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Century Communities, Inc. (CCS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered resilient execution in a muted demand backdrop: total revenues $980.3M, adjusted diluted EPS $1.52, homebuilding gross margin 17.9% GAAP / 20.1% adjusted; both revenue and adjusted EPS significantly beat S&P Global consensus, primarily on cost reductions offsetting higher incentives .
  • Management narrowed FY2025 guidance again: deliveries to 10,000–10,250 (from 10,000–10,500 in Q2), home sales revenue to $3.8–$3.9B; Q4 gross margin expected to ease up to 100 bps on higher incentives, with SG&A ~12.5% of home sales .
  • Operational improvements continue: cycle times averaged 115 days (one-third of divisions ≤100 days); incentives on closed homes ~1,100 bps; ARMs rose to ~20% of originations, aiding affordability .
  • Capital allocation remains shareholder-friendly: $20M repurchases (~297K shares) and $0.29 dividend maintained; senior notes refinanced to 2033, pushing maturities (no senior debt due until Aug 2029) .

What Went Well and What Went Wrong

What Went Well

  • “We delivered 2,486 homes, hitting the high end of our guidance,” with adjusted homebuilding gross margin of 20.1% modestly improving sequentially as reductions in direct costs offset higher incentives .
  • Cycle times improved to an average of 115 days, with one-third of divisions at 100 days or less; customer satisfaction scores are at all-time highs (referrals and lower warranty costs) .
  • Balance sheet strengthened and capital returns: repurchased $20M of shares (~297K, 23% discount to book), maintained $0.29 dividend; completed $500M 2033 notes, redeemed 2027 notes—no maturities until Aug 2029 .

What Went Wrong

  • Demand muted and buyer caution persisted; net new contracts fell to 2,386 and incentives on closed homes averaged ~1,100 bps; Q4 incentive levels expected to rise another ~100 bps, pressuring margins .
  • Backlog contracted: 1,117 homes and $416.9M (-29% homes, -38% dollars YoY), reflecting softer order activity and mix; community count dipped to 321 vs 327 in Q2 (still +5% YoY) .
  • Inventory impairment of $3.2M on closeout communities; continued abandonment charges ($5.2M option contracts) and loss on debt extinguishment ($1.4M) weighed on “other expense” .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$903.2 $1,000.7 $980.3
Home Sales Revenues ($USD Millions)$883.7 $976.5 $955.2
Diluted EPS (GAAP) ($)$1.26 $1.14 $1.25
Adjusted Diluted EPS ($)$1.36 $1.37 $1.52
Homebuilding Gross Margin (%) – GAAP19.9% 17.6% 17.9%
Adjusted Homebuilding Gross Margin (%)21.6% 20.0% 20.1%
SG&A / Home Sales Revenue (%)13.7% 13.2% 12.6%
Deliveries (Homes)2,284 2,587 2,486
Avg Sales Price (Deliveries, $USD Thousands)$386.9 $377.5 $384.2
Consensus vs ActualQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)*912.4921.5906.1
Revenue Actual ($USD Millions)903.2 1,000.7 980.3
Primary EPS Consensus Mean ($)*1.7121.1460.799
Adjusted Diluted EPS Actual ($)1.36 1.37 1.52

Values with asterisk retrieved from S&P Global.

Segment breakdown – Q3 2025 Home Deliveries by Region

RegionHomesASP ($USD Thousands)YoY Homes %YoY ASP %
West369 $591.0 +1.7% -10.8%
Mountain401 $506.0 -21.8% -4.2%
Texas460 $293.8 -13.2% -2.4%
Southeast423 $413.8 -0.9% -1.9%
Century Complete833 $268.9 -16.8% +1.6%
Total2,486 $384.2 -12.3% -2.4%

KPIs and Operating Metrics

KPIQ1 2025Q2 2025Q3 2025
Net New Home Contracts (#)2,692 2,546 2,386
Backlog (Homes)1,258 1,217 1,117
Backlog ($USD Millions)$521.1 $466.0 $416.9
Selling Communities (Count)318 327 321
Lot Inventory (Total)79,014 68,701 62,239
Lot Inventory (Owned/Controlled)35,897/43,117 37,419/31,282 36,483/25,756
Cycle Time~4 months ~4 months 115 days
Incentives on Closed Homes~900 bps ~1,050 bps ~1,100 bps
ARMs Share of Originations<5% N/A (increasing adoption) ~20%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Home DeliveriesFY 202510,000–10,500 (Q2) 10,000–10,250 (Q3) Lowered/narrowed
Home Sales RevenuesFY 2025$3.8–$4.0B (Q2) $3.8–$3.9B (Q3) Lowered/narrowed
Home DeliveriesFY 202510,400–11,000 (Q1) baseline 10,000–10,250 (Q3) Lowered twice since Q1
Homebuilding Gross Margin (GAAP)Q4 2025N/AEase up to 100 bps vs Q3 Lower sequential
SG&A / Home SalesQ4 2025N/A~12.5% Efficiency
IncentivesQ4 2025N/AIncrease up to ~100 bps Higher
Tax RateFY 202525%–26% (earlier) 24.5%–25.5% (updated) Slightly lower range
Financial Services ContributionQ4 2025N/ASimilar to Q3 Maintained
DividendOngoing$0.29 maintained $0.29 maintained Maintained
Share RepurchasesQ4 2025Opportunistic (Q2/Q3) Expect to continue if valuations attractive Maintained stance

Earnings Call Themes & Trends

TopicQ1 2025 (Two Quarters Back)Q2 2025 (Prior Quarter)Q3 2025 (Current)Trend
Incentives & MarginsIncentives ~900 bps; guided +200 bps in Q2; margins to ease Incentives ~1,050 bps; adjusted margin 20.0%; guided Q3 margin down to +100 bps lower Incentives ~1,100 bps; adjusted margin 20.1%; guide Q4 margin ease up to 100 bps Continued pressure from incentives; costs offset
Cycle Times~4 months; improving ~4 months; improving 115 days avg; 1/3 divisions ≤100 days Improving
Consumer DemandMuted spring; buyer caution Sequential order improvement in May/June; July choppy Orders seasonally consistent in Oct; demand remains cautious Cautious, seasonality
ARMs Adoption<5% ARMs Increasing adoption; leaning into ARMs ~20% of originations Growing to aid affordability
Tariffs & Supply ChainNo meaningful cost impact expected; mitigation plans Canadian lumber exposure 20–30%; monitoring No material direct cost increases YTD; price protection agreements Watching, limited impact YTD
Community Count318; mid-single-digit FY growth expected Record 327 at Q2 end 321 (5% YoY), still mid-single-digit FY growth Elevated base, slight dip vs Q2
Land Strategy80K lots owned/controlled; land-light, flexible options Controlled lots reduced ~12K; renegotiations; charges ~$2.6M 62,239 lots; disciplined underwriting; seeing some raw land cost reductions Conservative, flexible
SG&A & Cost Actions13.7%; workforce rightsizing to lower fixed costs 13.2%; detail on variable vs fixed mix 12.6%; Q4 guide ~12.5% Improving efficiency

Management Commentary

  • “We delivered 2,486 homes, hitting the high end of our guidance, and our adjusted home building gross margin of 20.1% was up slightly on a sequential basis as reductions in our direct construction costs offset higher incentives.” — Dale Francescon, Executive Chairman .
  • “Cycle times…currently sit at an average of 115 calendar days, with one third of our divisions at 100 calendar days or less. Our customer satisfaction scores are at all-time highs…lower warranty costs.” — Rob Francescon, CEO .
  • “We are narrowing our full year 2025 home delivery guidance to be in the range of 10,000 to 10,250 homes and home sales revenues to be in the range of $3.8 to $3.9 billion.” — Scott Dixon, CFO .
  • “Buyers remain hesitant…we expect that any interest rate relief and improvement in consumer confidence will start to unlock buyer demand.” — Dale Francescon .

Q&A Highlights

  • Margin drivers: Management cited ~50 bps higher incentives moderated by direct cost savings (down ~3% YTD), leading to adjusted margin stability at 20.1% .
  • Mortgage mix: ARMs (7-1/7-6/5-1) are gaining acceptance, expected to remain a meaningful share into Q4; buy-downs help monthly payments without 30-year fixed expense .
  • Community count ramp: Ending community count to rise mid-single-digit % by year-end; late-quarter openings drive less benefit in-period; implies Q4 ramp .
  • SG&A savings: Efficiency initiatives, headcount alignment, and compensation benefits support Q4 SG&A ~12.5%; continued use of broker commissions/advertising in competitive markets .
  • Land discipline: Exited/abandoned near-term optioned lots that didn’t underwrite under current assumptions; owned lots stable just under 37K; pursuing later-timeline projects .
  • ASP mix and tariffs: Sequential ASP lift driven by regional mix (more West/Mountain, less Complete); too early to size 2026 tariff impacts; no material Q4 impact expected .

Estimates Context

  • Q3: Revenue $980.3M vs S&P consensus $906.1M (+$74.2M); adjusted EPS $1.52 vs S&P consensus $0.80 (+$0.72). Q2: Revenue beat by ~$79.2M and adjusted EPS beat by ~$0.22. Q1: Revenue missed by ~$9.2M and adjusted EPS missed by ~$0.35.
  • Beats were driven by cost reductions (sticks-and-bricks), improved cycle times, and targeted incentives; sequential margin stability despite higher incentives supports EPS outperformance .

Values retrieved from S&P Global.

PeriodRevenue Consensus* ($M)Revenue Actual ($M)Diff ($M)EPS Consensus* ($)Adjusted EPS Actual ($)Diff ($)
Q1 2025912.4903.2 -9.21.7121.36 -0.35
Q2 2025921.51,000.7 +79.21.1461.37 +0.22
Q3 2025906.1980.3 +74.20.7991.52 +0.72

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential margin stability amid rising incentives underscores effective cost control and cycle-time improvements; watch Q4 margin guide (up to 100 bps lower) for near-term EPS cadence .
  • Strong beats vs consensus on Q3 revenue/EPS, combined with buybacks and no senior maturities until 2029, provide downside support; opportunistic repurchases likely to continue .
  • Demand remains cautious at entry-level price points; ARMs near 20% of originations and targeted buy-downs should support affordability through Q4 seasonality .
  • Backlog contraction and community-count timing imply reliance on in-quarter sales and spec inventory pacing; monitor absorption trends and incentive competitiveness into year-end .
  • Land-light option discipline reduces risk; controlled-lot reductions and renegotiations should mitigate capital at risk while preserving future community count growth .
  • FY2025 guidance narrowing suggests realistic stance amid macro uncertainty; upside lever remains direct cost reductions and operating efficiency (SG&A guided ~12.5% in Q4) .
  • Near-term trading: Expect focus on Q4 incentive trajectory and margin slope; medium term thesis centers on normalized demand, improved cycle times, and leveraged SG&A over a larger community base .