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 1, 2023
____________________
CENTURY COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
____________________
| Delaware | 001-36491 | 68-0521411 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (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 1, 2023, Century Communities, Inc. (the “Company”) issued a press release announcing its results of operations and financial condition as of and for the fourth quarter and year ended December 31, 2022. 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.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release, dated February 1, 2023, announcing Century Communities, Inc.’s results of operations and financial condition as of and for the fourth quarter and year ended December 31, 2022. |
| 104 | The cover page from this current report on Form 8-K, formatted in Inline XBRL. |
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 1, 2023 CENTURY COMMUNITIES, INC.
| By: | /s/ David Messenger |
|---|---|
| David Messenger | |
| Chief Financial Officer |
CCS 12312022 Earnings Release 8-K Exhibit 991
Century Communities Reports Fourth Quarter and Full Year 2022 Results
Record Home Sales Revenues of $1.2 Billion in the Fourth Quarter and $4.4 Billion for the Full Year -
Record Annual Net Income of $525.1 Million, or $15.92 per Diluted Share for the Full Year -
Book Value per Share Increased to a Record $67.67 -
Net Homebuilding Debt to Net Capital of 23.5% -
20th Consecutive Year of Profitability -
Greenwood Village, Colorado (February 1, 2023) – Century Communities, Inc. (NYSE: CCS), a top 10 national homebuilder, today announced financial results for its fourth quarter and full year ended December 31, 2022.
Fourth Quarter 2022 Highlights | · | Net income of $79.5 million, or $2.47 per diluted share | | --- | --- | | · | Adjusted net income of $87.3 million, or $2.71 per diluted share | | --- | --- | | · | Pre-tax income of $102.4 million | | --- | --- | | · | Total revenues of $1.2 billion | | --- | --- | | · | Deliveries of 2,903 homes, the second highest level in our history | | --- | --- | | · | Gross and net new home contracts of 2,008 and 1,258, respectively | | --- | --- | | · | EBITDA of $120.7 million | | --- | --- | | · | Homebuilding debt to capital of 32.0% | | --- | --- | | · | Net debt to net capital of 23.5% | | --- | --- |
Full Year 2022 Highlights | · | Net income of $525.1 million, or $15.92 per diluted share, both Company records | | --- | --- | | · | Adjusted net income of $533.0 million, or $16.16 per diluted share | | --- | --- | | · | Pre-tax income of $676.9 million, a Company record | | --- | --- | | · | Total revenues of $4.5 billion, a Company record | | --- | --- | | · | Deliveries of 10,594 homes, the second highest in our history | | --- | --- | | · | Gross and net new home contracts of 10,135 and 7,753, respectively | | --- | --- | | · | EBITDA of $742.8 million, a Company record | | --- | --- | | · | $2.2 billion in stockholders’ equity, a Company record | | --- | --- | | · | $67.67 book value per share as of end of 2022, a Company record | | --- | --- | “We executed on our objectives and achieved solid results in the fourth quarter, delivering 2,903 homes for $1.2 billion in revenue, generating strong operating cash flow and dropping our net leverage ratio to 23.5%, the lowest year end level in our history as a public company. Full year 2022 revenues, gross margins, net income and earnings per diluted share were all Company records as we achieved our 20th consecutive year of profitability,” said Dale Francescon, Chairman and Co-Chief Executive Officer. “In the quarter, we prioritized our sales efforts on properly incentivizing homes with near-term completions to turn our inventories even though higher direct construction costs weighed on our margins. We continued to see an improvement in our direct costs in the fourth quarter and expect further gains in 2023, which will allow homes being started now and in the future to earn improved margins.”
Rob Francescon, Co-Chief Executive Officer and President, said, “While higher interest rates and overall economic uncertainty have weighed on new home sales for the entire industry, we believe our spec-based model and focus on entry-level homes positions us well to navigate these near-term challenges. The flexibility of our operating model allowed us to reduce our controlled lot inventory and land spend commitments in the quarter for a minimal cost as we continue to focus only on projects that meet our investment criteria. Looking forward, we expect the
decreases in our controlled lots to start leveling off and our community count to grow at a measured pace in 2023. Our homebuyers continue to have a healthy financial profile, and our current level of completing homes across our national footprint positions us well with buyers that are looking for homes closer to completion in order to lock in their interest rates. Our balance sheet remains strong with $2.2 billion in stockholders’ equity and $1.2 billion in liquidity, including $353 million in cash, and we intend to continue investing in our business and returning capital to shareholders.”
Fourth Quarter 2022 Results
Net income for the fourth quarter 2022 was $79.5 million, or $2.47 per diluted share. Adjusted net income was $87.3 million, or $2.71 per diluted share.
Total revenues were $1.2 billion, consistent with the prior year quarter. Fourth quarter home sales revenues totaled $1.2 billion, a Company record. Deliveries totaled 2,903 homes, which were the second highest in our history compared to 2,915 homes in the prior year quarter. The average sales price of home deliveries for the fourth quarter 2022 was $396,900, compared to $395,000 in the prior year quarter.
Gross and net new home contracts in the fourth quarter 2022 were 2,008 and 1,258 contracts, respectively, and at the end of the fourth quarter 2022, the Company had 1,810 homes in backlog, representing $671.4 million of backlog dollar value.
Adjusted homebuilding gross margin percentage, excluding inventory impairment and interest, was 19.8% in the fourth quarter of 2022, and adjusted homebuilding gross margin percentage, excluding inventory impairment, was 18.4%. Homebuilding gross margin percentage in the fourth quarter 2022 was 17.6%. Selling, general, and administrative expenses as a percent of home sales revenues was 9.5% in the quarter. EBITDA for the fourth quarter 2022 was $120.7 million.
In the fourth quarter of 2022, we recorded an inventory impairment charge of $10.1 million. We also recorded a $4.2 million abandonment charge related to certain deposits and feasibility costs.
Our book value per share increased to $67.67 as of December 31, 2022.
Financial services revenues and pre-tax income were $23.1 million and $12.0 million, respectively, in the fourth quarter 2022.
Full Year 2022 Results
Net income for the full year 2022 increased to $525.1 million, or $15.92 per diluted share, both full year records. Adjusted net income increased to $533.0 million, or $16.16 per diluted share.
Total revenues for 2022 rose to $4.5 billion and home sales revenues increased to $4.4 billion, both Company records. The average sales price of home deliveries in 2022 increased to $414,700 compared to $373,300 in the prior year. Deliveries for the year 2022 were 10,594.
Net new home contracts in 2022 decreased to 7,753 contracts, primarily attributable to a decreased absorption pace and emphasis on channeling sales efforts and incentives towards near term completions.
Adjusted homebuilding gross margin percentage, excluding inventory impairment and interest, was 26.0% in 2022. Homebuilding gross margin percentage in 2022 was 24.5%. In the full year 2022, selling, general, and administrative expenses as a percent of home sales revenues was 9.8% and pre-tax income margin was 15.0%.
EBITDA for 2022 totaled $742.8 million.
Financial services revenues for 2022 were $95.4 million, and financial services pre-tax income was $41.2 million.
Balance Sheet and Liquidity
The Company ended the quarter with a strong financial position, including $2.2 billion of stockholders’ equity and $1.2 billion of total liquidity, including $353.3 million of cash.
During the fourth quarter, the Company maintained its quarterly cash dividend of $0.20 per share.
As of December 31, 2022, homebuilding debt to capital decreased to 32.0%, with net homebuilding debt to net capital decreasing to 23.5%, the lowest year end level in our history as a public company.
Full Year 2023 Outlook
David Messenger, Chief Financial Officer of the Company, commented, “While there is still a high degree of uncertainty in both the homebuilding industry and the economy in general, we have begun to see mortgage rates stabilizing, input costs recede and homebuyer traffic on sites increase. For the full year 2023, we expect our home deliveries to be in the range of 7,000 to 8,000 homes and our home sales revenues to be in the range of $2.6 billion to $3.1 billion.”
Webcast and Conference Call
The Company will host a webcast and conference call on Wednesday, February 1, 2023, at 5:00 p.m. Eastern time, 3:00 p.m. Mountain time, to review the Company’s fourth quarter and full year 2022 results, provide commentary, and conduct a question-and-answer session. To participate in the call, please dial 877-270-2148 (domestic) or 412-902-6510 (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 February 8, 2023, by dialing 877-344-7529 (domestic) or 412-317-0088 (international) and entering the passcode 5469570. A replay of the webcast will be available on the Company’s website for at least one year.
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 18 states and over 45 markets across the U.S., and also offers title, insurance and lending services in select markets through its Parkway Title, IHL Home Insurance Agency, and Inspire Home Loans 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 Excluding Inventory Impairment and Interest, Adjusted Homebuilding Gross Margin Excluding Inventory Impairment, 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,” “intend,” “estimate,” “plan,” “continue,” “will,” “may,” “potential,” and “outlook” 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 2023 and its expectations to see further improvement in its direct costs and margins in 2023 and for decreases in its controlled lots to start levelling off and its community count to grow at a measured pace in 2023. 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, including increased interest rates, inflation, and employment levels; the potential impact of global supply chain disruptions, labor, land and raw material or other resource shortages and delays, municipal and utility delays, and a threatened U.S. sovereign debt default on the Company’s business, industry and the broader economy; the ability to identify and acquire desirable land; availability and cost of financing; the effect of tax changes; reliance on contractors and key personnel; availability and pricing for land, labor and raw materials or other resources; the ability to pay dividends in the future; 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, | | | | | | 2022 | | 2021 | | 2022 | | 2021 | | | Revenues | | | | | | | | | | Home sales revenues | $ | 1,152,248 | $ | 1,151,564 | $ | 4,393,786 | $ | 4,032,969 | | Land sales and other revenues | | 3,825 | | 24,085 | | 16,697 | | 59,607 | | Total homebuilding revenues | | 1,156,073 | | 1,175,649 | | 4,410,483 | | 4,092,576 | | Financial services revenues | | 23,060 | | 31,152 | | 95,433 | | 123,738 | | Total revenues | | 1,179,133 | | 1,206,801 | | 4,505,916 | | 4,216,314 | | Homebuilding Cost of Revenues | | | | | | | | | | Cost of home sales revenues | | (939,733) | | (852,860) | | (3,305,366) | | (3,056,048) | | Cost of land sales and other revenues | | (1,477) | | (15,318) | | (10,628) | | (39,315) | | Total homebuilding cost of revenues | | (941,210) | | (868,178) | | (3,315,994) | | (3,095,363) | | Financial services costs | | (11,013) | | (18,443) | | (54,275) | | (72,578) | | Selling, general, and administrative | | (109,257) | | (107,650) | | (430,742) | | (389,610) | | Loss on debt extinguishment | | — | | — | | — | | (14,458) | | Inventory impairment | | (10,149) | | — | | (10,149) | | (41) | | Other expense | | (5,102) | | (353) | | (17,856) | | (3,142) | | Income before income tax expense | | 102,402 | | 212,177 | | 676,900 | | 641,122 | | Income tax expense | | (22,913) | | (47,212) | | (151,774) | | (142,618) | | Net income | $ | 79,489 | $ | 164,965 | $ | 525,126 | $ | 498,504 | | | | | | | | | | | | Earnings per share: | | | | | | | | | | Basic | $ | 2.50 | $ | 4.89 | $ | 16.12 | $ | 14.79 | | Diluted | $ | 2.47 | $ | 4.78 | $ | 15.92 | $ | 14.47 | | Weighted average common shares outstanding: | | | | | | | | | | Basic | | 31,772,786 | | 33,760,940 | | 32,578,967 | | 33,706,782 | | Diluted | | 32,195,308 | | 34,518,587 | | 32,977,935 | | 34,444,918 |
Century Communities, Inc.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share amounts)
| | |||
|---|---|---|---|
| | |||
| | December 31, | ||
| | 2021 | ||
| Assets | (audited) | ||
| Cash and cash equivalents | 296,724 | $ | 316,310 |
| Cash held in escrow | 56,569 | 52,297 | |
| Accounts receivable | 52,797 | 41,932 | |
| Inventories | 2,830,645 | 2,456,614 | |
| Mortgage loans held for sale | 203,558 | 353,063 | |
| Prepaid expenses and other assets | 250,535 | 200,087 | |
| Property and equipment, net | 31,688 | 24,939 | |
| Deferred tax assets, net | 20,856 | 21,239 | |
| Goodwill | 30,395 | 30,395 | |
| Total assets | 3,773,767 | $ | 3,496,876 |
| Liabilities and stockholders' equity | |||
| Liabilities: | |||
| Accounts payable | 106,926 | $ | 84,679 |
| Accrued expenses and other liabilities | 299,588 | 316,877 | |
| Notes payable | 1,019,412 | 998,936 | |
| Revolving line of credit | — | — | |
| Mortgage repurchase facilities | 197,626 | 331,876 | |
| Total liabilities | 1,623,552 | 1,732,368 | |
| 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, 31,772,791 and 33,760,940 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 318 | 338 | |
| Additional paid-in capital | 584,803 | 697,845 | |
| Retained earnings | 1,565,094 | 1,066,325 | |
| Total stockholders' equity | 2,150,215 | 1,764,508 | |
| Total liabilities and stockholders' equity | 3,773,767 | $ | 3,496,876 |
All values are in US Dollars.
Century Communities, Inc.
Homebuilding Operational Data
(Unaudited)
Net New Home Contracts | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three Months Ended December 31, | | | | Year Ended December 31, | | | | | | 2022 | 2021 | % Change | | 2022 | 2021 | % Change | | | West | 263 | 354 | (25.7) | % | 1,147 | 1,640 | (30.1) | % | | Mountain | 150 | 518 | (71.0) | % | 1,397 | 2,571 | (45.7) | % | | Texas | 211 | 307 | (31.3) | % | 1,078 | 1,616 | (33.3) | % | | Southeast | 110 | 444 | (75.2) | % | 1,174 | 1,595 | (26.4) | % | | Century Complete | 524 | 1,077 | (51.3) | % | 2,957 | 4,595 | (35.6) | % | | Total | 1,258 | 2,700 | (53.4) | % | 7,753 | 12,017 | (35.5) | % |
Home Deliveries
(dollars in thousands) | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three Months Ended December 31, | | | | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | | | Homes | Average Sales Price | | Homes | Average Sales Price | | Homes | | Average Sales Price | | | West | 391 | $ | 673.0 | 489 | $ | 648.1 | (20.0) | % | 3.8 | % | | Mountain | 535 | $ | 549.5 | 510 | $ | 549.3 | 4.9 | % | 0.0 | % | | Texas | 288 | $ | 313.8 | 536 | $ | 321.8 | (46.3) | % | (2.5) | % | | Southeast | 489 | $ | 404.7 | 361 | $ | 397.4 | 35.5 | % | 1.8 | % | | Century Complete | 1,200 | $ | 255.8 | 1,019 | $ | 234.1 | 17.8 | % | 9.3 | % | | Total / Weighted Average | 2,903 | $ | 396.9 | 2,915 | $ | 395.0 | (0.4) | % | 0.5 | % | | | | | | | | | | | | | | | Year Ended December 31, | | | | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | | | Homes | Average Sales Price | | Homes | Average Sales Price | | Homes | | Average Sales Price | | | West | 1,591 | $ | 675.3 | 1,602 | $ | 629.4 | (0.7) | % | 7.3 | % | | Mountain | 2,001 | $ | 568.5 | 2,315 | $ | 481.2 | (13.6) | % | 18.1 | % | | Texas | 1,331 | $ | 340.2 | 1,615 | $ | 295.1 | (17.6) | % | 15.3 | % | | Southeast | 1,682 | $ | 430.4 | 1,683 | $ | 394.1 | (0.1) | % | 9.2 | % | | Century Complete | 3,989 | $ | 251.9 | 3,590 | $ | 214.7 | 11.1 | % | 17.3 | % | | Total / Weighted Average | 10,594 | $ | 414.7 | 10,805 | $ | 373.3 | (2.0) | % | 11.1 | % |
Century Communities, Inc.
Homebuilding Operational Data
(Unaudited)
Selling Communities | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | As of December 31, | | Increase/(Decrease) | | | | | 2022 | 2021 | Amount | % Change | | | | | | | | | | West | 24 | 19 | 5 | 26.3 | % | | Mountain | 31 | 36 | (5) | (13.9) | % | | Texas | 25 | 16 | 9 | 56.3 | % | | Southeast | 22 | 22 | — | — | % | | Century Complete | 106 | 109 | (3) | (2.8) | % | | Total | 208 | 202 | 6 | 3.0 | % |
Backlog
(dollars in thousands) | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | | | | | | | | | | | | | | | | 2022 | | | | | 2021 | | | | | % Change | | | | | | | | Homes | Dollar Value | | Average Sales Price | | Homes | Dollar Value | | Average Sales Price | | Homes | | Dollar Value | | Average Sales Price | | | West | 80 | $ | 57,524 | $ | 719.0 | 524 | $ | 371,848 | $ | 709.6 | (84.7) | % | (84.5) | % | 1.3 | % | | Mountain | 441 | | 223,938 | $ | 507.8 | 1,045 | | 574,085 | $ | 549.4 | (57.8) | % | (61.0) | % | (7.6) | % | | Texas | 133 | | 42,244 | $ | 317.6 | 386 | | 136,893 | $ | 354.6 | (65.5) | % | (69.1) | % | (10.4) | % | | Southeast | 205 | | 96,671 | $ | 471.6 | 713 | | 308,663 | $ | 432.9 | (71.2) | % | (68.7) | % | 8.9 | % | | Century Complete | 951 | | 251,001 | $ | 263.9 | 1,983 | | 478,283 | $ | 241.2 | (52.0) | % | (47.5) | % | 9.4 | % | | Total / Weighted Average | 1,810 | $ | 671,378 | $ | 370.9 | 4,651 | $ | 1,869,772 | $ | 402.0 | (61.1) | % | (64.1) | % | (7.7) | % |
Lot Inventory
| | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | As of December 31, | | | | | | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | | | | | | | | | | | | | | | | | | | Owned | Controlled | Total | Owned | Controlled | Total | Owned | | Controlled | | Total | | | | | | | | | | | | | | | | | West | 4,433 | 509 | 4,942 | 4,440 | 4,877 | 9,317 | (0.2) | % | (89.6) | % | (47.0) | % | | Mountain | 10,845 | 1,566 | 12,411 | 11,860 | 8,039 | 19,899 | (8.6) | % | (80.5) | % | (37.6) | % | | Texas | 7,117 | 2,782 | 9,899 | 5,340 | 8,159 | 13,499 | 33.3 | % | (65.9) | % | (26.7) | % | | Southeast | 5,576 | 5,733 | 11,309 | 5,928 | 14,195 | 20,123 | (5.9) | % | (59.6) | % | (43.8) | % | | Century Complete | 4,141 | 10,417 | 14,558 | 5,287 | 11,734 | 17,021 | (21.7) | % | (11.2) | % | (14.5) | % | | Total | 32,112 | 21,007 | 53,119 | 32,855 | 47,004 | 79,859 | (2.3) | % | (55.3) | % | (33.5) | % | | % of Total | 60.5% | 39.5% | 100.0% | 41.1% | 58.9% | 100.0% | | | | | | |
Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Adjusted Net Income and Adjusted Diluted Earnings per 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. We define Adjusted Net Income as consolidated net income before (i) income tax expense, (ii) inventory impairment (iii) restructuring costs, and (iv) loss on debt extinguishment, less adjusted income tax expense, calculated using the Company’s GAAP tax rate for the applicable period. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by weighted average common shares – diluted.
Adjusted Net Income and Adjusted Diluted Earnings Per Common Share
(in thousands, except share and per share amounts)
| | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three Months Ended December 31, | | | | Year Ended December 31, | | | | | | 2022 | | 2021 | | 2022 | | 2021 | | | Numerator | | | | | | | | | | Net income | $ | 79,489 | $ | 164,965 | $ | 525,126 | $ | 498,504 | | Denominator | | | | | | | | | | Weighted average common shares outstanding - basic | | 31,772,786 | | 33,760,940 | | 32,578,967 | | 33,706,782 | | Dilutive effect of restricted stock units | | 422,522 | | 757,647 | | 398,968 | | 738,136 | | Weighted average common shares outstanding - diluted | | 32,195,308 | | 34,518,587 | | 32,977,935 | | 34,444,918 | | Earnings per share: | | | | | | | | | | Basic | $ | 2.50 | $ | 4.89 | $ | 16.12 | $ | 14.79 | | Diluted | $ | 2.47 | $ | 4.78 | $ | 15.92 | $ | 14.47 | | | | | | | | | | | | Adjusted earnings per share | | | | | | | | | | Numerator | | | | | | | | | | Net income | $ | 79,489 | $ | 164,965 | $ | 525,126 | $ | 498,504 | | Income tax expense | | 22,913 | | 47,212 | | 151,774 | | 142,618 | | Income before income tax expense | | 102,402 | | 212,177 | | 676,900 | | 641,122 | | Inventory impairment | | 10,149 | | — | | 10,149 | | 41 | | Loss on debt extinguishment | | — | | — | | — | | 14,458 | | Adjusted income before income tax expense | | 112,551 | | 212,177 | | 687,049 | | 655,621 | | Adjusted income tax expense(1) | | (25,236) | | (47,212) | | (154,050) | | (145,843) | | Adjusted net income | $ | 87,315 | $ | 164,965 | $ | 532,999 | $ | 509,778 | | | | | | | | | | | | Denominator - Diluted | | 32,195,308 | | 34,518,587 | | 32,977,935 | | 34,444,918 | | | | | | | | | | | | Adjusted diluted earnings per share | $ | 2.71 | $ | 4.78 | $ | 16.16 | $ | 14.80 | | (1) | The tax rates used in calculating adjusted net income for the years ended December 31, 2022 and 2021 was 22.4% and 22.2%, respectively, which are reflective of the Company’s GAAP tax rates for the applicable periods. For the three months ended December 31, 2022 and 2021, our adjusted income tax expense is reflective of our full year effective tax rate of approximately 22.4% and 22.2% applied to adjusted income before income tax expense. | | --- | --- | | | | --- | | |
Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Adjusted homebuilding gross margin excluding inventory impairment and interest and adjusted homebuilding gross margin excluding inventory impairment are not measurements 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 and indebtedness 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, | | | | | | | | | | 2022 | | % | | 2021 | | % | | | | | | | | | | | | | Home sales revenues | $ | 1,152,248 | 100.0 | % | $ | 1,151,564 | 100.0 | % | | Cost of home sales revenues | | (939,733) | (81.6) | % | | (852,860) | (74.1) | % | | Inventory impairment | | (10,149) | (0.9) | % | | — | — | % | | Homebuilding gross margin | | 202,366 | 17.6 | % | | 298,704 | 25.9 | % | | Add: Inventory impairment | | 10,149 | 0.9 | % | | — | — | % | | Adjusted homebuilding gross margin excluding inventory impairment | | 212,515 | 18.4 | % | | 298,704 | 25.9 | % | | Add: Interest in cost of home sales revenues | | 15,324 | 1.3 | % | | 15,427 | 1.3 | % | | Adjusted homebuilding gross margin excluding inventory impairment and interest | $ | 227,839 | 19.8 | % | $ | 314,131 | 27.3 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | | | | | | | 2022 | | % | | 2021 | | % | | | | | | | | | | | | | Home sales revenues | $ | 4,393,786 | 100.0 | % | $ | 4,032,969 | 100.0 | % | | Cost of home sales revenues | | (3,305,366) | (75.2) | % | | (3,056,048) | (75.8) | % | | Inventory impairment | | (10,149) | (0.2) | % | | (41) | (0.0) | % | | Homebuilding gross margin | | 1,078,271 | 24.5 | % | | 976,880 | 24.2 | % | | Add: Inventory impairment | | 10,149 | 0.2 | % | | 41 | 0.0 | % | | Adjusted homebuilding gross margin excluding inventory impairment | | 1,088,420 | 24.8 | % | | 976,921 | 22.2 | % | | Add: Interest in cost of home sales revenues | | 54,669 | 1.2 | % | | 66,846 | 1.7 | % | | Adjusted homebuilding gross margin excluding inventory impairment and interest | $ | 1,143,089 | 26.0 | % | $ | 1,043,767 | 25.9 | % |
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. 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, (v) loss on debt extinguishment, (vi) inventory impairment. 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.
(in thousands)
| | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three Months Ended December 31, | | | | | | | Year Ended December 31, | | | | | | | | | 2022 | | 2021 | | % Change | | | 2022 | | 2021 | | % Change | | | | Net income | $ | 79,489 | $ | 164,965 | | (51.8) | % | $ | 525,126 | $ | 498,504 | | 5.3 | % | | Income tax expense | | 22,913 | | 47,212 | | (51.5) | % | | 151,774 | | 142,618 | | 6.4 | % | | Interest in cost of home sales revenues | | 15,324 | | 15,427 | | (0.7) | % | | 54,669 | | 66,846 | | (18.2) | % | | Interest expense (income) | | (22) | | (230) | | (90.4) | % | | (36) | | (661) | | (94.6) | % | | Depreciation and amortization expense | | 3,016 | | 2,588 | | 16.5 | % | | 11,223 | | 10,912 | | 2.9 | % | | EBITDA | | 120,720 | | 229,962 | | (47.5) | % | | 742,756 | | 718,219 | | 3.4 | % | | Loss on debt extinguishment | | — | | — | | — | % | | — | | 14,458 | | NM | % | | Inventory impairment | | 10,149 | | — | | NM | | | 10,149 | | 41 | | NM | % | | Adjusted EBITDA | $ | 130,869 | $ | 229,962 | | (43.1) | % | $ | 752,905 | $ | 732,718 | | 2.8 | % |
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 (homebuilding debt less cash and cash equivalents, and cash held in escrow) by net capital (net homebuilding debt plus total stockholders’ equity). Homebuilding debt is our total debt minus outstanding borrowings under our construction loan agreement and mortgage repurchase facilities. 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, | | | | 2022 | | 2021 | | | Notes payable | $ | 1,019,412 | $ | 998,936 | | Revolving line of credit | | — | | — | | Construction loan agreements | | (7,389) | | — | | Total homebuilding debt | | 1,012,023 | | 998,936 | | Total stockholders' equity | | 2,150,215 | | 1,764,508 | | Total capital | $ | 3,162,238 | $ | 2,763,444 | | Homebuilding debt to capital | | 32.0% | | 36.1% | | | | | | | | Total homebuilding debt | $ | 1,012,023 | $ | 998,936 | | Cash and cash equivalents | | (296,724) | | (316,310) | | Cash held in escrow | | (56,569) | | (52,297) | | Net homebuilding debt | | 658,730 | | 630,329 | | Total stockholders' equity | | 2,150,215 | | 1,764,508 | | Net capital | $ | 2,808,945 | $ | 2,394,837 | | | | | | | | Net homebuilding debt to net capital | | 23.5% | | 26.3% |
Contact Information:
Tyler Langton, Senior Vice President of Investor Relations
303-268-8345
Investorrelations@CenturyCommunities.com
Category: Earnings