UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Exact name of registrant as specified in its charter)
|
|
|
| ||
(State or other jurisdiction of |
| (I.R.S. Employer |
|
| |
|
| |
(Address of principal executive offices) |
| (Zip Code) |
(Registrant’s telephone number, including area code): (
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
Title of each class | Trading Symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No o
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| x |
| Accelerated Filer |
| o |
Non-accelerated Filer |
| o |
| Smaller Reporting Company |
| |
|
|
|
| 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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No
On April 23, 2020,
CENTURY COMMUNITIES, INC.
FORM 10-Q
For the Three Months Ended March 31, 2020
Index
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Century Communities, Inc.
Condensed Consolidated Balance Sheets
As of March 31, 2020 and December 31, 2019
(in thousands, except share amounts)
|
|
|
|
|
|
|
|
| March 31, |
| December 31, | ||
|
| 2020 |
| 2019 | ||
Assets |
| (Unaudited) |
|
|
| |
Cash and cash equivalents |
| $ | |
| $ | |
Cash held in escrow |
|
| |
|
| |
Accounts receivable |
|
| |
|
| |
Inventories |
|
| |
|
| |
Mortgage loans held for sale |
|
| |
|
| |
Prepaid expenses and other assets |
|
| |
|
| |
Property and equipment, net |
|
| |
|
| |
Deferred tax assets, net |
|
| |
|
| |
Goodwill |
|
| |
|
| |
Total assets |
| $ | |
| $ | |
Liabilities and stockholders' equity |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts payable |
| $ | |
| $ | |
Accrued expenses and other liabilities |
|
| |
|
| |
Notes payable |
|
| |
|
| |
Revolving line of credit |
|
| |
|
| |
Mortgage repurchase facilities |
|
| |
|
| |
Total liabilities |
|
| |
|
| |
Stockholders' equity: |
|
|
|
|
|
|
Preferred stock, $ |
|
|
|
|
|
|
Common stock, $ |
|
| |
|
| |
Additional paid-in capital |
|
| |
|
| |
Retained earnings |
|
| |
|
| |
Total stockholders' equity |
|
| |
|
| |
Total liabilities and stockholders' equity |
| $ | |
| $ | |
See Notes to Unaudited Condensed Consolidated Financial Statements
Century Communities, Inc.
Unaudited Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2020 and 2019
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
| Three Months Ended March 31, |
| ||||
|
| 2020 |
| 2019 |
| ||
Revenues |
|
|
|
|
|
|
|
Homebuilding revenues |
|
|
|
|
|
|
|
Home sales revenues |
| $ | |
| $ | |
|
Land sales and other revenues |
|
| |
|
| |
|
Total homebuilding revenues |
|
| |
|
| |
|
Financial services revenue |
|
| |
|
| |
|
Total revenues |
|
| |
|
| |
|
Homebuilding cost of revenues |
|
|
|
|
|
|
|
Cost of home sales revenues |
|
| ( |
|
| ( |
|
Cost of land sales and other revenues |
|
| ( |
|
| ( |
|
Total homebuilding cost of revenues |
|
| ( |
|
| ( |
|
Financial services costs |
|
| ( |
|
| ( |
|
Selling, general and administrative |
|
| ( |
|
| ( |
|
Inventory impairment |
|
| ( |
|
| — |
|
Other income (expense) |
|
| |
|
| |
|
Income before income tax expense |
|
| |
|
| |
|
Income tax expense |
|
| ( |
|
| ( |
|
Net income |
| $ | |
| $ | |
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
| $ | |
| $ | |
|
Diluted |
| $ | |
| $ | |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
| |
|
| |
|
Diluted |
|
| |
|
| |
|
See Notes to Unaudited Condensed Consolidated Financial Statements
Century Communities, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019
(in thousands)
|
|
|
|
|
|
|
|
| Three Months Ended March 31, | ||||
|
| 2020 |
| 2019 | ||
Operating activities |
|
|
|
|
|
|
Net income |
| $ | |
| $ | |
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
| |
|
| |
Stock-based compensation expense |
|
| |
|
| |
Inventory impairment and other |
|
| |
|
| — |
Deferred income taxes |
|
| ( |
|
| |
Loss on disposition of assets |
|
| |
|
| |
Changes in assets and liabilities: |
|
|
|
|
|
|
Cash held in escrow |
|
| |
|
| ( |
Accounts receivable |
|
| |
|
| |
Inventories |
|
| ( |
|
| ( |
Prepaid expenses and other assets |
|
| |
|
| ( |
Accounts payable |
|
| ( |
|
| ( |
Accrued expenses and other liabilities |
|
| ( |
|
| ( |
Mortgage loans held for sale |
|
| |
|
| |
Net cash used in operating activities |
|
| ( |
|
| ( |
Investing activities |
|
|
|
|
|
|
Purchases of property and equipment |
|
| ( |
|
| ( |
Other investing activities |
|
| |
|
| ( |
Net cash used in investing activities |
|
| ( |
|
| ( |
Financing activities |
|
|
|
|
|
|
Borrowings under revolving credit facilities |
|
| |
|
| |
Payments on revolving credit facilities |
|
| ( |
|
| ( |
Principal payments on notes payable |
|
| ( |
|
| ( |
Proceeds from insurance notes payable |
|
| |
|
| |
Net proceeds from mortgage repurchase facilities |
|
| ( |
|
| ( |
Repurchases of common stock upon vesting of stock-based compensation |
|
| ( |
|
| ( |
Repurchases of common stock under stock repurchase program |
|
| — |
|
| ( |
Net cash provided by financing activities |
|
| |
|
| |
Net increase |
| $ | |
| $ | |
Cash and cash equivalents and Restricted cash |
|
|
|
|
|
|
Beginning of period |
|
| |
|
| |
End of period |
| $ | |
| $ | |
Supplemental cash flow disclosure |
|
|
|
|
|
|
Cash paid for income taxes |
| $ |
|
| $ |
|
Cash and cash equivalents and Restricted cash |
|
|
|
|
|
|
Cash and cash equivalents |
| $ | |
| $ | |
Restricted cash (Note 5) |
|
| |
|
| |
Cash and cash equivalents and Restricted cash |
| $ | |
| $ | |
See Notes to Unaudited Condensed Consolidated Financial Statements
Century Communities, Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
For the Three Months Ended March 31, 2020 and 2019
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock |
|
|
|
|
|
|
|
|
| |||
|
| Shares |
| Amount |
| Additional Paid-In Capital |
| Retained Earnings |
| Total Stockholders' Equity | ||||
Balance at December 31, 2019 |
| |
| $ | |
| $ | |
| $ | |
| $ | |
Repurchases of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock units |
| |
|
| |
|
| ( |
|
| — |
|
| — |
Withholding of common stock upon vesting of restricted stock units |
| ( |
|
| ( |
|
| ( |
|
| — |
|
| ( |
Stock-based compensation expense |
| — |
|
| — |
|
| |
|
| — |
|
| |
Net income |
| — |
|
| — |
|
| — |
|
| |
|
| |
Balance at March 31, 2020 |
| |
| $ | |
| $ | |
| $ | |
| $ | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock |
|
|
|
|
|
|
|
|
| |||
|
| Shares |
| Amount |
| Additional Paid-In Capital |
| Retained Earnings |
| Total Stockholders Equity | ||||
Balance at December 31, 2018 |
| |
| $ | |
| $ | |
| $ | |
| $ | |
Repurchases of common stock |
| ( |
|
| — |
|
| ( |
|
| — |
|
| ( |
Vesting of restricted stock units |
| |
|
| |
|
| ( |
|
| — |
|
| — |
Withholding of common stock upon vesting of restricted stock units |
| ( |
|
| ( |
|
| ( |
|
| — |
|
| ( |
Stock-based compensation expense |
| — |
|
| — |
|
| |
|
| — |
|
| |
Net income |
| — |
|
| — |
|
| — |
|
| |
|
| |
Balance at March 31, 2019 |
| |
| $ | |
| $ | |
| $ | |
| $ | |
See Notes to Unaudited Condensed Consolidated Financial Statements
Century Communities, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2020
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (which we refer to as “GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (which we refer to as the “SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by GAAP and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 that was filed with the SEC on February 7, 2020.
The recent outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies and created uncertainty regarding potential impacts to our operations and customer demand. Through late April, there is still significant uncertainty regarding the duration and severity of the disruption caused by this pandemic.
Commencing in March 2020 numerous state and local municipalities issued public health orders with varying expiration dates requiring the closure of nonessential businesses, as well as ordering individuals to stay at home and/or shelter in place whenever possible. General exceptions to shelter in place orders are essential services and critical businesses. As of the date of this filing, other than the state of Michigan and certain municipalities within the Bay Area market of Northern California, construction and sale of residential real estate has been determined to be an essential business, and accordingly our operations have been generally exempted from these applicable health orders.
The condensed consolidated financial statements include the accounts of the Company, as well as all subsidiaries in which we have a controlling interest, and variable interest entities for which the Company is deemed to be the primary beneficiary. We currently do not have any variable interest entities in which we are deemed the primary beneficiary. All intercompany accounts and transactions have been eliminated.
Financial Instruments - Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). The standard changes the accounting for credit losses for most financial assets and certain other instruments. Credit losses which have historically been accounted for on an
incurred loss basis will now be accounted for using an estimate of lifetime expected credit losses. This will generally result in earlier recognition of allowances for credit losses. We adopted this standard on January 1, 2020 with no material effect on the consolidated financial statements and related disclosures.
Internal-Use Software
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). This update is intended to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement by providing guidance for determining when the arrangement includes a software license. We adopted this standard on January 1, 2020 with no material effect on the consolidated financial statements and related disclosures.
Recently Issued Accounting Standards
In December 2019, the FASB issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). The standard simplifies the accounting for income taxes, eliminates certain exceptions, and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for us beginning January 1, 2021. We do not expect this standard to have a material effect on the consolidated financial statements and related disclosures.
Our homebuilding operations are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in
The management of our four geographic regions and Century Complete reports to our chief operating decision makers (which we refer to as “CODMs”), the Co-Chief Executive Officers of our Company. The CODMs review the results of our operations, including total revenue and income before income tax expense to determine profitability and to allocate resources. Accordingly, we have presented our homebuilding operations as the following
West (California and Washington)
Mountain (Colorado, Nevada and Utah)
Texas
Southeast (Georgia, North Carolina, South Carolina and Tennessee)
Century Complete (Alabama, Arizona, Florida, Georgia, Indiana, Iowa, Michigan, North Carolina, Ohio, South Carolina, and Texas)
We have also identified our Financial Services operations, which provide mortgage, title, and insurance services to our homebuyers, as a sixth reportable segment. Our Corporate operations are a non-operating segment, as they serve to support our homebuilding, and to a lesser extent our financial services operations, through functions, such as our executive, finance, treasury, human resources, accounting and legal departments. The following table summarizes total revenue and income before income tax expense by segment (in thousands):
|
|
|
|
|
|
| Three Months Ended March 31, | ||||
| 2020 |
| 2019 | ||
Revenue: |
|
|
|
|
|
West | $ | |
| $ | |
Mountain |
| |
|
| |
Texas |
| |
|
| |
Southeast |
| |
|
| |
Century Complete |
| |
|
| |
Financial Services |
| |
|
| |
Corporate |
| — |
|
| — |
Total revenue | $ | |
| $ | |
|
|
|
|
|
|
Income (loss) before income tax expense: |
|
|
|
|
|
West | $ | |
| $ | |
Mountain |
| |
|
| |
Texas |
| |
|
| |
Southeast |
| |
|
| |
Century Complete |
| |
|
| |
Financial Services |
| |
|
| |
Corporate |
| ( |
|
| ( |
Total income before income tax expense | $ | |
| $ | |
The following table summarizes total assets by operating segment (in thousands):
|
|
|
|
|
|
|
|
| March 31, |
| December 31, | ||
|
| 2020 |
| 2019 | ||
West |
| $ | |
| $ | |
Mountain |
|
| |
|
| |
Texas |
|
| |
|
|