Earnings call transcript Q4 2022

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Operator

Hello and welcome to the Century Communities Fourth Quarter 2022 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, this event is being recorded.

I would now like to turn the conference over to Senior Vice President of Investor Relations, Tyler Langton. ahead. go Please

Tyler Langton

you earnings Thank full us for today XXXX. Good call for for Communities conference and the Century afternoon. joining fourth year quarter

described Before and forward-looking uncertainties actual statements. remind implied statements forward-looking are risks like or made I and management's that this to These the results current a statements. on materially certain of expectations during constitute cause that from subject the to statements to may call based call begins, are could those everyone in differ would number

Certain of filings. uncertainties as can company's under duty found supplemented Factors be our undertake XX-K We Risk in these risks update latest SEC and the statements. to heading other no by our forward-looking the

on of considered for company's this conference non-GAAP accordance certain a or presented Additionally, call. in this to GAAP. be is with discussed presentation not in intended isolation financial information substitute as financial measures the be information The will

Co-Chief are Financial Officer; Hosting Officer. today Chief the Officer Francescon, Messenger, Co-Chief Executive Rob call Dale President; David Executive Chairman and and Francescon, and

today's open up questions. the remarks, will Following for line we prepared

will I to Dale. that, With the call turn over

Dale Francescon

Thank you, good everyone. Tyler, afternoon, and

homes, and lower with construction focused position, given the towards though homes start During leverage efforts monetize near-term even margins new and homes. reducing carried cost these cash strategy metrics, and in deliveries we start sales they due dates available increasing to the to earlier included year. us costs, direct our their incentives lower this The fourth goals our behind positioning quarter, inflated to

flow as company. during level the reduced down quarter efforts, in we net to year-end generated XX.X%, a million our our capital the operating to and $XXX As fourth public history result cash ratio of a the lowest net debt of

$XXX highest of of income solid $XX fourth off of our diluted homes delivered this closings the $X.XX second history, quarter, the and X,XXX million, per of record net in XXXX. homes included income, level only of and also in share EBITDA level In we million delivered million. the homes, XX of Our earnings $XXX quarter pre-tax fourth results quarter in a

supply year the we could While the the us of at pressures deliver to progressed, as XXXX, pace homes level most disruptions helping fourth the these of improved closings achieve on chain throughout strong quarter. in which weighed

Revenues from our in quarterly X% year-over-year billion, price increased our history; less sales were $XXX,XXX goal consistent sales home affordable building with than $X.X the of homes. level highest average our basis on by while a to

were elevated in potential and contracts uncertainty new fourth contracts cancellation X,XXX to due totaled new mortgage the Gross rate rate, an sidelines. on and the keeping X,XXX, quarter volatility homebuyers net many homes economic overall

backlog at consisted X,XXX $XXX sold quarter of Our million. homes end valued

continue be the and mortgage we underlying we believe pressured in to home that to While also expect uncertainty sales near-term adjust rates in higher remain buyers demographics favorable. as will the economy,

levels, mortgage leading Additionally, buyers rates in improvement in gross now levels market to this at sales. decline is an believe of November, us both and we think are were below to started rates November that the well new above led highs. December are beginning indication recent return in October net and that contracts the that An our to in that to stabilizing

During we've improvement buyer experienced home further January, activity. in

at intend rates. with this order major sales homes on our strategy, on are past deliveries. for continuing are not to Consistent focused we to a in sold up to several closer our that near-term to completions Similar completion in homebuyers and term with concentrating lock backlog point building continue the quarters, to significant look interest are homes of more their efforts

of these average incentives above forward from A third mortgage commitments especially of points amount about basis rate the in sales, went significant the points in roughly quarter. and homes when XXX quarter X%. Incentives that the form rates drove to fourth traffic XXX on and of increased basis sales price were buydowns closed in

by to finding clearing interest incentives continue especially recent to the moderate the move on that price will expect rates. we level the we're While a community a market offering average bit, of inventory basis, retrenchment with community we in by

the sold the adjusted margins not incentives sales incentives will largest with the first fourth last of higher strategy their decline homes sale many also of of year homes had being XX% with the last In backlog our to consistent with to quarter, burdened the quarter and the our will construction year. than of of delivering but quarter. with start generated dates XXXX we Consistent new closings, earlier These driver incentives to complete in expected that near-term XXXX be this been applied those elevated gross compared and given higher of the be of historical inventory, with quarter fourth norms. completing margins costs, earlier in prioritizing similar we expect only as

elevated last and were year had costs Many increased commonplace due of our starts of in incentives half become to postponed the our industry. input in that planned second

corporate, Our across and in have teams the great costs challenge, the strides made to board. and purchasing divisional regional reducing rose

at higher and they As pace improvement these result, to homes accelerated as direct reduced costs, margin to December, a carry cycle has Due a begin profile construction expected this into we November shorter in and which a the are close. incentives to began greater in year. starting homes times,

a of the they balance positively as in normalized the more beginning the of through we levels. quarter trend XXXX, to expect homebuilding gross sequential to return a year second As basis result, on margins

the turning year to setting to over record I the our full Rob, call for Before briefly wanted recap XXXX. performance

gross homes, consecutive company the XX% per highest year profitability, XXth level which history. per XX% the $XXX increased company's averaged company XX% record share we a million and also increased $XX.XX a to company the earnings X% adjusted income both respectively, XX,XXX and was year, for diluted records. to our the share, During not Net record. Gross margins year-over-year margins in and delivered of second year XXth only anniversary but the

a with our $XX.XX, of record increased equity per total value book increasing our history. year stockholders' in highest the $X.X Finally, billion, share level at to end to our

in navigate that have we this housing believe and near-term currently right demand. for with and completions meet positions are we We normalize. the market headwinds homes conditions us the strategy to one intend as current priced Buyers looking affordably well the to

price find in for homes the may market knowing will margins We completion, near-term. nearing clearing the on our that it weigh

and capital supply improved also current be going lower of better are confident We returns cycle earn homes due reduced to from that higher both that direct we able incentives. levels redeploy to our will start costs, and margins and forward, lot times new will

thank entire team, national our our on behalf closing, management senior footprint. across of In the employees want I to

would this their been we valued without have commitment possible hard their Century and dedication, achievements not both year and customers. our Our to and work greatly appreciate

over to discuss going in to and more call now I'll forward turn our detail. plans Rob business the

Rob Francescon

Thank you, good Dale, and afternoon, everyone.

near-term productive strategy continue. of Our representing and deliver to enabled was intend backlog, with efforts beginning XX% very of inventory us X,XXX an concentrating on completions and to incentives sales homes, we approach

category have of given within affordable coming approximately below strong quarter home range new We to any fourth allowing the buyers deliveries XX% with presence widest from a target us potential of the in priced FHA market. limits, homes

deliveries higher these fourth announced homes back below from December, limits. limits quarter would FHA priced And Additionally, approximately have for higher FHA loan of limits, XX% come with the XXXX. in our

levels Century and of with scores had throughout respective Our Communities average XXX Century Complete's homebuyers FICO homebuyers continue the financial to XXX, healthy profile. year. have consistent experienced and a

Our the cancellation quarter, fourth equal our Century rate brands. and with at Communities was XX% rates roughly Complete in Century

rates roughly XX% January. Our equal December, rate a as at both cancellations the of in number of quarter cancellation with in further rate declined also progress brands. The to declined

to continues improved. starting ease capacity delays, These housing by be industry challenged issues and as have slowed starts and utility trade to has supply chain homebuilding The pressures municipal shortages. and are especially

quarter improvements average costs by our approximately home. XX,XXX of versus in watermark cycle, which in throughout high seen the in the fourth have direct the year, an We per construction the roughly of X% quarter, the declined second

Looking forward, continue supply to cycle as our to trade direct we shortages expect improve and our subside. decline further chain times to and costs

This XXXX roughly lots This down relatively lot quarter and lots, and compared of We the remained the lots owned unchanged last as controlled our XX,XXX total year. beginning from of end with ended with own of at quarter almost and was the have pipeline roughly of lots was bucket quarter XX,XXX our within the third lots, owned XX% approximately at XX% the controlled. the and decline controlled to entirely year. the beginning XX,XXX the

provide three XX,XXX is years owned approximately volumes, of Our consistent XXXX lots past based with which on years. deliveries

XXXX deals the lots. generally throughout than to half investment of no our step second that were from standards longer continued our owned and price higher met that in land away We

commitments our nearly minimal of by our of fourth land Given while the million. XX,XXX million, and by our $XXX lots $X acquisition we reduce pipeline abandonment land the quarter were strategy, able effectiveness approximately costs roughly incurring in to

XX,XXX For near-term at which of sales the for our all and our investment, of by abandonment our $XX event year, by land lots cost acquisition growth allows to need reduced high on only in nearly reasonable during amounts without pipeline strategy absorptions periods limited lots us million commitments costs. impacting the to those million exit future for homes. a over for for full and we start This significant control adversely of $XXX land total positions a downturn, of a in market

to the forward, our controlled expect Looking lots we recent off. in decreases start leveling

quarter, at stood but from XXX from at XXX year count period. in the community total XXX, ago up Century's in previous end the down quarter

the Our as communities delay communities of fourth in conscious conditions community in closeout due of count market the second certain deteriorated. decision of year to and various the dropped half opening our the quarter to new sequentially

us times our moderation in and as to solid Looking measured at generate confidence declines the costs, of and grow from given increased cycle returns the ahead, in in a we margins improvements recent has expected expect new we incentives, opened. ability to count communities pace our community direct

elect be our year existing that pipeline, be our Given XXXX of to to land of range XXX the communities XXX in we to could all communities extent count we the community available. if expect open end

market full are and numerous performance this with of quarter year. the very we pleased challenges, our face the In for

of prices strategy to first XXXX that market homes that find our land were elevated manage half started generate completed operating Going forward, be the beyond. that Continue costs, last started with and and earlier in margin spend reinvested remains be will homes completed profiles new with improving for will cash year in consistent: flow and

over more I'll now Dave results discuss in our detail. to to call the financial turn

David Messenger

healthy which resulted Thank in ratios. and strong flow of cash net you, objectives our quarter, our We this generation the debt reductions operating and meaningful and met Rob. homebuilding delivered in results gross

records. quarter to Full diluted of the year company pre-tax both in share $XXX.X while was to period. quarter million, our income Fourth was of diluted share year prior net $X.XX ago company's to increased $XXX $XX.XX, $XXX.X net full compared increased in earnings per compared the the income XXXX, or And highest During quarter income $XX.X the in year the million. pre-tax earnings increased to income fourth million per million to $X.XX history. $XXX.X million, year

sales to in a flat XX,XXX. than increased X% than year second and of X%. Home our were less fourth X,XXX a Home our slightly company deliveries Home billion, above sales levels sales $X.X record nearly less highest of sales price. average X% billion our up an the revenues driven were quarter $X.X last basis, of increase full homes history XX,XXX of XX% the by deliveries $XXX,XXX last homes of year's for Home price by year's down company in levels. were average with for record on the year-over-year while was revenues

rates fourth homebuyers. quarter, cancellation sharp the impact was net this that potential footprint primarily the Similar increase year-over-year on due new contracts last and X,XXX. to had In elevated decline across rates interest the were to in our quarter,

X% last New XX.X% adjusted valued or price margin before At XX.X% of the compared impairments, decreased end, was X,XXX gross XX.X% fourth period contracts margin had prior Homebuilding was at totaled compared year-over-year. quarter. $XXX was the with cancellations homes percentage that the same year. XX.X% for gross when to homebuilding in an to inventory quarter, XX.X% by year our excluding In X,XXX backlog million, quarter homes. sold average

our and costs resulted year. our dates and though primarily to quarterly our reducing percentage reduction leverage As deliveries, of construction sales expected near-term by start strategy efforts their last margin and on profile carried was the incentives we elevated even call, focusing discussed they due earlier in on in this generating from our cash

quarter fourth also an million. recorded XXXX, the $XX.X inventory impairment of charge In of we

prior improved SG&A in percentage homebuilding was a was X.X% the market and the costs of For to full of percentage compared the year-over-year gross result the homebuilding levels. to minor due margin This conditions sales gross compared XX.X% margin year, year. the quarter fourth below improved to as percent XX% the prior to in X.X% of higher from increase XX.X% a home with adjusted year revenue XX.X%. commission to balance costs

as sales For home percent compared the XXXX. of in X.X% a year, X.X% SG&A full revenue to was

for XX.X% margin was in X.X% prior compared income the quarter year. Pre-tax the to

flat For incurred We expense the was margin quarter, full in the deposits at other million certain the expense million $X.X year, and of XX% abandonment of of versus essentially in pre-tax XXXX. income $X.X XX.X% feasibility including costs. fourth from

full For we of the deposits year, and of the $XX.X costs. expenses abandonment incurred feasibility million from

the a investment these as As no met longer from to reminder, result shift. of deposits was a of of our decision our that step market feasibility deliberate result charge-off away our land and costs a deals standards

commitments in business million competitive significant year quarters, increased forward in fourth in year revenues volatility to given the the into prior income captured million to in quarter, loan The surrounding services contributed generating and the primarily prior mortgage decline million pre-tax $XX.X compared the $XX in $XX.X accomplishment market. million $XX.X quarter, of pressures. originations revenues the to the quarter, During financial entered compared prior a due and fewer in XX% closings,

our our quarter, the per any repurchase dividend did of and share During maintained $X.XX not quarterly stock. cash of shares we common

million X% of share As invested we three authorization. approximately XX% a in approximately repurchases X.X year share end by at share. the approximately shares book available [$XXX.X year, common of price $XX.XX repurchasing share our quarters of our reduced million] value a roughly X.X in reminder, repurchase per XXXX this our current to with discount an stock first or remaining our count of million for XXXX $XX.XX These under average in

in objectives, flow we As our in a $XXX operating generated on million result of fourth executing the quarter. cash

our of year Our XX.X% net levels lowest ratio homebuilding as end compared and the XXXX company. declined to in a to significantly debt third public history quarter to net capital XX.X% level

compared homebuilding end as debt-to-capital quarter to ratio of Our to the declined XX.X% quarter third XXXX. XX% end the of at of

For in on consecutive December year-over-year $X.X cash. our represented quarter XX stockholders' return liquidity, equity XX.X%, and generated including return quarter strong above ending including months $XXX.X We million ended which billion the position, with in XX% XXXX, equity, XX%. increased, financial the total XX, a a we of equity with $X.X a billion on seventh in a

outstanding revolving $XXX and until on quarter, borrowings credit mature off the we outstanding paid does no fourth $XXX In the million April that XXXX. not the facility facility our million have on

no ample management. we providing debt for Additionally, have maturities senior years, five us leverage flexibility with our

with Now the homebuilding costs, year was rising increasing rates, declining guidance, deteriorating turning impacted and interest to ASPs, industry last demand.

We stabilize increase. homebuyer sites traffic to see mortgage on have and begun rates

For openings, due year our second be to completed limited half we This of executed the with our fact of prior leaving first number expect fourth XXXX the in softened deliveries, below homes as we sale is fewer of of near-term successfully levels. community us strategy the a quarters, quarter and homes. spec on and delayed prioritizing to market in deliveries the expected started decrease that second the the

have result, fewer lower quarters a XXXX. in second while the of costs delivery two delivery available for homes simply As will for start half the homes we input in we with XXXX, of new first

to the For of year in the our revenues of in sales to $X.X expect deliveries to billion XXXX, we to $X.X the range our and X,XXX full X,XXX home be be homes, range billion.

believe in environments. our as we that own as geographic dedicated based more navigate current balance spec sheet, positions on well and to our the well improved model, closing, homes, In solid economic affordable us thrive footprint focused market,

Operator? that, questions. the open I'll With line for

Operator

BTIG. Instructions] Reichardt comes Carl with first question [Operator Today's from

Carl Reichardt

ask regional to wanted question. I a

store flat. I count came was bit down orders think quite XX% and the Southeast a

Just little that, And of curious, pinned perspective, performance talk there, lot there? bit happened you've you Region the about a Mountain a then following what the on West. in can up and to lots, with from a backlogs West got

and working houses focus, the the is through So West? the half lots of be in on to going especially year in the first

David Messenger

of This were was throughout the the Southeast on half your strong the was community leaving a that is to the we to specs on year or flat question Carl. down, so sales answer of the for was We say, those still count Southeast I'd but the really in function specs 'XX product first Hey, and just available sales, near-term completed both any be and selling just completing 'XX us strong and sales. didn't have on have markets really enough in QX. didn't Dave.

got So off, some we open that even saw though we've drop communities.

this some yes, sales of existing first that down, year. we've prices and inventory something half at that's earlier last work down, work seen West first have the costs, us those that XXXX. come we'll through come year, the of you're as that And through half we to was Coast, going direct started of the inventory see started here higher On and

Carl Reichardt

Thanks, Dave.

more opposed elevated compared So to of excessively then is Southeast product the a the as availability function to an rest can company? of rate

David Messenger

We Southeast homes a correct. still definitely more function being just It’s see been construction. Correct, a strong under of region. the

Carl Reichardt

-- continuing one through little would January you you're Thanks. or in as the when trends and seeing XQ, then from seasonally, a about better what improvement seasonally? saw talked expect quarter expect you worse the as than January describe you'd the what you'd about you And than bit in what

Dale Francescon

terms sales mean, improvement seasonal, certainly traffic we're an seeing I Well, overall of in in sales. and

thing to seasonally can improving it to an hard or we from because it's to over But that forward. is, go And call is December. say are now the of market, expect that the you easiest rates we as lower whether see, we so, continue And just January tell. improvement in interest the what

Operator

The & Ratner comes Alan from question Zelman next Associates. with

Alan Ratner

interesting of there. lot the all info. for A comments Thanks great

correctly pricing pricing little think your year I'm like on you're that I'd comments bit that for you It decline comments some to or net interpreting if and on. has pricing that of incentives. in sounds of First, the bottomed a given goes here, love effectively on the incentives kind as guiding drill to

all, make that affordability want business as soon sure as needs is obviously your feel kind longer to I does to am, over buyers, understanding growth cohort like among kind be generate So of in I where that volume period? I'm you imply first a the time of that correctly. And that it to of of

Dale Francescon

a don't really had have buydown in obviously the in were those And affordability we rate of quarter, We programs fourth subdivisions. we across we any all available. Alan now. place forward commitments, We addressing -- had as of case the still come have see case has our rates buyers we we basis, some that help it our to portfolio. but need across by entire on down, don't do have

Alan Ratner

quite And to just that one have far prices been equation. I'm as over about base have like, think think obviously that any the trying years. home should that, several last as like is you attack gone way incentives offsets adjustments up point, to or pricing, the a to there been anything? bit we have there But price affordability

flat keeping are those as mortgage been the offering? pulling price base So you you're incentives had on that even you back

Dale Francescon

a had significantly that the in as our normally company-wide related quarter, we something some time adjust But to and we're quarter over been see. general, offering. to out becomes in that typically the what really dropping communities, quite than went ago. seeing prices. bringing base lower component we're third costs significant far an easier of our be we that won’t up -- programs prices. pretty we have would in are in it homes existing have them new community, we incentives as in we started And opening any But have were what backlog. Well, mortgage And the importantly, base input that We in fourth more don't would

Alan Ratner

I And that. appreciate Okay.

other actually at heard able how you said of lumber the be which going guys. you are cost, But was significant reductions. of probably the highlighting to me as to this correctly, costs out and your it kind than of I that about I if a them bullish question optimism a If think Correct point on they a And throw could you direct You up I you down that that think brought you versus some labor I'm been guys $XX,XXX if are generally, second up little I bit, from goes wrong curious will that. on. of But, input lot was have kind split think more of cost lot have builders the to you your I that commentary, the peak. of I'm on? see think highlight I other seen some kind or is inputs much kind relief of their relief like that 'XX first sounds

Dale Francescon

the it two-thirds depends It's it And areas. the on of and around too. some of lumber, balance on other

the as areas And end some front of released, nearly they but slowed starts across where people a are the have got not we more the on down back lot as end really things and were. on busy board

readily there, So we people to their come more that pricing. where are at and getting perform the potential reduction are work available

the and our in the were So it's way the job down, high a an think well. they really year. at of middle getting only ongoing and because division ours as focus from the And beginning of not I too of last just candidly, then and costs team team corporate has but regionally input good done

Alan Ratner

helpful. Got it. That's

So I some that rough is backlog here, about your average math $XXX,XXX. $XX,XXX, at look just pricing if

should as you the else X% flat points margins far everything of equal else as of first how a once to it kind margin comments that equal. the expect stays see? we think we flat, all Is that should year, XXX your what all pricing sequentially. and stays half call get basis lifting about else past see So Is impact you assuming

David Messenger

on You head. the right hit it

You that's math and did exactly it. the

So yes.

Operator

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

Jay McCanless

Good afternoon.

of couple on the Just guidance a 'XX. for questions

through the -- and closings, looks for a guys of versus the why If closing to to count XXX, the less low closure three year? maybe we four it 'XX between than I seems Maybe start like be you bit it such really out a -- closings 'XX. perceive are you fiscal anywhere relatively low to the month expecting are three community talk you average since guidance and guess per to cautious, being a then around what fiscal us midpoint a closings bit XXX, going the hesitant.

Dale Francescon

today think those them of where the And started continued based up second the with January. we've lot a number starts year. We of significantly and under into We sit on of homes construction. I Jay, half we reduced that the just December. in is November in picking

when look we it of part it, back at to just So we is build need up.

so we'll our And have homes half we'll the half be we higher they'll under we the run And we'll and then at first have in rate. that, a start houses the end by at look year, look half balancing And the deliver. But deliveries at the that's the just at see first second as have down, that will be time, as then increasing. available of out we we'll that to more the construction. year, and where year,

Jay McCanless

construction many So you at because open, and homes get what and year-end your spec? under those a to were basically total how up. more issue, get I guess got you timing of communities just to specs got were

David Messenger

of number we We construction under been given of XXX% That's are the that don't our model. but disclose have nearly time, always homes them spec. at any

Jay McCanless

then just… And

David Messenger

backlog. Go Other than our ahead.

Jay McCanless

to And wondering priced floor started that of in if year plans, lower price a midpoint just already I guidance put a XXX,XXX. guys drift than it to like where newer, by drift have up? just you'll these it of XX% year, that? and prices, homes some I But somewhere down you down guess with average X% to of kind through smaller out something you've I should by are the going mean like mean price, the I these works the I the question, thinking prices smaller base about end kind of looks know Or lower to be mean, is year-end? other the thinking

Dale Francescon

Well, when of look I brands. brand really grew. them. and our And think a it disparity last is between there's it's big year, at hard we pricing because Century Complete part of And obviously it our two

up, have And so last we is as and saw gone that a that certain the challenges obviously for year, set well prices up continue affordability extent. to think we that,

particularly pivoted done well to some So -- we've Complete, price higher smaller point that subdivisions, as our where that there's of a a Century of and overall as percentage we to and is new communities plans number down. plans the get of on

really combination it's of a those two things. So

Operator

comes Morgan. question from JP with next Rehaut The Michael

Michael Rehaut

point to Wanted could the basis color that though, gross additional math. When appreciate describe circle guess you're eventually, back on correctly. around margins back And second just I think the normal -- the interest levels? normalized when when about sure to you of levels, including XX.X% and Because averaged to the at interest quarter to a expect look you you I look saying the back XXXX, from half, the year, XXXX is, just make more that get I improve, gross normalized you and margin question mean you originally guess that half do thinking amortization question what you the consider XXX in quick -- after second amortization.

you that's XXX XX.X%. the math to With point basis putting like

what sense should consider? other if year we get want XX%, So if thinking, just by what that's XX% end? again, range to of, you're new or that factors you that's to the normal, get a there's consider to indeed, Is

David Messenger

Hey, They've how QX. past XX.X now probably calls over the us Mike, this about on a in bit in board over have the they're favor. margins it's obviously little We've year And last terms of being, our against talked all Dave. swung or been in two.

past. there's all about of be which a back we the good talked getting pricing, we that in our normalized think our than efficiencies, such will more improvements our rhythm into that to in if higher start QX, what cycle before, been times, we be As a and had margin, we plans, ought in scale, our we our lot a at building

XX% XXs stuff the result that's a norm something we've is of to recording are I place hopefully over We in put something now low a And of on in several lot But range. new to the that and be range. the in going XX% be past think going years.

Michael Rehaut

That’s helpful.

something, So, thinking? type is kind of of what you're that XX, range XX, XX,

David Messenger

Yes.

Michael Rehaut

Secondly -- appreciate that.

I expect to that us quarter. on on margins, of to the XX.XX, or should directional of working second for closer the the pretty inclusive a kind you'll X,XXX of low guidance modeling. to range? half for any little interest gross closings? perhaps you talked helpful type has of and year, just talked quarters. kind a just think of guess you closings XQ’s first full you half result looking Obviously, we as the the term couple half, of think similar to of first your approach, year, issue backlogs Or split? any a said that of be X,XXX can I very in give first about in be after Secondly, strategic terms about How that again, be off kind of the would you

David Messenger

that the of should of in here QX Yes, QX online a lot that grow QX. we'd through construction the do the that December, and QX into QX construction we our on sequentially as homes think expect deliver we've see going still of they I through lowest balance only our bringing year. backlog, January, be work to on started start we quarter and start could And that we when then to you're not closing

closing for to more we the end And it's of is of going third think, so course and the the weighted quarter where while a I a trend quarters, us lowest to back the back begins then to and year. traditional first little your get bit through to fourth be it grow quarter,

Michael Rehaut

the to had about it years expense This to more significantly. Anything to Obviously, that success expecting? a how grown should challenging if be one, any just SG&A? variable sneak obviously. around, just we in, in or terms of that lot could of be deleveraging think the is going you've over type about I year, you've ways of One last think

David Messenger

Yes.

gets little a you've large fairly got we're managing. across next fixed and bit coming running we've think states national been versus that because closings about more variable on a down, year, of a different got split just XX revenue deleveraging XX-XX footprint difficult We've a I basis.

we whether course will split we adjustments, staffing But full And to revenue and categories, more prone continue adjustments, year probably we a whatever acknowledge quickly with of that opportunity think it's any opportunity act bottom-line. difficult to to for it in as the I been more have next we past, we've line. year. that gets look little the is, case over division that the find the lower within deleveraging put SG&A the

Operator

Research next Alex comes The Housing ahead. go Center. Barron question Please Instructions]. with from [Operator

Alex Barron

talk Thank six do much times build see you think improvement and How the extended last now? you, year don't about did know, where they you to do out guys you months be, I gentlemen. from in build to times. if get I today wanted could where and they'll are feel

Dale Francescon

and all, the cycle looking a mixed times Alex, particular significantly vary particular back chain on labor supply the XX months. market, basically all. it's challenges And over the depending the plan past with challenges, So quite bag, the the and

Going forward that's reduce though, a that to down. focus real

supply in easing. chain prepared As I is remarks, mentioned the earlier the

We labor more availability else. of are seeing everything and

So all great. of that are

average. on starting average. on cycle on going pricing that that the our from XX look that, on at peak homes times at are we say, templates new six started, we ago, now forward we day we is As but homes reduction are months are There versus a variations at let's looking

We getting much a elongated. do we are as In month our number it's shooting areas, areas, great than cycle times on maximum also build some traction better a are can a getting six time. still we reduced. that; for of But round other

normalized going scenario. going times a that think more end pre-pandemic Where this going we it's of to back type But be were. cycle getting... what on at be to basis the closer It's year? are I to be of to a it's

Alex Barron

costs, subject to of last Great, half year, home hear. of of home then up, prices in beginning and away at the and up the terms was last costs. obviously, of year And great. Good everybody first or on

going started on are you And so guys forward? out lower were cost don't mentioning, far to starting the along are as But such flushing can selling are focus think lot and that much how stuff high specs you but high achieve you a inventory, had on need lower of cost to the so just now more that, cost the you curious, cost that selling kind imagine do I through of those stuff. new you focus I'm

David Messenger

we sale, for are listed homes on them. selling have we If focused

see are I higher costs. have you at think started in still that direct older we homes that last going those first some we of year going are to to the quarter,

think coming was. through what to we range that's going to and QX gross margin, that QX see are that You such going compared a on what's to similar weighing in is those our be

But for through better QX. half them in produce and on bleed you to think that But building pricing affordable, latter And into better take so will the in new we through see get inventory. margins I lot of going focusing all of us will going work costs, definitely us have the to probably year. of a homes are we better them QX. are that It's just time some to

Alex Barron

And one one. last ask if I could

down to So homes, all pretty or you new I you much cycle specs, XX be say, are the starter, going something stuff. close guys to just days the times mentioned on I think that that heard new

Dale Francescon

That’s yes. projected, the

Alex Barron

of houses? So that the smaller, houses Is average the price stuff What same Or what of about average ranging or generally the that those the speaking, type about creating? before? as of the size inventory you're average? those it cheaper or that of is

Dale Francescon

or generally a plan the standpoint, smaller And it may that not be smaller. a our doing building or would to affordability bit how it similar, particular Generally, whatever get in are down plan largest library, from we square but just we standpoint. the footage in is, series be little

would point. price be So homes lower as a trend, at smaller it a

Operator

The next with from Mike a Rehaut question is follow-up Morgan. JP

Michael Rehaut

year-over-year pace? it or there. improvement well that sales further done, more Just December it of a saw year-over-year, what declines on you in November be improvement granular the you're If in if have terms January. get the color able Any wanted October level on above describing even additional to provide either of would any in be helpful sense, and to could

Dale Francescon

standpoint very is delivery, And, just downstream focus if we’ve where something is not terms in it our of of on further it And anecdotal, some from focus incentivizing Mike, been clear, made our a completing we've homes. those as of is. completing, is homes.

it, how homes the we've we're prioritized when the we really to that at able sell and -- provide. incentives have really amount it's a of we been all quantifying of it's we that function more So it, have the and look that that's to for really sale. traffic And

continued progressed, delivery houses, and incentives. that the the which with into means And of were near-term Same thing so more we've we we improved, January. were less has quarter things said, doing as as selling it

focus really selling, proper homes. the So from houses but we're not that our it's it's making number selling on a standpoint, of sure we're the that

Michael Rehaut

would secondly, moderating you points basis from you basis bit, already points talked quantification a your reaching that deliveries, of incentives XXX about standpoint? expectation a sequentially. your guess, more up that that? or XQ I couple part less than you're or something moderate bit, a little about as way January to points to than I bit. think Any that orders? how for that mean, incentives a And Is you've basis to saying so XXX hundred that a incentives moderating be a seen something of in that, expect

Dale Francescon

we really As our XXX around in purchasing historical spiked points basis were our that to And of norm entire component been commitments across basis the XXX that said, company. It a forward points. were has QX. we significant

it, at we've look we taken when away. So that

that impacted X our so, margins X.X that's and And somewhere points somewhere between points. probably

direction. incentives overnight, in expect don't of get moving we back to we're points but that basis to So, XXX

where couple basis to we're So are. is probably points down of say hundred a we

Operator

session. would Dale to turn for like question-and-answer Francescon This over any I remarks. concludes to conference our closing the back

Dale Francescon

I'd of today. support for dedication homebuyers. for investment to work members to again their I'd continued investors like appreciate continued and Thank incredible and their quarter. thank team this our to time opportunity like to look to your We once you, next take forward our operator. all you to our also speaking again valued thank and

Operator

concluded. you today's attending for now has conference The presentation. Thank

now disconnect. You may

Century Communities (CCS) 1 Feb 232022 Q4 Earnings call transcript