Financial Data and Key Metrics Changes - In Q1 2025, the company reported a pretax income of $53 million and a net income of $39 million, translating to $1.26 per diluted share, with adjusted net income at $42 million or $1.36 per diluted share [18] - Home sales revenues for Q1 were $884 million, down 4% year-over-year, primarily due to lower deliveries and average sales price [19] - The average sales price in Q1 was $387,000, a 1% decrease year-over-year, attributed to higher incentives [19] - The adjusted homebuilding gross margin was 21.6%, down from 22.9% in Q4 2024, while GAAP gross margin was 19.9%, compared to 20.6% in the previous quarter [20] Business Line Data and Key Metrics Changes - Deliveries in Q1 totaled 2,284 homes, a 3% decline from the previous year, influenced by a strategy to manage starts at a lower level [19] - Net new contracts for Q1 were 2,692 homes, a 6% decline compared to the previous year but a 33% increase over Q1 2023 [8] - The company maintained stable homebuilding gross margins of 20.1%, easing by only 80 basis points sequentially [7] Market Data and Key Metrics Changes - The absorption rate averaged 2.8 in Q1 2025, with a sequential increase in February and March, but April's rate is trending below Q1 levels [8] - The company noted that Texas had the lowest absorption performance at 2.1, impacting overall results [30] Company Strategy and Development Direction - The company aims to balance pace and price while managing construction costs and incentives, targeting a growth in deliveries of approximately 10% annually over the next several years [9] - The company is focused on maintaining an appropriate level of spec inventory and matching starts with sales pace [9] - The land strategy involves low-risk, land-light agreements with landowners, minimizing upfront costs and risk exposure [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty, interest rate volatility, and eroding consumer confidence affecting the spring selling season [6] - The company expects to see further sequential increases in deliveries in the latter half of 2025, supported by community count growth [24] - Management remains optimistic about long-term demand, despite current market challenges, and is taking steps to address headwinds [24] Other Important Information - The company was recognized on Newsweek's list of America's most trustworthy companies for the third consecutive year [10] - The company increased its quarterly cash dividend by 12% to $0.29 per share and repurchased 753,000 shares for $56 million at a discount to book value [23] Q&A Session Summary Question: Absorption rate differences between Century Complete and regional businesses - Management noted that Century Complete operates in markets with less direct competition, leading to a more stable absorption profile compared to regional businesses [29] Question: Pricing strategies for moving product - Management indicated that they are using both interest rate buy downs and price reductions to move unsold homes, anticipating a potential margin impact in Q2 [32] Question: Guidance for the back half of the year - Management expects community count growth to support higher closings in the latter half of the year, despite current headwinds [38] Question: SG&A savings from workforce reductions - Management stated that cost savings from various initiatives, including workforce reductions, are incorporated into the full-year SG&A guidance [39] Question: Pricing and incentive strategies - Management explained that pricing decisions are made based on individual subdivisions and market conditions, balancing between price cuts and incentives [85]
Century munities(CCS) - 2025 Q1 - Earnings Call Transcript