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美國

證券交易委員會

華盛頓特區20549

表格 10-Q

（標記一）

x

根據1934年證券交易法第13或15(d)節的季度報告

截至季度結束日期的財務報告2024年9月30日

或者

o

根據1934年證券交易法第13或15(d)節的轉型報告書

委託文件編號：001-39866001-36491

世紀社區公司。

(根據其章程規定的註冊人準確名稱)

特拉華州

68-0521411

（國家或其他管轄區的
‎公司成立或組織）

（IRS僱主
‎唯一識別號碼）

8390 East Crescent Parkway, Suite 650
‎Greenwood Village, CO

80111

，（主要行政辦公地址）

(郵政編碼)

（註冊人的電話號碼，包括區號）：353-4475(303) 770-8300

每個交易所的名稱

每一類的名稱

交易代碼

在其上註冊的交易所的名稱

普通股，每股面值0.01美元

CCS

請使用moomoo賬號登錄查看New York Stock Exchange

請用複選標記指示：（1）在過去12個月內已根據1934年證券交易所法第13或15（d）條的規定提出所有要求提出的報告（或者對於要求提交此類報告的註冊人需要提交的較短期間），且（2）已經受到過去90天的此類提交要求。 是 x    否  o

請通過勾選標記指示，表明在過去的12個月內（或者在註冊人需要提交此類文件的更短期間內），是否已通過電子方式提交了根據《S-t 規則405條規》（本章節第232.405條）要求提交的所有交互數據文件。是x    否  o

請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。

大型加速報告人

x

加速申報人

o

非加速彙報人

o  

較小的報告公司

o

新興增長公司

¨

如果公司無法符合證券交易法第13(a)條規定，使用延長過渡期來遵守任何新的或修訂的財務會計準則，請在複選框中指示。 ¨

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2024年10月18日， 31,337,062 該註冊公司的普通股，每股面值$0.01，已發行.  

目錄

世紀社區，公司。

10-Q表格

截至2024年9月30日三個月和九個月的財務信息

Index

頁碼。

第一部分 - 財務信息財務信息

項目1.基本報表

2024年9月30日（未經審計）和2023年12月31日（經審計）的簡明綜合資產負債表

3

2024年9月30日和2023年三個月及九個月結束的未經審計簡明綜合損益表

4

截至2024年9月30日的九個月未經審計簡明綜合現金流量表

5

2024年9月30日和2023年三個月及九個月結束的未經審計簡明綜合股東權益表

6

未經審計的簡明合併財務報表附註。

7

項目2. 管理層對財務狀況和業績的討論與分析

19

項目3.有關市場風險的定量和定性披露

40

項目4.控制和程序

40

第二部分- 其他信息

項目1.法律訴訟

40

項目1A.風險因素

41

項目2. 未註冊的股權銷售和款項使用

41

項目3. 面對高級證券的違約情況

41

項目4.礦山安全披露

41

項目5.其他信息

41

項目6.附件

42

簽名

43

2

目錄

賓夕法尼亞州基礎報表 I – 財務信息

項目 1. 基礎報表。

Century Communities, Inc.

壓縮合並資產負債表

截至2024年9月30日和2023年12月31日

(以千爲單位，除每股數據外)

 

2020年9月30日

12月31日

2024

2023

資產

(未經審計)

（審計過）

現金及現金等價物

$

149,155

$

226,150

託管的現金

70,755

101,845

應收賬款

73,016

76,213

存貨

3,581,099

3,016,641

待售抵押貸款

257,187

251,852

預付款項和其他資產

427,961

350,193

資產和設備，淨值

165,117

69,075

17,241

16,998

商譽

39,434

30,395

總資產

$

4,780,965

$

4,139,362

負債和股東權益

負債：

應付賬款

$

165,369

$

147,265

應計費用及其他負債

287,937

303,392

應付票據

1,118,943

1,062,471

循環授信額度

414,000

—

按揭回購安排

247,214

239,298

負債合計

2,233,463

1,752,426

股東權益:

優先股，$0.00010.01每股面值，50,000,000 無未行權的

—

—

普通股，每股面值爲 $0.0001；0.01每股面值，100,000,000 31,337,062和頁面。31,774,615 2024年9月30日和2023年12月31日分別發行並流通的股份數

313

318

額外實收資本

547,724

592,989

保留盈餘

1,999,465

1,793,629

股東權益合計

2,547,502

2,386,936

負債和股東權益合計

$

4,780,965

$

4,139,362

請參閱未經審計的合併財務報表附註

3

目錄

Century Communities, Inc.

未經審計的簡化合並收支表

2024年和2023年9月30日止三個和九個月

(以千爲單位，除每股數據外)

截至9月30日的三個月

截至9月30日的九個月

2024

2023

2024

2023

收入

住宅銷售收入

住宅銷售收入

$

1,116,125

$

865,065

$

3,055,941

$

2,419,025

土地銷售和其他收入

650

722

2,242

3,811

總房屋建築收入

1,116,775

865,787

3,058,183

2,422,836

金融服務收入

20,091

23,636

66,676

63,768

總收入

1,136,866

889,423

3,124,859

2,486,604

住宅建造成本

住宅銷售成本

(873,081)

(652,411)

(2,386,208)

(1,910,630)

土地銷售和其他收入成本

(170)

—

(207)

(375)

房屋建造總成本收入

(873,251)

(652,411)

(2,386,415)

(1,911,005)

金融服務成本

(17,021)

(11,432)

(47,894)

(33,983)

銷售、總務及管理費用

(132,972)

(111,918)

(373,054)

(315,351)

存貨減值

(1,373)

—

(1,942)

—

其他支出

(2,337)

(1,663)

(10,690)

(1,509)

稅前收入

109,912

111,999

304,864

224,756

所得稅費用

(26,892)

(28,849)

(73,789)

(56,850)

淨收入

$

83,020

$

83,150

$

231,075

$

167,906

每股收益:

基本

$

2.65

$

2.60

$

7.31

$

5.25

稀釋的

$

2.59

$

2.58

$

7.19

$

5.21

加權平均流通股數:

基本

31,336,756

31,962,884

31,596,995

31,967,672

稀釋的

32,025,015

32,237,022

32,117,917

32,200,677

請參閱未經審計的合併財務報表附註

4

Table of Contents

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2024 and 2023

(in thousands)

Nine Months Ended September 30,

2024

2023

Operating activities

Net income

$

231,075

$

167,906

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization

17,437

11,019

Stock-based compensation expense

18,095

26,517

Fair value of mortgage loans held for sale and other

(647)

(2,269)

Inventory impairment

1,942

—

Impairment on other investment

7,722

—

Abandonment of lot option contracts

3,941

3,021

Deferred income taxes

(243)

2,078

(Gain) loss on disposition of assets

(1,851)

1,062

Changes in assets and liabilities:

Cash held in escrow

31,090

4,081

Accounts receivable

3,802

(1,081)

Inventories

(421,938)

(225,587)

Mortgage loans held for sale

(9,387)

36,343

Prepaid expenses and other assets

(50,041)

(21,179)

Accounts payable

14,659

54,126

Accrued expenses and other liabilities

(19,639)

(23,029)

Net cash (used in) provided by operating activities

(173,983)

33,008

Investing activities

Purchases of property and equipment

(29,856)

(14,565)

Proceeds from sale of property and equipment

11,169

127

Expenditures related to development of rental properties

(98,029)

(59,812)

Payments for business combinations

(157,130)

—

Other investing activities

(3,860)

(346)

Net cash used in investing activities

(277,706)

(74,596)

Financing activities

Borrowings under revolving credit facilities

1,459,000

25,000

Payments on revolving credit facilities

(1,045,000)

(25,000)

Borrowing under construction loan agreements

65,442

21,453

Proceeds from issuance of insurance premium notes and other

19,619

26,511

Principal payments on insurance premium notes and other

(29,779)

(17,273)

Net proceeds (payments) for mortgage repurchase facilities

7,916

(35,532)

Withholding of common stock upon vesting of stock-based compensation awards

(10,473)

(10,672)

Repurchases of common stock under stock repurchase program

(53,139)

(19,227)

Dividend payments

(24,629)

(22,074)

Other financing activities

(363)

—

Net cash provided by (used in) financing activities

388,594

(56,814)

Net decrease

$

(63,095)

$

(98,402)

Cash and cash equivalents and Restricted cash

Beginning of period

242,003

308,492

End of period

$

178,908

$

210,090

Supplemental cash flow disclosure

Cash paid for income taxes

$

80,361

$

41,358

Cash and cash equivalents and Restricted cash

Cash and cash equivalents

$

149,155

$

193,111

Restricted cash (Note 6)

29,753

16,979

Cash and cash equivalents and Restricted cash

$

178,908

$

210,090

See Notes to Unaudited Condensed Consolidated Financial Statements

5

Table of Contents

Century Communities, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2024 and 2023

(in thousands)

For the Three Months Ended September 30, 2024 and 2023

Common Stock

Shares

Amount

Additional Paid-In Capital

Retained Earnings

Total Stockholders' Equity

Balance at June 30, 2024

31,336

$

313

$

540,573

$

1,924,771

$

2,465,657

Vesting of stock-based compensation awards

1

—

—

—

—

Withholding of common stock upon vesting of stock-based compensation awards

—

—

(49)

—

(49)

Repurchases of common stock

—

—

—

—

—

Stock-based compensation expense

—

7,385

—

7,385

Cash dividends declared and dividend equivalents

—

—

178

(8,326)

(8,148)

Other

—

—

(363)

—

(363)

Net income

—

—

—

83,020

83,020

Balance at September 30, 2024

31,337

$

313

$

547,724

$

1,999,465

$

2,547,502

Balance at June 30, 2023

32,020

$

320

$

586,856

$

1,634,741

$

2,221,917

Vesting of stock-based compensation awards

1

—

—

—

—

Withholding of common stock upon vesting of stock-based compensation awards

—

—

(29)

—

(29)

Repurchases of common stock

(248)

(2)

(17,256)

(17,258)

Stock-based compensation expense

—

—

12,226

—

12,226

Cash dividends declared and dividend equivalents

—

—

537

(7,878)

(7,341)

Net income

—

—

—

83,150

83,150

Balance at September 30, 2023

31,773

$

318

$

582,334

$

1,710,013

$

2,292,665

For the Nine Months Ended September 30, 2024 and 2023

Common Stock

Shares

Amount

Additional Paid-In Capital

Retained Earnings

Total Stockholders' Equity

Balance at December 31, 2023

31,775

$

318

$

592,989

$

1,793,629

$

2,386,936

Vesting of stock-based compensation awards

335

3

(3)

—

—

Withholding of common stock upon vesting of stock-based compensation awards

(121)

(1)

(10,472)

—

(10,473)

Repurchases of common stock

(652)

(7)

(53,132)

—

(53,139)

Stock-based compensation expense

—

—

18,095

—

18,095

Cash dividends declared and dividend equivalents

—

—

610

(25,239)

(24,629)

Other

—

—

(363)

—

(363)

Net income

—

—

—

231,075

231,075

Balance at September 30, 2024

31,337

$

313

$

547,724

$

1,999,465

$

2,547,502

Balance at December 31, 2022

31,773

$

318

$

584,803

$

1,565,094

$

2,150,215

Vesting of stock-based compensation awards

448

4

(4)

—

—

Withholding of common stock upon vesting of stock-based compensation awards

(170)

(2)

(10,670)

—

(10,672)

Repurchases of common stock

(278)

(2)

(19,225)

—

(19,227)

Stock-based compensation expense

—

—

26,517

—

26,517

Cash dividends declared and dividend equivalents

—

—

913

(22,987)

(22,074)

Net income

—

—

—

167,906

167,906

Balance at September 30, 2023

31,773

$

318

$

582,334

$

1,710,013

$

2,292,665

See Notes to Unaudited Condensed Consolidated Financial Statements

6

Table of Contents

Century Communities, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2024

1. Basis of Presentation

Century Communities, Inc. (which we refer to as “we,” “CCS,” or the “Company”), together with its subsidiaries, is engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 18 states. In many of our projects, in addition to building homes, we entitle and develop the underlying land. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand has an emphasis on serving the entry-level homebuilding market but offers a wide range of buyer profiles including: entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the ability to personalize their homes through certain option and upgrade opportunities. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and generally provides no option or upgrade opportunities.

Our homebuilding operations are organized into the following five reportable segments: West, Mountain, Texas, Southeast, and Century Complete. Our indirect wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, IHL Home Insurance Agency, LLC, and IHL Escrow Inc., which provide mortgage, title, insurance and escrow services, respectively, primarily to our homebuyers, have been identified as our Financial Services segment. Additionally, our wholly owned subsidiary, Century Living, LLC, is engaged in the development, construction and management of multi-family rental properties, currently all located in Colorado. Century Living, LLC is included in our Corporate segment.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (which we refer to as “GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (which we refer to as the “SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations for the periods presented. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by GAAP and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2023, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on February 5, 2024.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company, as well as all subsidiaries in which we have a controlling interest, and variable interest entities for which the Company is deemed to be the primary beneficiary. We do not have any variable interest entities in which we are deemed the primary beneficiary.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board (which we refer to as “FASB”) issued Accounting Standards Update (which we refer to as “ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires more disaggregated income tax disclosures, including additional information in the rate reconciliation and additional disclosures about income taxes paid. ASU 2023-09 will become effective for us for the fiscal year ending December 31, 2025. Early adoption is permitted, and guidance should be applied prospectively, with an option to apply guidance retrospectively. We are currently evaluating the impact of the adoption of ASU 2023-09 on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (which we refer to as “CODM”) and included within each reported measure of segment profit or loss. The guidance also expands disclosure requirements for interim periods, as well as requires disclosure of other segment items, including the title and position of the entity’s CODM. ASU 2023-07 will become effective for us for the fiscal year ending December 31, 2024, and for interim periods starting in our first quarter of 2025. Early adoption is permitted, and guidance is required to be applied

7

Table of Contents

retrospectively. We are currently evaluating the impact of the adoption of ASU 2023-07 on our consolidated financial statements and related disclosures.

2. Reporting Segments

Our homebuilding operations are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 18 states. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand is managed by geographic location, and each of our four geographic regions offers a wide range of buyer profiles including: entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the ability to personalize their homes through certain option and upgrade selections. Each of our four geographic regions is considered a separate operating segment. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and generally provides no option or upgrade selections. Our Century Complete brand currently has operations in 11 states and it is considered a separate operating segment.

The management of our four Century Communities geographic regions and Century Complete reports to our chief operating decision makers (which we refer to as “CODMs”), the Co-Chief Executive Officers of our Company. The CODMs review the results of our operations, including total revenue and income before income tax expense to determine profitability and to allocate resources. Accordingly, we have presented our homebuilding operations as the following five reportable segments:

 

West (California and Washington)

Mountain (Arizona, Colorado, Nevada, and Utah)

Texas

Southeast (Florida, Georgia, North Carolina, South Carolina, and Tennessee)

Century Complete (Alabama, Arizona, Florida, Georgia, Indiana, Kentucky, Louisiana, Michigan, North Carolina, Ohio, South Carolina)

We have identified our Financial Services operations, which provide mortgage, title, insurance and escrow services to our homebuyers, as a sixth reportable segment. Our Corporate operations are a non-operating segment, as our Corporate operations serve to support our homebuilding, and to a lesser extent our Financial Services operations, through functions, such as our executive, finance, treasury, human resources, accounting and legal departments.

Additionally, our wholly owned subsidiary, Century Living, LLC, is engaged in the development, construction and management of multi-family rental properties, currently all located in Colorado. Century Living, LLC is included in our Corporate segment. 

The following table summarizes total revenue and income (loss) before income tax expense by segment (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Revenue:

West

$

240,722

$

167,708

$

617,047

$

436,081

Mountain

271,305

207,054

784,506

683,432

Texas

159,502

111,694

436,782

327,844

Southeast

180,226

164,968

496,032

369,414

Century Complete

265,020

214,363

723,816

606,065

Financial Services

20,091

23,636

66,676

63,768

Corporate

—

—

—

—

Total revenue

$

1,136,866

$

889,423

$

3,124,859

$

2,486,604

Income (loss) before income tax expense:

West

$

35,222

$

31,419

$

94,098

$

54,358

Mountain

31,770

25,449

93,943

77,946

Texas

14,682

16,377

46,385

31,502

Southeast

27,218

33,717

73,857

63,675

Century Complete

34,056

30,873

84,192

61,171

Financial Services

3,070

12,204

18,782

29,785

Corporate

(36,106)

(38,040)

(106,393)

(93,681)

Total income before income tax expense

$

109,912

$

111,999

$

304,864

$

224,756

8

Table of Contents

The following table summarizes total assets by segment (in thousands):

September 30,

December 31,

2024

2023

West

$

873,401

$

786,489

Mountain

1,054,141

1,051,052

Texas

858,559

577,129

Southeast

631,256

503,249

Century Complete

506,429

386,444

Financial Services

473,767

450,208

Corporate

383,412

384,791

Total assets

$

4,780,965

$

4,139,362

Corporate assets primarily include costs associated with development of multi-family rental properties, certain cash and cash equivalents, certain property and equipment, deferred tax assets, certain receivables, and prepaid insurance.

 

3. Business Combinations

On January 22, 2024, we closed on the acquisition of substantially all the assets and assumed certain liabilities of Landmark Homes of Tennessee, Inc. (“Landmark”), a homebuilder with operations, including six active communities, in Nashville, Tennessee, for approximately $33.4 million in cash, inclusive of customary holdbacks. We concluded that the acquisition represents a business combination, and in connection with this acquisition, we allocated $1.7 million in goodwill to the Southeast operating segment. We incurred $0.1 million in acquisition costs, which are reflected in other expense in our condensed consolidated statements of operations.

On July 31, 2024, we closed on the acquisition of substantially all the assets and operations and assumed certain liabilities of Anglia Homes LP (“Anglia”), a homebuilder with operations, including 26 active communities, in the greater Houston, Texas area, for approximately $127.0 million in cash, inclusive of customary holdbacks. We concluded that the acquisition represents a business combination, as we determined that the fair value of the gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets, and the acquired assets and processes have the ability to create outputs in the form of revenue from the sale of single-family residences. We incurred $0.5 million in acquisition costs, which are reflected in other expense in our condensed consolidated statements of operations.

The following is a summary of the allocation of the purchase price for Anglia based on the fair value of assets acquired and liabilities assumed (in thousands):

Prepaid expenses and other assets

$

7,885

Inventories

111,425

Property and equipment, net

127

Amortizable intangible assets

1,900

Goodwill

7,351

Total assets

$

128,688

Accounts payable

$

1,281

Accrued expenses and other liabilities

417

Total liabilities

1,698

Net assets acquired

$

126,990

Acquired inventories consist of work in process inventories and finished lots. We estimated the fair value of the acquired inventories based upon the stage of production of each unit and a gross margin that we believe a market participant would require to complete the remaining development and requisite selling efforts.  We estimated a market participant would require a gross margin ranging from approximately 8% to 20% based upon the stage of production of the individual lot.

Amortizable intangible assets acquired include right of first refusal and non-compete agreements, which we, with the assistance of a third-party valuation firm, estimated to have fair values of $0.9 million and $1.0 million, respectively. These intangible assets are amortized each over 2 years. Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed, and in connection with this acquisition, we have allocated $7.4 million in goodwill to the Texas operating segment. Goodwill allocated for tax purposes is expected to be deductible.

We determined that Anglia’s carrying costs approximated fair value for all other acquired assets and assumed liabilities.

9

Table of Contents

From the acquisition date, Anglia’s results of operations, which include home sales revenue of $20.3 million and loss before income tax, inclusive of purchase price accounting, of $1.5 million, are included in our accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2024.

4. Inventories

Inventories included the following (in thousands):

September 30,

December 31,

2024

2023

Homes under construction

$

1,771,516

$

1,334,584

Land and land development

1,727,324

1,609,459

Capitalized interest

82,259

72,598

Total inventories

$

3,581,099

$

3,016,641

5. Financial Services

Our Financial Services are principally comprised of our mortgage lending operations, Inspire Home Loans Inc. (which we refer to as “Inspire”). Inspire is a full-service mortgage lender and primarily originates mortgage loans for our homebuyers. Inspire sells substantially all of the loans it originates either as loans with servicing rights released, or with servicing rights retained, in the secondary mortgage market within a short period of time after origination, generally within 30 days. Inspire primarily finances these loans using its mortgage repurchase facilities. 

Mortgage loans held for sale and mortgage servicing rights are carried at fair value, with gains and losses from the changes in fair value reflected in financial services revenue on the consolidated statements of operations. Management believes carrying mortgage loans held for sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them. Net gains and losses from the sale of mortgage loans held for sale, which are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale, are also included in financial services revenue on the consolidated statements of operations. Financial services revenue also includes fees earned from originating mortgage loans, which are recognized at the time the mortgage loans are funded, which include origination fees and discount points provided directly to our customers to reduce interest rates based on commitment agreements entered into between our homebuilding and Financial Services segments. Intercompany fees charged directly to the homebuilder are eliminated from financial services revenue on the condensed consolidated statements of operations upon consolidation.   

As of September 30, 2024 and December 31, 2023, Inspire had mortgage loans held for sale with an aggregate fair value of $257.2 million and $251.9 million, respectively, and an aggregate outstanding principal balance of $257.1 million and $247.7 million, respectively. Net losses on the sale of mortgage loans were $1.1 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, and were $6.9 million and $3.4 million for the three and nine months ended September 30, 2023, respectively. The gain from the change in fair value for mortgage loans held for sale was $0.1 million for the three months ended September 30, 2024, and the loss from the change in fair value for mortgage loans held for sale was $4.1 million for the nine months ended September 30, 2024. Losses from the change in fair value for mortgage loans held for sale were $2.9 million and $4.9 million for the three and nine months ended September 30, 2023, respectively.

Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $146.0 million and $49.6 million at September 30, 2024 and December 31, 2023, respectively, and carried a weighted average interest rate of approximately 4.9% and 5.8%, respectively.  Interest rate risks related to these obligations are typically mitigated through our interest rate hedging program or by the preselling of loans to investors. Derivative instruments used to economically hedge our market and interest rate risk are carried at fair value. Derivative instruments typically include interest rate lock commitments and forward commitments on mortgage-backed securities. Changes in fair value of these derivatives as well as any gains or losses upon settlement are reflected in financial services revenue on our condensed consolidated statements of operations. Refer to Note 13 – Fair Value Disclosures for further information regarding our derivative instruments.

 

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6. Prepaid Expenses and Other Assets

Prepaid expenses and other assets included the following (in thousands):

September 30,

December 31,

2024

2023

Prepaid insurance

$

37,241

$

37,624

Lot option and escrow deposits

94,384

51,369

Performance deposits

10,282

10,170

Restricted cash (1)

29,753

15,853

Multi-family rental properties under construction (2)

146,993

136,300

Mortgage loans held for investment at fair value

24,032

21,041

Mortgage loans held for investment at amortized cost

6,679

6,826

Mortgage servicing rights

34,523

30,932

Derivative assets

3,757

1,618

Other assets and prepaid expenses

40,317

38,460

Total prepaid expenses and other assets

$

427,961

$

350,193

(1)Restricted cash consists of restricted cash related to land development, earnest money deposits for home sale contracts held by third parties as required by various jurisdictions, and certain compensating balances associated with our mortgage repurchase facilities and other financing obligations.

(2)During the nine months ended September 30, 2024, certain multi-family rental properties were completed and became available for leasing; and as such, we reclassified $92.4 million from multi-family rental properties under construction, included in prepaid expenses and other assets on the condensed consolidated balance sheets, to property and equipment, net on the condensed consolidated balance sheets.

   

7. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities included the following (in thousands):

September 30,

December 31,

2024

2023

Earnest money deposits

$

17,286

$

7,933

Warranty reserve

12,203

11,524

Self-insurance reserve

29,751

23,659

Accrued compensation costs

64,360

80,133

Land development and home construction accruals

98,746

120,224

Accrued interest

17,117

10,404

Income taxes payable

—

—

Derivative liabilities

1,088

5,291

Other accrued liabilities

47,386

44,224

Total accrued expenses and other liabilities

$

287,937

$

303,392

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8. Warranties

Estimated future direct warranty costs are accrued and charged to cost of home sales revenues in the period when the related home sales revenues are recognized. Amounts accrued, which are included in accrued expenses and other liabilities on the condensed consolidated balance sheets, are based upon historical experience rates. We subsequently assess the adequacy of our warranty accrual on a quarterly basis through a model that incorporates historical payment trends and adjust the amounts recorded, if necessary. Based on warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $0.3 million and $0.5 million during the three months ended September 30, 2024 and 2023, respectively, and we reduced our warranty reserve by $1.9 million and $1.2 million during the nine months ended September 30, 2024 and 2023, respectively. These adjustments are included in cost of home sales revenues on our condensed consolidated statements of operations.  Changes in our warranty accrual for the three and nine months ended September 30, 2024 and 2023 are detailed in the table below (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Beginning balance

$

11,598

$

12,984

$

11,524

$

13,136

Warranty expense provisions

2,721

2,199

7,861

6,500

Payments

(1,770)

(1,874)

(5,303)

(5,643)

Warranty adjustment

(346)

(520)

(1,879)

(1,204)

Ending balance

$

12,203

$

12,789

$

12,203

$

12,789

 

9. Self-Insurance Reserve

We maintain general liability insurance coverage, including coverage for certain construction defects after homes have closed and premise operations during construction. These insurance policies are designed to protect us against a portion of the risk of loss from claims, subject to certain self-insured per occurrence and aggregate retentions, deductibles, and available policy limits. In circumstances where we have elected to retain a higher portion of the overall risk for construction defect claims in return for a lower initial premium, we reserve for the estimated self-insured retention costs that we will incur that are above our coverage limits or that are not covered by our insurance policies. The reserve is recorded on an undiscounted basis at the time revenue is recognized for each home closing. Amounts accrued, which are included in accrued expenses and other liabilities on the condensed consolidated balance sheets, are based on third party actuarial analyses that are primarily based on industry data and partially on our historical claims, which include estimates of claims incurred but not yet reported. Adjustments to estimated reserves are recorded in the period in which the change in estimate occurs. Our self-insurance liability is presented on a gross basis without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimates of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable. Based on a third-party actuarial analysis, we reduced our self-insurance reserve by $0.8 million during the three and nine months ended September 30, 2024, and we reduced our self-insurance reserve by $3.4 million during the three and nine months ended September 30, 2023. Any adjustments are included in cost of home sales revenues on our condensed consolidated statements of operations.

Changes in our self-insurance reserve for incurred but not reported construction defect claims for the three and nine months ended September 30, 2024 and 2023 are detailed in the table below (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Beginning balance

$

27,684

$

21,477

$

23,659

$

16,998

Self-insurance expense provisions

3,106

2,470

8,334

7,029

Payments

(251)

(16)

(1,454)

(96)

Self-insurance adjustment

(788)

(3,436)

(788)

(3,436)

Ending balance

$

29,751

$

20,495

$

29,751

$

20,495

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10. Debt

Our outstanding debt obligations included the following as of September 30, 2024 and December 31, 2023 (in thousands):  

September 30,

December 31,

2024

2023

3.875% senior notes, due August 2029(1)

$

496,235

$

495,656

6.750% senior notes, due June 2027(1)

497,823

497,210

Other financing obligations(2)

124,885

69,605

Notes payable

1,118,943

1,062,471

Revolving line of credit

414,000

—

Mortgage repurchase facilities

247,214

239,298

Total debt

$

1,780,157

$

1,301,769

(1)The carrying value of senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest expense over the respective terms of the senior notes.

(2)As of September 30, 2024, other financing obligations included $14.5 million related to insurance premium notes and certain secured borrowings, as well as $110.3 million outstanding under construction loan agreements. As of December 31, 2023, other financing obligations included $24.7 million related to insurance premium notes and certain secured borrowings, as well as $44.9 million outstanding under construction loan agreements.

   

Construction Loan Agreements

Certain wholly owned subsidiaries of Century Living, LLC are parties to construction loan agreements with various banks (which we collectively refer to as “the lenders”). These construction loan agreements collectively provide that we may borrow up to an aggregate of $187.6 million from the lenders for purposes of construction of multi-family projects in Colorado, with advances made by the lenders upon the satisfaction of certain conditions. Borrowings under the construction loan agreements bear interest at various rates, including a fixed rate and floating interest rates per annum equal to the Secured Overnight Financing Rate (which we refer to as “SOFR”) and the Bloomberg Short-term Bank Yield Index, plus an applicable margin. The outstanding principal balances and all accrued and unpaid interest is due on varying maturity dates from March 17, 2026 through March 17, 2028, with certain of the construction loan agreements allowing for the option to extend the maturity dates for a period of 12 months if certain conditions are satisfied. The construction loan agreements contain customary affirmative and negative covenants (including covenants related to construction completion, and limitations on the use of loan proceeds, transfers of land, equipment, and improvements), as well as customary events of default. Interest on our construction loan agreements is capitalized to the multi-family properties assets included in prepaid expenses and other assets on the condensed consolidated balance sheets while the related multi-family rental properties are being actively developed.

As of September 30, 2024 and December 31, 2023, $110.3 million and $44.9 million was outstanding under the construction loan agreements respectively, with borrowings that bore a weighted average interest rate of 7.2% and 7.4% as of September 30, 2024 and December 31, 2023, respectively, and we were in compliance with all covenants thereunder.

Revolving Line of Credit

We are party to a Second Amended and Restated Credit Agreement, as amended, (which we refer to as the “Second A&R Credit Agreement”) with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, and the lenders party thereto. The Second A&R Credit Agreement, which amended and restated our prior Amended and Restated Credit Agreement, provides us with a senior unsecured revolving line of credit (which we refer to as the “revolving line of credit”) of up to $800.0 million, and unless terminated earlier, will mature on April 30, 2026. The revolving line of credit includes a $250.0 million sublimit for standby letters of credit and a $50.0 million sublimit for swingline loans. Under the terms of the Second A&R Credit Agreement, we are entitled to request an increase in the size of the revolving line of credit by an amount not exceeding $200.0 million. Our obligations under the Second A&R Credit Agreement are guaranteed by certain of our subsidiaries. The Second A&R Credit Agreement contains customary affirmative and negative covenants (including limitations on our ability to grant liens, incur additional debt, pay dividends, redeem our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions), as well as customary events of default. Borrowings under the Second A&R Credit Agreement are based on an adjusted term SOFR reference rate, which equals the greater of (i) 0.50% or (ii) the one-month quotation of the SOFR administered by the Federal Reserve Bank of New York, plus 0.10%.

As of September 30, 2024, $414.0 million was outstanding under the revolving line of credit, with borrowings that bore an interest rate of 7.4%, and we were in compliance with all covenants under the Second A&R Credit Agreement. As of December 31, 2023, no amount was outstanding under the revolving line of credit.

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Mortgage Repurchase Facilities – Financial Services

Inspire is party to mortgage warehouse facilities with J.P. Morgan Chase Bank, N.A., U.S. Bank National Association and Truist Bank, which provide Inspire with uncommitted repurchase facilities of up to an aggregate of $475.0 million as of September 30, 2024, secured by the mortgage loans financed thereunder. The repurchase facilities have varying short term maturity dates through September 26, 2025. Borrowings under the mortgage repurchase facilities bear interest at variable interest rates per annum equal to SOFR plus an applicable margin, and bore a weighted average interest rate of 6.8% as of September 30, 2024.

Amounts outstanding under the repurchase facilities are not guaranteed by us or any of our subsidiaries, and the agreements contain various affirmative and negative covenants applicable to Inspire that are customary for arrangements of this type. As of September 30, 2024 and December 31, 2023, we had $247.2 million and $239.3 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

 

11. Interest on Senior Notes and Revolving Line of Credit

Interest on our senior notes and revolving line of credit, if applicable, is capitalized to inventories while the related communities are being actively developed and until homes are completed. As our qualifying assets exceeded our outstanding debt during the three and nine months ended September 30, 2024 and 2023, we capitalized all interest costs incurred on these facilities during these periods.

Our interest costs were as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Interest capitalized beginning of period

$

77,930

$

69,745

$

72,598

$

61,775

Interest capitalized during period

20,821

14,234

51,778

42,281

Less: capitalized interest in cost of sales

(16,492)

(10,652)

(42,117)

(30,729)

Interest capitalized end of period

$

82,259

$

73,327

$

82,259

$

73,327

12. Income Taxes

At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and to use that rate to provide for income taxes for the current year-to-date reporting period. Our 2024 estimated annual effective tax rate, before discrete items, of 24.6%, is driven by our blended federal and state statutory rate of 24.6%, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation offset by estimated federal energy home credits for current year home deliveries.

For the nine months ended September 30, 2024, our estimated annual rate of 24.6% was benefitted by discrete items which had a net impact of decreasing our rate by 0.4%, including the impact of excess tax benefits for vested stock-based compensation.

For the three months ended September 30, 2024 and 2023, we recorded income tax expense of $26.9 million and $28.8 million, respectively. For the nine months ended September 30, 2024 and 2023, we recorded income tax expense of $73.8 million and $56.9 million, respectively.

 

13. Fair Value Disclosures

Fair value measurements are used for the Company’s mortgage loans held for sale, mortgage loans held for investment, mortgage servicing rights, interest rate lock commitments and other derivative instruments on a recurring basis. We also utilize fair value measurements on a non-recurring basis for inventories and intangible assets when events and circumstances indicate that the carrying value is not recoverable. The fair value hierarchy and its application to the Company’s assets and liabilities is as follows:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at the measurement date.

Mortgage loans held for sale – Fair value is based on quoted market prices for committed and uncommitted mortgage loans.

 

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Derivative assets and liabilities – Derivative assets are associated with interest rate lock commitments and investor commitments on loans and may also be associated with forward mortgage-backed securities contracts. Derivative liabilities are associated with forward mortgage-backed securities contracts. Fair value is based on market prices for similar instruments.

Level 3 – Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at the measurement date.

Mortgage servicing rights - The fair value of the mortgage servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service.

Mortgage loans held for investment at fair value – The fair value of mortgage loans held for investment at fair value is calculated based on Level 3 analysis which incorporates information including the value of underlying collateral, from markets where there is little observable trading activity.

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023, respectively (in thousands):

September 30,

December 31,

Balance Sheet Classification

Hierarchy

2024

2023

Mortgage loans held for sale

Mortgage loans held for sale

Level 2

$

257,187

$

251,852

Mortgage loans held for investment at fair value (1)

Prepaid expenses and other assets

Level 3

$

24,032

$

21,041

Derivative assets

Prepaid expenses and other assets

Level 2

$

3,757

$

1,618

Mortgage servicing rights (2)

Prepaid expenses and other assets

Level 3

$

34,523

$

30,932

Derivative liabilities

Accrued expenses and other liabilities

Level 2

$

1,088

$

5,291

(1)The unobservable inputs used in the valuation of the mortgage loans held for investment at fair value include, among other items, the value of underlying collateral, from markets where there is little observable trading activity.

(2)The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service, which were 7.8%, 10.4%, and $0.073 per year per loan, respectively, as of September 30, 2024, and 8.6%, 10.3%, and $0.072 per year per loan, respectively, as of December 31, 2023. The high and low end of the range of unobservable inputs used in the valuation did not result in a significant change to the fair value measurement.

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements, with gains and losses from the changes in fair value reflected in financial services revenue on our condensed consolidated statements of operations (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Mortgage servicing rights

2024

2023

2024

2023

Beginning of period

$

34,070

$

26,631

$

30,932

$

24,164

Originations

3,907

3,017

6,686

5,121

Settlements

(642)

(428)

(1,754)

(989)

Changes in fair value

(2,812)

1,273

(1,341)

2,197

End of period

$

34,523

$

30,493

$

34,523

$

30,493

Three Months Ended September 30,

Nine Months Ended September 30,

Mortgage loans held-for-investment at fair value

2024

2023

2024

2023

Beginning of period

$

21,763

$

20,559

$

21,041

$

18,875

Transfers from loans held for sale

2,707

1,268

4,663

4,432

Settlements

(244)

(316)

(905)

(997)

Reduction in unpaid principal balance

(102)

(120)

(464)

(753)

Changes in fair value

(92)

(24)

(303)

(190)

End of period

$

24,032

$

21,367

$

24,032

$

21,367

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For the financial assets and liabilities that the Company does not reflect at fair value, the following present both their respective carrying value and fair value at September 30, 2024 and December 31, 2023, respectively (in thousands).

September 30, 2024

December 31, 2023

Hierarchy

Carrying

Fair Value

Carrying

Fair Value

Cash and cash equivalents

Level 1

$

149,155

$

149,155

$

226,150

$

226,150

3.875% senior notes (1)(2)

Level 2

$

496,235

$

464,375

$

495,656

$

436,875

6.750% senior notes (1)(2)

Level 2

$

497,823

$

501,875

$

497,210

$

500,000

Revolving line of credit(3)

Level 2

$

414,000

$

414,000

$

—

$

—

Other financing obligations(3)(4)

Level 3

$

124,885

$

124,885

$

69,605

$

69,605

Mortgage repurchase facilities(3)

Level 2

$

247,214

$

247,214

$

239,298

$

239,298

(1)Estimated fair value of the senior notes is based on recent trading activity in inactive markets.

(2)Carrying amounts include any associated unamortized deferred financing costs, premiums and discounts. As of September 30, 2024, these amounts totaled $3.8 million and $2.2 million for the 3.875% senior notes and 6.750% senior notes, respectively. As of December 31, 2023, these amounts totaled $4.3 million and $2.8 million for the 3.875% senior notes and 6.750% senior notes, respectively.

(3)Carrying amount approximates fair value due to short-term nature and/or interest rate terms.

(4)During the period ended September 30, 2024, other financing obligations included $14.5 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 5.0% to 8.0%, and $110.3 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 7.2% as of September 30, 2024. During the period ended December 31, 2023, other financing obligations included $24.7 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 4.8% to 7.7%, and $44.9 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 7.4%.

Non-financial assets and liabilities include items such as inventory and property and equipment that are measured at fair value when acquired and as a result of impairments, if deemed necessary. During the three months ended September 30, 2024, we determined that inventory with a carrying value before impairment of $10.6 million for two communities in our Century Complete and Southeast segments were not recoverable. During the nine months ended September 30, 2024, we determined that inventory with a carrying value before impairment of $15.2 million for four communities in our Century Complete and Southeast segments were not recoverable. Accordingly, during the three and nine months ended September 30, 2024, we recognized impairment charges of an aggregate $1.4 million and $1.9 million, respectively, in order to record the communities at fair value. No impairment charges were recorded in the three and nine months ended September 30, 2023. When impairment charges are recognized, the estimated fair value of communities are determined through a discounted cash flow approach utilizing Level 3 inputs. Changes in our cash flow projections in future periods related to these communities may change our conclusions on the recoverability of inventory in the future.

 

14. Stock-Based Compensation

During the nine months ended September 30, 2024 and 2023, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million and 0.2 million shares of common stock, respectively, with a grant date fair value of $86.01 and $62.68 per share, respectively, that vest over a three year period. During the nine months ended September 30, 2024 and 2023, we granted 11.0 thousand and 11.0 thousand shares of common stock, respectively, on an unrestricted basis (which we refer to as “stock awards”) with a grant date fair value of $82.84 and $65.77 per share, respectively, to our non-employee directors.

During the nine months ended September 30, 2024 and 2023, we granted performance share units (which we refer to as “PSUs”) covering up to 0.3 million and 0.5 million shares of common stock assuming maximum level of performance with a grant date fair value of $82.23 and $60.05 per share, respectively, that are subject to both service and performance vesting conditions. The quantity of shares that will ultimately vest and be issued upon settlement of the PSUs ranges from 0% to 250% of a targeted number of shares and will be determined based on an achievement of a three year adjusted pre-tax income performance goal. During the nine months ended September 30, 2024 and 2023, we issued 0.2 million and 0.3 million shares of common stock, respectively, upon the vesting and settlement of PSUs that were granted in previous periods. Approximately 1.1 million shares will vest from 2025 to 2027 if the defined maximum performance targets are met, and no shares will vest if the defined minimum performance targets are not met.

A summary of our outstanding PSUs, assuming the current estimated level of performance achievement, and RSUs are as follows (in thousands, except years):

September 30, 2024

Unvested units

1,246

Unrecognized compensation cost

$

32,079

Weighted-average years to recognize compensation cost

1.46

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During the three months ended September 30, 2024 and 2023, we recognized stock-based compensation expense of $7.4 million and $12.2 million, respectively. During the nine months ended September 30, 2024 and 2023, we recognized stock-based compensation expense of $18.1 million and $26.5 million, respectively. Stock-based compensation expense is included in selling, general, and administrative expense on our condensed consolidated statements of operations. Stock-based compensation expense for PSUs is initially estimated based on target performance achievement and adjusted as appropriate throughout the performance period. Accordingly, future compensation cost associated with outstanding PSUs may increase or decrease based on the probability and extent of achievement with respect to the applicable performance measures.

 

15. Stockholders’ Equity

The Company’s authorized capital stock consists of 100.0 million shares of common stock, par value $0.01 per share, and 50.0 million shares of preferred stock, par value $0.01 per share. As of September 30, 2024 and December 31, 2023, there were 31.3 million and 31.8 million shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

On May 4, 2022, the stockholders approved the adoption of the Century Communities, Inc. 2022 Omnibus Incentive Plan (which we refer to as the “2022 Incentive Plan”), which replaced the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan (which we refer to as our “2017 Incentive Plan”). Under the 2022 Incentive Plan, 3.1 million shares of common stock are available for issuance to eligible participants, plus 51.2 thousand shares of our common stock that remained available for issuance under the 2017 Incentive Plan and any shares subject to awards outstanding under the 2017 Incentive Plan that are subsequently forfeited, cancelled, expire or otherwise terminate without the issuance of such shares. During the nine months ended September 30, 2024 and 2023, we issued 0.3 million and 0.4 million shares of common stock, respectively, related to the vesting and settlement of RSUs and PSUs. As of September 30, 2024, approximately 2.2 million shares of common stock remained available for issuance under the 2022 Incentive Plan.

The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the nine months ended September 30, 2024 and 2023, respectively (in thousands, except per share information):

Nine Months Ended September 30, 2024

Cash Dividends Declared and Paid

Declaration Date

Record Date

Paid Date

Per Share

Amount

February 7, 2024

February 28, 2024

March 13, 2024

$

0.26

$

8,264

May 15, 2024

May 29, 2024

June 12, 2024

$

0.26

$

8,217

August 14, 2024

August 28, 2024

September 11, 2024

$

0.26

$

8,148

Nine Months Ended September 30, 2023

Cash Dividends Declared and Paid

Declaration Date

Record Date

Paid Date

Per Share

Amount

February 8, 2023

March 1, 2023

March 15, 2023

$

0.23

$

7,365

May 17, 2023

May 31, 2023

June 14, 2023

$

0.23

$

7,368

August 16, 2023

August 30, 2023

September 13, 2023

$

0.23

$

7,341

Under the 2022 Incentive Plan and the previous 2017 Incentive Plan, at the discretion of the Compensation Committee of the Board of Directors, RSUs and PSUs granted under the plan have the right to earn dividend equivalents, which entitles the holders of such RSUs and PSUs to additional RSUs and PSUs equal to the same dividend value per share as holders of common stock. Dividend equivalents are subject to the same vesting and other terms and conditions as the underlying RSUs and PSUs.

Our stock repurchase programs, authorized by our Board of Directors, authorize us to repurchase up to 9.0 million shares of our outstanding common stock, of which 5.1 million shares remained available to be repurchased as of September 30, 2024. We did not repurchase any shares of our common stock during the three months ended September 30, 2024. During the nine months ended September 30, 2024, an aggregate of 651.9 thousand shares were repurchased for a total purchase price of approximately $53.1 million and a weighted average price of $81.49 per share. During the three and nine months ended September 30, 2023, an aggregate of 247.8 thousand and 278.2 thousand shares, respectively, were repurchased for a total purchase price of approximately $17.3 million and $19.2 million, respectively, and a weighted average price of $69.61 and $69.09 per share, respectively.

During the nine months ended September 30, 2024 and 2023, shares of common stock at a total cost of $10.5 million and $10.7 million, respectively, were netted and surrendered as payment for minimum statutory withholding obligations in connection with the vesting of outstanding stock-based compensation awards. Shares surrendered by the participants in accordance with the applicable award agreements and plan are deemed repurchased and retired by us but are not part of our publicly announced share repurchase programs.

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16. Earnings Per Share

We use the treasury stock method to calculate earnings per share as our currently issued non-vested RSUs and PSUs do not have participating rights.

The following table sets forth the computation of basic and diluted EPS for the three and nine months ended September 30, 2024 and 2023 (in thousands, except share and per share information):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Numerator

Net income

$

83,020

$

83,150

$

231,075

$

167,906

Denominator

Weighted average common shares outstanding - basic

31,336,756

31,962,884

31,596,995

31,967,672

Dilutive effect of stock-based compensation awards

688,259

274,138

520,922

233,005

Weighted average common shares outstanding - diluted

32,025,015

32,237,022

32,117,917

32,200,677

Earnings per share:

Basic

$

2.65

$

2.60

$

7.31

$

5.25

Diluted

$

2.59

$

2.58

$

7.19

$

5.21

Stock-based awards are excluded from the calculation of diluted EPS in the event they are subject to unsatisfied performance conditions or are antidilutive. We excluded 0.4 million and 0.9 million common stock unit equivalents from diluted earnings per share during the three months ended September 30, 2024 and 2023, respectively, and we excluded 0.4 million and 0.8 million common stock unit equivalents from diluted earnings per share during the nine months ended September 30, 2024 and 2023, respectively, related to the PSUs for which performance conditions remained unsatisfied.

 

17. Commitments and Contingencies

Letters of Credit and Performance Bonds

In the normal course of business, we post letters of credit and performance and other bonds primarily related to our land development performance obligations with local municipalities. As of September 30, 2024 and December 31, 2023, we had $527.9 million and $510.5 million, respectively, in letters of credit and performance and other bonds issued and outstanding.

Legal Proceedings

We are subject to claims and lawsuits that arise primarily in the ordinary course of business, which consist primarily of construction claims. It is the opinion of our management that if the claims have merit, parties other than the Company would be, at least in part, liable for the claims, and the eventual outcome of these claims will not have a material adverse effect upon our consolidated financial condition, results of operations, or cash flows. When we believe that a loss is probable and estimable, we record a charge on our condensed consolidated statements of operations for our estimated loss.

Under various insurance policies, we have the ability to recoup costs in excess of applicable self-insured retentions. Estimates of such amounts are recorded in other assets on our condensed consolidated balance sheet when recovery is probable. 

We do not believe that the ultimate resolution of any claims and lawsuits will have a material adverse effect upon our consolidated financial position, results of operations, or cash flows.

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ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

As used in this Quarterly Report on Form 10-Q (which we refer to as this “Form 10-Q”), references to “we,” “us,” “our,” “Century” or the “Company” refer to Century Communities, Inc., a Delaware corporation, and, unless the context otherwise requires, its subsidiaries and affiliates.

The following discussion and analysis of our financial condition and results of operations is intended to help the reader understand our Company, business, operations and present business environment and is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. We use certain non-GAAP financial measures that we believe are important for purposes of comparison to prior periods. This information is also used by our management to measure the profitability of our ongoing operations and analyze our business performance and trends.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements included in this Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, forecasts, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual results could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential,” “outlook,” the negative of such terms and other comparable terminology and the use of future dates. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors.

The forward-looking statements included in this Form 10-Q reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. Statements regarding the following subjects, among others, may be forward-looking and subject to risks and uncertainties including among others:

economic changes, either nationally or in the markets in which we operate, including changes in interest rates and the resulting impact on the accessibility of mortgage loans to homebuyers, persistent inflation, and decreased employment levels;

shortages of or increased prices for labor, land or raw materials used in housing construction and resource shortages;

a downturn in the homebuilding industry, including a reduction in demand or a decline in real estate values or market conditions resulting in an adverse impact on our business, operating results and financial condition, including an impairment of our assets;

changes in assumptions used to make industry forecasts, population growth rates or trends affecting housing demand or prices;

volatility and uncertainty in the credit markets and broader financial markets and the impact on such markets and our ability to access them in the event of a threatened or actual U.S. government shutdown or sovereign default;

our future business operations, operating results and financial condition, and changes in our business and investment strategy;

availability and price of land to acquire, and our ability to acquire such land on favorable terms or at all;

the effect of and risks associated with our recent acquisitions;

availability, terms and deployment of capital;

availability or cost of mortgage financing or an increase in the number of foreclosures in the market;

delays in land development or home construction resulting from adverse weather conditions or other events outside our control;

delays in completion of projects, land development or home construction, or reduced consumer demand for housing resulting from significant weather conditions and natural disasters in the geographic areas where we operate;

the impact of construction defect, product liability, and/or home warranty claims, including the adequacy of accruals and the applicability and sufficiency of our insurance coverage;

changes in, or the failure or inability to comply with, governmental laws and regulations;

the timing of receipt of municipal, utility and other regulatory approvals and the opening of projects and construction and completion of our homes;

the impact and cost of compliance with evolving environmental, health and safety and other laws and regulations and third-party challenges to required permits and other approvals and potential legal liability in connection therewith;

the degree and nature of our competition;

unstable economic and political conditions as well as geopolitical conflicts, could adversely affect our supply chain by causing shortages or increases in costs for materials necessary to construct homes and/or increases to the price of gasoline and other fuels and cause higher interest rates, inflation or general economic uncertainty;

our leverage, debt service obligations and exposure to changes in interest rates and our ability to obtain additional or refinance our existing debt when needed or on favorable terms;

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our ability to continue to fund and succeed in our mortgage lending business and the additional risks involved in that business;

availability of qualified personnel and contractors and our ability to obtain additional or retain existing key personnel and contractor relationships;

our ability to continue to pay dividends and make stock repurchases in the future; and 

taxation and tax policy changes, tax rate changes, new tax laws, new or revised tax law interpretations or guidance.

Forward-looking statements are based on our beliefs, assumptions and expectations of future events, taking into account all information currently available to us. Forward-looking statements are not guarantees of future events or of our performance. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these events and factors are described above and in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K, and other risks and uncertainties detailed in this report, including “Part II, Item 1A. Risk Factors,” and our other reports and filings with the SEC. If a change occurs, our business, financial condition, liquidity, cash flows and results of operations may vary materially from those expressed in or implied by our forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Therefore, you should not rely on these forward-looking statements as of any date subsequent to the date of this Form 10-Q.

Business Overview

Century is engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 18 states. In many of our projects, in addition to building homes, we entitle and develop the underlying land. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand has an emphasis on serving the entry-level homebuilding market but offers a wide range of buyer profiles including: entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the ability to personalize their homes through certain option and upgrade opportunities. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and generally provides no option or upgrade opportunities.

Our homebuilding operations are organized into the following five reportable segments: West, Mountain, Texas, Southeast, and Century Complete. Our indirect wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, IHL Home Insurance Agency, LLC, and IHL Escrow Inc., which provide mortgage, title, insurance, and escrow services, respectively, primarily to our homebuyers, have been identified as our Financial Services segment. Additionally, our wholly owned subsidiary, Century Living, LLC, is engaged in the development, construction and management of multi-family rental properties, currently all located in Colorado. Century Living, LLC is included in our Corporate segment.

While we offer homes that appeal to a broad range of entry-level, move-up, and lifestyle homebuyers, our offerings are heavily weighted towards providing affordable housing options in each of our homebuyer segments. Additionally, we prefer building move-in-ready homes over built-to-order homes, which we believe allows for a faster construction process, advantageous pricing with subcontractors, and shortened time period from home sale to home delivery, thus allowing our customers greater certainty on their financing and allowing us to more appropriately price the homes and deploy our capital. Of the 7,809 homes delivered during the first nine months of 2024, approximately 93% of our deliveries were made to entry-level homebuyers that were below the Federal Housing Administration-insured mortgage limits and approximately 98% of homes delivered were built as move-in ready homes.

During 2024, we have completed two acquisitions. On July 31, 2024, we closed on the acquisition of substantially all the assets and operations and assumed certain liabilities of Anglia Homes LP (“Anglia”), a homebuilder with operations in the greater Houston, Texas area, for approximately $127.0 million in cash, inclusive of customary holdbacks. On January 22, 2024, we closed on the acquisition of substantially all the assets and assumed certain liabilities of Landmark Homes of Tennessee, Inc. (“Landmark”), a homebuilder with operations, including six active communities, in Nashville, Tennessee, for approximately $33.4 million in cash, inclusive of customary holdbacks.

Current housing market conditions demonstrate solid, underlying demand for affordable new homes and, coupled with a more recent moderation in mortgage rates, we experienced solid demand during the first nine months of 2024, as net new home contracts (new home contracts net of cancellations) for the three and nine months ended September 30, 2024 increased 19.3% and 26.5%, respectively, as compared to the same prior year periods. We have continued to provide, when necessary, incentive offerings across our communities during the first nine months of 2024, including discounts on base home prices, lot premiums, and options and upgrades and financing incentives, including interest rate buydowns. During the nine months ended September 30, 2024, cycle times have remained in the four- to five-month timeframe.

We anticipate the homebuilding markets in each of our operating segments will continue to be tied to both the macro-economic environment and the local economy, and we expect our operating strategy will continue to adapt to market changes, though we cannot

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provide any assurance that our strategies will remain consistent or continue to be successful. We believe future demand for our homes remains uncertain as future economic and market conditions remain uncertain, in particular with respect to inflation; the impact of potential future increases or decreases to the federal funds interest rate by the Federal Reserve; interest rates; availability and cost of mortgage loans to homebuyers; financial markets, credit and mortgage markets; the extent to which and how long government monetary directives, actions, and economic relief efforts will impact the U.S. economy; consumer confidence; wage growth; household formations; levels of new and existing homes for sale; prevailing home and rental prices; availability and cost of land, labor and construction materials; demographic trends; housing demand; the effect of the U.S. Presidential election on the economy, consumer confidence and homebuilding; and other factors, including those described elsewhere in this Form 10-Q. Specifically, changes in mortgage interest rates impact the costs of owning a home and affect the purchasing power of our customers and could impact homebuyer confidence. Changes in demand for our homes or cancellations due to mortgage interest rates or otherwise affect our operating results in future periods, including our net sales, home deliveries, gross margin, origination volume of and revenues from our Financial Services segment, and net income. As a result, our past performance may not be indicative of our future results.

We believe we are well-positioned to benefit from any future declines in mortgage interest rates, the ongoing shortage of both new and resale homes available for purchase in our key markets, and the favorable demographics that support the need for new affordable housing. We believe our operations are prepared to withstand volatility in future market conditions as a result of our product offerings which both span the home buying segment and focus on affordable price points, and our current and future inventories of attractive land positions. We have continued to focus on maintaining an appropriate balance of home and land inventories in relation to anticipated future demand, as well as prudent leverage, and, as a result, we believe we are well positioned to continue to execute on our strategy to optimize stockholder returns.

Results of Operations

During the three and nine months ended September 30, 2024, we generated $109.9 million and $304.9 million, respectively, in income before income tax expense, as compared to $112.0 million and $224.8 million, respectively, in the respective prior year periods. During the three and nine months ended September 30, 2024, we generated net income of $83.0 million, or $2.59 per diluted share, and $231.1 million, or $7.19 per diluted share, respectively, as compared to $83.2 million, or $2.58 per diluted share, and $167.9 million, or $5.21 per diluted share, respectively, in the respective prior year periods.

During the three and nine months ended September 30, 2024, we generated total revenues of $1.1 billion and $3.1 billion, respectively, which represent increases of 27.8% and 25.7%, respectively, as compared to the respective prior year periods, driven primarily by increased home sales revenue from increased number of homes available for sale and increased average sales prices. During the three and nine months ended September 30, 2024, we delivered 2,834 and 7,809 homes, respectively, with an average sales price of $393.8 thousand and $391.3 thousand, respectively. The number of homes delivered increased by 25.2% and 21.8%, respectively, during the three and nine months ended September 30, 2024, as compared to the respective prior year periods, representing growth across all of our segments. Average sales price increased 3.1% and 3.7%, respectively, during the three and nine months ended September 30, 2024, as compared to the respective prior year periods. During the three and nine months ended September 30, 2024, net new contracts increased 19.3% and 26.5%, respectively, to 2,563 and 8,209, respectively, as compared to the respective prior year periods.

We ended the third quarter of 2024 with $149.2 million of cash and cash equivalents and $70.8 million of cash held in escrow. We had $414.0 million outstanding under our revolving line of credit, with a homebuilding debt to capital ratio of 35.8% and a net homebuilding debt to net capital ratio of 32.1%. During the three and nine months ended September 30, 2024, we paid quarterly cash dividends to our stockholders of $0.26 per share, which represents a 13% increase from the $0.23 per share quarterly dividends paid during the three and nine months ended September 30, 2023. During the nine months ended September 30, 2024, we have continued to strategically increase our lot pipeline, including both organically and through acquisitions, resulting in 80,121 lots owned and controlled at September 30, 2024.

For the three and nine months ended September 30, 2024, our Financial Services segment generated income before income tax of $3.1 million and $18.8 million, respectively, representing a decrease of 74.8% and 36.9%, respectively, as compared to the respective prior year periods.  During the three and nine months ended September 30, 2024, the number of mortgages originated increased 45.5% and 41.6%, respectively, as compared to the respective prior year periods, which benefited from increased capture rates, and the number of loans sold to third parties increased 35.5% and 37.0%, respectively, as compared to the respective prior year periods. While total loan origination volumes increased during the three and nine months ended September 30, 2024, the decrease in income before income tax is primarily driven by lower margins on mortgages originated due to a more competitive market, as well as a decrease in the fair value of our mortgage servicing rights portfolio.

Our Century Living operations are engaged in the development, construction and management of multi-family rental properties in Colorado, and currently comprise over 1,200 total units. As of September 30, 2024, one project had been successfully completed and available for leasing, and three projects remain under construction, two of which were available for pre-leasing. As of September 30, 2024, 407 units had been completed, 193 units of which were occupied, and 872 units were under development.

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The following table summarizes our results of operations for the three and nine months ended September 30, 2024 and 2023:

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Consolidated Statements of Operations:

Revenues

Home sales revenues

$

1,116,125

$

865,065

$

3,055,941

$

2,419,025

Land sales and other revenues

650

722

2,242

3,811

Total homebuilding revenues

1,116,775

865,787

3,058,183

2,422,836

Financial services revenues

20,091

23,636

66,676

63,768

Total revenues

1,136,866

889,423

3,124,859

2,486,604

Homebuilding cost of revenues

Cost of home sales revenues

(873,081)

(652,411)

(2,386,208)

(1,910,630)

Cost of land sales and other revenues

(170)

—

(207)

(375)

Total homebuilding cost of revenues

(873,251)

(652,411)

(2,386,415)

(1,911,005)

Financial services costs

(17,021)

(11,432)

(47,894)

(33,983)

Selling, general, and administrative

(132,972)

(111,918)

(373,054)

(315,351)

Inventory impairment

(1,373)

—

(1,942)

—

Other income (expense)

(2,337)

(1,663)

(10,690)

(1,509)

Income before income tax expense

109,912

111,999

304,864

224,756

Income tax expense

(26,892)

(28,849)

(73,789)

(56,850)

Net income

$

83,020

$

83,150

$

231,075

$

167,906

Earnings per share:

Basic

$

2.65

$

2.60

$

7.31

$

5.25

Diluted

$

2.59

$

2.58

$

7.19

$

5.21

Adjusted diluted earnings per share(1)

$

2.72

$

2.58

$

7.56

$

5.21

Other Operating Information (dollars in thousands):

Number of homes delivered

2,834

2,264

7,809

6,411

Average sales price of homes delivered

$

393.8

$

382.1

$

391.3

$

377.3

Homebuilding gross margin percentage(2)

21.7

%

24.6

%

21.9

%

21.0

%

Adjusted homebuilding gross margin excluding interest, inventory impairment, and purchase price accounting for acquired work in process inventory (1)

23.6

%

25.8

%

23.5

%

22.3

%

Backlog at end of period, number of homes

1,580

1,887

1,580

1,887

Backlog at end of period, aggregate sales value

$

671,404

$

707,169

$

671,404

$

707,169

Average sales price of homes in backlog

$

424.9

$

374.8

$

424.9

$

374.8

Net new home contracts

2,563

2,149

8,209

6,488

Selling communities at period end

305

252

305

252

Average selling communities

290

246

269

233

Total owned and controlled lot inventory

80,121

68,570

80,121

68,570

Adjusted EBITDA(1)

$

137,126

$

125,268

$

377,388

$

260,073

Adjusted income before income tax expense(1)

$

114,731

$

111,999

$

320,527

$

224,756

Adjusted net income(1)

$

86,962

$

83,150

$

242,947

$

167,906

Net homebuilding debt to net capital (1)

32.1

%

25.3

%

32.1

%

25.3

%

(1) This is a non-GAAP financial measure and should not be used as a substitute for our operating results prepared in accordance with GAAP. See the reconciliations to the most comparable GAAP measure and other information under “Non-GAAP Financial Measures.” An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

(2) Homebuilding gross margin percentage is inclusive of impairment charges, if applicable. We recorded impairment charges of $1.4 million and $1.9 million during the three and nine months ended September 30, 2024. No impairment charges were recorded during the three and nine months ended September 30, 2023.


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Results of Operations by Segment

(dollars in thousands)

New Homes Delivered

Average Sales Price of Homes Delivered

Home Sales Revenues

Income before Income Tax Expense

Three Months Ended September 30,

Three Months Ended September 30,

Three Months Ended September 30,

Three Months Ended September 30,

2024

2023

2024

2023

2024

2023

2024

2023

West

363

281

$

662.9

$

596.6

$

240,645

$

167,636

$

35,222

$

31,419

Mountain

513

415

528.4

498.5

271,049

206,857

31,770

25,449

Texas

530

382

300.9

292.3

159,459

111,656

14,682

16,377

Southeast

427

378

421.9

435.9

180,137

164,784

27,218

33,717

Century Complete

1,001

808

264.6

265.0

264,835

214,132

34,056

30,873

Financial Services

—

—

—

—

—

—

3,070

12,204

Corporate

—

—

—

—

—

—

(36,106)

(38,040)

Total

2,834

2,264

$

393.8

$

382.1

$

1,116,125

$

865,065

$

109,912

$

111,999

New Homes Delivered

Average Sales Price of Homes Delivered

Home Sales Revenues

Income before Income Tax Expense

Nine Months Ended September 30,

Nine Months Ended September 30,

Nine Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

2024

2023

2024

2023

West

972

738

$

634.3

$

590.5

$

616,583

$

435,774

$

94,098

$

54,358

Mountain

1,494

1,325

524.8

514.4

784,065

681,621

93,943

77,946

Texas

1,439

1,159

303.4

282.7

436,648

327,639

46,385

31,502

Southeast

1,155

851

429.1

433.6

495,637

368,993

73,857

63,675

Century Complete

2,749

2,338

263.0

258.8

723,008

604,998

84,192

61,171

Financial Services

—

—

—

—

—

—

18,782

29,785

Corporate

—

—

—

—

—

—

(106,393)

(93,681)

Total

7,809

6,411

$

391.3

$

377.3

$

3,055,941

$

2,419,025

$

304,864

$

224,756

West

During the three and nine months ended September 30, 2024, our West segment generated income before income tax expense of $35.2 million and $94.1 million, respectively, an increase of 12.1% and 73.1%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $73.0 million and $180.8 million, respectively. The revenue increases for the three- and nine-month comparisons were primarily driven by an increase of 29.2% and 31.7%, respectively, in the number of homes delivered, and increases of 11.1% and 7.4%, respectively, in the average sales price per home. The increases in the number of homes delivered were primarily driven by increases in the number of homes under construction, and the average sales price increases were driven by the mix of deliveries within individual communities.

Mountain

During the three and nine months ended September 30, 2024, our Mountain segment generated income before income tax expense of $31.8 million and $93.9 million, respectively, an increase of 24.8% and 20.5%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $64.2 million and $102.4 million, respectively. The revenue increases for the three and nine-month comparisons were primarily driven by an increase of 23.6% and 12.8%, respectively, in the number of homes delivered, and increases of 6.0% and 2.0%, respectively, in the average sales price per home. The increases in the number of homes delivered were primarily driven by increases in the number of homes under construction, and the average sales price increases were driven by the mix of deliveries within individual communities.

Texas

During the three months ended September 30, 2024, our Texas segment generated income before income tax expense of $14.7 million, a decrease of 10.3% over the prior year period, which was primarily driven by a decrease of 5.5% in the percentage of income before income tax expense to home sales revenues due to a decreased gross margin on home sales, which included purchase price accounting of $2.7 million related to our purchase of Anglia. This decrease was partially offset by an increase in home sales revenue of $47.8

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million, primarily driven by an increase of 38.7% in the number of homes delivered and an increase of 2.9% in the average sales price per home. During the nine months ended September 30, 2024, our Texas segment generated income before income tax expense of $46.4 million, an increase of 47.2% over the prior year period, which was driven by an increase in home sales revenue of $109.0 million. The revenue increase was primarily driven by an increase of 24.2% in the number of homes delivered, and an increase of 7.3% in the average sales price per home. For both the three- and nine-month comparisons, the increases in the number of homes delivered were primarily driven by increases in the number of homes under construction, and the average sales price increases were driven by the mix of deliveries within individual communities.

Southeast

During the three months ended September 30, 2024, our Southeast segment generated income before income tax expense of $27.2 million, a decrease of 19.3% over the prior year period, which was primarily driven by a decrease of 5.4% in the percentage of income before income tax expense to home sales revenues due to a decreased margin on home sales and impairment recognized during the current year period. This decrease was partially offset by an increase in home sales revenue of $15.4 million, primarily driven by an increase of 13.0% in the number of homes delivered, and partially offset by a decrease of 3.2% in the average sales price per home. During the nine months ended September 30, 2024, our Southeast segment generated income before income tax expense of $73.9 million, an increase of 16.0% over the prior year period, which was driven by an increase in home sales revenue of $126.6 million. The revenue increase was primarily driven by an increase of 35.7% in the number of homes delivered, and partially offset by a decrease of 1.0% in the average sales price per home. For both the three- and nine-month comparisons, the increases in the number of homes delivered were primarily driven by increases in the number of homes under construction, and the average sales price decreases were driven by the mix of deliveries within individual communities.

Century Complete

During the three and nine months ended September 30, 2024, our Century Complete segment generated income before income tax expense of $34.1 million and $84.2 million, respectively, an increase of 10.3% and 37.6%, respectively, over the respective prior year period, which increases were driven by increases in home sales revenue of $50.7 million and $118.0 million, respectively. The revenue increases for the three and nine- month comparisons were primarily driven by an increase of 23.9% and 17.6%, respectively, in the number of homes delivered, primarily driven by increases in the number of homes under construction.

Financial Services

Our Financial Services segment originates mortgages primarily for our homebuyers, and as such, the volume of loans originated typically correlates to our number of homes delivered. Fluctuations in financial services income before income tax may occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. For the three and nine months ended September 30, 2024, our Financial Services segment generated income before income tax of $3.1 million and $18.8 million, respectively, representing a decrease of 74.8% and 36.9%, respectively, as compared to the respective prior year periods.  During the three and nine months ended September 30, 2024, the number of mortgages originated increased 45.5% and 41.6%, respectively, as compared to the respective prior year periods, which benefited from increased capture rates, and the number of loans sold to third parties increased 35.5% and 37.0%, respectively, as compared to the respective prior year periods. While total loan origination volumes increased during the three and nine months ended September 30, 2024, the decrease in income before income tax is primarily driven by lower margins on mortgages originated due to a more competitive market, as well as a decrease in the fair value of our mortgage servicing rights portfolio.

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The following table presents selected operational data for our Financial Services segment in relation to our loan origination activities (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Total originations:

Number of loans

1,862

1,280

5,118

3,615

Principal

$

663,789

$

443,829

$

1,819,786

$

1,248,998

Capture rate of Century homebuyers

84

%

71

%

82

%

70

%

Century Communities

89

%

77

%

87

%

76

%

Century Complete

74

%

59

%

72

%

59

%

Average FICO score

729

727

728

725

Century Communities

736

731

735

730

Century Complete

714

719

714

715

Loans sold to third parties:

Number of loans sold

1,873

1,382

5,102

3,725

Principal

$

661,670

$

473,400

$

1,807,406

$

1,281,823

Corporate

During the three and nine months ended September 30, 2024, our Corporate segment generated losses of $36.1 million and $106.4 million, respectively as compared to a losses of $38.0 million and $93.7 million, respectively, during the same respective periods in 2023. The decrease in loss for the three-month comparison was primarily due to a decrease in compensation costs as compared to the prior year period. The increase in loss for the nine-month comparison was primarily due to increased insurance and acquisition costs and a reduction in interest income as compared to the prior year period, as well as a $7.7 million impairment related to other investments during the nine months ended September 30, 2024.

Homebuilding Gross Margin

Homebuilding gross margin represents home sales revenues less cost of home sales revenues and inventory impairment, if applicable. Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, decreased to 21.7% for the three months ended September 30, 2024 as compared to 24.6% in the prior year period, and increased to 21.9% during the nine months ended September 30, 2024 as compared to 21.0% in the prior year period. The decrease for the three-month comparison was primarily driven by higher incentives in the current year period. The increase for the nine-month comparison was primarily driven by deliveries during the prior year period that carried higher incentives.

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In the following table, we calculate our homebuilding gross margin and our adjusted homebuilding gross margin, as adjusted to exclude inventory impairment, if applicable, and interest in cost of home sales revenues, and further adjusted to exclude the effect of purchase price accounting for acquired work in process inventory, if applicable.

Three Months Ended September 30,

2024

%

2023

%

Home sales revenues

$

1,116,125

100.0

%

$

865,065

100.0

%

Cost of home sales revenues

(873,081)

(78.2)

%

(652,411)

(75.4)

%

Inventory impairment

(1,373)

(0.1)

%

—

—

%

Homebuilding gross margin

241,671

21.7

%

212,654

24.6

%

Add: Inventory impairment

1,373

0.1

%

—

—

%

Add: Interest in cost of home sales revenues

16,492

1.5

%

10,652

1.2

%

Adjusted homebuilding gross margin excluding interest and inventory impairment (1)

$

259,536

23.3

%

$

223,306

25.8

%

Add: Purchase price accounting for acquired work in process inventory

3,446

0.3

%

—

—

%

Adjusted homebuilding gross margin excluding interest, inventory impairment and purchase price accounting for acquired work in process inventory(1)

$

262,982

23.6

%

$

223,306

25.8

%

Nine Months Ended September 30,

2024

%

2023

%

Home sales revenues

$

3,055,941

100.0

%

$

2,419,025

100.0

%

Cost of home sales revenues

(2,386,208)

(78.1)

%

(1,910,630)

(79.0)

%

Inventory impairment

(1,942)

(0.1)

%

—

—

%

Homebuilding gross margin

667,791

21.9

%

508,395

21.0

%

Add: Inventory impairment

1,942

0.1

%

—

—

%

Add: Interest in cost of home sales revenues

42,117

1.4

%

30,729

1.3

%

Adjusted homebuilding gross margin excluding interest and inventory impairment (1)

$

711,850

23.3

%

$

539,124

22.3

%

Add: Purchase price accounting for acquired work in process inventory

5,999

0.2

%

—

—

%

Adjusted homebuilding gross margin excluding interest, inventory impairment and purchase price accounting for acquired work in process inventory(1)

$

717,849

23.5

%

$

539,124

22.3

%

 

 

(1)This non-GAAP financial measure should not be used as a substitute for our operating results in accordance with GAAP. See the reconciliations to the most comparable GAAP measure and other information under “Non-GAAP Financial Measures.” An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

 

 For the three and nine months ended September 30, 2024, our adjusted homebuilding gross margin percentage, excluding inventory impairment (if applicable), interest in cost of home sales revenues, and purchase price accounting for work in process inventory (if applicable), was 23.6% and 23.5%, respectively, as compared to 25.8% and 22.3% for the same respective periods in 2023. We believe the above information is meaningful as it isolates the impact that inventory impairment (if applicable), indebtedness, and acquisitions (if applicable) have on our homebuilding gross margin and allows for comparability of our homebuilding gross margins to previous periods and our competitors.

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Table of Contents

Selling, General and Administrative Expense

(dollars in thousands)

Three Months Ended September 30,

Change

2024

2023

Amount

%

Selling, general and administrative

$

132,972

$

111,918

$

21,054

18.8

%

As a percentage of home sales revenue

11.9

%

12.9

%

Nine Months Ended September 30,

Change

2024

2023

Amount

%

Selling, general and administrative

$

373,054

$

315,351

$

57,703

18.3

%

As a percentage of home sales revenue

12.2

%

13.0

%

Our selling, general and administrative expense increased $21.1 million and $57.7 million for the three and nine months ended September 30, 2024, respectively, as compared to the respective prior year periods. For both the three and nine-month comparisons, these increases were primarily attributable to an increase in internal and external commission expense associated with the increase in home sales revenue and increased compensation and other costs due to increased active community count. As a percentage of home sales revenue, our selling, general and administrative expense decreased 100 basis points and 80 basis points during the three and nine months ended September 30, 2024, respectively, driven primarily by increased revenue on a partially fixed cost base.

Income Tax Expense

At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and to use that rate to provide for income taxes for the current year-to-date reporting period. Our 2024 estimated annual effective tax rate, before discrete items, of 24.6%, is driven by our blended federal and state statutory rate of 24.6%, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation offset by estimated federal energy home credits for current year home deliveries.

For the nine months ended September 30, 2024, our estimated annual rate of 24.6% was benefitted by discrete items which had a net impact of decreasing our rate by 0.4%, including the impact of excess tax benefits for vested stock-based compensation.

For the three months ended September 30, 2024 and 2023, we recorded income tax expense of $26.9 million and $28.8 million, respectively. For the nine months ended September 30, 2024 and 2023, we recorded income tax expense of $73.8 million and $56.9 million, respectively.

Segment Assets

(dollars in thousands)

September 30,

December 31

Increase (Decrease)

2024

2023

Amount

Change

West

$

873,401

$

786,489

$

86,912

11.1

%

Mountain

1,054,141

1,051,052

3,089

0.3

%

Texas

858,559

577,129

281,430

48.8

%

Southeast

631,256

503,249

128,007

25.4

%

Century Complete

506,429

386,444

119,985

31.0

%

Financial Services

473,767

450,208

23,559

5.2

%

Corporate

383,412

384,791

(1,379)

(0.4)

%

Total assets

$

4,780,965

$

4,139,362

$

641,603

15.5

%

Total assets increased to $4.8 billion as of September 30, 2024 as compared to $4.1 billion as of December 31, 2023, primarily as a result of changes in our inventory balances within our homebuilding segments related to the timing of home and land development construction activities and an increase in the number of homes under construction.

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Table of Contents

Lots owned and controlled

September 30, 2024

December 31, 2023

% Change

Owned

Controlled

Total

Owned

Controlled

Total

Owned

Controlled

Total

West

4,445

3,703

8,148

4,036

3,259

7,295

10.1

%

13.6

%

11.7

%

Mountain

8,681

4,808

13,489

8,615

5,025

13,640

0.8

%

(4.3)

%

(1.1)

%

Texas

12,413

9,693

22,106

8,647

11,027

19,674

43.6

%

(12.1)

%

12.4

%

Southeast

5,563

12,127

17,690

5,486

10,941

16,427

1.4

%

10.8

%

7.7

%

Century Complete

4,584

14,104

18,688

3,839

12,845

16,684

19.4

%

9.8

%

12.0

%

Total

35,686

44,435

80,121

30,623

43,097

73,720

16.5

%

3.1

%

8.7

%

During the nine months ended September 30, 2024, we continued to strategically increase our lot pipeline, including both organically and through acquisitions, resulting in 80,121 lots owned and controlled at September 30, 2024, compared to 73,720 at December 31, 2023. Of our total lots owned and controlled as of September 30, 2024, 44.5% were owned and 55.5% were controlled, as compared to 41.5% owned and 58.5% controlled as of December 31, 2023.

Other Homebuilding Operating Data

Net new home contracts

Three Months Ended

Nine Months Ended

September 30,

Increase (Decrease)

September 30,

Increase (Decrease)

2024

2023

Amount

% Change

2024

2023

Amount

% Change

West

365

269

96

35.7

%

1,181

849

332

39.1

%

Mountain

463

395

68

17.2

%

1,626

1,174

452

38.5

%

Texas

454

377

77

20.4

%

1,488

1,252

236

18.8

%

Southeast

396

352

44

12.5

%

1,232

945

287

30.4

%

Century Complete

885

756

129

17.1

%

2,682

2,268

414

18.3

%

Total

2,563

2,149

414

19.3

%

8,209

6,488

1,721

26.5

%

Net new home contracts (new home contracts net of cancellations) for the three months ended September 30, 2024 increased by 414 homes, or 19.3%, to 2,563 as compared to 2,149 for the same period in 2023. Net new home contracts for the nine months ended September 30, 2024 increased by 1,721 homes, or 26.5%, to 8,209 as compared to 6,488 for the same period in 2023. These increases were primarily due to more homes available for sale, as well as favorable market conditions including a more recent moderation in mortgage interest rates.

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Table of Contents

Monthly absorption rate

Our overall monthly “absorption rate” (calculated as monthly net new home contracts divided by selling communities at period end) for the three and nine months ended September 30, 2024 and 2023 by segment are included in the tables below:

Three Months Ended September 30,

Increase (Decrease)

2024

2023

Amount

% Change

West

4.5

3.2

1.3

40.6

%

Mountain

3.1

2.7

0.4

14.8

%

Texas

2.0

3.0

(1.0)

(33.3)

%

Southeast

3.5

4.0

(0.5)

(12.5)

%

Century Complete

2.5

2.4

0.1

4.2

%

Total

2.8

2.8

—

—

%

Nine Months Ended September 30,

Increase (Decrease)

2024

2023

Amount

% Change

West

4.8

3.4

1.4

41.2

%

Mountain

3.8

2.7

1.1

40.7

%

Texas

3.4

3.3

0.1

3.0

%

Southeast

4.1

3.6

0.5

13.9

%

Century Complete

2.6

2.4

0.2

8.3

%

Total

3.4

2.9

0.5

17.2

%

During the three months ended September 30, 2024 and 2023, our absorption rates remained consistent at 2.8 per month, respectively. Absorptions in our Texas segment during the three months ended September 30, 2024 were impacted by a partial period of operations from our Anglia acquisition, which occurred on July 31, 2024. During the nine months ended September 30, 2024, our absorption rates increased by 17.2% per month, as compared to the same respective period in 2023, driven by strong demand for new homes during the current period.

Selling communities at period end

As of September 30,

Increase/Decrease

2024

2023

Amount

% Change

West

27

28

(1)

(3.6)

%

Mountain

49

49

—

—

%

Texas

74

42

32

76.2

%

Southeast

38

29

9

31.0

%

Century Complete

117

104

13

12.5

%

Total

305

252

53

21.0

%

Our selling communities increased by 53 communities to 305 communities at September 30, 2024 as compared to 252 at September 30, 2023. This 21.0% increase was a result of an increased land pipeline that resulted in new community openings in excess of community closeouts during the first nine months of 2024, and includes our acquisition of Anglia, which added 26 new communities in our Texas segment as of September 30, 2024.

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Table of Contents

Backlog

(dollars in thousands)

As of September 30,

2024

2023

% Change

Homes

Dollar Value

Average Sales Price

Homes

Dollar Value

Average Sales Price

Homes

Dollar Value

Average Sales Price

West

315

$

196,385

$

623.4

191

$

116,721

$

611.1

64.9

%

68.3

%

2.0

%

Mountain

295

171,990

583.0

290

146,137

503.9

1.7

%

17.7

%

15.7

%

Texas

315

99,066

314.5

248

76,224

307.4

27.0

%

30.0

%

2.3

%

Southeast

219

94,202

430.1

299

136,921

457.9

(26.8)

%

(31.2)

%

(6.1)

%

Century Complete

436

109,761

251.7

859

231,166

269.1

(49.2)

%

(52.5)

%

(6.5)

%

Total / Weighted Average

1,580

$

671,404

$

424.9

1,887

$

707,169

$

374.8

(16.3)

%

(5.1)

%

13.4

%


‎

Backlog reflects the number of homes, net of cancellations, for which we have entered into a sales contract with a customer but for which we have not yet delivered the home. As of September 30, 2024, we had 1,580 homes in backlog, which represents a decrease of 16.3% as compared to 1,887 homes in backlog at September 30, 2023, with a total value of $671.4 million, as compared to $707.2 million at September 30, 2023. Backlog dollar value decreased due to the decrease in the number of backlog units, and was partially offset by a 13.4% increase in the average sales price of backlog units, largely due to mix.

Supplemental Guarantor Information

Our 6.750% senior notes due 2027 (which we collectively refer to as our “2027 Notes”) and our 3.875% senior notes due 2029 (which we collectively refer to as our “2029 Notes” and together with the 2027 Notes, the “Senior Notes”) are our unsecured senior obligations and are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by substantially all of our direct and indirect wholly-owned operating subsidiaries (which we refer to collectively as “Guarantors”). Our subsidiaries associated with our Financial Services operations (referred to as “Non-Guarantors”) do not guarantee the Senior Notes. The guarantees are senior unsecured obligations of the Guarantors that rank equal with all existing and future senior debt of the Guarantors and senior to all subordinated debt of the Guarantors. The guarantees are effectively subordinated to any secured debt of the Guarantors. As of September 30, 2024, Century Communities, Inc. had outstanding $1.0 billion in total principal amount of Senior Notes.

Each of the indentures governing our Senior Notes provides that the guarantees of a Guarantor will be automatically and unconditionally released and discharged: (1) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the equity interests of such Guarantor after which the applicable Guarantor is no longer a “Restricted Subsidiary” (as defined in the respective indentures), which sale, transfer, exchange or other disposition does not constitute an “Asset Sale” (as defined in the respective indentures) or is made in compliance with applicable provisions of the applicable indenture; (2) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the assets of such Guarantor, which sale, transfer, exchange or other disposition does not constitute an Asset Sale or is made in compliance with applicable provisions of the applicable indenture; provided, that after such sale, transfer, exchange or other disposition, such Guarantor is an “Immaterial Subsidiary” (as defined in the respective indentures); (3) unless a default has occurred and is continuing, upon the release or discharge of such Guarantor from its guarantee of any indebtedness for borrowed money of the Company and the Guarantors so long as such Guarantor would not then otherwise be required to provide a guarantee pursuant to the applicable indenture; provided that if such Guarantor has incurred any indebtedness in reliance on its status as a Guarantor in compliance with applicable provisions of the applicable Indenture, such Guarantor’s obligations under such indebtedness, as the case may be, so incurred are satisfied in full and discharged or are otherwise permitted to be incurred by a Restricted Subsidiary (other than a Guarantor) in compliance with applicable provisions of the applicable Indenture; (4) upon the designation of such Guarantor as an “Unrestricted Subsidiary” (as defined in the respective Indentures), in accordance with the applicable indenture; (5) if the Company exercises its legal defeasance option or covenant defeasance option under the applicable indenture or if the obligations of the Company and the Guarantors are discharged in compliance with applicable provisions of the applicable indenture, upon such exercise or discharge; or (6) in connection with the dissolution of such Guarantor under applicable law in accordance with the applicable indenture.

If a guarantor were to become a debtor in a case under the US Bankruptcy Code, a court may decline to enforce its guarantee of the Senior Notes. This may occur when, among other factors, it is found that the guarantor originally received less than fair consideration for the guarantee and the guarantor would be rendered insolvent by enforcement of the guarantee. On the basis of historical financial information, operating history and other factors, we believe that each of the guarantors, after giving effect to the issuance of its guarantee of the Senior Notes when the guarantee was issued, was not insolvent and did not and has not incurred debts beyond its ability to pay

30

Table of Contents

such debts as they mature. The Company cannot predict, however, what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.

Only the 2027 Notes and the related guarantees are registered securities under the Securities Act of 1933, as amended (the “Securities Act”). The offer and sale of the 2029 Notes and the related guarantees were not and will not be registered under the Securities Act or the securities laws of any other jurisdiction and instead were issued in reliance upon an exemption from such registration. Unless they are subsequently registered under the Securities Act, neither the 2029 Notes nor the related guarantees may be offered and sold only in transactions that are exempt from the registration requirements under the Securities Act and the applicable securities laws of any other jurisdiction.

The Guarantors’ condensed supplemental financial information is presented in this report as if the Senior Note guarantees existed during the periods presented pursuant to applicable SEC rules and guidance. If any Guarantors are released from the guarantees in future periods, the changes are reflected prospectively. We have determined that separate, full financial statements of the Guarantors would not be material to investors, and accordingly, supplemental financial information is presented below.

The following summarized financial information is presented for Century Communities, Inc. and the Guarantor Subsidiaries on a combined basis after eliminating intercompany transactions and balances among Century Communities, Inc. and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from Non-Guarantor Subsidiaries.

Century Communities, Inc. and Guarantor Subsidiaries

Summarized Balance Sheet Data (in thousands)

September 30, 2024

December 31, 2023

Assets

Cash and cash equivalents

$

16,493

$

104,900

Cash held in escrow

70,755

101,845

Accounts receivable

65,080

67,480

Due from non-guarantors

8,222

17,982

Inventories

3,581,099

3,016,641

Prepaid expenses and other assets

352,340

282,056

Property and equipment, net

164,757

68,839

Deferred tax assets, net

17,241

16,998

Goodwill

39,434

30,395

Total assets

$

4,315,421

$

3,707,136

Liabilities and stockholders’ equity

Liabilities:

Accounts payable

$

163,122

$

145,231

Accrued expenses and other liabilities

254,607

259,912

Due to non-guarantors

—

—

Notes payable

1,118,943

1,062,471

Revolving line of credit

414,000

—

Total liabilities

1,950,672

1,467,614

Stockholders’ equity:

2,364,749

2,239,522

Total liabilities and stockholders’ equity

$

4,315,421

$

3,707,136

Summarized Statements of Operations Data (in thousands)

Nine Months Ended

Year Ended

September 30, 2024

December 31, 2023

Total homebuilding revenues

$

3,058,183

$

3,611,962

Total homebuilding cost of revenues

(2,386,415)

(2,840,583)

Selling, general and administrative

(373,054)

(447,311)

Inventory impairment

(1,942)

(1,877)

Other expense

(16,754)

(6,547)

Income before income tax expense

280,018

315,644

Income tax expense

(67,765)

(82,419)

Net income

$

212,253

$

233,225


‎

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Table of Contents

Critical Accounting Policies

Critical accounting estimates are those that we believe are both significant and require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and the estimates included in our financial statements might be impacted if we used different assumptions or conditions. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 5, 2024, in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies.” 

Liquidity and Capital Resources

Overview

Our liquidity, consisting of our cash and cash equivalents and cash held in escrow and revolving line of credit availability, was $605.9 million as of September 30, 2024 and $1.1 billion as of December 31, 2023.

Our principal uses of capital for the nine months ended September 30, 2024 were our land purchases, land development, home construction, the acquisition of Anglia and Landmark, share repurchases, dividends, and the payment of routine liabilities.

Cash flows for each of our communities depend on the stage in the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, entitlements and other approvals, and construction of model homes, roads, utilities, general landscaping and other amenities. Because these costs are a component of our inventory and not recognized in our consolidated statements of operations until a home closes, we incur significant cash outlays prior to our recognition of earnings. In the later stages of community development, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflow associated with home and land construction was previously incurred. From a liquidity standpoint, we continue to acquire and develop lots in our markets when they meet our current investment criteria.

Short-term Liquidity and Capital Resources

We use funds generated by operations, available borrowings under our revolving line of credit, and proceeds from issuances of debt or equity to fund our short-term working capital obligations and our purchases of land, as well as land development, home construction activities, and other cash needs. We had $414.0 million outstanding under our revolving line of credit as of September 30, 2024, as compared to no amounts outstanding as of December 31, 2023, which increase was primarily driven by increased community count and an increase in our investment in homes under construction during the period, as well as our acquisitions of Anglia and Landmark.

Our Financial Services operations use funds generated from operations and availability under our mortgage repurchase facilities to finance its operations, including originations of mortgage loans to our homebuyers.

Our Century Living operations use excess cash from our operations, as well as project specific secured financing under construction loan agreements to fund development of multi-family projects.

We believe that we will be able to fund our current liquidity needs for at least the next twelve months with our cash on hand, cash generated from operations, and cash expected to be available from our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available or on acceptable terms based on the macro-economy and market conditions at the time. In a higher interest rate environment, we may incur additional interest expense on borrowings that bear floating interest rates, such as our revolving line of credit. We believe we are well positioned from a cash and liquidity standpoint to operate in an uncertain environment, and to pursue other ways to properly deploy capital to enhance returns, which may include taking advantage of strategic opportunities as they arise.

Long-term Liquidity and Capital Resources

Beyond the next twelve months, we believe that our principal uses of capital will be land and inventory purchases and other expenditures, as well as principal and interest payments on our long-term debt obligations. We believe that we will be able to fund our long-term liquidity needs with cash generated from operations and cash expected to be available from our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available, or on favorable terms, especially if interest rates remain high. In a higher interest rate environment, we may incur additional interest expense on borrowings that bear floating interest rates, such as under our revolving line of credit, repurchase facilities, and construction loan agreements. To the extent these sources of capital are insufficient to meet our needs, we may also conduct additional public or private offerings of our securities, refinance debt, or dispose of certain assets to fund our operating activities and capital needs.

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Material Cash Requirements

In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future in addition to our outstanding debt obligations and debt service requirements described below. These obligations impact our short-term and long-term liquidity and capital resource needs. For the three and nine months ended September 30, 2024, there were no material changes to the contractual obligations we previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on February 5, 2024.

In the ordinary course of business, we enter into land purchase contracts in order to procure lots for the construction of our homes. We are subject to customary obligations associated with entering into contracts for the purchase of land and improved lots. Purchase and option contracts for the purchase of land enable us to defer acquiring portions of properties owned by third parties until we have determined whether to exercise our option, which may serve to reduce our financial risks associated with long-term land holdings. These purchase contracts typically require a cash deposit, and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements, including obtaining applicable property and development entitlements. We also utilize option contracts with land sellers and others as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Option contracts generally require payment by us of a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices. Our obligations with respect to purchase contracts and option contracts are generally limited to the forfeiture of the related non-refundable cash deposits.

As of September 30, 2024, we had outstanding purchase contracts and option contracts for 44,435 lots totaling approximately $2.6 billion and we had $94.4 million of deposits for land contracts, of which $56.0 million were non-refundable cash deposits pertaining to land contracts. For contracts for which cash deposits were non-refundable, and subject to the terms of the outstanding contracts continuing to meet our investment criteria, we currently anticipate performing on the majority of our purchase and option contracts during the next 24 months. Our performance, including the timing and amount of purchase, if any, under these outstanding purchase and option contracts is subject to change and dependent on future market conditions. Our utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to financial intermediaries to finance the development of optioned lots, general housing market conditions, and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

In addition, in the ordinary course of business, we explore, and from time to time, enter into purchase agreements to opportunistically acquire other homebuilders to add existing and future lots to our land portfolio and augment the organic expansion of our land portfolio. These acquisitions are often legally structured as asset acquisitions for cash and conditioned upon a due diligence investigation by us of the business for a limited period of time, in addition to other standard and customary closing conditions.

Outstanding Debt Obligations and Debt Service Requirements

One of our principal liquidity needs is the payment of principal and interest on our outstanding indebtedness. Our outstanding indebtedness is described in detail in Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements. We are required to meet certain covenants, and as of September 30, 2024, we were in compliance with all such covenants and requirements under the agreements governing our revolving line of credit, mortgage repurchase facilities, and construction loan agreements. See Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements for further detail.

Our outstanding debt obligations included the following as of September 30, 2024 and December 31, 2023 (in thousands):  

September 30,

December 31,

2024

2023

3.875% senior notes, due August 2029(1)

$

496,235

$

495,656

6.750% senior notes, due June 2027(1)

497,823

497,210

Other financing obligations(2)

124,885

69,605

Notes payable

1,118,943

1,062,471

Revolving line of credit

414,000

—

Mortgage repurchase facilities

247,214

239,298

Total debt

$

1,780,157

$

1,301,769

 

(1)The carrying value of the senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest cost over the respective terms of the senior notes.

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(2)As of September 30, 2024, other financing obligations included $14.5 million related to insurance premium notes and certain secured borrowings, as well as $110.3 million outstanding under construction loan agreements, as described below. As of December 31, 2023, other financing obligations included $24.7 million related to insurance premium notes and certain secured borrowings, as well as $44.9 million outstanding under construction loan agreements.

We may from time to time seek to refinance or increase our outstanding debt or retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may or may not be material during any particular reporting period.

Letters of Credit and Performance Bonds

In the normal course of business, we post letters of credit and performance and other bonds primarily related to our land development performance obligations with local municipalities. As of September 30, 2024 and December 31, 2023, we had $527.9 million and $510.5 million, respectively, in letters of credit and performance and other bonds issued and outstanding. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and performance and other bonds are not generally fully released until all development and construction activities are completed.

Construction Loan Agreements

Certain wholly owned subsidiaries of Century Living, LLC are parties to construction loan agreements with various banks (which we collectively refer to as “the lenders”). These construction loan agreements collectively provide that we may borrow up to an aggregate of $187.6 million from the lenders for purposes of construction of multi-family projects in Colorado, with advances made by the lenders upon the satisfaction of certain conditions. Borrowings under the construction loan agreements bear interest at various rates, including a fixed rate and floating interest rates per annum equal to the Secured Overnight Financing Rate (which we refer to as “SOFR”) and the Bloomberg Short-term Bank Yield Index, plus an applicable margin. The outstanding principal balances and all accrued and unpaid interest is due on varying maturity dates from March 17, 2026 through March 17, 2028, with certain of the construction loan agreements allowing for the option to extend the maturity dates for a period of 12 months if certain conditions are satisfied. The construction loan agreements contain customary affirmative and negative covenants (including covenants related to construction completion, and limitations on the use of loan proceeds, transfers of land, equipment, and improvements), as well as customary events of default. Interest on our construction loan agreements is capitalized to the multi-family properties assets included in prepaid expenses and other assets on the condensed consolidated balance sheets while the related multi-family rental properties are being actively developed.

As of September 30, 2024, $110.3 million was outstanding under the construction loan agreements, with borrowings that bore a weighted average interest rate of 7.2% as of September 30, 2024, and we were in compliance with all covenants thereunder.

Revolving Line of Credit

We are party to a Second Amended and Restated Credit Agreement, as amended, (which we refer to as the “Second A&R Credit Agreement”) with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, and the lenders party thereto. The Second A&R Credit Agreement, which amended and restated our prior Amended and Restated Credit Agreement, provides us with a senior unsecured revolving line of credit (which we refer to as the “revolving line of credit”) of up to $800.0 million, and unless terminated earlier, will mature on April 30, 2026. The revolving line of credit includes a $250.0 million sublimit for standby letters of credit and a $50.0 million sublimit for swingline loans. Under the terms of the Second A&R Credit Agreement, we are entitled to request an increase in the size of the revolving line of credit by an amount not exceeding $200.0 million. Our obligations under the Second A&R Credit Agreement are guaranteed by certain of our subsidiaries. The Second A&R Credit Agreement contains customary affirmative and negative covenants (including limitations on our ability to grant liens, incur additional debt, pay dividends, redeem our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions), as well as customary events of default. Borrowings under the Second A&R Credit Agreement are based on an adjusted term SOFR reference rate, which equals the greater of (i) 0.50% or (ii) the one-month quotation of the SOFR administered by the Federal Reserve Bank of New York, plus 0.10%.

As of September 30, 2024, $414.0 million was outstanding under our revolving line of credit, with borrowings that bore an interest rate of 7.4%, and were in compliance with all covenants under the Second A&R Credit Agreement. As of December 31, 2023, no amount was outstanding under the revolving line of credit.

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Mortgage Repurchase Facilities – Financial Services

Inspire is party to mortgage warehouse facilities with J.P. Morgan Chase Bank, N.A., U.S. Bank National Association and Truist Bank, which provide Inspire with uncommitted repurchase facilities of up to an aggregate of $475.0 million as of September 30, 2024, secured by the mortgage loans financed thereunder. The repurchase facilities have varying short term maturity dates through September 26, 2025. Borrowings under the mortgage repurchase facilities bear interest at variable interest rates per annum equal to SOFR plus an applicable margin, and bore a weighted average interest rate of 6.8% as of September 30, 2024.

Amounts outstanding under the repurchase facilities are not guaranteed by us or any of our subsidiaries, and the agreements contain various affirmative and negative covenants applicable to Inspire that are customary for arrangements of this type. As of September 30, 2024 and December 31, 2023, we had $247.2 million and $239.3 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

Stock Repurchases

Our stock repurchase programs, authorized by our Board of Directors, authorize us to repurchase up to 9.0 million shares of our outstanding common stock, of which 5.1 million shares remained available to be repurchased as of September 30, 2024. We did not repurchase any shares of our common stock during the three months ended September 30, 2024. During the nine months ended September 30, 2024, an aggregate of 651.9 thousand shares were repurchased for a total purchase price of approximately $53.1 million and a weighted average price of $81.49 per share. During the three and nine months ended September 30, 2023, an aggregate of 247.8 thousand and 278.2 thousand shares, respectively, were repurchased for a total purchase price of approximately $17.3 million and $19.2 million, respectively, and a weighted average price of $69.61 and $69.09 per share, respectively.

Under the terms of these programs, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws. The actual manner, timing, amount and value of repurchases under the stock repurchase program is determined by management at its discretion and depends on a number of factors, including, among others, the market price of our common stock, trading volume, our available cash balance, our anticipated working capital needs, other capital management objectives and opportunities, applicable legal requirements, applicable tax effects including the 1% excise tax instituted under the Inflation Reduction Act of 2022, and general market and economic conditions. We finance any stock repurchases through available cash and our revolving line of credit. Repurchases also may be made under a trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, which would permit shares to be repurchased when we otherwise may be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. Our stock repurchase programs have no expiration dates and may be extended, suspended or discontinued by our Board of Directors at any time without notice at our discretion. All shares of common stock repurchased under the programs will be cancelled and returned to the status of authorized but unissued shares of common stock.

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Cash Dividends

The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the nine months ended September 30, 2024 and 2023, respectively (in thousands, except per share information):

Nine Months Ended September 30, 2024

Cash Dividends Declared and Paid

Declaration Date

Record Date

Paid Date

Per Share

Amount

February 7, 2024

February 28, 2024

March 13, 2024

$

0.26

$

8,264

May 15, 2024

May 29, 2024

June 12, 2024

$

0.26

$

8,217

August 14, 2024

August 28, 2024

September 11, 2024

$

0.26

$

8,148

Nine Months Ended September 30, 2023

Cash Dividends Declared and Paid

Declaration Date

Record Date

Paid Date

Per Share

Amount

February 8, 2023

March 1, 2023

March 15, 2023

$

0.23

$

7,365

May 17, 2023

May 31, 2023

June 14, 2023

$

0.23

$

7,368

August 16, 2023

August 30, 2023

September 13, 2023

$

0.23

$

7,341

We expect to continue paying our quarterly cash dividends to stockholders for the remainder of 2024. However, the declaration and payment of future cash dividends on our common stock, whether at current levels or at all, are at the discretion of our Board of Directors and depend upon, among other things, our expected future earnings, cash flows, capital requirements, access to external financing, debt structure and any adjustments thereto, operational and financial investment strategy and general financial condition, as well as general business conditions.

Cash Flows— Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

For the nine months ended September 30, 2024 and 2023, the comparison of cash flows is as follows:

Our primary sources of cash flows from operations are from the sale of single-family attached and detached homes and mortgages. Our primary uses of cash flows from operations are the acquisition of land and expenditures associated with the construction of our single-family attached and detached homes and the origination of mortgages held for sale. Net cash used in operating activities was $174.0 million during the nine months ended September 30, 2024 as compared to net cash provided by operating activities of $33.0 million during the prior year period. This change is primarily a result of increased expenditures related to land acquisition and expenditures associated with the construction of homes during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. These increased expenditures were primarily offset by a $63.2 million increase in net income.

Net cash used in investing activities increased to $277.7 million during the nine months ended September 30, 2024, compared to $74.6 million used during the prior year period. This increase was primarily related to (1) $157.1 million in expenditures related to our acquisitions of Anglia and Landmark during the nine months ended September 30, 2024 and (2) a $38.2 million increase in expenditures related to the development, construction, and management of multi-family rental properties by our wholly owned subsidiary, Century Living.

Net cash provided by financing activities was $388.6 million during the nine months ended September 30, 2024, compared to net cash used in financing activities of $56.8 million during the prior year period. This change was primarily attributable to (1) a $414.0 increase in borrowings under our revolving credit facility; (2) a $43.4 million increase in net proceeds for our mortgage repurchase facilities; and (3) a $44.0 million increase in borrowings under construction loan agreements, in each case, during the nine months ended September 30, 2024, and as compared to the prior year period. These increases were partially offset by $53.1 million in repurchases of our common stock during the nine months ended September 30, 2024 as compared to $19.2 million in repurchases of our common stock during the prior year period.

As of September 30, 2024, our cash and cash equivalents and restricted cash balance was $178.9 million, as compared to $242.0 million as of December 31, 2023.


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Non-GAAP Financial Measures

In this Form 10-Q, we use certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, net homebuilding debt to net capital, adjusted net income and adjusted diluted earnings per share. These non-GAAP financial measures are presented to provide investors additional information to facilitate the comparison of our past and present operations. We believe these non-GAAP financial measures provide useful information to investors because they are used to evaluate our performance on a comparable year-over-year basis. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP measures and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive or standard set of accounting rules or principles. Accordingly, the calculation of our non-GAAP financial measures may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with our financial results as determined in accordance with GAAP. These measures should only be used to evaluate our financial results in conjunction with the corresponding GAAP measures. Accordingly, we qualify our use of non-GAAP financial information in a statement when non-GAAP financial information is presented.

EBITDA and Adjusted EBITDA

The following table presents EBITDA and adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023. EBITDA and adjusted EBITDA are non-GAAP financial measures we use as a supplemental measure in evaluating operating performance. We define EBITDA as net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense (income), and (iv) depreciation and amortization expense. We define adjusted EBITDA as EBITDA before loss on debt extinguishment (if applicable), inventory impairment (if applicable), purchase price accounting for acquired work in process inventory (if applicable), and impairment on other investments (if applicable). We believe EBITDA and adjusted EBITDA provide 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, our management believes that these measurements are useful for comparing general operating performance from period to period. Neither EBITDA or 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. Our presentation of adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Each of our EBITDA and adjusted EBITDA is limited as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

(dollars in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

% Change

2024

2023

% Change

Net income

$

83,020

$

83,150

(0.2)

%

$

231,075

$

167,906

37.6

%

Income tax expense

26,892

28,849

(6.8)

%

73,789

56,850

29.8

%

Interest in cost of home sales revenues

16,492

10,652

54.8

%

42,117

30,729

37.1

%

Interest income

(369)

(1,489)

(75.2)

%

(2,693)

(6,431)

(58.1)

%

Depreciation and amortization expense

6,272

4,106

52.8

%

17,437

11,019

58.2

%

EBITDA

132,307

125,268

5.6

%

361,725

260,073

39.1

%

Inventory impairment

1,373

—

NM

1,942

—

NM

Impairment on other investment

—

—

NM

7,722

—

NM

Purchase price accounting for acquired work in process inventory

3,446

—

NM

5,999

—

NM

Adjusted EBITDA

$

137,126

$

125,268

9.5

%

$

377,388

$

260,073

45.1

%

NM – Not Meaningful


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Net Homebuilding Debt to Net Capital

The following table presents our ratio of net homebuilding debt to net capital, which is a non-GAAP financial measure.  We calculate this by dividing net homebuilding debt (homebuilding debt less cash and cash equivalents, and cash held in escrow) by net capital (net homebuilding debt plus total stockholders’ equity). Homebuilding debt is our total debt minus our outstanding borrowings under our construction loan agreements and our repurchase facilities. The most directly comparable GAAP measure is the ratio of debt to total capital. We believe the ratio of net homebuilding debt to net capital is a relevant and useful financial measure to investors in understanding the leverage employed in our operations and as an indicator of our ability to obtain external financing.

(dollars in thousands)

September 30,

December 31,

2024

2023

Notes payable

$

1,118,943

$

1,062,471

Revolving line of credit

414,000

—

Construction loan agreements

(110,337)

(44,895)

Total homebuilding debt

1,422,606

1,017,576

Total stockholders' equity

2,547,502

2,386,936

Total capital

$

3,970,108

$

3,404,512

Homebuilding debt to capital

35.8%

29.9%

Total homebuilding debt

$

1,422,606

$

1,017,576

Cash and cash equivalents

(149,155)

(226,150)

Cash held in escrow

(70,755)

(101,845)

Net homebuilding debt

1,202,696

689,581

Total stockholders' equity

2,547,502

2,386,936

Net capital

$

3,750,198

$

3,076,517

Net homebuilding debt to net capital

32.1%

22.4%


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Adjusted Net Income and Adjusted Diluted Earnings per Share

Adjusted net income and adjusted diluted earnings per share (which we refer to as “Adjusted EPS”) are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating trends without the effect of certain non-recurring items. We believe excluding certain non-recurring items provides more comparable assessment of our financial results from period to period. We define adjusted net income as consolidated net income before (i) income tax expense, (ii) inventory impairment, if applicable (iii) restructuring costs, if applicable, (iv) loss on debt extinguishment, if applicable, (v) purchase price accounting for acquired work in process inventory, if applicable, and (vi) impairment on other investments, if applicable, less adjusted income tax expense, calculated using our estimated annual effective tax rate after discrete items for the applicable period. Adjusted EPS is calculated by dividing adjusted net income by weighted average common shares – diluted.

(in thousands, except share and per share information)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Numerator

Net income

$

83,020

$

83,150

$

231,075

$

167,906

Denominator

Weighted average common shares outstanding - basic

31,336,756

31,962,884

31,596,995

31,967,672

Dilutive effect of stock-based compensation awards

688,259

274,138

520,922

233,005

Weighted average common shares outstanding - diluted

32,025,015

32,237,022

32,117,917

32,200,677

Earnings per share:

Basic

$

2.65

$

2.60

$

7.31

$

5.25

Diluted

$

2.59

$

2.58

$

7.19

$

5.21

Adjusted earnings per share

Numerator

Net income

$

83,020

$

83,150

$

231,075

$

167,906

Income tax expense

26,892

28,849

73,789

56,850

Income before income tax expense

109,912

111,999

304,864

224,756

Inventory impairment

1,373

—

1,942

—

Impairment on other investment

—

—

7,722 

—

Purchase price accounting for acquired work in process inventory

3,446

—

5,999

—

Adjusted income before income tax expense

114,731

111,999

320,527

224,756

Adjusted income tax expense(1)

(27,769)

(28,849)

(77,580)

(56,850)

Adjusted net income

$

86,962

$

83,150

$

242,947

$

167,906

Denominator - Diluted

32,025,015

32,237,022

32,117,917

32,200,677

Adjusted diluted earnings per share

$

2.72

$

2.58

$

7.56

$

5.21

(1)The tax rates used in calculating adjusted net income for the three and nine months ended September 30, 2024 were 24.2%, respectively, which are reflective of our GAAP tax rates for the nine months ended September 30, 2024. The tax rates used in calculating adjusted net income for the three and nine months ended September 30, 2023 were 25.8% and 25.3%, respectively, which are reflective of our GAAP tax rates for the applicable periods.


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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rates

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our Second A&R Credit Agreement and construction loan agreements. There have been no material changes in our market risk since December 31, 2023. For additional information regarding our market risk, refer to the “Quantitative and Qualitative Disclosures About Market Risk” section of our Annual Report on Form 10-K for the year ended December 31, 2023.

Inflation

Our homebuilding operations have been and may continue to be adversely impacted by inflation, primarily from higher land, financing, labor, material, and construction costs. The Federal Reserve aggressively raised the federal funds interest rates during 2022 and 2023, in order to mitigate persistent inflation, which significantly impacting the U.S housing market. While the Federal Reserve reduced the federal funds interest rate during the third quarter of 2024, we cannot provide any assurance as to the impact of changes to the federal funds interest rate or mortgage rates on our current or future business. Inflation has led and could continue to lead to higher mortgage rates, which has and could continue to significantly affect the affordability of mortgage financing to homebuyers and lead to weakened demand for our homes, as well as increased cancellations compared to prior year periods.

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements. We typically experience the highest new home order activity during the spring, although this activity is also highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since it typically takes four to five months to construct a new home, we typically deliver more homes in the second half of the year as spring and summer home starts convert to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters, and the majority of our cash receipts from home deliveries occurs during the second half of the year. This seasonality pattern may be affected by volatility in the homebuilding industry, supply chain challenges, subcontractor and labor shortages, and changes in demand for our homes.

ITEM 4.     CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our co-principal executive officers and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined under Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”)) as of September 30, 2024, the end of the period covered by this Form 10-Q. Based on this evaluation, our co-principal executive officers and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2024 in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes during the third quarter of 2024 in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting, except for changes to integrate the operations of Anglia.

PART II – OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS.

Because of the nature of the homebuilding business, we and certain of our subsidiaries and affiliates have been named as defendants in various claims, complaints and other legal actions arising in the ordinary course of business. In the opinion of our management, the outcome of these ordinary course matters will not have a material adverse effect upon our financial condition, results of operations or cash flows.

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ITEM 1A.     RISK FACTORS.

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on February 5, 2024.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We did not purchase any shares of our common stock or other equity securities of ours during the quarter ended September 30, 2024.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.     MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.     OTHER INFORMATION.

Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications

During the three months ended September 30, 2024, none of our directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of SEC Regulation S-K.


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ITEM 6.     EXHIBITS.

The following exhibits are either filed or furnished herewith or incorporated herein by reference:

Item No.

Description

3.1

Restated Certificate of Incorporation of Century Communities, Inc. (incorporated by reference to Exhibit 3.1 to Century Communities, Inc.’s Quarterly Report on Form 10-Q for quarter ended September 30, 2023 (File No. 001-36491)).

3.2

Amended and Restated Bylaws of Century Communities, Inc., effective November 9, 2022 (incorporated by reference to Exhibit 3.1 to Century Communities, Inc.’s Current Report on Form 8-K filed with the SEC on November 10, 2022 (File No. 001-36491)).

10.1

Second Modification Agreement effective as of July 19, 2024 among Century Communities, Inc., the guarantor parties thereto, the lenders party thereto, and Texas Capital Bank, National Association, as Administrative Agent (filed herewith)

22.1

List of Guarantor Subsidiaries (filed herewith)

31.1

Certification of the Co-Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith)

31.2

Certification of the Co-Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith)

31.3

Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith)

32.1

Certification of the Co-Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.2

Certification of the Co-Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.3

Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101.INS

Inline XBRL Instance Document (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document (filed herewith)

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)

101.DEF

Inline XBRL Taxonomy Definition Linkbase Document (filed herewith)

101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document (filed herewith)

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)

104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Century Communities, Inc.

Date: October 23, 2024

By:

/s/ Dale Francescon

Dale Francescon

Chairman of the Board and Co-Chief Executive Officer

(Co-Principal Executive Officer)

Date: October 23, 2024

By:

/s/ Robert J. Francescon

Robert J. Francescon

Co-Chief Executive Officer and President

(Co-Principal Executive Officer)

Date: October 23, 2024

By:

/s/ J. Scott Dixon

J. Scott Dixon

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

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