Century Communities, Inc. Q3 FY2025 earnings call

• Delivered 2,486 homes, hitting the high end of guidance. Adjusted homebuilding gross margin 20.1% was up sequentially as direct costs reductions offset higher incentives. - Refinanced 2027 senior notes with 2033 notes at lower interest rate and repurchased $20 million of shares. - Direct construction costs down 3% YTD. Cycle times improved, with one-third of divisions at 100 calendar days or less. Customer satisfaction at all-time highs. - Net new contracts 2,386, down 6% sequentially but better than historical average decline. - Incentives on closed homes in Q3 averaged ~1,100 basis points, lower than forecasted 100 basis point increase. - Finished lot costs in Q3 up mid-single digit, expected flat in Q4. Ended Q3 with over 62,000 owned and controlled lots. ARMs accounted for ~20% of mortgages originated in Q3.

In the third quarter, sales revenues were $955 million, down 2% sequentially. Deliveries were 2,486 homes, down 4% sequentially, while average sales price was $384,000, up 2% QoQ. Adjusted homebuilding gross margin was 20.1%, up sequentially. Pretax income was $48 million, net income was $37 million, or $1.25 per diluted share, up 710% sequentially. EBITDA was $70 million, adjusted EBITDA was $82 million. Backlog of sold homes at quarter-end was 1,117, valued at $417 million with an average price of $373,000.

• Narrowed full-year 2025 home delivery guidance to 10,000-10,250 homes and home sales revenues to $3.8B-$3.9B. - Expect homebuilding gross margin to ease up to 100 basis points in Q4 due to higher incentives. - SG&A expected at ~12.5% in Q4, assuming continued use of broker commissions and potential advertising spend.

• Market uncertainty impacting homebuyer demand. - Potential tariff impact not clear for next year. - Incentive levels could affect gross margins. - Land market adjustments and terms affecting finished lot costs.

Q: As it relates to your adjusted gross margin that came in a bit above your guidance, was this more due to sort of prudent cost controls? Or was it due to, you know, incentives to some of the new sales?

A: Rob Francescon said a handful of factors, direct cost savings helped, incentives increased but moderated by cost savings.

Q: Your next question comes from Rohit Seth with B. Riley Securities. On the community count guidance, you mentioned if I heard this correctly, the community count going up mid-single digit by year-end. Is that right?

A: Rob Francescon confirmed community count expected to increase mid-single digit year-over-year, implying significant ramp-up in Q4.

Q: Natalie Kulzicker with Zelman Associates asked about SG&A upside and cost drivers. What drove SG&A lower year-over-year?

A: Scott Dixon said SG&A benefits from back-office efficiencies, headcount management, and compensation-related benefits.

Q: Andrew Azzi with JPMorgan asked about order ASP and tariff impact. What drove ASP and tariff outlook?

A: Scott Dixon said ASP driven by mix, and tariff impact for next year too early to tell