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- Record Second Quarter Net Income of $158.7 Million or $4.78 per Diluted Share -
- Return on Equity of 33.7% -
- Gross Margin of 28.2% and Adjusted Gross Margin of 29.4% -
- Pre-Tax Income Margin 18.3% -
GREENWOOD VILLAGE, Colo., July 27, 2022 /PRNewswire/ -- Century Communities, Inc. (NYSE: CCS), a top 10 national homebuilder, today announced financial results for its second quarter ended June 30, 2022.
Second Quarter 2022 Highlights Compared to Second Quarter 2021
Net income increased 35% to $158.7 million or $4.78 per diluted share, both second quarter records
Pre-tax income improved 40% to a Company record $213.6 million
Total revenues increased to a second quarter record $1.2 billion
Return on equity improved by 610 basis points to 33.7%, equaling a Company record
Deliveries of 2,713 homes, led by Century Complete and the West region
Net new home contracts of 2,233
Homebuilding gross margin increased to 28.2% from 23.9%, a 430-basis point increase
Adjusted homebuilding gross margin increased to 29.4%, a 370-basis point increase
Homes in backlog increased 7% to 4,767 homes valued at $2.0 billion
Selling communities increased 16% to 213 from 184 communities
"We delivered strong results in the second quarter, reporting record earnings per share and pre-tax income while maintaining our record return on equity of 33.7% for the second quarter in a row," said Dale Francescon, Chairman and Co-Chief Executive Officer. "While rising interest rates created buyer uncertainty and led to an industry-wide slowdown in current activity as the quarter progressed, we believe that Century is well positioned to navigate these near-term challenges. The flexibility of our operating model gives us the ability to adjust our home starts and product offerings to stay aligned with market changes and maintain our focus on delivering affordably priced homes."
Rob Francescon, Co-Chief Executive Officer and President, said, "Given the recent volatility in the market, we reduced our controlled lot inventory and land spend commitments in the quarter, and will continue to focus on projects that meet our stringent investment criteria. While the homebuilding industry remains impacted by supply chain issues, we saw an improvement in our cycle times and input costs during the quarter and expect further gains as the year progresses. Our homebuyers continue to have a healthy financial profile, and inventories across our 45 plus markets are still at low levels. Our balance sheet remains strong, and we intend to continue investing in our business and returning capital to shareholders throughout the various cycles in the market."
Second Quarter 2022 Results
Net income for the second quarter 2022 increased 35% to $158.7 million, or $4.78 per diluted share, as compared to $117.9 million or $3.47 per diluted share, in the prior year quarter.
Total revenues rose to $1.2 billion, a second quarter record and a 12% year over year increase. Home sales revenues for the second quarter 2022 increased to $1.1 billion, compared to $1.0 billion for the prior year quarter. Deliveries decreased slightly to 2,713 homes compared to 2,771 in the prior year quarter. The average sales price of home deliveries for the second quarter 2022 increased to $418,200, compared to $362,600 in the prior year quarter, primarily due to home price appreciation across all of our markets.
Net new home contracts in the second quarter 2022 were 2,233 contracts, compared to 3,120 contracts in the prior year quarter. At the end of the second quarter 2022, the Company had 4,767 homes in backlog, representing $2.0 billion of backlog dollar value, and year over year increases of 7% and 12%, respectively.
Adjusted homebuilding gross margin percentage, excluding interest, was 29.4% in the second quarter of 2022, compared to 25.7% in the prior year quarter. Homebuilding gross margin percentage in the second quarter 2022 was 28.2%, as compared to 23.9% in the prior year quarter, an improvement of 430 basis points. Homebuilding and adjusted gross margins were only 10 basis points lower than the Company records established in the first quarter of 2022. Selling, general, and administrative expenses as a percent of home sales revenues was 9.6%, compared to 9.9% in the prior year quarter. Pre-tax income margin was 18.3% in the second quarter of 2022 compared to 14.6% in the prior year quarter.
Selling communities at the end of the second quarter increased 16% to 213 from 184 communities in the prior year quarter.
Return on equity for the second quarter of 2022 was 33.7%, compared to 27.6% in the prior year period, and equaling the Company record established in the first quarter of 2022.
Financial services revenues were $22.8 million compared to $29.9 million in the prior year quarter, and financial services pre-tax income decreased to $8.6 million from $11.7 million, primarily as a result of lower originations and normalization of gain on sale premiums.
Strengthened Balance Sheet and Liquidity
The Company ended the quarter with a strong financial position, including $2.0 billion of stockholders' equity, a 31% year over year increase, and $819.5 million of total liquidity, including $160.5 million of cash.
During the second quarter, the Company maintained its quarterly cash dividend of $0.20 per share and repurchased 790,558 shares of its common stock for $35.9 million, for an average per share price of $45.42 or 75% of ending book value as of June 30, 2022.
As of June 30, 2022, homebuilding debt to capital increased to 37.1%, from 36.1% at December 31, 2021. As of June 30, 2022, net homebuilding debt to net capital increased to 33.6%, from 26.3% at December 31, 2021 primarily due to increased investments in inventory.
Full Year 2022 Outlook
David Messenger, Chief Financial Officer of the Company, commented, "Given the industry-wide slowdown in current activity, we are reducing our full year home delivery guidance to 10,750 to 11,750 homes. We are reaffirming our full year home sales revenues to be in the range of $4.3 billion to $4.9 billion, and depending on market conditions, we expect our year end selling communities to be in the range of 240 to 250."
Webcast and Conference Call
The Company will host a webcast and conference call on Wednesday, July 27, 2022, at 5:00 p.m. Eastern time, 3:00 p.m. Mountain time, to review the Company's second quarter 2022 results, provide commentary, and conduct a question-and-answer session. 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 August 27, 2022, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13731050. 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 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, 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.
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," "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 2022, management's belief that Century is well positioned to navigate near-term challenges and that the flexibility of its operating model gives it the ability to adjust its product offerings to stay aligned with market changes and maintain its focus on affordably priced homes, and management's expectations for further supply chain cycle gains as the year progresses. 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 inflation and interest rate increases; the potential impact of global supply chain disruptions, labor, land and raw material shortages and delays, municipal and utility delays, and COVID-19 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; 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.
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