Press Release

Century Communities Reports Second Quarter 2016 Results

Company Release - 8/2/2016 4:05 PM ET

Earnings Increased 34% to $0.62 Per Share

Home Sales Revenues Grew 38% to $257.2 Million

Home Deliveries Rose 21% to 768 Homes

Net New Home Contracts Increased 21% to 869 Contracts

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)-- Century Communities, Inc. (NYSE:CCS), a top-25 U.S. homebuilder of single-family homes, townhomes and flats in select markets, today announced financial results for its second quarter ending June 30, 2016.

Second Quarter 2016 Highlights Compared to Second Quarter 2015

  • Net income grew 34% to $13.1 million
  • Pre-tax income increased 32% to $19.1 million
  • Home sales revenues increased 38% to $257.2 million
  • Home deliveries increased 21% to 768 homes
  • Adjusted homebuilding gross margin increased 36% to $54.3 million
  • Adjusted EBITDA expanded 34% to $25.5 million
  • Net new home contracts grew 21% to 869 homes
  • Backlog dollar value increased 17% to $406.7 million
  • Open communities at the end of the quarter increased 12% to 91

“We delivered second quarter results in accordance with our plan with double-digit gains in home deliveries, revenues, new contracts and backlog value. We’re pleased with this progress and the balanced contribution to our success from all of our major markets during the quarter,” stated Dale Francescon, Co-Chief Executive Officer of the Company. “We increased adjusted gross margin by 36%, which more than offset additional SG&A investment to support our growth initiatives. We enter the second half of 2016 with an optimistic growth outlook and we remain confident in our ability to accomplish our full year goals.”

“During the second quarter, we experienced an overall higher level of activity with ten new community openings helping us capture additional traffic in our neighborhoods,” said Rob Francescon, Co-Chief Executive Officer of the Company. “The number of new contracts rose in every region, with Nevada nearly doubling. Even with the 21% increase in deliveries and strong revenue growth, our backlog continued to expand. Most of our markets are experiencing favorable homebuilding conditions and interest rates remain near record lows. These positive factors support a favorable backdrop for continued execution of our effective growth strategy.”

Second Quarter 2016 Results

Net income for the second quarter 2016 was $13.1 million, or $0.62 per share, compared to $9.8 million, or $0.46 per share, for the prior year quarter. The improvement in net income was primarily attributable to an increase in home sales revenues.

Home sales revenues for the second quarter 2016 were $257.2 million, compared to $186.8 million for the prior year quarter. The growth in home sales revenues was primarily due to an increase in homes delivered to 768, compared to 636 in the prior year quarter, and a higher average selling price of homes delivered, increasing to $334,900, compared to $293,700 in the prior year quarter. The increase in average selling prices was largely due to a shift in regional and product mix from our new communities.

Homebuilding gross margin percentage in the second quarter 2016 was 19.2%, as compared to 19.6% in the prior year quarter. Largely due to product and geographical mix, adjusted homebuilding gross margin percentage, excluding interest and purchase price accounting in cost of homes sales revenues, was 21.1%, compared to 21.3% in the prior year quarter. SG&A as a percent of home sales revenues was flat at 12.2% compared to the prior year quarter.

Net new home contracts in the second quarter 2016 increased to 869 homes, an increase of 21.0%, compared to 718 homes in the prior year quarter, largely attributable to a higher number of average open communities, as well as an overall increase in absorption rates. At the end of the second quarter 2016, the Company had 1,070 homes in backlog, representing $406.7 million of backlog dollar value, compared to 1,005 homes, representing $348.0 million of backlog dollar value in the prior year quarter. At the end of second quarter 2016, the Company had 91 open communities, an increase of 12.3%, compared to 81 open communities at the end of the prior year quarter.

Balance Sheet and Liquidity

As of June 30, 2016, the Company had total assets of $971.1 million and inventories of $869.7 million. Liabilities totaled $540.3 million, which included $412.9 million of long-term debt. At June 30, 2016, the Company’s ratio of net debt to net capital was 47.0%. As of June 30, 2016, the Company had $140.0 million of availability under its unsecured credit facility and the $100.0 million accordion feature thereunder was undrawn.

Full Year 2016 Outlook

David Messenger, Chief Financial Officer of the Company, commented, “We are encouraged by the healthy pace of activity in our communities year to date. Based on our current market outlook, we expect home deliveries to be in the range of 2,500 to 3,000 homes and our home sales revenues to be in the range of $850 million to $1.0 billion. We now expect our active selling community count to be in the range of 85 to 90 communities at the end of the full year 2016.”

Conference Call

The Company will host a webcast and conference call on Tuesday, August 2, 2016 at 5:00 p.m. Eastern time, 3:00 p.m. Mountain time, to review the Company’s second quarter 2016 results, discuss recent events and conduct a question-and-answer period. To participate in the call, please dial 877-705-6003 (domestic) or 201-493-6725 (international). The live webcast will be available at www.centurycommunities.com in the Investors section. A replay of the conference call will be available through September 2, 2016, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13640040.

About Century Communities

Founded in 2002, Colorado-based Century Communities is a builder of single-family homes, townhomes and flats in select major metropolitan markets in Colorado, Georgia, Nevada, Texas, and Utah. The Company offers a wide variety of product lines and is engaged in all aspects of homebuilding, including the acquisition, entitlement and development of land and the construction, marketing and sale of homes. Century Communities is a top-25 U.S. homebuilder based on homes delivered. To learn more about Century Communities please visit www.centurycommunities.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on historical information available at the time the statements are made and are based on management’s reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company’s control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company’s Annual Report on Form 10-K for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Century Communities, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

  Three Months Ended   Six Months Ended
June 30, June 30,
2016   2015 2016   2015
Revenue
Home sales revenues $ 257,179 $ 186,808 $ 438,260 $ 341,143
Land sales revenues 1,288 370 3,258 370
Golf course and other revenue   1,175     1,876     2,220     3,979  
Total revenue 259,642 189,054 443,738 345,492
Costs and expenses
Cost of home sales revenues 207,883 150,225 352,236 275,031
Cost of land sales revenues 587 365 2,413 365
Cost of golf course and other revenue 884 1,662 1,600 3,168
Selling, general, and administrative   31,383     22,812     56,568     43,744  
Total operating costs and expenses   240,737     175,064     412,817     322,308  
Operating income 18,905 13,990 30,921 23,184
Other income (expense):
Interest income 41 21 81 37
Interest expense (2 ) (3 ) (4 ) (6 )
Acquisition expense (244 ) (15 ) (413 ) (15 )
Other income 294 308 618 625
Gain on disposition of assets   103     130     323     130  
Income before income tax expense 19,097 14,431 31,526 23,955
Income tax expense   5,955     4,633     10,401     7,806  
Net income $ 13,142   $ 9,798   $ 21,125   $ 16,149  
 
Earnings per share:
Basic $ 0.62 $ 0.46 $ 1.00 $ 0.76
Diluted $ 0.62 $ 0.46 $ 1.00 $ 0.76
Weighted average common shares outstanding:
Basic 20,649,910 20,556,536 20,628,598 20,533,237
Diluted 20,747,312 20,556,536 20,686,697 20,533,237
 

Century Communities, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share amounts)

  June 30,   December 31,

2016

2015

Assets
Cash and cash equivalents $ 10,684 $ 29,287
Accounts receivable 29,290 17,058
Inventories 869,741 810,137
Prepaid expenses and other assets 25,085 26,735
Property and equipment, net 11,002 8,375
Deferred tax asset, net 279
Amortizable intangible assets, net 3,666 4,784
Goodwill   21,365     21,365  
Total assets $ 971,112   $ 917,741  
Liabilities and stockholders' equity
Liabilities:
Accounts payable $ 12,050 $ 10,967
Accrued expenses and other liabilities 115,441 106,777
Deferred tax liability, net 275
Notes payable and revolving line of credit   412,851     390,243  
Total liabilities   540,342     508,262  
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none outstanding
Common stock, $0.01 par value, 100,000,000 shares authorized, 21,059,230 and 21,303,702 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively 211 213
Additional paid-in capital 341,121 340,953
Retained earnings   89,438     68,313  
Total stockholders' equity   430,770     409,479  
Total liabilities and stockholders' equity $ 971,112   $ 917,741  
 

Century Communities, Inc.

Homebuilding Operational Data

 

Net New Home Contracts

  Three Months Ended   Six Months Ended
June 30, June 30,
2016   2015   % Change 2016   2015   % Change
Atlanta

373

 

329

 

13.4 %

755

 

660

14.4

 

%

Central Texas 71 50 42.0 % 119 112 6.3

 

%

Colorado 224 221 1.4 % 460 430 7.0

 

%

Houston 44 37 18.9 % 71 64 10.9

 

%

Nevada 155 81 91.4 % 256 158 62.0

 

%

Utah 2       NM    

2

    NM    
Total 869     718   21.0 %   1,663   1,424   16.8

 

%

NM – Not meaningful

 

Home Deliveries

(dollars in thousands)

Three Months Ended June 30,
2016 2015 % Change

Average Sales

Average Sales

Average Sales

Homes

Price

Homes

Price

Homes

Price

Atlanta 355 $ 254.8 319 $ 220.3 11.3

 

%

15.7

 

%

Central Texas 53 427.1 36 449.1 47.2

 

%

(4.9

)

%

Colorado 220 445.6 187 402.7 17.6

 

%

10.7

 

%

Houston 47 332.3 32 221.4 46.9

 

%

50.1

 

%

Nevada 93 327.2 62 290.1 50.0

 

%

12.8

 

%

Utah                    
Total / Weighted Average 768   $ 334.9   636   $ 293.7   20.8

 

%

14.0

 

%

 
Six Months Ended June 30,
2016 2015 % Change

Average Sales

Average Sales

Average Sales

Homes

Price

Homes

Price

Homes

Price

Atlanta 609 $ 254.5 574 $ 221.1 6.1

 

%

15.1

 

%

Central Texas 114 436.8 75 442.7 52.0

 

%

(1.3

)

%

Colorado 377 442.6 330 397.4 14.2

 

%

11.4

 

%

Houston 74 312.1 92 190.1 (19.6

)

%

64.2

 

%

Nevada 133 327.2 107 303.0 24.3

 

%

8.0

 

%

Utah                    
Total / Weighted Average 1,307   $ 335.3   1,178   $ 289.6   11.0

 

%

15.8

 

%

 

Century Communities, Inc.

Homebuilding Operational Data

Selling Communities

        June 30,  

2016

 

2015

% Change
Atlanta       29       28 3.6 %
Central Texas 16 13 23.1 %
Colorado 27 26 3.8 %
Houston 8 9 (11.1 ) %
Nevada 10 5 100.0 %
Utah       1           NM    
Total       91         81   12.3   %

NM – Not meaningful

 

Backlog

 

(dollars in thousands)

  June 30,  
2016   2015 % Change
   

Average

   

Average

   

Average

Homes Dollar Value

Sales Price

Homes Dollar Value

Sales Price

Homes Dollar Value

Sales Price

Atlanta 429 $ 126,218 $ 294.2 409 $ 94,875 $ 232

4.9

%

33.0

%

26.8

%

Central Texas 114 53,772 471.7 128 60,373 471.7

(10.9

)

%

(10.9

)

%

%

Colorado 345 161,312 467.6 318 145,945 458.9

8.5

%

10.5

%

1.9

%

Houston 28 9,821 350.7 66 18,229 276.2

(57.6

)

%

(46.1

)

%

27.0

%

Nevada 152 54,803 360.5 84 28,549 339.9

81.0

%

92.0

%

6.1

%

Utah 2   815   407.5     NM     NM     NM    
Total / Weighted Average 1,070 $ 406,742 $ 380.1 1,005 $ 347,971 $ 346.2

6.5

 

%

16.9

 

%

9.8

 

%

NM – Not meaningful

 

Lot Inventory

June 30,
2016 2015 % Change
 
Owned   Controlled Total Owned Controlled Total Owned Controlled Total
 
Atlanta 2,861 3,238 6,099 1,512 3,926 5,438

89.2

%

(17.5

)

%

12.2

%

Central Texas 1,308 340 1,648 1,232 282 1,514

6.2

%

20.6

%

8.9

%

Colorado 2,690 641 3,331 3,069 693 3,762

(12.3

)

%

(7.5

)

%

(11.5

)

%

Houston 205 361 566 318 194 512

(35.5

)

%

86.1

%

10.5

%

Nevada 1,771 107 1,878 1,869 193 2,062

(5.2

)

%

(44.6

)

%

(8.9

)

%

Utah 47     474   521     NM     NM     NM    
Total 8,882     5,161   14,043 8,000   5,288   13,288

11.0

 

%

(2.4

)

%

5.7

 

%

 

Century Communities, Inc.

Earnings Per Share

(Unaudited)

(in thousands, except share and per share amounts)

  Three Months Ended   Six Months Ended
June 30, June 30,
2016   2015 2016   2015
Numerator
Net income $ 13,142 $ 9,798 $ 21,125 $ 16,149
Less: Undistributed earnings allocated to participating securities   (280 )   (361 )   (530 )   (533 )
Net income allocable to common stockholders $ 12,862   $ 9,437   $ 20,595   $ 15,616  
Denominator
Weighted average common shares outstanding - basic 20,649,910 20,556,536 20,628,598 20,533,237
Dilutive effect of restricted stock units   97,402       58,099    
Weighted average common shares outstanding - diluted   20,747,312     20,556,536   20,686,697   20,533,237  
Earnings per share:
Basic $ 0.62 $ 0.46 $ 1.00 $ 0.76
Diluted $ 0.62 $ 0.46 $ 1.00 $ 0.76
 

Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory is not a measurement of financial performance under United States generally accepted accounting principles; however, the Company’s management believes that this information is meaningful as it isolates the impact that indebtedness and acquisitions have on homebuilding gross margin and permits the Company’s stockholders to make better comparisons with the Company’s competitors, who adjust gross margins in a similar fashion. This non-GAAP financial measure should not be used as a substitute for the Company’s operating results for the three and six months ended June 30, 2016 and 2015. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

Gross Margin from Home Sales Excluding Interest and Purchase Price Accounting for Acquired Work in Process Inventory

(in thousands)

  Three Months Ended June 30,

2016

  %  

2015

  %
 
Home sales revenues $ 257,179 100.0 % $ 186,808 100.0 %
Cost of home sales revenues   207,883   80.8 %   150,225   80.4 %
Gross margin from home sales 49,296 19.2 % 36,583 19.6 %
Add: Interest in cost of home sales revenues   4,918   1.9 %   2,830   1.5 %
Adjusted homebuilding gross margin excluding interest (1) 54,214 21.1 % 39,413 21.1 %
Add: Purchase price accounting for acquired work in process inventory   83   0.0 %   414   0.2 %
Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory (1) $ 54,297   21.1 % $ 39,827   21.3 %
 
 
Six Months Ended June 30,
2016 % 2015 %
 
Home sales revenues $ 438,260 100.0 % $ 341,143 100.0 %
Cost of home sales revenues   352,236   80.4 %   275,031   80.6 %
Gross margin from home sales 86,024 19.6 % 66,112 19.4 %
Add: Interest in cost of home sales revenues   7,985   1.8 %   4,451   1.3 %
Adjusted homebuilding gross margin excluding interest (1) 94,009 21.5 % 70,563 20.7 %
Add: Purchase price accounting for acquired work in process inventory   218   0.0 %   2,441   0.7 %
Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory (1) $ 94,227   21.5 % $ 73,004   21.4 %
 

Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

The following table presents adjusted EBITDA for the three and six months ended June 30, 2016 and 2015. Adjusted EBITDA is a non-GAAP financial measure we use as a supplemental measure in evaluating operating performance. We define adjusted EBITDA as consolidated net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense, (iv) depreciation and amortization expense, and (v) adjustments resulting from the application of purchase accounting for acquired work in process inventory related to business combinations. We believe adjusted EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, and items considered to be non-recurring. Accordingly, our management believes that this measurement is useful for comparing general operating performance from period to period. Adjusted EBITDA should be considered in addition to, and not as a substitute for, consolidated net income in accordance with GAAP as a measure of performance. Our presentation of adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our adjusted EBITDA is limited as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

Adjusted EBITDA

(in thousands)

  Three Months Ended June 30,   Six Months Ended June 30,

2016

 

2015

  % Change

2016

 

2015

  % Change
Net income $ 13,142 $ 9,798   34.1 % $ 21,125 $ 16,149   30.8 %
Income tax expense 5,955 4,633 28.5 % 10,401 7,806 33.2 %
Interest in cost of home sales revenues 4,918 2,830 73.8 % 7,985 4,451 79.4 %
Interest expense 2 3 (33.3 ) % 4 6 (33.3 ) %
Depreciation and amortization expense   1,393     1,282     8.7   %   2,797     2,270     23.2   %
EBITDA 25,410 18,546 37.0 % 42,312 30,682 37.9 %
Purchase price accounting for acquired work in process inventory   83     414     (80.0 ) %   218     2,441     (91.1 ) %
Adjusted EBITDA $ 25,493   $ 18,960     34.5   % $ 42,530   $ 33,123     28.4   %

Investor Relations:
Century Communities, Inc.
303-268-8398
InvestorRelations@CenturyCommunities.com

Source: Century Communities, Inc.

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The information contained herein is preliminary in nature and though deemed reliable is not guaranteed. Prices, features, locations and other content is subject to change without notice. Square footages are estimates. Models do not reflect racial preference.

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