Century Communities, Inc. (NYSE:CCS), Greenwood, Colorado after market close Tuesday reported net income for the first quarter of 2018 ended March 31 increased 128% to $20.0 million, or $0.67 per share, compared to $8.8 million or $0.40 per share for the prior year quarter. Analysts were expecting a gain of $0.52 per share.
Adjusted net income for the first quarter increased 144% to a record $22.5 million, or $0.75 per diluted share, as compared to $9.2 million, or $0.42 per diluted share, for the prior year quarter. Adjusted net income excludes the impact of one-time charges associated with home-builder acquisitions.
Home sales revenues and deliveries grew to record first quarter levels in the first quarter 2018. Home sales revenues for the first quarter 2018 increased 74% to $394.8 million, compared to $226.4 million for the prior year quarter. The growth in home sales revenues was attributable to a 55% increase in deliveries to 941 homes compared to 608 homes for the prior year quarter, and a higher average sales price of home deliveries of $419,600, compared to $372,400 in the prior year quarter. Deliveries and average sales price of home deliveries in the first quarter of 2018 were both favorably impacted, primarily in the West, by the acquisitions of UCP and Sundquist Homes. Excluding the West, the company’s legacy regions experienced growth of 22% in both home sales revenues and deliveries.
Adjusted home building gross margin percentage, excluding interest and purchase price accounting, was 23.2% in the first quarter 2018, as compared to 21.7% in the fourth quarter and 21.7% in the prior year quarter. Home building gross margin percentage in the first quarter 2018 was 19.1%, as compared to 19.5% in the prior year quarter, with the difference attributable to a 180 basis point impact of purchase price accounting in the first quarter 2018 partly offset by higher core profitability. SG&A as a percent of home sales revenues improved to 14.3%, compared to 14.7% in the prior year quarter. With the integration of UCP completing early in the second quarter, we expect to begin realizing synergies later in 2018.
Net new home contracts in the first quarter 2018 increased to a record 1,378 homes, representing an increase of 44%, compared to 957 homes in the prior year quarter, attributable to the addition of the new West region and stronger demand trends in all legacy regions. Excluding the West, the Company’s legacy regions experienced a 21% increase in net new home contracts. At the end of the first quarter 2018, the Company had a record 1,757 homes in backlog, representing $738.0 million of backlog dollar value, compared to 1,098 homes in backlog, representing $436.0 million of backlog dollar value in the prior year quarter, an increase of 60% in units and 69% in dollar value.
Financial services generated a $1.2 million profit in the first quarter 2018 as compared to a loss of $750,000 in the prior year quarter. Equity in income of unconsolidated subsidiaries increased 152% to $3.2 million, compared to $1.3 million in the prior year quarter.
As of March 31, 2018, the company had total assets of $1.7 billion, including cash of $52.0 million and inventories of $1.5 billion. Liabilities totaled $983 million, which included $777 million of long-term debt. As of March 31, 2018, the Company had no outstanding borrowings under its $400 million unsecured credit facility.
Rob Francescon, co-CEO, said, “We remain encouraged by the positive fundamentals exhibited in our markets during the first quarter. Our backlog expanded 60% to a record 1,757 homes as a result of a 44% increase in net new contracts to a record 1,378 homes, an indicator of the strong demand we experienced across our geographies. We continue to develop and open new communities while investing in attractive owned and controlled land parcels that complement our portfolio. Our Wade Jurney Homes joint venture, recently named the fastest growing private home builder by Builder Magazine, and our financial services operations both continue to surpass our expectations, providing exceptional returns on investment and accretive earnings. Combined with a focus on sustained execution, we believe our strong balance sheet and increased scale firmly situate our company to deliver on our growth objectives for the full year 2018 and beyond.”
David Messenger, CFO, commented, “We are encouraged by the sustained demand in our markets during the first quarter and believe we are well positioned for continued success throughout the remainder of the year. Based on our current market outlook, we are increasing our expected home deliveries to be in a range of 4,600 to 5,100 homes and our home sales revenues expectation to be in a range of $1.8 billion to $2.1 billion for 2018. We continue to expect our active selling community count to be in the range of 130 to 140 communities at the end of the full year 2018. Additionally, we continue to expect to incur an income tax rate of approximately 25% in 2018.”
