Century Communities, Inc., Greenwood Village, Colorado (NYSE: CCS) reported net income for the second quarter ended June 30 of $15.5 million, or $0.51 per diluted share, compared to $33.2 million or $1.10 per diluted share for the prior year quarter. Adjusted net income was $23.6 million, or $0.77 per diluted share for its second quarter ended June 30, 2019. Analysts were expecting a gain of $0.74 per share.
Home sales revenues for the second quarter increased 17% to a second quarter record $608.6 million, compared to $522.2 million for the prior year quarter. The growth in home sales revenues was primarily attributable to a 42% increase in home deliveries to a second quarter record 1,967 homes compared to 1,384 homes for the prior year quarter. Average sales price of home deliveries for the second quarter 2019 was $309,400, compared to $377,300 in the prior year quarter, consistent with the company’s expansion of its offering of lower priced homes.
Net new home contracts in the second quarter 2019 increased 41% to a record 2,182 homes, compared to 1,543 homes in the prior year quarter. At the end of the second quarter 2019, the Company had 2,591 homes in backlog, with a value of $784.2 million.
Adjusted net income for the first quarter was $23.6 million, or $0.77 per diluted share, as compared to $36.5 million, or $1.21 per diluted share, for the prior year quarter. Adjusted net income excludes the impact of one-time items associated with a debt refinancing and home builder acquisitions. The year over year difference in net income was primarily attributable to one-time non-operational items: a loss on debt extinguishment in the current period and a gain on the acquisition of Wade Jurney Homes in the prior year period.
Adjusted home building gross margin percentage, excluding interest and purchase price accounting, was 19.6% in the second quarter 2019, as compared to 22.3% in the prior year quarter, which benefited from a particularly favorable product mix. Home building gross margin percentage in the second quarter 2019 was 17.2%, as compared to 18.2% in the prior year quarter, largely attributable to product mix and higher incentives, primarily on homes sold in the prior two quarters when incentives were at their highest. SG&A as a percent of home sales revenues was 12.4%, compared to 12.2% in the prior year quarter, due to relocation and integration costs related to Wade Jurney Homes and certain litigation settlements.
Financial services generated pre-tax income of $2.2 million in the second quarter 2019 as compared to $2.6 million in the prior year quarter due to reduced gains on sales of loans as a result of a declining interest rate environment.
During the second quarter of 2019, the company completed an offering of $500 million in aggregate principal of 6.750% Senior Notes due 2027. In connection with this offering, the $385 million 6.875% senior notes due 2022 were extinguished and incurred approximately $10.8 million as a result of the associated call premium, tender costs and write-off of unamortized issuance costs.
As of June 30, 2019, the company had total assets of $2.4 billion, including cash of $57.5 million and inventories of $2.0 billion. Liabilities totaled $1.5 billion, which included $1.1 billion of long-term debt. As of June 30, 2019, the company had a record $897 million of stockholders’ equity, a 12% increase over the prior year quarter, and $428 million of capacity under its credit facility.
David Messenger, Chief Financial Officer of the Company, commented, “Given our year-to-date over performance and continued confidence in our strategy, we are increasing our full year outlook for home deliveries to be in the range of 7,500 to 8,000 homes and our home sales revenues to be in the range of $2.3 billion to $2.5 billion.”
Dale Francescon, co-CEO, stated, “As the second quarter progressed, we experienced meaningful improvement in new contracts as lower interest rates and better affordability, a trend which has continued into July, bolstered buyer activity across nearly all markets within our national platform. We remain committed to driving further efficiencies throughout our operations and continuing to invest in attractive land opportunities to deepen our presence in existing markets. Our solid performance year-to-date combined with housing market momentum leaves us well situated to achieve our 2019 growth objectives.”
Rob Francescon, co-CEO, said, “We are encouraged by the recent uptick in buyer traffic which resulted in a record 2,182 net new home contracts. During the quarter we opened new communities with appealing designs and amenities across all of our regions with a continued emphasis on the entry level price points. In our asset-light, Wade Jurney Homes business we experienced strong momentum during the quarter and expanded operations into Iowa and Michigan which represent the 16th and 17th states in our diversified footprint. With our strong balance sheet, attractive land positions and Wade Jurney Homes integration progressing as planned, we are pleased with the position of our company.”
