Century Communities, Inc. reported its financial results for the three and nine months ended September 30, 2024. The company’s revenue increased by 14.1% to $1.23 billion for the nine months ended September 30, 2024, compared to $1.08 billion for the same period in 2023. Net income for the nine months ended September 30, 2024 was $143.1 million, or $4.55 per diluted share, compared to $114.8 million, or $3.73 per diluted share, for the same period in 2023. The company’s cash and cash equivalents increased to $343.1 million as of September 30, 2024, compared to $244.1 million as of December 31, 2023. Century Communities, Inc. also reported a decrease in its debt-to-equity ratio to 0.43 as of September 30, 2024, compared to 0.51 as of December 31, 2023.
Century Communities Reports Strong Third Quarter Results
Century Communities, a leading homebuilder, has reported impressive financial results for the third quarter of 2024. The company generated $109.9 million in income before income tax expense, up from $112.0 million in the same period last year. Net income was $83.0 million, or $2.59 per diluted share, compared to $83.2 million, or $2.58 per diluted share, in the prior year quarter.
Revenue Growth Across All Segments
Century Communities’ total revenues increased 27.8% to $1.1 billion during the third quarter, driven primarily by a 25.2% increase in the number of homes delivered and a 3.1% increase in average sales prices. The company delivered 2,834 homes, up from 2,264 in the prior year quarter, with an average sales price of $393.8 thousand, up from $382.1 thousand.
The company’s five reportable segments all contributed to the revenue growth:
Segment | Q3 2024 Homes Delivered | Q3 2023 Homes Delivered | % Change |
---|---|---|---|
West | 363 | 281 | 29.2% |
Mountain | 513 | 415 | 23.6% |
Texas | 530 | 382 | 38.7% |
Southeast | 427 | 378 | 13.0% |
Century Complete | 1,001 | 808 | 23.9% |
The increases in home deliveries were driven by more homes under construction, while the higher average sales prices reflected the mix of deliveries within individual communities.
Profitability Remains Strong
Century Communities’ homebuilding gross margin percentage decreased to 21.7% in the third quarter, compared to 24.6% in the prior year quarter, primarily due to higher incentives offered in the current period. However, the company’s adjusted homebuilding gross margin, which excludes the impact of interest, inventory impairment, and purchase price accounting, was 23.6%, compared to 25.8% in the prior year quarter.
The company’s selling, general, and administrative (SG&A) expenses increased $21.1 million, or 18.8%, during the quarter, primarily due to higher commission expenses associated with the increase in home sales revenue and increased compensation and other costs related to the company’s expanded active community count. As a percentage of home sales revenue, SG&A expenses decreased from 12.9% to 11.9%, reflecting the company’s ability to leverage its fixed cost base.
Financial Services Segment Faces Headwinds
Century Communities’ Financial Services segment, which provides mortgage, title, insurance, and escrow services primarily to the company’s homebuyers, generated income before income tax of $3.1 million, a decrease of 74.8% compared to the prior year quarter. The decrease was primarily driven by lower margins on mortgages originated due to a more competitive market, as well as a decrease in the fair value of the company’s mortgage servicing rights portfolio.
The number of mortgages originated by the Financial Services segment increased 45.5% during the quarter, and the number of loans sold to third parties increased 35.5%. However, these volume increases were not enough to offset the margin compression and fair value adjustments.
Continued Investments in Land and Acquisitions
During the nine months ended September 30, 2024, Century Communities continued to strategically increase its lot pipeline, both organically and through acquisitions. The company ended the quarter with 80,121 lots owned and controlled, up from 73,720 at the end of 2023.
The company also completed two acquisitions during 2024. In July, it acquired substantially all the assets and operations of Anglia Homes LP, a homebuilder in the Houston, Texas area, for approximately $127.0 million. In January, it acquired substantially all the assets and assumed certain liabilities of Landmark Homes of Tennessee, Inc., a homebuilder in the Nashville, Tennessee market, for approximately $33.4 million.
These acquisitions have expanded the company’s geographic footprint and added to its land and lot inventory, positioning it for continued growth.
Strong Liquidity and Capital Position
Century Communities ended the third quarter with $149.2 million in cash and cash equivalents and $70.8 million in cash held in escrow. The company had $414.0 million outstanding under its $800.0 million revolving line of credit, resulting in a net homebuilding debt to net capital ratio of 32.1%.
During the nine months ended September 30, 2024, the company paid quarterly cash dividends of $0.26 per share, a 13% increase from the prior year period. The company also continued its stock repurchase program, repurchasing 651.9 thousand shares for a total of $53.1 million during the nine-month period.
Outlook and Risks
While the homebuilding market remains uncertain, with potential headwinds from factors like inflation, interest rate changes, and economic conditions, Century Communities believes it is well-positioned to navigate these challenges. The company’s focus on affordable housing, diversified product offerings, and strategic land and acquisition activities have helped it maintain a strong competitive position.
However, the company acknowledges that future demand for its homes remains uncertain and could be impacted by a variety of macroeconomic and market factors, including:
To mitigate these risks, Century Communities has continued to focus on maintaining an appropriate balance of home and land inventories, as well as prudent leverage. The company believes it is well-positioned to continue executing on its strategy and optimizing stockholder returns, despite the uncertain market conditions.
Conclusion
Century Communities has delivered another strong quarter, with robust revenue growth, solid profitability, and continued investments in land and acquisitions. While the company faces some headwinds in its Financial Services segment and uncertainty in the broader housing market, its focus on affordable housing, diversified product offerings, and strategic capital allocation have positioned it well for the future. Investors will be closely watching the company’s ability to navigate the evolving market conditions and capitalize on opportunities as they arise.