Century Communities Q1 Earnings Call Highlights

Key Points

• Century said Q1 results “held up” but worsening macro conditions in March prompted a 5% cut to full‑year delivery guidance to 9,500–10,500 homes and lowered home sales revenue guidance to $3.5–$3.8 billion.
• Operations and balance‑sheet actions showed progress: finished spec inventory fell 16% sequentially (31% YoY), cycle times shortened to 114 days, the company holds nearly 60,000 owned/controlled lots and plans $1.0–$1.2 billion of land spending with flexibility, while returning capital via a ~2% share repurchase (~$40M) and a 10% dividend increase to $0.32.
• Margins and demand dynamics: adjusted homebuilding gross margin rose to 19.7% helped by lower incentives (averaging ~1,250 bps) and management expects similar Q2 incentives, while buyer mortgage mix shifted toward ARMs (~30% of originations) easing affordability pressures.

Century Communities NYSE: CCS executives said first-quarter 2026 results held up amid what they described as intensifying macro pressure late in the quarter, while the homebuilder lowered its full-year delivery outlook and emphasized continued focus on balancing sales pace and pricing, managing inventory, and returning capital to shareholders.

Macro backdrop weighed on March orders

Executive Chairman Dale Francescon said demand began the quarter “roughly in line with year-ago levels,” but conditions deteriorated in early March. He cited “geopolitical issues and increased economic uncertainties, coupled with higher interest rates and gas prices,” which “further eroded consumer sentiment” and weighed most heavily on March order activity, typically the strongest sales month of the quarter.

Chief Executive Officer Rob Francescon provided more detail on sales trends, saying absorption in January was “roughly flat” year over year, with the normal seasonal step-up into February and March. However, he said March absorption declined year over year as conflict in the Middle East, along with higher gas prices and interest rates, hurt buyer sentiment. Century ended the quarter with net new orders of 2,379 homes.

Despite weaker conversion in March, management highlighted improving traffic and lower cancellations. Rob Francescon said traffic increased each month in the quarter, with March up 13% from January, and pointed to a first-quarter cancellation rate of 12.2%, which he said was below levels seen through most of 2025.

Deliveries, incentives, and mortgages

Century delivered 2,013 homes in the first quarter. Rob Francescon said incentives on closed homes averaged about 1,250 basis points, down roughly 50 basis points from fourth-quarter 2025 levels. He added that incentives were lowest in January and increased as the quarter progressed as the company sought to maintain an “appropriate pace” as headwinds intensified. Assuming current conditions, he said second-quarter incentives on closed homes are expected to be similar to first-quarter levels.

Management also discussed shifting mortgage preferences among buyers. Rob Francescon said adjustable-rate mortgages represented roughly 30% of mortgages originated by principal volume in the quarter, up from about 25% in the fourth quarter of 2025 and “well above” the less-than-5% level in the first quarter of 2025. He said receptivity to ARMs has been increasing and could partially address affordability challenges.

Operations, inventory, and land position

Executives pointed to operational efficiency and inventory reductions. Dale Francescon said finished spec inventory ended the quarter down 16% sequentially and 31% year over year. Rob Francescon said the company ended the quarter with less than three finished specs per community, after starting 2,749 homes ahead of the spring selling season.

On costs and build times, Rob Francescon said direct construction costs on delivered homes declined 2% sequentially, while cycle times averaged 114 calendar days, down from 134 days in the year-ago quarter. He also said finished lot costs declined 1% sequentially and that the company still expects average finished lot costs for 2026 to be 2% to 3% higher than fourth-quarter 2025 levels.

Century’s community count grew, with an average of 309 communities in the quarter and 316 at quarter-end, up 4% sequentially. Rob Francescon said the company continues to expect 2026 average community count to rise in the low- to mid-single-digit percentage range year over year.

On land, Rob Francescon said Century ended the quarter with nearly 60,000 owned and controlled lots, with total lots roughly flat sequentially as it managed its land position. The company expects 2026 land acquisition and development spending of $1.0 billion to $1.2 billion, with flexibility to reduce or accelerate depending on conditions.

Rob Francescon also described Century’s land option strategy as a key source of flexibility, saying it has allowed the company to adjust terms and “increasingly achieve lower prices as sellers have started to adjust their expectations.” At quarter-end, he said only 11 of 316 communities (about 3%) used a land bank. He added that the option lot count was 24,000 lots secured by $97 million of deposits, which he said was less than 4% of equity.

Financial results and margin drivers

Chief Financial Officer Scott Dixon reported first-quarter pre-tax income of $33 million and net income of $24 million, or $0.84 per diluted share. Adjusted net income was $26 million, or $0.88 per diluted share.

Home sales revenue totaled $734 million, and average sales price was $365,000, which Dixon said was roughly flat sequentially. He said deliveries were impacted by reduced order activity in March. For the second quarter, he guided to deliveries of 2,200 to 2,400 homes, with “further sequential increases” in the third and fourth quarters.

Land sales and other revenue were $33 million and produced about $11 million of profit, which Dixon said was driven primarily by a single transaction in the Southeast.

Century’s first-quarter GAAP homebuilding gross margin was 17.8%, up from 15.4% in the fourth quarter of 2025. Dixon said the first-quarter margin benefited by 90 basis points from a reduction to warranty accrual and rebate collections above prior estimates, and was impacted by 10 basis points of purchase price accounting. Adjusted gross margin was 19.7% versus 18.3% in the prior quarter, with Dixon attributing the sequential improvement primarily to lower incentives. Looking ahead, he said incentives are expected to remain the most significant driver of adjusted homebuilding gross margin in the second quarter.

SG&A was 15.8% of home sales revenue, which Dixon said was affected by lower-than-expected deliveries. Assuming the midpoint of full-year home sales revenue guidance, he said the company expects SG&A to be roughly 14% of home sales revenue for full-year 2026 and 14.5% in the second quarter.

Financial services revenue was $22 million, with $8 million of pre-tax income. Dixon said results benefited from a fair value adjustment related to growth in the locked loan pipeline and the mortgage servicing rights portfolio, and he said financial services contribution margin percentage in 2026 is expected to be similar to 2025.

Capital returns and updated 2026 outlook

Management highlighted ongoing capital returns. Dale Francescon said Century repurchased about 2% of shares outstanding during the first quarter and increased the quarterly dividend by 10% to $0.32 per share. Dixon said the company repurchased 617,000 shares for $40 million at an average price of $64.82, which he characterized as a 27% discount to book value per share of $88.75 as of quarter-end.

Century ended the quarter with $2.6 billion of stockholders’ equity and $886 million of liquidity, according to Dixon. Net homebuilding debt to net capital was 30.5%, and homebuilding debt to capital was 32.2%, which he said was basically consistent with the prior-year quarter. The effective tax rate was 26.8% in the quarter, and Dixon said the company expects a full-year tax rate of 26% to 27%.

Given the impact of the Middle East conflict and related pressure on consumer confidence, along with higher interest rates and gas prices that “adversely” affected order activity, Dixon said Century reduced full-year 2026 delivery guidance by 5%. The company now expects 9,500 to 10,500 home deliveries and home sales revenue of $3.5 billion to $3.8 billion.

In the question-and-answer session, management said April orders have improved. Rob Francescon said April “started out better than March” and was “trending higher” both sequentially and year over year. He also told analysts the Southeast remains strong, calling Nashville a top market, while noting “green shoots” in Austin and describing the Bay Area as the company’s slowest market currently.

On input costs, Rob Francescon said Century has so far avoided vendor price increases tied to oil-related headlines, but acknowledged uncertainty about whether that could become an issue in the second half of the year. Dixon added that the company views its current finished spec position as comfortable across most markets, with focus at the community level to support pricing and demand. Regarding expansion, Rob Francescon said the company—now in more than 45 markets—continues to evaluate new geographies, but its primary focus is growing within its existing footprint.

About Century Communities NYSE: CCS

Century Communities, Inc is a national homebuilder and land developer headquartered in Greenwood Village, Colorado. The company is engaged in the acquisition, development, construction and sale of single- and multi-family residential homes, offering a range of floor plans and design options to homebuyers. In addition to its core homebuilding activities, Century Communities provides ancillary services such as mortgage financing, title and closing services, and insurance products through its wholly owned subsidiaries, aiming to deliver a comprehensive homebuying experience.

Founded in 2009, Century Communities rapidly expanded through both organic growth and strategic land acquisitions, positioning itself in high-growth markets across the United States.

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