Market Overview

Century Communities Reports Record Second Quarter 2018 Results

Share:

- Delivered Record Second Quarter Earnings -

- Home Sales Revenues Increased 82% to $522.2 Million -

- Net New Home Contracts Increased 51% to 1,543 Homes -

- Established Position as a Top-10 U.S. Homebuilder Following Full
Acquisition of Wade Jurney Homes -

- Increased 2018 Outlook for Revenue and Deliveries -

Century Communities, Inc. (NYSE:CCS), a leading national homebuilder,
today announced financial results for its second quarter ended June 30,
2018.

Second Quarter 2018 Highlights Compared to Second Quarter 2017

  • Adjusted net income increased 135% to $36.5 million, or $1.21 per
    diluted share and net income increased 123% to $33.2 million, or $1.10
    per diluted share
  • Home sales revenues increased 82% to a record $522.2 million
  • Adjusted homebuilding gross margin increased 92% to $116.4 million
  • Adjusted homebuilding gross margin percentage improved to 22.3%
  • Deliveries grew 84% to 1,384 homes
  • Net new home contracts increased 51% to 1,543 homes
  • Backlog improved 134% to a record 3,199 homes
  • Backlog value increased 89% to $987.3 million
  • Adjusted EBITDA improved 119% to $70.9 million
  • Expanded senior unsecured credit facility to $640 million inclusive of
    a $50 million accordion and extended its maturity date to 2022
  • In June, acquired the remaining 50% interest in WJH, LLC ("Wade Jurney
    Homes") creating the 10th largest US homebuilder based on
    2017 home deliveries and strengthening the Company's exposure to
    entry-level buyers.

Dale Francescon, Co-Chief Executive Officer, stated, "During the second
quarter of 2018 we executed on our dynamic growth strategy, in which we
more than doubled backlog and net income and achieved significant growth
in revenues, deliveries and new contracts, with each metric at record
levels growing 82%, 84%, and 51%, respectively. We improved our adjusted
homebuilding gross margin percentage by 120 basis points year-over-year
and grew ancillary income to produce another record quarter of earnings.
Furthermore, we acquired the remaining 50% interest in Wade Jurney
Homes, establishing Century as a top-10 U.S. homebuilder and enhancing
our exposure to entry-level buyers. We are well positioned to further
leverage our national scale, improve profitability and drive additional
returns for shareholders."

Rob Francescon, Co-Chief Executive Officer, said, "We experienced
overall positive economic activity and strong buyer traffic in the
second quarter. Additionally, our well-located lots and targeted
marketing efforts are helping to drive successive quarters of
improvement and record results across nearly all key operating metrics.
We ended the quarter with a record backlog of 3,199 homes, up 134%
compared to a year ago, representing nearly $1 billion of backlog dollar
value. This backlog demonstrates the strong demand across our
geographies along with our full acquisition of Wade Jurney Homes' proven
and highly profitable operation, which we are already expanding. As we
look to the second half of 2018, we are encouraged by our strong
pipeline of more than 38,000 lots combined with a strong capital
position to further advance our position within the ranks of the top 10
largest U.S. homebuilders."

Second Quarter 2018 Results

Adjusted net income for the second quarter increased 135% to a record
$36.5 million, or $1.21 per diluted share, as compared to $15.5 million,
or $0.69 per diluted share, for the prior year quarter. Adjusted net
income excludes the impact of one-time items associated with homebuilder
acquisitions. Net income for the second quarter 2018 increased 123% to
$33.2 million, or $1.10 per diluted share as compared to $14.8 million
or $0.66 per diluted share for the prior year quarter.

Home sales revenues and deliveries grew to record levels in the second
quarter 2018. Home sales revenues for the second quarter 2018 increased
82% to $522.2 million, compared to $287.6 million for the prior year
quarter. The growth in home sales revenues was primarily attributable to
an 84% increase in deliveries to 1,384 homes compared to 753 homes for
the prior year quarter, including a favorable impact from acquisitions.
Average sales price of home deliveries for the second quarter 2018 was
$377,300, compared to $381,900 in the prior year quarter, primarily due
to geographic and product mix. Excluding the West region and Wade Jurney
Homes, the Company's legacy regions experienced growth in home sales
revenues and deliveries of 28% and 34% respectively.

Homebuilding gross margin percentage in the second quarter 2018 was
18.2%, as compared to 18.7% in the prior year quarter, with the
difference attributable to a 180 basis point impact of purchase price
accounting in the second quarter 2018 partly offset by higher core
profitability. Adjusted homebuilding gross margin percentage, excluding
interest and purchase price accounting, was 22.3% in the second quarter
2018, as compared to 21.1% in the prior year quarter, largely due to
geographic mix and continued emphasis on cost management. SG&A as a
percent of home sales revenues was 12.2%, compared to 11.9% in the prior
year quarter, largely attributable to investments to support our growth
initiatives as well as the completion of the UCP integration in the
second quarter 2018.

Net new home contracts in the second quarter 2018 increased 51% to 1,543
homes, compared to 1,021 homes in the prior year quarter, attributable
to stronger demand trends within legacy regions and the benefit of
acquisitions. Excluding the West region and Wade Jurney Homes, the
Company's legacy regions experienced growth of 19% in net new home
contracts. At the end of the second quarter 2018, the Company had a
record 3,199 homes in backlog, representing $987.3 million of backlog
dollar value, compared to 1,366 homes in backlog, representing $522.6
million of backlog dollar value in the prior year quarter, an increase
of 134% in units and 89% in dollar value.

Financial services generated a $2.6 million profit in the second quarter
2018 as compared to $0.3 million in the prior year quarter. Equity in
income of unconsolidated subsidiaries increased to $11.7 million,
compared to $2.7 million in the prior year quarter as a result of
continued growth in Wade Jurney Homes and a $7.2 million gain on our
previously held equity interest.

Balance Sheet and Liquidity

In June 2018, the Company announced an expansion of its senior unsecured
credit facility to $540 million, with an accordion feature allowing the
Company to increase the borrowing capacity to $640 million. Also in June
2018, the Company exercised $50 million of the accordion feature
increasing its senior unsecured credit facility to $590 million.
Borrowings under the revised credit facility bear interest at a rate of
LIBOR plus a minimum spread of 2.60%. The term of the credit facility
was extended to mature in April 2022.

As of June 30, 2018, the Company had total assets of $2.0 billion,
including cash of $63.4 million and inventories of $1.7 billion.
Liabilities totaled $1.2 billion, which included $907 million of
long-term debt. As of June 30, 2018, the Company had $460.0 million of
availability under the credit facility.

Acquisition Activity

In June 2018, the Company acquired the remaining 50% ownership interest
in Wade Jurney Homes, a leader in providing affordable homes to
entry-level buyers primarily in the Southeast. Wade Jurney Homes
operates as a wholly-owned subsidiary featuring a distinct brand under
the Century umbrella while retaining its existing asset-light and
streamlined business model, such as its unique marketing of homes
through retail outlets as opposed to model homes. The Company acquired
the 50% ownership interest for $37.5 million plus the retirement of
$94.2 million of secured debt, all of which was funded with the
Company's senior unsecured credit facility.

Wade Jurney Homes was the 35th largest U.S. home builder in 2017 and was
named the fastest growing private builder by Builder Magazine in each of
the last three years. Among the many benefits produced by the full
acquisition, the transaction established Century as the 10th
largest U.S. homebuilder based on pro forma 2017 deliveries. The
acquisition also enhanced the Company's geographic, product and buyer
diversification while providing a platform for additional growth in
ancillary revenue streams and expansion of Wade Jurney Homes into new
markets.

Full Year 2018 Outlook

David Messenger, Chief Financial Officer of the Company, commented, "We
are pleased with our performance in the first half of 2018, with strong
demand in legacy regions and the success of our acquisitions driving
positive results. Based on a strengthened market outlook and the
addition of Wade Jurney Homes, we are increasing our full year outlook
with home deliveries now expected to be in a range of 6,000 to 6,500
homes and our home sales revenues expected to be in a range of $2.0
billion to $2.3 billion for 2018. With our expanded scale, strategic
investments and sustained execution, we are firmly situated to deliver
on our profitable growth objectives."

Conference Call

The Company will host a webcast and conference call on Thursday, August
2, 2018 at 5:00 p.m. Eastern time, 3:00 p.m. Mountain time, to review
the Company's second quarter 2018 results, discuss recent events and
conduct a question-and-answer period. To participate in the call, please
dial 866-652-5200 (domestic) or 412-317-6060 (international). The live
webcast will be available at www.centurycommunities.com
in the Investors section. A replay of the conference call will be
available through September 2, 2018, by dialing 844-512-2921 (domestic)
or 412-317-6671 (international) and entering the pass code 10122470. A
replay of the webcast will be available on the Company's website through
September 2, 2018.

About Century Communities

Century Communities, Inc. (NYSE:CCS) is a top-10 U.S. homebuilder.
Century is engaged in all aspects of homebuilding, including the
acquisition, entitlement and development of land, along with the
construction, innovative marketing and sale of quality homes designed to
appeal to a wide range of homebuyers. The Colorado-based Company sells
its Century Communities and Wade Jurney Homes in 12 states across the
West, Mountain, Texas and Southeast U.S. regions and offers title and
lending services in select markets through its Parkway Title and Inspire
Home Loan subsidiaries. To learn more about Century Communities please
visit www.centurycommunities.com.

Non-GAAP Financial Measures

In addition to the Company's operating results presented in accordance
with generally accepted accounting principles (GAAP), this press release
includes the following non-GAAP financial measures: Adjusted Diluted
Earnings per Common Share (Adjusted Diluted EPS), Adjusted Homebuilding
Gross Margin, Adjusted EBITDA, and Ratio of Homebuilding Net Debt to Net
Capital. These non-GAAP financial measures should not be used as a
substitute for the Company's operating results presented in accordance
with GAAP, and an analysis of any non-GAAP financial measure should be
used in conjunction with results presented in accordance with GAAP.
Please refer to the reconciliation of each of the above referenced
non-GAAP financial measures following the historical financial
information presented in this press release.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and, as
such, may involve known and unknown risks, uncertainties and
assumptions. Forward-looking statements may be identified by the use of
words such as "anticipate," "believe," "expect," "estimate," "plan,"
"outlook," and "project" and other similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. Forward-looking statements in this release include
the company's operating and financial guidance for 2018. Forward-looking
statements should not be read as a guarantee of future performance or
results, and will not necessarily be accurate indications of the times
at, or by, which such performance or results will be achieved.
Forward-looking statements are based on historical information available
at the time the statements are made and are based on management's
reasonable belief or expectations with respect to future events, and are
subject to risks and uncertainties, many of which are beyond the
Company's control, that could cause actual performance or results to
differ materially from the belief or expectations expressed in or
suggested by the forward-looking statements. The following important
factors could cause actual results to differ materially from those
expressed in the forward-looking statement: adverse changes in general
economic conditions, ability to identify and acquire desirable land,
availability of financing, the effect of interest rate and tax changes,
reliance on contractors, and the other factors included in the Company's
most recent Annual Report on Form 10-K. Forward-looking statements speak
only as of the date on which they are made and the Company undertakes no
obligation to update any forward-looking statement to reflect future
events, developments or otherwise, except as may be required by
applicable law.

 

Century Communities, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

       

(in thousands, except share and per share amounts)

 
Three months ended June 30, Six months ended June 30,
2018 2017 2018 2017
Revenues
Home sales revenues $ 522,164 $ 287,588 $ 916,995 $ 514,008
Land sales and other revenues   1,714     2,493     3,174     4,389  
523,878 290,081 920,169 518,397
Financial services revenue   8,014     1,743     13,571     1,743  
Total revenues 531,892 291,824 933,740 520,140
Homebuilding Cost of Revenues
Cost of home sales revenues (427,197 ) (233,888 ) (746,780 ) (416,212 )
Cost of land sales and other revenues   (1,040 )   (1,746 )   (1,917 )   (2,890 )
(428,237 ) (235,634 ) (748,697 ) (419,102 )
Financial services costs (5,385 ) (1,445 ) (9,781 ) (2,199 )
Selling, general, and administrative (63,634 ) (34,220 ) (120,156 ) (67,432 )
Acquisition expense (165 ) (916 ) (338 ) (1,439 )
Equity in income of unconsolidated subsidiaries 11,681 2,676 14,849 3,931
Other income (expense)   350     824     (8 )   1,261  
Income before income tax expense 46,502 23,109 69,609 35,160
Income tax expense   (13,309 )   (8,278 )   (16,397 )   (11,530 )
Net income $ 33,193   $ 14,831   $ 53,212   $ 23,630  
 
Earnings per share:
Basic $ 1.11 $ 0.67 $ 1.79 $ 1.07
Diluted $ 1.10 $ 0.66 $ 1.77 $ 1.06
Weighted average common shares outstanding:
Basic 29,901,791 21,814,860 29,709,728 21,814,860
Diluted 30,170,689 22,029,962 30,003,276 22,029,962
 
 

Century Communities, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share amounts)

 

 

   June 30,   

December 31,
2018 2017
Assets (Unaudited)
Cash and cash equivalents $ 19,482 $ 88,832
Cash held in escrow 43,880 37,723
Accounts receivable 20,890 12,999
Inventories 1,696,931 1,390,354
Mortgage loans held for sale 57,353 52,327
Prepaid expenses and other assets 71,106 60,812
Property and equipment, net 32,482 27,911
Investment in unconsolidated subsidiaries 28,208
Deferred tax assets, net 9,704 5,555
Amortizable intangible assets, net 5,573 2,938
Goodwill   28,272   27,363
Total assets $ 1,985,673 $ 1,735,022
Liabilities and stockholders' equity
Liabilities:
Accounts payable $ 59,608 $ 24,831
Accrued expenses and other liabilities 162,085 150,356
Senior notes payable 777,275 776,283
Revolving line of credit 130,000
Mortgage repurchase facilities   52,999   48,319
Total liabilities   1,181,967   999,789
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none
outstanding
Common stock, $0.01 par value, 100,000,000 shares authorized,
30,119,259 and 29,502,624 shares issued and outstanding at June 30,
2018 and December 31, 2017, respectively
301 295
Additional paid-in capital 582,627 566,790
Retained earnings   220,778   168,148
Total stockholders' equity   803,706   735,233
Total liabilities and stockholders' equity $ 1,985,673 $ 1,735,022
 
                   

Century Communities, Inc.

Homebuilding Operational Data

 

Net New Home Contracts

 
Three Months Ended
June 30,

   2018   

   2017   

% Change
West 186 NM
Mountain 460 463 (0.7 )

%

Texas 194 112 73.2

%

Southeast 559 446 25.3

%

Wade Jurney Homes 144 NM    
Total 1,543 1,021 51.1  

%

 
Six months ended
June 30,

   2018   

   2017   

% Change
West 402 NM
Mountain 1,005 917 9.6

%

Texas 343 227 51.1

%

Southeast 1,027 834 23.1

%

Wade Jurney Homes 144 NM    
Total 2,921 1,978 47.6  

%

 

NM – Not meaningful

 

Home Deliveries

(dollars in thousands)

           
Three months ended June 30,
2018 2017 % Change

 Homes 

Average Sales
Price

 Homes 

Average Sales
Price

 Homes 

Average Sales
Price

West 213 $ 606.8

$

NM

NM
Mountain 421 425.4 382 426.7 10.2

%

(0.3 )

%

Texas 206 307.7 107 402.9 92.5

%

(23.6 )

%

Southeast 379 330.3 264 308.6 43.6

%

7.0

%

Wade Jurney Homes 165   153.0   NM   NM    
Total / Weighted Average 1,384 $ 377.3 753 $ 381.9 83.8

%

(1.2 ) %
 
Six months ended June 30,
2018 2017 % Change
Homes

Average Sales
Price

Homes

Average Sales
Price

Homes

Average Sales
Price

West 413 $ 600.9 $ NM NM
Mountain 764 $ 423.2 671 $ 423.2 13.9

%

%

Texas 314 $ 322.2 176 $ 415.8 78.4

%

(22.5 )

%

Southeast 669 $ 327.4 514 $ 305.2 30.2

%

7.3

%

Wade Jurney Homes 165 $ 153.0 $ NM   NM    
Total / Weighted Average 2,325 $ 394.4 1,361 $ 377.7 70.8

%

4.4  

%

 

NM – Not meaningful

 
 

Century Communities, Inc.

Homebuilding Operational Data

 

Selling Communities

                   
Selling communities at period end As of June 30, Increase/(Decrease)

  2018  

  2017  

Amount % Change
 
West 12 12 NM
Mountain 31 34 (3 ) (8.8 ) %
Texas 24 21 3 14.3 %
Southeast 53 36 17 47.2 %
Wade Jurney Homes N/A N/A N/A   N/A    
Total 120 91 29   31.9   %
 

NM – Not meaningful

N/A – Not applicable

 

Backlog

(dollars in thousands)

                 
June 30,
2018 2017 % Change

 Homes 

Dollar Value

Average
Sales Price

 Homes 

Dollar Value

Average
Sales Price

 Homes 

Dollar Value

Average
Sales Price

West 259 $ 150,619 $ 581.5 $ $ NM NM NM
Mountain 696 307,825 $ 442.1 575 244,512 $ 425.0 21.0 % 25.9 % 4.0 %
Texas 244 88,458 $ 362.5 202 90,314 $ 447.1 20.8 % (2.1 ) % (18.9 ) %
Southeast 738 242,378 $ 328.4 589 187,816 $ 318.9 25.3 % 29.1 % 3.0 %
Wade Jurney Homes 1,262   197,973 $ 156.9   $ NM   NM     NM    
Total / Weighted Average 3,199 $ 987,253 $ 308.6 1,366 $ 522,642 $ 382.5 134.2 % 88.9   % (19.3 ) %
 

NM – Not meaningful

 

Lot Inventory

                 
June 30,
2018 2017 % Change
 
Owned Controlled Total Owned Controlled Total Owned Controlled Total
 
West 3,790 2,420 6,210 NM NM NM
Mountain 5,399 4,851 10,250 4,262 4,702 8,964 26.7 % 3.2 % 14.3 %
Texas 2,560 3,201 5,761 1,786 4,273 6,059 43.3 % (25.1 ) % (4.9 ) %
Southeast 5,135 4,460 9,595 3,659 3,884 7,543 40.3 % 14.8 % 27.2 %
Wade Jurney Homes 2,472 4,356 6,828 NM   NM     NM    
Total 19,356 19,288 38,644 9,707 12,859 22,566 99.4 % 50.0   % 71.2   %
 

NM – Not meaningful

 

Century Communities, Inc.
Reconciliation of Non-GAAP
Financial Measures

(Unaudited)

Adjusted Diluted Earnings per Common Share (Adjusted Diluted EPS) is a
non-GAAP financial measure that we believe is useful to management,
investors and other users of the Company's financial information in
evaluating its operating results and understanding its operating trends
without the effect of certain non-recurring items. The Company believes
excluding certain non-recurring items provides more comparable
assessment of its financial results from period to period. Adjusted
Diluted EPS is calculated by excluding the effect of acquisition costs
and purchase price accounting for acquired work in process from the
calculation of reported EPS.

 

Adjusted Diluted Earnings Per Common Share

 

(in thousands, except share and per share amounts)

       
Three Months Ended Six months ended
June 30, June 30,
2018 2017 2018 2017
Numerator
Net income $ 33,193 $ 14,831 $ 53,212 $ 23,630
Less: Undistributed earnings allocated to participating securities   (3 )   (101 )   (67 )   (251 )
Net income allocable to common stockholders $ 33,190   $ 14,730   $ 53,145   $ 23,379  
Denominator
Weighted average common shares outstanding - basic 29,901,791 22,146,124 29,709,728 21,814,860
Dilutive effect of restricted stock units   268,898     219,953     293,548     215,102  
Weighted average common shares outstanding - diluted   30,170,689     22,366,077     30,003,276     22,029,962  
Earnings per share:
Basic $ 1.11 $ 0.67 $ 1.79 $ 1.07
Diluted $ 1.10 $ 0.66 $ 1.77 $ 1.06
 
Adjusted earnings per share
Numerator
Income before income tax expense $ 46,502 $ 23,109 $ 69,609 $ 35,160
Purchase price accounting for acquired work in process inventory 9,163 104 16,433 117
Gain on previously held interest in WJH (7,219 ) - (7,219 ) -
Acquisition expense   165     916     338     1,439  
Adjusted income before income tax expense 48,611 24,129 79,161 36,716
Adjusted income tax expense(1)   (12,153 )   (8,643 )   (19,790 )   (12,040 )
Adjusted net income 36,459 15,486 59,370 24,676
Less: Adjusted undistributed earnings allocated to participating
securities
  (3 )   (106 )   (74 )   (262 )
Adjusted net income allocable to common stockholders $ 36,456   $ 15,380   $ 59,296   $ 24,414  
 
Denominator - Diluted 30,170,689 22,366,077 30,003,276 22,029,962
 
Adjusted diluted earnings per share $ 1.21 $ 0.69 $ 1.98 $ 1.11
 
       

(1)

  For the three and six months ended June 30, 2018, the tax rate used
in adjusted net income was 25%. This rate is inclusive of our
estimated annual rate of 26.5% offset by the estimated annual
benefit associated with federal energy credits related to homes
delivered. For the three and six months ended June 30, 2017, the
Company's GAAP tax rate was utilized.
 

Century Communities, Inc.
Reconciliation of Non-GAAP
Financial Measures

(Unaudited)

Adjusted homebuilding gross margin excluding interest and purchase price
accounting for acquired work in process inventory is not a measurement
of financial performance under United States generally accepted
accounting principles; however, the Company's management believes that
this information is meaningful as it isolates the impact that
indebtedness and acquisitions have on homebuilding gross margin and
permits the Company's stockholders to make better comparisons with the
Company's competitors, who adjust gross margins in a similar fashion.
This non-GAAP financial measure should not be used as a substitute for
the Company's operating results. An analysis of any non-GAAP financial
measure should be used in conjunction with results presented in
accordance with GAAP.

Adjusted Homebuilding Gross Margin

(in thousands)

       
Three months ended June 30,
2018 % 2017 %
 
Home sales revenues $ 522,164 100.0 % $ 287,588 100.0 %
Cost of home sales revenues   (427,197 ) (81.8 ) %   (233,888 ) (81.3 ) %
Gross margin from home sales 94,967 18.2 % 53,700 18.7 %
Add: Interest in cost of home sales revenues   12,284   2.4   %   6,875   2.4   %
Adjusted homebuilding gross margin excluding interest 107,251 20.5 % 60,575 21.1 %
Add: Purchase price accounting for acquired work in process inventory   9,163   1.8   %   104   0.0   %
Adjusted homebuilding gross margin excluding interest and purchase
price accounting for acquired work in process inventory
$ 116,414   22.3   % $ 60,679   21.1   %
 
 
Six months ended June 30,
2018 % 2017 %
 
Home sales revenues $ 916,995 100.0 % $ 514,008 100.0 %
Cost of home sales revenues   (746,780 ) (81.4 ) %   (416,212 ) (81.0 ) %
Gross margin from home sales 170,215 18.6 % 97,796 19.0 %
Add: Interest in cost of home sales revenues   21,243   2.3   %   11,831   2.3   %
Adjusted homebuilding gross margin excluding interest 191,458 20.9 % 109,627 21.3 %
Add: Purchase price accounting for acquired work in process inventory   16,433   1.8   %   117   0.0   %
Adjusted homebuilding gross margin excluding interest and purchase
price accounting for acquired work in process inventory
$ 207,891   22.7   % $ 109,744   21.4   %
 

Century Communities, Inc.
Reconciliation of Non-GAAP
Financial Measures

(Unaudited)

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure we use as a supplemental
measure in evaluating operating performance. The Company defines
adjusted EBITDA as consolidated net income before (i) income tax
expense, (ii) interest in cost of home sales revenues, (iii) other
interest expense, (iv) depreciation and amortization expense, and (v)
adjustments resulting from the application of purchase accounting for
acquired work in process inventory related to business combinations. The
Company believes adjusted EBITDA provides an indicator of general
economic performance that is not affected by fluctuations in interest
rates or effective tax rates, levels of depreciation or amortization,
and items considered to be non-recurring. Accordingly, the Company's
management believes that this measurement is useful for comparing
general operating performance from period to period. Adjusted EBITDA
should be considered in addition to, and not as a substitute for,
consolidated net income in accordance with GAAP as a measure of
performance. The Company's presentation of adjusted EBITDA should not be
construed as an indication that its future results will be unaffected by
unusual or non-recurring items. Adjusted EBITDA is limited as an
analytical tool, and should not be considered in isolation or as a
substitute for analysis of the Company's results as reported under GAAP.

(in thousands)

               
Three months ended June 30, Six months ended June 30,
2018 2017 % Change 2018 2017 % Change
Net income $ 33,193 $ 14,831 123.8 % $ 53,212 $ 23,630 125.2 %
Income tax expense 13,309 8,278 60.8 % 16,397 11,530 42.2 %
Interest in cost of home sales revenues 12,284 6,875 78.7 % 21,243 11,831 79.6 %
Interest expense (income) 1 (100.0 ) % 1 2 (50.0 ) %
Depreciation and amortization expense   2,786   1,434   94.3   %   5,512   2,818   95.6   %
EBITDA 61,572 31,419 96.0 % 96,365 49,811 93.5 %
Purchase price accounting for acquired work in process inventory 9,163 104 8,714.3 % 16,433 117 13,967.0 %
Purchase price accounting for investment in unconsolidated
subsidiaries outside basis
30 30 % 60 825 (92.7 ) %
Acquisition expense   165   916   (82.0 ) %   338   1,439   (76.5 ) %
Adjusted EBITDA $ 70,930 $ 32,469   118.5   % $ 113,196 $ 52,192   116.9   %
 

Century Communities, Inc.
Reconciliation of Non-GAAP
Financial Measures

(Unaudited)

Ratio of Net Homebuilding Debt to Net Capital

The following table presents the Company's ratio of net homebuilding
debt to net capital, which is a non-GAAP financial measure. The Company
calculates this by dividing net homebuilding debt (senior notes payable
and revolving line of credit less cash held in escrow and cash and cash
equivalents) by net capital (net homebuilding debt plus total
stockholders' equity). The most directly comparable GAAP measure is the
ratio of debt to capital. The Company believes the ratio of net
homebuilding debt to net capital is a relevant and useful financial
measure to investors in understanding the leverage employed in its
operations and as an indicator of the Company's ability to obtain
external financing.

(in thousands)

             

   June 30,   

December 31,
2018 2017
Total debt $ 960,274 $ 824,602
Total stockholders' equity   803,706   735,233
Total capital $ 1,763,980 $ 1,559,835
Debt to capital   54.4%   52.9%
 
Total debt $ 960,274 $ 824,602
Cash and cash equivalents (19,482) (88,832)
Cash held in escrow (43,880) (37,723)
Mortgage repurchase facilities   (52,999)   (48,319)
Net homebuilding debt 843,913 649,728
Total stockholders' equity   803,706   735,233
Net capital $ 1,647,619 $ 1,384,961
 
Net homebuilding debt to net capital   51.2%   46.9%

View Comments and Join the Discussion!