Century Communities Q4 2025 Century Communities Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Century Communities Inc Earnings Call
Tyler Langton: Greetings, and welcome to the Century Communities Q4 and full year 2025 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note that this conference call is being recorded. I will now turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Thank you. You may begin.
Operator: Greetings, and welcome to the Century Communities Q4 and full year 2025 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note that this conference call is being recorded. I will now turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Thank you. You may begin.
Speaker #1: Communities, fourth quarter and full year greetings, and welcome to the Century Communities, Inc. 2025 earnings conference call. At this time, all lines are in a listen-only mode.
Speaker #1: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press *0 for the operator.
Speaker #1: Please note that this conference call is being recorded. I will now turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities.
Speaker #1: Thank you. You may
Speaker #1: begin.
Speaker #2: Good afternoon. Thank you for joining.
[Company Representative] (Century Communities): Good afternoon. Thank you for joining us today for Century Communities' earnings conference call for the Q4 and full year of 2025. 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. 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. We undertake no duty to update our forward-looking statements. Additionally, certain non-GAAP financial measures will be discussed on this conference call.
Tyler Langton: Good afternoon. Thank you for joining us today for Century Communities' earnings conference call for the Q4 and full year of 2025. 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 #2: us today for Century Communities earnings conference call for the fourth quarter and full year 2025. Before the call begins, I would like to remind everyone that certain statements made during this statements.
Speaker #2: These statements are based on management's current expectations and call may constitute forward-looking uncertainties that could cause actual results to differ materially from those described or implied in the forward-looking statements.
Certain of these risks and uncertainties can be found under the heading Risk Factors in the company's 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.
Speaker #2: of these risks and uncertainties can be found under the Certain heading "Risk Factors" in the company's latest 10-K, as supplemented by our latest 10-Q and other SEC filings.
Speaker #2: duty to update our forward-looking statements. Additionally, certain non-GAAP financial We undertake no measures will be discussed on this conference call. The company's presentation of this information is not intended to be considered an isolation or as a substitute for in accordance with the financial information presented GAAP.
[Company Representative] (Century Communities): 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. Hosting the call today are Dale Francescon, Executive Chairman, Rob Francescon, Chief Executive Officer and President, and Scott Dixon, Chief Financial Officer. Following today's prepared remarks, we'll open up the line with questions. With that, I'll turn the call over to Dale.
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. Hosting the call today are Dale Francescon, Executive Chairman, Rob Francescon, Chief Executive Officer and President, and Scott Dixon, Chief Financial Officer. Following today's prepared remarks, we'll open up the line with questions. With that, I'll turn the call over to Dale.
Speaker #2: Francescon, Chief Executive Officer and Executive Chairman; Rob Hosting the call today are Dale Francescon, President; and Scott Dixon, Chief Financial Officer. Following today's prepared remarks, we'll open up the line with questions.
Speaker #2: over to Dale. With that, I'll turn the call
Speaker #3: Thank you,
Dale Francescon: Thank you, Tyler, and good afternoon, everyone. We are pleased with our accomplishments and results in what was a challenging year for the new home market. We closed the year by exceeding our recent guidance across most financial and operating metrics, including the delivery of 3,435 residential units, comprised of 3,030 new homes, 105 previously leased rental homes, and 300 multifamily units delivered through our Century Living business, bringing our full-year residential units delivered to 10,792.
Dale Francescon: Thank you, Tyler, and good afternoon, everyone. We are pleased with our accomplishments and results in what was a challenging year for the new home market. We closed the year by exceeding our recent guidance across most financial and operating metrics, including the delivery of 3,435 residential units, comprised of 3,030 new homes, 105 previously leased rental homes, and 300 multifamily units delivered through our Century Living business, bringing our full-year residential units delivered to 10,792.
Speaker #3: Tyler, and good afternoon, everyone. We are pleased with our accomplishments and results in what was a challenging year for the new home market. We closed the year by exceeding our recent guidance across most financial and operating metrics, including the delivery of 3,435 residential units, comprised of 3,030 new homes, 105 previously leased rental homes, and 300 multifamily units delivered through our Century Living business.
Speaker #3: Bringing our full-year residential units delivered to 10,792. During the year, we repurchased over 7% of our shares outstanding at the beginning of the year, invested $1.2 billion in land acquisition and development to continue to position Century for future growth, and ended the year with a record book value per share of $89—all while reducing our net leverage to 26% and generating cash flow from operations of over $150 million.
Dale Francescon: During the year, we repurchased over 7% of our shares outstanding at the beginning of the year, invested $1.2 billion in land acquisition and development to continue to position Century for future growth, and ended the year with a record book value per share of $89, all while reducing our net leverage to 26% and generating cash flow from operations of over $150 million. Our fourth quarter deliveries of 3,030 new homes benefited from our focus on increasing sales pace, particularly in older, higher-cost communities and communities in closeout, through the continued use of price and financing incentives. As a result, our fourth quarter net orders of 2,702 homes set a company record, increasing 13% sequentially versus an average historical sequential decline of 6%.
During the year, we repurchased over 7% of our shares outstanding at the beginning of the year, invested $1.2 billion in land acquisition and development to continue to position Century for future growth, and ended the year with a record book value per share of $89, all while reducing our net leverage to 26% and generating cash flow from operations of over $150 million.
Speaker #3: Our fourth quarter deliveries of 3,030 new homes benefited from our focus on increasing sales pace, particularly in older, higher-cost communities and communities in closeout, through the continued use of price and financing incentives.
Our fourth quarter deliveries of 3,030 new homes benefited from our focus on increasing sales pace, particularly in older, higher-cost communities and communities in closeout, through the continued use of price and financing incentives. As a result, our fourth quarter net orders of 2,702 homes set a company record, increasing 13% sequentially versus an average historical sequential decline of 6%.
Speaker #3: As a result, our fourth quarter net orders of 2,702 homes set a company record, increasing 13% sequentially versus an average historical sequential decline of 6%.
Speaker #3: Our team's accomplishments for the full year 2025 included reducing our direct construction costs on starts by an average of $13,000 per home, and cycle times by 13 days to a new company record of 114 calendar days, with our faster build times allowing us to reduce our finished spec inventory by nearly 30%.
Dale Francescon: Our team's accomplishments for the full year of 2025 included reducing our direct construction costs on starts by an average of $13,000 per home and cycle times by 13 days to a new company record of 114 calendar days, with our faster build times allowing us to reduce our finished spec inventory by nearly 30%. We decreased our SG&A, excluding commissions and advertising, by 5% year-over-year, and maintained customer satisfaction scores and mortgage capture rates at all-time highs. As we look into 2026 and the years ahead, Century is well positioned for future growth. Given our land spend over the past several years, assuming improved market conditions, we have the ability to grow our deliveries by 10% annually in 2026 and 2027, based solely on our existing lot count as of the end of 2025.
Our team's accomplishments for the full year of 2025 included reducing our direct construction costs on starts by an average of $13,000 per home and cycle times by 13 days to a new company record of 114 calendar days, with our faster build times allowing us to reduce our finished spec inventory by nearly 30%. We decreased our SG&A, excluding commissions and advertising, by 5% year-over-year, and maintained customer satisfaction scores and mortgage capture rates at all-time highs.
Speaker #3: We decreased our SG&A excluding commissions and advertising by 5% year over year, and maintained customer satisfaction scores and mortgage capture rates at all-time highs.
Speaker #3: As we look into 2026 and the years ahead, Century is well positioned for future growth. Given our land spend over the past several years, assuming improved market conditions, we have the ability to grow our deliveries by 10% annually in 2026 and 2027 based solely on our existing lot count as of 2025.
As we look into 2026 and the years ahead, Century is well positioned for future growth. Given our land spend over the past several years, assuming improved market conditions, we have the ability to grow our deliveries by 10% annually in 2026 and 2027, based solely on our existing lot count as of the end of 2025.
Speaker #3: That said, we will remain disciplined if slower market conditions persist and will not look to grow either our lot pipeline or deliveries for the sake of growth alone as our more traditional land option strategy gives us significant flexibility in adjusting the timing and terms of land takedowns given the limited capital we have at risk.
Dale Francescon: That said, we will remain disciplined if slower market conditions persist and will not look to grow either our lot pipeline or deliveries for the sake of growth alone, as our more traditional land option strategy gives us significant flexibility in adjusting the timing and terms of land takedowns, given the limited capital we have at risk. We leaned into share repurchases in 2025, given our valuation levels, and our strong balance sheet is supportive of continued flexibility in our capital allocations in 2026, without limiting our ability to quickly ramp growth when the market rebounds. We expect any interest rate relief, improvement in consumer confidence, or governmental support for homebuyers to unlock buyer demand, which Century is well positioned to meet, and we continue to believe there is meaningful pent-up demand for affordable new homes.
That said, we will remain disciplined if slower market conditions persist and will not look to grow either our lot pipeline or deliveries for the sake of growth alone, as our more traditional land option strategy gives us significant flexibility in adjusting the timing and terms of land takedowns, given the limited capital we have at risk. We leaned into share repurchases in 2025, given our valuation levels, and our strong balance sheet is supportive of continued flexibility in our capital allocations in 2026, without limiting our ability to quickly ramp growth when the market rebounds.
Speaker #3: We leaned into share repurchases in 2025 given our valuation levels, and our strong balance sheet is supportive of continued flexibility in our capital allocations in 2026 without limiting our ability to quickly ramp growth when the market rebounds.
Speaker #3: We expect any interest rate relief, improvement in consumer confidence, or governmental support for homebuyers to unlock buyer demand, which Century is well positioned to meet. We continue to believe there is meaningful pent-up demand for affordable new homes.
We expect any interest rate relief, improvement in consumer confidence, or governmental support for homebuyers to unlock buyer demand, which Century is well positioned to meet, and we continue to believe there is meaningful pent-up demand for affordable new homes.
Speaker #3: For 2025, Newsweek named Century as one of America's most trustworthy companies for the third consecutive year while Century was designated as one of U.S.
Dale Francescon: For 2025, Newsweek named Century as one of America's most trustworthy companies for the third consecutive year, while Century was designated as one of U.S. News & World Report's Best Companies to Work For. These recognitions are a testament to the commitment of our team members and trade partners that allow us to achieve our mission of consistently delivering a home for every dream, and we want to thank them for their efforts. I'll now turn the call over to Rob to discuss our strategy, operations, and land position in more detail.
For 2025, Newsweek named Century as one of America's most trustworthy companies for the third consecutive year, while Century was designated as one of U.S. News & World Report's Best Companies to Work For. These recognitions are a testament to the commitment of our team members and trade partners that allow us to achieve our mission of consistently delivering a home for every dream, and we want to thank them for their efforts. I'll now turn the call over to Rob to discuss our strategy, operations, and land position in more detail.
Speaker #3: News and World Report's best companies to work for. These recognitions are a testament to the commitment of our team members and trade partners that allow us to achieve our mission of consistently delivering a home for every dream.
Speaker #3: And we want to thank them for their efforts. I'll now turn the call over to Rob to discuss our strategy, operations, and land position in more detail.
Speaker #2: Thank you, Dale, and good afternoon, everyone. Starting with sales, our net new contracts of 2,702 homes was a fourth quarter company record and represented an increase of 10% versus the prior year and 13% on a sequential basis.
Rob Francescon: Thank you, Dale, and good afternoon, everyone. Starting with sales, our net new contracts of 2,702 homes was a fourth quarter company record, and represented an increase of 10% versus the prior year, and 13% on a sequential basis. A significant improvement over our historic average fourth quarter sequential decline of approximately 6%. The strength in our orders was primarily driven by improved absorption rates, which averaged 2.9 homes per community in the fourth quarter, an increase of 12% year-over-year, and 16% sequentially. While we focus more on pace versus price for older, higher-cost communities, and communities in closeout in the fourth quarter, we plan to take a more balanced approach between pace and price as we enter 2026.
Rob Francescon: Thank you, Dale, and good afternoon, everyone. Starting with sales, our net new contracts of 2,702 homes was a fourth quarter company record, and represented an increase of 10% versus the prior year, and 13% on a sequential basis. A significant improvement over our historic average fourth quarter sequential decline of approximately 6%. The strength in our orders was primarily driven by improved absorption rates, which averaged 2.9 homes per community in the fourth quarter, an increase of 12% year-over-year, and 16% sequentially.
Speaker #2: A significant improvement over our historic average fourth quarter sequential decline of approximately 6%. The strength in our orders was primarily driven by improved absorption rates, which averaged 2.9 homes per community in the fourth quarter—an increase of 12% year over year and 16% sequentially.
Speaker #2: While we focused more on pace versus price for older, higher-cost communities and communities in closeout in the fourth quarter, we plan to take a more balanced approach between pace and price as we enter 2026.
While we focus more on pace versus price for older, higher-cost communities, and communities in closeout in the fourth quarter, we plan to take a more balanced approach between pace and price as we enter 2026. While our sales pace thus far in 2026 has been slower than the same period in 2025, we are encouraged by slightly stronger traffic trends on a year-over-year basis as we look forward to the upcoming, traditionally strong selling months of the year.
Speaker #2: While our sales pace thus far in 2026 has been slower than the same period in 2025, we are encouraged by slightly stronger traffic trends on a year-over-year basis as we look forward to the upcoming traditionally strong selling months of the year.
Rob Francescon: While our sales pace thus far in 2026 has been slower than the same period in 2025, we are encouraged by slightly stronger traffic trends on a year-over-year basis as we look forward to the upcoming, traditionally strong selling months of the year. Our incentives on closed homes increased in Q4 by 200 basis points and averaged roughly 1,300 basis points, driven by our Q4 pace strategy, as well as the general market dynamics as we competed with other builders for year-end closings. As a reminder, since the beginning of 2024, our incentives have ranged from 600 basis points to the high point of 1,300 basis points this quarter. And so we have ample leverage once improved market conditions enable us to meaningful pull back on incentives.
Speaker #2: Our incentives on closed homes increased in the fourth quarter by 200 basis points and averaged roughly 1,300 basis points, driven by our fourth quarter pace strategy as well as the general market dynamics as we compete with other builders for year-end closings.
Our incentives on closed homes increased in Q4 by 200 basis points and averaged roughly 1,300 basis points, driven by our Q4 pace strategy, as well as the general market dynamics as we competed with other builders for year-end closings.As a reminder, since the beginning of 2024, our incentives have ranged from 600 basis points to the high point of 1,300 basis points this quarter. And so we have ample leverage once improved market conditions enable us to meaningful pull back on incentives. As we look to resume our more balanced approach to pace, we currently expect incentives on closed homes in Q1 2026 to improve by up to 50 basis points from Q4 2025 levels.
Speaker #2: As a reminder, since the beginning of 2024, our incentives have ranged from $600 basis points to the high point of $1,300 basis points this quarter.
Speaker #2: Improved market conditions enable us, and so we have ample leverage once to meaningfully pull back on incentives. As we look to resume our more balanced approach to pace, we currently expect incentives on closed homes in the first quarter of 2026 to improve by up to 50 basis points from fourth quarter 2025 levels.
Rob Francescon: As we look to resume our more balanced approach to pace, we currently expect incentives on closed homes in Q1 2026 to improve by up to 50 basis points from Q4 2025 levels. In the fourth quarter, adjustable-rate mortgages accounted for roughly 25% of the mortgages that we originated, up from nearly 20% in the third quarter and less than 5% in the first quarter. Receptivity of our buyers to ARMs has been increasing, and we are encouraged that there is room for further adoption of ARMs going forward, which could help partially address the market's affordability challenges. While incentives have clearly weighed on our margins, our operations continue to perform extremely well. Our direct construction costs on the homes we delivered in the fourth quarter declined by 4% on a sequential basis.
Speaker #2: In the fourth quarter, adjustable rate mortgages accounted for roughly 25% of the mortgages that we originated, up from nearly 20% in the third quarter and less than 5% in the first quarter.
In the fourth quarter, adjustable-rate mortgages accounted for roughly 25% of the mortgages that we originated, up from nearly 20% in the third quarter and less than 5% in the first quarter. Receptivity of our buyers to ARMs has been increasing, and we are encouraged that there is room for further adoption of ARMs going forward, which could help partially address the market's affordability challenges. While incentives have clearly weighed on our margins, our operations continue to perform extremely well. Our direct construction costs on the homes we delivered in the fourth quarter declined by 4% on a sequential basis.
Speaker #2: Receptivity of our buyers to arms has been increasing, and we are encouraged that there is room for further adoption of arms going forward, which could help partially address the market's affordability challenges.
Speaker #2: While incentives have clearly weighed on our margins, our operations continue to perform extremely well. Our direct construction costs on the homes we delivered in the fourth quarter declined by 4% on a sequential basis.
Rob Francescon: Our cycle times in Q4 averaged 114 calendar days, down 10% from 127 days in the year-ago quarter. Given our record cycle times and advantageous direct construction costs, we are well positioned to take advantage of any favorable market conditions during the spring selling season and accelerate our starts from the 2,069 homes we started in Q4. Our 2025 average community count increased by 13% to 318 communities, while our year-end community count ended at 305. While we had been expecting modest growth in our ending community count this year, we closed a greater number of communities than initially expected, with that trend especially pronounced in the second half of Q4, given our increased sales pace.
Our cycle times in Q4 averaged 114 calendar days, down 10% from 127 days in the year-ago quarter. Given our record cycle times and advantageous direct construction costs, we are well positioned to take advantage of any favorable market conditions during the spring selling season and accelerate our starts from the 2,069 homes we started in Q4. Our 2025 average community count increased by 13% to 318 communities, while our year-end community count ended at 305.
Speaker #2: quarter averaged 114 Our cycle times in the fourth calendar days down 10% from 127 days in the year-ago quarter. Given our record cycle times and advantageous direct construction costs, we are well positioned to take advantage of any favorable market conditions during the spring selling season and accelerate our starts from the 2069 homes we started in the fourth quarter.
Speaker #2: Our 2025 average community count increased by 13% to 318 communities. While our year-end community count ended at 305. While we had been expecting modest growth in our ending community count this year, we closed a greater number of communities than initially expected, with that trend especially pronounced in the second half of the fourth quarter given our increased sales pace.
While we had been expecting modest growth in our ending community count this year, we closed a greater number of communities than initially expected, with that trend especially pronounced in the second half of Q4, given our increased sales pace.
Speaker #2: For 2026, we expect our average community count to increase in the low to mid-single-digit percentage range on a year-over-year basis. Before turning the call over to Scott, I wanted to provide some additional details on our land position that is supportive of our growth while also having an attractive risk and cost profile.
Rob Francescon: For 2026, we expect our average community count to increase in the low- to mid-single-digit percentage range on a year-over-year basis. Before turning the call over to Scott, I wanted to provide some additional details on our land position that is supportive of our growth while also having an attractive risk and cost profile. We ended the fourth quarter with roughly 61,000 owned and controlled lots and spent approximately $1.2 billion on land acquisition and development in 2025, nearly matching the 2024 levels of $1.3 billion. In 2026, we currently expect our land acquisition and development expense to be roughly flat with 2025 levels.
For 2026, we expect our average community count to increase in the low- to mid-single-digit percentage range on a year-over-year basis. Before turning the call over to Scott, I wanted to provide some additional details on our land position that is supportive of our growth while also having an attractive risk and cost profile. We ended the fourth quarter with roughly 61,000 owned and controlled lots and spent approximately $1.2 billion on land acquisition and development in 2025, nearly matching the 2024 levels of $1.3 billion. In 2026, we currently expect our land acquisition and development expense to be roughly flat with 2025 levels.
Speaker #2: We ended the fourth quarter with roughly 61,000 owned and controlled lots, and spent approximately $1.2 billion on land acquisition and development in 2025, nearly matching the 2024 levels of $1.3 billion.
Speaker #2: In 2026, we currently expect our land acquisition and development expense to be roughly flat with 2025 levels. We have the ability to reduce this number if market conditions warrant, without impacting our near-term growth prospects, or accelerate if market conditions improve given the strength of our balance sheet.
Rob Francescon: We have the ability to reduce this number if market conditions warrant, without impacting our near-term growth prospects, or accelerate if market conditions improve, given the strength of our balance sheet. More specifically on the topic of growth, given our land spend over the past several years, we have the ability to grow our deliveries, assuming improved market conditions, by 10% annually in both 2026 and 2027, based solely on our existing lot count, both owned and optioned as of the end of 2025.
We have the ability to reduce this number if market conditions warrant, without impacting our near-term growth prospects, or accelerate if market conditions improve, given the strength of our balance sheet. More specifically on the topic of growth, given our land spend over the past several years, we have the ability to grow our deliveries, assuming improved market conditions, by 10% annually in both 2026 and 2027, based solely on our existing lot count, both owned and optioned as of the end of 2025.
Speaker #2: More specifically on the topic of growth, given our land spend over the past several years, we have the ability to grow our deliveries assuming improved market conditions by 10% annually in both 2026 and 2027 based solely on our existing lot count, both owned and optioned, as of the end of 2025.
Speaker #2: I think it is also important to note that we generated positive cash flow from operations of $126 million in 2024 and $153 million in 2025, even with this level of land spend, further supporting Century's ability to self-fund future growth.
Rob Francescon: I think it is also important to note that we generated positive cash flow from operations of $126 million in 2024, and $153 million in 2025, even with this level of land spend, further supporting Century's ability to self-fund future growth. In addition to providing attractive future growth, our land position also has an attractive cost basis. In Q4, our finished lot costs were roughly flat on a sequential basis, and we expect our average finished lot costs for 2026 to only be 2% to 3% higher than Q4 2025 levels. The attractive growth profile and cost position of our land is also underpinned by a traditional land option strategy that is both flexible and reduces risk with minimal exposure to land banking.
I think it is also important to note that we generated positive cash flow from operations of $126 million in 2024, and $153 million in 2025, even with this level of land spend, further supporting Century's ability to self-fund future growth. In addition to providing attractive future growth, our land position also has an attractive cost basis. In Q4, our finished lot costs were roughly flat on a sequential basis, and we expect our average finished lot costs for 2026 to only be 2% to 3% higher than Q4 2025 levels. The attractive growth profile and cost position of our land is also underpinned by a traditional land option strategy that is both flexible and reduces risk with minimal exposure to land banking.
Speaker #2: In addition to growth, our land position also providing attractive future has an attractive cost basis. In the fourth quarter, our finished lot costs were roughly flat on a sequential basis, and we expect our average finished lot costs for 2026 to only be 2 to 3 percent higher than fourth quarter 2025 levels.
Speaker #2: The attractive growth profile and cost position of our land is also underpinned by a traditional land option strategy that is both flexible and reduces risk, with minimal exposure to land banking.
Speaker #2: The flexibility of our option agreements allowed us to adjust terms in many cases and achieve lower prices in some cases over the course of 2025.
Rob Francescon: The flexibility of our option agreements allowed us to adjust terms in many cases and achieve lower prices in some cases over the course of 2025. As a result, we have much more control over the pace at which we start homes rather than having fixed takedown schedules and higher interest costs influence our pace. Additionally, our current option lot count of 26,000 lots is secured by nonrefundable deposits that total just $74 million. In addition to having significant flexibility with our land position, a large portion of our land is also close to monetization, which further reduces the risk profile of our land. Specifically, 43% of our total owned land inventory at the end of Q4 was in finished lots, with another 32% in land under development.
The flexibility of our option agreements allowed us to adjust terms in many cases and achieve lower prices in some cases over the course of 2025. As a result, we have much more control over the pace at which we start homes rather than having fixed takedown schedules and higher interest costs influence our pace.
Speaker #2: As a result, we have much more control over the pace at which we start homes rather than having fixed takedown schedules and hire interest costs influence our pace.
Speaker #2: Additionally, our current option lot count of 26,000 lots is secured by non-refundable deposits that total just $74 million. In addition to having significant flexibility with our land position, a large portion of our land is also close to monetization.
Additionally, our current option lot count of 26,000 lots is secured by nonrefundable deposits that total just $74 million. In addition to having significant flexibility with our land position, a large portion of our land is also close to monetization, which further reduces the risk profile of our land. Specifically, 43% of our total owned land inventory at the end of Q4 was in finished lots, with another 32% in land under development.
Speaker #2: Which further reduces the risk profile of our land. Specifically, 43% of our total owned land inventory at the end of the fourth quarter was in finished lots, with another 32% in land under development.
Speaker #2: Going forward with our land investments, we remain focused on deepening our share in our existing markets to drive improved margins and returns. We are pleased with our performance in both the fourth quarter and for the full year.
Rob Francescon: Going forward with our land investments, we remain focused on deepening our share at our existing markets to drive improved margins and returns. We are pleased with our performance in both the fourth quarter and for the full year. We meaningfully reduced our cycle times and direct costs and controlled our fixed SG&A. We de-risked our land inventory where necessary, while preserving the ability of our land position to drive meaningful growth at attractive costs in the years ahead. I'll now turn the call over to Scott to discuss our financial results in more detail.
Going forward with our land investments, we remain focused on deepening our share at our existing markets to drive improved margins and returns. We are pleased with our performance in both the fourth quarter and for the full year. We meaningfully reduced our cycle times and direct costs and controlled our fixed SG&A. We de-risked our land inventory where necessary, while preserving the ability of our land position to drive meaningful growth at attractive costs in the years ahead. I'll now turn the call over to Scott to discuss our financial results in more detail.
Speaker #2: We meaningfully reduced our cycle times and direct costs, and controlled our fixed G&A. We de-risked our land inventory where necessary while preserving the ability of our land position to drive meaningful growth at attractive costs in the years ahead.
Speaker #2: I'll now turn the call over to Scott to discuss our financial results in more detail. Thank you, Rob. In the fourth quarter, pre-tax income was $47 million, and net income was $36 million, or $1.21 per diluted share.
Scott Dixon: Thank you, Rob. In the fourth quarter, pre-tax income was $47 million, and net income was $36 million, or $1.21 per diluted share. Adjusted net income was $47 million, or $1.59 per diluted share. Home sales revenues for the fourth quarter were $1.1 billion, up 16% on a sequential basis. Our deliveries of 3,030 new homes increased by 22% on a sequential basis, while our average sales price of $367,000 decreased by 5% on a quarter-over-quarter basis, with the decrease in our ASP largely driven by increased incentive levels.
Scott Dixon: Thank you, Rob. In the fourth quarter, pre-tax income was $47 million, and net income was $36 million, or $1.21 per diluted share. Adjusted net income was $47 million, or $1.59 per diluted share. Home sales revenues for the fourth quarter were $1.1 billion, up 16% on a sequential basis. Our deliveries of 3,030 new homes increased by 22% on a sequential basis, while our average sales price of $367,000 decreased by 5% on a quarter-over-quarter basis, with the decrease in our ASP largely driven by increased incentive levels.
Speaker #2: Adjusted net income was $47 million, or $1.59 per diluted share. Home sales revenues for the fourth quarter were $1.1 billion, up 16% on a sequential basis.
Speaker #2: Our deliveries of 3,030 new homes, increased by 22% on a sequential basis, while our average sales price of $367,000 decreased by 5% on a quarter-over-quarter basis, with a decrease in our ASP largely driven by increase incentive levels.
Speaker #2: For the first quarter of 2026, we expect our deliveries to range from $2,100 to $2,300 homes, which should represent the low point for the year as we expect our community count to increase over the course of 2026.
Scott Dixon: For Q1 2026, we expect our deliveries to range from 2,100 to 2,300 homes, which should represent the low point for the year, as we expect our community count to increase over the course of 2026. Our total revenues in Q4 also benefited from the sale of a 300-unit multifamily community within our Century Living segment for $97 million. In Q4, GAAP homebuilding gross margin was 15.4%, which was negatively impacted by 100 basis points of inventory impairment and 10 basis points of purchase price accounting from our two acquisitions in 2024. The $10.9 million impairment charge this quarter was related to several closeout communities. Adjusted homebuilding gross margin in Q4 was 18.3%.
For Q1 2026, we expect our deliveries to range from 2,100 to 2,300 homes, which should represent the low point for the year, as we expect our community count to increase over the course of 2026. Our total revenues in Q4 also benefited from the sale of a 300-unit multifamily community within our Century Living segment for $97 million. In Q4, GAAP homebuilding gross margin was 15.4%, which was negatively impacted by 100 basis points of inventory impairment and 10 basis points of purchase price accounting from our two acquisitions in 2024. The $10.9 million impairment charge this quarter was related to several closeout communities. Adjusted homebuilding gross margin in Q4 was 18.3%.
Speaker #2: Our total revenues in the fourth quarter also benefited from the sale of a 300-unit multifamily community within our Century Living segment for $97 million.
Speaker #2: In the fourth quarter, gap home building gross margin was 15.4%, which was negatively impacted by 100 basis points of inventory impairment and 10 basis points of purchase price accounting from our two acquisitions in 2024.
Speaker #2: The $10.9 million impairment charge this quarter was related to several closeout communities. Adjusted homebuilding gross margin in the fourth quarter was 18.3%. For the first quarter of 2026, we expect the most significant driver of our adjusted homebuilding gross margin to continue to be incentives needed to generate an acceptable sales base.
Scott Dixon: For Q1 2026, we expect the most significant driver of our adjusted homebuilding gross margin to continue to be incentives needed to generate an acceptable sales pace. SG&A, as a percent of home sales revenue, was 12.2% in Q4 and benefited from ongoing cost reduction efforts. Assuming the midpoint of our full year 2026 home sales revenue guidance, we expect SG&A as a percent of home sales revenue to be roughly 13% for the full year 2026, with SG&A as a percentage of home sales revenue of 14.5% for Q1. Revenues from financial services were $25 million in Q4, and the business generated pre-tax income of $8 million, benefiting from higher volumes in the quarter.
For Q1 2026, we expect the most significant driver of our adjusted homebuilding gross margin to continue to be incentives needed to generate an acceptable sales pace. SG&A, as a percent of home sales revenue, was 12.2% in Q4 and benefited from ongoing cost reduction efforts. Assuming the midpoint of our full year 2026 home sales revenue guidance, we expect SG&A as a percent of home sales revenue to be roughly 13% for the full year 2026, with SG&A as a percentage of home sales revenue of 14.5% for Q1. Revenues from financial services were $25 million in Q4, and the business generated pre-tax income of $8 million, benefiting from higher volumes in the quarter.
Speaker #2: SG&A as a percent of home sales revenue was 12.2% in the fourth quarter, and benefited from ongoing cost reduction efforts. Assuming the midpoint of our full-year 2026 home sales revenue guidance, we expect SG&A, as a percent of home sales revenue, to be roughly 13% for the full year 2026.
Speaker #2: With SG&A as a percentage of home sales revenue, a 14.5% for the first quarter. Revenues from financial services were $25 million in the fourth quarter, and the business generated pre-tax income of $8 million.
Speaker #2: Benefiting from higher volumes in the quarter. We currently anticipate the contribution margin from financial services in 2026 to be similar to 2025 levels. Our mortgage capture rate of 84% in both the fourth quarter 2025 and the full year 2025 representing quarterly and annual records.
Scott Dixon: We currently anticipate the contribution margin from financial services in 2026 to be similar to 2025 levels. Our mortgage capture rate of 84% in both Q4 2025 and the full year 2025, representing quarterly and annual records. Our tax rate was 23.5% in Q4 2025, and 24.1% for the full year, and we expect our full-year tax rate for 2026 to be in the range of 25% to 26%. Our Q4 2025 net homebuilding debt to net capital ratio improved to 25.9% compared to Q3 2025 levels of 31.4%. Our homebuilding debt to capital ratio also improved to 29.1% in Q4 compared to Q3 2025 levels of 34.5%.
Scott Dixon: We currently anticipate the contribution margin from financial services in 2026 to be similar to 2025 levels. Our mortgage capture rate of 84% in both Q4 2025 and the full year 2025, representing quarterly and annual records. Our tax rate was 23.5% in Q4 2025, and 24.1% for the full year, and we expect our full-year tax rate for 2026 to be in the range of 25% to 26%. Our Q4 2025 net homebuilding debt to net capital ratio improved to 25.9% compared to Q3 2025 levels of 31.4%. Our homebuilding debt to capital ratio also improved to 29.1% in Q4 compared to Q3 2025 levels of 34.5%.
Speaker #2: Our tax rate was 23.5% in the fourth quarter of 2025 and 24.1% for the full year. We expect our full year tax rate for 2026 to be in the range of 25% to 26%.
Speaker #2: Our fourth quarter 2025 net home building debt to net capital ratio improved to 25.9% compared to third quarter 2025 levels of 31.4%. Our home building debt to capital ratio also improved to 29.1% in the fourth quarter compared to third quarter 2025 levels of 34.5%.
Speaker #2: We ended the quarter with $2.6 billion in stockholders' equity and $1.1 billion of liquidity. In 2025, we generated cash flow from operations of $153 million, which follows the $126 million we generated in 2024, and to support our future growth.
Scott Dixon: We ended the quarter with $2.6 billion in stockholders' equity and $1.1 billion of liquidity. In 2025, we generated cash flow from operations of $153 million, which follows the $126 million we generated in 2024, even as we continue to invest in land to support our future growth. During the quarter, we maintained our quarterly cash dividend of $0.29 per share and repurchased 334,000 shares of our common stock for $20 million at an average share price of $59.90, or a 33% discount to our company record book value per share of $89.21 as at the end of Q4.
We ended the quarter with $2.6 billion in stockholders' equity and $1.1 billion of liquidity. In 2025, we generated cash flow from operations of $153 million, which follows the $126 million we generated in 2024, even as we continue to invest in land to support our future growth. During the quarter, we maintained our quarterly cash dividend of $0.29 per share and repurchased 334,000 shares of our common stock for $20 million at an average share price of $59.90, or a 33% discount to our company record book value per share of $89.21 as at the end of Q4.
Speaker #2: During the quarter, we maintained our quarterly cash dividend of $0.29 per share and repurchased 334,000 shares of our common stock for $20 million at an average share price of $59.90, or a 33% discount to our company record book value per share of $89.21 as of the end of the fourth quarter.
Speaker #2: For the full year 2025, we repurchased 2.3 million shares, or 7% of our shares outstanding at the beginning of the year, at an average price of $63.32—representing a 29% discount to our book value.
Scott Dixon: For the full year 2025, we repurchased 2.3 million shares, or 7% of our shares outstanding at the beginning of the year, at an average price of $63.32, or a 29% discount to our book value. During the year, we returned a record $178 million to our shareholders through dividends and share repurchases. Turning to guidance. Assuming no significant changes to the current economic environment, we currently expect our full year 2026 new home deliveries to be in the range of 10,000 to 11,000 homes, and our home sales revenues to be in the range of $3.6 billion to $4.1 billion. Our current guidance reflects an increase in our average open communities in the mid-single-digit percentage range and a similar per community absorption levels as the back half of 2025.
For the full year 2025, we repurchased 2.3 million shares, or 7% of our shares outstanding at the beginning of the year, at an average price of $63.32, or a 29% discount to our book value. During the year, we returned a record $178 million to our shareholders through dividends and share repurchases. Turning to guidance. Assuming no significant changes to the current economic environment, we currently expect our full year 2026 new home deliveries to be in the range of 10,000 to 11,000 homes, and our home sales revenues to be in the range of $3.6 billion to $4.1 billion. Our current guidance reflects an increase in our average open communities in the mid-single-digit percentage range and a similar per community absorption levels as the back half of 2025.
Speaker #2: During the year, we returned a record $178 million to our shareholders through dividends and share repurchases. Turning to guidance, assuming no significant changes to the current economic environment, we currently expect our full year 2026 new home deliveries to be in the range of $10,000 to $11,000 homes and our home sales revenues to be in the range of $3.6 billion to $4.1 billion.
Speaker #2: Our current guidance is to open communities in the mid-single-digit percentage range, with similar per-community absorption levels as the back half of 2025. Given our current lot and community count, we do have the ability to drive our deliveries above the high end of our guidance if absorption rates and overall market conditions are supportive of that growth.
Scott Dixon: Given our current lot and community count, we do have the ability to drive our deliveries above the high end of our guidance if absorption rates and overall market conditions are supportive of that growth. In closing, given our investments in land over the past several years, we are well positioned for growth when the market rebounds. We are also well situated to navigate the current market, given our flexible land strategy and success in reducing our direct costs and fixed G&A expenses, which has allowed us to generate solid levels of cash flow, invest in the business, and opportunistically repurchase shares at what we view as very attractive levels. With that, I'll open the line for questions. Operator?
Given our current lot and community count, we do have the ability to drive our deliveries above the high end of our guidance if absorption rates and overall market conditions are supportive of that growth. In closing, given our investments in land over the past several years, we are well positioned for growth when the market rebounds. We are also well situated to navigate the current market, given our flexible land strategy and success in reducing our direct costs and fixed G&A expenses, which has allowed us to generate solid levels of cash flow, invest in the business, and opportunistically repurchase shares at what we view as very attractive levels. With that, I'll open the line for questions. Operator?
Speaker #2: In closing, given our investments in land over the past several years, we are well positioned for growth when the market rebounds. We are also well situated to navigate the current market given our flexible land strategy and success in reducing our direct costs and fixed G&A expenses which has allowed us to generate solid levels of cash flow invest in the business and opportunistically repurchase shares at what we view as very attractive levels.
Speaker #2: With that, I'll open the line for questions. Operator. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone.
Tyler Langton: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Andrew Azzi from J.P. Morgan. Your line is now open.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Andrew Azzi from J.P. Morgan. Your line is now open.
Speaker #2: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two.
Speaker #2: If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Andrew Azi from JP Morgan.
Speaker #2: Your line is now open.
Speaker #3: Hi, guys. Thank you for taking my question. I appreciate it. I just wanted to kind of dial in on and clarify maybe some of the comments you made you gave a lot of great color.
Andrew Azzi: Hi, guys. Thank you for taking my question. I appreciate it. Just wanted to kind of dial in on and clarify maybe some of the comments you made. You gave a lot of great color. I mean, I believe you guys were intimating maybe the spring selling season might look a little bit stronger year over year. I mean, I'd love to kind of dive into that and just kind of what you're seeing from the consumer and how the consumer is behaving, alongside kind of, you know, potentially reduced incentives.
Andrew Azzi: Hi, guys. Thank you for taking my question. I appreciate it. Just wanted to kind of dial in on and clarify maybe some of the comments you made. You gave a lot of great color. I mean, I believe you guys were intimating maybe the spring selling season might look a little bit stronger year over year. I mean, I'd love to kind of dive into that and just kind of what you're seeing from the consumer and how the consumer is behaving, alongside kind of, you know, potentially reduced incentives.
Speaker #3: I mean, I believe you guys were intimating maybe the spring selling season might look a little bit stronger year over year. I mean, I'd love to kind of dive into that and just kind of what you're seeing from the consumer and how the consumer is behaving.
Speaker #3: Alongside kind of potentially reduced incentives.
Speaker #4: Yeah. So Andrew, so far in January, our sales pace, as we mentioned, has actually been slower versus the year ago period. However, the order activity has improved sequentially over the first three weeks of January.
Rob Francescon: Yeah. So, Andrew, so far in January, our sales pace, as we mentioned, has actually been slower versus the year ago period. However, the order activity has improved sequentially over the first 3 weeks of January, and our, when we look at our potential leads, that has actually gone up as well, so. And those take some time to convert anywhere from 15 to, you know, 45 days, depending on the situation. So we're hopeful that that will start picking up. You know, and as you know, last year's spring selling season, while everyone was very hopeful that we were going to have a great spring selling season, it did not mature, and it did not turn out that way. So we're hopeful this year that that's going to be the case.
Rob Francescon: Yeah. So, Andrew, so far in January, our sales pace, as we mentioned, has actually been slower versus the year ago period. However, the order activity has improved sequentially over the first 3 weeks of January, and our, when we look at our potential leads, that has actually gone up as well, so. And those take some time to convert anywhere from 15 to, you know, 45 days, depending on the situation. So we're hopeful that that will start picking up.
Speaker #4: And when we look at our potential leads, that has actually gone up as well. Those take some time to convert, anywhere from 15 to 45 days depending on the situation.
Speaker #4: So we're hopeful that that will start picking up. And as you know, last year's spring selling season while everyone was very hopeful that we were going to have a great spring selling season, it did not mature and it did not turn out that way.
You know, and as you know, last year's spring selling season, while everyone was very hopeful that we were going to have a great spring selling season, it did not mature, and it did not turn out that way. So we're hopeful this year that that's going to be the case. You know, there's obviously a lot of publicity and PR out there on a variety of fronts right now on housing, and so we're hopeful that that will be tailwinds for us going into the spring selling, and it will be better.
Speaker #4: So we're hopeful this year that that's going to be the case. There's obviously a lot of publicity and PR out there on a variety of fronts right now on housing, and so we're hopeful that that will be tailwinds for us going into the spring selling, and it will be better.
Rob Francescon: You know, there's obviously a lot of publicity and PR out there on a variety of fronts right now on housing, and so we're hopeful that that will be tailwinds for us going into the spring selling, and it will be better.
Speaker #3: Okay. And are those kind of efforts by the administration kind of baked into your guidance or would that just kind of be additional help or is it kind of towards the high end of the range?
Andrew Azzi: Okay. And are those kind of, you know, efforts by the administration kind of baked into your guidance, or would that just kind of be additional help, or is it kind of towards the high end of the range? How are you guys thinking about these kind of actions?
Andrew Azzi: Okay. And are those kind of, you know, efforts by the administration kind of baked into your guidance, or would that just kind of be additional help, or is it kind of towards the high end of the range? How are you guys thinking about these kind of actions?
Speaker #3: How are you guys thinking about these kinds of things?
Speaker #3: actions? That would be additional
Rob Francescon: That would be additional help at this point.
Rob Francescon: That would be additional help at this point.
Speaker #4: help at this
Speaker #4: point. Got it.
Andrew Azzi: Got it. And maybe I'd sneak in one more. I mean, the community count, you know, it looks like you're getting some low to mid single digits. I mean, how do we think about how that looks quarter to quarter? Is it, is that steady year-over-year increases, or is it more lumpy than that?
Andrew Azzi: Got it. And maybe I'd sneak in one more. I mean, the community count, you know, it looks like you're getting some low to mid single digits. I mean, how do we think about how that looks quarter to quarter? Is it, is that steady year-over-year increases, or is it more lumpy than that?
Speaker #3: And maybe I'd sneak in one more. I mean, the community count—it looks like you're getting some low- to mid-single digits. I mean, how do we think about how that looks quarter to quarter?
Speaker #3: Is it that steady year over year increases or is it more lumpy than that?
Scott Dixon: Yeah, Andrew, this is Scott. So, you know, from a community count perspective, you know, certainly our average community count this year was up to 318. We did have a little bit of a dip as we closed out the year, just as we really moved through pretty focused some of our closeout in communities as well as older specs. So we would anticipate that really to continue to grow throughout the year, especially kind of in the middle and back half of the year from a average community count perspective.
Speaker #4: Yeah, Andrew, this is Scott. So from a community count perspective, certainly our average community count this year was up to 318. We did have a little bit of a dip as we closed out the year just as we as we really moved through pretty focused some of our closeout communities as well as older specs.
Scott Dixon: Yeah, Andrew, this is Scott. So, you know, from a community count perspective, you know, certainly our average community count this year was up to 318. We did have a little bit of a dip as we closed out the year, just as we really moved through pretty focused some of our closeout in communities as well as older specs. So we would anticipate that really to continue to grow throughout the year, especially kind of in the middle and back half of the year from a average community count perspective.
Speaker #4: So we would anticipate that really to continue to grow throughout the year especially kind of in the middle and back half of the year from an average community count perspective.
Speaker #3: That's helpful. Thank you for all the color,
Andrew Azzi: That's helpful. Thank you for all the color, guys.
Andrew Azzi: That's helpful. Thank you for all the color, guys.
Speaker #3: guys. Thank
Speaker #4: you.
Scott Dixon: Thank you.
Scott Dixon: Thank you.
Speaker #2: Your next question comes from the line of Jay McCandless from Citizens JMP. Your line is now open.
Tyler Langton: Your next question comes from the line of Jay McCanless from Citizens JMP. Your line is now open.
Operator: Your next question comes from the line of Jay McCanless from Citizens JMP. Your line is now open.
Speaker #5: Hey, guys. Thank you for taking my questions. I guess the first one maybe drilling down on the gross margin a little bit do you think that it's going to be in line to maybe a little worse than the fourth quarter?
Jay McCanless: Hey, guys. Thank you for taking my questions. I guess the first one, maybe drilling down on the gross margin a little bit. Do you think that it's going to be in line to maybe a little worse than the fourth quarter? Is that what I'm hearing?
Jay McCanless: Hey, guys. Thank you for taking my questions. I guess the first one, maybe drilling down on the gross margin a little bit. Do you think that it's going to be in line to maybe a little worse than the fourth quarter? Is that what I'm hearing?
Speaker #5: Is that what I'm
Speaker #5: hearing? Yeah, Jay, this is Scott.
Scott Dixon: Yeah, Jay, this is Scott. I'll take that one, and great to have you and congrats on your new role, obviously.
Scott Dixon: Yeah, Jay, this is Scott. I'll take that one, and great to have you and congrats on your new role, obviously.
Speaker #4: I'll take that one. And great to have you and congrats on your new role, obviously.
Rob Francescon: Yeah, congratulations, Jay.
Rob Francescon: Yeah, congratulations, Jay.
Speaker #4: Thank Yeah, congratulations, Jay. you, guys. Just some commentary from a gross margin perspective, really what you're seeing come through the fourth quarter margins is some intentionality on our perspective to really focus on some closeout move some units we ended up communities.
Jay McCanless: Thank you, guys. Appreciate it.
Jay McCanless: Thank you, guys. Appreciate it.
Scott Dixon: You know, just some you know, commentary from a gross margin perspective. Really what you're seeing come through the Q4 margins is some intentionality on our perspective to really focus on some closeout communities and really move some units. We ended up from a sales pace over 2,700 units, which is a 16% increase quarter-over-quarter from pace. So we were pretty focused on the incentives side of the lever here in the Q1. And really, we've been taking a more balanced approach all in, and I think you'll see us revert back to that as we get into next year.
Scott Dixon: You know, just some you know, commentary from a gross margin perspective. Really what you're seeing come through the Q4 margins is some intentionality on our perspective to really focus on some closeout communities and really move some units. We ended up from a sales pace over 2,700 units, which is a 16% increase quarter-over-quarter from pace. So we were pretty focused on the incentives side of the lever here in the Q1. And really, we've been taking a more balanced approach all in, and I think you'll see us revert back to that as we get into next year.
Speaker #4: And really, from a sales pace, over 2,700 units, which is a 16% increase quarter over quarter from pace. So we were pretty focused on the incentives side of the lever here in the first quarter.
Speaker #4: And really, we've been taking a more balanced approach all in, and I think you'll see us revert back to that as we get into next year.
Speaker #4: Obviously, we'll see where the spring selling season is at and where the consumer is at. But I think as we get into the first quarter, that's reflective in the commentary that we do think you'll see a slight pullback of about 50 basis points from our current incentive levels in
Scott Dixon: Obviously, we'll see where the spring selling season is at and where the consumer is at. But I think as we get into the first quarter, that's reflective in the commentary that we do think you'll see a slight pullback of about 50 basis points from our current incentive levels in Q4.
Obviously, we'll see where the spring selling season is at and where the consumer is at. But I think as we get into the first quarter, that's reflective in the commentary that we do think you'll see a slight pullback of about 50 basis points from our current incentive levels in Q4.
Speaker #4: Q4. Okay.
Jay McCanless: Okay. Okay. I guess the second question I had is, you know, you talked about traffic. Sounds like traffic's a little bit better, but order pace is a little slower. Are there any geographic standouts in terms of the better versus worse?
Jay McCanless: Okay. Okay. I guess the second question I had is, you know, you talked about traffic. Sounds like traffic's a little bit better, but order pace is a little slower. Are there any geographic standouts in terms of the better versus worse?
Speaker #5: Okay. I guess the second question I had is, you talked about it sounds like traffic's a little bit better but order pace is a little slower.
Speaker #5: Are there any geographic standouts in terms of better versus worse?
Speaker #4: Yeah, Jay, this is Scott. I can jump in. I don't know that I would call out any specific one of our regions or markets so far this year that has performed really outside of some of the trends that we were working through all of last year.
Scott Dixon: Yeah, Jay, this is Scott. I can jump in. You know, I don't know that I would call out any specific one of our, you know, regions or markets so far this year that has performed really outside of some of the trends that we were working through all of last year. Certainly, we're excited about, you know, a little bit of the increased traffic. We have seen some of the headlines as we got a little bit closer to 6% on the mortgage rate, you know, drive a lot more traffic, and that's something that we're certainly excited to see play itself out.
Scott Dixon: Yeah, Jay, this is Scott. I can jump in. You know, I don't know that I would call out any specific one of our, you know, regions or markets so far this year that has performed really outside of some of the trends that we were working through all of last year. Certainly, we're excited about, you know, a little bit of the increased traffic. We have seen some of the headlines as we got a little bit closer to 6% on the mortgage rate, you know, drive a lot more traffic, and that's something that we're certainly excited to see play itself out.
Speaker #4: Certainly, we're excited about a little bit of increased traffic. We have seen some of the headlines as we got a little bit closer to 6% on the mortgage rate drive a lot more traffic, and that's something that we're certainly excited to see play itself out.
Scott Dixon: In the spring selling season, I think unfortunately, being so early here in January, and January historically being a much more muted month, we need a few more weeks really to get back underneath us before we have a good feel for where each region is at and where the spring selling season is building towards.
Speaker #4: In the spring selling season, I think unfortunately being so early here in January—and January historically being a much more muted month—we need a few more weeks really to get back underneath us before we have a good feel for where each region is at and where the spring selling season is building.
In the spring selling season, I think unfortunately, being so early here in January, and January historically being a much more muted month, we need a few more weeks really to get back underneath us before we have a good feel for where each region is at and where the spring selling season is building towards.
Speaker #4: towards. Understood.
Jay McCanless: Understood. And then just a housekeeping question. Can you remind us how much you have left on the stock repurchase authorization?
Jay McCanless: Understood. And then just a housekeeping question. Can you remind us how much you have left on the stock repurchase authorization?
Speaker #5: And then just the housekeeping question: Can you remind us how much you have left on the stock repurchase?
Speaker #5: authorization? Yeah, we have
Scott Dixon: Yeah, we have around 1.5 million shares underneath the stock repurchase program.
Scott Dixon: Yeah, we have around 1.5 million shares underneath the stock repurchase program.
Speaker #4: around a million and a half shares underneath the stock repurchase program.
Speaker #5: Okay. Great. Thanks,
Jay McCanless: Okay, great. Thanks, guys. Appreciate it.
Jay McCanless: Okay, great. Thanks, guys. Appreciate it.
Speaker #5: Appreciate it. Jay.
Speaker #4: Yep.
Scott Dixon: Yep, absolutely.
Scott Dixon: Yep, absolutely.
Speaker #4: Absolutely. Thanks, guys.
Rob Francescon: Thanks, Jay.
Rob Francescon: Thanks, Jay.
Speaker #2: Your next question comes from the line of Natalie Kolesiker from Zelman & Associates. Your line is now open.
Tyler Langton: Your next question comes from the line of Natalie Kulasekere from Zelman & Associates. Your line is now open.
Tyler Langton: Your next question comes from the line of Natalie Kulasekere from Zelman & Associates. Your line is now open.
Speaker #6: Hey, good afternoon. Thank you for taking my question. So, if I'm not mistaken, you said that SG&A as a share of sales is going to be 14.5% in one Q2 '26.
Operator: Hey, good afternoon. Thank you for taking my question. So, if I'm not mistaken, you said that SG&A as a share of sales is going to be 14.5% in Q1 2026. Is that correct?
Natalie Kulasekere: Hey, good afternoon. Thank you for taking my question. So, if I'm not mistaken, you said that SG&A as a share of sales is going to be 14.5% in Q1 2026. Is that correct?
Speaker #6: Is that correct?
Scott Dixon: Correct, 14.5% in Q1 2026.
Speaker #4: Correct. 14.5% in one Q2026.
Scott Dixon: Correct, 14.5% in Q1 2026.
Speaker #6: Okay. So that's a little higher than the run rate that you've been going at. So I'm just trying to figure out what would cause the spike, especially given that community count growth was much higher last year and so could you maybe talk through the moving pieces of that?
Operator: Okay, so that's a little higher than the run rate that you've been going at. So I'm just trying to figure out what would cause the spike, especially given that, you know, community count growth was much higher last year. And so could you maybe, like, talk through the moving pieces of that?
Natalie Kulasekere: Okay, so that's a little higher than the run rate that you've been going at. So I'm just trying to figure out what would cause the spike, especially given that, you know, community count growth was much higher last year. And so could you maybe, like, talk through the moving pieces of that?
Speaker #4: Sure. So, for the full year, we're really looking at 2025 and 2026 at the moment to be pretty flat from an SG&A as a percentage of revenue perspective.
Scott Dixon: Sure. You know, you know, for the full year, we're really looking at, you know, 2025 and 2026 at the moment to be pretty flat from a, from an SG&A, as a percentage of revenue perspective. So this year, we ended 12.9%. We're really looking somewhere around similar levels next year, which is, which, you know, the initial guide here is 13%. As we look into Q1 specifically, there's a, there's a handful of, of factors within, you know, within that piece. The first is, Q1 is typically our lowest closing quarter of the year, and therefore, from a percentage, is certainly one of our highest.
Scott Dixon: Sure. You know, you know, for the full year, we're really looking at, you know, 2025 and 2026 at the moment to be pretty flat from a, from an SG&A, as a percentage of revenue perspective. So this year, we ended 12.9%. We're really looking somewhere around similar levels next year, which is, which, you know, the initial guide here is 13%. As we look into Q1 specifically, there's a, there's a handful of, of factors within, you know, within that piece.
Speaker #4: So this year we ended at 12.9. We're really looking somewhere around similar levels next year, which is—the initial guide here is 13. As we look into Q1 specifically, there's a handful of factors within that piece.
The first is, Q1 is typically our lowest closing quarter of the year, and therefore, from a percentage, is certainly one of our highest. Additionally, as you know, when you kind of look at where our ASP is at and backlog and the implied guide, those two items really factor into that 14.5% for Q1.
Speaker #4: The first is, Q1 is typically our lowest closing quarter of the year, and therefore from a percentage, is certainly one of our highest. Additionally, as we kind of look at where our ASP is at, and backlog and the implied guide, those two items really factor into that 14.5% for Q1.
Scott Dixon: Additionally, as you know, when you kind of look at where our ASP is at and backlog and the implied guide, those two items really factor into that 14.5% for Q1.
Speaker #6: Okay. Thank you. And I guess my next question is, you said that order activity is trending kind of lower year over year. First three weeks of Jan.
Operator: Okay. Thank you. And I guess-
Natalie Kulasekere: Okay. Thank you. And I guess-
Scott Dixon: Yeah, absolutely.
Scott Dixon: Yeah, absolutely.
Operator: My next question is, you said that order activity is trending kind of lower year-over-year, for two weeks of Jan. So I'm just curious, how confident are you in your ability to dial back incentives more, you know, as you head to the spring and, you know, if things are still tracking down year-over-year?
Natalie Kulasekere: My next question is, you said that order activity is trending kind of lower year-over-year, for two weeks of Jan. So I'm just curious, how confident are you in your ability to dial back incentives more, you know, as you head to the spring and, you know, if things are still tracking down year-over-year?
Speaker #6: curious how confident are So I'm just you in your ability to dial back incentives more as you head to the spring and if things don't if things are still tracking down year over year?
Speaker #4: Well, again, we're going to have to see how that plays out. And again, as I mentioned last year, we were very hopeful, as all the other builders were, that it was going to be a great spring selling in 2025. That did not materialize this year.
Rob Francescon: Well, again, we're going to have to see how that plays out. And, you know, again, as I mentioned last year, we were very hopeful, as all the other builders were, that it was going to be a great spring selling in 2025. That did not materialize. You know, this year, again, for some of the reasons that I previously stated, that we think it will be better this year. But again, we're just going to have to wait and see. And when we say we're behind pace, I mean, we're not that far behind pace, but as we sit here today, we... you know, that is an accurate statement, of course.
Rob Francescon: Well, again, we're going to have to see how that plays out. And, you know, again, as I mentioned last year, we were very hopeful, as all the other builders were, that it was going to be a great spring selling in 2025. That did not materialize. You know, this year, again, for some of the reasons that I previously stated, that we think it will be better this year. But again, we're just going to have to wait and see. And when we say we're behind pace, I mean, we're not that far behind pace, but as we sit here today, we... you know, that is an accurate statement, of course.
Speaker #4: Again, for some of the reasons that I previously stated that we think it will be better this year. But again, we're just going to have to wait and see.
Speaker #4: And when we say we're behind pace, I mean we're not that far behind pace. But as we sit here today, that is an accurate statement.
Speaker #4: course. Got it.
Operator: Got it. Thank you.
Natalie Kulasekere: Got it. Thank you.
Speaker #6: Thank you.
Speaker #2: Your next question comes from the line of Alex Rigel from Texas Capital. Your line is now open.
Tyler Langton: Your next question comes from the line of Alex Rygiel from Texas Capital. Your line is now open.
Operator: Your next question comes from the line of Alex Rygiel from Texas Capital. Your line is now open.
Speaker #7: Thank you, and I appreciate the transparency and all the information you provide on this. It's very helpful. First question: it sounds like, obviously, the fourth quarter had some margin headwind from higher incentives on closeouts.
[Analyst] (Iera): Thank you, and I appreciate the transparency and all the information you provided on this call. It's very helpful. First question, it sounds like obviously the fourth quarter had some margin headwind from higher incentives on closeouts, but was there any pressure from the sale of the Century Living units?
Alex Rygiel: Thank you, and I appreciate the transparency and all the information you provided on this call. It's very helpful. First question, it sounds like obviously the fourth quarter had some margin headwind from higher incentives on closeouts, but was there any pressure from the sale of the Century Living units?
Speaker #7: But was there any pressure from the sale of the Century Living?
Speaker #7: units? Alex,
Scott Dixon: Alex, specifically, those, the sale of the Century Living units are not included in the gross margin, nor are they included in the incentive commentary that we provided.
Scott Dixon: Alex, specifically, those, the sale of the Century Living units are not included in the gross margin, nor are they included in the incentive commentary that we provided.
Speaker #4: specifically, the sale of the Century Living units are not included in the gross margin, nor are they included in the incentive commentary that we provided.
Speaker #4: Specifically, the sale of the Century Living units is not included in the gross margin, nor are they included in the incentive commentary that we...
Speaker #7: Helpful. And then as it relates to your teaser interest rate on your website of 3.75, are you finding that that's sort of that magical number that is really causing buyers to take
[Analyst] (Iera): Helpful. And then, as it relates to your teaser interest rate on your website of 3.75%, are you finding that that's sort of that magical number that is really causing buyers to take action?
Helpful. And then, as it relates to your teaser interest rate on your website of 3.75%, are you finding that that's sort of that magical number that is really causing buyers to take action?
Speaker #7: action? Alex,
Scott Dixon: You know, Alex, it's. There's a handful of different things going on on the mortgage side from a product perspective. When you kind of step back and look all in at the average rate that we originated our mortgages at this year, and our financial services segment has an 84% capture rate, so it's certainly the vast majority of our consumers.
Scott Dixon: You know, Alex, it's. There's a handful of different things going on on the mortgage side from a product perspective. When you kind of step back and look all in at the average rate that we originated our mortgages at this year, and our financial services segment has an 84% capture rate, so it's certainly the vast majority of our consumers.
Speaker #4: It's a handful of different things going on on the mortgage side from a product perspective. When you kind of step back and look all in at the average rate that we originated our mortgages at this year, and our Financial Services segment has an 84% capture rate.
Speaker #4: So it's certainly the vast majority of our consumers. We're kind of in the 5 and a quarter to 5 and a half range all in.
Rob Francescon: ...We're kind of in the 5.25 to 5.5 range, all in. We certainly will move product or solve certain equations for our buyer, and you will see teaser rates below 4, especially on our ARM product. You also will see, you know, a very popular product is, you know, a 4.875, 30-year fixed. It is certainly another product that will certainly help solve some of the affordability equations for our consumer. But all in, we're pretty consistent over the last, you know, 4 or 5 quarters, that we're originating our mortgages somewhere around in that 5.25 to 5.5 range.
Rob Francescon: ...We're kind of in the 5.25 to 5.5 range, all in. We certainly will move product or solve certain equations for our buyer, and you will see teaser rates below 4, especially on our ARM product. You also will see, you know, a very popular product is, you know, a 4.875, 30-year fixed. It is certainly another product that will certainly help solve some of the affordability equations for our consumer. But all in, we're pretty consistent over the last, you know, 4 or 5 quarters, that we're originating our mortgages somewhere around in that 5.25 to 5.5 range.
Speaker #4: We certainly will move product or solve certain equations for our buyer. And you will see teaser rates below 4%, especially on our ARM product.
Speaker #4: You also will see a very popular product is a 4.875 30-year fixed is certainly another product that will certainly help solve some of the affordability equations for our consumer.
Speaker #4: But all in, we're pretty consistent over the last four or five quarters that we're originating our mortgages somewhere around in that 5 and a quarter to 5 and a half range.
Speaker #7: And then more broadly, as we enter the spring selling season, how do you see sort of the industry's level of spec inventory developing right
[Analyst] (Iera): And then more broadly, as we enter the spring selling season, how do you see sort of the industry's level of spec inventory developing right now?
Alex Rygiel: And then more broadly, as we enter the spring selling season, how do you see sort of the industry's level of spec inventory developing right now?
Speaker #7: now? I think
Rob Francescon: You know, I think as we look at, you know, last year, and, you know, we were no different as we pushed pace over price. We entered the year with less specs than we did year over year, as we entered January 2025. And when we look at it, I think people have generally done the same thing, vis-a-vis not getting ahead of themselves on starts or all of that. But the positive side of that is, that can be ramped up very quickly, if the market is there, because cycle times have dropped for us and other builders. You know, ours is at 114 calendar days, and other builders are somewhat similar, depending on their product type. So with that, you know, new product can be created fairly quickly.
Rob Francescon: You know, I think as we look at, you know, last year, and, you know, we were no different as we pushed pace over price. We entered the year with less specs than we did year over year, as we entered January 2025. And when we look at it, I think people have generally done the same thing, vis-a-vis not getting ahead of themselves on starts or all of that. But the positive side of that is, that can be ramped up very quickly, if the market is there, because cycle times have dropped for us and other builders. You know, ours is at 114 calendar days, and other builders are somewhat similar, depending on their product type. So with that, you know, new product can be created fairly quickly.
Speaker #4: as we look at last year and we were no different as we pushed pace over price, we entered the year with less specs than we did year over year as we entered January of '25.
Speaker #4: And when we look at it, I think people have generally done the same thing vis-à-vis not getting ahead of themselves on starts or all of that.
Speaker #4: But the positive side of that is that can be ramped up very quickly if the market is there because cycle times have dropped for us and other builders.
Speaker #4: Ours is at 114 calendar days, and other builders are somewhat similar depending on their product type. So with that, new product can be created fairly.
Speaker #4: quickly. Very helpful.
[Analyst] (Iera): Very helpful. Thank you.
Alex Rygiel: Very helpful. Thank you.
Speaker #7: Thank you.
Speaker #4: Absolutely. As a reminder, if
Rob Francescon: Absolutely.
Rob Francescon: Absolutely.
Tyler Langton: As a reminder, if you wish to ask a question, please press star one. We will now turn back the line over to Rob for some brief closing remarks. Please go ahead.
Operator: As a reminder, if you wish to ask a question, please press star one. We will now turn back the line over to Rob for some brief closing remarks. Please go ahead.
Speaker #2: To ask a question, please press one. We will now turn the line back over to Rob for some brief closing remarks.
Speaker #2: Please go
Speaker #2: Ahead. To everyone on the call,
Rob Francescon: To everyone on the call, thank you for your time today and interest in Century Communities. To our team members, thank you for your hard work, dedication to Century, and your unwavering commitment to our valued home buyers.
Rob Francescon: To everyone on the call, thank you for your time today and interest in Century Communities. To our team members, thank you for your hard work, dedication to Century, and your unwavering commitment to our valued home buyers.
Speaker #4: thank you for your time today. And interest in Century Communities. To our team members, thank you for your hard work, dedication to Century, and your unwavering commitment to our valued home
Speaker #4: buyers. Thank
Tyler Langton: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
