Century Communities (NYSE:CCS) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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The full earnings call is available at https://events.q4inc.com/attendee/555908239
Summary
Century Communities reported a sequential increase in first quarter adjusted gross margin by 140 basis points and a 4% rise in community count despite macroeconomic challenges.
The company effectively managed inventory, with finished specs down 16% sequentially, and continued growth is anticipated when market conditions improve.
First quarter net new orders totaled 2,379 homes, with a cancellation rate of 12.2%, showing buyer commitment despite headwinds.
Century Communities repurchased 2% of shares at a 27% discount to book value and increased the quarterly dividend by 10%.
The company reduced its full year 2026 home delivery guidance by 5% due to geopolitical and economic uncertainties but remains focused on controlling costs and leveraging its land position.
Full Transcript
OPERATOR
Greetings. Welcome to Century Community’s first quarter 2026 earnings conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If any time during the call you require immediate assistance, please press Star zero for the operator. Please note 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.
Tyler Langton (Senior Vice President of Investor Relations)
Good afternoon. Thank you for joining us today for Century Communities’ earnings conference call for the first quarter 2026. 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 10K as supplemented by our latest 10Q to be filed shortly 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. 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. Presenting on the call today are Dale Franceskin, Executive Chairman, Rob Franciscan, Chief Executive Officer 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.
Dale Franceskin (Executive Chairman)
Thank you, Tyler and good afternoon everyone. We are pleased with our first quarter results given continued market pressures which intensified even further beginning in early March. While demand at the start of the quarter was roughly in line with year ago levels, geopolitical issues and increased economic uncertainties coupled with higher interest rates and gas prices further eroded consumer sentiment which weighed on our order activity most meaningfully in March, typically the highest sales month of the quarter. Despite these macro challenges, our operations continued to perform well. Our first quarter adjusted gross margin increased by 140 basis points sequentially and we grew our first quarter ending community count by 4% versus the prior quarter. We also continued to effectively manage our inventory levels with our finished specs at the end of the first quarter down 16% sequentially and 31% year over year. We also continue to be encouraged by bipartisan efforts to address the shortage of affordable housing and are still well positioned for growth when demand improves. Based on our current owned and controlled lot count, we have the ability to grow our deliveries by 10% or more annually once market conditions improve. So long as slower market conditions persist, we will continue to balance pace and price, control our costs and inventory levels, and return capital to our shareholders through dividends and opportunistically repurchasing shares at what we view as very attractive levels. In the first quarter, we repurchased approximately 2% of our shares outstanding at the beginning of the year at a 27% discount to our book value, and increased our quarterly cash dividend by 10% to 32 cents per share. I’ll now turn the call over to Rob to discuss our strategy, operations and land position in more detail.
Rob Franciscan (Chief Executive Officer)
Thank you, Dale and good afternoon everyone. Starting with Sales While in the fourth quarter of last year we focused more on pace versus price, we took the more balanced approach in the first quarter 2026 that we outlined on our conference call last quarter. The quarter started off on a relatively healthy basis, with our absorption rates in January roughly flat on a year over year basis in line with typical seasonality. We also saw sequential increases in absorption rates in both February and March. That said, our absorption rate in March declined on a year over year basis as the conflict in the Middle east as well as higher gas prices and interest rates weighed on home buyer sentiment and we ended the quarter with net new orders totaling 2,379 homes. We were pleased to see our traffic increase each month during the first quarter, with March levels up 13% over January, and we continue to believe that there is solid underlying demand for new homes. We are also optimistic that any interest rate relief and improvement in consumer confidence will unlock buyer demand and drive our conversion rates higher. Additionally, our cancellation rate of 12.2% in the first quarter was below the levels we experienced throughout most of 2025, demonstrating the commitment of buyers once they have made the decision to purchase a home. Our order activity so far in April has trended better than March, with orders also improving sequentially over the past several weeks. We delivered 2013 homes during the first quarter and our incentives on these homes averaged approximately 1250 basis points, down roughly 50 basis points from fourth quarter 2025 levels within the first quarter. Our incentives on closed homes were at the lowest level in January and increased as the quarter progressed as we look to maintain an appropriate pace as macro headwinds intensified. Assuming current market conditions, we expect incentives on closed homes in the second quarter of 2026 to be similar with first quarter levels. In the first quarter, adjustable rate mortgages accounted for roughly 30% of the mortgages that we originated by volume, in principle a Further increase from fourth quarter 2025 levels of approximately 25% and well above first quarter 2025 levels of less than 5%. Receptivity of our buyers to ARMS has been increasing and this increased adoption of ARMS could help partially address the market’s affordability challenges. While incentives are weighing on our margins, our operations continue to perform extremely well in the first quarter. Our direct construction costs on the homes we delivered declined by 2% on a sequential basis. Our cycle times averaged 114 calendar days, down 15% from 134 days in the year ago quarter. Our finished lot costs in the first quarter decreased by 1% on a sequential basis and we continue to expect our average finished lot costs for 2026 to be 2 to 3% higher than fourth quarter 2025 …
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