Century Communities earnings per share and revenue of $189.1 million both beat the expectations of analysts surveyed by Zacks Investment Research.
Century’s second quarter orders rose to 718, which is up 156% year-over-year, but below J.P. Morgan’s Michael Rehaut prediction of 950, or up 238%. Century boasted a 202% increase in community count, to 88, which beat Rehaut’s prediction of 85 communities. Century’s sales pace saw a 20% decline in absorption, to 8.2 sales per community. Rehaut predicted 11.2 sales per community, though noted the builder faced some tough comps from 2014.
Century’s gross margins of 19.6% fell below Rehaut’s forecast of 19.4%.
“The year-over-year decline was mostly driven by a shift in both regional and product mix, as for example, its recent Peachtree acquisition, which focuses on first-time buyers, has a lower gross margin and represented 50% of 2Q15 closings,” he wrote.
Weather was a factor for the builder in the second quarter. On average, it lost 70 days to wet weather in Texas (which will shift some closing to the third quarter) and lost 75 days to pour concrete in Colorado.
Still Century hit some key metrics in the quarter.
“We entered 2015 with a goal for the full year to more than double our home sales revenues and home deliveries, while opening additional communities and improving our profitability,” Dale Francescon, Chairman and CEO on the company’s earnings call. “Year-to-date we have achieved record results, sold and delivered more homes than we did in the entire year 2014 and are well on our way to accomplishing our goals and delivering another consecutive year of profitability.”
Though it beat some key estimates, things didn’t go exactly as planned for Century.
- Here are some highlights from the quarter:
- Net income of $9.8 million, an increase of 84%
- Pre-tax income of $14.4 million, an increase of 79%
- Total revenue of $ 189.0 million, an increase of 137%
- Home deliveries increased 221% to 636 homes
- Home building gross margin of $36.6 million, an increase of 91%
- Net new home contracts grew to 718 homes, an increase of 156%
- Homes in backlog expanded to 1,005 homes, an increase of 155%
- Average open communities increased 175% to 88
- Open communities at the end of the quarter increased 147% to 89
Century raised its closing outlook for the year from to 2,200-2,600 from 2,000-2,500 and it increased its home building revenue $650-$800 million to $700-$800 million. Its gross margins are expected to be similar to the first half. While the company is enjoying better-than-expected success in Atlanta, Texas is becoming a troublespot.
While co-CEO Rob Francescon says Atlanta “has continued to meet or exceed our acquisition underwriting assumptions,” Texas is a different story. “We expect our ASPs in Texas to continue to fluctuate from quarter-to-quarter based on product mix and while we experience near term slowing, we still remain encouraged by the long term prospects in all of our Texas markets,” he said on the earnings call.