Colorado-based builder Century Communities took its turn late Thursday releasing its third-quarter financial report and showed big gains in home deliveries, home building gross margins, and new home contracts.
Posting a 156% net income growth (currently $10.6 million) and a 99% total revenue increase to $182.7 million, Century’s Chairman and Co-CEO Dale Francescon was happy with his company’s performance. “Our positive results for the third quarter reflect our sustained efforts to deliver on our stated goals to significantly grow revenue and increase our profitability,” he said in a release. “We were especially pleased with our ability to more than double our net income to $10.6 million. We further contained our SG&A costs to achieve additional operating leverage on our scalable platform, in line with our commitment to effectively manage costs, while improving our adjusted gross margin percentage on a sequential basis.”
Home building gross margin grew 93% to $38.3 million, home deliveries jumped 124% to 578, and new home contracts increased 93% to 477. The average selling price of homes delivered was $311,031, up sequentially from $293,722 and compared to $351,687 in the prior year quarter, largely due to a shift in regional and product mix from new communities and acquisitions, according to the report.
Despite the sizable gains, J.P. Morgan’s Michael Rehaut rates the company’s performance as neutral due to third-quarter new home orders missing estimates. Rehaut had Century, a builder of single-family homes, townhomes, and flats in select major metropolitan markets in Colorado, Texas, Nevada, and Georgia, pegged for 610 new home orders while the company had 477.
Century maintains its neutral rating, said Rehaut, because its performance “fairly reflects not only our earnings outlook but also some upside potential as the company will likely continue to execute an accretive M&A strategy as it builds out its geographic footprint.” Century did post a 3Q EPS of $0.50, solidly above Rehaut’s $0.39 estimate and the Street’s $0.43.
According to Rehaut, CCS narrowed its 2015 closings outlook to 2,350 to 2,500 from 2,200 to 2,600 and its home building revenue outlook to $700-$750 million from $650-$800 million – effectively reiterating both midpoints – as it noted that while it is experiencing some delays due to labor shortages, its previous guidance had already reflected expectations for potential delays. The company also increased its fourth quarter active community count outlook to 90 to 95 from 80 to 90 previously.
Co-CEO said Rob Francescon said Century is well positioned heading into next year. “We ended the quarter with a high quality backlog of 904 homes, up 92% compared to a year ago, representing $325 million of backlog dollar value,” he said. “As we prepare to enter 2016, we have a strong pipeline of over 13,000 lots, a prudently levered balance sheet and a proven track record of profitably growing our business.”