Core Insights - Century Communities reported revenue of $980.28 million for Q3 2025, a year-over-year decline of 13.8%, with EPS of $1.52 compared to $2.72 a year ago, indicating a significant drop in profitability [1] - The revenue exceeded the Zacks Consensus Estimate of $972.9 million by 0.76%, while the EPS surprised positively by 76.74% against the consensus estimate of $0.86 [1] Financial Performance Metrics - Net New Home Contracts were reported at 2,386, slightly above the estimated 2,378 [4] - Average Sales Price for Home Deliveries was $384.20, exceeding the estimate of $377.50 [4] - Backlog of Homes stood at 1,117, below the average estimate of 1,194 [4] - Home Deliveries totaled 2,486, surpassing the estimated 2,400 [4] - Financial services revenues were $19.36 million, above the estimate of $18.38 million, but represented a 3.7% decline year-over-year [4] - Total homebuilding revenues were $960.93 million, slightly above the average estimate of $954.53 million, reflecting a 14% year-over-year decline [4] - Home sales revenues were reported at $955.16 million, below the estimated $977.7 million, marking a 14.4% decrease compared to the previous year [4] Stock Performance - Shares of Century Communities have returned -3.8% over the past month, contrasting with the Zacks S&P 500 composite's +1.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

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Financial Performance - For the three and nine months ended September 30, 2025, the company generated total revenues of $980.3 million and $2.9 billion, respectively, compared to $1.1 billion and $3.1 billion in the prior year periods[110]. - The company reported net income of $37.4 million, or $1.25 per diluted share, for the three months ended September 30, 2025, down from $83.0 million, or $2.59 per diluted share, in the prior year[109]. - Total revenues for Q3 2025 were $980.3 million, a decrease of 13.8% from $1,136.9 million in Q3 2024[113]. - Net income for Q3 2025 was $37.4 million, a decline of 55.1% compared to $83.0 million in Q3 2024[113]. - For the nine months ended September 30, 2025, total revenue was $2,884.2 million, a decrease from $3,124.9 million in the same period of 2024, representing a decline of 7.7%[118]. - Net income for the nine months ended September 30, 2025, was $98.4 million, a decline from $307.5 million in 2024[154]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $238.6 million, down from $381.3 million in the same period of 2024[113]. - Adjusted net income for Q3 2025 was $45,711, down 48.2% from $88,572 in Q3 2024[197]. - Adjusted diluted earnings per share (EPS) for Q3 2025 was $1.52, a decline of 45.1% from $2.77 in Q3 2024[197]. Home Deliveries and Sales - The company delivered 2,486 and 7,357 homes during the three and nine months ended September 30, 2025, with average sales prices of $384.2 thousand and $382.7 thousand, respectively, reflecting a decrease in home deliveries by 12.3% and 5.8% compared to the prior year[110]. - The number of homes delivered in Q3 2025 was 2,486, a decrease of 12.3% from 2,834 homes in Q3 2024[113]. - Home sales revenues in Q3 2025 were $955.2 million, down 14.4% from $1,116.1 million in Q3 2024[113]. - The average sales price of homes delivered in Q3 2025 was $384.2 thousand, down from $393.8 thousand in Q3 2024[113]. - The average sales price of new homes delivered decreased to $382.7 thousand in 2025 from $391.3 thousand in 2024, a reduction of 1.5%[118]. - The backlog at the end of Q3 2025 included 1,117 homes with an aggregate sales value of $416.9 million, compared to 1,580 homes valued at $671.4 million at the end of Q3 2024[113]. - The average sales price of backlog units decreased by 12.1% to $373.3 thousand, influenced by higher incentives and a change in community mix[146]. Contracts and Market Conditions - Net new home contracts decreased by 6.9% and 7.1% for the three and nine months ended September 30, 2025, totaling 2,386 and 7,624 contracts, respectively[110]. - Net new home contracts in Q3 2025 were 2,386, a decrease from 2,563 contracts in Q3 2024[113]. - The company anticipates that homebuilding markets will continue to be influenced by macro-economic conditions, including interest rates and consumer confidence, which may impact future demand for homes[106]. - The average monthly absorption rate decreased by 13.8% to 2.5 in Q3 2025 compared to Q3 2024, and by 20.6% to 2.7 for the nine months ended September 30, 2025, primarily due to slowing demand and elevated mortgage rates[143]. Financial Services and Assets - The Financial Services segment generated income before income tax expense of $3.0 million and $11.6 million for the three and nine months ended September 30, 2025, representing decreases of 2.7% and 38.4% from the prior year[112]. - The number of mortgages originated decreased by 6.3% for the nine months ended September 30, 2025, totaling 4,796 loans compared to 5,118 in 2024[125]. - The company recorded a decrease in Financial Services assets by 31.9% to $326.2 million as of September 30, 2025, due to a reduction in mortgage loans held for sale[140]. Debt and Liquidity - The company ended the third quarter of 2025 with $130.1 million in cash and cash equivalents and $44.7 million in cash held in escrow, with a homebuilding debt to capital ratio of 34.5%[111]. - The total debt as of September 30, 2025, was $1.66 billion, compared to $1.48 billion as of December 31, 2024[170]. - The company had $1.0 billion in total principal amount of Senior Notes outstanding as of September 30, 2025[147]. - The company believes it can fund its current liquidity needs for at least the next twelve months with cash on hand and cash generated from operations[161]. - The company has a senior unsecured revolving credit facility of up to $1.0 billion, with $339.0 million outstanding as of September 30, 2025, at an interest rate of 5.7%[180]. Operational Adjustments - The company strategically managed its lot pipeline, resulting in 62,239 lots owned and controlled as of September 30, 2025, while selectively reducing land acquisition activities[111]. - The total owned and controlled lot inventory as of September 30, 2025, was 62,239 lots, down from 80,121 lots in the previous year[113]. - The company reduced its land acquisition and development activities by terminating certain contracts that no longer met investment criteria, reflecting current market conditions[158]. - The company is exploring opportunities to acquire other homebuilders to enhance its land portfolio and support organic expansion[167]. Expenses and Margins - Homebuilding gross margin percentage for Q3 2025 was 17.9%, compared to 21.7% in Q3 2024[113]. - Homebuilding gross margin percentage decreased to 18.4% for the nine months ended September 30, 2025, down from 21.9% in the same period of 2024[128]. - Selling, general and administrative expenses decreased by $13.1 million (9.8%) in Q3 2025 compared to Q3 2024, but as a percentage of home sales revenue increased to 12.6% from 11.9%[134]. - Adjusted homebuilding gross margin excluding inventory impairment for Q3 2025 was 20.1%, down from 23.6% in Q3 2024[132]. Tax and Regulatory - The estimated annual effective tax rate for 2025 is 25.0%, influenced by federal and state statutory rates and certain permanent differences[135]. - Income tax expense for Q3 2025 was $10.4 million, significantly lower than $26.9 million in Q3 2024[138]. - The effective tax rate for adjusted net income was 24.3% for both Q3 2025 and Q3 2024[198]. Market Outlook - The company anticipates that inflation may continue to adversely impact homebuilding operations due to rising costs in land, labor, and materials[203].

Core Insights - Century Communities (CCS) reported quarterly earnings of $1.52 per share, exceeding the Zacks Consensus Estimate of $0.86 per share, but down from $2.72 per share a year ago, representing an earnings surprise of +76.74% [1] - The company posted revenues of $980.28 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.76%, but down from $1.14 billion year-over-year [2] - The stock has underperformed the market, losing about 16.7% since the beginning of the year compared to the S&P 500's gain of 14.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.77 on revenues of $1.18 billion, and for the current fiscal year, it is $5.36 on revenues of $4.04 billion [7] - The estimate revisions trend for Century Communities was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Building Products - Home Builders industry, to which Century Communities belongs, is currently in the bottom 17% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Another competitor in the same industry, D.R. Horton (DHI), is expected to report quarterly earnings of $3.29 per share, reflecting a year-over-year decline of -16.1%, with revenues anticipated to be $9.45 billion, down 5.5% from the previous year [9][10]

Financial Data and Key Metrics Changes - In Q3 2025, pre-tax income was $48 million, net income was $37 million, and adjusted net income was $46 million, reflecting increases of 7% and 10% sequentially [13] - Home sales revenues were $955 million, down 2% sequentially, while deliveries of homes declined by 4% [13] - Adjusted home building gross margin improved to 20.1% from 20% in Q2, driven by lower direct costs offsetting higher incentives [14] Business Line Data and Key Metrics Changes - The company delivered 2,486 homes, hitting the high end of guidance, with an average sales price of $384,000, up 2% quarter-over-quarter [4][13] - Net new contracts for Q3 were 2,386 homes, a decline of 6% sequentially, but better than the historical average decline of 9% [8] - The ending community count increased by 5% year-over-year to 321 communities [10] Market Data and Key Metrics Changes - The company holds top 10 positions in 13 of the 50 largest U.S. markets, with expectations for mid-single-digit percentage growth in community count by year-end 2025 [6] - The average cycle time for home deliveries improved to 115 calendar days, with one-third of divisions achieving 100 days or less [7] Company Strategy and Development Direction - The company aims to deepen its market share in existing markets while controlling costs and maintaining an adequate supply of land [18] - The strategy includes investing in people, processes, and systems to drive operational improvements, with expectations for growth to be realized once the market normalizes [6][18] Management's Comments on Operating Environment and Future Outlook - Management noted that while home buyer demand has been muted due to economic uncertainty, there is pent-up demand for affordable homes supported by demographic trends [5] - The company expects that any interest rate relief and improvement in consumer confidence will unlock buyer demand [5] Other Important Information - The company repurchased $20 million of its shares in Q3, totaling 6% of shares outstanding year-to-date [4][17] - The company completed a private offering of $500 million in senior notes, providing flexibility with leverage management [17] Q&A Session Summary Question: Adjusted gross margin performance - Management attributed the adjusted gross margin exceeding guidance to successful cost controls and lower direct costs, despite increased incentives [20] Question: Impact of adjustable-rate mortgages (ARMs) - Management noted a significant increase in ARMs usage among buyers, which helps address affordability challenges, and expects this trend to continue [21] Question: Community count guidance - Management confirmed a mid-single-digit increase in community count by year-end, indicating a significant ramp-up in Q4 [25][26] Question: Consumer behavior and incentives - Management observed cautious consumer behavior, particularly at entry-level price points, and anticipates increased incentives in Q4 due to competition [28] Question: SG&A cost reductions - Management highlighted operational efficiencies and headcount adjustments as key drivers for lower SG&A costs, with a focus on maintaining efficiency going forward [32][33] Question: Lot abandonment and future projects - Management explained that they are underwriting to current market conditions, leading to the exit from certain projects, while maintaining a steady owned lot count [35] Question: Average sales price dynamics - Management clarified that the sequential lift in average sales price was primarily driven by a favorable mix of deliveries rather than incentives [38] Question: Tariff impact for next year - Management stated it is too early to estimate the impact of tariffs for next year, as the situation remains fluid [41]

Financial Data and Key Metrics Changes - In Q3 2025, pre-tax income was $48 million and net income was $37 million, representing increases of 7% and 10% sequentially respectively [15] - Adjusted net income was $46 million or $1.52 per diluted share, while EBITDA for the quarter was $70 million and adjusted EBITDA was $82 million [15] - Home sales revenues were $955 million, down 2% sequentially, with deliveries of 2,486 homes declining by 4% [15][17] - The average sales price increased by 2% to $384,000, benefiting from a higher percentage of deliveries from the West and Mountain regions [15] Business Line Data and Key Metrics Changes - Adjusted home building gross margin was 20.1%, up from 20% in Q2, driven by lower direct costs offsetting higher incentives [17] - The company started 2,440 homes in Q3 and maintained a focus on matching starts with sales [11] - The ending community count increased by 5% year-over-year to 321 communities, with expectations for mid-single-digit growth by year-end 2025 [12][21] Market Data and Key Metrics Changes - Net new contracts for Q3 were 2,386 homes, a decline of 6% sequentially, but better than the historical average decline of 9% [10] - Customer satisfaction scores reached all-time highs, leading to more referrals and lower warranty costs [10] - The company observed a shift in mortgage types, with adjustable-rate mortgages (ARMs) accounting for close to 20% of originated mortgages in Q3, up from less than 5% in Q1 [13] Company Strategy and Development Direction - The company aims to deepen its market share in existing markets, with a goal of increasing community count and controlling costs [5][21] - Investments in people, processes, and systems are expected to drive future improvements, with confidence that the value of these investments will be realized once the market normalizes [6] - The company remains disciplined in land acquisitions, adjusting to current market conditions and seeing reductions in raw land and development costs [13] Management's Comments on Operating Environment and Future Outlook - Management noted that home buyer demand has been muted due to weaker consumer confidence, but there is pent-up demand for affordable homes [5] - The company expects that any interest rate relief and improvement in consumer confidence will unlock buyer demand [5] - Management anticipates that incentives will be the largest driver of changes to gross margins in the near term, with expectations for an increase in incentives in Q4 [11][21] Other Important Information - The company completed a private offering of $500 million of 2033 notes, using the proceeds to redeem $500 million of 2027 senior notes, providing flexibility with leverage management [20] - The company maintained a quarterly cash dividend of $0.29 per share and repurchased 297,000 shares for $20 million [20] Q&A Session Summary Question: Regarding adjusted gross margin performance - Management attributed the better-than-expected adjusted gross margin to successful cost controls and lower direct costs, despite some pressures from increased incentives [24] Question: Impact of adjustable-rate mortgages on business - Management noted that ARMs have gained wider acceptance, particularly among first-time home buyers, and expect this trend to continue into Q4 [26] Question: Community count guidance and ramp-up in Q4 - Management confirmed the community count is expected to increase by around 5% year-over-year, with consistent monitoring of community developments [30] Question: Consumer behavior and incentives - Management observed a cautious consumer environment, particularly at entry-level price points, and anticipates increased incentives in Q4 due to competition among builders [34] Question: SG&A cost reductions - Management highlighted various cost control activities contributing to lower SG&A costs, including operational efficiencies and headcount adjustments [38] Question: Lots walked away from during the quarter - Management explained that they are underwriting to current market conditions and have exited certain near-term projects that did not fit current underwriting standards [40]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported a pretax income of $48 million and a net income of $37 million, representing a 710% increase sequentially [15] - Adjusted net income was $46 million or $1.52 per diluted share, while EBITDA for the quarter was $70 million and adjusted EBITDA was $82 million [16] - Home sales revenues for Q3 were $955 million, down 2% sequentially, with deliveries of 2,486 homes declining by 4% [16] - The average sales price increased by 2% quarter over quarter to $384,000, benefiting from a higher percentage of deliveries from the West and Mountain regions [16] Business Line Data and Key Metrics Changes - The adjusted homebuilding gross margin was 20.1%, up from 20% in Q2, while GAAP homebuilding gross margin increased to 17.9% from 17.6% [17] - Direct construction costs decreased by 3% year to date, contributing to improved margins despite higher incentives [10][15] - Net new contracts of 2,386 homes declined by 6% sequentially, which was better than the historical average decline of 9% [11] Market Data and Key Metrics Changes - The company ended Q3 with a community count of 321, which increased by 5% year over year [12] - The finished lot costs increased in the mid-single digit range year over year and sequentially, but are expected to remain flat in Q4 [13] - Adjustable rate mortgages (ARMs) accounted for close to 20% of the mortgages originated in Q3, up from less than 5% in Q1 [14] Company Strategy and Development Direction - The company aims to increase its community count by mid-single digits by year-end 2025, focusing on increasing market share in existing markets [6][7] - The strategy includes maintaining cost controls, improving operational efficiencies, and investing in processes and systems for future growth [7][10] - The company plans to continue repurchasing shares and maintaining dividends while navigating current market headwinds [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted that homebuyer demand has been muted due to weaker consumer confidence, but there is pent-up demand for affordable homes [6] - The expectation is that any relief in interest rates and improvement in consumer confidence will unlock buyer demand [6] - The company anticipates that incentives will be the largest driver of changes to gross margins in the near term, with an expected increase in incentives for Q4 [12][19] Other Important Information - The company completed a private offering of $500 million of senior notes due 2033, using proceeds to redeem existing senior notes due 2027 [20] - The tax rate for Q3 was 21.8%, driven by 45L tax credits received in excess of previous estimates, with a full-year tax rate expected between 24.5% and 25.5% [20] Q&A Session Summary Question: Regarding the adjusted gross margin exceeding guidance, was this due to cost controls or reduced incentives? - Management indicated that the margin improvement was due to a combination of prudent cost controls and moderated incentives, with direct costs down 3% year to date [25][26] Question: How will the shift in buyers' use of adjustable rate mortgages impact the business? - Management noted that ARMs have gained acceptance, particularly among first-time homebuyers, allowing for lower initial rates without needing to buy down a fixed rate for 30 years [27][28] Question: Can you clarify the community count guidance and the expected ramp-up in Q4? - Management confirmed that the community count is expected to increase by around 5% year over year, with consistent monitoring throughout the year [30][32] Question: What is the outlook for SG&A costs and the factors driving lower costs year over year? - Management highlighted operational efficiencies and headcount adjustments as key factors, with a focus on maintaining efficiency in the competitive market [37][39] Question: Can you provide more details on the lots the company walked away from this quarter? - Management explained that they are underwriting to current market conditions and have exited near-term projects that did not fit current underwriting criteria [40][41]

Company Overview - Century Communities operates in 16 states and over 45 markets across the U S [9] - The company reported revenues of $4 2 billion for the last twelve months ending in Q3 2025 [14] - As of September 30, 2025, the company has 62,239 lots [14] Financial Performance & Growth - Total revenues increased by 64% from $2 5 billion in 2019 to $4 2 billion in LTM Q3 2025 [25] - EBITDA increased by 78% from $207 million in 2019 to $369 million in LTM Q3 2025 [25] - Book Value Per Share increased by 173% from $32 11 in 2019 to $87 74 in Q3 2025 [25] - Net Income increased by 90% from $113 million in 2019 to $214 million in LTM Q3 2025 [25] - Home sale deliveries increased by 32% from 8,000 in 2019 to 10,555 in LTM Q3 2025 [25] - The company repurchased approximately 6 2% of shares outstanding at the beginning of the year [23] Business Strategy & Operations - 94% of total company home deliveries are priced below FHA limits [30] - 99% of total company home deliveries are spec builds [32] - The company maintains a significant liquidity position of $836 million [43] - Financial Services revenues were $88 million with pretax income of $20 million in LTM 3Q 2025 [47]

Financial Performance - Deliveries totaled 2,486 homes, generating total revenues of $980.3 million, with home sales revenues of $955.2 million [3]. - Net income for the third quarter 2025 was $37.4 million, or $1.25 per diluted share, while adjusted net income was $45.7 million, or $1.52 per diluted share [4]. - Adjusted net income for the three months ended September 30, 2025, was $45.7 million, down 48.2% from $88.6 million in 2024, with adjusted diluted earnings per share of $1.52 compared to $2.77 [27]. - Net income for Q3 2025 was $37,403, a decrease of 54.9% compared to $83,020 in Q3 2024 [34]. - EBITDA for Q3 2025 was $69,724, down 47.3% from $132,307 in Q3 2024 [34]. - Adjusted EBITDA for Q3 2025 was $82,254, reflecting a 40.9% decline from $139,250 in Q3 2024 [34]. Home Deliveries and Sales - Home deliveries for the three months ended September 30, 2025, totaled 2,486 homes, a decrease of 12.3% compared to 2,834 homes in 2024, with an average sales price of $384.2 thousand, down 2.4% [21]. - Full year 2025 home delivery guidance was narrowed to a range of 10,000 to 10,250 homes, with home sales revenues expected to be between $3.8 billion and $3.9 billion [10]. - Total net new home contracts decreased by 6.9% year-over-year to 2,386 for the three months ended September 30, 2025, and by 7.1% to 7,624 for the nine months ended September 30, 2025 [20]. - The backlog as of September 30, 2025, was 1,117 homes valued at $416.9 million, representing a 29.3% decrease in homes and a 37.9% decrease in dollar value compared to 1,580 homes valued at $671.4 million in 2024 [23]. Financial Position and Equity - The company ended the quarter with $2.6 billion of stockholders' equity and $836 million of liquidity, including $174.8 million in cash [8]. - The book value per share reached a company record of $87.74 as of September 30, 2025 [8]. - Total stockholders' equity decreased to $2,578,022 as of September 30, 2025, down from $2,620,856 at the end of 2024 [38]. Debt and Margins - The adjusted homebuilding gross margin was 20.1%, consistent with the second quarter 2025 levels, while the overall homebuilding gross margin was 17.9% [6]. - The company reported a homebuilding gross margin of $171.4 million for the three months ended September 30, 2025, which is 17.9% of home sales revenues, down from 21.7% in 2024 [31]. - Homebuilding debt to capital ratio was 34.5%, and net homebuilding debt to net capital ratio was 31.4% [9]. - The ratio of net homebuilding debt to net capital increased to 31.4% as of September 30, 2025, compared to 27.4% at the end of 2024 [38]. - Total homebuilding debt rose to $1,355,219 as of September 30, 2025, up from $1,140,973 at the end of 2024 [38]. Inventory and Community Development - Lot inventory as of September 30, 2025, totaled 62,239 lots, a decrease of 22.3% from 80,121 lots in 2024, with owned lots increasing by 2.2% [24]. - The number of selling communities increased by 5.2% to 321 as of September 30, 2025, compared to 305 in 2024, with the West region seeing a 40.7% increase [22]. Other Financial Metrics - Financial services revenues were $19.4 million, with pre-tax income of $3.0 million for the third quarter [7]. - The company repurchased 296,903 shares of common stock for $20.0 million, reducing shares outstanding by 6% from the beginning of the year [4]. - Inventory impairment for Q3 2025 was $3,180, a significant increase of 131.6% from $1,373 in Q3 2024 [34]. - The company reported a loss on debt extinguishment of $1,361 in Q3 2025, with no comparable figure in Q3 2024 [34]. - Interest expense for Q3 2025 was $876, compared to an income of $(369) in Q3 2024, marking a 337.4% change [34]. - The company incurred restructuring costs of $1,505 during the nine months ended September 30, 2025, with no such costs reported in the prior period [34].

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