CCS - Earnings call transcript Q2 2018 | Century Communities, Inc.

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Operator

Good day, and welcome to the Century Communities Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note, today's event is being recorded. I would now like to turn the conference over to Scott Dixon, Vice President of Accounting. Mr. ahead. go please Dixon,

Scott Dixon

would Century thank earnings Communities’ We us conference for today for second like afternoon. you to joining call. Good quarter XXXX

everyone of materially differ these statements. in to those results and subject can call certain other actual most cause on could call Annual current on historical forward-looking Risk the begins, expectations of may would beliefs, that implied recently risks are or based Certain to Before be to constitute heading based Report our and forward-looking management's the SEC Company's Form I risks from filings. are in not are statements in the uncertainties statements a course the described remind made and uncertainties information, of the These XX-K number this Factors filed and by found like as that statements. under and on supplemented

filings The made Web call. www.sec.gov are that are and during Our no at any statements our update undertakes to Company on available forward-looking SEC www.centurycommunities.com. this at site duty

Officer; to Francescon, Executive this Additionally, today on the call will the will in not in the call turn with Francescon, the or Co-Chief not to considered financial conference call. of With available Dale. did David measures Chairman Officer; should information that, you be Financial be GAAP. intended be discussed Company's forward have are is substitute, after a Officer. information certain Dale call Rob will to as isolation, this The presented non-GAAP Management presentation Co-Chief that accordance earnings answered. Hosting Messenger, any over get I questions and Chief Executive and

Dale Francescon

and Dave balance outlook on Rob our operating follow the Scott. results, year. business balance Afterwards, up then for markets further detail. our in sheet the review discuss will our and will on financial the call I Today of and business updates. with information you, more will Thank highlights increased

for lines open we'll remarks, prepared questions. the our Following

Our more or second earnings quarter of largest U.S. and through expanded the and acquisition $XX.X Wade team million per homebuilder upsizing executed delivered. completed XXXX the $X.XX share. pro flexibility XXXX our and adjusted We doubled forma homes XXth become the Homes to to national Jurney of financial extension than diluted well credit based facility on in the year-over-year our

the the interest and a and less accretive Homes, remaining come. the for many unique Jurney business has transaction Homes requires expect business, and Century's a our acquisition XX% to Wade a proven our the expands including by scale will This particularly income in in geographically the made XXXX. from access to homes. outlets Jurney asset-like including XXXX, expand and model opposed model, transaction as through streamlined sales quarter to terms. asset next markets benefits unique quicker possible and the exposure acquired enhances resources Wade solidly other majority I the capital home Additionally, of to Homes purchase has new including sales we for significant Century's additional levels cost share growth in tight growth throughout home a our operations, and effective for Furthermore, initial and the backlog operating the investment step from the million highly want product our drives and few revenue of operation; take operation; it while healthy this reached This pre-acquisition capital environment. backlog driven of investments, and quarter, overall price record dollars we demand on the million our ancillary portion buyers; additional during across the diversification touch through revenue, integration metrics expand demand Jurney finalizing opportunities Wade completed was $X.X exposure Wade of improvement net to including the of that operational drove in venture of there exceeded improvements, the markets. was which initial partnership accelerating the new by to contracts, also provides; of logical sale The of $XX increasing and to services yields which given profitable we joint Jurney an a it is we business growth enhances has into which investments of and finally, to Century's from homebuilding and in in strong reaching part improved accelerate ability value of income acquisitions. In all our of streams, June full full approach inception XXXX, Homes venture to geographic previous it legacy model, already scalable maintained additional homes in second manner. acquisition operations this occurring. the level a points; since retail cost moment our November controls existing significant entry be a years This financial of our

For ended revenue. the $XXX closed XX-month homes, in period trailing generating X,XXX XX, Homes XXXX, Jurney Wade million June

or of have homes and as $XXX backlog, XXXX, X,XXX X,XXX XX, Wade Additionally, in June representing of a million. led Jurney Homes owned value lots

$XXX backlog dollar with overall, year ended in period. value, homes X,XXX little considerable value to billion nearly a of growth with Company, but the prior a the homes the For million $X quarter we compared X,XXX with representing in

also quarter, an homes grew sale XX% We revenues in from an improvement to increase of led the by delivered. year home prior million, XX% $XXX

The driving aspects with business. to continual our prior commitment items dynamic parcels acquisitions focus multi-market on situating in dynamic our a accretive, land include; on in in scalable support and continued attractive from position home strategic investments; adjusted improvement robust of expansion maintaining capitalize execution related building year’s demand the approximately capital that all impact success and net platform; acquisitions, to the home quarter. one-time a fundamentals; of markets income attractive operations national of builder strategy facilitate an sound our this million, markets; to growth the economic to was of our strong $XX.X XXX% Excluding of facets a of our the increase

to where record for builders. entitled home building to environment, shown with by especially a among XXXX. improve the an earnings to to quarters This delivering gain growing the further year compared five which year-over-year very further position land segment second the are sheet have consistent ample in leverage quarter a track our with line, of scale well our I we a buyer scale our combined strong achieved prior top second quarter earnings. expect us am and prospects profitability. deep the to positive another create we us has excited past increase Year-to-date, to ever capacity profitable XX and consecutive XXXX, our largest by in the revenue attractive record for maintain this mortgage years, on our of year consistent level contribution in half view $XXX,XXX growth expand of and of U.S. a to position ancillary of backlog, our entry services to by business over we way as solution encouraged validates continues we We presence. three-fold one-stop the healthy our services shareholders. are the and home record earned results financial the group, to million million $X pretax more momentum considerable provide returns we generating our come. Into U.S. Its than balance which buyers, outlook national for which current Our have in home $X.X favorable provides of

call opportunities investment potential evaluate carefully discuss drive now to to business over I’d greater our shareholders. our continue and turn will the returns to markets to in We to for Rob further detail. like

Rob Francescon

Dale, everyone. afternoon you, good and Thank

and focusing our avenues, existing During operations. additional the expanding quarter, to pursue improving on we continued actively growth while

driven backlog $X strong growth home was second net record contracts We homes. with deliveries XXX% This up billion. represents record homes a X,XXX in the was by backlog. to XX% Our to new quarter backlog in dollar value performance a ended quarter that up and significant

on Additionally, opportunities facility and new borrowing flexibility expanded with at future and provides million growth act accretive and us credit with in capacity extended capital additional now quarters. our to $XXX

pipeline. in the owned requirements. X,XXX visible We markets of strict of full $XX,XXX, continue at during with to believe land XX% the broaden and but situated a pipeline balanced acquisition this Homes Furthermore, increasingly added and by disciplined with quarter. the us Company. various in our approximately our owned our fundamentals support several and continue markets for controlled of end our of lots strategy ended the meet product underwriting which solid gives robust stable over sourcing land was land We to our to versus lots next healthy lots well growth of excess to approximately owned offerings, geographic controlled the We quarter diverse positions profile Jurney second The quarter years. more a flexible that controlled exposure for Wade footprint, grow this

We entry Alabama, number to models, Jurney This a and entry sales asset are prices investment as targets $XXX,XXX. us Carolina which returns Century Wade under grow have the Georgia, level South that like wholly-owned while his offers increase the averaging its home North Umbrella, unique operation pleased extremely remain Homes exceptional with builder business. with level experience as himself we this now will operating the Wade eliminate of buyers capital operation helps limited in this dollars. plans, Florida, needed and with Carolina a

level coupled rapidly with market, opportunity have areas in in intend the much as to of this success into position continue broader growing demonstrated entry business to exposure in Given a brand we markets. as growing level the Southeast, additional other the well the country. entry scalable buyers of expanding immense We now new the the

the of that availability and our months, is new positive the to for in tight, second strong, employment homes the legacy into the economic increase home regions the are year-over-year a up price supporting market’s we and summary, supply with increased revenues on sales just across primarily and outlook of contracts continued growth due we Southeast the robust geographic regions. in of backdrop. our regions Texas X.X half XX% over X,XXX at XX%. improved hills markets with increased during under business home areas. increasing additional growing of sales healthy led home mortgage our and where lower as remains remains demand of the market, year-over-year, types, have for were as sturdy and still half channels In the accounting Average price our inventory XX% are to Southeast made reach appreciation by In are backlog to widening quarter Looking remains the continue buyer with XX% all Overall, focus on approximately pleased our across indicators significant Net strides by growth trends XX% regions. second we moving diversifying product our during over our back home levels home industry segments, quarter in expectations point Texas we contracts new for net across growth our homes. our year. revenues demand by notably sales year-over-year Industry high new growing

top We reducing continued markets focus half supply Jurney the our of the continue turn plus within who U. home in I advance growth, level. in of We with of our job portfolio addition going XXXX and we macroeconomic than and growing dedicated to Dave and looking existing to our detail excess markets outlook. the our such attributes as and will the financial homes our price second of price largest home Wade deep provide the on and talented household favorable position XX,XXX ranks over positive now formations, at considered brand, more factors, lots, With members constrained greater our forecast. position strong expect land our to team capital the entry our will as call Homes of results XX we target be XX% remain on forward, our points encouraged by builders. S. of

David Messenger

Rob. you, Thank

experience million of per $X.XX purchase and net or in accounting share, items per year diluted quarter or million second net $X.XX one-time to in diluted per demand This $X.XX and in acquisition quarter. to the income XXX% helped compared trends This and the increase the continue prior diluted led income $XX.X per share. to year excluding compared margin share quarter. $XX.X million share adjusted gross legacy the which our During or acquired million $XX.X strong $XX.X Adjusted of to to prior or building XXXX, was a market, revenue grow home $X.XX levels. we record price

prior sales compared million million For in XXXX, income pretax million the Adjusted to more $XX.X of second quarter $XX.X to our in the EBITDA Home year quarter. million the to compared prior by driven quarter. doubled revenues prior the to increased to quarter. $XX.X million doubled the $XXX.X XX% to year compared than increase to home mainly year revenues to prior $XX.X million year XX% X,XXX in XXX homes $XXX.X quarter. was deliveries in This compared in improvement in an

year price compared home and and includes Similar mainly experienced labor selling have are to quarter. knows homebuilding climb. was XXX to behind This to Everyone was years, than percentage continue in currently to XX.X% $XXX,XXX average favorable year input three efficiencies mix. This improvement $XXX,XXX the quarter. to margin Our XX.X% basis what on in for we most operational the fluctuations, lumber increased and its more decline. the which costs Adjusted gross the compared story prior by driven prior point materials.

appreciation, supplier other process major national long-term focus concrete, seeing categories. also mitigating We and and increases price are agreements, trade purchasing through these we However, increase in home flooring, on and relationships. efficiencies paint, roofing, most

underwrite new into we our we homes and land higher cost factor interest As cost assumption. in acquisitions, and new start inflation

backlog our occur quarter at typical XX% expect adjusted X,XXX some fluctuations remain product XX% consistent of gross to the next mix due range. while our period-to-period, in the from geographical Looking and we homes, couple of to margins to over may

adjusted accounting reminder, XXX in from XX.X% capitalized a gross points homebuilding prior sales. attributable On GAAP a to gross cost basis quarter, impact of interest year purchase from XX.X% basis, and largely was charges. to As accounting the margin margin purchase impact compared as excludes

Jurney of UCP to of charges. Homes XXXX, which transaction $X.X quarter Wade accounting purchase $X $X.X second Sundquist acquisition. incurred the During million we pertain million to the and million the and Of

essentially quarters related $XX the million approximately million price incurred of acquisitions, preliminary along XXXX. two million percent revenues of with expect fourth for a includes more $XX accounting in the revenues Sundquist of the acquisition sequential increase Sundquist to $X the the purchase the than quarter. the basis XX a as points third a quarter G&A costs at investments being support and accounting quarter anticipated to remaining X.X%. SG&A be UCP to improved from in and of XXX basis, primarily complete our in XX.X% growth initiatives with stable during of incurred a homebuilding to On adjustments of purchase UCP our acquisitions. compared of and XX.X% adjustments basis of the our quarter fixed XXXX, of our improved integration Homes incurred quarter as the XXXX the the first This percent We complete and to with final was Jurney second SG&A XX.X% to estimate compared year prior due homebuilding to for to Wade point

SG&A We sequentially year. of continue expect percent our a of revenue total the to for the as remainder trending down

and $XXX,XXX quarter. in income Our in contributed the XXXX $X subsidiary pretax quarter million consisting second of financial services million title $X.X revenue with to mortgage compared in services $X.X million and of year prior of of the revenue

of a Homes $X.X We onetime our which XXX% $XX million operations, Our and increase price JV Wade income and fund Jurney quarter, the secured the gain purchase Wade facility related to million was credit Jurney million which $XX.X included an $XX.X second million retire of of $X.X approximately acquisition million for investment. million the the outstanding to year. approximately to of $X.X compared prior use in Homes’ was

to we've as acquisition activity item. the count this is the longer report definition Homes not brand. complete, Now will applicable calculate Jurney is we line to in using community joint no venture been The any Wade

count historical providing delivery, and decorated community since in sub-divisions no we allowing we approaches be quite model or is lieu of Jurney selling our measuring count different certain model any of homes material a located And varying be sizes and to Wade a in lines. to not store visibility on Our obviously of will concept absorptions homes generated front historical deliveries helpful for retail from future are specific be sales of to two centralized typically sales sub-division. scattered from and community communities sold sales of or are even going overall from providing this cases employes relatively brand Homes part to portion into Wade longer selling These effort expect Homes. homes, multiple business. that within a our guidance our forward in Jurney

$XXX sheet expanded borrowing through $XXX mature The we two XXXX. increase at to us the of capacity to extended balance was interest turning million. bears the to million of new rate transactions, credit spread minimum facility accordion X.X% a our allows an with Now and facility and LIBOR of an facility the our senior that feature plus April In to June credit to term unsecured liquidity.

$XXX $XXX of million revolver. in for of U. team’s Century work XXXX, helping hard expansion debt our team As premier $XX.X closing, a and in achieve their thank we including of The to liquidity S. long-term commitment Century and growth our total direct total business. availability In is XX, of quarter of dedication into million million, the June on of to want with we and improvement substantial $XXX a had us excellence. of million entire result another XX top homebuilder cash

Looking at record advantage are expanded committed year to deliver geographic XXXX, as of the we another take remainder of earnings of scale we reach. and our

our are As we a outlook. result, increasing XXXX

homes the $X range deliveries range We $X.X in billion revenues billion. to to of be in sales of expect be X,XXX X,XXX and the to home to

of approximately firmly and geographic investments situated emphasis, questions. growth expanded for We income continue on XX% profitable scale, full are year rate, lines deliver Operator, our With discrete tax to to execution, the strategic objectives. anticipate please level an entry for excluding sustained items, XXXX. our we open the

Operator

from first Raleigh J.P. ahead. The go Please Instructions] comes question with Morgan. [Operator Michael

Michael Raleigh

and had of people some are First builders or maybe markets miss, the June, the offset if in speaking throughout the couple you environment. the last had May, witnessed three points; some any not rebounding just builder was these off particular, -- I to intra-quarter your little to expecting, saw a other May. as experienced perhaps steady of I being was a or backdrop much across demand top but consistent month. types in enough if a trends as this you softer pointed result, you positive question more Obviously, broadly you strong curious of general of

Rob Francescon

and it slower was bit time look quarter. period say was saw trend during look were one specific significantly, than really another. that we would we or no the Well, at flows legacy at overall and and month ebbs we obviously There the so one it. Mike, of just sales at that up we look numbers when both our for very think Company our as pleased And I were -- region. then a we

all So few our performing a reflection hand last of chosen really all that they that's seem and well years think of did to well. be very general, markets very the fact over and markets, in the we we’ve these

Michael Raleigh

And mean investors I in builders you little a observed guess to incentive big then the levels of softer out I the that extent act softer or another as more might material result, period and a a aggressively. year there, into any pricing going is volume you're pricing, changes have that that have little

not curious some overall, well, across July into So and perhaps softer as on your to second it just half? just even of markets, those relates as incentive level but getting

Rob Francescon

anticipating perspective, not would it’s beyond you incentives. the that -- every look the any to homebuilders’ didn't think going do we're do forward. at change significant what not We I incentivize we really in Well, year, houses seen normally But need haven't when we it’s a favorite month. and from July sales

Michael Raleigh

Then also margins accounting. you Dave excluding interest for said expect and back purchase XX%, being to you XX% at half the I gross think

quarter around think because want just the excluding XX%, I that ex-purchase accounting to you’re you accounting, first purchase sure around were XX%. heard I right, quarter, So this make I in

I a a understand better, to inflation lower So half. it's versus cost little don’t little bit? bit maybe trying a range Wade of a is of like that seems know or impacting the Jurney if mix, catching And that up I first just little know or don’t

David Messenger

deliveries quarters is XX% of were XX% coming there XX% go then have they in in we margin range XX% -- quarter, better our I than a several the better things the that second the and of several been Historically, than for excess into with past in in think that. quarter. forecasting first to

we As be we for take is have a level account. to We backlog, there a of range next that couple numbers. delivered into margin of certain increases be quarters lot our look will there reasonable. think at to as of price through mix today's those the things backlog impacting XX% we of coming will got we today, XX% But is a adjusted over gross do

Michael Raleigh

forward. find not but a of the I comment lastly about really going guess also any the pace count just itself, sales helpful, providing not component equation. that metric talent it's Obviously, people your community understanding

Wade they does operate Wade understand, model. to mean, doesn't and but I'm I Jurney Jurney not your for not -- But unless I wanted obviously definition presume obviously fit do with familiar other to I the am Just out as in themselves. have, homes, relative their assume communities of I that of

So community? bit that color more also the obviously, for I pace, important again, and very just around future around little wanted sales discussions

David Messenger

Just a think on of as to is on there communities that you out When see be Wade site. site listed Web on you Jurney well, can -- about in storefront XX a Wade not selling a Jurney’s lot may lots couple follow one up things. centralized have a retail be is community. works, it model community community could Web it how could actually is that something -- that of selling effort overtime was that and primarily, store lot, out there one he signed and

our that pace really provide of in rest we going. enough the see community and And definition the sales guidance around where way we so in terms that selling in is quarters we’ll of that business think it work of narrative around to And metric, same order the a doesn't you what Century’s future works. providing

Operator

with ahead. question next McCanless Please The go Wedbush. Jay comes from

Jay McCanless

price be an should in business for selling about price question I we average thinking extent and take Century you're average now, price? to for had, What Wade forward months Jurney average the the the what there. points an other you talking If about Company we -- have should the with first price The comfortable and all it. XX from for

David Messenger

without probably a best be almost for guidance that’s probably probably using billion XX what We've metric $X from is perspective. into think got from of ASP and backlog for best you homes $XXX,XXX a an now months the in XXXX just I of our today. to modeling ASP X,XXX getting over metric for

Jay McCanless

And then could in the XQ repeat expecting said you what you margin and then XQ and what have about for purchase XQ? also you accounting

David Messenger

in $X I Sundquist on round guidance third and out out we those with over round then of would will quarters two and from that XQ QX, there Wade about So we're quarter. weighted million have we Sundquist And from was three $X that more $X $XX expecting Jurney. million UCP Wade of four will and being transaction million and heavily the then first had quarter. Jurney to $X million QX roughly to the the And related million UCP forward which transaction. million approximately the $XX looking for be That provided towards

Jay McCanless

And then I the had. question next

and comp Looking being us year-over-year at Could the order about of inside you and Vegas, the those mountain there. different just and Lake quarter? at performed Salt markets flat the how let that know looking Denver, during the talk

Rob Francescon

performing all the markets in the well Mountain Jay, are region.

were we various more because have so excellent good difference this that's low very in timing It's there. the Vegas, was an of And a Colorado we've closing was communities, why Las orders. years. out at well, performing the And been performing look in inventory many as market. seen you Utah Same flat markets as well If thing really it that market. is on

so that just now difference. And in timing we're

communities Colorado, an Utah in Mountain and So we're example, comprised opening up XX Las four in in two the as seven in region new in Vegas. QX, of

are the all three. very just the was in timing that situation markets So but healthy

Jay McCanless

I question last down market bit catching a and little Seattle a the have. We've heard of about up a discuss slowing how bit competitors there. little or things your then And couple maybe talk

Just you're What talk such to what's for expand that and on? what your next is like into if and wanted year. growth and spending to you about type California UCP be lots price the way, to of also thinking as see going focused points that you look guys going could

Rob Francescon

us we're Seattle all California. still So you've bullish two are markets seen last price of over the and and down our generally those We're no points in speaking, years, as our on do getting different. markets

areas, at have is margins those Counties Candidly, concessions look you very and little demand. North the Pearson Seattle, been If great then Snohomish, and a King still and the there of than the strong choppier trade in and other little areas. experiencing sales base Thurston we in some

so a little market bit times healthy. cycle And generally speaking, but is the are elongated

the still first foreseeable early well remain good buyers going We’re that of either some we thing relatively as both in that XXXX, the market year the is market as Same again half time price this lower at or we for points. continuing projects at in latter again future. part the to and time first will move-up. invest and hit have And California on think new to coming throughout that California that of

Operator

comes Deutsche next Bank. The with go question from Please Nishu ahead. Sood

Nishu Sood

How coming for So closing is ’XX. in thinking from increase are about in results? many including Jurney the expected Wade the being those X,XXX your of

David Messenger

basis consolidated the for joined end of from some Wade We low that X,XXX a for the of closing look on Obviously, Jurney. business. is delta it -- at X,XXX

haven’t provided of We break are terms of what a up out in that change. regions making all

Nishu Sood

just maybe a XQ. we -- sense in only got So a any of weeks few small,

just to of help the us how how So that deliver? might might new anything understand division -- can cadence you that

David Messenger

it be deliveries see that to and it, some can and coloration now positive site Century’s should we’ll they’ve able expand you see be Web have providing of in that there. to it and overall think numbers able business. been terms the how we on look grow some at right we historical think to But be I to accretive the business,

Nishu Sood

And as of entry best And fertile you’re then established year. seems think direction states about what sense any established. in, most some remainder so the the in, recently four most Texas filling thinking then say North done into I three many Wade growth, of two Carolina, of Texas markets? the to this as think it the the I years expansion for be you out? got the And could Jurney obviously let’s Alabama of out pretty that like states well ground MSAs What or how Is the of well. you’ve

David Messenger

Nishu, the think And parts viable and we business markets really of expansion. scalable. very currently the believe that for country prioritizing in we're it’s we most in is the process model of basic

Nishu Sood

by that month entity? now owned the now that to change it’s XX-XX. was And as is it’s is a Wade partnership going when very consolidated of strong be fully fully it obviously, What Century a greatest ago,

David Messenger

provide. we resources Really it’s that the can

we extremely become financial years becoming that notwithstanding the over full and more of operation was comfortable experienced the business be could XX business that to clear that growth operation months. So and to accelerated the more over access significant all if it last the the the had it with had few Century’s continue and operational the And last resources.

the what the forward of becomes we in basis. And with was viable that scalable before, go as that's business a so we're on think doing. as that process And more it viable even

Nishu Sood

as gross as a could, if the through driver And of price other gross of lot trends. folks a strong other mentioned drivers, margin gross margin, one, you walking were I acceleration Dave one margin have

seeing on as more focused folks’ you're very gross cost gross well? mix. those are trends as You folks But well. had the and here your did pricing a margin What management margins strong you and help

David Messenger

a subdivision, there less us, we're it's on that level. subdivision but subdivision depending There's the -- on pricing be evaluating, may something or power. more it's really It's by continually for

more why think price decide concerted we're level in affordability we a that so we've some about how and we to the the homes. where down has I concerns And industry everybody really fits home. made that's And to And effort. that owned business a the attractively priced our new Homes points price think down, over effort get perfectly time period offer last into wholly Wade our Jurney we of

Operator

The next Associates. Zelman from question Please Maguire Thomas comes with and go ahead.

Thomas Maguire

Just business? piece on obviously, relative to wanted it get just And think thoughts how pretty the the to any Century dig and on but in quickly love gross strong level on thoughts volume of side high Wade we business. do to of the would that the about there, Jurney profitability growth margin margin core

David Messenger

too not it's Wade Jurney margin Looking our dissimilar Century, we to of at operate business. where the versus

Thomas Maguire

expands we a And the Jurney the then where there guess think to core new just or Arizona, there an just they isolation? something semi-greenfield should markets, manner separately, in Florida, about is opportunity already Century as Midwest well even or it’s product Is in bring in Wade presence. the I Wade have Jurney

Rob Francescon

as Century actually, same the than Jurney we're looking think point there's even so Wade significantly the within operates opportunities the price at well. coexist opportunities we communities at series brand complete to No in our a those And Century lower obviously, markets. brand

sides the brand where both that we is so And markets into brand Jurney the that of vice can leverage Century where Wade can something that's versa. already come we think and

So we area. see definite synergies in that

Operator

go comes Housing The Please Alex with next Research Center. question ahead. from Barron

Alex Barron

ask to or said a But are comparable and margins you about their your standalone Journey the well than questions as their Way obviously be wanted here. comparable, higher would -- I of lower would lot on be operations? it SG&A

Rob Francescon

operationally They're relatively to ours. comparable

Alex Barron

they’re are simpler, the in obviously designs. Now of those standardized terms forms --

maybe time? or is at that looking delivery we conversion. it whether site block ordering a go some How to construction person a actual ask of does another way terms from home to quickly in So

David Messenger

at say four of time that three would sales houses. from construction for going to to you're really these looking looking I delivery, months

Alex Barron

homes the in goal comes homes? that. and strategy, as goal mid-XXXs. But on to of maintain pace maximize them goal or and to to nobody raise pressure -- maintain What's close of to to those is them And of high the the to to main in margins all goal the to affordable the obviously, cost affordable or you guys keep prices. of types we try to got sales is the emphasis those terms the else is being Is try

David Messenger

prices, But forward. to And intend raise the that remain we but that's to to extent change to the can prices going also intend most we can that we so. home buyer that's raise a really something home have. new not It's affordable going option

Alex Barron

all And sectors of or is and market I Phoenix have end specifically, well? for markets as them, factors in markets one set them guys centering you guys terms are of at think you which

David Messenger

as Arizona. certain at opportunities looked parts Texas a as We've verity in of well of

the we're what had its in the this on deploy our and additional relatively mean, just beyond ownership own. terms so the -- process now in venture XXX% I capital ability And of to is new

the So process the right entry markets prioritizing we're in which now. into of

Operator

up follow a with is Michael Morgan. ahead. question next the from J.P. And Raleigh go Please

Michael Raleigh

just some first the of think about or make for rather quarters forward back and strengths. little XX% few that perhaps quarter, perspective. in next than as gross basis circling so above to of XX%, and way better levels I to the when just asking in margins down were from recognizing midpoint. follow in But points to the XX the Dave, XXX into the sure above actually being backlog XX XQ second to wanted for the you So maybe anything the another ups still effect you of gross came the XX I it's then over would SG&A, opposed guess in on range in conservatism least to couple think to helpful that quarter, end is guidance that couple was perhaps margin that from XX above upside -- it say raising be looking more it that of the the if recognized anything first to going of I for at for it the you the drop year about quarters, higher

just what either margins standpoint but as as cost trying conservative half? Just understand the mix price more from those anything first if conservative a played is to push would or in it there that -- out not not being is ultimately or down,

David Messenger

make for our or backlog mix to that now seen in come you negative be whether pricing should its range and issues numbers, seeing think trying But alarming not backlog. of we’re given not to XX% history, a using sure But prepare our -- mortgage an we anything I numbers. see our rate. at in in range looking that order alarm we’re as anything Mike, issues strength XX% XX% to it’s that at getting to the do appropriate in negative we’re that through XX% we’re an or backlog some in giving

Michael Raleigh

in over scale. some get ability quarter much greater I And build an type we expect Jurney given up higher bp Or of SG&A of the continue first guess this we you something out has that’s forward second XX% on margin, to a just going out you’re cetera. How the the But the to XX year-over-year. think that quarter the invest, degree SG&A margin. that more to of for In et terms the similar next Wade said the still operating for should that like should the footprint, of margin, couple about years? leverage SG&A margin

David Messenger

said would down. percent in expect a our I I we as prepared that to revenue my remarks, say SG&A of trending homebuilding as begin

the stay related During integration of quarter, incurred final closing the employees, we incurred the of related UCP, bonuses costs. a completion variety second final those to we whether final X.XX and offices, hopefully of a integration software and to -- cost current verity of of

leveraged of fourth our into As we XX.X% quarter revenue, get we and And component the compared and we in saw SG&A in platform declining we to quarter we begin get fixed built. decline to that the sequentially third continue out building to percent X.X% overall book our expect from SG&A to the we first quarter. of home as second

Michael Raleigh

is second perhaps in should directionally something So be for like we things? half the sounds like about thinking the how obviously XX%

David Messenger

guidance but to trending Directionally out be and it number quarters. than be XX.X% down next should do the it we two there, have don’t into expect less we

Operator

go have We Research question from follow-up Housing ahead. a Please Center. Alex Barron with

Alex Barron

little tremendous region, Can there quarter? what this bit about guys Texas talk a growth to the the you lead

Rob Francescon

shifted So talked affordable we've as on Texas lower a offering more previous in points price at to point. Alex, into go price our we’ve calls,

price in And we continuing starting at bear points. what that's so communities as that’s to And a to saw go we forward that quarter. new basis second continue on bring see and fruit on the we those lower

do in that see market any issues we right Texas. not now price point, So at

Alex Barron

lower Now prices? in price you about lower your you point are brand for how talk starting sectors when

Rob Francescon

Houston sub-XXX,XXX on in we and have Well, Century the some that’s side…

Alex Barron

Austin? in And

Rob Francescon

XXX,XXX Austin, again, sub-XXX,XXX. very we low have and Antonio San

Operator

conference I to Mr. further like am This session. I in Dale any no seeing Okay, closing our remarks. concludes question-and-answer the queue. would questions Francescon over for the back

Dale Francescon

And look to you, us for again next again with speaking thank today. We forward Operator. you to Thank everyone joining quarter. you

Operator

conference now is presentation. for The today’s attending Thank concluded. you

disconnect. now may You

Century Communities (CCS) 2 Aug 182018 Q2 Earnings call transcript