Q2 2024 Century Communities Inc Earnings Call

Greetings, everyone. Welcome to Century Community's second quarter 2024 earnings conference call.

Operator: of 2024 Earnings Conference Call. All participants will be in a listen-only mode.

Operator: 24 Earnings Conference Call. All participants will be in a listen-only mode.

Operator: Should you need assistance? Please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Ask a question; you may press the star and then one, and you're touched on the telephone. For all your questions, you may press star. You also need to know today's event is being recorded. At this time, I'd like to turn the floor over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Sir, you may begin.

Operator: Ask a question. You may press star and then one on your touch and telephones.

Operator: Draw your questions you may press star into.

Operator: The opener today's event is being recorded.

Tyler Langton: At this time, I'd like to return the floor over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Sir, we may begin.

Tyler Langton: Good afternoon. Thank you for joining us today for Century Communities' earnings conference call for the second quarter of 2024. Before the call begins, I would like to remind everyone that certain statements made in this call may constitute forward-looking statements. These statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results different mature than 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 latest 10-K as supplemented by our latest 10-Q and other SEC filings.

Tyler J. Langton: Good afternoon. Thank you for joining us today for Century Communities' Earnings Conference Call for the second quarter of 2024. Before the call begins, I would like to remind everyone that certain statements made during this call may constitute forward-looking statements. These statements are based on management's current expectations 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.

Speaker Change: Good afternoon. Thank you for joining us today for century communities earnings conference call for the second quarter.

Speaker Change: 2024 before the call begins I would like to remind everyone that certain statements made during this call may constitute forward looking statements. These statements are based on management's current expectations.

Number of risks and uncertainties that could cause.

Actual results could differ materially from those described or implied in the forward looking statements.

Tyler J. Langton: Certainties, risks, and uncertainties can be found under the heading Risk Factors in the Company's latest 10-K, as supplemented by our latest 10-Q and other SEC filings. We undertake no duty to update our forward-looking statements. Additionally, certain non-GAAP financial measures will be discussed on this conference call. However, 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.

Speaker Change: Certain of these risks and uncertainties can be found under the heading risk factors in the company's latest 10-K.

The latest 10-Q and other SEC filings.

Tyler Langton: We undertake no duty to update our forward-looking statements. 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.

We undertake no duty to update our forward looking statements. Additionally, certain non-GAAP financial measures will be discussed on this conference call.

A brief presentation of this information is not intended.

Speaker Change: Do you consider it in isolation.

Speaker Change: The financial information presented in accordance with GAAP.

Tyler Langton: Posting a call today at GAAP Francescan, Chairman and Code Chief Executive Officer, Rob Francescan, Code Chief Executive Officer and President, and Scott Dixon, Chief Financial Officer. Following today's prepared remarks, we will open up the line for questions.

Tyler J. Langton: Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer, Rob Francescon, Co-Chief Executive Officer and President, and Scott Dixon, Chief Financial Officer. Following today's prepared remarks, we will open up the line for questions. With that, I'll turn the call over to Dale.

Speaker Change: Hosting the call today are Joe.

Speaker Change: Chairman and co Chief Executive Officer, Robert Tuscan Co Chief Executive Officer, President and Scott.

Dan: <unk> Financial Officer, Brian today's prepared remarks, we'll open up the line for questions with that I'll turn the call over to Dan.

Dale Francescon: With that, let's turn the call over to Dale.

Dale Francescon: Thank you, Tyler, and good afternoon, everyone. First, I want to congratulate Scott on his well-deserved promotion to Chief Financial Officer. Scott has been with the company for over 10 years, serving most recently as the interim chief financial officer for the last four months, and that transition has been seamless. Prior to that, Scott was the Assistant Chief Financial Officer, responsible for overseeing Century's accounting and SEC reporting, financial planning and analysis, and directly managing the financial system.

Dale Francescon: Thank you, Tyler, and good afternoon, everyone. First, I want to congratulate Scott on his well-deserved promotion to Chief Financial Officer. Scott has been with the company for over 10 years, serving most recently as the interim Chief Financial Officer for the last four months, and that transition has been seamless. Prior to that, Scott was the Assistant Chief Financial Officer responsible for overseeing centuries accounting and SEC reporting, financial planning and analysis, and directly managing the finance group. We are confident that Scott's strategic thinking and deep home-building knowledge will be a key component to help drive our future growth.

Dan: Thank you Tyler and good afternoon, everyone.

Joe: First I wanted to congratulate Scott on his well deserved promotion to Chief Financial Officer.

Speaker Change: Scott has been with the company for over 10 years, serving most recently as the interim Chief Financial Officer for the last four months and that transition has been seamless.

Speaker Change: Part of that Scott was the assistant Chief Financial Officer responsible for overseeing centuries accounting and SEC reporting.

Speaker Change: Planning and analysis and directly managing the finance group.

Dale Francescon: We are confident that Scott's strategic thinking and deep home building knowledge will be a key component to help drive our future growth. Moving on to the quarter, we are very pleased with our results for the second quarter, 2024, in which we generated strong year-over-year and sequential improvement in nearly all QMEC. Our deliveries of 2,617 homes increased by 17% year-over-year and 11% sequentially. Similarly, home sales revenues of $1 billion increased by 24% year-over-year and 10% sequentially.

Speaker Change: We are confident that Scott strategic thinking and deep homebuilding knowledge will be a key component to help drive our future growth.

Dale Francescon: Moving on to the quarter, we are very pleased with our results for the second quarter, 2024, in which we generated strong year-over-year and sequential improvement in nearly all key metrics. Our deliveries of 2,617 homes increased by 17% year-over-year and 11% sequentially. Similarly, home sales revenues of $1 billion increased by 24% year-over-year and 10% sequentially. Our adjusted home-building growth margin of 24% increased by 300 basis points year-over-year and 120 basis points sequentially, and our adjusted earnings per diluted share of $2.65. increased by 66% year-over-year and 19% sequentially. Even with the volatility of mortgage rates during the quarter, we continued to see strong demand for affordable new homes.

Moving on to the quarter, we're very pleased with our results for the second quarter 2024.

Speaker Change: We generated strong year over year and sequential improvement in nearly all key metrics, our deliveries of 2617 homes increased by 17% year over year and 11% sequentially.

Speaker Change: Similarly home sales revenues of $1 billion increased by 24% year over year and 10% sequentially.

Dale Francescon: Our adjusted home building gross margin of 24% increased by 300 basis points year over year and 120 basis points sequentially, and our adjusted earnings per diluted share of $2.65 increased by 66% year-over-year and 19% sequentially. Even with the volatility of mortgage rates during the quarter, we continue to see strong demand for affordable new homes. Our second quarter net new contracts of $2,780 increased by 20% year-over-year. We saw growth in all of our regions during the quarter, with the West and Texas posting the strongest gains at 59% and 30%, respectively, versus the prior year quarter.

Our adjusted homebuilding gross margin of 24%.

Speaker Change: Creased by 300 basis points year over year, and 120 basis points sequentially.

Speaker Change: Our adjusted earnings per diluted share of $2.65 increased by 66% year over year and 19% sequentially.

Speaker Change: Even with the volatility of mortgage rates during the quarter. We continued to see strong demand for affordable new homes, our second quarter net new contracts of 2780, <unk> increased by 20% year over year.

Dale Francescon: Our second quarter net new contracts of 2,780 increased by 20% year-over-year. We saw growth in all of our regions during the quarter, with the West and Texas posting the strongest gains at 59% and 30%, respectively, versus the prior year quarter. We also experienced an improvement in absorptions, with our second quarter 2024 monthly absorption rate averaging 3.5 versus 3.3 in the prior year quarter. While we typically see a sequential decline in orders as the second quarter progresses and we enter the summer months, our net orders actually increased sequentially in both May and June as interest rates stabilized and started to decline from the highs we saw towards the end of April.

Speaker Change: We saw growth in all of our regions during the quarter with the west and Texas, posting the strongest gains at 59% and 30% respectively versus the prior year quarter.

Dale Francescon: We also experienced an improvement in absorption, with our second quarter 2024 monthly absorption rate averaging 3.5 versus 3.3 in the prior year quarter. While we typically see a sequential decline in orders as the second quarter progresses and we enter the summer months, our net orders actually increased sequentially in both May and June as interest rates stabilized and started to decline from the highs we saw towards the end of May. So far in July, orders have stepped down from the June pace but are running ahead of prior year levels.

Speaker Change: We also experienced an improvement in absorptions with our second quarter 'twenty 'twenty four monthly absorption rate, averaging 3.5 versus three three in the prior year quarter.

Speaker Change: While we typically see a sequential decline in orders as the second quarter progresses, and we entered the summer months.

Speaker Change: Our net orders actually increased sequentially in both May and June.

Speaker Change: As interest rates stabilized and started to decline from the highs we saw towards the end of April.

Dale Francescon: So far in July, orders have stepped down from the June pace but are running ahead of prior year levels. Our focus on affordability positions us well for future growth and continued success as we can target the widest range of potential home buyers. Our average sales price of $389,000 in the quarter remains among the lowest of the publicly traded home builders. Nearly 100% of our homes were built on a spec basis in the second quarter, and this approach allows us to control our costs, maintain an appropriate supply of quick move-in homes, provide our home buyers with certainty of financing, and meet the healthy demand that we are seeing in our markets.

Speaker Change: So far in July orders have stepped down from the June pace, but are running ahead of prior year levels.

Dale Francescon: Our focus on affordability positions us well for future growth and continued success as we can target the widest range of potential homebuyers. Our average sales price of $389,000 in the quarter remains among the lowest of the publicly traded homebuilders. Nearly 100% of our homes were built on a spec basis in the second quarter, and this approach allows us to control our costs, maintain an appropriate supply of quick move-in homes, provide our homebuyers with certainty of financing, and meet the healthy demand that we are seeing in our market. Before turning the call over to Rob, I wanted to highlight a recent milestone for Century. A little more than a month ago, on June 18, we marked our 10-year anniversary as a public home builder.

Speaker Change: Our focus on affordability positions us well for future growth and continued success as we can target the widest range of potential homebuyers.

Speaker Change: Our average sales price of $389000 in the quarter.

Speaker Change: It remains among the lowest of the publicly traded homebuilders.

Speaker Change: Nearly 100% of our homes were built on a spec basis in the second quarter.

Speaker Change: This approach allows us to control our costs.

Speaker Change: [noise] maintain an appropriate supply of quick move in homes.

Speaker Change: Provide our homebuyers with certainty of financing.

Speaker Change: Meet the healthy demand that we're seeing in our markets.

Dale Francescon: Before turning the call over to Rob, I wanted to highlight a recent milestone for Century. A little more than a month ago, on June 18, we marked our 10-year anniversary as a public home builder. Over the past decade, we have meaningfully grown the company and transformed Century into a builder with a national footprint through both organic growth and acquisitions. Since our IPO, we have increased our presence from two states and five markets to 18 states and over 45 markets. We delivered 1,046 homes for $352 million of home sales revenues in 2014 and expect our full year 2024 deliveries to see more than a tenfold increase over those levels.

Speaker Change: Before turning the call over to Rob I wanted to highlight a recent milestone for century.

Speaker Change: A little more than a month ago on June 18, we marked our 10 year anniversary as a public homebuilder.

Dale Francescon: Over the past decade, we have meaningfully grown the company and transformed Century into a builder with a national footprint through both organic growth and acquisition. Since our IPO, we've increased our presence from 2 states and 5 markets to 18 states and over 45 markets. We delivered 1,046 homes for $352 million in home sales revenues in 2014, and we expect our full year 2024 deliveries to see more than a tenfold increase over those levels.

Rob: Over the past decade, we have meaningfully grown the company and transform century into a builder with a national footprint through both organic growth and acquisitions.

Rob: Since our IPO, we've increased our presence from two states in five markets to 18 states and over 45 markets.

Rob: We delivered 1046 homes for $352 million of home sales revenues in 2014.

Rob: And expect our full year 2024 deliveries to see more than a tenfold increase over those levels.

Dale Francescon: Similarly, over the last ten years, we have grown our shareholders' equity to $2.5 billion from $363 million and our book value per share to $78.68 from $16.93. Looking back at these achievements, we are filled with both an immense set of pride as well as gratitude to all the team members that made these accomplishments possible. Looking ahead, we are extremely excited about the strength and durability of the platform that has been built over the last ten years and a geographic platform that ranges from coast to coast over 18 states and 45 plus markets. We believe that Century is well positioned to drive future growth at higher returns by deepening our share in existing markets and generating further operating efficiencies by leveraging that increasing scale.

Dale Francescon: Similarly, over the last 10 years, we have grown our shareholders' equity to $2.5 billion from $363 million, and our book value per share to $78.68 from $16.93. Looking back at these achievements, we are filled with both an immense sense of pride, as well as gratitude to all the team members that made these accomplishments possible.

Rob: Similarly over the last 10 years, we have grown our shareholders' equity.

Rob: $2 $5 billion from $363 million and our book value per share to $78 68.

Rob: From $16 and 93 six.

Rob: Looking back a decent achievements, we are filled with both an immense set of pride as well as gratitude to all the team members that made these accomplishments possible.

Dale Francescon: Looking ahead, we are extremely excited about the strength and durability of the platform that has been built over the last 10 years, with a strong and seasoned team of home building professionals, over 78,000 owned and controlled logs, and a geographic platform that ranges from coast to coast in 18 states and 45 plus markets. We believe that Century is well positioned to drive future growth at higher returns by deepening its share in existing markets and generating further operating efficiencies by leveraging that increasing scale. I'll now turn the call over to Rob to discuss our operations and land position in more detail. Thank you, Dale, and good afternoon, everyone.

Rob: Looking ahead, we are extremely excited about the strength and durability of the platform that has been built over the last 10 years.

Rob: With a strong and seasoned team of homebuilding professionals.

Speaker Change: 78000 owned and controlled lots.

Speaker Change: On a geographic platform that ranges from coast to coast over 18 States and 45 plus markets. We believe that century is well positioned to drive future growth at higher returns by deepening our share in existing markets and generating further operating.

Speaker Change: CS by leveraging that increasing scale.

Rob Francescon: I'll now turn the call over to discuss our operations and land position in more detail.

Speaker Change: I'll now turn the call over to Rob to discuss our operations and land position in more detail.

Rob Francescon: Thank you, Dale, and good afternoon, everyone. As we've discussed in the past, interest rate buy downs continue to be the most important incentive for our customers, given their ability to significantly lower monthly payments, a key focus for our entry level buyer. We were able to reduce our incentives on closed homes to approximately 600 basis points in the second quarter 2024 from roughly 700 basis points in the first quarter 2024. This decrease was driven by a reduction in incentives on new orders that took place in the first quarter when mortgage rates were lower. However, with the increase in mortgage rates that took place in the second quarter, our incentives on new orders increased in the second quarter, averaging roughly 700 basis points.

Rob: Thank you Dale and good afternoon, everyone.

Robert J. Francescon: As we've discussed in the past, interest rate buydowns continue to be the most important incentive for our customers, given their ability to significantly lower monthly payments, a key focus for our entry-level buyers. We were able to reduce our incentives on closed homes to approximately 600 basis points in the second quarter of 2024 from roughly 700 basis points in the first quarter of 2024. This decrease was driven by a reduction in incentives on new orders that took place in the first quarter when mortgage rates were lower.

Rob: As we've discussed in the past interest rate buy downs continue to be the most important incentive for our customers given their ability to significantly lower monthly payments a key focus for our entry level buyer.

Rob: We were able to reduce our incentives on closed homes to approximately 600 basis points in the second quarter 2024 from roughly 700 basis points in the first quarter 2024.

Rob: This decrease was driven by a reduction in incentives on new orders that took place in the first quarter when mortgage rates were lower.

Robert J. Francescon: However, with the increase in mortgage rates that took place in the second quarter, our incentives on new orders increased in the second quarter, averaging roughly 700 basis points. Looking forward, our level of incentives on future sales will continue to be impacted by interest rates. In the second quarter, more than 90% of our deliveries were priced below FHA limits, and over 60% of the mortgages closed by our captive mortgage company, conspire home loans, were for FHA, USDA, or VA loans that typically carry interest rates and down payment requirements that are below those of conventional mortgages and help make homes more affordable.

Rob: With the increase in mortgage rates that took place in the second quarter, our incentives on new orders increased in the second quarter, averaging roughly 700 basis points.

Rob Francescon: Looking forward, our level of incentives on future sales will continue to be impacted by interest rates. In the second quarter, more than 90% of our deliveries were priced below FHA limits, and over 60% of the mortgages closed by our captive mortgage company, Inspired Home Loans, were for FHA, USDA, or VA loans that typically carry interest rates and down payment requirements that are below those of conventional mortgages and health make homes more affordable. The FIHO scores of our home buyers remained healthy and consistent with levels from the first quarter 2024 and full year 2023. We also had continued success in controlling our costs in the second quarter, with our direct construction costs on the homes we started remaining relatively flat on a sequential basis following the 2% quarter-over-quarter reduction in the first quarter of the year.

Rob: Looking forward our level of incentives on future sales will continue to be impacted by interest rates.

Rob: In the second quarter more than 90% of our deliveries were priced below FHA limits and over 60% of the mortgages close by our captive mortgage company inspire home loans were for FHA U S. P. A R V. A loved ones that typically carry interest rates and down payment requirements that are below.

Rob: Those of conventional mortgages and help make homes more affordable.

Robert J. Francescon: The FICO scores of our homebuyers remain healthy and consistent with levels from the first quarter of 2024 and full year 2023. We also had continued success in controlling our costs in the second quarter, with our direct construction costs on the homes we started remaining relatively flat on a sequential basis, following the 2% quarter-over-quarter reduction in the first quarter of the year. We've been able to maintain these stable direct construction costs by both leveraging and expanding our trade and supply base across our national footprint. During the second quarter, we can continue to see some incremental improvement in our cycle times, which remain at the four to five month pre-COVID levels.

Rob: FICO scores of our homebuyers remain healthy and consistent with levels from the first quarter 2024, and full year 2023.

Rob: We also had continued success in controlling our costs in the second quarter with our direct construction costs on the homes. We started remaining relatively flat on a sequential basis following the 2% quarter over quarter reduction in the first quarter of the year.

Rob Francescon: We've been able to maintain the stable direct construction costs by both leveraging and expanding our trade and supply base across our national footprint. During the second quarter, we can continue to see some incremental improvement in our cycle times, which remain in the 4 to 5 month pre-COVID levels. On the landfront, we ended the second quarter with approximately 78,000 owned and controlled lots, a 35% year-over-year increase. The higher lot count on a year over your basis was driven mainly by an increase in our control lots, which accounted for 58% of our total lots in the second quarter.

Rob: We've been able to maintain these stable direct construction costs by both leveraging and expanding our trade and supply base across our national footprint.

During the second quarter, we can send continued to see some incremental improvement in our cycle times, which remain in the four to five months pre COVID-19 levels.

Robert J. Francescon: On the land front, we ended the second quarter with approximately 78,000 owned and controlled lots, a 35% year-over-year increase. The higher lot count on a year-over-year basis was driven mainly by an increase in our controlled lots, which accounted for 58% of our total lots in the second quarter. Additionally, at the end of the second quarter, Texas and the Southeast accounted for close to 50 percent of our total lot count, up from 42 percent in the year-ago period and reflective of our strategy to grow our presence in these attractive markets that are benefitting from relative affordability.

Rob: On the land front, we ended the second quarter with approximately 78000 owned and controlled lots a 35% year over year increase.

Rob: The higher lot counts on a year over year basis was driven mainly by an increase in our control lots, which accounted for 58% of our total lots in the second quarter.

Rob Francescon: Additionally, at the end of the second quarter, Texas and the Southeast accounted for close to 50% of our total lot count, up from 42% in the year-ago period and reflective of our strategy to grow our presence in these attractive markets that are benefited from relative affordability, strong employment, and population growth. Combined with Century Complete, these more affordable markets comprise over 70% of our own and controlled land supply. Additionally, the strength of our relationships with third-party land developers across the Southeast, Texas, and in all of Century Completes markets further supports our traditional land-light strategy that is focused on acquiring finished lots.

Rob: Additionally, at the end of the second quarter, Texas, and the southeast accounted for close to 50% of our total lot count up from 42% in the year ago period, and reflective of our strategy to grow our presence in these attractive markets that are benefiting from relative affordability.

Robert J. Francescon: Strong Employment and Population Growth. Combined with Century Complete, these more affordable markets comprise over 70% of our owned and controlled land supply. Additionally, the strength of our relationships with third-party land developers across the Southeast, Texas, and in all of CenturyComplete's markets further supports our traditional land light strategy that is focused on acquiring finish line.

Rob: Strong employment and population growth.

Rob: Combined with century complete these more affordable markets comprise over 70% of our owned and controlled land supply.

Rob: Additionally, the strength of our relationships with third party land developers across the southeast, Texas and in all of century complete markets. Further supports our traditional land light strategy that is focused on acquiring finished lots.

Rob Francescon: We've also been encouraged by the growth of our home starts and community count through the first half of this year, which will support future growth in our deliveries in the quarters ahead. In the second quarter, we started 3,867 homes. Up from the 2,814 homes, we started in the first quarter, 2024, an increase of 37% in the year. We ended the second quarter with a community count of 266, the highest level in our company's history, and ahead of our initial plans as we were able to open new communities at a faster-than-expected pace in the quarter. Specifically, during the second quarter, we opened 50 new communities and closed 37.

Robert J. Francescon: We've also been encouraged by the growth of our Home Starts and Community Count through the first half of this year, which will support future growth in our deliveries in the quarters ahead. In the second quarter, we started 3,867 homes, up from the 2,814 homes we started in the first quarter of 2024, an increase of 37%. We ended the second quarter with a community count of 266, the highest level in our company's history and ahead of our initial plan, as we were able to open new communities at a faster than expected pace during the quarter.

Rob: We've also been encouraged by the growth of our home starts and community count through the first half of this year, which will support future growth in our deliveries in the quarters ahead.

Rob: In the second quarter, we started 3867 homes up from the 2814 homes. We started in the first quarter 2024, an increase of 37%.

Rob: We ended the second quarter with a community count of 266, the highest level in our company's history and ahead of our initial plans.

Rob: As we were able to open new communities at a faster than expected pace in the quarter.

Robert J. Francescon: Specifically, during the second quarter, we opened 50 new communities and closed 37. Our community count increased 14% versus year-ago levels and 5% sequentially, with the Southeast and Texas experiencing the highest growth rates over both periods. Century Complete accounted for 43% of our community count at the end of the second quarter, while Southeastern Texas accounted for 30%.

Rob: Specifically during the second quarter, we opened 15, new communities and closed 37.

Rob Francescon: Our community count increased 14% versus year-ago levels and 5% sequentially, with the Southeast and Texas experiencing the highest growth rates over both periods. Century complete accounted for 43% of our community count at the end of the second quarter, while the Southeast and Texas accounted for 30%.

Rob: Our community count increased 14% versus year ago levels, and 5% sequentially with the southeast and Texas experienced the highest growth rates over both periods.

Rob: Century complete accounted for 43% of our community count at the end of the second quarter, while the south Eastern Texas accounted for 30%.

Rob Francescon: Given our success in opening new communities through the first half of the year, we now expect our year-end 2024 community count to be in the range of 275 to 285.

Scott Dixon: Given our success in opening new communities through the first half of the year, we now expect our year-end 2024 community count to be in the range of 275 to 285. I'll now turn the call over to Scott to discuss our financial results in more detail. Thank you, Rob.

Rob: Given our success in opening new communities through the first half of the year. We now expect our year end 2020 for community count to be in the range of 275 to 285.

Scott Dixon: I'll now turn the call over to Scott to discuss our financial results in more detail. Thank you, Rob.

Rob: I'll now turn the call over to Scott to discuss our financial results in more detail.

Scott Dixon: To start, I want to thank our Board of Directors for my promotion to Chief Financial Officer. As Dale mentioned, I joined Century over 10 years ago, and I have had the opportunity to be part of the company's strong growth over that time, and I'm excited to help drive Century's future success. Turning to the finances.

Scott: Thank you Rob to start I want to thank our board of directors for my promotion to Chief Financial Officer.

Scott Dixon: To start, I want to thank our Board of Directors for my promotion to Chief Financial Officer. As Dale mentioned, I joined Century over 10 years ago, have had the opportunity to be part of the company's strong growth over that time, and I'm excited to help drive Century's future success.

Scott Dixon: During the second quarter of 2024, pre-tax income was $110.6 million, and that income was $83.7 million, or $2.61 per diluted share, a 63% year-over-year increase. Adjusted net income was $85.2 million, or $2.65 per share, a 66% year-over-year increase. EBITDA for the quarter was $129.1 million, and adjusted EBITDA was $130.6 million, respective increases of 61% and 63% over year-ago levels.

Scott: As Dale mentioned I joined century over 10 years ago, I've had the opportunity to be part of the company's strong growth over that time and I'm excited to help drive centuries future success.

Scott Dixon: Turning to the financials. During the second quarter of 2024, pre-tax income was $110.6 million, and that income was $83.7 million, or $2.61 per diluted share, a 63% year-over-year increase. Adjusted net income was $85.2 million, or $2.65 per share, a 66% year-over-year increase. Ebeda for the quarter was a $129.1 million, and the Chelsea Debeda was a $130.6 million, respective increases of 61 and 63% over Eurocode levels. Home sales revenues for the second quarter were $1 billion, up 24% versus the prior year quarter on both higher deliveries and average sales price, with our AFP increasing by 6% on a year-over-year basis.

Speaker Change: Turning to the financials during the second quarter of 2020 for pre tax income was $110.6 million and net income was $83 $7 million or $2 61 per diluted share.

Speaker Change: 63% year over year increase adjusted.

Adjusted net income was $85 2 million or $2 65 per share.

Speaker Change: 66% year over year increase.

Speaker Change: EBITDA for the quarter was $129 1 million and adjusted EBITDA was $136 million respective increases of 61 and 63% over year ago levels.

Scott Dixon: Home sales revenues for the second quarter were $1 billion, up 24% versus the prior year quarter on both higher deliveries and average sales prices, with our ASP increasing by 6% on a year-over-year basis. On a sequential basis, our average sales price of $388,800 in the second quarter decreased by less than 1% as Century Complete accounted for 37% of second quarter deliveries versus 33% in the first quarter of 2024, with a partial offset from lower levels of inflation. Our deliveries of 2,617 units increased by 17% versus the prior year period. We saw growth across all our regions, with the West, Southeast, and Century Complete all posting growth rates of over 20%.

Speaker Change: Home sales revenues for the second quarter with $1 billion up 24% versus the prior year quarter on both higher deliveries and average sales price with our ASP, increasing by 6% on a year over year basis.

Scott Dixon: On a sequential basis, our average sales price of $388,800 in a second quarter decreased by less than 1%, essentially complete account for 37% of second quarter deliveries versus 32% in the first quarter 2024, with a partial offset from lower levels of incentives. Our deliveries of 2,617 increased by 17% versus the prior year period. We saw growth across all our regions with the West, Southeast, and Century complete, all posting growth rates of over 20%. We are pleased with the strong growth that we have seen in our deliveries in the first half of a year in expect to see sequential growth in both the third and fourth quarters of 2024.

Speaker Change: On a sequential basis, our average sales price of 388 $800 in the second quarter decreased by less than 1% essentially complete accounted for 37% of second quarter deliveries versus 32% in the first quarter 2024, with a partial offset from lower.

Speaker Change: Levels of incentives.

Our deliveries of 2000, and 617 increased by 17% versus the prior year period we.

Speaker Change: We saw growth across all our regions with the west southeast and century complete all posting growth rates of over 20%.

Scott Dixon: We are pleased with the strong growth that we have seen in our deliveries in the first half of the year and expect to see sequential growth in both the third and fourth quarters of 2024. At quarter end, our backlog of sold homes was $1,753, valued at $755 million with an average price of $430,500. While the average price of our second quarter backlog was above the average sales price of our second quarter deliveries, this difference is largely due to mix, including the percentage of century complete homes, and we continue to expect our average sales price for the full year 2024 deliveries to be approximately $390,000.

Speaker Change: We are pleased with the strong growth that we've seen in our deliveries in the first half of the year and expect to see sequential growth in both the third and fourth quarters of 2024.

Scott Dixon: At quarter end, our backlog of sold homes was $1,753, valued at $755 million, with an average price of $430,500. While the average price of our second quarter backlog was above the average sales price of our second quarter deliveries, this difference is largely due to mix, including the percentage of century complete homes. And we continue to expect our average sales price for the full year 2024 deliveries to be approximately $390,000. In the second quarter, adjusted home building growth margin percentage was 24% compared to 21% in the second quarter 2023. Home building growth margins was 22.5% compared to 19.7% in the prior year quarter.

Speaker Change: At quarter end, our backlog of sold homes was 1753 valued at $755 million with an average price of $430500.

Speaker Change: The average price of our second quarter backlog was above the average sales price of our second quarter deliveries. This difference is largely due to mix, including the percentage of century complete homes and we continue to expect our average sales price for the full year 2024 deliveries to be approximately $390000.

Scott Dixon: In the second quarter, adjusted home building growth's margin percentage was 24 percent compared to 21 percent in the second quarter of 2020. Home building gross margins were 22.5% compared to 19.7% in the prior year quarter. Our adjusted gross margins in the second quarter also improved by approximately 120 basis points on a sequential basis, with the improvement largely driven by lower incentives on closed markets.

Speaker Change: In the second quarter adjusted homebuilding gross margin percentage was 24% compared to 21% in the second quarter 2023.

Speaker Change: Homebuilding gross margins was 22, 5%.

Speaker Change: Third to 19.7 in the prior year quarter.

Scott Dixon: Our adjusted growth margins in the second quarter also improved by approximately 120 basis points on a sequential basis, with the improvement largely driven by lower incentives on closed homes. S-GNA is a percent of home sales revenue was 12.4% in the second quarter compared to 12.8% in the prior year quarter. For 2024, we expect our S-GNA as a percent of home sales revenues to decline on a year-over-year basis as we grow our deliveries and keep our fixed levels of GNA relatively constant. In the second quarter, our tax rate was 24.3% compared to 25.2% in the prior year quarter.

Our adjusted gross margins in the second quarter also improved by approximately 120 basis points on a sequential basis with the improvement largely driven by lower incentives on closed homes.

Scott Dixon: SG&A is a percent of home sales revenue, with 12.4% in the second quarter compared to 12.8% in the prior quarter. For 2024, we expect our SG&A as a percent of home sales revenues to decline on a year-over-year basis as we grow our deliveries and keep our fixed levels of G&A relatively constant. In the second quarter, our tax rate was 24.3% compared to 25.2% in the prior quarter.

Speaker Change: SG&A as a percent of home sales revenue was 12, 4% in the second quarter compared to 12, 8% in the prior year quarter.

For 2024, we expect our SG&A as a percent of home sales revenues to decline on a year over year basis, if we grow our deliveries and keep our fixed levels of G&A relatively constant.

Speaker Change: In the second quarter, our tax rate was 24, 3% compared to 25, 2% in the prior year quarter we.

Scott Dixon: We expect our full year tax rate for 2024 to be in the range of 24.5% to 25%. Our net home building debt to net capital ratio was 28.1% compared to the first quarter 2024 levels of 24.9%. With our land and land development inventory remaining relatively flat, quarter over quarter, this change should have been mainly by an increase in our home center construction that will support a higher level of deliveries in the second half of 2024 as compared to the first.

Scott Dixon: We expect our full-year tax rate for 2024 to be in the range of 24.5% to 25%, and our net home building debt to net capital ratio was 28.1% compared to first quarter 2024 levels of 24.9%. With our land and land development inventory remaining relatively flat quarter over quarter, this change was driven mainly by an increase in our home center construction that will support a higher level of deliveries in the second half of 2024 as compared to the first.

Speaker Change: We expect our full year tax rate for 2024 to be in the range of 24, 5% to 25%.

Our net homebuilding debt to net capital ratio was 28 128, 1% compared to first quarter 2024 levels of 24, 9%.

Speaker Change: With our land and land development inventory remaining relatively flat quarter over quarter. This change was driven mainly by an increase in our homes under construction that will support a higher level of deliveries in the second half of 2024 as compared to the first half.

Scott Dixon: Staff. During the quarter, we maintained our quarterly cash dividend of 26 cents per share, and repurchased 464,980 shares of our common stock for $37 million at an average share price of $79.61. We grew our book value per share to a record $78.68, a 13% year-over-year increase in the end of the quarter, with $2.5 billion in stockholders' equity. At June 30, to support our growth, we had $841 million in total liquidity. Additionally, we have no senior debt maturities until June of 2027, providing us ample flexibility with our leverage management. Subsequent to quarter end, our board of directors approved a new stock repurchase program, allowing for the purchase of up to $4.5 million additional shares.

Speaker Change: During the quarter.

Scott Dixon: We maintained our quarterly cash dividend of $0.26 per share and repurchased 464,980 shares of our common stock for $37 million at an average share price of $79.61. We grew our book value per share to a record $78.68, a 13% year-over-year increase, and ended the quarter with $2.5 billion in stockholder equity. At June 30, to support our growth, we had $841 million in total liquidity. Additionally, we have no senior debt maturities until June 2027, providing us with ample flexibility with our leverage management. Subsequent to Quarter End, our Board of Directors approved a new stock repurchase program, allowing for the purchase of up to $4.5 million additional.

Speaker Change: We maintained our quarterly cash dividend of 26 per share 26 cents per share and repurchased 464980 shares of our common stock for $37 million at an average share price of $79 61.

Speaker Change: We grew our book value per share to a record $78 68.

Speaker Change: A 13% year over year increase and ended the quarter with $2 5 billion in stockholders equity.

Speaker Change: At June 30 to support our growth, we had $841 million in total liquidity. Additionally.

Speaker Change: Additionally, we have no senior debt maturities until June of 2027, providing us ample flexibility with our leverage management.

Speaker Change: Subsequent to quarter end, our board of directors approved a new stock repurchase program, allowing for the purchase of up to $4 5 million additional shares.

Scott Dixon: Now turning to guidance, given the strength that we have seen in our orders, deliveries, and community counts so far in 2024, we are increasing our guidance for our full year 2024 deliveries to be in the range of 10,700 to 11,300 homes and our home sales revenues to be in the range of 4.2 to 4.4 billion. In closing, demand for affordable new homes remains healthy, and we are encouraged by the strong performance through the first half of the year. We are successfully managing our costs and cycle times, and we will grow both our community count and deliveries on a year-over-year basis.

Scott Dixon: Now turning to guidance. Given the strength that we have seen in our orders, deliveries, and community count so far in 2024, we are increasing our guidance for our full year 2024 deliveries to be in the range of 10,700 to 11,300 homes and our home sales revenues to be in the range of $4.2 to $4.4 billion. In closing, demand for affordable new homes remains healthy, and we are encouraged by the strong performance through the first half of the year. We are successfully managing our costs and cycle times and will grow both our community count and delivery on a year-over-year basis. With that, I'll open the line for questions. Operator? Ladies and gentlemen,

Speaker Change: Now turning to guidance given the strength that we've seen in our orders deliveries and community count. So far in 2024, we are increasing our guidance for a full year of 2024 deliveries to be in the range of 10700 to 11300 homes in our home sales revenues.

Speaker Change: To be in the range of 4.2 to $4 4 billion.

Speaker Change: In closing demand for affordable new homes remains healthy and we are encouraged by the strong performance through the first half of the year. We are successfully managing our costs and cycle times, and we will grow both our community count in deliveries on a year over year basis.

Operator: With that, I will open the line for questions, Operator. Ladies and gentlemen, at this time we will begin the question-and-answer session. To ask a question, you may press star and then warn them you are touching on telephones.

Speaker Change: With that I'll open the line for questions operator.

Operator: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press the star and then 1 on your touch screen telephone. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session.

Speaker Change: To ask a question you May press Star and then one on your Touchtone telephone.

Operator: If you are using a speaker phone, would you ask the app, please pick up the handset prior to pressing the keys to ensure the best sound quality. So withdraw your questions; you may press star and to.

Speaker Change: You are using a speakerphone please pick up the handset prior to pressing the keys to enjoy the best sound quality.

Operator: So with all your questions, you may press star and... At this time, we'll pause momentarily to shred the roster. And our first question today comes from Carl Reichardt from BTIG. Please go ahead with your question. Thanks.

Speaker Change: Would you all your questions you May press star two.

Operator: At this time, we will pause momentarily to assemble the roster.

Speaker Change: At this time, we'll pause momentarily to assemble the roster.

Karl Leichardt: And our first question today comes from Karl Leichart from ETIG. Please go ahead with your question. Thanks, everybody. Hope you are doing well.

Carl Edwin Reichardt: And our first question today comes from Carl Reichardt from <unk>. Please go ahead with your question. Thanks say, everybody hope you're doing well.

Carl Edwin Reichardt: Thanks, everybody. I hope you're doing well.

Rob Francescon: First, just a clarification, Rob, on something you said. I may have written this down wrong, but you mentioned some incremental improvement four to five months pre-COVID levels in your cycle times. I guess I just wasn't sure what you meant by that. Maybe I can ask what are cycle times now, what were they at the worst of COVID, and what were they pre-COVID? At the worst of COVID, you know it fluctuated quite a bit due to material shortages and labor shortages. But you know, when we look at pre-COVID, our build times, depending on product type, can be sub 90 days to over 120 days, just again depending on the particular house that we are building.

Carl Edwin Reichardt: First just a clarification Rob on something you said I may have written this down wrong, but you mentioned some incremental improvement four to five months pre COVID-19 levels in your cycle times I guess I just wasn't sure. What you meant by that maybe I can ask what our cycle times now what were they at the worst of Covid and what where they are pre COVID-19.

Carl Edwin Reichardt: First, just a clarification, Rob, on something you said. I may have written this down wrong, but you mentioned some incremental improvement four to five months pre-COVID levels in your cycle times. I guess I just wasn't sure what you meant by that.

Robert J. Francescon: Maybe I can ask, what are the cycle times now? What were they at the worst of COVID? And what were they pre-COVID?

Speaker Change: At the worst of Covid, it fluctuated quite a bit due to material shortages in labor shortages, but you know when we look at pre Covid, our build times, depending on product type can be sub 90 days to.

Robert J. Francescon: At the worst of COVID, you know, it fluctuated quite a bit due to material shortages and labor shortages. But, you know, when we look at pre-COVID, our build times, depending on product type, can be, you know, sub 90 days to, you know, over 120 days, just again, depending on the particular house that we're building. So what I would say with that comment is that we saw continuing tightening in our timeframes to complete homes during the second quarter.

Speaker Change: Over 120 days, just again, depending on the particular house that we're building so what I would say with that comment is that we saw continuing tightening and our.

Rob Francescon: So what I would say with that comment is that we saw continuing tightening in our time frames to complete homes during the second quarter, and we see that continuing going forward in the third and fourth quarter and beyond for right now, so that we are at a more of a normal run rate of what we had on a pre-COVID level. And that being said, again from sequentially Q1 to Q2, we've tightened it up, and that's what I meant by that comment.

Timeframes to complete homes during the second quarter, and we see that continuing going forward in the third and fourth quarter and beyond for right. Now. So that we are at a more of a normal run rate of what we had on a pre COVID-19 level.

Robert J. Francescon: And we see that continuing going forward in the third and fourth quarters and beyond for right now, so that we are at more of a normal run rate of what we had pre-COVID. And that being said, again, from sequentially Q1 to Q2, we've tightened it up. And that's what I meant by that comment. Okay.

Speaker Change: And that being said again from sequentially Q1 to Q2, we've tightened it up and that's what I meant by that comment okay. Great. Thank you for that clarification okay.

Carl Edwin Reichardt: Okay, great. Thank you for that clarification. Okay.

Karl Leichardt: Okay, great! Thank you for that clarification.

Carl Reichardt: Okay I want to ask a little about gross margins in the in the back half and third quarter in particular. So we see some cross turns here, right? We've got we've got some incentives picking back up in orders during this quarter. I look at your backlog mix, and it's skewing reasonably heavily as a percentage more towards the west where your pre-tax margins have been higher. So there's some uncertainty about rates. Can you give me a rough sense of how you expect the margins to kind of lay out gross margins to lay out as you go as you go through the next couple of quarters.

Speaker Change: Wanted to ask a little about our gross margins in the back half and third quarter in particular, so we see some cross currents here right. We've got we've got some incentives picking back up in orders during this quarter.

Carl Edwin Reichardt: I want to ask a little about gross margins in the back half and third quarter, in particular. So we see some cross currents here, right? We've got some incentives picking back up in orders during this quarter, and I look at your backlog mix, and it's skewing reasonably heavily as a percentage more towards the West, where your pre-tax margins have been higher. There's some uncertainty about rates. Can you give me a rough sense of how you expect the margins to kind of lay out, gross margins to lay out, as you go through the next couple of quarters? It sounds like maybe next quarter will be tougher, and fourth quarter will be better.

Speaker Change: Look at your backlog mix and it's it's skewing.

Speaker Change: Reasonably heavily as a percentage more towards the west where your pretax margins have been higher.

Speaker Change: So yes, there is some uncertainty about rates can you give me a rough sense of how you expect the margins to kind of lay out gross margin to lay out as you go as you go through the next couple of quarters. It sounds like maybe next quarter tougher fourth quarter better.

Scott Dixon: It sounds like maybe next quarter tougher fourth quarter back. Yeah, Carl, this is Scott, and I'll take that one, I guess, to address the second part first in terms of the mix on Backlog ASP is compared to how you look at what's been coming through actual deliveries. We experienced a little bit of a similar dynamic at the end of Q1, where just from a mix perspective, we were a little bit more heavily rated to our higher priced region. So, as we look forward into the back half in terms of actual closings, we generally expect that mix to be pretty consistent with how it's come through year to date, which is actually included in our guide on the revenue side of really being somewhere around that 390,000 ASP level for the full year.

Scott Dixon: Yeah, yeah, Carl, this is Scott, and I'll take that one, I guess, to address the second part first, in terms of the mix of backlog ASP as compared to how you look at what's been coming through actual deliveries, we experienced a little bit of a similar dynamic at the end of Q1, where just from a mixed perspective, we were a little bit more heavily weighted to our higher priced region. So, as we look forward into the back half in terms of actual closings, we generally expect that mix to be pretty consistent with how it's come through year to date, which is actually included in our guide on the revenue side of really being somewhere around that 390,000 ASP level for the full year.

Speaker Change: Yeah, Yeah. Carl This is this is Scott and I'll take that one I guess to address the second part first in terms of the mix on on backlog ESP as compared to how you look at what's been coming through actual deliveries, we experienced a little bit of a similar dynamic at the end of Q1, where just from a mix.

Speaker Change: <unk> perspective, we were a little bit more heavily weighted to our higher priced regions. So yes.

Speaker Change: As we look forward into the into the back half in terms of actual closings, we generally expect that mix to be pretty consistent with how it's come through year to date.

Speaker Change: Which is actually included in our guide on the revenue side are really being somewhere around that 390000 E. S. P level for the full year.

Scott Dixon: And then on the margin side, you know, I think you're correct that the largest variable here that we're looking at is going to be the impact on incentives, especially in the mortgage side depending on how rates move on us. And we did see that tick off about 100 basis points on orders here during the second quarter, which obviously a large percentage of those which will flow through into closings in Q3. If you give a little bit of color, kind of from the cost perspective, as we said, and look at how the back half of the year will play itself out.

Scott Dixon: And then on the margin side, I think you're correct that the largest variable here that we're looking at is going to be the impact on incentives, especially on the mortgage side, depending on how rates move on us, and we did see that tick up about 100 basis points on orders here during the second quarter, which obviously a large percentage of those will flow through into closings in Q3. I'll give you a little bit of color kind of from the cost perspective as we sit and look at how the back half of the year will play itself out.

Speaker Change: And then on the margin side.

Speaker Change: You're correct that the largest variable here that we're looking at.

Speaker Change: Is it is going to be the impact on incentives.

Speaker Change: Especially in the mortgage side, depending on how rates move on us and we did see that tick up about 100 basis points on orders.

Speaker Change: Here during the second quarter, which obviously, a large percentage of those which will flow through in two closings in Q3.

Speaker Change: I can give you a little bit of color kind of from the cost perspective is as we said and look at how the back half of the year.

Speaker Change: We will play itself out we do we do have a little bit of land inflation.

Scott Dixon: We do have a little bit of land inflation coming through in Q3 and Q4, really more on kind of that 5% or call it typical land inflation side, but we do believe that's offset with the DCCs that we're able to savings that we're able to capture earlier in the cycle coming through. So from a all-in cost side, it feels pretty stable. So the larger variable that we're looking at is really on the incentive side from a margin perspective back off the year.

Scott Dixon: We do have a little bit of land inflation coming through in Q3 and Q4, really more on the 5% or call it the typical land inflation side, but we do believe that's offset with the DCCs that we're able to capture earlier in the cycle coming through. So from an all-in cost side, it feels pretty stable, so the larger variable that we're looking at is really on the incentive side from a margin perspective back half the year. Okay, that's great.

Speaker Change: Going through.

Speaker Change: In Q3 and Q4.

Speaker Change: More on kind of that 5% I'll call. It typical land inflation side.

Speaker Change: But we do believe that's offset with some the PCC is that we're able to savings that we're able to capture them earlier in the cycle coming through so from our all in cost side. It feels pretty stable. So the larger variable that we're looking at is really on the incentive side.

Speaker Change: From a margin perspective back half of the year. Okay. That's great. Thank you Scott. Thanks, a lot guys I appreciate it absolutely.

Carl Reichardt: Okay, that's great.

Scott Dixon: Thank you, Scott. Thanks a lot, guys. I appreciate it. Absolutely.

Carl Edwin Reichardt: Okay. That's great. Thank you, Scott. Thanks a lot, guys. I appreciate it.

Scott Dixon: Thanks so much.

Alex Ligent: Our next question comes from Alex Ligent from Be Rather. Could you have a question? Thank you. A very solid quarter, gentlemen. Dale and Rob, with this being an election year, a couple with possible rate actions by the Fed in September and later in the fourth quarter. How are you thinking about the back half, just more broadly? It's just time to get aggressive. Is this the time when the consumer pulls back? Is there just too much uncertainty? Yeah, you know, is the market sort of clearing up for you in visibility getting better or weaker? How do you broadly think about it?

Alexander John Rygiel: Our next question comes from Alex Rygiel from eRiley. Please go ahead with your question. Thank you.

Alex Barron: Our next question comes from Alex <unk> from B Riley. Please go ahead with your question.

Alexander John Rygiel: Thank you. A very solid quarter, gentlemen. Dale and Rob, with this being an election year, coupled with possible rate actions by the Fed in September and later in the fourth quarter... How are you thinking about the back half, just more broadly? Is this a time to get aggressive? Is this a time when the consumer pulls back? Is there just too much uncertainty? You know, is the market sort of clearing up for you, and is visibility getting better or worse? How do you broadly think about it?

Alex Barron: Thank you a very solid quarter, gentlemen, tell Rob well with this being an election year, coupled with possible rate actions by the fed in September and.

Speaker Change: Later in the fourth quarter.

Speaker Change: How are you thinking about the back half just more broadly just trying to get a grasp of is this the time when the consumer pulls back is there just too much uncertainty.

Speaker Change: Is the market sort of clearing up for you on visibility getting better or weaker how do you broadly think about it.

Dale Francescon: You know, we've really built our business to try to avoid dealing with those kind of items. We have our starts up. We were, you know, pleased to see interest rates starting to soften a little bit, but we're going to sell through our inventory. And it's, when we look at that, I mean, we're really focused on flowing our business. And, you know, regardless of whether it's an election year or not, people are still making decisions on where they live and how they live. And we intend to supply that. And with the increase in the share buyback program, if that's sending a signal that, I don't know, maybe you're incrementally more focused on returns and driving value back to shareholders, or there's, you know, no need to, or land costs have gotten too high.

Dale Francescon: You know, we've really built our business to try to avoid dealing with those kind of items. We have our own start-up. We were pleased to see interest rates starting to soften a little bit. But we're going to sell through our inventory, and when we look at that, I mean, we're really focused on growing our business. And regardless of whether it's an election year or not, people are still making decisions about where they live and how they live, and we intend to provide that.

Speaker Change: You know, we've we've really built our business to try to avoid dealing with those kind of items.

Speaker Change: We've we have our starts up.

Speaker Change: We were you know please.

We used to see interest rates, starting to soften a little bit, but we're going to sell through our inventory and it's when we look at that I mean, we're really focused on growing our business.

Speaker Change: And.

Speaker Change: <unk> of whether it's a election year or not people are still making decisions on where they live and how they live and we intend to supply that.

Dale Francescon: And with the increase in the share buyback program, is that sending a signal that... I don't know, maybe you're incrementally more focused on returns and driving value back to shareholders, or there's... you know, no need to, or land costs have gotten too high and therefore you're reallocating capital back to share repurchases.

Speaker Change: And with the increase in the share buyback program.

Is that sending a signal that I don't know, maybe you're incrementally more focused on <unk>.

Speaker Change: Returns and driving value back to shareholders.

Speaker Change: Or theirs.

Speaker Change: No need to or land costs have gotten too high and therefore, you're reallocating capital back to <unk>.

Dale Francescon: And therefore you're reallocating capital back to share repurchases. I wouldn't read anything more into it; that our approach has always been to drive our returns up and return value to our shareholders in all matters. When we look at it, we put our last share we purchased plan in place in 2018. We're down to under 600,000 shares remaining on that, and our approach really hasn't changed. I mean, we're still focused on investing in the business. We will, each year, we'll buy back sufficient shares to keep everything static from an equity comp stock issuance. And then beyond that will be opportunistic, which is what we did in the second quarter.

Speaker Change: Share repurchases.

Dale Francescon: I wouldn't read anything more into it, but our approach has always been to drive our returns up and return value to our shareholders in all matters. When we look at it, we put our last share repurchase plan in place in 2018, and we're down to under 600,000 shares remaining on that. And our approach really hasn't changed. I mean, we're still focused on investing in the business. We will buy back sufficient shares each year to keep everything static from an equity comp stock issuance.

Speaker Change: I wouldn't read anything more into it that our approach has always been to drive our returns up and returned value to our shareholders and all it all matters.

Speaker Change: When we look at it we put our last share repurchase plan in place in 2018.

Speaker Change: We're down to under 600000 shares remaining on that and our approach really hasn't changed I mean, we're still focused on investing in the business.

Speaker Change: We will each.

Each year, we will buyback sufficient shares to keep everything static from a equity comp.

Speaker Change: Stock issuance and then beyond that we'll be opportunistic which is what we did in the second quarter. We saw that the stock had come under pressure, we were able to buy sub $80 a share and as a result, we were in the market and so that's that's really been our approach and it continues to be our approach. We just wanted to.

Dale Francescon: And then beyond that, it will be opportunistic, which is what we did in the second quarter. We saw that the stock had come under pressure, and we were able to buy under $80 a share, and as a result, we were in the market. And so that's really been our approach, and it continues to be our approach; we just want,

Alexander John Rygiel: Excellent. Thank you very much.

Dale Francescon: We saw that the stock had come under pressure; we were able to buy some $80 a share, and as a result, we were in the market. And so that's really been our approach, and it continues to be our approach. We just want to make sure that we've got the availability under our plan if we see the opportunistic buys to execute on them.

Speaker Change: Make sure that we've got the availability under our plan if we see the opportunistic buys to execute on them.

Alex Ligent: Excellent. Thank you very much.

Speaker Change: Excellent. Thank you very much.

Jay Mccanless: Welcome. Our next question comes from Jay McCannis from Wedbush. Please go ahead with your question. Thanks for the first one. Can you remind us when you guys buy a mortgage rate down for a customer, how does that get reflected on the income statement?

Speaker Change: Welcome.

Jay McCanless: Our next question comes from Jay McCanless from Wedbush. Please go ahead with your question.

Speaker Change: Our next question comes from Jay Mccanless from Wedbush. Please go ahead with your question.

Jay McCanless: Hey, thanks for taking my question. So for the first one, can you remind us when you guys buy a mortgage rate down for a customer, how does that get reflected on the income statement?

Jay McCanless: Hey, Thanks for taking my questions. So for the first one can you remind us when you guys buy a mortgage REIT down per customer how does that get reflected on the income statement.

Scott Dixon: Yeah, Jay, this is Scott. So the incentives that the home buyer is paying or the owner is paying, end up as a reduction of home sales revenue. So the reduction to your ASP. Okay.

Scott Dixon: Yeah Jay, this is Scott. So the incentives that the home buyer is paying, or excuse me, the home builder is paying, end up as a reduction in home sales revenue.

Jay McCanless: Yeah, Jay this is Scott so.

The incentives at the home homebuyer is paying or the excuse me the homebuilder is tank.

And up as a reduction of home sales revenue.

Speaker Change: So it's a reduction to your ESP. Okay. The reason I ask is.

Jay McCanless: So it's a reduction to your AST. Okay, the reason I ask is: When we look at financial services, revenues were basically flat year-over-year, but profitability was down pretty meaningfully, and that's kind of the reverse of what we've seen from some of the other builders. So maybe you could talk us through what happened in financial services this quarter and what type of profitability we should be expecting in the back half of the year. Yeah, absolutely.

Scott Dixon: The reason I ask is when we look at financial services, revenues were basically flat year-rear, but profitability was down pretty meaningfully. And that's kind of the reverse of what we've seen from some of the other builders. So maybe talk us through what happened in financial services this quarter and what type of profitability we should be expecting in the back half of the year. Yeah, absolutely. So I think the full thing is going on on the financial services line item, and there certainly is a little bit of a depression in terms of the margin profile as compared to previous run rates.

Speaker Change: When we look at your financial services revenues were basically flat year over year, but profitability was down pretty meaningfully.

Speaker Change: That's kind of the reverse of what we've seen from some of the other builders So maybe talk us through.

Speaker Change: What happened in financial services, this quarter and what type of profitability, we should be expecting in the back half of the year.

Scott Dixon: Yeah, absolutely. So there are a handful of things going on in the financial services line item, and there certainly is a little bit of a depression in terms of the margin profiles compared to previous run rates. So I'll start on the cost side for a second. There are some increased costs coming through just from personnel as well as some investment in that business to really get ahead of the growth to ensure that we continue to capture the capture rate that we have been able to achieve so far this year as we look into the future.

Speaker Change: Yeah, absolutely I'm, sorry, it's a handful of things going on on that.

Speaker Change: Financial services line item and there certainly is a little bit of a depression in terms of the margin profile as compared to previous run rates. So I'll start on the cost side for a second there are some increased costs coming through just just from personnel as well as some investment in that business to really get ahead of that growth.

Scott Dixon: So I'll start on the cost side for a second. There's some increased cost coming through just from personnel as well, some investment in that business to really get ahead of the growth to ensure that we continue to capture the capture rate that we have been able to achieve such far this year as we look into the future. So there's some investments on the cost side that are coming through this quarter. On the revenue side, a lower gain on sale is usually the majority of the driver, as well as some fair value marks that went against us here this quarter.

Speaker Change: To ensure that we continue to a.

Speaker Change: Captured the capture rate that we have been able to achieve such are this year as we look into the future. So so theres some investments on the cost side that are coming through this quarter on the revenue side.

Scott Dixon: So there are some investments on the cost side that are coming through this quarter. On the revenue side, a lower gain on sale is really the majority of the driver, as well as some fair value marks that went against us this quarter. More broadly speaking, I would anticipate going forward into the back half of the year that the margin profile on financial services will more mimic Q2 as opposed to Q1.

Speaker Change: A lower gain on sale.

Speaker Change: It's really the majority of the driver as well as some fair value marks that went against US here this quarter.

Scott Dixon: And more broadly speaking, I would anticipate going forward into the back half of the year that the margin profile on the financial services would more mimic the Q2 as opposed to the Q1.

Speaker Change: More broadly speaking I would I would anticipate.

Speaker Change: Going forward into the back half of the year.

Speaker Change: Is that the margin profile on the financial services with more mimic the Q2 as opposed to the Q1.

Scott Dixon: So then one other thing that I on the first quarter call, I think at the time you guys said that gross margin going into 2Q should be flat sequentially with Q1. What change I'm guessing is the incentives you're talking about, the incentives came down. I mean, because when you all did the first quarter call, that was right in the middle where mortgage rates were going up. So was that the thinking at the time that higher rates are going to continue to push up incentives? Yeah, I mean, from the sequential standpoint, Q2 over Q1 from the margin perspective, we were benefited from orders during the first quarter, having a lower incentive profile as rates were lower during the first quarter, and a lot of that did play itself through into closing during the second quarter.

Jay McCanless: So then, um... One other thing on the first quarter call, I think at the time you guys said that gross margin going into 2Q should be flat sequentially. With Q1, what changed, I'm guessing, is the incentives you're talking about. The incentives came down. I mean, because when you did the first quarter call, that was right in the middle of where mortgage rates were going up. So was that the thinking at the time, that higher rates were gonna continue to push up incentives?

Speaker Change: So then.

One other thing is that on the first quarter call I think at the time you guys said that gross margin going into <unk> should be flat sequentially with Q1 did what change I'm guessing in the incentives you're talking about the incentives came down I mean, because when when you all did the first quarter call that was right in the middle where mortgage rates were going up so it was that the.

Speaker Change: Thinking at the time that higher rates are going to continue to push push up incentives.

Scott Dixon: Yeah, I mean, from the sequential standpoint, you know, Q2 over Q1, from the margin perspective, we benefited from orders during the first quarter, having a lower incentive profile as rates were lower during the first quarter, and a lot of that did play itself through into closings during the second quarter.

Speaker Change: Yeah, I mean from it from a sequential standpoint Q2 over Q1 from the margin perspective, we were benefited from orders during the first quarter.

Speaker Change: Having a lower incentive profile as rates were lower during the first quarter and a lot of that did play itself through into closings during that during the second quarter.

Speaker Change: Sure.

Jay Mccanless: And then the last thing I wanted to ask about this time last year and really most of the second half, 23, it was a pretty competitive environment, a lot of aggressive discounting, rate buy downs, etc. I guess how is this summer shaping up compared to last year and what type of incentives are you seeing your competitors offer and are they stepping those up from what you were seeing this time last year? You know, it's always a competitive market regardless of what the environment is, and we, along with the other builders, are definitely doing what it takes.

Jay McCanless: And then the last thing I wanted to ask about... This time last year, and really most of the second half of the year, 23, it was a pretty competitive environment. A lot of aggressive discounting, rate buydowns, et cetera. I guess, how is this summer shaping up compared to last year, and what type of incentives are you seeing your competitors offer, and are they stepping those up from what you were seeing this time last year?

Speaker Change: And then the last thing I wanted to ask about.

Speaker Change: And this time last year and really most of the second half 'twenty three.

Speaker Change: It was a pretty competitive environment.

Speaker Change: Lot of aggressive discounting rate buy down onto et cetera.

Speaker Change: How is how is this summer shaping up compared to last year and and what type of.

Speaker Change: Of incentives are you seeing your competitors offer and are they stepping those up from what you were seeing this time last year.

Robert J. Francescon: You know, it's always a competitive market regardless of what the environment is, and we, along with the other builders, are definitely doing what it takes. When we look at The, Because of the rapid growth in our company, a lot of it is probably coming at the detriment of some of the private builders that are having a harder and harder time competing with the larger home builders. In terms of the discounting that we're doing, it's still mainly related to interest rates, help for our homebuyers as opposed to heavily discounting the home price themselves.

Speaker Change: It's always a competitive market regardless of what the environment is and we along with the other builders.

Speaker Change: Our are definitely doing what it takes when we look at the.

Dale Francescon: When we look at the growth in our company, a lot of it is probably coming at the detriment of some of the private builders that are having a harder and harder time defeating the larger home builders. In terms of discounting that we're doing, it's still mainly related to interest rate help for our home buyers as opposed to heavily discounting the whole price themselves. And when we look around at our various markets, that's pretty much what we're seeing our competitors doing as well. So, in terms of the discounting that we see in our market, it's primarily helping in terms of closing costs and interest rates, as opposed to the large reductions in purchase price themselves.

Speaker Change: The.

The growth in our company.

Speaker Change: Lot of it is probably coming yet.

Speaker Change: The detriment to southern of private builders that are having a harder and harder time with the larger homebuilders.

Speaker Change: In terms of discounting that virtually it's still.

Speaker Change: Mainly related to interest.

Speaker Change: Interest rate held for our homebuyers as opposed to.

Speaker Change: Heavily discounting the whole price themselves.

Robert J. Francescon: And when we look around at our various markets, that's pretty much what we're seeing our competitors doing as well. So in terms of the discounting that we see in our market, it's primarily helping in terms of closing costs and interest rates as opposed to, you know, the large reductions in purchase price themselves.

Speaker Change: And when we look around at our various markets that's pretty much what we're what we're seeing our competitors doing as well so.

Speaker Change: In terms of the discounting that we see in our market.

Speaker Change: It's it's primarily helping in terms of closing costs and interest rates as opposed to.

Speaker Change: The large reductions in purchase price themselves.

Okay.

Jay Mccanless: And then the last one, and I'll pass it on. It seems like the growth and volume for orders and closings. This quarter was mainly a function of community count growth, which it's a good thing. But I was just wondering if now that you're on track to get the community count back up, when do you start trying to produce a couple more orders or a couple more closings per community, or is kind of this low threes level is that what we should expect probably through the balance of the year?

Jay McCanless: And then the last one, and I'll pass it on, it seems like the growth in volume for orders and closings this quarter was mainly a function of community count growth, which is a good thing, but I was just wondering if now that you're on track to get the community count back up, when do you start trying to produce a couple more orders or a couple more closings per community, or is kind of this low threes level, is that what we should expect probably through the balance of the year?

Speaker Change: And then the last one and I'll pass it on it it seems like the growth in volume for orders and closings. This quarter was mainly a function of community count growth, which is a good thing, but I was just wondering if.

Speaker Change: Now that you're you're on track to get the community count back up when do you start trying to produce a couple more orders are couple more closings per community or is kind of this low threes level is that what we should expect probably through the balance of the year.

Scott Dixon: Well, I guess a handful of things on that topic. I think from a seasonality perspective, you know, I do think from a pace standpoint, generally speaking, the back half of the year is a little depressed as compared to the front half of the year. But from a pace perspective, you know Jay, we're seeing year-over-year increases in pace in Q1 as well as Q2, and we anticipate being up from a pace perspective year-over-year by the time we get through the end of the year.

Speaker Change: Well.

Rob Francescon: Well, I guess a handful of things on that topic. I think from a seasonality perspective, I do think from a pace generally speaking, the back half of the year is a little depressed as compared to the front half of the year. But from a pace perspective, Jay, we're seeing your over-year increases in pace Q1 as well as Q2. And we anticipate from a pace perspective being year over year up by the time we get through the end of the year. So from a focus perspective, in terms of a target pace, so they're not a blanket pace that we're managing the business to, a much more of a build up on a community by community side and where we can optimize the economics of each one of our stores.

Speaker Change: I guess, a handful of things on that topic I think from it from a seasonality perspective.

Speaker Change: I do think from a from a pace generally speaking the <unk>.

J: Half of the year is a little depressed as compared to the front half of the year, but from a pace perspective, J, we were seeing year over year.

J: Increases in pace Q1.

J: As well as Q2 and we anticipate.

From a pace perspective being year over year up by the time, we get through the end of the year.

Scott Dixon: So from a focus perspective in terms of, you know, a target pace, certainly not a blanket pace that we're managing the business to, and much more of a buildup on a community-by-community basis where we can optimize the economics of each one of our stores.

J: So from a from a focus perspective in terms of.

J: In terms of target pace, certainly not certainly not a blanket pace that we're managing the business too.

J: And much more of a buildup on a community by community side, and where we can optimize the economics of each one of our stores.

Jay McCanless: Got it. Okay. Thanks for taking my question.

Speaker Change: Got it okay. Thanks for taking my questions.

Jay Mccanless: Thanks.

Operator: Thanks for your question. Thank you.

Speaker Change: Absolutely. Thank you.

Alan Ratner: Our next question comes from Alan Ratner from Zellman and Associates. Please go ahead with your question. Hey, guys, good afternoon. Nice quarter, and congrats to Scott on the promotion. Thank you.

Alan S. Ratner: Our next question comes from Alan Ratner from Zellman & Associates. Please go ahead with your question.

Speaker Change: Our next question comes from Alan Ratner from Zelman and Associates. Please go ahead with your question.

Alan S. Ratner: Hey guys, good afternoon. Nice quarter and congrats to Scott on the promotion. I'd love to drill in a little bit to your start pace. I thought that disclosure was interesting.

Alan S. Ratner: Hey, guys good afternoon.

Speaker Change: This quarter and congrats to Scott on the promotion.

Scott: Thank you I appreciate the drill on a little yeah yeah.

Scott Dixon: I'd love to drill in a little bit to your start pace. I thought that disclosure was interesting. If I heard you correctly, you started just under 3,700 homes in the quarter, which is well above where you had been trending. As I think through your cycle times, presumably a lot of those homes will be completed before a year end. Your closing guidance suggests an average quarterly closing pace of about 3,000 homes. Your orders have been trending well below that 3,700 level on a quarterly basis.

Speaker Change: If you drill in a little bit to your start pace.

Speaker Change: I thought that disclosure was interesting. So if I heard you correctly you started just under 3700 homes in the quarter, which which is well above where you had been trending and.

Scott Dixon: So if I heard you correctly, you started just under 3,700 homes in the quarter, which is well above where you had been trending. And as I think through your cycle times, presumably, a lot of those homes will be completed before year end. Your closing guidance suggests an average quarterly closing pace of about 3,000 homes. However, your orders have been trending well below that 3,700 level on a quarterly basis. So I'm just trying to figure out, was this kind of like a one-time jump in starts, and do you expect to pull back a little bit here in the near term?

Speaker Change: You know as I as I think through your cycle times, and presumably a lot of those homes will be completed before year end.

Speaker Change: Your closing guidance suggests an average quarterly closing pace of about 3000 homes.

Speaker Change: Your orders have been trending well below that that 3700 level on a quarterly basis. So I'm just trying to figure out you know what.

Scott Dixon: I'm just trying to figure out, was this kind of like a one-time jump in starts, and you expect to pull back a little bit here in the near term? Is there upside potential to your closing targets if the demand, environment, accelerating to year end, and I guess more broadly speaking, why start that many homes if presumably a lot of these homes will deliver during a seasonally slower time of year? Yeah, great question. I think a handful of things going on in that start number, as you look at a kind of so clinchily quarter over quarter.

Speaker Change: This kind of like a one time jump in starts and you expect to pull back a little bit here in the near term.

Scott Dixon: Is there upside potential to your closing targets if the demand environment, you know, accelerates into year-end? And, more broadly speaking, why start that many homes if presumably a lot of these homes will deliver, you know, during a seasonally slower time of year?

Speaker Change: Is there upside potential to your your closing targets if the demand environment.

Yeah, it accelerates into year end and I guess more broadly speaking why start that many homes, if presumably a lot of these homes will deliver during the seasonally slower time of the year.

Scott Dixon: Yeah, I mean, a great question. So, you know, I think a handful of things going on in that first number. As you look at it kind of sequentially, quarter over quarter, I think, kind of from a macro perspective, we feel, quite frankly, very, very confident and strong and bullish in our individual communities as we got into the quarter and wanted to make sure that we had the inventory on the ground for which to deliver into the back half of the year.

Speaker Change: Yeah, Great question so.

Speaker Change: I think a handful of things going on in that start number as you look at it kind of sequentially quarter over quarter.

Scott Dixon: I think on a macro perspective, we feel quite frankly very confident and strong in bullish in our individual communities as we got into the quarter and wanted to make sure that we had the inventory on the ground for which to deliver into the back half of the year. The other dynamic that is occurring a little bit is given the number of communities that we did open. The increase in the community count, generally speaking, we will put a little bit more inventory on the ground at the front end of a community. We find it helps with; it helps with the consumer to be able to visualize what the community will look at.

Speaker Change: Yeah, I think kind of on a macro perspective, we feel we feel quite frankly, very very confident in strong and bullish in our individual communities.

Speaker Change: As we got into the quarter and wanted to make sure that we have the inventory on the ground for which to deliver into the back half of the year.

Scott Dixon: The other dynamic that is occurring a little bit is given the number of communities that we did open and the increase in the community count, generally speaking, we will put a little bit more inventory on the ground at the front end of a community. We find it helps with, you know, it helps the consumer to be able to visualize what the community will look like. So there's a little bit of front-end on the starts in terms of the community.

Speaker Change: The other dynamic that is occurring a little bit.

Speaker Change: Is given the number of communities that we did open and the increase in the community count generally speaking, we will put a little bit more inventory on the ground at the front end of a community we find it helps with.

Speaker Change: It helps with.

Speaker Change: It helps it a consumer to be able to visualize the community. We're look at so there's a little bit of front ending on the starts in terms of the community count.

Scott Dixon: So there's a little bit of front naming on the start in terms of the community count. And then from a go-for perspective on, it's a matter of what the demand environment continues to look like as we get into the back half of the year. But we are focused on growth right now. You can see that from our community count increase, from our guide, that's up 10-14 percent. And so I do think over time you'll continue to see starts increase along with the community count. Got it, and I appreciate the insights there. That makes sense.

Scott Dixon: And then from a go-forward perspective, Alan, it's a matter of what the demand environment continues to look like as we get into the back half of the year, but we are focused on growth right now. You can see that from our...

Speaker Change: And then from a go forward perspective island, it's it's it's a matter of.

Speaker Change: It's a matter of if the demand environment continues to look like.

Speaker Change: As we get into the back half of the year.

Speaker Change: But we are we are focused on growth right now.

Speaker Change: You can see that from from our community count increase.

Speaker Change: Our guy that's up 10% and 14% and so I do think over time, you'll continue to see starts increase along with along with the community count.

Alan S. Ratner: Got it, and I appreciate the insights there; that makes sense. And second question, I apologize if I missed this or all the calls are blurring together here today, but I don't think I heard...

Speaker Change: Got it and I appreciate the.

Speaker Change: The insights there that makes sense and second question I apologize if I missed this or all the calls are blurring together here today, but I.

Alan Ratner: And second question, I apologize if I missed this or all the calls are blurring together here today, but I don't think I heard, I don't think I heard you guys talk about resell inventory in your markets, and I'm just curious, when you think about incentives and the increase you saw during the quarter, are you seeing any correlation between markets that are experiencing greater increases in resell inventory in terms of having to incentivize more? And in general, how are you feeling about the resell environment? Well, the inventory is up on resale, but up from very low numbers.

Speaker Change: I don't think I heard.

Speaker Change: I don't think I heard you guys talk about resale inventory in your markets and I'm. Just curious you know when you think about incentives and the increase you saw during the quarter.

Speaker Change: Are you seeing any correlation between markets that are experiencing greater increases in resale inventory in terms of having to incentivize more.

And in general how are you feeling about the retail environment today.

Robert J. Francescon: Well, the inventory is up for resale, but up from very low numbers. And, you know, apples for apples, people would still rather have, generally speaking, a new home. So, you know, that's a competitive advantage. There are certain markets, potentially, that we do see a lift in inventory where it's a little more competitive, and maybe incentives are a little bit higher. But as a general statement across the country, we're not seeing that as a complete headwind right now, and so we're able to navigate through that. And, you know, again, when you look at a used home versus a new home, you know, generally speaking, people want a new home.

Speaker Change: Well the inventories up on resale, but up from very low numbers and.

Dale Francescon: And apples for apples, people would still rather have, generally speaking, a new home. So that's a competitive advantage. There's certain markets potentially that we do see a lift in inventory where it's a little more competitive, and maybe incentives are a little bit higher. But, as a general statement across the country, we're not seeing that as a complete headwind. And so we're able to navigate through that. And you know, again, you know, when you look at a used home versus a new home, you know, generally speaking, you know, people want a new home. All right. I appreciate it, guys.

Speaker Change: Apples for apples people would still rather have generally speaking our new home. So that's a competitive advantage there are certain markets potentially that we do see a lift in inventory, where it's a little more competitive and maybe incentives are a little bit higher but as a general statement across the country.

Speaker Change: We're not seeing that as a complete headwind right now and so we're able to navigate through that.

Speaker Change: And.

Again, when you look at a used home versus a new home generally speaking people wanting it.

Alan S. Ratner: All right. I appreciate it, guys. Thanks a lot.

Speaker Change: Alright, I appreciate it guys. Thanks a lot.

Alan Ratner: Thanks a lot. Absolutely.

Speaker Change: Absolutely.

Operator: I don't want to, again. If you would like to ask a question, please press star and then one. So withdraw your questions. You may press star and two.

Operator: And once again, if you would like to ask a question, please press star and then one. To withdraw your question, you may press star again. Our next question comes from Michael Rayhut from J.P. Morgan. Please go ahead with your question.

Speaker Change: Once again, if you would like to ask a question. Please press star and then one to withdraw your question you May Press Star two.

Michael Rehaut: Our next question comes from Michael Rehaut from JP Morgan. Please go ahead with your question. Hi, thanks. Good afternoon. And thanks for taking my questions. It's, it's, it's Mike Rehaut. And my person I want to, hey, hey, don't. So first, I just wanted to circle back in a couple of earlier comments. First on the community count. I believe you said you're in. You expect now to be at 275 to 285. I believe earlier you talked about mid to high single digit growth, which I think kind of places or placed that number prior to this quarter at 260 to 275.

Speaker Change: Our next question comes from Michael Rehaut from Jpmorgan. Please go ahead with your question.

Michael Jason Rehaut: Hi, thanks. Good afternoon, and thanks for taking my questions. It's Mike Rehart. Am I? Am I not?

Michael Rehaut: Alright. Thanks.

Michael Rehaut: Good afternoon, and thanks for taking my questions. It's it's a it's Mike Rehaut.

Mike Rehaut: Yeah. My first name I wanted hi, how are you doing so first I just wanted to.

Michael Jason Rehaut: Hi, how are you doing? So first I just wanted to circle back on a couple of earlier comments. First on the community count, I believe you said year-end you expect now to be at 275 to 285. I believe earlier you had talked about mid to high single-digit growth, which I think kind of places or placed that number prior to this quarter at 260 to 275. I just wanted to make sure I was getting that right.

Michael Rehaut: Circle back in a couple of earlier comments first on the community Count I believe you said year end you expect now to be at $2 75 to $2 85 I believe.

Speaker Change: Earlier, you had talked about mid to high single digit growth, which I think kind of places or placed that number.

Speaker Change: Prior to this quarter at $2 60 to $2 75.

Scott Dixon: I just wanted to make sure I was getting that right. And when we think about, I know you haven't, you know, really a little premature for 2025. But I should be thinking about community count growth in the next couple of years, you know, just from a rough standpoint. If you're able to hit that, you know, let's say 280 midpoint at the end of this year.

Speaker Change: So I just wanted to make sure I was getting that right and when we think about.

Michael Jason Rehaut: And when we think about, I know you haven't, you know, really a little premature for 2025, but how should we think about community count growth over the next couple of years, you know, just from a rough standpoint, if you were able to hit that, you know, let's say 280 midpoint at the end of this year?

Speaker Change: No you haven't really it's a little premature for 2025, but how should we think about community count growth in.

Speaker Change: In the next over the next couple of years just from a rough standpoint, if you were able to hit that let's say $2 80 midpoint at the end of this year.

Scott Dixon: Yeah, my list is Scott. I'll take that. I think for the most part, you have that cadence in terms of our expectations correct from where we started out the year. I think we were quite pleased with our team's performance across our entire platform in terms of being able to get the community count open. We saw particular strength in Texas and the Southeast as well as C&P in terms of getting those communities open either on time or earlier than maybe we had originally anticipated.

Scott Dixon: Yeah, my name is Scott. I'll, I'll take that. I think, I think for the most part, you have, I have that, that cadence in terms of our expectations, correct from where we, we started out the year. You know, I think we were quite pleased with our team's performance really across our entire platform in terms of being able to get community count open. We saw particularly strengths and access in Southeast as well as CMP in terms of getting those communities open either on time or earlier than maybe we had originally anticipated. So I think we're bullish in terms of been able to hit that target from a community count guide in the back half of the year by the time we get there.

Speaker Change: Yeah. Michael This is Scott I'll take that I think I think for the most part you have had that that cadence in terms of our expectations correct from where we started out the year.

Michael Rehaut: You know I think we were quite pleased.

Speaker Change: With with our teams performance really across our entire platform in terms of it being able to get community Count open we saw particular strength in the Texas.

Speaker Change: And southeast as well as CMP.

Speaker Change: In terms of getting those communities open either on time or or.

Speaker Change: Or earlier than maybe we had originally anticipated.

Scott Dixon: So I think we're bullish in terms of being able to hit that target from a community count guide in the back half of the year by the time we get there. But I think it's a little too early to look into 2025 from a community count perspective. One of the dynamics that occurs, especially in our Century Complete line of business, is our ability to buy finished lots from land developers allows us to add community count later in maybe the typical cycle than if we were having it under control and working through the entitlements throughout the process.

Speaker Change: We're bullish in terms of being able to.

Speaker Change: Chip that that target.

Speaker Change: From a community Count guide.

Speaker Change: In the back half of the year by the time, we get there.

Scott Dixon: I think it's a little too early to look into 2025 from a community count. One of the dynamics that occurs, especially on our, our century complete line of business, is our ability to buy finished lots from land developers, allows us to add community count. You know, later and maybe the typical cycle than if we were having it under control and working through the entitlements throughout the process. So a little too early for us to really get a feel for what that looks like and how it plays itself out into 2025. But again, when you step back and look at the increase in our total lot count to 78,000 known in control, I think we feel like we're in very good shape right now to continue to go community count back half of this year as well as into 2025.

Speaker Change: I think it's a little too early to look into 2025 from a community count.

Speaker Change: One of the dynamics that occurs especially on our century complete line of business.

Speaker Change: It's our ability to buy finished lots from land developers.

Speaker Change: Allows us to community count.

Speaker Change: Well you no later than may be the typical cycle than if we were having it under control and working through the entitlement throughout the process. So little too early for us to really get a feel for what that.

Scott Dixon: So, a little too early for us to really get a feel for what that looks like and how it plays itself out into 2025, but again, when you step back and look at the increase in our total lot count to 78,000 known and controlled, I think we feel like we're in very good shape right now to continue to grow the community count back half of this year as well as into 2025.

Speaker Change: It looks like and how it plays itself out.

Speaker Change: Into 2025, but again when you step back and look at the increase in our total lot count to 78000 owned and controlled.

Speaker Change: I think we feel like we're very good shape right now to continue to grow community count back half of this year as well as into 2025.

Dale Francescon: Okay, great. Fair enough. Appreciate that. I guess, secondly, just circling back on the resale question that Alan posed. If it's at all possible, perhaps get just a little more granular in some of your markets that have been of key focus for investors, and specifically, obviously, I'm thinking about Texas. But if any of your markets in the Southeast, particularly Florida, if you've seen any really like challenges, I guess, obviously, I think most builders have kind of indicated that on a national level or on a consolidated level that businesses are still, you know, not facing any type of significant issues from a resale inventory standpoint, but maybe a couple of markets here or there, it's been a little more challenging.

Michael Jason Rehaut: Okay, great. Fair enough. I appreciate that.

Okay, Great fair enough I appreciate that.

Speaker Change: I guess secondly, just circling back on the resale question.

Dale Francescon: I guess, secondly, just circling back on the resale question that Alan posed, you know, is it at all possible to perhaps get just a little more granular in some of your markets that, you know, have been of key focus for investors, and specifically, obviously, I'm thinking about Texas, but if any of your markets in the Southeast, particularly Florida, have, if you've seen any really like challenges, I guess, You know, obviously, you know, I think most builders have, kind of indicated that on a national level or on a consolidated level, the business is still, you know, not facing any type of significant issues from a resale inventory standpoint, but maybe a couple markets here or there, it's been a little more challenging. So, just would love to get your thoughts if there are any of those markets that you might want to highlight that have been a little more challenging and, you know, again, across you know, Southwest, for example, and, you know, how... If any of those markets kind of check those boxes and, you know, how the, you know, health of the markets have responded, so to speak.

Alan posed.

Yeah, if it's at all possible to perhaps get us a little more granular on some of your markets that had been a key focus for investors and specifically, obviously I'm thinking about Texas, but if any of your markets in the southeast you can't really Florida.

Speaker Change: If you've seen any.

Speaker Change: I really like challenges I guess.

Speaker Change: You know obviously you know I think most builders have.

Speaker Change: Indicated that on a on a national level.

Speaker Change: Solid entity level the business is still.

Speaker Change: Not facing any type of significant issues from a retail inventory standpoint, but maybe a couple of markets here or there it's been a little more challenging.

Dale Francescon: Just would love to get your thoughts if there are any of those markets that you might want to highlight that have been a little more challenging and, you know, again, across Texas or if they're part of the Southwest, for example, and, you know, how, if any of those markets kind of check those boxes and, you know, how the, you know, health of the markets have responded, so to speak.

Speaker Change: Just would love to get your thoughts if there are any of those markets that you might want to highlight that had been a little more challenging.

Speaker Change: Again across Texas water parks in the AR.

Speaker Change:

Speaker Change: South southwest.

Speaker Change: For example.

Speaker Change:

Speaker Change: And you know how.

Speaker Change: Any of those markets kind of check those boxes and you know how that you know.

Speaker Change: Health of the market have responded so to speak.

Dale Francescon: Mike, this is Dale. And, you know, more broadly, when we look at competing against used homes, one of the advantages that we and the other homeowners have is the ability to provide below market interest rates. And as we indicated earlier, I mean, that's where the majority of our incentives are going. And that's something that is very difficult to do in the recent past. It's an advantage that the homebuilders have.

Dale Francescon: Sure, this is Dale. And, you know, more broadly, you know, when we look at competing against used homes, one of the advantages that we, and the other homeowners, have is the ability to provide below market interest rates. And, as we indicated earlier, I mean, that's where the majority of our incentives are going. And that's something that is very difficult to do in the resale markets. That's an advantage that the homeowners have. Looking at our markets specifically, we really haven't seen any pressure to speak of in Texas. We look at Texas; each one of our markets was up in terms of new sales on a year-over-year basis.

Mike Rehaut: Sure Mike.

Mike Rehaut: This is dale and more broadly.

Mike Rehaut: When we look at competing against used homes, one of the advantages that.

Mike Rehaut: We as in the other homebuilders have is the ability to provide below market interest rates and as we indicated earlier I mean, that's where the majority of our incentives are going in.

Mike Rehaut: That's something that.

Mike Rehaut: It is very difficult to do in the resale market. So that's an advantage that the homebuilders have.

Dale Francescon: Looking at our markets specifically, we really haven't seen any pressure to speak of in Texas. When we look at Texas, each one of our markets was up in terms of new sales on a year over year basis. Specifically, Houston has remained very strong for us. I'd look at the other market that's had some notoriety and concerns with that, Florida. And we have seen some buildup in inventory in Southwest Florida. Fortunately for us, that's a very small part of our business.

Mike Rehaut: Looking at our markets specifically.

Mike Rehaut: We really haven't seen any pressure.

Mike Rehaut: To speak of in Texas.

Mike Rehaut: We look at Texas, each one of our markets.

Mike Rehaut: In terms of new sales on a year over year basis.

Mike Rehaut: Specifically Houston has remained very strong for us.

Dale Francescon: Specifically, Houston has remained very strong for us. You know, we look at one of the other markets that's had some notoriety in concerns with that is Florida. And we have seen some build-up in inventory in Southwest Florida. Fortunately for us, that's a very small part of our business. We only operate there on our Century-complete brand. When we look at Jacksonville, for example, where we have both Century Communities and Century Complete operations, we really haven't seen that pressure there. So I think part of it, while it's well indicated, we have seen an increase of used homes come on the market.

Mike Rehaut: So we look at.

Mike Rehaut: The other market. That's that's had some notoriety within concerns with that is Florida.

Mike Rehaut: And we have seen some build up in inventory in southwest Florida.

Mike Rehaut: Fortunately for us that's a very small part of our business. We only operate there on our century complete brand.

Dale Francescon: We only operate there under our Century Complete brand. When we look at Jacksonville, for example, where we have both Century Communities and Century Complete operations, we really haven't seen that pressure there. So I think part of it is, while, as Rob indicated, we have seen an increase in used homes come on the market, it's still really very small in comparison to what it historically has been, and we're not seeing it as a particular challenge, particularly with the ability to provide rate assistance for our volunteers.

Mike Rehaut: When we look at <unk>.

Mike Rehaut: Jacksonville for example, where we have.

Mike Rehaut: Both century communities and century complete operations, we really haven't seen that pressure there. So I think part of it.

Speaker Change #100: Well as Rob indicated the.

Rob: We have seen an increase of used homes come on the market.

Michael Rehaut: It's still really very small in comparison to what it historically has been. And we're not seeing it as a particular challenge, particularly with the ability to provide rate assistance for our markets. Okay, now appreciate that. Thank you.

Rob: It's still really very small in comparison to what it historically has been.

Rob: And we're not seeing it as a particular challenge, particularly with the ability to provide.

Speaker Change #101: Great assistance for our buyers.

Michael Jason Rehaut: Okay, no, I appreciate that. Thank you.

Speaker Change #102: Okay No I appreciate that thank you.

Michael Rehaut: I guess it's lastly more of a technical question. You know, you repurchased almost 500,000 shares during the quarter. Your average share count, though, is down, you know, only, you know, a little more than 100,000. I just was curious if we might see the fuller impact of that in the third quarter from a share count perspective and more broadly. With the large repurchase authorization, if we should be expecting any change to the approach and share count, I think, you know, is mentioned earlier that it sounded like the primary goal is just to keep the overall share count steady.

Speaker Change #103: I guess, just lastly, more of a technical question you repurchased almost 500000 shares during the quarter. Your average share count goes down you know only you know little more than 100000.

Michael Jason Rehaut: I guess just lastly, more of a technical question. You know, you repurchased almost 500,000 shares during the quarter. Your average share count, though, is down, you know, only you know, a little more than 100,000. I just was curious if we might see the fuller impact of that in the third quarter from a share count perspective and, more broadly, with the large repurchase authorization, if we should be expecting any change to the approach in share count.

Speaker Change #104: Just was curious if we might see the fuller impact of that.

Speaker Change #105: In the third quarter from a share count perspective, and more broadly.

Speaker Change #105: With the large repurchase authorization.

Speaker Change #106: If we shouldn't be expecting any change to the approach and share count I think you know it was mentioned earlier that it sounded like the primary goal is just to keep the overall share count steady so.

Michael Jason Rehaut: I think, you know, it was mentioned earlier that it sounded like the primary goal was just to keep the overall share count steady. So, in other words, just to offset any share creep from awards. And just wanted to make sure I heard that right or, if not, whether we might start expecting the share count to come down a little more consistently given the size of that repurchase authorization.

Scott Dixon: So, in other words, just to offset any share creep from awards, and just wanted to make sure I heard that right or it's not. If we might start expecting the share count to come down a little more consistently, given the size of that repurchase authorization. Yeah, Michael, let me try to hit some of those there. So the timing of the share counts is really what is, I think, driving which we're looking at in terms of, or excuse me, the share buybacks is what is driving the impact on the weighted average shares. So I would expect to get additional benefit from those buybacks from the share count perspective as we get farther into the gear.

Speaker Change #107: In other words, just to offset any share creep from awards and just wanted to make sure I heard that right or.

Speaker Change #108: If it's not if it's if we might start expecting the share count to come down a little more consistently given the size of that repurchase authorization.

Scott Dixon: Yeah, Michael, let me try to hit some of those there. So the timing of the share counts is really what is driving what you're looking at in terms of, or excuse me, the share buybacks are what is driving the impact on the weighted average shares. So I would expect to get additional benefit from those buybacks from a share count perspective as we get farther into the year. There's also some small issuances that do occur for our board of directors that do offset some of that during the quarter. So, you know, from a larger perspective.

Speaker Change #108: Yeah, Mike I'll, Let me, let me try to hit.

Speaker Change #108: Some of those there so.

Speaker Change #108: The.

Speaker Change #109: The timing of the share counts is really what is I think driving what youre looking at in terms of the or excuse me the share buybacks is what is driving the.

Speaker Change #109: The impact on the weighted average shares.

Speaker Change #109: So I would expect to get additional benefit from those buybacks from a share count perspective, as we get farther into the year.

Scott Dixon: There's also some small issuances that do occur for our board of directors that there does, you know, offset some of that during the quarter. From a larger perspective, you know, I wouldn't, I wouldn't read into the increase of the share buyback program to 4.5 million is anything other than what we've articulated previously in terms of our capital allocations. It is Dale walked through a little bit earlier. The last, you know, the last shareback authorization we had was put in place in 2018. And so we continue to look at share buybacks in terms of, you know, really in the first quarter of the year offsetting any dilution from restricted shares that have tested and then opportunistically being in the market.

Speaker Change #109: Theres also some small issuances that do occur for our <unk>.

Speaker Change #109: Board of directors that there does offset some of that during the quarter.

Speaker Change #109: So you know from a larger perspective.

Scott Dixon: I wouldn't read into the increase in the share buyback program to $4.5 million as anything other than what we've articulated previously in terms of our capital allocations. As Dale walked through a little bit earlier, the last share buyback authorization we had was put in place in 2018, and so we continue to look at share buybacks in terms of really in the first quarter of the year offsetting any dilution from restricted shares that have vested, and then opportunistically being in the market when we think that there's an opportunity from pressure on our share price. And really, what you saw here It was our ability to get in the market and take some shares off the table, letting them effectively book value.

Speaker Change #109: I wouldn't read into the increase of the share buyback program.

Speaker Change #109: Two four and a half million as anything other than what we've articulated previously in terms of our capital allocations.

Dale: Its dale walked through a little bit earlier, the last the last share buyback authorization. We had was was put in place in 2018.

Dale: And so we continue to look at share buybacks in terms of really in the first quarter of the year offsetting any dilution from restricted shares that have vested.

Dale: And then opportunistically being in the market when we think that there's an opportunity from pressure on our share price and really what you saw here. During this during the second quarter was it was just that it was our it was our ability to get in the market.

Scott Dixon: When we think that there's an opportunity from pressure on our share price and really what you saw here during the, during the second quarter was, was just that it was our, it was our ability to, to get in the market and take some shares off the table, let effectively book value. Great.

Dale: Some shares off the table, let effectively book value.

Michael Jason Rehaut: Great. Thanks so much.

Dale: Great. Thanks, so much.

Scott Dixon: Thanks so much.

Scott Dixon: Absolutely.

Dale: Absolutely.

Dale Francescon: And ladies and gentlemen, with that, we'll conclude today's question-and-answer session. I'd like to turn the floor back over to Dale, Francesca, for any closing remarks. Thank you, operator. To our team members, thank you for your hard work, dedication to Century and commitment to our valued home buyers. To our investors and everyone on the caller day, we appreciate your continued support and look forward to speaking with you again next quarter and sharing our continued progress.

Dale Francescon: And ladies and gentlemen, with that, we'll conclude today's question and answer session. I'd like to turn the floor back over to Dale Francescon for any closing remarks. Thank you, Operator.

Speaker Change #111: And ladies and gentlemen, with that we'll conclude today's question and answer session I'd like to turn the floor back over to Dale Francesca Lee for any closing remarks.

Speaker Change #112: Thank you operator.

Dale Francescon: To our team members, thank you for your hard work, dedication to Century, and commitment to our valued homebuyers. To our investors and everyone on the call today, we appreciate your continued support and look forward to speaking with you again next quarter and sharing our continued progress.

Speaker Change #113: Team members. Thank you for your hard work dedication to century and commitment to our valued homebuyers.

Operator: And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining us. You may now disconnect your lines.

Speaker Change #114: To our investors and everyone on the call today. We appreciate your continued support and look forward to speaking with you again next quarter and sharing our continued progress.

Operator: And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining.

Speaker Change #114: And ladies and gentlemen, with that we'll conclude today's conference call and presentation. We do thank you for joining you may now disconnect your lines.

Operator: You may now disconnect your loss.