Century Communities, Inc. Q4 FY2024 earnings call

• Full year 2024 deliveries and community count reached records, with deliveries up 15% and community count up 28%.
• Adjusted gross margin increased 80 basis points to 23.3% in full year 2024, and SG&A as % of home sales revenue was reduced by 40 basis points.
• Returned capital to shareholders through share repurchases (over 3% of shares outstanding at start of 2024) and 13% dividend increase.
• Succession planning: Dale Francescon moved to Executive Chairman, Rob Francescon became sole CEO.
• Geographically balanced land portfolio across 17 states and 45+ markets, with community count expected to increase mid to high single-digit in 2025.
• Spec home model used, with 92% of Q4 deliveries priced below FHA limits, and captive mortgage subsidiary helping with affordable financing.

In the fourth quarter of 2024, home sales revenue was $1.2 billion, a quarterly record, with deliveries of 3,198 homes also a quarterly record. Full year 2024 deliveries increased 15% year-over-year to 11,007 homes, and community count grew 28% to 322 communities. Adjusted gross margin for full year 2024 was 23.3%, an 80 basis point increase. SG&A as a percentage of home sales revenue was reduced by 40 basis points. Financial services revenue in the fourth quarter was $26.2 million, and Century Living contributed other income from a project sale. Home sales revenue for full year 2024 was driven by these segments, with deliveries and average sales price contributing to growth.

• Full year 2025 deliveries expected to be in the range of 11,700 to 12,400 homes.
• Home sales revenue expected to be in the range of $4.5 billion to $4.8 billion.
• Expect delivery growth of approximately 10% year-over-year at midpoint of guidance, driven by increased lot and community count, and leveraging existing market share.

• Mortgage rate volatility impacting housing affordability.
• Potential impacts from labor issues or policy changes (e.g., deportation rhetoric) on construction labor, though no impacts seen to-date.
• Risks associated with regional downturns given geographically balanced portfolio, but regions like Florida and Texas combined only accounted for 31% of 2024 deliveries.

Q: Could you talk about differences in traffic levels or incentives between communities and complete product types, and mix outlook for 2025?

A: Scott Dixon said no significant difference in incentives seen, expecting both brands to grow with no significant mix changes in 2025 P&L.

Q: What incentive levels are currently being put on?

A: Rob Francescon said incentives are around 900 basis points, consistent with Q4 levels.

Q: Are there potential M&A deals in 2025?

A: Rob Francescon said always looking at deals with stringent underwriting criteria, two acquisitions in 2024 were within footprint, TBD on 2025 deals.

Q: At what point would base price adjustments be considered if absorption is flat?

A: Scott Dixon said spec model helps right-size inventory, bullish on spring selling season, and levers like cost control, land costs, and square footage moderation can be adjusted.

Q: Impact of labor issues/tariffs?

A: Rob Francescon said no impacts seen to-date, but early on unfolding, controlling what can be controlled for now.

Q: Relative strength across regions and markets?

A: Scott Dixon said West, Mountain regions strong, Texas market has healthy supply at price point, Southern California and Atlanta strong markets.

Q: ASP outlook for 2025?

A: Scott Dixon said 2025 guide implies flat to slightly down ASP, focusing on affordability, with potential appreciation in longer term.

Q: Share repurchase strategy?

A: Dale Francescon said strategy is to ensure share count doesn't creep up, opportunistic with buying when opportunities arise.

Q: Guide for deliveries in 2025 doesn't presume additional acquisitions?

A: Scott Dixon said correct, guide doesn't presume additional acquisitions beyond those already made.