Century munities(CCS)2024-10-23 23:50Financial Data and Key Metrics Changes - In Q3 2024, the company reported a net income of 2.59 per diluted share, with adjusted net income of 2.72 per diluted share [10] - Home sales revenues reached 394,000, remaining competitive among publicly traded homebuilders [4] Market Data and Key Metrics Changes - The company ended Q3 with over 80,000 owned and controlled lots, a 17% year-over-year increase, with Texas, the Southeast, and Century Complete accounting for 73% of the total lot count [6][7] - The community count reached 305, marking a 21% increase year-over-year and a 15% sequential increase [7] - The backlog of sold homes at the end of the quarter was 1,580, valued at 424,900 [10] Company Strategy and Development Direction - The company aims for delivery growth of 10% or more annually starting in 2025, driven by increased market share and improved margins [5] - Recent acquisitions, including Anglia Homes, are part of a strategy to deepen market presence in existing areas while maintaining a land-light approach [5][6] - The focus remains on affordable entry-level homes, positioning the company to benefit from potential declines in mortgage rates [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for growth, citing strong demand for affordable homes and improvements in mortgage affordability due to declining rates [13] - The company anticipates stable order activity in Q4, despite a moderation in orders observed in October due to rising mortgage rates [3][26] - Management highlighted the importance of maintaining cost control and improving cycle times to support future growth [12][13] Other Important Information - The company maintained a quarterly cash dividend of 81.29, a 13% year-over-year increase [12] - Century Communities was recognized on Newsweek's list of the World's Most Trustworthy Companies for 2024, reflecting a strong company culture [9] Q&A Session Summary Question: What percentage of the additional option lots are finished lot option contracts? - Management indicated that the additional option lots are a mix of finished lot option contracts and other types, with no predominant category [14][15] Question: Who do you think you can take market share from? - Management believes the primary competition will come from private homebuilders, who are facing challenges compared to public builders [16][17] Question: What was the start number for the quarter? - The company reported starting 3,158 homes in Q3, with nearly 10,000 homes started year-to-date [18][19] Question: What are the incentives on orders for Q3? - Incentives on orders averaged around 800 basis points in Q3, up from 700 basis points in Q2, split approximately 50-50 between price reductions and mortgage buydowns [20][22] Question: Any notable change in your cancellation rate in the quarter? - The cancellation rate remained consistent, benefiting from the spec homebuilding model and buyer understanding of home delivery timing [24] Question: What impact should we expect from purchase accounting in Q4? - Management expects a drag of 30 to 50 basis points from purchase accounting in Q4 and Q1, tapering off in Q2 of the following year [32] Question: How did Anglia contribute to closings in Q3? - Anglia contributed less than 2% to the overall closings for the quarter due to the timing of the acquisition [31] Question: What are the expectations for lot cost increases into next year? - Management anticipates stable lot costs in Q4 and early Q1, with normal cost inflation expected in the latter half of 2025 [35]