Century Communities, Inc. Q1 FY2025 earnings call

• Economic challenges: Increased economic uncertainty, interest rate volatility, and eroding consumer confidence led to a slower spring selling season with weaker absorption rates and elongated sales cycles.
• Delivery and pricing: Deliveries were 2,284 homes, 3% below year-ago; average sales price down ~1%. Homebuilding gross margins were relatively stable at 20.1% excluding purchase price accounting.
• Contracts and absorption: Net new contracts totaled 2,692 homes, 6% lower y-o-y but 33% higher than Q1 2023. Absorption pace averaged 2.8 in Q1 2025, increased in Feb/March but April trending below Q1.
• Community and land: Community count ended Q1 at 318, up 26% y-o-y; expected year-end 2025 community count to increase mid-single-digit. Started 2,211 homes in Q1. Land position: ~80,000 owned/controlled lots, controlled lots 55% of total.
• Incentives and costs: Incentives on closed homes increased to ~900 basis points in Q1, expected to rise 200 basis points in Q2. Rightsized workforce in mid-April, cost savings to impact Q3/Q4.

In the first quarter of 2025, home sales revenues were $884 million, down 4% year-over-year due to lower deliveries and average sales price. Financial services revenues were $18.5 million. Deliveries totaled 2,284 homes, 3% below year-ago levels. Net new contracts were 2,692 homes, a 6% decline versus the prior year but a 33% increase over first quarter 2023 levels. Adjusted homebuilding gross margin was 21.6%, while GAAP homebuilding gross margin was 19.9%. The average sales price declined by approximately 1% year-over-year. Revenue contribution: Home sales were the primary segment, with financial services contributing a smaller portion.

• Full-year home delivery guidance reduced to 10,400-11,000 homes and home sales revenue to $4-$4.2 billion.
• Q2 deliveries expected 2,300-2,500 homes assuming absorption rate 2.8. Back half of 2025 to see sequential delivery increase.
• SG&A as % of home sales revenue expected ~12.5% midpoint of full-year guidance, 70% fixed, 30% variable.
• Tax rate expected 25%-26% in 2025, higher than 2024 due to fewer 45L credits.

• Economic uncertainty, interest rate volatility, and eroding consumer confidence impacting sales performance.
• Potential supply chain disruptions and tariff impacts, though no immediate significant cost impact currently, with awareness of potential issues.
• Slower than expected spring selling season leading to elongated sales cycles and homebuyer pauses.

Q: Carl Reichardt asked about absorption rate difference between communities and Complete, and pricing/incentive mix.

A: Rob Francescon discussed dynamics between Century and Century Complete brands, Texas market as an outlier, and incentives including interest rate buy downs and price reductions.

Q: Jay McCanless asked about closing guidance, SG&A savings, pricing.

A: Rob Francescon talked about community growth driving back half volume, SG&A savings in line with guidance, and incentives in mid-fives with 55% price, 45% incentive mix.

Q: Alan Ratner asked about incentive increase timing, absorption guide, tariffs.

A: Rob Francescon discussed recent incentive increases due to market volatility, absorption guide stability, and no significant tariff impact but awareness of potential supply chain issues.

Q: Andrew Azzi asked about demand trends, long-term 10% growth.

A: Rob Francescon talked about seasonality in demand, community count growth driving volume, and optimism about long-term demand.

Q: Ken Zener asked about incentive shift nature, starts vs orders.

A: Rob Francescon discussed incentive consistency across regions, moderation of starts to appropriate inventory levels.

Q: Alex Barron asked about cash flow use, rate buy down vs price cut decision.

A: Rob Francescon talked about capital allocation to business reinvestment and share buybacks, and balancing rate buy downs and price cuts by market/subdivision