Greetings. Welcome to Century Communities First Quarter 2026 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If any time during the call you require immediate assistance, please press star zero for the operator. Please note 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 first quarter, 2026. 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 differ materially from those described or implied in the forward-looking statements. Certain of these risks and uncertainties can be found under the heading Risk Factors in the company's latest 10-K, as supplemented by our latest 10-Q to be filed shortly, and other SEC filings. We undertake new 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 on the call today are Dale Franceskin, Executive Chairman, Rob Franceskin, Chief Executive Officer, and Scott Dixon, Chief Financial Officer. Following today's prepared remarks, we will open up a line for questions. With that, I'll turn the call over to Dale.

Thank you, Tyler, and good afternoon, everyone. We are pleased with our first quarter results, given continued market pressures, which intensified even further beginning in early March. While demand at the start of the quarter was roughly in line with year-ago levels, geopolitical issues and increased economic uncertainties, coupled with higher interest rates and gas prices, further eroded consumer settlement, which weighed on our order activity most meaningfully in March, typically the highest sales month of the quarter. Despite these macro challenges, our operations continue to perform well. Our first quarter adjusted gross margin increased by 140 basis points sequentially, and we grew our first quarter ending community count by 4% versus the prior quarter. We also continue to effectively manage our inventory levels, with our finished specs at the end of the first quarter down 16% sequentially and 31% year-over-year. We also continue to be encouraged by bipartisan efforts to address the shortage of affordable housing and are still well-positioned for growth when demand improves. Based on our current owned and controlled lot count, we have the ability to grow our deliveries by 10 percent or more annually once market conditions improve. So long as slower market conditions persist, we will continue to balance pace and price, control our costs and inventory levels, and return capital to our shareholders through dividends and opportunistically repurchasing shares at what we view as very attractive levels. In the first quarter, we repurchased approximately 2% of our shares outstanding at the beginning of the year at a 27% discount to our book value and increased our quarterly cash dividend by 10% to $0.32 per share. 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, while in the fourth quarter of last year, we focused more on pace versus price, we took the more balanced approach in the first quarter, 2026, that we outlined on our conference call last quarter. The quarter started off on a relatively healthy basis, with our absorption rates in January roughly flat on a year-over-year basis. In line with typical seasonality, we also saw sequential increases in absorption rates in both February and March. That said, our absorption rate in March declined on a year-over-year basis as the conflict in the Middle East, as well as higher gas prices and interest rates, weighed on home buyer settlement, and we ended the quarter with net new orders totaling 2,379 homes. We were pleased to see our traffic increase each month during the first quarter, with March levels up 13% over January, and we continue to believe that there is solid underlying demand for new homes. We are also optimistic that any interest rate relief and improvement in consumer confidence will unlock buyer demand and drive our conversion rates higher. Additionally, our cancellation rate of 12.2% in the first quarter was below the levels we experienced throughout most of 2025, demonstrating the commitment of buyers once they have made the decision to purchase a home. Our order activity so far in April has trended better than March, with orders also improving sequentially over the past several weeks. We delivered 2,013 homes during the first quarter, and our incentives on these homes averaged approximately 1,250 basis points, down roughly 50 basis points from fourth quarter 2025 levels. Within the first quarter, our incentives on closed homes were at the lowest level in January and increased as the quarter progressed, as we look to maintain an appropriate pace as macro headwinds intensify. Assuming current market conditions, we expect incentives on closed homes in the second quarter of 2026 to be similar with first quarter levels. In the first quarter, adjustable rate mortgages accounted for roughly 30% of the mortgages that we originated by volume of principle, a further increase from fourth quarter 2025 levels of approximately 25 percent, and well above first quarter 2025 levels of less than 5 percent. Receptivity of our buyers to arms has been increasing, and this increased adoption of arms could help partially address the market's affordability challenges. While incentives are weighing on our margins, our operations continue to perform extremely well in the first quarter. Our direct construction costs on the homes we delivered declined by 2% on a sequential basis. Our cycle times averaged 114 calendar days, down 15% from 134 days in the year-ago quarter. Our finished lot costs in the first quarter decreased by 1% on a sequential basis, and we continue to expect our average finished lot costs for 2026 to be 2 to 3 percent higher than fourth quarter 2025 levels. In the first quarter, we started 2,749 homes in advance of the spring selling season and remained focused on managing our inventory levels, ending the quarter with less than three finished specs per community. Our average community count was 309 communities in the first quarter, and we ended the quarter with 316 communities, up 4% on a sequential basis. For 2026, we continue to expect our average community count to increase in the low-to-mid single-digit percentage range on a year-over-year basis. We ended the first quarter with nearly 60,000 owned and controlled lots with our total lot count roughly flat on a sequential basis as we continue to proactively manage our land position. In 2026, we expect our land acquisition and development expense to be in the range of $1 billion to $1.2 billion. 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. As we have stated over the past several quarters, 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 has allowed us to adjust terms in many cases and increasingly achieve lower prices as sellers have started to adjust their expectations. At the end of the first quarter, only 11 of our 316 communities, or roughly 3%, utilized a land bank. 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 24,000 lots is secured by deposits that total just $97 million or less than 4% of equity. We remain focused on controlling our costs, maintaining an appropriate sales pace, and preserving the ability of our favorable land position to drive meaningful growth so that we can take advantage of improved conditions when the market rebounds. I'll now turn the call over to Scott to discuss our financial results in more detail.

Thank you, Rob. In the first quarter, pre-tax income was $33 million and net income was $24 million or $0.84 per diluted share. Adjusted net income was $26 million or $0.88 per diluted share. Home sales revenues for the first quarter were $734 million, with our average sales price of $365,000 roughly flat on a sequential basis. Our deliveries of 2013 homes were impacted by the reduced order activity that we experienced in March. For the second quarter, 2026, we expect our deliveries to range from 2,200 to 2,400 homes with further sequential increases in both the third and fourth quarters. In the first quarter, land sales and other revenues totaled $33 million and generated a profit of approximately $11 million, driven primarily by a single transaction in our southeast region. Our first quarter 2026 GAAP home building gross margin of 17.8% increased by 240 basis points over fourth quarter 2025 margins of 15.4%. Our first quarter margin benefited by 90 basis points from a reduction to our warranty accrual and rebate collections in excess of previous estimates, but was impacted by 10 basis points of purchase price accounting. Our adjusted gross margin in the first quarter was 19.7% compared to 18.3% in the fourth quarter 2025. The sequential improvement in our adjusted gross margin was primarily driven by lower incentives. For the second 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 pace, which as Rob noted earlier, we currently expect to be similar to first quarter levels. SG&A is a percentage of home sales revenue with 15.8% in the first quarter and impacted by lower than expected deliveries. Assuming the midpoint of our full year 2026 home sales revenue guidance, we expect our SG&A as a percent of home sales revenue to be roughly 14% for the full year 2026, with SG&A as a percentage of home sales revenue of 14.5% for the second quarter. Revenues from financial services were $22 million in the first quarter, and the business-generated pre-tax income of $8 million. Revenues benefited from a fair value adjustment associated with an increase in our locked loan pipeline and mortgage servicing rights portfolio. We currently anticipate the contribution margin percent from financial services in 2026 to be similar to 2025 levels. Our tax rate was 26.8% in the first quarter of 2026, and we expect our full year tax rate for 2026 to be in the range of 26% to 27%. Our first quarter 2026 net home building debt to net capital ratio was 30.5%, and our home building debt to capital ratio was 32.2%, basically consistent with a prior year quarter. We ended the quarter with $2.6 billion in stockholders' equity and $886 million of liquidity. During the quarter, we increased our quarterly cash dividend by 10% to $0.32 per share and repurchased 617,000 shares of our common stock for $40 million at an average share price of $64.82 or a 27% discount to our book value per share of $88.75 as of the end of the first quarter. Given the impact of the conflict in the Middle East with lower consumer confidence and higher interest rates and gas prices adversely affecting our order activity, we are reducing our full year 2026 home delivery guidance by 5% and now expected to be in the range of 9,500 to 10,500 homes and our home sales revenues to be in the range of 3.5 to 3.8 billion. In closing, we are pleased with our performance in the current environment as we effectively balance pace and price and manage our costs in inventory levels. We increased our quarterly dividend and bought back 2% of our shares outstanding in the first quarter and will continue to be opportunistic with buybacks while continuing to position the company for future growth. 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 the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speaker phone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Alex Riegel with Texas Capital Securities. Please go ahead.

Alex Riegel Thank you. Good evening, gentlemen, a nice quarter. A couple of quick questions here. So, I appreciate the commentary with regards to sort of reducing spec inventory and whatnot sequentially in year over year. Can you comment on how you think your competitors and your markets have adjusted their spec inventory? And how do you feel about spec inventory just broadly across all your portfolio?

Yeah, Alex, this is Scott. So generally speaking, I think we're pretty I think we're pretty optimistic with what we see from a market perspective in terms of the level that our specs are out there from a finished perspective, especially as we kind of compare back to, you know, maybe this quarter or mid last year. So generally speaking, I think we're comfortable with most markets with where the overall finished spec inventory is at. From our perspective, really a focus area to really ensure at a community level, we feel like we're in a pretty strong position from pricing as well as consumer demand. And so that's really where the focus has come from, from our perspective on our finish count inventory at the end of the quarter.

And a few years back, we were, you know, I don't know, fairly on a fairly regular basis. You were entering new geographies or new markets. I feel like that message has slowed a little bit here. At what point do you think Century sort of re-accelerates its geographic expansion?

Well, I think the focus, Alex, was to get a larger geographic reach in the past. We're now in over 45 markets, you know, coast to coast, and we like the markets we're in. As far as new markets, you know, we continue to look at new markets, but candidly, our biggest focus is growing within our existing footprint. And because when you look at our size of company, we actually have, that's one of our competitive advantages is we have a large geographic reach. But the key is really to start growing deeper in each one of those markets to be in a top 10 if we're not already in a top 10 position or in a top five position or even higher than that within a market. So that's really what our focus is. We would still look at new markets, but that would come secondary to growing in our existing markets.

Thank you.

Thank you. Your next question comes from Natalie Kulazikir with Salmon & Associates. Go ahead, Natalie.

Hey, good afternoon, and thank you for taking my question. Have you received any communication regarding potential cost increases or field surcharges from your vendors? And if you have, do you think it's something that could be negotiated, or do you expect a re-acceleration in cost inflation towards, you know, the latter part of this year or even heading into next year?

Well, you know, to date, we've been able to avoid price increases and sequentially our costs were down 2% on our directs. With that said, you know, of course, there's a lot of headlines on oil and petroleum products, diesel fuel, and all of that. And that runs through various channels, as you know, within, you know, the home building skews of people we use. But with that, so far, we've been able to hold off on that. Is that something that's going to be a topic in Q3 and Q4? Don't know. We hope that this is short-lived and everything gets back to normal on those prices. But to date, what I can tell you is we've been able to avoid price increases as it's related to oil.

All right. Thank you. And are you able to provide more detail about the land sale? I know you said it was a single transaction in the Southeast, but are there any more in the pipeline, and how should we kind of look at this line item going forward?

Sure, Natalie, really just an opportunistic item that came up in the Southeast that we went ahead and took advantage of. So it's so much more of an opportunistic transaction that came our way in the first quarter that we went ahead and executed on.

And it was a community where it was a larger community. These were back half lots that we did not need for the foreseeable future, so it made sense to pare that investment down.

Okay, thank you.

Absolutely.

Your next question comes from Jay McCamless with Citizens. Please go ahead.

Hey, good afternoon, guys. So just wanted to kind of pick through the regions. It looks like southeast saw a jump in closings or a gain in closings there. The west is doing a little better. Were some regions of the country affected more than others? And maybe what have you seen so far in April in terms of regional strength versus weakness?

So the southeast still remains really strong. Within that, Nashville would be, you know, one of our top markets. Austin, we're seeing some green shoots coming out of Austin. And candidly, you know, on the west, the Bay Area has probably been the slowest or the weakest market that we're experiencing right now. But generally, the southeast has been very good.

That's good to hear. And then as you think about trying to hold the line on pricing, I mean, right now, is it still pretty aggressive incentives out there? You said 12.5%, I think, this quarter. You're expecting maybe the same for second quarter. I guess, what are you seeing out of competitors? Are they still leaning in pretty aggressively on incentives as well? What's happening there?

You know, I think that definitely the market's driven by incentives, of course. In terms of, you know, the peak on that, hopefully it was like Q4 end of last year and things are tempering slightly. you know we're 50 basis points less we think will be flat in q2 still remains to be seen i think other builders are messaging the same thing that you know there is a little bit of a pullback but when you look at you know some buyer uncertainty out there with everything that's going on uh it's it's a needed thing today to move houses okay got it all right that's all ahead. Thank you.

Thanks, Jay. Good talking to you.

Your next question comes from Michael Verholt with J.P. Morgan.

Thanks. Good afternoon, everyone. I wanted to, you know, kind of get a sense for sales pace in April. I'm sorry if I missed those comments earlier, but, you know, The sales pace for the first quarter, rather, was down about 9% year-over-year, you know, and it seems like it maybe got worse throughout the quarter, if I also heard that right. If you could get us any kind of sense of how April is trending, and I guess I have a follow-up as well.

So, you know, just going back to Q1, January started out kind of, you know, roughly flat year over year. Incrementally, we picked up pace from February versus January and from March versus February. However, March, with a lot of the things that were happening within the marketplace, our year over year was actually down quite significantly for March. So we didn't have, another way to say it, we didn't have as good of March as we had hoped for based on the Mideast conflict and all that. When you look at April, April's actually started out better than March, and we're trending higher in the month of April. So that feels good right now.

So when you say trending higher, do you mean higher sequentially or year over year or both? Both. No, that's good to hear. And I guess, you know, it kind of leads me to the second question with the expectation that incentives will be flat in 2Q versus 1Q. Um, does that, uh, you know, something that you think can hold as long as sales pace also kind of holds on a year over year basis? Or are there markets that you're kind of watching right now in terms of, you know, inventory levels or competitive trends that, you know, could potentially, you know, make you rethink the incentive approach if, you know, sales pace doesn't hit a certain level?

Well, you know, of course, Michael, it's always fluid, but right now we feel fairly comfortable where the market is that from an incentive basis, we will be lapped, you know, at worst from where we were in Q1 to where we'll be in Q2. As far as markets, you know, it really goes down to the subdivision level, and you could have a market that is good, but you have a subdivision that may need additional incentive or less incentive, and so that just really plays out at the individual subdivision level. But all in all, we think right now incentives are going to be flat from Q2 to Q1.

Thanks so much. Thank you.

As a reminder, if you wish to ask a question, please press star followed by the one. As there are no more questions, we will now turn the line back over to Rob for some brief closing remarks.

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 commitment to our valued home buyers.

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