Century Communities, Inc. (CCS) has firmly established itself as a leading national homebuilder, delivering impressive financial results and driving shareholder value. With a strong presence across 18 states and over 45 markets, the company has undergone a remarkable transformation over the past decade, growing from a regional player to a formidable force in the industry.
Financials
In the fiscal year 2023, Century Communities reported annual net income of $259.2 million, annual revenue of $3.69 billion, annual operating cash flow of $41.6 million, and annual free cash flow of -$90.1 million. These figures demonstrate the company's ability to generate consistent profitability and cash flow, even in the face of market challenges.
The company's second quarter of 2024 was particularly noteworthy, with pretax income reaching $110.6 million and net income of $83.7 million, or $2.61 per diluted share. This represents a 63% year-over-year increase in net income. Adjusted net income for the quarter was $85.2 million, or $2.65 per share, a 66% year-over-year increase.
Business Overview
Century Communities' focus on affordability has been a key driver of its success. The company's average sales price of $389,000 in the second quarter of 2024 remains among the lowest of the publicly traded homebuilders, allowing it to target a wide range of potential homebuyers. This strategy has paid off, as the company saw a 20% year-over-year increase in net new home contracts during the quarter, with growth across all of its regions.
The company's geographic diversification has also been a strength, with its West, Mountain, Texas, Southeast, and Century Complete segments all contributing to its strong performance. The West and Texas regions, in particular, posted the strongest gains, with year-over-year increases in home sales revenue of 64.4% and 19.5%, respectively, in the second quarter of 2024.
Century Communities' focus on cost control and operational efficiency has also been a key factor in its success. The company was able to maintain relatively flat direct construction costs on a sequential basis in the second quarter, despite the ongoing challenges in the industry. This was achieved through leveraging and expanding its trade and supply base across its national footprint.
Financial Services Segment
The company's Financial Services segment, which provides mortgage, title, insurance, and escrow services primarily to its homebuyers, also contributed to its overall performance. However, this segment saw a decrease in income before income tax of 54.7% and 10.6% in the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year. This was primarily due to an increase in financial services costs related to increased commissions, investor fees, and other support fees, as well as increases in net losses on the sale of mortgage loans.
Outlook
Looking ahead, Century Communities is well-positioned for continued growth. The company ended the second quarter of 2024 with a backlog of 1,753 homes valued at $755 million, with an average price of $430,500. While this average price is higher than the $388,800 average sales price for homes delivered in the quarter, the company expects its full-year 2024 average sales price to be approximately $390,000.
The company has also been actively expanding its land pipeline, ending the second quarter with approximately 78,000 owned and controlled lots, a 35% year-over-year increase. This positions Century Communities to continue growing its community count, which reached a record high of 266 at the end of the second quarter, a 14% increase from the prior year.
In terms of guidance, Century Communities has increased its full-year 2024 delivery guidance to a range of 10,700 to 11,300 homes, up from its previous guidance. The company also expects its full-year 2024 home sales revenues to be in the range of $4.2 billion to $4.4 billion.
Liquidity
The company's strong financial position and ample liquidity also provide it with the flexibility to navigate any potential market challenges. As of June 30, 2024, Century Communities had $841 million in total liquidity, with no senior debt maturities until June 2027.
Conclusion
Overall, Century Communities' consistent performance, focus on affordability, geographic diversification, and operational efficiency have positioned the company for continued success. With a robust land pipeline, growing community count, and a strong financial foundation, the company appears well-equipped to capitalize on the ongoing demand for new homes and deliver value to its shareholders.