

$
494.6
Mountain

440,451

1403

1046

$
421.1

350,742

984

854

$
410.7
Texas

108,955

360

266

$
409.6

98,270

271

252

$
390.0
Southeast

306,938

1128

1010

$
303.9

272,530

1235

1057

$
257.8
Total

$
1,135,659

3,478

2,882

$
394.1

$
925,815

2,992

2,576

$
359.4


Summarized Balance Sheet Data (in thousands)	June 30, 2021		December 31, 2020

Assets
Cash and cash equivalents	$	362,548	$	307,167
Cash held in escrow		37,640		23,149
Accounts receivable		25,904		18,742
Inventories		1,948,769		1,929,664
Prepaid expenses and other assets		113,634		94,181
Property and equipment, net		25,503		27,360
Deferred tax assets, net		18,392		12,450
Goodwill		30,395		30,395
Total assets	$	2,562,785	$	2,443,108
Liabilities and stockholders’ equity
Liabilities:
Accounts payable	$	79,018	$	106,288
Accrued expenses and other liabilities		249,489		267,708
Intercompany loan payable		—		17,600
Notes payable		901,253		894,875
Revolving line of credit		—		—
Total liabilities		1,229,760		1,286,471
Stockholders’ equity:		1,333,025		1,156,637
Total liabilities and stockholders’ equity	$	2,562,785	$	2,443,108


Summarized Statement of Operations Data (in thousands)	Six Months Ended June 30, 2021		Year Ended December 31, 2020

Total homebuilding revenues	$	1,987,996	$	3,057,884
Total homebuilding cost of revenues		(1,538,195)		(2,490,062)
Selling, general and administrative		(191,807)		(341,710)
Inventory impairment and other		(41)		(2,172)
Other income (expense)		(1,872)		(3,014)
Income before income tax expense		256,081		220,926
Income tax expense		(57,532)		(52,389)
Net income	$	198,549	$	168,537

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Critical Accounting Policies

Critical accounting estimates are those that we believe are both significant and ~~that~~ require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and the estimates included in our financial statements might be impacted if we used different assumptions or conditions. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2020, filed with the SEC on February ~~15, 2017,~~5, 2021, in the section entitled “Management’s Discussion and Analysis of Financial Condition

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and Results of Operations—~~Significant~~Critical Accounting Policies.” We have had no significant changes in our critical accounting policies from those described therein, other than those related to our Mortgage loans held for sale, as discussed in “Note 1. Basis of Presentation.”

Liquidity and Capital Resources

~~Overview~~

Overview

Our principal uses of capital for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 were ~~the acquisition of UCP, Inc.,~~our land purchases, land development, home construction, and the payment of routine liabilities. We ~~used~~use funds generated by operations, ~~bond offerings, and~~ available borrowings under our ~~Credit Agreement~~revolving line of credit, and proceeds from sales of common stock, including our at-the-market facility, to ~~meet~~fund our ~~short-term~~short term working capital ~~requirements.~~obligations and fund our purchases of land, as well as land development and home construction activities. During the three months ended June 30, 2021, we initiated a quarterly cash dividend, which we intend to fund from our funds generated by operations.

Cash flows for each of our communities depend on the stage in the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, entitlements and other approvals, and construction of model homes, roads, utilities, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our ~~statement~~statements of operations until a home closes, we incur significant cash outlays prior to our recognition of earnings. In the later stages of community development, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflow associated with home and land construction was previously incurred. From a liquidity standpoint, we are ~~currently~~ actively acquiring and developing lots in our markets to maintain and grow our lot supply and active selling communities. As we continue to expand our business, ~~we expect that~~our cash outlays for land purchases and land development to grow our lot inventory ~~could~~may exceed our cash generated by operations.

~~Covenant Compliance~~

In response to the COVID-19 pandemic, we took certain measures to ensure we are positioned with cash flow and liquidity to endure an extended period of lower demand for our homes, should it arise. Specifically commencing in mid-March of 2020, we slowed our land acquisition and development activities and instituted a variety of actions designed to reduce our operating expenses, including a reduction in the size of our workforce through a targeted layoff in April 2020. In addition, given the uncertainty surrounding the COVID-19 pandemic, we initially increased our borrowings under our revolving line of credit during the end of the first quarter of 2020 and into the beginning of the second quarter of 2020 as a proactive measure in order to expand our financial flexibility at that time. We repaid these borrowings during the second quarter of 2020 in light of our second quarter 2020 operating results and to decrease our interest expense. As of June 30, 2021, we continued to have no amounts outstanding under our revolving line of credit.

We increased our land acquisition and development activities during the first six months of 2021, which resulted in 65,610 lots owned and controlled at June 30, 2021, a 31.3% increase as compared to December 31, 2020.

Our Financial Services operations use funds generated from operations and availability under our mortgage repurchase facilities to finance operations including originations of mortgage loans to our homebuyers.

Under our shelf registration statement, which we filed with the SEC on July 1, 2021 and was automatically effective upon filing, we have the ability to access the debt and equity capital markets in registered transactions from time to time and as needed as part of our ongoing financing strategy and subject to market conditions.

We believe that we will be able to fund our current and foreseeable liquidity needs with our cash on hand, cash generated from operations, and cash expected to be available from our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available or on acceptable terms, especially in light of the current COVID-19 pandemic, its impact on the macro-economy, and market conditions at the time. While the impact of the COVID-19 pandemic will continue to evolve, we believe we are well positioned from a cash and liquidity standpoint to not only operate in an uncertain environment, but also continue to grow with the market, pay down debt and pursue other ways to properly deploy capital to enhance returns, which may include taking advantage of debt refinancing and/or strategic opportunities as they arise.

Revolving Line of Credit

On ~~October~~June 5, 2018, we entered into an Amended and Restated Credit Agreement with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, the lenders party thereto and certain of our subsidiaries (which we refer to as the “Amended and

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Restated Credit Agreement”), which provided us with a revolving line of credit of up to $640.0 million, and unless terminated earlier, was scheduled to mature on April 30, 2023.

On May 21, ~~2014,~~2021, we entered into a ~~credit agreement~~Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with, Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, and the lenders ~~from time to time~~ party ~~thereto (which, as modified as described below, we refer to as the “Credit Agreement”).~~thereto. The Second A&R Credit Agreement, which amended and restated the Amended and Restated Credit Agreement,provides ~~the Company~~us with a senior unsecured revolving line of credit ~~(which, as modified as described below, we refer to as the “Revolving Credit~~(the “Credit Facility”) of up to ~~$120 million.~~$800 million, and unless terminated earlier, will mature on April 30, 2026. The Credit Facility includes a $250.0 million sublimit for standby letters of credit. Under the terms of the Second A&R Credit Agreement, ~~we are~~the Company is entitled to request an increase in the size of the ~~Revolving~~ Credit Facility by an amount not exceeding ~~$80~~$200 million. If the existing lenders elect not to provide the full amount of a requested increase, we may invite one or more other lender(s) to become a party to the Credit Agreement, subject to the approval of the Administrative Agent and L/C Issuer. The Credit Agreement includes a letter of credit sublimit of $20 million. TheOur obligations under the ~~Revolving~~Second A&R Credit ~~Facility~~Agreement are guaranteed by certain of our subsidiaries.

On July 31, 2015, we entered into a First Modification Agreement with Texas Capital Bank, National Association, as Administrative Agent, the lenders party thereto, and our subsidiary guarantors party thereto, which modified the Credit Agreement. The First Modification Agreement, among other things, (i) increased the Revolving Credit Facility from $120 million to $200 million, (ii) extended the maturity date of the Revolving Credit Facility from October 21, 2017 to October 21, 2018, (iii) admitted Bank of America, N.A. as a new lender under the Revolving Credit Facility, and (iv) increased the amount of the increase in the size of the Revolving Credit Facility that we had the option to request, from time to time, from an amount not exceeding $80 million to an amount not exceeding $100 million, subject to the terms and conditions of the First Modification Agreement and the Credit Agreement.

On August 19, 2016, we entered into a Third Modification Agreement with Texas Capital Bank, National Association, as Administrative Agent, the lenders party thereto, and our subsidiary guarantors party thereto, which further modified the Credit Agreement. The Third Modification Agreement, among other things, (i) increased the Revolving Credit Facility from $300 million to $380 million, (ii) admitted Citibank, N.A. and Flagstar Bank, FSB as new lenders under the Revolving Credit Facility, (iii) increased certain lenders’ respective commitments to the Revolving Credit Facility, and (iv) extended the term of the Revolving Credit Facility by one year to mature in October 2019.

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~~million through our exercise of the remaining $20 million of the accordion feature of the Credit Agreement, and (ii) increased Flagstar’s commitment to the Credit Facility.~~

~~The~~A&R Credit Agreement contains customary affirmative and negative covenants (including limitations on ~~the Company’s~~our ability to grant liens, incur additional debt, pay dividends, redeem ~~its~~our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions), as well as customary events of default. ~~The~~Borrowings under the Second A&R Credit Agreement ~~also requires~~bear interest at a floating rate equal to the ~~Company to maintain (i)~~adjusted Eurodollar Rate plus an applicable margin between 2.05% and 2.65% per annum, and if made available in the Administrative Agent’s discretion, a ~~leverage ratio~~base rate plus an applicable margin between 1.05% and 1.65% per annum

As of ~~not more than 1.75 to 1.0 as of~~June 30, 2021, we had no amounts outstanding under the last day of any fiscal quarter, based upon the ratio of debt to tangible net worth of the Company and its subsidiaries on a consolidated basis, (ii) an interest coverage ratio of not less than 1.50 to 1.0 for any four fiscal quarter period, based upon the ratio of EBITDA to cash interest expense of the Company and its subsidiaries on a consolidated basis, (iii) a consolidated tangible net worth of not less than the sum of $250 million, plus 50% of the net proceeds of any issuances of equity interests of the Company and the guarantors of the Revolving Credit Facility ~~plus 50% of the amount of consolidated net income of the Company~~ and its subsidiaries, (iv) liquidity of not less than $25 million, and (v) a risk asset ratio of not more than 1.25 to 1.0, based upon the ratio of the book value of all risk assets owned by the Company and its subsidiaries on a consolidated basis to the Company’s tangible net worth.

~~As of September 30, 2017, we~~ were in compliance with all covenants under the Second A&R Credit Agreement.

~~ATM Program~~

Mortgage Repurchase Facilities – Financial Services

On ~~November 7, 2016, we~~May 4, 2018, September 14, 2018, and August 1, 2019, Inspire entered into ~~a Distribution Agreement~~mortgage warehouse facilities, with Comerica Bank, J.P. Morgan, and Wells Fargo, respectively. The mortgage warehouse lines of credit (which we refer to as the ~~“Distribution Agreement”~~“repurchase facilities”), which were increased during 2020, provide Inspire with J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Citigroup Global Markets Inc. (which we refer to collectively as the “Sales Agents”), relating to our common stock. Under the Distribution Agreement, we are authorized to offer and sell shares of our common stock having an aggregate offering priceuncommitted repurchase facilities of up to $50.0 million from time to time through any of our Sales Agents in “at the market” offerings. On August 9, 2017, we entered into a second Distribution Agreement (which we refer to as the “Second Distribution Agreement”) with the Sales Agents, pursuant to which we may offer and sell from time to time up to $100.0 million in “at the market” offerings. During the three months ended September 30, 2017, we sold and issued an aggregate of ~~0.4~~$350 million ~~shares~~as of our common stock under the Distribution Agreement, which provided net proceeds of $8.9 million, and, in connection with such sales, paid total commissions and fees to the Sales Agents of $0.2 million. During the three months ended SeptemberJune 30, 2017, we sold and issued an aggregate of 47.4 thousand shares of our common stock under the Second Distribution Agreement, which provided net proceeds of $1.1 million, and, in connection with such sales, paid total commissions and fees to the Sales Agents of $23.5 thousand.

~~Mortgage Repurchase Facility – Financial Services~~

On April 10, 2017, Inspire Home Loans Inc. (which we refer to as “Inspire”), an indirect wholly-owned subsidiary of the Company, entered into a Master Repurchase Agreement (which we refer to as the “Master Repurchase Agreement”) with Branch Banking and Trust Company, as the buyer thereunder (which we refer to as the “Buyer”). The Master Repurchase Agreement provides Inspire with a revolving mortgage loan repurchase facility of up to $25 million (which we refer to as the “Repurchase Facility”). The primary purpose of the Repurchase Facility is to provide financing and liquidity to Inspire by facilitating purchase transactions in which Inspire transfers eligible loans to the Buyer, against the transfer of funds2021, secured by the ~~Buyer, subject to a simultaneous agreement by the Seller to repurchase from the Buyer such eligible~~mortgage loans (i) upon written notice to the Buyer by Inspire, (ii) on a prescribed date in the future, (iii) upon the occurrence of prescribed events, or (iv) on the Termination Date (as defined below). The purchase transactions are based on and subject to the terms and conditions set forth in the Master Repurchase Agreement. The maximum aggregate amount of the Buyer’s commitment to fund purchase transactions under the Repurchase Facility is $25 million (which we refer to as the “Commitment”), subject to certain sublimits. The Repurchase Facility and the Buyer’s Commitment thereunder expires on the earlier of (i) April 9, 2018, and (ii) the date when the Buyer’s Commitment is terminated pursuant to the Master Repurchase Agreement or by operation of law (which we refer to as the “Termination Date”).

~~On September 15, 2017, Inspire entered into a second Master Repurchase Facility (which we refer to as the “Second Master Repurchase Agreement”) with J.P. Morgan Chase Bank, N.A. as the buyer~~financed thereunder. The Second Master Repurchase Agreement provides Inspire with a revolving mortgage loan repurchase facility of up to $35 million (which we refer to as the “Second Repurchase Facility”). The purpose of the Second Repurchase Facility is similar to the purpose outlined above for the Repurchase Facility. Amounts outstanding under the ~~Repurchase Facility and Second Repurchase Facility~~repurchase facilities are not guaranteed by us or any of our ~~subsidiaries. Each of~~subsidiaries and the ~~Master Repurchase Agreement and Second Master Repurchase Agreement contains~~agreements contain various affirmative and negative covenants applicable to Inspire that are customary for arrangements of this type. As of ~~September~~June 30, ~~2017,~~2021, we had $159.8 million outstanding under these repurchase facilities and were in compliance with all covenants ~~under each~~thereunder.

During the three and six months ended June 30, 2021, we incurred interest expense on the repurchase facilities of $0.6 million and $1.4 million, respectively. During the same periods in 2020, we incurred interest expense on the repurchase facilities of $0.5 million and $1.3 million, respectively. Interest expense on mortgage repurchase facilities is included in financial services costs on our condensed consolidated statements of operations.

At-the-Market Offerings

On November 27, 2019, we entered into a Distribution Agreement with J.P. Morgan Securities LLC, BofA Securities, Inc., Citigroup Global Markets Inc., and Fifth Third Securities, Inc. (which we refer to as the “Distribution Agreement”), as sales agents pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $100.0 million from time to time through any of the ~~Master Repurchase~~sales agents party thereto in “at-the-market” offerings, in accordance with the terms and conditions set forth in the Distribution Agreement. This Distribution Agreement, which superseded and replaced a prior similar distribution agreement, had all $100 million available for sale as of June 30, 2021. We did not sell or issue any shares of our common stock during the ~~Second Repurchase Agreement.~~three and six months ended June 30, 2021 and 2020, respectively. The Distribution Agreement will remain in full force and effect until terminated by either party pursuant to the terms of the agreement or such date that the maximum offering amount has been sold in accordance with the terms of the agreement. Sales cannot be made under the Distribution Agreement unless and until we file a prospectus supplement to our recently filed shelf registration statement that was filed on July 1, 2021, which prospectus supplement we intend to file in the near future.

Letters of Credit and Performance Bonds

In the normal course of business, we post letters of credit and performance and other bonds primarily related to our land development performance obligations with local municipalities. As of ~~September~~June 30, ~~2017, there was an aggregate~~2021, and December 31, 2020, we had $464.6 million and $402.7 million, respectively, in letters of ~~$27.5 million outstanding under~~credit and performance and other bonds issued and outstanding. Although significant development and construction activities have been completed related to the ~~Master Repurchase Agreement~~improvements at these sites, the letters of credit and ~~Second Master Repurchase Agreement, which is presented as Mortgage Repurchase Facility in our Condensed Consolidated Balance Sheets. The amount outstanding under the Master Repurchase Agreement~~performance and ~~the Second Master Repurchase Agreement was collateralized by $30.1 million of mortgage loans held for sale.~~other bonds are not generally released until all development and construction activities are completed.

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Debt

Our outstanding debt obligations included the following as of June 30, 2021 and December 31, 2020 (in thousands):



	June 30,		December 31,
	2021		2020
6.750% senior notes, due May 2027⁽¹⁾	$	495,176	$	494,768
5.875% senior notes, due July 2025⁽¹⁾		397,170		396,821
Other financing obligations		8,908		3,286
Notes payable		901,254		894,875
Revolving line of credit		—		—
Mortgage repurchase facilities		159,776		259,050
Total debt	$	1,061,030	$	1,153,925

⁽¹⁾The carrying value of the senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest cost over the respective terms of the senior notes.

A summary of our debt obligations is included in Note 10 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 5, 2021 and in Note 8 to our condensed consolidated financial statements in this Form 10-Q. We may from time to time seek to refinance or increase our outstanding debt or retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may or may not be material during any particular reporting period.

Stock Repurchase Program

On November 6, 2018, our Board of Directors authorized a stock repurchase program, under which we may repurchase up to 4,500,000 shares of our outstanding common stock. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws. The actual manner, timing, amount and value of repurchases under the stock repurchase program will be determined by management at its discretion and will depend on a number of factors, including the market price of our common stock, trading volume, other capital management objectives and opportunities, applicable legal requirements, and general market and economic conditions.

We intend to finance any stock repurchases through available cash and our revolving credit facility. Repurchases also may be made under a trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, which would permit shares to be repurchased when we otherwise may be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The stock repurchase program has no expiration date and may be extended, suspended or discontinued by our Board of Directors at any time without notice at our discretion. All shares of common stock repurchased under the program will be cancelled and returned to the status of authorized but unissued shares of common stock.

No shares were repurchased during the three and six months ended June 30, 2021 and 2020, respectively.The maximum number of shares available to be purchased under the stock repurchase program as of June 30, 2021 is 3,812,939.

Dividends

On May 19, 2021, our Board of Directors announced the initiation of a quarterly cash dividend. Additionally on May 19, 2021, our Board of Directors declared our first quarterly cash dividend of $0.15 per share and totaling $5.1 million, which was paid on June 16, 2021 to stockholders of record of our common stock as of June 2, 2021.

Cash Flows—~~Nine~~ Six Months Ended ~~September~~June 30, ~~2017~~2021 Compared to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2020

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, the comparison of cash flows is as follows:

Our primary sources of cash flows from operations are from the sale of single-family attached and detached homes and mortgages. Our primary uses of cash flows from operations is the acquisition of land and expenditures associated with the construction of our single-family attached and detached homes and the origination of mortgages held for sale. During the six months ended June 30, 2021 and 2020, we generated $143.4 million and $173.8 million in cash from operations, respectively. The decrease in cash provided by operations is primarily a result of increased investment in our homebuilding

Net cash used in operating activities increased to $130.8 million during the nine months ended September 30, 2017 from net cash used of $61.4 million during the same period in 2016. The increase in cash used in operations was primarily a result of a net outflow associated with inventories of $95.1 million during the nine months ended September 30, 2017, compared to a net outflow of $85.6 million during the same period in 2016. The outflow in 2017 was driven by our investment in inventories through the purchase of 8,512 lots, including those acquired through our acquisition of UCP, Inc. during the nine months ended September 30, 2017, as well as 2,811 homes under construction as of September 30, 2017. These outflows were offset by cash inflows associated with 2,329 home deliveries during the nine months ended September 30, 2017. We had net cash used in working capital items including cash held in escrow, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses and other liabilities, and mortgage loans held for sale of $75.4 million for the nine months ended September 30, 2017, as compared to cash used of $15.3 million for the same period in 2016.

Net cash used in investing activities was $66.1 million during the nine months ended September 30, 2017, compared to $5.0 million used during the same period in 2016. The increase relates to our acquisition of UCP Inc., which resulted in cash outflows, net of cash acquired, totaling $77.5 million, and decreased proceeds from sale of assets, partially offset the sale of our South Carolina operations which generated cash proceeds of $17.1 million, as a decrease in purchases of property and equipment during the nine months ended September 30, 2017 as compared to the same period in 2016.

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Net cash provided by financing activities was $225.9 million during the nine months ended September 30, 2017, compared to $54.5 million during the same period in 2016. The increase in cash provided by financing activities is primarily attributed to cash proceeds from issuance of senior notes totaling $523.0 million, the net proceeds received from the sale of common stock totaling $35.0 million and net proceeds from our mortgage repurchase facility of $27.5 million, partially offset by an increase in net payments on our Revolving Credit Facility totaling $250.0 million, a decrease in proceeds received from issuance of insurance premium notes totaling $11.6 million, and an increase of debt issuance costs of $2.6 million.

inventories for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, partially offset by a $155.0 million increase in net income during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Net cash used in investing activities decreased to $4.4 million during the six months ended June 30, 2021, compared to $4.9 million used during the same period in 2020. The decrease was primarily related to less purchases of property and equipment.

Net cash used in financing activities increased to $112.5 million during the six months ended June 30, 2021, compared to $50.5 million used during the same period in 2020. The increase was primarily attributable to a $122.6 million increase in net payments on our mortgage repurchase facilities, partially offset by a $68.7 million decrease in net payments under our revolving line of credit.

As of ~~September~~June 30, ~~2017,~~2021, our cash and cash equivalents and restricted cash balance was ~~$58.5~~$424.7 million.

Off-Balance Sheet Arrangements

In the ordinary course of business, we enter into land purchase contracts in order to procure lots for the construction of our homes. We are subject to customary obligations associated with entering into contracts for the purchase of land and improved lots. These purchase contracts typically require a cash deposit, and the purchase of ~~land~~properties under these contracts is generally contingent upon satisfaction of certain requirements, including obtaining applicable property and development entitlements. We also utilize option contracts with land sellers and others as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. ~~These~~Option contracts generally require payment by us of a non-refundable deposit for the right to acquire lots over a specified period of time ~~or in bulk at a point in time,~~ at pre-determined prices. We generally have the right at our discretion to terminate our obligations under both purchase contracts and these contracts by forfeiting our cash deposit with no further financial responsibility to the land seller. Our obligations with respect to ~~the~~purchase contracts and option contracts are generally limited to the forfeiture of the related non-refundable cash deposits. As of ~~September~~June 30, ~~2017,~~2021, we had outstanding purchase contracts and option contracts for ~~17,150~~43,049 lots ~~totaling $754.1 million,~~with a total purchase price of approximately $1.7 billion and had ~~$11.2~~$35.2 million of non-refundable cash deposits pertaining to land option contracts. While our performance, including the timing and amount of purchase, if any, under these outstanding purchase and option contracts is subject to change, we currently anticipate performing on ~~60% to 70%~~the substantial majority of the purchase and option contracts during the next twelve months, with performance on the remaining purchase and option ~~contacts~~contracts occurring in future periods.

Our utilization of land option contracts is dependent on, among other things, the availability of land sellers ~~and others~~ willing to enter into option takedown arrangements, the availability of capital to financial intermediaries to finance the development of optioned lots, general housing market conditions, and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

We post letters of credit and performance and other bonds primarily related to our land development performance obligations, with local municipalities. As of ~~September~~June 30, ~~2017,~~2021, and December 31, ~~2016,~~2020, we had ~~$70.1~~$464.6 million and ~~$70.1~~$402.7 million, respectively, in letters of credit and

~~Table of Contents~~

performance and other bonds issued and outstanding. We anticipate that the obligations secured by these performance bonds and letters of credit generally will be performed in the ordinary course of business.

Contractual Obligations

For the three and six months ended June 30, 2021, there were no material changes to the contractual obligations we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that was filed with the SEC on February 5, 2021.

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Non-GAAP Financial Measures

In this Form 10-Q, we use certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, net homebuilding debt to net capital, and adjusted net earnings per diluted common shares. These non-GAAP financial measures are presented to provide investors additional information to facilitate the comparison of our past and present operations. We believe these non-GAAP financial measures provide useful information to investors because they are used to evaluate our performance on a comparable year-over-year basis. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP measures and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive or standard set of accounting rules or principles. Accordingly, the calculation of our non-GAAP financial measures may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with our financial results as determined in accordance with GAAP. These measures should only be used to evaluate our financial results in conjunction with the corresponding GAAP measures. Accordingly, we qualify our use of non-GAAP financial information in a statement when non-GAAP financial information is presented.

EBITDA and Adjusted EBITDA

The following table presents ~~adjusted~~EBITDA and Adjusted EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~2020. Adjusted EBITDA is a non-GAAP financial measure we use as a supplemental measure in evaluating operating performance. We define ~~adjusted~~Adjusted EBITDA as consolidated net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense, (iv) loss on debt extinguishment, (v) inventory impairment and other, (vi) depreciation and amortization expense, and ~~(v)~~(vii) adjustments resulting from the application of purchase accounting for acquired work in process inventory related to business combinations. We believe ~~adjusted~~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, our 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. Our presentation of ~~adjusted~~Adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our ~~adjusted~~Adjusted EBITDA is limited as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under ~~GAAP.~~GAAP.


	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended June 30,							Six Months Ended June 30,
	2017		2016		% Change			2017		2016		% Change			2021		2020		% Change			2021		2020		% Change
Net income	$	9,470	$	13,342		(29.0)	%	$	33,100	$	34,467		(4.0)	%	$	117,910	$	38,450		206.7	%	$	219,562	$	64,576		240.0	%
Income tax expense		5,686		6,389		(11.0)	%		17,216		16,790		2.5	%		34,224		11,653		193.7	%		63,621		19,615		224.3	%
Interest in cost of home sales revenues		8,794		5,192		69.4	%		20,625		13,177		56.5	%		18,406		18,694		(1.5)	%		36,783		32,379		13.6	%
Interest expense		1		—		NM			3		4		(25.0)	%
Interest expense (income)																(172)		(684)		(74.9)	%		(283)		(847)		(66.6)	%
Depreciation and amortization expense		2,256		1,418		59.1	%		5,073		4,215		20.4	%		2,849		3,427		(16.9)	%		5,655		6,842		(17.3)	%
EBITDA		26,207		26,341		(0.5)	%		76,017		68,653		10.7	%		173,217		71,540		142.1	%		325,338		122,565		165.4	%
Purchase price accounting for acquired work in process inventory		6,214		100		6,113.8	%		6,331		318		1,890.9	%
Purchase price accounting for investment in unconsolidated subsidiaries outside basis		30		—		NM			885		—		NM
Inventory impairment and other																41		910		(95.5)	%		41		1,691		(97.6)	%
Restructuring costs																—		1,584		NM			—		1,584		NM
Adjusted EBITDA	$	32,451	$	26,441		22.7	%	$	83,233	$	68,971		20.7	%	$	173,258	$	74,034		134.0	%	$	325,379	$	125,840		158.6	%

NM – Not Meaningful

‎

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Net Homebuilding Debt to Net Capital

The following table presents our ratio of net homebuilding debt to net capital, which is a non-GAAP financial measure. We calculate this by dividing net homebuilding debt (notes payable and borrowings under our revolving line of credit less cash and cash equivalents and cash held in ~~escrow and cash and cash equivalents)~~escrow) by net capital (net homebuilding debt plus total stockholders’ equity). The most directly comparable GAAP measure is the ratio of debt to total capital. We believe the ratio of net homebuilding debt to net capital is a relevant and useful financial measure to investors in understanding the leverage employed in our operations and as an indicator of our ability to obtain external ~~financing.~~financing.


	September 30,		December 31,		June 30,		December 31,
	2017		2016		2021		2020
Total debt	$	803,481	$	454,088
Total homebuilding debt					$	901,254	$	894,875
Total stockholders' equity		653,012		473,636		1,488,658		1,280,705
Total capital	$	1,456,493	$	927,724	$	2,389,912	$	2,175,580
Debt to capital		55.2%		48.9%
Homebuilding debt to capital						37.7%		41.1%

Total debt	$	803,481	$	454,088
Total homebuilding debt					$	901,254	$	894,875
Cash and cash equivalents		(58,522)		(29,450)		(419,416)		(394,001)
Cash held in escrow		(42,262)		(20,044)		(37,640)		(23,149)
Net debt		702,697		404,594
Net homebuilding debt						444,198		477,725
Total stockholders' equity		653,012		473,636		1,488,658		1,280,705
Net capital	$	1,355,709	$	878,230	$	1,932,856	$	1,758,430

Net debt to net capital		51.8%		46.1%
Net homebuilding debt to net capital						23.0%		27.2%

‎

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Adjusted Net Income and Adjusted Diluted Earnings per ~~Common~~ Share

Adjusted Net Income and Adjusted Diluted Earnings per ~~Common~~ Share (which we refer to as “Adjusted ~~Diluted~~ EPS”) ~~is a~~are non-GAAP financial ~~measure~~measures that we believe isare useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating trends without the effect of certain non-recurring items. We believe excluding certain non-recurring items provides more comparable assessment of our financial results from period to period. We define Adjusted Net Income as consolidated net income before (i) income tax expense, (ii) inventory impairment and other and (iii) restructuring costs, less adjusted income tax expense, calculated using the Company’s estimated annual effective tax rate after discrete items for the applicable period. Adjusted Diluted EPS is calculated by excluding the effect of ~~acquisition~~loss on inventory impairment and other and restructuring costs ~~and purchase price accounting for acquired work in process~~ from the calculation of reported ~~EPS.~~EPS.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2021		2020		2021		2020
Numerator
Net income	$	9,470	$	13,342	$	33,100	$	34,467	$	117,910	$	38,450	$	219,562	$	64,576
Less: Undistributed earnings allocated to participating securities		(52)		(241)		(289)		(785)
Net income allocable to common stockholders	$	9,418	$	13,101	$	32,811	$	33,682
Denominator
Weighted average common shares outstanding - basic		25,445,552		20,673,521		23,038,390		20,643,682		33,738,586		33,340,184		33,651,727		33,274,056
Dilutive effect of restricted stock units		280,585		148,545		236,930		88,248		218,052		121,510		269,212		195,013
Weighted average common shares outstanding - diluted		25,726,137		20,822,066		23,275,320		20,731,930		33,956,638		33,461,694		33,920,939		33,469,069
Earnings per share:
Basic	$	0.37	$	0.63	$	1.42	$	1.63	$	3.49	$	1.15	$	6.52	$	1.94
Diluted	$	0.37	$	0.63	$	1.41	$	1.62	$	3.47	$	1.15	$	6.47	$	1.93

Adjusted Earnings per share
Adjusted earnings per share
Numerator
Income before income tax expense	$	15,156	$	19,731	$	50,316	$	51,257	$	152,134	$	50,103	$	283,183	$	84,191
Purchase price accounting for acquired work in process inventory		6,214		100		6,331		318
Acquisition expense		7,205		53		8,645		466
Inventory impairment and other										41		910		41		1,691
Restructuring costs										—		1,584		—		1,584
Adjusted income before income tax expense		28,575		19,884		65,292		52,041		152,175		52,597		283,224		87,466
Income tax expense(1)		(9,801)		(6,439)		(21,350)		(17,047)
Adjusted income tax expense⁽¹⁾										(34,188)		(12,254)		(63,630)		(20,378)
Adjusted net income		18,774		13,445		43,942		34,994	$	117,987		40,343	$	219,594		67,088
Less: Undistributed earnings allocated to participating securities		(104)		(243)		(384)		(797)
Adjusted net income allocable to common stockholders	$	18,670	$	13,202	$	43,558	$	34,197

Denominator - Diluted		25,726,137		20,822,066		23,275,320		20,731,930		33,956,638		33,461,694		33,920,939		33,469,069

Adjusted diluted earnings per share	$	0.73	$	0.63	$	1.87	$	1.65	$	3.47	$	1.21	$	6.47	$	2.00

⁽¹⁾

The tax rate used in calculating adjusted net income was 34.3% and 32.7% for the three and nine months ended September 30, 2017, respectively. The tax rate used is reflective of our GAAP tax rate for the three and nine months ended September 30, 2017 of 37.5% and 34.2%, respectively, adjusted for certain acquisition costs which are not deductible for tax.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rates

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with ~~our~~Second A&R Credit Agreement ~~which was entered into on October 21, 2014. Future borrowings~~. Borrowings under the Second A&R Credit Agreement bear interest at a floating rate equal to the ~~London Interbank Offered~~adjusted Eurodollar Rate plus an applicable margin between ~~2.75%~~2.05% and ~~3.25%~~2.65% per annum, ~~or,~~and if made available in the Administrative Agent’s discretion, a base rate plus an applicable margin between ~~1.75%~~1.05% and ~~2.25%~~1.65% per annum. The “applicable margins” described above are determined by a schedule based on the leverage ratio of the Company, as defined in the Second A&R Credit Agreement. The Second A&R Credit Agreement also provides for fronting fees and letter of credit fees payable to the L/C Issuer and commitment fees payable to the Administrative Agent equal to 0.20% of the unused portion of the ~~Revolving~~ Credit Facility. ~~Under~~

For fixed rate debt, such as our ~~current policies,~~senior notes, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows.

Our Financial Services business utilizes mortgage-backed securities, forward commitments, option contracts and investor commitments to protect the value of rate-locked commitments and loans held-for-sale from fluctuations in mortgage-related interest rates. To mitigate interest risk associated with loans held-for-sale, we ~~do not~~typically use ~~interest rate~~ derivative financial instruments to ~~manage~~hedge our exposure to ~~changes in~~risk from the time a borrower locks a loan until the time the loan is securitized. We also typically hedge our interest ~~rates.~~rate exposure through entering into interest rate swap futures.

~~Inflation~~

Inflation

Our homebuilding operations can be adversely impacted by inflation, primarily from higher land, financing, labor, material, particularly lumber, and construction costs. In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers. While we attempt to pass on cost increases to customers through increased prices, when weak housing market conditions exist, we are often unable to offset cost increases with higher selling prices.

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements. We typically experience the highest new home order activity during the spring, although this activity is also highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since it typically takes four to eight months to construct a new home, we deliver more homes in the second half of the year as spring and summer home orders convert to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters, and the majority of cash receipts from home deliveries occurs during the second half of the year. We expect this seasonal pattern to continue over the long term, although it may be affected by volatility in the homebuilding industry and the COVID-19 pandemic.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our co-principal executive officers and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined under Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”)) as of ~~September~~June 30, ~~2017,~~2021, the end of the period covered by this Form 10-Q. Based on this evaluation, our co-principal executive officers and principal financial officer concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017~~2021 in providing reasonable assurance that information required to be disclosed by us in the reports that we file or ~~furnish~~submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

During the ~~nine months~~financial statement close for the quarter ended ~~September~~June 30, ~~2017, we completed our acquisition of UCP, Inc.~~2021, certain accounting and ~~we are in~~finance employees worked remotely due to the ~~process of integrating UCP, Inc. into our overall~~COVID-19 pandemic. All internal control over financial reporting ~~process.~~continued as in the past, but with certain necessary documentation changes in light of the remote working environment for certain personnel. There were no changes during the second quarter of 2021 in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Because of the nature of the homebuilding business, we and certain of our subsidiaries and affiliates have been named as defendants in various claims, complaints and other legal actions arising in the ordinary course of business. In the opinion of our management, the outcome of these ordinary course matters will not have a material adverse effect upon our financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2020 that was filed with the SEC on February ~~15, 2017.~~5, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the three months ended September 30, 2017, certain of our employees surrendered approximately 44,220 shares of our common stock owned by them to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted shares of common stock issued under our First Amended & Restated 2013 Long-Term Incentive Plan. The following table summarizes the repurchases that occurred during the three months ended September 30, 2017:

Total number of shares purchased

Average price paid per share

Total number of shares purchased as part of publicly announced plans or programs

Maximum number of shares that may yet be purchased under the plans or programs
July

Purchased 7/1 through 7/31

29,022

$
25.90

N/A

N/A
August

Purchased 7/1 through 7/31

-

-

N/A

N/A
September

Purchased 9/1 through 9/30

15,198

24.00

N/A

N/A
Total

44,220

$
25.25

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

~~None.~~

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.OTHER INFORMATION.

~~None.~~

Not applicable.

‎

Table of Contents

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this ~~Quarterly Report on Form 10-Q~~report to be signed on its behalf by the undersigned thereunto duly authorized.


	Century Communities, Inc.



Date: ~~November 2, 2017~~July 28, 2021	By:	/s/ Dale Francescon
		Dale Francescon
		Chairman of the Board and Co-Chief Executive Officer (Co-Principal Executive Officer)

Date: ~~November 2, 2017~~July 28, 2021	By:	/s/ Robert J. Francescon
		Robert J. Francescon
		Co-Chief Executive Officer and President (Co-Principal Executive Officer)


Date: ~~November 2, 2017~~July 28, 2021	By:	/s/ David Messenger
		David Messenger
		Chief Financial Officer (Principal Financial Officer)


Date: ~~November 2, 2017~~July 28, 2021	By:	/s/ J. Scott Dixon
		J. Scott Dixon
		Chief Accounting Officer (Principal Accounting Officer)


	Page No.
PART I – FINANCIAL INFORMATION
Item 1. ~~Unaudited Condensed Consolidated~~ Financial Statements
~~Unaudited~~ Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2021 (unaudited) and December 31, ~~2016~~2020 (audited)	3
Unaudited Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months ~~ended September~~Ended June 30, ~~2017~~2021 and ~~2016~~2020	4
Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months ~~ended September~~Ended June 30, ~~2017~~2021 and ~~2016~~ 2020	5
Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2021 and 2020	6
Notes to the Unaudited Condensed Consolidated Financial Statements ~~– September 30, 2017~~	67
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2416
Item 3. Quantitative and Qualitative Disclosures About Market Risk	38
Item 4. Controls and Procedures	38
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	39
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3. Defaults Upon Senior Securities	39
Item 4. Mine Safety Disclosures	39
Item 5. Other Information	39
Item 6. Exhibits	40
Signatures	42
	41


	September 30,		December 31,		June 30,		December 31,
	2017		2016		2021		2020
Prepaid insurance	$	8,327	$	12,236	$	22,060	$	18,699
Lot option and escrow deposits		26,873		12,320		52,749		39,985
Performance deposits		5,732		1,544		10,104		9,372
Deferred financing costs revolving line of credit, net		2,030		2,637
Deferred financing costs on revolving line of credit, net						5,727		3,206
Restricted cash(1)		6,850		1,505		5,259		4,080
Secured note receivable		2,772		2,850		2,380		2,434
Golf course, net		5,294		5,857
Other		4,484		1,508
Right of use assets						14,012		16,175
Other assets and prepaid expenses						8,327		8,082
Mortgage loans held for investment						10,823		8,727
Derivative assets and mortgage servicing rights						15,843		11,870
Total prepaid expenses and other assets	$	62,362	$	40,457	$	147,284	$	122,630



	September 30,		December 31,		June 30,		December 31,
	2017		2016		2021		2020
Earnest money deposits	$	15,086	$	7,304	$	42,114	$	30,578
Warranty reserve		8,850		2,479		13,862		13,824
Accrued compensation costs		13,949		12,603		51,842		60,692
Land development and home construction accruals		66,119		31,486		81,381		80,088
Liability for product financing arrangement		21,893		—
Liability for product financing arrangements						19,808		62,084
Accrued interest		14,936		3,039		13,649		13,649
Lease liabilities - operating leases						14,551		16,801
Income taxes payable		—		783		—		3,118
Other		16,872		4,620
Derivative liabilities						758		3,807
Other accrued liabilities						25,991		18,110
Total accrued expenses and other liabilities	$	157,705	$	62,314	$	263,956	$	302,751


Lots owned and	September 30, 2017			December 31, 2016			% Change
controlled	Owned	Controlled	Total	Owned	Controlled	Total	Owned		Controlled		Total
													June 30, 2021			December 31, 2020			% Change
													Owned	Controlled	Total	Owned	Controlled	Total	Owned		Controlled		Total

West	3,542	2,630	6,172	—	—	—	NM		NM		NM		3,833	5,532	9,365	3,266	3,392	6,658	17.4	%	63.1	%	40.7	%
Mountain	4,291	5,068	9,359	4,354	2,959	7,313	(1.4)	%	71.3	%	28.0	%	7,800	8,046	15,846	7,951	5,910	13,861	(1.9)	%	36.1	%	14.3	%
Texas	2,223	4,795	7,018	1,356	3,420	4,776	63.9	%	40.2	%	46.9	%	3,468	6,767	10,235	3,035	5,873	8,908	14.3	%	15.2	%	14.9	%
Southeast	4,790	4,657	9,447	2,953	3,254	6,207	62.2	%	43.1	%	52.2	%	2,973	12,567	15,540	3,076	6,389	9,465	(3.3)	%	96.7	%	64.2	%
Century Complete													4,487	10,137	14,624	3,473	7,600	11,073	29.2	%	33.4	%	32.1	%
Total	14,846	17,150	31,996	8,663	9,633	18,296	71.4	%	78.0	%	74.9	%	22,561	43,049	65,610	20,801	29,164	49,965	8.5	%	47.6	%	31.3	%


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


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



	Three Months Ended June 30,				Six Months Ended June 30,
Mortgage servicing rights:		2021		2020		2021		2020
Beginning of period	$	8,249	$	—	$	4,115	$	—
Originations		2,500		—		6,382		—
Disposals/settlements		(143)		—		(270)		—
Changes in fair value		(308)		—		71		—
End of period	$	10,298	$	—	$	10,298	$	—

	Three Months Ended June 30,				Six Months Ended June 30,
Mortgage loans held-for-investment		2021		2020		2021		2020
Beginning of period	$	10,078	$	6,387	$	8,727	$	3,385
Originations		1,981		1,209		3,381		4,646
Disposals/settlements		(1,180)		(754)		(1,180)		(1,173)
Reduction in unpaid principal balance		(56)		(29)		(105)		(45)
Changes in fair value		—		—		—		—
End of period	$	10,823	$	6,813	$	10,823	$	6,813


		As of September 30, 2017
	Restricted Stock Awards		Restricted Stock Units		Total
Unvested awards/units		139		732		871
Unrecognized compensation cost	$	909	$	9,323	$	10,232
Period to recognize compensation cost		0.4 years		2.1 years		1.9 years (average)



	Supplemental Condensed Consolidated Balance Sheet
	As of September 30, 2017 (in thousands)
			Guarantor		Non Guarantor		Elimination		Consolidated
	CCS		Subsidiaries		Subsidiaries		Entries		CCS
Assets
Cash and cash equivalents	$	35,881	$	16,278	$	6,363	$	—	$	58,522
Cash held in escrow		—		41,740		522		—		42,262
Accounts receivable		11,306		9,312		192		—		20,810
Investment in consolidated subsidiaries		1,382,958		—		—		(1,382,958)		—
Inventories		—		1,352,989		—		—		1,352,989
Mortgage loans held for sale		—		—		30,071		—		30,071
Prepaid expenses and other assets		2,859		59,129		374		—		62,362
Deferred tax asset, net		6,403		—		—		—		6,403
Property and equipment, net		2,409		10,760		489		—		13,658
Investment in unconsolidated subsidiaries		20,677		—		—				20,677
Amortizable intangible assets, net		—		1,889		—		—		1,889
Goodwill		—		21,365		—		—		21,365
Total assets	$	1,462,493	$	1,513,462	$	38,011	$	(1,382,958)	$	1,631,008
Liabilities and stockholders’ equity
Liabilities:
Accounts payable	$	(17)	$	16,707	$	120	$	—	$	16,810
Accrued expenses and other liabilities		35,746		121,251		708		—		157,705
Notes payable		773,752		2,264		—		—		776,016
Revolving line of credit		—		—		—		—		—
Mortgage repurchase facility		—		—		27,465		—		27,465
Total liabilities		809,481		140,222		28,293		—		977,996
Stockholders’ equity:		653,012		1,373,240		9,718		(1,382,958)		653,012
Total liabilities and stockholders’ equity	$	1,462,493	$	1,513,462	$	38,011	$	(1,382,958)	$	1,631,008


	Supplemental Condensed Consolidated Balance Sheet
	As of December 31, 2016 (in thousands)
			Guarantor		Non Guarantor		Elimination		Consolidated
	CCS		Subsidiaries		Subsidiaries		Entries		CCS
Assets
Cash and cash equivalents	$	14,637	$	8,646	$	6,167	$	—	$	29,450
Cash held in escrow		—		20,044		—		—		20,044
Accounts receivable		2,980		2,749		—		—		5,729
Investment in consolidated subsidiaries		884,665		—		—		(884,665)		—
Inventories		—		857,885		—		—		857,885
Prepaid expenses and other assets		14,628		25,662		167		—		40,457
Property and equipment, net		1,166		10,224		22		—		11,412
Investment in unconsolidated subsidiaries		18,275		—						18,275
Amortizable intangible assets, net		—		2,911		—		—		2,911
Goodwill		—		21,365		—		—		21,365
Total assets	$	936,351	$	949,486	$	6,356	$	(884,665)	$	1,007,528
Liabilities and stockholders’ equity
Liabilities:
Accounts payable	$	257	$	15,575	$	(124)	$	—	$	15,708
Accrued expenses and other liabilities		12,587		49,697		30		—		62,314
Deferred tax liability		1,782		—		—		—		1,782
Senior and other notes payable		253,089		5,999		—		—		259,088
Revolving line of credit		195,000		—		—		—		195,000
Total liabilities		462,715		71,271		(94)		—		533,892
Stockholders’ equity:		473,636		878,215		6,450		(884,665)		473,636
Total liabilities and stockholders’ equity	$	936,351	$	949,486	$	6,356	$	(884,665)	$	1,007,528


		Supplemental Condensed Consolidated Statement of Operations
	For the Three Months Ended September 30, 2017 (in thousands)
				Guarantor		Non Guarantor		Elimination		Consolidated
		CCS		Subsidiaries		Subsidiaries		Entries		CCS
Revenues
Homebuilding revenues
Home sales revenues		$	—	$	374,935	$	—	$	—	$	374,935
Land sales and other revenues			—		1,826		—		—		1,826
			—		376,761		—		—		376,761
Financial services revenue			—		—		2,955		—		2,955
Total revenues			—		376,761		2,955		—		379,716
Homebuilding cost of revenues
Cost of homes sales revenues			—		(311,365)		—		—		(311,365)
Cost of land sales and other revenues			—		(2,104)		—		—		(2,104)
			—		(313,469)		—		—		(313,469)
Financial services costs			—		—		(2,450)		—		(2,450)
Selling, general and administrative			(13,342)		(32,823)		—		—		(46,165)
Acquisition expense			(7,205)		—		—		—		(7,205)
Equity in earnings from consolidated subsidiaries			20,470		—		—		(20,470)		—
Equity in income of unconsolidated subsidiaries			3,716		—		—		—		3,716
Other income (expense)			495		518		—		—		1,013
Income before income tax expense			4,134		30,987		505		(20,470)		15,156
Income tax expense			5,336		(10,845)		(177)	��	—		(5,686)
Net income		$	9,470	$	20,142	$	328	$	(20,470)	$	9,470


		Supplemental Condensed Consolidated Statement of Operations
	For the Nine Months Ended September 30, 2017 (in thousands)

				Guarantor		Non Guarantor		Elimination		Consolidated
		CCS		Subsidiaries		Subsidiaries		Entries		CCS
Revenues
Homebuilding revenues
Home sales revenues		$	—	$	888,942	$	—	$	—	$	888,942
Land sales and other revenues			—		6,216		—		—		6,216
			—		895,158		—		—		895,158
Financial services revenue			—		—		4,697		—		4,697
Total revenues			—		895,158		4,697		—		899,855
Homebuilding cost of revenues
Cost of homes sales revenues			—		(727,577)		—		—		(727,577)
Cost of land sales and other revenues			—		(4,994)		—		—		(4,994)
			—		(732,571)		—		—		(732,571)
Financial services costs			—		—		(4,648)		—		(4,648)
Selling, general and administrative			(30,876)		(82,721)		—		—		(113,597)
Acquisition expense			(8,645)		—		—		—		(8,645)
Equity in earnings from consolidated subsidiaries			52,869		—		—		(52,869)		—
Equity in income of unconsolidated subsidiaries			7,648		—		—		—		7,648
Other income (expense)			852		1,386		36		—		2,274
Income before income tax expense			21,848		81,252		85		(52,869)		50,316
Income tax expense			11,252		(28,438)		(30)		—		(17,216)
Net income		$	33,100	$	52,814	$	55	$	(52,869)	$	33,100


	New Homes Delivered				Average Sales Price of Homes Delivered				Home Sales Revenues				Income before Income Tax				New Homes Delivered				Average Sales Price of Homes Delivered				Home Sales Revenues				Income before Income Tax Expense
	Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2017		2016		2017		2016		2017		2016		2017		2016		2021		2020		2021		2020		2021		2020		2021		2020
West		151		—	$	488.0	$	—	$	73,684	$	—	$	5,259	$	—		385		313	$	616.5	$	530.6	$	237,359	$	166,089	$	40,903	$	13,747
Mountain		375		344	$	417.3	$	408.0		156,482		140,356		19,101		18,995		611		417	$	473.1	$	418.6		289,058		174,559		55,814		20,616
Texas		90		64	$	397.5	$	396.6		35,772		25,385		2,166		(288)		477		400	$	273.9	$	246.4		130,641		98,558		19,139		9,610
Southeast		352		298	$	309.7	$	276.3		108,997		82,334		6,001		7,848		429		515	$	392.7	$	338.8		168,453		174,492		26,096		12,020
Century Complete																		869		835	$	206.3	$	160.1		179,278		133,717		23,089		8,548
Financial Services		—		—	$	—	$	—		—		—		505		—		—		—	$	—	$	—		—		—		11,697		12,978
Corporate		—		—	$	—	$	—		—		—		(17,876)		(6,824)		—		—	$	—	$	—		—		—		(24,604)		(27,416)
Total		968		706	$	387.3	$	351.4	$	374,935	$	248,075	$	15,156	$	19,731		2,771		2,480	$	362.6	$	301.4	$	1,004,789	$	747,415	$	152,134	$	50,103

	New Homes Delivered				Average Sales Price of Homes Delivered				Home Sales Revenues				Income before Income Tax				New Homes Delivered				Average Sales Price of Homes Delivered				Home Sales Revenues				Income before Income Tax Expense
	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,				Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2017		2016		2017		2016		2021		2020		2021		2020		2021		2020		2021		2020
West		151		—	$	488.0	$	—	$	73,684	$	—	$	5,259	$	—		704		546	$	601.1	$	536.0	$	423,149	$	292,651	$	68,364	$	29,089
Mountain		1,046		854	$	421.1	$	410.7		440,451		350,742		56,137		47,234		1,296		813	$	446.9	$	407.2		579,123		331,091		107,794		39,094
Texas		266		252	$	409.6	$	390.0		108,955		98,270		6,407		2,138		805		644	$	271.3	$	246.4		218,380		158,697		27,670		15,108
Southeast		866		907	$	307.0	$	261.7		265,852		237,323		16,609		21,827		997		883	$	389.7	$	346.4		388,534		305,894		49,536		20,329
Century Complete																		1,766		1,458	$	201.0	$	159.0		354,882		231,792		44,819		9,333
Financial Services		—		—	$	—	$	—		—		—		(192)		—		—		—	$	—	$	—		—		—		27,016		13,187
Corporate		—		—	$	—	$	—		—		—		(33,904)		(19,942)		—		—	$	—	$	—		—		—		(42,016)		(41,949)
Total		2,329		2,013	$	381.7	$	341.0	$	888,942	$	686,335	$	50,316	$	51,257		5,568		4,344	$	352.7	$	303.9	$	1,964,068	$	1,320,125	$	283,183	$	84,191


	Three Months Ended					Six Months Ended
Net new home contracts	June 30,		Increase (Decrease)			June 30,		Increase (Decrease)
	2021	2020	Amount	% Change		2021	2020	Amount	% Change
West	497	389	108	27.8	%	891	725	166	22.9	%
Mountain	617	474	143	30.2	%	1,564	1,088	476	43.8	%
Texas	399	391	8	2.0	%	917	724	193	26.7	%
Southeast	288	566	(278)	(49.1)	%	764	1,082	(318)	(29.4)	%
Century Complete	1,319	844	475	56.3	%	2,439	1,433	1,006	70.2	%
Total	3,120	2,664	456	17.1	%	6,575	5,052	1,523	30.1	%



Selling communities at period end	As of June 30,		Increase/(Decrease)
	2021	2020	Amount	% Change

West	17	23	(6)	(26.1)	%
Mountain	27	38	(11)	(28.9)	%
Texas	14	21	(7)	(33.3)	%
Southeast	22	40	(18)	(45.0)	%
Century Complete	104	101	3	3.0	%
Total	184	223	(39)	(17.5)	%



Selling communities at period end	As of September 30,		Increase/(Decrease)
	2017	2016	Amount	% Change

West	10	—	10	NM
Mountain	33	35	(2)	(5.7)	%
Texas	24	23	1	4.3	%
Southeast	40	29	11	37.9	%
Total	107	87	20	23.0	%


	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
July
Purchased 7/1 through 7/31	29,022	$	25.90	N/A		N/A
August
Purchased 7/1 through 7/31	-		-	N/A		N/A
September
Purchased 9/1 through 9/30	15,198		24.00	N/A		N/A
Total	44,220	$	25.25

Item No.		Description
~~2.1~~3.1		Agreement and Plan of Merger, dated as of April 10, 2017, by and among the Company, Casa Acquisition Corp., and UCP, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 11, 2017)*
~~3.1~~		Certificate of Incorporation of ~~the Company,~~Century Communities, Inc., as amended (incorporated by reference to Exhibit 3.1 to the initial filing of the Company’s Registration Statement on Form S-1, filed with the SEC on May 5, ~~2014)~~2014 (File No. 333-195678))
3.2		Restated Bylaws of ~~the Company (incorporated by reference to Exhibit 3.2 to the initial filing of the Company’s Registration Statement on Form S-1, filed with the SEC on May 5, 2014)~~Century Communities, Inc. (filed herewith)
~~3.3~~10.1		~~Amendment to the Bylaws of the Company, adopted~~Second Amended and ~~effective on April 10, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 11, 2017)~~
~~4.1~~		~~Indenture (including form of 5.875% Senior Notes Due 2025),~~Restated Credit Agreement, dated as of May ~~12, 2017,~~21, 2021, by and among Century Communities, Inc., the ~~Company, the Guarantors~~lenders party thereto, Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, and Texas Capital Bank, National Association, BBVA USA, BofA Securities, Inc., Fifth Third Bank, National Association and U.S. Bank National Association, as ~~trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 12, 2017)~~
~~10.1~~		~~Master Repurchase Agreement, dated~~Joint Lead Arrangers and Joint Book Runners, and Wells Fargo Bank, N.A., as of April 10, 2017, by and between Inspire Home Loans Inc. and Branch Banking and Trust Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 13, 2017)
~~10.2†~~		~~Century Communities, Inc. 2017 Omnibus Incentive Plan~~Syndication Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May ~~12, 2017)~~25, 2021 (File No. 001-36491))
~~10.3†~~22.1		~~Form~~List of Employee Restricted Stock Unit Award Agreement for use with the Century Communities, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on May 12, 2017)Guarantor Subsidiaries (filed herewith)
~~10.4†~~31.1		Form of Non-Employee Director Restricted Stock Unit Award Agreement for use with the Century Communities, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on May 12, 2017)
~~10.5~~		Registration Rights Agreement, dated as of May 12, 2017, by and among the Company, the Guarantors party thereto, and J.P. Morgan Securities LLC, on behalf of the initial purchasers (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on May 12, 2017)
~~31.1~~		Certification of the Co-Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith)
31.2		Certification of the Co-Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith)
31.3		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith)
32.1		Certification of the Co-Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2		Certification of the Co-Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.3		Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS		Inline XBRL Instance Document (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF		Inline XBRL Taxonomy Definition Linkbase Document (filed herewith)
101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document (filed herewith)
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104		Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)