Q4 2020 Century Communities Inc Earnings Call
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Yeah.
Greetings and welcome to the century communities fourth quarter and full year 'twenty 'twenty earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Should anyone require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Hunter Wells, Vice President of Investor Relations.
Good afternoon. Thank you for joining us today for century communities, earning conference call for the fourth quarter and full year ended December 31st 2020 before the call begins I would like to remind everyone that certain statements made in the course of this call are not based on historical information and May constitute forward looking statements.
These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in the forward looking statements certain of these risks and uncertainties can be found under the heading risk factors in the company's most recently filed annual.
Our report on form 10-K, as supplemented by our other SEC filings, our SEC filings are available at Www Dot Sedaka and on our website at Www Dot century communities Dot Com. The company undertakes no duty to update any forward looking statements that are made during this call.
Additionally, certain non-GAAP financial measures will be discussed on this conference call. The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP management will be available. After the call should you have any questions that did not get answered.
Hosting the call today are Dale Franciscan Chairman and co Chief Executive Officer, Rob Franciscan Co Chief Executive Officer, and David Messenger, Chief Financial Officer. Following todays prepared remarks, we will open up the line for questions with that I will turn the call over to Dale.
Thank you Hunter and good afternoon, everyone. We're pleased to report that in 2020, we achieved multiple milestones, including our 18th consecutive year of profitability.
$3 $2 billion in total revenues, a 25 per cent increase.
10822, net new contracts <unk> 38 per cent increase and 9453 home deliveries and 18% increase these.
These results again demonstrate our ability to achieve consistent double digit revenue on delivery growth, reflecting the power of our business model.
On the appeal of our geographically diverse footprint as we deliver new homes across the country's most active housing markets.
In the fourth quarter, we generated record home sales revenues of nearly $950 million, a 22% increase while increasing home deliveries by 14% to a company record 2826 homes.
During the quarter. We also increased our net new contracts by 45 per cent to a fourth quarter record of 2566 homes.
Our sales pace accelerated through the end of 2020 and into the beginning of 'twenty 'twenty, one with net new contracts for December increasing 54% in January increasing 77%.
Reflecting not only the resiliency of demand, but our ongoing sales momentum into <unk> 'twenty 'twenty one.
We also made significant progress in growing our backlog ending the year with 3439 sold homes with a value of nearly $1 $3 billion.
More importantly, we drove significant profitability expansion, achieving our highest pretax income for both the fourth quarter and full year and more than twice the prior year periods net.
Net income for the quarter and year also increased 72 per cent and 82%, respectively to $92 million and $206 million.
Our cash flows continued to increase in the fourth quarter as reflected by an 87% increase in EBITDA to a company record $145 million.
Our net homebuilding debt to net capital ratio also improved to 27, 2% down 1800 basis points from 45, 2% in the fourth quarter last year, and a 570 basis point sequential improvement compared to 32 point now.
9% at the end of the third quarter.
We also achieved gross margin and SG&A leverage expansion.
Adjusted homebuilding gross margin percentage increased sequentially 300 basis points to 23%, primarily due to improved home price appreciation across our markets as well as a reduced reliance on incentives.
SG&A as a percent of home sales declined 80 basis points to 10, 1% the lowest in our history.
This was down from 10, 9% in the fourth quarter of last year, and a sequential improvement of 120 basis points from the third quarter.
In 2021, we expect to see continued margin and leverage improvement as we realize further operational efficiencies across our organization.
Since going public in 2014, we've successfully expanded and diversified our footprint primarily through acquisitions, while transforming our competitive positioning to become one of the largest homebuilders in the country.
We've invested deeply into our platform to advance synergize and better position century to thrive not only in the current environment, but future housing cycles as well.
Over the last two years, our focus on completing the integration of our past acquisitions.
Improving the visibility into all aspects of our business and generating efficiencies from our growing scale and national platform have resulted in increased returns on equity.
We believe that over the course of the next few years, we can further improve upon this achievement.
In early 2020, we took prudent actions to strengthen our balance sheet by reducing expenditures, increasing liquidity and accelerating asset turns in order to provide us with maximum flexibility to manage our organization and capitalize on opportunities as they arise.
We are better situated than ever before to expand our scale and scope accelerate growth and generate expanded profitability.
Before the full effects of the pandemic, we felt last year housing demand was solid and picking up pace.
At that time, there were already multiple demand drivers and industry tailwind that play.
We believe these trends are real and have considerable staying power.
The primary factor is and continues to be record low interest rates in January the federal reserve reiterated its expectation to maintain low rates, while the mortgage bankers Association recently echoed a similar conviction.
Recently U S mortgage rates, even hit a 30 year low of $2 65 per cent compared to 3.6 for one year ago.
Yeah.
Additionally, there exists a severe housing shortage across the U S. At all price points. This trend continues to intensify.
Across the majority of centuries markets. The estimated months of supply decreased on average by approximately 30% from the third quarter to the fourth reflecting an average supply of 1.2 months and well below the national average of 2.3 months.
In terms of demographics. The U S population of millennials represents a key home buying group that is expected to grow incrementally over the next decade.
An increasing number of baby boomers are also entering retirement checks.
Taking advantage of recent gains in home price appreciation and either downsizing or refinancing their homes, both of which provide additional investable dollars to help grow the overall economy.
Looking ahead to 2021 were emboldened by the supported tail wins, which will not only propel incremental housing demand, but helped spur expanded home price appreciation.
We continue to raise prices across all of centuries markets throughout the fourth quarter and into January.
We believe low mortgage rates increased personal savings and improved buyer credit profiles will allow us to increase price, while maintaining affordability for buyers.
Across our entire product portfolio, we are strongly positioned within the attractive affordable new home category with nearly 80% of our 2020 deliveries qualifying for FHA loans.
FHA recently increased their floor and ceiling loan limits by approximately 7%.
Helping expand our pool of potential buyers support our strategy to attract first time and move up homebuyers and drive accelerated growth for century complete.
Over the past several years, we have built a strong foundation to solidly propel century to even greater success. Our goal is to deliver our customers high quality beautiful homes at affordable prices, while creating long term shareholder value.
Our national footprint robust systems, and talented employee base competitively position us to grow our presence in existing markets as well as future ones.
We were recently named one of Fortune's 100 fastest growing companies and one of America's most trusted homebuilders outperforming nearly all of our peers for.
For this honor as well as our success, we thank our exceptional team of 1400 employees that share our drive our passion and our customer first philosophy.
I'll now turn the call over to Rob to discuss our business in more detail.
Thank you Dale and good afternoon, everyone.
Given the strength in market conditions and to support our future growth expectations, we have devoted considerable energy to expanding our land pipeline and more deeply penetrating local markets.
We expect significant future growth to come from our existing markets and we are heavily focused on growing our local market share.
As part of executing on this growth plan, we grew our year over year land holdings by 26% ending the year with nearly 50000 owned and controlled lots.
In the fourth quarter alone, we added nearly 8000 gross slots and over 5000 lots net of home closings.
In keeping with our land light operating strategy, our mix of control lots versus owned improved to 58% compared to 52% at the end of 2019.
We continue to be disciplined in our land and lot acquisition strategy and still do not include home price appreciation into our underwriting assumptions.
Last month, we announced our organic expansion into the Phoenix Metro area with our century communities brand.
Previously only our century complete brand had a presence in Phoenix.
Near term, we plan to break ground across multiple planned communities consisting of over 1700 home sites, which will be dedicated to our legacy brand.
This extension further diversify centuries offerings in this attractive high potential market for new home demand is at an all time high.
In 2020, Phoenix was a top 10 U S city for inbound growth.
We're excited to fully enter the Phoenix Metro area and expect to begin delivering homes under the century communities brand in the third quarter of 2021.
Arizona will now be the fifth state in addition to Texas, Georgia, North Carolina, and South Carolina, where both our brands have a presence.
Because there's two brand strategy enable century to have a bigger presence within a market. We can more efficiently by land as a single large deal can provide lots for both our century communities and century complete brands.
Additionally, given we already have personnel in place with local market expertise, we have immediate access to land opportunities and can rapidly scale and turn on invested capital more quickly.
Across our footprint, we see additional opportunities for organic expansion by adding a second brand to help further our growth within existing markets.
Another aspect of our operating strategy is the preference for building move in ready overbuilt to order homes.
In the fourth quarter, 83% of our total deliveries were built on spec.
We see several advantages in building spec homes, particularly in a high demand environment, such as what we're experiencing today.
The construction process is typically faster more efficient and less prone to closing delays.
We can also obtain.
Better trade pricing due to this even flow approach.
And the timeframe between sale and delivery can be materially shortened, allowing us to more appropriately price the house and maximize our margin potential.
Across our two brands, we have a high concentration in the attractive entry level segment with approximately 80% of our total deliveries representing entry level buyers. Additionally.
Additionally of the 9453 homes, we delivered over the past 12 months, 88% of those were sold at less than 500000.
Even with this focus on delivering homes at the lower price points within a particular market we.
We sell to many move up homebuyers and view this as an opportunity to further expand our business.
Given the increasing number of millennial and other buyers. We expect this trend to further drive new home demand at all price points.
Over the past year, we have all witnessed a move to a more virtual world.
In keeping with this trend we continue to evaluate new opportunities and implement new tools to improve the customer experience for our homebuyers.
Not only did century's total web traffic increased 60% compared to the prior year, but our team has embraced this as an opportunity to demonstrate the meaningful potential of online home buying.
We recently launched a new website to better highlight and further simplify our online home buying process.
A key component of this redesign was to improve the functionality of the mobile experience of our site as many prospective buyers now begin their home purchase journey from their smartphone.
Our new mobile friendly site brings our two brands under one domain, allowing homebuyers to search for either brand in prime locations throughout the United States.
We've also made it easier to get pre qualified in minutes for alone or to secure a home online with a click of a buy now button.
We believe our investments into digital tools and capabilities mobile friendly applications and a more simplified online experience will be reflected in our ongoing success in 2021 and beyond.
Our history of strong profitable and consistent performance is compelling evidence that our business model operating strategy strategic investments and efficiency initiatives are working.
Looking ahead, we expect market conditions to remain favorable into the spring selling season and throughout the balance of the year, enabling us to further grow our business strengthen our competitive positioning and in turn drive increased returns and long term growth for our shareholders.
I will now turn the call over to Dave to discuss our financial results in more detail.
Thank you Rob during the fourth quarter of 2020, net income increased 72% to a record $91 $8 million for $2 72 per diluted share compared to $53 4 million and $1 63 in the prior year quarter.
Full year net income increased 82% to $206 2 million with earnings per diluted share rising to $6 13.
Compared with $113 million and $3 62 in the prior year.
Fourth quarter pre tax income was $121 2 million an increase of 125%.
And a fourth quarter record, while pre tax income for the full year increased 104% to $270 2 million the highest in the company's history.
Home sales revenues for the fourth quarter increased to $946 8 million an increase of 22%.
<unk>, two 770, $775 7 million in the prior year quarter.
Total revenues increased 25% to a record $987 8 million.
This improvement in revenues was propelled by a 14% increase in deliveries to a record of 2826 homes.
In the fourth quarter net new contracts across our divisions were up 45% to 2566 homes, a fourth quarter record with our mountain region outpacing all other divisions and demonstrating the substantial broad based demand. We are currently witnessing.
We improved our year end backlog of 66% to 3439 homes valued at $1 3 billion.
In the past within our century complete brand, while some homes would be built on lots within communities similar to our legacy brand a number of homes would also be built be built outside of communities on scattered lots. However.
However, as the brand has matured entered new markets and expanded its land pipeline, we have significantly reduced our reliance on scattered lots in increasingly build the majority of homes in traditional subdivisions or in pods clustered together, which function more like a traditional community.
As such beginning this quarter.
We will provide a community count number for the century complete brand.
In 2020, our total community Count was 198 communities of which 102 of these communities were part of the century complete brand.
This was down from 212 communities in the prior year.
This decrease was an expected consequence of us selling through more communities that we opened as we aggressively work to meet accelerated demand as well as our pause on land acquisition and development for a period of time at the beginning of the second quarter given the uncertainty we were experiencing at the time.
Our team has been intently focused on building our land pipeline and in the coming year plan to open a variety of communities across all of our markets.
Looking ahead, we expect to end 2021, with total community count increasing potentially as high as 10%.
Adjusted homebuilding gross margin percentage was 23% compared to 21% in the prior year quarter.
On a sequential basis adjusted homebuilding gross margin percentage improved 300 basis points.
From the previous third quarter.
Homebuilding gross margin improved 28% compared to 18, 2% for the same period last year and 17, 5% in the third quarter of 2020.
We expect to continue to see year over year improvement as a result of our divisions, increasing price and reducing reliance on incentives in order to offset material and labor cost increases.
In fact, beginning in June of last year, we experienced incremental margin improvement on newly sold homes and each month throughout the balance of the year a trend which has continued into January of this year.
SG&A as a percent of home sales revenues improved 80 basis points to 10, 1% in the fourth quarter compared to 10, 9% in the prior year.
This was a result of our path to continued efforts to contain costs and improve the operating leverage of our company.
Yeah.
In the fourth quarter of 2020, our financial services business generated $35 8 million in revenues compared to $14 5 million in the fourth quarter of 2019.
The business contributed $17 $8 million on pretax income compared to $4 7 million in the prior year quarter.
Our fourth quarter results were primarily due to a larger number of loan originations an increase spread on loans sold.
The increase in loan originations resulted from both growth in our homebuilding business and a continued increase in our capture rate across the platform.
We believe our financial services and homebuilding businesses are well positioned to benefit from the low interest rate environment and demand trends being seen at all price points.
In 2020, the strategic actions, we took to strengthen our balance sheet resulted in an improvement of our net homebuilding debt to net capital ratio of 27, 2% down significantly from 45, 2% in the prior year quarter.
We improved our cash flows and in the fourth quarter with approximately $417 million of cash and total liquidity of $1 1 billion, which includes our availability under our undrawn $640 million unsecured revolving credit facility.
In the fourth quarter, our tax rate was 24% compared to one 1% in the same quarter the prior year and up slightly from 23, 3% in the third quarter of 2020.
In the fourth quarter of 2019.
Century is tax rate benefited from the retroactive reinstatement of energy efficient home credits for the full years of 2019 2018 in 2017.
We are very pleased with our strong results for the fourth quarter and full year 2020, and remain encouraged by the strength and health of the housing market.
The combination of our recent performance coupled with a favorable demand tailwind and our proven ability to execute gives us confidence our positive momentum will continue.
Accordingly, we are introducing 2021 guidance of deliveries to be in the range of 10500 to 11500 homes.
Home sales revenues to be in the range of $3 3 billion for $3 8 billion.
We look forward to delivering another year of exceptional performance as we strengthen our business scale, our organization accelerate growth and deliver outsized returns to our shareholders with that I'll open the line for questions operator.
Thank you.
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Please poll for questions.
Yeah.
First question is from Michael Rehaut of Jpmorgan. Please go ahead.
Thanks.
Janine everyone and congrats on all the results are very very encouraging.
First.
I wanted to just clarify here around demand.
You said debt.
We don't want some new sales pace, but now I think youre seeing orders order growth in December up 54% January yes, 77% can you just wanted to make sure that we understood that correctly that those are referring to actual order growth and you know it.
But also.
Net you're indeed also referring tune in peak sales pace sequentially as well during those months.
Yes, Hi, Mike its Dale.
Yeah.
You heard the numbers correctly, that's that was the year over year improvement and we.
We did see incremental sales base.
In addition to just the the year over year improvement.
When we look back on it.
We really didn't see the slowdown at the end of the year that is pretty typical and oftentimes at the very beginning of the year. It takes a while to get going we didn't experience that either.
So we just we sold completely through the holidays and just continued on after the new year.
Great.
Here.
I also wanted to shift a little bit towards the gross margins.
You know obviously.
On this results in the fourth quarter kind of a step function change.
I believe Dave you talked about expecting.
Improvement in 'twenty, one over 'twenty.
But I was hoping to get a little bit of sense.
How we should think about gross margins into the first and second quarters of the year.
Believe you had mentioned that in your backlog.
Every month over the past six months Youre seeing improved margins in your backlog. So it's 23% kind of a new bar for the company.
Is it something that you can kind of hold on to in the first or second quarters, how should we think about it directionally.
As we head into 'twenty one.
I think that will we'll definitely do as much as we can to hold onto it as we've been pushing we've been able to increase our ASP.
Across the portfolio. We're also dealing with a lot of the cost factors.
He is reading about in the industry, but as we look at our margins.
28% in Q4 on a GAAP basis 23 on an adjusted basis I think that you know Q1 Q2 being in that 20% to 21 range on a GAAP basis for margins.
It should be expected.
Great.
Thanks very much.
Thanks, Mike.
The next question is from Jack Mechanical on FY, Inc. Please go ahead.
Hi, good afternoon.
Wanted to talk a little bit about the community count growth for next year.
Talk to you a potential up.
One how does that look through the year it looks like you've kind of pulled forward.
Some demand later on here because it can be more back end weighted and then can you can you continue to leverage the G&A.
As you open these communities.
Based on the cadence through the year.
Hey, Jack Hey, Jack It's Dave I would say that as we look at our community count growth is going to be more backend weighted towards Q3 and Q4.
If you look at last year, we took a pretty heavy pause and it brought to a stop all land buying and century complete and so now there's lots of we have under control, they're going back to the acquisition cycle will bring those on in the later part of this year on our central community size, we've had such great sales pace, we've been selling through our communities faster than originally expected.
And dealing with land development, just like everyone else, we expect to be bringing more communities online. So I think you'd probably see on community count dip in the first half for the year, but we bring it back.
It being backend weighted in Q3 and Q4 and then in terms of G&A. We've continued to make progress on over each of the last several years.
Doing a bit better every year than a year before and I would think that as we look at.
Each of the quarters. This year looking at 2021, we would expect to continue seeing improvements out of the G&A line.
Okay, Great and then.
On the mix.
Now breaking out the two business lines by community.
Is it going to be a comparable sort of 50 50.
As you see it for 2021 as well.
Or or is it going to be more replenishment.
Some of the legacy brands versus versus complete.
Are you referring to the community count Yeah, Yeah community mix basically.
Okay. So I think for you.
Hey.
And really on how our land development goes depending on how much the central century communities brand, we bring on line and how much we continue to sell through but we've been saying that we expect for century complete brand to be growing so you're probably going be a little bit more weighted towards century. Complete then you would be century communities.
Okay. Okay, just one more for me if I could.
80% first time.
Buyer.
I think you said, 80%.
For the qualified price point for FHA I heard that right okay.
Have you done a stress tests have you done a stress test about affordability.
Things are great everybody is pushing price they're getting it.
But that for Q <unk>, Inc, 2018, and kind of what kind of sits on the back of your mind I'm. Just curious if there's if you've done on sensitivity work around.
These entry level buyers.
How much of an updraft.
Absorb on rates.
On your moves higher from here. Thanks.
Yeah, I would say that we definitely have all of our divisions on us here at the corporate office looking at what we can be doing on that.
Our ASP versus what affordability and the subsequent loans are for the buyers and we keep that keep that in mind and especially on our century complete brand as we're dealing with a a lower priced house on a different credit profile for the buyers. We were very cognizant of it. So we ran a variety of stress test on <unk>.
We price our homes against those.
Okay. Thank you.
The next question is from Alan Ratner from Zelman and Associates. Please go ahead.
Hey, guys. Good afternoon, congrats on the great year, and especially they had a great fourth quarter.
Yeah, I guess first question would love to dig in a little bit more on the land underwriting I know you made the comment about not assuming price appreciation on the land deals at the same time I'm looking at your lot count and it's pretty striking that roughly.
Roughly 50% of your lots each tied up over the last 12 months, so clearly theres going to be some mixed dynamic as these communities come online and.
I'm curious when you think about gross margin for example, you're at 23% today.
What's the underwriting threshold I know I don't know if its gross margin on returns, but how do you think about gross margin on new land deals that you're tying up and how does that compare to what you are delivering today.
So we're looking at similar gross margins, but Alan it depends on the risk profile of the particular land.
For buying finished lots on adjusted time basis, we would take a lower margin versus a development deal that has additional risk on an elongated time frame, but as we look at it we're not only looking at gross margin. We're looking at various other returns that have to meet our internal thresholds, but we're not looking at.
Anything generally speaking lower than where we are right now on a margin basis.
And that specifically on the fourth quarter level I, just want to be clear because obviously it ramped tremendously through the year or are you referring more on it again Alan it it really depends on mix on <unk>.
Whats coming through the pipeline. So as an example, if we had a lot of finished lots coming through the pipeline then it would be a lower margin generally speaking I would say more on a consolidated if everything was kind of coming through on the same amounts.
Got it okay. That's helpful.
And then on the closing growth guidance, obviously I don't think anybody is expecting you to keep up the growth rates, you've been running at them, especially as you get up against some tougher comparisons but.
Admittedly I would've thought it might've been a touch stronger than that based on where your backlog is and certainly based on where January started off. So is is that a function of the comps getting tougher in the back half of the year or are you getting to a point, maybe where youre having to intentionally slow the sales pace too to keep.
The production machine running efficiently and not GAAP out even more on communities.
I think I.
Alex It's Dave I think it's a combination of a couple of things that when you look at our backlog conversion rates I'm expecting some of those will get.
Crest over the next couple of quarters as we're dealing with the elongated cycle times.
Different supply chain issues. So I think that that's going to be one component and then it's going to be a matter of when we bring some of those communities on mine in Q3 and Q4.
Talk about earlier and so I think a combination of those will.
It will really depend on how much we can quote how much we can grow our closings.
Okay, Great and then Dave did I Miss It did you give a first quarter closing a guidance number by any chance.
No I didn't.
[laughter] any chance you can hold our hand, a bit on that one just given the range that we're dealing with.
I think that you know as Youre looking at prior years, you look at last year.
On to my point about backlog conversion coming down.
Have you started with.
Our conversion rate from last year and adjusted Accordingly for what we're seeing in the industry and supply chain and cycle times are taking longer and bring debt down a little bit that's probably going to get you on a decent range. Okay.
Okay. That's helpful. Thanks, guys. Good luck.
The next question is from Alex <unk> of B Riley FBR. Please go ahead.
Thank you great quarter, and great year gentlemen.
Thanks, Alex Alex.
Can you expand upon your comment about the potential to expand into the move up market.
Just some more color around that please.
Okay.
Yeah happy to it's it's always been a component of our business and where we're in no way, suggesting that we're moving away from our entry level focus, but we see opportunity to continue to add move up product to the mix as we've said when we look at what we've been.
Delivering its about 80% focused on the entry level buyer, which means 20% or so is move up and so but those are opportunities. We continue to look for them. When we look at our heavy concentration on entry level, adding some additional move up as just incremental business for us.
And do you have have you started to shift your lot inventory already.
For that.
Plan.
No.
I wouldn't really call. It a shift it's really more opportunistic we just look at it we're open to those kind of opportunities and we're not limiting ourselves to strictly doing entry level product.
Nor have we ever done so.
And so for a while there we were expecting average selling prices to sort of drift down.
The century complete product category.
Larger as a percentage of total.
Could we maybe alter that view and start to think that maybe average selling prices youre going to drift higher over the coming years.
Yeah, No I I wouldn't expect that I think what youre, what youre seeing happen. This quarter. For example was really a reflection of the pause that we took on land acquisition and starts on century complete.
Look it on the entire business, but it really impacts the century complete business because.
We do not we do not release our house for sale until it has already started so we ended up with a gap.
There and so no I think that's just a really more a matter of circumstances, we would still expect that our average asps will come down.
And one last question one of the elephants in the room has always been sort of the leverage that you've carried on the balance sheet for work that down below 30%. Congratulations on that what's your new new sort of normal operating range for leverage on your balance sheet.
Well I think right now we're demonstrating that we've been able to make some very significant strides in bringing it down for me on north of 45 and in 2019 North of 50 to now today. We're at 2017, two and I think that you'll continue to see us operate somewhere in this range that we've got cash on the balance sheet and Undrawn revolver and we've got the ability to fund.
Funded growth and expansion plans, we have from free cash flow on our balance sheet and so leverage will just tick tick up on around you know as we continue to fund our business.
That's great. Thank you.
The next question is from Alex Barron from housing Research Center. Please go ahead.
Yeah, Hey, guys, thanks, and great job.
Thanks, Alex.
So I heard you say that you're expanding into.
Into Phoenix with the essentially complete Grand I'm, sorry on century brand I.
I was curious whether you guys have any other.
Expansion plans either in century complete or the regular century brand into new markets.
Well, we've talked for a year or so that we'd like to get the century brand the legacy brand into Florida, and so as we talked we have five markets, where we've paired up both brands right now and Florida would be a natural century complete is throughout Florida and growing.
Quite substantially we're hoping in the future with new.
Penetration in the north part of Florida, and so to have the legacy brand go into Florida would be a nice addition, and so that would kind of be the first one I think we'd be looking at.
Okay that sounds great.
I also wanted to ask I mean, it doesn't sound like it but are.
Are you guys doing anything to intentionally tried to slow down the business or you're just taking as many orders as people.
For me away I guess, what I'm getting at is is there any limitations to your production.
Pasadena that would cause you to try to slow down the business at this point.
No. We've got we've got production challenges like all the other homebuilders to but no we have not.
Intentionally metered the production down.
It is.
We really because most of our of our starts are on a spec basis we.
We try to.
Put them out on an even flow basis, so that we don't create gaps.
Either in in terms of inventory or on expectations that we have for our trade partners, but.
So far we've been able to manage price and pace.
Neither one has really been a hindrance.
Okay and would it be possible to know roughly how many homes you guys are starting to month or per per quarter.
As we as I look at it you know in the back half of 'twenty 'twenty.
We are doing.
Anywhere from 700 to 900.
Is it a bump that we're doing so somewhere in that range. It varies by month, but just looking round numbers.
Right now I believe we've got more under construction between spec and backlog homes than we did this time last year.
At 12, 31, so we feel good about what our production capabilities are while it may take a little bit longer, but we are continuing to to bring sales on board and we're continuing to build homes.
Okay, Great look forward to your success this year. Thanks.
Thanks, Alex.
Yeah.
The next question is from Jay Mccanless Wedbush. Please go ahead.
Hey, good afternoon, great quarter everyone.
Thanks Jay.
Yes.
Cancellation rate what was it this year versus last year.
I mean, one quick second here.
I'll get that to you offline.
I'll get that to answer that call.
Okay. Thanks, and then.
Okay.
Last quarter pretty.
Pretty significant increase in lots and it was pretty well dispersed among the regions. The lots that you acquired this quarter was there any geographic focus or product focus on them or was it pretty evenly balance like we saw on the third quarter.
It was evenly balance then as you pointed out.
Year over year, each region grow from the end of 19% at the end of 'twenty.
And it was evenly balanced.
Obviously, it primarily entry level type product, but lots for product of entry level, but it was fairly even.
Okay, and so that mix of what's coming on in 'twenty. One is going to start to move the asps probably closer back to what something we saw like at the end of 2019 or maybe splitting the difference between the end of 19% to 20.
Well, yes, but theres been price appreciation on the markets to Jay as everybody is aware of and so.
So where the fourth quarter might be a high mark in terms of <unk>.
SP and seeing that come down.
And again predominantly entry level I don't think its going to be back at the 19 numbers, though.
Got it okay. Thanks for taking my questions.
Thanks Jay.
We have reached the end of day question and answer session and now I would like to turn the call back over to Dale Francesca <unk> for closing comments.
Thank you operator.
Our impressive performance as compelling evidence of the power of our business model as well as the strength of our entire team and our ability to overcome the unprecedented challenges for the past year.
We would like to thank each and every one of our employees for their continued dedication to century.
We couldnt have done it without you.
While we have much to be proud of we are even more excited for what lies ahead. We are entering 2021 with a great sense of opportunity and looking into the future remain confident in our ability to build on our success and achieve our long term growth vision.
Thank you for your time today, we appreciate your continued support and investment and look forward to speaking with you again next quarter.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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