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Century Communities, Inc. (CCS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat vs Wall Street on both revenue and EPS: revenue $1.00B vs $0.92B consensus and Primary EPS $1.37 vs $1.15 consensus; however GAAP diluted EPS was $1.14 as incentives and an inventory impairment weighed on margins * * *. Values retrieved from S&P Global.
  • Sequential demand improved through May/June and deliveries rose 13% q/q to 2,587, but net orders fell 8% YoY and management revised FY25 deliveries to 10,000–10,500 (from 10,400–11,000 in April and 11,700–12,400 in January) .
  • Margins compressed: homebuilding gross margin fell to 17.6% (adjusted ex interest/impairment/PPA 20.0% vs 21.6% in Q1), driven primarily by higher incentives; Q3 HB GM is guided to ease another ~100 bps and SG&A guided to 14% for Q3 .
  • Capital return and balance sheet remain supportive: $48.0M buybacks (~3% shares) at ~37% discount to $86.39 book value per share; liquidity $857.6M; quarterly dividend maintained at $0.29 .
  • Near-term stock reaction catalyst: headline beats offset by guidance cut and margin pressure; watch subsequent commentary on absorption, incentives trajectory, and Q3 deliveries (2,300–2,500 guided) *. Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Sequential demand and deliveries improved; customers responded to incentives, enabling more sell-and-close within the quarter: “deliveries of 2,587 homes increased by 13% on a sequential basis” .
  • Cost control progress: direct construction costs declined 3% YoY and 2% q/q; cycle times improved to ~4 months, with some builds in the 70–90 day range .
  • Capital allocation and book value: repurchased 883,602 shares (~3%) for $48.0M at $54.35 average, a 37% discount to $86.39 book value; liquidity $857.6M; equity $2.6B . “Our book value per share increased by 10% YoY to $86.39, a Company record” .

What Went Wrong

  • Orders softness and guidance cut: net new home contracts down 8.4% YoY to 2,546; FY25 deliveries cut to 10,000–10,500 and home sales revenue to $3.8–$4.0B amid affordability and rate headwinds .
  • Margin compression from higher incentives and impairment: HB GM 17.6% and adjusted ex interest/impairment/PPA 20.0% vs 21.6% in Q1; $7.4M inventory impairment on closeout communities (primarily Florida); Q3 HB GM expected to ease up to 100 bps .
  • Backlog and community ramp timing: backlog units/dollars fell to 1,217/$466.0M; net community count gains came late in June, limiting orders uplift within the quarter .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$1,273.4 $903.2 $1,000.7
Diluted EPS (GAAP) ($)$3.20 $1.26 $1.14
Adjusted EPS ($)$3.49 $1.36 $1.37
Homebuilding Gross Margin % (GAAP)20.6% 19.9% 17.6%
Adjusted HB GM % (ex interest/impairment/PPA)22.9% 21.6% 20.0%
SG&A % of Home Sales Revenues11.5% 13.7% 13.2%
Deliveries (Homes)3,198 2,284 2,587
Avg Sales Price (ASP) ($USD Thousands)$389.8 $386.9 $377.5
Q2 2025 vs EstimatesConsensusActualSurprise
Revenue ($USD Millions)$921.5*$1,000.7 +$79.2*
Primary EPS ($)$1.15*$1.37 +$0.22*
# of EPS Estimates2*——
# of Revenue Estimates3*——
Values retrieved from S&P Global.

Segment breakdown (Deliveries and ASP)

RegionQ2 2024 HomesQ2 2024 ASP ($k)Q2 2025 HomesQ2 2025 ASP ($k)
West325 $626.7 335 $602.5
Mountain486 $532.7 396 $521.0
Texas485 $301.1 501 $294.2
Southeast349 $441.3 401 $429.9
Century Complete972 $262.2 954 $260.5
Total / Wtd Avg2,617 $388.8 2,587 $377.5

KPIs and balance sheet

KPIQ1 2025Q2 2025
Net New Home Contracts (Units)2,692 2,546
Backlog (Homes)1,258 1,217
Backlog ($USD Millions)$521.1 $466.0
Community Count318 327
Lot Inventory (Owned / Controlled / Total)35,897 / 43,117 / 79,014 37,419 / 31,282 / 68,701
Book Value per Share ($)$84.41 $86.39
Liquidity ($USD Millions)$787.5 $857.6
Net Homebuilding Debt to Net Capital30.1% 31.0%
Inventory Impairment ($USD Millions)$0.4 $7.4
EBITDA / Adjusted EBITDA ($USD Millions)$72.5 / $76.3 $66.5 / $75.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Home DeliveriesFY 202511,700–12,400 (Jan-25) 10,000–10,500 Lowered
Home Sales RevenuesFY 2025$4.5–$4.8B (Jan-25) $3.8–$4.0B Lowered
Home DeliveriesFY 202510,400–11,000 (Apr-25) 10,000–10,500 Lowered
Home Sales RevenuesFY 2025$4.0–$4.2B (Apr-25) $3.8–$4.0B Lowered
Deliveries (Q3)Q3 2025—2,300–2,500 New
HB Gross MarginQ3 2025—Easing up to ~100 bps q/q Lower
SG&A (% of Home Sales)Q3 2025—~14% Higher (seasonal)
SG&A (% of Home Sales)FY 2025—~13% Maintained target
Purchase Price Accounting impact on GMQ3–Q4 2025—~20 bps per quarter Maintained
Effective Tax RateFY 2025—25–26% Higher vs 2024
Quarterly DividendOngoingIncreased to $0.29 (Apr-25) Maintained at $0.29 (May-25 & Q2) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 & Q1’25)Current Period (Q2’25)Trend
Demand/AbsorptionMuted spring selling, balancing pace/price; adjusted GM held up Sequential improvement in May/June; July trending below Q2 levels Mixed; choppy in early Q3
IncentivesModerating into Q4’24; Q1 adjusted GM 21.6% Incentives ~1,050 bps; expected +up to 100 bps in Q3; main driver of margin changes Rising near-term
Costs & Cycle TimeImproved leverage in 2024; continued cost focus Direct costs -3% YoY, -2% q/q; cycle times ~4 months improving Improving
Land StrategyLot inventory growth in 2024; controlled lots 56% Exited ~12k controlled lots; renegotiated terms/pricing; disciplined underwriting Sharpened discipline
Regional TrendsBroad growth; Southeast strong West strong; Mountain mixed; Texas variable; Southeast strongest; Complete brand resilient Divergent by market
Mortgage Mix/ARMsNot highlighted~70% government / 30% conventional; growing ARM adoption since late Q1 More ARMs
Regulatory/MacroConsumer confidence and rate volatility pressuring demand Potential Canadian lumber tariffs; ~20–30% exposure (market-dependent) Watch input costs

Management Commentary

  • Dale Francescon (Executive Chairman): “Our second quarter results were in line with our expectations... deliveries of 2,587 homes increased by 13% on a sequential basis as customers responded to incentives...” . “We continued to focus on balancing pace with price... successfully managed our costs, and drove further improvement in our cycle times.”
  • Rob Francescon (CEO): “Our direct construction costs... declined by 3% YoY and 2% sequentially... we currently expect incentives to increase by up to another 100 basis points in our third quarter closings.” “We ended the second quarter with nearly 70,000 owned and controlled lots... we renegotiated a portion of our existing contracts... controlled lot count decreased by 12,000 lots” .
  • Scott Dixon (CFO): “Adjusted homebuilding gross margin was 20% compared to 21.6% in the first quarter... quarter over quarter differential was driven almost entirely by increased incentive levels” . “We are revising our full year 2025 home delivery guidance to 10,000 to 10,500 and home sales revenues to $3.8 to $4.0 billion” . “Sold mortgage servicing rights (MSR) on $3.0B UPB for ~$47.3M, resulting in a ~$4.0M gain” .

Q&A Highlights

  • Land investment and lot strategy: Reduced land investment; exited ~12k controlled lots with minimal feasibility costs due to land-light strategy flexibility .
  • Mortgage product mix: ~70% government loans and ~30% conventional; growing ARM adoption through Q2 .
  • Guidance drivers and regional color: July seasonal softness and affordability drove lower FY guidance; West strongest, Mountain mixed, Texas working through affordability/inventory, Southeast strongest; Complete brand strong in Carolinas/Midwest .
  • Margins outlook and impairment risk: Margin pressure primarily from incentives; impairment related to closeout communities; significant additional impairments would require market deterioration .
  • Canadian lumber tariffs: Potential exposure ~20–30% of lumber sourced from Canada; awaiting final tariff details; not yet impacting costs .
  • Starts and spec management: Q2 starts 2,485; focus on matching starts with sales to maintain spec levels .

Estimates Context

  • Q2 2025 beat: Revenue $1.00B vs $0.92B consensus; Primary EPS $1.37 vs $1.15 consensus; both above expectations. Only two EPS estimates and three revenue estimates contributed to consensus, indicating limited coverage depth*. Values retrieved from S&P Global.
  • Implications: Consensus likely needs to reflect lower FY25 deliveries and home sales revenue ranges ($3.8–$4.0B) and margin headwinds from rising incentives; near-term quarterly EPS may drift lower given guided HB GM compression and Q3 SG&A at ~14% .

Key Takeaways for Investors

  • Strong headline beat vs consensus, but the more important narrative is the guidance reset lower and margin pressure from higher incentives—expect estimate revisions to tilt down despite Q2 upside * * . Values retrieved from S&P Global.
  • Operational execution remains solid: improved cycle times, direct cost reductions, and disciplined land-light approach (renegotiations and controlled lot rationalization) provide cushion .
  • Demand remains rate-sensitive and choppy; sequential improvements in May/June can reverse quickly—monitor weekly absorption and ARM penetration as affordability tools .
  • Capital return is a support: buybacks at deep discount to book and maintained $0.29 dividend signal confidence and downside support, with liquidity of $857.6M .
  • Near-term trading lens: trade the spread between beat and cut—initial strength on beat may fade as the market digests FY guide down and Q3 margin commentary; watch peers’ incentives and input cost updates (e.g., lumber tariffs) .
  • Medium-term thesis: community count growth (327 record, with mid-single-digit YoY increase by YE) and brand positioning (Century Complete) can re-accelerate as rates stabilize, but price/incentive discipline will drive returns through 2025 .
  • Key watch items: Q3 deliveries (2,300–2,500), HB GM trajectory (guided ~100 bps lower), SG&A mix (~14% in Q3), and backlog rebuild path from 1,217 homes / $466.0M .