Century Communities, Inc. (NYSE:CCS), Greenwood Village, Colorado, after market close Thursday reported net income of $26.2 million, or $0.85 per diluted share, for its fourth quarter ended December 31, 2018, a 52% gain compared with a net profit of $7.2 million, or $0.62 per share, for the prior-year quarter. Analysts were expecting a gain of $1.05.
Shares of CCS were down 3.35% in after-market trading Thursday.
Adjusted net income for the fourth quarter increased 20% to $34.4 million, or $1.11 per diluted share, as compared to $28.6 million, or $1.01 per diluted share, for the prior year quarter. Adjusted net income excludes the impact of one-time items associated with home builder acquisitions.
Net income for the fourth quarter 2018 increased 52% to $26.2 million, or $0.85 per diluted share as compared to $17.2 million or $0.60 per diluted share for the prior year quarter.
Home sales revenues for the fourth quarter 2018 increased 24% to $640.2 million, compared to $516.5 million for the prior year quarter. The growth in home sales revenues was primarily due to a 55% increase in deliveries to 2,028 homes compared to 1,311 homes for the prior year quarter. Average sales price of home deliveries for the fourth quarter 2018 was $315,700, compared to $394,000 in the prior year quarter, consistent with the company’s expansion of its offering of entry level homes.
Adjusted home building gross margin percentage, excluding interest and purchase price accounting, was consistent with our expectations at 20.4% in the fourth quarter 2018, as compared to 21.7% in the prior year quarter. Home building gross margin percentage in the fourth quarter 2018 was 16.5%, as compared to 17.6% in the prior year quarter. SG&A as a percent of home sales revenues improved to 11.4%, compared to 12.1% in the prior year quarter.
Net new home contracts in the fourth quarter 2018 increased 32% to 1,221 homes, compared to 922 homes in the prior year quarter, attributable to stronger demand trends within the Texas Region and the benefit of our Wade Jurney Homes acquisition, partly offset by softer demand trends in the company’s other regions. At the end of the fourth quarter 2018, the company had 2,181 homes in backlog, representing $669.5 million of backlog dollar value, compared to 1,320 homes in backlog, representing $572.9 million of backlog dollar value in the prior year quarter, an increase of 65% in units and 17% in dollar value.
Financial services generated pre-tax income of $3.3 million in the fourth quarter 2018 as compared to $1.1 million in the prior year quarter.
Full Year 2018 Results
Net income for the full year 2018 was $96.5 million, or $3.17 per share compared to $50.3 million, or $2.03 per share a year earlier.
Home sales revenues for 2018 increased 50% to $2.1 billion, compared to $1.4 billion for 2017. The increase in home sales revenues was primarily due to home deliveries increasing 68% to 6,099 homes. On a pro forma basis, including Wade Jurney Homes for the entire year, our revenues and deliveries would have been $2.3 billion and 7,092, respectively. Average selling price of homes delivered decreased to $346,000 compared to $386,100 in the prior year, consistent with the company’s expansion of its offering of entry level homes.
Adjusted home building gross margin percentage, excluding purchase price accounting and interest in cost of home sales revenues, improved to 21.6% compared to 21.4% in the prior year. Home building gross margin percentage in 2018 was 17.5%, compared to 17.9% in 2017. SG&A as a percent of home sales revenues remained constant at 12.5% compared to the prior year, with tight cost controls offsetting numerous investment initiatives to support growth objectives.
Net new home contracts in 2018 increased to 5,657 homes, an increase of 48%, compared to 3,814 homes in the prior year, largely attributable to a slightly higher community count and absorption pace.
At the end of full year 2018, the company had 122 open communities in its Century Communities brand, compared to 119 open communities at the end of the prior year.
Financial services generated pre-tax income of $8.8 million in the full year 2018 as compared to $1.2 million in the prior year.
Balance Sheet and Liquidity
As of December 31, 2018, the company had $387.5 million of availability under its credit facility.
During the fourth quarter, the company repurchased 687,061 shares of its common stock at a weighted average price of $17.99 per share.
Dale Francescon, co-CEO, stated, “2018 was another year of strong revenue growth and earnings acceleration for Century, leading to our 16th consecutive year of profitability. In the fourth quarter, we delivered 2,028 homes and generated $651.9 million in total revenues. That said, fourth quarter home deliveries and net new contracts were impacted by the industry-wide softening of home building activity since mid-year 2018. Into 2019, we will continue to carefully monitor the home building climate in each of our markets and pursue our disciplined growth strategy while taking advantage of our diversified national scale to achieve additional efficiencies in our business.”
Rob Francescon, co-CEO, said, “During 2018, we grew our business into a top-10 U.S. home builder through strategic positioning in attractive markets, broader product offerings and sound investments with a focus on lower price points. Additionally, we made significant progress in the ramp up of our Financial Services business, with that segment growing full year pre-tax income over six times. While we are encouraged by our progress and positive long-term housing fundamentals in our markets, demand may remain muted in 2019 due to a variety of macro factors, including higher mortgage rates and tightening affordability. In response, we plan to continue to tailor our product offerings according to evolving demand trends, expand our Wade Jurney Homes’ brand and drive operational efficiencies.”
Full Year 2019 Outlook
David Messenger, CFO, commented, “We remain confident in our business and the long-term fundamentals in our markets. Into 2019, we will continue to focus on growing our presence in existing markets, expanding Wade Jurney Homes in existing and new markets, strengthening our balance sheet, and taking accretive actions to drive shareholder value. Given limited near-term visibility across the national housing market combined with uncertainty in the U.S. macroeconomic environment, we are not providing revenue and closing guidance for fiscal year 2019 at this time.