EX-99.1 2 ccs-20180630xex99_1.htm EX-99.1 CCS 06.30.2018 Earnings Release 8-K Exhibit 99.1





Picture 8





Century Communities Reports Record Second Quarter 2018 Results

-  Delivered Record Second Quarter Earnings -

- Home Sales Revenues Increased 82% to $522.2 Million -

-  Net New Home Contracts Increased 51% to 1,543  Homes -

- Established Position as a Top-10 U.S. Homebuilder Following Full Acquisition of Wade Jurney Homes -

- Increased 2018 Outlook for Revenue and Deliveries -





Greenwood Village, Colorado (August 2, 2018) – Century Communities, Inc. (NYSE: CCS), a leading national homebuilder, today announced financial results for its second quarter ended June 30, 2018.

Second Quarter 2018 Highlights Compared to Second Quarter 2017

·

Adjusted net income increased 135% to $36.5 million, or $1.21 per diluted share and net income increased 123% to $33.2 million, or $1.10 per diluted share

·

Home sales revenues increased 82% to a record  $522.2 million

·

Adjusted homebuilding gross margin increased 92% to $116.4 million 

·

Adjusted homebuilding gross margin percentage improved to 22.3%

·

Deliveries grew 84% to 1,384 homes

·

Net new home contracts increased 51% to 1,543 homes

·

Backlog improved 134% to a record 3,199 homes

·

Backlog value increased 89% to $987.3 million

·

Adjusted EBITDA improved 119% to $70.9 million

·

Expanded senior unsecured credit facility to $640 million inclusive of a $50 million accordion and extended its maturity date to 2022

·

In June, acquired the remaining 50% interest in WJH, LLC (“Wade Jurney Homes”) creating the 10th largest US homebuilder based on 2017 home deliveries and strengthening the Company’s exposure to entry-level buyers.



Dale Francescon, Co-Chief Executive Officer, stated, “During the second quarter of 2018 we executed on our dynamic growth strategy, in which we more than doubled backlog and net income and achieved significant growth in revenues, deliveries and new contracts, with each metric at record levels growing 82%, 84%, and 51%, respectively. We improved our adjusted homebuilding gross margin percentage by 120 basis points year-over-year and grew ancillary income to produce another record quarter of earnings. Furthermore, we acquired the remaining 50% interest in Wade Jurney Homes, establishing Century as a top-10 U.S. homebuilder and enhancing our exposure to entry-level buyers. We are well positioned to further leverage our national scale, improve profitability and drive additional returns for shareholders.”



Rob Francescon, Co-Chief Executive Officer, said, “We experienced overall positive economic activity and strong buyer traffic in the second quarter. Additionally, our well-located lots and targeted marketing efforts are helping to drive successive quarters of improvement and record results across nearly all key operating metrics. We ended the quarter with a record backlog of 3,199 homes, up 134% compared to a year ago, representing nearly $1 billion of backlog dollar value. This backlog demonstrates the strong demand across our geographies along with our full acquisition of Wade Jurney Homes’ proven and highly profitable operation, which we are already expanding. As we look to the second half of 2018, we are encouraged by our strong pipeline of more than 38,000 lots combined with a strong capital position to further advance our position within the ranks of the top 10 largest U.S. homebuilders.”

 





Second Quarter 2018 Results

Adjusted net income for the second quarter increased 135% to a record $36.5 million, or $1.21 per diluted share, as compared to $15.5 million, or $0.69 per diluted share, for the prior year quarter. Adjusted net income excludes the impact of one-time items associated with homebuilder acquisitions. Net income for the second quarter 2018 increased 123% to $33.2 million, or $1.10 per diluted share as compared to $14.8 million or $0.66 per diluted share for the prior year quarter.

Home sales revenues and deliveries grew to record levels in the second quarter 2018. Home sales revenues for the second quarter 2018 increased 82% to $522.2 million, compared to $287.6 million for the prior year quarter. The growth in home sales revenues was primarily attributable to an 84% increase in deliveries to 1,384 homes compared to 753 homes for the prior year quarter, including a favorable impact from acquisitions. Average sales price of home deliveries for the second quarter 2018 was $377,300, compared to $381,900 in the prior year quarter, primarily due to geographic and product mix. Excluding the West region and Wade Jurney Homes, the Company’s legacy regions experienced growth in home sales revenues and deliveries of 28% and 34% respectively.

Homebuilding gross margin percentage in the second quarter 2018 was 18.2%, as compared to 18.7% in the prior year quarter, with the difference attributable to a 180 basis point impact of purchase price accounting in the second quarter 2018 partly offset by higher core profitability. Adjusted homebuilding gross margin percentage, excluding interest and purchase price accounting, was 22.3% in the second quarter 2018, as compared to 21.1% in the prior year quarter, largely due to geographic mix and continued emphasis on cost management. SG&A as a percent of home sales revenues was 12.2%, compared to 11.9% in the prior year quarter, largely attributable to investments to support our growth initiatives as well as the completion of the UCP integration in the second quarter 2018.

Net new home contracts in the second quarter 2018 increased 51% to 1,543 homes, compared to 1,021 homes in the prior year quarter, attributable to stronger demand trends within legacy regions and the benefit of acquisitions. Excluding the West region and Wade Jurney Homes, the Company’s legacy regions experienced growth of 19% in net new home contracts. At the end of the second quarter 2018, the Company had a record 3,199 homes in backlog, representing $987.3 million of backlog dollar value, compared to 1,366 homes in backlog, representing $522.6 million of backlog dollar value in the prior year quarter, an increase of 134% in units and 89% in dollar value.

Financial services generated a $2.6 million profit in the second quarter 2018 as compared to $0.3 million in the prior year quarter. Equity in income of unconsolidated subsidiaries increased to $11.7 million, compared to $2.7 million in the prior year quarter as a result of continued growth in Wade Jurney Homes and a $7.2 million gain on our previously held equity interest.



Balance Sheet and Liquidity



In June 2018, the Company announced an expansion of its senior unsecured credit facility to $540 million, with an accordion feature allowing the Company to increase the borrowing capacity to $640 million. Also in June 2018, the Company exercised $50 million of the accordion feature increasing its senior unsecured credit facility to $590 million. Borrowings under the revised credit facility bear interest at a rate of LIBOR plus a minimum spread of 2.60%. The term of the credit facility was extended to mature in April 2022. 



As of June 30, 2018, the Company had total assets of $2.0 billion, including cash of $63.4 million and inventories of $1.7 billion. Liabilities totaled $1.2 billion, which included $907 million of long-term debt. As of June 30, 2018, the Company had $460.0 million of availability under the credit facility.



 

Acquisition Activity



In June 2018, the Company acquired the remaining 50% ownership interest in Wade Jurney Homes, a leader in providing affordable homes to entry-level buyers primarily in the Southeast. Wade Jurney Homes operates as a wholly-owned subsidiary featuring a distinct brand under the Century umbrella while retaining its existing asset-light and streamlined business model, such as its unique marketing of homes through retail outlets as opposed to model homes.  The Company acquired the 50% ownership interest for $37.5 million plus the retirement of $94.2 million of secured debt, all of which was funded with the Company’s senior unsecured credit facility.



Wade Jurney Homes was the 35th largest U.S. home builder in 2017 and was named the fastest growing private builder by Builder Magazine in each of the last three years. Among the many benefits produced by the full acquisition, the transaction established Century as the 10th largest U.S. homebuilder based on pro forma 2017 deliveries. The acquisition also enhanced the Company’s geographic, product and buyer diversification while providing a platform for additional growth in ancillary revenue streams and expansion of Wade Jurney Homes into new markets.



Full Year 2018 Outlook



David Messenger, Chief Financial Officer of the Company, commented, “We are pleased with our performance in the first half of 2018, with strong demand in legacy regions and the success of our acquisitions driving positive results. Based on a strengthened market outlook and the addition of Wade Jurney Homes, we are increasing our full year outlook with home deliveries now expected to be in a range of 6,000 to 6,500 homes and our home sales revenues expected to be in a range of $2.0 billion to $2.3 billion for 2018.  With our expanded scale, strategic investments and sustained execution, we are firmly situated to deliver on our profitable growth objectives.”



Conference Call



The Company will host a webcast and conference call on Thursday, August 2, 2018 at 5:00 p.m. Eastern time, 3:00 p.m. Mountain time, to review the Company’s second quarter 2018 results, discuss recent events and conduct a question-and-answer period. To participate in the call, please dial 866-652-5200 (domestic) or 412-317-6060 (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 September 2, 2018, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 10122470.   A replay of the webcast will be available on the Company’s website through September 2, 2018.



About Century Communities

Century Communities, Inc. (NYSE:CCS) is a top-10 U.S. homebuilder. 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 sells its Century Communities and Wade Jurney Homes in 12 states across the West, Mountain, Texas and Southeast U.S. regions and offers title and lending services in select markets through its Parkway Title 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 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,” “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 2018.  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, 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.  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.

 

Picture 7



Century Communities, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



(in thousands, except share and per share amounts)





 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended June 30,

 

Six months ended June 30,



 

2018

 

2017

 

2018

 

2017

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Home sales revenues

 

$

 522,164 

 

$

 287,588 

 

$

 916,995 

 

$

 514,008 

Land sales and other revenues

 

 

 1,714 

 

 

 2,493 

 

 

 3,174 

 

 

 4,389 



 

 

 523,878 

 

 

 290,081 

 

 

 920,169 

 

 

 518,397 

Financial services revenue

 

 

 8,014 

 

 

 1,743 

 

 

 13,571 

 

 

 1,743 

Total revenues

 

 

 531,892 

 

 

 291,824 

 

 

 933,740 

 

 

 520,140 

Homebuilding Cost of Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Cost of home sales revenues

 

 

 (427,197)

 

 

 (233,888)

 

 

 (746,780)

 

 

 (416,212)

Cost of land sales and other revenues

 

 

 (1,040)

 

 

 (1,746)

 

 

 (1,917)

 

 

 (2,890)



 

 

 (428,237)

 

 

 (235,634)

 

 

 (748,697)

 

 

 (419,102)

Financial services costs

 

 

 (5,385)

 

 

 (1,445)

 

 

 (9,781)

 

 

 (2,199)

Selling, general, and administrative

 

 

 (63,634)

 

 

 (34,220)

 

 

 (120,156)

 

 

 (67,432)

Acquisition expense

 

 

 (165)

 

 

 (916)

 

 

 (338)

 

 

 (1,439)

Equity in income of unconsolidated subsidiaries

 

 

 11,681 

 

 

 2,676 

 

 

 14,849 

 

 

 3,931 

Other income (expense)

 

 

 350 

 

 

 824 

 

 

 (8)

 

 

 1,261 

Income before income tax expense

 

 

 46,502 

 

 

 23,109 

 

 

 69,609 

 

 

 35,160 

Income tax expense

 

 

 (13,309)

 

 

 (8,278)

 

 

 (16,397)

 

 

 (11,530)

Net income

 

$

 33,193 

 

$

 14,831 

 

$

 53,212 

 

$

 23,630 



 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 1.11 

 

$

 0.67 

 

$

 1.79 

 

$

 1.07 

Diluted

 

$

 1.10 

 

$

 0.66 

 

$

 1.77 

 

$

 1.06 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 29,901,791 

 

 

 21,814,860 

 

 

 29,709,728 

 

 

 21,814,860 

Diluted

 

 

 30,170,689 

 

 

 22,029,962 

 

 

 30,003,276 

 

 

 22,029,962 



 

Picture 6



Century Communities, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



(in thousands, except share amounts)







 

 

 

 

 

 



 

June 30,

 

December 31,



 

2018

 

2017

Assets

 

(Unaudited)

 

 

Cash and cash equivalents

 

$

 19,482 

 

$

 88,832 

Cash held in escrow

 

 

 43,880 

 

 

 37,723 

Accounts receivable

 

 

 20,890 

 

 

 12,999 

Inventories

 

 

 1,696,931 

 

 

 1,390,354 

Mortgage loans held for sale

 

 

 57,353 

 

 

 52,327 

Prepaid expenses and other assets

 

 

 71,106 

 

 

 60,812 

Property and equipment, net

 

 

 32,482 

 

 

 27,911 

Investment in unconsolidated subsidiaries

 

 

 —

 

 

 28,208 

Deferred tax assets, net

 

 

 9,704 

 

 

 5,555 

Amortizable intangible assets, net

 

 

 5,573 

 

 

 2,938 

Goodwill

 

 

 28,272 

 

 

 27,363 

Total assets

 

$

 1,985,673 

 

$

 1,735,022 

Liabilities and stockholders' equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

 59,608 

 

$

 24,831 

Accrued expenses and other liabilities

 

 

 162,085 

 

 

 150,356 

Senior notes payable

 

 

 777,275 

 

 

 776,283 

Revolving line of credit

 

 

 130,000 

 

 

 —

Mortgage repurchase facilities

 

 

 52,999 

 

 

 48,319 

Total liabilities

 

 

 1,181,967 

 

 

 999,789 

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, 30,119,259 and 29,502,624 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively

 

 

 301 

 

 

 295 

Additional paid-in capital

 

 

 582,627 

 

 

 566,790 

Retained earnings

 

 

 220,778 

 

 

 168,148 

Total stockholders' equity

 

 

 803,706 

 

 

 735,233 

Total liabilities and stockholders' equity

 

$

 1,985,673 

 

$

 1,735,022 





 

Picture 5



Century Communities, Inc.

Homebuilding Operational Data



Net New Home Contracts







 

 

 

 

 

 

 

 

 



 

Three Months Ended



 

June 30,



 

2018

 

 

2017

 

 

% Change

West

 

 186 

 

 

 —

 

 

NM

 

Mountain

 

 460 

 

 

 463 

 

 

 (0.7)

%

Texas

 

 194 

 

 

 112 

 

 

 73.2 

%

Southeast

 

 559 

 

 

 446 

 

 

 25.3 

%

Wade Jurney Homes

 

 144 

 

 

 —

 

 

NM

 

Total

 

 1,543 

 

 

 1,021 

 

 

 51.1 

%



 

 

 

 

 

 

 

 

 



 

Six months ended



 

June 30,



 

2018

 

 

2017

 

 

% Change

West

 

 402 

 

 

 —

 

 

NM

 

Mountain

 

 1,005 

 

 

 917 

 

 

 9.6 

%

Texas

 

 343 

 

 

 227 

 

 

 51.1 

%

Southeast

 

 1,027 

 

 

 834 

 

 

 23.1 

%

Wade Jurney Homes

 

 144 

 

 

 —

 

 

NM

 

Total

 

 2,921 

 

 

 1,978 

 

 

 47.6 

%

NM – Not meaningful

Home Deliveries 



(dollars in thousands)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended June 30,

 

 

 

 

 

 



 

2018

 

2017

 

% Change

 



 

Homes

 

Average Sales Price

 

Homes

 

Average Sales Price

 

Homes

 

Average Sales Price

West

 

 213 

 

$

 606.8 

 

 —

 

$

 —

 

NM

 

 

NM

 

Mountain

 

 421 

 

 

 425.4 

 

 382 

 

 

 426.7 

 

 10.2 

%

 

 (0.3)

%

Texas

 

 206 

 

 

 307.7 

 

 107 

 

 

 402.9 

 

 92.5 

%

 

 (23.6)

%

Southeast

 

 379 

 

 

 330.3 

 

 264 

 

 

 308.6 

 

 43.6 

%

 

 7.0 

%

Wade Jurney Homes

 

 165 

 

 

 153.0 

 

 —

 

 

 —

 

NM

 

 

NM

 

Total / Weighted Average

 

 1,384 

 

$

 377.3 

 

 753 

 

$

 381.9 

 

 83.8 

%

 

 (1.2)

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Six months ended June 30,

 

 

 

 

 

 



 

2018

 

2017

 

% Change

 



 

Homes

 

Average Sales Price

 

Homes

 

Average Sales Price

 

Homes

 

Average Sales Price

West

 

 413 

 

$

 600.9 

 

 —

 

$

 —

 

NM

 

 

NM

 

Mountain

 

 764 

 

$

 423.2 

 

 671 

 

$

 423.2 

 

 13.9 

%

 

 —

%

Texas

 

 314 

 

$

 322.2 

 

 176 

 

$

 415.8 

 

 78.4 

%

 

 (22.5)

%

Southeast

 

 669 

 

$

 327.4 

 

 514 

 

$

 305.2 

 

 30.2 

%

 

 7.3 

%

Wade Jurney Homes

 

 165 

 

$

 153.0 

 

 —

 

$

 —

 

NM

 

 

NM

 

Total / Weighted Average

 

 2,325 

 

$

 394.4 

 

 1,361 

 

$

 377.7 

 

 70.8 

%

 

 4.4 

%

NM – Not meaningful



.

 

Picture 10 



Century Communities, Inc.

Homebuilding Operational Data





Selling Communities



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Selling communities at period end

 

As of June 30,

 

 

Increase/(Decrease)



 

2018

 

2017

 

 

Amount

 

% Change



 

 

 

 

 

 

 

 

 

 

West

 

 12 

 

 —

 

 

 12 

 

NM

 

Mountain

 

 31 

 

 34 

 

 

 (3)

 

 (8.8)

%

Texas

 

 24 

 

 21 

 

 

 3 

 

 14.3 

%

Southeast

 

 53 

 

 36 

 

 

 17 

 

 47.2 

%

Wade Jurney Homes

 

N/A

 

N/A

 

 

N/A

 

N/A

 

Total

 

 120 

 

 91 

 

 

 29 

 

 31.9 

%

NM – Not meaningful

N/A – Not applicable



Backlog



(dollars in thousands)





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

June 30,

 

 

 

 

 

 

 

 

 



 

2018

 

2017

 

% Change

 



 

Homes

 

Dollar Value

 

Average Sales Price

 

Homes

 

Dollar Value

 

Average Sales Price

 

Homes

 

Dollar Value

 

Average Sales Price

West

 

 259 

 

$

 150,619 

 

$

 581.5 

 

 —

 

$

 —

 

$

 —

 

NM

 

 

NM

 

 

NM

 

Mountain

 

 696 

 

 

 307,825 

 

$

 442.1 

 

 575 

 

 

 244,512 

 

$

 425.0 

 

 21.0 

%

 

 25.9 

%

 

 4.0 

%

Texas

 

 244 

 

 

 88,458 

 

$

 362.5 

 

 202 

 

 

 90,314 

 

$

 447.1 

 

 20.8 

%

 

 (2.1)

%

 

 (18.9)

%

Southeast

 

 738 

 

 

 242,378 

 

$

 328.4 

 

 589 

 

 

 187,816 

 

$

 318.9 

 

 25.3 

%

 

 29.1 

%

 

 3.0 

%

Wade Jurney Homes

 

 1,262 

 

 

 197,973 

 

$

 156.9 

 

 —

 

 

 —

 

$

 —

 

NM

 

 

NM

 

 

NM

 

Total / Weighted Average

 

 3,199 

 

$

 987,253 

 

$

 308.6 

 

 1,366 

 

$

 522,642 

 

$

 382.5 

 

 134.2 

%

 

 88.9 

%

 

 (19.3)

%

NM – Not meaningful



Lot Inventory





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

June 30,

 

 

 

 

 

 

 

 

 



 

2018

 

2017

 

% Change

 



 

 

 

 

 

 



 

Owned

 

Controlled

 

Total

 

Owned

 

Controlled

 

Total

 

Owned

 

Controlled

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

 3,790 

 

 2,420 

 

 6,210 

 

 —

 

 —

 

 —

 

NM

 

 

NM

 

 

NM

 

Mountain

 

 5,399 

 

 4,851 

 

 10,250 

 

 4,262 

 

 4,702 

 

 8,964 

 

 26.7 

%

 

 3.2 

%

 

 14.3 

%

Texas

 

 2,560 

 

 3,201 

 

 5,761 

 

 1,786 

 

 4,273 

 

 6,059 

 

 43.3 

%

 

 (25.1)

%

 

 (4.9)

%

Southeast

 

 5,135 

 

 4,460 

 

 9,595 

 

 3,659 

 

 3,884 

 

 7,543 

 

 40.3 

%

 

 14.8 

%

 

 27.2 

%

Wade Jurney Homes

 

 2,472 

 

 4,356 

 

 6,828 

 

 —

 

 —

 

 —

 

NM

 

 

NM

 

 

NM

 

Total

 

 19,356 

 

 19,288 

 

 38,644 

 

 9,707 

 

 12,859 

 

 22,566 

 

 99.4 

%

 

 50.0 

%

 

 71.2 

%

NM – Not meaningful





 

Picture 2



Century Communities, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)





Adjusted Diluted Earnings per Common Share (Adjusted Diluted EPS) is a non-GAAP financial measure that we believe is 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 acquisition costs and purchase price accounting for acquired work in process from the calculation of reported EPS.



Adjusted Diluted Earnings Per Common Share



(in thousands, except share and per share amounts)





 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six months ended



 

June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

 33,193 

 

$

 14,831 

 

$

 53,212 

 

$

 23,630 

Less: Undistributed earnings allocated to participating securities

 

 

 (3)

 

 

 (101)

 

 

 (67)

 

 

 (251)

Net income allocable to common stockholders

 

$

 33,190 

 

$

 14,730 

 

$

 53,145 

 

$

 23,379 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

 

 29,901,791 

 

 

 22,146,124 

 

 

 29,709,728 

 

 

 21,814,860 

Dilutive effect of restricted stock units

 

 

 268,898 

 

 

 219,953 

 

 

 293,548 

 

 

 215,102 

Weighted average common shares outstanding - diluted

 

 

 30,170,689 

 

 

 22,366,077 

 

 

 30,003,276 

 

 

 22,029,962 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 1.11 

 

$

 0.67 

 

$

 1.79 

 

$

 1.07 

Diluted

 

$

 1.10 

 

$

 0.66 

 

$

 1.77 

 

$

 1.06 



 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

$

 46,502 

 

$

 23,109 

 

$

 69,609 

 

$

 35,160 

Purchase price accounting for acquired work in process inventory

 

 

 9,163 

 

 

 104 

 

 

 16,433 

 

 

 117 

Gain on previously held interest in WJH

 

 

 (7,219)

 

 

 -

 

 

 (7,219)

 

 

 -

Acquisition expense

 

 

 165 

 

 

 916 

 

 

 338 

 

 

 1,439 

Adjusted income before income tax expense

 

 

 48,611 

 

 

 24,129 

 

 

 79,161 

 

 

 36,716 

Adjusted income tax expense(1)

 

 

 (12,153)

 

 

 (8,643)

 

 

 (19,790)

 

 

 (12,040)

Adjusted net income

 

 

 36,459 

 

 

 15,486 

 

 

 59,370 

 

 

 24,676 

Less: Adjusted undistributed earnings allocated to participating securities

 

 

 (3)

 

 

 (106)

 

 

 (74)

 

 

 (262)

Adjusted net income allocable to common stockholders

 

$

 36,456 

 

$

 15,380 

 

$

 59,296 

 

$

 24,414 



 

 

 

 

 

 

 

 

 

 

 

 

Denominator - Diluted

 

 

 30,170,689 

 

 

 22,366,077 

 

 

 30,003,276 

 

 

 22,029,962 



 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share

 

$

 1.21 

 

$

 0.69 

 

$

 1.98 

 

$

 1.11 



(1)

For the three and six months ended June 30, 2018, the tax rate used in adjusted net income was 25%.  This rate is inclusive of our estimated annual rate of 26.5% offset by the estimated annual benefit associated with federal energy credits related to homes delivered. For the three and six months ended June 30, 2017, the Company’s GAAP tax rate was utilized.









 







Picture 9



Century Communities, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)



Adjusted homebuilding gross margin excluding 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 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 June 30,



 

2018

 

% 

 

2017

 

% 



 

 

 

 

 

 

 

 

 

 

 

 

Home sales revenues

 

$

 522,164 

 

 100.0 

%

 

$

 287,588 

 

 100.0 

%

Cost of home sales revenues

 

 

 (427,197)

 

 (81.8)

%

 

 

 (233,888)

 

 (81.3)

%

Gross margin from home sales

 

 

 94,967 

 

 18.2 

%

 

 

 53,700 

 

 18.7 

%

Add: Interest in cost of home sales revenues

 

 

 12,284 

 

 2.4 

%

 

 

 6,875 

 

 2.4 

%

Adjusted homebuilding gross margin excluding interest

 

 

 107,251 

 

 20.5 

%

 

 

 60,575 

 

 21.1 

%

Add: Purchase price accounting for acquired work in process inventory

 

 

 9,163 

 

 1.8 

%

 

 

 104 

 

 0.0 

%

Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory

 

$

 116,414 

 

 22.3 

%

 

$

 60,679 

 

 21.1 

%



 

 

 

 

 

 

 

 

 

 

 

 



 

 



 

Six months ended June 30,



 

2018

 

% 

 

2017

 

% 



 

 

 

 

 

 

 

 

 

 

 

 

Home sales revenues

 

$

 916,995 

 

 100.0 

%

 

$

 514,008 

 

 100.0 

%

Cost of home sales revenues

 

 

 (746,780)

 

 (81.4)

%

 

 

 (416,212)

 

 (81.0)

%

Gross margin from home sales

 

 

 170,215 

 

 18.6 

%

 

 

 97,796 

 

 19.0 

%

Add: Interest in cost of home sales revenues

 

 

 21,243 

 

 2.3 

%

 

 

 11,831 

 

 2.3 

%

Adjusted homebuilding gross margin excluding interest

 

 

 191,458 

 

 20.9 

%

 

 

 109,627 

 

 21.3 

%

Add: Purchase price accounting for acquired work in process inventory

 

 

 16,433 

 

 1.8 

%

 

 

 117 

 

 0.0 

%

Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory

 

$

 207,891 

 

 22.7 

%

 

$

 109,744 

 

 21.4 

%







 



Picture 1



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) depreciation and amortization expense, and (v) 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 June 30,

 

Six months ended June 30,

 



 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

Net income

 

$

 33,193 

 

$

 14,831 

 

 

 123.8 

%

 

$

 53,212 

 

$

 23,630 

 

 

 125.2 

%

Income tax expense

 

 

 13,309 

 

 

 8,278 

 

 

 60.8 

%

 

 

 16,397 

 

 

 11,530 

 

 

 42.2 

%

Interest in cost of home sales revenues

 

 

 12,284 

 

 

 6,875 

 

 

 78.7 

%

 

 

 21,243 

 

 

 11,831 

 

 

 79.6 

%

Interest expense (income)

 

 

 —

 

 

 1 

 

 

 (100.0)

%

 

 

 1 

 

 

 2 

 

 

 (50.0)

%

Depreciation and amortization expense

 

 

 2,786 

 

 

 1,434 

 

 

 94.3 

%

 

 

 5,512 

 

 

 2,818 

 

 

 95.6 

%

EBITDA

 

 

 61,572 

 

 

 31,419 

 

 

 96.0 

%

 

 

 96,365 

 

 

 49,811 

 

 

 93.5 

%

Purchase price accounting for acquired work in process inventory

 

 

 9,163 

 

 

 104 

 

 

 8,714.3 

%

 

 

 16,433 

 

 

 117 

 

 

 13,967.0 

%

Purchase price accounting for investment in unconsolidated subsidiaries outside basis

 

 

 30 

 

 

 30 

 

 

 —

%

 

 

 60 

 

 

 825 

 

 

 (92.7)

%

Acquisition expense

 

 

 165 

 

 

 916 

 

 

 (82.0)

%

 

 

 338 

 

 

 1,439 

 

 

 (76.5)

%

Adjusted EBITDA

 

$

 70,930 

 

$

 32,469 

 

 

 118.5 

%

 

$

 113,196 

 

$

 52,192 

 

 

 116.9 

%



 

Picture 4

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 (senior notes payable and revolving line of credit less cash held in escrow and cash and cash equivalents) 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)



 

 

 

 

 

 



 

June 30,

 

December 31,



 

2018

 

2017

Total debt

 

$

 960,274 

 

$

 824,602 

Total stockholders' equity

 

 

 803,706 

 

 

 735,233 

Total capital

 

$

 1,763,980 

 

$

 1,559,835 

Debt to capital

 

 

 54.4% 

 

 

 52.9% 



 

 

 

 

 

 

Total debt

 

$

 960,274 

 

$

 824,602 

Cash and cash equivalents

 

 

 (19,482)

 

 

 (88,832)

Cash held in escrow

 

 

 (43,880)

 

 

 (37,723)

Mortgage repurchase facilities

 

 

 (52,999)

 

 

 (48,319)

Net homebuilding debt

 

 

 843,913 

 

 

 649,728 

Total stockholders' equity

 

 

 803,706 

 

 

 735,233 

Net capital

 

$

 1,647,619 

 

$

 1,384,961 



 

 

 

 

 

 

Net homebuilding debt to net capital

 

 

 51.2% 

 

 

 46.9% 







Contact Information:

Investor Relations:

303-268-8398

InvestorRelations@CenturyCommunities.com