Century Communities, Inc. Q4 FY2025 earnings call

• Dale Francescon: Pleased with accomplishments in challenging new home market, closed year exceeding guidance on most metrics, delivered 10,792 residential units, repurchased over 7% of shares, invested $1.2 billion in land, ended year with record book value per share, reduced net leverage, generated cash flow from operations over $150 million.
• Rob Francescon: Fourth quarter net new contracts of 2,702 homes were a record, absorption rates improved, incentives adjusted, operations performed well with reduced direct construction costs and cycle times, community count increased, land position supportive of growth with attractive cost basis and flexible land option strategy.
• Scott Dixon: Fourth quarter pretax income $47 million, net income $36 million; home sales revenues up sequentially; deliveries in 2026 expected range; SG&A expenses managed, financial services revenues and pretax income noted, cash flow from operations positive, dividends and share repurchases returned record $178 million to shareholders.

In the fourth quarter, home sales revenues were $1.1 billion, up 16% sequentially. Deliveries of 3,030 new homes increased 22% sequentially, with an average sales price of $367,000, down 5% quarter-over-quarter. Revenues from the Century Living segment benefited from the sale of a 300-unit multifamily community for $97 million in the fourth quarter. For the full year, 10,792 residential units were delivered, including 3,030 new homes, 105 previously leased rental homes, and 300 multifamily units through Century Living. Home sales revenues for the full year and delivery figures contributed to the overall financial performance of the company's segments.

• Full-year 2026 new home deliveries expected in range of 10,011 homes and home sales revenues in range of $3.6 billion to $4.1 billion.
• 2026 new home deliveries expected to range from 2,100 to 2,300 homes in the first quarter.
• SG&A as a percent of home sales revenue expected to be roughly 13% for full year 2026 and 14.5% for the first quarter of 2026.
• Contribution margin from financial services in 2026 anticipated to be similar to 2025 levels.
• Full-year tax rate for 2026 expected to be in range of 25% to 26%.

• Certain statements made are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially, such as economic environment, interest rates, consumer confidence, governmental support for homebuyers, and risks associated with land strategy including land banking and market conditions.

Q: Hi, guys. Thank you for taking my question. So wanted to kind of dial in on and clarify maybe some of the comments you made. You gave a lot of great color. I mean, I believe you guys were intimating maybe the spring selling season might look a little bit stronger year over year. I mean, I'd love to kind of dive into that and just kind of what you're seeing from the consumer and how the consumer is behaving alongside kind of, you know, potentially reduced incentives.

A: Yeah. So, Andrew, so far in January, our sales pace, as we mentioned, has actually been slower versus the year-ago period. However, the order activity has improved sequentially over the first three weeks of January. And when we look at our potential leads, they have actually gone up as well. So and those take some time to anywhere from fifteen to forty-five days depending on the situation. So we're hopeful that that will start picking up. You know, and as you know, last year, spring selling season, while everyone was very hopeful that we were gonna have a great spring selling season, it did not mature, and it did not turn out that way. So we're hopeful this year that that's gonna be the case. There's obviously a lot of publicity and PR out there on a variety of fronts right now on housing. And so we're hopeful that that will be tailwinds for us going into the spring sign and it will be better.

Q: Hey, guys. Thank you for taking my questions. I guess the first one maybe drilling down on the gross margin a little bit. Do you think that it's going to be in line to maybe a little worse than the fourth quarter? Is that what I'm hearing?

A: Jay, this is Scott. I'll take that one and great to have you and congrats on your new role, obviously. Just some good, you know, commentary from a gross margin perspective, really. Really, what you're seeing come through the fourth-quarter margins is an intentionality on our perspective to really focus on some close-up communities. And really move some units. We ended up from a sales pace over 2,700 units which is a 16% increase quarter over quarter from pace. So we were pretty focused on the incentives side of the lever here in the first quarter. And, really, we've been taking a more balanced approach all in, and I think you'll see us revert back to that as we get into next year. Obviously, we'll see where the spring selling season is at and where the consumer is at. But I think as we get into the first quarter, that's reflective in the commentary that we do think you'll see a slight pullback of about 50 basis points from our current incentive levels in Q4.

Q: Hey. Good afternoon. Thank you for taking my question. So if I'm not mistaken, you said that SG&A as a share of sales is going to be 14.5% in 1Q 2026. Is that correct?

A: That's correct. 14.5% in Q1 2026.

Q: Thank you, and I appreciate the, and all the information you provided on this call. It's very helpful. First question, it sounds like, obviously, the fourth quarter, that's margin headwind from higher incentives on closeouts. But was there any pressure from the sale of the Century Living units?

A: Alex, specifically, the sale of the Century Living units is not included in the gross margin. Nor are they included in the incentive commentary that we provided.