8-K
Century Communities, Inc. (CCS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 2021
____________________
CENTURY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
____________________
| HIDDEN_ROW | ||
|---|---|---|
| 001-36491 | Delaware<br><br>(State or Other Jurisdiction of Incorporation) | 68-0521411 |
| (Commission File Number) | (I.R.S. Employer Identification Number) | |
| 8390 East Crescent Parkway, Suite 650<br>Greenwood Village, Colorado | 80111 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(303) 770-8300
(Registrant’s telephone number, including area code)
Not Applicable
(Former name of former address, if changed since last report.)
____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | CCS | New York Stock Exchange |
__________________________
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933, as amended, or Rule 12b-2 of the Securities Exchange Act of 1934, as amended. | |
|---|---|
| Emerging growth company ¨ | |
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
Item 2.02. Results of Operations and Financial Condition
On February 4, 2021, Century Communities, Inc. (the “Company”) issued a press release announcing its results of operations and financial condition as of and for the three months and year ended December 31, 2020. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K (including Exhibit 99.1) is being “furnished” in accordance with General Instruction B.2 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be incorporated by reference into any registration statement or any other document filed pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.
As discussed therein, the press release furnished as Exhibit 99.1 to this Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements relate to the Company’s current expectations and are subject to the limitations and qualifications set forth in the press release as well as in the Company’s other documents filed with the U.S. Securities and Exchange Commission, including, without limitation, that actual events and/or results may differ materially from those projected in such forward-looking statements.
Item 9.01. Financial Statements and Exhibits
(d)Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 4, 2021 CENTURY COMMUNITIES, INC.
| By: | /s/ David Messenger |
|---|---|
| David Messenger | |
| Chief Financial Officer |
CCS 12312020 Earnings Release 8-K Exhibit 991
Century Communities Reports Record Fourth Quarter and Full Year 2020 Results
Net Income for the Quarter Increased 72% to a Record $91.8 Million or $2.72 per Diluted Share -
Net New Home Contracts for the Quarter Increased 45% to 2,566 Homes -
Home Sales Revenues for the Quarter Increased 22% to a Company Record $946.8 Million -
EBITDA for the Quarter Increased 87% to a Company Record $144.7 Million -
Full Year 2020 Revenues Increased 25% to a Company Record $3.2 Billion -
Full Year Home Deliveries Increased 18% to a Company Record 9,453 Homes -
Greenwood Village, Colorado (February 4, 2021) – Century Communities, Inc. (NYSE: CCS), a leading national homebuilder, today announced financial results for its fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights Compared to Fourth Quarter 2019
| · | Net income increased 72% to a Company record $91.8 million or $2.72 per diluted share | | --- | --- | | · | Home sales revenues increased 22% to a Company record $946.8 million | | --- | --- | | · | Deliveries grew to a Company record 2,826 homes, a 14% increase | | --- | --- | | · | Net new home contracts increased 45% to a fourth quarter record of 2,566 homes | | --- | --- | | · | Homes in backlog improved 66% to a fourth quarter record 3,439 homes valued at $1.3 billion | | --- | --- | | · | Pre-tax income improved 125% to a Company record $121.2 million | | --- | --- | | · | EBITDA increased 87% to a Company record $144.7 million | | --- | --- | | · | Net homebuilding debt to net capital improved to 27.2% from 45.2% | | --- | --- | | · | Quarter end total liquidity of $1.1 billion | | --- | --- |
Dale Francescon, Co-Chief Executive Officer, stated, “Our exceptional performance in the fourth quarter concludes an impressive year, reflecting our ongoing momentum and scale benefits, as we capitalized on vigorous housing market demand trends and achieved fourth quarter and full year records in many categories including net new contracts, home deliveries and home sales revenues, along with the highest quarterly and full year net income in our history. As we continue to increase the penetration within our high-growth markets, we expect to generate further operational efficiencies from our national platform which, coupled with robust price appreciation and continued demand, will drive top-line growth, expanded margins and increased profitability.”
Rob Francescon, Co-Chief Executive Officer, said, “We are confident our positive trajectory will continue as not only did our fourth quarter net new contracts increase 45% over last year but we have seen our sales pace accelerate, with December up 54% and January increasing 77%. We are solidly positioned with a backlog of 3,439 sold homes, an increase of 66%, along with nearly 50,000 owned and controlled lots which will support further increases in deliveries, contracts and community count across our Century Communities and Century Complete brands. We’ve substantially strengthened our balance sheet, further improved our cash position, reduced our net debt-to-net-capital ratio to 27% and are well positioned to generate even higher returns to our shareholders.”
Fourth Quarter 2020 Results
Net income for the fourth quarter 2020 increased 72% to $91.8 million, or $2.72 per diluted share as compared to $53.4 million or $1.63 per diluted share for the prior year quarter.
Home sales revenues for the fourth quarter 2020 increased 22% to $946.8 million, compared to $775.7 million for the prior year quarter. The growth in home sales revenues was primarily due to a 14% increase in deliveries to 2,826 homes compared to 2,479 homes for the prior year quarter. Average sales price of home deliveries for the fourth quarter 2020 was $335,000, compared to $312,900 in the prior year quarter, primarily due to our successful efforts in increasing sales prices of our homes and a higher proportion of deliveries from our Century Communities brand. Across all our markets in the fourth quarter, we were successful in raising prices in order to offset the increased materials costs we experienced.
Adjusted homebuilding gross margin percentage, excluding interest, was 23.0% in the fourth quarter of 2020, an improvement of 200 basis points, compared to 21.0% in the prior year quarter and on a sequential basis, an improvement of 300 basis points from 20.0% in the third quarter. Homebuilding gross margin percentage in the fourth quarter 2020 was 20.8%, as compared to 18.2% in the prior year quarter and 17.5% in the third quarter 2020. SG&A as a percent of home sales revenues improved 80 basis points to 10.1%, compared to 10.9% in the prior year quarter. On a sequential basis, SG&A as a percent of homes revenues improved 120 basis points from 11.3% in the third quarter.
Net new home contracts in the fourth quarter 2020 increased 45% to 2,566 homes, compared to 1,775 homes in the prior year quarter. At the end of the fourth quarter 2020, the Company had 3,439 homes in backlog, representing $1.3 billion of backlog dollar value, increases of 66% and 103%, respectively.
Financial services revenues increased to $35.8 million compared to $14.5 million in the prior year quarter, and financial services pretax income increased to $17.8 million from $4.7 million.
Full Year 2020 Results
Net income for the full year 2020 was $206.2 million, or $6.13 per diluted share compared to $113.0 million, or $3.62 per diluted share in the prior year.
Home sales revenues for 2020 increased 22% to $3.0 billion, compared to $2.5 billion for 2019. The increase in home sales revenues was primarily due to home deliveries increasing 18% to 9,453 homes. Average selling price of homes delivered in 2020 was $320,200, compared to $310,200 in the prior year.
Adjusted homebuilding gross margin percentage, excluding interest, impairments and purchase price accounting, was 20.8% in 2020 compared to 20.3% in the prior year. Homebuilding gross margin percentage was 18.4%, compared to 17.7% in 2019. SG&A as a percent of home sales revenues decreased 90 basis points to 11.3% compared to 12.2% the prior year.
Net new home contracts in 2020 increased to 10,822 homes, an increase of 38%, compared to 7,861 homes in the prior year, primarily attributable to an increased absorption pace.
Financial services generated pre-tax income of $48.5 million in the full year 2020 as compared to $10.7 million in the prior year.
Strengthened Balance Sheet and Liquidity
The Company ended the quarter with a strong financial position including $1.3 billion of stockholders’ equity, $417 million of cash and $1.1 billion of total liquidity.
As of December 31, 2020, net homebuilding debt to net capital decreased to 27.2%, a reduction of 1,800 basis points from 45.2% in the prior year quarter and a sequential reduction of 570 basis points from 32.9% at the end of third quarter of 2020.
Full Year 2021 Outlook
David Messenger, Chief Financial Officer of the Company, commented, “Our recent performance demonstrates the resiliency of our business and proven ability to execute. We remain encouraged by the strength and health of the housing market and as such, are introducing full year guidance of deliveries in the range of 10,500 to 11,500 homes and homes sales revenues in the range of $3.3 billion to $3.8 billion.”
Conference Call
The Company will host a webcast and conference call on Thursday, February 4, 2021 at 5:00 p.m. Eastern time, 3:00 p.m. Mountain time, to review the Company’s fourth quarter and full year 2020 results, discuss recent events and conduct a question-and-answer period. To participate in the call, please dial 877-451-6152 (domestic) or 201-389-0879 (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 March 4, 2021, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13714670. A replay of the webcast will be available on the Company’s website.
About Century Communities:
Century Communities, Inc. (NYSE: CCS) is a top 10 national homebuilder. Offering new homes under the Century Communities and Century Complete brands, Century is engaged in all aspects of homebuilding — including the acquisition, entitlement and development of land, along with the construction, innovative marketing and sale of quality homes designed to appeal to a wide range of homebuyers. The Colorado-based company operates in 17 states across the U.S., and offers title, insurance and lending services in select markets through its Parkway Title, IHL Insurance Agency, and Inspire Home Loan subsidiaries. To learn more about Century Communities, please visit www.centurycommunities.com.
Non-GAAP Financial Measures
In addition to the Company’s operating results presented in accordance with generally accepted accounting principles (GAAP), this press release includes the following non-GAAP financial measures: Adjusted Net Income, Adjusted Diluted Earnings per Common Share (Adjusted Diluted EPS), Adjusted Homebuilding Gross Margin, Adjusted EBITDA, and Ratio of Homebuilding Net Debt to Net Capital. These non-GAAP financial measures should not be used as a substitute for the Company’s operating results presented in accordance with GAAP, and an analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. Please refer to the reconciliation of each of the above referenced non-GAAP financial measures following the historical financial information presented in this press release.
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,” “continue,” “will,” “may,” “potential,” “looking ahead,” “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 in this release include the Company’s operating and financial guidance for 2021, its intent to take certain actions to successfully navigate through the current COVID-19 crisis and the success of these actions on its future operating results. 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. The following important factors could cause actual results to differ materially from those expressed in the forward-looking statement: adverse changes in general economic conditions, the potential impact of COVID-19 on the Company’s business, industry and broader economy, the ability to identify and acquire desirable land, availability of financing, the effect of interest rate and tax changes, reliance on contractors, and the other factors included in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. 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.
Century Communities, Inc.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three months ended December 31, | | | | Year ended December 31, | | | | | | 2020 | | 2019 | | 2020 | | 2019 | | | Revenues | | | | | | | | | | Home sales revenues | $ | 946,803 | $ | 775,667 | $ | 3,027,167 | $ | 2,481,465 | | Land sales and other revenues | | 5,200 | | 2,347 | | 30,717 | | 11,184 | | | | 952,003 | | 778,014 | | 3,057,884 | | 2,492,649 | | Financial services revenue | | 35,775 | | 14,528 | | 103,308 | | 43,262 | | Total revenues | | 987,778 | | 792,542 | | 3,161,192 | | 2,535,911 | | Homebuilding Cost of Revenues | | | | | | | | | | Cost of home sales revenues | | (749,587) | | (632,722) | | (2,468,133) | | (2,040,241) | | Cost of land sales and other revenues | | (3,332) | | (2,015) | | (21,929) | | (8,130) | | | | (752,919) | | (634,737) | | (2,490,062) | | (2,048,371) | | Financial services costs | | (17,956) | | (9,825) | | (54,797) | | (32,575) | | Selling, general, and administrative | | (95,580) | | (84,538) | | (341,710) | | (301,525) | | Loss on debt extinguishment | | — | | — | | — | | (10,832) | | Inventory impairment and other | | (481) | | (4,783) | | (2,172) | | (4,783) | | Other income (expense) | | 322 | | (4,691) | | (2,211) | | (5,190) | | Income before income tax expense | | 121,164 | | 53,968 | | 270,240 | | 132,635 | | Income tax expense | | (29,347) | | (610) | | (64,083) | | (19,641) | | Net income | $ | 91,817 | $ | 53,358 | $ | 206,157 | $ | 112,994 | | | | | | | | | | | | Earnings per share: | | | | | | | | | | Basic | $ | 2.75 | $ | 1.65 | $ | 6.19 | $ | 3.66 | | Diluted | $ | 2.72 | $ | 1.63 | $ | 6.13 | $ | 3.62 | | Weighted average common shares outstanding: | | | | | | | | | | Basic | | 33,350,633 | | 32,392,398 | | 33,312,554 | | 30,886,382 | | Diluted | | 33,806,462 | | 32,807,678 | | 33,610,098 | | 31,186,952 |
Century Communities, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
| | |||
|---|---|---|---|
| | December 31, | ||
| | 2019 | ||
| Assets | |||
| Cash and cash equivalents | 394,001 | $ | 55,436 |
| Cash held in escrow | 23,149 | 35,308 | |
| Accounts receivable | 21,781 | 27,438 | |
| Inventories | 1,929,664 | 1,995,549 | |
| Mortgage loans held for sale | 282,639 | 185,246 | |
| Prepaid expenses and other assets | 122,630 | 124,008 | |
| Property and equipment, net | 28,384 | 35,998 | |
| Deferred tax assets, net | 12,450 | 10,589 | |
| Goodwill | 30,395 | 30,395 | |
| Total assets | 2,845,093 | $ | 2,499,967 |
| Liabilities and stockholders' equity | |||
| Liabilities: | |||
| Accounts payable | 107,712 | $ | 84,794 |
| Accrued expenses and other liabilities | 302,751 | 213,975 | |
| Notes payable | 894,875 | 896,704 | |
| Revolving line of credit | — | 68,700 | |
| Mortgage repurchase facilities | 259,050 | 174,095 | |
| Total liabilities | 1,564,388 | 1,438,268 | |
| 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, 33,350,633 and 33,067,375 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | 334 | 331 | |
| Additional paid-in capital | 697,200 | 684,354 | |
| Retained earnings | 583,171 | 377,014 | |
| Total stockholders' equity | 1,280,705 | 1,061,699 | |
| Total liabilities and stockholders' equity | 2,845,093 | $ | 2,499,967 |
All values are in US Dollars.
Century Communities, Inc.
Homebuilding Operational Data
(Unaudited)
Net New Home Contracts | | | | | | | --- | --- | --- | --- | --- | | | Three Months Ended | | | | | | December 31, | | | | | | 2020 | 2019 | % Change | | | West | 331 | 246 | 34.6 | % | | Mountain | 648 | 347 | 86.7 | % | | Texas | 313 | 264 | 18.6 | % | | Southeast | 449 | 385 | 16.6 | % | | Century Complete | 825 | 533 | 54.8 | % | | Total | 2,566 | 1,775 | 44.6 | % | | | | | | | | | Year ended | | | | | | December 31, | | | | | | 2020 | 2019 | % Change | | | West | 1,526 | 1,013 | 50.6 | % | | Mountain | 2,389 | 1,637 | 45.9 | % | | Texas | 1,448 | 997 | 45.2 | % | | Southeast | 2,191 | 1,635 | 34.0 | % | | Century Complete | 3,268 | 2,579 | 26.7 | % | | Total | 10,822 | 7,861 | 37.7 | % |
Home Deliveries
(dollars in thousands) | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three months ended December 31, | | | | | | | | | | | | 2020 | | | 2019 | | | % Change | | | | | | Homes | Average Sales Price | | Homes | Average Sales Price | | Homes | | Average Sales Price | | | West | 380 | $ | 517.4 | 346 | $ | 492.4 | 9.8 | % | 5.1 | % | | Mountain | 646 | | 443.2 | 497 | | 435.0 | 30.0 | % | 1.9 | % | | Texas | 387 | | 262.9 | 277 | | 260.2 | 39.7 | % | 1.0 | % | | Southeast | 599 | | 356.4 | 556 | | 345.8 | 7.7 | % | 3.1 | % | | Century Complete | 814 | | 182.7 | 803 | | 155.3 | 1.4 | % | 17.6 | % | | Total / Weighted Average | 2,826 | $ | 335.0 | 2,479 | $ | 312.9 | 14.0 | % | 7.1 | % | | | | | | | | | | | | | | | Year ended December 31, | | | | | | | | | | | | 2020 | | | 2019 | | | % Change | | | | | | Homes | Average Sales Price | | Homes | Average Sales Price | | Homes | | Average Sales Price | | | West | 1,242 | $ | 545.7 | 1,029 | $ | 519.3 | 20.7 | % | 5.1 | % | | Mountain | 1,973 | $ | 424.8 | 1,665 | $ | 431.7 | 18.5 | % | (1.6) | % | | Texas | 1,338 | $ | 251.8 | 903 | $ | 279.9 | 48.2 | % | (10.0) | % | | Southeast | 1,903 | $ | 353.1 | 1,592 | $ | 344.3 | 19.5 | % | 2.6 | % | | Century Complete | 2,997 | $ | 167.6 | 2,811 | $ | 152.0 | 6.6 | % | 10.3 | % | | Total / Weighted Average | 9,453 | $ | 320.2 | 8,000 | $ | 310.2 | 18.2 | % | 3.2 | % |
Century Communities, Inc.
Homebuilding Operational Data
(Unaudited)
Selling Communities | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | Selling communities at period end | As of December 31, | | Increase/(Decrease) | | | | | 2020 | 2019 | Amount | % Change | | | | | | | | | | West | 17 | 15 | 2 | 13.3 | % | | Mountain | 38 | 37 | 1 | 2.7 | % | | Texas | 15 | 20 | (5) | (25.0) | % | | Southeast | 26 | 45 | (19) | (42.2) | % | | Century Complete | 102 | 95 | 7 | 7.4 | % | | Total | 198 | 212 | (14) | (6.6) | % |
Backlog
(dollars in thousands) | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | December 31, | | | | | | | | | | | | | | | | | | 2020 | | | | | 2019 | | | | | % Change | | | | | | | | Homes | Dollar Value | | Average Sales Price | | Homes | Dollar Value | | Average Sales Price | | Homes | | Dollar Value | | Average Sales Price | | | West | 486 | $ | 294,113 | $ | 605.2 | 202 | $ | 104,652 | $ | 518.1 | 140.6 | % | 181.0 | % | 16.8 | % | | Mountain | 789 | | 365,328 | $ | 463.0 | 373 | | 159,248 | $ | 426.9 | 111.5 | % | 129.4 | % | 8.5 | % | | Texas | 385 | | 134,023 | $ | 348.1 | 275 | | 72,906 | $ | 265.1 | 40.0 | % | 83.8 | % | 31.3 | % | | Southeast | 801 | | 306,644 | $ | 382.8 | 513 | | 186,307 | $ | 363.2 | 56.1 | % | 64.6 | % | 5.4 | % | | Century Complete | 978 | | 194,094 | $ | 198.5 | 707 | | 114,638 | $ | 162.1 | 38.3 | % | 69.3 | % | 22.5 | % | | Total / Weighted Average | 3,439 | $ | 1,294,202 | $ | 376.3 | 2,070 | $ | 637,751 | $ | 308.1 | 66.1 | % | 102.9 | % | 22.1 | % |
Lot Inventory
| | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | December 31, | | | | | | | | | | | | | | 2020 | | | 2019 | | | % Change | | | | | | | | | | | | | | | | | | | | | | Owned | Controlled | Total | Owned | Controlled | Total | Owned | | Controlled | | Total | | | | | | | | | | | | | | | | | West | 3,266 | 3,392 | 6,658 | 3,133 | 1,413 | 4,546 | 4.2 | % | 140.1 | % | 46.5 | % | | Mountain | 7,951 | 5,910 | 13,861 | 4,771 | 7,949 | 12,720 | 66.7 | % | (25.7) | % | 9.0 | % | | Texas | 3,035 | 5,873 | 8,908 | 3,326 | 2,278 | 5,604 | (8.7) | % | 157.8 | % | 59.0 | % | | Southeast | 3,076 | 6,389 | 9,465 | 4,160 | 3,827 | 7,987 | (26.1) | % | 66.9 | % | 18.5 | % | | Century Complete | 3,473 | 7,600 | 11,073 | 3,324 | 4,761 | 8,085 | 4.5 | % | 59.6 | % | 37.0 | % | | Total | 20,801 | 29,164 | 49,965 | 18,714 | 20,228 | 38,942 | 11.2 | % | 44.2 | % | 28.3 | % |
Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Adjusted Net Income and Adjusted Diluted Earnings per Common Share (Adjusted Diluted EPS) are non-GAAP financial measures that we believe are useful to management, investors and other users of the Company’s financial information in evaluating its operating results and understanding its operating trends without the effect of certain non-recurring items. The Company believes excluding certain non-recurring items provides more comparable assessment of its financial results from period to period. Adjusted Diluted EPS is calculated by excluding the effect of loss on debt extinguishment, inventory impairment, restructuring costs and purchase price accounting for acquired work in process from the calculation of reported EPS.
Adjusted Net Income and Adjusted Diluted Earnings Per Common Share
(in thousands, except share and per share amounts)
| | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three Months Ended | | | | Year ended | | | | | | December 31, | | | | December 31, | | | | | | 2020 | | 2019 | | 2020 | | 2019 | | | Numerator | | | | | | | | | | Net income | $ | 91,817 | $ | 53,358 | $ | 206,157 | $ | 112,994 | | Denominator | | | | | | | | | | Weighted average common shares outstanding - basic | | 33,350,633 | | 32,392,398 | | 33,312,554 | | 30,886,382 | | Dilutive effect of restricted stock units | | 455,829 | | 415,280 | | 297,544 | | 300,570 | | Weighted average common shares outstanding - diluted | | 33,806,462 | | 32,807,678 | | 33,610,098 | | 31,186,952 | | Earnings per share: | | | | | | | | | | Basic | $ | 2.75 | $ | 1.65 | $ | 6.19 | $ | 3.66 | | Diluted | $ | 2.72 | $ | 1.63 | $ | 6.13 | $ | 3.62 | | | | | | | | | | | | Adjusted earnings per share | | | | | | | | | | Numerator | | | | | | | | | | Income before income tax expense | $ | 121,164 | $ | 53,968 | $ | 270,240 | $ | 132,635 | | Restructuring costs | | - | | - | | 1,584 | | - | | Loss on debt extinguishment | | - | | - | | - | | 10,832 | | Inventory impairment and other | | 481 | | 4,783 | | 2,172 | | 4,783 | | Purchase price accounting for acquired work in process inventory | | - | | - | | - | | 1,724 | | Adjusted income before income tax expense | | 121,645 | | 58,751 | | 273,996 | | 149,974 | | Adjusted income tax expense(1) | | (28,846) | | (9,400) | | (64,974) | | (23,803) | | Adjusted net income | | 92,799 | | 49,351 | | 209,022 | | 126,171 | | | | | | | | | | | | Denominator - Diluted | | 33,806,462 | | 32,807,678 | | 33,610,098 | | 31,186,952 | | | | | | | | | | | | Adjusted diluted earnings per share | $ | 2.75 | $ | 1.50 | $ | 6.22 | $ | 4.05 | | ^(1)^ | The tax rate used in calculating adjusted net income for the years ended December 31, 2020 was 23.7%, which is reflective of the Company’s GAAP tax rate for the applicable period, as adjusted for certain discrete items. For the year ended December 31, 2019 our adjusted income tax expense of 15.9% is reflective of our statutory income tax rate adjusted for permanent differences between our taxable income and our income before income taxes as reported under GAAP, including the benefit of Federal Energy Credits of $17.3 million. For the three months ended December 31, 2020 and 2019 our adjusted income tax expense is reflective of our full year effective tax rate of approximately 24% and 16% applied to adjusted income before income tax expense. | | --- | --- |
Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Adjusted homebuilding gross margin excluding impairment, 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 inventory impairment, 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. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.
Adjusted Homebuilding Gross Margin
(in thousands)
| | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three months ended December 31, | | | | | | | | | | 2020 | | % | | 2019 | | % | | | | | | | | | | | | | Home sales revenues | $ | 946,803 | 100.0 | % | $ | 775,667 | 100.0 | % | | Cost of home sales revenues | | (749,587) | (79.2) | % | | (632,722) | (81.6) | % | | Inventory impairment | | (481) | (0.1) | % | | (1,993) | (0.3) | % | | Gross margin from home sales | | 196,735 | 20.8 | % | | 140,952 | 18.2 | % | | Add: Inventory impairment | | 481 | 0.1 | % | | 1,993 | 0.3 | % | | Add: Interest in cost of home sales revenues | | 20,573 | 2.2 | % | | 19,651 | 2.5 | % | | Adjusted homebuilding gross margin excluding interest and inventory impairment | | 217,789 | 23.0 | % | | 162,596 | 21.0 | % | | Add: Purchase price accounting for acquired work in process inventory | | — | — | % | | — | — | % | | Adjusted homebuilding gross margin excluding interest, inventory impairment and purchase price accounting for acquired work in process inventory | $ | 217,789 | 23.0 | % | $ | 162,596 | 21.0 | % | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | | | | | 2020 | | % | | 2019 | | % | | | | | | | | | | | | | Home sales revenues | $ | 3,027,167 | 100.0 | % | $ | 2,481,465 | 100.0 | % | | Cost of home sales revenues | | (2,468,133) | (81.5) | % | | (2,040,241) | (82.2) | % | | Inventory impairment | | (2,172) | (0.1) | % | | (1,993) | (0.1) | % | | Gross margin from home sales | | 556,862 | 18.4 | % | | 439,231 | 17.7 | % | | Add: Inventory impairment | | 2,172 | 0.1 | % | | 1,993 | 0.1 | % | | Add: Interest in cost of home sales revenues | | 72,002 | 2.4 | % | | 61,150 | 2.5 | % | | Adjusted homebuilding gross margin excluding interest and inventory impairment | | 631,036 | 20.8 | % | | 502,374 | 20.2 | % | | Add: Purchase price accounting for acquired work in process inventory | | — | — | % | | 1,724 | 0.1 | % | | Adjusted homebuilding gross margin excluding interest, inventory impairment and purchase price accounting for acquired work in process inventory | $ | 631,036 | 20.8 | % | $ | 504,098 | 20.3 | % |
Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure we use as a supplemental measure in evaluating operating performance. The Company defines adjusted EBITDA as consolidated net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense, (iv) loss on debt extinguishment, (v) inventory impairment and other, (vi) depreciation and amortization expense, and (vii) adjustments resulting from the application of purchase accounting for acquired work in process inventory related to business combinations. The Company believes 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, the Company’s 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. The Company’s presentation of adjusted EBITDA should not be construed as an indication that its future results will be unaffected by unusual or non-recurring items. Adjusted EBITDA is limited as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
(in thousands)
| | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three months ended December 31, | | | | | | | Year ended December 31, | | | | | | | | | 2020 | | 2019 | | % Change | | | 2020 | | 2019 | | % Change | | | | Net income | $ | 91,817 | $ | 53,358 | | 72.1 | % | $ | 206,157 | $ | 112,994 | | 82.4 | % | | Income tax expense | | 29,347 | | 610 | | 4,711.0 | % | | 64,083 | | 19,641 | | 226.3 | % | | Interest in cost of home sales revenues | | 20,573 | | 19,651 | | 4.7 | % | | 72,002 | | 61,150 | | 17.7 | % | | Interest expense (income) | | (112) | | — | | NM | | | (1,141) | | 16 | | (7,231.3) | % | | Depreciation and amortization expense | | 3,053 | | 3,589 | | (14.9) | % | | 13,141 | | 13,382 | | (1.8) | % | | EBITDA | | 144,678 | | 77,208 | | 87.4 | % | | 354,242 | | 207,183 | | 71.0 | % | | Loss on debt extinguishment | | — | | — | | NM | | | — | | 10,832 | | NM | | | Inventory impairment and other | | 481 | | 4,783 | | (89.9) | % | | 2,172 | | 4,783 | | (54.6) | % | | Purchase price accounting for acquired work in process inventory | | — | | — | | NM | | | — | | 1,724 | | NM | | | Adjusted EBITDA | $ | 145,159 | $ | 81,991 | | 77.0 | % | $ | 356,414 | $ | 224,522 | | 58.7 | % |
NM – Not Meaningful
Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Ratio of Net Homebuilding Debt to Net Capital
The following table presents the Company’s ratio of net homebuilding debt to net capital, which is a non-GAAP financial measure. The Company calculates this by dividing net homebuilding debt (notes payable and revolving line of credit less cash and cash equivalents and cash held in escrow) by net capital (net homebuilding debt plus total stockholders’ equity). The most directly comparable GAAP measure is the ratio of debt to capital. The Company believes the ratio of net homebuilding debt to net capital is a relevant and useful financial measure to investors in understanding the leverage employed in its operations and as an indicator of the Company’s ability to obtain external financing.
(in thousands) | | | | | | | --- | --- | --- | --- | --- | | | December 31, | | December 31, | | | | 2020 | | 2019 | | | Total homebuilding debt | $ | 894,875 | $ | 965,404 | | Total stockholders' equity | | 1,280,705 | | 1,061,699 | | Total capital | $ | 2,175,580 | $ | 2,027,103 | | Homebuilding debt to capital | | 41.1% | | 47.6% | | | | | | | | Total homebuilding debt | $ | 894,875 | $ | 965,404 | | Cash and cash equivalents | | (394,001) | | (55,436) | | Cash held in escrow | | (23,149) | | (35,308) | | Net homebuilding debt | $ | 477,725 | $ | 874,660 | | Total stockholders' equity | | 1,280,705 | | 1,061,699 | | Net capital | $ | 1,758,430 | $ | 1,936,359 | | | | | | | | Net homebuilding debt to net capital | | 27.2% | | 45.2% |
Contact Information:
Hunter Wells, Vice President of Investor Relations
719-426-3520
Hunter.Wells@CenturyCommunities.com
Category: Earnings