Greetings and welcome to the Century Community's fourth quarter and full year 2025 earnings conference call. At this time, all lines are in Ellison-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note that this conference call is being recorded. I will now turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Thank you. You may begin.

Good afternoon. Thank you for joining us today for Century Communities earnings conference call for the fourth quarter and full year 2025. Before the call begins, I would like to remind everyone that certain statements made during this call may constitute forward-looking statements. These statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to this material from from those described or implied in the forward-looking statements. Certain of these risks and uncertainties can be found under the heading risk factors and the company's latest 10-K as supplemented by our latest 10-Q and other SEC filings. We undertake no duty to update our forward-looking statements. Additionally, certain non-GAAP financial measures will be discussed on this conference call. The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Posting the call today are Dale Franceskin, Executive Chairman, Rob Franceskin, Chief Executive Officer and President, and Scott Dixon, Chief Financial Officer. Following today's prepared remarks, we'll open up final questions. With that, I'll turn the call over to Dale.

Thank you, Tyler, and good afternoon, everyone. We are pleased with our accomplishments and results in what was a challenging year for the new home market. We closed the year by exceeding our recent guidance across most financial and operating metrics, including the delivery of 3,435 residential units comprised of 3,030 new homes, 105 previously leased rental homes, and 300 multifamily units delivered to our Century Living business, bringing our full-year residential units delivered to 10,792. During the year, we repurchased over 7% of our shares outstanding at the beginning of the year, invested $1.2 billion in land acquisition and development to continue to position Century for future growth, and ended the year with a record book value per share of $89, all while reducing our net leverage to 26% and generating cash flow from operations of over $150 million. Our fourth quarter deliveries of 3,030 new homes benefited from our focus on increasing sales pace, particularly in older, higher-cost communities and communities in closeout through the continued use of price and financing incentives. As a result, our fourth quarter net orders of 2,702 homes set a company record, increasing 13% sequentially versus an average historical sequential decline of 6%. Our team's accomplishments for the full year 2025 included reducing our direct construction costs on starts by an average of $13,000 per home and cycle times by 13 days to a new company record of 114 calendar days, with our faster build times allowing us to reduce our finished spec inventory by nearly 30%. We decreased our SG&A excluding conditions and advertising by 5% year-over-year and maintained customer satisfaction scores and mortgage capture rates at all-time highs. As we look into 2026 and the years ahead, Century is well-positioned for future growth. Given our land spend over the past several years, assuming improved market conditions, we have the ability to grow our deliveries by 10% annually in 2026 and 2027, and pay solely on our existing lot count as of the end of 2025. That said, we will remain disciplined if slower market conditions persist and will not look to grow either our lot pipeline or deliveries for the sake of growth alone, as our more traditional land option strategy gives us significant flexibility in adjusting the timing and terms of land takedowns given the limited capital we have at risk. We leaned into share repurchases in 2025, given our valuation levels, and our strong balance sheet is supportive of continued flexibility in our capital allocations in 2026, without limiting our ability to quickly ramp growth when the market rebounds. We expect any interest rate relief, improvement in consumer confidence, are governmental support for homebuyers to unlock buyer demand, which Century is well-positioned to meet. And we continue to believe there is meaningful pent-up demand for affordable new homes. For 2025, Newsweek named Century as one of America's most trustworthy companies for the third consecutive year, while Century was designated as one of U.S. News and World Report's best companies to work for. These recognitions are a testament to the commitment of our team members and trade partners that allow us to achieve our mission of consistently delivering a home for every dream. And we want to thank them for your efforts. I'll now turn the call over to Rob to discuss our strategy, operations, and land position in more detail.

Thank you, Dale, and good afternoon, everyone. Starting with sales, our net new contracts of 2,702 homes was a fourth quarter company record and represented an increase of 10% versus the prior year and 13% on a sequential basis, a significant improvement over our historic average fourth quarter sequential decline of approximately 6%. The strength in our orders was primarily driven by improved absorption rates, which averaged 2.9 homes per community in the fourth quarter, an increase of 12% year-over-year and 16% sequentially. While we focus more on pace versus price for older, higher-cost communities and communities in closeout in the fourth quarter, we plan to take a more balanced approach between pace and price as we enter 2026. While our sales pace thus far in 2026 has been slower than the same period in 2025, we are encouraged by slightly stronger traffic trends on a year-over-year basis as we look forward to the upcoming traditionally strong selling months of the year. Our incentives on closed homes increased in the fourth quarter by 200 basis points and averaged roughly 1,300 basis points, driven by our fourth quarter pace strategy, as well as the general market dynamics as we computed with other builders for year-end closings. As a reminder, since the beginning of 2024, our incentives have ranged from 600 basis points to the high point of 1,300 basis points this quarter. And so we have ample leverage once improved market conditions enable us to mean full pullback on incentives. As we look to resume our more balanced approach to PACE, we currently expect incentives on closed homes in the first quarter of 2026 to improve by up to 50 basis points from fourth quarter 2025 levels. In the fourth quarter, adjustable rate mortgages accounted for roughly 25% of the mortgages that we originated, up from nearly 20% in the third quarter and less than 5% in the first quarter. Receptivity of our buyers to ARMS has been increasing, and we are encouraged that there is room for further adoption of ARMS going forward, which could help partially address the market's affordability challenges. While incentives have clearly weighed on our margins, our operations continue to perform extremely well. Our direct construction costs on the homes we delivered in the fourth quarter declined by 4% on a sequential basis. Our cycle times in the fourth quarter averaged 114 calendar days, down 10% from 127 days in the year-ago quarter. Given our record cycle times and advantageous direct construction costs, we are well positioned to take advantage of any favorable market conditions during the spring selling season and accelerate our starts from the 2069 homes we started in the fourth. Our 2025 average community count increased by 13% to 318 communities, while our year-end community count ended at 305. While we have been expecting modest growth in our ending community count this year, we closed a greater number of communities than initially expected, with that trend especially pronounced in the second half of the fourth quarter given our increased sales pace. For 2026, we expect our average community count to increase in the low to mid single-digit percentage range on a year-over-year basis. Before turning the call over to Scott, I wanted to provide some additional details on our land position that is supportive of our growth while also having an attractive risk and cost profile. We ended the fourth quarter with roughly 61,000 owned and controlled lots and spent approximately $1.2 billion on land acquisition and development in 2025, nearly matching the 2024 levels of $1.3 billion. dollars. In 2026, we currently expect our land acquisition and development expense to be roughly flat with 2025 levels. We have the ability to reduce this number if market conditions warrant without impacting our near-term growth prospects or accelerate if market conditions improve given the strength of our balance sheet. More specifically on the topic of growth, given our land spend over the past several years, we had the ability to grow our deliveries, assuming improved market conditions, by 10% annually in both 2026 and 2027, based solely on our existing lot count, both owned and optioned as of the end of 2025. I think it is also important to note that we generated positive cash flow from operations of $126 million in 2024 and $153 million in 2025, even with this level of land spend, further supporting Century's ability to self-fund future growth. In addition to providing attractive future growth, our land position also has an attractive cost basis. In the fourth quarter, our finished lot costs were roughly flat on a sequential basis, and we expect our average finished slot costs for 2026 to only be 2% to 3% higher than fourth quarter 2025 levels. The attractive growth profile and cost position of our land is also underpinned by a traditional land option strategy that is both flexible and reduces risk with minimal exposure to land banking. The flexibility of our option agreements allowed us to adjust terms in many cases and achieve lower prices in some cases over the course of 2025. As a result, we have much more control over the pace at which we start homes rather than having fixed takedown schedules and higher interest costs influence our pace. Additionally, our current option lot count of 26,000 lots is secured by nonrefundable deposits that total just $74 million. In addition to having significant flexibility with our land position, a large portion of our land is also close to monetization, which further reduces the risk profile of our land. Specifically, 43% of our total owned land inventory at the end of the fourth quarter was in finished lots, with another 32% in land under development. Going forward with our land investments, we remain focused on deepening our share in our existing markets to drive improved margins and returns. We are pleased with our performance in both the fourth quarter and for the full year. We meaningfully reduced our cycle times and direct costs and controlled our fixed G&A. We do risk our land inventory where necessary while preserving the ability of our land position to drive meaningful growth at attractive costs in the years ahead. I'll now turn the call over to Scott to discuss our financial results in more detail. Thank you, Rob.

In the fourth quarter, pre-tax income was $47 million and net income was $36 million, or $1.21 per diluted share. Adjusted net income was $47 million, but $1.59 per diluted share. Home sales revenues for the fourth quarter were $1.1 billion, up 16% on a sequential basis. Our deliveries of 3,030 new homes increased by 22% on a sequential basis, while our average sales price of $367,000 decreased by 5% on a quarter-over-quarter basis, with a decrease in our ASB, largely driven by increased incentive levels. For the first quarter of 2026, we expect our deliveries to range from 2,100 to 2,300 homes, which should represent the low point for the year as we expect our community count to increase over the course of 2026. Our total revenues in the fourth quarter also benefited from the sale of a 300-unit multifamily community within our Century Living segment for $97 million. In the fourth quarter, GAAP home building gross margin was 15.4%, which was negatively impacted by 100 basis points of inventory impairment and 10 basis points of purchase price accounting from our two acquisitions in 2024. The $10.9 million impairment charge this quarter was related to several closeout communities. Adjusted home building gross margin in the fourth quarter was 18.3%. For the first quarter, 2026, we expect the most significant driver of our adjusted home building gross margin to continue to be incentives needed to generate an acceptable sales space. SG&A as a percent of home sales revenue was 12.2% in the fourth quarter and benefited from ongoing cost reduction efforts. Assuming the midpoint of our full year 2026 home sales revenue guidance, we expect SG&A as a percent of home sales revenue to be roughly 13% to the full year 2026. With SG&A as a percentage of home sales revenue of 14.5% to the first quarter. Revenues from financial services were $25 million in the fourth quarter, and the business generated pre-tax income of $8 million, benefiting from higher volumes in the quarter. We currently anticipate the contribution margin from financial services in 2026 to be similar to 2025 levels. Our mortgage capture rate of 84% in both the fourth quarter 2025 and the full year 2025, representing quarterly and annual records. Our tax rate was 23.5% in the fourth quarter 2025 and 24.1% for the full year. And we expect our full-year tax rate for 2026 to be in a range of 25 to 26%. Our fourth quarter 2025 net home building debt to net capital ratio improved to 25.9% compared to third quarter 2025 level of 31.4%. Our home building debt to capital ratio also improved at 29.1% in the fourth quarter compared to third quarter 2025 levels at 34.5%. We ended the quarter with $2.6 billion in stockholders' equity and $1.1 billion of liquidity. In 2025, we generated cash flow from operations of $153 million, which follows the $126 million we generated in 2024, even as we continue to invest in land to support our future growth. During the quarter, we maintained our quarterly cash dividend of $0.29 per share and repurchased 334,000 shares of our common stock for $20 million at an average share price of $59.90 or a 33% discount to our company record book value per share of $89.21 as at the end of the fourth quarter. For the full year 2025, we repurchased 2.3 million shares or 7% of our shares outstanding at the beginning of the year at an average price of $63.32, or a 29% discount to our bulk value. During the year, we returned a record $178 million to our shareholders through dividends and share repurchases. Turning to guidance, assuming no significant changes to the current economic environment, We currently expect our full year 2026 new home deliveries to be in the range of 10,000 to 11,000 homes and our home sales revenues to be in the range of $3.6 billion to $4.1 billion. Our current guidance reflects an increase in our average open community in the mid-single-digit percentage range and a similar per-community absorption level at the back half of 2025. from us. Given our current lot and community count, we do have the ability to drive our deliveries above the high end of our guidance if absorption rates and overall market conditions are supportive of that growth. In closing, given our investments in land over the past several years, we are well positioned for growth when the market rebounds. We are also well-situated to navigate the current market given our flexible land strategy and success in reducing our direct costs and fixed gna expenses which has allowed us to generate solid levels of cash flow invest in the business and opportunistically we purchase shares at what we view as very attractive levels with that i'll open the line for questions operator thank you ladies and gentlemen we will now begin the question and answer session should you have a question please press star followed the number one on your touchstone phone you will hear a prompt that your hand has been raised should you wish to decline from the folding process please press star followed by the number

two if you're using a speakerphone please lift the handset before pressing any keys one moment please for your first question your first question comes from the line of andrew azzi from jpmorgan their line is now open hi guys uh thank you for taking my question i appreciate it um just wanted to kind of dial in on and clarify maybe some of the comments you made uh you gave a lot of great color I mean I believe you guys were intimating maybe the spring selling season might look a little bit stronger year over year I mean I'd love to kind of dive into that and just kind of what you're seeing from the consumer and how how the consumer is behaving alongside kind of you know potentially reduced

incentives yeah so Andrew so far in January our sales pace as we mentioned has actually been slower versus the year-ago period. However, the order activity has improved sequentially over the first three weeks of January. And when we look at our potential leads, that has actually gone up as well. And those take some time to convert anywhere from 15 to, you know, 45 days, depending on the situation. So we're hopeful that that will start picking up. You know, and as you know, last year's spring selling season, while everyone was very hopeful that we were going to have a great spring selling season, it did not mature and it did not turn out that way. So we're hopeful this year that that's going to be the case. You know, there's obviously a lot of publicity and PR out there on a variety of fronts right now on housing, and so we're hopeful that that will be tailwinds for us going into the spring selling and it will be better.

Okay. And are those kind of, you know, efforts by the administration kind of baked into your guidance, or would that just kind of be additional help, or is it kind of towards the high end of the range? How are you guys thinking about these kind of actions?

That would be additional help at this point.

Got it. And maybe I'd sneak in one more. I mean, the community count, you know, it looks like you're getting some low to mid-single digits. I mean, how do we think about how that looks quarter to quarter? Is that steady year-over-year increases, or is it more lumpy than that?

Yeah, Andrew, this is Scott. So, you know, from a community count perspective, you know, certainly our average community count this year was up to 318. We did have a little bit of a dip as we closed out the year, just as we as we really move through pretty focused some of our close out in communities as well as as older specs so we would anticipate that really to continue to grow throughout the year especially kind of in the middle and back half of the year from average community perspective that's helpful thank you for all the color guys thank you your next question comes from the line of Jay McCandless from Citizens JMT.

Your line is now open.

Hey, guys. Thank you for taking my questions. I guess the first one, maybe drilling down on the gross margin a little bit, do you think that it's going to be in line to maybe a little worse than the fourth quarter? Is that what I'm hearing?

Jay, this is Scott. I'll take that one, and great to have you, and congrats on your new role, obviously. Congratulations, Jay.

Thank you, guys.

Just some commentary from a gross margin perspective, really what you're seeing come through the fourth quarter margins is some intentionality on our perspective to really focus on some closeout communities and really move some units. We ended up from a sales pace over 2,700 units, which is a 16% increase quarter over quarter from pace. So, we were pretty focused on the incentives side of the, you know, of the lever here in the first quarter. And really, we've been taking a more balanced approach all in, and I think you'll see us revert back to that as we get into next year. Obviously, we'll see where the spring selling season is at and where the consumer is at. But I think as we get into the first quarter, that's reflective in the commentary that we do think you'll see a slight pullback of about 50 basis points from our current incentive levels in Q4.

I guess the second question I had is, you know, you talked about – it sounds like traffic's a little bit better, but order pace is a little slower. Are there any geographic standouts in terms of better versus worse?

Yeah, Jay, this is Scott. I can jump in. You know, I don't know that I would call out any specific one of our, you know, regions or markets so far this year that has performed really outside of some of the trends that we were working through all of last year. Certainly, we're excited about, you know, a little bit of increased traffic. We have seen some of the headlines as we got a little bit closer to 6% on the mortgage rate, you know, drive a lot more traffic. And that's something that we're certainly excited to see play itself out. In the spring selling season, I think, unfortunately, being so early here in January and January historically being a much more muted month, we need a few more weeks really to get back underneath us before we have a good feel for where each region is at and where the spring selling season is building towards.

Understood. And then just the housekeeping question, can you remind us how much you have left on the stock repurchase authorization?

Yeah, we have around a million and a half shares underneath the Stock Group Burgess Program. Okay, great. Thanks, guys.

Appreciate it. Yeah, absolutely.

Your next question comes from the line of Natalie Kalesikar from Gentlemen and Associates. Your line is now open.

Hey, good afternoon. Thank you for taking my question. So, if I'm not mistaken, you said that SG&A as a share of sales is going to be 14.5% in 1K26. Is that correct?

Correct, 14.5% in 1Q2026.

Okay, so that's a little higher than the run rate that you've been going at, so I'm just trying to figure out what would cause the spike, especially given that, you know, community count growth was much higher last year. And so could you maybe like talk through the moving pieces of that?

Sure, you know, for a full year, we're really looking at, you know, 2025 and 2026 at the moment to be pretty flat from an SG&A as a percentage of revenue perspective. So, this year we ended 12.9. We're really looking somewhere around similar levels next year, which is – you know, the initial guide here is 13. As we look into Q1 specifically, there's a handful of factors within, you know, within that piece. The first is Q1 is typically our lowest closing quarter of the year. and therefore from a percentage is certainly one of our highest. Additionally, as you know, we can kind of look at where our ASP is at in backlog and the implied guide, those two items really factor into that 14.5% for Q1.

Okay, thank you. And I guess the next question is you said that order activity is trending kind of lower year over year for three weeks of Jan. So I'm just curious, how confident are you in your ability to dial back incentives more, you know, as you head to the spring and, you know, if things are still tracking down year over year?

Well, again, we're going to have to see how that plays out. And, you know, again, as I mentioned last year, we were very hopeful, as all the other builders were, that it was going to be a great spring selling in 2025 that did not materialize, you know, this year again for some of the reasons that I previously stated that we think it will be better this year but again we're just going to have to wait and see and when we say we're behind pace I mean we're not that far behind pace but as we sit here today we know that is an accurate statement of course got it thank you your next question comes from the line of Alex Rigel from Texas Capital their line is now open thank you and I appreciate the transparency and all the information

you provided and it's very helpful. First question, it sounds like obviously the fourth quarter has the margin headwind from higher incentives on closeouts, but was there any pressure from the sale of the century living units?

Alex, specifically those, the sale of the century living units are not included in the gross margin, nor are they included in the incentive commentary that we provided.

Helpful. And then as it relates to your teaser interest, rate on your website of 3.75. Are you finding that that's sort of that magical number that is really causing buyers to take You know, Alex, there's a handful of different things going on on the mortgage side from the product perspective.

When you kind of step back and look all in at the average rate that we originated our mortgages at this year, and our financial services segment has an 84% capture rate, so it's certainly the vast majority of our consumers. We're kind of in the five and a quarter to five and a half range all in. We certainly will move product or solve certain equations for our buyer, and you will see teaser rates below four, especially on our ARM product. You also will see, you know, a very popular product is, you know, a 4875 30-year fix. is certainly another product that will certainly help solve some of the affordability equations for our consumer. But all in, we're pretty consistent over the last, you know, four or five quarters that we're originating our mortgages somewhere around in that five and a quarter to five and a half range.

And then more broadly, as we enter the spring selling season, how do you see sort of the industry's level of spec inventory developing right now?

Now, I think as we look at, you know, last year, and, you know, we were no different as we pushed pace over price. We entered the year with less specs than we did year over year as we entered January of 25. And when we look at it, I think people have generally done the same thing vis-à-vis not getting ahead of themselves on starts or all of that. But the positive side of that is that can be ramped up very quickly if the market is there because cycle times have dropped for us and other builders. Ours is at 114 calendar days, and other builders are somewhat similar depending on the product type. So with that, a new product can be created fairly quickly.

Very helpful.

Absolutely. As a reminder, if you wish to ask a question, please press bar 1. We will now turn back the line over to Rob for some brief closing remarks. Please go ahead.

To everyone on the call, thank you for your time today and interest in Century communities. To our team members, thank you for your hard work, dedication to Century, and your unwavering commitment to our valued homebuyers.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.