CCS - Earnings call transcript Q4 2024 | Century Communities, Inc.

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Operator

Greetings. Welcome to Century Communities Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Thank you.

You may begin.

Tyler Langton

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

the subject this of could to implied Factors SEC in our and the would latest from certain I these those to based uncertainties Certain on under Risk risks statements. call and filings. that can statements. heading remind expectations XX-K described duty are number no Before that in update found be and other differ or of undertake current latest XX-Q everyone and are by These like statements uncertainties forward-looking forward-looking results statements our a company's may materially We cause call as to the supplemented during actual management's the statements. constitute to forward-looking made begins, risks

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

Executive Hosting Officer Rob are today Dale Chairman; the Officer. President; Francescon, Financial and Francescon, and Chief Scott call Dixon, Executive

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

turn With over that, the to I'll Dale. call

Dale Francescon

afternoon, good and Tyler, you, Thank everyone.

beyond. and pleased to Century and results, is returns are drive improved full well continued our We fourth and with XXXX quarter in positioned XXXX year believe that growth and

both our XX.X%. of sales, community quarter levels and XX% that quarterly our were homes gross year rates year XX% communities. Fourth we our record revenues XXXX home by X,XXX points of of increased increased in incentives records. year-over-year homes, continued deliveries Even the volatility drive to count Our we basis saw XX with and this $X.X and XXXX margin to adjusted full a increased record of full a to year-over-year to year elevated deliveries use XXX company billion sales XX,XXX mortgage

through leveraging basis reduced expect and our further revenues this SG&A by of see fixed metric XXXX. points a as wholesale percentage in our to cost also We XX improvement year-over-year

year, with XX%. income full quarter adjusted year-over-year the net up income adjusted by increased XX% our fourth For our net

growth, While through in acquisitions both organic we integrated we focused XXXX. clearly and completed X fully are the on and

to over our We were of by XXXX also our at X% increasing shareholders dividend of capital the shares outstanding by repurchasing return to and that our quarterly continue XX%. beginning

X,XXX of fourth from of quarter increased and in XXXX by decline which year-over-year fourth by to Our X% increased net new an X% average through quarter X% compares sequentially, sequential contracts the XXXX.

homes. contracts increased For the net XX,XXX to XX% our full new year-over-year year,

benefiting equal October highest our the were the in mortgage month and from that quarter, Within November, levels in at in rates and December. orders both roughly much potentially the over decline of

activity So but of the been we the strong in month, far through rate improvement has very January, the our typical with course XXXX. line over in pace saw January seasonal order with below

Our homebuilders. average the full quarter and year the XXXX traded sales publicly among price was approximately remains of fourth the $XXX,XXX lowest for and both

solid volatility, demographic housing by there mortgage that While by homes has underlying we is demand rate firmly new trends. recent been affordability the impacted strong underpinned for believe

incentives. and our and to our an other through allows buyers model, of interest mortgage captive costs, and full that basis nearly move-in are Additionally, quick pace sales us to an affordability certainty the the reduce we fourth seeking mortgage elevated steps supply spec believe appropriate environment. continue in with and a the provide the to subsidiary, current actions This year. financing rates are in maintain market homes appropriate along helping for rates homes having with the take homebuyers at business entry-level We that us impacts of are address our maintain of built our buydowns on quarter on rate XXX% low

scores over XX% for mortgages interest FHA, loans, and our of XX% typically mortgage closed inspire In loans payment and our more rates quarter, captive of with first those homebuyers requirements FICO by homes the down VA remain and fourth our that XXXX of and are they FHA below the of consistent year or company were were and help levels of from the mortgages healthy USDA, limits XXXX. deliveries X carry The below home affordable. conventional priced quarters full make

to X, moved of from Rob, call Co-Chief the Before turning recent Executive our over Executive to process. as Chairman has part while Directors Century's ongoing Officer. Executive the January our Sole steps Chief the succession to took become I want I have briefly of Board planning Wall Officer, Rob discuss Effective

part do but responsibilities, to any plan to either time higher to of corporate percentage and not this of As anticipate initiatives. transition, a it is my day-to-day changes strategic immediate of we our devote

I of for In thank our members Century and hard and continued beyond. their improvements dedication all the work drove closing, our to that business XXXX and position success in want team XXXX in in significant for

to to detail. operations our and more Rob land over in position I'll now call discuss turn the

Robert Francescon

and Thank everyone. you, Dale, good afternoon,

turning I Before wanted Century. about on here Dale's our add our to at remarks planning to succession operations, to

national XX-plus needed public leaders incredibly well as the the process as proud since divisions at and we Century always with that and team both ongoing ensure of and years view as drive skills We succession future planning a corporate of we to to deep the have have bench have an throughout the it. success. over to experience level going platform built our We lead at we that that are regions our the assembled past

managed year fourth to to X,XXX XX,XXX earlier an maintain homes year In full the in of year-over-year quarter, year-over-year the a home started consistent XX% spec For level we the net appropriate orders. we given number XXXX, of down homes homes, in starts our with XX% started our inventory. increase, the increase

fourth level of by company's our count. with highest XX% We year-over-year continue the be a a community basis and sequentially. X% and the up our encouraged to count quarter the in community We XXX, in ended history, growth on

our greater opportunities our believe with downturns. us across markets land growth across over that to continue geographically stretches XX states that national risk footprint also provides regional from portfolio and for and mitigates balanced We XX

inventories about Florida our these accounted been year rising As regions while concern full XXXX of some Texas, only deliveries. in an example, XX% for combined there and recently has X

the still XXXX recognizing our our years. deliveries in is we currently count in percentage expect couple to support or further our by high the community over range, XX% year-end XXXX, community early in growth grow mid- in XX% it single-digit of annually which more our count will While to plans next to increase the

had construction we roughly started to in sequential costs success our with the quarter on in a on basis. the costs. Turning costs direct homes We controlling our continued fourth flat

construction basis. X% on by our year-over-year XXXX, a year full costs the direct declined For

costs a quarter lot sequential finished the roughly Our by in increased fourth X% basis. on

are our the averaging quarter, X During fourth sequential basis approximately a modestly on improved and months. cycle times

As third points increased XXX expected, quarter. the closed in to quarter fourth points, homes incentives on basis in roughly the XXX our from approximately up basis

quarter on earnings discussed fourth the we through third new moved higher sales these to in our on on our call, orders quarter our mortgage higher third and As quarter. the deliveries incentives the flowed incentives as increased risk in

seasonally maintain we fourth basis orders mortgage to remained as as Our approximately incentives XXX points new in the fourth in quarter quarter. sales rates slower our pace the to elevated the look increased of months on

in margins incentive on and our given to their in and our be near success direct driver rates finished any controlling term changes largest the levels the of loss. our impact mortgage construction expect gross We to

ended count. to over our total quarter XX% of Turning and lot the period with XX% We land. lots. count controlled for by the lot prior total Century owned fourth accounted year XX,XXX increased completes versus and

in finished sourcing acquires lots only demonstrates complete Century great throughout count Arizona. Southeast, lots reminder, attractive Florida, efficient, a capital Midwest and lot finished XXXX in As continued and team's in success locations the the the

of accounted total controlled lot Additionally, count. our at XX% the the quarter, our for end of fourth consolidated lots

about and Scott for remarks, details will in I talk outlook wanted beyond. for XXXX our our briefly While his provide XXXX more about growth to guidance

year lot on absorption to expect environment current approximately rates. our and in XX% of full in by our community We the increases at basis meaningful to and XXXX have XX% not ability year least and count guidance deliveries full is well. year-over-year X.Xx assume the barring or of to count changes in on a This homebuilding deliveries the XXXX our midpoint mortgage any our grow as XXXX our does at increase any changes from growth based pace XXXX

have share primarily throughout the our from as past, we our Additionally, at within leverage discussed have markets the level. our to growth level in we markets and to increasing corporate we come expect benefit we the the and made this returns existing delivery as at both local investments and margins

records in we excited Dale by book in a years have and As to number including per set potential we the count, XXXX, achieved ahead. of new are share and mentioned, records value the deliveries community

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

John Dixon

share, $X.XX XX% income levels. of and both $XXX.X Rob. $XXX.X or income you, Adjusted or EBITDA and XX% share, year XXXX, net an XX% EBITDA respective income quarter of Thank quarter per net fourth million, of the pretax increases diluted and XX% year-over-year diluted million was $XXX $XXX.X for a was increase. million increase. In million the $XXX.X year-over-year was was per million, a ago adjusted $X.XX

record price. the prior fourth both the higher quarter quarter a billion, year and average $X.X revenue X% sales for company Home sales and quarterly were deliveries for versus up on the

a year-over-year $XXX,XXX, X% quarter price on sales fourth Our with average increased by basis.

our were record full in for a Our XXXX record. deliveries a on company, year-over-year increased deliveries the of year company a XX,XXX quarter basis homes the and XX% fourth X,XXX also homes, to quarterly

growth Southeast, growth For across over all West, the the with of and we rates all Texas year, posting XX%. saw regions

to For and levels. typical the our to sequential deliveries basis be similar we XXXX, a XXXX to quarter first first decline on quarter expect due seasonality

fourth quarter remaining well. second deliveries low basis in with year over of during on As year, deliveries XXXX, as a our on a the each we quarter a quarter quarter expect the Starting for the sequential year-over-year being the first represents our the with the the up point typically basis to the reminder, increase quarters strongest.

average end, quarter backlog $XXX,XXX. with XXX valued At of units of million $XXX.X homes an price our was at sold

price mix, deliveries, XX.X% fourth adjusted the to this our the XX.X% quarter. percentage of including gross the the was Complete fourth due for compared backlog quarter fourth difference in While margin price of the was prior sales Century In above homebuilding percentage homes. to average largely quarter, our is average quarter

XX.X% of versus gross prior change in was Homebuilding The driven XX.X% the a incentives quarter. homes. level is margin sequential on higher primarily by

reduced by reduction with accounting price in purchase quarter. margin in was our third XX quarter the XXXX which fourth basis Additionally, points, line the gross

impact purchase We similar accounting on to of half XXXX. price in our a expect gross margins homebuilding have first the

our For as continue we the gross to costs of to both XXXX, on a should costs. finished we our flat manage and sequential successfully direct margin first quarter-over-quarter basis, lot homebuilding construction expect roughly quarter ease be our

were XXXX higher quarter quarter. detailed remarks, in his in an incentives on we incentives on as the as However, seasonally our in fourth XXX deliveries Rob slower basis focus pace on approximately points our fourth sales orders the maintaining appropriate in

Additionally, leverage margin our for some first should operating our quarter the homebuilding point in that the from reduced see low operating typically impact represents deliveries. quarter

XX% SG&A and XX.X% year as a in the revenue for sales quarter home the fourth full of was percent XXXX.

as next we the have made revenues we expect couple XXXX, home we expect the For in years. we should that basis year-over-year decline leverage and growth a as over SG&A both a to delivery the at sales level percent investments continue on corporate to our of of divisions support our the

$XX.X $XX.X Century financial predominantly was in Living million, pretax the of Revenues income the sale million our a within business. the services fourth Other by income in were project $X.X business million driven and this with in income. contributed quarter the quarter from

Century reminder, rental construction development, the and multifamily of is in a As properties. engaged Living management

the for and was Our quarter XX.X% tax fourth the full rate XXXX. in year XX%

be ] by to with rate to full XXXX [ our to primarily XX XX% for XX% a tax reduced of year range qualify increase homes We in driven expect number for of the the expected credits.

homebuilding debt of XX.X% to ratio to third to quarter improved net capital the quarter XX.X%. levels XXXX net fourth Our compared

third ratio levels also debt Our end XX.X% of XX.X%. to homebuilding decreased compared to quarter the capital at to quarter

common stock maintained share repurchased quarterly XXX,XXX we $XX.X shares of dividend million. of our During for quarter, our approximately per $X.XX cash the and

we over share million shareholders of in $XXX beginning million. X we paid of X% share totaling our XXXX, were common and at repurchased year that over our the returned year per over the shares our and our of full dividend $XX.X XXXX. cash were the Through repurchases, million to For $X.XX dividends stock shares outstanding or

ended our XX% share the $XXX $XX.XX, grew per $X.X in of and value stockholders' to a record billion increase. book million We a We equity year-over-year liquidity. quarter,

the million, During up XXXX. credit new from maturity quarter, the entered and to fourth $XXX April increased we of which credit from a the million into November agreement extended of to $XXX our facility capacity unsecured XXXX

with debt providing us our flexibility Additionally, leverage we have no XXXX, of ample manager. June senior until maturities

turning Now guidance. to

the count billion. we lot XX,XXX expect and of home of XXXX revenue in sales to $X.X range growth year to deliveries in homes, our the in community be our full our the and to count Given $X.X to range in be XXXX, billion XX,XXX

are we excited closing, by In outlook XXXX. our for

our grow to year-over-year approximately of the our expect deliveries We midpoint XX% guidance. at by

mentioned, Rob margins from our increasing primarily at made markets to come expect the share and positively the delivery and at as within and growth affect throughout returns we level. both Additionally, existing we as leverage investments the markets have local our we the corporate level to our

underlying rate for firmly been the affordable recent affordability has demand that volatility, by While for mortgage new homes. impacted the homes new we strong believe

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

Operator

will first Carl come question Reichardt BTIG. with our And [Operator Instructions] from today

Carl Reichardt

-- and traffic on types, volume? at talk differences perhaps in delivery difference? how incentives the you any mix or to if levels do if look can XXXX there's offer about terms product just of between to those with, in between start to in look you that complete, business we significant you need expect your communities X the any Just And

John Dixon

between and Century Yes, Century slightly compared Carl, great different as brand. the on we not side step that know within we're the complete significant. mortgage significantly But When the brands, to I Maybe look don't financing really core differences incentives. seeing our more question. we're at it of levels back

those going brands. P&L mix opportunities bots. trying control forward, in current certainly lot coming our of markets standpoint, grow We position all of in owned of can and it's you of that to see terms both through In from I a really think and we're how operations under our our see

grow brands differences both through to no in anticipate in XXXX's that significant rolling we'd So P&L. we're mix really anticipating

Carl Reichardt

what homes or not closed Okay. tell be I'd you quarter? it, and you're you have could was. expecting both that as I whether -- over next this number me that to as you're And particular as you of go but time you curious what And your expecting percentage that if then assume sold percentage year, increase well, to

John Dixon

Yes, absolutely.

the the above been some this going For cycle even that QX, on quite slightly last the would our the sold was no anticipate seen quarters significant stabilized, the high closed model and point we've really we've XXX% Since have spec of been of model the period that were in X. really quarter. we XX% pretty number in XXs. spec high number have our couple within in time, to for a We given really consistent changes forward times over with at and year or XXs

Operator

[Operator will Wedbush. from with Jay your next question McCanless Instructions] come And today

James McCanless

First quarter? putting what you the question are I about guys talk current on you had, levels incentive in the could

Robert Francescon

is it's now, around consistent points. we Right QX, seeing basis what which XXX were with in

James McCanless

I just then you in I the And Okay. think this it. prior comments, check to answered but double want

sales same growth that are of level terms XX% the is guys 'XX? In of saw about in about 'XX thinking how unit thinking in that of for absorption you're volumes, still roughly you you

Robert Francescon

Yes.

X.Xx basically roughly. that's So

looking stagnant. we're that so at And being

community from count. really it's So

James McCanless

to And I you footprint, the to a that little like fact you on that have I expanding front footprint bit. terms expand here have you of acquisitions said deals? are a front of And hearing possibility What inside try going business? couple potential then and you're guys guess maybe M&A to in are the do done the grow or what from your more the but you seeing the

Robert Francescon

that's what Houston, which got go-forward acquisitions a in were really larger our along. has Sure. one all and in for both deeper so been us of it within those footprint, both Well, Nashville, did on we're in strategy And basis. markets, X looking the we . just the one 'XX in and

deals. we've we how to M&A as this that company. grow always criteria. M&A, stringent deals. at do I'm entire 'XX to We've our homebuilding Regarding M&A look continued goes people at lot got, But a just see We're sure we'll through public of underwriting like the year. and very And do career looking

coming As X on TV year. year, what saw, we did ends through you last this up

Operator

with Zelman question And come your Ratner Associates. & Alan from today next will

Alan Ratner

in little as they comps year-over-year. this January, what down easier more quarter, like recognizing pretty I'd know incentives it the XX%. strategy just guidance question, a versus sounds year the your that were to get for bit implies 'XX. the your absorptions on. to I and bit But at like price First maybe now, right Fourth down were little -- a absorption goes with pace drill is recently. flattish point up

Or at the point get the on is do incentives? are So what either target absorptions, in more for still outright that absorption base solve and to adjustments of would you're lower trending if some year-on-year consider sales? margin between is maybe Or it in you rate? spring it a price flat you after balanced spring order basis on aggressive year that other more the there adjustments for

John Dixon

the think to I some the level. able we're and current as rightsizing have you're Alan, for see we demand where Yes, as amount the really is that what we benefits that of seeing ensure as of model what been the a we've the well the ground obviously spec here of division submarket community inventory on

that quarter. the you And here that's the the some fourth of saw come in so moderation during starts across

to demand. continue to demand bullish generally provide housing, terms very the in of speaking, affordable and out think in that there that see markets we're our we're I is the ability we

those So move bullish a we season, the perspective we're through. I from on as very adjustments selling spring we'll make think and pace

direct remained which in fairly sequential only well that has next year. -- we side, some we see, levers costs throughout year, inflation X% you're we seen lot to X% a We've been have throughout entire normal it, terms land coming cost stable. relatively and certainly look In The we I'll aware, year, And this of the seen have cost really decreases as finished the call have, as stable helped. perspective, through. has from really, of out

the X%. on other that We our items the down. we've overall about -- of Some year Year-over-year, footage came to square just moderate done square footage continuing are size. this

get some ability as that's to we'll continue to spring And tough selling have we affordability community obviously solve the So level. that something we that do continue to the season. at into

Alan Ratner

appreciate moving and pieces Great. there all I the the comments.

out crackdowns pretty complacent or question, a to labor. fair were construction know on be dramatic of just if the over raids this? of from and have could amount some not weeks have to any the that last guess heard Second rhetoric curious, over that I headlines any, I a few weeks, But few you've there builders, been about or job ICE there's your could deportation expecting many what the and with impact, impact. seen there any last about I'm any rumblings whether sites unfold preelection impact impact

Robert Francescon

all Well, unfolding. early still this is on

not have what not But to potentially answer how speculate have early We as point, we affect we're would mean, this your on But unfolding. can the that tariffs. -- this any impacts us is we well seen think on controlling to I at date. question, can as again, we we control.

We structure a or not in needs have certain ground way. cost us our to anything that on the seen in react

to But is seeing wait we're just and anything now, it's so negative And not right see. the business. that

Operator

today from Michael your And question come JPMorgan. Rehaut with will next

Michael Rehaut

strength oriented just love Bigger I sense your get I of that's around couple markets. picture, across then questions, fundamental a your kind across regions, if have of modern okay. to questions of couple a and relative would oriented a

to perhaps worse of had you markets different how kind those could in rank just roughly average, wanted better and or trending where that currently? revenue. a I corporate of feel You order than are sense doing you line XX% and or closings and Texas account mentioned Florida if markets for your get your

John Dixon

give think of are of and the speaking, we've of the diversification, platform always that. I'll that some I Mike, one color. for ethoses seeing primary one we we benefits is that looked to really Broadly terms our provide national in have

there I Mountain optimistic that continue perspective. seeing and underlying the us, to West us move and about XXXX. fundamentals demand has an continued for from some upward, think, So to been and generally make speaking, excited has strong absorption we're

long is We bit our lower through dig in of supply some As little us And the and range bit on. that's you back very those a smaller start high of at gives supply that the in I seen to numbers and into we're XXXX, in month supply optimistic X months a overall piece optimism markets noted, a And Xs within we a Generally standpoint, is there. healthy supply on. X Texas maybe more that When comfort little going kind point, term a we're obviously generally or us you of our detail, the have an certainly our that for rising supply. market seeing into that of the think think items from of speaking, terms XXXX to from price a overall. on of both environment footprint. of the

Michael Rehaut

Okay.

Or So Any are a or you more your granular. saying of out I positively just more Florida maybe kind and little more stand than negatively? of of again, regions, it Texas footprint markets kind not, guess? similar the more is outside across

John Dixon

I Orange would, year. out think within a if in mountain. certainly Phoenix, seeing If as this we're Southeast, the a us, generally kit regions. any a our for a continues with of strong well strong necessarily Atlanta for mean, little County, perspective consistent market From In California I within don't very which to Southern is which bit regions, some be those market as themes. is demand I us. call know one I I

And so I'll call individual out. those are markets probably that the

Michael Rehaut

through XXXX of looking might Obviously, 'XX, ASP growth Okay. the if -- guys laid XX% at change focused expectation on get year Also this next. kind volume pretty or the and remain move all. your out affordability. better wondering as at was I even through -- as we for or we you a you

ASP the nearly your in in past, think up X%. XXXX, I was

is, expect in maybe further affordability where should that even the we that little country? addressing bit, anything challenge just remaining going a So terms it the in of maybe down number,

John Dixon

Yes.

play effectively that to with flat implied is The is reality numbers, the name For of the slightly ASP. the down is the game. really the guide to affordability 'XX,

we so every management. on And is are here focused that as what single day

incorporates continued think obviously incentive the incentive mortgage use and the primarily that guide of levels on I side.

longer future coming think should continue tell in as number. 'XX us that we we see periods, on to term, think get appreciation that through top would some absolutely line I I that into we ASP

Michael Rehaut

That's helpful. in to been contribution a if million modeling Okay. there. that was $X line? that would other I And couple then have what it real of could, exact a What to The In of or income, number million words, just mostly X sale to Would a without project. line quick. $XX the game? due other million, questions, minus? it actual was that get have Just or been or $X plus the trying

John Dixon

through some a $XX things The handful There's line The primary around of item $XX that disposal that Century some other including of total costs, Yes. driver going ran a as to one here of through million. to Absolutely. There's get that run was Living. that this on expenses that handful Sure. offsets line, is of other our line well quarter. that the gain communities income generally million. that here feasibility of write-off through of on

Michael Rehaut

then And one. just Okay. last one

X shares during share highlighted the You the repurchase million of year.

share unchanged. diluted roughly count, fully You is though,

it's -- forward, of the million looking to Are there. offset couple this share you to through year. trying to are effectively in or want understand years, going we past equity gone just looking down of creep kind strategy I account awards or a still the by $X roughly So reduce whatnot just

more So year flat? this was

Dale Francescon

that think up. I count -- we're creep share that going haven't the changed, does really said we to is and we make we're not sure

I at, that's count shares we're We're benefit strategy you end market. same. on increase. purchased, down, doesn't sure making when bringing share opportunistic. the the But that there, into step on buying we of terms towards opportunities, focused In opportunistic mean the then focused as purchase we -- And see look shares really it growth. other our of so that. were generally, we have we'll there is our the When don't full

Operator

Carl And your BTIG. a Reichardt from next is question follow-up of

Carl Reichardt

be contribute sure you've beyond The to 'XX, additional for any will does that deliveries presume guide for just and Anglia not others acquisitions So correct? this. about made, already what

John Dixon

Correct.

Carl Reichardt

Okay. be that. question just to Mike's Scott, go about And to to I want the then, just back on other sure income.

had So feasibility putting on the that X.X%. those where how you any go do early-stage in to of inventory Is right? other plus That's impairments impairments expense you options, And then dirt, it? line. walkaways guys you're option

John Dixon

That's correct.

Our impairment owned in if line item on or go would it stage statements you that sort development of would face active either. be anything financial pre-acquisition some be in see through in owned the... the and is Owned of that community it's an cost, will

Operator

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

Dale Francescon

that the we strong our beyond. and for thank and are on XXXX in range everyone metrics To operator. the today pleased with growth outlook Thanks, across a excited Century XXXX for you saw call, of time by and interest in Communities. We're very

Operator

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

disconnect. may You now

Century Communities (CCS) 29 Jan 252024 Q4 Earnings call transcript